2008 Woodie Awards
View print edition front page as a PDF
Opinions
Column...Bureaucracy, false incentives: Why welfare is broken
By Erin Wildermuth on 3/1/07
As a libertarian, I am philosophically opposed to government transfers of wealth. Period. As a concerned citizen, though, I am more comfortable with transfers of wealth that accomplish their aims of increased equality and living standards for the poor than I am with those that don't.
If government welfare accomplished this I would be hard-pressed to oppose it, despite my philosophical background. However, this is not the case. Welfare programs have proven again and again that they are inefficient and rarely accomplish any long term diminution of poverty.
As far as I can tell, there are at least three reasons for this failure. Government agencies do a poor job of getting money to those who need it, create false incentives for the poor and spend more money on the administrative and bureaucratic costs of maintaining a welfare state than on the poor themselves. These failures are all a direct result of bureaucracy and are greatly diminished when private institutions administer welfare.
The first problem is simply getting the money to the people who really need it. Welfare, like every other bureaucratic regime, relies on forms. While caseworkers may try to bend the rules to help out a family in a tight situation, there is only so much rule-bending allowed in a bureaucracy. If the forms and documents don't add up, applicants don't get welfare. End of story. This works the other way, too. Many people who are able to show the proper forms don't really need welfare. A system that hands out money based on a one-fits-all questionnaire can hardly be as efficient as an organization that is able to tailor aid based upon the specific circumstances of recipients.
Government welfare also creates false incentives that are often detrimental to the poor. Any logical person who is qualified for welfare would only give up their qualification if the benefits outweighed the losses. However, the steps out of poverty are not always significant. The first steps may not even begin to compensate for the loss in welfare benefits. This discourages people from taking these first steps. For example, saving increases a person's assets and may disqualify them. Alternatively, receiving a raise may increase a person's salary by less than the amount of benefits they will lose.
If government welfare accomplished this I would be hard-pressed to oppose it, despite my philosophical background. However, this is not the case. Welfare programs have proven again and again that they are inefficient and rarely accomplish any long term diminution of poverty.
As far as I can tell, there are at least three reasons for this failure. Government agencies do a poor job of getting money to those who need it, create false incentives for the poor and spend more money on the administrative and bureaucratic costs of maintaining a welfare state than on the poor themselves. These failures are all a direct result of bureaucracy and are greatly diminished when private institutions administer welfare.
The first problem is simply getting the money to the people who really need it. Welfare, like every other bureaucratic regime, relies on forms. While caseworkers may try to bend the rules to help out a family in a tight situation, there is only so much rule-bending allowed in a bureaucracy. If the forms and documents don't add up, applicants don't get welfare. End of story. This works the other way, too. Many people who are able to show the proper forms don't really need welfare. A system that hands out money based on a one-fits-all questionnaire can hardly be as efficient as an organization that is able to tailor aid based upon the specific circumstances of recipients.
Government welfare also creates false incentives that are often detrimental to the poor. Any logical person who is qualified for welfare would only give up their qualification if the benefits outweighed the losses. However, the steps out of poverty are not always significant. The first steps may not even begin to compensate for the loss in welfare benefits. This discourages people from taking these first steps. For example, saving increases a person's assets and may disqualify them. Alternatively, receiving a raise may increase a person's salary by less than the amount of benefits they will lose.
Be the first to comment on this story