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Matt Cavedon is working for the Acton Institute for the Study of Religion and Liberty this summer. Attending Acton University 2009 was his first assignment, where for four days earlier this month nearly 400 participants from almost 50 countries came to Grand Rapids, Mich., to learn about natural law, economics, religious morality and other essential elements of a free and virtuous society. This the second of a three-part series of columns this week related to Acton U.
This year, the economy imploded. Every American was hurt, but as is always the case, the poorest people in our country were hit the hardest. Now that Congress is back in session, proposals are afloat to help the poor by expanding public health insurance, building more public housing and increasing funding for public education.
These measures identify the very real problems facing poor Americans, but they are not the best way to help. Subsidizing poor people to make their own choices in the marketplace is a far more effective and fair way to help.
This is not the way that the government has traditionally provided health insurance, housing and education for the poor. Ever since the rise of the modern welfare state in the middle of the last century, the federal government has made itself the provider of necessities for the poor through measures like Medicare, Medicaid, housing projects and ever-increasing funding for local school districts.
This approach has been well-intentioned, but it has failed to break the cycle of poverty for many people. These programs also tend to underperform private alternatives: nearly every American would choose private health insurance over going through the bureaucracy of Medicare, “the projects” has become a synonym for all slums, and most people in poor neighborhoods who can afford it send their children to comparatively safer private and parochial schools as often as they can.
This is not to say that the state should simply throw in the towel and leave the poor to fend for themselves. Naturally, there are many people who cannot afford the luxuries of private health insurance, private housing and private education. That is precisely the problem that the state has been trying to remedy, though: the poor cannot afford these things. That does not mean that the state has to provide them itself. It only means that the state ought to empower people to be able to afford them.
Take food, for example. Most of the same folks who cannot afford to buy their own apartment generally cannot afford to buy enough food to feed their families adequately. If the state chose to provide food for the poor in the same way that it does housing, then poor people would normally go from their projects out to a public food distribution warehouse and take whatever the government could provide for them, based on how much the government prioritized spending on public food programs. Given the quality of public housing, it wouldn’t exactly be a gourmet steak.
Instead, the state gives poor people money to buy their own food through the food stamps program. The government does not care what you buy with food stamps, nor does it need to oversee the entire chain of production and distribution for food in order to make sure that there is plenty of food available. Even in bad budget years, the government tends to be able to sign a check for people to go out and buy food much easier than it can hire an army of bureaucrats to staff food centers and negotiate unfairly low prices for farmers. By the way, farmers are also welcome to keep growing good food and get the prices that are owed to them by the market under food stamps, meaning that the program doesn’t hurt producers like Medicare does doctors, who routinely reject Medicare patients because they know they will not be fairly compensated.
Empowering poor people to make their own decisions rather than treating them like children who need an allowance and to be tucked into bed also has a positive effect on society. The more that poor people have to manage their own budgets and prioritize about what they get, whether it is food through food stamps or housing through the Section 8 subsidy, the more that they will learn the lessons of responsibility and prudence that can end chronic poverty.
The government this year faces the dual challenges of preventing huge deficits in the coming years while still making sure that the poorest Americans are able to get their basic needs met in a satisfying and humane way. Applying creativity and good economic sense to welfare programs is the best possible way to meet both demands.
Introducing subsidies for private health insurance, expanding housing subsidies and introducing vouchers for private education is the best way to give people opportunities to better their own lives — and saves a pretty penny for the government.
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