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John C. Goodman / Feb. 7, 2016

Relief of Poverty: Four Centuries of Futility

More than 400 years ago, the British adopted the Poor Law system, under which local communities were made responsible for the relief of poverty. For the next four centuries the Poor Laws were amended again and again, as the following argument went to and fro: Was the system providing necessary relief or was it in various ways interfering with the natural workings of the labor market by subsidizing idleness and encouraging indolence.

More than 400 years ago, the British adopted the Poor Law system, under which local communities were made responsible for the relief of poverty. For the next four centuries the Poor Laws were amended again and again, as the following argument went to and fro: Was the system providing necessary relief or was it in various ways interfering with the natural workings of the labor market by subsidizing idleness and encouraging indolence.

At one point a royal commission recommended the following two tests:

  • The less eligibility test: a pauper should have to enter a workhouse with conditions worse than that of the poorest free labourer outside of the workhouse.

  • The workhouse test: relief should only be available in a workhouse in which conditions were to be so uninviting that anyone capable of coping outside them would choose not to be in one.

The history of the British Poor Laws makes for interesting reading and even more interesting is their treatment in the novels of Charles Dickens and Frances Trollope and later Jack London.

But before continuing, let’s stop and ask a pertinent question. Do you see anything wrong with this historical approach to welfare?

Think about it. The central government (the British Parliament) was passing laws telling local communities how to deal with people. The standards all have to do with making sure that welfare is no more attractive than work. But this only works if the “paupers” are all the same. The system becomes completely dysfunctional if what one person views as “uninviting” is different than what someone else regards as “uninviting.” Or if conditions that one person views as “worse” or “better” are different from what others view as “worse” or “better.” Treating people at the bottom of the income ladder as if they all viewed the world the same way is not only foolish, it’s the sort of thing no private charity would ever do. (More on that below.)

So, the biggest problem with the Poor Laws is that they tended to treat everyone seeking relief as if they were the same when in fact they were not at all the same. (Just read Charles Dickens!)

Flash forward to the current era and we find that the right-leaning American Enterprise Institute and the left-leaning Brookings Institution have come together to find common ground in a new report on how to reform the American approach to welfare.

Among the recommendations: such conservative ideas as attaching a job requirement to the food stamp program and provisions to encourage marriage and birth control; such liberal ideas as a small increase in the minimum wage and more federal investment in early childhood education and community colleges; and what I suppose is a left/right idea: increasing the amount of the Earned Income Tax Credit.

Even getting this much agreement was not easy according to a report in The New York Times. Just so l get this exactly right I am going to quote directly from reporter Eduardo Porter’s account:

The two sides will never entirely agree, of course, partly because they view the causes of poverty from such different angles.

To the left, deprivation is caused mostly by factors beyond the control of the poor. These include globalization that undercut good jobs previously within the reach of the less educated, an educational system segregated by race and class, lack of parental resources, discrimination, excessive use of prison.

Experts on the right, by contrast, put a lot of the weight on personal responsibility, often faulting the bad choices of the poor. And government support, by providing the poor with an income with few strings attached, has made their choices worse.

In other words, after four centuries of fruitless debate, not much has really changed. Scholars sitting in a room in Washington, DC are arguing about the motivations and the behavior of millions of people they have never met and never will meet and both sides feel free to generalize about the whole lot of them.

Meanwhile, the system continues in its dysfunction. In the Wall Street Journal, House Speaker Paul Ryan and Sen. Tim Scott write:

The federal government now runs more than 80 different antipoverty programs at a cost of about $750 billion a year. Yet 46 million Americans are poor today, and the poverty rate has barely budged: from 19% in 1965 to 14.8% in 2014. If you were raised poor, you’re as likely to stay poor as you were 50 years ago.

Yet there are programs that work and Ryan visited one in Dallas the other day. They are almost always in the private sector, supported by voluntary contributions from people who would never even think of contributing to the Food Stamp program.

Ordinary people living in the communities with others who need help have far more common sense than scholars or bureaucrats or legislators who are miles away.

That’s why Michael Stroup and I recommended 30 years ago letting taxpayers decide where their welfare tax dollars go, instead of leaving that decision to bureaucrats. (See these Forbes posts here and here.) More on that in a future column.

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