10 Special reportPoverty in America The EconomistSeptember 28th 2019
(^2) Policymakers have long wanted to use public dollars to jump-
startprivateinvestmentinpoorareas,buttheresultsofsuchpro-
grammeshaveconsistentlydisappointed.Mostfollow-upassess-
mentsfor“enterprisezones”,createdinthe1980stoprovidetax
creditsforbusinessesinhigh-povertyareas,havefoundnoem-
ploymentgrowthorpovertyreduction,yethigherhouseprices.
“Opportunityzones”,thelatestiterationofa place-basedpolicy
signedintolawbytheTrumpadministration,seemdestinedfora
similarfate.Thereislittleoversightoverwhichzonesqualifyfor
taxcredits,andnoplantotrackresultssystematically.Planned
projectsincludea gastro-touristspotinPortland,Maine,andthe
constructionofa glassynewofficebuildinginMiami.Theanti-
povertyresultsofsuchinvestmentsmaybeminimal.
Federallyfundedretrainingprogrammesfordisplacedworkers
alsoseemtohaveachievedlittle,thoughsomeeconomistsargue
thatisbecausetheyhavenotbeenproperlyfinanced.Federalpro-
grammespaidforbytheWorkforceInvestmentAct,inplacefrom
1998 to2014,seemedactuallytoreducetheearningsofdisplaced
adultworkers.Itspredecessor,theJobTrainingPartnershipAct,
hadsimilarlyweakreturns.Thecurrentversion,theWorkforceIn-
novationandOpportunityAct,hasevenlessfundingandisthe
samebasicmodel.Themixedresultsreflecta generaltrendinpov-
ertyresearch:aspeoplegetolder,itbecomeshardertodiscern
whichpoliciesarebest.It alsobecomesmoreexpensivetofix.
Privateefforts—whetherphilanthropyormore effectivere-
training—aremosthelpfulwhentheyshowinnovativeapproach-
estopovertyreductionthatcanthenbescaledupwithpublicdol-
lars.Thiscanhelpsidesteponeproblemofrelyingoncharity
alone:well-endowedfoundationsfocusingontheplightofcities,
notsmalltowns.WhileBarackObamawaspresident,theDepart-
mentofEducationbegana “PromiseNeighbourhood”programme
thatsoughttoreplicatehcz-stylezonesinplaceslikeeasternKen-
tucky.Butmeasuringtheultimatesuccessoftheseinitiativesre-
quiresdecadesoftracking.Inthemeantime,povertyprevention
amongchildrenisalmostcertainlycheaperthanrehabilitation. 7
Social mobility, Harlem-style
E
vencriticswhothinkthatpovertyresultsfroma defective
characterconcedethatpoorchildren,all13moftheminAmeri-
catoday,arenottoblamefortheirplight.Butassoonastheyreach
theageof18,manyofthosechildrenwillbecomepooradultswho
willthenbeunceremoniouslydeemedculpablefortheirpredica-
ment.Bytheofficialstatistics,nearlyoneinsixAmericanchildren
ispoor.Bythespm, whichtakesbenefitsandcostoflivingintoac-
count,thingslookonlya bitbetter:justoveroneinsixispoor.
TheyareconcentratedinclustersacrosseverystateinAmerica.
TheyarefoundindepressedareaslikeCleveland,wherehalfof
childrenlivebelowthefederalpovertyline,ruralSouthDakotaand
centralAppalachia.Theyarealsofoundamongimmenseprosper-
ity—thechildrenlivingintheBronxoroftheserviceworkerswho
drivethreehourseachwaytodomenialjobsinSanFrancisco.
ThisAmericantragedyisanignoredone.Poorchildrenneither
votenorhirelobbyists.It isalsomorallysenseless,punishingchil-
drenforthesinsormisfortunesoftheirparents.It iseconomically
pointless,too.Poorchildrenwhogrowuptobepooradultshave
notjustreducedincomes,butshorterlivesanda higherriskof
criminality.Thesafetynet,althoughimportant,doeslesstoblunt
povertyinchildrenthaninadults.
Itwasnotalwaysthisway.WhenMichaelHarringtonwrote
“TheOtherAmerica”in1962—aseminalstudywhichhelpedspark
LyndonJohnson’swaronpoverty—theelderly,hobbledbymedical
andhousingcosts,werethepoorestagegroupinthecountry.“Fif-
typercentoftheelderlyexistbelowminimumstandardsofdecen-
cy,”hewrote.Today,theproblemhasbeeninverted.Withthead-
ventofuniversalprogrammeslikeMedicare,thehealth-insurance
schemefortheelderly,andSocialSecurity,thepublic-pension
programme,thereisnoagegroupbetterserved.Accordingtothe
spm, 48%ofelderlyAmericanswouldhavebeenpoorwithoutthe
safetynet.Aftertaxesandtransfers,thatfigureisdownto14%.
WhatAmericahasdoneforitselderly,it canalsodoforitschil-
dren,withlesscomplicationandcost.Theprimaryleverisreori-
entingpublicsafety-netspendingaroundpoorchildren.Itisim-
portanttospendsothatpooradultsdonotgohungry,homelessor
untreatedforillness.Butwhileitishardfora personrelianton
foodstampsattheageof 40 toachieveself-sufficiency,opportuni-
tiesstillaboundforthepoorchildreceivingfreelunchesatschool.
Everyonelearnstogether
Thesecondimperativeisforintegration.Increasingly,poorchil-
drenaresegregated,livingandattendingschoolwithotherslike
them.A bifurcatedsocietyismorethanjustdamagingdemocrati-
cally.Livinginconcentratedpovertyworsensoutcomesinfuture
health,criminality,employmentandhappiness.
Severelyreducingoreliminatingchildpovertythroughthe
simplestmeans imaginable—unrestricted cash transfers—can
seemstarry-eyeduntilonestudiesthedetails.DavidGruskyof
StanfordUniversitysaysthatthestateofCalifornia,whichhasthe
highestshareofpoorpeopleafteraccountingfortaxes,transfers
andcostofliving,couldenddeepchildpovertywithtargetedcash
transfersthatamounttoa mere$2.8bnperyear.Thisis“insane”,
headds.It isa quarterofthesumthestatespendsonprisons.
Targetedanti-povertyprogrammesinAmericausuallyattracta
The kidsarenotalright
Povertyhaslong-lasting,destructiveconsequencesforchildren
Children
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