Take a look at the graph below. From the end of World War II until 1964 the poverty rate in this country was cut in half. Further, 94% of the change in the poverty rate over this period can be explained by changes in per capita income alone. Economic growth is clearly the most effective antipoverty weapon ever devised by man.
The dotted line shows what would have happened had this trend continued. Economic growth would have reduced the number in poverty to a mere 1.4% of the population today ? a number so low that private charity could probably have taken care of any unmet needs.
But we didn't continue the trend. In 1965 we launched a War on Poverty. And as the graph shows, in the years that followed the portion of Americans living in poverty barely budged. In 1965, 18% of the population lived in poverty. Today we are at 15%, or 50 million Americans. That's after spending $15 trillion on antipoverty programs and continuing to spend $1 trillion a year.
Now here is something you may not know. Early on ? in the first decade of our 50-year experiment with an expanded welfare state ? carefully controlled experiments funded by the federal government established without question that welfare changes behavior. It leads to the very behavioral changes that keep people in a state of poverty and dependency. Think about that. Any serious social science debate about the effects of welfare on the behavior of the recipients was resolved four decades ago!
We now know a lot about how behavior affects poverty. In fact, if you do these four things, it's almost impossible to remain poor:
1. Finish high school,
2. Get a job,
3. Get married, and
4. Don't have children until you get married.
So how does welfare affect behavior? In the late 1960s the federal government sought to find that out in what Charles Murray calls "the most ambitious social science experiment in history."
John C. Goodman is President of the Goodman Institute and a Senior Fellow at The Independent Institute. He is the author of the widely acclaimed book, Priceless: Curing the Healthcare Crisis. The Wall Street Journal and National Journal, among other media, have called him the "Father of Health Savings Accounts.”