“Public Provisions” Pitfalls

Nobody likes physical pain, but often it gives us a signal that we need to change our behavior before we incur serious injury. In the sphere of social policy, government entitlements designed to avoid short-term pain too often work against natural and healthy incentives that help individuals to avoid longer-term pain. Many people will endure smaller temporary pains, work harder, save more, eat healthier and build a social network in order to avoid larger future pains like hunger or homelessness. This is not a new observation and has been commented on for thousands of years.

Our nation’s founders were well aware of the importance of incentives. In 1766 Benjamin Franklin declared in a letter to the London Chronicle that England’s poor were the most miserable in the world because England’s welfare programs had destroyed essential incentives, making people dependent on the government. He concluded after his world travels that “the more public provisions were made for the poor, the less they provided for themselves, and of course became poorer,” but “the less [that] was done for them, the more they did for themselves, and became richer.”

Franklin observed that there was “no country in the world where so many provisions are established for them” as in England, including hospitals for the poor, almshouses for the elderly, and generous government support. Of England’s government welfare he said:

The day you passed that act, you took away from before their eyes the greatest of all inducements to industry, frugality, and sobriety, by giving them a dependence on somewhat else than a careful accumulation during youth and health, for support in age or sickness.

In short, you offered a premium for the encouragement of idleness, and you should not now wonder, that it has had its effect in the increase of poverty. Repeal that law, and you will soon see a change in their manners.

While these words may seem harsh, Franklin was a well-known philanthropist who exhorted his peers to help the needy personally and voluntarily. He appreciated the difference between supporting and enabling.

In early America, most poverty relief was delivered voluntarily through relationships. This not only encouraged gratitude, strong relationships and a strong community; but it also allowed those who gave aid to require recipients to take genuine steps toward employment and responsible behavior, when appropriate. Givers could tailor their aid to the needs and best interest of the individuals they sought to help, giving more to the neediest, and less to others.

Private charities still thrive today. However, their efforts are often undermined by government programs that create perverse incentives to work less, spend more and not plan for the future.

Government-sponsored attempts to alleviate poverty are funded by taxes and dictated by regulations. Regulations, by their nature, draw arbitrary lines and apply equally to all citizens. Accordingly, when government creates social safety nets, it creates entitlements, something to which citizens have a right if they fit certain legal criteria. Regulations, not relationships, determine how these programs are administered. If people have a legal right to something, they rarely will feel gratitude for it. If it is denied, they will feel cheated, regardless of whether or not they deserved it in the first place.

Nowhere is the failure of government entitlements more evident than in the failed War on Poverty. Since the 1960s, government spending on poverty relief has risen precipitously even after adjusting for inflation, yet it has had little or no impact on the poverty rate. The only significant progress in reducing poverty, especially child poverty, came from the welfare reforms of the mid-1990s, which required more welfare recipients to work or to train for work. Commenting on these reforms, Ron Haskins, a scholar for the Brookings Institute, agrees that using “carrots and sticks” is the most effective way to get individuals out of poverty. Yet, even if the government would build further upon such reforms, it could not substitute for charity, nor could it escape trampling on individual liberty.

Government programs always involve coercion, because that is the only tool in the government’s toolbox. When your neighbor gets welfare, you are forced to work on his behalf. There is no compassion involved in robbing Peter to pay Paul. In contrast, private charity violates no one’s rights and allows people to express their compassion in the manner and the amount they wish. A shift to a system that relies more on private charity and philanthropy not only would restore liberty and property rights, it also would restore the important natural incentives that motivate people to work hard and to live responsibly.


Christina Martin is Director of the Asset Ownership Project at Cascade Policy Institute, Oregon’s free market public policy research organization.

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  • Ron Marquez

    Yet BHO and his minions continue on an entitlement rampage while those such as Governors Christie and Daniels are trying to turn the tide at the state level.

    Things will only change when enough of the populace decides they want to keep what they’ve earned and elect their government accordingly.

    I’m waiting…..

  • Britt Storkson

    The welfare state never was about concern for the poor. The welfare state was always about taking money by force from those who earned it and giving it to those who didn’t earn it to keep the “takers” in power. It’s pretty hard to compete with someone who gives away money. Just look at the re-election percentages.

    The welfare state (socialism) gives money to both the very poor AND the very rich (corporate welfare) at the expense of the working class.

  • Rupert in Springfield

    >Government programs always involve coercion, because that is the only tool in the government’s toolbox.

    And this is why Socialism will always have a tendency towards what it in fact is, an essentially evil practice. In a capitalist society no one puts a gun to your head and says “you open up a business and start employing people or else”. In a socialist one they do exactly that – you pay for that which your neighbor does not feel inclined to do or else. A capitalist society generally will have no law proscribing people from acting in a socialist fashion should they chose to do so privately. One is allowed to work as hard as one wants and give money away to those who chose not to. A socialist society depends on proscribing capitalist behavior. Business is heavily regulated and taxed, The harder you work at it, the more your work is apportioned of to those who chose idleness.

    It is this dependency upon compulsion as an essential element of socialism that will always give it the greater tendency towards evil. The greatest mass murders, the Soviet Union, Nazi Germany, Mao’s China, have been in the name of socialism and this is no surprise. Socialism does not beget mass murder, but more often than not it is an essential element. It is for this reason attempts towards socialism, and those who promote such a system, should be viewed with great skepticism.

  • valley p

    So this explains why Sweden, Norway, Denmark, Finland, France, Germany, and the rest of Western Europe, have more poverty than the United States and Great Britain?

    Oh wait, it turns out that the welfare states have LOWER levels of poverty than we do. Thus your theory, relying on limited observations of one very rich person in the 18th century, appears to be wrong.

    But don’t let that get in the way of your beliefs.

  • Bob Clark

    Logic is also on the side of fostering individual initiative and reigning in the size of government. I personally have chosen to produce less because of marginal tax rates approaching 40 to 50% or more, choosing more leisure in its place. I also choose to give less because as I see it the government has taken over the role of forcing charity by providing more entitlements indiscriminately to both the deserving and undeserving. Guess what if you increase tax rates on the productive and offer more to those choosing to be less productive? You get less economic output, and after we hit debt constraints and public spending constraints, public services will be cut abruptly as in Greece and California. Nobody really wins in the long run when government is excessive as it has become since the turn of this century and was back in the 1970s.

    Keep Europe in Europe!

    • theBeav

      Yet as valley p noticed above, poverty and income inequality is greater in the U.S. than in any other post-industrialized nation, which in large part explains our overall poor health and general lack of well-being. The Keynesians of the world are slowly being proven correct, while the Friedmanites not. Are we on the road to serfdom? So says you and all the other die-hard believers in the “free-market”, but it sure seems more like we’ve been on the road to private affluence and public squalor for the last three decades. And, yes, you’re reaction in terms of your philanthropic behavior is expected and appropriate.

      Keep democracy in the U.S. and let the chips fall where they may.

    • valley p

      Logic and experience and data all suggest that there is a dynamic tension between how much help governments should provide people and how much people ought to be left to their own devices. There is no magic formula. Sweden had too generous a welfare state for a time. They cut it back and had good results economically without increasing poverty rates. Germany has a very generous welfare state (and has had since the mid 19th century) and a very wealthy, productive people. Compared to other wealthy nations the US already has the weakest safety net, yet our economic growth and productivity are not much different than Sweden or other nations. Cutting our welfare further will only increase poverty. It will do nothing for economic growth and might have the opposite effect simply because more poor people are a drag on growth (low productivity and low purchasing power).

      There is no direct line between tax rates and economic activity. Clinton raised the top rate and the economy boomed. Reagan lowered it and the economy boomed. Kennedy lowered it and the economy boomed Bush Lowered it and the economy went over a cliff. The lesson we ought to learn is that we have business and financial cycles that happen irrespective of small changes in tax rates. A few points one way or the other just do not matter.

      California has always been a high tax state and yet has had the most dynamic economy in the nation and has led the nation and world in innovation. Greece has always been a poor nation that simply got over generous with respect to what they collected in taxes. This is largely due to widespread corruption by the way, resulting in people NOT paying the taxes they are supposed to be paying and hence big deficits.

      You made an individual choice to cut back. Great for you. I think you are wise. I have done the same though my motivation has nothing to do with tax rates and everything to do with valuing free time over more money.

    • Rupert in Springfield

      Obviously logic and experience are what first needs to be disposed of to make an argument for socialism.

      The first piece of false logic we have to buy into is the notion that Sweden Denmark et. al. have a more socialist model as regards the welfare state than the US.

      Clearly this is patently untrue even on the most cursory examination.

      To my knowledge no place in the world allows greater access to the welfare system than the US. Just by being here you are entitled to a vast array of benefits that you couldn’t touch in other countries.

      In addition, the US provides welfare on an international basis – such as national defense. Does Sweden or Denmark or Norway subsidize our national defense? Obviously not. Do we subsidize theirs? Of course, and have done so for over half a century.

      Welfare from the US, in the form of national defense, is the main reason why other countries are able to spend on social programs the left loves.

      Therefore to argue that other countries have surpassed the US in some aspect of social fitness, one has to utterly dispense with logic and reason – They are only able to do so for two reasons:

      Welfare subsidies from the US and restrictions on acess through citizenship requirments and strict immigration law.

    • dartagnan

      “I also choose to give less because as I see it the government has taken over the role of forcing charity by providing more entitlements indiscriminately to both the deserving and undeserving.”

      I know many people who raise this argument against personal charity. You all should be grateful to the government for providing a convenient rationalization for your selfishness and lack of compassion.

  • Steve Plunk

    I guess if you ignore the poverty socialism has caused in other nations you can make it seem somewhat benign. Socialism taken as a whole has been a failure and will always be a failure. Using health outcomes as a measuring stick ignores issues such as obesity and poor choices. “General lack of well being”? Now that’s a made up measure if I ever heard one. Income inequality doesn’t mean anything other than there are rich people. It’s a socialist measure since everyone should be equal in their eyes.

    The public squalor we are seeing is the result of the ineptitude of our government and the corruption brought to government by unionized public sector workers. In short government here is wasteful and abusive of it’s citizens. The solution is a steady move toward smaller government.

  • valley p

    “I guess if you ignore the poverty socialism has caused in other nations you can make it seem somewhat benign. ”

    Except that socialism in Western Europe has not caused poverty. It has factually alleviated poverty. Its easy to look up poverty rates by nation to confirm this. The median income is higher in most of western Europe than it is in the US. And the percent of people living below the poverty line is much much lower.

    “Obviously logic and experience are what first needs to be disposed of to make an argument for socialism.”

    You are confusing logic with rationalizing. Or more likely, you are unable to reconcile the conclusions of your own logic with actual facts, a problem you seem to have often. Your logic may lead you to conclude that “socialism” results in no one wanting to work and increasing poverty, but facts show that a high level of socialism is not a disincentive to work and leads to less poverty, not more.

    But why let facts get in the way of your logic?

    Our national defense is not welfare for other countries. We maintain over 100 bases overseas for our own purposes. Some of these bases are fully paid for by host nations by the way. In any case we do not do it out of charity to other nations. We choose to spend money as we see fit for the things we care about and so do they. Total government expenditures, even factoring in military, are much higher in W. Europe than they are in the US.

    “In short government here is wasteful and abusive of it’s citizens. ”

    That sounds like an argument for changing those who govern, not for cutting back on social welfare. Unless you think people on Medicare and SSI feel abused.

    • Steve Plunk

      How did socialism work out for the Soviets? The Chinese before capitalist reforms? Venezuela? How’s that going? The list goes on and you are ignoring everything except for Western Europe. Hold on, the great socialist experiments in Western Europe are failing because of unsustainable costs? That’s right. It has failed or is failing everywhere.

      The reason government is wasteful and abusive isn’t because of the individuals who run it or work for it but because any organization given the power and size our government has will become what it has become. The only solution is to make it smaller. Oh, and cut their pay.

      • valley p

        “How did socialism work out for the Soviets? The Chinese before capitalist reforms? ”

        You confuse totalitarian communism with Democratic socialism. They are not the same thing Steve. If you can’t discern the differences, then that explains your confused attitude.

        Venezuela was desperately poor when it was run by capitalists, and is still quite poor under a self described socialist President. Just like Cuba was poor before and after its revolution.

        “The list goes on and you are ignoring everything except for Western Europe. ”

        OK. Then add in Canada, Australia, New Zealand, and Japan if you like. They all have pretty generous socialistic policies alongside Democracy and capitalism. And they are all quite wealthy and have very little poverty, less than here in the good ole US of A.

        “Hold on, the great socialist experiments in Western Europe are failing because of unsustainable costs? ”

        No Steve, the great social-democratic experiments are experiencing difficulties financing current operations because of the current global downturn. When national incomes decline, public expenditures go into deficit or they have to be cut. In Europe’s case, they are less capable than we are of sustaining deficit spending for all sorts of economic and cultural reasons too complicated to tutor you on here. What we are all experiencing (except for China, Brazil, and India) is a failure of capitalism, not socialism. Capitalists, particularly bankers, gambled big on real estate and lost, and they took national economies down with them. We and Europeans are experiencing the tsunami they caused.

        “The reason government is wasteful and abusive isn’t because of the individuals who run it or work for it but because any organization given the power and size our government has will become what it has become.”

        Well that is your opinion and you are entitled to it. But the historical evidence is that large governments have sustained themselves for many many years through ups and downs. In the US we had our worst ever depression when we had a very small Federal government with a fraction of today’s powers. We averted a 2nd depression only by having a large government with great economic authority.

        Modern technological societies can’t exist without large technocratic governments. And the more technocratic our economy becomes the more government we will need, not the less.

        If you don’t believe me, then go ask the poor folks living around the Gulf. Deep sea drilling requires very advanced technology, and when things go wrong it requires a huge response capability. Nothing like a few oil wells in Oklahoma. Picture the gulf event happening in a world where no government exists to manage and respond to the crisis. BP would have just walked away from the mess they made on day one and stuck another hole in the sea floor somewhere else, just like they do in Nigeria today.

        • Steve Plunk

          Confused attitude? No. In the world of socialism/communism there are various degrees of economic freedoms and political freedoms. Every country’s form is a little different than the others. What matters in all these cases is the lack of free markets and a high level of government taxes or takings. The less free the markets and larger the government intrusion the less prosperous the country.

          Now every country has some level of government taxation and market interference but we are talking about the degree of those things. Just like medicine too much and it becomes poison. I am arguing us and many other countries have moved too far and need to move back. Europe is learning the same lesson.

          Your illustration of gulf drilling is another of your reductio ad absurdum arguments. Nobody is calling for the elimination of government and environmental protections. We are arguing for less government and more reasonable regulation. You picture a world with no government and I could easily picture a world with Big Brother watching us. Both are unreasonable and fail to advance the debate.

          Capitalism hasn’t failed, capitalism was nearly killed by government but has survived. The socialist/capitalist hybrid model went too far toward socialist to work properly.

          • valley p

            “The less free the markets and larger the government intrusion the less prosperous the country.”

            I hate to keep bursting your bubble here but that statement is false on the facts. Denmark has very high taxation yet is among the most prosperous nations on a per capita basis. Germany is as well. Somalia has zero government intrusion on the economy and is the poorest nation on earth.

            “Just like medicine too much and it becomes poison. ”

            Here we are finally in agreement. It is a matter of degree. We disagree on the appropriate dose.

            “Your illustration of gulf drilling is another of your reductio ad absurdum arguments”

            No. But it is another example of your misusing reductio ad absurdum to counter my arguments.

            “Nobody is calling for the elimination of government and environmental protections.”

            I didn’t say they were. I said a large problem caused by complex technology requires a large capability to respond, which means a large government, not a small one. Its true for energy policy, banking, environment, and health care among other big endeavours. Arguing for less government and less regulation is precisely what led to the well blowout and hte economic meltdown. There were insufficient rules and oversight, brought to us by Reagan, Clinton, Bush-Cheney and perpetuated by Obama. Put it this way, we had zero banking crises from Roosevelt to Reagan. What changed? Deregulation amidst increasing financial transaction complexity.

            “You picture a world with no government and I could easily picture a world with Big Brother watching us. Both are unreasonable and fail to advance the debate.”

            We agree. But constantly arguing for LESS government without putting forward any ideas about how much government is the right amount also advances nothing. You made the comment above that the private sector is always better. That suggests either no or extremely limited government, approaching zero. You constantly excuse private sector failures or blame them on the government, as you just did above with the ODOT example. I think your views are simply way out of balance.

            Capitalism failed spectacularly in the Gulf and in 2007-08. And it has done so time and again since at least the Tulip mania of the 16th century. Left to its own devices it overreaches, becomes speculative rather than productive, and creates conditions for huge economic or environmental disasters. Your failure to recognize this lets you blindly cheer lead for irresponsible and sometimes criminal behavior.

            Just my opinion.