All Commentary
Monday, October 1, 1973

Is Escape from the Poverty Trap Possible?

Bertel M. Sparks is professor of Law at Duke University School of Law, Durham, North Carolina.

In present-day America one cannot listen to either radio or television for long without being told about somebody being in a poverty trap. According to the usual script, not only is somebody in that unfortunate trap, but he is so held there that escape is impossible without outside help. and of course the viewer or listener is looked upon as an appropriate source for that help.

In so far as these commercials are expressions of sympathy and concern for the welfare of fellow human beings, they are to be commended. But the more thoughtful viewer or listener cannot avoid looking beyond the immediate emergency and inquiring into the meaning of the word “poverty” and the word “trap” and all the other trimmings and emotion-laden words that go with such pleas. He is moved to ask such questions as what is a poverty trap, who sets the trap, and why isn’t the culprit arrested and brought to justice? Inquiries such as these might lead to some surprising embarrassments.

Webster defines a trap as, “Something by which or in which one is unsuspectingly caught, injured, [or] led astray….” The same source defines poverty as, “Any deficiency in what is desired or desirable or in what constitutes adequacy.” Maybe these two definitions can be put together to give some rational meaning to the expression, “poverty trap.” When that is done, a poverty trap appears to be a condition of deficiency in which one is unsuspectingly caught. Like all efforts to reduce ideas or concepts to words, that definition is less than perfect. But it does set forth a framework within which one may at least consider the question, “Is escape from the poverty trap possible?”

Within that framework the question becomes, “Is it possible to escape from this condition of deficiency in which one is unsuspectingly caught?” Here again the thoughtful inquirer is likely to want further clarification. He will want to know what kind of deficiency or what kind of poverty. He will realize that there are such things as poverty of thought, poverty of soul, and many others, any one of which could occupy a lifetime of study. But it seems reasonably clear that the poverty being discussed in the ever-present radio and television commercials is economic poverty and that the deficiency is a deficiency of material well-being. Even within that limited context, poverty is still a relative term. It is a deficiency of what is desired or desirable. And what is desired by one person might be abhorred by another. In a sense every human being is in poverty because no one has everything he desires. The unsatisfied desire, however, is itself desirable in that it is often the catalyst for increased production.

Relative Affluence

But these insatiable desires are not the things that come to mind when one is talking about an escape from the poverty trap. Some element other than desire alone must be considered. It is a known fact that material well-being is not evenly distributed. In one historical setting the general level of well-being is likely to be quite different from what it is in a different period. In any given society it might be substantially different from what it is in another society within the same historical period. And even within a society that is restricted and confined to one moment of time and to a very small area of the earth’s surface, there are always some individuals who are blessed with far more of this world’s goods than are other individuals. If escape from the poverty trap means anything at all, it must have something to do with movement from among the least well-to-do toward those on a higher plane in a material sense. With that understanding, the question, “Is escape from the poverty trap possible?”, can be re-stated as follows: Can an individual caught on the lower levels of economic well-being move from that position toward the upper levels within his own society, and can one society which is presently on the lower levels of human existence move itself as a society toward the more affluent societies of the earth? There are at least two ways of approaching this question.

There is the philosophical approach and the experience approach. The philosophical approach usually means that the members of a group undertake to think about the problem, pool their individual opinions, and agree upon a common answer before any action is started. The weakness of this method is that it tends to ignore the lessons of experience. If the present generation were the only people ever to inhabit the earth and if every person now living had from the date of his birth to the present always been in the same relative position with regard to his material well-being, the philosophical process might possibly be a suitable way to begin. Rational thought honestly exercised might point the way toward a solution. But this absence of experience does not exist. The human race actually has a few thousand years of recorded history to examine and it might be worthwhile to look at the record. Have any societies or any individuals ever escaped from poverty, and, if they did, how did they do it? The best abstract thought of which the human mind is capable is likely to look pale against so much as a small segment of that record of experience.

An Early Example

If an under-developed country is needed as an exhibit for study, there could hardly be found a better example than the United States. Have a look at that nation’s beginnings. See its inhabitants as a small band of foreigners on a rocky, unimproved, hostile shore where there were no houses, no factories, no drug stores, and not even any neon signs to brighten up the horizon. Were they in poverty? Was there a way of escape?

The known fact is that they did escape. Within a short time that unwelcome hoard of intruders had grown into one of the wealthiest nations on earth. Even before their first one-half century of nationhood had been completed, the country was characterized by a visiting Frenchman as being a land without paupers.¹ And by the 1970′s it could be said that although they occupied only one-sixteenth of the land surface of the world and constituted only about one-fifteenth of the world’s population, they were enjoying about three-fourths of the world’s television sets and consuming about two-thirds of its petroleum products, one-half of its coffee, and two-thirds of its silk.’ One wonders what the visiting Frenchman of the Nineteenth Century might say if he could pay a return visit. At the very least, an underdeveloped country did escape the poverty trap without the benefit of foreign aid.

The Key?

How did it happen? Why did people leave the older, the more developed and the more affluent nations of Europe in order to get here? What is more important, why was this the place and the time where there developed the highest level of material well-being the world has ever known? Why didn’t that development take place somewhere else or at some other time? And before offering the easy response that it was our fabulous natural resources that made the difference, it is suggested that the reader first review his geography a little. This might lead to no small degree of wonder as to why the affluent society didn’t develop in South America rather than North America. Why didn’t it happen in Africa? Why didn’t it happen in India? These questions cannot be answered or explained in terms of the presence or absence of natural resources. There has to be another reason.

Is it possible that there was something about the goals that brought the Seventeenth Century settlers to these shores that accounts for their unparalleled economic progress after they arrived? Most of them came here to escape oppression of one kind or another in the old country. Sometimes it was religious oppression; sometimes it was political oppression. In either event, that very oppression gave them a yearning for freedom that would not die. It was that yearning combined with a confidence in their own worth as persons that shaped their destiny and marked them as new creatures by the time they left the ships that brought them here. That confidence in their own worth as persons sometimes made Americans unattractive, both to the outside world and to each other; but it also gave them an unconquerable spirit which did not allow room for fear of the impossible. A search for the source of that confidence leads to the conclusion that it was, in no small degree, a product of their religious faith.

Throughout Tocqueville’s writings on American Democracy he placed surprising emphasis on the extent to which religion was the driving force in the development of free institutions in this country. If that is true, even in part, it is fair to ask what kind of religion? It was a religious experience that was just emerging from the period of the reformation which had placed new emphasis upon the dignity and worth of each individual. The offspring of such an experience could no longer look to government as a source of either human rights or material well-being. They were too proud for that. They considered themselves endowed by a divine creator with certain inalienable rights which no human agency could either give or take away. That was their secret. With that confidence in individual worth and dignity, there could be no conflict between devout religious faith and the practical work essential to material progress. Even the ships on which these early settlers were transported to the New World were launched by profit-seeking joint stock companies. And they carried with them the dreams of the merchants seeking adventure and a new source of trade no less than the dreams of others seeking religious freedom.

A Nobility of Work

The settlers brought with them a new nobility. It was a nobility of work. They left countries where those of the upper social strata did not often work with their hands. They tended to remain aloof, to live in the better houses, and to depend upon others for most of their material support. Some of that sort were included among our early colonists. They identified themselves as “gentlemen.” They usually defined gentlemen as men who abstained from physical labor. But whether they arrived in the rocky hills of New England or in the humid valleys of the Delaware and the James Rivers, they found that that philosophy didn’t work. It was abhorrent to both the physical surroundings and the new doctrine that each individual was responsible for his own welfare. In a land where there were no homes, no machinery, no factories, and no roads, there was no room for one class to live at the expense of another. The force of necessity dictated that each man was entitled to all the fruits of his own labor and nothing more. A gentleman became one who could stand on his own feet, develop a trade, and earn his own living. He knew that he was not a worm to be trampled upon by some “upper class” but he also knew that he was not a god controlling the lives or the wills of other human beings. It became fashionable for gentlemen to till the soil and to get their hands dirty. That is the philosophy that laid the foundation for an industrial empire that was to become the number one wonder of the world. It was a philosophy within which escape from the poverty trap was not only possible; it was inevitable.

But that philosophy has not always prevailed. There have been departures. There were experiments with public relief through communal living right at the outset in both Jamestown and Plymouth. Both experiments failed. Governor Thomas Dale soon discovered that “martial law did not grow corn” in Virginia and Governor Bradford later learned the same lesson in Plymouth. Governor Dale has been criticized for his apparently harsh edict that those who did not work could not eat. But those who do the criticizing have probably overlooked the fact that Governor Dale was simply quoting from the author of the famous essay on love of the Christian New Testament. St. Paul had offered the same rule of conduct to the citizens of Thessalonica centuries before.3

And why should such a rule have come from the pen of the same writer who could say that if you have not charity you are nothing?4 Again it was an essential part of the dignity of the individual. It was recognizing an inherent human value in the labor of the man or woman who produced the food as well as in the pleasure of the one who was to eat it. Didn’t the producers have dignity? Were they not entitled to the integrity of their own bodies? And did not that include the fruits of their own labor? There is a distinction between a voluntary act of compassion and being the victim of a forced taking.

A doctrine that everyone is entitled to the fruit of his own labor calls for a recognition of private property. And if private property is to ripen into specialization and division of labor, there must be freedom of exchange. But neither private property nor freedom of exchange are possible without limited government. There must be government to protect against intruders and that government must be limited to prevent the government itself from becoming an intruder. A limited government then is one that is strong within its proper sphere but is restricted in its power to venture beyond that sphere. The proper sphere includes such functions as maintaining order, enforcing contracts, and punishing dishonesty, cheating, stealing, and violence. It does not include dictating to individuals the kinds of employment in which they shall engage, the kinds of houses in which they shall live, or the prices they choose to place upon either their labor or its product.

Things Began to Happen

Once these principles were firmly established in the new country, the lack of material prosperity ceased to be a problem. As each human being set about to pursue his own safety, security, and happiness in his own way, things began to happen. Crude huts became comfortable homes, wilderness trails became highways, and impossible forests became fertile fields. A War of Independence was fought and won against odds that seemed impossible and which no amount of military logic can explain.

Even as the new country matured, additional settlers continued to arrive by the millions. The significant thing about these new settlers was that they were free people who were voluntarily leaving the older and more firmly established communities of Europe to move to a new and a strange land. The countries they left might have had tyrannical governments and the citizens themselves might have been an oppressed people, but they were free in that their choice to come here was of their own making. They chose to come even though the choice usually meant a sacrifice of a high order. It meant abandonment of friends, relatives, and a known way of life. It often meant giving up several years of hard-earned savings to pay for their transportation and for the privilege of arriving penniless in an unknown country. Why did they do it? Was it still the appeal of freedom that had tempted the first arrivals? Was it the attraction of the high level of economic prosperity which the fact of freedom generates? Can the two be separated?

No One Told Them

In any event they came to an under-developed country that hadn’t been told it couldn’t absorb under-developed people. They were received and they were absorbed and Nineteenth Century United States presented to the world the most fantastic industrial growth the world has ever witnessed. The fact that the American society as a society moved constantly upward toward higher and higher levels of economic well-being is too well known to require comment. As viewed from the Twentieth Century heights of comfort and luxury, that earlier period might appear less than ideal. But compared with what had gone before, the steadily improving quality of life dazzles the imagination. The dawn-to-dusk drudgery of the farm was being abandoned for the comparatively easier life of the ten- or even twelve-hour day of easier work, higher pay, and more comfortable living to be found in the cities. And that work day (unreasonably long by current standards but short by the standards of the era in which it was instituted) was gradually shortened as the invention of newer and better tools multiplied and the resulting increase in the productive capacity of each worker made the shorter day possible. At the same time Cyrus McCormick, John Deere, and others were getting newer and better tools out to the farm to reduce the amount of labor required for the production of food there. Escape from the poverty trap, whether on the farm or at the factory, was commonplace. As better machinery and better tools were developed, the hours of human labor required to produce the necessities of life were constantly reduced. Time to produce luxury items and time to enjoy such items after they were produced were being realized. The poverty level, for those who might have thought in such terms, was continuously redefined upward; and with each new definition, a whole nation continued to rise above it. So rapid was the economic growth that the individuals on the very lowest level of material existence at any particular time were almost invariably abundantly affluent as compared with their counterparts of a decade earlier.

Mobility Within

Nor was the escape of a society from poverty the end of the story. There was constant movement of individuals within that society. The poorest did not remain at the bottom nor did the wealthiest remain at the top. The financial magnates at any given moment were often individuals who had begun their lives at the very bottom of the economic ladder and only occasionally were corporate presidents the inheritors of great wealth. It was a free society where free people were permitted to enjoy the fruit of their own labor. In such a society the only way one can benefit himself is by serving others. He must offer for sale goods or services which others want and for which others are willing to pay. And in such a society the route upward is necessarily open to all corners, the newly arriving immigrants no less than the American born. It was open to the newcomer who had nothing to offer except a willingness and a capacity to serve. Youth who were reaching adult years in the Appalachian hills without ever having owned a toothbrush or enjoyed a balanced diet for so much as a single day were migrating to the industrial centers of Ohio, Pennsylvania, and Michigan by the thousands to become affluent home owners and often the new managers of substantial business enterprises that were just being born. The “hopelessly deprived” of New York’s lower east side who had never known any playground except a street were clawing their way to the top of the financial world or becoming the major political figures of the Empire State. They were escaping the poverty trap — if there was one.

Andrew Carnegie

A Scottish immigrant family that arrived in 1848 included a thirteen-year-old boy who was deprived of a high school education when it became necessary for him to take a job as a bobbin boy in a cotton factory in order to help support the family. Even with that handicap, he found a way to go to night school, learned certain secretarial skills, became a telegraph operator, and from there moved to a job as secretary to the president of the Pennsylvania Railroad. That would seem to be enough for one of such humble origins. But it was not enough for Andrew Carnegie. He soon found himself superintendent of the railroad’s Western division, eventually entered the steel business, and became the founder of United States Steel Corporation. The miracle of the free market was being demonstrated. The rise of one man was giving the nation an improved product at a lower cost and supplying the needed foundation for numerous allied industries ranging all the way from railroads and automobiles to tableware and garden tools. At the same time millions were being employed at wages undreamed of a generation earlier.

But the skeptic still asks, can it be done in a mature industrial society? Can it be done where industrial empires are already well established and the magnates of great wealth are already secure in their positions? The logical answer is that in a free society there is no such thing as financial security. The wealthy can remain wealthy only so long as their fortunes are wisely invested in the production of goods other citizens want. But an even better answer is, look at the record. Fortunes have continued to rise from the least promising beginnings.

Lena Himmeistein

Who would have anticipated that the sixteen-year-old Russian immigrant named Lena Himmeistein who debarked in New York in 1896 would ever be more than a burden to her newly adopted land? Orphaned as a baby in Lithuania, she was not excessively educated and did not speak English. Her passage to the United States had been paid for by relatives who were already here and who anticipated her becoming the bride of their son. When Lena met the prospective groom, she abandoned that idea rather hurriedly. She found a job in the garment industry where she began at $1 per week. Four years later she had left her job, had become a bride, then a mother, and then a widow with a son less than one year of age. Her prospects did not look good. Her maternal obligations made return to her old job out of the question. Tax-supported day care centers had not been invented. She remembered that in the garment industry she had learned to sew. She pawned a pair of earrings, the only item of value she had from her deceased husband, made a down payment on a sewing machine, and began taking in contract jobs as she could get them at her small New York apartment. Much of her sewing in those days was done with her infant son on her knee. But she did earn a living and by the time of her death in 1951 her venture had grown into a multi-million dollar industry with a chain of retail outlets extending throughout most of the United States. Lena Himmeistein is known to the clothing trade as Lane Bryant. She escaped from the poverty trap.

Tom Murray

But is the escape route still open in the final half of the Twentieth Century? It was open to Tom Murray when he arrived in this country as an Irish immigrant just one year before Lena Himmeistein’s death. It was his luck to find a job as a bellboy in a Detroit hotel where he soon found himself manager of the same establishment. The hotel business was enough for Tom until he read an announcement from the United States Postmaster General that junk mail and third-class mail were dragging down postal income to such an extent that rates for these classes would have to be increased by one-third. He had doubts as to whether such an increase was really necessary and he couldn’t help wondering what might happen if a private industry suddenly announced a thirty-three per cent price increase. How many Representatives and Senators would hurt themselves falling over each other to see which one would become chairman of the appropriate investigating committee? A little private investigating by Tom revealed that while the United States Government maintained a monopoly on the delivery of first-class mail, the third-class and junk varieties were open to private competition if anyone chose to enter the field. With $500 in borrowed capital, Tom entered in February, 1968. He delivered the mail at only 60% of the Federal rate, made a profit, and in 1971 grossed $10,000,000 and was still expanding as rapidly as new delivery machinery could be put into place. He was also reaching out for contracts in foreign countries and was saying that he would not be satisfied until he was delivering third-class and junk mail to Moscow.5 He just might do it.

Tom Murray rose above the poverty level. Hundreds of others are still doing the same thing every year. But Tom and others of his generation are encountering difficulties not faced by those of the Nineteenth Century. Government regulations have multiplied. New infringements on personal freedom have appeared on the American scene. Governmentally imposed restraints on the release of creative human energy are providing the real substance of whatever poverty trap exists for either the society as a whole or the individual within that society. As one speculates and wonders about the future of America, he might do well to speculate and wonder about what might have happened if present-day restraints had prevailed in the Nineteenth and early Twentieth Centuries.

What would Lena Himmelstein have done if, as a widowed mother, she had been given an apartment in a public housing project and had been told that if her income rose above a certain level, she would have to vacate? As her income approached that level, would she have dared the risk of allowing herself to earn too much? Indomitable little woman that she was, she might have accepted the challenge. And she might not. Even if she had, what would she have done if, when preparing to hire that first employee, she had learned that on each payday she would be compelled to withhold two different kinds of taxes from the employee’s wages and hand both sums over to the Federal government for whom she would also be required to keep accurate financial records available for official inspection? Would that have been too much for a foreign-born, “disadvantaged” person who was too timid to ask for a correction in the spelling of her own name when a bank clerk made a mistake?6 Questions such as these tend to suggest that the poverty trap has tightened considerably since Lena Himmelstein got her start.

And what choice might Andrew Carnegie have made if movement from bobbin boy to telegraph operator had brought with it a sufficient increase in pay to terminate the receipt of food stamps by the family his income was helping support? Could he have afforded the transition? Would he have been willing to receive an income that would, not only terminate welfare benefits for his family, but would just barely bring him into the category of those paying taxes to help support his contemporaries who were content to remain bobbin boys? These are questions that must be faced by the prospective Andrew Carnegies and Lena Himmelsteins of the Twentieth Century. And they are not easy. They are stultifying, discouraging questions for all who are close to that hairline division between the recipients of tax-supported benefits and those who are called upon to supply the benefits. Only those who have been critically close to one side or the other of that line can grasp the full meaning of the risk involved in its crossing. Those who are only slightly above the line are strongly tempted to give up the struggle as they see their neighbors on the other side who are avoiding all economic responsibility and still living on substantially the same level as the workers. And those below the line find that the very laws that are designed for their benefit have become the binding cords holding them down. They are being dared to even try to improve themselves.

Never Say Die

When an individual accepts defeat in his efforts to improve himself, not only does he lose his dignity as a human being, but society itself is deprived of the potential value of that individual as a producer. Likewise, the individual who remains a producer, although from purely selfish motives, cannot help benefiting the society in which he lives. Whether it is Andrew Carnegie, Lena Himmelstein, Tom Murray, or any one of hundreds of others who could be named, their personal triumphs over poverty do not tell the whole story. The significant part of the story is that as they helped themselves, they carried thousands or even millions along with them into areas of improved standards of living for all. In a free society it cannot be otherwise. Let it be repeated that the harsh rule of the free market is that no one can serve himself without serving others. That service manifests itself both in an increase in the supply of goods and in better incomes for the personnel participating in the production. The entrepreneur can increase in wealth only when he provides a good or a service others want at a price they are willing to pay. As he does that, more goods and services are produced and more workers are needed. Every new machine that can take over tasks previously performed by human labor creates new demands for still newer products that will provide greater comfort or leisure or will relieve some form of human drudgery or suffering.

Increasing Obstacles

Escape from the poverty trap is still possible. The experience of Tom Murray demonstrates that. But it is not easy; it never has been. If it is more difficult now than it was in an earlier day, it might be wise to ask what things have changed. The most significant change appears to be a constant increase in governmentally imposed restraints on the release of creative human energy. The fact that the substance of poverty is a scarcity of goods is all but forgotten. Whether it is the Square Deal, the New Freedom, the New Deal, the Fair Deal, the New Federalism, the New Frontier, the Great Society, or the New Republicanism, the central theme seems to be an attack on the producer. In this attack the identity of the producer has been ignored. He has been assumed to be a person of great wealth. Sometimes he is. More often he is one with a potential for becoming wealthy if allowed the freedom to produce the goods and services other people want. Quite often he is the farmer of modest means in the Appalachian hill country who is still trying to grow corn while paying taxes to provide payments to his neighbor who has already given up the struggle and put his land into the soil bank. He is the coal miner who, when his mine closed, moved a short distance to an industrial city where he could get a job in order to pay taxes to provide welfare benefits for his fellow miner who elected not to move. He is the janitor in a New York City apartment house who has been offered a job as building superintendent but knows that if he accepts the promotion he will lose his own claim to live in subsidized housing provided by taxpayers for “low income” families. He is a college student who spends his summer as a laborer with a construction crew and then returns to college to find that his tuition has been increased in order to provide a scholarship for his fellow student who chose to spend the summer on a pleasure cruise in the Mediterranean and is now broke. He is the independent grocer on Bleecker Street who felt so oppressed by the extensive business records he was compelled to maintain for the Internal Revenue Service that he chose to close his store and take a job as cashier in a dime store on Sixth Avenue. He is the Texas poultry farmer who felt compelled to destroy 20,000 baby chickens when a government regulation told him he would not be permitted to sell them as broilers at a price sufficient to cover the cost of feeding them.

Somewhere among these producers there just might be found a dollar-per-week employee in the garment industry who has the potential for introducing a whole new concept in ladies garments, a bobbin boy who will one day be a builder of heavy industry, or a bellboy who has dreams of operating an international mail service. Why penalize these people? And why penalize a whole society by depriving it of the goods that might otherwise be produced? If citizens are being held in a “poverty trap,” that is to say, in a condition of deficiency in which they are unsuspectingly caught, why not loosen the condition and allow them to escape? And if the “condition” happens to be a maze of laws and regulations which, although designed to help the entrapped persons, actually operates to their detriment, maybe just identifying the trap will hasten their release.



1 Tocqueville, DEMOCRACY IN AMERICA, Vol. I, 235 (Arlington House).

² Opitz, Our Disordered Lives, 23 THE FREEMAN 399, 401 (July, 1973).

3 II THESS. 3:10.

4 I Cox. 13:2.

5 For more information on the Post Office and certain other related problems see Crane, What’s Going On?, 1 IMPRIMIS 1-4 (No. 2, July, 1972, Hillsdale College).

6 The name of the young widow’s deceased husband was David Bryant. When she was ready to open her first bank account, she found the bank’s marble lobby a bit awesome for one of her humility. Apparently her hand shook as she signed the deposit slip. The bank clerk misread it as “Lane” and opened the account in that form. Rather than complain about the error, she allowed her business name to remain Lane Bryant.



Emotion vs. Reason

People who would be among the first to deny that prosperity could be brought about by artificially boosting prices, people who would be among the first to point out that minimum price laws might be most harmful to the very industries they were designed to help, will nevertheless advocate minimum wage laws, and denounce opponents of them, without misgivings.

HENRY HAZLITT, Economics in One Lesson 

  • Bertel Sparks, a native of Jackson County, Ky., was a professor of law at Duke University and taught in Harlan and Jackson County Schools. During World War II, he served as a special agent with the Counter Intelligence Corps. He was professor of law at New York University from 1949 to 1967.