Monday, May 19, 2008

Facing Poverty

I have been watching and reading about the face of poverty in the US and hearing more about various ways to address it. In reading Sowell's book on economics I am not yet to the point where I understand what answers he might give to address poverty -- beyond his confidence in the market's ability to address things better than government.  Hopefully I will develop a more nuanced understanding as I continue reading. 

But I have gotten his point that all government policies to address social ills through funding have unintended consequences as they create incentives or disincentives.  For instance, "fixing" costs for things like rent prices or gas (on behalf of low income citizens) increases demand for the same amount of goods (since artificially lower prices don't increase production), thereby putting those intended to be helped at the same or greater disadvantage.  

Still, there at times when NOT doing something is more expensive than doing something.  If I don't fix the leak in my roof while it is small (saving money) the problem will definitely get worse.  

So I am reading the most recent campaign to end poverty (called Half in Ten) which calls for specific legislative remedy around specific topics to reduce the current number of Americans living in poverty (36 million) in half in the next decade.  The drafters of the campaign and its reports suggest that this will cost $90 billion per year in additional government expenditures, but imply that it will save a larger amount of money in the long term costs of poverty to the economy (unproductive citizens both cost $ and remove their positive production from the economy.  

So I am left very interested and yet asking questions:  What disincentives will be created through these programs?  How would you calculate the long term costs/savings from such a project?  What is the role of the church?

1 comment:

JudyBright said...

Hi Joel.

I don't know if you've heard of Dave Ramsey, but I thought this article related at least to the issue of government programs and redistribution of income.