Great Antidote Extras: Scott Winship on Poverty & Welfare
Kevin Lavery for AdamSmithWorks
Lavery digs into the Great Antidote archives with a Scott Winship interview from 2021 on the causes, trends, and innovations in addressing poverty.
In his first State of the Union address on January 8th, 1964, President Lyndon B. Johnson announced an “unconditional war on poverty” as part of his ‘Great Society’ program to tackle the 19% poverty rate in the United States at the time. Johnson created new social safety net programs such as Supplemental Nutrition Assistance Program (SNAP) benefits, and “the building blocks of Medicare and Medicaid”, while expanding others such as Aid to Families with Dependent Children (AFDC). This aggressive expansion of the social safety net has continued with the policies of larger tax credits, expansions to Medicare and Medicaid, universal childcare and pre-K education, and paid family leave.
Have welfare programs held back impoverished Americans or has the social safety net been effective? Scott Winship joins host Juliette Sellgren on the Great Antidote podcast to discuss the success and failures of the welfare state, the persistent gaps between black and white Americans, and the importance of economic mobility. Winship is a senior fellow and the director of the Center on Opportunity and Social Mobility at the American Enterprise Institute.
Listen to the podcast here: Scott Winship on Poverty & Welfare (thegreatantidote.com)
One of the key questions Winship answers is whether or not we won the war on poverty. The answer he gives is an emphatic yes. But, he qualifies this statement with a caveat that this doesn’t mean we should be satisfied with a level of poverty anywhere above 0. As was discussed in a previous episode with Marian Tupy which I write about here, there shouldn’t be a cap placed on economic growth and consequent improvement in worldwide standard of living.
Have welfare programs held back impoverished Americans or has the social safety net been effective? Scott Winship joins host Juliette Sellgren on the Great Antidote podcast to discuss the success and failures of the welfare state, the persistent gaps between black and white Americans, and the importance of economic mobility. Winship is a senior fellow and the director of the Center on Opportunity and Social Mobility at the American Enterprise Institute.
Listen to the podcast here: Scott Winship on Poverty & Welfare (thegreatantidote.com)
One of the key questions Winship answers is whether or not we won the war on poverty. The answer he gives is an emphatic yes. But, he qualifies this statement with a caveat that this doesn’t mean we should be satisfied with a level of poverty anywhere above 0. As was discussed in a previous episode with Marian Tupy which I write about here, there shouldn’t be a cap placed on economic growth and consequent improvement in worldwide standard of living.
If you compare 1962, where the War on Poverty started, about 20% of the population was poor…fast forward to today and that’s more like under 5%...economic growth and the social safety net are part of the story.
I don’t think we should ever be satisfied with how much poverty there is, as long as there are poor people in the United States we should care about there being fewer poor people.
Winship is correct. Since about the late 18th century significant progress has been made in human innovation, income, wealth, and health. If at any point during the Great Enrichment humans became satisfied with the progress that had been made so far, stagnation would set in and the poverty level in the United States would surely be larger than 5%.
These numbers might come as a shock to many listeners due to the lack of coverage surrounding progress in poverty reduction in the United States. So why has the success in alleviating poverty been downplayed? According to Winship, bad measurement methods. The benefits of federal safety net programs aren’t taken into account as income.
We don’t count social security benefits…we count student loans as debt, as negative wealth, but the reason people take out those loans is because they’re getting something from college or from graduate school that they expect will be worth the trade off…but we don’t count that human capital as an asset even though we count the student loans as negative wealth.
These fallacious measurement methods skew poverty measurements by not taking into account the vast improvement in nutrition, income, housing, healthcare, and education these programs provide. Winship states, “if we really care about poor people we have to start with the most accurate facts we can.”
Another reason for the pessimism of the American people surrounding poverty alleviation is the significant motivation for both the left and right to minimize the amelioration of poverty. As Winship points out, both sides benefit from the American people believing that little or no progress has been made regarding poverty.
Another reason for the pessimism of the American people surrounding poverty alleviation is the significant motivation for both the left and right to minimize the amelioration of poverty. As Winship points out, both sides benefit from the American people believing that little or no progress has been made regarding poverty.
There are incentives on both the left and the right to downplay the progress we’ve made. If you’re liberal, you don’t want people realizing we’ve reduced poverty a whole lot, because that might erode support for more policies to reduce poverty even more. You want to overstate the problem, where we may have a problem that’s actually manageable, or the solutions that might be appropriate might be smaller than the policies most liberals are in favor of. If you’re conservative you don’t want people to know that poverty has significantly decreased because it might suggest that all the policies that the government adopted may have been successful in some ways.
A common concern of welfare programs is the unintentional disincentives of productive economic activity wrapped up in welfare benefits. Sellgren and Winship examine what these disincentives are, and how they contributed to trapping families in poverty.
The safety net has these weird disincentives that prevent some people from working, or from marrying, or from saving.
Before welfare reform in the 1990’s, about nine in 10 families on welfare were workless, unwed births were on the rise creating a trend in intergenerational child poverty…it didn’t leave people very well off, but it also didn’t enable people to better themselves.
Currently work rates are the opposite of the numbers in the late 1980’s for people on welfare benefits. According to a 2018 U.S. Census Bureau report, 84% of married couple families receiving SNAP benefits had at least one person working, and 49% had two or more working people. So what changed? Winship concludes that welfare reform played a large role both in getting people in poverty back to work and in decreasing poverty on aggregate.
Clinton, and other moderate democrats joined with republicans…to make it harder to receive cash benefits without working, but also provide more money to people who worked who were low-income. We expanded tax credits, childcare benefits, and healthcare benefits, to low-income working families. This seemed to be the right combination. The number of single parents that were working increased quite a bit, the number that were getting welfare benefits fell by a lot, but neither of those would necessarily be positive without the fact that poverty fell as well.
This leads into Winships preferred policy solutions of reformed incentive structures and baby bonds: a fixed amount of money given to a child’s parents at birth, and yearly installments depending on income which parents can spend on a limited number of economic activities such as education. Evaluations of the policy are quite positive, as “A 2019 analysis by the Committee for a Responsible Federal Budget found the bill’s proposed revenue increases would more than offset the cost of the legislation.”
I would provide more generous benefits to low-income workers because it helps them and encourages more people to work. I would also provide incentives to parents and children to make decisions that help promote their upward mobility…such as baby bonds.
A key variable in the progress in cutting poverty by 75% over the past few decades has been economic mobility. However, Winship believes that focusing on poverty has taken away attention from accelerating upward mobility, which leads to three problems.
We have three mobility problems. One is, we can do better…the second problem is that we’re not doing better over time at increasing mobility…and then the third problem is this big disparity between upward mobility rates of black and white americans.
Winship illustrates how large the racial mobility gap truly is with his own research conducted with the Brookings Institute:
We measured how common it is to be in the bottom fifth for three generations in a row for blacks and whites, and it turns out it differs a lot. For instance, about one in five african-americans in their thirties in the third generation of being in the bottom fifth. For whites, it’s one in one-hundred…among blacks who are in the bottom fifth, about half have a parent and a grandparent who was in the bottom fifth…for whites it’s about 8%.
Why are these gaps so persistent? Winship says the key lies in the discrimination suffered by past generations, which has created a “concentration of poverty” in black communities. This theme is explored in other episodes of The Great Antidote Podcast, such as William B. Allen on The State of Black America, Rachel Ferguson on Black Liberation Through the Marketplace, and Jason Riley on Black America.
At the peak of the civil rights movement we had these big black-white disparities which themselves were rooted in 400 years of discrimination. There was slavery, and for much of the African American population stuck in the deep south there was Jim Crow, a whole system designed to limit their freedoms. In the North it was better, but African Americans were still discriminated against by employers, by unions, in housing, by banks, and federal policy.
For centuries there was a profoundly uneven playing field and one of the outcomes of that was to concentrate african americans, who were disproportionately poor into a small number of poor neighborhoods, and once you concentrate poverty it’s a machine for preventing upward mobility…it concentrates family instability, poor performing schools, crime, you name it.
Here are some questions I had while listening to the episode. Feel free to share your thoughts as well.
1. Winship discussed how racial discrimination has concentrated poverty in black neighborhoods leading to generational racial gaps in crime, education, and economic mobility. How have gentrification and housing policy such as restrictive zoning regulations affected this concentration of poverty? How can government policy, private enterprise, civil society, and individual ambition best be balanced to alleviate poverty and decrease significant gaps between black and white Americans?
2. Why has the discussion over alleviating class inequality usurped the discussion of improving upward mobility over the past twenty or so years?
3. Winship mentioned how COVID relief policies caused many families to save the money that was sent in stimulus packages as opposed to spending it in the market due to them not needing the extra cash. What conditions create ineffective government economic policy? When can reducing poverty in the short-term actually create it in the long-term?
4. A policy of welfare reform that Winship believes was especially effective is work requirements for welfare benefits. Given that a significant amount of non-elderly adults with children receiving welfare benefits such as SNAP benefits are working, and recent research suggests that work requirements have a tenuous link to unemployment, are work requirements necessary in today’s America? Would a loosening of work requirement restrictions cause work rates to return to pre welfare reform levels?
5. The issues Winship mentions regarding how poverty is tracked and how many people don’t know the scale of American success in alleviating poverty due to political incentives on the left and right present a large problem. If Americans can’t trust the official numbers on poverty or their elected officials, then how can the correct information be presented to the American people? How will a continuation of ignorance of poverty over time affect the kind of public policy being passed? Will it lead to a large increase in welfare spending or massive cuts to social programs?