Why poverty has nothing to do with money
Imagine that this morning, a check shows up at the Oval Office. As an aide sets it down on the Resolute desk, the president’s eyes widen. The check is from a consortium of anonymous citizens. The amount box can barely contain all the zeroes needed to display the $3 trillion sum, and the memo reads: “For ending poverty in America.”
Nearly every American would be bursting with suggestions as to how the money might best be allocated, and many spirited arguments would surely follow. But this reveals an even more basic supposition which most of us do not even question: that if it could just be allocated properly, the money would indeed end poverty. Yet the history of American political reform tells a far different story. The idea implicit in every reform effort of the past half century is that poverty is caused by a lack of money. Every social program is anchored upon this definition, but the lack of money, as we shall see, is not the cause but the symptom. Poverty is not caused by lack of money—lack of money is caused by poverty. But how, then, shall we define poverty? A much more productive definition is grounded in what money actually gives us: self-determination. Money helps people achieve self-determination, but it is only instrumental. But by abstracting wealth away from the choices we make with the help of money and onto the money itself, we blind ourselves to the real sources of poverty in our society.
Our present politics are centered on symptoms. If people are poor, we give them money; if test scores are low, we try to raise test scores; if healthcare is not affordable, we subsidize it dearly. This approach is centered on the concept of marginal benefit. That is, we make choices based on the benefit to be gained from spending money, dollar-for-dollar. Yet this way of thinking is utterly ruinous: it says, in essence, that unless there is a point when a single dollar would be better spent on highways than hunger relief, then every single dollar must be spent on hunger relief. This is intuitively wrong, but up to now, few of our leaders have been able to figure out why. In the wake of the recent healthcare vote we can now see more clearly than ever where they have gone wrong. The misconception is that poverty is a problem that is fundamentally economic in nature.
The federal government has for decades believed that money was its best and only tool for solving the nation’s problems, and the American people have been satisfied as long as they hear that their favorite causes are receiving money. The long-term failure of these staggering expenditures to end crushing poverty, ensure universal healthcare or construct a successful public school system evince the short-sightedness of this symptom-focused approach. Indeed, our leaders were never searching for truly causalist solutions to these problems to begin with—never seeking the deeper reasons why we suffer the problems we do. As college undergraduates, we are currently paying the price for symptom-focused policy. The Higher Education Act of 1965, a part of Lyndon Johnson’s Great Society, sought to make college more affordable for young Americans. Yet unlike FDR’s landmark GI Bill a generation earlier, the HEA was not intended to solve a root-cause sociological problem. Rather, it addressed the front end of the problem by simply covering students’ monetary shortfall. This severed the link between tuition and enrollment, and colleges found that they could raise tuition without losing many students because the government was making up the difference. As a result, college tuitions have risen roughly twice as fast as general inflation, actually diminishing the tuition buying power of constant dollars. Schools that would have cost around $15,000 a year now cost $50,000, so far outstripping wage increases that it is now virtually impossible for students to work their own way through school. This mounting financial pressure on students could be linked with the recent surge in student suicides. More perverse results would be difficult to imagine. Now we see the same shallow, symptom-focused approach being taken with our nation’s healthcare system.
As long as our nation’s leaders continue to approach the issue as a deficiency of money, we cannot affect the structural changes that would actually be transformative. This is a problem for two reasons. First, it is inefficient. Just as it is more efficient to spend a dollar on anti-smoking campaigns than on lung transplants, it is always better to reduce demand for healthcare than to subsidize it. It is essentially the distinction between preventive medicine and trauma medicine. The present approach takes the principles of trauma care—stop the bleeding, then apply life support—and applies them to the most complex field of activity in our society. Second, the present approach is unsustainable. If a patient is profusely coughing up blood, transfusions can keep them alive temporarily, but unless doctors find and remedy the internal source of the bleeding, the blood supply will eventually run out. The trillions of dollars commanded by the federal government soften this reality, though. Whether health care or the auto industry, each problem seems to Washington nothing more than a deficiency of money, and the fallacy has dragged us to the brink of ruin. We are now in a position of utmost urgency, and the call upon our leaders must be insistent. Let them pledge to forsake the spending increases that have too long passed for progress in this country. Only with a commitment to causalist problem solving can we perhaps still avoid the hard choices and greater hardship that are the fruits of inaction.
John-Clark Levin and Jason Soll are both sophomores at Claremont McKenna College, majoring in Philosophy, Politics and Economics. Both are editors of the Claremont Independent, the journal of conservative and libertarian political thought at the Claremont Colleges.