Last revised 10/7/09
The hottest political news at the end of January, 2001, were the stories about President Bush establishing, by Executive Order, the "Office of Faith-Based and Community Initiatives", and his push for allowing religious groups to receive public funds for social service efforts. Bush and his new Attorney General, Ashcroft, have been strong proponents for federal funding of "faith-based" charity organizations (in fact, Ashcroft, when he was a senator, was the prime mover of the "Charitable Choice" initiative in the "Personal Responsibility and Work Opportunity Reconciliation Act of 1996").
A study of the history of welfare programs reveals that the belief that, somehow, religious groups do much better in helping the poor is quite unfounded and, like every other idea that has been tried on this problem, will likely make it worse. The purpose of this essay is to examine the fundamental problems of poverty and welfare, to identify some of the intractable aspects of the problems, and make clear why these problems should not be left to the whims of politicians.
While the history of welfare is replete with failure, the results of the last 40 years are the most disastrous. President Johnson, in his Special Message to the Congress Proposing a Nationwide War on the Sources of Poverty, March 16, 1964, seemed determined to win (see box at right). Whether this was naivete or duplicity, I will leave to the reader to decide. In any case the result is a disastrous worsening of the poverty situation after spending over $8 trillion that was going to end it.Let us look at the results of this grand experiment. (The primary source of this summary is from renowned welfare scholar, Robert Rector, Senior Policy Analyst, The Heritage Foundation, "WELFARE: Broadening the Reform #1" and "WELFARE: Broadening the Reform #2"):
The problem of how to humanely meet the needs of the members of society that cannot adequately take care of themselves is a very difficult one. This essay will attempt to bring out into the open the many difficult and often paradoxical issues associated with poverty and state or community provided welfare.
Any time an individual reacts with a group, paradoxes and dilemmas are immediately apparent. These diabolical difficulties are well known and have been discussed extensively in books and the academic journals. My web site, "A Rational Life" is devoted to this subject and provides extensive references to other resources for further study.
It is not surprising then that when an individual cannot make ends meet and must depend on the help of the group the individual is associated with, all the "individual/group" problems of normal interaction are in effect plus considerable more.
The fact that these problems are rarely discussed in a rational way by the public, the media, or the politicians is really no great surprise and absolutely no indication that the problems are not serious. There are various reasons why you are not exposed to an honest discussion, mostly political, but one serious reason is simply that the problems have difficult solutions or none at all. When such is the case, many people do not like to discuss it. The possibility that something might not have a solution is a hard pill to swallow. Think of it as something like getting a "16" in a game of Blackjack -- whatever you do, the odds are you're going to lose.
The poor and unfortunate have always been with us. Up until recent times, the immediate family and community took care of those that were not doing well. In general, they recognized that they had two types of unfortunate -- those in which a true misfortune had happened and those that were lazy. They treated the two differently -- unlike most of the modern programs.
For various reasons -- too many to go into in this article -- the trend of government involvement has been away from the local, community, family responsibility toward the distant central authority. Progressively over time, government control has moved from city, to county, to state, and now to federal control.
While this trend may have solved some of the abuses that existed under local control, it has made worse many other problems; which is what much of this article is about.
Now let us examine some of the extreme difficulties associated with the poverty problem, its many paradoxes and dilemmas. While, in general, I do not claim to have solutions to these problems, I think their examination has considerable value in that it helps to understand why the government solutions have essentially a 100% failure rate - not all that surprising when we realize that all the attempted solutions are essentially politically motivated.
One note of caution here: one should not assume that just because the government has failed in solving poverty that private industry could succeed (given A or B, proving A wrong does not prove B right). For "welfare" is basically a "public good" and it is an economic fact that the free market generally fails in the provision of "public goods". For more, see "The Universal Welfare State as a Social Dilemma" by B Rothstein.
Some Background on Vagueness and Social Dilemmas
Before we get into the specifics of poverty and welfare, it would be best to have a general understanding of a couple of the underlying philosophical issues that make the problem nearly intractable. You can learn more than you ever wanted to know about these issues at my web site, "A Rational Life".
First off, the government has to deal with the vagueness problem. While you and I can just say, "this person is in dire straits and I think I will help her", that option is not available to the government. Due to the intrigues of politics, the laziness of the bureaucrats, and assorted other reasons, functions that are inherently vague and should be so treated, are converted to absolute functions by the imposition of an arbitrary break point. In the case of poverty, that breakpoint is the "poverty level".
The basis for most of the handouts given to the recipients of government welfare is the so-called "poverty level". Now a rational person would no more try to make a black and white definition of poverty than she would "attractiveness", "good wine", or "obscenity on the internet". But the government, not known for its rationality, has decided that it can by a simple measure separate all of society into two camps, the poor and the non-poor (and can attempt to outlaw "obscenity" without defining it -- sigh).
If you did try to define an absolute level of poverty, you would probably insist that it contain many parameters -- what kind of environment does the family live in, what is their health, what financial burdens do they have, what resources do they have, are they rural or city, what is the cost of living in their community, what other options do they have, what total income to they have, and on and on. Of course, the government chooses not to do that.
No the government, for the most part, only looks at income! Particularly, they only consider "income" in what is called the "Poverty Guidelines" as issued by the "Department of Health and Human Services" (HHS). While that is just one of many definitions of poverty used by the government, it is generally the basis for most of the handouts (actually several programs have a qualification based on a multiple of the poverty level; anywhere from 1.5 to 3 times). Each state has its own definitions but they are generally about the same.
The HHS, for year 2000, defines poverty in terms of income per family unit size. For a family unit size of 4, for instance, the level is set at $17,050. Now this begs at least two other questions; what is a "family unit" and what is "income"? In the HHS web page, a feeble attempt is made to define "family unit" but they have given up entirely on trying to define "income". I quote:
Note that this notice no longer provides a definition of "income." This is for two reasons. First, there is no universal administrative definition of "income" that is valid for all programs that use the poverty guidelines. Second, in the past there has been confusion regarding important differences between the statistical definition of income and various administrative definitions of "income" or "countable income." The precise definition of "income" for a particular program is very sensitive to the specific needs and purposes of that program.
Of course, this in no way prevents the thousands of agencies from using the "poverty guidelines" as a basis for dispensing billions of dollars.
In summary then, we see that "poverty level" is an absolutely meaningless number, totally arbitrary in its value. For the population, we have annual incomes that vary from less than zero to several million. If you make a distribution plot of this, you will get something like a bell shaped curve (see the data -- in PDF files -- at the U.S. Census Bureau's "Statistical Abstract"). Chart #744 of the Statistical Abstract shows us that, as of 1997, in the lower ranges of income there are 7 or 8 million families in a range of $5,000 per annum. That is, if we move the poverty threshold up by another $5,000, another 8 million families become paupers -- by definition!
With the triply ill-defined vagueness here (what is income, what is family, what is poverty level) we see that the government can have any number of people declared as paupers to provide a basis for whatever programs it wishes to foist on the taxpayers.
We citizens have essentially lost control (if we ever had it) if the government can dispense billions of dollars annually on programs that are based on vague definitions with arbitrarily set levels.
Once we have established who should be eligible for help -- based on some definition of poverty -- the next thing we need to address is what, if anything, we should do. The answer is not, and never has been, obvious.
An issue rarely discussed in these times but which was a subject of great concern in the past is the "deserving poor vs. undeserving poor" (they were treated quite differently). Since by definition, the "deserving poor" have no choice about their situation, we can assume that they only accept welfare because they have to. The following comments then, are directed toward the "undeserving poor", which we assume will game the system if they can.
A major unresolved problem in the theory of welfare is just exactly what can we do to improve the lot of the underclass. When you study the history of poverty programs you are struck by the realization that there is nothing new in the variety of programs being tried today -- it has all been tried before (An excellent survey of the history of the welfare state is provided by the book, From Poor Law to Welfare State, by Walter I. Trattner, copyright 1994, published by The Free Press. Also see "How Poverty Lost Its Meaning", by F. Allan Hanson, online.).
We have tried everything from beating them and throwing them in prisons to overwhelming them with money and goods. Everything that has been tried has failed.
"The way to eliminate poverty is to give the poor people enough money so that they won't be poor anymore." (page 6 of Hanson's paper)
To learn more on the history of welfare, see Marvin Olasky's book, The Tragedy of American Compassion, 1992, Regnery Publishing. Further details on the current system are covered throughout this essay.
From the above historical summary, we can draw a number of conclusions:
"Welfare is hated by those who administer it, mistrusted by those who pay for it and held in contempt by those who receive it."
-- Peter C Goldmark Jr, NY State Budget Director, (NY Times 24 May 77)
Security and medical benefits aren't bad either compared to the poor who actually work.
* In Hawaii, Alaska, Massachusetts, Connecticut, the District of Columbia, New York, and Rhode Island welfare pays more than a $12.00 an hour job--or two and a half times the minimum wage.
* In nine states welfare pays more than the average first-year salary for a teacher. In 29 states it pays more than the average starting salary for a secretary. And in the six most generous states it pays more than the entry-level salary for a computer programmer.
While the 1996 law, the "Personal Responsibility and Work Opportunity Reconciliation Act" (PRWORA), appears to be on the right track for it appears to be making welfare recipients go to work, one can never be sure of what is really going on (a careful and realistic evaluation is given by Lisa E. Oliphant in her paper, "Four Years of Welfare Reform: A Progress Report").
The problem is what do we mean by work? Well for welfare purposes, it means, for the most part, jobs provided by businesses subsidized by the government, government work, or community service -- for at least 30 hours per week -- unless you get a waiver. Sounds a little suspect to me! I have great confidence that between the ingenuity and resourcefulness of the welfare recipients and the government bureaucrats, a way to get around this will be figured out!
Let us call it like it is -- there just may very well not be a solution to the poverty problem. First off, let us agree that there are basically two types of people on welfare: the deserving poor (their situation is not their fault) and the undeserving poor (the lazy opportunists/ able-bodied and free to work). The issue of interest here is the undeserving poor, which is probably very much in the majority at this time of near full employment (what percentage the deserving poor are is not known and it varies with time and place).
It is a problem of the "social dilemma" type, in particular, of the sub-class, "The Tragedy of the Commons". An individual that is of the underclass makes a rational decision to accept a government handout or not. I quote Charles Murray from his book, Losing Ground, page 162:
There is no "breakdown of the work ethic" in this account of rational choices among alternatives... There is no need to invoke the spectres of cultural pathology or inferior upbringing. The choices may be seen much more simply, much more naturally, as the behaviour of people responding to the reality of the world around them.Every action that the government takes to help the poor provides incentive to the poor person to stay poor. That civil society will suffer in the long run and could even collapse is just not in the utility equation of the pauper. She is simply acting rationally to the alternatives presented to her.
Apparently it is difficult to design a system of help that rewards the right behavior. For an example of what not to do, I quote Robert Rector from Chapter 7 of his online book, WELFARE: Expanding the Reform,
The welfare system that has existed for the past 30 years may best be conceptualized as a system that offered each single mother with two children a "paycheck" of combined benefits worth an average of between $8,500 and $15,000, depending on the state. 14 The mother had a contract with the government. She would continue to receive her "paycheck" as long as she fulfilled two conditions:
- She must not work.
- She must not marry an employed male.
Every benefit, then, is a reward for staying on welfare. So what do we do? To even consider such a question is to imagine that scientists of intelligent mind, after much research and thought, might find something that would work better -- and still be politically unacceptable, of course. Politicians have their on reasons for designing the programs the way they are and that consists mainly of "buying" votes. Nevertheless, we might imagine that a rational plan could be considered.
To remove the encouragement for the poor to stay on welfare, it seems to me that we should look at the two extremes with regard to benefits: 1) Eliminate benefits altogether or 2) Provide the benefits to everyone without regard to means. Let us look at each.
Eliminating benefits altogether is unacceptable because of the toll it would take on those who are poor due to no fault of their own. While Social Darwinists might argue that this would be best of society in the long run, there is essentially no possibility of any modern society adapting this approach even if the people believed or it could be proven that it would be best in the long run.
Providing benefits to everyone without regard to means would eliminate the incentive to stay on the welfare dole. For an individual would be able to make even more money and to live better by working, having both the welfare check and the wages from the job. However this solution has the disadvantage of much greater cost and, more importantly, it is politically unacceptable. Sending money to the well off is just not going to happen in this country even if it was understood and could be proven that we would all be better off in the long run. Not even if it cost less money!
Government administrators have experimented with schemes that contain a mixture of these two extreme approaches. For example, they might proportionally reduce welfare benefits as the income of the recipient increases. When you look at that persons total income, this scheme has the same effect as a very high marginal income tax rate. It is interesting that this effective tax rate can be as high as 100% which even exceeds the 90% rate that the wealthiest people in this country once enjoyed!
Even if we could devise a system that would help the deserving poor and punish the fraudulent gamers, we still have a problem: what about the innocent children?
The most agonizing predicament is what to do about children. Consider the following scenario: A welfare mother, unmarried with one or more boyfriends that may change from time to time, living in government housing, buying her groceries with food stamps and spending as much of her welfare check as she can on drugs and alcohol. She now has 4 kids that more or less fend for themselves and has been told by her friends that the government will pay her an additional $175 a month for each additional child she has (varies by the state) plus additional food stamps and other benefits. Medical care is provided by Medicaid.
What can we do to punish her for her abuses without punishing the children? Sadly, our government has a history of ignoring the disastrous impact on children when it is in the act of punishing adults (in spite of all the soundbites, "it is for the children" -- sigh). Note our activities in Iraq and Cuba and the disastrous "War on Drugs". Nevertheless it is difficult to perceive a way to avoid the problem of hurting the children, short of removing them to an orphanage or some such.
The public has pressured congress into trying to reduce the incentive to have children and the 1996 Welfare Reform act has provisions to encourage states to try to limit such "child-bearing for profit" activities. But what should the administrators really do? Should they cut off welfare or at least not increase it if the welfare mother has another child? That is what some states are trying to do. But who does this punish? I suggest that the children will suffer the most.
At this point we might ask, what is the "greater common good"? Providing food, housing, and a good home to children is a major justification by the government for many of their welfare programs. The stated logic is that if we help out a child then that child will be less likely to grow up to be a criminal which would seem to save society a lot of expense. So, then, how does withholding welfare support for these "excess" children make for a "greater common good"? A case can be made that putting the child in foster homes also does not serve the "greater common good". Surely we could find a way to punish the mother without punishing the children.
Once we have decided how to deal with the poor, the issue that must be addressed is how do we pay for it. We have tried both government solutions (forced transfer of wealth) and private contribution in the past. Many feel that a mixture of the two doesn't quite add up.
What happens to private contributing when the government gets involved? There are two aspects to answering this question.
First, government funding of welfare is destructive to private incentive to help. As a youth, I saw many examples of the community helping someone in hardship or bad luck. Examples cover the range of food baskets all the way to a house being built for a widow whose previous home burnt. That doesn't happen much anymore. We all know that a poor person has "free" medical care, food stamps, shelter, and supplemental income. Further we know that we have already been hit hard to pay for this when we paid our income tax. To most of us, this discourages direct contribution. I believe this is damaging to the ethical and moral quality of our community.
Secondly, there is the impact on the amount of contributions we are willing to make to charities. While the exact impact is not known, studies have shown that there is as much as a 1 to 1 "crowding out" (see for example, "SOURCES OF SUPPORT FOR CHARITY, GOVERNMENT PROGRAMS, AND INCOME REDISTRIBUTION") when government starts picking up the tab.
Tax write-offs are not the issue for the great philanthropists, Carnegie, et al, made their contributions before there was actually a big tax benefit. Even today, it is not clear that the tax write-off is all that great of a benefit.
Now we have President Bush proposing that much of the welfare money be channeled through religious organizations. Economically this might make sense due to the 70% overhead of government organizations. That is, if they can do any better -- there is some claim that private organizations, once on the government dole, also degenerate into inefficient and somewhat bureaucratic organizations.
Unfortunately, this is a large and complicated subject with parameters such as marginal tax rate, overhead rate, "crowding out" rate, etc. that are way too much for this paper.
But even if we are not expert economists we can see that private charities at least seem to have their economic advantages. Now the problem is, how do we get the government to cut back?
In a House of Representatives document, "Child Care for American Families", a concern is expressed about the states not spending all the money sent them:
There have also been questions raised about the need for additional child care funding, given the incomplete use of existing child care funds in recent years. In FY 1997, for example, states spent only 72 percent of their allocated funds for that year. However, in FY 1998, state spending has accelerated dramatically and the majority of the FY 1997 funding has been spent.
An historical analysis of government programs reveals that with few exceptions, cost cutting actions against government programs always results in increased costs. The rule is that "It costs money to reduce costs". A good example is the 1996 Welfare to Work law (PRWORA). This highly praised action by Congress intended to move everyone that is able to work off welfare and into a job. There are indications that the program has had some success in doing this (it may be somewhat illusionary). Nevertheless, the cost of the welfare programs continues to rise. The Congressional Budget Office projects that the Welfare program costs will continue to rise at about 5% per year for the next 5 years (see Robert Rector's essay, "Welfare: Expanding the Reform"). Since the 1996 Welfare to Work law (PRWORA) has, for several states, actually succeeded in dramatically reducing welfare rolls , the states now are frantically searching for ways to spend all this money pouring in from Washington! See the adjoining box.
So, what justification does Washington have for spending even more money on welfare now that reform seems to be working? Well, to move people off work requires that you provide training and jobs. Other benefits may also be necessary such as child care. In fact Congress partially justified its increased subsidies for child care on the observation that there are a lot more young single mothers now that have babies than there used to be!
All that costs piles of money. Business as usual.
Of course the real problem is not the welfare recipients but the administrators. Just because we have fewer welfare cases is no reason to go crazy and start laying off bureaucrats! Since most of the cost of welfare goes for administration and doesn't actually end up in welfare checks, you can see that the costs will continue to increase. I quote from Michael Tanner's "Replacing Welfare":
Private charity also has a better record of actually delivering aid to recipients. Surprisingly little of the money being spent on federal and state social welfare programs actually reaches recipients. In 1965, 70 cents of every dollar spent by the government to fight poverty went directly to poor people. Today, 70 cents of every dollar goes, not to poor people, but to government bureaucrats and others who serve the poor. Few private charities have the bureaucratic overhead and inefficiency of government programs.
Almost without exception, every new program foisted on the public pocket book by the politicians comes with the claim that it will save us piles of money in the long run. Typical is the statement made by President Johnson in his 1964 "War on Poverty" speech, "And in the future, as in the past, this investment will return its cost many fold to our entire economy." Oh really. Didn't seem to happen.
But the argument makes sense -- prudent spending now should save costs in the future. Many examples come to mind:
Making the poor earn their own keep would help the economics a lot but -- sigh -- there's problems there too.
A major political impasse in the effort to help the poor and a major reason why nothing is really accomplished is the possibility that when paupers are put to work that means less jobs for the rest of us. That, of course, will not do -- they can just stay unemployed and poor. (A similar situation is true in the rehabilitation of prisoners. We really can't put prisoners to doing productive work and learning a useful trade, for it would put others out of work). It is an extremely challenging dilemma for the welfare reformers to find some job that the poor can do without upsetting some already gainfully employed workers.
After consideration of these and other issues we realize that for every action we take to help the poor there will be pluses and minuses. Ultimately, it gets down to what helps society the most.
There is a great deal of confusion and inconsistency regarding the achieving the "greatest common good".
First we need to consider: is that the goal of government and should it be? The answer is a qualified yes. Government does justify its involvement into such programs as an attempt to improve the common good. But they are not real consistent in the application of that principle. Basically, they pursue an action that would result in a greater common good only if it is "politically correct" to pursue that action.
Presumably, the actions they took at Ruby Ridge and the Branch Davidian Compound in Waco, were for the greater common good. In general, a case can be made that much of punishment, including the death penalty, is to set an example to the rest of society which makes for a better common good. However, the government seems to be very reluctant to apply relatively harsh measures to welfare recipients even if it is highly probable that society as a whole would improve. They, for example, avoid making the recipients of welfare do difficult common labor or demeaning tasks. Historically, while paupers were not allowed to perish, nevertheless they were not quite treated as royalty. In fact their lives were still harsh and their work very difficult. Such difficult tasks were even required in Roosevelt's programs in the 1930s but, alas, they are no longer considered acceptable.The question of when and how to apply programs that "improve the common good" is a question loaded with land mines. It brings to mind such proposals as the castration of confirmed child molesters, using death row inmates to test new drugs, euthanasia, and other such ideas that we are forbidden to talk about. My point is, it is an extremely dangerous concept, too dangerous to be put in the hands of politicians. Yet, that is in fact the basis for many programs involving welfare. An example of course, is the termination of welfare benefits to a mother who abuses drugs. This punishes the mother supposedly for "the betterment of the common good" since others will hopefully not follow her example. Unfortunately, as discussed above, this action also punishes her children and would seem to "worsen the common good". Apparently the calculation of the value of the "common good" is not simple.
If you would like to learn more about the major issues of poverty -- politics, human nature, availability of jobs, etc. see Lawrence Mead's excellent book, The New Politics of Poverty, 1992, Basic Books.
There are some things that politicians can handle without doing major damage to the citizens. Roads, dams, space exploration, and setting flush limits on commodes come to mind. Sure, there is a lot of waste and vote buying pork, but such programs rarely endanger the masses.
But there are other societal issues that are just too complicated and dangerous to be left to the politicians and their selfish manipulations. Welfare is probably number one in that category. Allowing the politicians to determine welfare policies has been disastrous. The politicians don't just waste money, they destroy lives. Addiction to welfare, living in crime and squalor, fatherless homes for children, class hatred, are all just part of the price that millions pay as a result of politicians promoting their own selfish agendas.
While the solution to the poverty predicament is obviously very complex, there is little doubt that we could do much better. Social scientists have built up a great knowledge on the science of animal and human behavior. In fact, the government has spent many millions of dollars supporting thousands of studies in this area. Yet, when it comes to deciding what should be done, or at least tried, politics always determines the answer; without, of course, ever looking at the studies that they paid for. Since millions of votes are at stake that can be impacted by various welfare policies, the politician will do whatever she thinks will maximize her vote count and her control -- whatever the cost to humanity.
|How often it is difficult to be wisely charitable - to do good without multiplying the sources of evil. To give alms is nothing unless you give thought also. It is written, not, "blessed is he that feedeth the poor," but "blessed is he that considereth the poor." A little thought and a little kindness are often worth more than a great deal of money. -- John Ruskin|
Copyright 2001 by Leon Felkins. All rights reserved.Back to the "Politics" Page.