Are government programs the best way to help the poor?

Michael Medved has important things to say in his recent book, The 10 Big Lies about America. I have covered several of these lies, but there are still several interesting ones left. One involves faith in the powers of the federal government to take care of us (sound familiar?).

He says many Americans instinctively accept the idea that government programs provide the best way to cope with economic hardship in the problems of the poor. But he says this is not true. Democrats love to recall the stirring days of Franklin Delano Roosevelt and the New Deal; they believe his programs helped lift people out of terrible poverty. However, during the Depression FDR's radical policies were little help. He controlled money generated by society's most productive elements and then distributed it in an often arbitrary manner to his government's favored groups. The truth is, the New Deal brought higher tax burdens and a corresponding loss of liberty with little gain (sometimes serious damage) for the intended beneficiaries of this wealth.

Medved offers a great deal of proof for this perspective. For example, in 1931 the national unemployment rate was 17.4 percent. After more than five years of Roosevelt and all his new government programs, the national unemployment rate was exactly the same. At no time during the 1930s did unemployment go below 14 percent. After seven years of New Deal experiments, the Dow Jones Industrial Average had collapsed far below its mark during the Hoover administration. Federal spending during this time soared from 2.5 percent of gross domestic product in 1929 to 9 percent in 1936.

What's the main point of all this? A "growing majority of economic historians now concede that the programs of the New Deal prolonged, rather than terminated, the Depression." Now some people will want to say that the rest of the world was suffering right along with us, but that's not true. In nearly all European nations the Depression ended more quickly than it did in Roosevelt's America. The Brookings Institution (a left-leaning think tank) concluded that the most ambitious and controversial program of Roosevelt's, the National Recovery Administration, had "on the whole... retarded recovery."

Medved says an examination of depressions throughout our history reveals something interesting. Leaders who cut government to revive the economy succeeded far more quickly and painlessly than did FDR with his New Deal. He uses examples from Presidents Martin Van Buren, Grover Cleveland, Warren Harding, Calvin Coolidge, and Ronald Reagan.

Medved also takes on more recent government programs. He looks at Lyndon Johnson's Great Society. Poverty, illegitimacy, crime, and social dysfunction grew at the same time that government spending to address these ills vastly increased. Antipoverty programs encouraged a culture of dependency and discouraged self-reliance. Johnson also established the Job Corps in an attempt to train disadvantaged young people for productive employment. A later study found only trivial benefits to Job Corps graduates compared to nonparticipants. But Congress continues to authorize money for this program, which costs taxpayers $21,500 for each enrollee in the eight-month program.

I'm especially concerned right now with Medved's analysis since our current President places so much hope in an enlarged government to solve all our problems. It hasn't worked before, and there's no reason to think it will now. I'll cover more of Medved’s book in a future blog.