Welfare's Hidden Waste

http://www.economist.com/news/finance-and-economics/21651897-replacing-welfare-payments-basic-income-all-alluring

Welfare is a generic term that could mean the health and general well-being of a person or a set of federal programs distributing money to either the poor and/or any organization set up to receive payments. Many elements make up welfare benefits to a country's poor and are all ruinously expensive in First World countries. Ideas about how to redistribute money more effectively from wealth producing to wealth consuming sectors, fail to convince me that they constitute real progress. Welfare always gets more expensive for governments, and by extension citizens, since the foundation for propping up the poor needs a consistent cash pile. A cash pile that stays full when the economy is growing but that dwindles when the economy slows down. Budget cuts and downsizing reduce the money for welfare recipients who have by now gotten used to being fed regularly like pigeons at the park. In truth, welfare is difficult to cut whether talking about food stamps for low income or the tax breaks enjoyed by large corporations. Congressmen and women are pushed and pressed to hold on to whichever benefit their respective region is enjoying while anyone suggesting cuts in the rate of increase or even a flat rise in taxes gets quickly labeled a sell out.

Politics are messy when money is being made by the truck load, doubly hard when it dries up. The author enlightens us about some of the thinking on national welfare programs meant to distribute money to everyone and avoid the complex bureaucratic maze that looses money between state and citizen. A straight line is what's needed, say some economists who worry about efficiency and nothing else. This solution leaves out the problem of chronically unemployed people who contribute seldom or nothing at all to the general fund and get a comfortable return on their laziness. This one I think irks regular folks more than most because of the inherent unfairness of such a system that rewards irresponsible behavior. Not to worry, assure other accountants, a person drawing benefits would have to prove they are working in order to draw a paycheck. One aspect that's always overlooked is the ability of welfare kings and queens to game any system set up to catch them. Tell them to show evidence they have work and they'll do just that, until you look away and they quit the job or learn how to fudge employment paperwork. Anyway, adding a layer of checks and balances to prevent scammers is pretty much what we have now and it works for shit. The question that really hangs over this whole debate about welfare and the how, should really be about the why. Why does welfare need to exist at all? It is difficult to think about a society in which some form of government aid doesn't exist, from student loans to HUD mortgages and even tax breaks on personal loans; the fact is the federal government has been in the banking business for such a long time most people can't conceive of private institutions without FDIC guarantees running the mortgage, student loan, and personal loan business. I am trying to imagine it myself and struggling; welfare, understood as wealth taken from productive sectors of the economy and distributed to unproductive ones will cease to exist in the future. Hard to say when exactly the bottom will fall out, but the levels at which governments (not just the U.S) are buying debt and distorting the marketplace, it is a certainty that a HUGE correction is coming. With this correction, welfare will be a thing of the past as central banks try to spike failing programs.

Here is where the real pain hits and why I am against welfare in general and subsidies for the poor in particular. Welfare for the poor has increased as percentage every couple of years since the late sixties, one exception being the mid-ninties when it was cut. Generations of kids have grown up with some form of food stamps and income related to not working and not gaining the higher earning potential that comes from steady employment. They could be forgiven for thinking a link card is basically a credit card that buys food and that someone replenishes every month; no thought is given to where the money really comes from. This is the definition of generational poverty and it is the real waste at the heart of the issue. When human potential is wasted and held down by the 'tyranny of low expectations' the whole country suffers. Debates about how best to distribute money more effectively or which program costs less in the long run are just wonkish debates among eggheads when the people affected have never been taught how to earn, save, invest and contribute. I am not convinced by arguments that use the same re-distributionist techniques because they rely on continuous funding that ultimately ruins lives and perpetuates the system. Real change requires taking away the free money and allowing businesses to hire and grow and sustain. I hope we learn this lesson before the entrenchment of free handouts has caused irreparable damage.