FREEDOM vs POVERTY

Updated: Aug 15, 2021




The War on Poverty and the Decline of Marriage

As Chart 2 shows, throughout U.S. history, marriage was the norm. Prior to the mid-1960s, nearly all children were born to married couples. When the War on Poverty began in 1964, only 7 percent of children were born to unmarried women. However, over the next four-and-a-half decades the share of non-marital births exploded. In 2013, 41 percent of all children born in the U.S. were born outside marriage.



A Two-Caste Society


Non-marital child bearing is not uniformly spread across U.S. society. Most non-marital births occur to women who will have the hardest time going it alone as single parents: young adult women with a high school degree or less. As Chart 4 shows, nearly two-thirds of births to women who were high school dropouts occurred outside marriage. Among women who had only a high school degree, well over half of all births were outside marriage. By contrast, among women with at least a college degree, only 8 percent of births were to single women, while 92 percent of births occurred to married couples.

The U.S. is steadily separating into a two-caste system with marriage and education as the dividing line. In the high-income third of the population, children are raised by married parents with a college education; in the bottom-income third, children are raised by single parents with a high school degree or less.



Welfare and the Decline of Marriage


It is no accident that the collapse of marriage in America largely began with the War on Poverty and the proliferation of means-tested welfare programs that it fostered. When the War on Poverty began, only a single welfare program—Aid to Families with Dependent Children (AFDC)—assisted single parents. Today, dozens of programs provide benefits to families with children, including the Earned Income Tax Credit (EITC), Temporary Assistance for Needy Families (TANF), the Women, Infants and Children (WIC) food program, Supplemental Security Income (SSI), food stamps, child nutrition programs, public housing and Section 8 housing, and Medicaid. Although married couples with children can also receive aid through these programs, the overwhelming majority of assistance to families with children goes to single-parent households.

The burgeoning welfare state has promoted single parenthood in two ways. First, means-tested welfare programs such as those described above financially enable single parenthood. It is difficult for single mothers with a high school degree or less to support children without the aid of another parent. Means-tested welfare programs substantially reduce this difficulty by providing extensive support to single parents. Welfare thereby reduces the financial need for marriage. Since the beginning of the War on Poverty, less-educated mothers have increasingly become married to the welfare state and to the U.S. taxpayer rather than to the fathers of their children.


As means-tested benefits expanded, welfare began to serve as a substitute for a husband in the home, and low-income marriage began to disappear. As husbands left the home, the need for more welfare to support single mothers increased. The War on Poverty created a destructive feedback loop: Welfare promoted the decline of marriage, which generated a need for more welfare.



Penalizing Marriage


A second major problem is that the means-tested welfare system actively penalizes low-income parents who do marry. All means-tested welfare programs are designed so that a family’s benefits are reduced as earnings rise. In practice, this means that, if a low-income single mother marries an employed father, her welfare benefits will generally be substantially reduced. The mother can maximize welfare by remaining unmarried and keeping the father’s income “off the books.”

For example, a single mother with two children who earns $15,000 per year would generally receive around $5,200 per year of food stamp benefits. However, if she marries a father with the same earnings level, her food stamps would be cut to zero. A single mother receiving benefits from Section 8 or public housing would receive a subsidy worth on average around $11,000 per year if she was not employed, but if she marries a man earning $20,000 per year, these benefits would be cut nearly in half. Both food stamps and housing programs provide very real financial incentives for couples to remain separate and unmarried.

Overall, the federal government operates over 80 means-tested welfare programs that provide cash, food, housing, medical care, and social services to poor and low-income individuals. Each program contains marriage penalties similar to those described above. Low-income families generally receive benefits from several programs at the same time. The marriage penalties from multiple programs when added together can provide substantial financial disincentives to marriage. For example, if a single mother who earns $20,000 per year marries a man who earns the same amount, the couple will typically lose about $12,000 a year in welfare benefits. In effect, the welfare system makes it economically irrational for most low-income couples to marry.

The anti-marriage aspect of the welfare state can be illustrated by comparing means-tested welfare with the federal income tax code. For example, under a progressive income tax system with only a single schedule of tax rates indiscriminately covering both single persons and married couples, nearly all individuals would experience an increase in taxes owed when they married and lower taxes if they remain separate or divorce. The current federal income tax system mitigates this anti-marriage effect by having separate tax schedules for singles and married couples.


By contrast, the means-tested welfare system, in most cases, does not have a separate schedule for married couples. When a low-income mother and father marry, they will generally experience a sharp drop in benefits, and their joint income will fall. The anti-marriage penalty is often most severe among married couples where both parents are employed.



It is an obvious fact that severe poverty has disappeared in the most industrialized countries. Nations like the US, UK, Switzerland, and Japan industrialized within what were predominantly laissez-faire free-market conditions. Even the so-called social democracies, like Sweden and Germany, developed in free-market conditions, and adopted extensive state welfare and regulatory programs only after achieving high levels of economic development and industrialization. World Bank data shows that there is inequality, but this inequality is between the free-market nations and the crony-capitalist and socialistic nations.1


The idea that domestic laissez-faire causes poverty is unfounded. It is a historical fact that India, China, and Kenya never tried capitalism, so this system was never given a chance to work. Furthermore, China and India have realized some progress in abating poverty since they moved in the direction of capitalism. Of course, China and India adopted regulated crony capitalism, but this is still better than their old socialist systems.


One could argue that global capitalism allows a few people in some nations to exploit the masses of other nations. Marxists have attempted to make this case since Lenin. Lenin revised Marx because even in his day it had become obvious that Marx’s prediction that capitalists would exploit domestic workers was refuted by evidence. We now know that Lenin’s attempt to blame poverty on global markets is wrong. As previously mentioned, economic conditions in China and India improved after switching from socialism to crony capitalism. China and India have also expanded trade in global markets.

There have been significant improvements in living conditions around the world over the past thirty years. The largest improvements in the poorest nations took place during the wave of globalization that took place twenty years ago, after the fall of the USSR. The collapse of the Soviet Union opened the door to unprecedented globalization of industry. What does real data tell us about poverty during this period? Per Capita GDP rose dramatically:


Thirty years ago half (50 percent) the people in the poorer nations of the world lived