Unfortunately, there is no simple "30 second" answer that can even start to explain why a free society actually does a better job of curing poverty than any statist approach. The reason is that when people use the term "poverty," they are describing a very complex set of issues.

The most obvious issue is whether a free market economy creates poverty as Marx and Lenin suggested. The jury is no longer out on this issue: Free markets do a much better job than statist economies of creating jobs while increasing the general standard of living of the entire population. For example, the average person living under the poverty line in the U.S. has more living space than the average for the middle class in Japan.

• Countries throughout the world are changing toward free market policies. For people who care about the plight of the poor, they look to places such as Hong Kong, where it is almost impossible to hire receptionists because people can easily find better paying jobs. Prosperity cures poverty. (As a side note, the standard of living in Hong Kong has now passed that of Great Britain.) All that being said, the free market system benefits some people more than others. Many people continue to be concerned that people at the bottom of the economic ladder would be worse off under laissez faire than they would be in a poorer country with more redistributionist policies.

In certain circumstances this might be true. The real question is whether this would justify the economic damage caused by statist interventionism on the overall level of prosperity and personal freedom. I think Libertarians can make a convincing case that it does not.

Before addressing the problems of the poor, it is necessary to consider what we mean by "poverty" or by being "poor." Merely looking at income statistics confuses the issue.

One of the problems we have in looking at this issue is that there is a difference between being "poor" versus being "temporarily without funds." We often hear of tycoons going bankrupt, yet we never hear of them moving into public housing. They may have no money for the moment, but they are not "poor."

In a similar manner, recent college graduates often have little or no income prior to getting their first job. Some people lose their jobs and have little income for a while, but they are not really "poor."

Income statistics are also confusing when dealing with retired people living in homes with the mortgage paid off and substantial savings, adult children of affluent parents, and people with erratic incomes such as writers and artists.

It is not clear that there is a "problem" with low income people who are temporarily without funds. Perhaps in "utopia" everyone can be idly rich, but that is hardly a relevant public policy issue.

If there is a "problem" it is with people who seem to be trapped in their situation without a sense of hope. We should consider their problem seriously, but keep in mind that each individual's situation is unique.

For the sake of this discussion, I contend that there are at least four broad categories of people who are generally thought of as being "poor" rather than merely temporarily without funds. Let me suggest that each category may require a different response, and that requires judgment which is difficult for government agencies to apply because they risk lawsuits over "discrimination."

There is no single answer because there is no single problem. The four categories are:

1) The Unfortunate

1) THE UNFORTUNATE are people who are poor due to circumstance beyond anyone's control. This might include medical or mental problems, catastrophes, etc. Someone with a below-average IQ who has impaired vision is likely to be poor no matter how strong the job market is. Most people agree they should be helped. The only question is how.

This is an obvious area for charity. Historically, free people have been generous. The people of this country give more to charity per capita than those of any other country in the world and their generosity increased at an average of 5.1 percent during the 1980s (the alleged "decade of greed") compared to an average of only 3.5 percent during the previous 25 years.

To a certain degree this is out of self-interest because each of us can imagine being afflicted and we want to live in a society that would be supportive.

Unfortunately, the problem of poverty in America is not limited to the merely "unfortunate." Government programs designed for the "unfortunate" tend to break down when trying to deal with other causes of poverty. Charities and religious groups can use judgment in deciding who will be helped and who will not. (For example, the Mormons do an extraordinary job of taking care of "unfortunate" members of their churches.

2) MISFITS are poor because of their behavior. Such behavior ranges from merely poor work habits (failure to get to work on time, yelling at customers, etc.) to substance abuse to outright criminal behavior.

Unfortunately, the social pathologies that push certain individuals into self-destructive behavior seem to be impervious to government action. Historically, non-statist social systems have had more effect than government programs that are inevitably "legalistic."

One example of how non-statist agencies can help is a group called "Delancey Street," which works with ex-cons. They rigidly control the actions of the participants while training them to work in the agencies' businesses including a restaurant, a construction company, and a trucking company, among others. Their results have been phenomenal, yet they receive no public funds or private charity.

Mutual aid and voluntary community programs work better without government interference. Unfortunately, government money invariably attracts professional "do-gooders" who are inclined to view these people as "clients" rather than as human beings capable of solving their own problems.

In any case, it is now clear that government is extraordinarily ineffective at dealing with misfits. Yet many statists assume that misfits are merely unfortunate, which is simply not true. Giving misfits money only helps them put off the day when they will have to change their behavior. Sending misfits to schools is a joke and only serves to destroy the educational opportunities of others. Forcing misfits into "12-step programs" such as Alcoholics Anonymous fails because these programs work only when the participants want to change.

As one leading libertarian put it, "It is not really clear that we as individual members of this society have any real obligation to people who are the cause of their own problems." This statement seems harsh to many social democrats who are inclined to blame "society" for the personal problems of the misfits rather than to insist on individual responsibility.

As libertarians, we tend to focus on the expanded role of charities and mutual support groups in an environment of rising prosperity and increased economic opportunities. Nonetheless, the message of libertarianism is clear: "There ain't no such thing as a free lunch." (Oddly enough, socialist countries are much harsher on people who refuse to work. Many have practiced the Biblical maxim: "He who will not work, nor shall he eat.")

3) LEISURE SEEKERS are people who prefer poverty to working hard. If you increase the level of welfare benefits, the result will be more people who will go on welfare.

Some social democrats deny that this happens, pointing out the relatively low standard of living sustained by welfare recipients. However, the data are overwhelming: Higher benefits lead to more applicants.

Leisure seekers are not necessarily misfits. They are simply responding rationally to the law of supply and demand. Higher prices lead to more of what is being paid for to be offered. This holds for oil, chewing gum, and welfare recipients.

Another part of this problem is that there is a significant number of people who receive benefits who actually work in the underground economy. For this group in particular, the cost of getting a regular market job includes not only paying taxes, but also losing all of the welfare benefits including housing subsidies, food stamps, medicaid, etc.

Most attempts to get "able bodied" welfare recipients off the books tend to fail. As long as the same system is used to support the "unfortunate," the politicians are reluctant to cut the benefits. At the same time, the cost of determining who should be excluded is often greater than any "savings" because the beneficiary has the right to due process. Tax-funded Legal Services Agencies often drag this out as long as possible in the name of the poor's "right" to an equal share of the wealth of others.

Private charities permit judgments as to who really needs help. Government agencies cannot discriminate for fear of abuse.

4) VICTIMS are people who are poor due to the actions of others. For the most part, I look at the "working poor" as being the primary victim class of poverty. However, the sense of being trapped that is felt by many welfare recipients is a power form of victimization.

In spite of what many people suppose, the real victimization is not by greedy capitalists or rednecked bigots (although some is), but due to the unintended consequences of government action.

Economist Martha Fuhrig once stated that the reason she is a libertarian is that "government is hurting people." No group is hurt more than the working poor.

· Federal labor law permits unions to increase the wages of some workers by "restricting supply," i.e. destroying the jobs of others. Poor people might take jobs in the auto companies at lower wages, but aren't permitted to do so. Racial minorities and women are far less likely to get jobs on union construction jobs than on non-union jobs, yet the federal government prevents effective competition by non-union contractors with the Davis-Bacon Act.

· Licensing laws keep poor people from forming businesses such as taxi companies or hairdressing salons. In most states, it is illegal to offer babysitting for more than a couple of families. In California, there are over 130 licensed professions that require tests and various other requirements that make it hard for the less well educated to even enter the profession.

· Local business licenses and permit controls are used to prevent the creation of shoe shine stands, street vendors in most communities, and other low-capital businesses.

· Federal laws forbidding "home production" (especially of clothing) hurt poor female heads of households. Local zoning laws do much the same.

· Land use laws (zoning, building codes, etc.) are used to restrict the supply of housing units, driving up the price of housing. Urban renewal type programs have destroyed hundreds of thousands of low income housing units on net, further impoverishing the poor.

· Employment taxes increase the cost to the employer without providing money to the employee. Strict enforcement of income tax laws regarding "tips" primarily hurt the poor. Studies show that government mandated "benefits" such as unpaid leave result in lower wages.

· Sales taxes, excise taxes, tariffs, agricultural price supports, etc., all raise prices, reducing the standard of living of all consumers and hurting the poor hardest. (Realistically, even the corporate income tax tends to get passed through to the consumer through higher prices.)

· Regulations on the performance of domestic work (butler, maid, gardener, etc.) include extensive paperwork requirements, employment taxes, and even withholding taxes on the value of meals, clothing, lodging, etc., given to the domestic. The results are very few job opportunities in an area requiring limited education and the importation of foreign laborers exempt from these requirements to take jobs that would have gone to poor Americans. (The option of ignoring the state such as was done by Zoe Baird is a high-risk one as she eventually found out.)

· Government schools are especially bad for the poor. Unlike the middle class that can move to cities with good schools, the poor are often limited to schools where violence is uncontrolled and the teachers fail to teach. A black man running for superintendent of schools in one state claimed that David Duke couldn't have designed a system better at keeping blacks down. It is remarkable how many poor parents send their children to non-governmental schools (in spite of paying taxes for public schools) because they want better for their children.

· The poor are frequently the victims of crime resulting from the failed policies of drug prohibition. Also, the high crime rate in many poor neighborhoods tends to drive away businesses and therefore jobs. However, laws prohibiting flexible transportation alternatives like jitneys make it almost impossible for many poor people to get to where the jobs are.

Libertarians' solution to the "problem of the poor" is prosperity, a freeing up of resources from government to charity (it is estimated that less than 30 cents on the dollar actually gets to the supposed beneficiaries), increased emphasis on mutual assistance programs, and most of all an end to all the destructive policies that actually make people worse off. It is not a utopian solution, but it is one that has a real chance of making a real difference.

The federal government has spent $3 trillion over the past 25 years on social welfare, yet poverty is worse than ever. It is time for caring people to look at the final result of the government run "war on poverty" - poverty won.