Published August 13, 2008 in FrontPageMagazine

What About the Poor?

by Barry Loberfeld

For defenders of the Constitution, the free market, and individual liberty, no single issue has thus far proved more defeating -- on both the intellectual and electoral battlefields -- than that of poverty. It has handed one unearned (and by no means inevitable) victory after another to the unconstitutional statism of collectivist liberals.

The conquest of poverty (to borrow the title of Henry Hazlitt's classic) requires just two weapons: wealth and compassion. So the only real question is: Who can better provide these -- civil society ("the market") or the political state? The answer as it regards wealth has now been settled: "[C]apitalism has won," conceded left-aligned economic historian Robert Heilbroner in 1989. "Socialism," conversely, "has been a great tragedy this century." Paul Samuelson's famous textbook a few years later deemed state production the "failed model." It is a society of free people, not coercive government, that produces wealth. And yet, most bizarrely, liberals still believe it is that government, not those people, that possesses the compassion necessary to redistribute some of that wealth to those who find themselves in need of aid (a percentage of any population).

Society will starve the poor, but the State won't. How did it come to that? Mostly from the premise If government doesn't do it, it doesn't get done. But if we followed that consistently, we'd wind up right back with the "failed model" of socialist state planning of production and everything else, e.g., Stalin and Ceausescu's prohibition of abortion or the Chinese Communists' imposition of (even late-term) abortion. It is a premise refuted by an insight from an American Founder. We know Madison and his politics of limited government, we know Jefferson and his morality of individual rights, but we often forget Paine and his philosophy of the primacy of society over the State:

A great part of that order which reigns among mankind is not the effect of government. It had its origin in the principles of society and the natural constitution of man. It existed prior to government, and would exist if the formality of government was abolished. The mutual dependence and reciprocal interest which man has upon man, and all parts of a civilized community upon each other, create that great chain of connection which holds it together. The landholder, the farmer, the manufacturer, the merchant, the tradesman, and every occupation, prospers by the aid which each receives from the other, and from the whole. Common interest regulates their concerns, and forms their laws; and the laws which common usage ordains, have a greater influence than the laws of government. In fine, society performs for itself almost every thing which is ascribed to government.

We don't need state charities for the same reason we don't need state churches, state families, or state anything else, i.e., we don't need state socialism because we already have civil society. Government, organized armed force, exists only to provide governance -- basically, defense against the violent criminal element (domestic and foreign, e.g., bin Laden). Condemning limited government for not performing the functions of the charity, the church, the family, the firm, the school, and the other organs of the body politic is like condemning the skeleton for not performing the functions of the brain, the heart, the stomach, the liver, the lungs, and the other organs of the body proper. Freedom is the framework that secures all other virtues.

Ironically, the widely expressed fear that people won't voluntarily help those who can't help themselves -- the foremost objection to the free market -- is self-refuting. If everyone is concerned about the poor primarily, then what's the problem? Religionists and secularists of virtually all stripes proclaim identical sentiments when it comes to aiding the less fortunate. And yet we have this theater-of-the-absurd chorus with each member wailing that he alone cares about his fellow man.

An example of all this is the statement by Paul Kurtz in the February/March Free Inquiry ("Published by the Council for Secular Humanism"):

[C]learly we need to support the free market but not in an absolutistic sense. I submit that some measure of ... empathy for the needs of the disadvantaged should be encouraged. I consider politics based on greed and self-interest alone morally wrong.

Well, would clergymen Jesse Jackson and Mike Huckabee disagree? And yet what does that statement mean -- practically? Forced labor ("national service") as well as forced payment? And why should such empathy -- yes, a very real virtue -- be the only virtue "encouraged" by state coercion? Can free inquiry itself -- arguably the most fundamental virtue -- also be "encouraged" by, not an appeal to the mind, but a gun to the head? If government doesn't force people to, say, read, does that constitute a "politics based on ignorance and solipsism"? What is left then of the free market -- in ideas or anything else? And who is to be "encouraged" and who is to do the "encouraging"? I submit that an atheistic ideology that sees people as clay and "government" as sculptor is not secular humanism, but secular statism -- a theocracy-without-a-theos that still criminalizes sin ("greed").

Not only will a free society provide charity and aid, but it will do so better than the so-called "welfare state." For one thing, people will not have their charity dollars taxed away to non-charity troughs, e.g., Archer Daniels Midland, Boeing, IBM, GE, the NEA, the DEA, tobacco, ethanol, husbandmen Ted Turner and Sam Donaldson ("Almost three-quarters of [agricultural] subsidies go to 20,000 multi-millionaire play farmers and blue chip corporations" -- Mark Steyn), the "bridge to nowhere," the Mississippi railroad relocation project (included, like a lot of pork, in a "defense" bill), Womyn's Studies, or the Egyptian government. (When was the last time you worried about any of them not having enough money? As for that last item, recall Lord Bauer's famous characterization of foreign aid: the "transferring [of] money from poor people in rich countries to rich people in poor countries.") Also, a monopoly charity system means one definition of poverty and one means of attempting to alleviate it. A market in charity means a diversity of conceptions, providers, and approaches. It means competition, that much maligned virtue. A government program doesn't have to prove anything to its coerced funders; taxpayers can't take their dollars elsewhere if they don't think it's doing the best job it can. But a private charity must prove it's doing a better job than anyone else or that next check won't come. As pointed out by Cato Institute scholar Michael Tanner in The End of Welfare: Fighting Poverty in the Civil Society (1996), private charity, despite the coercive domination of the field by government, already

has a better record of actually delivering aid to recipients. Surprisingly little of the money spent on federal and state social welfare programs actually reaches recipients.... Today, 70 cents of every [welfare] dollar goes, not to poor people, but to government bureaucrats and others who serve the poor. Few private charities have the bureaucratic overhead and inefficiency of government programs.

Furthermore, the welfare state doesn't "encourage" people to have a sense of "social responsibility" -- it relieves us of it. The disadvantaged become the bureaucrats' responsibility, not ours. Now, like Scrooge, we think our only moral duty is to the taxman ("The Treadmill and the Poor Law are in full vigour, then?"). And if anything warps people's values, it's the social-democratic redistributionism that forces everyone to throw their wealth onto the table and then allows them to grab what they can. There's your "politics based on greed"!

Another factor is government intervention as a cause of poverty. Yes, most people (excluding breakaway platoons of Marxist die-hards) concede that capitalism has won over socialism -- broadly speaking. That means they acknowledge the need for the market, not for its abolition. It doesn't mean they support the free market in an "absolutistic sense." What they don't concede is that that market would be more productive and more just if left untinkered with by the taxation-inflation-regulation complex, the special interests' tool with which the State allegedly fixes the problem of "greed and self-interest." Thus the socialist destruction of the market's wealth production is replaced by a social-democratic reduction of that production. As Roger Ream, now president of the Fund for American Studies, once wrote:

High incomes and profits, the incentives to invest and produce, are put to work, provided they are not confiscated by government. The motive for wanting a larger income and higher profits should not be a concern of economics; whether for a base reason or a high-minded objective, the only way to get more, in a free market economy, is to serve others. The way to lessen poverty is to create a favorable environment for investment and wealth creation. In fact, when William E. Simon was Treasury Secretary, he suggested to a Senate committee that, "If you really want to help the poor, help the rich. They're the ones who will invest, build more factories, create more jobs." The only "help" the rich need is the same freedom to which all men and women are entitled, the freedom to produce, to trade, and to use their property peacefully and as they choose. Ultimately, the extent of the market [i.e., the output of the production] process is in direct relation to the amount of freedom in society.

The obverse of less wealth is more poverty. Lowered productivity means a diminished ability to offer jobs to those who can work and charity to those who can't.

But what's most cruel about government intervention in the economy is not how it stops us from helping the poor, but how it stops the poor from helping themselves. In "Scratching By: How Government Creates Poverty as We Know It" (available at, Charles Johnson of the Molinari Institute exposes the unsightly truth of what the State forces upon the poor:

Government regimentation of land, housing, and labor creates and sustains the very structure of urban poverty. Government seizures create and reinforce the dilapidation of ghetto neighborhoods by constricting the housing market to a few landlords and keeping marginal lands out of use. Government regulations create homelessness and artificially make it worse for the homeless by driving up housing costs and by obstructing or destroying any intermediate informal living solutions between renting an apartment and living on the street. And having made the ghetto, government prohibitions keep poor people confined in it, by shutting them out of more affluent neighborhoods where many might be able to live if only they were able to share expenses.

Government barriers to self-employment are legion. One example:

Every modern urban center has a tremendous demand for taxi cabs. In principle, anyone who needed to make some extra money could start a part-time "gypsy cab" service with a car she already has, a cell phone, and some word of mouth.... But in the United States, city governments routinely impose massive constraints and controls on taxi service. The worst offenders are often the cities with the highest demand for cabs, like New York City, where the government enforces an arbitrary cap on the number of taxi cabs through a system of government-created licenses, or "medallions." ... At the auction last November a total of 63 new medallions were made available for auction with a minimum bidding price of $189,000.... Lots of poor people have cars they could use; not a lot have a couple hundred thousand dollars to spend on a government-created license.

And then, as we've seen time and again, government poverty programs are proposed to alleviate this government-inflicted poverty -- the problems of Big Government will be solved by Bigger Government! Paraphrasing Karl Kraus, we might say that statism is the disease that prescribes itself as the cure. Or perhaps Ludwig von Mises put it best: "A governmental system that spends every year billions of dollars of the taxpayers' money to make essential foodstuffs, cotton and many other articles more expensive should certainly have the decency not to boast of an alleged war against poverty." The real conflict is between the goals of eliminating poverty and fortifying Big Government.

Unless political ideals are to be Platonic Ideals, theory must be translated into practice. And how exactly is that to be done? Libertarians, for example, play a thought game in which they must decide whether they would push the Big Red Button that would immediately end all government programs. Too obviously, there's nothing even approaching that button, so such speculation is nothing more than What if reality were other than what it is? irrelevancy. The fact is, as Ayn Rand once observed, "we are living in a disastrously mixed economy, which cannot be freed overnight." That means we need a strategy. So, what is the first step?

What it is not is the abolition of programs for the poor -- a blunder for a multitude of reasons. As noted, the fate of the needy in a free market is, understandably, the biggest concern people have. Why take the path of greatest resistance? Who would we have an easier time convincing people should be taken off the dole tomorrow: Archer Daniels Midland or an elderly widow who's the guardian of her two grandchildren? The answer is obvious because the people are sound in their judgment -- contrary to liberals' hysterical fear of them. Indeed, how can we leave that family to private charity when people's charity dollars are still taxed away to that corporation and thousands of other such drains? How can we kick people off the welfare rolls, only for them to face the joblessness and homelessness still being caused by government? And why should we expect investment capital to flow into areas that the War on Drugs -– “Programs to drive drugs out of black neighborhoods need to be supplemented by strong and sustained police work” (Roger Wilkins, The Village Voice, 2/4/86) -- has left looking like actual combat zones? A free market in charity presupposes a free market in everything else -- exactly what we don't have. Nothing would lose us more ground than the popular identification of the "free market" with a welfare state in which the poor are the only ones who don't get welfare.

In short, it must be understood that ending programs for the poor (via phase-out) is logically the last step in the process of desocialization, and there is a hideous glut of statism before we ever reach that point ... at which this will all be academic. The economic freedom we'll have then either will or will not convince us to move towards complete privatization. (One thing we can do right now about programs for the worse-off is terminate their use by the well-off. Our first target: "Medicaid was supposed to help the poor, but one of its most expensive roles is to serve as 'inheritance insurance' for the wealthy. One of the fastest-growing areas of legal practice involves helping the affluent qualify for Medicaid long-term care" -- Dr. Jane M. Orient, executive director of the Association of American Physicians and Surgeons.)

It must be understood and openly declared. For decades now, the defenders of the statist quo have painted any electoral challenger to Big Government as intent on immediately abolishing poverty programs. Fear sets in, the challenger loses, and the entrenched defenders continue to make Big Government bigger. It is an obscene spectacle whereby the truly greedy hide behind the truly needy. It is both the perpetuation and the exploitation of poverty.

By declaring welfare for the poor off-limits and thereby disarming that fear tactic, we put an end to this travesty. Now let's see the liberals (and "Big Government conservatives") defend handouts for people who don't need a hand up. Let us see them defend treating the middle class and the rich as if they were the poor. Let us see them defend their proliferating pork from the blade of budget cutting. And let us see them defend the regulatory policies that prevent everyone, including the poor themselves, from reducing poverty. (Also, by moving the fight against corporate privilege to the forefront, we effectively take it away from those Marxist die-hards -- who point to such privilege as a validation of Marx -- and their corrupt "solutions." Social-democratic liberals, let there be no doubt, have always been the benefactors of Big Business. The latest example? Self-styled "progressive" E.J. Dionne Jr., who praises Fed chair Ben Bernanke for his $30-billion bailout of Wall Street: "He doesn't want the economy to collapse on his watch, so he is willing to violate all the [free-market] shibboleths about the dangers of government intervention." Evidently what's good for JPMorgan Chase....)

By removing poverty from the debate, we also expose the egalitarians' sham indignation over "inequality" -- their demand for tax dollars not because they have little, but because they have less. (This creed of more-for-more's-sake is another perversely perfect example of a "politics based on greed.") Finally, we prevent the exploitation of the poor as an excuse to put everyone on the dole, e.g., the invocation of the number of Americans without affordable health care -- yes, a very real problem -- to justify a move to "universal health care," the popular Orwellianism for what really gets delivered: total government control of medicine. With that, we can begin to explain how government interventions (cartelization of the insurance industry and the Newspeak redefinition of "malpractice" to include besides negligence other things [e.g., fallibility], to pick but two) have only contracted the supply of quality medical care. From medicine we'll move to other areas; now the forces of freedom will be gaining ground....

Wars are won battle by battle, not by fighting on all fronts at once. The struggle for a genuine market economy has been a nightmarishly protracted one. Even well into the '80s, establishment liberals Samuelson and John Kenneth Galbraith still had favorable things to say about the Soviet economy. (Here a less gentlemanly soul would surrender to temptation and quip that modern liberalism isn't a philosophy -- it's a learning disorder.) If that proves anything, it's that there's still a barrage of widely held economic fallacies to be exploded. But by attacking statism at the top, i.e., at its weakest point, we begin a practical (and, concomitantly, intellectual) dismantling process. This reduction of current Big Government is preferable to its replacement by a purportedly "better" model (e.g., Milton Friedman's negative income tax or Charles Murray's recent variation in In Our Hands [2006].) Marching in the right direction is the first step onto the road to freedom.

Recommended Reading

David T. Beito, From Mutual Aid to the Welfare State: Fraternal Societies and Social Services, 1890-1967, 1999.

Timothy P. Carney, The Big Ripoff: How Big Business and Big Government Steal Your Money, 2006.

Martin Fridson, Unwarranted Intrusions: The Case Against Government Intervention in the Marketplace, 2006.

David Gratzer, The Cure: How Capitalism Can Save American Health Care, 2006.

James Gwartney, Richard L. Stroup, and Dwight R. Lee, Common Sense Economics: What Everyone Should Know About Wealth and Prosperity, 2005.

Tibor R. Machan, Generosity: Virtue in Civil Society, 1998.

Joel Miller, Size Matters: How Big Government Puts the Squeeze on America's Families, Finances, and Freedom, 2006.

Mary J. Ruwart, Healing Our World: The Other Piece of the Puzzle, 1993.

D. Eric Schansberg, Poor Policy: How Government Harms the Poor, 1996.

Hans F. Sennholz, Sowing the Wind: Essays and Articles on Popular Economic Policies that Make Matters Worse, 2004.

Daniel Shapiro, Is the Welfare State Justified?, 2007.

William Tucker, The Excluded Americans: Homelessness and Housing Policies, 1990.

Richard K. Vedder and Lowell E. Gallaway, Out of Work: Unemployment and Government in Twentieth-Century America, 1993.