Is Vermont lagging behind the “aid to enterprise” trend?

by Robert Maynard

Back on march 24th, this site carried an article, which explored an alternative model to fighting poverty.  The project is entitled “Povertycure: From Aid to Enterprise.”  Here is how the project is described: “The PovertyCure vision for development isn’t based on untested theory. It’s founded on decades of successful, sustainable practices employed by organizations from every continent. Explore our network to learn how our 190+ partners spanning 142 countries are making a difference.”

Here are a list of some of the approaches they are moving away from and the alternative approaches that they are moving towards:

  • From aid to enterprise
  • From poverty alleviation to wealth creation
  • From paternalism to partnerships
  • From handouts to investments
  • From seeing the poor as consumers or burdens to seeing them as creators
  • From viewing people and economies as experiments to pursuing solidarity with the poor
  • From viewing the poor as recipients of charity to acknowledging them as agents of change with dignity, capacity, and creativity.
  • From encouraging dependency to integrating the poor into networks of productivity and exchange
  • From subsidies and protectionism to open trade and competition
  • From seeing the global economy as a fixed pie to understanding that human enterprise can grow economies

Their extensive experience in dealing with poverty in the developing world has led them to the conclusion that simply showering benefits on the poor can end up doing more long term harm than good.  That is a lesson which we here in Vermont could learn from. It seems that the solution to poverty on the part of a large sector of Vermont’s anti-poverty activists is to create more government programs that will shower the poor with more benefits that come from already over burdened taxpayers.  It would be one thing to constantly call for more taxes and spending for more programs if there was any evidence that this approach worked, but there is scant little evident that it does.  The latest such example of this approach in the call to raise the state provided benefits for unemployed workers.  This story was covered in the Vermont Digger article.  The following bit of information was pointed out in the article by the Associated Industries of Vermont’s (AIV) Vice President William Driscoll:

According to Driscoll, who analyzed federal government data, Vermont’s weekly benefit, relative to the state’s average wage, is 20 percent higher than national average unemployment benefits.

State businesses also face an unemployment insurance tax burden 63 percent higher than the national average, said Driscoll.

Vermont is lagging behind the trend that is moving “from aid to enterprise.”  Instead of creating more dependency by throwing more benefits at the poor, we should be encouraging enterprise by freeing up businesses from the shackles of excessive taxes and regulation.  We should also raise the question of just who is benefiting from all of these government programs that are keeping the poor dependent on them.

Robert L. Woodson has been an anti-poverty and civil rights activist since the 1960s. He is founder and president of the National Center for Neighborhood Enterprise (NCNE).  Here is how he describes what he refers to as the “Poverty Industrial Complex”:

Prior to the 1960s, the black community, even though we had no political rights, didn’t have voting rights, were not represented in local government and some of us being lynched everyday. Even in the presence of all those economic and social injustices, the black marriage rate in 1930 to 1940 was higher than in the white community. That 82 percent of all black families had a man and a woman raising children. The out-of-wedlock birth was something like 12 or 15 percent and that was considered a scandal. So, but what happened in 1960 when government intervened with the poverty programs a major paradigm shift occurred. And that is: government began to intervene and 80 percent of the money that it invested went not to institutions and communities but to a service industry. And so 82 percent or 80 percent of the money that government spent on helping poor people does not go to poor people but to professional service providers. They ask not which problems are solvable, but which problems are fundable this year, and as a consequence of this we had the poverty programs. We provided perverse incentives for maintaining people in poverty. So that if you are running an agency to serve poor people, you get paid for the number of people you purportedly serve not how many problems you solve. Also welfare policy made a major shift and contributed to the decimation of the family, as well, because welfare policy said if you drop out of school, don’t work, have babies the government will pay you. And the more children you have the more we’ll pay you. Even the public housing policies mitigated against healthy families. For instance, if you and I had an increase in salary our rent or mortgage payment doesn’t go up, but if you are a resident in public housing your income is, your rent is indexed to your income so that’s a disincentive for families to form. So there, it was a perfect storm of government policies, as well as welfare policies. Where now 30 percent of black families have a man and a woman raising children and it is true not only for the black community but for other groups as well. So obviously government has injured with the helping hand.

 We need to stop assuming that the answer to poverty is to funnel more money into more government programs administered by government bureaucrats.