Paul Ryan Has Answer for Ferguson

Economist Milton Friedman said “The economic race should not be arranged so everyone arrives at the finish line at the same time but so that everyone starts at the starting line at the same time.”

Those on the left and the right have always contended whether economic outcomes for any given set of individuals is the business of government. But few, on the left or right, dispute that government should work to assure that every American starts the game under fair conditions.

It’s the latter point, fairness at the beginning of the game, that defines the motivation behind Republican Congressman Paul Ryan’s vast and sweeping new set of ideas for taking on poverty in our nation.

According to the Census Bureau, there are almost 50 million Americans living under the poverty line.

Since President Johnson’s “War on Poverty” half century ago, government has spent $15 trillion dollars fighting poverty. The federal government now spends $800 billion per year on means-tested anti-poverty programs.

Yet, we see no change. The incidence of poverty has remained constantly at around 15 percent of the population. And the racial component has been constant, with black poverty rates consistently at three times the rate of white poverty.

Paul Ryan’s important contribution here is to show that not only are these vast government anti-poverty programs not working, but also they themselves contribute to the persistence of the problem.

Because these programs are means-tested – they’re tied to how much money you earn – they perversely discourage work and advancement because earning more means losing a huge array of benefits.

Beyond creating a universe of disincentives to work and advancement, many of these individual programs create their own unique perversities.

HUD housing vouchers, for instance, simply subsidize slumlords and build ghettos because they can’t be used freely anywhere, but only with landlords authorized by HUD.

The end of it all is we wind up with entrenched areas of poverty, which foster crime, drugs, unemployment, frustrated youth, and then, inevitably, tragic incidents like we just witnessed in Ferguson, Missouri.

The left yells racism and calls for more government, more money, even though this is most often the source of the problem, not the solution.

If we are going to spend the money, says Congressman Ryan, let’s try to do it in a way that will lead people out of poverty, rather than perpetuate it.

Ryan is proposing experimental programs – Opportunity Grants – that consolidate 11 distinct government anti-poverty programs into one cash grant to states, allowing states flexibility to propose new and creative ways to use these funds.

I am currently working with state legislators in Oklahoma, led by Senator Rob Standridge, to show how government assistance for the poor can encourage, rather than discourage, work, marriage and family, education, and savings.

Low-income families with children would get matching grants from the state up to an annual income of $30,000. So as a married couple earns more, government grants kick in – up to $30,000. For every year the couple stays married, $2500 is deposited in a household retirement account, $2500 in a housing down payment account, and $5000 in an education savings account. A monthly housing grant of $500 is provided while household income is under $50,000.

Ten hours of monthly volunteer service at a community non-profit would create eligibility for prizes at monthly raffles.

Beyond this, minimum wage laws that discourage employment should be addressed, as well as taxes and regulations that discourage opening businesses in low-income neighborhoods.

Low wage workers and America’s poor need freedom to labor, not laws that penalize businesses that come to their communities or laws that keep them from moving to the second or third rung of the economic ladder. They need freedom from policies that keep their kids trapped in government subsidized, union controlled schools, and government housing policies that keep them trapped in ghettos.

Photo credit: Gage Skidmore (Creative Commons)