"Was President Lyndon Johnson’s “war on poverty” the main driver of declining poverty rates after 1964?
Not according to a new study. The researchers examined a measure of poverty
that accounts for all taxes and government benefits … [and] anchored [the] poverty measure to the official poverty rate in 1963. ... [They also] adjusted income thresholds for inflation and the size of each person’s household.
Using this measure, they found that
poverty fell substantially prior to the War on Poverty, primarily due to increases in market income, without a substantial rise in the dependency of working-age adults and their children on government transfers for most of their income. … These trends were particularly stark for black people, who experienced a steep decline in poverty before the War on Poverty."
Friday, June 5, 2026
Why Has Poverty Declined in the U.S.?
The Myth of a Permanently Poor Underclass
The bottom income quintile is not a static social class but a temporary snapshot of lives in motion. Most Americans do not remain poor for life, and removing policy barriers can help more people move up.
"One of the most misleading ideas in American politics is that the United States has a large, fixed class of permanently poor people stuck at the bottom year after year, while everyone else moves on without them.
That story is emotionally powerful. It also happens to be a poor guide for serious policy.
Poverty is real. Hardship is real. Some people do remain trapped for long periods, and that deserves serious attention. But the popular picture of a vast, permanent underclass does not describe most Americans who show up in the bottom income quintile in any given year. As economist Anthony Davies has put it, many are there because of “retirement, homework, and diaper rash.” That line works because it captures something basic: a snapshot of income is not the same thing as a life story.
Students often have very low current earnings. So do many retirees living on savings or Social Security instead of wages. So do young parents working fewer hours, people between jobs, and entrepreneurs in low-cash-flow years. Treating all of them as members of a permanent poor class is not compassion. It is a category mistake.
The data back that up. The Federal Reserve’s Survey of Consumer Finances distinguishes between “actual” and “usual” income precisely because current-year income can be temporarily depressed. In 2010, about a quarter of families reported that their actual income was unusually low relative to normal. That matters because it means many households classified as poor in a given year are experiencing a temporary dip, not living permanently at the bottom.
In fact, the same survey found that a large share of households in the lowest quintile by actual income ranked higher when measured by usual income instead.
The tax data tell the same story. A Treasury study tracking taxpayers from 1996 to 2005 found that about 56 percent moved to a different income quintile over the decade. More important, roughly half of those in the bottom quintile moved up by 2005, depending on the measure used. About 29 percent moved up one quintile, another 29 percent moved up at least two quintiles, and roughly five percent moved all the way from the bottom quintile to the top quintile. That is not what a rigid caste system looks like. It is a dynamic picture in which many people pass through low-income years rather than remain stuck there permanently.
This is where so much bad policy begins. Politicians see a one-year income snapshot and talk as if they are looking at a permanent social class. They are not. They are often looking at transition.
This does not mean every measure of mobility is strong. A lot of the confusion comes from mixing together two different questions. The first is short-run income mobility: do people move up or down within their own lives? On that question, the evidence clearly shows substantial movement. The second is intergenerational mobility: do children rise above the economic position of their parents? That is a different question, and the answer there is more mixed.
The newer Census mobility data show that income mobility varies significantly by geography, age, race, and sex. And other work has shown that absolute mobility has weakened relative to earlier generations. Those are serious concerns. But uneven mobility is not the same as a large, fixed, poor class.
The latest Archbridge Institute report on social mobility in the 50 states broadens the analysis beyond annual income. Archbridge evaluates mobility through four pillars: entrepreneurship and growth, institutions and the rule of law, education and skills development, and social capital. It also distinguishes between natural barriers such as family instability or social networks and artificial barriers created by policy, such as excessive occupational licensing, weak school choice, or heavy regulation. That is a much better framework than casually conflating poverty, inequality, and mobility.
The state rankings tell an important story. In Archbridge’s 2025 report, Utah ranked first, followed by Vermont, Montana, Wyoming, and Idaho. At the bottom were Louisiana, Mississippi, Alabama, New York, and Arkansas. That does not prove one policy explains everything. It does show that institutions matter.
Mobility is shaped by the rules, incentives, and social conditions people live under. The poor are not static, but the barriers they face can be.
This is where the free-market case becomes especially important. If you care about mobility, you should care about growth. The AEI “Land of Opportunity” project and its essay on the greatness of growth and the American Dream make the point clearly: growth is not a side issue. Growth is the oxygen of mobility.
A faster-growing economy creates more businesses, more jobs, more opportunity, more room for incomes to rise, and more chances for people to accumulate wealth over time. A slower-growing economy makes class lines harder and mobility weaker.
That is why policies that burden growth hurt the poor most over time. Heavy regulation, bad schools, housing shortages, excessive licensing, and weak property rights do not just reduce efficiency in the abstract. They reduce mobility in practice.
A recent article highlights how land-use rules and housing constraints quietly kill mobility by making it harder for families to move to places with better labor-market opportunities. Another essay points to research showing that economic freedom, especially lighter regulation and stronger property rights, is associated with greater intergenerational mobility.
That is the key insight the static-poor narrative misses. If policymakers really want more upward mobility, the answer is not to freeze people into permanent income categories and redistribute more aggressively. The answer is to remove the barriers that keep people from climbing.
That means stronger growth, more entrepreneurship, more housing, better schools, more school choice, lower regulatory burdens, and institutions that reward work, saving, investment, and family stability. It also means respecting people’s freedom to vote with their feet toward states, cities, and communities with better opportunity. Mobility is not just something economists measure after the fact. It is something people actively pursue when they are free to move toward better institutions and opportunities.
The myth of the static poor survives because it is politically useful. It turns a moving picture into a still frame. It makes the government look like the only answer. But it misses the reality that most Americans who are poor at one point in time do not stay there forever, that incomes often rise over time, and that wealth accumulation frequently follows when people are free to work, save, invest, and build.
The real task is not to manage a permanently poor class. It is to build a freer society where more people can rise."
Thursday, June 4, 2026
Europe Demands Family Dynasties
"In the US, someone with wealth is free to give it away more or less as they see fit (spousal claims excepted, which partly reflect marital co-ownership). In much of Europe, however, there is forced heirship–a large fraction of wealth must be handed down to children which makes it harder to direct large portions of wealth to charities, foundations, or non-family causes compared to the US. (Louisiana, with its French-Spanish civil law roots, is the one state with forced heirship and even it mostly gutted it in 1995.)
Here is an excellent post by John Arnold who, if he were European, would be required to give 75% of his wealth to his three children instead of spending it on philanthropy as he and his spouse are now doing.
America’s cultural ideal has been the self-made entrepreneur while Europe’s was rooted in aristocracy, with status inherited rather than earned. Europe’s inheritance laws show this divide.
Many European countries have “forced heirship” laws that require people to leave 50-75% of their estates to their children. Want to leave the majority of your wealth to charity? not allowed. Your kids are estranged from you, struggling with addiction, or irresponsible? still required to give them the money. Want your kids to avoid a life of entitlement? tough.
Incredibly, these laws look back at transfers made during your lifetime. If you have 3 children in France, you’re required to bequeath them a minimum of 75% of your estate. Because French law calculates this based on your assets at death plus all lifetime gifts, giving away more than 25% of your wealth while alive means your heirs can legally sue to force charities or foundations to return the funds. This has limited the development of the nonprofit sector on the continent.
The cultural gap between an entrepreneurial society and one shaped by dynastic wealth is enormous. If you make it yourself, you tend to want your kids to do the same. If you inherit it, the primary goal is protecting the estate for the next gen.
Countries like Spain, France, and Italy legally entrench family dynasties, while America has historically sought to limit them through estate taxes. The result is not only a weaker culture of philanthropy and civil society in Europe, but also less economic dynamism.
It’s interesting that in Capital Piketty discusses required equal division to children as an egalitarian legacy of the revolution but, as far as I recall, never reflects on the fact that forced heirship prevents a French entrepreneur from giving his fortune away to charity. A case for laissez-faire, no?"
Health Insurance Affordability: The Trump Administration Overthinks a Short Putt
"Last Friday, the Trump administration quietly moved a little closer to granting temporary relief from Obamacare. That action is not useless, but it does appear to signal a wasted opportunity.
The administration is preparing a regulation to change how the federal government interprets the law governing so-called “short-term limited duration insurance,” or STLDI. Only a few million people enroll in STLDI plans. The market has outsized importance, however, because it is one of only two kinds of health insurance that are exempt from Obamacare’s costliest health insurance regulations, the other being health insurance in US territories. Unlike territorial plans, STLDI is exempt from both Obamacare and nearly all other federal health insurance regulations. That is why STLDI plans can offer comprehensive health insurance to many or most Obamacare enrollees at premiums 60 percent (Congressional Budget Office) to 66 percent (Kaiser Family Foundation) below the lowest-price Obamacare plans.
Trump’s greatest health care victory was a 2018 regulation that provided relief from Obamacare by adding consumer protections to these plans. In 2016, President Obama tried to force reluctant consumers into overpriced, low-quality Obamacare plans by arbitrarily limiting STLDI plans to three months. The Obama rule tossed patients out of their coverage after they got sick, leaving them with nothing. In 2018, Trump clarified that it was perfectly consistent with federal law for STLDI contracts to last 12 months, for insurers to renew the initial contract for up to 24 additional months, and for insurers to issue separate renewal guarantees—so that when consumers reached the 36-month limit, they could enroll in a new STLDI plan at healthy-person premiums, even if they had fallen seriously ill. Trump clarified, and two federal courts affirmed, that federal law effectively leaves this market enough freedom to offer consumers long-term health insurance protection.
The Trump rule was a success. Premiums for comprehensive coverage fell. Consumers could purchase health insurance free from Obamacare’s quality-reducing regulations. Obamacare premiums did not spike and enrollment did not fall, as critics predicted. Instead, while the Trump rule was in place from 2018 to 2024, Obamacare premiums stabilized and enrollment increased.
Nevertheless, in 2024, President Biden rescinded the Trump rule. Like Obama, Biden wanted to force reluctant consumers into overpriced, low-quality Obamacare plans. He limited STLDI plans to four-month contracts and prohibited all renewals—federal court rulings notwithstanding.
The only flaw in the Trump rule is that it was not permanent. While it clarified that insurers were free to offer renewal guarantees, the fact that it came from administrative rulemaking rather than legislation meant that the next president could take that freedom away at the stroke of an autopen. So insurers did not have sufficient incentive to invest in renewal guarantees.
For months, the Trump administration has been debating how to promote health insurance affordability. On one side are those who support a regulation-only strategy by which the administration reissues the 2018 rule, even though the new rule may last as little as two years. This side is apparently unaware that tremendous gains in freedom and affordability would come from codifying the Trump rule, that they are sitting on a winning messaging strategy, and that experience with the Trump rule has already negated critics’ fearmongering. The savvier side of this debate advocates for a legislative strategy by which Trump pushes Congress to make his greatest health care victory permanent and pursues regulation only as a backup.
Unfortunately, the regulation-only side appears to be winning. The president’s Great Health Care Plan doesn’t mention STLDI, much less demand that Congress codify the Trump rule. I have seen no indication from the administration that it plans to push Congress to do its job.
It is a tremendous waste of an opportunity. The administration can reissue the 2018 rule. It can even improve on that rule. But any relief it provides would disappear with the next Democratic administration.
President Trump needs to push legislators to legislate. I’ve already provided the arguments, data, talking points, polling, poster child, graphs, and legislative language the administration needs.
People are still struggling under the high cost of Obamacare. They need permanent relief."
Should we recriminalize marijuana?
"The present and also future of mankind is a world where reasonably high levels of self-discipline are needed to do well. The journalist Daniel Akst pointed this out in his 2011 book Temptation: Finding Self-Control in an Age of Excess, and we are now living it full force.
I would rather cope with that world than face the full nanny state, backed by modern, AI-intensified surveillance techniques to boot. Concentrating more power in political authorities hardly solves the basic problem. If marijuana and sports gambling can manipulate weak individuals, so can unscrupulous political leaders. A greater realization of individual weakness does not translate into a case for more government action; if anything, it suggests the opposite. Better to allow our social problems to fester in a more decentralized fashion, rather than reinforce our social pathologies through a manipulative and dysfunctional leader at the very top.
In the longer term, we may need to look to medications, such as GLP-1 drugs and their offshoots, which seem to curb some forms of addictive behavior beyond the appetite for food. Alternatively, some individuals may choose self-surveillance, with self-imposed penalties for bad or addictive behavior. Perhaps your AI, or a hired third party, docks your bank account every time you puff on a joint. I am not convinced such services ever will become popular, but that should be taken seriously as an indicator of what people really want to do. We can at least give them better options for self-constraint. If they rarely choose such options, then perhaps for many of those people, marijuana consumption is not a matter of weakness but a very well-established preference, whether we like it or not…
In short, it is time to realize that paternalism is far less workable than in times past. Our government does not have the credibility, the control over information, or the control over our lives to pull it off.
I do understand that is in some significant ways bad news, as voluntary choice is overwhelming some of us with bad outcomes.
My response is to start by accepting some steps backward, holding paternalist tyranny at bay, and hoping some longer-run cultural and technological adjustments will make this all more workable.
If you have a better solution, I would love to hear it."
Wednesday, June 3, 2026
The Least Surprising Headline Ever: 'Blowing Up Boats Hasn't Slowed Cocaine Traffic to U.S.'
After nine months of murdering suspected cocaine smugglers, the Trump administration has no evidence that the strategy is working as advertised.
"Since September 2, the U.S. military has attacked suspected drug boats in the Caribbean and the Eastern Pacific 59 times, killing 196 people. According to President Donald Trump's mysterious math, that means this campaign of carnage has prevented around 1.5 million drug-related deaths in the United States—more than 20 times the total number recorded in the year before Trump started treating suspected cocaine smugglers as "combatants" who can be killed at will, from a distance and in cold blood.
Back on planet Earth, there is no reason to think the boat strikes have prevented any deaths at all. That could only happen if blowing up smugglers—as opposed to the previous practice of intercepting them, arresting them, and seizing their cargo, which Trump says was "totally ineffective"—reduced the supply of cocaine available to American consumers. Given more than a century of failed attempts to "stop the flow" of illegal intoxicants, that never seemed likely. And nearly nine months after Trump launched his new, deadlier version of the war on drugs, there is no evidence that it is more effective than the traditional tactics he derides as insufficiently homicidal.
"Blowing Up Boats Hasn't Slowed Cocaine Traffic to U.S.," The New York Times says in what surely qualifies as one of the least surprising headlines ever. That conclusion is based on several indicators, none of which is moving in the direction you would expect if Trump's strategy were working as advertised.
One sign of success would be a decline in the amount of cocaine seized at the border, since that number represents a percentage of the total supply, and it is unlikely that the percentage changed much between the first eight months of Trump's second term and the eight months after he started murdering alleged cocaine smugglers. But according to data reported by U.S. Customs and Border Protection (CBP), cocaine seizures have gone up, not down. From January through August 2025, CBP seized about 43,300 pounds of cocaine. From September 2025 through April 2026, it seized about 47,800 pounds.
If Trump were putting a significant dent in the cocaine supply (or, more plausibly, imposing new costs that traffickers felt compelled to recoup by charging more), you would expect retail prices to rise. But according to University of North Carolina drug researcher Nabaruun Dasgupta, the Times says, "street prices for cocaine remain between $60 [and] $100 per gram in many U.S. cities, about where they were before the boat strikes began."
Pressure from the boat strikes might also be reflected in adulteration of cocaine with cheaper substances such as levamisole and lidocaine. But Dasgupta reports that "the average number of such substances in cocaine samples ranges from 1.3 to 1.5 in 2026, after the boat strikes began, compared with a range of 1.4 to 1.6 for much of 2025."
A reduced supply of cocaine also should be reflected in the substances detected after drug-related deaths. But according to provisional estimates from the Centers for Disease Control and Prevention (CDC), deaths involving cocaine fell slightly in early 2025 but remained flat during the four months after the boat strikes began. Cocaine was detected in 27.9 percent of total drug fatalities last year, up slightly from 27.5 percent in 2024.
Attributing all those deaths to cocaine is highly problematic, since the vast majority of the cases involve combinations of drugs. From January 2021 through June 2024, according to a 2025 CDC study, four-fifths of "cocaine-involved overdose deaths" also involved opioids, which pose a much bigger overdose risk. That may explain why Trump, in his eagerness to brag that he is saving lives by killing people, conflates cocaine with fentanyl.
Although Trump's bloodthirsty strategy has not affected the amount of cocaine available in the United States, it does seem to have driven changes in smuggling patterns. According to the experts consulted by the Times, traffickers have shifted from the small speedboats targeted by Trump to overland routes through Central America and shipments concealed in cargo on larger vessels.
"These operations raise serious concerns about effectiveness," Sen. Mark Kelly (D–Ariz.) noted during a Senate Armed Services Committee hearing in March. "These repeated boat strikes suggest a tactical approach that may be generating headlines, but it's far less clear that they are producing durable security outcomes. To me, this operation looks like a cycle of reactive strikes with limited long-term impact." Kelly asked Gen. Francis L. Donovan, who oversees the boat strikes as head of the U.S. Southern Command, "what evidence" he had that "this campaign is actually degrading cartel operations rather than simply destroying some low-level assets," "killing some people," and "displacing some trafficking routes."
Donovan candidly admitted that "I couldn't provide you [with] measures of effectiveness for the current effort." Although "we've seen changes in the narco-traffickers' patterns," he said, "the boat strikes aren't the answer."
Someone should tell the president. Or maybe the secretary of defense. The boat strikes are a "highly effective" way to "stop lethal drugs," Pete Hegseth insisted on X in November. Then again, he also claimed that summary execution of criminal suspects is "lawful under both U.S. and international law"—an equally implausible proposition.
"They're not moving the needle at all," Adam Isacson, director of defense oversight at the Washington Office on Latin America, told the Times. "Is that worth killing all these people?"
Not All Inequality Is Created Equal
By Justin Callais. Excerpt:
"In a 2017 paper, my friend Vincent Geloso and Steven Horwitz drew an important distinction. They separated what they called “good” inequality from “bad” inequality; this distinction helps explain why you cannot just simply look at inequality on its own and expect to explain societal outcomes or prescriptions from it.
Good inequalities arise from individual choices and the rewards to skill and innovation. The Patrick Mahomes example earlier explains this. Also, the fortunes accumulated by genuinely innovative entrepreneurs reflect how much value they created for everyone else. Previous estimates found that innovators “capture” a negligible amount of the value that they create for others. The entrepreneur captures a tiny slice, and the remaining surplus and value go to the rest of society. Not a bad deal for us! As Vincent and the late-Steven note, policies trying to limit this type of inequality will inevitably make society worse off.
Bad inequalities, on the other hand, arise when government policy restricts options for many, especially those at the bottom, while providing even more opportunities for those at the top. Here are some simple examples. Zoning restrictions raise housing costs and trap less skilled and younger workers (without the financial capital to afford to move there) out of high-productivity cities. Ganong and Shoag estimated that this dynamic alone explains about 10% of the rise in U.S. inequality from 1980 to 2010. Occupational licensing, an area we focus on a lot here at Archbridge, erects expensive barriers to entry into industries that the credentialed already occupy. This harms low-income people to a greater extent, given that a fixed fee is a higher percentage of their income than for someone who is already relatively well off. Corporate subsidies and lobbying for regulations on new entrants entrench wealth for the well-off and politically connected. These are the types of “bad inequalities” that are worth pursuing fixes for.
There’s also a simple measurement issue. Take a simple example. If an immigrant moves from another country to the United States, they typically make much more than they did back home (if not, why would they move in the first place). However, on average, immigrants (at least at first) make less than the average income in the United States. By definition, that increases inequality, but few would argue that this is bad for the immigrant. The immigrants’ mobility and opportunities increased. This is one of the many reasons why I prefer measuring something closer to social or income mobility, as it better captures opportunities for individuals.
Other “measurement error” issues arise from aging populations. Thomas Lemieux estimates that about 75% of the increase in inequality can be explained by aging populations. People typically earn more the further along in their career they are; if societies get older on average (people living longer, fewer kids, etc), then simply inequality measures will naturally rise. And furthermore, much of the “not-measurable” skills (networking, social capital, etc) will only further conflate that.
This framing maps well to my recent piece on billionaires. Where markets reward value creation, ambitious people build companies. Where the state controls enough resources and regulatory leverage, ambitious people capture those instead.
Good inequality is the downstream result of productive entrepreneurship rewarded in competitive markets, while bad inequality is the result of unproductive entrepreneurship rewarded by political capital. The crucial insight from Baumol is that it is a story about institutions. Productive behavior and unproductive behavior respond to incentives, but they just operate in different institutional environments."