Can The Government Fix Poverty? Part III

From the department of "Can they really be this stupid?" today comes exactly what you have known was coming since the rioting in Baltimore began:  a lead, front page article in the New York Times promoting the next gigantic government spending program that they promise is really, really, really going to fix the poverty this time.  The headline is "Change of Address Offers A Pathway Out of Poverty."  

Needless to say, there is no mention or recognition in this article of the current $1 trillion +/- of annual government anti-poverty spending in this country, all of which has brought us Baltimore, not to mention Detroit, Cleveland, St. Louis, Buffalo, Camden, Newark, Bridgeport, Hartford, Memphis, and fifty or so more of same scattered around the country.  But this time it's going to be different!  Here's the "new" idea: The poverty is caused by people being trapped in bad neighborhoods.  If "we" just give "them" the help they need to move to better neighborhoods, suddenly their lives will shift upwards and all will be well.  How do we know that?  The Times breathlessly reports that "a large new study" is just out from Harvard professors Raj Chetty and Nathaniel Hendren.  Here are the results:

Based on the earnings records of millions of families that moved with children, it finds that poor children who grow up in some cities and towns have sharply better odds of escaping poverty than similar poor children elsewhere.  

Wow!  It's based on "earnings records of millions of families"!  It's done by professors from Harvard!  It shows "sharply better odds" of escaping poverty!  Surely it must be right!

The Times goes out and asks a few questions to Chetty, and he immediately gives away the mindset at work:

“The data shows we can do something about upward mobility,” said Mr. Chetty. . . .  "Every extra year of childhood spent in a better neighborhood seems to matter.”

Who's the "we" there, Raj?  Undoubtedly it's the sinister alliance of government bureaucrats and Harvard professors who got us here in the first place.  It's the official "we" who know so much better than "they" do how to run "their" lives.  But don't worry, Professor Chetty "has presented the findings to members of the Obama administration, as well as to Hillary Rodham Clinton and Jeb Bush, both of whom have signaled that mobility will be central themes of their 2016 presidential campaigns."  Do you think that any one of those three has the critical thinking ability to ask an intelligent question about this?  Don't count on it.  Meanwhile, over at the Department of Housing and Urban Development this must sound like a fabulous new gravy train of additional funding.  Here's the reaction of the current Secretary:

In an interview Friday, Julián Castro, the secretary of Housing and Urban Development, said he was excited by the new data. Mr. Castro said his department had been planning to reallocate funding, so that some people moving to more expensive neighborhoods would receive larger vouchers. Currently, the value of vouchers tends to be constant across a metropolitan area.

So how could any moral person be against this?  Well, there's this from the opening paragraphs of the article:

In the wake of the Los Angeles riots more than 20 years ago, Congress created an anti-poverty experiment called Moving to Opportunity. It gave vouchers to help poor families move to better neighborhoods and awarded them on a random basis, so researchers could study the effects.  The results were deeply disappointing. Parents who received the vouchers did not seem to earn more in later years than otherwise similar adults, and children did not seem to do better in school. The program’s apparent failure has haunted social scientists and policy makers, making poverty seem all the more intractable.

In other words, the ideas of giving out housing vouchers to be used in "good" neighborhoods, or building "affordable housing" in "good" neighborhoods, are not "new" ideas for curing poverty at all. They are things that have already been tried and demonstrated to be total failures.  But don't the Chetty/Hendren data show that these things are going to work next time?  Absolutely not.  The Chetty/Hendren data are derived from people who moved from one place to another as part of their own striving to better their own lives.   Moving to Opportunity was the opposite -- a handout program.  These things are about as different as night and day.

The Times, Chetty, Hendren, et al., are just incapable of understanding that the results that people are able to achieve through their own efforts and striving cannot be duplicated with government handouts.  Striving gets you upwardly mobile suburbs and gentrifying urban neighborhoods.  Handouts get you Baltimore.  No amount of experience, no number of failed programs, will ever enable them to understand this. 

And really, forget about Move to Opportunity -- can't the Times look under its own nose?  Manhattan is the wealthiest county in the country.  It has a far higher density of high-paying jobs than any place else.  So if you were going to move poor people somewhere to enable them to better their lives, Manhattan would be far and away the best place, right?  Well, we've built over 50,000 units of public housing in Manhattan, housing about 150,000 people -- about 10% of the population of the island.  And the result?  The poverty rate in NYCHA projects is 51.3%, according to data they sent me last week.

Can The Government Fix Poverty? -- Part II

In yesterday's article I pointed out that due to its high levels of poverty the city of Baltimore gets far more than its pro rata share of government programs and handouts supposedly to fix the poverty, and we can see the disastrous results.  Given the obvious failure of the trillions of dollars of spending to date, I asked: Could it really be that anyone here thinks that the next round of "programs" and handouts is going to work?

Today the New York Times chimes in on the subject with an editorial, two op-eds, and five letters to the editor.  Most of it is just a liberal guilt-fest, but it's still worth examining the mind-set of the people who caused this horror.  Most illustrative is the op-ed by Michael Eric Dyson.  Here's an excerpt:

Without a brick tossed or a building burning, we are hardly confronting the hopelessness of the future for these young people. The unemployment rate in the community where Mr. Gray lived is over 50 percent; the high school student absence rate hovers at 49.3 percent; and life expectancy tops out at 68.8 years, according to analysis by prison reform nonprofits. These statistics are a small glimpse of the radical inequality that blankets poor black Baltimore. It’s no wonder that black Baltimore erupted in social fury.

OK, the high school student absence rate hovers at 49.3%.  How did it get there?  Baltimore of course follows the Democrat model of government-monopoly unionized public schools.  According to figures compiled by the Baltimore Sun in 2013, Baltimore in 2011 ranked second among the nation's 100 largest school districts in per student spending.  (Number one being New York City of course!)  So what's the answer?  Well, we know the answer of the Baltimore Teachers Union:  Still more government money for the schools!  Here's a link describing their big rally in March to lobby the legislature for more money.

Life expectancy tops out at 68.8 years?  I thought we had free government medical care, otherwise known as Medicaid, for all the poor and near-poor.  That's well over $400 billion of annual government spending in this country, almost $8 billion in Maryland.  We just doubled down on Medicaid with a massive expansion under Obamacare.  Are you now saying that it doesn't work?

And then there's what Mr. Dyson calls the "unemployment rate," which is not what the Labor Department calls the unemployment rate, but rather a rate of idleness among people completely detached from the world of jobs.  Well, the government gave the people welfare, and food stamps, and public housing, and free medical care, and now we find that a lot of the young men just don't work any more.  Didn't anybody stop for a minute to think that this might happen?

New York Times and Mr. Dyson, it's time to take ownership of this.  All of your "solutions" have been adopted at enormous cost, and they have just made the problem worse.  Do you really still think that more of same can possibly work?

Here's the fundamental problem:  All of your guilt always leads to advocacy that "we" must help "them" with some kind of program or handout.  Inherent in that thought is that "they" are not capable of taking care of themselves -- the bigotry of low expectations.  Well, I can say with 100% certainty that more programs and more handouts will cost still more money and still will lead to more idleness and more hopelessness.

So is it possible to turn this around?  Absolutely.  There's exactly one way.  Real businesses must be attracted to Baltimore to provide real jobs.  This cannot be done by handouts to business and crony capitalism.  It must be done be creating a bona fide good investment climate.  That means crime under control, lower taxes and lower government spending, and fostering a belief among members of the business community that the government will not turn on you after you commit your investors' money.  In New York, with 20 years of Republican and Independent mayors from 1994 to 2013, we made huge strides in re-establishing a good investment climate, and the economy roared back.  Baltimore can do it too.  But it's the exact opposite of the approach they have taken to date.  Oh, and riots sure aren't going to help. 

Do You Think The Government Can Fix Poverty? Look At Baltimore

I have written many times (for example here and here) about the spectacular failure of the government's efforts to fix the problem of human poverty by the favored devices of "programs" and handouts.   But it isn't often that the nation's attention gets riveted onto quite such a graphic display of the disaster of our anti-poverty efforts as we have had in the past couple of days from Baltimore.

Baltimore is in that group that I have often referred to as the "basket case cities" -- the not small group of U.S. cities that have thrown wads of cash and hordes of bureaucrats at the poverty problem, only to see poverty worsen while the population of the city declines precipitously and the place basically circles the drain.  The poster children for this phenomenon are Detroit and Cleveland, but they are really just the start.  Chicago and Philadelphia also qualify, even though they both put on good shows in their downtowns.  Another trait that the basket case cities share is voting 80% + for Democrats in their elections.  Could it really be that anyone here thinks that the next round of "programs" and handouts is going to work?

Baltimore easily meets all the criteria to qualify as a "basket case."  By the official decennial census, the population peaked in 1950 at 949,708, and has been in decline ever since.  In 2010 it hit 620,961, down about 35% from the peak.  Maryland is one of the wealthiest states, but Baltimore is one of the poorest cities in the country.  The official Census Bureau "poverty rate" for Baltimore is 23.8%, about 9% above the rate for the rest of the country and 14% above the rate for Maryland as a whole.  Median household income is $41,385, compared to $51,900 for the U.S. as a whole and $73,538 for Maryland (all 2013 data).  The murder rate in Baltimore is 37.4 per 100,000; by comparison, New York's is around 4 per 100,000.  This is not a small difference.  And how do they vote?  To take just one example, in the 2012 presidential election, Obama got over 200,000 votes in the City of Baltimore to Romney's 25,000.

As befits its status as a relatively poor city, Baltimore has long "benefited" -- if you want to use that term -- from more than its pro rata share of the government programs and handouts supposedly designed to cure poverty.  Comparative statistics aren't easily available for every program, but consider just a few.  In the U.S., following the explosion during Obama's presidency, there are now about 46 million recipients of food stamps/SNAP; that's about 14% of the population.  In Baltimore the percentage on food stamps was 24% when Obama first came to office, and then it really took off.  Today it's more like 35%.  Or consider public housing.  According to HUD's website here, well less than 1% of U.S. families live in public housing.  In Baltimore, it's more like 4.5%.

Yet the government's own income statistics show that with all the programs and handouts, Baltimore remains poor and is not catching up.  And there's another statistic that I think is even more revealing.  Take the number of jobs in the country here, and divide by the population, and you get an employment-to-population ratio.  For the U.S. as a whole, depending on which measure of employment you use, you get something in the range of 44 - 47%.  For Baltimore, the Maryland Department of Labor says that the December 2014 unemployment rate was 8.2% -- it doesn't sound so bad.  But divide the number employed in Baltimore (251,889) by the 2014 population (622,793) and you get barely 40%.  That means there's a good 5% of the population -- more like 6.5% of the working age population -- that is working in other places in the country but is not working in Baltimore.  These people don't show up in the labor force or in the official unemployment rate.

This is tens of thousands of people.  Who are they?  A very good hypothesis is that large numbers of them have been appearing on our television screens the last couple of days.  Without doubt, there is a good deal of idleness in many of their lives.  Others likely work at what might be called "non-traditional" activities, without getting counted by the government as employed.  They have been relieved of the necessity of steady, regular work by the supposed kindness of the government programs.  This is a prescription for exactly the result we have been seeing.

The fundamental assumption behind the government programs and handouts is that the recipient population is just not up to the job of taking care of itself like the rest of us.  The correct term for this is liberal racism.  The young men have been put in the insulting and demeaning position where their wives/girlfriends and children don't need them for support and they are "free" to hang out, take or deal drugs, or hustle on the street.  Should we be surprised that they are aimless and angry?  I too would be in their position.  Now, why they vote with 90 or so percent majorities for more of the same, that I can't explain.  But it is very, very hard not to take the handout. 

UPDATE, July 25, 2018:  A reader wrote in to inform me that my links to the Census data for Baltimore did not work any more because the Census Bureau had moved the data to a new site.  So I have update the links above.  However, unfortunately, the data have also changed, and no longer match the numbers in the post, although the changes are not material to the points made.  I have left in the post the data that were provided by Census at the date of the post. 

How Worried Should You Be About A Greek Default?

My answer:  not at all.  In fact, the opposite:  we should all be praying for a Greek default.

The Greek default business has been mostly off the front pages of the U.S. papers for a while, but that doesn't mean that it has gone away.  Greece has some big debt payments coming due as early as June, and many think they won't have enough money to pay without some infusion of cash from EU colleagues or some "restructuring."  ("Restructuring" means that the creditors agree to take less than they are owed and not call it a default.)  And thus endless "negotiations" take place over some kind of "deal" to avoid default.

The benefits to everyone else of Greek default are obvious.  Greece's politicians have made ridiculous spending promises to their voters, counting on other people's money to fulfill the promises.  They way overpay their government workers, demand pitifully low productivity, give out lavish pensions and benefits, don't enforce their taxes -- and pay for it all with borrowing.  When they default the borrowing spigot turns off, at least for a while.  They literally can't pay their bills at the level they are running, and they will have a modicum of financial discipline forced upon them.

Of course there would be losers.  But the only obvious losers are the holders of the defaulted debt.  The people who have lent money to Greece in any recent time frame are not people that anyone should feel sorry for.  Greece's financial irresponsibility has been obvious for many, many years.  Lenders to Greece have gotten premium interest rates for most of human memory.  Why does anyone else owe them a bailout?  Other than lenders to Greece, the potential losers from a Greek default are not obvious at all, and would only emerge if there is some kind of systemic financial crisis that follows the default.

And yet these endless negotiations continue, with the seemingly universal assumption that there will be a bailout or restructuring of some kind if only the recalcitrant Greeks agree to sufficient "conditions."  What I don't understand is, why is anyone even talking to them?

The only answer I can find boils down to -- fear of the unknown.  As one of many examples, consider Rick Moran today at American Thinker:

Thankfully, American banks have very little direct exposure to a Greek default.  But the wild uncertainty of what would happen to the rest of Europe in the case of a Grexit is extremely worrisome to American financial institutions. . . .  But no one in Europe is sure if these measures [taken by European pooh-bahs so far] are enough.  That's because managing expecations following a Grexit cannot possibly take into account the panic factor.  And as swiftly as crisis can move in these days of instantaneous news reporting and speed-of-light transfer of funds, it is more than a distant possibility that panic could overwhelm the system and start a domino effect of collapsing banks in every corner of Europe.

In an afternoon, the international banking system could collapse.

Really?  Of course, I can't predict what will happen with certainty, but frankly this is ridiculous.

And why is this the unknown?  Sovereign defaults happen all the time.  Argentina, with about 4 times the population and two plus times the GDP of Greece, defaults regularly -- most recently last year, and the time before that in 2001.  Venezuela, well over double Greece in population and close to double in GDP, is about to default, and nobody seems to think that that poses any great threat to the world financial system.  Russia, ten times or so the size of Greece in population and GDP, defaulted in 1998.  And I could go on and on.

Well, Greece is part of the Euro.  Does that make a difference?  Only in the sense that nobody knows.  Here is Charles Wyplosz writing today at the Credit Writedowns site:

What makes the coming event interesting is that it will be the first time that a default occurs within a monetary union.

I would dispute that.  Eight U.S. states defaulted on their debt in the 1840s.  Doesn't the U.S. qualify as a monetary union?  Nobody bailed those states out and they didn't exit the dollar.  Is the world different today?  Sure.  But do any of the differences constitute a reason to panic?

I have a very simple proposition:  If the EU can be buffaloed into bailing out Greece by use of threat of "global financial collapse" or something like that, then there is no end to it.  Sooner or later we either have to pour the entire world GDP down the infinite maw of Greece, or toughen up and let the default happen.  The financial institutions need to learn now how to harden the financial system to deal with defaults, or else the Portugals and Italys of the world will follow Greece's example and hit up everyone else for a bailout.  Best to do the default sooner rather than later. 

Competition For The "Sustainability" Award: New York City?

Mayor de Blasio must have heard about Manhattan Contrarian winning the "World's Most Sustainable Web Site" award, because from the moment that award was announced on Tuesday (April 21) literally ever second word out of the guy's mouth has been "sustainable."  But can New York City actually compete with the Manhattan Contrarian for coveted "sustainability" brownie points?  Not a chance!  In fact, de Blasio seems to be making a ridiculous parody of himself as he tries to compete on the elite "sustainability" battlefield.  (Or was he already a ridiculous parody of himself and just made it a little more ridiculous by tacking the word "sustainable" on to every sentence he utters?  You be the judge!)

So as reported in the New York Times here, on Wednesday April 22 de Blasio announced his new "OneNYC" plan for the next several decades for New York City.  The speech announcing the plan can be summarized as ". . . sustainable . . . sustainability . . . sustainable . . . sustainability . . . blah, blah, blah, blah, blah . . . ."  Or, to take an actual quote from the Times article:

“Environmental sustainability and economic sustainability have to walk hand in hand,” he said. “Some of my brothers and sisters in the environmental movement don’t get that yet.”  He added, “A beautifully sustainable city that is the playground of the rich doesn’t work for us.”

"Economic sustainability" -- Wait a minute, that's a new one.  You ask, what the heck is it?  The very fact that you ask the question indicates that you don't understand the first thing about "sustainability."  Obviously, it means whatever the cool people want it to mean at any given moment.  But maybe can we get a clue what he's talking about by taking a look at the OneNYC document?

Good luck with that.  The Times article discusses the document as if it's something real, like with actual text and paragraphs and things like that.  Not so much.  Here it is.  I'd say it's a lot of bright colors with a few sentences or phrases consisting of the most banal of possible clichés scattered around each page.  It's not quite as low as kindergarten level, but maybe second grade.  A few snippets from the first page will give you some flavor: "We must act boldly to build on our strengths and confront our challenges."  "The goals we envision and the actions we take today will define our city's future."  "Our Growing, Thriving City" "Our Just And Equitable City" "A Sustainable City."  (You knew the word "sustainable" would be there at least once!)

But still no clues on what "economic sustainability" might mean.  For that, try the link called "Our Just And Equitable City." Go there and you'll find exactly two sentences that give some idea what they're talking about:

When combined with OneNYC anti-poverty initiatives, we will move 800,000 people (10% of the city's population) out from poverty or near poverty over the next decade. This is transformative change.

So does "economic sustainability" mean "moving people out of poverty"?  The concept doesn't seem to bear a relationship to any meaning of the word "sustainability" that you were previously familiar with.  But anyway, didn't Lyndon Johnson promise to end poverty 50 years ago, only to see the percentage of people said to be in poverty in this country remain flat ever since, even as the taxpayers threw $20 trillion or so at the project?

Permit me for a moment to examine critically this idea that a New York City governed by de Blasio and his progressive pals is actually going to "move 800,000 people out of poverty" over the next decade.  This is the New York City that already spends more on anti-poverty programs than anywhere else, and what do we have to show for it?  The City's official "poverty rate" is right there on the same page as that last link.  It's 21.3% according to this very document.  That's a solid 6+ points above the average for the rest of the country, where they don't come close to our smorgasbord of anti-poverty programs.  Can't we see that something here is not working?

And then take a look at the proposals here that are supposedly going to accomplish the goal.  It's just doubling down on the exact same stuff that got us where we are.  "Raising the minimum wage to $15 per hour would be a powerful force in reducing poverty."  How so exactly?  There's not a word of analysis here as to whether that is true or not.  I think it is highly likely that raising the minimum wage, particularly by such a dramatic amount, would increase measured poverty.  Why?  Because very few minimum wage workers are in poverty now (in a small family full time minimum wage work is sufficient to put you above the poverty line, and in larger families with minimum wage workers there are usually other workers too), and because some workers at the current minimum will lose their jobs and go into poverty.  It's just how the numbers work: no job is poverty; full time minimum wage work is not poverty.  Are they too uninformed to know this?  While you're puzzling over that one, consider the other proposal on this page that supposedly will help get 800,000 people out of poverty over the next decade: "Pre-K for All."  Do they think we don't know that nobody who attends their new universal pre-K within the next decade will be older than 15 when the decade is up?

In truth they have zero interest in reducing the number of people said to be in poverty.  Any reduction in poverty will be in spite of, and not because of, their policies.  The shimmering distant mirage of 800,000 fewer people in poverty ten years from now is just the sales tool to convince the public to spend yet additional billions on things that obviously will not improve the designated metrics, not to mention the lives of the people in question.  

Compare this to the actual, real accomplishments of the Manhattan Contrarian.  For example, at Manhattan Contrarian we always eat locally-sourced food, except when we don't.  Now that's real sustainability! 

Manhattan Contrarian Named World's Most "Sustainable" Web Site

And who, you may ask, gave us that prestigious honor?  We gave it to ourselves, of course!  Why not?

If you've been having an actual life and plodding away at a real job lately, you may have missed that "sustainability" is the latest obsession in the precincts of the Left, particularly academia.  But what does it actually mean?  That's the great thing about it -- nobody knows!

For example, the big thing now if you are an academic institution is that you must divest your endowment from investments in companies in the fossil fuel business.  If you have ever taken an economics course, or even thought about the subject for a few minutes, you will realize that divestment from fossil fuels by a few or even many academic institutions will have exactly zero effect on the production and consumption of fossil fuels, although it might slightly raise the returns on investments in fossil fuels for those still willing to make them, of which there will assuredly be plenty.  So this is just a completely futile symbolic gesture.  Then why divest?  Because it's "sustainable"!

George Will has a great column a few days ago making fun of the campus "sustainability" movement, titled "Sustainability Gone Mad On College Campuses."  Will in turn refers to a report just out from the National Association of Scholars calling the "sustainability" movement "higher education's new fundamentalism."  Why fundamentalism?  Here's Will's take:

Like many religions’ premises, the sustainability movement’s premises are more assumed than demonstrated. Second, weighing the costs of obedience to sustainability’s commandments is considered unworthy. Third, the sustainability crusade supplies acolytes with a worldview that infuses their lives with purpose and meaning. Fourth, the sustainability movement uses apocalyptic rhetoric to express its eschatology. Fifth, the church of sustainability seeks converts, encourages conformity to orthodoxy and regards rival interpretations of reality as heretical impediments to salvation.

And he hasn't even gotten to the wonderful feeling of superiority over the lesser humans that you can get from engaging in completely futile symbolic gestures.  But he does get to the real point, which is promoting socialism and bureaucratic control:

 The unvarying progressive agenda is for government to supplant markets in allocating wealth and opportunity. “Sustainability” swaddles this agenda in “science,” as progressives understand it — “settled” findings that would be grim if they did not mandate progressivism. 

Don't believe that sustainability has gone mad on campuses?  Check out the endless breastbeating issuing from my own degree-granters, Yale and Harvard.  Here is Yale's "sustainability" web page, and here is Harvard's.  Would you think that these seemingly prestigious institutions would be capable of at least a smidgeon of critical thinking?  Forget it. Just today I got an email from Yale reporting that a task force had recommended that Yale adopt its very own carbon charge "as an incentive to reduce Yale's carbon emissions."  Do they even know that China and India between them plan to build 1000 or so new coal power stations over about the next decade?  But of course, facts like that are irrelevant.  This is about performing meaningless gestures to demonstrate that you are part of the cool group.

So of course, performing meaningless gestures is exactly what the Manhattan Contrarian has done to win its prestigious "most sustainable web site" award.  For example, we live in Manhattan!  Here in Manhattan, we always eat locally produced food, except when we don't.  Hey, it's cold here half the year -- you can't expect us to eat nothing but potatoes and carrots all winter!  We save huge amounts on heat and air conditioning by having our home be right adjacent to the neighbors.  We drive a fraction as much as you guys in the hinterlands.  And that's just the start.  For example, unlike climate campaigner Barack Obama, we didn't take a flight on Air Force One to Florida to make a speech for Earth Day!  And unlike Leonardo di Caprio, we didn't take six flights on private jets in the past month! Think of the thousands of gallons of evil fossil fuel we have saved.  Clearly the Manhattan Contrarian is a worthy recipient of the "world's most sustainable web site" award.