The New Ideas Blog

I used to argue against government welfare programs on moral grounds. My reasoning? Here’s the short version: If you don’t have the right to take my money to pay your bills, you don’t gain that right by having a government do it for you. Now I tend to favor limited welfare because survival is a higher value than my right to keep all of my money. But there’s another reason to be critical of welfare programs: They don’t work very well. Welfare that works should not just feed people, but help them to feed themselves.

I come from a background that not only included a very low income for years, but also included many friends and neighbors who received various sorts of welfare checks. My experience as well as the research I have done tell me that government welfare is about the least efficient way to truly improve people’s lives. To start with, in the United States, most who are on welfare would find a way to live decently without it if they had to, which suggests a huge amount of waste.

This imposes a cost on society in two ways. First, there is the direct extraction of money from individuals through taxes to pay for the programs. This not only harms the interest of the taxpayer, but reduces economic activity in general (since we have less to spend or invest). Secondly, the fact that capable people are encouraged to not work damages not only their own character, but also reduces the productivity of society since they are not contributing.

The more tragic results are the personal effects that such programs have on the recipients. A culture of dependency is created. I have always had friends and acquaintances who are disabled by free money, meaning they get welfare of some sort. Virtually all of them could find a job, and they are less happy for the lack of anything productive to do. When they do entertain the idea of getting a job, they hesitate from fear of damaging their future welfare claims (this is especially true of those who have disability claims that would be discredited by working).

It is a pernicious process by which people are taught to be victims, to be helpless, so that they can get their free money. By the way, my welfare friends tolerate my views because I don’t tend to blame them. Few of us could resist free money, even when seeing the potential consequences. That is part of the problem. It is a systemic problem, and only later (and only sometimes) becomes a character flaw on an individual level.

We need new ideas for truly helping people. We need to find ways to actually improve their lives rather than making them more dependent and helpless. This is true whether we argue that such programs should be created by private organizations or governments.

I recently read about a program run by FXB, a Swiss charity, that helps thousands of people around the world who live in poverty and have been diagnosed with AIDS. The organization pays for the schooling of children in a household and for medical care for the entire family, while helping the adults start a small business. After one year, the direct aid is cut by 25%, and then cut again after the second and third year. The goal is to take the family out of poverty and have them able to support themselves comfortably by year four.

They have had great success, which lead me to think about applying the idea to welfare programs in general. The problems that I forsee, though, are that a government will almost certainly mess it up and make it too bureaucratic. FXB keeps their overhead to 14% or less - not something we could expect of a similar government program. And governments are not known for the entrepreneurial spirit nor their fiscal responsibility, so we can’t expect government employees to pass these traits on to recipients.

Perhaps an alternative is to contract out welfare to competing private companies. They would be required to run a program that not only met basic needs but helped client/recipients get back to work or start a business, and learn important financial skills. The companies could be rewarded for the average rate of success in making real improvements in clients lives. Criteria used to measure performance might include having a savings account, a job or business income, the level of that income, children’s attendance records for school and more.

Some providers might even look for ways to do their own hiring from among their clients in order to boost their success rates. That would be a win-win solution for all concerned.

There are certainly many people who need direct financial assistance, perhaps even for life, but many others just need to learn how to be more independent. And even those with disabilties can be helped in this goal. After all, anyone who has a good head on their shoulders and two working fingers can do what I am doing right here for a living (and yes, I really type all of my hundreds of website pages, ebooks and articles with just two fingers).

We all need help at times (and some all of the time) but it seems entirely fair - and better for the soul - to work when we can rather than expect others to work for us. Like medicines that help in moderation but become addictive and destructive when taken regularly, welfare needs to be distributed more wisely. We need welfare that works.

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Tags: government, welfare, welfare that works

This entry was posted on Saturday, June 6th, 2009 at 9:46 am and is filed under Economic Theories, Political Ideas. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.