How Big Government
Breeds Vice: Perverse Incentives of the Welfare State
GrassTopsUSA Exclusive Commentary
By Gennady Stolyarov II
07-02-07
Expanding the
scope and power of government cannot make people more virtuous than
they otherwise would be. But it certainly can make them less
moral than they would have been in a free society. Vast government
controls, social programs, and handouts, by encouraging permanent
dependence on entitlements, lead to a steady decline in the moral
characters of large numbers of people.
Showing that
big government breeds vice does not require the assumption that
politicians are in some way malevolent or that widespread immorality
is their intention. Indeed, let us assume the contrary: a
hypothetical world of entirely well-meaning and sincere politicians
who believe that expanding government will ultimately improve the
lives of the general public. They do not intend to do harm through
their policies, but the harm ensues nonetheless. We need only look
at several illustrations to see this unfortunate tendency at work.
Compare two
possible worlds: A – where all assistance to the poor and needy is
furnished by private charitable organizations, and B – where the
government provides an extensive “social safety net” consisting of
welfare for the chronically unemployed, Medicaid for those unable to
afford health care, and taxpayer-funded drug rehabilitation programs
for those who engage in self-destructive habits.
In World A, a
man who has fallen on hard times can still get help, and there is a
variety of private sources to which he can appeal and plead his
case. But he does not receive assistance automatically. Rather, the
help he gets is conditional, both on his past and his
present. If he has been an industrious, frugal, upright person who
tried to provide for the future but encountered a series of
misfortunes outside of his control, he is likely to get temporary
assistance. Of course, he cannot rely on private aid permanently and
therefore has a strong incentive to seek steady employment and
rebuild his life as quickly as possible.
Indeed, before
the establishment of the American welfare state in the 1930s, there
existed a vast network of private charitable organizations focused
on helping the worthy poor, a designation widely used at the
time. Private donors had the opportunity to actually get to know the
people they were assisting and to judge for themselves whether such
individuals would indeed use charitable help to smooth the
transition to autonomy. Of course, orphans, the elderly, and the
disabled were also taken care of privately, because it was
recognized that their predicaments were no fault of their own.
But in World
A, there is no room for the man who squandered his money through
wasteful habits or ruined his health through a self-destructive
lifestyle. Addicts, delinquents, adulterers, and others who were
ruined by vice rather than by unfortunate circumstances are not seen
as the worthy poor and are allowed to suffer the consequences of
their actions. Where every man has the right to decide whom he will
help, he can refuse assistance to those that he believes will not
use the aid to improve their condition in life.
Thus, in a
system of solely private charity, there exists a great incentive for
everyone – especially for the poor – to adopt consistent habits of
virtue so as to be able to rely on the assistance of friends,
neighbors, and charities during hard times. Furthermore, there is a
substantial disincentive against immoral behavior, because
the purveyor of vice will suffer the full physical and social
consequences of transgressing against his own nature and his fellow
human beings.
In World B,
where the government provides extensive social services, the
incentives become completely flipped. Unlike a private charitable
donor or a neighbor extending a helping hand, the taxpayer has no
choice over whom his money will help. Rather, some government
official will make that decision for him. The official will engage
in what economist Milton Friedman termed “Category IV spending,”
or spending somebody else’s money on somebody else.
There is thus
a severely weakened motivation for the official to ensure that
taxpayer money does not go to fund the lifestyles of individuals
whose unemployment or physical ailment was caused by their own vice.
Furthermore, the bureaucratic tendency to make all procedures as
uniform as possible will tend to lead to one-size-fits-all treatment
of every welfare recipient, irrespective of his personal qualities
and the reasons for his unemployment.
Hence,
indiscriminate government provision of a “social safety net”
eliminates the disincentives against vice that exist under a system
of solely private charity. To add to the problem, government
programs tend to crowd private charities out of the market for
poverty relief. Since they are already forced to help the needy
through their taxes, many citizens come to see it as increasingly
less worthwhile to devote still additional money to private
organizations.
But large
government social programs go a step further. They are so structured
as to actively encourage immoral behavior, especially among
those with currently limited earning power. These individuals are
faced with an alternative. Either they work hard, save diligently
for the future, and forgo many present enjoyments in the hope of a
better life, or they can give into some tempting vice and still
get money. When choosing between money and hard work on one hand
and money and no hard work on the other, many people are all too
ready to abandon the hard work.
Indeed, the
American welfare state has created a situation where multiple
generations can subsist off of welfare without ever
transitioning to autonomy or even thinking about it. Among the
people who receive welfare, the incidences of violence, delinquency,
broken families, drug use, prostitution, and other signs of vice are
the highest. This is not to say that there are no worthy poor on
welfare, but such individuals remain moral despite the
perverse incentives built into the present system.
To add insult
to injury, government minimum wage regulations make it illegal for a
welfare recipient to work for less than some specified hourly rate.
Thus, even if a man of a low skill level or scant education
wishes to get out of the welfare trap, the law does not permit
him to do so. He cannot take a job paying, say, $4.00 per hour, and
use his work to learn valuable skills and habits that will increase
his future earning capacity. He must remain on the dole, whether he
wishes to or not.
Surely, a
government whose controls discourage individuals from even trying
to reach financial autonomy will ultimately lead many to think
that efforts at self-improvement are ultimately not worth it, since
the law is bound to frustrate them. When they abandon hope for their
future, even the initially more upright welfare recipients will have
no option left to them but to sink into immoral, self-destructive
conduct.
I urge all the
politicians who truly are benevolent and think that extensive
government social services will somehow benefit the poor to
recognize the perverse unintended effects of taxpayer-funded
handouts to the needy. Indeed, such programs in reality amount to
little more than a vast subsidy to vice.
Gennady Stolyarov II is
Editor-in-Chief of
The Rational Argumentator, a magazine championing the principles
or Reason, Rights, and Progress. His works have been published by
Le Quebecois Libre,
Enter Stage Right Magazine, the
Ludwig von Mises Institute,
Rebirth of Reason, and other organizations. Mr. Stolyarov can be
contacted at
gennadystolyarovii@yahoo.com.
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