The Cure of Poverty

William Henry Chamberlin

Mr. Chamberlin is a skilled observer and re­porter of economic and political conditions at home and abroad. In addition to writing a number of books, he has lectured widely and is a contributor to The Wall Street Journal and numerous magazines.

The subject of poverty, individ­ual and national, is receiving a good deal of attention and dis­cussion. Large sums are being ap­propriated for a so-called crusade against poverty in "underprivi­leged" city and rural areas. And it is a current intellectual fad to suggest that there is danger of war, or some other kind of un­pleasant explosion, in the wide gap in living standards between the relatively prosperous nations of North America and Western Eu­rope and the poorer countries of Asia, Africa, and South America.

There has been a plethora of proposals for "sharing the wealth," nationally as well as in­ternationally. And a fair start has been made in this direction by the graduated income tax and other devices for pillaging the thrifty for the benefit of the thriftless and by setting up an unprece­dented system of peacetime subsi­dies from the United States and various European countries to the needy states of the world.

But the poor are still with us at home; the campaigns in the loudly advertised war against pov­erty often seem to break down in an atmosphere of squabbling over who gets what when, and charges of misappropriation of funds. In the case of the HARYOU organi­zation in Harlem the argument in reply to these accusations was that lots of money had to be spent fast as a kind of payment of black­mail to disorderly characters not to engage in riot, arson, and pill­age. It might be noted that, ac­cording to all experience, paying blackmail in this fashion does not purchase permanent immunity from violence. For the blackmailer always comes back.

Nor has foreign aid, extended by the United States and other countries, proved a panacea for most of the newly independent states. Such countries as Indo­nesia, Algeria, the Congo are conspicuously worse off than they were under Dutch, French, and Belgian administration; and this is true as regards a number of other fledgling states.

The prediction of war unless, in some miraculous way, the poorer countries of the world are raised to the economic level of the more prosperous is not impressive or convincing. There was a time when hordes of barbarians could overrun much more civilized em­pires, if the latter had gone soft and neglected their defenses. But in the twentieth century only a nation sufficiently developed eco­nomically to produce modern nu­clear and other sophisticated weap­ons could start a war against a nuclear "have" power without in­viting devastation to the point of annihilation.

The big wars of modern times have been fought between states with maturely developed econ­omies. The days of sudden irrup­tions of hosts of unknown barbar­ians, often fleeing from the pressure of still more formidable barbarian forces, are over.

In order to see the problem of poverty and its cure or alleviation in perspective, several points must be borne in mind.

Compared with What?

First, poverty is relative. A family that would be considered poor in the United States would be the envy of most families in India, Albania, Chad, or Upper Volta. John Steinbeck’s novel, The Grapes of Wrath, was a bitter in­dictment of the depression suffer­ing that drove many tenant farm­ers in Oklahoma to migrate to California — where, incidentally, most of them found new oppor­tunities and got along quite well. Yet, when a film based on this novel was shown in the Soviet Union, its propaganda value missed fire. Where did these peo­ple, if they were so poor and miser­able, get their automobiles, was one question that occurred to So­viet audiences. How could they move without permission of the authorities? How could they be wearing such good shoes? There was this same element of rela­tivity when Red Army peasant soldiers, breaking into working-class quarters in Vienna, could not believe that workers lived in apartments with individual baths and kitchens.

I was in the United States at the height of the depression in the winter of 1932-33. An old ac­quaintance in Milwaukee, con­nected with the relief organiza­tion there, gave me a list of gro­ceries supplied to persons on re­lief. I took the list back to Russia with me and showed it to a non­communist Soviet friend. He could hardly believe his eyes. "There isn’t an employed worker in Rus­sia who could count on a diet like this," he said. "Even highly placed Party and Soviet officials would be happy if they could count on a regular allotment of oranges and other food items on this list, some of which we haven’t seen for years."

Some Poorer than Others

Second, no matter how high a country may raise its standard of living, there will always be a bot­tom tenth, or fifth, or third, what­ever fractional measurement is chosen, of the people who will be less well off than others. This is partly a matter of misfortune in the case of those who are physi­cally or mentally handicapped, partly a matter of comparative in­telligence and aptitude in acquir­ing skills, partly a matter of will­ingness to work. This last element becomes especially important in keeping people on the unemploy­ment rolls and in the general classification of poverty when Fed­eral and state relief programs be­come so generous that there is little incentive to perform the jobs which are lowest in economic value and remuneration.

Moreover, a certain number of people will always, of their own volition, withdraw from the com­petitive world. In some cases this may be for high motives, as when a writer, an artist, a musician, a scientist is willing to live on a subsistence minimum while he de­votes himself to literary, artistic, or scientific creation and experi­mentation. More frequently the cause is temperamental aversion to or incapacity for steady work. So, under any economic system, some people will have less earning capac­ity and live in poorer houses, wear cheaper clothes, eat less luxurious food than others; although the average standard of living in some countries will be much higher than it is in others.

Compulsory Equality Challenged

If one desires a convincing prac­tical illustration of the futility of trying to establish a society based on complete equality of compensation for all its members, one need only look at the contrast between the Soviet Union, as it was in the first years of the com­munist revolution and as it is today.

There was no means of fore­thought by which a man of thrift and property could have insured himself against the consequences of the wave of nationalization, confiscation, and robberization that swept over Russia as Lenin and his followers seized and con­solidated their power. The factory owners, the factory stockholders were expropriated. The banks and their assets were nationalized. The owner of a house was lucky if he could stay on in the basement after the local Soviet had taken over the dwelling and assigned the more desirable rooms to de­serving comrades. All land was taken over by the state and par­celed out to the peasants on the basis of the size of their families. The individual who preferred to hide his money savings in a sock found himself with only waste paper as the value of the ruble dwindled to zero. Perhaps the first challenge to the wild-eyed egali­tarianism of the time — an equal­ity, incidentally, of hunger, cold, and general misery — was that of the famous singer, Chaliapin, un­forgettable in the roles of Boris Godunov and Mephistopheles.

It was decreed that all the personnel in the state opera, from leading singers to stagehands, should receive the same scanty ration. Chaliapin, a husky peas­ant with an enormous appetite, balked and carried out a one-man strike with conspicuous success. "Very well," he said, "I worked at manual jobs before I became a singer. I will be a stagehand now." And the authorities, anxious at least to give the public some en­tertainment, gave in and winked at Chaliapin’s receiving a sub­stantial individual ration, so long as he would continue to sing.

Income Variations in Russia

But after this initial sweeping universal impoverishment, a whole new system of differential wages and salaries grew up. In the be­ginning members of the ruling Communist Party, as a means of preserving their idealism, were re­quired to accept only a skilled worker’s pay, regardless of the importance of the post they might occupy. This rule has long been discarded and today, ironically enough, membership in the Com­munist Party is one of the surest roads to wealth, provided the holder of the party card possesses enough ability and ingenuity to climb to the top of the political and economic ladder. Visitors to Moscow are often strongly im­pressed by the tremendous spread in standards of living between the privileged class at the top in Rus­sia today and the masses of workers, peasants, and employees. This is reflected in such perqui­sites of membership in the Soviet elite as chauffeur-driven cars, ex­pensive apartments with luxuri­ous furnishings, country homes, ability to patronize expensive res­taurants — all things far beyond the dreams of the ordinary citizen.

The Necessity of Inequality

The Soviet experiment, and the Chinese, offer convincing proof that there is no cure for poverty in wholesale expropriation and spoliation. This may temporarily produce equality of a sort, but only equality of extreme priva­tion and misery. As soon as eco­nomic life begins to revive, new favored classes begin to appear, and new inequalities. This process is as inescapable as the working of some law of natural science. The necessity — not of poverty in its more extreme and squalid forms, which tend to abate or disappear in more prosperous so­cieties, but of inequality as a con­dition of human progress — is forcefully put by one of America’s most powerful conservative politi­cal thinkers, John C. Calhoun, in his Disquisition on Government:

Now, as individuals differ greatly from each other, in intelligence, sa­gacity, energy, perseverance, skill, habits of industry and economy, phy­sical power, position and opportun­ity, the necessary effect of leaving all free to exert themselves to better their condition, must be a corres­ponding inequality between those who may possess these qualities and advantages in a high degree and those who may be deficient in them. The only means by which this result can be prevented are, either to im­pose such restrictions on the exer­tions of those who may possess them in a high degree as will place them on a level with those who do not, or to deprive them of the fruits of their exertions. But to impose such restrictions on them would be de­structive of liberty, while to deprive them of the fruits of their exertions would be to destroy the desire of bettering their condition.

It is indeed this inequality of con­dition between the front and rear ranks, in the march of progress, which gives so strong an impulse to the former to maintain their posi­tion, and to the latter to press for­ward into their files. This gives to progress its greatest impulse. To force the front rank back to the rear, or attempt to push forward the rear into line with the front, by the interposition of the government, would put an end to the impulse and effectually arrest the march of progress.

These wise reflections should be borne in mind when it is lightly assumed that large appropriations of government funds will end poverty at home or that big enough government-to-government handouts will end poverty among nations. Among all the factors promoting human progress toward higher living standards, perhaps the most dynamic is competition. And the existence of a fairly com­petitive society is the best guar­anty against extreme poverty that has yet been discovered. (There was a good deal of homely truth in the sticker which figured in a recent political campaign: "I Fight Poverty. I Work.")

The Cure for Poverty is to Spark Personal Ambition

The only hopeful real cure for poverty is not a proliferation of bureaucratic social agencies and eager-beaver crusaders. It is the kindling of the vital spark of per­sonal ambition in the hearts of those whose poverty is not the re­sult of causes beyond their con­trol. How to kindle this spark is not a simple or easy problem. But surely one of the most hopeful means is to hold out the prospect that the man who is poor today may be well-to-do or even rich in the future. And it is only in a fluid, competitive society that this prospect becomes a reality. There is much truth in Macaulay’s for­mula for continued economic progress, which may be summed up as follows:

Leave capital to find its most lucrative course, commodities their fair price, industry and intelligence their natural reward, idleness and folly their natural punishment, by maintaining peace, by defending property and by observing strict economy in every department of the state. Let the government do this and the people will assuredly do the rest.

The only effective cure for in­dividual poverty is individual effort. The best stimulus to this effort is the constant spectacle of what other individuals, no more favored by early surroundings and circumstances, have been able to achieve by their own efforts. Handouts are of no permanent value. Still less is any benefit to be expected from resort to vio­lence and rioting. Imagine what impression a rioter would make on a prospective employer by offering as a job recommendation some such statement as this: "I took part in looting four stores and burning six others."

With nations as with individ­uals, there is no short magic road from destitution to affluence. No one owes the more indigent areas of the world a living, although one would never suspect this from the yeasty oratory that is popular in some quarters. Asians, Africans, South Americans must work for their living like everyone else. How quickly and successfully these economically retarded areas of the world will achieve their goals of better schools and roads, more food and clothing, and other good things of life depends mainly on the policies which their govern­ments pursue.

On the International Scale

Unfortunately, these policies have not always been marked by wisdom. All developing lands need capital; but the new governments often frighten away foreign in­vestment by hostile and confisca­tory measures. Foreign aid, when it is given, is often frittered away in mistaken projects of state planning.

Some years ago a distinguished Indian member of the Mt. Pelerin Society — an organization com­mitted to the ideal of integral liberty, with economic liberty as its base — after pointing out many examples of misapplication of American aid by Indian state planners, drew a round of ap­plause when he announced his conclusion: "What India needs is not dollars, but the spirit of the Mt. Pelerin Society."

For nations, as for individuals, the cure for poverty is intelli­gently directed individual effort, free from the blunders and dis­tortions of state direction.

 

***

Marxism in One Minute

The whole gospel of Karl Marx can be summed up in a single sentence: Hate the man who is better off than you are. Never under any circumstances admit that his success may be due to his own efforts, to the productive contribution he has made to the whole community. Always attribute his success to the exploita­tion, the cheating, the more or less open robbery of others. Never under any circumstances admit that your own failure may be owing to your own weaknesses, or that the failure of anyone else may be due to his own defects — his laziness, incompetence, im­providence, or stupidity. Never believe in the honesty or disin­terestedness of anyone who disagrees with you.

This basic hatred is the heart of Marxism. This is its animat­ing force. You can throw away the dialectical materialism, the Hegelian framework, the technical jargon, the "scientific" analy­sis, and millions of pretentious words, and you still have the core: the implacable hatred and envy that are the raison d’etre for all the rest.

HENRY HAZLITT

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