Economics with Dr. Hendrickson: Should the Government Help the Poor?

Value-Free: Economics can only tell us what is or will happen under specific conditions. 

By Scott Cross

Recently, former Grove City College economics professor delivered a lecture entitled Should Government Help the Poor? for the second episode of Economics with Dr. Hendrickson. Although many expect a simple “yes” or “no” answer, Dr. Hendrickson hastens to point out that it is not actually an economics question, and therefore can not be answered by economics. (LISTEN MORE: Economic Wisdom: Insights from Dr. Hendrickson)

Economics is “value-free,” meaning it can’t tell us what we should do; economics can only tell us what is or what will happen under specific conditions. In the example of the government helping the poor, economics cannot say if the government should help the poor, only what will happen if certain actions are taken. It is up to individual people to use their own value judgements to determine if they should undertake those actions.

Economics can, however, shed light on the potential effects of programs that aim to assist the poor. Before the government in the US started offering vast social welfare programs, private charities, religious institutions, and families were the primary caregivers of the poor. The main causes of poverty in this time were ignorance, laziness, and intemperance and these private institutions assisted in educating and mitigating these vices. As a result, they offered the poor accountability. People did not have a right to assistance, but through charity, they received help that enabled them to improve their own situation.

Changing Policies

This all changed, Dr. Hendrickson points out, as social progressives pushed for a broader role for government, including caring for the poor. He emphasizes the New Deal and Lyndon Johnson’s War on Poverty among other programs. Dr. Hendrickson points out that these changes destroyed the concept of accountability. Instead of encouraging the poor to improve themselves, society gave them the expectation of government assistance. The state, rather than individuals or private institutions, became responsible for caring and the well-being of everyone in society.

These welfare programs create “perverse incentives,” discouraging people from working, seeking employment, or turning to private institutions for help.” If guaranteed government money is available, why bother trying to improve one’s situation? Essentially, the government is providing a financial reward for remaining poor, which leads to even more poverty overtime.

Moreover, the incentives for those running welfare programs are also problematic. If welfare systems were to succeed in reducing poverty, they would reduce the need for these bureaucratic programs. In other words, if they were truly effective, the welfare programs themselves could eventually become unnecessary, which would threaten the jobs of those running them.

Listen to Economics with Dr. Hendrickson!

Interested in hearing more from Dr. Hendrickson? You can find other lectures in the series Economics with Dr. Hendrickson here.

About the Author

Scott T. Cross is a content editor for Checkpoint News from Columbiana, Ohio. As a junior student at Grove City College, Scott is majoring in Economics with a minor in Music. He is a marketing fellow at the Institute for Faith and Freedom.

During the summers of 2023 and 2024, Scott interned as a Research Assistant at the Allegheny Institute for Public Policy in Pittsburgh. There, he co-authored numerous published Research Briefs analyzing and advocating for public policies that promote private property and roll back the ever-increasing scope of government power. Scott also appeared on multiple radio broadcasts to discuss his research.

On campus he serves as Vice President of the Mises Society, an organization he co-founded that seeks to promote fellowship and the ideas congruent with the Austrian School of Economics

Scott has won a Don Lavoie Fellowship through the Mercatus Center, is a member of the Omicron Delta Epsilon international honors society in economics, and his work has been published by the Mises Institute.

Following Graduation, Scott intends to pursue graduate studies in either economics or law.

Disclaimer: The views and opinions expressed are those of the writer alone and do not necessarily reflect the official policy or position of Grove City College, the Institute for Faith and Freedom, or their affiliates.

Cover Image: The Institute for Faith and Freedom (cropped).