The modern poverty industrial complex began with the war on poverty sixty years ago. It started with the grandest of intentions, the biggest of hearts. In 1963, President Lyndon Johnson (LBJ) declared a war on poverty, and we introduced the Great Society Programs to fix it. We developed Housing assistance, food stamps, child nutrition, Medicaid, Aid to Families, and more. Over the years, non-profit organizations have followed suit. We formed food banks, homeless shelters, and other services. Corporations also got involved. They took government grants to administer programs, deliver school lunches, build shelters, and supply aid. It was big business. Steadily, citizens absolved themselves of any worry about the poor. Pay your taxes and maybe give a few dollars to charity – enough done. Let the poverty industrial complex handle things.
But as we look around today, the poverty rate hasn’t changed much. In 1968, 12.4% of the population was in poverty. In 2022, the rate was 11.5%; it has been as high as 15.1% and as low as 10.5% since 1968. But over that same time, federal spending increased from under $500 per person in poverty to over $16,000 (more). That is adjusted for inflation and doesn’t include the millions of dollars spent by non-profits supporting the poor. The poverty industrial complex has grown and spent billions, but the poverty rate has remained flat as a pancake. The graph to the right is not a pretty picture (more). People get aid from the system, but that has not led them to obtain financial independence. We lost sight of the purpose of welfare.
Understanding the Poverty Industrial Complex
The poverty industrial complex, a complex network of institutions, policies, and practices, encapsulates the entities that benefit from poverty. It includes government agencies, nonprofit organizations, corporations, and media that profit from poverty through various means, such as high-paying jobs, bureaucratic growth, cheap labor, and perpetuating stereotypes.
A portion of the poverty industrial complex is the welfare industrial complex. The welfare industrial complex specifically refers to the network of government agencies, private contractors, and service providers involved in administering welfare programs. It focuses primarily on delivering social assistance to needy individuals and families, such as cash transfers, food stamps, and housing assistance.
Consequences of the Poverty Industrial Complex
The main consequence of the poverty industrial complex is that it does not lead people to lives of financial independence. It does not end poverty. It hands out benefits and makes life easier for the poor. But it takes away the responsibility for the poor to provide for themselves. It injures dignity and too often leads to misery. Humans are better off when we strive forth, not when we stagnate and isolate. Americans know that and, therefore, strongly believe in work. In fact, 80% believe work is its own reward.
The central failing of the Poverty Industrial Complex is that it assumes that people need handouts to stabilize their lives so that they can focus on improving their lives. So, the focus is on food, housing, school lunches, phone subsidies, pre-school, etc. It focuses on people’s needs, which are defined as tangible things, not the human needs of emotional support, skill development, and life coaching.
Should it surprise us that government is not the answer to improving people’s lives? The nation’s founders didn’t think government should be in the business of helping the poor. It was never provided for in the Constitution. Benjamin Franklin believed that the easier it was for people to be poor, the more poor people there would be. That axiom covers both government, charitable, and personal handouts. Franklin warned that we had better be very circumspect when we get into the business of handouts, lest we do more harm than good.
Life is hard; people need skills, education, and a work ethic to succeed. We need to quit focusing solely on the tangible stuff and start to focus on the intangibles. We all needed help to climb the ladder to success. Why do we leave the poor isolated without our support, knowledge, expectations, and hope?
That fact is not lost on the poor.
- 63% of people receiving welfare today say that the war on poverty has not succeeded (more).
- 13% of those in poverty favor sending benefits to the poor without asking for any effort in return. 83% believe a work requirement or job training should be attached to receiving welfare (more).
- When a young black woman in poverty was asked what the biggest problem was facing poor people, she said, “Poverty pimps.[i]”
The poverty industrial complex pulls dollars away from efforts with more effective results. But a bigger problem is it relieves citizens of worrying about the problem. It used to be neighbor helping neighbor. That turned to reliance on the experts in the poverty industrial complex. But those experts haven’t solved the problem, and their solution is that they need more money, programs, and growth. It is a playbook that has been followed for 60 years and continues unabated today.
The Self-serving Focus of the Poverty Industrial Complex
It is easy to see the self-serving focus of the poverty industrial complex in the federal government’s agencies and policies. Here are three examples:
There is no Department of Welfare – Eight federal agencies have welfare programs. They all target low-income individuals and families to distribute benefits. Each has separate rules and qualification standards. If the user were the highest priority, the welfare system would be streamlined and easier to use. There would be a Department of Welfare. Instead, there are 13 separate programs run by eight different agencies. It is a frustrating and burdensome system to use. Without coordination, the welfare system has many unintended consequences, such as a marriage penalty and high administrative costs. The poverty industrial complex has no sensitivities to the time and skill it takes to manage such a complex system. It simply dictates and expects the users to adapt.
The Lifeline program shows the absurdity of government for government’s sake – The Lifeline Program distributes a $9.25 monthly phone subsidy to low-income households. That is less than $120 per household annually, and the program requires users to apply and qualify. The program is run by Telecommunication Companies who follow complex rules as dictated by the Federal Communication Commission (FCC) and receive cash reimbursement from the FCC. It means databases, reports, audits, and rules. All this for less than $120 a year for a household. We could raise the SNAP amounts by $10 a month, and users would come out in the same place economically. But then the FCC would miss out on the welfare game.
Housing First – The Housing First initiative is a classic self-serving policy leading to more homelessness and spending. The policy calls for putting people in temporary and permanent housing regardless of their circumstances, including addiction or mental illness. All the studies show how well the system works on a case-by-case basis. But none of the studies look at the community as a whole whereby homelessness remains a problem. Portland, Seattle, and San Francisco are great examples. They spend far more on homelessness than most communities, and yet the homeless problem is acute and growing. So, the cycle continues with more buildings, salaries, grants, studies, and experts.
It is also easy to see it in nonprofit organizations. Those who claim to fill a community need but don’t grade themselves on the true progress of the poor are playing a game. Many charities don’t even know their users by name. Food banks are a good example. If handing out food proves that the poor are in need, the charity can grow and pay more salaries, fundraise, and hand out more food. We all know the saying about giving a man a fish versus teaching him to fish. Most food banks make no attempt to do the heavy lifting of getting to know their users and attempting to change lives. If people come by and take the food, it is proof to them that they are an important service and justify their existence and growth.
It is easy to see it in people and corporations. If compassion is measured at the giver, we have a problem. That is the root cause of the poverty industrial complex. It measures compassion at the giver instead of the receiver. Effective compassion means the receiver of our compassion is understood and advanced. We measure the performance of a teacher, a coach, or a doctor on the students, athletes, and patients’ progress. But in the poverty world, having a big heart and giving stuff away is enough. But this is self-serving and aggrandizing. Helping the poor is hard work; throwing a few dollars at something is much easier. More.
Resistance and Alternatives
Resistance to the poverty industrial complex has been there all along, but it has been a minority of voices. Their work with the poor has been buried under the weight of ever-growing handouts from the poverty industrial complex. It is hard to give people a hand up when the hands are full of handouts. But that is starting to change.
The poor themselves are beginning to see that their own development must come from somewhere other than the poverty industrial complex. New state, local, and nonprofit entities are starting to do things differently and effectively. They all have one thing in common—they work one-on-one with the poor to help them develop their financial independence. That means life coaching, education, training, and work. It is heavy lifting and can take years, but some organizations are taking it on.
Here is a website that highlights some of these organizations.
Conclusion
We have been falling on the same poverty sword now for 60 years. We use the same evidence of people in poverty to create and grow the poverty industrial complex, but the poverty rate doesn’t change.
When LBJ declared the war on poverty, he also said the government couldn’t do it alone. He meant the people would have to get involved and help their fellow citizens. But as the government stepped up, people stepped back. Today, we think the government is responsible for solving poverty, not citizens helping citizens. The people handed the keys to the government, and the government created the poverty industrial complex. Ever since, too many people have been trapped in lives of dependency, and we have been trapped with a bureaucratic behemoth that grows on its own ineptitude. It tells us, and we believe, that they can make things better with just a little more money and a bit more power. So, the cycle repeats. When will we wake up and move in a different direction?
[i] Robert S. Pfeiffer. Poverty in the United States. 2018. Page 1.