What Went Wrong with the War on Poverty

Family and Nation, by Daniel Patrick Moynihan, New York: Harcourt Brace Jovanovich, 207 pages, $12.95

In Family and Nation, Sen. Daniel Patrick Moynihan strikes me as a general who is groping on a defeated battlefield counting casualties. Shocked into a stupor by the ugly facts of defeat, the general reminisces: "If we had only tried this!…If we had only done more of that, and had there been more commitment—we could have won the war." The scene is the body-strewn landscape of our war on poverty. Befitting the scenario, chapter two of Family and Nation bears a title quite appropriate as an epitaph for our warrior's escutcheon: "In the War on Poverty, Poverty Won."

Family and Nation begins with Moynihan's recitation of the casualties: "In 1984 the proportion of poor black children under 6 rose to 51.1 percent.…The number of female-headed families had increased by 28 million (97 percent) since 1970.…The poverty rate in 1983, 15.2 percent, was at its highest level since 1965." War casualty statistics spill over into chapter two, where we learn: "In 1984 half the poor in America (47.8 percent) lived in female-headed families.…Only 2 percent of two-parent children were low achievers [compared to]…fully 40 percent of one-parent children."

A reasonable interpretation of Moynihan's lament is that the American family is in decline and that government, especially under the Reagan administration, is doing little to stop the decline. To stem the decline of the family, Moynihan proposes that "formulation of a national policy concerning the quality and stability of life could be the cornerstone for a new era of U.S. social legislation."

Therein lies the problem: the attempt to do something inherently impossible. Man's ignorance and arrogance makes him think that just because he managed to split the atom and travel to the moon, he can easily accomplish "trivial" tasks like managing the family and the economy.

We cannot know all of the unknown and possibly unknowable web of social interrelationships that lead to and sustain that spontaneous order known as the family. The evidence available suggests that all government intervention can do for the institution of the family is weaken it. For example, some government undermining of the family has been brought about by the "adultification" of children through court decisions that consider it a violation of a minor's rights to privacy if parents are notified when their children receive a prescription for birth control or have an abortion. The specific relationship between government policy and the decline of the family may be difficult to ferret out, but economic theory can give us some broad outlines.

The Law of Demand, from which there is no escape, predicts that when the cost of a behavior is reduced (or its benefit increased) we will see more of it. Sex is fun, premarital or otherwise. The cost of premarital sex can be the stigma of pregnancy, the child labeled a "bastard," abject poverty, and venereal disease. Since the 1960s these costs have been in decline. For many, there is no stigma to pregnancy; in reference to a child, bastard has gone out of usage; and government welfare payments provide a floor to poverty. It is only our new exotic diseases that threaten to up the ante on the '60s teaching to "let it all hang out."

Moynihan hints that the welfare state might encourage family destruction and dependency, but he points with pride to what it's done to eliminate poverty among the elderly. Indeed, poverty among the elderly has been all but eliminated through government programs. But just like any other politician, Moynihan proudly boasts of the visible beneficiaries of government policy but ignores or disavows that it has invisible victims—invisible in the sense that no one makes the connection between a government policy and the victims.

Social Security payments have provided its recipients with many times over the value of their "contribution." But the Tooth Fairy did not give Congress the money for that miracle. It was obtained through higher payroll taxes on workers. Higher payroll taxes increase the cost of hiring a worker. Higher worker costs make the employer seek more-productive employees or substitute capital for labor. Both measures reduce the employability of the least-skilled worker for whom Moynihan weeps.

Senator Moynihan has probably voted in support of measures that aggravate the plight of poor people. Increases in the minimum wage constitute one example. One wonders what Moynihan's position is on New York City's taxi-licensing law that makes the license for his constituent to own one taxi, an employment opportunity for the poor, cost more than $100,000.

In his recent pathbreaking work, Losing Ground, Charles Murray argues that the '60s poverty programs actually harmed the poor. According to the anti-Murray camp, in which Moynihan is a charter member, welfare does not generate incentives for family breakup or stifle the work ethic. Moynihan cites some of the statistics—selectively. But studies that Moynihan chooses not to cite suggest that welfare does make a difference.

Lowell Gallaway and Richard Vedder, economics professors at the University of Ohio, find that 50 percent of the increase in the divorce rate between 1964 and 1979 can be explained by welfare growth. They also report that between 1969 and 1979, poverty among children fell in West Virginia by 24 percent and rose in New York by 50 percent. They say that income differences by states must explain some of the variation, but we cannot be blind to the effect of welfare benefits that are 90 percent higher in New York than in West Virginia.

Moynihan does not say much that is meaningful about causal factors. He just drags out more casualty statistics from the War on Poverty: "For children under six, the poverty rate is nearly seven times that of the elderly: 17.5 percent compared with 2.6 percent.…In 1984 approximately 33.7 million persons were poor. Children, who represented less than 27 percent of the overall population, comprised 40 percent of the poor. Children were the only age group overrepresented in the poverty population."

According to Moynihan, the overrepresentation of children in poverty, relative to the elderly, is because Social Security payments, in constant dollars, have risen 54 percent since 1970 while AFDC (Aid to Families with Dependent Children) payments per recipient have fallen by 34 percent (the decline is overstated to the extent it does not include in-kind payments such as food stamps, school lunches, housing subsidies, Medicaid, and the like).

In one sense Moynihan is right. Children have less political power than older people to use government as a means to higher income. After all, what senator owes his seat to the children's vote? But many senators do owe their seats to the senior-citizen vote. In political hardball, those with political clout are favored and those without clout are dumped on. That reasoning may help to explain why we have a minimum wage and why youngsters have been drafted instead of fully capable older people. If we choose to pursue the more sinister answer to Moynihan's observations, we might also add that children are used as tickets to the dole. Those without children are locked out of Aid to Families with Dependent Children.

In reading the 194 pages of Family and Nation it is difficult to find sensible analysis of the problem of family breakdown in America. Instead we get a whimpering about the casualties. The only policy recommendation that emerges is a plea to give the poor more of the poison that got them to where they are in the first place—dependent upon the welfare state.

The most useful feature of the book is its demonstration to the careful reader that politicians do not understand the effects of their policy. They are well intentioned. Moynihan is well intentioned, but the road to perdition is lined with good intentions and so are the streets of Detroit, Chicago, and Philadelphia and the back roads of Appalachia.

Despite Moynihan's suggestions, Americans are the most generous people on the face of this earth. About 80 percent of all world giving is done by us. But we have forgotten the most important question to be asked when setting out to help someone: What is the effect of our help on the person's own incentives to help himself? We have forgotten that question. As a result we have created a group of people who are immune to the standard cure for poverty—economic growth.

Family and Nation could easily be filed among that voluminous set of materials catalogued under the heading, "Priceless Economics." That category is reserved for works where the author sees an increased presence of a certain behavior but ignores the role that prices (the costs associated with that behavior) may have played. The author instead blames solar activity, greedy Arabs, rapacious businessmen, moods, styles, evil spirits, greed, cardinal humors, and the like. What is truly amazing about the Senator is his willingness to accept the fact that government subsidies increase our supplies of wheat but will not seriously question whether government subsidies also increase our supplies of irresponsible behavior.

Contributing Editor Walter Williams, the John M. Olin Distinguished Professor of Economics at George Mason University, is the author of The State Against Blacks.