42 Comments

Great article! I personally find this a convincing argument for the war on poverty and might even use this data in the future when talking to people. However, I was curious about the conservative opinion that you referenced. You said, "conservatives generally like to think that government action to alleviate poverty is doomed to failure, creates a culture of dependency, etc." and it feels to me that the article does not adequately rebuke this statement. The first statement that it is doomed to failure is obviously subject to different interpretations of the perceived goal of the war on poverty. That is where the "culture of dependency" comes in. I think that many conservatives view the goal of the war on poverty, and possibly even the rest of government, as allowing people to become self-dependant, individualistic, and contribute to society on their own. In that sense, you have not proven that the war on poverty was a success. Adding in the government programs is effective in proving that people are better off, but I think it serves to further support that people are becoming dependant on the government, especially since you show that right next to the stagnant wage growth. What would you say to a conservative that thinks this article only supports their notion that the war on poverty increased dependence on the government? Would you try to convince them that people are not truly more dependant on the government than before the war on poverty? Or would you say that the value system that ranks individualism over well-being should not be followed? Thank you again for the article! very happy that I subscribed!

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It doesn't seem quite right to only measure "dependence" on the government as these safety net programs. Everyone is dependent on the government, and I'm not sure people at the bottom of the scale are even receiving the most.

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Since the war on poverty was officially declared in 1964, and the stagnation in the baseline poverty rate didn't start until 1970 it looks like whatever started in 1964 probably didn't cause the stagnation 6 years later. It's just too far apart to have caused it. That's not to say that some kind of welfare program that started around 1970 didn't cause a culture of dependence, but it's unlikely because there are better explanations for the 1970 stagnation, such as stagnating total factor productivity growth, the oil crisis, stagflation etc.

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The official declaration didn't result in a whole structure of funding and staffing springing up instantly. Allow two or three years for that process and a few more for people to respond to a changed set of incentives and it fits pretty well.

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Good point

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I agree, Jeffrey. The point of the war on poverty was not to create intergenerational dependence upon the public dole, it was to help get people back on their feet. I agree that public assistance, properly measured, lifts those not working well above the poverty line, indeed in many cases well above what the lower quintile earns in Europe. The failure is the dependency it has created in working age people, especially in mothers who have neglected marriage.

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Jul 10, 2021Liked by Noah Smith

Excellent!! Informative!

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Jul 10, 2021Liked by Noah Smith

You are a brave man, Noah. To some people, belief that the economy is and was a disaster is central to their ideology -- and not just the tankies. It;s the same with the belief that poverty is the sole cause of crime.; obvious "facts" that may not be challenged.

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The original, stated, objective of the War on Poverty was not to make poverty less unpleasant — that can always be done, at least in the short run, by giving people money. It was to end poverty, to convert the present poor into people who could support themselves at a reasonable level.

That objective has not been achieved. As your graph shows, it was being gradually achieved prior to the start of the War on Poverty. That progress ended at about the point when the War on Poverty got fully staffed and funded. Once the failure became clear, the original objective was abandoned in favor of the one that could be achieved.

Do you really want to argue that creating a permanent welfare class is a success? That, by your description, is what happened.

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Most people define poverty as an economic condition that is unpleasant. You seem to be re-defining it to something like an economic condition of self-sufficiency. I don't know who stated the objective of the War on Poverty, but the term doesn't obviously suggest the latter rather than the former.

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Fewer poor people is good, surely. Who do you cite as a success in reducing poverty, that doesn't involve government support measures? Or are you measuring a real life achievement, warts and all, against a theoretical libertarian ideal?

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How much of that "permanent welfare class" is due to the perverse incentives built into social programs? One of the highest-profile causes for so-called "welfare dependency" is also one of the epic failures of U.S. public support programs: the benefits cliff, where benefits simply stop if certain conditions are met. Marriage. Pay raise if they are working. Hell, my niece lost access to a Medicaid nurse for her disabled daughter because an increase in the daughter's SSI meant there was now too much money coming in.

What's wrong with tapering the benefits in the same manner as the EITC? I think you'd be much less likely to see "dependency".

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Don't forget -- that though the passage of social security preceded the War on Poverty -- social security was remarkably effective at eliminating poverty. Before the passage of the Social Security Act of 1935, about half of all senior citizens were living in poverty. As of 2018, about 9% of seniors lived in poverty (official rate), the lowest percentage of any age group.

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These programs preceded the War on Poverty but saw major increases in eligibility & benefit levels under LBJ: old-age pension, survivors, disability insurance, and more. Great Society is responsible for much of the reduction in senior poverty that is associated with social security.

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Real per capita GNP was $7,730 in 1935. In 2018 it was $57,459, seven and a half times as large. It would be extraordinary if the fraction of seniors, or any other group, living in poverty by a fixed definition hadn't dropped very sharply with that large an increase in average income.

Your observation is a little like concluding that hay is more nutritious than meat, as shown by the fact that elephants are larger than cats.

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Yes, thank you. You are, of course, right that the fact that poverty among the elderly has declined substantially since 1935 is not proof that social security contributed that decline.

However, I do think there is plenty of evidence that social security made a difference. The Center for Budget and Policy Priorities (CBPP) estimates that today Social Security benefits lift about 22 million people (about 7% of the U.S. population) out of poverty. While the CBPP estimate does not consider what the savings behavior of current retirees would have been without Social Security, more rigorous studies (e.g. Engelhardt and Gruber, 2004) have come to similar conclusions.

As of 2015, the poverty rate among minors (under 18) was 20%. The poverty rate among non-elderly adults (18-64) was 12%. The poverty rate among those 65 and above was 9%. Furthermore, in the first half of the 20th century, the elderly had the highest poverty rate and now they have the lowest. There may be many reasons for these trends, but the existence of a highly redistributive mandatory savings (social insurance) program for retirees is probably one of them.

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This is not the first time I've said that Johnson was, by a wide margin, our best post-war president.

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I think youre misunderstanding the conservative argument. Nobody really disputes that welfare raises the income of people who receive welfare. The point of contention is about welfare traps and dependence.

The conservative standard for poverty reduction is self-sufficiency. As reagan said, “We should measure welfare's success by how many people leave welfare, not by how many are added.”

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The conservative standard for welfare is how much lower could the percentage of wealth and income that doesn't go to plutocrats be without causing the plebes to rise up and kill their betters.

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I think there are two ways to look at this that are both valid. In terms of mitigating material deprivation, the War on Poverty has been a success, but it's important to note that this is a really low bar. By spending 6% of GDP we bought a lot of things for people who couldn't afford to buy them themselves. But was there ever really doubt that this was possible? There was a hole, and we filled it with money.

The higher bar is reducing pre-transfer poverty, and it's not clear that the War on Poverty has had any effect here at all. For the last 55 years, depending on the point in the business cycle, 11-15% of the population has failed to earn enough to get over the poverty line.

Maybe the WoP helped it get down to this level, where it would otherwise be bouncing between 15 and 20%. Maybe it stopped the pre-transfer poverty rate from settling down into the 7-12% range. Maybe it had no effect at all.

But I feel like we were promised more. Wasn't the idea that the War on Poverty would be a permanent solution that would break the cycle of poverty and ultimately reduce market income poverty? Maybe I'm wrong. I wasn't around back then. But I think permanently devoting 6% (and growing!) of GDP to mitigating the failure of 11-15% of the population to provide for themselves is a deeply unsatisfying victory.

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Why do we care what's pre- and post-transfer? If the logic of the "winner take all economy" tends to be towards inequality and towards a higher share of income going to capital, but the long-term health of the polity and the economy requires keeping money in the hands of a broader mass of consumers, why not just redistribute? The government is _really good_ at redistribution (see: Social Security), and much less good at figuring out how to fight the structural forces of technology and global trade.

There are certainly things we can do, like raising the housing supply through a system of carrots and sticks to reward good zoning reform, or running Cory Booker's "baby bonds" program to put capital into the hands of the next generation of the middle class. But redistribution should be regarded as part of the normal function of government. The Welfare State is Good, Actually. Of those to whom much was given, much is expected.

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(To clarify: The Baby Bonds program functions _both_ as redistribution, but also quite likely as a lever against concentration in the next round, because of how it gives that next generation more options for investing in themselves and avoiding dependence on debt. Right now, you get an education, you pay off a huge debt to the class whose money works for them. You buy a house, debt. Etc. Starting people off with a few tens of thousands in the bank can make a huge difference. Similarly, systematically raising the housing supply would unlock real wage growth and reduce debt dependence.)

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You are taking a very optimistic view of the range of possibilities. If you extrapolate what was happening before the WoP got going, maybe it stopped the pre-transfer poverty rate from continuing to fall, as it had been doing ever since the end of WWII — and, with some ups and downs, for a century or more before that.

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Right, I did mention the possibility that the War on Poverty stopped the pre-transfer poverty rate from falling further, but it's hard to say where it would have stopped in a counterfactual scenario. Obviously we can't just do a linear extrapolation, which would eventually result in a negative poverty rate. It also seems unlikely that it would have fallen to zero. For various reasons, some people are just really hard to employ productively. Plus temporary unemployment or voluntary labor force nonparticipation would result in transitory poverty. I technically lived in poverty with a mid six-figure balance in my brokerage account in 2011 and 2012; if I live 80 years my lifetime poverty rate will be at least 2.5%.

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I think the very least interesting takeaway here is that when you give people money they have money. The most interesting fact seems to be that when you ignore SNAP, TANF, EITC etc the progress against poverty somehow stopped right around 1970 (because of course that's when it stopped amirite?). So in the same vein as the holy grail of developmental economics is establishing a self-sustaining growth trajectory, if you expected the war on poverty to manifest a downward trend in that baseline poverty rate then you're gonna be disappointed.

After all when we waged war against the Nazis we didn't plan on bombing the Germans 80 years later because of a stubborn baseline rate of Nazis that we can't seem to get below 10% of the German population. And if we did, we probably wouldn't call it a "success". Looking at that 10% poverty baseline is an indication of *some* kind of failure, and whether the war on poverty was *that* failure depends on what we meant by "winning" it. And I honestly don't know. Were we supposed to get to a point where the war on poverty would eventually subside as the baseline poverty rate approached zero?

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If we declare war on cancer, I expect some of that war to take the form of reducing exposure to environmental carcinogens, thus reducing the incidence of tumerous growths, but a lot of that war will take the form of getting better treatment of tumerous growths to prevent them from becoming harmful cancers. What mix of the two should we hope for, and should every decade make progress on both?

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Well as it happens we've made no progress for 5 decades. So when do we stop and concede that our attempts to reduce the baseline poverty rate have failed?

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Which attempts to reduce the baseline poverty rate are you talking about? Most of the measures being discussed are attempts to reduce overall poverty rate, and the charts above show they have been succeeding. We have been making progress in the overall war, even if one half of it hasn't been advanced.

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My entire question was whether the War on Poverty in fact *was* an attempt to reduce baseline poverty rate. At least one other commenter in this thread says the War on Poverty was intended to reduce the baseline poverty rate. You're hinting at the fact that this wasn't the intention. Is this an assumption you're making based on the fact that surely nobody would ever expect these policies to actually work in reducing the baseline poverty rate, or is this based on you knowing that the proponents of these efforts in fact never intended for it to actually reduce the baseline poverty rate?

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I think the problems you are identify are more problems with using war metaphors where they don't quite fit than it is anything else.

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It could, but I'm skeptical. If that 10% was the bottom rank of the population in something like IQ, which by all accounts is an immutable characteristic then I'd be with you. But as it happens that's not the case. The bottom 10% is characterized by things like not finishing high school, being single parent households, or getting into trouble with the law etc. As far as we know these failures are almost universally not due to any immutable characteristics, which indicates the threshold of no marketable abilities should be lower than 10%.

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Seems you're right, failure to finish HS seems to correlate with IQ more than socioeconomic.

Re: single-parent households. It's not the same as teenage pregnancy. The fact of the matter is that single-parent households are up quite drastically since the 1960s. And the correlation between single-parent households and poverty is strong; 33% of single-parent households are in poverty, compared to the 10% average.

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Look at Noah's first graph. Using the simple measure of poverty, the rate had fallen roughly in half before the War on Poverty got started. Are you arguing that, by some curious coincidence, the War on Poverty started just at the point when all the people who could escape poverty had done so and the only ones left were the hopeless cases?

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Did you not read the rest of the article?

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Tldr so what if that’s what’s happened, it’s not what matters.

What strikes me about this piece is how the paper you are quoting seems to be a classic piece of hacking away until you find the answer you want while your post buries the lede at the end.

What matters to humans is not some dry analysis and re-analysis and optimistic conclusion but how they feel. The stuff you do mention as also being also important at the end is perhaps the most important.

The impact of precaricity and the way one feels relative to others is more important to health, mental health and social cohesion than some dry number is to the people this paper talks about. Humans are adaptable as the success of our species shows and will tolerate almost anything if we believe that’s the status quo, eg phrases like “we’re all in this together” got people to endure rationing for years after the WW2 ended.

Brushing it aside is to my mind the equivalent to accumulating dry tinder in a Californian national park and saying there’s no fire so it’s ok? Sooner or later there’s going to be a lightning strike and everything’s going to burn to the ground?

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I think you're maybe not quite fully appreciating the reality of absolute poverty? Yes, as the article says relative poverty is important. I imagine many people share the sentiment that in a country with so much wealth it is extremely disappointing that we continue to have such high rates of people who can barely afford what are considered the basic necessities for modern life and are constantly dealing the mental and physical health toll that living in such a financially precarious state exacts. But the conclusion that "what matters to humans is not some dry analysis and re-analysis and optimistic conclusion but how they feel" is only true when the ability to survive and subsist, even precariously, is met. Abject poverty is quite literally a battle for survival that has far greater and more immediate consequences for one's physical and mental health - let alone ability to be happy. That our idea of poverty has more to do with "the way one feels relative to others" and the impact of constantly being one bill from not being able to pay rent or having to go hungry for a meal is only because of the great success of the war on poverty, which has mostly eliminated what used to be the 20% of Americans - abject poverty where daily survival was much less assured and every meal was one that left you hungry. "The way one feels relative to others" is in fact not "more important to health, mental health and social cohesion than some dry number is to the people this paper talks about." That dry number is the one saying that Americans in poverty are overwhelmingly people who's main issue is the strain of potential complete ruin, as opposed to people who's main issue is they already have complete ruin and their main issue remains can I survive the day with enough calories to not starve - every single day. Certainly the version of poverty that challenges America today certainly is awful and desires much more attention and effort than it does (as the article says!). But it is not the same as the grinding, abject poverty that 20% of Americans faced half a century ago. If you think the relative poverty that most impovershed Americans face now has dire health (mental and physical) and social consequences, the reality is that what used to exist was far, far more damaging. Luckily, it's almost gone in this country. That's worth acknowledging.

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As someone who lives in the developing world, your concept of poverty seems completely out of touch.

"Humans can adapt to anything" doesn't magically fix infant mortality.

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2 points of fact; the article is about the USA and its efforts to eradicate poverty and that is the context in which I made my comments. The quote refers to the ability of humans to accept and work with the prevailing conditions and improve things, I never suggested nor would I suggest it could fix tragedies such as infant mortality.

As to my experience of poverty, I grew up in rural Ireland in the 60's and while definitely not poor I lived alongside and experienced poverty albeit at a developing country level and not at the lowest level.

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If the problem of relative poverty is proportional to the difference between your income and the average income of your friends, and if we assume that people's friends are near them in the wealth distribution but a bit above and below, then the shape of the wealth distribution matters. If wealth were normally distributed (which it never is), then people above median would feel relatively rich and people below median would feel relatively poor, and the relative feel would be proportional to how far out in the distribution you are. If wealth is power law distributed (which is a better approximation) then everyone will feel relatively poor, by the same amount, which is inversely proportional to the exponent in the power law.

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Yes that analysis works well in societies where the coefficient of informational friction is high. My concern would be in this new new world that coefficient is nearly zero so now you get to compare yourself to the top X% on a daily/hourly/minute basis. In fact you could argue its next to impossible to avoid it these days?

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It seems to me that relative poverty is only a problem if you're poor relative to your peers - not compared to the rest of the nation in general. So from your perspective it may be more important to reduce income inequality in the workplace than it is to reduce income inequality in America.

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I disagree, there is a policy solution and it's called redistribution, and if anything this article demonstrates that that policy response is successful, particularly the first graph.

The point I clearly made badly was that, despite the clear progress made in the US, it stopped when unilateral redistribution stopped. The article then shows it was replaced by a nanny state response determining exactly what sort of support you might get and limiting support to those limited forms only (does this sound similar to a failed political movement of the mid 20th century?). Strangely enough these later interventions have be justified by increasingly Byzantine analysis which was why I asked does it matter? The second point/question I was making/asking was that in a world where the coefficient of informational friction, tldr how much I might know about things not in my immediate social circle?, is approaching zero that the corrosive effects of the relative gaps may be much more damaging because it attacks that "can do, make do" We're all in this together" that clearly is successful because it has created most of the modern world.

I guess thinking about it the article may be a good justification for UBI?

There is a quote by A. E. Wilson that is important to keep in mind for complex problems such a this “The real problem of humanity is the following: We have Paleolithic emotions, medieval institutions and godlike technology. And it is terrifically dangerous, and it is now approaching a point of crisis overall.” Too often we focus on only 1 or at best 2 of these while we need to focus on all 3?

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