Intergenerational poverty, taxation and the Scrooge response

Earlier this week I spoke at an important conference on intergenerational poverty in Salt Lake City. Karen Crompton of Voices for Utah Children and State Senator Stuart Reid organized the conference and invited my participation as a follow-up to Senator Reid’s legislation on the topic.

My remarks drew on a passage from Charles Dickens’ A Christmas Carol, when Scrooge was invited to to “make some slight provision for the Poor and destitute, who suffer greatly at the present time. Many thousands are in want of common necessaries; hundreds of thousands are in want of common comforts, sir.” Scrooge’s response?

“Are there no prisons?” asked Scrooge.

“Plenty of prisons,” said the gentleman, laying down the pen again.

“And the Union workhouses?” demanded Scrooge. “Are they still in operation?”

“They are. Still,” returned the gentleman, “I wish I could say they were not.”

“The Treadmill and the Poor Law are in full vigour, then?” said Scrooge.

“Both very busy, sir.”

“Oh! I was afraid, from what you said at first, that something had occurred to stop them in their useful course,” said Scrooge. “I’m very glad to hear it.”

“Under the impression that they scarcely furnish Christian cheer of mind or body to the multitude,” returned the gentleman, “a few of us are endeavouring to raise a fund to buy the Poor some meat and drink, and means of warmth. We choose this time, because it is a time, of all others, when Want is keenly felt, and Abundance rejoices. What shall I put you down for?”

“Nothing!” Scrooge replied.

This passage highlights the reality that government welfare (in the sense of transfer payments from taxpayers to needy, or sometimes not even needy, individuals) may be necessary in some instances but is hardly sufficient.

In providing welfare, government typically does both too much and too little. The former because it provides assistance to those who could be self-sufficient; it provides few if any work opportunities for recipients; it creates perverse incentives (such as for cohabitation); and it often robs recipients of dignity and self-reliance.

Government does too little in its efforts. Decades of government assistance has done little to affect the spread of poverty, government programs do little to character development or self-reliance, and it does not promote stronger families.

It is necessarily impersonal, distant, and broad-brush in its solutions.

Thankfully, private, particularly religious charities, can provide much of what government cannot. Successful private efforts focus on individual needs, meet local needs with local resources, respect the role of families, promote personal and family responsibility, create sustainable employment services, make a better assessment of actual needs, and provide attention to considerations that really matter to people and that make real differences. They also, importantly, change the giver, not just the recipient.

In my next post, I will talk more about perhaps the crucial missing element of government welfare — the need to strengthen marriage and family.

Attending the conference prompted some additional thoughts about our efforts as a community to address issues of poverty.

It seems that if we are to make progress it would be helpful to have a better sense of what poverty is. The most common metric seems to be income, but that does not reflect welfare payments received. Consumption might be helpful to add to the mix.

It might also be helpful to examine some context. The child of a medical student might be born into poverty but one would think her unlikely to remain there. A person may suffer from mental illness and would seem to require a completely different approach than a person who faced a series of trials (job loss and catastrophic medical expenses).

One speaker noted that everyone is better off today than in the past, but that the ability to climb the earnings ladder seems to be fading for many. Should we be willing to live with some inequality of outcome if basic needs are met?

One important initial question for policymakers, it would seem, is what does poverty look like? How endemic is it and among whom? What characteristics seem to mark those who cannot seem to escape from the cycle of poverty? Are some people being served adequately by non-government assistance or could they be? Once we are able to identify the answers to these types of questions, it would seem to be much easier to begin planning appropriate responses and to tailor each response to specific needs. It would also be easier to identify benchmarks of progress.