JLF Memo
Feb. 19th, 2015: - johnlocke.org Manage Subscriptions

Effectively fighting poverty in North Carolina
By Jon Sanders

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In a draft report released this week, the working group of the University of North Carolina Board of Governors has completed its review of the 240 research centers scattered among the system campuses. It recommends further review of only 13 and closure of just three.

One of the three that didn't pass muster is the UNC-Chapel Hill Center on Poverty, Work, and Opportunity. Supporters of the center and its outspoken leader, Gene Nichol, are outraged.

They are doing a disservice to fighting poverty in North Carolina by acting as if the center is the state's leading effort in the fight -- or that its existence is the only acceptable sign North Carolinians care about the poorest among us. The reality is that the actual, effective fight against poverty is and continues to be

waged by job creators, entrepreneurs, innovators, and private charities on the ground in communities.

The poverty center is, if anything, an object of distraction from that fight. Its leaders have unfailingly promoted empirically unsound public policies, demagoguery, and most of all, themselves.

It didn't have to be this way, of course, although from its founding the center was geared to be little more than a resume enhancer.

A political vehicle from the start

The Center on Poverty, Work, and Opportunity was hatched shortly after the 2004 presidential election. Former U.S. Senator John Edwards had just lost that election as former Sen. John Kerry's running mate. Nichol, then dean of the UNC-CH Law School, told the Durham Herald-Sun on December 3, 2004, that he had "started discussions with Edwards several weeks ago" over "the possibility of Edwards teaching in some capacity at the law school."

From the outset, it was clear that the "Edwards center" was a vehicle to keep him politically viable till the 2008 presidential campaign. The center's formation was announced with copious denials, of course, that Edwards had any political motivations behind it. Then-UNC chancellor James Moeser assured everyone that "We've tried to keep this on an academic footing, and he will have his own political life off the campus."

The denials rang hollow as soon as they were uttered. Edwards announced the center's formation that night "at a Democratic Party dinner in Manchester, N.H., site of the first primary of the 2008 campaign."

He then proceeded to do very little with the center, even as it enhanced his own political life off campus. Prior to leaving to run for president, Edwards reportedly made only 20 appearances in two years with the center. That count was quite generous; it included his showing up to the opening reception and his spending an hour having coffee with students.

On October 25, 2006, The Daily Tar Heel ran an investigative report entitled "Edwards on the Road: Travels Point to Political Ambitions." The report showed that Edwards had spent most of his time not on campus, but instead in the states considered crucial to securing the Democratic nomination.

The center's online "Events" section was such a running joke that it sported the same typographical error for over a year. Perhaps it would be unfair to pick on a typo, but this particular one was "The [sic] are no events posted at this time."

When Edwards left, the directorship was handed to Nichol. He had during Edwards' brief time at the center spent 19 months as president of the College of William & Mary, making such a hash of it that he alienated the college's donors so greatly he had to resign. He had a fallback position in public academe, however: the center he himself created.

A poverty of promised 'innovative and practical ideas'

In announcing the center, UNC-CH had promised it would "examine innovative and practical ideas for moving more Americans out of poverty and into the middle class." For that reason, and from the very beginning, I and others urged Edwards to investigate freedom's effects in fighting poverty. We worried that Edwards and the center confused being poor (a relative measure) with being impoverished, that his focus kept drifting to the middle class, that he tended toward bromides and ambiguities, and that he gravitated toward government policies that are neither innovative nor practical, let alone effective.

We strongly urged that Edwards and the center abandon its pursuit of a higher minimum wage. Why? Because of the minimum wage's well-known negative effects against the poorest and least skilled -- they being the very people the center was supposed to be focused upon helping. Raising it would only make matters worse for them.

These negative effects -- "A minimum wage increases unemployment among young and unskilled workers" -- are one of the issues over which economists are in greatest agreement. An academic center in a major research university promising innovative and practical ideas to fight poverty would not reflexively advocate for a higher minimum wage. A politician would.

Incidentally, the early progressives behind the first minimum wage did so in full knowledge and expectation of its effects on the poor. That's why they wanted it. They were steeped in the same odious eugenics philosophy behind North Carolina's forced-sterilization law to prevent "undesirables" from reproducing.

Thomas C. Leonard exposed this sorry history in his Fall 2005 Journal of Economic Perspectives article on "Eugenics and Economics in the Progressive Era." He wrote:

Progressive economists, like their neoclassical critics, believed that binding minimum wages would cause job losses. However, the progressive economists also believed that the job loss induced by minimum wages was a social benefit, as it performed the eugenic service ridding the labor force of the "unemployable." Sidney and Beatrice Webb (1897 [1920], p. 785) put it plainly: "With regard to certain sections of the population [the "unemployable"], this unemployment is not a mark of social disease, but actually of social health." "[O]f all ways of dealing with these unfortunate parasites," Sidney Webb (1912, p. 992) opined in the Journal of Political Economy, "the most ruinous to the community is to allow them to unrestrainedly compete as wage earners." A minimum wage was seen to operate eugenically through two channels: by deterring prospective immigrants (Henderson, 1900) and also by removing from employment the "unemployable," who, thus identified, could be, for example, segregated in rural communities or sterilized.

Leonard goes on to show how progressives found a "race-suicide" theory to support pricing out "the colored races" from wage competition with white workers with higher living standards:

For these progressives, race determined the standard of living, and the standard of living determined the wage. Thus were immigration restriction and labor legislation, especially minimum wages, justified for their eugenic effects.

Today's progressives favor the same policy -- under the mistaken belief that it would make things better for the poor. The economics, however, remains the same.

(Readers can learn more about the hideous, racist origins of the minimum wage from Jeffrey A. Tucker's Feb. 10 feature in The Freeman, "The Eugenics Plot Behind the Minimum Wage"; Carrie Sheffield's April 2014 column in Forbes, "On the Historically Racist Motivations Behind the Minimum Wage"; and Ryan McMaken's post to the Mises Institute's blog; among others.)

A 'moral failing'

Nichol continued to push for increasing the minimum wage and other stale, impractical government tools. He did, however, take a public position on an innovative policy tool: the Opportunity Scholarship Program, passed by the General Assembly in July 2013.

Opportunity Scholarships are school scholarships tailored specifically for children from lower-income families, providing as much as $4,200 in scholarships to offset the cost of attending private schools. Eligible voucher recipients in the first year must be children enrolled in a public school the previous year and qualified for free- or reduced-price lunches

Now in his "Message from the Director" on the center's home page, Nichol had deplored "the scourge of debilitating poverty [which] is the largest problem faced by the people of North Carolina -- even if our political leaders ignore it, or declare, with a breathtaking stupidity, that it doesn't exist. Editing 1.7 million Tar Heels out of the family portrait." Among his examples was the plight of underprivileged schoolchildren:

Ignoring school kids who can't get access to decent meals, much less quality teachers, or safe classrooms, or the internet -- but who we say enjoy a steely equality with the well-tutored and heavily-financed children of Chapel Hill and Myers Park. Though when we say this, we know we lie.

Not addressing these would be, in Nichol's words, a "moral failing."

Regardless, Nichol publicly opposed the Opportunity Scholarships. In so doing, he was careful to present the issue as being over private schools being able to take tax dollars from public schools -- not poor families being able to use taxpayer money to choose the schools that best meet their needs.

To be clear, Nichol chose to edit poor families out of the discussion over Opportunity Scholarships, even though they are at the very heart of the issue.

Only once did his column mention "underprivileged children in low-performing schools." There Nichol was directly quoting Sen. Phil Berger and then-House Speaker Thom Tillis. He introduced the quotation with "Legislators howled."

'The greatest beneficiaries of capitalism are those at the bottom of the income ladder'

Regardless of the center's fate, waging an effective fight against poverty would involve a healthy dose of the overlooked portion of the center's name: Opportunity. As has been shown throughout history, what best provides opportunity is freedom. More freedom means more opportunities for the effective poverty fighters: job creators, entrepreneurs, innovators, and private charities working individually. Policymakers' role is safeguarding and expanding freedom and opportunities.

Knowing this, the John Locke Foundation has since its inception 25 years ago advocated policies expanding freedom and opportunity for all North Carolinians. Its Founding Principles recognize that "the individual pursuit of economic opportunity benefits all." It underlies our commitment to restoring North Carolina's heritage as "First in Freedom."

Ahead of JLF's silver anniversary, then-president John Hood surveyed 25 years' worth of peer-reviewed scholarly research on the relationship between public policies and economic growth, 681 studies with 1,389 separate findings. The survey found "strong empirical support" for our policy preferences. That is, most peer-reviewed academic studies

find that lower levels of taxes and spending, less-intrusive regulation, and lower energy prices (which often reflect fiscal and regulatory policies) correlate with stronger economic performance.

As Vice President for Research Dr. Roy Cordato wrote in introducing our most recent Agenda candidate's guides on key policy issues,

The unifying principles of Agenda 2014 are the same as they have always been. All of our analysis and policy proposals seek to advance individual liberty, personal responsibility, and a free market economy. Whether we are discussing school choice, economic growth, or health care reform, these are the concepts that have animated the John Locke Foundation's analysis since its founding in 1989. We firmly believe that policies that advance these goals are, happily, policies that will create employment opportunities, lower health care costs and improve access, reduce the costs of energy, and better educate our children. Both in the United States and internationally, it has been proven time and time again that liberty and prosperity go hand in hand.

On our Locker Room blog I posted a quotation from Nobel laureate economist Gary Becker:

The greatest beneficiaries of capitalism are those at the bottom of the income ladder. That's why I favor capitalism. Were that not the case, I would not be in favor of capitalism. Milton Friedman feels the same way.

In posting that, I wrote that "This core conviction animates my work and the work of my colleagues at John Locke." I offered copious examples and concluded with a "Case in point." That case? Our urging John Edwards and his new center to investigate freedom's effects in fighting poverty.

When Becker passed away last May, I revisited his observation and discussed its wisdom in greater detail, contrasting government's costly but ineffective fight against poverty with free enterprise's far greater results.

I took encouragement that state leaders took steps in the right direction of "bringing empirically proven ways to expand economic liberty and create more room for entrepreneurs and job creators." Again, these are not ends in and of themselves; they are the most effective antipoverty tools known to history.

Fellow North Carolinians concerned about poverty and worried about what possibly losing the poverty center portends can take encouragement from this: We will continue to strive to expand individual liberty and economic opportunity for all. The goal to be First in Freedom necessarily includes a vision of being first in effectively fighting poverty.

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