The Poverty Industry, by Daniel L. Hatcher

This book makes my blood boil.  University of Baltimore law professor Daniel Hatcher has exposed a perspective on the welfare state that is as disgusting as it is unsurprising.  In The Poverty Industry: The Exploitation of America's Most Vulnerable Citizens, Hatcher examines the widespread practice of federal and state governments working with providers and private firms to siphon off funds intended for the poor and elderly to fund other government budgets and agencies.

Put crudely, a target population, e.g. foster children or elderly nursing home residents, qualify for federal grant money.  State governments contract with private firms for "revenue maximization" to discover what sources of additional funding individuals may qualify for.  Then the state accesses those funds, such as by being named as payee for a minor in foster care, and absorbs those funds into the general state budget.

Hatcher gives example after example of the various ways state and local governments accomplish this.  The resulting "poverty-industrial complex" results in "Medicaid funds . . . often not used for Medicaid purposes." "Child welfare agencies . . . obtain foster children's Social Security benefits for state use," while "states and their revenue contractors seek out loopholes and illusory schemes to maximize and divert the aid to other uses."

I don't share Hatcher's absolute opposition to the use of contractors to maximize revenue.  It's the practice of diverting funds to uses other than the benefit of the children, disabled individuals, or retirees for whom the funds are intended that troubles me.  The fault lies less with the contractors than with the government agencies that are directing the funds, reflecting the inevitable corruption caused by the centralization of power with people who have a great deal of access to other people's money.

I also wonder about Hatcher's blanket assumption that the funds are misdirected.  He makes a solid case, but when, for example, funds intended for a foster child are put into the general fund, is it possible that these funds rightly go toward the bureaucracy that supports the foster care system?  In that case, the conversation should center around the role of such a bureaucracy and its necessity and effectiveness.  Granted, this may be beyond Hatcher's topic, but I think it should be addressed.

Lawmakers, agency heads, state and local government officials, please take note of this book.  Activists for foster children and disabled individuals, please hold the government to account.  To the extent Hatcher is right, the practices he describes must stop.  It's unconscionable, and a violation of public trust.


Thanks to NetGalley and the publisher for the complimentary electronic review copy!