Waging "Wars" is More Lucrative Than Winning Them
How the ongoing "War on Poverty" provides clues to the coming "War on COVID"
When was the last time you looked around your community with scrutiny? What did you see? If your community is anything like mine, you may have seen more panhandlers with signs near heavily trafficked intersections. You might notice a little more blight with buildings in both commercial and residential neighborhoods. Maybe your mall sees its best days in the rearview mirror.
What drives that?
Economics, obviously, but something more insidious lurks.
Poverty.
In over 15 years at a top Fortune 500 company and nearly 10 years running the local chapter of well-known non-profit, I’ve discovered a shocking difference.
Poverty is good for business.
It’s not good for the business of the Fortune 500. It’s certainly not good for the business of Flyover Country residents, and it’s really not good for refugees subjected to the crime and decay in our largest urban centers.
But for those tasked with waging this “war on poverty”, well, business just keeps getting better year after year. The chaos and misery work out great for them. And because more poverty means more money, why would they want to solve it?
Those who fail to learn from history are doomed to repeat it. Let’s uncover valuable lessons from one ongoing war to see what’s in store for us with the coming one.
In the for-profit world…
The free market provides incentives for companies to address and solve consumer needs and problems. Companies and economic sectors grow and expand their market share and profits based on a track record of results and demonstrated success in addressing the needs and problems of consumers. Those that fail to do so, shrink and disappear. Wal-Mart and Amazon expanded to their current size through a combination of convenience and competitive prices, while similar retailers like Sears and K-Mart cease to exist for their failure to do the same. To expand beyond that simplistic version is outside the scope of this post.
In the non-profit world…
Contrast that with those in the government, NGO’s (non-governmental organizations), and non-profits (e.g. social service agencies) tasked with defeating poverty.
According to the Heritage Foundation ( War on Poverty Costs ), in the 50 year time period from 1965 to 2015, we’ve spent $22 TRILLION (adjusted for inflation) waging the “War on Poverty”. This doesn’t even include social security or Medicare.
With this amount of investment, we’d expect at least some organizations to perform like an Amazon or Wal-Mart and create groundbreaking innovation and success coupled with free market accountability for organizations that failed to produce results like a Sears or K-Mart.
We’ve seen neither.
According to the U.S. Census data, 1970 Poverty Data, the poverty rate in 1970 was 13% or around 25.5 million people. Forty-five years later, the U.S. Census data showed the poverty rate was 13.5% or around 43.1 million people 2015 Poverty Data.
We’re paying for Wal-Mart and Amazon, and they’re giving us Sears and K-Mart.
And the worst part?
Those fighting this “war” have no incentive for it to end because in spite of Sears and K-Mart failures, they keep getting paid as if they’ve generated Wal-Mart or Amazon successes.
How does this happen?
My non-profit once partnered with another non-profit to address poverty and workforce development for at-risk youth in our community. This organization relies heavily on state and federal funding to the tune of 90 to 95% of their overall operational revenue/budget.
One such grant paid them to work with youth aged 18 to 24. Once these young people turned 24, the non-profit basically stopped working with them regardless of whether they had achieved any results or positive outcomes, like career training or employment. Why?
Here’s dirty, little secret #1 – it’s always about their funding.
For-profit companies stop producing a product line or delivering a service when it stops generating revenue. Consumer behavior creates a feedback loop that benefits both the for-profit company and the consumer by signaling that a particular service or product is no longer solving a problem or meeting a need. The for-profit company must innovate and evolve to continue to generate revenue and retain customers.
In most things, a non-profit acts like a poor charity that lacks the vast resources of a for-profit company, but I’ve witnessed time and again, how a non-profit behaves like a for-profit company when it affects their funding. When it serves their own best interest, the non-profit stops delivering a product or service when it doesn’t generate revenue, just like a for profit company would. They exhibit this “for profit” behavior because providing that service no longer meets their organizational “need” for funding. The now 24 year-old client has the same needs they had as a 23 year-old the day before, and this is when they learn the truth.
Here’s dirty, little secret #2 – it’s about their funders, not their clients.
The 24 year-old above loses the service and now feels hopeless and fears they can’t escape poverty. The frontline caseworker grows frustrated with how regularly these situations occur, and typically, they experience burnout, leading to high turnover rates.
Remember, because it’s always about funding, the leadership of these organizations focus more on what their funders require or desire rather than what the clients they serve might need. They’re creatures of the system. They’re crafty in exploiting it to the benefit of themselves and their organization, and they detest anything that threatens this funding system.
A for profit company at least attempts to address a customer’s problems and needs precisely because it generates revenue to keep them in business. Innovation creates little benefit for a non-profit because their lack of it creates new poverty customers year after year. The data above shows that in the 50 year period from 1965 to 2015, waging the “War on Poverty” created nearly 20 million new customers.
Innovation and reducing the number of customers jeopardizes the system. More customers means more funding.
And that brings us to…
Here’s dirty, little secret #3 – you get paid more fighting the war, so why “win” it?
Remember how I mentioned the high turnover rates in #2 above? In this case, turnover is not just okay, it’s vital because it takes some time before you recognize how the game works. High turnover means fewer people stick around long enough to realize that the real money and power coincides with waging the war, not winning it.
Those in government turn your taxes into federal and state budgets that they then use for governmental programs or grant funding for NGO’s and non-profits. In simplified form, these grants typically require them to report on what they’re working on (e.g. poverty), how many clients they serve, number of hours of programming, and an agreed upon or acceptable methodology in delivering said service.
See anything missing?
Achieving tangible results.
In this sector, you can claim to be addressing poverty and repeatedly get paid without actually improving anything or achieving any meaningful results for the communities they claim to serve. More poverty customers allows the politicians and government bureaucracy to demand more resources to address a social issue they have no incentive to solve.
It’s a war of attrition for those in charge, the leadership of the governmental agencies, the NGO’s, and the non-profits. The funding leads to programs these various organizations administer, and just like the ever-expanding government, your loyalty and your vote belong to those that maintain or increase your funding. Why would you vote or make decisions that threaten your funding (that would betray Dirty Little Secrets #1 and #2)?
Here’s dirty secret #4 – they get paid regardless of their results or customer satisfaction.
The organization we attempted to partner with above proves that. They got paid regardless of what life is like now for that 24 year-old, and they’ll continue to get paid regardless of what happens to the next one.
Imagine a for-profit business like Wal-Mart getting paid by foot traffic. You come to their store in desperate need of some formula for your toddler, a trained staffer provides assistance, and shuttles you out the door shoving something in your hand as they greet the next customer. You’re left standing in the parking lot, with no formula, holding a car battery, and you don’t even own a car.
Wal-Mart ceases to exist in the business world acting that way. Meanwhile, a non-profit “fighting” poverty in that manner gets their grant renewed and expanded.
In my experience, I’m unaware of any grants that incentivize these organizations to meet a specific, measurable result like you’d see in the business world. They don’t require say a 10% reduction of the number of residents in poverty in your community or moving 100 at-risk youth into the workforce. They talk a great game about “outcomes”, which is non-profit speak for “results that aren’t really results. They’re more of a qualitative (thus open to interpretation unlike a quantitative result) measure that helps disguise activities as results.
When you measure success in this way, you incentivize the wrong behaviors. Maintaining or ideally, increasing the number of clients holds more value than helping them become self-sufficient. This is how you get poverty expanding from 25.5 million to 44 million while waging the “war”.
In other words, this “market” provides no incentives for actually solving poverty.
Why this matters in the coming “War on COVID”
And from these 4 Dirty Little Secrets of the world I’m in, you may start to sense some parallels with the current panic peddling about the “Delta Variant”. You constantly need more cases to create more of a crisis or emergency that requires an all-out war and an endless stream of resources.
Who benefits from a never-ending pandemic? A lot of the same organizations that continue to benefit from the “war” on poverty. For those planning to turn a pandemic from a hiccup into a new never-ending war, the real stroke of genius is including the for-profit world in on the spoils.
Remember, the War on Poverty really only benefitted the non-profit and governmental world. The Pandemic War benefits all of the same organizations from the ongoing multi-trillion dollar War on Poverty, but it creates new benefactors:
Giant retailers like Amazon and Wal-Mart operate without fear of closure like their small-business competitors
Big Pharma/Big Medicine – generate massive profits through COVID tests, PPE, endless booster shots, liability protections from adverse vaccine reactions, and a guaranteed and ever expanding market of customers (sound familiar?) for their goods and services – check out all the new billionaires created in just 18 months of this new war, and imagine how many more want to join those ranks New COVID Billionaires
Big Finance – the endless eviction moratoriums create potential for a massive transfer of property from cash strapped landlords to hedge funds and banks
Big Tech/Corporate Media – let’s face it, COVID panic porn has been great for their business models
Even more than I can list here will benefit or already are from the “War on COVID”. A lot of MERC (managerial experts, ruling class) will benefit in this new, never-ending war.
Just like Flyover Country once bought into the noble rhetoric that launched the War on Poverty, the cries of “we’re all in this together” paint a thin veneer that everyone benefits in launching this new “war” on a virus.
Don’t fall for it.
I’m a witness to one ongoing war and how they’re waging it. They plan to run the same playbook for the upcoming ones on COVID, “Climate Change”, “Gun Violence”, etc. They seek to enrich themselves, their families, and their friends waging each war with zero results or accountability.
We must reject their premise and refuse to enlist in their new wars.
Trump’s policies exposed the fraud and deceit of the “War on Poverty”. Between 2015 and 2019, 9 million people escaped poverty. The rate dropped to 10.5%...the lowest rate observed since 1959. All of the trillions of dollars and programs failed in 50 years to do what a new approach (actively moving people out of poverty and into the workforce) created in just 4 years.
I would suggest to all of my fellow Flyover Country residents to start thinking about how we can apply the same approach and methods in the coming wars. Things look bleak now, but after 50 years of failure, we reversed course, exposed the rot and corruption, and started winning the “War on Poverty” in just 4 short years.
It’s time to do the same with the coming “COVID War”.