Why poverty persists in rich countries

Without even mentioning corporate welfare and subsidies to agriculture, Matthew Desmond writes about the tragedy of US poverty. Longish excerpts, because it's paywalled:

The evidence indicates that low-income Americans are not taking full advantage of government programs for a much more banal reason: we’ve made it hard and confusing. People very simply often don’t know about aid designated for them or are burdened by the application process.

 In 2020 the federal government spent more than $193 billion on homeowner subsidies, a figure that far exceeded the $53 billion allocated to housing assistance for low-income families.

I can’t tell you how many times someone has informed me that we should reduce military spending and redirect the savings to the poor. I’ve met far fewer people who have suggested we boost aid to the poor by reducing tax breaks that mostly benefit the upper class, even though we spend over twice as much on them as on the military and national defense. According to recent data compiling spending on social insurance, means-tested programs, tax benefits, and financial aid for higher education, the average household in the bottom 20 percent of the income distribution receives roughly $25,733 in government benefits a year, while the average household in the top 20 percent receives about $35,363. The High Cost of Being Poor, Matthew Desmond, New York Review of Books dated 20 April

If we allow that programmes ostensibly designed to relieve poverty are actually intended to relieve poverty, then these facts point to a tragic failure of policy. Perhaps the system isn't wholly cynical, in that policymakers find the programmes just as confusing as do the intended beneficiaries. Assuming good intentions, then, my solution would be to:

1. recognise that poverty is a complex problem, requiring long-term, diverse, adaptive approaches;
   
2. decide exactly the goals we want to achieve, in quantitative, robust, verifiable terms;
3. reward people for achieving those goals.

Sadly, policymakers do not work like this. When it comes to poverty alleviation, as with climate change, water pollution, housing and the rest, if there are stated goals at all, they will be vague and incoherent sound bites. There will be changes in the funding of established bodies, or the creation of new bodies and, perhaps, some Mickey Mouse micro-targets set in the sure knowledge that nobody will actually check on whether their achievement or otherwise has done anything useful. 

Politicians can escape blame for absurd, destructive and corrupt programmes such as their supposed policy alleviation efforts because they are not expected to express society's goals in terms of outcomes. One of the advantages of a Social Policy Bond regime is that policymakers would have to express policy goals in explicit, transparent and verifiable terms. These would be expressed in ways that ordinary people can understand. Few would argue for programmes that favour wealthy corporations, farmers and individuals, but those are the policies in place now. Making poverty goals transparent would go a long way to solving the poverty problem. A bond regime would generate further gains by providing incentives for those working to relieve poverty to do so cost-effectively.

It's not uncommon to hear the wealthier beneficiaries of government largesse bemoaning the cost of supporting single mothers, the homeless and other unfortunate and genuinely struggling individuals. The politicians deceive the people, and the rich welfare beneficiaries deceive themselves.

Tax breaks are nice if you can get them. In 2020 the mortgage interest deduction allowed more than 13 million Americans to keep $24.7 billion. Homeowners with annual family incomes below $20,000 enjoyed $4 million in savings, and those with annual incomes above $200,000 enjoyed $15.5 billion. Also in 2020, more than 11 million taxpayers deducted interest on their student loans, saving low-income borrowers $12 million and those with incomes between $100,000 and $200,000 $432 million. In all, the top 20 percent of income earners receives six times what the bottom 20 percent receives in tax breaks. We have chosen to prioritize the subsidization of affluence over the alleviation of poverty. And then we have the gall—the shamelessness, really—to fabricate stories about poor people’s dependence on government aid and shoot down proposals to reduce poverty because they would cost too much.

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I have finished adding several pages to SocialGoals.com under the Criticism header