It Takes a Nation: A New Agenda for Fighting Poverty.

A War on Poverty was officially declared by President Johnson in the 1960s, but poverty was hardly an overnight concept in American when Molly Orshansky invented her now-famous poverty line. For much of American history, "poor relief" was the responsibility of state and local governments. In the 1930s, demands for public assistance overwhelmed state and local government, and welfare as we know it today was born. Over the ensuing six decades, control over welfare passed from the state and local levels to the federal government.

The United States is currently in the midst of a massive social experiment in which control over welfare is being shifted back to the state and local levels. States receive their share of the federal dollars as a grant, and they are free - within certain limits - to vary the terms upon which welfare is dispensed. Perhaps most importantly, welfare is no longer an entitlement, although public officials can insulate some individuals from the more draconian limits on current and lifetime participation. It is a truism of political debate in this country that welfare, as it evolved from its New Deal origins, is irredeemable, to be scrapped rather than tinkered with. Fed up with images of "welfare queens," rampant illegitimacy, and menacing young men loitering on urban street comers, the public evidently wants an end to welfare as we know it.

In the face of such views, it takes a courageous individual to challenge perceived wisdom. That is what Rebecca M. Blank does in It Takes a Nation. Based on the premise that the debate leading up to welfare reform was full of misinformation, stylized nonfacts, and political ideology masquerading as social science, Blank tries to set the record straight. By and large, she succeeds, offering her own vision for reforming welfare along the way. It is a vision shaped by one expert's deep knowledge of relevant social science research, yet suffused with a compassion for the people whose lives depend on the kindness of strangers.

It Takes a Nation has six substantive chapters, an introduction, and a conclusion. State welfare program officials are the target audience. There are plenty of tables, charts, and figures, and plenty of economics, but no econometrics. Blank has a knack for presenting complex research findings in understandable prose, and there is nothing that could not be understood by, say, readers with a college-level background in economics or sociology.

Following the introduction, Chapter One sketches the face of poverty in contemporary America. The poor, Blank tells us, are an extremely heterogeneous lot - they are old as well as young, married as well as single, white as well as nonwhite, college-educated (about 7%), and live everywhere. Among whites who experience a spell of poverty, the majority (around two-thirds) remain poor for less than three years; among African-Americans, however, fully 17% remain poor essentially forever (10 years or more). People become poor when their family circumstances change (for example, divorce) or, most of the time, when hit by an adverse economic shock. Also most of the time, poverty ends with an improvement in economic circumstances, not because of a change in family composition. Although there is at least one worker in most poor families, part-time work is much more prevalent than full-time work and, surprisingly, it is married men in poor families who have experienced a substantial decline in participation over the past two decades. It is true that illegitimacy rates have soared since 1960, but Blank attributes the rise primarily to a decline in marriage rates, expanded economic opportunities for adult women, and declines in the attractiveness of less-educated young men as marriage partners. Nonetheless, single mothers are at great risk of slipping into poverty, and their children suffer for it. The chapter also reviews the evidence on nonpayment of child support and the relationship between crime and poverty.

Chapter Two introduces a key theme of the book, the changing relationship between poverty and economic growth. Before 1980, poverty was inversely related to economic growth. However, declining demand for less-skilled labor, reflected in a sharp upsurge in wage inequality and the movement of jobs out of central cities, has greatly reduced the effectiveness of economic growth as a weapon against poverty. While no one can doubt that a job is necessary to escape poverty, a job alone will not do the trick for an increasing fraction of today's poor.

Chapter Three comprehensively reviews the myriad pieces of America's social safety net, while Chapter Four confronts the evidence on the safety net's effectiveness. In 1995, all forms of public assistance accounted for roughly 14% of the federal budget, three percentage points less than the portion allotted for national defense. The public assistance share went up in the 1980s entirely because of Medicaid - that is, rising health care costs. By calculating the total direct effect of the various transfer programs on household income, Blank makes an extremely important point: the social safety net works in the sense that it reduces the poverty gap, but it does not (and was never intended to) reduce the poverty rate. Chapter Four incorporates behavioral responses of the poor into the calculations but does not alter the substantive finding. This chapter also discusses the impact of job training programs. Even relatively crude efforts at job assistance seem to help women on Aid to Families with Dependent Children, but not much works for low-skilled adult men. Preventive medicine - that is, programs aimed at disadvantaged youth - does some good, provided such programs are targeted at youth while they are still in school.

Chapter Five is philosophical, aimed at critics who believe the federal government should stay out of welfare. Blank reminds readers of the various positive and normative reasons for a safety net, why the federal government needs to play a role, and why private charity cannot replace public assistance. Chapter Six addresses an interesting feature of the recent history of public assistance: the shift towards target programs (such as food stamps) and away from cash assistance. Americans, it seems, are willing to support programs aimed at particular hardships, such as hunger, but are increasingly less willing to provide cash assistance, even though, on microeconomic grounds, there are efficiency reasons for preferring dollars to in-kind transfers.

Chapter Seven is a wish list of alternatives to the present safety net. It is both eclectic and pragmatic, balancing incentives, effectiveness, and administrative feasibility. The key idea is a three-tier system. Those who need just a little help are assigned by a case evaluator to the first tier. (In Blank's scenario, the case evaluators have far more discretion than currently is true among front-line administrators.) Those who need job-search assistance and training are assigned to Tier 2, which requires work in exchange for cash assistance. The hard-core poor, one hopes a small number in the long run, are the responsibility of Tier 3. The Earned Income Tax Credit, with its favorable incentives towards work, is maintained, and child support is assured by involving states in enforcing payments to a greater extent than under the current system. However, as Blank emphasizes, we cannot reform the safety net by smoke and mirrors. Money, lots of it, still is needed.

Despite my admiration for Blank's achievement, the book has a few failings. Blank takes as given that the poverty line is a meaningful indicator of material hardship, despite the mounting number of studies challenging the notion that hardship and current income are closely linked. Historical context is slighted except as brief filler found generally at the beginnings of chapter sections. More fundamentally, I wonder if studies of the economic behavior of welfare recipients are really as informative as Blank seems to think. In the last two decades, the Lucas critique has dramatically altered our understanding of the effectiveness of macroeconomic policies. Similar thinking, however, has not filtered its way into policy debate on welfare. In the face of a massive regime switch, such as the current reforms, behavior derived from experience under previous regimes may be a poor predictor of how the poor will react to a new system.

The book's tone is that of a moral crusade, as much as one might ever expect from a social scientist. Blank seems to believe that knowing the facts can improve public policy, a position that some readers will regard as incomplete, if not naive. I do not think Blank is naive, but I do think the book would have benefited from greater attention to political economy. Given mounting budget deficits, rising health care costs, and the apparent unwillingness of taxpayers to allow any serious reform of Social Security or Medicare, the poor, like public universities, are an easy scapegoat. Perhaps marginal voters will change their minds about "welfare queens" after reading Blank's book. It is certainly easier to convince ourselves that we are doing the right thing if welfare were truly as evil as its severest critics maintain, but I suspect many of us could invent other equally fallacious reasons to leave, say, 90% of the reforms intact despite the facts that Blank carefully lays out.

These criticisms are minor, however. I regularly teach an undergraduate course on poverty and discrimination. Blank's book will go immediately to the top of my reading list.

Robert A. Margo Vanderbilt University, Harvard University, and National Bureau of Economic Research