BY JOHN STOSSEL – The other day, I went to Times Square to ask people what government should do to help poor people. Most everyone agreed on the answer: “more social programs and a higher minimum wage.”
It’s intuitive to think that way. I used to think that, too. When President Johnson declared a “war on poverty,” he said “compassionate government” was the road to prosperity for poor people. That made sense to me. At Princeton, I was taught that government’s central planners had the solution to poverty.
But then I watched them work. Government spent trillions of dollars on poverty programs, and the poverty level stayed stuck at about 12 percent of the population. It’s stayed there for about 40 years.
Now I understand that that government poverty programs encourage people to stay dependent. There’s money in it. Policymakers would have known this 25 years ago had they read The State Against Blacks. The author, an economist, said poverty programs destroy the natural mechanisms that have always enabled poor people to lift themselves out of poverty.
That author is Walter Williams of George Mason University. Williams, who is black, says “there’s a huge segment of the black population for whom upward mobility is elusive, and it’s because of the welfare state—because of government.”
Williams elaborates in a new book, Race and Economics. A chief culprit, he insists, is the minimum wage.
“Let’s not look at the intentions behind minimum wage,” he said. “We have to ask, what are the effects? Put yourself in the place of an employer who must pay $7.25 no matter whom you hire. Will that employer hire a person who can only add $3 or $4 of value per hour?”
He will not. And so fewer young people get hired and “get their feet on the bottom rung of the economic ladder.” This hurts all young people, but black teens most, he says, because “many of them get a fraudulent education in the public school system. So a law that discriminates against low-skill people has a doubly negative effect on black teenagers. The unemployment rate among black teens today is unprecedented in U.S. history. In the ’40s, black teenage unemployment was less than white teenage unemployment.”
And yet a Pew survey says 83 percent of Americans support raising the minimum wage.
“People have the misguided notion that the minimum wage is an antipoverty tool.”
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Economists understand the truth. A survey of the American Economic Association found that 90 percent of economists say the minimum wage increases unemployment.
Williams says the minimum wage law has also been a tool of racism. In his book South Africa’s War Against Capitalism, he studied that country’s labor markets during apartheid:
“White racist unions in South Africa that would never have a black as a member were the major supporters of minimum wage laws. Their stated purpose was to protect white workers from having to compete with low-skill, low-wage black workers. In the United States we found some of the same reasoning for support of a super minimum-wage law,” the Davis-Bacon Act, which forces taxpayers to pay union-like wages for government-funded construction projects.
Williams says other programs designed to help the poor—like welfare payments—have wrecked the lives of millions of black people. He likens the welfare state to a “drug pusher” that keeps people dependent and in poverty.
“The welfare state has done to black Americans what slavery (and Jim Crow and racism) could not have done … break up the black family. Today, just slightly over 30 percent of black kids live in two-parent families. Historically, from the 1870s on … 75-90 percent of black kids lived in two-parent families.”
Why does the welfare state create illegitimacy?
“(Without welfare,) people would decide, ‘I’m going to go out and get a job, I’m going to live more responsibly.'” And that would include getting married before having children, something the welfare system discourages.
I believe the creators of the welfare state had good intentions, but good intentions aren’t good enough. Even if deficit spending were not bankrupting America—which it is—America should end these programs.
John Stossel is host of Stossel on the Fox Business Network. He’s the author of Give Me a Break and of Myth, Lies, and Downright Stupidity. To find out more about John Stossel, visit his site at johnstossel.com.
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