by Sandy Ikeda

There are a couple of discussions of poverty going on right now, here and on the “Austrianecon” list-serve, which gives me a convenient opening for the following.

I’ve been re-reading Jane Jacobs’s second book, The Economy of Cities (1969), while working on a short piece for a Festschrift in her honor. FYI I’m writing about the virtue of inefficient cities, paying close attention to the chapter 3, “The valuable inefficiencies and impracticalities of cities.” Although less known and influential than her first book, The Death and Life of Great American Cities (1961), EC is devoted to developing her economic ideas and is full of great insights, such as the following from that chapter:

To seek ‘causes’ of poverty…is an intellectual dead end because poverty has no causes. Only prosperity has causes. Analogically, heat is a result of active processes; it has causes. But cold is not the result of any process; it is only the absence of heat. Just so, the great cold of poverty and economic stagnation is merely the absence of economic development. It can be overcome only if the relevant economic processes are in motion.

What Jacobs has in mind here is the underlying condition of poverty, not temporary impoverishment that’s due to episodes of unemployment, which may indeed be traced to particular causes. And the “relevant economic processes” she’s referring to are those that for her drive dynamic, entrepreneurial development, i.e., urbanization, diversity of land uses and tastes, and high population density all in the context of free trade.

(If you want more on the mechanism, which she clearly explains as spontaneously emergent, I could post something later but it would be best just to read this book, or, if you’re in a hurry, the amazing first chapter. I can’t find an ungated version online but you can read a bit of it here.)

Anyway, I don’t know if Mises or Hayek or Rothbard ever put it quite this way. But Jacobs’s observation implies that an effective “war on poverty” (remember, she’s writing during the height of Johnson’s Great Society) would really just be the by-product of establishing the enabling conditions for economic development, rather the outcome of a redistributive state.

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As many of you are aware, for centuries, poverty was the default condition for humankind, and as recently as 1959 the rate of measured poverty among families in the United States was over 20% (before which I don’t think there are recorded data) and has fluctuated around 10% since 1968 despite the boatloads of money thrown at the problem especially since the early 1970s. Taking the longer view, although reliable statistics on poverty naturally don’t exist, Henry Hazlitt’s The Conquest of Poverty (also downloadable from the Mises Institute) chronicles the incidence of famine in Europe: “thirty-one major famines from ancient times down to I960.” It’s been quite some time, probably not since the beginning of the Industrial Revolution (circa 1760), that there has been any famine in the West that has not been the result of war or genocide.