The United States has been wrestling with how best to eliminate poverty ever since the days of Lyndon Johnson. The solution, however, isn’t really all that complicated: If people don’t have money, you give it to them. The U.S. cut elder poverty by about half in the late 1960s and early 1970s by expanding Social Security. And today, in the richer corners of Europe and the English-speaking world, governments use straightforward redistribution to keep their poverty levels well below ours.
Here’s an illustration of that point, based on 2010 Luxembourg Income Study data included in the Stanford Center on Poverty and Inequality’s most recent “State of the Union Report.” If you only measure by market incomes—earnings before taxes and government benefits, shown in blue—the U.S. has a slightly lower poverty rate than most other similarly wealthy nations. But once you take taxes and social spending by the government into account, as shown in red, our poverty rate is generally higher. We start out ahead and finish behind.
It’s not as if the U.S. is particularly good at helping specific vulnerable populations, either. Take child poverty. Using the U.S. poverty rate as a benchmark once again, we’re less effective at bringing down our rate of youth impoverishment than most of our peers in Northern Europe or the Anglophone world. (Again, Greece, Italy, and Spain are another story. To make matters worse for them, these figures were gathered before the worst of the euro crisis.) We let kids dangle in need.
A conservative might counter that countries like Denmark or France are just papering over poverty by handing out benefits rather than combating its root causes through better schools or job training. But even countries like Finland, which has higher labor-force participation than the U.S. and an education system that’s globally envied, still have fairly significant amounts of poverty (by our standards, at least).
They choose to combat it with cash. We don’t.