Is Free Money the Way Out of Poverty?
A growing number of people think free money is the simple, long-awaited solution to the millennia-old problem of poverty. Feasibility aside, would unrestrained distribution of free money actually help lift America’s poor out of poverty?
In reality, such a policy would actually do more to hurt the poor and empower the government.
The United States government has over 80 different welfare programs to help low-income families and individuals pay for necessities such as food and housing. To help visualize how that money trickles down from the government to the needy, House Ways and Means Human Resources Subcommittee put together a simple flowchart in November 2015.
The U.S. handed out $1 trillion in 2014 through its various welfare programs. What if the government had no cap on how much it could spend on welfare programs? Giving as much as possible to those in need sounds like a good thing. But in today’s flawed welfare system, and with a power- and vote-hungry federal government, an increase in welfare spending would be the biggest barrier keeping America’s poor from getting out of poverty.
The Welfare Trap
One problem with welfare is that overdependence can become a trap. It’s known as the “welfare cliff.” Poor families become reliant on welfare to the point that getting a higher-paying job actually means less income.
Take the state of Illinois for example. This state has struggled with poverty. A single-parent family making $12 an hour can receive enough handouts equivalent to earning upwards of $60,000 annually—well above America’s median income, and tax free on top of that.
The problem arises when that single parent seeks a better job. If the parent finds a job where he or she receives, say, $18 an hour, those handouts decrease substantially—to the point of making below $40,000 annually.
If that parent receiving $12 an hour wanted to maintain the same income level, he or she would have to find a job that paid $38 an hour.
In a December 2014 report, the Illinois Policy Institute wrote, “The system subsequently discourages any natural effort on the part of the parent to seek a better paying job or to advance her situation, contrary to what market forces would incentivize if left untampered.”
A welfare system should help people gradually work their way out of poverty, making them less reliant on the government and capable of contributing more to the economy. Instead, many of those on welfare see no reason to work their way out of poverty. If the government takes care of them, why should they bother?
This is more than just an economic trap; it’s also a character trap.
“Moral agency is undermined as governments take over the tasks individuals used to do for themselves,” wrote Kenneth Minogue in The Servile Mind: How Democracy Erodes the Moral Life. “Removing problems from the lives of people certainly enhances their convenience …. In the long run, convenience has costs, even if only in the form of a steady decline of our own resourcefulness.”
When work ethic declines and government dependence increases, it means Americans are paying more and working less—not a good combination for anyone.
Americans don’t work like they used to, especially American men, oftentimes because they don’t have to. In December 2014, New York Times published an article by Binyamin Appelbaum titled “The Vanishing Male Worker: How America Fell Behind.”
“Working, in America, is in decline,” wrote Appelbaum. “The share of prime-age men—those 25 to 54 years old—who are not working has more than tripled since the late 1960s, to 16 percent.”
Unemployment is expected when the economy hits a recession, but as the economy slowly recovers, fewer people are choosing to work, especially men. Appelbaum explains that some of the factors contributing to this “include the availability of federal disability benefits; the decline of marriage, which means fewer men provide for children; and the rise of the Internet, which has reduced the isolation of unemployment.”
Unemployment isn’t a proud position to be in, but today it is an easy position.
Appelbaum notes that only 28 percent of men without jobs have a child under 18 living with them, compared to 58 percent of unemployed women. “Men today may feel less pressure to find jobs because they are less likely than previous generations to be providing for others,” wrote Appelbaum.
That observation shoots to the core of what is causing America’s welfare problems.
Because the government has taken over the role of the provider in the home, the man who should be taking care of his family doesn’t have to.
The father’s role as provider is diminished in today’s society. Minogue wrote that, at one time, “[t]he crucial mark of independence was the ability to generate the resources needed for life without dependence on governmental subsidy, and it constituted ‘respectability.’”
Taking responsibility pays off. Taking free money, not so much. Why? When a man must provide, it creates an incentive to work that cannot be ignored. Providing for his family and taking care of their needs is his personal responsibility. This drives him to work harder and learn more so he can seek a higher paying job.
Funding a system that discourages marriage and encourages laziness in men will not help people out of poverty. Marriage and the workingman are actually the greatest drivers to lift people out of poverty!
A Government-Run Family
According to the U.S. Census Bureau, in 2014, there were approximately 12 million single-parent families; 9.9 million of them were homes headed by single mothers. One in four children—roughly 17.4 million—are being raised without a father. Forty-five percent of homes run by single moms live below the poverty line.
But these single mothers do have a provider; they’re married to the government.
The further the government wedges itself into the family institution, the more it discourages the formation of the self-supporting family unit. Single mothers with more children are rewarded more benefits than married couples with children.
Handing out free money promotes a disastrous alternative to marriage: single-parent households with women who can’t get better jobs and men who don’t need to. In both instances, reliance on the government is increased.
According to Urban Institute, more than 15 percent of single-mother families are in deep poverty. That number is around 3 percent for families with both parents.
Isn’t it odd that government policies would discourage the greatest institution to combatting poverty—the family? A self-sustaining family, with a working man, takes a load off the government and the taxpayer; encourages men to seek higher-paying job opportunities; and provides children with a stable environment.
Handing out free money incentivizes individuals to remain unmarried but have more children, despite not being financially capable. Government handouts are not good for children, taxpayers or the growth of America as a whole. It does, however, provide the government with a lot of power.
When the Government Provides
The picture of poverty in America is vastly different from third-world countries. Slums filled with sheet metal shacks and malnourished children on the streets are a rare, if not impossible, site to find in the United States.
In 2013, economist Thomas Sowell wrote, “Most Americans with incomes below the official poverty level have air-conditioning, television, own a motor vehicle, and, far from being hungry, are more likely than other Americans to be overweight.”
Poverty in America is based on income levels and is defined by the government. Today, poverty means, as Sowell wrote, “whatever the government bureaucrats, who set up the statistical criteria, choose to make it mean. And they have every incentive to define poverty in a way that includes enough people to justify welfare state spending.”
Why would the government want to spend more on welfare?
The more people are dependant on the government, the more control it gives the government over the lives of those individuals, creating less freedom.
British novelist C.S. Lewis isn’t known necessarily for his commentary on economics, but in 1958 he wrote an article for the Observer that made an important point about the dangers of the welfare state:
I believe a man is happier, and happy in a richer way, if he has “the freeborn mind.” But I doubt whether he can have this without economic independence, which the new society is abolishing. For economic independence allows an education not controlled by government; and in adult life, it is the man who needs, and asks, nothing of government who can criticize its acts and snap his fingers at its ideology.
In the United States, the government is designed to answer to the people. When the people become too dependent on the government, the reverse starts to happen—people have to answer to the government.
For politicians who need votes to stay in power, policies that create more government dependence are highly valued; it creates a demographic of guaranteed voters.
This trend is as dangerous for the poor as it is for every other American citizen. The biggest check on the U.S. government is the people. When the people can’t “snap their fingers,” as Lewis wrote, at the government when they disagree, then the idea of a nation “run by the people for the people” erodes.
Getting Out of Poverty
Should the poor sit around waiting for the next government experiment to magically lift them out of poverty?
Actually, a lot of people aren’t sitting around—they’re protesting. They want the government to do more! Calls have increased for a more socialist-style approach, redistributing money from the rich down to the poor.
Should it come as a surprise that the poor are seeking more from the government? After all, numerous welfare programs have given people the idea that more government means more handouts. The more reliant people become, however, the more trapped they are in a system that: discourages personal betterment, devalues the family, and gives the government more leverage over their lives.
It will take personal responsibility and initiative to break out of this trend. William Boetcker put it bluntly, “You cannot help people permanently by doing for them what they could and should do for themselves.”
Much of our condition comes down to the decisions we make. Decisions are what we control, and in large part, they determine our lives.
Three years ago, Brookings Institution published an article by Ron Haskins highlighting three simple rules to help young people avoid poverty in their adult life: “finish high school, get a full-time job, and wait until age 21 to get married and have children.”
“Our research,” wrote Haskins, “shows that of American adults who followed these three simple rules, only about 2 percent are in poverty and nearly 75 percent have joined the middle class.”
What if you’re older and have already missed those opportunities? Strive to apply them in principle. Continue to educate and train yourself to develop greater skills so you can become a better employee. Take any job opportunity that is a step above what you’re earning now, even if that means less benefits from the government. Calculate the decisions you make in your life: create a budget and stick to it. Lower your standard of living so you can put away more in savings.
Your Greatest Help
Poverty in America today is drastically different from what it was in the early 1900s. That’s when Herbert W. Armstrong endured 28 years of poverty. He wrote in his Autobiography, “At one time we were in darkness nights of involuntary necessity. The electricity was shut off because we were delinquent. My wife did her cooking on a small gas plate, and our gas was shut off. Only the water was left running. We were out of food, and out of fuel. Our heating stove was one my father had made, shaped something like an old covered wagon—with rounded top.”
Mr. Armstrong was out of work with a family to feed. Of the year 1930 he wrote, “Not only were we confronted with another lean year economically—with our own personal financial condition at rock bottom—with the whole nation plunging on down, down,down into the depths of depression—but it seemed as if we were destitute of faith in God as well.”
It was during these years that Mr. Armstrong learned to rely on God to take care of his needs. “But if these were the lean years financially, they were the fat years spiritually—years of coming into the true riches,” he wrote. In his autobiography he recalled what Jesus said in Matthew 6:33, “But seek ye first the kingdom of God, and his righteousness; and all these things shall be added unto you.”
Mr. Armstrong’s priority shifted from seeking physical gain to building righteous character. The Bible doesn’t place the importance on physical wealth as our society does today. God’s concern is our character development. Beware falling into a system that discourages values such as hard work, strong families and good morals. Not developing character is the greatest form of poverty any person could experience. That is why free money is a dangerous trap.
It’s too late for the United States to turn it around as a nation. But you still have the power to choose to get off the dangerous path this nation is heading down. Mankind has experimented with all sorts of governments and economies. All have failed to bring true prosperity to the world. But there is a system that works. Isn’t it about time you learned what it is?