Book Review:
Is the welfare state justified?
Finally, there is a lucid answer to that question. I say lucid, because, in the past, the answer always has been given from the perspective of the bleeding-heart liberal or the "eat-cake" conservative.
The lucid answer that I refer to comes from the pen of Dr. Daniel Shapiro, professor of philosophy at West Virginia University. He has done a remarkable service for society with the publication of his new book "Is the Welfare State Justified?" (Cambridge University Press, 2007).
On seeing the book's cover, the first question I wanted Dr. Shapiro to answer was: Is the welfare state justifiable?
He dutifully answered me by defining the two most important social welfare programs that we have -- health care and retirement income. This is the first time that I have read anything regarding health and old age benefits wherein the author bothered with definitions. How novel!
Each of us will succumb to illness or injury in our lifetime, and we have come to expect medical care when we need it. The option of not helping the ill or the injured was settled long ago. We cannot stand idly by and watch others suffer.
Hippocrates offered pain relief to his patients by having them chew on willow bark. Today, the same drug (aspirin) is available over the counter. You may think my example as trivial. However, I chose aspirin for a reason. Going from doctor-prescribed herbs to self-medicating patients represents, at least in my mind, the quantum leap that has landed us in our current health care dilemma.
Once upon a time, there was one Hippocrates. Hence, health care was rationed as he could see only a limited number of patients. Today, we have Docs-in-a-Box available 24/7. Yet we believe health care is rationed too stringently. Is it?
Dr. Shapiro discusses the aspect of rationing health care in a thorough manner. But before diving in, he takes special care to educate the reader about what we refer to as private health insurance and government health care. We have neither private (market health insurance) nor government insurance (national health insurance). We have a hodgepodge system of health care options cobbled together as a result of federal and state legislation and state insurance regulations.
Make no mistake -- health care is rationed now and will continue to be rationed. Dr. Shapiro describes how both systems (market and national insurance) ration care and then makes his recommendation for the best plan.
"Is the Welfare State Justified?" also delves into the sources of retirement income. If we live long enough, we'll need some form of income subsidy. Should government (the taxpayer) bear the expense of old age benefits? Or should individuals (and their families) bear this responsibility?
Once again, the author points to a system that is neither a national plan nor a market plan. Our retirement plans have resulted from years of meddling with the tax code. And like my aspirin example, "if it feels good at the time, then chew on it" seems to be the way our government has dealt with the regulation and taxation of old-age income.
In the past 50 years, health care and retirement income have come to be viewed as entitlements. We know that Social Security and Medicare are bankrupting this nation. The situation is only going to get worse.
Medicare and Medicaid have survived this long on the kindness of cost-shifting their respective burdens to group health insurance policyholders. Social Security is failing based solely on demographics. We cannot tax today's youth enough to keep the Baby Boomers on the golf course.
Policymakers could right the ship in time before it sinks if they would consider Dr. Shapiro's analysis and recommendations. Because his arguments are based on the philosophy of social welfare, and not on the partisan politics of entitlements, Dr. Shapiro succeeds in understanding how to overhaul the welfare state.
By coincidence, I began reading "Is the Welfare State Justified?" just after re-reading "Theory of the Leisure Class" by Thorstein Veblen. Though written a century ago, Veblen understood exactly where society was headed. He coined the term "conspicuous consumption." High-priced goods and services sometimes are referred to as Veblen goods, meaning that people desire them more as their price increases. Thus, do you wonder why increases in health care costs outpace the general inflation rate?
I can only hope that our policymakers will read Dr. Shapiro's book. His insight on the philosophy of the welfare state outclasses anything that I have read prior.
Showing posts with label welfare state. Show all posts
Showing posts with label welfare state. Show all posts
Friday, February 8, 2008
Friday, September 14, 2007
War On Poverty Gave Us Entitlements (2)
Part two of two parts.
Regardless of all the welfare programs that we have tried, we are no more advanced than the ancient societies that allowed the poor to glean the fields. Like the ancients, we spend on welfare what we feel we can afford at the time.
If our welfare programs had truly attacked the root causes of poverty, then we would have seen some results by now. Head Start schools would be consolidating due to a dearth of students. Child abuse would be fading from view.
But the truth is that Head Start still serves only a portion of the kids who desperately need that respite. And watch the news or read the statistics; child abuse, if not outright child torture, is still all too common in West Virginia.
Welfare spending has done a wonderful job of alleviating the state of being poor. The best example of this comes from elder care.
Millions of the elderly have been spared a life of destitution because of Social Security and Medicare. The social safety net for the aged is broad indeed. An old man may not live out his dying days in a suite at the Ritz, but he is assured a bed in a nursing home.
Unfortunately, this charitable solution is about to end. The aging baby boomers will bust the system.
Had Social Security been used only as a safety net, or had workers been required to save more for their own retirement, then Social Security would be solvent for another century. Instead, Social Security became an entitlement. Whatever surplus the plan ever had has been frittered away.
We no longer see poor people wearing rags. Clothing vouchers and thrift shops have given the poor a contemporary wardrobe that lets them blend in with the crowd.
We no longer see the starving poor. Food stamps have cured undernourishment. But the food stamp program is an entitlement, and the poor have learned nothing from it about nutrition or meal planning.
We have created a class of people, some of whom are third generation, who have mastered the welfare rules. Trust me: They know the eligibility rules better than their case workers.
Because liberals have always viewed poverty as a structural rather than a cultural problem, they desperately needed to develop a spending program that could mask, if not altogether remove, the stigma of poverty. They succeeded (mightily). But in doing so, they also created this class of welfare pros.
This is but a brief summary of forty years of welfare spending. In short, welfare spending has bought us much wallpaper and window dressing. The foundation of the house, however, is what we should have concentrated on.
There are causes of poverty that we will never eliminate. We will always have to take care of the mentally retarded, those with severe birth defects, and those afflicted by a debilitating illness or medical condition.
There are causes of poverty that we will exacerbate. To tease people with dreams of hitting the lottery is most irresponsible. Jack Whitaker won the Powerball jackpot. Ask him what his winning ticket was worth now that he’s spent the money.
We may never cure poverty. However, the day will come when we spend much less ameliorating it. Gone will be the clothing vouchers. Food stamps, the first of which were used to buy baked beans, will possibly return to that role. Gone will be the Social Security largesse. And then the raw images of gripping poverty will again appear in a popular magazine.
The United States is so wealthy now that we cannot image a return to our recent past. But it will happen. And when that day comes, let us hope that some social scientist bothered to save a 1961 dictionary so he can redefine poverty for that era.
In my old neighborhood, we had a running joke about Little Debbie cakes. The joke went like this: "Only people on food stamps buy Little Debbie cakes." To this day, I have never bought them.
Whenever I see a picture of Little Debbie, I remember that joke, and I also think of Marie Antoinette. Though neither of these females cured poverty, their respective cake recipes can teach us a valuable lesson: Timing is everything.
Regardless of all the welfare programs that we have tried, we are no more advanced than the ancient societies that allowed the poor to glean the fields. Like the ancients, we spend on welfare what we feel we can afford at the time.
If our welfare programs had truly attacked the root causes of poverty, then we would have seen some results by now. Head Start schools would be consolidating due to a dearth of students. Child abuse would be fading from view.
But the truth is that Head Start still serves only a portion of the kids who desperately need that respite. And watch the news or read the statistics; child abuse, if not outright child torture, is still all too common in West Virginia.
Welfare spending has done a wonderful job of alleviating the state of being poor. The best example of this comes from elder care.
Millions of the elderly have been spared a life of destitution because of Social Security and Medicare. The social safety net for the aged is broad indeed. An old man may not live out his dying days in a suite at the Ritz, but he is assured a bed in a nursing home.
Unfortunately, this charitable solution is about to end. The aging baby boomers will bust the system.
Had Social Security been used only as a safety net, or had workers been required to save more for their own retirement, then Social Security would be solvent for another century. Instead, Social Security became an entitlement. Whatever surplus the plan ever had has been frittered away.
We no longer see poor people wearing rags. Clothing vouchers and thrift shops have given the poor a contemporary wardrobe that lets them blend in with the crowd.
We no longer see the starving poor. Food stamps have cured undernourishment. But the food stamp program is an entitlement, and the poor have learned nothing from it about nutrition or meal planning.
We have created a class of people, some of whom are third generation, who have mastered the welfare rules. Trust me: They know the eligibility rules better than their case workers.
Because liberals have always viewed poverty as a structural rather than a cultural problem, they desperately needed to develop a spending program that could mask, if not altogether remove, the stigma of poverty. They succeeded (mightily). But in doing so, they also created this class of welfare pros.
This is but a brief summary of forty years of welfare spending. In short, welfare spending has bought us much wallpaper and window dressing. The foundation of the house, however, is what we should have concentrated on.
There are causes of poverty that we will never eliminate. We will always have to take care of the mentally retarded, those with severe birth defects, and those afflicted by a debilitating illness or medical condition.
There are causes of poverty that we will exacerbate. To tease people with dreams of hitting the lottery is most irresponsible. Jack Whitaker won the Powerball jackpot. Ask him what his winning ticket was worth now that he’s spent the money.
We may never cure poverty. However, the day will come when we spend much less ameliorating it. Gone will be the clothing vouchers. Food stamps, the first of which were used to buy baked beans, will possibly return to that role. Gone will be the Social Security largesse. And then the raw images of gripping poverty will again appear in a popular magazine.
The United States is so wealthy now that we cannot image a return to our recent past. But it will happen. And when that day comes, let us hope that some social scientist bothered to save a 1961 dictionary so he can redefine poverty for that era.
In my old neighborhood, we had a running joke about Little Debbie cakes. The joke went like this: "Only people on food stamps buy Little Debbie cakes." To this day, I have never bought them.
Whenever I see a picture of Little Debbie, I remember that joke, and I also think of Marie Antoinette. Though neither of these females cured poverty, their respective cake recipes can teach us a valuable lesson: Timing is everything.
Friday, September 7, 2007
During Past Decades, Nation Has Redefined Poverty (1)
Definition of poverty
Poverty: The state of being poor or without competent subsistence; need; penury.
Poor: Lacking means of comfortable subsistence; indigent; needy.
Penury: Extreme poverty or want.
Funk and Wagnalls, New College Standard Dictionary, 1961
-------------------------------------------------------
Part one of two parts.
In 1960, poverty in West Virginia meant something altogether different than it means today.
In his campaign for the presidency, U. S. Senator John F. Kennedy cast the national spotlight on poverty in our state. West Virginians warmed to him (and to his pledge to end Appalachian poverty), and we handed him the nomination with our primary vote. Then came a photo essay about West Virginia’s poverty in the Saturday Evening Post. The photos shocked the nation.
Whether poverty was the topic of political oratory or sensationalism in the coffee-table magazine graced by Norman Rockwell’s idyllic covers, poverty was a word and an image to be feared.
I looked up "poverty" in my 1961 dictionary and discovered that the word had a much more severe meaning than it does today. Poverty is now defined by Merriam-Webster dictionary as "the state of one who lacks a usual or socially acceptable amount of money or material possessions." Poverty, a lifestyle that not so long ago "gripped" its victims, is now an arbitrary measure of spending money.
Daniel Patrick Moynihan served as advisor to President Lyndon B. Johnson in 1965, and he made quite a name for himself when he argued that curing poverty was not a function of spending. Rather, he argued, poverty was a social problem aggravated by broken familes, a lack of education, and so on. His analysis infuriated liberals; they had already concluded that monetary benefits would cure poverty. The only question in their minds for fighting LBJ’s War on Poverty was "How much do we need to spend?"
For the next three decades, the government spent more and more. Uncle Sam even paid single women to have more children out of wedlock. Then in 1996, Congressional politics changed, and welfare programs, such as Aid to Families with Dependent Children, were either terminated or radically modified.
In an interesting footnote to the 1996 welfare debate, Mr. Moynihan (then the senior U. S. senator from New York) argued loudly that cutting welfare spending would create chaos. In his book, Miles To Go, Sen. Moynihan railed that "the national commitment to dependent children'' would be ''eagerly abandoned'' by what he called "welfare repeal."
The boy genius who understood so well the root causes of poverty in 1965 ended his Senate career as a partisan-a liberal general still fighting the last war, a war over spending levels.
Eric Blair, the British author known to us as George Orwell, hoped to learn what it meant to be poor during the years that he experimented with socialism. In Down and Out in Paris and London, Orwell recounts his life in Paris as a restaurant dishwasher trying to survive on less than a livable wage. He lived among other poor kitchen workers and waiters.
Orwell certainly lived in poverty. At one point he sold his clothes for two hundred francs. He also skipped out of his boarding house owing rent. And there were times when he could not afford even bread.
Parisian bakers sold their loaves whole and charged one franc each. From this formula, they would not budge. Orwell could not understand why the baker would not sell him part of a loaf for eighty centimes, all the money that he had to his name in one of his telling chapters.
His comrades, the waiters, for the most part had never known anything but poverty. When they had less than one franc, they did not eat. Nor did they trouble themselves with trying to understand the baker’s one-franc rule. But when the waiters got an unexpected big tip, they splurged. They bought good wine and fine pastries. They sated themselves rather than save for hard times.
You have lived Orwell’s scene. You have passed up Delmonico steaks and instead opted for the meat loaf mix because of your budget. But when you checked out, the shopper in front of you paid with food stamps. And topmost on her grocery cart was the shrimp cocktail platter. Then you realized it was the first of the month.
Whether by Orwell’s observation or your own, you can see that the cause of poverty is better defined in terms of behaviors rather than by levels of disposable income.
Compared to King Midas, we are all paupers. In that sense, our poverty can be lessened by his charity. But to cure the roots of poverty, charity alone has little effect.
In Part Two, I will discuss the future of welfare now that society has accepted poverty as an income problem.
Poverty: The state of being poor or without competent subsistence; need; penury.
Poor: Lacking means of comfortable subsistence; indigent; needy.
Penury: Extreme poverty or want.
Funk and Wagnalls, New College Standard Dictionary, 1961
-------------------------------------------------------
Part one of two parts.
In 1960, poverty in West Virginia meant something altogether different than it means today.
In his campaign for the presidency, U. S. Senator John F. Kennedy cast the national spotlight on poverty in our state. West Virginians warmed to him (and to his pledge to end Appalachian poverty), and we handed him the nomination with our primary vote. Then came a photo essay about West Virginia’s poverty in the Saturday Evening Post. The photos shocked the nation.
Whether poverty was the topic of political oratory or sensationalism in the coffee-table magazine graced by Norman Rockwell’s idyllic covers, poverty was a word and an image to be feared.
I looked up "poverty" in my 1961 dictionary and discovered that the word had a much more severe meaning than it does today. Poverty is now defined by Merriam-Webster dictionary as "the state of one who lacks a usual or socially acceptable amount of money or material possessions." Poverty, a lifestyle that not so long ago "gripped" its victims, is now an arbitrary measure of spending money.
Daniel Patrick Moynihan served as advisor to President Lyndon B. Johnson in 1965, and he made quite a name for himself when he argued that curing poverty was not a function of spending. Rather, he argued, poverty was a social problem aggravated by broken familes, a lack of education, and so on. His analysis infuriated liberals; they had already concluded that monetary benefits would cure poverty. The only question in their minds for fighting LBJ’s War on Poverty was "How much do we need to spend?"
For the next three decades, the government spent more and more. Uncle Sam even paid single women to have more children out of wedlock. Then in 1996, Congressional politics changed, and welfare programs, such as Aid to Families with Dependent Children, were either terminated or radically modified.
In an interesting footnote to the 1996 welfare debate, Mr. Moynihan (then the senior U. S. senator from New York) argued loudly that cutting welfare spending would create chaos. In his book, Miles To Go, Sen. Moynihan railed that "the national commitment to dependent children'' would be ''eagerly abandoned'' by what he called "welfare repeal."
The boy genius who understood so well the root causes of poverty in 1965 ended his Senate career as a partisan-a liberal general still fighting the last war, a war over spending levels.
Eric Blair, the British author known to us as George Orwell, hoped to learn what it meant to be poor during the years that he experimented with socialism. In Down and Out in Paris and London, Orwell recounts his life in Paris as a restaurant dishwasher trying to survive on less than a livable wage. He lived among other poor kitchen workers and waiters.
Orwell certainly lived in poverty. At one point he sold his clothes for two hundred francs. He also skipped out of his boarding house owing rent. And there were times when he could not afford even bread.
Parisian bakers sold their loaves whole and charged one franc each. From this formula, they would not budge. Orwell could not understand why the baker would not sell him part of a loaf for eighty centimes, all the money that he had to his name in one of his telling chapters.
His comrades, the waiters, for the most part had never known anything but poverty. When they had less than one franc, they did not eat. Nor did they trouble themselves with trying to understand the baker’s one-franc rule. But when the waiters got an unexpected big tip, they splurged. They bought good wine and fine pastries. They sated themselves rather than save for hard times.
You have lived Orwell’s scene. You have passed up Delmonico steaks and instead opted for the meat loaf mix because of your budget. But when you checked out, the shopper in front of you paid with food stamps. And topmost on her grocery cart was the shrimp cocktail platter. Then you realized it was the first of the month.
Whether by Orwell’s observation or your own, you can see that the cause of poverty is better defined in terms of behaviors rather than by levels of disposable income.
Compared to King Midas, we are all paupers. In that sense, our poverty can be lessened by his charity. But to cure the roots of poverty, charity alone has little effect.
In Part Two, I will discuss the future of welfare now that society has accepted poverty as an income problem.
Friday, January 19, 2007
Borrow It Forward: The Real West Virginia State Motto
Of late, there has been a great deal of bold talk among politicians about reforming tax codes. In Washington, Congress is talking about ending its long love affair with the Alternative Minimum Tax. Imagine that-populists debating the death of a punitive income tax on the rich and the upper middle class.
So as not to be left behind in the tax debate, our state leaders are talking about tax reform with all of the gusto of astronauts readying for the first mission to Mars. I use the comparison of going to Mars because changing West Virginia’s tax policies will be a long-term venture with peril at every step.
Politicians always fail when enacting taxes because they cannot help but authorize more spending than the taxes collect. This is true of both Democrats and Republicans.
There is a philosophical hurdle at work when it comes to collecting taxes and balancing the books. I call it the Government Dependency Ratio. In West Virginia, we are trending toward an unsustainable GDR of 1:1 payees/payors.
Former Secretary of Agriculture Earl Butz (under Presidents Nixon and Ford) once addressed the GDR this way. In the early 1970’s, it had become apparent that Social Security recipients would eclipse the number of workers paying into the system.
Mr. Butz compared the situation to his days growing up on an Indiana farm. He said he overslept one frigid morning and was late in going to the barnyard to feed the cows. When he got there, two heifers were suckling each other’s udder to stave off hunger. Then he added to his anecdote that, in such situations, some milk always ends up on the ground.
Mr. Butz, of course, was making a joke. Cows, unlike humans, are weaned from the teat. But the barnyard example nevertheless holds true for people who have become dependent on the government. Should milk spill on the ground, the government simply borrows milk from other farms with the promise that future government cows will pay back the shortfall.
Government is the biggest employer in West Virginia. For starters, one out of six West Virginians is covered by Public Employees Insurance Agency health insurance. Add to that the federal employees. In Harrison County alone, we have a large postal distribution facility, a veteran’s hospital, a federal courthouse and the FBI Center with its growing biometrics offshoot. There are a lot more federal employees in our state that you might first imagine.
The health care industry receives a major portion of its revenue from Medicaid, Medicare and worker’s comp. Were it not for these reimbursements, a great number of hospital and health care workers would be out of work. To calculate the GDR, we have to include that percentage of full-time equivalent positions that are paid, albeit indirectly, by government programs.
When it comes to construction, government builds the big ticket projects such as highways, airports and dams. Next down on the list are water and sewage systems. While construction workers are paid by the private sector, most construction jobs exist only because the government is paying for them. Even in the housing sector, most new homes would never get built without the homeowner’s deduction for mortgage interest.
How many grocery workers would lose their jobs if food stamps and free school meals disappeared tomorrow?
In short, a whole lot of West Virginia workers depend on government for a paycheck. And neither federal nor state tax collectors are the least bit shy when it comes to asking for a goodly portion of those paychecks in return for those jobs.
To complete the calculation of the state’s GDR, just add in everyone who gets a transfer payment. Whether that payment is social security, government-paid disability, military retirement, earned income credit or one of the myriad welfare benefits that is out there doesn’t matter. Just start adding.
"Getting a check" is a big deal in West Virginia. Changing that attitude will take a radical departure from current policy.
Taxes and tax rates aren’t the problem. Government spending, including a mountain of deficit borrowing and unfunded liabilities, is the issue. Reduce the Government Dependency Ratio, and the tax code will take care of itself.
So as not to be left behind in the tax debate, our state leaders are talking about tax reform with all of the gusto of astronauts readying for the first mission to Mars. I use the comparison of going to Mars because changing West Virginia’s tax policies will be a long-term venture with peril at every step.
Politicians always fail when enacting taxes because they cannot help but authorize more spending than the taxes collect. This is true of both Democrats and Republicans.
There is a philosophical hurdle at work when it comes to collecting taxes and balancing the books. I call it the Government Dependency Ratio. In West Virginia, we are trending toward an unsustainable GDR of 1:1 payees/payors.
Former Secretary of Agriculture Earl Butz (under Presidents Nixon and Ford) once addressed the GDR this way. In the early 1970’s, it had become apparent that Social Security recipients would eclipse the number of workers paying into the system.
Mr. Butz compared the situation to his days growing up on an Indiana farm. He said he overslept one frigid morning and was late in going to the barnyard to feed the cows. When he got there, two heifers were suckling each other’s udder to stave off hunger. Then he added to his anecdote that, in such situations, some milk always ends up on the ground.
Mr. Butz, of course, was making a joke. Cows, unlike humans, are weaned from the teat. But the barnyard example nevertheless holds true for people who have become dependent on the government. Should milk spill on the ground, the government simply borrows milk from other farms with the promise that future government cows will pay back the shortfall.
Government is the biggest employer in West Virginia. For starters, one out of six West Virginians is covered by Public Employees Insurance Agency health insurance. Add to that the federal employees. In Harrison County alone, we have a large postal distribution facility, a veteran’s hospital, a federal courthouse and the FBI Center with its growing biometrics offshoot. There are a lot more federal employees in our state that you might first imagine.
The health care industry receives a major portion of its revenue from Medicaid, Medicare and worker’s comp. Were it not for these reimbursements, a great number of hospital and health care workers would be out of work. To calculate the GDR, we have to include that percentage of full-time equivalent positions that are paid, albeit indirectly, by government programs.
When it comes to construction, government builds the big ticket projects such as highways, airports and dams. Next down on the list are water and sewage systems. While construction workers are paid by the private sector, most construction jobs exist only because the government is paying for them. Even in the housing sector, most new homes would never get built without the homeowner’s deduction for mortgage interest.
How many grocery workers would lose their jobs if food stamps and free school meals disappeared tomorrow?
In short, a whole lot of West Virginia workers depend on government for a paycheck. And neither federal nor state tax collectors are the least bit shy when it comes to asking for a goodly portion of those paychecks in return for those jobs.
To complete the calculation of the state’s GDR, just add in everyone who gets a transfer payment. Whether that payment is social security, government-paid disability, military retirement, earned income credit or one of the myriad welfare benefits that is out there doesn’t matter. Just start adding.
"Getting a check" is a big deal in West Virginia. Changing that attitude will take a radical departure from current policy.
Taxes and tax rates aren’t the problem. Government spending, including a mountain of deficit borrowing and unfunded liabilities, is the issue. Reduce the Government Dependency Ratio, and the tax code will take care of itself.
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