WASHINGTON, June 10, 2017 ⏤ In a free market, capitalist economy, workers are paid up to the value of their output. Those who are most productive earn the highest incomes and can maintain the highest levels of consumption.
What happens to people who are unable or unwilling to produce goods or services with social value?
Wealth transfer programs: good intentions gone awry.
Americans are generally compassionate, hence most voters support giving some of their income to those in need. Governments use taxation to take some income away from those who earned it and give it to those who did not, but who need it.
Income transfer programs are meant to be short-term solutions for people who can’t care for themselves. If people suffer from permanent conditions that make it impossible for them to work, the income transfer program may be life-long.
Today, our problem is that these temporary programs have become permanent, and often span generations. In addition, because of liberal requirements to qualify for these programs, the number of people requesting assistance has grown rather than shrunk.
For instance, in 1964 President Lyndon Johnson unveiled his “Great Society.” His plan sought to eliminate poverty and racial injustice. Johnson, a Democrat, felt a responsibility to transfer enough income to those living in poverty. A substantial portion of those living in poverty were black.
Did Johnson’s Great Society help ethnic minorities?
In 1963, 7 percent of black children were born to single mothers. Today that figure is 73 percent. Even though blacks account for 13 percent of the population, 38 percent of the prison population is black.
According to the US Census Bureau, the poverty rate in 1964 was 15 percent. As a result of the economic growth in the early 1960’s, the poverty rate fell from the 22 percent level recorded in 1959. Today it is about 13.5 percent.
The data show that, in the five-year period 1959 to 1964, economic growth cut the poverty rate substantially, while over 50 years, the Democrats’ Great Society had a negligible impact. In addition, generations of Americans have been trapped in the poverty cycle.
Noted African-American economist Walter Williams has said that the Democrats have hoodwinked blacks. Others, like black political scientist Carol Swain, agree with Williams. Swain calls that “the inconvenient truth about the Democratic Party.”
Democrats historically treat black voters poorly.
In fact, the Democratic Party has a long history of poor treatment of the black community while the party claims to be helping them. The Democrats have been successful at increasing income transfer programs, but those programs trap the poor in poverty.
Williams notes, “Since its founding in the late 1820s, the Democratic Party has defended slavery, started the Civil War, and opposed Reconstruction. The Democratic Party imposed segregation.”
He continues, “During Reconstruction, hundreds of black men were elected to Southern state legislatures as Republicans, and 22 black Republicans served in the U.S. Congress by 1900. The Democratic Party did not elect a black man to Congress until 1935. President Woodrow Wilson was a progressive Democrat and an avowed racist.”
President Obama makes things worse.
The Obama administration expanded the policies of the Democratic Party. Obama expanded the food stamp program, removed the work requirement for welfare recipients and gave health insurance subsidies to millions.
The poverty rate increased during Obama’s term in office.
For black citizens, the poverty rate increased by 1.6 percent from 2009 to 2014. Currently, more than 26 percent of African Americans live in poverty.
Yet with these numbers, most black voters support Democrats. Republicans, including President Trump, want to take a much different approach. Instead of simply giving those in poverty fee stuff, the GOP wants to give people the opportunity to earn what they need.
The difference in philosophy can be summarized thus: Give a hungry person some fish and two problems are created; teach the hungry person to fish and there are no problems.
By simply giving those in need free food, free welfare and free health care, the two problems are 1) the person in need becomes dependent on the producers for survival and 2) the producer has to produce enough for himself and enough for the people he supports.
If provided instead with opportunity, the person in need can earn enough to sustain himself, so he is not dependent and the producers are not burdened by having to support themselves and those in need.
President Trump wants to give all Americans economic opportunity, especially those trapped in cycles of generational poverty. To do that, he must significantly increase economic growth and spend tax dollars wisely. Trump’s economic policy includes lower tax rates, less government regulation, a revitalized health care system, and less government spending, particularly on income transfer programs.
These policies all share the same goal: to increase economic growth and provide opportunity so all able-bodied people can take care of themselves. The federal government will spend less because there will be fewer people in need.
That self-sufficiency will reduce the poverty rate and really help all Americans. And it is consistent with the American way.