Where Does Poverty Come From?

Barbara Lee should spend some time with Magatte Wade.

“Poverty just doesn’t happen,” Rep. Lee, a California Democrat, declared at the launch of the “Children’s Budget,” a kind progressive wish-list, last week. “It’s a policy choice.” Rep. Lee has run up against a kind of metaphysical limit there: She is as wrong as it is possible for a human being to be. 

As practically every serious thinker about the issue has understood for a few thousand years at least, poverty does just happen—it is, in fact, one of the few things that does just happen. Poverty is the natural state of the human animal. Do nothing, and you will have poverty. Thomas Hobbes knew it. Aristotle knew it 2,000 years before Hobbes. Hesiod knew it centuries before Aristotle. The authors of the Upanishads knew it centuries before Hesiod. “Throughout history, poverty is the normal condition of man,” the American sci-fi writer Robert Heinlein observed. Or, as Thomas Sowell spent a lifetime explaining to an apparently impenetrable public, poverty has no causes—the absence of poverty has causes. Rep. Lee’s error is not novel. Her mistake repeats—nearly verbatim—the error of Rep. Ayanna Pressley: “Poverty is not naturally occurring; it is a policy choice.” 

“Poverty isn’t the problem,” Sowell wrote. “Creating wealth is.” 

In another sense—not the one she intended, of course—Rep. Lee is correct: Poverty is a choice. Providence has seen the world abundantly supplied with the necessary physical inputs, a condition that one would expect from an intelligent reading of Christian theology or of the facts of evolution (the cultivated imbecilities of Paul Ehrlich et al. notwithstanding). The 19^th-century economist Henry George had an idea of how the world works:

In soil and sunshine, in vegetable and animal life, in veins of minerals, and in pulsing forces which we are only beginning to use, are capabilities which we cannot exhaust—materials and powers from which human effort, guided by intelligence, may gratify every material want of every human creature. There is in nature no reason for poverty—not even for the poverty of the crippled or the decrepit. For man is by nature a social animal, and the family affections and the social sympathies would, where chronic poverty did not distort and embrute, amply provide for those who could not provide for themselves.

But if we will not use the intelligence with which we have been gifted to adapt social organization to natural laws—if we allow dogs in the manger to monopolize what they cannot use; if we allow strength and cunning to rob honest labor, we must have chronic poverty, and all the social evils it inevitably brings. Under such conditions there would be poverty in paradise.

Which is to say, if you desire to inflict poverty on the world, then you must proceed in two ways: 1) Do nothing; 2) Prevent others from using their own creativity, energy, intelligence, and labor to use that most valuable of all commodities—human action—to leaven the physical world, turning atoms and particles and energy stored up in them to bring life and life’s blessings out of the sterile world. 

It is not for nothing that the Biblical account of the beginning of all things starts with physical creation and continues with man’s role as a participant in that creation, as a cultivator of the created world who eats his bread by the sweat of his brow. There was no scarcity in Eden and, though we must understand scarcity as a consequence of our exile from that paradise, we may also understand scarcity as a sign of the Creator’s love and providence that it was precisely in adapting himself to the consequences of his disobedience that man learned to become, gloriously, himself. Human beings have our physical needs in common with the other animals and the divine spark of our intelligence and creativity in common with God—that is the nexus that we, alone among all the creatures in the known universe, are privileged to occupy. Perhaps the judgment on us was not as harsh as it may have seemed on a first reading of Genesis.  

Magatte Wade is better positioned to understand that than most of us. 

Wade, a Senegalese American entrepreneur and author raised in France before immigrating to the United States, will sometimes tear up—and make you tear up—when she tells her story, as she did on Friday evening. Her parents, she says, initially left her behind in Senegal not because they did not love her but because they did—they had to leave their home, and their beloved child, to go to Europe to find work. Why? There was no work to be done where they were, no opportunity even to achieve a decent life, much less to thrive and to provide their gifted daughter with the resources she needed to make for herself a life fitted to her own abilities. Theirs was the story of millions of immigrants like them.

“All you do is work and send money home,” Wade said on Friday, accepting the Julian L. Simon Award from my colleagues at the Competitive Enterprise Institute. Simon wrote a very famous book in 1981, The Ultimate Resource, the thesis of which is that while there are limits on natural resources and physical inputs, human flourishing does not depend on these but on the ultimate resource: human action enabled by human creativity and human ingenuity. Market prices do the work of rationing those scarce physical resources, which, as everybody learns on the first day of Econ 101, become more expensive as they become more scarce relative to demand. Learning to adapt to changes in scarcity is where that ultimate resource shows its real value as we create substitutes, improve existing products and process or invent new ones, dream up new modes of human flourishing, and do that necessary Hayekian work of discovering the most valuable ways to serve each other. 

Wade learned the basics of her political economy from the two greatest professors in the field: hardship and anger. Her parents left her with her grandmother to raise her. And then, when they were able to do so, they sent for her to join them—an occasion for great joy, to be sure, but it also meant that she would never see her beloved grandmother again. 

That was the hardship. She found anger in the shower. 

At home in Senegal, she announced ahead of time when she wanted to take a warm shower, at which time her grandmother would do what one does—of course!—when a child wants to take a warm shower: She put a pot of water on to boil, mixed that boiling water with some cooler water to get it to the right temperature, put it into a large bucket, and then handed her granddaughter a ladle. When Wade was reunited with her parents (in Germany at first), she encountered her first shower with hot running water. She remembers thinking, “What kind of juju is this?” And then there were the streets and the cars and the trains, and the shops full of every kind of thing that a person could want—things that her parents could buy, though they were by no means rich. And that’s where the anger came in. 

Unless one were to simply accept what had been accepted around the world, including in Africa, for many generations—the idiotic and superstitious belief that Africans are inferior—then there must be another explanation for African poverty. Africans were not born to be poor any more than Europeans or Americans were. Yes, poverty is man’s natural state—but the fact that so many Africans were being kept in that natural state was a choice. African poverty was and is something that was and is being done to Africans. Wade has made it her life’s work to discover and understand what that something is, and she has come to something very much like Henry George’s conclusion above. 

Wade offers a two-part prescription for human flourishing: 1) economic liberty; 2) access to an abundant and reliable source of energy. As she learned about the world through her own entrepreneurship—among other ventures, she has started a soft-drink company and a cosmetics company, with operations both in the United States and Senegal—she learned that poor countries tend to be excessively and badly regulated. Setting up a new business in the United States was a matter of a few minutes’ work filling out some paperwork and paying a small filing fee; in Senegal, it took years. In the United States, she could hire and fire workers as necessary; in Senegal, she needed government permission to do either. She also came to learn that rich countries tend to be relatively high consumers of energy, while poor countries consume relatively little. Energy, and human energy: These explained why resource-poor places such as Hong Kong, Dubai, and Singapore became enormously wealthy while many resource-rich African countries remained terribly poor. Wade speaks movingly of the shame this poverty inflicted on many Africans. 

Magatte Wade and Barbara Lee have some things in common. Both are black women, both have accomplished difficult and impressive things in their lives. Rep. Lee’s politics are not mine, but I admire her perseverance. She is a black woman born in El Paso in the 1940s who had endured a great deal of suffering and privation before she was 20 years old, by which time she had been through divorces—her parents’ divorce and one of her own—an abusive marriage, an abortion in Juárez when she was 15 years old, homelessness, and much else. But while Rep. Lee no doubt has acquired a kind of hard-won wisdom along that road, she would benefit from sitting down with Wade and taking in the lessons of a different kind of hard-won wisdom—even as she approaches 80, it is not too late to learn. 

No, the heavy-handed economic and regulatory ideas that Rep. Lee has advanced over the course of her political career are not going to turn the United States into Senegal.  However, they are not conducive to the kind of long-term profound flourishing that will continue to make the United States the beacon it has been to the Magatte Wades of the world, nor will they ensure that the country continues to be the grand nursery and great garden it has been to homegrown entrepreneurs. We can push one way or pull in the other, and Rep. Lee and her allies are, still, after all these years and with no intellectual excuse for failing to know better, pushing in the wrong way. Perhaps another black woman, one with an immigrant background, would do herself the favor of sitting down with Magatte Wade and listening to her story—Kamala Harris should make the time. 

A world that would have wasted one Magatte Wade is a world that should be ashamed of itself. What can be said about a world that wastes millions—and billions—of women and men, each of them a blessing, each of them created in the image of the Creator, each of them with something to offer. Not everyone has the particular gifts of Magatte Wade, but not everyone has to. That, too, is part of the genius of economic liberty: It is the only way to accommodate and to honor the genuine diversity of the human race, which is above all a diversity of talents, interests, and sensibilities rather than merely the dreary litany of race, sex, etc. in which the campus grievance merchants specialize. 

We cannot afford to waste one Magatte Wade. Where would we be without such heroes? 

And Furthermore

After honoring Magatte Wade, CEI gave out its Prometheus Award for Human Achievement—only the second time it has given the award in 40 years—to one of the great champions of liberty and human flourishing: George Will. I had the honor of introducing him and presenting the award, and, if you’ll indulge my repeating one remark: When I was a teenager, I wanted to grow up to be George Will. 

And I still do. 

Words About Words

“Dog in the manger?” Well, get ready for some Words about Words running headlong into Economics for English Majors. 

The metaphor of the dog in the manger refers to someone who jealously guards and keeps for himself something he cannot use, preventing its use by those who might benefit from it. This is a situation we might describe as Pareto non-optimal. 

“Pareto non-optimal? What happened to the dog?” We’ll get back to the dog in just a sec. 

A situation is “Pareto optimal” if every possible “Pareto improvement” has been made. A Pareto improvement is a reallocation of resources that harms no one and benefits at least one person. When you donate clothes you don’t want anymore to Goodwill, you’re making a Pareto improvement. That old coat isn’t doing you any good, selling it would be more trouble than it is worth, and it would be valuable to somebody who doesn’t have a coat and who cannot afford one. Add the idea of Pareto optimality to the notion of diminishing marginal utility and you have the most rigorous argument there is for redistributive economic policies: Elon Musk’s second $130 billion doesn’t do anything for him that his first $130 billion didn’t do in any meaningful personal well-being terms, so why not go stick a gun in his face and take that money by force and give it to somebody we think would benefit from it more? (You should never leave out the gun in the face—that is what government ultimately is, brute force even where it is entirely legitimate brute force.) 

There are lots of arguments against this, of course. There’s the moral one (it’s his money and he has a right to do with it as he pleases), the practical one (government programs cannot be relied upon to put the funds to a genuinely good use), the business one (Musk may not need a new pair of shoes, but he might want to buy a company that costs $130 billion and muck it up as badly as he has Twitter), etc. 

So, the dog in the manger, being a dog, doesn’t eat barleycorn. (I suspect Pancake, the world’s hungriest dachshund, would eat the barleycorn, but never mind that for now.) But he chases off the oxen and the other animals who would eat the barleycorn. The story of the jealous dog (de cane invido) has been around since at least the first century and shows up everywhere from Lucian to the apocryphal Gospel of Thomas to medieval writers such as Heinrich Steinhöwel. 

The metaphor of the dog in the manger is related to the idea of usufruct, an idea from Roman law holding that a person may enjoy the right to use and benefit from the property of another person as long as doing so does not harm the other party. A usufruct may be granted voluntarily, as in a life estate (and, boy, do I hate life estates), or (not usually the case in the United States) simply recognized, often in cases in which property ownership is contested or unresolved. For example, a little farmer who is growing some crops on a corner of land claimed by a very large landowner who isn’t currently using it may be granted usufruct, the right to enjoy the fruits of his labor, while the ownership issue is being worked out. 

Usufruct outside of its strictly legal meaning touches on a broader moral principle: “that the earth belongs in usufruct to the living,” as Thomas Jefferson put it in a letter to James Madison. The idea there is that you don’t want to be the dog in the manger, that those who can benefit from something have a kind of moral claim superseding the formal claims of those who may have technical title (or simply effective control) over an asset from which they can derive no benefit. 

And that takes us back to good ol’ Henry George. 

George was most famous for his advocacy of funding government through a single tax, a tax on the value of land in its unimproved state. As George reasoned, land is one of the few genuinely finite commodities widely held as a form of wealth and one that nobody—no mere mortal!—could claim to have created through his own effort. All land ownership begins with somebody saying, “This is mine.” Doing so was the “Origin of Inequality,” according to that godfather of tyranny, Rousseau: 

The first man who, having enclosed a piece of ground, bethought himself of saying This is mine, and found people simple enough to believe him, was the real founder of civil society. From how many crimes, wars and murders, from how many horrors and misfortunes might not any one have saved mankind, by pulling up the stakes, or filling up the ditch, and crying to his fellows, “Beware of listening to this impostor; you are undone if you once forget that the fruits of the earth belong to us all, and the earth itself to nobody.”

George’s argument (which found admirers everywhere from socialists to radical libertarians to William F. Buckley Jr.) was that the single tax would encourage a usufruct mentality: People would, if taxed according to his model, have incentives to improve land, or sell it to somebody who could improve it and make good use of it, rather than hoarding it as a nonproductive asset functioning only as a store of wealth, as a kind of big pile of gold sitting in a treasury doing nothing. (Of course, gold that is storing wealth isn’t doing nothing. But that was the idea.) George believed that his tax model would relieve entrepreneurs and traders from tax burdens while encouraging the widespread redistribution of land and, hence, of the wealth that comes from owning and using land. 

Many modern Georgists note that many modern evils—such as exurban sprawl and the environmental problems associated with it—would have been discouraged by a Georgist tax system in that taxes on the unimproved value of land would encourage dense development. You can get more economic value out of a few acres of land if you build a 60-story building on top of it than if you build one of those faux-Tuscan suburban horrors that we Americans are for some reason so fond of living in. 

Big landlords sitting on idle acres were, in George’s view, the big dogs in the manger, scheming “to monopolize what they cannot use.” 

While the Georgist tax is not the worst idea in economic history, the moralistic notion that we have a right to seize unused assets if we think we know better how to dispose of them is, in my view, an extraordinarily dangerous idea, the source of much mischief around the world over many years. Secure property title and a rigorous legal system for maintaining and transferring such title is one of the things essential to a free and prospering society. People who stage protests and wave placards like to rave about justice and equality and that kind of thing, which is all good and fine. But if you want to create a free, decent, secure, and prosperous society, you really have to start with property rights. 

And I would advise Donald Trump and J.D. Vance that property rights include the right to exchange property with others as you see fit—even if they are foreigners, even if they are nefarious Canadians. 

Elsewhere …

I was in Ohio! I looked for dog-eating Haitians! I found … none. But I did find some interesting stuff, some facts you might want to know and some observations you might find useful or interesting: 

At the end of my time in Springfield, I turn around and head back into the mountains, taking a different route toward the south, moving in the direction opposite from the ghosts of J.D. Vance’s ancestors, eternally marching the other way. In West Virginia, I think of John Brown—hanged on the other side of the state at Charles Town—and his last words, not the famous summation of his life and his jihad but what he said when he was led up onto the scaffold, where he could take in the view: “This is a beautiful country. I did not have the chance to see it before.”

And it is a beautiful country. But one of the little ironies of life that you really come to appreciate wandering around Appalachia after some time in Springfield, Ohio, is that the things that make a place quaint or unspoiled are also the things that make the people there poor, while the engines of human flourishing bellow black smoke, spoil the view, take the tops off the mountains. There is a price to pay for everything, for prosperity most of all. 

When J.D. Vance’s hillbilly antecedents came pouring out of the Appalachian mountains into the factory towns of Ohio, they were looking for jobs and a decent standard of living. They were leaving something behind—something they loved but couldn’t live with. Vance knows all about that: He wrote an interesting and moving book on the subject of moving on. He is an intelligent and energetic man: If he had been born in Haiti, he’d have made it to Ohio a long time ago, and he surely would be thriving there.

Some of these Haitian newcomers are going to send their children to Ohio State, the Marine Corps, and Yale Law, too. Some of them will end up in Silicon Valley and Wall Street and, bless their hearts, in elected office. Donald Trump is the grandson of one of those German immigrants, the man who started building the Trump fortune—and the Trump reputation—by operating a whorehouse in a Yukon mining town and a restaurant that did not serve kitty kebabs but did offer freshly slaughtered horse meat. Young Ewan, Mirabel, and Vivek Vance are the grandchildren of immigrants, too. That’s the American story: weirdos and geniuses, scoundrels and patriots, pimps and roadside horsemeat dealers …

Read all about it on The Dispatch’s website. 

I talked about imaginary Haitian dog-eaters on Morning Joe, here.

I talked about imaginary Haitian dog-eaters with Jonah Goldberg, here. 

You can buy my most recent book, Big White Ghetto, here. 

You can buy my other books here. 

You can see my New York Post columns here. 

Please subscribe to The Dispatch if you haven’t. 

You can check out “How the World Works,” a series of interviews on work I’m doing for the Competitive Enterprise Institute, here. 

In Closing

How about a little more from Henry George?

“The poor ye have always with you.” If ever a scripture has been wrested to the devil’s service, this is that scripture. How often have these words been distorted from their obvious meaning to soothe conscience into acquiescence in human misery and degradation—to bolster that blasphemy, the very negation and denial of Christ’s teachings, that the All-Wise and Most Merciful, the Infinite Father, has decreed that so many of his creatures must be poor in order that others of his creatures to whom he wills the good things of life should enjoy the pleasure and virtue of doling out alms! “The poor ye have always with you,” said Christ; but all his teachings supply the limitation, “until the coming of the Kingdom.” In that kingdom of God on earth, that kingdom of justice and love for which he taught his followers to strive and pray, there will be no poor. But though the faith and the hope and the striving for this kingdom are of the very essence of Christ’s teaching, the stanchest disbelievers and revilers of its possibility are found among those who call themselves Christians. Queer ideas of the Divinity have some of these Christians who hold themselves orthodox and contribute to the conversion of the heathen. A very rich orthodox Christian said to a newspaper reporter, awhile ago, on the completion of a large work out of which he is said to have made millions: “We have been peculiarly favored by Divine Providence; iron never was so cheap before, and labor has been a drug in the market.”