Economics 101 & Public Square

The Best Way to Help the Poor

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Then the righteous will answer him, ‘Lord, when did we see you hungry and feed you, or thirsty and give you something to drink? When did we see you a stranger and invite you in, or needing clothes and clothe you? When did we see you sick or in prison and go to visit you?’ “The King will reply, ‘Truly I tell you, whatever you did for one of the least of these brothers and sisters of mine, you did for me.”

–Matthew 25: 37-40

Are the poor getting poorer while the rich get richer?

Reading the news, you’d think so – take a look at these recent reports from ABC News and Forbes, for example.

Are these claims true, and what does this mean for the Christian’s obligation to care for the poor?

Different Types of Poverty

Scripture is clear that not only are we called to care for the poor, but we will be judged on whether we did. How do we best carry out this call? Answering this question involves sorting out a couple nuances up front.

  1. There are different types and causes of poverty and they should be treated differently.
  2. Poverty is relative. It’s a lamentable condition in any situation, but being poor in the United States or any other first world country is not anything like being poor in a developing third world country.

Regarding the first point, Dr. Glenn Sunshine has argued in previous posts that while most biblical references to the poor regard material poverty, these references can and do include spiritual poverty.

Sunshine goes on to say that you can be poor through no fault of your own, but you can also be poor though your own doing, either by laziness, gluttony, drunkenness, or chasing fantasies as Proverbs 23:21 and 28:19 point out.

The focus of this post, though, is on the second point, specifically poverty in the United States. Poverty has been a policy focus of the federal government since Lyndon Johnson declared the first “War on Poverty” in 1965. Since then, we have spent fifteen trillion dollars on domestic poverty alleviation.

Even after fifteen trillion dollars, the poor are still among us. But in all the numbers, is it possible we are missing something?

We live in one of the most dynamic economies planet earth has ever known. We have experienced massive economic growth since 1965 and our per capita GDP continues to rise. This week’s video gives us a glimpse behind the statistics and shows us that the poor are in fact doing better in America.

What this video is getting at is that we often misunderstand income mobility because we measure it incorrectly. The data surrounding income mobility is often incorrect, because it doesn’t examine individuals. When data doesn’t follow individuals, it skews the results. The truth is the poor are not getting poorer and staying poor.

Most people who start out in the lower income quintiles don’t stay there. In fact, more than fifty percent climb out of the the lower quintiles.

  • Data from the University of Michigan suggests that of households that were poor in 1975, over ninety-five percent of them were no longer poor by 1991.
  • The Treasury Department reports that between 1996 and 2005, “roughly half of taxpayers who began in the bottom income quintile in 1996 moved up to a higher income group by 2005.”
  • The Brookings Institution and Pew Charitable Trusts took a look at generational income mobility, and found that “the current generation of adults is better off than the previous one.”

This illustrates a concept called income mobility, which is an indicator of a thriving society. Remember when you started working for the first time? You had low levels of education, skills, and experience. You probably didn’t make very much. I had my first job when I was fifteen. I worked in an ice cream shop and I earned the minimum wage.

I was grateful for that job. As I gained education and experience, I moved out of those types of jobs into higher skilled jobs where I was able to make different types of contributions to the common good. This is a story many Americans share.

A Long-Term Solution

If we think back to the Scripture that started this post, Matthew 25: 37-40, the real question is how do we foster a society in which the poor climb out of poverty on their own merits?

Each and every person who is poor is made in the image of God and has gifts they can use to serve others through trade. When we think of the poor and we think of the scriptural command to care for them, what is it that we want for them? Certainly part of what we want is for them to able to care for themselves and their families.

The United States has historically been a place where we let markets thrive. It’s been a place where you can start with nothing and make millions using your creativity. The best long-term way for us to fulfill the command of Scripture regarding the poor is to support a system of free markets and well-defined property rights.

This is the reason the poor in the U.S. fare so much better than the poor in developing countries. It is also why most of the poor in the U.S. don’t stay poor. The goal of modern market trade is permanently lifting the poor out of poverty.

We must understand the problem if we are going to be part of the solution. Poverty of some sort, spiritual or material, will always be with us, but it doesn’t have to be abject, long-term poverty. It’s imperative that we not only act to care for the short-term needs of the poor, but that we direct our attention toward the long-term solution: better functioning markets, which will improve the lives of everyone, rich and poor alike.

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