The Great Society: It Was Great
Every time new poverty numbers come out, I inevitably find the historical chart and am once again reminded of what a persistent and pernicious myth it is that somehow Lyndon Johnson’s Great Society was a failure. As with any ambitious series of new policy initiatives, some of the things done in the Kennedy-Johnson years didn’t work out well, but the results shown here speak volumes. When Ronald Reagan proclaimed “we declared war on poverty and poverty won” he was dead wrong — poverty still existed, but the number of impoverished Americans had declined precipitously. Then, under 12 years of conservative rule, the number went way up! In percentage terms, we haven’t moved as far back in the wrong direction, but we still haven’t managed to climb all the way back to where we were. Meanwhile, if you look at the age breakout you’ll see that one reason we haven’t swung too far back to where we were pre-LBJ is that the poverty numbers for senior citizens have remained very low — thanks in large part to the fact that the elements of the Great Society that targeted seniors have basically been kept in place.
50 Responses to “The Great Society: It Was Great”
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August 27th, 2008 at 8:52 am
You want to be a bit careful here. I’d need to look up the numbers here, but a large fraction in the poverty decrease is from Social Security benefit increases (and more people with coverage coming into the retirement age pool) and Medicare, i.e. a decrease of old people in poverty. A second large decrease in poverty is from the implementation of civil rights laws in employment in their up to 1965 guises (I’d need to check timing here).
So it depends on what you associate with ‘Great Society’. There are quite a few phases and programs here that should not be lumped together. Same for the fiscal costs of Social Security and Medicare, ‘welfare’, education expansion and education access funding, public employee unions and the war.
August 27th, 2008 at 8:52 am
Just curious, what’s the source for this data? What’s their definition of poverty? I’m guessing it’s government data, but just wanted to be sure.
August 27th, 2008 at 8:54 am
Post hoc ergo propter hoc.
August 27th, 2008 at 9:01 am
I’ve looked for the time series for the 1960s for poverty rates for whites under 65, but I cannot find them. This is to get a sense of how the group for whom the two effects I mentioned above, old age support and civil right laws, fared (for all reason, not just the Great Society — I’d expect ill understood ’standard’ labor market effects to dominate).
Anybody know where this data is? From looking at the time series for blacks and people over 65 it looks to me like whites under 65 do quite well, but it would be nice to see the figure year by year.
August 27th, 2008 at 9:01 am
If the graph counts government transfer payments, then it would indicate that the war of poverty is a quagmire that the government is stuck in. It seems that the government keep using the same old tactics and that all the government (taxpayers) can do if fight poverty to a standstill.
August 27th, 2008 at 9:02 am
Matt,
Do you really want to go there? I’m guessing if you asked 10 people that were adults during that time period which economy they prefer, 1979 or 1988, 9 would say 1988.
August 27th, 2008 at 9:02 am
Marc is asking the right question. Official measures of poverty are almost always just a count of the number of households earning below a certain proportion of a moving average income level. A few hundred billionaires could leave America and the average would drop, but those who are now above that average level would be no less poor. Similarly, by definition some people are going to be significantly below the average – being shocked and appalled that between a tenth and a fifth of Americans earn significantly less than the average wage is very much like Eisenhower being shocked to discover that half of Americans had below average intelligence.
August 27th, 2008 at 9:02 am
The standard Census link for this data.
August 27th, 2008 at 9:09 am
I’m sold. One chart is all I need. The Great Society was great. The myth has been debunked. Correlation equals causation. Post hoc ergo…
Apparently the Clinton-era reforms were unnecessary. Everything in the garden was lovely when Reagan was elected, even though the poverty rate was almost at the pre-1965 level in 1980, despite massive increases in government expenditures on poverty.
If Matt’s intent is to “debunk” a “myth”, maybe he should address some of the reasons why people think the Great Society programs were a failure first. Otherwise, it sounds kind of crack-pot to cite one chart, and ignore any other indices of success or other causal factors. This is perhaps more a critique of the medium of blogging (at least as Matt does it), but still, this is lame.
August 27th, 2008 at 9:12 am
While the debunking is just as accurate with or without it, it doesn’t hurt to cite the AEI’s Ben J. Wattenberg as one of the longtime debunkers.
August 27th, 2008 at 9:35 am
Wow.
Matthew finally posts something unambiguously correct, and his “post-partisan” commenters all assail him for it.
This is what happens you bash the Democratic Party for the entire primary campaign, Matthew. You end up with Andrew Sullivan’s commenters.
August 27th, 2008 at 9:56 am
Looking at your charts it appears to me that the Great Society programs of the 60s made that much difference. Poverty started dropping about 1960 and 70% of the reduction in poverty had occurred by 1965 when most of the Great Society measures went into effect. In the period from 65 to ‘70 the economy grew at about 4-4.5% a year which probably contributed greatly to the reduction in poverty.
August 27th, 2008 at 10:00 am
The drop from over 22% to under 13% was the most dramatic decline over such a brief period in this century.
Other parts of Great Society:
- Head Start program
- Medicare/Medicaid (over 200 million enrollees)
- School Lunch program (over 100 million beneficiaries)
- Civil Rights Act of 1964, Voting Rights Act of 1965, The 1968 Fair Housing Act
- Ginnie Maw, Fannie Mae
- Product Safety Commission, Child Safety Act (childproof caps for medicine), Truth in Lending Act
- Sensible Gun Control (Eliminating mail orders and sales to minors)
etc etc . . .
While, clearly, not all of the above are related to reducing the level of poverty, many of the above are, and those that aren’t are still related to improving society for the better.
Matt’s argument is not a one chart post hoc ergo propter hoc
August 27th, 2008 at 10:02 am
If we are to credit reduced poverty rates to LBJ, how do we account for the downward trend beginning in 1961-1963?
Can anyone read a chart around here?
August 27th, 2008 at 10:03 am
Official measures of poverty are almost always just a count of the number of households earning below a certain proportion of a moving average income level.
From Stefan’s link:
Poverty statistics are based on a definition developed by Mollie Orshansky of the Social Security Administration (SSA)in 1964 and revised in 1969 and 1981 by interagency committees…. The original poverty definition provided a range of income cutoffs or thresholds adjusted by such factors as family size, sex of the family head, number of children under 18 years old, and farm-nonfarm residence. At the core of this definition of poverty was the economy food plan, the least costly of four nutritionally adequate food plans designed by the Department of Agriculture. It was determined from the Department of Agriculture’s 1955 Household Food Consumption Survey that families of three or more people spent approximately one-third of their after-tax money income on food; accordingly, poverty thresholds for families of three or more people were set at three times the cost of the economy food plan. [etc.]
In short, the poverty rate has nothing whatsoever to do with the proportion of an average income level; it has to do with the cost of food. We can certainly be shocked and dismayed that a significant number of families would have to spend more than one-third of their income to buy subsistence-level food.
August 27th, 2008 at 10:06 am
“If we are to credit reduced poverty rates to LBJ, how do we account for the downward trend beginning in 1961-1963?”
Same reason that poverty rates dropped from ‘83 to ‘86. A healthy economic recovery has temporary effects.
What the Great Society did was to reduce the poverty rate in a permanent way.
I understand the Andrew Sullivan “post-partisan” commenters can’t recognize this, but that’s just because they’re mouth-breathers.
August 27th, 2008 at 10:17 am
It’s important to remember, as Matt points out, that the Great Society programs were effective at reducing poverty as it existed in the 1960s. Primarily, this meant poverty among the elderly and rural America. The Depression-era photos of Walker Evans and other FSA-OWI photographers are a good example of what poverty looked like in the U.S. during the middle of the 20th century.
The problem is that poverty changed dramatically during the last four decades of the 20th century. Today, poverty primarily means people in urban areas and young people of color. (Thomas Sugrue’s Origins of the Urban Crisis explains this transition well.) Point being that the Great Society is today criticized for not fixing something it never meant to fix while it gets no recognition for in fact remedying the problem it set out to solve. (This is a persistent problem of good policy. If you fix the problem, it goes away and people aren’t worried about it any more.)
August 27th, 2008 at 10:23 am
This seems to me to be exactly wrong. The structural change in our society that reduced poverty occurred before Great Society.
Whatever that change in our society was, it ended in approximately 1965. As the chart Matthew posted makes clear, the poverty rate has been essentially steady between 1966 and 2007: it has ranged between 11% and 15% for that entire period. However, between 1959 and 1965, the poverty rate fell from 23% to 15% – a change that appears to be permanent.
I don’t know why Matthew seems to think that the enactment of things like Medicare (1965), Medicaid (1966), and Title I of ESEA (1965), caused a structural decline in poverty before 1965.
Maybe Matthew believes in time travel, who knows.
August 27th, 2008 at 10:24 am
Be careful when interpreting these poverty numbers over a long span of time when there were important policy changes. Be especially careful when trying to use the poverty numbers to evaluate these changes. There is an overwhelming consensus among experts that the US poverty measure is deeply flawed. It measures money income against a threshold that depends on the number of people in a family. See here for details. There are two main problems with the measure:
1) Using money income is a huge problem when trying to evaluate anti-poverty policy because many anti-poverty policies provide non-monetary benefits. For example, food stamps and housing subsidies unquestionably reduce the costs of low-income people, making them less poor, but this is in no way reflected in the official poverty statistic. Similarly, because the income measure used is pre-tax, cash given to low-income families through the EITC is also not counted.
2) There is less consensus on this issue, but some argue that using a flat threshold to measure poverty is also a problem. First, the original measure was created by assuming that food makes up 1/3 of the costs of low-income families. This is no longer true. Second, costs vary greatly by region. Third, some argue that certain costs (transportation to work) should not be counted. If a mother is forced to work through a welfare to work program it may appear that she has been brought out of poverty because her earnings are greater than her former welfare payments, but to the extent that those earnings are going into transportation and daycare costs of work, she is not less poor.
August 27th, 2008 at 10:37 am
There seems to be a pretty strong relationship between economic growth and the bottom line. Notice how in the white areas the line goes down, but when you hit a recession it bumps up?
The fact that we had 20+ years of basically uninterrupted post-war economic growth has something to do with the decline in poverty during the 1960s, I would wager.
August 27th, 2008 at 10:47 am
It’s weird.
Matthew’s constant attacks on the Democratic Party this primary season has produced a commentariat that has a majority that agrees with Al.
August 27th, 2008 at 11:00 am
There are quite a few phases and programs here that should not be lumped together.
That is exactly wrong. You don’t get some of those programs in the 60s without it and naturally you don’t get expansions of those programs with out it either.
What the Great Society did was to reduce the poverty rate in a permanent way.
Indeed. It created the political cover for talking about government assistance in combating poverty.
August 27th, 2008 at 11:06 am
I don’t think that majority of commenters agree with me that the relevant drop in poverty rate occurred from 1959-1965 – before the Great Society programs to which Matthew attributes it – and that since 1966, there has been essentially no change in poverty rate (it has been in a narrow band of 11%-14% for that entire period). A few commenters note it, in one way or another, but certainly not a majority.
(Of course, a majority of commenters should agree with me, since my point is obviously correct, as even a cursory glance at the chart Matthew posted would show. But it’s never been the case that a majority of commenters agree with even my obviously correct points.)
August 27th, 2008 at 11:10 am
Looking at this graph I wonder how much of the increase in the numbers of those in poverty can be attributed to an increase income volatility.
Over at Economics Round table there is a post about a study examining income mobility for families in different income brackets. According to the study about 28% of families in the bottom income quintile in 2001 were in a higher quintile in 2003.
It is possible to imagine a scenario where more families spend a higher proportion of their effective lives below the poverty line but there overall lifetime earnings are dramatically higher.
Does anyone know of some studies that try to adjust for these type of affects?
I think when people look at poverty statistics they assume that they all measure those families that a persistently in poverty – I know I did before I studied economics in college. Just to be clear I am NOT saying that this graph is misleading and distorts the actual blissful reality of the modern American economy. But, if we’re going to be analyzing policy we need a more detailed picture of whats going on.
August 27th, 2008 at 11:35 am
“Of course, a majority of commenters should agree with me, since my point is obviously correct”
I believe I satisfactorily refuted you upthread…
August 27th, 2008 at 1:03 pm
Matt,
Unfortunately, the CPS, where these numbers came from, can’t address the dynamics of poverty very well because participants only stay in the sample for two years, they only do so if they don’t move (households, not families are repeated), and only half the 2007 participants also participated in 2008 (the others will participate in 09).
The Survery of Income and Program Participation is a panel survey that can answer these sortf of questions. Data from 2004 through 2008 will be released in 2009, but here are some older reports you might be interested in:
http://www.census.gov/population/www/socdemo/wellbeing.html
August 27th, 2008 at 1:44 pm
How about the influx of 50 million uneducated immigrants in the last twenty years? How did this affect the poverty level?
August 27th, 2008 at 3:39 pm
Doesn’t the poverty statistic exclude transfer payments? So, all we’re seeing here is the impact of the strong, manufacturing-driven economy of the 1960s.
August 27th, 2008 at 7:35 pm
Re: According to the study about 28% of families in the bottom income quintile in 2001 were in a higher quintile in 2003.
There’s less to this statistic than meets the eye: over time people do see their income increase with age. In early 1992 I definitely would have counted as poor (my income was just $7000). Two years later my income was several times that. The difference of course is that I graduated from college and got a job.
August 28th, 2008 at 6:02 am
Statatheleft has it right here.
Using those living at or below the federal poverty level from the official statistics doesn’t in fact measure the number of people living in poverty.
What it measures is the number of people living in poverty based upon market incomes plus direct cash transfers.
No allowance is made for either poverty alleviation measures made in kind (food stamps, housing vouchers, medicaid etc) nor any poverty alleviation methods made through the tax system (EITC).
You absolutely cannot say anything useful about the prevalence of post alleviation poverty by looking at these numbers.
For example, the mid 60s saw a large rise in the use of direct cash transfers (ie, welfare) as a means of poverty alleviation. So, of course, given that our measure above includes this payment, poverty rates dropped. Starting in the late 70s/early 80s (1975 for the EITC) a bipartisan move was made to move from such direct cash transfers to either transfers in kind or through the tax system. We do not count these in the above measure of poverty. So, even if exactly the same amount was being spent on poverty alleviation (the number actually rose) and the poor had exactly the same disposable incomes (which is what actually counts of course) we would see the poverty level rising. Because, quite simply, we’ve moved from counting what we spend to alleviate poverty to not counting what we spend to alleviate poverty.
To put it even more simply. The above numbers do not include the effects of the EITC. The EITC is the largest poverty alleviation program in the US. So we are measuring poverty without taking account of the biggest thing we do to alleviate poverty.
It’s not that this is just not very sensible, it’s that it’s nonsense.
We could triple the EITC, give every poor family in the country a $100,000 a year housing voucher, upgrade medicaid to the level of health care that Senators get, issue food stamps so that everyone lives on lobster, steak and caviare and we wouldn’t have changed the poverty rate, as measured above, by one single basis point, by even one single person.
There are other, vastly better, methods of measuring poverty. You could use relative poverty (say, 60% of median household income, as just about every other country does), you could use poverty properly adjusted (like, say, post tax, post benefits in kind income, adjusted for household size, again, as every other country does) but this unique American system of measuring poverty is absurd and I’m surprised that someone as bright as Matt is taken in by it.
September 12th, 2008 at 4:23 am
There is still a poor segment in our country. Some of them don’t show up as quite as poor because their “income” from transfer payments is shown as income on your chart.
Some people receive transfer payments, their total income increases, some of them go above the “poverty line”. But you haven’t actually solved the *problem*, you are just masking it.
This is all absurd. Rich and poor are relative. The “poverty line” is an arbitrary number picked by bureaucrats who have a vested interest in maintaining the status quo.
America’s “poor” are the richest poor in the world, with TV sets, cars, the ability to afford a two pack a day habit, and the biggest obesity rate in the entire world. That, frankly, is rich by the standards of anyone in the third world.
What your chart is measuring, is the low-end tail of a bell curve. There will always be a tail to this bell curve, no matter how many more trillions of dollars we pour into the “Great Society”.
In the 30’s FDR made people’s retirements dependent on government. In the 60’s Johnson made people’s daily meals dependent on government.
This isn’t solving the problem. The problem is that “the poor” aren’t being productive. Yes there are some who are mentally ill or handicapped and there is room to discuss how to help them. But most have nothing wrong with them, they just for whatever reason aren’t productive. Instead of paying them off, imagine if some of the trillions of dollars we’ve spent had instead been invested in ways to help them join a real “Great Society”.
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