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What If All The Poor People Were Gone?

Wednesday, October 12, 2016 7:17
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Last night, I was at a talk by Arthur Brooks.  It was pretty thought provoking and I thought I’d share his opening question with everyone to get their thoughts.  His question was this, What if all the poor people were miraculously  gone?  A magic wand swept them away.

Would your life change?

C’mon.  Would it?  Think hard about it.  How many poor people do you interact with on a daily basis?  More importantly, how many poor people do you rely on daily?

Yet, we know there are poor people out there.  65% of the Federal budget is entitlement spending.  Much of that goes to alleviate the problems poor people encounter in their daily lives.  But, if all the poor people were gone, a lot of that 65% would go from spending and deficit to surplus!  That’s a net positive right?  You might have to pay more for some produce, because poor people wouldn’t be picking it.   But, it’s not going to really hurt your budget to pay a few pennies more for apples.Another plus, poorer areas have higher crime so violence and police costs would go down.   After you really stop and consider what it really means for your daily life, having no poor people in society looks like a net benefit.  Why not just eliminate them?

Of course, we used government spending and programs for the last 50 years to eliminate them.  Arthur Brooks says to read President Lyndon Johnson’s speech announcing the war on poverty back in 1964.  He gave it at the University of Michigan. I linked to it so you can read it.  Brooks says, “I defy anyone on the right or left to disagree with the words in that speech.”  He’s right.

Instead of eliminating poverty, we have warehoused it.  It’s like a dead weight on society.  The more government programs we come up with and the more spending we do, the greater the problem.  It never seems to go away.  But, the solutions that are proposed is more programs, more spending, and higher taxes-and higher deficits.  Here is a chart from the St. Louis Federal Reserve.

It’s unsustainable.

The poor in the US have subpar neighborhoods, subpar schools, and subpar opportunity.  It’s not just inner cities, it is in rural areas too.  Over the past 8 years, many suburbs have started to see the number of poor escalate.  Yet, over the last 8 years we have spent more and done more than ever.  What’s the problem?

GDP growth is the problem. Since 2008, only 20% of the US population has benefitted.
US Real GDP Growth Chart

US Real GDP Growth data by YCharts

Why? Because only a sliver of the population can take advantage of the economic incentives that are available.

How do we change it? We know increasing government programs and government spending doesn’t work. The way to change it is the free enterprise system. It’s the only way. It’s why I totally love seed stage entrepreneurship. People taking ideas and building companies creates opportunities for other people. I get to be a part of it and help it along.

It’s time to embrace free enterprise in the US if we are going to get out of the mess we have created for ourselves. If we don’t, we are going to be in a heap of trouble sooner, not later. Your children, your children’s children and their children will be living with a standard of living lower than yours. They will be poor.


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