Arnold Kling argues that The Real Solution to Poverty is not any centralized, planned, well-intentioned, anti-poverty program:
In the United States, the poverty threshold for a family of four is just under $20,000 a year in income. However, consider what would happen if you were to force every family of four all over the world the world to live on $20,000 a year. The majority of families would say, “Thank you.” Outside the United States, there are more people living under our poverty threshold than over it. Perhaps as many as one billion people are living on less than one-tenth of our poverty threshold, or less than $2000 a year for a family of four.If $500 a year per person represents extreme poverty, then consider that in the year 1800 the average income per person in the world was half that. What we consider extreme poverty today would have been considered upper-middle-class two hundred years ago. If that seems implausible, consider that even in Africa longevity has more than doubled over the past hundred years. This reflects better nutrition and public health, even though African economies on the whole are doing very poorly. William Nordhaus, in The Health of Nations, argues persuasively that if improvements in longevity were included in GDP, then our estimates of growth over the last century would roughly double.
Overall, as David R. Henderson and Charles L. Hooper wrote three years go for TCS, virtually every American alive today is in the top one percent of income, if one takes a worldwide historical perspective. It would be better to live on $20,000 a year in America today than to be a relatively wealthy person living here one hundred years ago.
The ultimate source of our wealth is our moral and mental development. With moral development, we are able to trade peacefully with strangers, create habits and institutions that reward work more than theft or expropriation, and value education and learning. With mental development, we have accumulated knowledge that enables us to achieve high levels of productivity.
Why do people advocate centralized programs?
I think that the key to maintaining faith in these ideas is to focus only on intentions. If a program is intended to reduce poverty, then it is an anti-poverty program. Instead, I believe that anyone who sincerely wants to do something about poverty needs to focus on outcomes.
Some facts on “poor” American households:
Forty-three percent of all poor households actually own their own homes. The average home owned by persons classified as poor by the Census Bureau is a three-bedroom house with one-and-a-half baths, a garage, and a porch or patio.Eighty two percent of poor households have air conditioning. By contrast, 35 years ago, only 36 percent of the entire U.S. population enjoyed air conditioning.
Nearly three-quarters of poor households own a car; 30 percent own two or more cars.
Ninety-seven percent of poor households have a color television; over half own two or more color televisions; Seventy-eight percent have a VCR or DVD player; 62 percent have cable or satellite TV reception; Seventy-three percent own microwave ovens, more than half have a stereo, and a more than a third have an automatic dishwasher.