The Left Needs More Than Good Intentions on Helping the Poor to Justify Their Anti-Poverty Policy Preferences

I watched the Democratic presidential primary debates last week. Senator Bernie Sanders droned on about Wall Street and sticking it to the rich. Kamala Harris brought up meeting people on the campaign who work two to three jobs, implying that is more of a norm (which it is not). More of the candidates want to move to single-payer as a way to give healthcare to the poor. When watching this debate, I noticed a more overarching theme spanning over decades: the Democratic Party ( and by extension, the American Left) likes to portray itself as the "champion of the poor."Those who are Republican, conservative, or libertarian are portrayed as those who are callous to the "have-nots." It has become a stereotype increasingly engrained in American society that only the Left cares about the poor, as if they somehow acquired a monopoly on caring about the poor.

To perpetuate this stereotype, what I have noticed that is all too common on the Left is to rely very heavily, if not solely, on the emotional piece. "How dare you comment on minimum wage if you don't know what it's like to live on it?" "How can you be against Social Security? That's all some people have to live on when they retire."

Regardless of topic, what this sort of argumentation comes down to is that if you do not agree with the Left's prescription or support a large welfare state, you hate the poor. I cannot speak for everyone, but I can tell you that I do not hate the poor. I believe that all individuals should have self-ownership, freedom of conscience, freedom of contract, essentially the right to life their life provided they are not harming others. I do not know if I would go as far as calling myself a "bleeding heart libertarian," but I can say that I believe the best way to help the poor is through high-growth, liberalized economies with fewer government regulations. My disagreement is not on whether the poor should be helped, but how. While there are exceptions, the predominant view for those on the Left is that the only way to help the poor is through the largesse of the government. What is irksome about the Left's prevailing view is that it focuses on process and intention:

"One of the great mistakes is to judge policies and programs by their intentions rather than their results." -Milton Friedman

I take Friedman's quote to heart because it is valid and unfortunately all too relevant these days. If the American Left is going to argue that a certain policy should exist or be expanded upon because it helps the poor, they should argue for something that actually helps the poor. Rather than speak in theoretical terms, what I would like to do now is provide a list of examples illustrating how policies favored by the American Left all too frequently result in either harming the poor or preventing them from escaping poverty.

1. Obamacare. More officially known as the Affordable Care Act (ACA), this signature legislation of the Obama administration was intended to provide more affordable, universal healthcare. Its expansion of Medicaid to low-income households puts emphasis on how the ACA was supposed to expand coverage to the poor. What Obamacare ended up doing was increasing both premiums and deductibles, thereby making healthcare less affordable for the poor. Obamacare also provided fewer choices in doctors and insurance providers. The individual mandate penalty, which had been since removed by Trump, was affecting the poor because they had to make a tough choice between paying for expensive insurance or the mandate penalty. Many opted for the penalty. In short, Obamacare fell short of its goal to help the poor have better access to healthcare.  
2. Federal subsidies for college education. Education is the single most important indicator for one's success and wellbeing. Being able to have an education to acquire a job to adequately support yourself financially is vital. In the developed world, having a postsecondary education is the way to go about that goal. The problem is that college can be so cost-prohibitive, especially for young adults from lower-income households, that it de facto becomes inaccessible. Cost is one of the main reasons why the college dropout rate is so high. The thing is that college was not always so expensive. Since the early 1980s, college costs have been skyrocketing, and the primary culprit is federal subsidies. The very subsidy that is supposed to make college more affordable is actually making college more inaccessible for those coming from lower-income households.  
3. Social Security. Social Security was initially created to be a temporary safety net during the Great Depression. It later evolved into a supplemental source of retirement income. Social Security is not structured in a way to adequately replace retirement income, which partially explains its insolvency. Social Security helps the elderly with retirement, but only modestly so. Even with Social Security, there is still significant enough poverty among the elderly. Being able to invest privately provides a greater rate of return (see OECD paper; also see here, here, and here). If taxpayers were allowed to invest in their own private account instead of having to pay the payroll tax, retirement would not be as much of a strain. That is why the focus should be on making the 401(k), universal savings accounts, and other financial instruments in the private sector more accessible to the poor, as well as inculcating a savings culture.   
4. Minimum wage. Minimum wage is supposed to pull people out of poverty by providing a "living wage." Forgetting the effects on the economy or individual businesses for a moment, this narrative only tells part of the story. Yes, those who receive the wage increase often have an improved quality of life. But it comes at a price of greater unemployment in the labor market for unskilled workers. The tradeoff is that while some receive a higher wage, others are left without a job. For minimum wage workers, this work experience is a necessary step in professional development. Without that work, they stay in poverty for longer.
5. Occupational licensing. This is the legal requirement to acquire a credential before entering a certain career. The argument for such licensing is based on ensuring quality and safety. Occupational licensing has run amok and has exceeded reasonable concerns over health. If you want to be a hair stylist, interior decorator, or florist, for example, you need occupational licensing. Occupational licensing drives up the costs of goods and services while exacerbating income inequality. Additionally, it acts as a significant barrier of entry, which is another way of saying "occupational licensing makes it more difficult for poor people to pursue a lucrative enough of a career." 
6. Consumer Loan Interest Rate Cap. Senator Bernie Sanders and Congresswoman Alexia Ocasio-Cortez recently introduced legislation to limit interest rates for credit cards at 15 percent. Their goal was to help poor people not be exploited by credit card companies. What happens with such caps? One of the main outcomes is that poor people have less access to the mainstream credit system. As a result, they either find payday loans or a pawn shop, thereby worsening their financial predicament and making them poorer. 
7. Housing Policy: Mortgage Interest Deduction and Land Use Regulations. This could be divided into two bullet points, but I combine them into one. Having a roof over one's head is one of the necessities for survival. Being able to afford housing is thus important. There are at least two government policies that get in the way of such affordability. 
• The first policy is that of land use regulations. The purpose of these regulations is to restrict the development of private land for public policy goals. What happens when you artificially restrict supply? Prices go up, and the same thing happens in the housing market. These higher prices disproportionately hit lower-income households harder. Consulting firm McKinsey found that lightening up on land use regulations could lower housing prices 8 to 23 percent, thereby improving equity and housing access for the poor.
• The mortgage interest deduction (MID) is a tax deduction that allows a taxpayer to reduce the taxable income base by the amount of the interest paid on their mortgage. Not only is the MID one of the most expensive tax deductions, but it disproportionately benefits the rich. More to the point, the MID drives up housing prices, which makes housing less affordable for lower-income households.
8. Charter schools versus public schools. I return to the theme of education, but this time, it pertains to K-12 education. Not everyone has the luxury to send their child to private school. At the same time, there are those who would like an alternative to public schools. This is where charter schools come in. Charter schools are schools that receive at least some government funding, but are privately and independently operated. Charter schools are an important alternative because they disproportionately admit disadvantaged students. While their success rates are more variable than public schools, they tend to perform better than public schools, especially when it comes to serving disadvantaged students. Those who want better schooling for children from lower-income households should encourage charter schools instead of keeping children trapped in an underperforming public school. 
9. Employer-sponsored health insurance. Employer-sponsored health insurance is like it sounds: it is a health insurance policy employers purchase for their employees. This tax break dates back to World War II. While about 60 percent of Americans are on employer-sponsored health insurance (and most are happy with it), it creates a number of problems. I went as far as calling it the worst tax break back in 2015. It is costly to the American taxpayer. It also drives up healthcare costs because it artificially inflates the demand for medical goods and services in a way we do not see in other countries, which is one of the main reasons why U.S. healthcare is more expensive than it is in other countries. More to the point, it exacerbates income inequality because lower-income households are less likely to have jobs that provide employer-sponsored health insurance. I would go as far as arguing that this tax break has done more damage to Obamacare, which says a lot considering how much damage Obamacare has done to the U.S. healthcare market. 
10. Foreign aid. Foreign aid is the allocation of government funds to a developing nation in order to alleviate poverty there. The problem is that foreign aid is an overall ineffective way to alleviate poverty in developing countries. What works better? Trade liberalization.  
11. Renewable Fuel Standard (RFS) and Food Prices. The RFS was a mandate created to increase renewable fuel. Aside from being a subsidy to the ethanol industry, what the RFS ended up doing was driving up food costs not only for the people in this country (which affects the poor because they pay a higher percentage of their income towards food), but for those in developing countries. 

Postscript

This was not a complete list, but these examples still cover so many of the major expenses for lower-income households. This was merely a list of policy examples based on pieces I have written for this blog over the years. It should nevertheless illustrate my overall point: no matter how well-intentioned it may or may not be, government intervention all too often either keeps poor people trapped in poverty or makes the situation of poor people even worse and more precarious.

Rather than focus on good intentions or whether the government was part of the solution, those on the Left should ask whether the policy in question actually helps the plight of the poor first or if it harms those it was meant to help, which is something that too few people on the Left ask these days. We can get into arguments about economic efficiency, political feasibility, cost-benefit analysis, or unintended consequences afterwards. The problem is that if those on the Left cannot even answer the question of "Does this policy actually help the poor, or is it merely feel-good, misguided policy solely built on one's good intentions," then it becomes difficult to take the American Left seriously when they say they want to help out the poor.