The Laughable Notion That California Is the U.S.'s "Poverty Capital"

The Laughable Notion That California Is the U.S.'s "Poverty Capital"
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Back in the booming, Ronald Reagan 1980s, homelessness not-so-coincidentally became a national epidemic.  It was all over the news.  According to members of the American left, Reagan’s policies were the cause. 

Interesting about the time in question was that immigrant inflows into the U.S., and in particular from Mexico, were on the rise. In a big way. The economically stimulating and moving arrival of the tired and hungry from Mexico and other countries existed as an inconvenient truth for emotional puddles on the left eager to reveal a downside to Reagan-era prosperity.  If impoverished immigrants who didn’t speak English were rushing into the U.S. for economic opportunity, the notion that Reagan’s policies were causing poverty and homelessness among those lucky enough to already live here made little sense. 

Amid the supposed Reagan-authored “homeless epidemic,” Los Angeles Magazine did a story on it.  Actually, it probably did lots of stories.  But the one that stood out revealed some homeless Los Angelenos in theoretical possession of keen entrepreneurial instincts.  A Los Angeles reporter discovered in the process of following a few of the impoverished that they in fact didn't lack homes.  In truth, they earned in the $30,00-$40,000 range (tax free, obviously) annually by virtue of dressing up as though they lived without shelter, only to drive each day to target-rich environments.  In superrich Los Angeles, homelessness was a good business for some.  

Economist Thomas Sowell noticed a variation of the above around the same time.  The memory is hazy, but in a column he noted how one could frequently find the same people working the same streets in San Francisco each day.  Everyone responds to market signals, and San Francisco’s homeless made sure to ask for money in areas of the city trafficked by those with the most money.  California is known for great weather and lots of well-to-do people.  Is it any surprise so many long-term poor who get by without shelter live there? 

About what’s been written so far, ideally none of it will be construed as a flippant statement about human struggles (past or present) in the Golden State.  At the same time, the happy arrival of the desperate from much poorer countries was a market signal that California was where poverty was regularly cured. Through hard work.  More than most would like to admit, long-term poverty in the U.S. is an effect of bad decisions and/or an inability to make good decisions, as opposed to it springing from policies foisted on us by Republicans and/or Democrats.  If it weren't, immensely poor immigrants would have long ago passed on the U.S. as a destination.  

All of this came to mind while reading a recent piece by a conservative writer who dubbed California the “poverty capital” of the U.S.  It's a reminder that the partisanship of the left and right isn’t all that different.  Nor are their tactics different.  According to each side, poverty in what is the richest country in the world is invariably an effect of policy.  Each side twists statistics and reason to prove its assertions about the poverty-creating policy errors commited by the other side.  

Applied to California, it was a much more Republican state back in the 80s, that had produced Reagan no less.  Now it’s a Democratic Party-controlled state seemingly at all levels.  That California is a one-party state renders it an easy target for the right in the way that it was an easier target for the left during Reagan’s presidency.  

That's why it's so hard to take seriously the recent conservative critique.  For instance, it noted that California, “not Mississippi, New Mexico, and West Virginia – has the highest poverty rate in the United States.” Ok, but if the previous stat were an effect of economic policies conducive to poverty in California, then it stands to reason that foreigners bound for the United States would more likely be found in Mississippi, New Mexico and West Virginia.  Except that California has more immigrants than any state in the U.S.; double the number in New York, and almost triple the number in Texas.  This wouldn’t be true if California’s policies truly suffocated economic opportunity for the poorest. 

Taking this further, immigrants generally reach the U.S. in an impoverished state.  Remember, they’re often here to better themselves economically.  Having come from countries known for a lack of opportunity, they’ve frequently risked their lives to reach a country where poverty is once again cured.  Crucial here is that immigrants, much like natives, and much like homeless people, respond to market signals.  They’re coming to California, as opposed to Mississippi, New Mexico and West Virginia, precisely because there’s much greater opportunity in California.  If the economic landscape were truly barren as this conservative suggests, the poverty rate in the state would paradoxically be lower precisely because so few poor would be there working tirelessly to erase – yes – their poverty. 

It would be one thing if California were where economic dreams die, but the migration patterns of human beings are the purest market signal of all.  Without defending the myriad statist errors committed by California’s Democratic politicians, the state thrives despite.  Surely its prosperity would be even greater were the role of government there smaller, but the fact that there are so many poor immigrant Californians starting new lives is a sign of abundant economic opportunity in the state. Let's never forget that the U.S. itself is a magnet for the world's poorest thanks to the basic truth that the richest countries in the world offer the poor the best chance to emerge from poverty.  That California is the richest state in the world's richest country is very telling when it comes to poverty.  That California has lots of poor human beings isn't a signal that it's creating poverty as much as the poor logically go to where wealth is greatest in search of the opportunity that uniquely exists where the rich congregate.  Just the same, there are lots of poor (immigrant and native) in other states where there's lots of wealth like New York and Texas.  

Thinking about all of this in terms of conservative high-fiving about Democrat-run California as the U.S.’s “poverty capital,” those who promote this narrative should know better.  They’re offering up a variation of the witless attacks foisted on Reagan in the 80s; all based on the falsehood that policy drives poverty in the U.S. In truth, endless poverty is an effect of decisions made.  California attracts the poor, along with the soon-to-not-be-poor, but for each the appeal of the Golden State is a sign of its economic success, not its decline. 

John Tamny is editor of RealClearMarkets, Director of the Center for Economic Freedom at FreedomWorks, and a senior economic adviser to Toreador Research and Trading ( His new book is titled They're Both Wrong: A Policy Guide for America's Frustrated Independent Thinkers. Other books by Tamny include The End of Work, about the exciting growth of jobs more and more of us love, Who Needs the Fed? and Popular Economics. He can be reached at  

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