Get Government out of the Welfare Business

Mises Institute ^ | 12/5/17 | Lee Friday

[markomalley]

Fighting poverty is a favorite pastime of government because politicians get to portray themselves as champions of the poor. However, the unfortunate few tend to be far fewer in number when aid is extended privately instead of through tax funded programs.

Government Bureaucracies Benefit from Welfare Programs

Coercion is used to acquire the revenue (taxes) to finance welfare programs. As evidenced by the commission it retains prior to redistributing this wealth, government bureaucracies are one of the beneficiaries of these programs, and thus highly incentivized to claim a perpetual need for the programs. I live in Canada, where the number of federal government welfare program employees increased by 43% between 2006 and 2012. Clearly, it serves the interests of politicians and bureaucrats to create (impose) a culture of dependency. As Murray Rothbard wrote in For a New Liberty:

Since welfare families are paid proportionately to the number of their children, the system provides an important subsidy for the production or more children. Furthermore, the people being induced to have more children are precisely those who can afford it least; the result can only be to perpetuate their dependence on welfare, and, in fact, to develop generations who are permanently dependent on the welfare dole.

Economist Thomas Sowell wrote:

The black family, which had survived centuries of slavery and discrimination, began rapidly disintegrating in the liberal welfare state that subsidized unwed pregnancy and changed welfare from an emergency rescue to a way of life.

The government exacerbates the problems it is supposedly trying to solve.

Why Private Aid is Superior to Public Aid

Drawing on the work of David Beito, historian Hildegard Hoeller describes the presence of decentralized systems of mutual aid:

Regardless of where they came from, the members of nearly all ethnic and national groups erected formidable networks of individual and collective self-help for protection. These social welfare systems fell into two broad categories: hierarchical and reciprocal relief.

While hierarchical relief was often bureaucratic, Beito notes, “reciprocal relief tended to be decentralized, spontaneous, and informal. The donors and recipients were likely to from the same or nearly the same walks of life. Today’s recipients could be tomorrow’s donor.”

In his book From Mutual Aid to the Welfare State, Beito continues:

Reciprocal relief was far more prevalent than either governmental or private hierarchical relief. Its most basic expression was informal giving, the countless and unrecorded acts of kindness from neighbors, fellow employees, relatives, and friends . . .

. . . The self-help and informal neighborly arrangements created by the poor themselves dwarfed the efforts of formal social welfare agencies. In this regard Edward T. Devine, a prominent social worker, used an article in the “Survey” to warn his colleagues against the sin of self-importance. He reiterated that millions of poor people were able to survive and progress without recourse to organized charities and governmental aid: “We who are engaged in relief work . . . are apt to get very distorted impressions about the importance, in the social economy, of the funds which we are distributing or of the social schemes which we are promoting . . . If there were no resources in times of exceptional distress except the provision which people would voluntarily make on their own account and the informal neighborly help which people would give to one another . . . most of the misfortunes would still be provided for.”

Private charity was more effective than government welfare because private persons contributing their own money are highly incentivized to identify genuine needs. On the local level it is easy to monitor recipients to ensure they are making every effort to become independent. Indeed, long ago, much of the aid provided came from those who personally knew the recipients.

In contrast, centralized government bureaucracies are impersonal by nature. This does not mean government employees are uncaring and lack empathy. It means they deal with countless welfare recipients who they can’t possibly know personally, and perhaps are forbidden from doing so. Coupled with the fact that they are giving away someone else’s money, incentives for determining genuine need are very weak. Thus, the indolent know how to milk the modern public system, but were denied aid in the private system of the nineteenth century.

There is a big difference between those who are incapable of supporting themselves, and those who are capable but unwilling. If you fall into the latter group, you are undeserving of assistance — a concept a ten-year-old can understand. Yet, socialists are aghast at such a statement. It is not for us to assess personal character and habits, they say. When a person says they are in need, we must automatically open our wallets, but we must never judge (which, by the way, simply means to express an opinion). As William Gairdner unhappily noted in his book The Trouble With Canada . . . Still!, “Canada’s National Council of Welfare deplores any effort to distinguish between the “deserving” and the “undeserving” poor.”

Is Reform Possible?

Politicians say they can alleviate poverty, which they often blame on ‘greedy capitalists’ and ‘inequality’ — assertions which Ryan McMaken has disproven. Consistent with McMaken’s article, when markets are hampered by government intervention, poverty increases. As Ludwig von Mises wrote in Human Action:

It is highly probable that the funds of the charitable institutions would be sufficient in the capitalist countries if interventionism were not to sabotage the essential institutions of the market economy . . . The greater part of those assisted by charitable institutions are needy only because interventionism has made them so.

Can government welfare programs be reformed in order to match the superior incentives possessed by private individuals? No. The superior nature of private incentives derives from the fact that individuals are deploying their own resources — their own money. As such, this is impossible to duplicate within the coercive institutional structure of government.

Conclusion

Government welfare discourages productive work, encourages dependency, and places an enormous economic burden on the backs of resentful, hard-working taxpayers. As Gairdner wrote:

Like iron fillings drawn to magnets, the country divides into those who produce and want to protect what they have earned, and those who want to share by right (and so, by force) in what the former have produced. In this respect, the shift from the idea of a State set up to provide and protect equal opportunity, to one that is expected to provide equal outcomes, or results, has been decisive, and has resulted in what the insurance industry calls a “moral hazard.” George Gilder summed up the misguided policy effects as follows:

The moral hazards of current programs are clear. Unemployment compensation promotes unemployment. Aid for families with dependent children . . . makes more families dependent and fatherless. Disability insurance in all its multiple forms encourages the promotion of small ills into temporary disabilities and partial disabilities into total and permanent ones. Social security payments may discourage concern for the aged and dissolve the links between generations . . . All means-tested programs . . . promote the value of being “poor” (the credentials of poverty), and thus perpetuate poverty.

[ridesthemiles]

Under Obama, HUD could NOT supply receipts for over 42% of their entire budget. It must be cleaned up. Many recipients were handed ‘emergency cash’, and there is no accounting records of where that money went or who got it or for what.

Inspector General for HUD is beyond frustrated, as the employees there are not co=-operating.

[ridesthemiles]

Government out of the student loan business, also.

[NorthMountain]

Nice rant, DP, complete with threats of violence.

I notice the question went unanswered.

Was it worth while to institute a vast bureaucracy to take take care of a case like yours, when the result is grave harm to a both the whole people and our government?

I answer that it was not and is not. Private organizations did a much better job of aiding the indigent, before Big Government shoved them to the side with its hack job. Unlike Big Government, they did not create a multi-generation parasite class or a mentality of entitlement.

[dp0622]

I apologize to all for that terrible post I made.

There is no excuse for it but mom DID tough it out.

Taking care of a sick husband and five kids while taking 18 credits in nursing school is TOUGHING IT OUT.

I submit this: how much would it have cost had she just stayed on welfare and then we did, for the net 50 years?

And maybe you, NorthMountain, have friends with the kind of money to carry a family’s mortgage and food and electric and you may have a CHURCH with such riches. We did not.

She could have gotten a job at kmart instead, but that would have been incredibly short sighted.

Making 6 an hour at the time instead of 50,000 a year only a few years later.

I apologize again to all, especially northmountain for my post. It was outrageous.

But I stand by the need or a program for such life emergencies.

Are you going to cash your SS checks or are you already?

I know you paid into it, but if ever there was a bloated bureaucracy, that’s it and as a protest you could rescind taking what is essentially a socialist payout program.

How about medicare?

How about the military admitting losing FIVE TRILLION over the years in a statement last year. How do you LOSE five trillion.

IS IT WORTH IT HAVING A MILITARY THAT CAN LOSE FIVE TRILLION?!?!?!!

Yes. It just needs a real president and real management.

Again, I sincerely apologize for an uncalled for post and I respect and enjoy your posts very much.

[Mears]

You owe NO ONE an explanation—————your Mom coped with a very tough situation,and she made it.

Good for her.

She has every right to hold her head up high-——and she has a family that loves and respects her. That’s what matters,not what is posted on the internet.

[Bonemaker]

You said or did nothing wrong. No need for apologies. If one is in a jam one takes whatever one can get....like all the rest of us.

[NorthMountain]

I submit this: how much would it have cost had she just stayed on welfare and then we did, for the net 50 years?

I cast no aspersions, personally, on anyone in your family. I understand that some folks will at times need a hand. Been there, done that, don't ask.

Are you going to cash your SS checks or are you already?

I have repeatedly called for Medicare and Social Security to be abolished. I call for that right now. I will continue to do so in the future. Those programs are absolutely highway robbery.

So are the other "welfare" programs. The whole ruddy lot should be abolished. Prior to the government getting involved and screwing it up, private organizations both religious and secular did a much better job of helping those who were then called the "deserving poor". What that system did NOT produce was generation after generation of people utterly dependent on "benefits", who feel entitled to the fruits of others' labor, with no obligation to better themselves. What that system did NOT produce was a bloated government that saw no limits on its size, scope, and power. Government run assistance to the poor has produced both, with no end in sight. The fact that you personally benefited from a system which is, as a whole, evil does not negate the fact that the system is evil.

I stand by the need or a program for such life emergencies.

I agree. I utterly REJECT the idea that government at any level should be involved in it.

how much would it have cost had she just stayed on welfare and then we did, for the net 50 years?

You're asking the wrong question. The right question is: what would it have cost if millions of people stayed on welfare for generation after generation? We know the answer to that: Nearly 20 TRILLION dollars of Federal Debt, with currently over 200 TRILLION dollars of unfunded liabilities, and no end in sight. Allowing the government to take over the provision of poverty assistance and retirement income is right now destroying these United States.

IS IT WORTH IT HAVING A MILITARY THAT CAN LOSE FIVE TRILLION?!?!?!!

Better than not having one at all ... And no, I don't condone financial misconduct in DOD. It's just small potatoes compared to welfare/SS/Medicare. Let the numbers speak for themselves:

[NorthMountain]

See #27 above.

[dp0622]

Very pertinent points. My mother was the exception who used it to better herself and save her family. The norm is to stay on it forever. I stand corrected. And I apologize once again. Just very protective of mom :-)