If you’ve read Charles Murray’s Losing Ground, you probably know the story already, but this piece provides a nice summary of the same information even if you haven’t:
The 1960s Great Society and War on Poverty programs of President Lyndon Baines Johnson (LBJ) have been a colossal and giant failure. One might make the argument that social welfare programs are the moral path for a modern government. They cannot, however, make the argument that these are in any way effective at alleviating poverty.
In fact, there is evidence that such aggressive programs might make generational poverty worse. While the notion of a “culture of dependence” is a bit of a cliché in conservative circles, there is evidence that this is indeed the case – that, consciously or not, the welfare state creates a culture where people receive benefits rather than seeking gainful employment or business ownership.
This is not a moral or even a value judgment against the people engaged in such a culture. Again, the claim is not that people “choose to be on welfare,” but simply that social welfare programs incentivize poverty, which has an impact on communities that has nothing to do with individual intent.
We are now over 50 years into the development of the Great Society and the War on Poverty. It is time to take stock in these programs from an objective and evidence-based perspective. When one does that, it is not only clear that the programs have been a failure, but also that they have disproportionately impacted the black community in the United States. The current state of dysfunction in the black community (astronomically high crime rates, very low rates of home ownership and single motherhood as the norm) are not the natural state of the black community in the United States, but closely tied to the role that social welfare programs play. Or as Dr. Thomas Sowell stated:
“If we wanted to be serious about evidence, we might compare where blacks stood a hundred years after the end of slavery with where they stood after 30 years of the liberal welfare state. In other words, we could compare hard evidence on “the legacy of slavery” with hard evidence on the legacy of liberals.”
It then provides a nice overview of the various Great Society welfare programs before covering the the resulting breakdown of the black family, declining black participation in the labor market, etc. The section on black business ownership is one I don’t think Murray really touched on:
Participation in the labor market is not the only metric of economic activity. Another is business ownership. The years between 1900 and 1930 are known as “the Golden Age of Black Entrepreneurship.” By 1920, there were tens of thousands of black businesses in the United States, the overwhelming majority of them very small, single proprietorship. This in no way diminishes the importance of this sector of the black economy. People who had, in many cases, started their lives as slaves were now, even when “poorer” in terms of income, freer than many of their white counterparts who worked for wages.
There was also a social aspect to this period of black entrepreneurship. Black insurance companies and black-owned banks represent the apex of the economic pyramid in the black community. While the black community was comparatively poorer than its white counterparts, money spent by black Americans could stay within the black community. Thus, the black community could enrich itself from the bottom of the ladder all the way up to the top.
This concept was known as “double duty dollars.” The idea is that money spent at black businesses not only purchased goods for the consumer, but also played a role in advancing the black race in America. This, and not government handouts, was seen as the primary means of achieving, if not a perfect equality with whites, a social parity with them.
Another aspect of why black entrepreneurship was so important in the black community was that national businesses tended to ignore the black market entirely. This, however, began to change in the 1950s and, to a much greater extent, by the dawn of the next decade. No one forced national businesses to begin marketing their products to black America. National businesses simply saw that there was an emerging black middle class with money to spend and didn’t want to get cut out of the market.
Today, black business ownership is in a state of “collapse” according to Marketplace.org. This cannot entirely be laid at the foot of the Great Society. For example, the unlikely culprit of integration is one of the reasons that the black business districts began to fall apart. For example, once the biggest burger joint in town would serve black people, there was no reason to go to “the black burger joint” anymore.
Still, it’s impossible to separate the end of the thriving black business districts from the Great Society. These were once centers of the community, in addition to being centers of commerce. Now they are virtually extinct. While other factors are in play, it’s difficult to not notice the overlap between the rise of the welfare state through the Great Society, the overall decline in the black community’s civil society anchored by the black business community, and black business ownership in general.
Read the whole thing. (And read Losing Ground if you haven’t already; it’s the most important book written about welfare policy in the last half century.)