The Welfare State Doesn't Work?

The Welfare State is pushing the globe towards worldwide economic collapse?  Go figure? 

Robert J. Samuelson writing in the Washington Post:

The welfare state's death spiral

What we're seeing in Greece is the death spiral of the welfare state. This isn't Greece's problem alone, and that's why its crisis has rattled global stock markets and threatens economic recovery. Virtually every advanced nation, including the United States, faces the same prospect. Aging populations have been promised huge health and retirement benefits, which countries haven't fully covered with taxes. The reckoning has arrived in Greece, but it awaits most wealthy societies...(emphasis added)

...The welfare state's death spiral is this: Almost anything governments might do with their budgets threatens to make matters worse by slowing the economy or triggering a recession. By allowing deficits to balloon, they risk a financial crisis as investors one day -- no one knows when -- doubt governments' ability to service their debts and, as with Greece, refuse to lend except at exorbitant rates. Cutting welfare benefits or raising taxes all would, at least temporarily, weaken the economy. Perversely, that would make paying the remaining benefits harder.

Greece illustrates the bind. To gain loans from other European countries and the International Monetary Fund, it embraced budget austerity. Average pension benefits will be cut 11 percent; wages for government workers will be cut 14 percent; the basic rate for the value-added tax will rise from 21 percent to 23 percent. These measures will plunge Greece into a deep recession. In 2009, unemployment was about 9 percent; some economists expect it to peak near 19 percent.

If only a few countries faced these problems, the solution would be easy. Unlucky countries would trim budgets and resume growth by exporting to healthier nations. But developed countries represent about half the world economy; most have overcommitted welfare states. They might defuse the dangers by gradually trimming future benefits in a way that reassures financial markets. In practice, they haven't done that; indeed, President Obama's health program expands benefits. What happens if all these countries are thrust into Greece's situation? One answer -- another worldwide economic collapse -- explains why dawdling is so risky. (emphasis added)

The riots in Greece are a stark example of what happens when the population becomes dependent on government for their most basic needs.  When the money runs out, and it always does, people rebel at that thought of doing for themselves what they should have been doing all along. 

Once people get the notion that the government is going to pay their mortgage and put gas in their car and pay for it all with some magical "stash" the don't let go of that "free" money without a fight.  Afterall, they're entitled to it.  That is exactly the future our children have to look forward to unless we decide to pass on the stash now rather than force our children to pay to piper later.

Legal Crookery

Ponzi schemes and pyramid schemes are illegal in this country UNLESS they are perpetrated by the government. Social Security and Medicare depend on tax dollars for fuel. Increased unemployment and/or lowered birthrates decreases the money paid in to the social pool, whereas, increased longevity increases the number of people withdrawing from the social pool. Eventually, more is withdrawn from the pool than is paid in and either the scheme collapses or the pool must be rebalanced through increased taxes or lowered benefits. Unfortunately, no politician wants to look a voter in the eye and say, “We need more of your money.” Equally distasteful is telling older voters that after a lifetime of paying in to the pool their benefits are going to be cut. As a result, the typical politician ignores the situation and hopes that the problem will wait until after they have left office.


But the current bunch of Dems in Congress and the Administration decided against the “wish and a prayer” style of politics. Instead, with Social Security and Medicare imploding they decided to act and they did so by creating an additional entitlement program in the form of ObamaCare. As Ronald Reagan once said, “There you go again.”

So now we have a program that, according to the Administration, will provide health “care” to an additional 30, 40, 50 million people with no increase in costs and no decrease in coverage and anyone who can’t afford the coverage will be taken care of by the government. Problem is, most Americans are well aware that “the government” doesn’t have a pot to piss in or a window to throw it out of. The only money that “the government” has is that which it has confiscated from its working citizens in the form of taxes.

We know that we will be expected to contribute ever increasing amounts to the entitlement pool. We know that even at confiscatory levels our money won’t be enough. We know that rationing of what will eventually pass for “care” will ensue. We know from observing Great Britain and Canada where we are heading.

Explain to me why Bernie Madoff is in jail while Congress roams free.

h/t Instapundit

Redefining kindness

Saturday I wrote Moral Imperatives and Freedom.  My point was that under the guise of "moral imperative" our government tries, and often succeeds, in convincing people to trade freedom for personal security.  Dan Riehl, wrote yesterday about a possible unintended consequence of government provided health care.

Dan correctly points out that many people have health insurance through their employer and that if you sever the relationship between health insurance and employment there is one less reason to work.  Does this mean that if ObamaCare becomes law that we will suddenly see a flood people leaving the job market?  No, social changes come over time.  Consider this from Dr. Helen's post "These women are not so much welfare queens as matriarchal dynasties..."  that discusses this article:

Are men surplus to requirements? The answer, after more than half a century of feminism and the welfare state, depends largely on class. Men from the employable and educated classes are still in strong demand among women. But much lower down the socioeconomic scale, among the least privileged, men have become — or have come to seem — entirely optional.

As many of these women become grandmothers, a new pattern has emerged of three generations of mothers without a man in the house — lone granny, lone mum and fatherless children, all expecting the state to stand in for daddy, as of right. These women are not so much welfare queens as matriarchal dynasties of welfare Amazons...

We currently have various social "safety net" programs, AFDC, WIC, Food Stamps, Medicaid, Section 8 housing, that at the time the programs were created we were told that each was a moral obligation.  But as a result, we have children for whom there is no relationship between employment and basic needs.  Education has no relevance in these young people's lives. The cycle of dependence expands because of the false notion that a "kind" nation takes care of its own.  From the comments on Dr. Helen's post:

 "People and governments who care about the poor will make them uncomfortable in their poverty. Countries who spend the most on their poor have the most poor to spend money on."

- Benjamin Franklin.

The more entitlement programs we enact the poorer our general welfare becomes.  Even worse than the debt that we are passing on to our children is the independence we are robbing them of.  It is time we redefine kindness.

Why Are We Adding Another Entitlement Program When The Ones We Already Have Are Broke?

Washington Post:

The recession's jobless toll is draining unemployment-compensation funds so fast that according to federal projections, 40 state programs will go broke within two years and need $90 billion in loans to keep issuing the benefit checks.

The shortfalls are putting pressure on governments to either raise taxes or shrink the aid payments.

Debates over the state benefit programs have erupted in South Carolina, Nevada, Kansas, Vermont and Indiana. And the budget gaps are expected to spread and become more acute in the coming year, compelling legislators in many states to reconsider their operations.

Currently, 25 states have run out of unemployment money and have borrowed $24 billion from the federal government to cover the gaps. By 2011, according to Department of Labor estimates, 40 state funds will have been emptied by the jobless tsunami.

Chances are that on Christmas Eve we will be gifted with yet another entitlement program. Let’s look at the entitlement programs we already have-Medicare will be broke by 2017, Social Security may well beat Medicare to insolvency and now we learn that 25 states are out of their employment funds and that number will soon swell to 40.

In order to “rescue” these programs either benefits will be cut or taxes will be raised. Most likely, there will be a combination of both. Reid and Company recognized that ObamaCare would also require services/treatments be limited (rationed) so deep in the belly of the bill they hid a provision:

Section 3403 of Senator Harry Reid’s amendment requires that “it shall not be in order in the Senate or the House of Representatives to consider any bill, resolution, amendment, or conference report that would repeal or otherwise change this subsection.” The good news is that this only applies to one section of the Obamacare legislation. The bad news is that it applies to regulations imposed on doctors and patients by the Independent Medicare Advisory Boards a/k/a the Death Panels.

The Dem’s aim is to lock-in the Advisory Board’s ability to cut costs through rationing. In other words, while the Dems have been denying that rationing is a feature of government health care, they have been simultaneously planning for it.

Rather than pushing through yet another entitlement program that will increase taxes, increase hardship and decrease productivity our government should be concentrating on fixing the broken programs we already have. They should start by getting people back to work.