Welfare and Poverty [Libertarian Starter Pack]

[By Ben Noble]

Welcome to the Libertarian Starter Pack. The goal of this series is to let people know that there is an alternative to voting for Clinton or Trump. There is a third political party. The Libertarian Party. In the last video I gave an overview of the libertarian stance on economic policy. In short, you could say that libertarian’s want a separation of economy and state. Right now I would like to talk about the libertarian stance on welfare programs and poverty. Many politicians seem overly focused on the welfare part of poverty and not the solutions. The status quo right now, whether intentional or not, is for the government to hinder economic activity and job growth and then cut a check to the people that are harmed in the process. This is completely unsustainable and immoral.

YouTube video for this post [https://youtu.be/beiqCBnoUoI]

First, here are some quick facts about the current web of welfare programs. All sources are listed below. Hold onto your butts.

  • The United states spends around $1 trillion dollars on welfare and entitlement programs every year.
  • Poverty rates in the US have remained unchanged since the 1960s even though welfare spending has exploded.
  • The US government is very inefficient. Only 30% of every dollar collected for welfare programs go to the recipients.
  • Around 49% of all Americans get some sort of check from the government.

Objectively speaking, from the data it could be concluded that the US government is in the business of sustaining poverty. The combination of massive spending and no results is staggering. It is plain to see that the US government is on the March to insolvency. Approaching poverty and welfare like they have been for over 50 years is completely unsustainable. All attempts of solve poverty by throwing money at it have failed.

So what is the answer to poverty? It’s simple. Economic freedom. Let me count the ways.

End the minimum wage

Rothbard Minimum Wage

The economic principle that when you increase the cost of something you generally get less of it is not controversial. Hell, that’s one of the government’s reasons for taxing cigarettes so heavily. To reduce their use. Logically, the same goes for the labor market. If you make low skilled work more expensive for businesses to pay for, then you will get less of it. This is one of the drivers of youth unemployment and disproportionately, minority youth unemployment. New research finds that higher minimum wages result in lower employment for lower-skilled workers. In the long run, a 1% increase in the minimum wage leads to ~0.4% decrease in employment. The real minimum wage is $0 / hour and outlawing jobs that don’t pay enough to make politicians feel warm and fuzzy only pushes more people into that category. Remember, most people don’t spend their whole life in a low paying job, but they need somewhere to start.

End government occupational licensing

Selling Licensing

Less than 5 percent of US workers in the 1950s needed to have a license from government in order to do their jobs. In 2008 it was estimated to be almost 29 percent. It’s not just high skill jobs that require it, either. Florists, truck drivers, hair stylists, and even internal decorators! Oh, the insanity! Research indicates that this licensing extravaganza hasn’t improved the quality of these industries, but sure have made them more expensive. There is something wrong with the government stealing your right to work in a field and then selling it back to you.

Prevent inflation

Inflation 1980 2016 copy

Inflation steals purchasing power out of people’s savings accounts. Long term savings are destroyed by inflation. It takes $290 from 2016 to purchase the same goods that $100 could in 1980. Our money is deeply flawed. This makes saving for retirement insanely hard. Imagine losing more than half the purchasing power of your savings from 30 years ago! You’re forced into the slot machine of the stock and financial markets just to make enough returns so that inflation doesn’t eat your lunch! No wonder retirees have to rely so heavily on government programs. The government has destroyed the effectiveness of saving long term. Google “End the Fed” for more on this.

Reduce costly regulation

The cost of regulation

I talked about the huge cost of government regulation on the economy in my video on Economic Policy. Go there for an in depth look at the wet blanket the government has thrown on the economy. In short, it is estimated that the US economy is smaller today by $4 trillion because of government intervention since the 1980s. That is the size of the German economy. Scheiße! That’s a lot of jobs and wealth that could help a lot of people right about now.

Reduce the cost of employing someone

Cost of employment copy

In a similar way to how a minimum wage inflates the cost of labor, so does the various taxes and regulations that government piles on businesses when they hire someone. New employees cost businesses between 18 and 25% more because of things like the Social Security Tax, the Medicare tax, State unemployment insurance, health care insurance, and so on. These taxes pull money out of the income that these employees might otherwise have received. What’s worse is that this hurts small and local businesses more than the big business. They can afford it. Small businesses and startups are the ones that feel the pain. Anyone that supports these types of policies are effectively seeking to harm small business and give big business an advantage. Looking at you Bernie.

The current system of fighting poverty with welfare and regulation is like hitting someone in the knee with a bat and then handing them a crutch. Instead of handing them a second crutch, lets take away the bat. Welfare does not reduce poverty. Employment does. We must end the policies and taxes that prevent people from working and punish businesses for hiring people. Or we could do more of the same and get the same results.


Unbiased America Graphic [http://www.census.gov/prod/2012pubs/p60-243.pdf]





America’s Poverty Problem hasn’t changed [http://www.theatlantic.com/business/archive/2015/09/americas-poverty-problem/405700]

Private Charity versus Government Entitlements [http://www.softwaremetrics.com/Economics/Private%20Charity%20versus%20Government%20Entitlements.pdf]

Census: 49% of Americans Get Gov’t Benefits; 82M in Households on Medicaid [http://cnsnews.com/news/article/terence-p-jeffrey/census-49-americans-get-gov-t-benefits-82m-households-medicaid]

The Truth About Welfare: Past, Present and Future [https://youtu.be/XooUY4p4RaY]

The Truth About Poverty [https://youtu.be/g-5rxFDXW4E]

Welfare Reform [http://www.cato.org/publications/congressional-testimony/welfare-reform]

Minimum wage:

Being Classically Liberal Graphic [https://www.facebook.com/permalink.php?story_fbid=1229068630460890&id=592589870775439] [http://ftp.iza.org/dp9864.pdf]

California just passed a $15 minimum wage. Even left-leaning economists say it’s a gamble [http://www.vox.com/2016/3/30/11332686/california-minimum-wage-gamble]

Low-Skilled Workers Flee the Minimum Wage [https://fee.org/articles/low-skilled-workers-flee-the-minimum-wage]

Occupational licensing:

3 Myths about Economic Intervention [https://fee.org/articles/3-myths-about-economic-intervention]

Costly regulation:

Economic Policy [Libertarian Starter Pack] [https://youtu.be/H-QqqjNNxb4]

Cost of employing someone:

You make $70k but cost your boss $88k [http://money.cnn.com/2013/02/28/smallbusiness/salary-benefits]

EMPLOYER COSTS FOR EMPLOYEE COMPENSATION – DECEMBER 2015 [http://www.bls.gov/news.release/pdf/ecec.pdf]


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