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PERSPECTIVE

Welfare Spending

Antipoverty Spending Hasn't Lowered the Poverty Rate

FEBRUARY 01, 1994 by EXECUTIVE ALERT

Before 1962, three out of every four dollars in federal aid to the poor went to them directly, in cash. Today, the numbers are almost reversed. Most federal aid and local welfare spending goes to the “welfare industry” rather than directly to poor people.

In Milwaukee County, Wisconsin, for example, only 37 percent of total welfare spending goes directly to poor people. The rest either ends up in government programs or goes to service providers who are supposed to design programs to help the poor. As a result, antipoverty spending in the county was $1.038 billion in 1988. That was $10,793 for each poor person, or $32,379 for a family of three—well above the poverty line. Yet the poverty rate in the county has not gone down.

—Executive Alert

Private Property

Gain all you can by common sense, by using in your business all the understanding that God has given you. It is amazing to observe how few do this; how men run on in the same dull track with their forefathers. But whatever they do who know not God, this is no rule for you. It is a shame for a Christian not to improve upon them, in whatever he takes in hand. You should be continually learning from the experience of others, or from your own experience, reading and reflection, to do everything you have to do better today than you did yesterday. And see that you practice whatever you learn, that you make the best of all that is in your hand.

—John Wesley

The Government and Inspiration

In his monograph, “Edison,” published by the Newcomen Society in 1948, General David Samoff, then president of RCA, said:

The Government is to be congratulated for the encouragement which it is giving to the advance of science through the scientific training of young men and women in colleges, universities, and research institutions throughout the country. If out of the thousands of young men and women who are now pursuing scientific studies, there emerges one Edison, then the millions of dollars being devoted to their training will be well worthwhile.

It has been over 40 years since this pronouncement and still no Edison has emerged—at least not from the government-funded universities. It is well known that Edison (February 11, 1847- October 18, 1931) was not happy in school. He was taught at home because the publicly funded teachers found him untrainable.

Edison claimed that genius is 99 percent perspiration. His former employee and lifelong competitor, Nikolai Tesla, said that if Edison were tasked to find a needle in a haystack, he would examine each straw in turn until he found the needle. This can be taught. Meticulous, grinding, repetitive labor is very much a part of most schoolwork. Yet the other one percent, the inspiration, cannot be taught. Without that spark of genius, there is no way to know what a “haystack” is, and why finding a “needle” would be exciting.

Since 1985, I have worked as a community college teacher and a corporate trainer. I can show proof positive that I have helped people learn to use technology. Yet, I cannot imagine any way that any teacher in any school can “train” someone to be an Edison. A million smart young people cannot be collected into a single mastermind. Edison was a once-in-a-century genius who cannot be created by government fiat.

—Michael E. Marotta

Benefits of Deregulation

Deregulation of the airline, railroad, and trucking industries in the late 1970s and early 1980s has decreased costs to consumers. And despite claims that more competition would encourage risk-taking, the safety records of all three industries have significantly improved.

Airlines. Since the passage of the Air Cargo Deregulation Act in 1977 and the Airline Deregulation Act of 1978:

• Fares are an estimated 18 percent lower than they would have been under regulation, giving consumers an annual benefit of more than $10 billion.

• Air fares have fallen (in real, inflation-adjusted terms) by more than 20 percent since 1978.

• Accident rates have fallen by 48 percent since 1978.

Railroads. The Staggers Rail Act of 1980 allowed railroads to reduce operating costs and reduce rates to consumers. As a result:

• Shippers save between $3.5 billion and $5 billion a year.

• Railroad accidents have declined 70 percent since the late 1970s.

• Although operating revenues have fallen, expenses have declined even further, making it more profitable for railroads to operate.

Trucking. The Motor Carrier Act of 1980 eliminated the barriers to entry, price discrimination, and price fixing that had characterized the interstate trucking industry since 1935. As a result:

• Between 1980 and 1992, the number of carriers increased from about 18,000 to more than 48,000 and the total number of jobs in the industry increased about 30 percent.

• Savings to the economy are estimated to be $7.8 billion a year.

• The fatal accident rate per 100 million vehicle miles shrank 40 percent between 1978 and 1989.

The trucking industry still is governed by other federal regulations, the elimination of which could save about $28 billion annually on logistical costs. State de-control could bring additional savings of $12 billion per year.

—Melinda Warren

“Government Regulation and American Business”

ASSOCIATED ISSUE

February 1994

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