The Poverty Enigma
Published in La Nación
(Costa Rica) on 28 January 2014
by Jaime Gutiérrez Góngora (link to original)
Half a century ago, on Jan. 8, 1964, President Lyndon B. Johnson posed this challenge to the public before the U.S. Congress: “This administration here and now declares unconditional war on poverty …. We shall not rest until that war is won.” That war started with a poverty rate of 14.7 percent.
In 1900, 65 percent of American families were poor. However, by 1964, poverty had been reduced to 14.7 percent without any governmental social assistance programs.
Johnson implemented a series of massive government assistance programs for a total value of almost $20 trillion leading to present day, a figure larger than the current national debt of the United States.
In the 50 years of unconditional war on poverty, after an inversion of $20 trillion, not only was the war not won, poverty has increased from 14.7 percent to 15 percent. In stark contrast, during the 60 years that the government refrained from meddling, poverty decreased from 65 percent in 1900 to 14.7 percent in 1964.
A Lost War
Johnson lost the war because his administration decided to throw money at the poverty problem instead of combating its structural causes.
Something similar happened in Germany after the reunification of communist East Germany and democratic West Germany. German economist Simon Huber commented that, “After two decades and $2 trillion or more worth of aid to poor eastern Germany, there was practically no benefit seen. Subsidies do not forge successful economies. Money alone does not help. Someone can only be saved when they do it without counting on help from anybody …. Our studies suggest that, for aid to be effective in the future, the methods by which help is granted have to be reconsidered.”*
In an editorial, the leftist New York Times addressed the question this way: “The interesting part is that now aid is not set aside for poverty, but for ‘saving lives.’ Aid is directed to that which saves lives, mainly food and health.”*
Poverty Reduction
There are methods that, in global experience, have been successful in combating poverty. The economy as a whole has to grow. Distribution is not enough. It is established that a GDP increase of 10 percent generates an 11 percent decrease in poverty.
Economic growth has to be oriented toward the generation of the working class, not increasing the number of civil servants.
In 1970, shortly before Allende came to power, with Chile dominated by leftist thought, 21 percent of Chileans were victims of extreme poverty. But less than two generations later, only 8 percent suffered from this epidemic. Chileans found what Marxists call a “qualitative leap.” They achieved success by regulation of the market economy, common sense on the part of the public administration and a reasonable attachment to orthodox economy.
Just like government assistance, foreign aid has not had much success either in reducing poverty. In “A Farewell to Alms,” Gregory Clark, an economist from the University of California, argues that conventional aid that wealthy countries grant to African countries has actually harmed them. William Easterly, a World Bank economist, remembered that, despite the $1 trillion in loans to underdeveloped countries since the ‘60s, the growth of per capita income in those countries during the last 20 years has been zero.
Jesus Christ said to his disciples: “The poor you will always have with you,” Matthew 26:11. This is something that dogmatics of liberation theology fail to understand. Poverty continues to be an enigma in the 21st century, as it was in the time of Christ. It is something that cannot be understood — neither its origin nor its solution.
Attainable Goal
Until now, government and international institution programs have proved failures in the war against poverty because it cannot stop there. We must redirect this noble cause toward a reachable goal: easing poverty. And the quickest and most efficient tool to ease it is simple: creating wealth and generating jobs to save lives.
*Editor’s note: These quotations, translated accurately, could not be verified.
In 1900, 65 percent of American families were poor. However, by 1964, poverty had been reduced to 14.7 percent without any governmental social assistance programs.
Johnson implemented a series of massive government assistance programs for a total value of almost $20 trillion leading to present day, a figure larger than the current national debt of the United States.
In the 50 years of unconditional war on poverty, after an inversion of $20 trillion, not only was the war not won, poverty has increased from 14.7 percent to 15 percent. In stark contrast, during the 60 years that the government refrained from meddling, poverty decreased from 65 percent in 1900 to 14.7 percent in 1964.
A Lost War
Johnson lost the war because his administration decided to throw money at the poverty problem instead of combating its structural causes.
Something similar happened in Germany after the reunification of communist East Germany and democratic West Germany. German economist Simon Huber commented that, “After two decades and $2 trillion or more worth of aid to poor eastern Germany, there was practically no benefit seen. Subsidies do not forge successful economies. Money alone does not help. Someone can only be saved when they do it without counting on help from anybody …. Our studies suggest that, for aid to be effective in the future, the methods by which help is granted have to be reconsidered.”*
In an editorial, the leftist New York Times addressed the question this way: “The interesting part is that now aid is not set aside for poverty, but for ‘saving lives.’ Aid is directed to that which saves lives, mainly food and health.”*
Poverty Reduction
There are methods that, in global experience, have been successful in combating poverty. The economy as a whole has to grow. Distribution is not enough. It is established that a GDP increase of 10 percent generates an 11 percent decrease in poverty.
Economic growth has to be oriented toward the generation of the working class, not increasing the number of civil servants.
In 1970, shortly before Allende came to power, with Chile dominated by leftist thought, 21 percent of Chileans were victims of extreme poverty. But less than two generations later, only 8 percent suffered from this epidemic. Chileans found what Marxists call a “qualitative leap.” They achieved success by regulation of the market economy, common sense on the part of the public administration and a reasonable attachment to orthodox economy.
Just like government assistance, foreign aid has not had much success either in reducing poverty. In “A Farewell to Alms,” Gregory Clark, an economist from the University of California, argues that conventional aid that wealthy countries grant to African countries has actually harmed them. William Easterly, a World Bank economist, remembered that, despite the $1 trillion in loans to underdeveloped countries since the ‘60s, the growth of per capita income in those countries during the last 20 years has been zero.
Jesus Christ said to his disciples: “The poor you will always have with you,” Matthew 26:11. This is something that dogmatics of liberation theology fail to understand. Poverty continues to be an enigma in the 21st century, as it was in the time of Christ. It is something that cannot be understood — neither its origin nor its solution.
Attainable Goal
Until now, government and international institution programs have proved failures in the war against poverty because it cannot stop there. We must redirect this noble cause toward a reachable goal: easing poverty. And the quickest and most efficient tool to ease it is simple: creating wealth and generating jobs to save lives.
*Editor’s note: These quotations, translated accurately, could not be verified.
Previous article![]( "Is the US Beginning To Grow Wary of Abe?")
Next article![]( "Pen Approach Won’t Write Obama into History")
