The War On Poverty Cut Poverty By 1.2 Billion People-Years

One of the stranger things conservatives who want to reduce the incomes of poor people do is tally up some big figure of money spent on the War On Poverty and then remark that we still have poverty. Usually these sums include spending that has nothing to do with poverty reduction, e.g. Pell Grants, and spending that is not calculated into any of the poverty metrics, e.g. Medicaid and other health care spending. So the dollar figures themselves are rather nonsensical.

Stranger than the inflated dollar figures though is that poverty is not a one-off thing that you solve. Nothing solves poverty once and for all because staving off poverty requires a constant, endless resource flow. Transfer incomes for those at the bottom don't end poverty once and for all for the same reason paychecks don't: they eventually run out and you need more money.

We have spent a massive amount of our national income sending out paychecks to people over the last 50 years, but people still have to go out and get more paychecks in order to not be poor. Does that mean paychecks are a failure at reducing poverty? Surely not.

Put simply: poverty is a flow, not a stock. Poverty is when someone lacks a certain level of resources for a specific period of time. Ending or reducing poverty is an endless task because producing and distributing income are endless tasks.

If you want to assess the effectiveness of transfer programs at reducing poverty over the last 50 years, you need to utilize a metric that adequately captures the temporal and flow-like nature of poverty. The most straightforward way to do that is to go through each of the last 50-odd years and determine the difference between 1) the number of people impoverished by the market distribution of income and 2) the number of people impoverished after taxes and income transfers. If you add all of that up, you get the number of people-years by which public programs reduced poverty over that period.

Using this method and recent research extending the supplemental poverty measurement back in time, Jason Furman determined that public programs reduced poverty by 1.2 billion people-years between 1967 and 2012. And that 1.2 billion figure only captures a fraction of the people whose lives were improved by these programs. Many others below the poverty line received income boosts from the programs, but not enough to get them over the poverty line. Others just above the poverty line received boosts, but because they were above the line already, do not get counted into the 1.2 billion.

Despite what you hear, the War On Poverty has been a smashing success. Public programs have been and continue to be hugely successful at cutting poverty and improving the lives of those at the bottom. A proper accounting of its impact tells us, not that we need to reassess our anti-poverty strategy, but that we need to take the one we have now and massively ramp it up. As everywhere else in the world tells us, the most successful way to cut poverty in a developed nation is to jack up transfer incomes.

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