Safety Nets Can Strangle

Mr. Fred Smith, an economics professor at Davidson and Mr. Brian Balfour, the policy director at Civitas, both offer interesting insights into how government policies affect, or should affect, the poor. Between the two of them, they offer some significant leads on how government can improve the safety net programs now in place.

Mr. Smith starts off talking about how he won a lottery. This is his description of getting a good job – winning a lottery. He also gives good luck part credit because he considers his getting a job his good luck and wishes to show how some people have bad luck and, he believes, government should take care of them. These are interesting thoughts, but luck is with us always and bad luck as much as good luck. In his case luck has to do with getting and keeping a job. For others it has to do with being hit by a meteorite or winning the lottery, although the second requires some efforts on your part, which means it is not pure luck. The same is true with jobs.

Certainly being in the right place at the right time contributes to luck, but making yourself qualified and having a government which enhances opportunities instead of limiting them has a lot to do with how many chances there are for some piece of good luck to occur. This is where Mr. Smith fails his readers, hopefully not his students.

In counterpoint, Mr. Balfour leaves luck aside and cites examples of how government, even while attempting to help the poor, contributes to their remaining poor. He explains that some government programs are set up to discourage the working poor from improving their situation themselves. Citing the Fiscal Research Division of the General Assembly, he tells us how a working parent of 2 young children, making $15,000 per year, who is using housing, food stamps and medical assistance, must make a huge jump in salary before a salary increase will offset the losses in benefits which will occur for getting an incremental raise.

This should be one focus of our legislators: Making our safety net programs efficient and programs which encourage self improvement. It is not that the programs are bad, in and of themselves, it is the haphazardness of them.

People who need financial assistance should have one stop shopping. (This is the same thing businesses are asking for with permitting)

There are so many different government programs, a person needing help is left to wander from place to place, perhaps missing the one program which would be the most help. Then the programs need to be set up to encourage and help one to do better.

There are two examples which come to mind. The first is unemployment insurance. As it is, one gets a check for a specific amount, which is substantially less than what he was making, and that amount continues for a set period of time. Instead, the check should be larger immediately after the person files, and become less each month. This will help the recipient out more when he first is without a job, but decline over time, so his income slowly dissipates. This will either encourage a new job or give one a chance to adapt to his new reality.

The other is, as Mr. Balfour points out, the welfare cliff, where a bit more income causes people to lose a lot of social safety net benefits. These benefits should be fazed out. If a person is making minimum wage and collecting some type benefit, then they should not lose all their benefits if they get a job paying $1.00 per hour more. Perhaps for every extra dollar of income they lose 15% of their benefits. They would be encouraged to work more, and by doing so would actually improve their situation.

These are the type things government should be doing. It should not be a nanny-state, where people belly up to the trough and stay their for a lifetime. And it seems to be the history of our country, where people were encouraged to work, which Mr. Smith forgets, but Mr. Balfour reminds us of, and to which he offers some solutions.

The reason this country is so rich is because people were encouraged to work, to start businesses, to take chances. The reason we have so many material goods is because it was worthwhile for someone to build it. When politicians and their staff write stifling regulations, tax people inordinate amounts, write safety net policies which discourage self-improvement, then we work against the very things which gave us the opportunities which built this country. It is easy to see that the single most influential reason our economy is not doing as well as it could and people are seeking jobs, is government policies.

If our representatives wish to truly help the people, they should examine all programs which affect the people’s ability to have work and improve their lives and change them to encourage people to do their best to help themselves. Beyond that, government should get out of the way.