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Advancing Austrian Economics, Liberty, and Peace

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Making Economic Sense
by Murray Rothbard
(Contents by Publication Date)

Chapter 14
Welfare as We Don't Know It

The welfare system has become an open scandal, and has given rise to justified indignation throughout the middle and working classes. Unfortunately, as too often happens when the public has no articulate leadership, the focus of its wrath against welfare has become misplaced. 

The public's rage focuses on having to pay taxes to keep welfare receivers in idleness; but what people should zero in on is their having to pay these people taxes, period. The concentration on idleness vs. the "work ethic," however, has given the trickster Bill Clinton the loophole he always covets: seeming to pursue conservative goals while actually doing just the opposite. Unfortunately, the welfare "reform" scam seems to be working.

The President's pledge to end "welfare as we know it," therefore, turns out not to be dumping welfare parasites off the backs of the taxpayers. On the contrary, the plan is to load even more taxpayer subsidies and privileges into their eager pockets. The welfarees will become even more parasitic and just as unproductive as before, but at least they will not be "idle." Big deal.

The outline of the Clintonian plan is as follows: Welfarees will be given two years to "find a job." Since nothing prevents them from "finding a job" now except their own lack of interest, there is no reason for expecting much from job-finding. At that point, "reform" kicks in. The federal government will either pay private employers to hire these people or, if no employers can be found, will itself "employ" the welfarees in various "community service" jobs. The latter, of course, are unproductive boondoggles, jobs which no one will pay for in the private sector, what used to be called "leaf-raking" in the Federal Works Progress Administration of the 1930s New Deal.

Welfarees will now be paid at minimum wage scale by taxpayers to shuffle papers from one desk to another or to engage in some other unproductive or counter-productive activity. As for subsidizing private jobs, the employers' businesses will be hampered by unproductive or surly or incompetent workers. In the private jobs, furthermore, the taxpayers will wholly subsidize wages not only at minimum wage scale (which we can expect to keep rising), but also at whatever pay may be set between employer and government. The taxpayer picks up the full tab.

But this is scarcely all. In addition to the actual job subsidies, Clinton proposes that the federal government also pay the following to the welfare parasites: free medical care for all (courtesy the Clinton health "reform"); plenty of food stamps for free food; free child care for the myriad of welfare children; free public housing; free transportation to and from their jobs; free child "nutrition" programs; and lavish "training programs" to train these people for productive labor.

If these training programs are anything like current models, they will be lengthy and worthless, including "training" in "conversational skills." If a free and lavishly funded public school system can't seem to manage teaching these characters to read, why should anyone think government qualified to "train" them in any other skills? In addition to the huge cost of direct payments to the welfarees, an expensive government bureaucracy will have to be developed to supervise the training, job finding, and job supervision. In addition, welfare mothers with young children will be exempt from the workfare requirements altogether.

Even the supporters of the Clinton welfare plan concede that the plan will greatly increase the welfare cost to the taxpayers. The Clintonians of course, as usual with government, try to underestimate the cost to get a foot in the door, but even moderate observers estimate the annual extra cost to be no less than $20 billion. And that's probably a gross underestimate. And while the White House claims that only 600,000 people will need the workfare, internal Health and Human Services memoranda estimate the number at no less than 2.3 million, and that's from Clintonian sources.

Of course, the Clintonian claim is that these huge increases are "only in the short-run"; in the long run, the alleged improvement in the moral climate is supposed to lower costs to the taxpayers. Sure.

Forcing taxpayers to subsidize employers or to provide busy-work for unproductive "jobs" is worse than keeping welfare recipients idle. There is no point to activity or work unless it is productive, and enacting a taxpayer subsidy is a sure way to keep the welfarees unproductive. Subsidizing the idle is immoral and counterproductive; paying people to work and creating jobs for them is also crazy, as well as being more expensive.

But paying people to work is worse than that. For it removes low-income recipients of subsidy from the status of an exotic, marginal, and generally despised group, and brings the subsidized into the mainstream of the workforce. The change from welfare to workfare thereby accelerates the malignant socialist and egalitarian goal of coerced redistribution of income. It is, in other words, simply another part of the 20th century's Long March toward socialism.

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