State body wrongly talks of making child poverty worse

If the rhetoric coming out of a Child Poverty Prevention Council forum is any indication of the kinds of policy its state legislator members wish to advocate on this issue, Louisiana might as well abolish an institution that will increase, rather than decrease, child poverty in the state.

Some things said by its members were inane enough. State Sen. Sharon Weston Broome, for example, seemed to indicate that defeated causes she has stumped for, such as increased regulation of small lending and government subsidization by tax credits of lower-income housing have some thing to do with children being in poverty. The thinking appears to be that these kinds of loans, voluntarily entered into by people, trap them in some way and keeps families in poverty, and that more low-income housing is needed to prevent homelessness that can affect negatively children.

Naturally, these miss the real causes of poverty. The so-called “payday” loan industry already is heavily regulated and full information about the nature of the loans is given out when they are contracted. Increased government regulation may serve only to negate the industry in its entirety, and the vast majority of clients who pay off such loans in a timely fashion would not have access to micro-capital. It is likely in many cases of those who get caught up in not repaying and eventually find much of the money owed is in accumulated interest is because they already access many government benefits which discourages them to think about the long-term consequences of failure to repay, as they are used to receiving monetary benefits without strings attached. (Also, in a number of these cases the money is used for nonessentials so the money never was even really needed in the first place, just that personal affectation took over.)

The solution for housing provision is not more government, but less. Developers want to make money, and they can’t make it without building to meet unsupplied demand; property managers want to make money, and they can’t unless they place renters in housing stock. The market provides solutions to both of these conditions without any government subsidies; if anything, government regulation discourages provision by driving up costs to developers and owners. (This very debate is going on in New Orleans now, about how much government should intervene into the market.)

But perhaps the biggest indicator of the failure, if not downright harmfulness, of this effort, came from an incredibly asinine remark during the session about “what the absence of public benefits looks like. It’s called poverty.” This attitude absolutely misunderstands the origins and nature of poverty, ignoring the theoretical understanding of it first elucidated by Edward Banfield’s The Unheavenly City and then initially empirically verified by Charles Murray’s Losing Ground.

Lack of government benefits does not “cause” poverty; otherwise, why is the poverty rate essentially the same in the U.S. after over four decades of presumed “anti-poverty” programs costing in the neighborhood of $15 trillion? Rather, as Banfield noted, poverty comes from a complex of attitudes residing in and behaviors practiced by individuals that retards their abilities to earn their way out of impoverished status. As Murray first demonstrated, government “anti-poverty” policies have encouraged these attitudes and behavior by rewarding with government benefits many who prefer to remain less productive and to make inferior long-term choices in their lives. If anything, many “public benefits” are more likely to increase poverty than to decrease its incidence for those who are able-bodied.

This especially is true if the financing of these benefits comes at the expense of diverting productive resources of the people through taxation. For this is the real solution to poverty: getting government out of the way of the private sector and enabling it to use maximally its resources to produce jobs and wealth without government distortion of the marketplace. Eliminating disincentives for productivity while allowing people to keep more of what they earn will do much more to reduce child poverty than by throwing large sums of money at wealth transfer programs. But it appears that this fundamental truth of the human condition remained unrecognized in all the talk that took place in this forum.

Without that basic understanding, the Council is nothing more than a useless entity wasting taxpayer dollars, and it will be complicit in failing to provide opportunity for Louisiana’s children to exit poverty.