Sunday, January 14, 2018

If You Want More Of Something, Subsidize it.

Which state has the highest level of poverty in the United States?  Not Mississippi or West Virginia, but... drumroll please.... it's California.  Yeah, really!
It’s not as though California policymakers have neglected to wage war on poverty. Sacramento and local governments have spent massive amounts in the cause. Several state and municipal benefit programs overlap with one another; in some cases, individuals with incomes 200% above the poverty line receive benefits. California state and local governments spent nearly $958 billion from 1992 through 2015 on public welfare programs, including cash-assistance payments, vendor payments and “other public welfare,” according to the Census Bureau. California, with 12% of the American population, is home today to about one in three of the nation’s welfare recipients.
The generous spending, then, has not only failed to decrease poverty; it actually seems to have made it worse.
That's what happens when liberalism runs wild.  They throw money at a problem, and make it worse.  We could draw numerous parallels to the War On Poverty from LBJ during the '60s.  It's the same thing that my economics professor told us when we were studying macroeconomics.  "If you want more of something, subsidize it."

We've been subsidizing poverty for a long time.  That's why we have so much of it.


Old NFO said...

Truth! And I'm NOT surprised it's Cali in the lead... sigh

Eaton Rapids Joe said...

Another thing you learn in a basic macroeconomics class is that subsidies drive up the prices of inputs. Subsidize corn production and that drives up the price of everything from fertilizer to tractors.

So subsidies increase production which lowers prices. And subsidies raise prices of inputs. The net result is that producers who do not line up to suck on the subsidy teat are forced out of business.

In a similar way, less affluent households are forced into the welfare system as the cost of the least expensive housing and childcare and healthcare is forced upward and they can no longer "make it".

There is a tipping point where the welfare system becomes like the Dresden firestorm. The firestorm created such a strong updraft that it sucked more fuel into the burning zone. And so it is with welfare.

Either politicians and bureaucrats never took Econ 101 or they want to create the North American version of Venezuela.