2008-10-31

The Tradegy of Unintended Consequences

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Has our country's welfare system done more harm than good over the past 40 years? Watch the video below from the Acton Institute which focuses on Christian stewardship and effectively reaching the poor. It lays out the argument that government intervention has devastated our inner cities, and makes the point that the government is no substitute for family. What it does not say however is that the poor should be left to their own devices, so before nodding your head in agreement ask yourself what you're doing to help the situation.

(Brought to in part by The Daily Dish)



If you're mind works like mine, the question you're asking yourself right now is, "What caused this to happen?" (Before you jump to any partisan conclusions however keep in mind that the Earned Income Tax Credit, EITC, is one of the primary tax drivers to spur work productivity amongst the poor. It is highly redistributive and has been expanded by every President since it was originally enacted.) In searching for a reasonable answer to this question, I came across the following white paper from the Tax Policy Center entitled "Encouraging Work and Family Formation among Low-Income Men." It concludes:

Low-income men without children, and especially those who are African American, have left the workforce in great numbers in recent years, for a variety of reasons—especially their poor earnings opportunities. Current tax and welfare law discourages them from work by penalizing work, savings, and marriage—making government resources available more through unemployment or incarceration than through work or family involvement.
The paper focuses on data for low-income single men with no children dating back to the early 1990's, but the pattern in fact began in the 1960's. It seems that the tragedy of the liberal movement is to simply throw money at a deeply flawed problem, and therefore it should come as no surprise that the maximum tax benefits for the working poor come for a Head of Household (i.e. single mother) with two or more kids making $10 - 20k. However, the tragedy of the conservative movement is to build a platform around tax breaks for the wealthy.

The job creation argument that is derived from the trickle down theory is not the answer to a problem that discourages work for the poor however. Until the tax incentives are altered to encourage work for low wage earners and further strengthen the family unit by removing marriage tax penalties, the status quo is here to stay.

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