 It shouldn't be left voodoo economics. It just should be mainstream left and right voodoo economics And it really is a voodoo economics. I mean a voodoo economics is a term. I think the George Bush Senior Remember George was senior Junior's dad who was president for four years one term president after Ronald Reagan I think he called Ronald Reagan's economics voodoo economics in the 1980s When he was running against him In 1980 for the presidency, I think that's where the term comes from So the no Michael says He says hello, I thought he said no so I mean the voodoo economics was a leftist kind of left Republican accusing the last semi free market Republican are being voodoo so The real voodoo's of course Bush and the Democrats and Romney and almost all the pumpkins today and Trump And it's it's it's truly voodoo because voodoo is mystical voodoo is primacy of consciousness voodoo is a Prayer and a whim and that's exactly what this economic theory is. So let's let's start with the child credit So the idea was this the idea that poverty is is high today in the United States primarily because of COVID and Of course poverty has been Mostly flat in the United States since the late 1960s it was declining fast into the late 1960s and flattened out sometime in the late 1960s and it's been coming up and down since then and It's fascinating to me that if you were from another planet didn't have the context and didn't have the Embedded altruism that so many people have today if you just showed up on planet Earth and you look at the graph of poverty and you and you say Just and this is poverty the way the government measures it I'm not even don't want to even all get into the whole statistical debate about what it means and The fact that a lot of young people are poor and therefore They're calculating the poverty rate even though they all get out of poverty once they get their jobs or once they get out of college or Everything to the whole measure is bogus, but they are really poor people They're people who truly struggle and people that have a really really hard time to be able to afford some of the basics That they need in order to live but I don't know that the poverty rate is actually capturing that I'm not sure what the poverty rate actually captures and whether it's objective But let's assume it was real let's assume it was real and and you came from another planet and you saw a graph that showed Steady decline in the rates of poverty as mentioned by the government and then it flattens out and then it stays flat Pretty much for it bounces around a little bit recessions economic growth and so on Wouldn't you ask the question? What happened in the late 1960s that caused the graph to flatten out? It was heading in a nice Direction poverty was declining systematically was really going down and was you know It's heading towards zero and suddenly it stops and it flattens out what happened in the late 1960s to cause poverty not to go down anymore and That would be the mystery and anybody knows what happened in the 1960s to cause The rate of poverty to what we don't know about cause But you would want to know so that you could get a sense of cause and effect right you would want to know What coincided with it so that you could try to figure out causality? So what happened in the 1960s that is related to poverty well we launched a war on poverty We launched a war on poverty and we established what? the Johnson administration termed the Great Society and We embraced not only Medicare and Medicaid, but then a whole array of poverty killing poverty Blasting into outer space welfare programs, which were we were told we were told were guaranteed to eliminate poverty in America and All of this came about during the Johnson administration So so what would that be 63 to 68? Never eliminated never reduced never really challenged until to some extent Bill Clinton's welfare reform in 1990 was it 97 or 98 I think But really The programs the extent of them certainly Medicare Medicaid, but but but all that the entire welfare infrastructure and the entire welfare Industrial complex that's a new term. We should we should embrace the welfare industrial complex Or the welfare monetary complex or the welfare. I don't know parasitical complex Whatever you want to call it and I'm not talking about the people who receive welfare. I I view them more as victims than anything else I'm talking about the people who administer the welfare programs. We're talking about Thousands if not hundreds of thousands of bureaucrats and government officials and government programs at the state level that get money from the federal government and The federal government that has all these branches and it's welfare in the United States It's not one simple program where people get a check It's a million different little programs where people get pieces of stuff and you need a PhD in welfare Sciences just to understand and figure out what you owed So one of the characteristics of American welfare is that People don't use it Anywhere near as much as for example, they use it in places like Europe not because they don't want to use it But because it's so complicated. Nobody knows how to use it So for example a lot of their child credit and a lot of the like negative income tax that we have the income tax credit All of those things 22% of people who are eligible to use it and who actually file Don't use it. Don't get it. Don't apply for it Because it's so complicated and one of the differences between the United States and Europe is Europe is much more efficient less bureaucratic Less dribble and drabble in a million different programs with their welfare, right put aside the whole morality of welfare, but so anyway It's curious, isn't it? Then about the same time as all these welfare programs as a war on poverty was launched Poverty rates flattened out poverty rates flattened out Jesus says you can't find a poverty rate graph that doesn't start around 15 act probably not measured before that You can probably find it in people in some studies where people Try to estimate what it was in the past. We see one of the great evils of government This might be controversial what I say one of the great evils of government in the last 40 50 years is that they started measuring stuff Because the more they measure The more they think they can control The more they want to intervene the more they want to tinker The more they want to influence when it's not measured they don't know so they leave it alone so government statistics are not a good thing not a Good thing Because the more they can now today they know everything that statistics on everything they've got a federal reserve They you know federal reserve employees is the largest employer of Economists in the world is the federal reserve Maybe not in the world because I don't know maybe Chinese government employees more but suddenly in the western world the largest employer of Economists is the federal reserve. I mean that's all they do they put together statistics and And the more statistics the more central planning the more they think they know and the more we're just an average We talked about this yesterday with a minimum wage and productivity and different different ways of measuring income You become just the statistics. It's an average and then and they just dabble in statistics And then they want to manipulate the statistics. They don't want to enhance your life as an individual. They just want to manipulate the stat Anyway, all this is to say All this is to say that Poverty as measured by the government Has been flat Since we declared a war on poverty now This is consistent with the fact that America for a variety of different reasons has not won a war Since World War two. I mean, I don't count Grenada as a war, right or even the first Gulf War Harder harder really define that as a victory, but given that you had to have a second Gulf War. Um, Didn't have to have but had one America's not what I was since the World War two it hasn't won the war didn't win the war in Vietnam didn't really win the war in Korea Hasn't won the wars in the Middle East Didn't wait hasn't won the war in Afghanistan, but hasn't won a war on drugs You can't win a war on drugs I would argue and has won a war on poverty and again, you can't win a war on poverty I mean, there's a simple principle there. You cannot have a war on an inanimate object On some, you know, what does a war on poverty mean? It means nothing. You can't have a war on a condition And it was about blowing stuff up a War is about blowing stuff up. You can't have a war on COVID So we launched a war we've actually lost it because the progress we were making The world the economy was making in annihilating poverty was reduced now. Somebody asked what is poverty? poverty is is is a is You know, I'd say it's a state of being in a particular culture where you're barely getting by That is you are struggling To feed yourself to buy diapers for your children for your babies to to pay the bills and You're living at, you know at a very low standard of living you barely have a car if you have a car to view the old one So you could objectively evaluate poverty, right? I mean a Lot of us were poor at some point, right? I was poor My aunt, you know, while I was getting while I was going to college in in in the US six years of Masters and PhD. I mean I worked odds and ends job. I got a little help from my wife's dad, but generally We just got by I think I when my kids were born my largest expense was diapers monthly expense was diapers But so what right Sometimes you have to be poor to get wealthier to get an education to get to the point where you could be successful but some people get stuck in poverty and Arguably you could make the argument that welfare state actually Encourages people to get stuck in poverty it pays them to get to Stay poor it provides them with the means for them to do a little better without getting a job or Not advancing in your job and actually if you think of it if you lose your benefit when you get a raise then Why would you get a raise? So it discourages ambition Now of course really truly ambitious people don't pay attention to incentives provided them by things like welfare. They do it anyone Alex, I'll talk about morality of welfare in a minute so The welfare state the war on poverty the welfare program programs to date have not Significantly reduced poverty. What has when when poverty goes down when does it go down? Well, it went down poverty as measured by the government went down during the Trump administration. Why? because unemployment went down during the Trump administration and When unemployment goes down poverty goes down. Isn't that amazing? The real cure for poverty is increased employment and increased productivity of labor and productivity has gone up and An employment went down significantly it started going down under Obama, but it went down even more under Trump part of that is The deregulation part of it by the way is the corporate tax cut Which which as I told you when it happened the benefits of a corporate tax cut go primarily to labor and to lower prices less so to shareholders Right, so corporate taxes and some deregulations led to less unemployment Less unemployment more people employed leads to less poverty David writes the Thomas soul track data from the Bureau of Labor Statistics now notice how Thomas soul did it and The IRS during the late 1980s he tracked this data found that only 5% of those the wind poverty in a poverty category in a particular year Stayed in that category if you look into the future and that's the point That's how you should do these kind of statistics if you're going to do anything, right? The way to do them is to look at individuals and how they progress over time none of the averages Because average is going to impact it by the size of the next generation coming in By how many young people they are in every given point of time So while I don't think enough there's enough social mobility income mobility in the United States I don't think there's enough people rising out of poverty and and and enough mobility from the top down as well mobility in both directions that Requires a free market. There's still a lot of mobility and It's not that somebody born poor stays poor as Thomas soul Shows in his studies and his other economists have documented, but that's the kind of That's the kind of data you would have to look at, right? Yeah, David says throughout their lifetime so labor stats do represent reality. Well, they do if interpreted right But you never see that interpretation That is they get the statistics and then government bureaucrats and leftist economists or statist economists I should say collectivist economists are the ones typically using those stats in ways That don't reflect reality and it takes a Thomas soul to dig into the statistics and To draw out of them the truth of what's really going on in the background. Okay Sorry, David. I miss miss interpreted what you asked so take this child credit for example so both The Democrats plan and Mitt Romney's plan Mitt Romney has a plan that has support from a number of Republicans Both of them involve giving direct payments to people who have children under a certain income threshold Direct cash payments. So they have the benefit of not creating a bureaucracy Right It's simple Everybody just gets a check you have a kid you get a check Unless you make more than a certain amount and then you don't get a check Of course, again, there's that threshold where if I get a raise I lose this child benefit Hopefully it doesn't make that big of a difference And the story is that if we do this Child poverty in America will be reduced by 50% Now my guess is that when the welfare state was established government made all kinds of promises About the reduction in poverty that was going to be generated through the welfare state, none of them came to fruition Medicare made promises about the costs of Medicaid and the benefits are making now the benefits for the most part You could argue at least, you know, we haven't seen a dramatic deterioration in the healthcare old people get yet But the costs anybody know by what factor The projections about Medicaid costs were wrong Ten years out. So in 1960 whatever when they when Medica was instituted they said in ten years Medicare is gonna cost X By how much more than X? By how much were they wrong in other words? How much more than exit it actually cost? Anybody anybody want to take a guess? Well, since there's a lag between me speaking and you typing I'll tell you a hundred That is for every dollar they projected, you know, Stephanie got a right for every dollar they projected They actually landed up spending a hundred times that dollar a hundred X a hundred X Talk about bad financial projections So government is fantastic Fantastic at Predicting the future of the impact of its plans Now all this is well-known all this has been written about all this is out there The fact the poverty rates have not declined the fact that the government gets it wrong all the time the fact they spend more than they anticipate The fact that they cannot make projections all of this is no, but it doesn't make any difference Another welfare program and another welfare, but no all the other ones didn't work Why is this one gonna work and by the way, let's not eliminate 550 welfare programs and consolidate them into one that maybe could work now We're gonna add one so we have now 552 welfare programs so we can create more confusion voodoo economics this time it'll work. Why? Well, because economists say so but economists said so back then well, they're smarter now They've AI They've experienced they know more it works in Europe But now you don't get people out of poverty not real poverty not long-term by writing them checks unless You don't care about their well-being and you're willing to do what Europeans do which is write them big checks and Do it efficiently and accept that they will never work Except that work is not a requirement Yeah, Jennifer rates. Can you comment on Walter Williams idea the flanking out of high school or having illegitimate children was a large cause of poverty Yes, I think the breakup of the of the black family in in the 1970s coming out of one of the Consequences of the welfare state Was the destruction of the black family? I think much of that It's gotten better in a sense that single family Out of wedlock Pregnancies all of that is in decline in the black community in among poor people generally But there's no question that that was a big factor In creating poverty you incentivizing it and these child Payments are gonna continue to incentivize it and and you're gonna have more kids than you can afford to have because hey, you know one of these it gives you 1400 bucks Before birth right so why you're pregnant you get 1400 bucks I mean 1400 bucks if your poor is a lot of money and in 350 dollars a month is a lot of money so Welfare creates Massive distortions of incentives which nobody seems to care or learn or want to learn about Nobody wants to learn about about these nobody learns to learn from the distortions from the fact that poverty has not come down Just load up another offer program loads some more now. I put aside The morality of warfare, but let's for a minute talk about the morality of warfare The morality of getting money to have kids whose money is it? So first flip one side of the morality of this is You have to take somebody's money by force and give it to somebody else. Why? Because they're less productive Because they have kids when they can't afford to have kids. How about the idea of don't have kids until you can afford to have them It's all about I mean, there's no way to do this without coercion without actually taking money from some people and Giving it to others and then it's not an accident that the government is incredibly inefficient to doing this because it's caused because there's no proper incentives because the bureaucrats don't really care because The people giving the money are not giving it With a clear purpose so you compare a welfare state to a charity If I give to a charity To help poor people, let's say I want to make sure they're doing a good job And if they want my money the next year, they would have to come to me and convince me That they use my money. Well, otherwise I Wouldn't give them the money so they have to They have to live up to certain standards Now you could say in a democracy we vote for them, but no, you don't vote for the bureaucrats and politicians have no incentive really to shape things up into clean house and We don't vote the bastards out. We never do The market the market for charity, for example, it's far more efficient and Making sure that the money gets used. Well, not even there things break down because We are so eager to give to charity because of altruism We're so eager to give to charity because of altruism too many of us don't pay attention to how the money is used It's even charities often create disincentives often destroy those people that are trying to help You know, there was a Document you call charity ink which I highly recommend charity ink and it goes through all the different examples of our charities distort and pervert and actually in some cases actually increase Poverty and hurt employment and her production and Do the opposite of what they claim to do and people don't monitor them closely enough because we're so committed to charity because of altruism We don't pay attention in a rational world. We would So first welfare is immoral because it requires Cursion force It requires the stealing of money from some to give to others and that's just wrong If I want to help a poor person, I can do it more effectively more productively myself And if I don't want to help a poor person somebody says I don't have a heart I mean he was kidding, but I don't have a heart right if I don't have a heart. So what? You get to tell me I have to have a heart You get to tell me what my value should be you get to tell me how I should live what should I do with my money? No so no it is not Right to cause some people to fund charity and to fund an inefficient bureaucratic self-serving power-lusting Bureaucracy not even charity itself Yeah, Scott says it saw a documentary that gave free shoes to poor in Africa And it put a company that made shoes out of business same with solar panels in Haiti same over and over and over again You remember that charity where you if you buy a pair of shoes they donate a pair shoes in Africa That company did a lot of harm in Africa a lot of harm To local businesses that produce shoes Suddenly you get Really nice Western shoes for free Why would you buy the local shoes? But secondly from a morality perspective It is what is done through welfare is evil towards the recipient You're basically telling the recipient you're worthless You cannot take care of yourself You're incentivizing them to be irresponsible. You're incentivizing them to abandon personal responsibility don't Think about how when you should have kids and how you can afford them and how do you get a job so you can feed the kids and Maybe you should only have one kid not four Because you can't really afford four No, they're gonna sing have as many kids as you want. Here's a check They're gonna sing don't get a job. Here's a check. They're gonna sing Don't have pride Don't be productive Don't have integrity. Here's a check The biggest victims of the welfare state Are the recipients They're institutionalized into poverty The more you give them the less likely it is that they go and Find work The more you give them add to that the minimum wage add to that business regulation all the controls Licensing laws you make it very expensive very hard for them to find a job. You pay them a check so they don't find a job and Shockingly They don't find jobs and poverty rates stay high What we need today what I called a new intellectual would be any man or woman who is willing to think Meaning any man or woman who knows that men's life must be guided by reason by the intellect Not by feelings wishes women's or mystic revelations Any man or woman who values his life and who does not give want to give in to today's cult of the spare cynicism and impotence and does not intend to give up the world to the dark ages and to the role of the collectivist All right before we go on reminder, please like the show we've got a hundred and sixty-three live listeners right now 30 likes That should be at least a hundred I figure at least a hundred of you actually like the show Maybe they're like sixty of the Matthews out there who hate it, but but at least the people who like it You know, I want to see I want to see a thumbs up. There you go. 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