Inefficient. Wasteful. Dehumanizing. Inhumane. Conservatives and libertarians commonly attach all of these epithets to the American welfare system. Any reader of Charles Murray’s voluminous accounts of these programs will know, in exacting statistical detail, just how true these claims are of the welfare and entitlement state. But few have gone through the alphabet soup of programs themselves, and even fewer have written about the “personal” side of the welfare process.
I have applied for these programs. I have consulted lawyers, social workers, and other advocates to help me jump through so many hoops and fill out so many forms that I long ago lost count. I am a diagnosed schizophrenic and a college drop-out, but I have enough sense (and enough of an understanding of economics, particularly public choice theory) to appreciate the unalloyed, banal horror of those who fall through the cracks of American society, and the unnecessary barriers put in the way of self-advancement and personal initiative by the very measures designed to help them.
My thesis is simple: first, the welfare state as currently constituted systematically discriminates against the poorest, sickest, and most vulnerable; second, the programs themselves are deeply paternalistic and stifle rational, adult decision-making at every conceivable level of action; and third, that the entirety of the welfare state should be abolished along with labor market regulations (such as the minimum wage) and replaced with a negative income tax or universal basic income.
The first contention, even to conservative ears, is probably the most shocking: welfare spending doesn’t go to those who need it most? Let’s consider Social Security. In general, Social Security payments for non-retirees fall into two categories: Social Security Insurance (SSI), which is earmarked for individuals who have never held a job, and Social Security Disability Insurance (SSDI), which is for people who have either worked and become disabled (that is, have “paid into” the system to some degree) or were disabled prior to reaching adulthood and have no reasonable expectation of becoming employed due to their disability.
When I first applied for SSI benefits, I drove my car to my county’s Social Security Administration (SSA) office, met with a low-level bureaucrat who explained the application process to me, and gave me the reams of paperwork I needed to fill out to be considered for SSI.
Pause and consider what was required of the typical applicant just to initiate the process: a car, the ability to drive the car, the ability to understand and communicate English at a tolerably high level to the bureaucrat, and the mental fortitude necessary to fill out the paperwork. That alone cuts off the lowest rungs of the ladder for the most disabled people, namely those with serious mental retardation, active psychosis, or a severe physical or speech impairment.
But supposing (as I did) that you manage to retrieve and fill out the paperwork, you’re then confronted with the next absurd bureaucratic roadblock: around 90 percent of first-time applicants for SSI or SSDI are rejected, requiring a lengthy appeal process and a closed session court hearing, almost invariably requiring that you hire the services of a lawyer. I am still waiting for the court hearing, and by all accounts I’ll be waiting a pretty long time: the average wait, according to my attorney, is one-and-a-half years.
This is where the public choice aspect of the welfare state comes into play. The bureaucrats in the SSA are rational, and to the extent that they’re rational they’re governed by the same incentives and face similar constraints as the businessman or the consumer. They want to keep their jobs, their funding, and their institutional prestige (such as it is), and the easiest way to do this is to appear to be tough-minded and hard-headed about initial applicants.
Like the Food and Drug Administration with experimental drugs and treatment methods, bureaucrats cultivate a very high “false negative” rejection rate to shield themselves from congressional or public criticism. No FDA supervisor wants to be blamed for approving thalidomide, just as no SSA social worker wants to have his feet put to the fire over encouraging “welfare queens.”
Then, the second go-around, the perverse incentives at play allow for a correspondingly high “false positive” approval rate: if you can afford a lawyer (or afford to have the lawyer paid out of your SSI benefits, yet another perverse incentive) there is a reasonable, albeit not dispositive, chance that you don’t need the scarce SSI or SSDI benefits. But this go-around the SSA, after having wasted the applicant’s time and money, is shielded from the aforementioned criticism. After all, if you’ve gone to the trouble of procuring an attorney, filling out even more paperwork, and waiting a year (or two), you must “really” need the benefits.
All this would be bad enough, from an economic and political point of view, if it wasn’t for the fact that the process and the programs are radically dehumanizing. The reader likely has a good sense now of how that occurs in Social Security, but it applies even more so to Medicaid, a program I’m currently enrolled in.
Medicaid, while partially funded by federal taxpayers, is largely shaped on a state-by-state basis, so my comments about Medicaid are prima facie not as universally applicable as my analysis of Social Security. However, I do think (based on a perusal of programs in other states) that my experience is reasonably typical.
I applied for Medicaid online, and was approved quickly, or at least “quickly” as far as welfare programs go (about four weeks). Upon acceptance, I was informed that I needed to see my physician about a “healthy living” plan of action: that is, a plan to quit smoking, lose weight, lower cholesterol, and the like. I neither smoke nor have high cholesterol, although guilty as charged on being heavy-set, so I can only assume that this is issued to all Medicaid patients in my state. Incidentally, failure to create and follow through on a healthy living plan would result in a higher copay for Medicaid or a total withdrawal of benefits.
On one level, such requirements make sense: the public shouldn’t be footing the bill for, say, smoking-related diseases, especially when the risk of contracting such an illness falls effectively to zero once someone stops smoking (or drinking, or overeating). But from the perspective of the welfare recipient, Medicaid is interposing itself between the patient and his doctor on extremely intimate, personal medical and health-related decisions. It’s bad enough to be diabetic, but it’s undoubtedly worse to be a diabetic without personal agency.
Of course, for programs like Medicaid, it’s almost a metaphysical necessity that these programs be paternalistic, heavy-handed, and crude. For this reason, I don’t think trimming the fat will make much of a difference, either to the taxpayer or to the welfare recipients. Work or job-search requirements are all well and good, but they should be recognized for what they are: one, perhaps more efficient, type of nannyism replacing another type of nannyism. So what can be done about the chronically disabled and the hardcore unemployed?
The first and most obvious step to take would be to stop limiting their employment options. Minimum wage laws, which price individuals with low labor productivity out a job, should be abolished. Even the Americans with Disabilities Act, which raises the specter of lawsuits directed at businesses that “wrongfully” fire a disabled person, should be repealed. Any and all laws restraining free, uncoerced trade, from state occupational licensing laws to laws limiting where and when small businesses can be established, should be ended outright. We’re in a deep pit on our policies regarding the disabled and unemployed: it’s time to stop digging.
Now for the welfare state itself. I’ve already mentioned the difficulty of creating an in-kind benefit program that isn’t paternalistic, so my recommendation is natural: completely end them, and replace the entire system with a negative income tax or universal basic income system. The comparative virtues and vices of each need not detain us here, but the benefits of either should be obvious.
By putting the control of welfare spending back into the hands of the disabled, the poor, and the unemployed, by liberating them from the labyrinthine confines of the administrative state, and by ending the steep drop-off in benefits upon obtaining a job (the so-called “hidden welfare tax”), we will both save the taxpayer’s money and empower the poorest among us.
Moreover, a negative income tax or universal basic income, which would replace all existing welfare programs with a cash transfer system graduated according to income level, would cost far less than the myriad programs currently in existence and largely eliminate the need for bureaucratic oversight.
The welfare state wasn’t built overnight, and I have no expectation that it will be abolished or reformed overnight either. Other contingencies need to be addressed to truly help those who most need our support: a re-invigoration of civil and communal society, a return to self-help and neighborliness, and most of all a renewed emphasis on the bourgeois virtues of thrift, hard work, and voluntary charity.
But first, as in all things, do no harm. We’re doing far too much of that as it is.