How to Win the War on Poverty


Lyndon Johnson launched the “War on Poverty” in 1964. In the fifty years since its inception, hundreds of billions, if not trillions of dollars have been spent by the government, countless governmental programs have been implemented, and numerous and enormous bureaucracies have been created. The results of these initiatives have largely been that of failure, but excuses continue to be made as to why prior programs have failed, why subsequent reforms have failed, and new programs and reforms are continuously proposed and implemented. In spite of all this, present times and recent history have seen a shrinking of the middle class along with an ever-widening disparity between the very wealthy and those who are barely getting by. Living standards largely do not seem to be improving for the lower and middle classes. For the first time in this country’s history, the younger generations do not have the expectation of doing better than their previous generation. If legislating away poverty was possible, it would have occurred long ago.

For poverty to shrink, wealth must be created. It must be created in a way that benefits the unemployed and the underemployed. This can only be accomplished through a focused effort of removing the existing restrictions on the marketplace, and through continuous movement toward a free market economy and society. Taxes must be eliminated and regulations must be removed. Businesses and entrepreneurs must be free to conduct business as they see fit and have the ability to reap the benefits of the risks inherently associated with business ownership and entrepreneurial endeavors.

Being a business owner is extremely risky, and the risks associated with being an entrepreneur are even greater. It is through the efforts of these two types of individuals, however; that society prospers. Consider what it is that each of these people actually do. The business owner engages in voluntary transactions with customers in order to make a profit. This transaction is mutually satisfactory and mutually beneficial – otherwise neither party would agree to it. Through this, the business owner makes a profit and the customer has the product or service he paid for. It is the profits of the business owner that society as a whole benefits from. First, he uses his profits to pay his employees’ salaries; that is the most visible benefit. He also uses those profits to buy food and products for his family – and the owner of the supermarket makes a profit from that transaction, causing the cycle to start again.

If the business owner is savvy enough, he will make profits great enough that he will be able to re-invest those profits into his business. This is another major area where society as a whole benefits. Let’s say this business owner is producing a product that requires the labor of ten employees. With the profits he has made, he is able to invest in an automated machine that will make a part of the product in a fraction of the time it had taken previously. He is able to increase his production capacity and decrease his labor costs at the same time. He correspondingly lowers the price of his product to stay ahead of his competitors and gain a larger market share.

Another man, whose business relies on the use of the first man’s product, is now making a greater profit since part of his process has become cheaper. With his new profits, he can hire additional employees to increase his production. He can give raises to deserving workers, re-invest back into his business, add an addition onto his house, or spend his new found profits in any number of ways. Society as a whole will benefit from whatever he does with these profits. To paraphrase Murray Rothbard, the unhampered free market is a beautiful, chaotic coordination of transactions between individuals all working for the betterment of themselves yet achieving the betterment of all.

It is through this process that entrepreneurs are able to arise. Entrepreneurs are business owners who haven’t made it yet. They are people who see a need in the world, and have an idea as to how to address that need, be it through creation of a product or offering of a service. What makes entrepreneurship so risky is that someone must invest their own hard-earned capital into an idea with no guarantee of success. In the transition from idea to legitimate business, the entrepreneur will likely have to go through design stages, research, marketing, and more before ever making a profit.

As soon as the entrepreneur begins the process of turning his idea into a legitimate business, he has benefited society. The entrepreneurial process alone requires him to invest his saved capital into materials and research, and he must pay existing business owners for those necessary products and services. These existing business owners enjoy profits that they weren’t necessarily expecting, and are able to use those profits to benefit society as described above. The road to entrepreneurial success can be long and difficult. While this process may not always lead to success for the entrepreneur, it always leads to increased prosperity for society. The capital the entrepreneur spends to purse his vision produces profits for others. While the business owner obviously benefits from these profits, we cannot overlook the benefits of those same profits for society as the cycle continues.

The entrepreneur who is successful and is able to develop his idea into a business will not only benefit society as a business owner in the manner described above, but he will also have filled a void that previously existed in society. He will have created a product that makes a particular task easier, or developed a service which eases a particular burden. If he fails, he will have released his previously saved capital into the market to be used by others. He will also have gotten out an idea which others hadn’t previously thought of, and perhaps another more skilled entrepreneur will attempt the idea and be successful. Either way, entrepreneurial endeavors require some courage due to their riskiness, but will benefit society whether they are successful or not. Entrepreneurship should be encouraged, and entrepreneurs should be lauded.

We need more entrepreneurs. We need more business owners. We need more employers and job-creators. None of those can be created, legislated, or mandated by government. They can only come from the free market. In order for business owners to reinvest in their businesses, and for entrepreneurial endeavors to be undertaken, profits must be great enough for the capital to be saved which would allow that; only business owners are able to determine what level of profit is necessary. Individuals, including business owners, must be free to conduct business as they see fit, and to keep the fruits of their labor. In order for that to happen, taxes must be eliminated and regulations must be removed. Taxes take profits away from business owners and individuals. They kill jobs. Regulations put restrictions on what would otherwise be voluntary, mutually-beneficial transactions. Regulations also kill jobs. As long as no force or violence is used, individuals should be allowed to interact, engage in transactions, and develop contracts with each other however they see fit.

When taxes and regulations are low – or better yet – eliminated altogether, businesses and entrepreneurs thrive, leading to a healthier economy and a more prosperous society. Prices of products and services fall as businesses become more efficient, and new employment opportunities are created as businesses grow and as entrepreneurs develop and create new businesses.

The free market will increase the overall prosperity of a society, reduce unemployment, reduce consumer costs, continually solve previously unsolved problems, and increase overall standard of living. No government programs are needed to yield these types of outcomes, and no government programs are capable of producing these outcomes as we’ve seen through the failure of the “War on Poverty.”

I want to live in a world where my generation can do better than that which came before me, and I want the generations after me to do better than my own. The only way to do this is to eliminate the burden of taxes and regulations, and to move in the direction of an ever more free market society. Remove the shackles that are currently holding the free market back, and watch what business owners and entrepreneurs are capable of. Watch how quickly poverty declines.

Jared graduated in 2009 from Rensselaer Polytechnic Institute with a Bachelors Degree in Mechanical Engineering. He is currently employed as an energy efficiency consultant in New Jersey, drives for Uber in his spare time, and is an aspiring entrepreneur. He came to the philosophy of liberty through the Ron Paul presidential campaigns, and has evolved into a voluntaryist anarchist through reading and listening to the Tom Woods Show.

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