The Difference Between Direct and Indirect Help to the Poor

The Difference Between Direct and Indirect Help to the Poor
(Tatiana Morozova/iStock)
Walter Block
5/30/2023
Updated:
5/30/2023
0:00
Commentary

There are two very different ways to help the poor. One is beloved of the left, but doesn’t work. The other is favored by the right and is effective alright, but it’s rarely defended on this ground. Let me explain.

The left liberals want to help the poverty-stricken directly. They want to throw money at them; for example, through the welfare program, or food stamps, or Social Security, etc., or by setting up programs presumed to help them such as public education or meals at school for children, or homecare for the elderly and the disabled.

The conservatives, in contrast, advocate policies that will indeed help the poor, but all too often even they don’t see these plans in that regard. Which policies? Free markets, private property rights, profit-seeking. They’re rarely advocated on the basis of reducing poverty, but that’s exactly what they do.

Consider the population emigration from Cuba, from East to West Germany, from North to South Korea, or, at present, from south and central America to the United States, via Mexico. The left would enroll them in all sorts of programs and financially support them. The right, instead, concentrates on making our country the type of place immigrants from south of us, even from all over the world, would like to enter. But profit maximization, private property, etc., are rarely seen as help to the poor. These initiatives are dismissed as “trickle-down theory” and are said not to work. Tell that to those willing to risk their lives to become Americans.

Even free-market advocates themselves rarely couch their public policies as a means of eradicating poverty. Gordon Gekko, of the movie “Wall Street,” claims that greed is good. Indeed it is. When harnessed through the “invisible hand” of Adam Smith, this is precisely the reason why some nations are wealthy and others decidedly not. This is the explanation of why the former are targets for immigration and the latter are sources of emigration, even if you risk being shot for daring to leave your home country for a better place.

Advocates of free enterprise need to do more to demonstrate that markets, competition, profits, etc., redound to the benefit of the poor. The poverty-stricken in this country enjoy air conditioning, color televisions, cell phones, automobiles (ok, not new ones, nor those of the luxury variety), and dozens of other benefits lacking in even what passes for the middle class in underdeveloped nations.

In contrast, we have done yeoman work in demonstrating the flaws in the public policies undertaken by our friends across the aisle. Charles Murray has done more than most to show that welfare programs have boomeranged. Before Lyndon Baines Johnson’s “Great Society,” there was at most a “dime’s worth of difference” between the level of intactness of white and black families. A decade or so later, the process began that left some two-thirds of African American children without a father in the home. An awful lot of the plight of this demographic—unemployment, criminality, lack of education, being out of the labor force—can be traced to that phenomenon.

We have also “piled on” against the minimum wage law. Opposition to this legislation serves well as a litmus test for competence in economics. Before its advent in the mid-1930s, the unemployment of teenagers and adults was about the same; ditto for blacks and whites. Nowadays, thanks to this mischievous law, the rate of joblessness for teens is twice that of middle-agers, and double the amount for blacks vis a vis whites. The unemployment rate for black teens is quadruple (this is not a typographical error) that of adult whites.

Once upon a time, meals at school for children, home care for the elderly, etc., were family affairs. No one threw grandma, in her wheelchair, off the cliff. Adults in the family helped both older and younger generations. When the state takes over these tasks, it undermines the family, and our society suffers from the resulting havoc.

It’s one thing to prove that “progressive” initiatives boomerang. That’s all well and good. But we must also demonstrate that free enterprise is the last best hope of the poor if we’re to win the hearts and minds of people who read the New York Times, The Washington Post, and/or watch CNN and MSNBC. Viewing the misery now occurring on our southern border, and realizing just why it is these masses of people are so anxious to enter our country, might serve as exhibit “A” in this initiative.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.
Walter E. Block is the chair in economics at Loyola University in New Orleans. He is also an adjunct scholar at the Mises Institute and the Hoover Institute.
Related Topics