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Scratching By: How Government Creates

Poverty as We Know It

The experience of oppressed people is that the living agerial aid workers will never do is just get out of the
of one’s life is confined and shaped by forces and barri- way and let poor people do the things that poor people
ers which are not accidental or occasional and hence naturally do, and always have done, to scratch by.
avoidable, but are systematically related to each other in Government anti-poverty programs are a classic case
such a way as to catch one between and among them of the therapeutic state setting out to treat disorders
and restrict or penalize motion in any direction. It is created by the state itself. Urban poverty as we know it
the experience of being caged in: all avenues, in every is, in fact, exclusively a creature of state intervention in
direction, are blocked or booby trapped. consensual economic dealings. This claim may seem
—Marilyn Frye, “Oppression,” in bold, even to most libertarians. But a lot turns on the
The Politics of Reality phrase “as we know it.” Even if absolute laissez faire
reigned beginning tomorrow, there would still be peo-
ple in big cities who are living pay-

overnments—local, state,
and federal—spend a lot of check to paycheck, heavily in debt,
time wringing their hands The one thing that homeless, jobless, or otherwise at the
about the plight of the urban poor. the government and bottom rungs of the socioeconomic
Look around any government ladder. These conditions may be per-
agency and you’ll never fail to find its managerial aid sistent social problems, and it may be
some know-it-all with a suit and a that free people in a free society will
nameplate on his desk who has just
workers will never still have to come up with voluntary
the right government program to do is just get out of institutions and practices for addressing
eliminate or ameliorate, or at least them. But in the state-regimented
contain, the worst aspects of grind- the way. market that dominates today, the mate-
ing poverty in American cities— rial predicament that poor people find
especially as experienced by black people, immigrants, themselves in—and the arrangements they must make
people with disabilities, and everyone else marked for within that predicament—are battered into their famil-
the special observation and solicitude of the state iar shape, as if by an invisible fist, through the diffuse
bureaucracy. Depending on the bureaucrat’s frame of effects of pervasive, interlocking interventions.
mind, his pet programs might focus on doling out con- Consider the commonplace phenomena of urban
ditional charity to “deserving” poor people, or putting poverty. Livelihoods in American inner cities are typi-
more “at-risk” poor people under the surveillance of cally extremely precarious: as Sudhir Alladi Venkatesh
social workers and medical experts, or beating up
recalcitrant poor people and locking them in cages for
Charles Johnson ( is a research fellow at the
several years. Molinari Institute and author of the Rad Geek People’s Daily
But the one thing that the government and its man- ( weblog.

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Scratching By: How Government Creates Poverty as We Know It

writes in Off the Books: “Conditions in neighborhoods least politically connected people at the mercy of the
of concentrated poverty can change quickly and in political process.
ways that can leave families unprepared and without But in a free market—a truly free market, where
much recourse.” Fixed costs of living—rent, food, individual poor people are just as free as established for-
clothing, and so on—consume most or all of a family’s mal-economy players to use their own property, their
income, with little or no access to credit, savings, or own labor, their own know-how, and the resources that
insurance to safeguard them from unexpected disasters. are available to them—the informal, enterprising
actions by poor people themselves would do far more
Dependent on Others to systematically undermine, or completely eliminate,

T heir poverty often leaves them dependent on other

people. It pervades the lives of the employed and
the unemployed alike: the jobless fall
each of the stereotypical conditions that welfare statists
deplore. Every day and in every culture from time out
of mind, poor people have repeatedly
back on charity or help from family; shown remarkable intelligence,
those who live paycheck to pay- Every day and in courage, persistence, and creativity in
check, with little chance of finding every culture from finding ways to put food on the table,
any work elsewhere, depend on the save money, keep safe, raise families,
good graces of a select few bosses time out of mind, live full lives, learn, enjoy themselves,
and brokers. One woman quoted by and experience beauty, whenever,
Venkatesh explained why she contin-
poor people have wherever, and to whatever degree they
ued to work through an exploitative repeatedly shown have been free to do so. The fault for
labor shark rather than leaving for a despairing, dilapidated urban ghettoes
steady job with a well-to-do family:
remarkable lies not in the pressures of the market,
“And what if that family gets rid of intelligence, courage, nor in the character flaws of individual
me? Where am I going next? See, I poor people, nor in the characteristics
can’t take that chance, you know. . . . persistence, and of ghetto subcultures. The fault lies in
All I got is Johnnie and it took me creativity in finding the state and its persistent interference
the longest just to get him on my with poor people’s own efforts to get
side.” ways to put food on by through independent work, clever
The daily experience of the hustling, scratching together resources,
urban poor is shaped by geographical
the table. and voluntary mutual aid.
concentration in socially and culturally
isolated ghetto neighborhoods within the larger city, Housing Crisis
which have their own characteristic features: housing
is concentrated in dilapidated apartments and housing
projects, owned by a select few absentee landlords;
P rogressives routinely deplore the “affordable hous-
ing crisis” in American cities. In cities such as New
York and Los Angeles, about 20 to 25 percent of low-
many abandoned buildings and vacant lots are scat- income renters are spending more than half their
tered through the neighborhood, which remain incomes just on housing. But it is the very laws that
unused for years at a time; the use of outside spaces is Progressives favor—land-use policies, zoning codes,
affected by large numbers of unemployed or homeless and building codes—that ratchet up housing costs,
people. stand in the way of alternative housing options, and
The favorite solutions of the welfare state—govern- confine poor people to ghetto neighborhoods. Histori-
ment doles and “urban renewal” projects—mark no cally, when they have been free to do so, poor people
real improvement. Rather than freeing poor people have happily disregarded the ideals of political humani-
from dependence on benefactors and bosses, they tarians and found their own ways to cut housing costs,
merely transfer the dependence to the state, leaving the even in bustling cities with tight housing markets.

13 DECEMBER 2007
Charles Johnson

Credit: Miami Independent Media Center

One way was to get other families, or friends, or government intervention also blocks homeless peo-
strangers, to move in and split the rent. Depending on ple’s efforts to find themselves shelter outside the
the number of people sharing a home, this might mean conventional housing market. One of the oldest and
a less-comfortable living situation; it might even mean commonest survival strategies practiced by the urban
one that is unhealthy. But decisions about health and poor is to find wild or abandoned land and build
comfort are best made by the individual people who shanties on it out of salvageable scrap materials. Scrap
bear the costs and reap the benefits. Unfortunately materials are plentiful, and large portions of land in
today the decisions are made ahead of time by city ghetto neighborhoods are typically left unused as
governments through zoning laws that prohibit or condemned buildings or vacant lots. Formal title is
restrict sharing a home among people not related by very often seized by the city government or by quasi-
blood or marriage, and building codes that limit the governmental “development” corporations through
number of residents in a building. the use of eminent domain. Lots are held out of use,
Those who cannot make enough money to cover often for years at a time, while they await government
the rent on their own, and cannot split the rent public-works projects or developers willing to buy up
enough due to zoning and building codes, are priced the land for large-scale building.
out of the housing market entirely. Once homeless,
they are left exposed not only to the elements, but Urban Homesteading
also to harassment or arrest by the police for “loiter-
ing” or “vagrancy,” even on public property, in efforts
to force them into overcrowded and dangerous insti-
I n a free market, vacant lots and abandoned build-
ings could eventually be homesteaded by anyone
willing to do the work of occupying and using them.
tutional shelters. But while government laws make Poor people could use abandoned spaces within their
living on the streets even harder than it already is, own communities for setting up shop, for gardening,

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Scratching By: How Government Creates Poverty as We Know It

or for living space. In Miami, in October 2006, a your possessions, with doors you can lock, and some-
group of community organizers and about 35 home- times even air conditioning and heating. But staying
less people built Umoja Village, a shanty town, on an in a car over the long term is much harder to manage
inner-city lot that the local government had kept without running afoul of the law.Thelmon Green got
vacant for years.They publicly stated to the local gov- by well enough in his van for ten years, but when the
ernment that “We have only one demand . . . leave us Indianapolis Star printed a human-interest story on
alone.” him last December, the county health commission
That would be the end of the story in a free mar- took notice and promptly ordered Green evicted
ket: there would be no eminent domain, no govern- from his own van, in the name of the local housing
ment ownership, and thus also no political process of code.
seizure and redevelopment; once-homeless people Since government housing codes impose detailed
could establish property rights to requirements on the size, architecture,
abandoned land through their own and building materials for new per-
sweat equity—without fear of the manent housing, as well as on special-
government’s demolishing their Pervasive government ized and extremely expensive
work and selling their land out from contract work for electricity, plumb-
under them. But back in Miami, the
regulation, passed in ing, and other luxuries, they effec-
city attorney and city council took the so-called “public tively obstruct or destroy most efforts
about a month to begin legal efforts to create transitional, intermediate, or
to destroy the residents’ homes and
interest” at the behest informal sorts of shelter that cost less
force them off the lot. In April 2007 of comfortable than rented space in government-
the city police took advantage of an approved housing projects, but pro-
accidental fire to enforce its politi- middle- and upper- vide more safety and comfort than
cally fabricated title to the land, class Progressives, living on the street.
clearing the lot, arresting 11 people,
and erecting a fence to safeguard the creates endless Constraints on Making Income
once-again vacant lot for profes-
sional “affordable housing” develop-
constraints on poor
people’s ability to
T urning from expenses to
income, pervasive government
regulation, passed in the so-called
Had the city government not “public interest” at the behest of
made use of its supposed title to the
earn a living or make comfortable middle- and upper-class
abandoned land, it no doubt could needed money on Progressives, creates endless con-
have made use of state and federal straints on poor people’s ability to
building codes to ensure that resi- the side. earn a living or make needed money
dents would be forced back into on the side.
homelessness—for their own safety, There are, to start out, the trades
of course. That is in fact what a county health com- that the state has made entirely illegal: selling drugs
mission in Indiana did to a 93-year-old man named outside of a state-authorized pharmacy, prostitution
Thelmon Green, who lived in his ’86 Chevrolet van, outside of the occasional state-authorized brothel
which the local towing company allowed him to keep “ranch,” or running small-time gambling opera-
on its lot. Many people thrown into poverty by a sud- tions outside of a state-authorized corporate
den financial catastrophe live out of a car for weeks or casino. These trades are often practiced by women
months until they get back on their feet. Living in a and men facing desperate poverty; the state’s efforts
car is cramped, but it beats living on the streets: a car add the danger of fines, forfeitures, and lost years in
means a place you can have to yourself, which holds prison.

15 DECEMBER 2007
Charles Johnson

Poor Shut Out tinely impose massive constraints and controls on taxi
service. The worst offenders are often the cities with
B eyond the government-created black market, there
are also countless jobs that could be done above-
ground, but from which the poor are systematically
the highest demand for cabs, like New York City,
where the government enforces an arbitrary cap on the
shut out by arbitrary regulation and licensure require- number of taxi cabs through a system of government-
ments. In principle, many women in black communi- created licenses, or “medallions.” The total number of
ties could make money braiding hair, with only their medallion taxis is capped at about 13,000 cabs for the
own craft, word of mouth, and the living room of an entire city, with occasional government auctions for a
apartment. But in many states, anyone found braiding handful of new medallions. The system requires any-
hair without having put down hundreds of dollars and one who wants to become an independent cab driver
days of her life to apply for a government-fabricated to purchase a medallion at monopoly prices from an
cosmetology or hair-care license will existing holder or wait around for the
be fined hundreds or thousands of city to auction off new ones. At the
dollars. auction last November a total of 63
In principle, anyone who knows
The practical new medallions were made available
for auction with a minimum bidding
how to cook can make money by consequence is that price of $189,000.
laying out the cash for ingredients
and some insulated containers, and poor people who Besides the cost of a medallion,
cab owners are also legally required to
taking the food from his own kitchen might otherwise be pay an annual licensing fee of $550
to a stand set up on the sidewalk or,
with the landlord’s permission, in a able to make easy and to pay for three inspections by
parking lot. But then there are busi- the city government each year, at a
ness licenses to pay for (often hun-
money on their own total annual cost of $150. The city
dreds of dollars) and the costs of are legally forced out government enforces a single fare
complying with health-department structure, enforces a common paint
regulations and inspections.The latter
of driving a taxi, or job, and now is even forcing all city
cabs to upgrade to high-cost, high-
make it practically impossible to run else forced to hire tech GPS and payment systems,
a food-oriented business without
buying or leasing property dedicated themselves out to an whether or not the cabbie or her cus-
tomer happens to want them. The
to preparing the food, at which point existing medallion- primary beneficiary of this politically
you may as well forget about it unless
you already have a lot of start-up holder on his imposed squeeze on independent
capital sitting around. cabbies is VeriFone Holdings, the first
Every modern urban center has a
own terms. firm approved to sell the electronic
tremendous demand for taxi cabs. In systems to a captive market. Doug
principle, anyone who needed to Bergeron,VeriFone’s CEO, crows that
make some extra money could start a part-time “gypsy “Every year, we find a free ride on a new segment of
cab” service with a car she already has, a cell phone, the economy that is going electronic.” In this case,Ver-
and some word of mouth. She can make good money iFone is enjoying a “free ride” indeed.
for honest labor, providing a useful service to willing The practical consequence is that poor people
customers—as a single independent worker, without who might otherwise be able to make easy money
needing to please a boss, who can set her own hours on their own are legally forced out of driving a taxi,
and put as much or as little into it as she wants in order or else forced to hire themselves out to an existing
to make the money she needs. medallion-holder on his own terms. Either way, poor
But in the United States, city governments rou- people are shoved out of flexible, independent

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Scratching By: How Government Creates Poverty as We Know It

work, which many would be willing and able to squeeze puts many more poor people into the position
do using one of the few capital goods that they of living “one paycheck away” from homelessness and
already have on hand. Lots of poor people have cars makes that position all the more precarious by harass-
they could use; not a lot have a couple hundred ing and coercing and imposing artificial destitution on
thousand dollars to spend on a government-created those who do end up on the street.
license. American state corporatism forcibly reshapes the
Government regimentation of land, housing, and world of work and business on the model of a com-
labor creates and sustains the very mercial strip mall: sanitized, central-
structure of urban poverty. Govern- ized, regimented, officious, and
ment seizures create and reinforce dominated by a few powerful propri-
the dilapidation of ghetto neigh- Artificially limiting etors and their short list of favored
borhoods by constricting the hous- partners, to whom everyone else
ing market to a few landlords the alternative options relates as either an employee or a
and keeping marginal lands out of for housing ratchets consumer. A truly free market, with-
use. Government regulations create out the pervasive control of state
homelessness and artificially make it up the fixed costs of licensure requirements, regulation,
worse for the homeless by driving up living for the urban inspections, paperwork, taxes, “fees,”
housing costs and by obstructing or and the rest, has much more to do
destroying any intermediate informal poor.Artificially with the traditional image of a
living solutions between renting an bazaar: messy, decentralized, diverse,
apartment and living on the street.
limiting the informal, flexible, pervaded by hag-
And having made the ghetto, gov- alternative options for gling, and kept together by the spon-
ernment prohibitions keep poor taneous order of countless small-time
people confined in it, by shutting independent work independent operators, who quickly
them out of more affluent neighbor- ratchets down the and easily shift between the roles of
hoods where many might be able to customer, merchant, contract laborer,
live if only they were able to share opportunities for and more. It is precisely because we
expenses. increasing income. have the strip mall rather than the
bazaar that people living in poverty
Ratcheting Costs Up and find themselves so often confined to
Opportunities Down ghettoes, caught in precarious situa-

A rtificially limiting the alternative options for hous-

ing ratchets up the fixed costs of living for the
urban poor. Artificially limiting the alternative options
tions, and dependent on others—either on the bum
or caught in jobs they hate but cannot leave, while
barely keeping a barely tolerable roof over their
for independent work ratchets down the opportunities heads.
for increasing income. And the squeeze makes poor The poorer you are, the more you need access to
people dependent on—and thus vulnerable to negli- informal and flexible alternatives, and the more you
gent or unscrupulous treatment from—both landlords need opportunities to apply some creative hustling.
and bosses by constraining their ability to find other, When the state shuts that out, it shuts poor people into
better homes, or other, better livelihoods. The same ghettoized poverty.

17 DECEMBER 2007