Government Is No Friend of the Poor
JANUARY 04, 2012 by GARY CHARTIER
Filed Under : Poverty, Taxation
You’ve heard it all too many times to count, I suspect. Apologists for big government—the New York Times’s Paul Krugman and Washington Post’s Eugene Robinson being good recent examples—are convinced there’s just no good alternative to government social services. Without the government, people will go hungry. They’ll die in the streets. We’ll lapse back into an era of mass poverty. So anyone who questions the need for the State’s antipoverty efforts is heartless, clueless, or both.
I’m not convinced.
To be sure, it’s easy to see why an uncritical observer might think people like Krugman and Robinson are right. We can certainly look back on centuries—millennia, even—during which poor people have gotten the short end of the stick, in which poverty has coexisted, heart-breakingly, with great wealth. And perhaps those memories make it tempting for some people to buy the civics-class story that the only thing standing between us and a world full of Dickensian nightmares is activist government.
But that would be a mistake. The poverty and exclusion evident throughout history, and still very much a part of today’s world, can frequently be traced precisely to the unjust acts of government officials and their cronies. When people are denied ownership of land they’ve homesteaded with their labor so feudal overlords can turn them into serfs, the culprit isn’t freedom, or the market—it’s government support for the wealthy and well-connected. Ditto for cases in which people are denied the right to work by laws, like England’s old Acts of Settlement, that limit their ability to travel in search of new opportunities.
More generally: There’s no reason to trust activist government because the people in charge can be expected, time and again, to back those with power and influence over those without. Being poor doesn’t make you a favored object of government attention—instead, it means you’re likely to be used and abused. Politicians will claim to be defending your interests when they’re really promoting their own. They’ll continue to enact rules that limit your ability to support yourself and make it costly for you to provide decent shelter and clothing for yourself and your family. And law enforcement agencies will subject you to violence—whether they’re enforcing drug laws or immigration restrictions, or ensuring that you conform to zoning regulations and local codes designed to be easy for middle-class people to follow while making your life costly and difficult.
Government action in contemporary society makes and keeps people poor. Licensing laws, zoning regulations, and similar restrictions make it hard for poor people to enter particular job markets and to operate businesses out of their homes. Without these kinds of government regulations in place, people would be less likely to be poor.
Poverty is a systemic problem. It’s a product of lots of different, overlapping, mutually reinforcing factors. Getting rid of just one abuse or inequity here or there might well leave many people poor. But systemic change, change that addresses all the different factors that make poverty a persistent, ugly feature of our lives, can make a profound difference. And the kind of systemic change we need is change that eliminates State-secured privileges and State-imposed liabilities, not another State-created bureaucracy designed to ameliorate problems the State itself has created.
Government’s role in making and keeping people poor is just one of the factors that make poverty endemic and make it hard to survive while poor.
For instance: Governments don’t treat recipients of the antipoverty aid they disburse especially well. It’s important to avoid comparing idealized State practice with imaginary worst-case practice in the government’s absence. If we focus on actual government practice we find that poor people are not served particularly well by the State, which routinely intrudes into the lives of recipients of assistance, violating their privacy and seeking to regulate their behavior. People pay a high price for aid from the State. Government aid programs come with hidden price tags.
And governments increase the number of poor people in part precisely through some antipoverty programs, which can create perverse incentives both for people to remain poor enough to qualify for government funds and for bureaucrats to keep people poor in order to retain their own jobs.
Governments raise the cost of being poor. Building codes and zoning regulations raise the cost of housing and so make it harder for people to find inexpensive homes. Some people are forced to live without permanent housing at all, while others must spend much larger fractions of their incomes on housing than they otherwise would. As for food, that’s also more expensive thanks to agricultural tariffs and import quotas. In the absence of government policies that make meeting their basic needs unnecessarily expensive, poor people would have more disposable income and would be more economically secure.
More than that, though, governments actively take money from poor people. Many poor people pay more in taxes than they get back in services under the State’s rule. These people would have more resources on net in the absence of the State’s demand for tax money. In addition many people are poor, or poorer, today because the State has actively stolen land and other resources from them or their ancestors or has sanctioned such thefts committed by the wealthy and well-connected. (Think eminent domain among other methods.) Historically the existence of a peasant class and of a class of displaced urban workers willing to accept employment on dismal terms is inexplicable without reference to State violence or State tolerance for or endorsement of violence by the wealthy and well-connected.
The government raises the cost of obtaining key goods and services. The State does a range of things (notably requiring professional licenses, hospital accreditation, and prescriptions and enforcing drug and medical device patents, and other restraints on trade) to make particular services such as health care especially expensive.
All these different factors fit together, each one making people’s conditions worse than they’d otherwise be and making the effects of the other factors more severe. People often start out with less money because of large-scale past injustices. They have less money now because of government limitations on the kind of work they can do and where they can do it. Their ability to provide decent lives for themselves and their families is further limited because the government raises the cost of living, and government regulation of the economy drives down the overall level of productivity even further in ways that obviously hurt the poor the most.
In sum the government plays a crucial role in creating and perpetuating poverty—and that’s really the most important thing to recognize. But of course that doesn’t mean that, absent the government’s abuses, people wouldn’t have accidents, confront disasters, and make unwise choices. With costs of living reduced, as they would be if the government completely left the economy alone, people would find it easier to deal with these challenges. They’d still need one another’s help, but those who think there’d be no way to get this kind of help except through tax-funded government agencies are mistaken.
The existence of State antipoverty programs crowds out alternatives and reduces the effectiveness of those that remain. It’s easy to view these alternatives as essentially ineffectual and anemic. But a crucial reason they’re not more vibrant is that State action commandeers money and attention that might otherwise be directed to these alternatives, creating the illusion that in the government’s absence, they couldn’t be much more effective.
Support for poverty relief doesn’t just come from tax funds now. People give money to charitable causes over and above their tax bills today, despite the huge sums the State claims. There’s no reason to think they would not do so if the government absented itself from economic life. It is naive to suppose that the wealthy and powerful are opposed to State funding for services to the poor at present; the poor have far less clout than the wealthy and powerful, and yet the State provides minimal services for poor people. Why suppose that wealthy and well-connected people willing to see the State spend their tax money to support services for the poor would be dramatically less willing to contribute to the support of such services if the government weren’t involved? (Why do people give money to good causes, including voluntary programs that help the poor? Why do wealthy and well-connected people endorse State spending on programs that provide services to poor people? Presumably for a combination of reasons, including, in no particular order, compassion, social norms, the desire for good reputations, the desire to avoid bad reputations, and the desire to avoid social disorder. All of these reasons would be operative in a free society.)
In addition, mutual-aid networks could provide many of the services well-intentioned statists want the government to offer. Societies in which people pooled risk and provided pensions, health care, and other services functioned effectively before the rise of State social services, and there’s no reason they couldn’t do so again in the government’s absence—and, indeed, wouldn’t function much better given that people would have access to more resources and the State would not be regulating them out of existence.
Both charity and mutual aid are more viable than government-run antipoverty programs, more able to help poor people, precisely because those programs have high administrative costs. (Thanks to Tom Woods for this point.) Programs supported freely by people in the government’s absence would not feature such high costs. Because donors could choose among multiple programs, there would be persistent pressure for administrative costs to be reduced.
In addition, social norms could ensure predictable, consistent support of community-wide aid programs without taxation. General acceptance of a social norm entailing regular contributions to a community income support fund, or leaving the edges of fields available (as in Leviticus) for gleaning, could ensure that poor people who needed it could rely on community assistance.
State-managed antipoverty programs draw on tax resources taken unwillingly from people. People work less energetically and enthusiastically when they know that some of what they produce will in effect be taken from them at gunpoint. Thus taking resources from people through taxation to fund antipoverty programs can function as a drag on the economy. By contrast, when people give willingly to support antipoverty efforts, their own objectives are not being thwarted; if they wish to support these efforts, they will be willing to work hard to do so. With the government out of the economy, people can work enthusiastically to earn wealth and foster overall economic productivity even as they support significant antipoverty efforts.
Advocates of government antipoverty programs sometimes worry that the absence of the State would mean a return to the misery and squalor typical of many people’s lives in the eighteenth and nineteenth centuries; they too often attribute these conditions to the absence of State regulation and antipoverty programs. But it’s important to emphasize that these conditions reflected the much lower overall levels of societal wealth. People weren’t poor because of the absence of State regulations and antipoverty programs; they were poor in part because there was very little wealth overall and thus less for those who wanted to help the poor. (Thanks to Tom Woods again on this score.) And of course the misery and squalor weren’t entirely natural or inevitable: Some resulted from persistent—and remediable—injustice on the part of elites and their political cronies.
It’s also important to emphasize that getting the State out of the economy doesn’t—can’t—mean simply stopping State intervention. It also has to mean providing rectification for State-committed and State-sanctioned wrongdoing. Politically privileged elites have stolen land and resources from poor, working-class, and middle-class people—directly and by securing tax-funded subsidies and government contracts. There’s no way to understand the distribution of wealth and power in contemporary society without acknowledging this history of theft and violence. To the extent that it’s possible, past injustice ought to be remedied. For instance, people ought to be able to homestead land engrossed by the State, especially land allocated arbitrarily to the State’s cronies. If land and other resources were made available for homesteading or returned to those from whom they were taken, the poverty of the State’s victims could be significantly reduced.
Structural changes would also make poverty less likely in the absence of government intervention. Rules that made it harder for absentee landlords to sit on undeveloped, uncultivated land could open up this land for homesteading by people with limited resources and thus provide them an avenue to greater economic security. Eliminating subsidies and legal privileges for hierarchical corporations would increase the likelihood that people could enjoy the job security associated with working for themselves (with less risk than accompanies being an independent contractor in a less healthy economy) or in partnerships or cooperatives and that, when they did work for others, they could bargain successfully for better compensation.
Libertarianism isn’t a philosophy of atomism. Libertarians have every reason to value interdependence and shared responsibility. Obviously, that’s true of the interdependence fostered by the market order. But it’s also true of the interdependence of friends and family members and strangers who work together to help one another meet life’s challenges. People working together don’t need the government’s help to deal with poverty. The government often makes the problem worse, and it’s definitely not needed to remedy deprivation and economic insecurity.
Poverty has multiple causes—but many of those causes interact with and reinforce one another. Many are created by government action. If we get the government out of the economy and see to it that past injustices committed or sanctioned by the government are remedied, we can effectively meet the challenge of poverty together.