Wintery Knight

…integrating Christian faith and knowledge in the public square

New York Times columnist exposes the moral hazards created by welfare programs

Ultra-leftist Nicholas Kristoff writes about the incentives created by welfare programs in the New York Times.

Excerpt:

This is what poverty sometimes looks like in America: parents here in Appalachian hill country pulling their children out of literacy classes. Moms and dads fear that if kids learn to read, they are less likely to qualify for a monthly check for having an intellectual disability.

Many people in hillside mobile homes here are poor and desperate, and a $698 monthly check per child from the Supplemental Security Income program goes a long way — and those checks continue until the child turns 18.

“The kids get taken out of the program because the parents are going to lose the check,” said Billie Oaks, who runs a literacy program here in Breathitt County, a poor part of Kentucky. “It’s heartbreaking.”

This is painful for a liberal to admit, but conservatives have a point when they suggest that America’s safety net can sometimes entangle people in a soul-crushing dependency. Our poverty programs do rescue many people, but other times they backfire.

Some young people here don’t join the military (a traditional escape route for poor, rural Americans) because it’s easier to rely on food stamps and disability payments.

Antipoverty programs also discourage marriage: In a means-tested program like S.S.I., a woman raising a child may receive a bigger check if she refrains from marrying that hard-working guy she likes. Yet marriage is one of the best forces to blunt poverty. In married couple households only one child in 10 grows up in poverty, while almost half do in single-mother households.

Most wrenching of all are the parents who think it’s best if a child stays illiterate, because then the family may be able to claim a disability check each month.

“One of the ways you get on this program is having problems in school,” notes Richard V. Burkhauser, a Cornell University economist who co-wrote a book last year about these disability programs. “If you do better in school, you threaten the income of the parents. It’s a terrible incentive.”

About four decades ago, most of the children S.S.I. covered had severe physical handicaps or mental retardation that made it difficult for parents to hold jobs — about 1 percent of all poor children. But now 55 percent of the disabilities it covers are fuzzier intellectual disabilities short of mental retardation, where the diagnosis is less clear-cut. More than 1.2 million children across America — a full 8 percent of all low-income children — are now enrolled in S.S.I. as disabled, at an annual cost of more than $9 billion.

That is a burden on taxpayers, of course, but it can be even worse for children whose families have a huge stake in their failing in school. Those kids may never recover: a 2009 study found that nearly two-thirds of these children make the transition at age 18 into S.S.I. for the adult disabled. They may never hold a job in their entire lives and are condemned to a life of poverty on the dole — and that’s the outcome of a program intended to fight poverty.

Charles Murray of the American Enterprise Institute is delighted that a leftist has finally discovered what welfare programs actually do in practice:

Several people have tagged me and Losing Ground since Nicholas Kristoff’s column on Friday about the ways that social programs can backfire. It was a praiseworthy column—all of us on both sides of the political spectrum should be as ready as Kristoff to acknowledge problems with our beliefs. But it also offers an opportunity to recall the three laws of social programs in Losing Ground, because the backfires are not idiosyncratic. They occur everywhere and always for inherent reasons.

1. The Law of Imperfect Selection. Any objective rule that defines eligibility for a social transfer program will irrationally exclude some persons.

This law accounts for the reason that programs like Food Stamps and the Supplemental Security Income program constantly expand. Whenever the people who administer the programs run into a case of a genuinely needy person who has been excluded under a current rule, they tend to redefine the rule or otherwise alter the program’s administration to be more inclusive, which in turn brings more people who don’t need the social transfer under its umbrella.

2. The Law of Unintended Rewards. Any social transfer increases the net value of being in the condition that prompted the transfer.

Kristoff referenced the increased net value of being illiterate because of the “intellectual disability” payment of $698 per month that leads parents to withdraw their children from literacy classes. But the same thing is true of every payment of any kind that requires people to demonstrate that they have a problem before they qualify for the payment. It is not a defect in program design. It is inescapable whenever you give rewards for having a problem.

3. The Law of Net Harm. The less likely it is that the unwanted behavior will change voluntarily, the more likely it is that a program to induce change will cause net harm.

This is not as obvious as the first two laws, but just as inexorable. My favorite chapter of Losing Ground is a thought experiment about a government program that uses financial rewards to reduce smoking. If the rewards are small, nothing will change. If they are large enough to induce a significant number of people to quit smoking, the program will inevitably lead to more people who take up smoking in the first place and the net number of inveterate smokers.

Fewer and fewer people are old enough to remember, but once upon a time almost all children were born to married couples and almost all young men were physically able to work and knew how to show up on time and work hard. Then, in the mid-1960s, before globalization, before manufacturing jobs disappeared, while working-class wages were still going up, we decided that compassion should be bureaucratized. The three laws of social programs explain a lot of what has happened to the working class since then.

The Daily Caller reported that food stamp usage reached a record high – now up to 47.7 million. That’s about 1 in 6 Americans. We used to be a country of independence, entrepreneurship and hard work. But things changed – we had an explosion in welfare spending. Welfare spending changed the incentives and that changed behaviors. We have to understand that having the government reward laziness gets us more laziness. Taxing people who create jobs gets us fewer jobs. It’s that simple – people respond to incentives.

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3 Responses

  1. BillT says:

    “Yet marriage is one of the best forces to blunt poverty. In married couple households only one child in 10 grows up in poverty, while almost half do in single-mother households.”

    The problems assocaited with single parenthood have been written about repeatedly by those on the right especially Heather MacDonald. Here is another stunning statistic. Adjusted for single parenthood, black and white crime rates (which run 80/20) are equal. The destruction of the nuclear family in the inter city by the social welfare programs that deincented it has been an unmitigated disaster for those in the inter city which those programs were meant to help. Worse, it seems it was the intended consequence of those prorgams.

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