Imagine There’s No Welfare, Its Easy if You Try…

A few days back I posted (here) on an article in the NYT that focused on recipients of welfare (usually Social Security, Medicaid, disability) who are dependent on the state but also seem without options. My post ended on a somber note: “the expansion of the safety net has been accompanied by changes in social norms and the displacement of private institutions. At one time, people…might have been confident that their extended families and congregations would never let them fall into abject poverty in the absence of public programs. But it is difficult to imagine that a significant reduction in entitlement spending would lead to a revivification of a world that has long passed.” As a result, reform in entitlement programs—which I see both as inevitable and desirable—will induce a lot of pain, and this should be a source of concern, particularly if it makes incremental reform impossible in a democratic system.

At Ace of Spades, one commentator linked to the post (with the tag: “Americans seem to have difficulty imagining a time when there was no pervasive government-run welfare state”).

“There was a time when the arm of the federal government did not reach far at all, and citizens had to rely on themselves, their friends, their families, and their communities for help and support. And you know what? It worked, mostly. … Misery and hardship is the lot of humanity on this earth. Yet our forbears managed to not only get by, but to build the greatest nation in the history of the world…and they did it without an overbearing, interfering, smothering nanny state monitoring their every breath.”

Of course, it is not difficult to imagine a time when there was no welfare state. That is, in fact, quite easy (no more difficult than imagining a time when dinosaurs ruled the earth). The difficulty comes in charting a course back to that original position. Moreover, I would not deny that there was a time pre-welfare when citizens relied on “themselves, their friends, their families and their communities for help and support.” One may be justified in longing for a return to these times (although these claims are often tinged with a bit of romanticism).

The key point of my original post is there have been significant changes in social institutions and norms in the postwar period. Arguably, much of this has been driven by policy decisions that have altered individual behavior and displaced private institutions. It was once a norm for extended, multi-generational families to live together and pool resources. It is no longer.  Indeed, procreation outside of marriage will soon be the rule. Private pensions and savings once provided the primary sources of retirement income; now two of the three legs have disappeared for many, leaving them dependent on Social Security. Private institutions that once had a mission to provide others in times of need have in many cases been starved for resources (“Why tithe when I pay taxes?”) or coopted by the state,  becoming quasi-private service delivery organizations that would  wither on the vine without a flow of public funds.  If one believes that political and social development is path dependent, one should not expect an instantaneous return to a previous branching point. Indeed, the path may prove arduous.

One could argue—and I think persuasively—that elements of the old order may reassert themselves in the future. But the future is a big place. Changes will not come quickly and not necessarily in ways that one may hope. Significant reforms in entitlements will impose a fair amount of pain in the interim. For some, the pain will be minimal (e.g., readjusting the timing of retirement, deleting costly items from the bucket list). But for others, it will be devastating (e.g., selling the family homestead for rent and food, foregoing medical procedures that could extend life or improve the quality of life).

The observation that there once was a time when welfare did not exist is a bit too easy. We can all imagine a world without welfare. Yet, it tells us nothing about whether a return to this original position is possible (or likely) and whether individuals will willingly accept the sacrifices it will entail.

The characters described in the NYT article referenced in the original post were working class or lower middle class individuals who were sympathetic to the Tea Party but were simultaneously fearful of how they could survive (in some cases, literally) without their existing entitlements. They were not Reagan’s mythic welfare queens, exploiting the system for a life of ill-gained luxury. One can only wonder whether their embrace of small government will prove all too thin once they understand the short-term consequences?

Ideally, reform would occur in a deliberate and reasoned manner. But if broad support for reform is difficult to create or maintain, an incremental path to reform will be politically impossible. Ultimately, fiscal crisis could open the door to changes that are far less compatible with liberty than one might hope. This too, is not difficult to imagine.

16 thoughts on “Imagine There’s No Welfare, Its Easy if You Try…

  1. Marc,

    Great to see you sparking a conversation on these important questions. And you realism about the possibilities and constraints is certainly necessary to keep in mind when we talk about reform. But I would only ask whether your position induces resignation to the fact of the creeping (or more accurately, crept) state rather than a path forward. I’d love to hear your thoughts on how we might revitalize civil society and individual responsibility to change the path we are on (which can only end in the erosion of so much we believe in).

    GC

    1. Great question. My answer is not going to prove too satisfying, I’m afraid. I tend to assume that civil society institutions and norms emerge spontaneously overtime. Although they can prove robust, they can also be destroyed as a result of policy interventions. Once that occurs, I am not convinced that one can easily recreate them. They may well reemerge (albeit in somewhat different forms) but this will occur as a result of repeated human interaction.

  2. The change can be quite instantaneous. The collapse of the Soviet Union is a good example. It was the ultimate nanny state, cradle to grave healthcare, subsidized housing, free education, a guaranteed job, everything the Democrats want. Then, it evaporated, almost overnight. The quality of life declined precipitously. Average lifespan dropped markedly. Yet two decades later, they have recovered completely and then some without all the nanny state attachments.

    1. Hm… Estonia or Slovenia might be happier comparisons. Russia’s market reforms stalled with Yegor Gaidar’s sacking in 1993. The other countries went much further. However, by the late 1990s, almost all of eastern Europe had reconstructed expansive welfare states, just without the market-crushing regulations and inflation that Russia continued to suffer.

  3. Jardinero One’s thesis is spot on. Today, America is bankrupt. The government doles out more than it takes in in taxes. The government has tied an albatross of debt around every American’s neck for the next 3 generations. Due to money printing,the American dollar will soon be inflated into worthlessness. When,because of the above economic conditions, the Welfare checks won’t buy much there will inevitably be social disruptions throughout America,especially in the cities. What is happening in Greece will soon happen in America.Many Americans see this situation on the horizon and are buying firearms in increasing numbers to protect themselves and their families. They are also stocking up on food. Maybe this scenario is best for America in the long run. Sort of a tough love situation where the armies of entitlement receivers will have to relearn self responsibility and self reliance. I think that this would be best for our nation. Especially if the American people through off the yoke of political answers to economic and social problems. Of course there is always the question of whether or not the political class will accept the new status quo. Probably not. At which time that parasite class will roll out the gestapo and open up the gulags. People who have power hate to give it up. What a sad state of affairs.

  4. This same discussion is taking place on many blogs and the conclusions are all about the same. No one has yet found the argument that will convince people who believe there is a government solution to every problem that in the long run, if we want any of these government solutions to survive we have to make incremental changes to them now. They seem to believe that if rich people are taxed enough then we can have a full blown, European style welfare state. They aren’t convinced by Europe’s current problems. They probably won’t be convinced until there is a complete collapse and then they will probably still argue that the fault lies with those who wouldn’t fund government programs enough.

    Regarding the NYT piece: advocates of expanding the welfare state regularly support their case with anecdotal evidence. It is probably the most effective way to persuade because one publicized adverse effect of limiting social welfare (or suicide caused by bullying, or death from some disease or other) trumps a thousand unpublicized positives. Advocates of limiting the reach of government need to adopt this technique.

    1. “They seem to believe that if rich people are taxed enough then we can have a full blown, European style welfare state. They aren’t convinced by Europe’s current problems.”

      …..And the reason why the current Euro-Zone problems don’t convince anyone in this regard is because these problems have been painted incorrectly as caused by “evil bankers” who “ignored” government regulations. In my mind, here’s the correct train of blame:

      1.) Euro-Zone Nations, not having to largely defend themselves thanks to the US, erect high tax-regimes and set up overly generous Welfare-States. Result: huge outlays that couldn’t last.

      2.) Highly educated Euro-Zone women decide to have few or none children. Result: fewer and fewer taxpayers, reesulting in smaller and smaller revenue-streams.

      3.) Public-Employee Unions jump on the gravy-train. Result: more and more consumers of tax-revenues, and fewer generators of same.

      4.) Weaker Euro-Zone nations like Greece start to sputter, but cook their books in order to meet standards and join the EU, which, due to the wealth-transfers embodied in that organizations, allows the gravy-train to last a bit longer. Result: Healthier nations like Germany get stuck to their own personal parasites, but, in order to “keep the EU dream alive”, just keep paying without complaint.

      5.) Bankers come along and “help” Greece and others address and hide their difficulties by using derivatives, SPEs, etc. Additionally, Bankers are forced to buy “safe” government bonds for their balance-sheets and keep 0% risk-capital for them. Result: IT’s THE “GREEDY” BANKERS’ FAULT!!

  5. I am coming to your piece from Monty’s essay at Ace’s place. We have a tool that can guide us back to those simpler days; Adam Smith’s Invisible Hand. The Progressives knew they had to disengage the public from recognizing the costs of their agenda, simply re-engage the taxpaying voters and allow society to make an informed decision on the value of the welfare state. Not a tax cut, no changes to current knot of regulations, just a simple check – certified funds due at the start of the US Government fiscal year. Let the voters who are now cognizant of the value they perceive provide us with a new political class, with a mandate and a plan for change.

  6. No one can deny there should be some kind of safety net these days simply because of the cultural changes we have gone through. There is no more dependence on family or community any more for a vast number of Americans. That’s what a mobile society got us. Not that this is a bad thing, being mobile made ideas and concepts throughout the country more homogenous.
    Mind you, the necessity for the safety net resides mostly in the large population centers, in my estimation.
    I’m old enough to remember the birth of the welfare state and, in fact, my family availed itself of government “largess”. It was not a proud time for me or my family.
    The difference between then and now is the scope and the accountability of those receiving assistance. Back then it was truly limited to just surviving. It gave one the impetus to get off public assistance as quickly as possible. It was backed up by case workers that did their job. Guarding the public purse from those that would scam it. Oh, the scamming still happened but, one was always mindful that a case worker might drop by any moment to check for liquor or more than one package of smokes or question how you managed to buy a slightly better used car without a job of some sort on the side. Your assistance could be cut off at a moment’s notice just on suspicion or on the words of a neighbor.
    Means testing it was and how it should be.
    These days people are actually rewarded for signing up others for food stamps!
    There is little to no accountability on the part of the government or the recipient.
    Nobody cares any more. The public purse is bottomless!
    There are even programs to give away free cell phones and time to use them!!
    I don’t have a cell phone. (not that I would want one). Why should I be expected to provide one for others?
    The safety net should be provided but, accountability should also be adhered to.
    Human nature tells all of us to do as little as possible to survive. Though many of us struggle to do more than that, it’s still a fact.
    When government tells us we don’t have to work too hard or at all and still have access to food, clothing, shelter, communications, vehicles, health care and flat screen TVs ’cause someone else will provide them for free, what do you expect will happen?
    We are a mobile society, as I said. What is wrong with a policy that says, if you want government assistance, for a limited time, how about moving to where the jobs are? In fact, give more assistance to those who would screw up the courage to uproot to better themselves.
    Will any politician have the gumption to say things like this? Implement a means test for example? Suggest folks have to move out of places like Detroit, for example to get assistance? Not on your life! Those kinds of policies are vote killers!
    We have become a nation of slaves.

  7. Often left out of the discussion is the tremendous opportunity cost of collectivism. This is the century of the biotechnology revolution, with large increases in human lifespan to come, but it could all be undone by the bureaucracy of socialized medicine that sets as its goal the punching out of its subjects before they cost the state too much in upkeep. Unless a vigorous black market develops, “80 and out” could be the fate of our children and grandchildren.

  8. The oldest people in the US area still, by FAR, the richest people. The median person ages 60-69 has over $250k in savings, the assertion that such an amount can’t be one of ‘the legs of the stool,’ as it always has, is just absurd. If your house is paid for — and it certainly should be by retirement — you can live off that amount alone for 15 years at a reasonable rate of return [7%]. Even with the horrific performance of the Dow since 1997, it’s compounded at 6.72% with record low inflation in recent years.

    If you’re in the top 25%, and with a college degree and a ‘real job’ in your past you most certainly will be, at the same age you’re worth almost $750k [median]. You can live off that forever if you own your house and don’t spend extravagantly.

    Benefits are going to have to be cut for the top earners, as much as it pains me to say it, because the math is unassailable.

  9. well f#(l< me Freddy, liberals that make sense! Sweet gee-bus there is hope for the world after all. Now, be careful, the professional left will crush you without remorse.

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