An Inquiry Into the Nature and Causes of Poverty in America and How to Combat It (2023)

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An Inquiry Into the Nature and Causes of Poverty in America and How to Combat It (1)

Jack Kemp


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An Inquiry into the Nature and Causes of Poverty in America And Howto Combat It

By The Honorable Jack Kemp It is a pleasure to be back at Heritageamong so many friends and colleagues. Actually, I was lookingforward to working here, until President Bush asked me to 'oin hiscabine t. After my first couple days at HUD, when I starteddiscovering the scandal and abuse, I al- most called Ed Feulner toget my old job back. We are living in the single most dramatic erain world history, other than perhaps at the founding of ourRepublic in the Revolution of 1776. Consider this quotation: In anironic sense, Karl Marx was right. We are witnessing today a greatrevolutionary crisis - a crisis where the demands of the economicorder are colliding directly with those of the political order. But the crisis is happening not in the free, non-Marxist West, butin the home of Marxism-Leninism, the Soviet Union. What we see hereis a political structure that no longer corresponds to its economicbase, a society where productive forces are hampered b y politicalones. Ladies and gentlemen, that was not last month or last year,that was said in June 1982 by President Ronald Reagan in anhistoric speech to the English Parliament. How far we've come! Andwe've come a lot further than even Mikhail Gorbach e v understands.Just a few days ago at Stanford University, he said that it doesn'tmatter who won the Cold War. With all due respect, it does matter,very much.17he real Cold War victory is not our arms over theirarms, it is a victory of the American ide a of democraticcapitalism over the Soviet idea of statist socialism. The truth isPresident Gorbachev will not be able to repair socialism, it mustbe replaced. All around the world, despite the resistance of theold guard, freedom and free markets, democ r acy and capitalism areincreasingly on the march. From Eastern Europe and Latin America toAfrica and Asia and even the Soviet Union, people are dreaming offreedom and democracy after decades and even centuries ofoppression, poverty, despair, and debt. P ermanent Revolution. Inhis State of the Union address, President Bush called it therevolution of 1989, but perhaps it may be in reality just thecontinuation of the American revolution of 1776. Marxist-Leninistsused to talk about their "permanent revol u tion," but as it turnsout the only permanent revolution the world has ever seen is theAmerican Revolution. Yet, in such revolutionary times, CharlesDickens's observation on the French Revolu- tion may well stillapply: it can be the best of times and t he worst of timessimultaneously. Here in the U.S., we're enjoying unprecedentedeconomic growth and opportunity, yet after nearly eight years ofcontinuing expansion, there are some parts of our nation and alltoo

(Video) What It Takes to Escape Poverty

The Honorable Jack Kemp is Secretary of the Department ofHousing and Urban Development. He spoke at The Heritage Foundationon June 6,1990. ISSN 0272-1155. 01990 by The HeritageFoundation.

many of our people left out and left behind, suffering from thetragedy of h omelessness, poverty that stretches over generations,and a sense of hopelessness and despair about the future. As EdFeulner said recently, the world is looking to us for advice on thefree market ideas of Adam Smith: "They don't want lectures onincome r edistribution and capitalist exploita- tion, they wantincome and capitalism." Ed is right; -but after one and a half-years of -representing-the. Bush Administration at HUD, I knowthat not only is Eastern Europe looking to us for market-orientedanswers , but so is East Harlem, East St. Louis, and East LA. If weare to present the example of democratic capitalism and the rule oflaw to the rest of the world, we've got to make it work for thelow-income people and distressed neighbor- hoods and communitiesright here in our own country. Right Morally. Helping those leftbehind and left out is not only a moral imperative for our nation,I am convinced it is also a winning - indeed decisive - politicalstrategy for bringing impoverished communities and low-in c omepeople and minorities into the ranks of the Party -of Lincoln.Whether it's called bleeding heart conservatism, capitalism with asocial conscience, or populist conservatism - it's the right thingto do, the right time to do it, and we're the right pe o ple tohelp lead it. Robert Kuttner of the New Republic, anequally-bleeding heart but liberal columnist, recently wrote thatpolls continue to show that the voters trust Republicans more thanDemocrats to conduct foreign policy, manage the economy, hold d owninflation, and resist higher taxes. Democrats still score only onthe question of who cares more about the com- mon American. He goeson to conclude that if Republicans ever figure out that they cancapture the issue of caring as well, the Democrats m i ght as wellgo out of business. Now, I don't want to put them out of business,just out of the Congress! Traveling across the country, I've seenthousands upon thousands of low-income people and families inpublic housing communities eagerly seeking chang e and respondingpositive- ly to our ideas. They don't want more government promisesand egalitarian welfare schemes, they want to live in neighborhoodsfree from crime and drug abuse, with good jobs and opportunities toown property and homes; they want q u ality education so that theyand their children can live better lives. They want what we allwant - a chance to develop their talent, potential, andpossibilities. Republicans Understand. Our friend Kimi Gray ofKenilworth-Parkside recently said that her r esidents and publichousing tenants throughout the country may be registered Democrats,but they work with Republicans because Republicans are "the onesthat seem to understand that we do not want to stay a poor andpermanent underclass." Well, of course t hat's true. And that's howMr. Lincoln built the Republican Party. As he said, "When onestarts poor, as most do in the race of life, free society is suchthat he knows he can better his condition: he knows that there isno fixed condition for his whole l i fe." A debate over how toincrease the wealth and opportunities of the poor plays to thestrengths of our Party's Lincoln wing - our most authentic roots.The Democrats will win any debate over redistribution. After all,that's what they are on this earth for. But that's the


debate of yesterday. Today's debate is how to tap and unleash thewealth, talent, and poten- tial in low-income communities andcities all over America. Cuomo's Tale. In 1984, Governor MarioCuomo of New York electrified the Demo cratic Convention with histale of America as two cities, one rich and one poor, permanentlydivided into two classes. He talked about the rich growing richerand the poor becoming poorer, with the conclusion that classconflict, if not warfare, was the o n ly result, and redistributionof wealth was the solution. But with all due respect to GovernorCuomo, he got it wrong. America is not divided im- mutably into twostatic classes. But it is separated or divided into two economies.One economy - our mainstr e am economy - is democratic capitalist,market-oriented, entrepreneurial, and incentivized for workingfamilies whether in labor or management. This mainstream rewardswork, investment, saving, and productivity. Incentives abound forproductive human, econ o mic, and social behavior. It was thiseconomy led by President Reagan's supply-side revolution of taxrate cuts in 1981 that generated 21.5 million new jobs, more than 4million new business enterprises, relatively low inflation, andhigher standards of l i ving for most of our people. This economyhas created more jobs in the last decade than all Europe, Canada,and Japan combined. And according to the U.S. Treasury, federalincome taxes paid by the top I percent of tax- payers has surged byover 80 percent - up from $51 billion in 1981 to $92 billion in1987. Harvard and White House economist Lawrence Lindsey estimatesthat by 1985, economic output was between 2 and 3 percent higherthan it would have been without the tax cut. But the best news ofthe eight i es was that good policies lead to good results,confirming what deep down we always understood, that the realwealth of America comes not from our physical resources, but ourhuman resources; not from things, but from ideas. But there isanother economy - a second economy that is similar in respects tothe East- ern European or Third World "socialist" economy if youwill - and it is almost totally op- posite to the way people aretreated in our mainstream capitalist economy, and it predominatesin the pock e ts of poverty throughout urban and rural America.This economy has barriers to productive human and social activityand a virtual absence of economic in- centive and rewards that denyentry to Black, Hispanic and other minority men and women into themain s tream, almost as effectively as hiring notices 50 years agothat read "no Blacks (or Hispanics or Irish or whatever) needapply." Noble Intentions Gone Awry. The irony is that the secondeconomy was set up not out of malevolence, but out of a desire tohe l p the poor, alleviate suffering, and provide a basic so- cialsafety net. But while the intentions were noble, the results led toa counterproductive economy. Instead of independence, it led todependency. In effort to minimize economic pain, it maximizedwelfare bureaucracy and social costs that are near pathological.Now, let's pause, and step away from our orthodox notions andexamine this from afar. What if you wanted to create poverty. Whatpolicies and principles would you use to destroy the economy ofcities and make people dependent on government? How would you doit? Let me offer some suggestions: 1) Impose steeply graduated andprogressive tax rates and then inflate the currency to push peopleinto ever higher tax brackets.


2) Reward welfare and unemployment at a higher level than workingand productivity. 3) Tax the entrepreneur who succeeds in the legalcapitalistic system much higher than in the illicit undergroundeconomy. 4) Reward people who stay in public housing more thanthose who w a nt to move up and out into private housing andhomeownership. 5) Reward the family that breaks up rather than thefamily that stays together. 6) Encourage debt, borrowing, andspending rather than saving, investing, and risk-taking. 7) Butmost of all, if you really wanted to create poverty and dependency,weaken and in some cases destroy the link between effort andreward. Examples abound of howThird World disincentives havecreated poverty in inner cities. I recently read a Wall StreetJoumal article abo u t a woman on welfare in Milwaukee, Wiscon- sinwho tried to put away a few pennies, nickels, dimes, and dollars sothat one day she --could -do what every other mother wants to do,send her daughter to college. She managed to build a savingsaccount of ju s t over $3,000, but there was a catch. The socialwelfare agen- cy said she was violating welfare rules. She wastaken into court, prosecuted for fraud, and fined $15,000. Butsince she didn't have $15,000, they just took her $3,000, gave hera year's sent e nce in jail, but suspended it. Guess what?According to the same Wall Street Joumal article, she now spendsevery cent she gets, and she must rely on government subsidies topay for just about everything. Inci- dently, the story may have agood ending for this woman. After I talked about her in a speech, aman came forward from the audience and offered to finance a trustfund for the cost of a college education for the young girl. EugeneLang, a wealthy businessman from New York City, also believes inthe p ower of incentives to produce positive behavior. According tothe New York I-Imes, he went into P.S. 121 elementary school inEast Harlem and told children that if they stayed in school, gotgood grades, stayed drug free, and qualified, he would personall ypay for a college educa- tion. Talk about behavior modification!Whereas, 60 percent of those children were drop- ping out, today 90percent are in their first two years of college. Negative Pay. Thestartling fact in America today, however, is that the h ighestmarginal tax rates are not being paid for by the rich, but bywelfare mothers or unemployed fathers who want to take a job. Inmost cities, a welfare mother would have to earn $15,000-$18,000 ina private sector job to earn the equivalent of the av e ragetax-free welfare payment. Ac- cording to a study by ChristopherJencks and Kathryn Edin in the American [emailprotected] magazine, aworking mother with two children employed at about $5.00 per hour,would ac- tually take home pay of about minus 45 cents per hour.She'd be losing nearly $4.00 a day after taking into account theloss of government benefits, taxes, and work-related expenses suchas transportation and child care. The heavily-regulated U.S.housing market is another example of government-created scarcity.Rent controls in many major cities have crippled rental housing bymaking it un- profitable to be a landlord or investor in affordablehousing. And make no mistake about it,


rent controls do not help the poor. The foreign minister of communistic North Vietnam vividly recalls the lessons of rent control inthis own country when he said recently that the war couldn'tdestroy housing in Hanoi, "but we have destroyed our city by verylow rents. We realize it was stupid and that we must change p olicy." Ladies and gentlemen, if communists can learn to change, whycan't bleeding heart, liberal democrats! Subsidies forAffluent.-While affordable housing is a real-national challenge,and we in the Administration are taking steps to solve it, there isno shortage of low-income housing in some so-called tight markets -it's just occupied by affluent people. Author William Tuck- erpoints out that Ed Koch maintained a $441 per month GreenwichVillage apartment during his twelve years as mayor of New York andactress Shelly Winters paid a little more for a two bedroomapartment near Central Park. Another glaring example ofcounterproductive government policy is how HUD was sub- sidizingvacant public housing until we took over. It had been costing thetaxp a yer over $1,300 per unit to subsidize vacant public housingoften used as crack houses for gangs and drug pushers. You'll beglad to know that we have started a policy called Operation Oc-cupancy where only units actually occupied by low-income people Wil l be subsidized with public housing funds. As I said earlier, thegood news is that government policies can change and that goodpolicy can lead to good results. Productive human effort can bepromoted, behavior can be modified or altered. Work effort can beunleashed. Tle forces that cause poverty can be reversed. PresidentBush said that for these seeds of productive behavior to grow, wemust d9give people -working people, poor people, all our citizens -control over their own lives. And it means a commi t ment to civilrights and economic opportunity for every American." Along withplanting a billion new trees in the decade of the nineties, weought to plant the seeds of millions of new minority enterprises.In other words, expanding the base of capitalism and access tocapital can alter the conditions of poverty. In the BushAdministra- tion, we recently set as a goal the creation of morethan I million new home owners by 1992 through our HOPE initiative,i.e., Homeownership and Opportunity for People Ever y where. Weplan through urban homesteading, privatization of public housing,and reform of FHA to make homeownership and empowerment thehallmark of this Administration's housing and urban developmentpolicy. As columnist William Raspberry wrote recently " . ..whenassets are present, people begin to think in terms of the asset. Ifa young mother owns her own home, she begins to pay at- tention toreal estate values, property taxes, the cost of maintenance and soforth .... Note," he says, "that it is the ass e ts themselves thatcreate this effect, as opposed to just educational programs orexhortations toward better values." Freedom and Opportunity. StuartButler and Bob Woodson point out that to the liberals, empowermentmeans giving power to government to co n trol our lives. Butempowerment really means not control over others, but freedom tocontrol one's own affairs. Tle poor don't want paternalism, theywant opportunity - they don't want the servitude of welfare, theywant to get jobs and private property. They don't want dependency,they want a new declaration of independence.


In that spirit, let me outline some ideas for a national agenda tohelp low-income people and our nation find the keys that willunlock the shackles and cycles of poverty and despair. First, cutthe capital gains tax to 15 percent for the nation and elimi n ateit altogether in distressed inner cities and rural communities wewould designate as Enterprise Zones. President Bush correctlyimplored the Democratic majority in Congress to cut the capitalgains tax rate and finally - after ten years - to establish what 37states have already imple- mented, Enterprise Zones, as a nationalpolicy. The capital gains tax reduction isn't to help the rich orsecure old wealth, but to free up or unlock old capital and oldwealth to help new business, new risk-takers, job- c reation, andeconomic growth. Virtually every survey shows that the majorproblem for inner city entrepreneurs is the absence of seedcapital. The capital gains tax reduction, coupled with EnterpriseZones, will help "unlock" existing, status-quo capital t o fund andsupport a whole new generation of budding entrepreneurs inAmerica's inner cities where economic opportunity is needed most.When the top capital gains tax rate was reduced from 49 percent to20 percent, the num- ber. of start-ups more thandoubled, rising to 640,000 and creating 15 million new jobs. Bydramatically reducing the capital gains tax rates again, andgreenlining inner city neighborhoods, we can expand the economy andput that enormous job-creating poten- tial to work w h ere it isneeded most. Not only would a lower capital gains tax rate help thepoor, but it would also increase tax revenues. Lower capital gainsrates would greatly increase the number of capital gains trans-actions passing through federal, state, and lo c al tax gates,raise the total value of assets throughout the economy, and makethe economy bigger, more efficient, and more produc- tive. Second,an expansion of resident management and urban homesteading inpublic housing can empower residents to acquire private ownershipand control of their homes and receive pride and dignity ofownership. Third, housing vouchers and certificates should besignificantly increased and expanded so as to give low-incomefamilies greater choice and more freedom where to liv e , while ex-panding access to affordable housing for those most in need.Fourth, a new version of tax reform is needed to remove low-incomefamilies from the tax rolls and dramatically increase the after-taxincome of welfare mothers and unemployed father s who go to work.In 1948, at the median income, a family of four paid virtually noincome taxes, and only $30 a year in direct Social Security taxes(1 percent). T'his year, the same family's tax burden would be over$6,000. To be comparable to 1948, the p ersonal exemption - the taxal- lowance for the costs of nurturing children -would have to bewell over $6,000 today. In- stead, it is only $2,000. Fifth, adramatic expansion of the earned income tax credit, the creation ofup to a $6,000 exemption for c hildren under 16, and thePresident's Child Care tax credit to roll back this tax burden onlow-income families and unemployed parents.


Sixth, helping homeless people who now wander aimlessly in streetsor are warehoused in shelters. ne Congress should pass theAdministration's new Shelter Plus Care program to expandcommunity-based mental health facilities, drug abuse treatment, jobtraining, and day care. This program will help homeless Americansget shelter, transitional housing, and support service s to helpthem reenter the mainstream economy. Seventh, in order to enhanceeducation and opportunity, we've got to expand true choice andcompetition through magnet schools, education vouchers, tuition taxcredits, and the type of choice-enhancing policie s that Wisconsinstate Representative Polly Williams and Detroit CouncilmemberReverend Keith Butler recommend. Eighth, Congress should passPresident Bush's HOPE legislation, including IRAs for first timehomebuyers, the low-income housing tax credit, and OperationBootstrap linking hous- ing vouchers to strategies for gainingself-sufficiency. Winning the War. My friends, over 200 years agoAdam Smith wrote the recipe for creat- ing wealth. It was titled anInquiry into the Nature and Causes of the Wealth of Nations. Today,I'm asking for an inquiry into the nature and causes of the wealthof cities. It's a variation o.n.Adam Smith's theme of "naturalliberty." As I said in another speech to Heritage about what GeorgeGilder called the quantum age of new t e chnology, our greatestassets are not in the wealth we see around us but the potentialwhich is unseen ... in the minds yet to be educated, in thebusinesses not yet opened, the technologies not yet dis- covered,the jobs waiting to be created. Wealth is n ot what we've done, butwhat we have yet to do. This is a country of dreams. America haslong dreamed of a better future for people everywhere. America'spermanent revolution has brought a fresh air of freedom that'sblow- ing around the world. Yes, it's a struggle. Yes, we need tostay strong. Yes, we need to main- tain our alliances. Yes, we mustmaintain peace through strength. But also it's time to bring therevolution back home to America to extend the capitalist economyacross our whole society, and p ut it to work for all of ournation's people. In May 1981, Ronald Reagan said that "T'he Westwill not contain Communism, it will transcend Communism. We willnot bother to denounce it, we'll dismiss it as a sad, bizarrechapter in human history whose las t pages are even now beingwritten." Just as Ronald Reagan predicted the transience ofCommunism, so must we commit our- selves to put poverty on a pathtowards elimination. Let us make the decade of the '90's the timewe win the war against poverty, just as the decade of the '80's wasthe time we won the cold war against Communism. Let us dedicatethis decade to the rebirth of human poten- tial, freedom, andequality of opportunity for all. Thank you, and God Bless America.

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What is the best way to combat poverty in the US? ›

  1. Eliminating poverty through equity. One of the main causes of poverty is inequality. ...
  2. Reducing poverty with resilience. ...
  3. Commit to climate change solutions and climate justice. ...
  4. Eradicating poverty through education. ...
  5. Halting poverty by ending hunger (and thirst) ...
  6. Poverty alleviation through peace. ...
  7. Cash solves poverty.
24 Apr 2022

How can we solve poverty short answer? ›


Simply eating three meals a day and getting a healthy amount of calories and nutrients can go a long way to addressing the cycle of poverty. When a person doesn't have enough to eat, they lack the strength and energy needed to work.

What is the cause of poverty essay? ›

The other causes are- lack of education, war, natural disaster, lack of employment, lack of infrastructure, political instability, etc. For instance- lack of employment opportunities makes a person jobless & he is not able to earn enough to fulfill the basic necessities of his family & becomes poor.

What actually causes poverty? ›

Poverty rarely has a single cause. A range of factors including rising living costs, low pay, lack of work, and inadequate social security benefits together mean some people do not have enough resources.

Why poverty is the main problem of the world? ›

Quick Facts on Global Poverty

Hunger, lack of sanitation and access to clean water and lack of resources for proper health care are the main reasons.

What is the government doing to combat poverty? ›

Improving living conditions through developing basic physical and social services, health care, and education and training for urban and rural communities. Establishing a social security system and other safety nets and protect the poor, the disabled, the elderly and other vulnerable groups.

What is poverty in your own words? ›

Poverty is about not having enough money to meet basic needs including food, clothing and shelter. However, poverty is more, much more than just not having enough money. The World Bank Organization describes poverty in this way: “Poverty is hunger. Poverty is lack of shelter.

What are the causes and effects of poverty in our country? ›

One of the biggest causes of poverty in India is the country's high population growth rate. This leads to a high rate of illiteracy, inadequate healthcare facilities, and a lack of financial resources. Furthermore, rapid population increase has an impact on per capita income, lowering it even further.

What is conclusion of poverty? ›

Effects of Poverty

It affects people living in a lot of ways. Also, it has various effects that include illiteracy, reduced nutrition and diet, poor housing, child labor, unemployment, poor hygiene and lifestyle, and feminization of poverty, etc.

What is poverty essay? ›

Poverty is a call for needed clothing and protection against social and political violence for the poor to earn enough money to buy food, receive an education, and find a suitable place to live. This is an unseen problem that harms a person's social life.

What are the two main causes of poverty in? ›

Causes of Poverty
  • The low level of economic development under British colonial rule. ...
  • Unequal distribution of land and resources is another vital cause for poverty in India.
  • To fulfil the demands of social obligations and religious ceremonies the poor community end up spending a lot which leads to poverty.

Why do we need to solve poverty? ›

Because poverty and inequities hurt all of us in the long run. They erode social cohesion and create a burden on all taxpayers to pay for poverty reduction, healthcare services, unemployment, crime and homelessness. Our economic system and well-being are at risk of serious deterioration unless we take action now.

Why is it important to end poverty? ›

Poverty is associated with a host of health risks, including elevated rates of heart disease, diabetes, hypertension, cancer, infant mortality, mental illness, undernutrition, lead poisoning, asthma, and dental problems.

How does poverty affect our society? ›

Effects on society as a whole

In the end, poverty is a major cause of social tensions and threatens to divide a nation because of the issue of inequalities, in particular income inequality. This happens when wealth in a country is poorly distributed among its citizens.

What advice can you give the government in solving poverty? ›

Make education a priority

A huge factor in how to solve poverty involves education. Lifting a country out of poverty means educating its citizens not only on basics like math and science, but on proper hygiene, gender equality, educating females equally, economic factors and investing in resources for schools.

What are 5 factors that lead to poverty? ›

The big five factors of poverty (as a social problem) include: ignorance, disease, apathy, dishonesty and dependency. These, in turn, contribute to secondary factors such as lack of markets, poor infrastructure, poor leadership, bad governance, under-employment, lack of skills, lack of capital, and others.

What are 10 causes of poverty? ›

Some of the major causes of poverty, with historical perspective, were noted as follows: the inability of poor households to invest in property ownership. limited/poor education leading to fewer opportunities. limited access to credit, in some cases—creating more poverty via inherited poverty.

What are effects of poverty? ›

Poverty is linked with negative conditions such as substandard housing, homelessness, inadequate nutrition and food insecurity, inadequate child care, lack of access to health care, unsafe neighborhoods, and underresourced schools which adversely impact our nation's children.

What are the effects of poverty in America? ›

In addition to lasting effects of childhood poverty, adults living in poverty are at a higher risk of adverse health effects from obesity, smoking, substance use, and chronic stress. Finally, older adults with lower incomes experience higher rates of disability and mortality.

What are the causes and effects of poverty? ›

Issues like hunger, illness, and poor sanitation are all causes and effects of poverty. That is to say, that not having food means being poor, but being poor also means being unable to afford food or clean water. The effects of poverty are often interrelated so that one problem rarely occurs alone.

Why is poverty so important? ›

Poverty costs our economy billions of dollars annually

Child poverty alone is estimated to cost the U.S. economy more than $500 billion annually in lost productivity, increased health care costs, and higher criminal-justice expenditures.

Who is affected by poverty? ›

Children, lone parents, disabled people and people in households in which no one works are more likely to experience poverty, to remain in poverty for longer and to experience deeper poverty, than others.

Why is poverty a social issue? ›

While poverty has many dimensions, its two fundamental aspects are the lack of economic power owing to low incomes and assets, and the lack of socio-political power, as reflected in the limited access to social services, opportunities and information and often in the denial of human rights and the practice of ...

What are the 3 types of poverty? ›

There are multiple types of poverty.
  • Situational poverty.
  • Generational poverty.
  • Absolute poverty.
  • Relative poverty.
  • Urban poverty.
  • Rural poverty.
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