In 1968, as Lyndon Johnson left office, 13 percent of Americans were poor, using the official definition. Over the next 12 years, our expenditures on social welfare quadrupled. And, in 1980, the percentage of poor Americans was—13 percent.

Moreover, basic indicators of well-being—participation in the labor force, educational achievement, crime rates, and the like—took a turn for the worse in the 1960s, most consistently and most dramatically for the poor. In some cases, earlier progress slowed; in other cases mild deterioration accelerated; in a few instances advance turned into retreat.

The question is why. Why at that moment in history did so many trends in the quality of life for the poor go sour? The easy hypotheses—the economy, changes in demographics, the effects of Vietnam or Watergate or racism—fail as explanations. As often as not, taking them into account only increases the mystery.

Nor does the explanation lie in idiosyncratic failures of craft. It is not just that we sometimes administered good programs improperly, or that sound concepts sometimes were converted to operations incorrectly. It is not that a specific program, or a specific court ruling or act of Congress, was especially destructive. The error was strategic.

A government’s social policy helps set the rules of the game—the stakes, the risks, the payoffs, the tradeoffs, and the strategies for making a living, raising a family, having fun, defining what “winning” and “success” mean. The more vulnerable a population and the fewer its independent resources, the more decisive the effect of the rules imposed from above. The most compelling explanation for the marked shift in the fortunes of the poor is that they continued to respond, as they always had, to the world as they found it, but that we—meaning the not-poor and the un-disadvantaged—had changed the rules of the world. Not of our world, just of theirs. The first effect of the new rules was to make it profitable to behave in the short term in ways that were destructive in the long term. The second effect was to mask these long-term losses—to subsidize irretrievable mistakes. We tried to provide more for the poor and produced more poor instead. We tried to remove the barriers to escape from poverty and inadvertently built a trap.

What, then, can be done? I begin with the proposition that it is within our resources to do enormous good for some people quickly. We have available to us a program that would convert a large proportion of the younger generation of hard-core unemployed into steady workers making a living wage. The same program would drastically reduce births to single teenage girls. It would reverse the trend line in the breakup of poor families. It would measurably increase the upward socioeconomic mobility of poor families. These improvements would affect millions of people.

All these are results that have eluded the efforts of the social programs installed since 1965, yet from everything we know, there is no real question about whether they would occur under the program I propose. A wide variety of persuasive evidence from our own culture and around the world, from experimental data and longitudinal studies, from theory and practice, suggests that the program would achieve such results.

The proposed program consists of scrapping the entire federal welfare and income-support structure for working-aged people, including Aid to Families with Dependent Children, Medicaid, food stamps, unemployment insurance, workers’ compensation, subsidized housing, disability insurance, and the rest. It would leave the working-aged person with no recourse whatsoever except the job market, family members, friends, and public or private locally funded services. It is the Alexandrian solution: cut the knot, for there is no way to untie it. It is difficult to examine such a proposal dispassionately. Those who dislike paying for welfare are for the proposal without thinking. Others reflexively imagine bread lines and people starving in the streets. But as a means of gaining fresh perspective on the problem of effective reform, let us consider what this hypothetical society might look like.

A large majority of the population is unaffected. A surprising number of the huge American middle and working classes go from birth to grave without using any social welfare benefits until they receive their first Social Security check. Another portion of the population is technically affected, but the change in income is so small or so sporadic that it makes no difference in quality of life. A third group comprises people who have to make new arrangements and behave in different ways.

Sons and daughters who fail to find work continue to live with their parents or relatives or friends. Teenaged mothers have to rely on support from their parents or the father of their children and perhaps work as well. People laid off from work have to use their own savings or borrow from others to make do until the next job is found. All these changes involve great disruption in expectations and accustomed roles.

Along with the disruptions go other changes in behavior. Some parents do not want their young adult children continuing to live off their income, and become quite insistent about their children learning skills and getting jobs. This attitude is most prevalent among single mothers who have to depend most critically on the earning power of their offspring.

Parents tend to become upset at the prospect of a daughter’s bringing home a baby that must be entirely supported on an already inadequate income. Some become so upset that they spend considerable parental energy avoiding such an eventuality. Potential fathers of such babies find themselves under more pressure not to cause such a problem, or to help with its solution if it occurs.

Adolescents who were not job-ready find they are job-ready after all. It turns out that they can work for low wages and accept the discipline of the workplace if the alternative is grim enough. After a few years, many—not all, but many—find that they have acquired salable skills, or that they are at the right place at the right time, or otherwise find that the original entry-level job has gradually been transformed into a secure job paying a decent wage. A few—not a lot, but a few—find that the process leads to affluence.

Perhaps the most rightful, deserved benefit goes to the much larger population of low-income families who have been doing things right all along and have been punished for it: the young man who has taken responsibility for his wife and child even though his friends with the same choice have called him a fool; the single mother who has worked full time and forfeited her right to welfare for very little extra money; the parents who have set an example for their children even as the rules of the game have taught their children that the example is outmoded. For these millions of people, the instantaneous result is that no one makes fun of them any longer. The longer-term result will be that they regain the status that is properly theirs. They will not only be the bedrock upon which the community is founded (which they always have been), they will be recognized as such. The process whereby they regain their position is not magical, but a matter of logic. When it becomes highly dysfunctional for a person to be dependent, status will accrue to being independent, and in fairly short order. Noneconomic rewards will once again reinforce the economic rewards of being a good parent and provider.

The prospective advantages are real and extremely plausible. In fact, if a government program of the traditional sort (one that would “do” something rather than simply get out of the way) could as plausibly promise these advantages, its passage would be a foregone conclusion. Congress, yearning for programs that are not retreads of failures, would be prepared to spend billions. Negative side effects (as long as they were the traditionally acceptable negative side effects) would be brushed aside as trivial in return for the benefits. For let me be quite clear: I am not suggesting that we dismantle income support for the working-aged to balance the budget or punish welfare cheats. I am hypothesizing, with the advantage of powerful collateral evidence, that the lives of large numbers of poor people would be radically changed for the better.

There is, however, a fourth segment of the population yet to be considered, those who are pauperized by the withdrawal of government supports and unable to make alternate arrangements: the teenaged mother who has no one to turn to; the incapacitated or the inept who are thrown out of the house; those to whom economic conditions have brought long periods in which there is no work to be had; those with illnesses not covered by insurance. What of these situations? The first resort is the network of local services. Poor communities in our hypothetical society are still dotted with storefront health clinics, emergency relief agencies, employment services, and legal services. They depend on local taxes or local philanthropy, and the local taxpayers and philanthropists tend to scrutinize them rather closely. But, by the same token, they also receive considerably more resources than they formerly did. The dismantling of the federal services has poured tens of billions of dollars back into the private economy. Some of that money no doubt has been spent on luxury cars and summer homes on the Cape. Rut some has been spent on capital investments that generate new jobs. And some has been spent on increased local services to the poor, voluntarily or as decreed by the municipality. In many cities, the coverage provided by this network of agencies is more generous, more humane, more wisely distributed, and more effective in its results than the services formerly subsidized by the Federal Government.

But we must expect that a large number of people will fall between the cracks. How might we go about trying to retain the advantages of a zero-level welfare system and still address the residual needs?

As we think about the nature of the population still in need, it becomes apparent that their basic problem in the vast majority of the cases is the lack of a job, and this problem is temporary. What they need is something to tide them over while finding a new place in the economy. So our first step is to reinstall the unemployment insurance program in more or less its previous form. Properly administered, unemployment insurance makes sense. Even if it is restored with all the defects of current practice, the negative effects of unemployment insurance alone are relatively minor. Our objective is not to wipe out chicanery or to construct a theoretically unblemished system but to meet legitimate human needs without doing more harm than good. Unemployment insurance is one of the least harmful ways of contributing to such ends. Thus the system has been amended to take care of the victims of short term swings in the economy.

Who is left? We are now down to the hardest of the hard core of the welfare-dependent. They have no jobs. They have been unable to find jobs (or have not tried to find jobs) for a longer period of time than the unemployment benefits cover. They have no families who will help. They have no friends who will help. For some reason, they cannot get help from local services or private charities except for a meal at the soup kitchen and a bed in the Salvation Army hall.

What will be the size of this population? We have never tried a zero-level federal welfare system under conditions of late-twentieth-century national wealth, so we cannot do more than speculate. But we may speculate. Let us ask of whom the population might consist and how they might fare.

For any category of “needy” we may name, we find ourselves driven to one of two lines of thought. Either the person is in a category that is going to be at the top of the list of services that localities vote for themselves, and at the top of the list of private services, or the person is in a category where help really is not all that essential or desirable. The burden of the conclusion is not that every single person will be taken care of, but that the extent of resources to deal with needs is likely to be very great—not based on wishful thinking, but on extrapolations from reality.

To illustrate, let us consider the plight of the stereotypical welfare mother—never married, no skills, small children, no steady help from a man. It is safe to say that, now as in the 1950s, there is no one who has less sympathy from the white middle class, which is to be the source of most of the money for the private and local services we envision. Yet this same white middle class is a soft touch for people trying to make it on their own, and a soft touch for “deserving” needy mothers—AFDC was one of the most widely popular of the New Deal welfare measures, intended as it was for widows with small children. Thus we may envision two quite different scenarios.

In one scenario, the woman is presenting the local or private service with this proposition: “Help me find a job and day care for my children, and I will take care of the rest.” In effect, she puts herself into the same category as the widow and the deserted wife—identifies herself as one of the most obviously deserving of the deserving poor. Welfare mothers who want to get into the labor force are likely to find a wide range of help. In the other scenario, she asks for an outright and indefinite cash grant—in effect, a private or local version of AFDC—so that she can stay with the children and not hold a job. In the latter case, it is very easy to imagine situations in which she will not be able to find a local service or a private philanthropy to provide the help she seeks. The question we must now ask is: What’s so bad about that? If children were always better off being with their mother all day and if, by the act of giving birth, a mother acquired the inalienable right to be with the child, then her situation would be unjust to her and injurious to her children. Neither assertion can be defended, however—especially not in the 1980s, when more mothers of all classes work away from the home than ever before, and even more especially not in view of the empirical record for the children growing up under the current welfare system. Why should the mother be exempted by the system from the pressures that must affect everyone else’s decision to work?

As we survey these prospects, important questions remain unresolved. The first of these is why, if federal social transfers are treacherous, should locally mandated transfers be less so? Why should a municipality be permitted to legislate its own ALDC or food stamp program if their results are so inherently bad?

Part of the answer lies in conceptions of freedom. I have deliberately avoided raising them—the discussion is about how to help the disadvantaged, not about how to help the advantaged cut their taxes, to which arguments for personal freedom somehow always get diverted. Nonetheless, the point is valid: Local or even state systems leave much more room than a federal system for everyone, donors and recipients alike, to exercise freedom of choice about the kind of system they live under. Laws are more easily made and changed, and people who find them unacceptable have much more latitude in going somewhere more to their liking.

But the freedom-of-choice argument, while legitimate, is not necessary. We may put the advantages of local systems in terms of the Law of Imperfect Selection. A federal system must inherently employ very crude, inaccurate rules for deciding who gets what kind of help. At the opposite extreme—a neighbor helping a neighbor, a family member helping another family member—the law loses its validity nearly altogether. Very fine-grained judgments based on personal knowledge are being made about specific people and changing situations. In neighborhoods and small cities, the procedures can still bring much individualized information to bear on decisions. Even systems in large cities and states can do much better than a national system; a decaying industrial city in the Northeast and a booming Sunbelt city of the same size can and probably should adopt much different rules about who gets what and how much.

A final and equally powerful argument for not impeding local systems is diversity. We know much more in the 19S0s than we knew in the 1960s about what does not work. We have a lot to learn about what does work. Localities have been a rich source of experiments. Marva Collins in Chicago gives us an example of how a school can bring inner-city students up to national norms. Sister Falaka Fattah in Philadelphia shows us how homeless youths can be rescued from the streets. There are numberless such lessons waiting to be learned from the diversity of local efforts. By all means, let a hundred flowers bloom, and if the Federal Government can play a useful role in lending a hand and spreading the word of successes, so much the better.

The ultimate unresolved question about our proposal to abolish income maintenance for the working-aged is how many people will fall through the cracks. In whatever detail we try to foresee the consequences, the objection may always be raised: We cannot be sure that everyone will be taken care of in the degree to which we would wish. But this observation by no means settles the question. If one may point in objection to the child now fed by food stamps who would go hungry, one may also point with satisfaction to the child who would have an entirely different and better future. Hungry children should be fed; there is no argument about that. It is no less urgent that children be allowed to grow up in a system free of the forces that encourage them to remain poor and dependent. If a strategy reasonably promises to remove those forces, after so many attempts to “help the poor” have failed, it is worth thinking about.

But that rationale is too vague. Let me step outside the persona I have employed and put the issue in terms of one last, intensely personal, hypothetical example. Let us suppose that you, a parent, could know that tomorrow your own child would be made an orphan. You have a choice. You may put your child with an extremely poor family, so poor that your child will be badly clothed and will indeed sometimes be hungry. But you also know that the parents have worked hard all their lives, will make sure your child goes to school and studies, and will teach your child that independence is a primary value. Or you may put your child with a family with parents who have never worked, who will be incapable of overseeing your child’s education—but who have plenty of food and good clothes, provided by others. If the choice about where one would put one’s own child is as clear to you as it is to me, on what grounds does one justify support of a system that, indirectly but without doubt, makes the other choice for other children? The answer that “what we really want is a world where that choice is not forced upon us” is no answer. We have tried to have it that way. We failed. Everything we know about why we failed tells us that more of the same will not make the dilemma go away.


City Journal is a publication of the Manhattan Institute for Policy Research (MI), a leading free-market think tank. Are you interested in supporting the magazine? As a 501(c)(3) nonprofit, donations in support of MI and City Journal are fully tax-deductible as provided by law (EIN #13-2912529).

Further Reading

Up Next