What America Won in the ‘War on Poverty’

A safety net, if we can keep it.
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Reuters

In an unabashed endorsement of government action to alleviate the plight of the poor, this week President Obama commemorated the 50th anniversary of the War on Poverty with his own call for new policies to address the continued struggles of tens of millions of Americans.

In his official statement, Obama remarked that, “In the richest nation on earth, far too many children are still born into poverty, far too few have a fair shot to escape it, and Americans of all races and backgrounds experience wages and incomes that aren’t rising… That does not mean… abandoning the War on Poverty.  In fact, if we hadn’t declared ‘unconditional war on poverty in America,’ millions more Americans would be living in poverty today. Instead, it means we must redouble our efforts to make sure our economy works for every working American. “

It would seem hard to argue with such sentiments, yet some have done so. Fox News published a piece saying “despite trillions spent, poverty won.” Many others react by shaking their heads sadly, acknowledging the noble effort and concluding that it was an abject failure. The implication is clear: government spent a mint and did not end poverty, and now Obama is calling for more of the same.

This raises two crucial questions: did the first “war” really fail? And what should we do today?

As for the first, when Lyndon Johnson called for an end to poverty on January 8, 1964, he continued the tradition of the New Deal and decades of American policy designed to provide all Americans with basic standards of living — housing, education, healthcare and jobs. Americans believed that an activist government could achieve those goals, hence the trillions of dollars directed at the War on Poverty.

Those trillions have over time reduced the official “poverty rate” from 19 percent to 15 percent. Many have concluded that such a minor shift wasn’t worth the massive expense. Johnson’s legacy was tarnished by the chaos unleashed by opposition to the Vietnam War and by the morass of the 1970s, and the Reagan revolution of the 1980s was predicated in part on aconviction that the government’s attempt to alleviate the plight of the poor was not only social engineering, but badly-done social engineering.

Yet poverty today is of a different order than poverty 50 or 100 years ago. During the Great Depression, millions of Americans were still without electricity or running water. By the 1960s that had changed, but many people still lacked basic healthcare, and the elderly were often at the mercy of their families. Today, there is still widespread poverty as defined by official income statistics, but the conditions of poverty are materially different, as Jordan Weissmann at The Atlantic has shown.

In part, that is because of the safety net we have since created. Many conservatives believe that we were better off in a world where private charity groups and religious organizations provided assistance, rather than government programs such as food stamps, welfare, unemployment benefits, Social Security and disability payments. But while that world did place much greater stock in self-reliance, it also left far more people at a huge disadvantage, struggling for life’s basic necessities. You could — and some do — argue that such a world produced heartier souls more able to cope with life’s vicissitudes. You could also argue—and should—that such a world was harsh and destructive to many in ways that humans for centuries have strived to ameliorate.

Today we have a massive social safety net, thanks to both the New Deal and the substantial expansion of federal and state programs beginning in the 1960s. These programs soon included housing as well. Many have seen more waste than not, and housing programs in particular did not fare well, as the scarred urban landscape of housing projects demonstrates.

But that safety net—much of which is not well-captured in the per capita income statistics that are used to assess the poverty rate—did create a set of expectations about the minimum level of necessities that all Americans deserve. That minimum—consisting of adequate shelter, food, heat and air conditioning, public education, and access to healthcare for the elderly—is a reality today.

The real critique, however, and the area we should focus on in the years ahead, is that because Americans are divided about this safety net, we accomplish two things, neither of which are optimal. We spend trillions on programs designed to provide some level of basic security, and yet these programs remain controversial. Significant opposition to these programs and the constant threat that they could be cut means that instead of providing security, they create insecurity, and because of that opposition, it becomes almost impossible to discuss how they could be improved, rather than maintained or terminated.

The result is something of a worst of all possible worlds: We maintain a vast safety net while pretending that we do not, and many of us act as if safety nets are at best ineffective and at worst immoral. The net result is that as a society, we find ourselves unable to enact needed reforms.

The answer, then, is to recognize that in securing many basic necessities, the War on Poverty succeeded, either in actually ensuring that those necessities exist, or in establishing that having them is a fundamental right. Even the most virulent opponents to social safety net programs accept that right, which would not have been the case well into the 20th century. The programs may not have altered the poverty rate, but in part that’s because we have constantly reset and raised the bar about what we consider to be the most basic resources that every American deserves. Our “enough” today is considerably greater than it was fifty years ago.

The next solutions to the challenges of today’s poverty, therefore, are not better public housing and Medicaid. We do not need the same approach that various administrations have been advocating for the past 50 years. We need instead a consensus about what we believe are the next level of basic material rights of every citizen—beyond food, clothing and shelter. Many of those—such as self-esteem, the tools to build careers, the ability to navigate a world defined by information rather than manufacturing—are within the ability of government to provide.

State and local governments have been laboratories of new initiatives—from work and training programs, to partnerships between local businesses and community colleges, to food banks. Thankfully, such initiatives at all levels of government require less money than more traditional social services. They also demand more flexibility. Government programs defined not by ideology but by flexibility and the ability to help private and local institutions act—not by giving them grants as the War on Poverty did, but via tax incentives that help run programs—that would be welcome innovation, and the best way to continue the legacy of the War on Poverty. And with the federal government unlikely to spend more in today’s climate, it may also be the only way.

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Zachary Karabell is Head of Global Strategy at Envestnet, a financial services firm, and author of The Leading Indicators: A Short History of the Numbers that Rule Our World. More

At River Twice Research, Karabell analyzes economic and political trends. He is also a senior advisor for Business for Social Responsibility. Previously, he was executive vice president, head of marketing and chief economist at Fred Alger Management, a New York-based investment firm, and president of Fred Alger and Company, as well as portfolio manager of the China-U.S. Growth Fund, which won a five-star designation from Morningstar. He was also executive vice president of Alger's Spectra Funds, which launched the $30 million Spectra Green Fund based on the idea that profit and sustainability are linked. Educated at Columbia, Oxford, and Harvard, where he received his Ph.D., he is the author of several books, including Superfusion: How China and America Became One Economy and Why the World's Prosperity Depends on It (2009), The Last Campaign: How Harry Truman Won the 1948 Election, which won the Chicago Tribune Heartland Award, and Peace Be Upon You: The Story of Muslim, Christian, and Jewish Coexistence (2007), which examined the forgotten legacy of peace among the three faiths. In 2003, the World Economic Forum designated Karabell a "Global Leader for Tomorrow." He sits on the board of the World Policy Institute and the New America Foundation and is a member of the Council on Foreign Relations. He is a regular commentator on national news programs, such as CNBC and CNN, and has written for The Wall Street Journal, Newsweek, Time, The Washington Post, The New Republic, The Los Angeles Times, The New York Times, and Foreign Affairs.

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