Exaggerated Effects


With the Clinton/Gingrich welfare reform coming up for reauthorization, Cato's Michael Tanner casts a skeptical eye on the law's alleged accomplishments.


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  1. “And, most important, it has not enabled former recipients to become independent and self-sufficient.”

    “The long-term answer to poverty and dependency does not lie with any government program, no matter how well intentioned.”

    Just goes to show what happens when you replace leftist micromanagement with rightist micromanagement.

    Attention: people will not be micromanaged!! They will either succeed or fail on their own devices!!

  2. The fundamental problem with all social safety net concepts is they create a moral hazard – they reduce the tendency of folks to avoid falling off the rope.

    In insurance, moral hazard has a limit switch: if too many people practice it their rates go up. If an insurance company suspects outright dishonesty (i.e. wrecking your car just to get a new one) they can deny coverage altogether. The problem with government ‘insurance’ programs is twofold: No direct feedback mechanism through costs to the individual, and part of the point of such social policies is to make sure no one ever is denied coverage they “need”. In principle the two necessary feedbacks to control costs and prevent abuse are removed.

    I’m reminded of P.J. O’Rourke’s contention that God is a Republican and Santa Claus is a Democrat. To paraphrase, God is big on rules and not necessarily too kind to the poor and disadvantaged. Santa Claus is fond of the poor, and although he may know who’s naughty and nice, he never really does anything about it. Santa Claus is preferable to God in every way but one: there is no Santa Claus.

  3. The idea that there’s no limit switch to social safety nets doesn’t seem borne out by reality. People get thrown off welfare fairly regularly, and it’s not as if they’re living like kings off it. Far more important is the weird limit switches on our far more limited health care safety net–see, for instance, the Periscope item in this week’s Newsweek about parents giving up their kids to foster care so they can qualify for health insurance for psychiatric care and then losing them to the system. The idea that insurance companies should be our model for welfare seems pretty strange, given that you don’t exactly hear about a lot of poor people getting treated remarkably well by their health insurance provider, for instance. It’s a balance, as you say, but I think that balance is wobbling far more in the favor of the taxpayers than the needy right now.

    And if you don’t think there’s a huge disincentive to “fall off the rope”–whoo boy–you should try living hand-to-mouth for a while.

  4. I think it’s pretty clear the current “dole” system doesn’t work. In many places there are so many generations of welfare recipients within a family that everyone has forgotten HOW to work at a job. Social safety nets do nothing but create and maintain a permanent underclass beholden to the government.

    I’m not necessarily saying that “if a man does not work, he should not eat”, but there’s a whole bunch of folks getting the dole who are perfectly capable of saying, “Welcome to McDonalds. How can I help you?”

    And while people may not get rich on welfare, I see enough of them buying steaks, cookies and ice cream with food stamps that I don’t think it’s real bad out there.

    Incidentally….60.1% of federal government outlays go to “transfer payments”-Social Security, Income Security, Medicare, something called “Health”-would that be Medicaid?-,Education and Social services, and Veterans Benefits.

    A paltry 17.4% of the budget is dedicated to defense-the Constitutional part of the budget.

    If nobody’s getting rich, where’s all the money going?

  5. Steve,

    The pisser is that while they’re paying for their steaks, cookies and ice cream with food stamps, they’re standing at the register in FUBU jackets, NBA tanks, Hilfiger socks and Nikes. Wish I had a sugar daddy to pay for my food so I could blow my wad on designer togs.

    Oh, that’s right. They bought all those fancy namebrands at Goodwill for 50 cents per after wasteful middle-classers cleaned out their closets.

  6. Tom:


  7. Steve:

    You should see what Bill Gates and Alice Walton are buying with THEIR welfare!

    I am opposed in principle to tax-financed welfare, because it involves robbing producers at gunpoint to support others against their will. But it is a relatively minor part of a much larger genus. And it serves monopoly capital by preventing the kind of widespread destitution that could destabilize the system (not to mention keeping the potentially radicalized under the supervision of an army of case workers and liberal social engineers). Then, too, the threshold of subsistence would be a lot lower and the polarization of wealth a lot less without all the kinds of subsidy, privilege, and other coercive intervention into the market under state capitalism. In a very real sense, the welfare state is just another example of big business acting through the state to clean up or stabilize the mess they created in the first place.

    I’d like to start with the forms of robbery and welfare that are built into the very structure of state capitalism. Do away with subsidies, banking laws that uphold usury, patent monopolies, and the military-, R&D-, prison-, and etc. industrial complexes, and the role of the federal government in preempting access to a third of the land in the country, and then we can worry about the “welfare queens.”

    When the middle class focuses its main resentment on the underclass, it takes the heat off the REAL welfare deadbeats who run this country.

  8. Steve: Not business, just the monopoly corporations that make their money off the public tit. If you really doubt that the “commanding heights” of the corporate economy are parts of a state capitalist system, or that their profits come mainly from their political connections, maybe YOU need a hat to block the transmissions from Fox News and MSNBC.

    Mr. Stinker: Nope, just wishing not to live under the thousand-year global reich that Perle and Condi are wet-dreaming about.

  9. Kevin:

    Just so ya know, according to the OMB, 60+% of federal outlays for 2004 will go to INDIVIDUALS. Not CORPORATIONS.

    I work in a corporation. I’ve worked with Welfare whores. I know who the bad guys are.

    You’re badly in need of a grip. I’ll see if I have a spare.

  10. Kevin: Quit dodging. You said it, now own up to it. Don’t pull a “Dixie Chic Dodge”. I quoted you saying in the LeftLibertarian group that you are *hoping* for a continuation of the War. You said you WANT another Vietnam (which left 50K Americans killed, millions of Vietimese) all to prove your wet dream of anti-war/anti-Bush and your crackpot theories.

    That is a disgusting and anti-libertarian position and I am calling you out on it (I love Google BTW, so easy to expose hypocrites).

  11. Mr. Stinker:

    No, you CHARACTERIZED what I said as calling for another Vietnam. What I actually SAID was:

    “I hope, before this is over, that the Iraqi experience bites Bush in the ass so bad that the new “Vietnam syndrome” lasts for a
    century and makes the old one look like a momentary attack of cold feet.”

    If what I actually said, in so many words, was so bad, then why weren’t you satisfied with making a direct quote and leaving it at that, eh? To accuse me of desiring American casuaties for their own sake, you have to put words in my mouth. I’d actually prefer American power and the discredit of the neocons to be accomplished with the minimum possible loss of life–so long as they’re accomplished. But I doubt it will happen that way.


    Outlays to individuals, in many cases, serve monopoly capital. When the state creates a “social safety net,” it removes the risk premium of covering potential unemployment, etc., from the total wage paid by the average employer. And by acting through the state to provide these forms of social insurance, monopoly capital effectively cartelizes the costs and removes them as an issue of cost competition. See Rothbard on regulatory “virtual cartels” in Man, Economy and State. The same can be said for “individual” expenditures on higher education, which cartelizes technical training costs through the state and removes them as an issue of cost competition. A regulatory cartel enforced by the state, unlike a voluntary private one, is indefectable, and therefore stable.

    Not to mention the items that don’t appear as expenditures at all: patent rights, banking capitalization requirements, legal tender laws, etc.

    I think you already have a grip–it’s just in the wrong place. 😉

  12. Oh…that’s right. It’s all the fault of business. I forgot. If they’d just EMPLOY everyone at a LIVING WAGE we wouldn’t have any of thee problems.

    And oh, don’t get me started on the banking system and Bildeburgers or whoevertheyare and the illuminati and the trilateralists and the CFR.

    Put your freakin’ tin foil hat back on.

  13. “When the middle class focuses its main resentment on the underclass, it takes the heat off the REAL welfare deadbeats who run this country.”

    Yeah those greedy CEOs and Corporations. It is all their fault. The dude smoken crack, sitting on a couch in his state-subsitized yard at 3:30 am on weekday – HE is the victim!

    “I hope, before this is over, that the Iraqi experience
    bites Bush in the ass so bad that the new “Vietnam syndrome” lasts for a
    century and makes the old one look like a momentary attack of cold feet.”
    -Kevin Carson, 4-25-03, wishing for continued war and millions dead to spite the evil gloating neocons

  14. EMAIL: draime_2000@yahoo.com
    URL: http://www.pills-for-penis.com
    DATE: 01/25/2004 06:23:02
    Perceptions do not limit reality.

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