The current campaign in the war on poverty might be waged more successfully had Lord Acton devoted less attention to the corrupting influence of power and recognized that weakness also tends to corrupt and absolute weakness corrupts absolutely.
Is that not the lesson of the parable of the talents? The wicked and slothful servant did nothing constructive with the property entrusted to his care; whereupon, the property was transferred to the good and faithful servant whose capacity for stewardship had been proven. There is war on poverty — with a vengeance! But many will doubt the justice and humanity of transferring property from the least efficient to the more efficient users of it. Instead, they would propose a negative income tax, for the more equitable distribution of wealth. In their zeal for equality of material possessions, they stumble over the basic flaw of the communist idea — the destruction of the incentive for anyone to develop and use his talents more constructively. They cater to man’s weakness rather than his strength, failing to see that hatred, greed, envy, and similar weaknesses are the most corrupting vices of all.
Individuals are not equally endowed nor do they develop their talents at the same pace — each is an individual, with his own scale of values, wants, satisfactions. Essentially, there are but two ways in which a person may implement his choices. One is through production and willing exchange, earning power converted to purchasing power in the open competition of a market place policed to the extent necessary to protect life and property and keep the peace. The alternative method of implementing choices is through the physical or political power of coercing others to obey and serve, with government perverted into an instrument of plunder.
Reliance on the Market
Most of us are fully aware that it is morally wrong to murder, rob, cheat, and lie to one another to get what we want. When we seek employment, we instinctively look first to the most successful business managers, savers, creators of job opportunities. Likewise, in our shopping for bargains, we tend to buy from the most efficient, most successful suppliers, rewarding with handsome profits those who best serve our wants. The market measures a man by what he does with his own resources. Each man more or less chooses and is responsible for his market position, relative to that of other self-choosing and self-responsible individuals. Day after day we depend upon our purchasing power and the method of willing exchange to implement our choices; and we ought to be aware that this market method serves us well.
But the market is not the sole determinant of each man’s economic status, there also being "people control" through political action. To the extent that government negates the individual’s choice, it also renders him irresponsible. True, the protective services of government may be designed and may indeed help to curb irresponsible actions of certain individuals, with a resultant net gain in the total voluntary activity of all persons in the market place. This is man’s hope and expectation of a government confined to keeping the peace.
Nevertheless, nearly every person of restricted means, low income, limited purchasing power can be tempted to see an advantage to himself of redistributing all incomes higher than his own. The idea of Federal aid, the negative-income-tax proposal of taking from the rich to help the poor, finds popular support. Without thought for the consequences, we turn over the power of taxation to those who lack purchasing power. Thus, the market is wrecked and abandoned, and coercion substituted as a new way of life, when we allow our weaknesses to corrupt us.
The simplest application of logic ought to tell us that a weak person cannot force a stronger person to help him. So, it should be self-evident that turning from the voluntary method to the coercive method of fulfilling wants can only work to the disadvantage of the weak and poor among us.
Subsidy and Taxation
Government control, aside from its defensive role of keeping the peace, may be summarized under two general headings: subsidy and taxation.
That "the power to tax is the power to destroy" seems so clear and obvious, one hesitates to discuss the matter further. Yet, it must be recognized that a government without the power to collect taxes is also powerless to do anything else. If government is to preserve the peace, it must be able to collect taxes enough to pay for that service. If government is to protect life and property, it must have sufficient claim upon lives and property to give the necessary protection. But, the fact that any government does involve claims upon the lives and the property of the citizenry is the all-important reason why the scope of government should be limited. An unlimited power to destroy those under its influence is more "protection" than anyone can afford. To be defended to the end of one’s resources, and then to death, is of no avail. The power to tax is indeed the power to destroy.
While most of us can see the harmful or dangerous aspects of the power of taxation, we may see less clearly the nature and impact of the governmental power to subsidize. Yet, the power to subsidize also is the power to destroy. Nor is the destructive effect confined to those whose lives and property are taxed away to obtain the means for subsidies to others. The recipient of unearned goods or services may sadly discover the truth of the expression that "one man’s meat is another’s poison," for there is no surer way to destroy a man than to assume the responsibility for his well-being.
Even the most altruistic voluntary act of charity is capable of lasting harm to the intended beneficiary if it in the smallest degree diminishes his will or capacity to help himself. Rare indeed is the individual with sufficient strength of character to accept unearned assistance and not be tempted to ask for more. And strength of character is not a notable quality among those most likely to be found on the receiving line for a handout.
Specific Programs Examined
A more careful examination of some specific governmental welfare programs may help expose the futility of such coercive measures to alleviate poverty.
Unemployment compensation, for example, supposedly is intended to help overcome the lack of employment opportunities for persons whose livelihood depends upon the sale of their services. The problem of the unemployed is that their services are not worth the price they are asking in the current market; no employer can see a chance for profit at such wage rates; his resources may better be used to obtain laborsaving equipment or devoted to some other purpose he has in mind. But, to make matters worse, the unemployment compensation program constitutes a coercive drain upon an employer’s resources. All other taxes upon his business or his earnings similarly reduce his incentive and capacity to provide job opportunities at attractive wage rates and to produce goods and services at prices attractive to consumers. The heavier the tax load upon the most efficient and successful business entrepreneurs, the less chance there will be for the least skilled workers to find jobs or to purchase food, shelter, clothing, and other necessities at prices they can afford. The poor, rather than the wealthy, are the ones with most to lose when coercion displaces willing exchange.
Social security, medicare, and various other welfare programs are closely related to the unemployment compensation idea and similarly disrupt the free flow of goods and services between suppliers and consumers. The combined old age, disability, and medicare tax is supposed to level off in due course at 11.3 per cent of a person’s wages up to $6,600, which comes to a tidy $746 a year. That would be the equivalent of a 5 per cent return on a capital investment of about $15,000. If a person began investing $746 a year at age 21, with earnings of 5 per cent compounded annually, he would have accumulated $15,000 before age 36, $30,000 by age 44, $115,000 by age 65. A 5 per cent return on $115,000 would yield $5,750 a year — without eating into the principal.
It is recognized, of course, that some wage earners will accumulate private savings and invest in productive enterprises in spite of the heavy burden of social security and other taxes, whereas others would save nothing even if relieved of all tax liabilities. Some individuals tend to be more thrifty and self-responsible than others. Be that as it may, the fact remains that the presently scheduled social security tax deprives the individual of the opportunity to save and invest up to 11.3 per cent of his earnings, which could accumulate to as much as $115,000, and possibly more, by the time he had reached age 65. This compulsory seizure of potential savings, for current redistribution among consumers, deprives individuals and the economy generally of the capital that could create more and better job opportunities for all working men and women. And the greatest disservice of this entire procedure is to the poorest and the least productive members of society who so need additional tools and equipment and other facilities to improve their productivity.
True social security may be approached when individuals generally, and voters especially, begin to understand that savings and investment and the prerogatives of ownership are best left in the hands of those whom consumers have rewarded and designated as the most efficient and generous suppliers of the goods and services people want. To tax and confiscate property and savings is to frustrate the choices of consumers; and the first and sharpest cutback in productivity is of those very items that had been most abundantly mass produced — for the masses.
Tax-supported education has been promulgated and widely accepted in theory as a great equalizer, not only at the elementary and secondary school levels, but more and more at the college level, and even for graduate studies. When a high proportion of the population of a nation is able to read and write, it may be argued convincingly that illiteracy is a handicap and that everyone should have the opportunity to learn these skills in order that he may become a better citizen and a self-responsible, contributing member of society rather than a hopeless burden to himself and to others. At least, some such rationale lay behind the first steps toward government schools in the United States — elementary schools, operating at the community level.
People can be helped, even compelled, to learn to read and write. But not all who can will read or write; not every opportunity extended is accepted; not everyone relieved of self-responsibility seizes upon the situation as an opportunity to grow in ability and responsibility. Indeed, nothing but the precise opposite may be inferred from the sorry record of the consequences of government education in the United States. Never before in the history of civilization have so many literate citizens deemed and decreed themselves incapable of self-support as in the United States of America in 1966. There is no evidence whatsoever that compelling a person to learn to read and write will sharpen the sense of self-responsibility within him.
Furthermore, when all have learned to read and write, some will read and write more wisely than others and develop talents that others neglect. And eventually, high school diplomas and college degrees will be required — are being required — of applicants for jobs of the type formerly fulfilled respectably by illiterates. This may be one of the reasons why major universities in the United States now look to Washington for 40 and 50 per cent and more of their total budgets. And those who are obliged to pay the costs of education, from the community grade schools of country-club atmosphere to the tax-supported centers for graduate study, are the poor taxpayers presumed capable of and willing to educate everybody’s children but their own.
After tiny tots have been jogged about town in yellow buses, through red and green lights until they no longer are able to distinguish black from white, they may proceed to express themselves concerning national and international problems until free lunch is served; and some eventually may learn to read and write — with reading machines and automatic typewriters. Whether the student dropout from such a curriculum is intellectually inferior to the one who carries on and graduates is a nice question that cannot be resolved by any of the theories and practices of the system of compulsory schooling. Is the one any better trained than the other to demonstrate his animal nature in the streets or otherwise express the civil disobedience that passes for maturity according to the formula of personal irresponsibility? Nor should anyone be surprised that the heaviest current governmental expenditures for higher education are devoted to research and development for occupation of the moon!
Urban Renewal plans and practices may afford the best illustration of all the misguided campaigns in the war on poverty. If anyone can be found living in substandard housing or other slum conditions, no matter that he is conscientiously doing his best to live within his means while striving to help himself toward something better. Root him out, and force him to find a home he cannot afford in a community with public services and tax rates tailored for those in high-income brackets.
Government is organized intolerance; and there is nothing wrong with such intolerance leveled against those criminal acts by individuals who disturb the peace and jeopardize the life and property of others who are minding their own business. The most deplorable kind of intolerance is that evidenced by the "humanitarian with the guillotine," the well-intended reformer armed with the power of eminent domain and the full force of government to simply wipe out all signs of poverty and suffering, including the individuals so afflicted.
The free market economy is tolerant of differences in human wants and capacities, leaving the individual free to fill his needs according to his abilities — to draw supplies from the market in proportion to his own offer-and-delivery of goods and services. It affords each person the maximum incentive and opportunity to help himself, which, in the final analysis, is the only kind of help that does not carry the prospect of greater harm than good to the intended beneficiary.
A strong case can be made, and has been made on numerous occasions by countless individuals, concerning the immorality of forcefully taking the property of the more provident and thrifty citizenry for redistribution in one form or another among the poor. But far too little attention has been paid by anyone to the immorality and injustice of thus depriving those poor persons of the opportunity to experience the reality of cause and consequence, effort and reward, method and results. To feed and clothe and house and surround a man’s body with other physical comforts beyond the capacity of his mind to appreciate and earn and cope with these material blessings is to deprive him of the opportunity of ever rising above the level of a domesticated animal. No greater injury can be inflicted on any man than to "save" him from earning his own way. The benevolent government that taxes the rich also robs the poor at the same time, taking from one his property, from the other his human dignity. When it is recognized that the important part of urban renewal must take place within the minds and souls of human beings, it may be seen that the coercive force of government can play no constructive role in this do-it-yourself project of mental and moral achievement.
Transport subsidies, ranging from below-cost subway and commuter fares to the underwriting of luxury liners and plush air travel, generally tend to transfer property by force to those who can afford to travel from those who can’t.
There are economic as well as other reasons why the poorer members of a community tend to congregate and crowd together in what seem to be the rundown tenements and slums near the heart of an urban industrial area. There is the inexpensive, secondhand housing they can afford near to their places of work, with older and unadorned but nonetheless adequate schools and other service and shopping facilities within their reach and means. Those persons with ambition always have managed to help themselves out of such crowded areas if they really wanted to leave, thus making room for others on their way up the economic ladder. The market, comprised of individuals each minding his own business, is tolerant of such arrangements.
There are persons, however, especially among the new rich recently moved to Suburbia, who have failed to understand the market method of progress and who see no further need for those less elegant and lower rungs in the economic structure. By taxation, subsidy, and force, they would abolish slums, displace with orderly empty space what once were homes and shops and service centers and sources of livelihood for emergent, self-reliant human beings. Then in the name of the displaced poor, but more obviously in their own interest, the new suburbanites clamor for subsidized subway fares, subsidized commuter services, subsidized freeways and parking space, subsidized correctives for the destruction they have promulgated in the name of renewal and progress. And the inevitable workings of the process of taxation, however steeply graduated to soak the rich, are such that each dollar of return on investment capital thus withdrawn from the market place of productive enterprise means something like six dollars of wages never earned and never paid.’ The ones who finally pay, and pay dearly, for every dollar politically diverted to the "war on poverty" are the poor workers who so need the freedom of the market place in order to help themselves.
Foreign aid to undeveloped countries will be our final example here of the miscarriage of justice in the political war on poverty.
Bad enough that every item assembled for give-away by the donor government, whether it be food and other necessities or the most elaborate kind of capital equipment, is ultimately at the expense of those of our own citizens most in need of cheap food, clothing, and shelter and most in need of the additional capital that makes for improved job opportunities and working conditions. It always is the poor who pay most dearly for goods and services their government withdraws from the domestic market in which they are trying to earn their livelihood. Persons of means, by bidding enough, can always obtain portions of what remains for sale after government has forcibly taken "its share" of scarce resources.
But worse than these domestic injustices of intergovernmental give-away programs is the impact of such measures upon the individuals supposed to be helped in the recipient countries. Theirs is primarily a problem of too much regulation and control by their own government, too little freedom and incentive to assume personal responsibility for additional production, saving, and investment. Yet, there is no record nor even the slightest hint of any attempt to put foreign-aid funds anywhere except at the disposition of the government of the recipient nation. Thus are these already authoritarian and dictatorial governments sustained and bolstered in their power to regulate and control the lives of their citizen subjects.
Nor does it customarily make very much difference in what form the foreign-aid goods and services are originally transmitted from one government to the other. Let us say that boatloads of food grains are intended to stave off starvation among the teeming millions of India — a million dollars worth of food. The immediate consequence is that the power of the interventionist government of India is bolstered by that amount. It has an additional million dollars worth of patronage to distribute among its lackeys and favorites. And the probability that a starving Indian may receive some of the foreign-aid food will depend upon how much of it he can afford to buy in the black market.
Many persons, of course, will be quick to condemn the marketeers who would thus profit from traffic in the necessities of life. On the contrary, the role of the black marketeers is the most constructive of any played in the entire foreign-aid procedure. The great injustice is done by those governmental enthusiasts who would deny the functioning of the market in the allocation of scarce resources.
A More Hopeful Approach
In questioning and criticizing the conduct of the current campaign against poverty I have tried to suggest what seems to me a more hopeful strategy. Two things, I believe, are necessary to make of any community the most prosperous economic and cultural garden spot of the world:
First, and most essential, is to populate it with individuals in whom flows the spirit and understanding and practice of liberty. Due respect for life, liberty, and property under the rules of peaceful exchange among self-reliant, self-responsible, self-respecting human beings would seem to rest upon a faith that this is God’s world, a humility that we are creatures, and a tolerance toward fellow men peacefully participating as we ourselves aspire to do in the infinite process of the Creation.
Second, though supplemental to the first, is to relieve that community of every form of government aid and subsidy and at the same time relieve it of all tax burdens, regulations, interventions, and controls other than those necessary and strictly limited to its own internal policing and its defense against foreign attack.
And the mottoes above the open gates of such a free society would read:
POWER CORRUPTS—AND SO DOES WEAKNESS and
JUSTICE FOR ALL— SPECIAL PRIVILEGE FOR NONE