Eliminate US Poverty

People have been offering programs to eliminate poverty for 2000 years, yet it persists in the richest country on earth. I claim the reason for poverty is that poor people don't have enough money, it's that simple. There are lots of ways to get more money to the poor and some, or all, have been tried at one time or another: tax breaks, reverse taxes (EITC), food stamps and other in-kind handouts, welfare payments and better wages, among others. 

Supposed we tried something that has never been done before, guaranteeing a minimal standard of living to everyone. The country is certainly wealthy enough to afford this. The most optimistic poverty programs don't even approach the amount of money being spent on Iraq, for example. Well there would be objections about those people who don't "deserve" it. There would, supposedly, be a rise in free loaders. That's OK too, we can afford some free loaders as well. This can be kept under control by social disapprobation.  Just like Humvees are falling out of favor with the rich, because of the visible sight of waste it presents, those not doing their part could be made to feel uncomfortable.

What would be the benefits? Higher incomes would  lower crime, improve health care, create a better educated workforce and produce a reduction in class resentment. Eliminating the expenses of crime control and remedial health care could easily exceed the costs of the program. 

What is preventing this? A distortion of the Judeo-Christian precepts of charity. Rather than helping those less fortunate, a mean-spirited brand of Puritanism underlies much of political policy, and, implicitly or explicitly, seeks to punish or blame the victims.

How could this be financed?  There are any number of ways, equalizing tax collections so that the wealthy pay more, eliminating runaway militarism and using the money for social programs, or taxing corporate earnings more effectively, for example. Let's assume that we provide, on average, $10,000 to each of the approximately 40 million poor people in the US. This comes to $400 billion per year. For reference this is slightly less than the US military budget.

Crime: A recent study puts the direct costs of crime at $105 billion and when pain and reduced quality of life are added the number rises to $450 billion. (reference: Cost of Crime). These figures don't include the savings from needing a smaller police, judicial and prison system. With no economic insecurity we can expect that what crime remains will be motivated by greed. This type of crime is usually white collar or involved with illicit substances and tends to result in less violence and damage to property.

Health: For health care the figure for economic losses due to under insurance (caused by poverty) ranges from $65-130 billion. Reduced productivity due to health issues is also estimated at an additional $87-126 billion. The economic value of a diminished quality of life due to ill health is not included. (reference: UN Report).

Conclusion: Just these two factors would almost pay for the costs estimated above. When the better education and healthier childhoods of the poor are added in it is easy to see that even $400 billion is affordable. In addition, the existence of a minimum standard of living for all would increase the overall economic activity. The poor are currently under spending compared to their needs. So the additional funds that they would receive would be quickly recycled into the economy in terms of purchases of goods and services.

I have written a short essay on the issues associated with wealth (re)distribution here:
Wealth Distribution

Moral: If it hasn't worked so far, try something new!


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If you have any comments or for further discussions email me at robert.feinman@gmail.com
Copyright © 2006 Robert D Feinman
Feel free to use the ideas, but the words are mine.