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Archive for the ‘Dependency’ Category

I’ve written many times about America’s looming fiscal collapse, and I’ve also pontificated about America’s costly and failed welfare state.

I even have speculated about when America reaches a tipping point, with too many people riding in the wagon of government dependency (as illustrated by these famous cartoons, which even have a Danish equivalent).

If you read all my posts on these issues, I like to think you’d be very well informed on these topics. But if you want to save time, my colleague Tom Palmer put all these issues together in a recent speech in Australia.

Best of all, he includes lots of great material on the moral and historical aspects of this discussion.

The good news is that there are signs of progress, at least outside the United States. Denmark, for instance, has cut back on its welfare state.

And now, even the United Kingdom has engaged in some serious welfare reform.

Here are some excerpts from a column in the UK-based Telegraph.

 Why should there have been this improvement in the labour market? …The most convincing explanation is surely the Government’s welfare reforms. They have made it more difficult and less attractive to live off benefits, thereby increasing the supply of workers. In economists’ jargon, the natural rate of unemployment has fallen.

Another Telegraph column digs into the details.

…more jobs are being created in Britain than in the rest of Europe put together. …There has clearly been a game-changer… What confounded the eggheads was that the number of workers is growing four times faster than the number of working-age people: in other words, Britons have become far more likely than pretty much anyone else to look for –and find – work. Why?

The answer is simple economics and incentives.

Fewer people now claim the three main out-of-work benefits than at any time during the Labour years. This, of course, is perfectly explained by IDS’s reforms, which make it a lot harder to live on welfare. Those who have been on incapacity benefit for years have been summoned to assessment centres to see what work they’re fit to do. Far more of the unemployed are being penalised for missing job interviews. A benefits cap has been imposed; housing benefit is being reformed; and the so-called “spare room subsidy” has been abolished, making life more expensive for those on benefits with unused rooms. …this is not about punishing “shirkers”, but helping good people trapped in a bad system. Fixing that system means making life harder for people who have it pretty tough already, at least for a short while. But under the Labour regime, such people were being led down the path to dependency and poverty. A new road had to be built, leading to work. And only now is it becoming clear quite how many people are taking it.

Here’s a chart showing how actual job creation is beating the forecasts.

These are remarkable numbers, particularly when you compare them to the job forecast put forth by the Obama White House, which grossly over-stated the number of jobs that would exist under the so-called stimulus.

The key takeaway is that incentives matter. When you give people unemployment insurance, you reduce incentives to find work. When you give people Obamacare, you reduce incentives to earn income. When you give people welfare and food stamps, you reduce incentives for self-reliance.

And when you add together the panoply of redistribution programs operated by government, it’s easy to see why far too many people are being trapped in government dependency.

If you like charts, here’s a very sobering image of how the welfare state destroys incentives for upward mobility. And if you like anecdotes, here’s a dismal story about government making leisure more attractive than productivity.

P.S. At least one honest leftist acknowledges that there’s a problem.

P.P.S. On a lighter note, here’s a satirical Declaration of Dependency from the left.

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What’s the worst economic development during Obama’s reign?

Some would say it’s the higher tax burden.

Some would say it’s the wasteful faux stimulus.

Others would say it’s the fiscal nightmare of Obamacare.

And others would say it’s the loss of millions of workers from the labor force.

I suppose there’s no objective way to pick the most ill-conceived policy, but if you think the biggest problem is either Obamacare or falling labor force participation, then I have some very grim news that will confirm your fears.

According to new research, it appears Obamacare will drive many more people from the labor force. More specifically, the Medicaid expansion will alter – in a very destructive way – the tradeoff between labor and leisure.

Researchers Laura Dague, Thomas DeLeire, and Lindsay Leininger argue in a National Bureau of Economic Research working paper that Medicaid enrollment will lead to significant and lasting reductions in employment among childless adults. …Dague and her colleagues conclude that if the Medicaid expansion enrolls about 21 million additional adults, anywhere from 511,000 to 2.2 million fewer people will be employed. Furthermore, they argue that the Medicaid expansion will knock almost a full point off of today’s labor force participation rate — or share of the civilian population that is working — a measure of economic health that is already at its lowest point since 1977. …This research provides strong evidence for the contention that enrolling in Medicaid traps people in poverty and makes it harder for them to make their way into the middle class. Furthermore, it links the Medicaid expansion to the weakening of our nation’s economy.

By way of background, Medicaid is the federal government’s healthcare entitlement for (supposedly) poor people, while Medicare is the entitlement for old people. And, as part of Obamacare, the eligibility rules for Medicaid were dramatically weakened.

But the new research cited above shows that if you give people “free” health care, that makes them less likely to work.

Particularly when you combine that freebie with food stamps, housing subsidies, welfare, and other handouts.

That’s obviously bad news for taxpayers, who bear the direct cost of a bloated welfare state.

Welfare CliffBut it’s also bad for the less fortunate. They get trapped in a web of dependency, both because handouts reduce the incentive to work (humorously depicted here and here), band also because they face very high implicit marginal tax rates if they actually try to escape government dependency.

But Obama and other leftists probably see this as a feature, not a bug.

After all, those who are lured into being dependent on government presumably have an incentive to vote for those who give them the most goodies.

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The Census Bureau just released a report on America’s aging population.

The big takeaway is that our population will be getting much older between now and 2050.

And since I’m a baby boomer, I very much like the fact that we’re expected to live longer.

But as a public finance economist, I’m not nearly as happy.

As I explain in this interview with the Wall Street Journal’s Digital Network (and as confirmed by BIS, OECD, and IMF data), the United States is going to get deluged by a tsunami of entitlement spending.

I mentioned that it’s important to focus on the ratio of workers to retirees. This “dependency ratio” matters because economic output largely is a function of an economy’s working-age population.

To cite my famous cartoons, you need a sufficient number of people pulling the wagon to support those riding in the wagon.

Here’s a chart from the Census report to help you understand the magnitude of the problem. As you can see, both in the United States and other nations, the increase in the dependency ratio is almost entirely the result of aging populations.

Census Dependency Ratio

This is why I said that we face a slow-motion train wreck because of poorly designed entitlement programs.

But the good news is that there is time to reform those programs and avert a crisis.

Which explains why I probably sound like a broken record about the need for genuine entitlement reform.

In a column citing the new private pension system in the Faroe Islands, I gave the arguments for modernizing Social Security with personal retirement accounts.

But we also need to deal with the health entitlements.

Here’s how to fix Medicare.

And here’s how to fix Medicaid.

By the way, some of the damaging provisions of Obamacare can be de facto repealed by including them in the Medicaid block grant, so it’s a critically important reform.

Needless to say, I think these reforms are far better for the economy than the big tax hike Obama has endorsed to deal with the giant financing gap.

P.S. For a clever look at the worker-dependency ratio, check out the party ship produced by a Danish think tank.

P.P.S. The interviewer also mentioned that America’s racial composition is changing, which gives me an excuse to point out that Social Security reform is particularly beneficial for blacks because of differences in life expectancy.

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About one year ago, I decided to create a “Moocher Hall of Fame” to highlight how certain people went above and beyond the call of indolence in their efforts to sponge off taxpayers.

This award isn’t for ordinary deadbeats. You have to do something really special (the bad kind of special) to get recognized.

* Like convincing a government to give you “disability” benefits so you can satisfy your diaper-wearing fetish.

* Such as cutting off your own foot to maintain handouts from the state.

* Or trying to impregnate 12-year old girls to increase household welfare payments.

* And how about plotting to kill the people who are subsidizing your laziness.

We have a new candidate for the MHoF.

Or perhaps I should say candidates. Our contestants are a husband and wife who enjoyed a first class lifestyle at taxpayer expense. Here are some passages from a Fox News report.

A Minnesota couple who allegedly lived in expensive homes and owned a yacht while taking more than $160,000 in state welfare benefits has been arrested. …Court documents allege the pair illegally obtained food stamps and other benefits from 2005 to 2012. According to the criminal complaints, over the years, the Chisholms received medical assistance, welfare payments and food stamp benefits. …When they first applied for welfare benefits, the couple allegedly listed their residence as Andrea Chisholm’s mother’s home in Minneapolis. Shortly after getting approved, they moved to Florida, according to court documents. They remained in that state for at least 28 months, first on their $1.2 million yacht, and then moving to a house, officials said. They collected welfare from Florida, as well as Minnesota during that time, which is prohibited, according to court documents.

So why should the Chisholms win an award?

Well, I thought it was supposed to be difficult for married adults to sponge off taxpayers, particularly if there was an able-bodied male in the household, yet that didn’t stop the Chisholms from raking in the cash.

I guess you could consider them to be the older – and American – version of Danny and Gina (though I don’t know if that deadbeat couple is/was married).

But that’s not why the Chisholms deserve to be in the MHoF. What caught my attention is that they financed a yacht with welfare payments. That’s going above and beyond the call of indolence.

P.S. I have to confess that Mr. Chisholm reminded me of Rand Paul, at least at first glance.

Separated at birth?

Though I feel like apologizing for implying any connection. After all, Senator Paul has been kind enough to give me credit for jokes I steal from other people. More important, he defends taxpayers.

Whereas Mr. Chisholm likes to steal from taxpayers.

That’s a big difference.

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My all-time most-viewed blog post wasn’t the parable about beer and the tax system.

Nor was it the joke about California, Texas, and the Coyote.

Those won the silver and bronze trophies. Welfare State Wagon CartoonsThe gold medal belongs to the two pictures that explain how the welfare state begins and how it ends.

Those images make a very serious point that the social capital of a nation gets eroded and the economy gets overburdened when there are too many people riding in the wagon and not enough people pulling the wagon.

And I’ve been especially fond of the wagon cartoons because they were my idea.

Unfortunately, I can no longer claim to be the first one to explain this relationship using humor.

I’m currently in Copenhagen, where I just gave a speech on the collapse of the welfare state at the Center for Politiske Studier (CEPOS). While at the CEPOS offices, I noticed a big print hanging on the wall and it was eerily familiar.

One of Denmark’s main newspapers put together this cartoon, based on CEPOS research, about the growing share of the population living off the state. It shows a boat of galley slaves (i.e., taxpayers) towing a party boat filled with people (like the infamous Lazy Robert) who live off the state.

Denmark Party Boat

Since Denmark has a very large burden of government spending, you won’t be surprised to learn that the dependency class is a huge chunk of the population.

Here’s a table from the CEPOS study.

You don’t to be fluent in Danish to get the message. The first line is the number of government bureaucrats (and they’re really expensive in Denmark). The second line is the number of people getting transfers.

Those categories are then added together on line 3 and compared to the adult population on line 4.

The key takeaway is that two-thirds of the population is riding in the wagon!

Denmark 67 percent Dependency

No wonder the burden of government spending is enormous and tax rates are so high.

It’s so bad that I even joked that birthers should accuse Obama of being born in Denmark.

But at least the Danes have a sense of humor. Here’s Mads Lundby Hansen, one my friends at CEPOS, holding the “trophy” they received from the Swedish Taxpayers Association.

Denmark Tax Prize

Not exactly the prize a nation should want to win.

Though it’s worth noting that Denmark actually does better than the United States in the Economic Freedom of the World rankings.

Their welfare state is bigger than ours, so they get a bad score on fiscal policy. But they are more pro-capitalism in other areas and their overall grade is higher.

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On several occasions, I’ve observed that the poverty rate in America was steadily falling, but that progress came to a halt in the mid-1960s when the government declared a War on Poverty.

And I almost always included a chart showing the annual poverty rate over several decades.

Moreover, I posted graphs showing how government programs trap people in dependency because of very high implicit marginal tax rates. And that’s true in other nations as well.

But it didn’t matter how many times I revisited this issue, I was never clever enough to look at the poverty-rate data to estimate what would have happened if the federal government hadn’t become involved.

Fortunately, John Goodman of the National Center for Policy Analysis was insightful enough to fill the breach. He shows that the War on Poverty has made a big difference. But in the wrong way.

Poverty Goodman

Here’s some of what John wrote about the topic in a column for Forbes.

From the end of World War II until 1964 the poverty rate in this country was cut in half. Further, 94% of the change in the poverty rate over this period can be explained by changes in per capita income alone. Economic growth is clearly the most effective antipoverty weapon ever devised by man. The dotted line shows what would have happened had this trend continued. Economic growth would have reduced the number in poverty to a mere 1.4% of the population today—a number so low that private charity could probably have taken care of any unmet needs. …we didn’t continue the trend. In 1965 we launched a War on Poverty. And as the graph shows, in the years that followed the portion of Americans living in poverty barely budged.

John augments this analysis by looking at some of the social science research about poverty and government dependency.

The numbers are very depressing.

…here is something you may not know. Early on ― in the first decade of our 50-year experiment with an expanded welfare state ― carefully controlled experiments funded by the federal government established without question that welfare changes behavior. It leads to the very behavioral changes that keep people in a state of poverty and dependency. …The experiments were all conducted by social scientists who believed in the welfare state and had no doubt about its capacity to be successful. …The experiments were all controlled. Randomly selected people were assigned to a “control group” and an “experimental group.” …the results were not pretty. To the dismay of the researchers, they largely confirmed what conventional wisdom had thought all along. …The number of hours worked dropped 9% for husbands and 20% for wives, relative to the control group. For young male adults it dropped 43% more. The length of unemployment increased 27% among husbands and 42% for wives, relative to the control group. For single female heads of households it increased 60% more. Divorce increased 36% more among whites and 42% more among blacks. (In a New Jersey experiment, the divorce rate was 84% higher among Hispanics.)

President Obama and other folks on the left don’t seem overly interested in this data.

Instead, they beat the drums about class warfare and income inequality.

They want us to believe the economy is a fixed pie and that all of us somehow get less if some entrepreneur becomes rich.

But John’s point from the column is correct. Economic growth is the way to help the poor, not redistribution.

Unfortunately, many politicians are hostile to the types of policies that produce more growth. Maybe it’s because they don’t understand economics. Or maybe they understand economics but don’t care because they think they’ll be more successful at the ballot box if they pursue the politics of envy and division.

But regardless of motive, bigger government doesn’t have good results, as illustrated by this Gary Varvel cartoon.

Political Cartoons by Gary Varvel

This Chip Bok cartoon, featuring Obama with his ideological soulmate, also is worth sharing.

Political Cartoons by Chip Bok

P.S. Margaret Thatcher has the best-ever takedown of the left’s inequality agenda.

P.P.S. If you want to get agitated, click here to see how a bureaucracy in Paris is using American tax dollars to push a crazy new definition of poverty. Why? To promote more redistribution.

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When I posted a video about “libertarian porn” back in 2010, readers presumably were either relieved or disappointed that there was no nudity.

Heck, even my libertarian sex jokes don’t involve sex, so I doubt I’ll be in much demand at comedy clubs.

I may get the same reaction today, because we’re going to have a discussion – but only G-rated – about what our British friends are referring to as “poverty porn.”

More specifically, that’s the term that’s being used for television reality shows in the United Kingdom that expose welfare fraud. Here are some excerpts from a story in U.S. News & World Report.

A shoplifter, a recovering drug addict and a young couple barely able to feed their kids are among the stars of “Benefits Street” — a smash hit reality show featuring welfare recipients that has stirred up a storm of controversy in Britain. The program zooms in on a rough Birmingham street where 9 out of 10 people are said to live off state payouts, chronicling over five episodes the lives of jobless neighbors as they struggle with their daily problems. …Britain’s welfare state has long been a subject of pride among many Britons, but these days attitudes toward benefits have hardened — and polls suggest that support for pouring taxpayer money into welfare, especially for the young, is at a record low. British tabloids are replete with hysteria stories about unemployed people buying flat-screen TVs and designer goods using welfare funds. And “Benefits Street” is the hottest in a growing genre of reality shows about the poor that has been dubbed “poverty porn” because of its sensationalist nature. Even the sober BBC has jumped on the bandwagon with a documentary called “Britain on the Fiddle,” which set out to catch benefits fraudsters in the act on camera. …The “poverty porn” trend comes as Prime Minister David Cameron’s government tries to overhaul the benefits system.

By the way, if you want examples of the “hysteria stories” in the “tabloids,” check out NatailijaTraceyAnjem, and Gina and Danny.

You’ll understand why I wrote that, “if there was a welfare Olympics, the U.K. would have a lot more medals.”

Anyhow, the good news is that politicians in the United Kingdom are finally taking some measures to rein in the welfare state. I don’t know if it’s because television programs are exposing waste and fraud, but it’s clearly good news since welfare spending has exploded over the past 10-plus years in the UK.

Here’s part of a report in the Telegraph.

In a speech that seeks to build on “extraordinary” jobless figures, the Work and Pensions Secretary will promise to end the “twilight world” of entire communities that are reliant on benefits. …Mr Duncan Smith will warn that there are still benefits-dependent areas that “for the most part remain out of sight”. Sources suggested that this is a reference to communities such as the one seen on Benefits Street, a Channel 4 documentary, and said that he was on “a crusade to rescue Benefits Street Britain”. “I have long believed there is no kindness in a benefits system that traps people, leaving them in a twilight world where life is dependent on what is given to you, rather than what you are able to create,” Mr Duncan Smith will say. …A Conservative government wants to ensure that welfare is “a journey that people are on, rather than a destination where they stay”, he will add.

I’ll withhold judgement on whether the squishy Cameron government actually is doing something good in this area, but I’m glad that there’s at least pressure for positive change.

Which is why we need some “poverty porn” in America.

Maybe that would be a wake-up call for our politicians on how the welfare state creates a poverty trap and erodes social capital (something that a few honest liberals have acknowledged).

P.S. In an example of sloppy/biased journalism, the U.S. News article states that “The show has struck a strong chord in a nation…still reeling from its most brutal austerity measures in a generation, with basic public services trimmed drastically.” Why is that passage biased and/or sloppy? Well, because as I had to explain to Paul Krugman, there hasn’t been any genuine austerity in the United Kingdom.

P.P.S. The story in the Telegraph also contains this passage.

The number of people in work rose by 280,000 in the past three months to a record 30.15 million, the biggest quarterly increase in employment on record. Minutes released by the Bank of England’s Monetary Policy Committee said that the “tightening in the eligibility requirements for some state benefits might have led to an intensification of job search”. Mr Duncan Smith claimed that the comments were a tacit endorsement of his welfare reform programme. He said the Bank of England, led by Mark Carney, now believed that the welfare reforms had contributed to the dramatic fall in unemployment.

In other words, this Michael Ramirez cartoon is correct. The numbers from the UK are evidence – in addition to all this evidence – that people are more likely to find jobs when they can’t rely on taxpayer handouts.

P.P.P.S. If “poverty porn” changes the political environment, it could mean the end of the Moocher Hall of Fame.

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Washington is in the middle of another debate about redistributing money.

But that’s hardly newsworthy. Politics, after all, is basically a never-ending racket in which insiders buy votes and accumulate power with other people’s money.

The current debate about extending unemployment benefits is remarkable, though (at least from an economic perspective), because certain politicians want to give people money on the condition that they don’t get a job. Needless to say, that leads to a very perverse incentive structure.

There is a problem with joblessness, to be sure, but it’s misguided to think that extending unemployment benefits is the compassionate response.

Senator Paul and I wrote a column for USA Today about a better way of helping the unemployed. Looking at the empirical evidence, we argue that it’s time to unleash the private sector by reducing the burden of government.

We started with an assessment of the labor market, which has been dismal under Obama’s reign.

The nation is enduring the weakest recovery since the Great Depression, 11 million people remain unemployed, and millions more have dropped out of the labor force. For minorities, it’s even worse. The black unemployment rate is more than twice that of whites. And the weak job market means that even those who are employed are having a hard time climbing the economic ladder.

We explain that more unemployment benefits is a misguided approach.

There’s a lot of talk about helping those down on their luck, but there’s a big divide on the best approach. Our view is that America needs a growth agenda based on reducing the burden of government. The unemployed need a strong job market, not endless handouts that create dependency. …There’s an understandable desire in Washington to “do something,” and extending benefits once again certainly is the easy route for policy makers. But if we are serious about keeping workers out of the long-term unemployment trap, we must have a debate about which policies cause unemployment and which policies create jobs.

The column cites many of the academic studies showing that unemployment benefits lead to more joblessness.

I’ve made this point during television interviews, and this Michael Ramirez cartoon echoes our thinking in a more entertaining fashion.

And we definitely can’t overlook this superb Wizard-of-Id parody. It doesn’t focus specifically on unemployment benefits, but it makes a great point about labor supply incentives.

But let’s get back to the column. Our main goal is to identify the types of policies that would generate jobs and growth.

Simply stated, genuine compassion should be defined by helping people get back to work so they don’t need to be wards of the state.

And easing the burden of government is the best way to make that happen. Our column looks at some evidence – from both overseas and here at home – about the policies that are associated with better economic performance.

Big government is responsible for today’s unemployment situation. …Since President Obama was elected, we have spent $560 billion on unemployment benefits. It’s likely many more jobs would have been created had the government not diverted that money from the economy’s productive sector. …Instead of copying stagnant European nations with bigger public sectors, we should learn from countries that have achieved better performance by lowering the burden of government. Singapore and Hong Kong are examples of jurisdictions with small governments and free markets that enjoy strong and sustained growth with very low levels of joblessness. …look at Canada, which has significantly boosted its jobs market with pro-growth reforms, or Switzerland, which has cemented its traditionally strong labor markets with reforms to control the growth of government. This is not a partisan argument. Or at least it shouldn’t be. The United States enjoyed strong levels of job creation during both the Reagan and Clinton years. But in both cases, public policy was largely the same, featuring an increase in economic freedom.

Some people may wonder whether Reagan and Clinton belong in the same category.

Well, as illustrated by this chart, they both presided over periods with impressive job creation.

And they both presided over periods with generally good economic policy.

Reagan moved the country in the right direction on purpose. Clinton, by contrast, may have wanted to move the nation in the other direction, but he was unsuccessful. Indeed, the evidence is very strong that the overall burden of government fell during his tenure.

Whether by accident or design, America needs another period of free markets and shrinking government.

For further details on the recipe for good policy, here’s the video I narrated for the Center for Freedom and Prosperity, which explains the conditions that lead to strong and sustained growth.

P.S. I’m obviously a fan of Senator Rand Paul. Not only does he choose good people as op-ed partners, he also gave me public credit for a good Obamacare joke.

P.P.S. On a separate topic, I wrote in December 2012 that the strongest evidence for media bias is which stories get covered. A perfect example is that journalists already have given 17 times as much coverage of the Chris Christie “bridgegate” scandal as they gave to the IRS scandal over the past six months.

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I’ve shared many charts over the years, but two of the most compelling ones deal with poverty.

Poverty Rate DataThe numbers in this chart, which are based on Census Bureau data and scholarly studies (see here, here, here, and here), show that the poverty rate was steadily falling in the United States – until the federal government decided to launch a so-called War on Poverty.

Once Washington got more involved and started spending trillions of dollars, we stopped making progress. The poverty rate has changed a bit with shifts in economic conditions, but it’s stayed remarkably steady between 11 percent and 15 percent of the population.

So why have we stopped making progress? This second chart shows how redistribution programs create a dependency trap. The plethora of handouts from government make self-reliance and work comparatively unattractive, particularly since poor people are hit with very high implicit marginal tax rates.

And just as rich people respond logically to incentives, the same is true of poor people.

In a recent debate with a representative of the Center for American Progress, I tried to make these points. I doubt I had any effect on her outlook, but hopefully viewers began to see that the welfare state has been bad news for taxpayers and bad news for poor people.

Our debate was cut short by the host, but I think it was a fair representation of each side’s views.

And if you want more information on this topic, my former colleague from my days at the Heritage Foundation, Robert Rector, assesses the War on Poverty for today’s Wall Street Journal.

He starts with some very sobering numbers.

Fifty years later, we’re losing that war. Fifteen percent of Americans still live in poverty, according to the official census poverty report for 2012, unchanged since the mid-1960s. Liberals argue that we aren’t spending enough money on poverty-fighting programs, but that’s not the problem. …The federal government currently runs more than 80 means-tested welfare programs that provide cash, food, housing, medical care and targeted social services to poor and low-income Americans. Government spent $916 billion on these programs in 2012 alone, and roughly 100 million Americans received aid from at least one of them, at an average cost of $9,000 per recipient. …Federal and state welfare spending, adjusted for inflation, is 16 times greater than it was in 1964. If converted to cash, current means-tested spending is five times the amount needed to eliminate all official poverty in the U.S.

He then explains that poor people don’t suffer from material deprivation (which may explain why the Obama Administration wants to manipulate the numbers to justify more welfare spending).

…the typical American living below the poverty level in 2013 lives in a house or apartment that is in good repair, equipped with air conditioning and cable TV. His home is larger than the home of the average nonpoor French, German or English man. He has a car, multiple color TVs and a DVD player. More than half the poor have computers and a third have wide, flat-screen TVs. The overwhelming majority of poor Americans are not undernourished and did not suffer from hunger for even one day of the previous year.

Robert then gets to the heart of the issue, explaining that the welfare state has expanded dependency and exacerbated social pathologies.

…consider LBJ’s original aim. He sought to give poor Americans “opportunity not doles,” planning to shrink welfare dependence not expand it.  …By that standard, the war on poverty has been a catastrophe. The root “causes” of poverty have not shrunk but expanded as family structure disintegrated and labor-force participation among men dropped. A large segment of the population is now less capable of self-sufficiency than when the war on poverty began. …In 1963, 6% of American children were born out of wedlock. Today the number stands at 41%. As benefits swelled, welfare increasingly served as a substitute for a bread-winning husband in the home. …children raised in the growing number of single-parent homes are four times more likely to be living in poverty than children reared by married parents of the same education level. …Even in good economic times, a parent in the average poor family works just 800 hours a year, roughly 16 hours weekly, according to census data. Low levels of work mean lower earnings and higher levels of dependence.

Mr. Rector also has some specific suggestions in his column, most of which seem sensible, but this is where I think my idea of sweeping decentralization and federalism is very appropriate.

P.S. Thomas Sowell’s indictment of the welfare state is must reading.

P.P.S. Some honest leftists now acknowledge that big government creates worrisome forms of dependency.

P.P.P.S. If you want to know how dependency varies by state, here’s a map showing welfare payments and another map showing food stamp usage.

P.P.P.P.S. Shifting to a bigger stage, my least favorite international bureaucracy has made the preposterous claim that poverty is a bigger problem in America than it is in basket-case nations such as Greece and Portugal. Not that we should be surprised since the OECD actively urges a bigger welfare state in the United States.

P.P.P.P.P.S. And don’t forget our Moocher Hall of Fame if you want examples of the human cost of the welfare state.

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One of my missions in life is fundamental tax reform. I would like to replace the corrupt internal revenue code with a simple and fair flat tax.

Though what I really want is a tax system that minimizes the damage of extracting money from the productive sector of the economy, so I’ll take any system with a low rate, no double taxation, and no distortionary loopholes.

The national sales tax, for instance, also would be a good option if we can first repeal the 16th Amendment so there’s no risk that politicians would pull a bait and switch and saddle us with both an income tax and a sales tax (and in my ultimate fantasy world, we would shrink the federal government to the size envisioned by the Founding Fathers, in which case we probably wouldn’t need any broad-based tax at all).

While I normally make the economic case for tax reform, there are many reasons to fix our broken tax code.

Many Americans, for instance, are rightfully upset that the tax code is a 76.000-page monstrosity that enables the politically well connected to benefit from special provisions.

So we don’t know if the rich are paying an appropriate amount. Some of them are paying too much because of high rates and double taxation, while some of them are paying too little because they have clever lawyers, lobbyists, and accountants.

In an ideal world, if someone like Bill Gates earns 10,000 times as much as I do, then he should pay 10,000 times as much in tax. That’s a core principle of the flat tax.

But this post isn’t about why we need tax reform to promote economic growth or fairness. Instead, I want to focus on tax reform as a way of reducing welfare fraud. The Treasury Department just released a report acknowledging that the IRS made more than $100 billion of improper “earned income credit” payments over the past decade and that about one-fourth of all such payments are in error.

This Fox News article is a good summary. Here are the key details.

The Internal Revenue Service paid out more than $110 billion in tax credits over the past decade to people who didn’t qualify for them, according to a Treasury report released Tuesday. …IRS inspector general J. Russell George said more than one-fifth of all credits paid under the program went to people who didn’t qualify. …George said in a statement. “Unfortunately, it is still distributing more than $11 billion in improper EITC payments each year and that is disturbing.” …The agency said it prevents “nearly $4 billion in improper claims each year and is committed to continuing to work to reduce improper claims.” The EITC is one of the nation’s largest anti-poverty programs. In 2011, more than 27 million families received nearly $62 billion in credits.

Now some background. The “earned income credit” or “earned income tax credit” is actually an income redistribution scheme operated by the IRS. It’s basically a wage subsidy. If someone earns money (the “earned income” part), the law says the IRS should augment that money with a payment from the government (the “credit” or “tax credit” part).

The key thing to understand, though, is that the EITC is “refundable,” which is the government’s term for payments to people who don’t earn enough to owe any income tax. That’s why it’s primarily an income redistribution program. Only it’s operated by the IRS rather than the Department of Health and Human Service or some other welfare agency.

And when government is giving away other people’s money, there are those who will try to abuse the program. That’s true for corporate welfare, and it’s true for traditional welfare like food stamps. And, as we see from the Treasury report, it’s true for the EITC.

That’s the bad news.

The good news is that the EITC has a redeeming feature. Some lawmakers realized traditional welfare programs were very destructive because they paid people not to work. The EITC supposedly offsets that perverse incentive because you get the money only because you earn some income.

But now let’s share some additional bad news. The government takes away the EITC once your income reaches a certain level, and this is equivalent to a big increase in the marginal tax rate on earning additional income.

And when you combine the EITC with all the other redistribution programs operated by government, you create a huge dependency trap. Indeed, the chart shows that many of these programs can be larger than the EITC (which is called “negative income tax”).

So let’s adopt a flat tax and get rid of all the bad features of the tax system, including the EITC. Welfare and income redistribution are not proper roles of the federal government.

We’re far more likely to get good results – both for poor people and taxpayers – if we let state and local governments experiment and learn from each other on what actually helps people climb out of poverty.

P.S. I can’t overlook an opportunity to point out that today’s complicated and convoluted tax code is the reason why we have a powerful and intrusive Internal Revenue Service. And never forget that the IRS has a long record of abusive actions.

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Obamacare was put together by people who don’t understand economics.

This is probably the understatement of the year since I could be referring to many features of the bad law.

The higher tax burden on saving and investment, making an anti-growth tax system even worse.

The exacerbation of the third-party payer problem, which is the nation’s biggest healthcare problem.

The increased burden of government spending, worsening America’s entitlement crisis.

Those are all significant problems, but today I want to focus on how Obamacare encourages people to be less productive. And I’m going to use a rather unexpected source. The left-leaning San Francisco Chronicle has a financial advice column that inadvertently show how Obamacare discourages people from earning income.

The article nonchalantly explains that people may want to reduce their income so they can get more goodies from the government.

People whose 2014 income will be a little too high to get subsidized health insurance from Covered California next year should start thinking now about ways to lower it to increase their odds of getting the valuable tax subsidy. “If they can adjust (their income), they should,” says Karen Pollitz, a senior fellow with the Kaiser Family Foundation. “It’s not cheating, it’s allowed.” Under the Affordable Care Act, if your 2014 income is between 138 and 400 percent of poverty level for your household size, you can purchase health insurance on a state-run exchange (such as Covered California) and receive a federal tax subsidy to offset all or part of your premium. …getting below the 400 percent poverty limit could save many thousands of dollars per year.

You may be thinking that this is just a theoretical problem, but the article cites a very real example.

To get a subsidy, the couple’s modified adjusted gross income for 2014 income would need to fall below $62,040, which is 400 percent of poverty for a family of two. …Proctor estimates that her 2014 household income will be $64,000, about $2,000 over the limit. If she and her husband could reduce their income to $62,000, they could get a tax subsidy of $1,207 per month to offset the purchase of health care on Covered California. That would reduce the price of a Kaiser Permanente bronze-level plan, similar to the replacement policy she was quoted, to $94 per month from $1,302 per month. Instead of paying more than $15,000 per year, the couple would pay about $1,100.

To put it in even simpler terms, this couple has figured out that they can get almost $14,000 of other people’s money by reducing how much they earn by just $2,000.

That, in a nutshell, is the perfect illustration of the welfare state. It tells people that they can get more by producing less. And the system is based on the theory that there will always be some suckers who work hard to provide the subsidies.

But as we’ve seen in Greece, Italy, Spain, and elsewhere, this system eventually breaks down as more and more people learn that it’s easier to ride in the wagon than it is to pull the wagon (as powerfully illustrated by these two cartoons).

And remember that the United States isn’t too far behind Europe’s welfare states.

Thanks to the plethora of welfare programs and income-redistribution schemes that already exist, millions of Americans have an incentive to earn less money and get trapped in government dependency. This graph, for instance, shows that various handouts mean that a single mom with $29,000 of income can be better off than a self-reliant person with $69,000 of income.

And a local CBS station discovered that a low-income household could be eligible for more than $80,000 of goodies from the government. Earning more money, though, would mean fewer handouts.

The same problem exists, by the way, in other nations such as Denmark and the the United Kingdom.

Remember Julia, the mythical moocher created by the Obama campaign to show the joys of government dependency? As illustrated by this Ramirez cartoon, Julia symbolizes the entitlement mentality. But the cartoon doesn’t go far enough. It should show how Julia decides to lead a less productive and less fulfilling life because she gets hooked on the heroin of handouts.

P.S. Some honest liberals recognize that redistribution can trap people in poverty.

P.P.S. Unsurprisingly, Thomas Sowell explains this issue with blunt and powerful logic.

P.P.P.S. To close with some humor, here’s a new Declaration of Dependency put together for our leftist friends. Though they may want to think twice before asking for a divorce from Red State America.

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We’re making a tiny bit of progress in the battle against the welfare state. No, policy hasn’t changed yet, but at least there’s growing recognition that maybe, just maybe, it’s not a good idea to pay people not to work. Particularly when you trap them in lives of dependency and despair and undermine progress in the fight against poverty.

This chart shows that various handouts discourage low-income people from earning more money, and a recent blockbuster study from a couple of my colleagues at the Cato Institute revealed that welfare pays more than entry-level employment in dozens of states.

And a growing number of people are now aware that there’s been an explosion of food stamp dependency, so one hopes that all this knowledge eventually will translate into a new round of welfare reform.

Why am I optimistic? Well, because awareness already is leading to change in some very unexpected places. Even Scandinavian nations are realizing that there has to be a limit to incentive-killing and taxpayer-sapping redistribution.

Here are some excerpts from a remarkable Bloomberg report about developments in Denmark.

“We live in a world of global competition for jobs,” the 40-year-old minister said in an interview in Copenhagen. “For any finance minister wanting to be taken seriously, it’s something to deal with. That requires a modernization of the welfare state.” The AAA rated nation, whose economy contracted 0.2 percent in the first half, needs to contain welfare spending or risk losing the respect of investors, Corydon said. Danes, who like Swedes and Norwegians, are used to generous jobless pay as well as state-financed education and health care, need to learn that those privileges come at a cost, he said. …Denmark’s challenge now is to ensure its welfare habits don’t leave it unable to compete with populations that work harder at a lower cost, he said.

That’s a noteworthy passage, both because the Danish Finance Minister recognizes jurisdictional competition as a check on the welfare state (something confirmed by a study from German economists) and because Denmark is ruled by Social Democrats.

Yet even these leftists are grasping that it makes no sense to have a system that generates perverse incentives.

…out-of-work Danes in some cases earn even more than those in low-skilled jobs. An Aug. 27 report by the Economy Ministry showed that about 250,000 Danes have no economic incentive to give up their unemployment benefits and take a job. That compares with 2.64 million people in full- and part-time jobs, according to Statistics Danmark. …The Social Democrat-led coalition of Prime Minister Helle Thorning-Schmidt, in office since 2011, has pushed through cuts including limiting unemployment benefits to two years from four years.

It’s hardly radical libertarianism to reduce unemployment benefits from four years to two years, but it is rather significant when even politicians realize that it’s not good – as illustrated by these powerful cartoons – to lure people into the wagon when nations need more people pulling the wagon.

The article even mentions “Lazy Robert,” a famous deadbeat who became the first Danish member of the Moocher Hall of Fame last April. No wonder Danes may be saying that enough is enough.

There’s even a bit of good news on the tax side of the fiscal ledger.

The government has responded to the economic slump by cutting the corporate tax rate, as well as some other taxes.

Sounds like Danish policy makers could give some lessons to their self-destructive American counterparts.

But you won’t be surprised to learn that  there’s still plenty of bad policy in Denmark. The politicians can’t resist, for instance, the siren song of Keynesian economics.

It plans to spend 44 billion kroner ($7.8 billion) next year on building railroads, highways and hospitals. …Corydon,…said he wants to keep public investments close to a 30-year high to create jobs.

By the way, it’s a bit depressing that Denmark actually ranks higher than the United States in the most recent Economic Freedom of the World rankings.

Yes, their welfare state is too big, their tax system is a nightmare, and they are saddled with one of the world’s most expensive bureaucracies, but Denmark has ultra-free market policies in other areas.

But even those laissez-faire policies no longer are apparently enough to compensate for bad fiscal policy.

P.S. Denmark may have Lazy Robert, but the United Kingdom has Natailija, Tracey, Anjem, and Gina and Danny, so if there was a welfare Olympics, the U.K. would have a lot more medals.

P.P.S. Speaking of poverty, you may be surprised that bureaucrats at the OECD assert that America has more poverty than some very poor nations. But that’s only because the Paris-based bureaucracy is trying to advance Obama’s redistribution agenda by redefining poverty to mean differences in income rather than lack of income. Sort of makes you wonder why we’re subsidizing their statist agenda with our tax dollars.

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About two years ago, I shared a map put together by a pro-statism organization that supposedly showed that welfare benefits were very miserly and not sufficiently generous to lift people out of poverty.

My gut instinct was to reject the findings. As I wrote at the time:

The poverty line is set considerably above a level that would indicate material deprivation…far above the average level of income in most nations of the world. …Welfare checks are just one of many forms of redistribution, and the data used to create the map do not count food stamps, Medicaid, housing subsidies and a plethora of other means-tested programs.

My skepticism was further augmented when I ran across an amazing chart showing that it made more sense to live off the government in Pennsylvania rather than earn more income.

It turns out that I was right to be skeptical. My colleagues at the Cato Institute have just released a detailed study calculating the amount of handouts available in each state. They then investigated whether the level of redistribution was so high that people might decide it didn’t make sense to be productive members of society.

You probably won’t be surprised to learn that it’s better to live off the government in most states.

Welfare benefits continue to outpace the income that most recipients can expect to earn from an entry-level job, and the balance between welfare and work may actually have grown worse in recent years. The current welfare system provides such a high level of benefits that it acts as a disincentive for work. Welfare currently pays more than a minimum-wage job in 35 states, even after accounting for the Earned Income Tax Credit, and in 13 states it pays more than $15 per hour.

Here are some of the details from the study, which used the example of a mother and two children.

…the federal government currently funds 126 separate programs targeted toward low-income people, 72 of which provide either cash or in-kind benefits to individuals. …no individual or family receives benefits from all 72 programs, but many recipients do receive aid from a number of the programs at any given time. …this study seeks to determine the approximate level of benefits that a typical welfare family, consisting of a single mother with two children, might receive, and to compare those benefits with the wages that a recipient would need to earn in order to take home an equivalent income.

What shocked me the most were a couple of tables showing how living off the taxpayers is a pretty good deal.

The first table shows how much a household would have to earn – before tax – to have the same lifestyle that is available from the welfare system. The study also looks at median salary in each state and shows that eight states actually provide handouts that are greater than that amount!

Redistribution Nation Worst 24

The study also reveals that handouts give recipients far more than is needed to reach the federal poverty level. Indeed, the panoply of benefits is so excessive in some places that recipients are pushed to more than twice what is needed to get out of poverty.

Redistribution Nation Poverty Rate

Or maybe it would be more accurate to state that handouts are so excessive that recipients are lured into dependency.

I’ll close with a couple of surprises from the study. I was shocked that Illinois and Maine both ranked among the least extravagant states. Maine “earned” third place in the Moocher Index, so I assumed they would be especially profligate. But I guess having a lot of people on welfare doesn’t necessarily mean that they’re getting a lot of money.

And Illinois has veered far to the left on fiscal policy in recent years, so I assumed politicians were giving out lots of goodies. But apparently bureaucrats are first in line for handouts and that reduces the amount of loot available for other groups.

On the other hand, I didn’t expect to find New Hampshire being about as profligate as Vermont.

Most of the other states are where you would expect them to be. Fiscal hell-holes like New York and California redistribute money like crazy, while zero-income tax states such as Texas, Florida, and Tennessee are comparatively frugal.

P.S. Here’s a map showing which states have the most food stamp dependency.

P.P.S. Let’s not forget that the poverty rate was falling steadily before the federal government declared a “War on Poverty.”

P.P.P.S. If you’re thinking about moving, you may want to avoid “death spiral states.”

P.P.P.P.S. The U.K. welfare system also makes work unattractive compared to living off taxpayers.

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I’ve already shared the statist version of the fairy tale about The Little Red Hen.

And I’ve also shared the Obama version of the fable about The Ant and the Grasshopper.

So how about the left-wing version of The Little Engine that Could. Or, in this case, couldn’t.

Left-Wing Nursery Rhymes

My lovely and charming daughter sent this to me. I don’t know if this is a real book, but it sounds like it could be amusing. Sort of like the Politically Correct Storybook.

And if you like this type of humor, I also recommend the modern-day fable about bureaucracy, featuring an ant and a lion. And I’ve also posted a revised version of Green Eggs and Ham.

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Back in 2010, I put together a “Moocher Index” as a rough measure of which states had the highest levels of welfare dependency after adjusting for poverty rates.

My goal was to answer this question.

Is there a greater willingness to sign up for income redistribution programs, all other things being equal, from one state to another?

It turned out that there were huge differences among states. Nearly 18 percent of non-poor Vermont residents were utilizing one or more welfare programs, putting them at the top of the Moocher Index.

In Nevada, by contrast, less the 4 percent of non-poor residents had their snouts in the public trough.

Does this mean Nevada residents are more self-reliant and Vermont residents are culturally statist?

To be perfectly frank, I don’t know, in part because the Moocher Index was an indirect measure of attitudes about dependency.

So I was very interested when I came across some state-by-state numbers from the Department of Agriculture showing food stamp participation compared to food stamp eligibility.

Food Stamp Participation Rate

There are some clear similarities between these food stamp numbers and the Moocher Index. Maine and Vermont are in the top 3 of both lists, which doesn’t reflect well on people from that part of the country.

And Nevada and Colorado are in the bottom 10 of both lists.

But there’s no consistent pattern. Mississippi and Hawaii are in the top 10 of the Moocher Index but bottom 10 for food stamp utilization.

What really stands out, though, is that the people of California win the prize for self reliance, at least with regard to food stamps. Only 55 percent of eligible people from the Golden State have signed up for the program. Doesn’t make sense when you look at some of the crazy things that are approved by California voters, but I assume the numbers are accurate.

I’m also surprised that folks from New Jersey are relatively unlikely to utilize food stamps.

On the other hand, why are Tennessee residents so willing to use my wallet to buy food?

As you can see from the map, they not only have a very high participation/eligibility rate, but also have one of the highest overall levels of food stamp dependency.

Oregon, not surprisingly, always does poorly, whether we’re looking at a map or a list.

Let’s close with a few real-world examples of what we’re getting in exchange for the tens of billions of dollars that are being spent each year for food stamps.

With stories like this, I’m surprised my head didn’t explode during this debate I did on Larry Kudlow’s show.

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According to my reader poll, Michael Ramirez is the nation’s best political cartoonist.

His new masterpiece about entitlements is a good example of his talent. In one image, he manages to convey how the system lures people into danger by offering the illusion that they can get something for nothing.

Ramirez Entitlement Cartoon

The cartoon is an apt illustration of where we are today with programs such as Food Stamps and disability, with ever-greater numbers of people being lured into lives of dependency.

In other cases, though I’m afraid we’ve already passed the point of biting the hook, particularly for many of the middle-class entitlements. We’re now being reeled in and face a very real danger of being turned into euro-style fish filets.

Though if I’m allowed to extend the metaphor, many people are working to reform Social Security, Medicare, and Medicaid in hopes of escaping the hook of dependency and fiscal crisis.

But it’s very important to realize that not all entitlement reform is created equal. As I explained back in 2011, the left would be more than happy to impose price controls and means testing as part of a “grand bargain” that seduces gullible Republicans into accepting a tax hike.

Which is why this Glenn Foden cartoon hits the nail on the head.

Foden Entitlement Cartoon

Sort of reminds me of this Ramirez cartoon. Simply stated, Republicans are dangerously susceptible to bad deals, which helps to explain why tax-increase budget agreements are always fiscal disasters.

The moral of the story is that we need the right kind of entitlement reform, but that won’t be possible until at least 2017.

P.S. If you want a tragically funny look at how the welfare state changes people for the worse, read the politically correct version of The Little Red.

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Although he implemented a flat tax in Russia, I don’t think of Vladimir Putin as a supporter of free markets.

Heck, he was head of the a senior officer of the KGB during the communist era, and he presides over a country that is more known for cronyism rather than competitive markets.

So if he criticizes European nations for having excessive welfare states, it’s like being called ugly by a frog.

Here are some of the amusing details from Euractiv.com.

He’s no Milton Friedman, but he’s right about the welfare state

Russian President Vladimir Putin, speaking ahead of the G8 Summit in Northern Ireland on 17-18 June, said his country would not follow the mistakes of Europe that led to the eurozone crisis. In a wide-ranging interview he blamed the EU’s “mentality” for endangering the economy and the “moral basics of society”. …Asked if Europe’s welfare state model can be competitive today, Putin said Europe is living beyond its means, losing control of the economic situation and that Europe’s structural distortions were “unacceptable” to Russia. “Many European countries are witnessing a rise of [the] dependency mentality when not working is often much more beneficial than working. This type of mentality endangers not only the economy but also the moral basics of the society. It is not a secret that many citizens of less developed countries come to Europe intentionally to live on social welfare,” Putin said.

It’s hard to disagree with anything Putin says in that passage.

Seems like he understands that Europe made a big mistake by having too many people in the wagon and too few people pulling the wagon.

Addendum: Oops, I gave Putin an undeserved promotion. He was a high-ranking KGB official – Lieutenant Colonel – but did not head that warm and cuddly organization.

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My great fear is that the “social capital” of self reliance in America will slowly disappear and that the United States will turn into a European-style welfare state.

That’s the message in the famous “riding in the wagon” cartoons that went viral and became the most-viewed post on this blog.

Well, this Glenn McCoy cartoon has a similar theme.

Obama Voter Cartoon

The only thing I would change is that the rat would become a “pro-government voter” or “left-wing voter” instead of an “Obama voter.” Just like I wasn’t satisfied with an otherwise very good Chuck Asay cartoon showing the struggle between producers and moochers.

That’s for two reasons. First, I’m not partisan. My goal is to spread a message of liberty, not encourage people to vote for or against any candidate.

Second, I’ve been very critical of Obama, but I was also very critical of Bush. Indeed, Bush was a bigger spender than Obama! And Clinton was quite good, so party labels often don’t matter.

But I’m getting wonky. Enjoy the cartoon and feel free to share it widely.

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John Geary is not a good person.

He’s been a bureaucrat for about a decade, which almost surely means he’s over-paid and under-worked.

IRS welfareNot only is he a bureaucrat, but his job is to distribute welfare, which means he’s been screwing taxpayers and trapping poor people into government dependency.

But apparently he wasn’t satisfied with screwing taxpayers and poor people, at least in the figurative sense of the word. Here’s some of a report from a local CBS station.

Welfare Bureaucrat CriminalA state welfare worker is facing charges after allegedly offering benefits in exchange for sex. …According to the police criminal complaint, Geary also repeatedly asked the woman to smoke crack with him on the weekends when his wife was working and his children were asleep in their North Versailles home. …Police think there may be more victims as Geary allegedly told the woman that he had done the same thing with women in the past.

Gee, he sounds like a really swell guy and a model husband and father, wouldn’t you agree?

P.S. Perhaps Mr. Geary should be the first non-recipient member of the Moocher Hall of Fame?

P.P.S. Furthermore, we could include this in the Great-Moments-in-Local-Government series. Previous versions can be seen here, here, here, here, here, here, here, here, here, here, here, here, and here.

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I woke up this morning in Albania, after a string of speeches for the Free Market Road Show. One of my topics was the terrible jobs outlook for young people.

I sought to give audiences some basic understanding of economics, most notably telling them that businesses won’t create jobs unless the total revenue generated by workers is greater than the total cost of employing those workers.

But I also explained that people don’t have much incentive to find jobs unless they can enjoy better lives while working than they can enjoy while not working. In other words, they may not bother accepting jobs if there’s no significant increase in their living standards.

In other words, you can’t give people lots of handouts and then expect them to be aggressive job seekers.

I should have shared this Robert Gorrell cartoon. It makes the point in a much simpler fashion.

Work for food

This cartoon is quite similar to this Chuck Asay gem, and also has the same theme as this excellent Wizard of Id parody (which tied for 5th-place in the political cartoonist contest).

I did share these two amazing charts (here and here), so the audiences did get some powerful data showing that the welfare state is dramatically undermining incentives to provide labor to the market.

P.S. At least one honest liberal has recognized the danger of government-created dependency.

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I’m a big fan of Chuck Asay’s political cartoons. My favorite is his nothing-left-to-steal masterpiece.

And his tractor cartoon and his regime-uncertainty cartoon are brilliant indictments of Obamanomics.

Here’s another classic. It shows the impact of the welfare state on incentives for work, self reliance, and independence.

Asay Welfare CartoonIn six cartoon frames, he cleverly explains the economics of labor supply in a welfare state. Heck, there are many economists who could learn something from Asay’s work.

With gems like this, no wonder he came in second place in my political cartoonist contest.

This unsigned Wizard-of-Id parody has the same basic message about labor supply and handouts, and here’s a chart with some staggering real-world evidence of how the welfare state discourages people from productive behavior.

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Back in 2010, I posted a “Moocher Index” showing the states with the most dependency. But that was based on numbers and lacked any human-interest angle.

So let’s create a Moocher Hall of Fame for the individuals who best exemplify the culture of loafing, laziness, and dependency that is being subsidized by our vote-buying political class.

But you don’t receive this honor simply by accepting other people’s money. Membership in the Moocher Hall of Fame is reserved for deadbeats who demonstrate some special characteristic that warrants their induction.

* Let’s start with Olga, a Greek woman who earned membership in the Hall of Fame because she protested against the notion that she should be responsible for her own life since she might have to – gasp! – work more than one job and live at home.

* Another proud member of the Hall of Fame is Stanley, who was a shoo-in for the honor after it was learned that this 30-year old man has been scamming disability checks from the government so he can fulfill his fetish of wearing diapers and being an “adult baby.”

* Leroy entered the Hall of Fame after it was reported that he won $2 million from the lottery, but somehow is still collecting food stamps.

* A welfare mother with 11 kids in the United Kingdom was invited into the Hall of Fame after one of her sons was arrested for looting and she said “the riots are because the government does “f*** all” for children.”

* If the Hall of Fame had an award for going above and beyond the call of loafing, then Hans from Austria would be an obvious choice. He cut off his own foot to ensure continued handouts.

* We also have a husband-wife team in the Hall of Fame. Alicia and Matthew were unanimous inductees after it was revealed that they tried to impregnate a 12-year old girl to increase their welfare payments.

* Speaking of husband-wife duos, let’s not forget Danny and Gina, who bragged that it didn’t make sense for them to work when the government was providing them with enough loot to enjoy an apartment, a big flat-screen TV, and 40 daily cigarettes.

* Abdul from Australia is an esteemed member of the Hall of Fame’s terror wing, having received 19 years of welfare while plotting to kill the people who were paying for his life of leisure.

* Keeping with that theme, let’s also recognize Anjem, who got elected to the Hall of Fame for collecting about $40,000-per year in handouts while spewing hate and recruiting other “fanatics to copy him by going on benefits.”

* Last but not least, we have Natalijia, a Lithuanian woman who in now enjoying foreign holidays and designer clothes thanks to the generosity of British taxpayers, but nonetheless complained that she wasn’t getting a taxpayer-financed nanny.

Quite a collection of scroungers.

But I don’t think they’re very bright. They wanted to invite Julia to be the speaker at this year’s induction ceremony, apparently not realizing that she was a make-believe cartoon character created by the Obama campaign to celebrate dependency.

Perhaps they should ask Obama to speak. After all, more people have latched on to the disability system during his presidency than have gotten jobs. Quite an achievement…of sorts.

But I’m digressing. The purpose of this post is to announce the newest member of the Moocher Hall of Fame.

Our proud new bum comes from Denmark. Lazy RobertKnown as “Lazy Robert,” he’s been mooching off the taxpayers for 12 years and he’s very proud of his lifestyle. Here are some inspirational details from a New York Times report.

Robert Nielsen, 45, made headlines last September when he was interviewed on television, admitting that he had basically been on welfare since 2001. Mr. Nielsen said he was able-bodied but had no intention of taking a demeaning job, like working at a fast-food restaurant. He made do quite well on welfare, he said. He even owns his own co-op apartment. …Mr. Nielsen, called “Lazy Robert” by the news media, seems to be enjoying the attention. He says that he is greeted warmly on the street all the time. “Luckily, I am born and live in Denmark, where the government is willing to support my life,” he said.

The story also mentions another Danish moocher. Her story is worth sharing because it shows how the folks riding in the wagon enjoy higher living standards than many of those pulling the wagon.

Visit a single mother of two on welfare, a liberal member of Parliament goaded a skeptical political opponent, see for yourself how hard it is. It turned out, however, that life on welfare was not so hard. The 36-year-old single mother, given the pseudonym “Carina” in the news media, had more money to spend than many of the country’s full-time workers. All told, she was getting about $2,700 a month, and she had been on welfare since she was 16.

This probably doesn’t bode well for Denmark’s future. As illustrated by this famous set of cartoons, this kind of system creates very perverse incentives.

By the way, I decided that Carina didn’t deserve membership in the Hall of Fame because at least she has the decency to be ashamed. Or at least that’s one I’m assuming since the story says she “will no longer give interviews.”

But there are some people who genuinely deserve something, and those folks are the taxpayers of Denmark. They deserve our sympathy. They have one of the world’s most oppressive tax systems, thanks in part to a welfare system that provides a comfortable hammock for Robert and Carina.

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I don’t think the federal government should be in the business of redistribution income. Simply stated, the welfare state has been a disaster for both taxpayers and recipients.

But our system, with whatever flaws it might have now or in the future, presumably will never be as crazy as the system in the United Kingdom.

A reader sent a story that blows my mind. Our cousins across the ocean give big welfare handouts to terrorist agitators. Here are some excerpts from The Sun.

British taxpayers subsidize this hate-filled moocher

…hate preacher Anjem Choudary has told fanatics to copy him by going on benefits — urging: “Claim your Jihad Seeker’s Allowance.” He cruelly ridiculed non-Muslims who held down 9-to-5 jobs all their lives and said sponging off them made plotting holy war easier. …Father-of-four Choudary, who has praised terrorist outrages, pockets more than £25,000 a year in benefits — £8,000 more than the take-home pay of some soldiers fighting the Taliban in Afghanistan. He laughed as he told supporters:  “You find people are busy working the whole of their life. They wake up at 7 o’clock. They go to work at 9 o’clock. They work for eight, nine hours a day. They come home at 7 o’clock, watch EastEnders, sleep, and they do that for 40 years of their life. That is called slavery.

This dirtbag is right about one thing. It is a form of slavery to involuntarily confiscate money from the hard-working taxpayers of the United Kingdom and give the money to scroungers such as Choudary.

Choudary may be a despicable worm, but he’s clever enough to bilk the system.

Figures obtained by The Sun in 2010 showed the extremist cleric received £15,600 a year in housing benefit to keep him in a £320,000 house in Leytonstone, East London. He also got £1,820 council tax allowance, £5,200 income support and £3,120 child benefits — equivalent to a taxed salary of £32,500.

A £320,000 house?!? That’s about $500,000! That’s probably more valuable than the average home of the people paying punitive taxes to support this deadbeat.

For all intents and purposes, Choudary is like Natailija, Tracey, and Gina and Danny – but far worse since he sponges off the taxpayers and also advocates for terrorism. All subsidized by tax dollars.

P.S. You probably won’t be surprised to learn that the French government gives welfare handouts to terrorists. But I’m surprised the Australian government also allows mooching by pro-Jihad activists.

P.P.S. The good news is that at least some leftists are beginning to realize that the welfare state cripples people by creating government dependency.

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When I think of the disability program, I think of the bum who is collecting a check so he can be an “adult baby” and indulge his fetish of wearing diapers. Though I guess that’s not as bad as the situation in Greece, where you can get a disability payment for being a pedophile.

But this is a much bigger and more serious issue. Earlier this morning, I took part in a joint Brooking Institution/American Enterprise Institute/Secretary’s Innovation Group conference on the disability insurance program.

I only had a minor role, posing question to Mark Duggan of the University of Pennsylvania and Stephen Goss of the Social Security Administration, but it was a very useful exercise because I was exposed to some sobering details about the program.

Let’s review a couple of Professor Duggan’s charts, starting with a look at how the disability rate has exploded in the past 22 years.

Disability Slide 2

And here is some very disturbing data showing that much of the increase is in the areas that are most subject to abuse because of subjective judgements about “bad backs” and “depression.”

Disability Slide 1

Hmmm…, I’m a bit depressed about the ever-rising burden of government. Maybe I should get a check from the government!

Joking aside, I briefly touched on this issue in a recent CNBC interview. Here’s the segment dealing with the disability program and the disturbing rise in dependency.

I’m not overly impressed by the counter-argument from Christian Weller. Does he really want us to believe that the service sector jobs of today are more disabling than the manufacturing jobs of 20-plus years ago?

This is a depressing topic, so let’s close with a couple of cartoons, starting with this gem from Chip Bok.

Disability Cartoon 1

It’s amusing, but keep in mind that we have an unusually high joblessness rate right now, but it would be even higher if we counted the people who shifted to this other form of unemployment dependency.

And here’s a Chuck Asay cartoon that I really like because he augments my argument in the interview that it hurts the economy when you lure workers out of the job market and make them wards of the state.

Disability Cartoon 2

Asay takes it one step farther and shows the lifeboat sinking. That’s basically what will happen if we don’t adopt the entitlement reforms that are needed to rein in the welfare state.

P.S. If you want some jokes referencing the disability program, we have the politically correct version of The Little Red Hen, as well as two very similar jokes about Jesus performing miracles and how liberals differ from conservatives and libertarians.

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When we think of Julia, the mythical moocher created by the Obama campaign, our first instinct is probably to grab our wallets and purses. After all, she symbolizes the entitlement mindset, as illustrated by this Ramirez cartoon.

But let’s think of this from Julia’s perspective and speculate about what it will mean for her life. Shouldn’t we worry whether a life on the dole will destroy her spirit?

Or perhaps that question is too abstract, so let’s make it more personal. Would we ever want any of our children and grandchildren to become wards of the state, living empty and hollow lives of dependency and never achieving anything?

The answer is no, of course, because we want our loved ones to have good and happy lives.

So why, then, would anybody want to impose that fate on a stranger? And this isn’t an abstract question. That’s what the welfare state does, every day, over and over again, subsidizing poverty and sloth.

And not just in the United States. I shared a truly sad video a couple of years ago showing how the British welfare state created multi-generational poverty and misery.

Now we have another video, this one from the folks at The Commentator, showing a news report from London that should anger all taxpayers. But it also should upset all people who care about rescuing people from government-induced emptiness.

I’m almost at a loss for words. At the risk of making sweeping judgments based on a short news clip, it appears that this poor woman’s life has been destroyed by government dependency.

And if you’re wondering how someone could ever allow themselves to be caught in the quicksand of the welfare state, don’t forget the story of Natalija, as well the expose about Danny and Gina. They are all healthy young people who made rational economic decisions to mooch since they could enjoy more comfortable lives.

The same thing happens in America. This story from Pennsylvania also shows that it can be far more lucrative to rely on handouts than to climb the economic ladder.

Just in case you think that’s an isolated example, look at this remarkable chart revealing how life on the dole can be much more remunerative than a life of striving and work (you can see similar charts for the U.K. by clicking here).

Let’s return to the woman in the video. I confess that I’m a bit conflicted. Should I feel sorry for Ms. MacDonald or should I look down on her?

The government has wrecked her life with handouts, yet there are probably people just like her who made the choice to avoid dependency and climb out of poverty. If you believe in free will, then she deserves some scorn.

That being said, I’m much more willing to heap abuse on Natalija, Gina, and Danny. They’re young and they should know better. Then again, in 30 years, how will they be different from the woman in the video?

These questions don’t have any good answers, so let’s close with a few examples of how the welfare state subsidizes some truly odd behavior.

And remember, you’re paying for all this!

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The food stamp program seems to be a breeding ground of waste, fraud, and abuse. Some of the horror stories I’ve shared include:

With stories like this, I’m surprised my head didn’t explode during this debate I did on Larry Kudlow’s show.

So exactly how bad is the food stamp program?

One way of measuring the cost of the program, both to taxpayers and to the people who get trapped in dependency, is to see what share of a state’s population is utilizing the program.

I just did a “Mirror, Mirror” post on states with the most education bureaucrats compared to teachers and got a lot of good feedback, so let’s do the same thing for food stamps.

Here’s a rather disturbing map from the Washington Post.

Food Stamp Map

A couple of things stand out. I can understand Mississippi, Louisiana, and New Mexico being among the worst states because they have relatively low average incomes. And that’s sort of an excuse for Tennessee, though it’s worth noting that economically and demographically similar states such as Georgia and Alabama don’t fall into the same dependency trap.

Why such a significant handout culture?

But the state that stands out is Oregon. Based on the state’s income, there’s no reason for more than 20 percent of resident’s to be on the dole. The state does get a “high” ranking on the Moocher Index, so there’s some evidence of an entitlement mentality. And welfare handouts also are above average in the Beaver State as well.

It’s also disappointing to see that food stamp dependency has doubled since 2008 in Florida, Rhode Island, Nevada, Utah, and Idaho. Though it’s a credit to the people of Utah that they’re still in the least-dependent category. But the trend obviously is very bad.

And it’s also depressing to look at the bar chart on the right and see that spending on the program has tripled in the past 10 years. Heck, food stamps were about 70 percent of the cost of a recent Senate “farm bill.”

P.S. A local state legislator asked an official in Richmond why Virginia got such a bad score in the ranking of teachers compared to education bureaucrats. The good news, so to speak, is that Virginia is not as bad as suggested by the official numbers. According to the response sent to this lawmaker, “VDOE has determined that the data it reported on school division personnel and assignments to NCES for 2005-2006 through 2009-2010 through the US Department of Education’s EdFacts Portal were inaccurate.”

The bad news, as you can see from this table, is that there are still more edu-crats than teachers, but the ratio apparently isn’t as bad with this updated data.

Virginia Bureaucrat-Teacher Numbers

As a Virginia taxpayer, I suppose I should be happy. But it’s hard to get overly excited when other states are taking positive steps to bring choice and competition to education, and the best thing I can say about the Old Dominion is that we’re not quite as infested with bureaucrats as we originally thought.

P.P.S. I guess I should give the left-wing Washington Post some credit for sharing the map on food stamp dependency. And, to be fair, the paper did reprint this remarkable chart showing how bad Obama’s record is on jobs compared to Reagan and Clinton. And the paper also printed this chart showing how the economy’s performance is way below average under Obama.

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One of my favorite political cartoons is this Michael Ramirez gem showing President Obama following the European lemmings over the cliff of statism.

But this isn’t a laughing matter. As shown in this remarkable graph on global living standards, Americans enjoy significantly more consumption than their European counterparts.

And here’s another set of charts showing a big gap between the United States and Europe.

So the obvious question is whether we should copy the statist policies of our cousins across the Atlantic.

This video explores some of the possible consequences.

The video should make us contemplate the importance of cultural attitudes.

Values such as the work ethic, the spirit of self reliance, and personal responsibility are all form of social capital that help an economy prosper.

But if social capital begins to erode, restoring it is a bit like trying to put toothpaste back in a tube.

So while I obviously think tax and spending policy is important, pro-growth fiscal policy may not mean much in a society where dependency and mooching are considered acceptable lifestyles.

Which is why the third and fourth lessons in this video on the European fiscal crisis are very important.

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A Warning from Ronald Reagan

If you want some inspiration from Ronald Reagan, these brief remarks reveal his understanding of both economics of history (especially with regards to the other great president of the 20th century).

And this short video excerpt also gets me fired up to fight big government.

But maybe it’s also time to share a warning from the Gipper. Here’s a quote (which I’ve verified since not everything that lands in my inbox is necessarily accurate) about the perils of government dependency.

Reagan Slave Quote

This actually overstates the competence of government.

Communist nations, after all, didn’t do a very good job at providing food, shelter, and healthcare. Though, to be fair, there were quite proficient at turning people into slaves and prisoners.

We have a reverse problem in today’s welfare states. The people who produce the most are being coerced into turning over 50 percent of their earnings, which is sort of akin to the way the nobility treated serfs in medieval times.

Meanwhile, the “slaves” and “prisoners” wind up living rather comfortable lives, oftentimes bribed into government dependency because they can enjoy higher living standards by mooching rather than working.

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Remember Julia, the mythical moocher created by the Obama campaign to show the joys of government dependency? As illustrated by this Ramirez cartoon, Julia symbolizes the entitlement mentality.

Unfortunately, there are many real-life Julias.

I wrote a couple of years ago about Olga, a Greek woman who petulantly believed that government was responsible for her empty life.

But we don’t know any details about Olga other than her desire to mooch, so the best real-world examples of Julia may be from England. We have Natalija, a Lithuanian immigrant who has quickly learned bad habits of dependency, and Danny and Gina, two native-born scroungers.

Natalija, Danny, and Gina all decided to get a free ride from taxpayers, largely because overly generous handouts meant that they could enjoy higher living standards by staying at home and watching TV rather than living productive lives.

And if these info-graphics are any indication, there must be lots of people in the United Kingdom who make similar calculations.

No wonder English employers sometime have a hard time filling slots. Why climb the economic ladder when government is providing a comfy hammock?

Unfortunately, the same misguided policies exist in the United States. I shared a remarkable chart last year showing that a household would be better off with $29,000 of income rather than $69,000 of income because of the combined impact of both taxes and redistribution programs.

Now, courtesy of some first-rate journalism by a local television station, we have a powerful example exposing how the system operates. We learn the story of Kristina, who chooses to earn less money in order to keep the taxpayer-funded gravy train rolling.

We’ve all heard the line that America is becoming an entitlement society or welfare state, with half of U.S. households now receiving some type of government benefit. But a CBS 21 News investigation has taken that stat one step further to show you how much people are actually getting for free. A few years ago, reporter Chris Papst worked with a single mom who had two children. She turned down a raise because she said the extra money would decrease her government benefits. It was hard to understand why she did that, until Chris started working on this story. “You do what you have to do as a single mom,” explained Kristina Cogan. “And that’s what I did.” ……she admits living a life off the government can be comfortable. “If you’re going to get something for free, are you going to work for it?” Cogan explained. “It kind of like sucks you in.”

Here are some of the horrific details.

For this story, CBS 21 researched what government programs are available to a single mother of two making $19,000 a year. What we found was incredible. Our family would be eligible for $14,976 in free day care, another $13,400 for Head Start and Early Head Start, $7,148 in housing vouchers, $6,500 for weatherization projects, $400 to pay heating bills, $480 a year for a cell phone, with an extra $230 for a land line, and $182 in free legal advice. The family would get more than $6,028 in food assistance and another $6,045 in medical assistance. The mother is eligible for $5,500 in Pell Grants for school with an additional $12,000 for the Education Opportunity Grant; SMART Grant; and TEACH Grant. Our family would also get $6,800 in tax credits, and $1,900 in withholding would be returned. Add it up and this family can get $81,589 in free assistance.

There’s nothing in the story to suggest that Ms. Cogan is utilizing all these programs, but the plethora of available goodies certainly helps to explain why so many people decide it’s easier to be moochers rather than producers.

Which also explains why the welfare state is a recipe for ever-increasing dependency, as shown by this famous set of cartoons.

Which also causes a sluggish economy, as illustrated by this Chuck Asay cartoon.

No wonder the share of households taking something from the government has been increasing. And no wonder the poverty rate stopped falling once the government’s so-called War on Poverty began.

P.S. Most stories about welfare are pathetic, as we see from this dependency contest featuring the “Connecticut Kid” vs the “English Loafer.” But the welfare state also breeds more bizarre behaviors.

P.P.S. Are you subsidizing bad behavior? Click here to see a map revealing which states offer the most extravagant welfare benefits.

P.P.P.S. Share this video to help others understand the high cost of the welfare state.

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I posted a horrifying story last week about a Lithuanian immigrant who was mooching off British taxpayers.

She basically had a very comfortable life thanks to beleaguered taxpayers, and I compared her to a Greek woman who thought the state owed her everything.

But there’s no ethnic requirement to be a bum. I’ve also shared stories about American moochers and Austrian moochers.

I’ve even shared stories about terrorists getting welfare handouts in Australia and France!

UK BumsSo I hope my British friends won’t be upset that I’m now going to highlight a couple of English deadbeats.

Here are some odious details from the UK-based Sun.

Danny Creamer, 21, and Gina Allan, 18, spend each day watching their 47in flatscreen TV and smoking 40 cigarettes between them in their comfy two-bedroom flat. It is all funded by the taxpayer, yet the couple say they deserve sympathy because they are “trapped”.

Does this mean they are imprisoned? Is someone holding them at gunpoint?

Hardly. It simply means that these two scroungers get such lavish handouts that their living standards would fall if they actually lived decent and honorable lives and went to work.

The couple, who have a four-month-old daughter Tullulah-Rose, say they can’t go out to work as they could not survive on less than their £1,473-a-month benefits. The pair left school with no qualifications, and say there is no point looking for jobs because they will never be able to earn as much as they get in handouts. Gina admits: “We could easily get a job but why would we want to work — we would be worse off.” Danny’s father, 46, even offered him a job with his bowling alley servicing company — but could not pay him enough.

So how much are these moochers stealing from taxpayers? Quite a lot, particularly if you keep in mind that £1 is equal to $1.57.

The couple, who live in Hants, receive £340 a week, made up of £150 housing benefit, £60 child tax credit, £20 child benefit and £110 in Job Seeker’s Allowance. They pay just £25 towards their spacious £625-a-month home. Their lounge is dominated by the huge TV and a leather sofa. …They spend the same on tobacco as they do on their daughter’s milk and nappies.

Gee, isn’t that nice. Taxpayers are even financing their cigarettes.

I blame Danny and Gina for being a couple of bums, but I also blame British politicians for creating a lavish welfare state that enables this awful behavior.

It’s not that people are trapped in poverty, but they definitely are lured into dependency.

By the way, the same problem exists in the United States. Indeed, this chart shows that the plethora of freebies from taxpayers means a household can be better off with $29,000 of income rather than $69,000 of income.

No wonder the poverty rate stopped falling once the so-called War on Poverty began.

For more information, here’s a short debate I had about the topic, and here’s a video explaining how the welfare state is bad for both poor people and taxpayers.

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