Welfare Is Integral to Our System

SOME POLITICIANS say that ending welfare will improve the character of those who depend on it—make them think twice about having kids, getting divorced or just being lazy.  Presumably, once these folks are shaped up by the removal of their safety net, they’ll put on clean clothes, find re­spectable jobs and start paying taxes like the rest of us.  Banish food stamps, Medicaid and aid to poor moms with a wave of the Congres­sional wand, and voila, “personal re­sponsibility” will be restored, making America a wondrous “opportunity soci­ety.”

Has anyone asked business people if they’re ready to hire millions of new workers and pay them a living wage?  As one who has started companies and helped create jobs, I can answer that question.  There are not now and will not be in the foreseeable future jobs for most of those on welfare—certainly not jobs that will lift them out of poverty.  This is not the fault of unwed mothers, unimaginative business people or even soft-hearted liberals.  It is a consequence of private enterprise as we know it.

Here are some realities:

First, it’s the explicit policy of the Federal Reserve Board to keep 6% of our work force unemployed.  Our economy must maintain this level of joblessness, the Fed insists, lest inflation rear its head and bondholders lose value.  If too many Americans are employed, the Fed will raise interest rates to throw people out of work.  Since the Fed’s arithmetic excludes em­ployable adults who have stopped looking for work as well as those who have exhausted their unem­ployment benefits, we can say that capitalism as we know it requires rough­ly one-tenth of its potential workers to be jobless for the sake of price stability.

Second, there’s a need for dead-end, low-paying, often part-time jobs—jobs no one can support a family on.  Yet whenever anyone suggests raising the minimum wage, the outcry is that it will cause a loss of these jobs.  Thus, the choice for millions is poverty wages or no wages at all, meaning capitalism as we know it requires anoth­er sizable portion of our workers to live at a bare subsistence level and their children to grow up with inadequate nutrition, health care and physical safe­ty.

Third, there’s the simple demographic reality that, in any sample group of people, a certain number will be too old, sick or distraught to perform paid work.  And last, there are such recent trends as the entry of women into the labor pool, the export of manufacturing jobs, corporate downsizing in response to global competition and the frenzy to shrink the public sector.

The bottom line is that there’s no way, under modern capitalism, to end the welfare state.  The good jobs just aren’t there.  So, like those who say drugs, pornography and sin will go away if outlawed, those who persist in attacking welfare are not merely wrong but dan­gerously wrong.

OF COURSE, we could jettison our capi­talist system in favor of a command-style econ­omy in which, as Russians used to say, “We pretend to work and they pretend to pay us.”  That would get people off welfare by housing them in subsidized, inefficient enterprises—a^, course few in Washington would advo­cate.  Or we might remain capi­talist and ask charities to provide the needed social safety net.  Such supplication would be quaint but not likely to be rewarded, since human-services agencies now get thirty percent of their budgets from government, and few Americans have volun­teer­ed to replace that fund­ing with charitable gifts, much less to contribute the extra billions it would take to replace welfare.

So we are left with two alternatives: the welfare state more or less as we know it or a great increase in neediness, despair and crime.

Winston Churchill once said that de­mocracy was a flawed political system, but less flawed than any other.  The same might be said of welfare in a capitalist economy.  As distasteful and degrading as public assistance is, it is less distasteful and degrading than people begging, stealing and starving on the streets. To pretend otherwise is demagoguery and will surely lead to tragedy.