Posted on 04/20/2023 12:24:53 PM PDT by Twotone
The latest banking crisis only increased concerns that the U.S. economy is headed for a downturn. Some politicians, including President Joe Biden, are now exploiting recession fears to extend pandemic-era aid programs.
The sad reality is that these aid programs cannot deliver on their promises to solve the poverty problem.
Between the beginning of Ronald Reagan’s presidency and that of Donald Trump, taxpayer spending on the nation’s 13 largest means-tested welfare programs increased by almost 240 percent. While poverty generally tends to fall during boom times and rise during busts, the overall trend has been mostly unchanged. That’s a terrible return on public investment.
My recent research, commissioned by the Commonwealth Foundation, suggests the ever-soaring growth in public spending is likely counterproductive. In fact, cutting government spending—and expanding economic freedom more broadly—can simultaneously lower poverty and promote prosperity across all income levels.
Economic freedom entails expanding the sphere of personal choice—and minimizing the role government plays in our lives. It means reasonably low levels of government spending, low taxes, and a lack of onerous labor market regulations.
Nearly three decades of research has found that areas with higher levels of economic freedom experience positive outcomes, ranging from faster economic growth to cleaner environments. Data from the 2022 Economic Freedom of North America (EFNA) report shows that, on average, residents in the most economically free states have incomes per capita over $3,000 higher than residents in the least free states.
The least free states also tend to spend significantly more on public welfare programs—with the 10 least free states spending almost twice as much per recipient as the most free states. While poverty rates are higher in less free states, they’re not high enough to necessitate twice the spending. Unfortunately, government solutions that focus on the alleviation of poverty—and not the promotion of prosperity—come riddled with damaging unintended consequences. The structure of many programs is at odds with incentivizing upward mobility, essentially trapping recipients in the very poverty they want to escape.
The goal of a successful anti-poverty program should be creating an environment conducive to broader human flourishing. Economic freedom is the key to crafting this environment. My research suggests that economic freedom not only alleviates poverty but can also promote economic prosperity for all people.
Specifically, my findings show that a one-point improvement in economic freedom over a five-year period correlates with substantial decreases in poverty the subsequent year.
And it’s not just the poverty rate that improves. In Pennsylvania, for example, a one-point improvement in its EFNA score over five years is associated with a $2,338 growth in per capita income and a 2.08 percentage point employment increase.
New York, California, Hawaii, Vermont, and Oregon are currently the lowest-ranked states for economic freedom. While New York and California remain relatively wealthy, the other three have per capita personal incomes lower than the national average.
While large jumps are rare, changes in economic freedom tend to accumulate over time. In the same five-year period, Arizona lost nearly a full point on the EFNA index while North Dakota gained a full point. Six additional states changed more than half a point.
Critics might object that cutting government spending would mean decreasing needed assistance to the poor—but this doesn’t have to be the case. And not all government spending is helpful; the federal government spent $281 billion in improper payments in 2021 alone.
Government spending also tends to crowd out what would otherwise be private spending or investment. Even programs that are designed to attract or spur economic development can hamper the business environment.
Economic freedom, however, strongly relates to entrepreneurship. In recent years, people and businesses have fled New York, California, and Illinois—all states that rank low in economic freedom. Where are they going? Texas and Florida are popular choices—both consistently rank among the top five most free states.
By pursuing an agenda of economic freedom, policymakers might be able to decrease poverty and spread the benefits of prosperity more widely. Win-win policy solutions are rare, yet this is an example where government can help more by doing less.
Oh it’s had results, alright.
Cut it out and suddenly people will get jobs.................
Nike, for example, would be out of business if its target customers weren’t a bunch of stunted losers who are willing to pay $500 for a stupid pair of athletic shoes.
Shut down the border and deport illegals
That will cut down on welfare at least somewhat
No welfare for able bodied.
Try it the old fashioned way — you don’t work, you don’t eat.
Reboot the planet? I don’t see how man fixes what’s wrong. There will be no more revolutions for freedom.
There is no free lunch, Abolish all Welfare Programs for able bodied people and put up Soup Kitchens on every corner that needs one
They could start by eliminating the baby factory incentives.
All the more reason to cut social security and Medicare. Saving have to start somewhere.
It was time to cut back 30 years ago.
It’s so entrenched in American culture now than you could no more cut back on welfare payments than you could privatize Social Security.
Take the illegals off the welfare rolls would be a nice start...and any coming over the borderes legal and not if they can’t pay their own way.
Put thm to work cleaning parks and other janitorial types jobs - no work no welfare.
The inflation calculator puts $1.00 40 years ago at $3.08 today—and that’s based on an understatement of the true inflation rate.
https://www.bls.gov/data/inflation_calculator.htm
The headline is incorrect! The results are exactly what was intended. The Democrats now have a government funded class of voters. They have no reason to “fix” something that isn’t broken.
This is only a VERY NARROW measure of it.
Every Fed.gov agency has an "equity" division. All of them are making loans, grants, payments, etc... basis that.
in 2008 we had a housing/financial crash due to a housing bubble based, in large part, on loans made under the "Community Reinvestment Act" and loans subsidized and purchased by Government supported companies like Fannie-Mae. It was a giant, corrupt welfare-scheme based on housing loans.
That cost the economy $$ TRILLIONS.
I would argue most of what Fed.gov is a welfare/redistribution scheme
The law says those sponsoring immigrants to the United States has to be Financially Liable for 40 quarters, just make Illegal Aliens the Financial Responsibility of Public Employee’s, since they are the legal sponsors.
M<y Wife has a Green Card and I had to pledge my income and assets for 10 Years to guarantee she would not be a public burden
Trump wants to move the homeless to the outskirts of town. That way we don’t have to look at them. Sweeps it under the rug but seems fair. Public sidewalks belong to the taxpayers, not the squatters. Cutting off all welfare would get 30% of immigrants to return to where they came from, just like 100 years ago.
Think London 100+ years ago. Economic capitol of the world and lots of open poverty to go with all the opulence. The poor will always be with us THEY will have to be managed because they can’t. Freedom and markets don’t work for them.
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