How the Government Keeps People Poor

--America used to be the land of opportunity.

As long as you worked hard, it was true that you really could carve out your version of “the good life.”

Even if you arrived here by boat with a quarter and seven nickels in your pocket.

This encouraged even those on the lowest rungs to become entrepreneurs because each individual knew he or she had a fair chance to succeed.

Today’s America, though, is much different. Due to bad monetary policies, exorbitant taxes and a severely anti-business regulatory environment, there’s very little incentive for anyone to take the risk of providing value to his or her fellow human beings.

And those who suffer the most from this lack of opportunity, of course, are those on the lowest rungs of society — the poor.

Not only are the poor nearly shut completely out of making their own money on their own terms, they’re also often immediately smacked down when they try.

A little over a year ago, for example, Baltimore officials raided one of the city’s last arabber stables.

The officials immediately declared that the conditions of the stable didn’t meet the state standards.

They accused the horse owners of animal cruelty and confiscated 14 horses, sending them to a rescue shelter about 30 miles away.


The trial for these accusations happened last month… fourteen months later. (Expediency, as you know, isn’t really the government’s greatest asset.)

Baltimore Sun reporter Justin Fenton, while covering the trial, wrote: “Veterinarian Richard J. Forfa, one of the state’s expert witnesses, testified during cross-examination that the horses seized from the stable were not in poor health and showed no signs that would require the owners to be reported for abuse and neglect.”

As a result of this testimony, all the charges were dropped. But, of course, the horses are long gone. The shelter had adopted them out several months ago.

So, in the end, five entrepreneurs who were filling a legitimate need in Baltimore’s food deserts — where access to fresh produce is nearly nonexistent — were treated as criminals and had their horses stolen from them.

If you think this is an isolated incident, think again. Big Government — time and time again — works directly against the poor and pushes otherwise productive individuals into state-sanctioned dependency. Even if they have the desire to work.

And this is just one small way that government keeps the little guy from rising up.

Today, we’ll take a look at three more BIG ways government keeps people trapped in poverty.

Read on…

ONE: Artificially High Cost of Living

Agricultural tariffs raise the cost of food. And tariffs and quotas on imports raise the price on other bare necessities like shoes and clothing.

Though these things might sting a bit for the middle class, for those who scrape by just to put food on the table, it makes all the difference.

“Without the state to make meeting their basic needs unnecessarily expensive,” Gary Chartier writes on, “poor people would have more disposable income and would be more economically secure.”

On top of that, the poor are forced to pay taxes. They pay the payroll tax to support the nearly-bankrupted Social Security and Medicare. They pay sales tax, property taxes (through rent), and gas tax. Even to the middle-class, these taxes are far more than negligible. To the poor, they are disastrous. 

Also, not to mention, government has quietly eroded the value of our currency through control of the monetary system. Our dollar has lost over 90% of its value in the past century. And, of course, the poor are hit the hardest by rising costs on consumer goods as a result.

Moreover, due to our politicians’ vast inability to spend less than it collects in taxes, the United States is living on borrowed money. Which, inevitably, lowers the standard of living for the poor and middle class.

Two: Artificially High Barriers to Entry

Government occupational licensing, as Sheldon Richman puts it in a Future of Freedom Foundation article, is “a devastating one-two punch against low-income people: Licensing makes the number of practitioners of many occupations artificially low, raising the price of needed services.

“Obviously that harms low-income people more than others,” Richman goes on. “Moreover, licensing raises the cost, and often makes it impossible for low-income people to enter certain occupations. Someone who is talented at cutting and styling hair may have to pay thousands of dollars to achieve the paper qualifications necessary to become eligible for a license. That barrier can be prohibitive for many low-income people.”

(And who, really, is the government protecting by forcing people who cut hair to obtain expensive licenses? Certainly not the poor.)

Also, arbitrary zoning restrictions make it so that many poor — even if they don’t need an occupational license for their trade — can’t work out of their homes. “I rented apartments to a couple of women who were supporting themselves and forced on to welfare by these laws,” Mary J. Ruwart recalls in her book Healing Our World. “One was sewing curtains in her apartment for businesses. Another watched children who lived in adjacent apartments. Neither business created extra traffic.

“The city government hounded these women because they didn’t have a business license and their apartments weren’t zoned for commercial activities,” Ruwart says. “They even called me asked me to evict them, which I refused to do. When I asked them how they thought these women would get by without an income, they simply said, ‘They should be on welfare anyway.’ Eventually, the women, terrified by the threats from the city, ended up on the dole.”

Also, Ronnie Forston, a homeless man in Atlanta, was arrested seven times in 18 months for shining shoes without a license. He needed a vendor’s permit in order to get the $175 license. But, thing is, the city had frozen the issuance of vendor’s licenses. So even if he’d tried to get a permit, he would’ve just been wasting his time.

And then there are, of course, minimum wage laws. Minimum wage laws are far from compassionate. They were originally created, in fact, to price “undesirables” out of the market and, hopefully, weed them out altogether.

Minimum wage laws, by design, destroy the poor’s ability to get paid while getting trained and building experience. Those at a disadvantage are forced, out of the gate, to either pay for school or expensive licenses. Which the poor, more often than not, simply cannot do.

So, instead, most of them, even if they want to work for a living, are forced on the dole.

“Rent is Too Damn High!”

“In cities such as New York and Los Angeles,” Charles Johnson writes on, “about 20 to 25 percent of low income renters are spending more than half their incomes just on housing. But it is the very laws that Progressives favor — land-use policies, zoning codes, and building codes — that ratchet up housing costs, stand in the way of alternative housing options, and confine poor people to ghetto neighborhoods.”

It’s also these same laws that price many impoverished individuals out of the housing market and push them into homelessness.

And, Johnson writes, “Once homeless, they are left exposed not only to the elements, but also to the harassment or arrest by police for ‘loitering’ or ‘vagrancy,’ even on public property, in efforts to force them into overcrowded and dangerous institutional shelters.”

Government also blocks one of the oldest and most common survival strategies of the urban poor: urban homesteading. Which, without government interference, is, at the very least, a temporary way to deal with homelessness.

In Miami, for example, community activists and the local homeless built a shanty town on an inner-city lot that had been vacant for years. The local government, a month later, cleared the lot, arrested 11 people and put up a fence. The lot sits vacant and unused to this day.

But even on private land you’re not safe from the long arm of powerful stupidity.

In Indianapolis, Thelmon Green, with the owner’s permission, lived in his van on a local towing company’s lot. Unfortunately for him, the Indianapolis Star took an interest in him and ran a story about his life.

The county health commission saw the story and said “Not on my watch!”  The commission immediately took action and evicted Green from his van. Why? Because it didn’t meet the local housing code.

The streets, so goes the logic, are much safer than a warm van.

This is by no means an exhaustive list of the ways the state pushes people into poverty. But it’s a good primer.

Tomorrow, we’re going to talk about the Welfare State — and how the United States used to manage without it.

American communities helped the poor more effectively and with much more compassion than the State ever has through what’s called “mutual aid.”

We’ll get into that in more detail in tomorrow’s episode.

Stay tuned…

Until then,

Chris Campbell
Managing editor, Laissez Faire Today

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Chris Campbell

Written By Chris Campbell

Chris Campbell is the Managing editor of Laissez Faire Today. Before joining Agora Financial, he was a researcher and contributor to