The "War on Poverty" is an Expensive Failure

Blog Post - The "War on Poverty" is an Expensive Failure

In his 1964 State of the Union, President Lyndon Johnson declared the “War on Poverty” and launched numerous government initiatives to combat the supposed rampant poverty in the United States. Of course, at the time, poverty rates were well on the decline. As with any government program, however, we must evaluate it based on results rather than intent.

The intent was indeed noble – who wouldn’t want to eliminate poverty? Unfortunately, the results were not as intended. After 50 years and trillions of dollars, the War on Poverty has done nothing to reduce poverty.

So what exactly does the War on Poverty mean? Major initiatives included Social Security, Medicare, Medicaid, and food stamps. Additionally, the Economic Opportunity Act created the Office of Economic Opportunity – the centerpiece of the overall initiative. This was essentially a massive federal jobs program.

The decade following 1964, poverty rates dropped to their lowest level. This decline, however, began before the “war” began – specifically 1959. Since this program was intended to have long run effects, it’s prudent to evaluate more than a decade of data.

Indeed, in 1974, poverty rates increased, dipped down again, and then trended upwards. In fact, since 1964, poverty rates have fluctuated between 15.2% and 11%. Fast forward to 2014 and the poverty rate is not much different than it was in 1964.

Economically speaking, these programs allow people to be unproductive by acting as competition to earned income. As Paul Krugman states in his economics textbook, "Public policy designed to help workers who lose their jobs can lead to structural unemployment as an unintended side effect”. This persistent and structural unemployment results in lost income gains from regular labor market movement and thus has a net zero effect on poverty rates.

Considering the enormous costs associated with these federal programs, the taxpayer investment has not at all lived up to the expectations that LBJ sold the nation in 1964. 

Grant Phillips is a panelist on UA Live, an admin of We Are Capitalists, and founder of The Modern Libertarian.


 

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