August 20th, 2015
Have A Question?
If you would, please indulge me this week, as I would like to set aside the machinations of economic theory and write about something that strikes close to home – Moms. It recently struck me just how important moms are to our economy. As I watched the tragic events unfold in Baltimore over the past few weeks, I was moved by the brave action of Toya Graham, a single mother of six children. As young men rioted in Baltimore, Ms. Graham recognized her son among the mob. She swiftly marched over and grabbed her son forcefully, smacking him about the head and berating him for his conduct (all in front of his friends and news cameras). Surely this was a difficult thing for Ms. Graham to do; she had other kids at home to attend to and the sentiment of her neighborhood was likely in favor of the riots and protests. However, she was the last line of defense in a world where her son was on the brink of crossing over to a dark side of society, from which, he may never return. Ms. Graham stood her ground against an environment that was pushing her son down a path, which could ruin his life. Ms. Graham has my vote for “Mom of The Year!” (Click image to see video.)
Economics is the study of such incentives, and to be sure, they have gone awry in many of our rural neighborhoods and inner cities. Families are trapped in a way of life that offers little hope. This despair breeds resentment, crime and other forms of destructive behavior. The path of least resistance is to blame “police brutality” or demand more government funding for programs to help these neighborhoods. However, if we could take a deep breath and look at the complexities of poverty in America, we will see things we don’t want to discuss, or admit.
In American society today, there is often a separate economy—a sub-economy that functions opposite to the incentives of mainstream capitalist economics. It prevails in neighborhoods of poverty throughout urban and rural America. Plagued with an absence of the incentives and rewards that promote productive activity, this sub-economy denies its people entry into the mainstream of America.
Within the construct of economic incentives, means-tested programs (intended to aid the poor) actually create disincentives for households to increase their income (at the risk of losing their benefits). These programs create roadblocks to the two main factors in economic success and progress: Marriage and Gainful Employment. Government run anti-poverty programs incent mothers to replace fathers and husbands with government checks. If that sounds cruel, don’t blame these moms, blame the system that puts them in that position. You see, when the food on your table, roof over your head, clothes on your back and medical services needed are provided by government, and government says if you earn more than X amount, you will lose these entitlements; people will do only what it takes to survive, so as to not bite the hand that feeds them. It’s a form of psychological bondage.
Un-wed child bearing, since 1965, has increased from 7% to 39% (and 69% for African Americans). Children in single-parent households are seven-times more likely to live in poverty. Likewise, these children are many times more likely to:
Furthermore, sons seem to be more adversely affected than daughters, when considering these statistics. Marriage is an economic issue, not just a social or moral issue. As has been pointed out:
“There is no other single force causing as much measurable hardship and human misery in this country as the collapse of marriage. It hurts children, it reduces mothers’ financial security and it has landed with particular devastation on those who can bear it least: the nation’s underclass.”
To be sure, there are exceptions to this. Certain single moms have obviously beaten the odds. Look at the case of Dr. Ben Carson, whose mother was single, illiterate and unskilled. However, Dr. Carson has become a world renowned brain surgeon, as a result of his mom’s efforts. But applying exceptions to otherwise prevalent facts would be foolish.
As I have said many times, if you get the economics wrong, you get the incentives wrong and people suffer (the ramifications of flawed economics are quite serious). This is the real story behind poverty in America. I am not optimistic that we as a society will soon change course in a manner that will free our poor from the bonds of misguided social programs. Given the fodder it provides to politicians (and the rhetoric they spew) the misplaced tactics of “The War on Poverty” will likely persist. In the meantime, moms may be the last line of defense for young people growing up in dysfunctional communities. In light of such, let’s champion the mothers who are in the trenches as the last line of defense to save their children.
Lastly, I want to thank my Mom for making me the man I am. Although we came from poor circumstances, Mom always seemed to make ends meet. Mom kept us in-line when Dad was away or at work (and did not hesitate to have Dad straighten us out when he got home). Mom was unwavering in her principles of right and wrong. However, she also let us make mistakes, fail and learn from such. I was fortunate to have two loving parents at home. Despite adversities, I believe they were better equipped (as a couple) to raise us than either of them (even Mom!) would have been on their own.
On this Mother’s day, thank your Mom for all she does (and has done) for you. She is important for The Future of Your Wealth!