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Posts Tagged ‘redistribution’

This story from the Manhattan Institute’s City Journal makes the point, excerpted below, that the welfare state subsidizes dysfunctional behavior. But read the story to understand how big government destroys lives, ruins families, and creates inter-generational poverty. A very powerful, albeit very depressing article. It’s basically the American version of this grim news report from England.

Connecticut is among the most generous of the states to out-of-wedlock mothers. Teenage girls like Nicole qualify for a vast array of welfare benefits from the state and federal governments: medical coverage when they become pregnant (called “Healthy Start”); later, medical insurance for the family (“Husky”); child care (“Care 4 Kids”); Section 8 housing subsidies; the Supplemental Nutrition Assistance Program; cash assistance. If you need to get to an appointment, state-sponsored dial-a-ride is available. If that appointment is college-related, no sweat: education grants for single mothers are available, too. Nicole didn’t have to worry about finishing the school year; the state sent a $35-an-hour tutor directly to her home halfway into her final trimester and for six weeks after the baby arrived.

In theory, this provision of services is humane and defensible, an essential safety net for the most vulnerable—children who have children. What it amounts to in practice is a monolithic public endorsement of single motherhood—one that has turned our urban high schools into puppy mills. The safety net has become a hammock.

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Here’s a passage from a speech by a well-known political figure, but it wasn’t Ronald Reagan, Ron Paul, or Milton Friedman.

The lessons of history, confirmed by the evidence immediately before me, show conclusively 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. It is inimical to the dictates of sound policy. It is in violation of the traditions of America. …The Federal Government must and shall quit this business of relief.

Interestingly, it was Franklin Delano Roosevelt, in his 1935 State of the Union address. FDR recognized that welfare was akin to a drug that sapped people’s independence. (Or he at least was politically astute enough to realize he should pretend to be concerned about the impact of government-induced dependency.)

Here’s a more recent example, which was cited in a National Review Online column by my Cato colleague Mike Tanner. A prominent politician in DC said that welfare leads to “a cycle of generational poverty, government dependency, and economic disparity.”

But the person who said this wasn’t Jim DeMint, Barry Goldwater, or Friedrich Hayek. It was the former Mayor of Washington, DC, Marion Barry.

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This isn’t a video produced by an anti-welfare group. It’s not even from the United States.

Instead, you’re looking at a straight news clip from England that unintentionally offers a very powerful example of how welfare saps initiative, creates dependency, subsidizes irresponsibility, and destroys the human spirit.

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I’m dumbfounded and amazed. When Democrats and Republicans have a game of chicken, the GOP blinks 99 percent of the time. And I thought for sure this was going to happen in the fight about whether to extend all the 2001 and 2003 tax cuts (the GOP position), or whether to impose a big, class-warfare tax increase on investors entrepreneurs (the Obama position to punish the so-called rich).

Democrats simply needed to get one Republican senator to surrender and they would have 60 votes in the Senate to overcome any procedural objection. But, to my astonishment, this didn’t happen. Democrats threw in the towel. Not totally, the issue is simply being postponed to a “lame duck” session after the election, but it’s hard to see how the left will feel any more emboldened after being kicked in the teeth by voters. But there is a very dark lining to this silver cloud. As the Wall Street Journal warns, many statists actually want a big tax increase on everybody, and they can make this happen by simply sitting on their hands.

Only a week ago, President Obama and his media supporters were asserting that they had Republicans caught in their class-war pincers: They’d lure the GOP into opposing an extension of lower tax rates for the middle class in order to defend lower tax rates for those making more than $200,000 a year.

…[But] the Democrats have cut and run, lest they get blamed for voting for a tax increase in a slow-growth economy. This is how legislative majorities behave when they’ve lost the political argument and can sense their days are numbered.

…Democrats will now enter the campaign’s home stretch with the threat that all of the Bush-era tax rates could expire on January 1. That means the lowest tax bracket would revert to 15% from 10%, the per child tax credit would revert to $500 from $1,000, and millions of middle class families would pay thousands of dollars more in federal taxes.

Keep in mind that this is the not-so-secret desire of many on the left who think the country “can’t afford” to let Americans keep so much of their own money. Peter Orszag has already admitted this since leaving his post as White House budget director. What these Democrats really mean is that they think the only way to pay for their spending plans is by soaking the middle class—because that’s where the real money is.

…Liberals pretend they can finance a European-style entitlement state by taxing only the rich because they know that soaking the middle class is unpopular.

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This little story appeared in my inbox. It’s obviously meant to illustrate the perverse incentive structure created by redistribution, but one wonders why statists in the academic world don’t follow through on their convictions and use this grading system.

A professor said he had never failed a single student before but had, once, failed an entire class. The class had insisted that socialism worked and that no one would be poor and no one would be rich, a great equalizer. The professor then said ok, we will have an experiment in this class on socialism.

All grades would be averaged and everyone would receive the same grade so no one would fail and no one would receive an A.

After the first test the grades were averaged and everyone got a B. The students who studied hard were upset and the students who studied little were happy. But, as the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too, so they studied little.

The second test average was a D. No one was happy.

When the third test rolled around, the average was an F.

The scores never increased as bickering, blame, and name calling all resulted in hard feelings and no one would study for anyone else.

To their great surprise, all failed. The professor told them that socialism would ultimately fail because the harder it is to succeed the greater the reward, but when a government takes all the reward away, no one will try so no one will succeed.

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One of the big problems with statists is that they define compassion incorrectly. They think they are being compassionate when they take other people’s money and give it to somebody that they define as being less fortunate. But genuine compassion occurs when you spend your own money. Another problem is that they define compassion by the number of people getting handouts from the government. A truly compassionate person, however, should strive for a society where the less fortunate are able to climb the economic ladder and no longer are dependent on redistribution programs. So it is definitely bad news that a record number of people – one out of six – now are on the dole in some form or fashion. Part of this growth in dependency is due to the economic downturn, but USA Today also notes that politicians have expanded eligibility and lured more people into dependency.

Government anti-poverty programs that have grown to meet the needs of recession victims now serve a record one in six Americans and are continuing to expand.

More than 50 million Americans are on Medicaid, the federal-state program aimed principally at the poor, a survey of state data by USA TODAY shows. That’s up at least 17% since the recession began in December 2007.

…More than 40 million people get food stamps, an increase of nearly 50% during the economic downturn, according to government data through May. The program has grown steadily for three years.

Caseloads have risen as more people become eligible. The economic stimulus law signed by President Obama last year also boosted benefits.

…Close to 10 million receive unemployment insurance, nearly four times the number from 2007. Benefits have been extended by Congress eight times beyond the basic 26-week program, enabling the long-term unemployed to get up to 99 weeks of benefits.

…As caseloads for all the programs have soared, so have costs. The federal price tag for Medicaid has jumped 36% in two years, to $273 billion. Jobless benefits have soared from $43 billion to $160 billion. The food stamps program has risen 80%, to $70 billion. Welfare is up 24%, to $22 billion.

…The steady climb in safety-net program caseloads and costs has come as a result of two factors: The recession has boosted the number who qualify under existing rules. And the White House, Congress and states have expanded eligibility and benefits.

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