It was around 50 years ago that Lyndon Johnson declared war
on poverty. I remember it well. At the time, I was earning barely enough to put
food on the table for my family – wife and three daughters. I didn’t consider
us as impoverished, but going to University full-time and working two jobs left
me tired and broke. A war on poverty didn’t sound so bad then.
Of course, the devil is always in the details. I soon found
out that a rising tide doesn’t always float all boats. Mine must have been
stuck in the mud.
Then President Johnson managed to create a HUD sponsored mortgage program for low-income applicants. It was the centerpiece of his war on poverty, intended to give everyone a chance at the American dream of home ownership. It sure gave the home construction industry a shot in the arm.
At that time, I lived in Indiana, just along the south end
of Lake Michigan and had to drive through the city of Gary along I-94 to get to
school and one of my jobs. Almost overnight the swampy and run-down area on
both sides of the Interstate became filled with houses.
In the ‘60s the demographic of Gary was about 70 percent
poor Blacks. President Johnson’s HUD program seemed to give nearly all of them
a fine new start in the brand new houses along the Interstate. The new
developments filled quickly, but within the next couple of years, the area
became increasingly depopulated. It wasn’t long until it could easily qualify
as a slum.
One day, as I drove by, I noticed heavy equipment leveling
the area where just a few years before they had built fine new houses.
If you can remember, the ‘60s was also a time when the civil rights movement provoked huge changes in the racial tenor of the country. When I applied for a HUD mortgage, I was turned down even though I am certain I made more money than many of the people in the Gary housing developments. HUD said I didn’t earn enough to qualify. Really? They might as well have said I wasn’t black enough.
After 50 years, I believe we can declare Mr. Johnson’s war
on poverty has fared no better than his war on Vietnam. Both were abject -- and costly -- failures.
In his recent State of the Union address, Mr. Obama
indicated that the middle-class is sinking ever deeper into the region of
poverty despite the government’s relentless attempts to regulate and tax the
life out of free enterprise. And now the Democrats are certain that raising the
minimum wage by phenomenal amounts will pull people out of poverty.
Obviously, you can always tell a socialist, but you can’t
tell them much. It looks like they will never learn that by strangling the life
force out of business they are merely hastening the departure of the
middle-class into poverty. Companies are not philanthropic enterprises created
for the sole purpose of providing jobs.
As wages are forcibly increased, businesses will need to
make adjustments to maintain their “bottom line.” There are only two ways to
accomplish this: reduce the number of employees or raise prices. Either way
results in everyone paying more for
goods. Eventually, when wages and costs balance out again, those making the new
“minimum wage” will find themselves in the hole again.
The best way to win the way on poverty has proven to be
through free enterprise. If the politicians want to get serious about winning
this war, they need to get out of the business of regulating and taxing
businesses to death.
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