The Inclusive Economy: How to Bring Wealth to America's Poor

by Michael D. Tanner

Author Michael Tanner offers a new anti-poverty agenda that includes criminal justice reform, educational freedom, housing deregulation, banking reform, and more inclusive growth.

The Inclusive How to Bring Wealth to America’s Poor energetically challenges the conventional wisdom of both the right and the left that underlies much of the contemporary debate over poverty and welfare policy. National public policy expert Michael Tanner takes to task conservative critiques of a “culture of poverty” for their failure to account for the structural circumstances in which the poor live. In addition, he criticizes liberal calls for fighting poverty primarily through greater redistribution of wealth and new government programs.

Rather than engaging in yet another debate over which government programs should be increased or decreased by billions of dollars, Tanner calls for an end to policies that have continued to push people into poverty. Combining social justice with limited government, his plan includes reforming the criminal justice system and curtailing the War on Drugs, bringing down the cost of housing, reforming education to give more control and choice to parents, and making it easier to bank, save, borrow, and invest.

The comprehensive evidence provided in The Inclusive Economy is economic growth lifts more people out of poverty than any achievable amount of redistribution does. As Tanner notes, “we need a new debate, one that moves beyond our current approach to fighting poverty to focus on what works rather than on noble sentiments or good intentions.” The Inclusive Economy is a major step forward in that debate.

Genres: Economics, Nonfiction, Politics

358 pages, Kindle Edition

Published December 4, 2018

Reviews

[Vance Ginn · Rating 5 out of 5]

Michael Tanner provides an insightful look at the state and contributing factors of poverty. Trillions of dollars have been spent and there are more than 100 federal welfare programs that have tried to eliminate it. In fact, LBJ called for a War on Poverty. This book gives a terrific account of this history.

However, there remains a similar share of people in poverty in America since the 1960s despite this tremendous amount of precious resources.

Tanner makes the case that cultural factors such as more divorces and babies out of wedlock contribute to more single parent households, racial and gender discrimination over many years, and economic dislocation from industry changes have been major factors to concentrated poverty.

There is a valuable discussion on each of these key factors but Tanner also notes paths forward that will make work valuable again.

Fighting poverty includes criminal justice reform, improving human capital through education freedom, reducing the cost of housing through deregulation, increasing access to savings and wealth for the poor, and reducing government barriers to opportunity to support more economic growth that collectively would provide a limited government framework to promote human flourishing.

This is a well-written book that I highly recommend. In fact, much of what’s in this book is what I’m building a research agenda on to note how institutions matter to let people prosper. I give “The Inclusive Economy” 5 stars.

[Christopher Hudson Jr. · Rating 4 out of 5]

Michael Tanner provides a good overview of the effects of poverty and details several strategies to better combat poverty by making economic growth more inclusive. Tanner begins by giving a brief history of the various attitudes toward the poor and the resulting anti-poverty measures that followed. He then summarizes and critiques what he sees to be the standard conservative and progressive analyses of poverty. While conservatives often focus on cultural or individual factors, progressives emphasize structural reasons that keep people, specifically marginalized groups, poor. Although Tanner attempts to synthesize these two views, he’s clearly more sympathetic to structural reasons for poverty. Although redistribution efforts receive the majority of political attention, Tanner argues that even though these schemes typically lessen the misery of being poor, we should be focusing more on strategies that actually reduce the number of poor people in our society. Aimed at center-right to center-left audiences, Tanner proposes several market liberal reforms (e.g criminal justice reform, school choice, barriers to entry, etc.), some of which will be more controversial than others. Although each chapter is heavily sourced, readers coming in hostile towards things like drug reform or education vouchers will unlikely leave convinced. Those well versed in the research on inequality and poverty will likely long for something with more substance. Despite this, The Inclusive Economy is a satisfying read. Tanner is a excellent writer and makes a strong case for his thesis that too many of our population is structurally & culturally excluded from access to wealth & opportunity.

[Bank · Rating 5 out of 5]

Anyone who is interested in the plight of the poor and near poor should read this book . Lots of good discussion on the causes of poverty and a well researched and presented position on what has not worked to date and what may work going forward . To put in context , Feds define poverty for family of four with two children at $30,000. Single parent with two children is about $25,000. Working full time by one adult at $12 hour will result in gross income of about $25,000. Important note : the $25,000 is before any earned income tax credit , child care credit , etc. The existing system of transfer payments to the those in poverty will alleviate the symptoms but will NOT solve the underlying structural problems of a broken criminal justice system, a broken educational system , more affordable housing and better job opportunities.
Regardless of where you may be on the political spectrum , this book will certainly cause some reflection on all these issues .
Importantly Tanner makes the distinction between surviving and flourishing; will the children of families in poverty be able to escape inter generational poverty ?
As Hamlet said , there’s the rub .
Actually I think everyone should read this book because we all have a stake in our economic future . And everyone is either giving or receiving money from our modern welfare state. I hope our fundamental premise would be for all to flourish , not just survive .

[Frankie Lia · Rating 4 out of 5]

Poverty is a very difficult problem that both the right and the left think they can fix overnight. Since the beginning of civilization, humanity has been obsessed with eliminating it. Poverty programs have existed since the Roman and Greek eras. Emperors to princes have done their best to give to the poor. But do these programs actually work?

Conservatives tend to think that the Morgan Freedman “pull yourself up by the bootstraps” approach will eradicate poverty because they tend to think poverty is caused by sheer laziness. Progressives tend to think the Robin Hood approach by taking from the rich and giving to the poor will eliminate it. Both are wrong for many reasons that are laid out in the book. Various regulations and programs make it very difficult for the poor to escape poverty. The poverty programs in place by the government such as housing, work against the poor because of their design. They work against the poor building wealth and any wealth they do build, they are met with fierce taxes or exclusion from the program altogether. Such programs are not working. The criminal system targets the poor and minority groups. The poor benefit the least when there is an economic boom and are worse off when there is a recession. They are trapped by the education monopoly and are unable to enroll their children in better schools just because of where their address is.

The book outlines five solutions that would help reduce, if not, eliminate it:
(1) Reform the criminal justice system and curtail War on Drugs
(2) Give parents the choice to place them in schools of their choice
(3) Reduce housing costs by eliminating unnecessary housing regulations and codes
(4) Make it easier to use banking and save
(5) Reduce regulation for the poor to increase economic growth

The author provides a lot statistics regarding various issues throughout the book. Both the right and left have over-simplistic plans on how to reduce poverty, which both end up doing nothing for the poor. Sure, there are poor people who can “pull themselves up by the bootstraps” and make it in society. However, that is a small minority. That minority is just as small when they have to use programs such as SNAP to help get out of poverty. The redistributing of wealth because of how the Left views capitalism is another major fall in this thought. Like I said, neither side has been correct on this. The solutions that the free market will provide will help more people escape poverty and into the middle class than any government intervention will.

[Austin D. · Rating 5 out of 5]

Penetrating look into causes and partial solutions to poverty

Great survey of definition and causes of poverty. Well sourced and heavily researched arguments. I just wish he would have gone into even greater depth into his proposed solutions as they are so intuitive and seem to be right on the money. Highly recommend to anyone interested in causes of poverty from libertarian perspective.

[Geena · Rating 1 out of 5]

i read this for extra credit and i have to say it was better than i thought it’d be, but it still is fundamentally ?!? tbh i dont think i even read all of this sometimes id just read like most of the chapter and not all lmao

[Paul Sand · Rating 2 out of 5]

[Imported automatically from my blog. Some formatting there may not have translated here.]

I regret to say that this book (obtained via Interlibrary Loan by the University Near Here from Wesleyan University) goes in the "Wish I'd Liked It Better" category. I had high hopes, as it emanates from the Cato Institute. I've noticed the author, Michael D. Tanner, writing a lot of good stuff in the past. But…

That's not to say it's bad, it's merely "not awful", could have been better. Poverty is not a burning issue in America, causing pols to me more vocal about what they'll do for (or, more likely, to) you. Still, if you walk around with open eyes, it's hard not to be concerned.

What causes American poverty? Guess what? It's complicated. Tanner discusses (some of) the usual culprits: racism, sexism, changing social attitudes, economic dislocation, etc. And his proposed reforms are conveniently listed:

Reform the criminal justice system, end the war on drugs. Reform education system and stop the slide of the U.S. in education outcomes. Bring down the cost of housing. Make it easier for the poor to bank, save, borrow and invest–and start businesses. Increase economic growth and make it more inclusive.

All worthy endeavours, and the sub-reforms (e.g., reform of regulations, occupational licensing, zoning, etc.) are congenial to liberty-minded folks who are also compassionate toward the less well-off.

So what was not so good about the book?

You'd think that Charles Murray would have made a more frequent appearance in a libertarian-oriented book about poverty. But as far as Tanner seems to be concerned, Murray's contribution started and ended with 1984's Losing Ground. But The Bell Curve (1994) described a significant correlation between intelligence and poverty. And Coming Apart (2012) went into more detail on "assortive mating"; to the extent that IQ is heritable, the haves and the have-nots tend to procreate with each other, and the correlation propagates into the likely future.

But it's not just (specifically) Murray, the issue of intelligence is, as near as I can tell, entirely absent from Tanner's book. OK, so maybe Tanner thinks it's unimportant. But (still) we're owed at least a cursory dismissal of why he thinks it's unimportant.

Also largely absent is Thomas Sowell. His insight that statistical disparities between groups need not, and often are not the result of invidious discrimination goes unmentioned. And Tanner usually assumes the worst, especially in his discussion of criminal justice. (Yes, African-Americans are jailed out of proportion to their presence in the popultion. But they also commit more crime,)

Similarly, the issue of immigration is (as near as I can tell) MIA in Tanner's book. Specifically, low-skilled immigration. Tanner is eloquent on the damage that minimum wage laws do to the poor: they literally make it illegal to hire someone whose value to the employer might not make economic sense.

So, what about an increased supply of low-skill labor? What does that do to the poor job-seeker?

Again, Tanner might not find this important. But (again) not mentioning it at all is difficult to excuse.

Finally, a quibble: in a mostly-good discussion of the need to provide financial/banking services to the poor, Tanner includes this bit of evidence:

For instance, according to the Federal Reserve, 46 percent of adults say they either could not cover an emergency expense costing $400, or would cover it by selling something or borrowing money.

It's not that simple, and (guess what) I found a more nuanced discussion on the Cato blog (because this was also a talking point of presidential ex-candidate John Hickenlooper): Is it True that 40% of Americans Can't Handle a $400 Emergency Expense? Asked and answered by Alan Reynolds:

The question was about how people would choose to pay a $400 “emergency expense” — not whether or not they could pay it out of savings (or checking) if they wanted to.  Respondents were also free to choose more than one way of paying the extra $400 (“please selects [sic] all that apply”), so the answers add up [to] 143% rather than 100%.  Even if 100% said they could pay an extra $400 with cash, there could still be more than 40% who would choose a different method.

It turns out that 86% would pay cash or charge it and then pay off the bill at the next statement (many consumers autopay credit card bills from checking accounts). Some (11%) said they might borrow some or all of it from a friend or family member, but that probably means a spouse or parent in most cases (respondents included full-time students).

I.e., Tanner either should have reported this more carefully, or left it out. This sloppiness says that there may be problems in some of those other footnotes and citations as well.

But it's not just (specifically) Murray, the issue of intelligence is, as near as I can tell, entirely absent from Tanner's book. OK, so maybe Tanner thinks it's unimportant. But (still) we're owed at least a cursory dismissal of why he thinks it's unimportant.

So, what about an increased supply of low-skill labor? What does that do to the poor job-seeker?

Again, Tanner might not find this important. But (again) not mentioning it at all is difficult to excuse.

For instance, according to the Federal Reserve, 46 percent of adults say they either could not cover an emergency expense costing $400, or would cover it by selling something or borrowing money.

It's not that simple, and (guess what) I found a more nuanced discussion on the Cato blog (because this was also a talking point of presidential ex-candidate John Hickenlooper): Is it True that 40% of Americans Can't Handle a $400 Emergency Expense? Asked and answered by Alan Reynolds:

The question was about how people would choose to pay a $400 “emergency expense” — not whether or not they could pay it out of savings (or checking) if they wanted to.  Respondents were also free to choose more than one way of paying the extra $400 (“please selects [sic] all that apply”), so the answers add up [to] 143% rather than 100%.  Even if 100% said they could pay an extra $400 with cash, there could still be more than 40% who would choose a different method.

It turns out that 86% would pay cash or charge it and then pay off the bill at the next statement (many consumers autopay credit card bills from checking accounts). Some (11%) said they might borrow some or all of it from a friend or family member, but that probably means a spouse or parent in most cases (respondents included full-time students).

The question was about how people would choose to pay a $400 “emergency expense” — not whether or not they could pay it out of savings (or checking) if they wanted to.  Respondents were also free to choose more than one way of paying the extra $400 (“please selects [sic] all that apply”), so the answers add up [to] 143% rather than 100%.  Even if 100% said they could pay an extra $400 with cash, there could still be more than 40% who would choose a different method.

It turns out that 86% would pay cash or charge it and then pay off the bill at the next statement (many consumers autopay credit card bills from checking accounts). Some (11%) said they might borrow some or all of it from a friend or family member, but that probably means a spouse or parent in most cases (respondents included full-time students).

I.e., Tanner either should have reported this more carefully, or left it out. This sloppiness says that there may be problems in some of those other footnotes and citations as well.

Bottom line: not awful. Could have, and should have, been much better.

[JP · Rating 4 out of 5]

The Inclusive Economy presents an articulate, heavily researched recommendation for advancing further against poverty by means of the same economic liberties that have raised economies in general across the world. Tanner begins with an objective overview of the American legacy that has resulted in divergent levels of prosperity. From there he argues for the direction of economic and political reform, including more school choice, more universal access to savings and investing benefits, and more economic freedom in general, as measured by the Economic Freedom Index. It's a Cato book. The reader should expect a libertarian orientation. They will also find admission of the gaps that remain, especially between races and between genders. The arguments are backed by plenty of research; the 240 pages of content is followed by 75 pages of end notes.

[Barry · Rating 4 out of 5]

An evenhanded analysis of which methods designed to help alleviate poverty are effective, and which are actually harmful. It’s a tricky business trying to help the poor without creating disincentives that end up exacerbating their difficulties. Tanner shows that further efforts at redistribution will have diminishing returns, but also understands that there are deep structural problems (racism, criminal justice issues, economic dislocation) that are at play, and we cannot expect the poor to simply “pull themselves up by their bootstraps.”

[Jen D'Angelo Gürcüoğlu · Rating 4 out of 5]

3.5 stars. This book offers an intelligent analysis of the history and causes of economic poverty with an abundance of data to support its arguments. It is refreshingly nonpartisan. I don’t wholeheartedly agree with some of the prescriptions he offers (heavily libertarian in theory), especially in housing and education. Some data are very difficult to ascribe and makes some of the arguments questionable. In general, the book is smart and fair, and definitely worth reading.

[Josh · Rating 4 out of 5]

An excellent book that takes policymakers from both the left and the right to task. The biggest strength of Tanner's book is showing how libertarian solutions to certain issues (the drug war, over-criminalization, failing public schools, excessive regulations) have real potential in helping the poor. The solutions aren't simply throwing more money at current welfare programs or expecting the poor to pull themselves out of poverty without major institutional reforms.

[Nancy · Rating 4 out of 5]

A libertarian explains why doing away with troublesome government regulations and welfare will help the poor escape poverty. The book's arguments are actually much more nuanced and moderate than that, though. I found Tanner's key recommendations to be fairly rational and persuasive, although I certainly didn't agree with everything he said. The writing style was thick and academic; scarcely a paragraph goes by without 10 citations and 20 statistics.

[Braeden Udy · Rating 4 out of 5]

I really enjoyed this book. I was surprised (and grateful) on how much he centered on racial and gender inequalities in our economy and systems of oppression. I mostly liked his solutions and think they are practical and attainable. However, I did feel some of his wording regarding low-income folks was condescending, and I could have recited from memory his libertarian rant in the closing chapters, but overall I think this was a terrific read.

[Al Lock · Rating 4 out of 5]

Regardless of your political view of the world, or your opinion of social services, this book is worth reading. Mr. Tanner does an excellent job of lining up studies, data and information to show us what contributes to poverty as well as how effective or ineffective redistribution of wealth programs are. From education to property taxes to zoning laws to business regulations, he points out numerous areas where the government contributes to keeping people in poverty.

Recommended.

[Kyle · Rating 5 out of 5]

This book completely changed my mind on poverty and further opened my eyes to clear solutions we can pursue to help those in need. This is a must read for virtually anybody interested in helping the poor or participating in politics, economics, or having making better voting decisions.

[Tomasz Drozdz · Rating 5 out of 5]

Great analysis of welfare state inefficiencies. This book could be used as a source of inspiration not only by the public policymakers in the United States but also by economists all over the world, where social spending brings multiple unintended consequences.

[Mary Ellen Barringer · Rating 5 out of 5]

A broad overview of policy changes that could make a difference in the "war on poverty". Well documented and this makes for challenging reading. Worth the read if you have a heart for battling poverty.

[Rachel · Rating 5 out of 5]

An incredibly holistic, empathetic, and action-oriented view of poverty. It was refreshing to read something that didn’t demonize or infantilize those living in poverty while also offering real solutions. I’m trying to get everyone in my life to read this.

[Mark · Rating 4 out of 5]

Good book with lots of insightful stats. A little dry at times but overall very informative.

[Ashley Wiersma · Rating 5 out of 5]

Fascinating, balanced look at poverty's history ... and its future. Loved this read.

[Jason Clarke · Rating 4 out of 5]

Thoughtful and clear. Even-handed and fair. I agree with the proposals, although I’m not as ready to give up on the public school system as the author is.

[Sue · Rating 4 out of 5]

Very informative about the causes of poverty. Not so effective at offering solutions, but perhaps that is beyond the scope of this book.

[Grant Burke]

Very relevant to 2020.

[Laurence Ashbacher]

Good introduction to topic and good documentation. Good ideas - now we have to actuate them.