The Boston Globe: A proven way to reduce poverty? Give poor people money

Ian Pajer-Rogers |

From The Boston Globe:

by Evan Horowitz

Poverty is such a longstanding, deeply-rooted problem that it’s hard to believe there could be a relatively straightforward way to address it. But here’s one: Give poor people money.

That’s a highly controversial idea here in the United States, where so many social programs are focused on helping people find work, rather than offering them services or sending them checks.

But elsewhere around the world, things work differently. Virtually every developed nation has a lower poverty rate than the US. That’s not because all their citizens have jobs and earn a decent living. It’s because they provide direct assistance to those at risk, in the form of cash, housing subsidies, pensions, and child benefits. 

How do other countries fight poverty?

By collecting taxes and distributing the money to people who need it. And it really does seem to work.

One way to see the central role tax-and-transfer programs play is by looking at what would happen if they didn’t exist. In other words, how many people would be living in poverty if they had to survive on their paychecks alone?

It turns out that even in famously egalitarian European nations, lots of people would be left with poverty-level earnings if it weren’t for government support. One in every three people in France and Germany would be living in poverty, one in four in Sweden and Denmark. And by this measure, the United States fits right in, with a poverty rate of 28 percent.

No one, in other words, has been able to tackle poverty by building an economy that works for all involved. Yes, European countries tend to have higher unionization rates, tighter business regulations, and other mechanisms to ensure that workers get a meaningful share of the profit pie. But what the above chart shows is that if people had to rely on salary alone, poverty would be a massive social problem.

Read the full story from The Boston Globe.