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Archive for the ‘Welfare’ Category

Because of my disdain for the two statists that were nominated by the Republicans and Democrats, I’m trying to ignore the election. But every so often, something gets said or written that cries out for analysis.

Today is one of those days. Hillary Clinton has an editorial in the New York Times entitled “My Plan for Helping America’s Poor” and it is so filled with errors and mistakes that it requires a full fisking (i.e., a “point-by-point debunking of lies and/or idiocies”).

We’ll start with her very first sentence.

The true measure of any society is how we take care of our children.

I realize she (or the staffers who actually wrote the column) were probably trying to launch the piece with a fuzzy, feel-good line, but let’s think about what’s implied by “how we take care of our children.” It echoes one of the messages in her vapid 1996 book, It Takes a Village, in that it implies that child rearing somehow is a collective responsibility.

Hardly. This is one of those areas where social conservatives and libertarians are fully in sync. Children are raised by parents, as part of families.

To be fair, Hillary’s column then immediately refers to poor children who go to bed hungry, so presumably she is referring to the thorny challenge of how best to respond when parents (or, in these cases, there’s almost always just a mother involved) don’t do a good job of providing for kids.

…no child should ever have to grow up in poverty.

A laudable sentiment, for sure, but it’s important at this point to ask what is meant by “poverty.” If we’re talking about wretched material deprivation, what’s known as “absolute poverty,” then we have good news. Virtually nobody in the United States is in that tragic category (indeed, one of great success stories in recent decades is that fewer and fewer people around the world endure this status).

But if we’re talking about the left’s new definition of poverty (promoted by the statists at the OECD), which is measured relative to a nation’s median level of income, then you can have “poverty” even if nobody is poor.

For the sake of argument, though, let’s assume we’re using the conventional definition of poverty. Let’s look at how Mrs. Clinton intends to address this issue.

She starts by sharing some good news.

…we’re making progress, thanks to the hard work of the American people and President Obama. The global poverty rate has been cut in half in recent decades.

So far, so good. This is a cheerful development, though it has nothing to do with the American people or President Obama. Global poverty has fallen because nations such as China and India have abandoned collectivist autarky and joined the global economy.

And what about poverty in the United States?

In the United States, a new report from the Census Bureau found that there were 3.5 million fewer people living in poverty in 2015 than just a year before. Median incomes rose by 5.2 percent, the fastest growth on record. Households at all income levels saw gains, with the largest going to those struggling the most.

This is accurate, but a grossly selective use of statistics.

If Obama gets credit for the good numbers of 2015, then shouldn’t he be blamed for the bad numbers between 2009-2014? Shouldn’t it matter that there are still more people in poverty in 2015 than there were in 2008? And is it really good news that it’s taken Obama so long to finally get median income above the 2008 level, particularly when you see how fast income grew during the Reagan boom?

We then get a sentence in Hillary’s column that actually debunks her message.

Nearly 40 percent of Americans between the ages of 25 and 60 will experience a year in poverty at some point.

I don’t know if her specific numbers are accurate, but it is true that that there is a lot of mobility in the United States and that poverty doesn’t have to be a way of life.

Hillary then embraces economic growth as the best way of fighting poverty, which is clearly a true statement based on hundreds of years of evidence and experience.

…one of my top priorities will be increasing economic growth.

But then she goes off the rails by asserting that you get growth by spending (oops, I mean “investing”) lots of other people’s money.

I will…make a historic investment in good-paying jobs — jobs in infrastructure and manufacturing, technology and innovation, small businesses and clean energy.

Great, more Solyndras and cronyism.

And fewer jobs for low-skilled workers, if she gets here way, along with less opportunity for women (even according to the New York Times).

And we need to…rais[e] the minimum wage and finally guarantee… equal pay for women.

The comment about equal pay sounds noble, though I strongly suspect it is based on dodgy data and that she really favors the very dangerous idea of “comparable worth” legislation, which would lead to bureaucrats deciding the value of jobs.

Then Hillary embraces a big expansion of the worst government department.

…we also need a national commitment to create more affordable housing.

And she echoes Donald Trump’s idea of more subsidies and intervention in family life.

We need to expand access to high-quality child care and guarantee paid leave.

And, last but not least, she wants to throw good money after bad into the failed Head Start program.

…we will work to double investments in Early Head Start and make preschool available to every 4-year-old.

Wow, what a list. Now perhaps you’ll understand why I felt the need to provide a translation of her big economic speech last month.

The moral of the story, based on loads of evidence, is that making America more like Europe is not a way to help reduce poverty.

P.S. The only other time I’ve felt the need to fisk an entire article occurred in 2012 when I responded to a direct attack to my defense of low-tax jurisdictions.

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Statists occasionally get very angry about some of my views.

My support for “tax havens” periodically seems to touch a raw nerve, for instance, though I guess I shouldn’t be too surprised since some people are so crazy that they have even urged military action against these low-tax jurisdictions.

I also get some angry responses when I praise Ronald Reagan’s achievements. I’ve even had a few leftists get all agitated simply because I occasionally share a hypothetical poll from 2013 showing that Reagan would beat Obama in a landslide.

But what really gets these folks angry is when I argue that recipients of welfare and redistribution should feel shame and embarrassment. As far as they’re concerned, I’m being a heartless jerk who wants to inflict emotional pain on vulnerable people.

Though, to be fair, their anger usually dissipates when I explain that my real goal is to protect people from long-term dependency on government. And it’s also hard for them to stay agitated when I point out that I’m basically making the same argument as Franklin Roosevelt, who famously warned about welfare being “a narcotic” and “a subtle destroyer of the human spirit.”

In other words, I don’t like the welfare state because I care about both the best interests of taxpayers and also about the best interests of poor people. And this is why I repeatedly share data showing how American was making impressive progress against poverty before there was a welfare state. But once the federal government declared a “War on Poverty,” the poverty rate stopped falling.

But that’s only part of my argument. I also think there are very worrisome implications for overall society when people start thinking that they have a “right” to welfare and redistribution. At the risk of sounding like a cranky libertarian, I fear that any nation will face a very grim future once too many people lose the ethic of self-reliance and think it’s morally and ethically acceptable to be moochers.

Indeed, my theory of “Goldfish Government” is based in part on what happens when a sufficient number of voters think it’s okay to steal from their neighbors, using government as a middleman. Short-sighted politicians play a big role in this self-destructive process, of course, along with unfavorable demographic changes.

And when people want examples, I just point to nations such as Greece, Italy, and France. Or states such as California and Illinois.

At this stage, a clever leftist will usually interject and argue I’m being unfair. They’ll say that Nordic nations such as Denmark and Sweden are proof that a big welfare state is compatible with a prosperous and stable society.

Au contraire, as our French friends might say. Yes, the Nordic nations may be relatively successful big-government countries, but there are three very important things to understand.

  1. The Nordic nations became comparatively rich in the 1800s and early 1900s when economic policy was dominated by free markets and small government.
  2. The adoption of high taxes and big welfare states (particularly an explosion in the burden of government spending starting in the 1960s) weakened economic performance.
  3. In recent years, Nordic nations have sought to undo the damage of big government with pro-market reforms and limits on the fiscal burden of government.

But let’s specifically focus today on whether the Nordic nations are somehow an exception to the rule that welfare and redistribution have a pernicious impact on a society. In other words, does welfare in nations such as Denmark and Sweden undermine “social capital”? Is there a negative impact on the work ethic and spirit of self-reliance?

Fortunately, we have some very good data from a new, must-read book by Nima Sanandaji, who grew up in Sweden. Entitled Debunking Utopia: Exposing the Myth of Nordic Socialism, Nima’s book is a comprehensive analysis of public policy in that part of the world, both what’s good and what needs improvement.

One of his 11 chapters is about “The Generous Welfare Trap” and it’s filled with very valuable information about the human and societal cost of the welfare state.

Though I can’t resist pointing out that he starts his analysis by citing President Roosevelt.

Franklin D. Roosevelt…was concerned that the institution he was fostering…might destroy the spirit of self-reliance. Two years into his presidency, he held a speech to Congress…the president warned that…”continued dependence upon relief induces a spiritual and moral disintegration fundamentally destructive to the national fibre. To dole out relief in this way is to administer a narcotic, a subtle destroyer of the human spirit.” …In today’s political climate, Franklin D. Roosevelt’s view on public benefits would seem quite harsh.

Nima then looks at whether the Nordic nations somehow might be proof that FDR was wrong.

Yet there has been a persistent conviction among the modern proponents of welfare states that it is indeed-somehow-possible to create stable systems with generous benefits and high taxes. The main line of reasoning is based on the Nordics. The welfare states in this part of the world seem to, at least at first glance, succeed in providing extensive services and generous cash benefits without eroding personal responsibility. If generous welfare works in Sweden and Denmark, why not also in the rest of the world?

The problem, as Nima points out, is that these policies don’t work in his part of the world.

And not just because of the fiscal burden. His main point is that the welfare state is weakening people’s integrity.

…the World Values Survey shows that erosion of norms is very much a thing in the Nordics. In the beginning of the 1980s, 82 percent of Swedes and 80 percent of Norwegians agreed with the statement “Claiming government benefits to which you are not entitled is never justifiable.” …However, as the population adjusted their behavior to new economic policies, benefit morale dropped steadily. In the survey conducted between 2005 and 2008, only 56 percent of Norwegians and 61 percent of Swedes believed  that it was never right to claim benefits to which they were not entitled. The survey conducted between 2010 and 2015 only included Sweden out of the Nordic countries. It found that benefit morale had continued to fall, as merely 55 percent of Swedes answered that it was never right to overuse benefits. …Over time even the Nordic people have changed their attitudes as social democratic policies have made it less rewarding to work hard and more rewarding to live off the government.

By the way, at the risk of nit-picking, I would have advised Nima to use the term “benefit morality” rather than “benefit morale.” Though I assume almost all readers will understand the point he’s making.

Returning to our topic, Nima also cites some scholarly research that basically echoes my “Theorem of Societal Collapse.”

Martin Halla, Mario Lackner, and Friedrich G. Schneider performed an empirical analysis of the dynamics of the welfare state. They explained that…”the disincentive effects may materialize only with considerable time lags.” ..However, after some time the expansion of welfare programs leads to a deterioration of benefit morale. The three researchers concluded that “the welfare state destroys its own (economic) foundation and we have to approve the hypothesis of the self-destructive welfare state.”

The bottom line, he explains, is that the Nordic nations have been the best possible example of how a welfare state can operate.

But even in these nations, the narcotic of government dependency has slowly but surely done its damage.

Although Nordic welfare states seemed initially able to avoid this moral hazard, today we know beyond doubt that this was not the case. Even the northern European welfare states-founded in societies with exceptionally strong working ethics and emphasis on individual responsibility-have with time caught up to Roosevelt’s harsh predictions.

The good news is that Nordic nations are trying to undo the damage of the welfare state. Many governments in the region are scaling back the generosity of handouts and trying to restore the work ethic.

I don’t want to give away too much information. You need to buy his book to learn more. And the other 10 chapters are just as enlightening.

I’ll close by simply observing that Calvin Coolidge (as quoted by Ronald Reagan) understood today’s topic way back in the 1920s.

P.S. I’ve also cited Nima’s great work on how people of Nordic descent in America are much more productive than their cousins who remained in Scandinavia, as well as his work showing that Nordic nations originally became rich because of Hong Kong-style economic policy. And I’ve also shared some of his fascinating research on the policies that generate super-entrepreneurs.

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As a general rule, I like immigration and I don’t like redistribution.

As such, I share the late Milton Friedman’s concern about the risks of having a welfare state combined with open borders. And based on many conversations all over the country, I think that’s a big reason why many people oppose amnesty (augmented by Republican partisans who fear, probably with some validity, that changing the political landscape of America is the real reason Senator Schumer is a big advocate of amnesty).

So how can we reap the benefits of immigration without the risk of a bigger welfare state?

In part, we should have programs designed to attract people with skills and education.

I’m a big advocate and defender, for instance, of the EB-5 program that gives a preference for foreigners who invest in America’s economy and create jobs.

And if you peruse Mark Perry’s chart, we must be doing something right. Look at all these immigrant groups that are boosting per-capita income for the United States (including people from Lebanon, home of the Princess of the Levant).

I’ve always thought far more Americans would be sympathetic to immigration if they could be convinced that people were coming to America for the right reasons – i.e., to earn money rather than mooch off taxpayers.

With that in mind, Professor Tyler Cowen of George Mason University has a Bloomberg column about Denmark that cites the great work of Nima Sanandaji about how Americans of Nordic descent have much higher incomes than the people remaining in Nordic nations. Tyler’s entire article is worth reading, but I want to focus on a quasi-open-borders proposal that he puts forth in his conclusion.

For all the anti-immigrant sentiment that is circulating at the moment, would it hurt the U.S. to have fully open borders with Denmark? It would boost American gross domestic product and probably also improve American education. History teaches that serious assimilation problems would be unlikely, especially since many Danes already speak English. Open borders wouldn’t attract Danes who want to live off welfare because the benefits are so generous at home. How’s this for a simple rule: Open borders for the residents of any democratic country with more generous transfer payments than Uncle Sam’s.

I can’t think of any reasonable objection to this idea. Everything Tyler says makes sense. People like “Lazy Robert” won’t be lining up to get plane tickets to America. Instead, we’ll get the young and aspirational Danes.

For what it’s worth, I even think he understates the case since the type of people who would migrate to America wouldn’t just boost GDP. They almost surely would do something arguably more important, which is to boost per-capita GDP.

Just think of all the productive entrepreneurs who would take the opportunity to escape over-taxed Denmark and come to the United States. Along with ambitious and skilled people from nations such as Italy, France, and Sweden (though our welfare state is very expensive, so I admit I’m just guessing at nations which would be eligible based on Tyler’s rule about “more generous transfer payments”).

By the way, Denmark apparently has learned a lesson about the risks of being a welfare magnet.

A story from Spiegel Online has the details.

Denmark’s strict immigration laws have saved the country billions in benefits, a government report has claimed. …The extremely strict laws have dramatically reduced the flow of people into Denmark in recent years, and many government figures are delighted with the outcome. “Now that we can see that it does matter who comes into the country, I have no scruples in further restricting those who one can suspect will be a burden on Denmark,” the center-right liberal integration minister, Søren Pind, told the Jyllands Postennewspaper. Pind was talking after the ministry’s report — initiated by the right-wing populist Danish People’s Party (DPP) — came to the conclusion that by tightening immigration laws, Denmark has saved €6.7 billion ($10 billion) over the last 10 years, money which otherwise would supposedly have been spent on social benefits or housing. According to the figures, migrants from non-Western countries who did manage to come to Denmark have cost the state €2.3 billion, while those from the West have actually contributed €295 million to government coffers.

Sounds like Danish lawmakers don’t want to add even more passengers to the nation’s already-overburdened “party boat.”

And who can blame them. The nation already has a crippling problem of too many people depending on government.

P.S. If you want to enjoy some immigration-related humor, we have a video about Americans migrating to Peru and a story about American leftists escaping to Canada.

P.P.S. For those interested in the issue of birthright citizenship (a.k.a. anchor babies), I’ve shared some interesting analysis from Will Wilkinson and George Will.

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When I was young and innocent, I thought that giving welfare handouts to advocates of terrorism was the most perverse and disgusting way to abuse taxpayers.

Now that I’m old and jaded, I’ve learned that governments are so masochistically stupid that they routinely give taxpayer-financed goodies directly to the people who actually engage in terrorist attacks.

The U.K. government provided lots of handouts to Jihadi John, the ISIS psychopath who likes to sever heads.

The French government generously subsidized Mohammed Merah, the thug who executed a little girl.

The Danish and Austrian governments give welfare payments that get used to finance ISIS fighters going to Syria.

And there are plenty of other examples.

So should any of us be surprised to learn that the human scum who planned and executed the recent terror attacks in France and Belgium were mooching off taxpayers as well?

The Wall Street Journal has a very disturbing story revealing the degree to which Islamo-terrorists in Europe relied on welfare handouts as they plotted and schemed to brutally murder innocent people.

Belgian financial investigators looking into recent terror plots have discovered a disturbing trend: Some of the suspects were collecting welfare benefits until shortly before they carried out their attacks. At least five of the alleged plotters in the Paris and Brussels terror attacks partly financed themselves with payments from Belgium’s generous social-welfare system, authorities have concluded. In total they received more than €50,000, or about $56,000 at today’s rate. The main surviving Paris suspect, Salah Abdeslam, collected unemployment benefits until three weeks before the November attacks—€19,000 in all, according to people familiar with the case. At the time, he was manager and part-owner of a bar, which Belgian officials say should have made him ineligible. Many of the participants in a disrupted Belgian terror plot also had been on the dole, according to the judge who sentenced more than a dozen people in the so-called Verviers cell last month.

Unsurprisingly, government officials seem incapable of drawing the right conclusion.

Instead, we get navel-gazing exercises.

The revelations raise a difficult conundrum for Europe. On one hand, the modern welfare state is a primary tool for combating poverty as well as integrating immigrants. On the other, officials are working hard to find and stop potential sources of revenue for those bent on committing terrorist atrocities.

I’m tempted to respond with a word describing the manure of male bovines.

Instead, I’ll simply note that the welfare state is a system that subsidizes and exacerbates poverty, while also hindering assimilation.

And, as the enemies of modernity have learned, it’s a handy way to finance terrorism.

Islamic State itself suggested welfare benefits as a financing source, in a 2015 manual called “How to Survive in the West: A Mujahid Guide.” In a section headed “Easy Money Ideas,” the manual suggested “if you can claim extra benefits from a government, then do so.”

Here are some more details

In Belgium, people exiting prison often receive social benefits to help reintegrate into society. This was the case with Khalid el-Bakraoui,who served two years in prison before blowing himself up in the Maelbeek subway station in Brussels in March. Bakraoui was given jobless benefits in early 2014, after a stint in prison for armed robbery and carjacking. In total, he collected about €25,000 in unemployment, medical and other benefits, according to one of the people familiar with the case. He wasn’t shut off until last December, when Belgian authorities issued a warrant for him in connection with the Paris attacks.

Sounds like Bakraoui used his handouts to reintegrate into terrorism.

Investor’s Business Daily also weighed in on this issue, pointing out that the welfare state in Europe subsidizes terrorists.

Belgium’s government has been extremely generous toward its Muslim population. Most of its welfare goes to Muslims, and it even subsidizes their mosques and imams. Many of these young Muslim men who supposedly can’t find gainful employment don’t want to work. Why would they, when welfare checks are normally 70% to 80% of their income?

The editorial notes that generous handouts hinder assimilation.

Far from being mistreated, Belgian Muslims are one of the most pampered minorities in Western history. Lest it offend its burgeoning Muslim population, Belgium has “de-Christianized” its Christian holidays. The holiday previously known as All Saints Day is now referred to as Autumn Leave, Christmas Vacation is now Winter Vacation, Lenten Vacation is now Rest and Relaxation Leave and Easter is now Spring Vacation…  .Heavily subsidized by Belgium’s overgenerous welfare system, North African immigrants have little incentive to integrate. Instead they turn inward, creating Islamic no-go zones divorced from and hostile to Western society.

The problem may be especially acute in Belgium, but it’s a problem all across Europe.

…welfare is abused by Muslims across Europe — some 80% of Muslim immigrants to Europe are on the dole, and more than half are “economically inactive.” Muslims claim disability more than any other group. In the EU capital of Belgium, as well as neighboring Netherlands, Muslims are roughly 5% of the population yet consume 40% to 60% of the welfare budget. Belgium spends more on unemployment benefits than any other country outside Denmark. European society isn’t oppressing Muslim immigrants. Far from it. It’s coddling them

If those numbers are anywhere close to accurate, the problem of welfare-subsidized terrorism is going to get worse before it gets better. If it ever gets better.

By the way, this also is a problem in the United States.

The low-life losers who bombed the Boston Marathon got handouts.

And the State Department actually has a program that takes “refugees” from countries with terrorism problems and signs them up for government dependency.

P.S. The U.K. government has decided that giving welfare to jihadists isn’t enough. It now sometimes hires them and makes them part of the law enforcement bureaucracy.

P.P.S. Though that’s not as bad as the Danish government, which persecutes people who fight back against attackers.

P.P.P.S. But officials representing the bloated Belgian government surely deserves some sort of prize for claiming that the nation’s government is too small to fight terrorism. Especially when that government is famously incompetent in thwarting obvious terror suspects.

P.P.P.P.S. Unsurprisingly, folks in Texas are smarter than Europeans about responding to terror attacks.

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Over the years, I’ve shared some clever images, jokes, and cartoons to expose the flawed mindset of those who hope to achieve coerced equality of outcomes with redistribution and high tax rates.

The size of a pizza vs the share of a slice.

The modern version of the Little Red Hen.

Washington’s Byzantine welfare state.

Chuck Asay’s overburdened tractor.

A left-wing nursery rhyme.

The Wizard-of-Id parody.

Two pictures showing how the welfare state begins and ends.

A socialist classroom experiment (including a video version).

The economics of redistribution in one image.

As you can see, this is a common-sense issue. When you give people money on the condition that they don’t earn much money, you create a perverse incentive for them to be unproductive.

Especially since, when people work more and earn more, they get hit by a combination of fewer handouts and more taxes. The net result is very high implicit marginal tax rates, in some cases rising above 100 percent.

Needless to say, it’s very foolish to have a welfare state that puts people in this untenable situation where the welfare state becomes a form of economic quicksand.

And it’s also foolish to punish the people who are pulling the wagon with high tax rates and pervasive double taxation of income that is saved and invested.

Russell Jaffe, one of our Cato interns, helpfully cranked out a clever little image showing how redistribution is bad for both those who receive and those who pay.

No wonder the welfare state and War on Poverty have been bad news for both taxpayers and poor people.

And the problem is getting worse, not better.

Let’s begin to wrap up. I shared a Thomas Sowell quote at the beginning to today’s column.

Now let’s read some of his analysis.

He aptly and succinctly summarized why redistribution is a no-win proposition (h/t: Mark Perry).

The history of the 20th century is full of examples of countries that set out to redistribute wealth and ended up redistributing poverty. …It is not complicated. You can only confiscate the wealth that exists at a given moment. You cannot confiscate future wealth — and that future wealth is less likely to be produced when people see that it is going to be confiscated. …Those who are targeted for confiscation can see the handwriting on the wall, and act accordingly. …We have all heard the old saying that giving a man a fish feeds him only for a day, while teaching him to fish feeds him for a lifetime. Redistributionists give him a fish and leave him dependent on the government for more fish in the future.

So what’s the bottom line?

The simple (and correct) answer is to dismantle the welfare state. State and local governments should be in charge of “means-tested” programs, ideally with much less overall redistribution (a goal even some Scandinavian nations are trying to achieve).

In effect, the goal should be to replicate the success of the Clinton-era welfare reform, but extending the principle to all redistribution programs (Medicaid, food stamps, EITC, etc).

P.S. Some honest leftists admit that the welfare state cripples independence and self reliance.

P.P.S. For those who like comparisons, you can peruse which states provide the biggest handouts and also which nations have the most dependency.

P.P.P.S. To end on a sour note, our tax dollars are being used by the Paris-based OECD to produce junk research that argues more tax-financed redistribution somehow is good for growth.

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Led by Speaker Paul Ryan, House Republicans have put forth an anti-poverty agenda.

It’s definitely worth reading just for the indictment of the current welfare state. There are some excellent charts, including versions of ones that I’ve already shared on the $1 trillion-plus fiscal burden of current welfare programs, as well as the “bloated, jumbled, and overlapping bureaucracy” that administers all that money.

But there are some charts that deserve to be reproduced, either because they contain new insights or because they make very important economic points.

Regarding the former, here’s a chart that indirectly shows that the most effective anti-poverty program is work. Specifically a full-time job.

So the real challenge is why there are some households with persistent multi-generational poverty.

And, as Thomas Sowell already has told us, that’s a behavioral problem.

But it’s somewhat understandable behavior because government in many cases makes dependency more attractive than self-sufficiency.

Here’s a chart showing the implicit marginal tax rates that apply if a poor household tries to climb out of poverty. The bottom line is that handouts are so generous that it’s very difficult for a poor person to be better off by working instead of mooching.

No wonder dependency is a growing problem!

Some folks say the solution to this problem is to reduce the “phase-out” of benefits, but that’s a recipe for making the welfare state vastly more expensive and giving handouts to people who are not poor. That’s the approach in some European nations and it hasn’t worked.

Here’s another chart that basically makes the same point about the upside-down incentive structure created by redistribution programs. It shows that a poor household can enjoy a much higher standard of living with low earnings than with high earnings.

The bottom line is that the current welfare state is a disaster for both poor people and taxpayers.

And this video is an excellent introduction to that topic.

But let’s focus on the GOP anti-poverty plan. They put together a powerful indictment of what we have now, but what are they proposing as a solution?

Here’s where we get good news and bad news. The good news is that there is a focus on work, as explained in a column for Forbes by Scott Winship of the Manhattan Institute.

…the report declares that “Our welfare system should encourage work-capable welfare recipients to work or prepare for work in exchange for benefits, and states should be held accountable for helping welfare recipients find jobs and stay employed.” The blueprint points toward greater use of work requirements and time limits for food stamp recipients and beneficiaries of federal housing benefits who are able to work. …This emphasis on work generalizes the experience from the landmark 1996 welfare reform legislation, which increased work among single-parent families, reduced welfare receipt and (most importantly) lowered poverty.

So far so good, and Scott also notes that the key to work is reducing the appeal of being on the dole.

Most of the success of welfare reform in encouraging work can be attributed to the ways that it has made receipt of benefits less attractive relative to work. People largely left welfare or chose not to enroll independently of state work promotion efforts.

But here’s the problem. There’s no big attempt to reduce benefits in the GOP proposal.

Indeed, it doesn’t even turn programs over to the states, which presumably would lead to better policy since sub-national governments wouldn’t want to be overly generous lest they attract welfare migration.

But the dog that didn’t bark in the new agenda is the consolidation and block granting proposed in Speaker Ryan’s Budget Committee discussion draft from 2014. Rather, the blueprint appears to envision increased use of state waivers in the various programs… It is worth recalling that in the 2014 discussion draft, the “opportunity grants” that would have combined a dozen federal programs and funded them at a fixed level were proposed as a pilot program in a few states.

Though at least the plan apparently doesn’t increase the fiscal burden of the welfare state by further expanding the EITC, which already is the federal government’s most costly redistribution program.

The antipoverty blueprint mentions the Earned Income Tax Credit (EITC)…only in passing. On the one hand, the report points out that an expanded EITC would be one way to reduce some of the high marginal tax rates that recipients of federal aid face when they contemplate working. On the other, the program’s high rate of improper payments is also emphasized, rightfully, as a problem that must be addressed.

Scott also points out that the Republican plan also foresees a much more aggressive attempt to measure what works and doesn’t work. Which is good, though hardly necessary since we already know that a one-size-fits-all approach from Washington is a recipe for ever-higher costs and ever-increasing dependency.

Indeed, there’s even a Laffer Curve-type relationship between welfare spending and poverty.

Let’s check out a couple of other reactions.

From the left, Jordan Weissman of Slate is predictably unimpressed.

As part of his effort to convince Americans that the Republican Party is [not] a band of nihilistic anti-government lunatics—House Speaker Paul Ryan unveiled…an anti-poverty plan. Which is a laugh riot. …Most of the agenda is a rehash of, or at least a variation on, material Ryan has trotted out before. Inspired by the welfare reforms of the 1990s, the speaker still wants to push more safety net beneficiaries to go to work, devolve more program control down to state and local officials, and yet somehow increase accountability and carefully monitor results… There’s also some talk about increasing the Earned Income Tax Credit for low-wage workers—which is one of those nice, liberal-conservative consensus positions that never seems to go anywhere.

From the right, Kevin Williamson sympathizes with the GOP/Ryan approach, but also makes a more important point in his National Review column.

Paul Ryan has just introduced a welfare-reform proposal… We already knew what was going to be in it — work requirements and time limits for able-bodied adults — because there are only so many meaningful avenues of reform. We also know what the Left’s response is going to be: that this is cruel, callous, punitive, etc. But there are really only two choices: Get people moving toward economic self-sufficiency or sustain them forever in the soul-killing state of dependency. There isn’t a third option. Not really. This is only partly about money. We are a very, very rich society, and we can afford to provide decently for people who cannot care for themselves, including children and those who are physically or mentally disabled. But that isn’t our problem: Our problem isn’t people who are physically disabled but people who are morally disabled, people who wouldn’t take a bus 15 minutes to work at a gas station, much less walk 15 miles to do so.

My view, for what it’s worth, is that the only good welfare reform is one that shifts all programs to the states as part of a block grant. But since funding redistribution is not a function of the federal government, that block grant should then disappear over time.

Last but not least, we need to understand that economic growth is easily the most powerful and effective anti-poverty program. That’s why the poverty rate fell from 90 percent to 15 percent in America before we had a welfare state.

And it’s no coincidence that we stopped making progress once the so-called War on Poverty began.

P.S. On the topic of poverty, it’s worth remembering that the White House has tried to redefine poverty as part of a dishonest campaign to promote class warfare policies. And the leftist bureaucrats at the OECD are pushing the same disingenuous approach.

P.P.S. If you want to know which states have the highest welfare benefits, click here. And if you want to know which ones have the highest overall levels of redistribution, click here.

P.P.P.S. There’s at least one honest leftist who understands the human cost of redistribution.

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The welfare state is bad news. It’s bad for taxpayers and it’s bad for recipients.

It’s also bad for the economy since prosperity is in part a function of the quantity of labor that is productively employed. As such, government programs that lure people into dependency obviously reduce national economic output.

We can get a sense of how the nation is being hurt by reviewing some of the scholarly literature.

Writing for the Cato Journal, Lowell Gallaway and Daniel Garrett explore the relationship between redistribution spending and poverty reduction.

They start by pointing out that more welfare spending used to be associated with reductions in poverty. But when President Johnson launched his so-called War on Poverty and dramatically increased the level of redistribution, the link between welfare spending and poverty reduction substantially weakened.

…the real per capita cost in the United States of federal public aid rose 70 percent in the 11 years between 1953—the first year the federal government reported an official poverty rate—and Johnson’s 1964 remarks. In the 11 years that followed, however, that same real per capita cost increased by an astonishing 434 percent—that is, more than six times faster than in 1953–64. …in 1953–64, every 10 percentage point increase in public aid was associated with a 1 percentage point drop in the official poverty rate. Compare that with the experience of the 11 years following the outbreak of hostilities in the War on Poverty. During that interval, every 1 percentage point fall in the poverty rate was accompanied by a 50 percentage point increase in real public aid. …the relationship between public aid and the poverty rate is subject to the principle of diminishing returns.

Not just a diminishing return. There’s a point at which more redistribution actually leads to an increase in poverty.

Just like there’s a point at which higher tax rates lead to less revenue. And the authors recognize this link.

This is a Laffer Curve type relationship, which is to say that while public aid initially decreases poverty, there eventually comes a point at which additional increases in public aid increase poverty. …the effectiveness of additional real public aid expenditures, as a policy instrument designed to reduce the poverty rate, had been exhausted by the mid-1970s. Indeed, any additional public aid beyond the mid-1970s levels would result in an increase, not a decrease, in the poverty rate.

Gallaway and Garrett crunch the numbers.

…to calculate the impact of public aid expenditures on the incidence of poverty in the United States. The greatest poverty-reducing effect occurs at $1,291 of per capita expenditures on public aid, which produces a 6.07 percentage point reduction in the overall poverty rate. However, as the level of real per capita public aid rises beyond $1,291, the poverty reducing effect is eroded. …at $2,407 of per capita public aid, all of the initial reductions in the poverty rate have disappeared. …By 2010, real per capita aid stood at $2,697—a level that produces a 2.52 percentage point increase in the poverty rate. Thus, the impact of per capita public aid in 2010 being $1,406 greater than the optimal, poverty-reducing level was to increase the poverty rate by 8.59 percentage points, according to our analysis.

Here’s the relevant table from their article.

Unfortunately, they didn’t create a hypothetical curve to show these numbers, so we don’t have the welfare/poverty version of the Laffer Curve.

But they do estimate the negative human impact of excessive redistribution spending.

Since the official poverty rate in 2010 was 15.1 percent, this implies that in the absence of that extra $1,406 of per capita public aid, the official poverty rate in 2010 would have been 6.5 percent. …Taking dynamic factors into consideration would probably lower the figure to less than 6 percent. This implies that the actual poverty rate in 2010 was more than two and-one-half times higher than it could have been were it not for the excessive use of public aid income transfers as an instrument of policy. In other words, it may be argued that public aid overreach was responsible for approximately 30 million extra people living in poverty in 2010.

And children are among the biggest victims.

…one in every eight American children is living below the poverty line because public aid payments exceed the level that would minimize the poverty rate.

Ugh, this is terrible news. Children raised in government-dependent households are significantly more likely to suffer adverse life outcomes, in large part because of very poor social capital.

Last but not least, the authors also speculate that excessive redistribution may be one of the reasons why the distribution of income has shifted.

…up to the mid- 1970s, government cash income transfers (public aid) were increasing the incomes of those in the bottom quintile of the income distribution by more than work-disincentive effects were reducing them. The result was a reduction in the official poverty rate. …However, as the volume of public aid payments continued to increase, the work-disincentive effect more than offset the income enhancements generated by the flow of public aid. As this happened, the poverty rate began to drift upward and the percentage share of all income received by those in the bottom quintile of the income distribution began what would turn out to be a long and steady decline.

By the way, I don’t think that there’s a “correct” or “proper” level of income distribution. That should be a function of what people contribute to economic output. I’m concerned instead with boosting growth so everyone has a chance to rise.

Which is why it is especially tragic that redistribution spending is trapping less-fortunate people in long-term government dependency by undermining their incentives to earn income.

The bottom line is that it’s time to reduce – and ideally eliminate – the Washington welfare state.

Though that involves a major challenge since the real beneficiaries of the current system are the “poverty pimps” in Washington.

P.S. This Wizard-of-Id parody contains a lot of insight about labor supply and government-distorted incentives. As does this Chuck Asay cartoon and this Robert Gorrell cartoon.

P.P.S. If you want to see sloppy and biased analysis (paid for with your tax dollars), take a look at efforts to rationalize that redistribution is good for growth from the International Monetary Fund and Organization for Economic Cooperation and Development.

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