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BOHANON & STYRING: War on Poverty funds wasted in Baltimore, too

May 16, 2015

Economic AnalysisPresident Obama and most “progressives” truly believe a lack of government spending is the reason Baltimore and other inner cities are a mess. Their solution is “massive public investment.” A companion argument is that Baltimore public schools are lousy due only to lack of resources. If only we had enough money for more programs for at-risk kids!

The problem with this narrative is that it’s demonstrably untrue. We’ve fought a 50-year War on Poverty with a cornucopia of public dollars. Poverty is winning.

Consider the city of Baltimore as a whole. Our friend Alex Tabarrok points out in The Marginal Revolution blog that Baltimore public schools spend over $17,000 per student (the national average is $12,281). Baltimorans pay little of this. Over 81 percent of the funds come from state and federal taxpayers (the national average is 55 percent). Just how much is enough?

In addition to various development, infrastructure and transfer programs, The Washington Free Beacon reports that, from 2009 to now, the city of Baltimore received an additional $1.8 billion in “stimulus” funds. Had the money been targeted to the poorest one-fourth of the population, that would have been $12,000 per person.

That means that, in addition to whatever other public assistance, a mom with two kids could have been given a $36,000 grant—enough for a two-year degree or to make a down payment and repairs on a house.

The Wall Street Journal reports the Sandtown-Winchester neighborhood of Baltimore (population 11,000), where the worst riots took place, has benefited from special largess. In the 1990s, a public-private partnership (headed by Jimmy Carter) poured in $130 million to fix homes and schools. The feds made it a “homeownership zone” and added another $30 million.

The failure of anti-poverty programs isn’t unique to Baltimore. Poverty was declining rapidly before LBJ declared War on Poverty in 1964. Using current measures, in 1914 about 66 percent of the U.S. population lived in poverty. By 1965, when the poverty warriors were just cranking up, it had dropped to 15 percent. Since then, the figure has bounced up and down. In 2013, it was 14 percent.

Fifty years and literally trillions of well-intentioned dollars have bought us a 1-percent decline in the poverty rate.

With a war record like that, Eisenhower would have been fired.

We’re just a couple of dumb economists and don’t pretend to have all the answers to society’s ills. But doesn’t the evidence say we should try something different?•

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Bohanon is a professor of economics at Ball State University. Styring is an economist and independent researcher. Both also blog at INforefront.com. Send comments to ibjedit@ibj.com.

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