By Dr. Harold Black
Sunday, September 2, 2012
In most areas, government has an unbroken record of failure. Yet we tolerate it. Over $16 trillion has been spent on the War on Poverty with no impact on the percentage of people in poverty. This past year welfare spending is $668 billion spread over 126 programs or about $14,000 per poor American.
The question is how much of the money actually redounds to the benefit of the recipient or is used simply to support those who administer the money? Years ago when I reached the point where I was paying enough in income taxes to support a family of four above the poverty level, I said that I wouldn't mind paying the taxes if you just assigned me a family. I would send them the check every month — instead of to the IRS. That way I could get pictures of the kids, visit them at Christmas and take them to baseball games.
There is an obvious disconnect between expenditures and results. Unlike the market, which punishes failure, the government rewards it. Just like the Department of Education has failed to increase educational achievement and the Department of Energy has failed to provide for energy independence, there is no doubt that the War on Poverty has been a failure.
In 2009, President Obama stated that he "will use only one test when deciding what ideas to support with your precious tax dollars: It's not whether an idea is liberal or conservative, but whether it works."
So what was his response to a major study which showed that Head Start has spent more than $100 billion without there being any difference after the first grade between children who were in Head Start and those that were not? The administration recommended an increase in Head Start funding.
Currently, Head Start costs $22,600 per child versus the average cost of day care being $9,500. Don't you think we could do better? Of course we could.
If bids were taken to fund Head Start at $10,000 per child, the market could produce results that would truly create a head start for those kids. Instead of the government collecting and doling out the money for programs, we should privatize most of government. If we wanted to get people out of poverty rather than keeping them impoverished, we should tie incentives to the receipt of funds.
As Ben Franklin said "I am for doing good to the poor, but … I think the best way of doing good to the poor, is not making them easy in poverty, but leading or driving them out of it. I observed … that the more public provisions were made for the poor, the less they provided for themselves, and of course became poorer. And, on the contrary, the less was done for them, the more they did for themselves, and became richer."
If we put the various programs out for bid, we would get innovative solutions that would work. If the company that received the contract could not produce the results, then it would have to pay a hefty fine.
The same could be done in education and in energy. Since the founding of the Department of Energy we have become less energy independent. Privatizing education would result in higher levels of achievement across the board.
Do you know that there are programs that result in higher levels of reading proficiency in areas serving at-risk children than are achieved in even the "best" public schools in Knoxville? So instead of bemoaning the state of poverty, of education and of energy, privatization would produce the results that most of us should demand from our governments.
To quote Alfred Jay Nock, "It is a curious anomaly. State power has an unbroken record of inability to do anything efficiently, economically, disinterestedly or honestly; yet when the slightest dissatisfaction arises over any exercise of social power, the aid of the agent least qualified to give aid is immediately called for."
Harold A. Black is professor emeritus in the Department of Finance, University of Tennessee, Knoxville having retired after 24 years of service. He has served on the faculties of American University, Howard University, the University of North Carolina - Chapel Hill and the University of Florida. His government service includes the Office of the Comptroller of the Currency and as a Board Member of the National Credit Union Administration. He also has served on the boards of directors Home Savings of America and its parent company, H. F. Ahmanson & Co., Irwindale, California prior to its merger with Washington Mutual Savings Bank, on the board of New Century Financial Corporation, Irvine, California, then the nation’s largest real estate investment trust and as director and later chairman of the Nashville Branch of the Federal Reserve Bank of Atlanta. He writes an occasional article for the Knoxville News-Sentinel at http://www.knoxnews.com/staff/dr-harold-black/. His web page is haroldablackphd.com