Reforming Federal Means-Tested Benefits Programs

A proposed 2016-2017 resolution for the Stoa league was: The United States federal government should substantially reform one or more of its means-tested benefits programs.

NSDA debaters had a similar resolution in 2009, calling for expanding social services for the poor. Economic Thinking prepared an eight-page study guide for that resolution: Social Services Study Guide. (8-page pdf): socialservicesmtt-fall09bet

The first article, “Rethinking Social Safety Nets,”  begins with a discussion of “safety nets” for the poor, contrasting government (means-tested) safety nets with voluntary/private-sector safety nets.

Civil society safety nets are different from government ones, because society is different from government. Government is the only social institution able to legally use force to extract funding as well as use force to carry out programs. Understanding this distinction between society and the state is key for effective poverty programs. Americans have long been skeptical of state coercion to fund and provide social services. Societies are collections of institutions each drawing upon unique relationships. Social safety nets draw upon relationships based on caring, or secured with contracts, that shape the scope and quality of services provided. When we say someone “fell through the safety net” it suggests a government agency could have or should have caught them. Not to quibble about language, but social services are provided by society: governments provide government services. State and non-state services are similar: the U.S. Postal Service provides services similar to FedEx and UPS, and Social Security is similar to individual savings. But though these services are similar in form, they are far different in substance, as most customers can attest.

The most cited book on the 2009-2010 social services for the poor topic was Out of Reach: Place, Poverty, and the New American Welfare State (discussed page two in Social Services Study Guide). Other books critical of federal welfare programs included The Poverty of Welfare: Helping Others in Civil Society.

David Beito’s From Mutual Aid to Welfare State documents the many civil society self-help organizations that supported the poor and disadvantaged before federal means-tested benefits existed. See also Beito’s July, 2000 Heritage Lecture: “From Mutual Aid to Welfare State: How Fraternal Societies Fought Poverty and Taught Character.” Beito writes:

Despite the impressive research by Marvin Olasky, Carolyn Weaver, and other scholars on the role played by voluntary institutions in the history of American social welfare, old attitudes still retain a powerful hold. A case in point is an article in U.S. News & World Report entitled the “Myths of Charity.” The authors conclude that it “is highly doubtful that charities could pick up all or even most of the slack from the $76 billion to $450 billion in spending cuts now being proposed by Democrats and Republicans in Washington.” Citing examples from history, they imply that Americans have never relied (and thus can never rely) on private-sector charities to do the job of the welfare state.

It is indeed true that when measured in dollar amounts, the combined efforts of traditional charities at the turn of the last century, such as the Salvation Army, were small when compared to those of the modern welfare state. The chief problem with such an approach is that it entirely misses the point. It fails to come to grips, for example, with the fact that before the rise of the welfare state, Americans of all classes shared a deep aversion to dependence on either private organized charity or governmental relief. Indeed, there was a great stigma in the folk culture attached to any form of what might be called hierarchical relief (relief in which those who control the purse strings are higher on the socio-economic scale than the recipients).

A review of Marvin Olasky’s 1992 book, The Tragedy of American Compassion begins:

Marvin Olasky believes that the present American poverty programs and welfare system have failed, not only in terms of money squandered, but also in regard to human souls corrupted and national character corroded. As a Christian, he argues for a biblical model for fighting poverty. In The Tragedy of American Compassion, Olasky develops this argument historically, by chronicling and criticizing efforts to fight poverty from colonial times to the present. As he states in his introduction, “The key to the future, as always, is understanding the past.”

Consider means-tested medical care and insurance benefits. “Health Insurance before the Welfare State: The Destruction of Self-Help by State Intervention,” in the Independent Review, explains:

Since the publication of Charles Murray’s Losing Ground (1984), if not earlier, it has been clear that Western-style welfare states are encountering deepening problems and that despite social scientists and politicians’ efforts and an increasing amount of resources, these states’ traditional measures are failing to achieve their main goals.  Harvard sociologist Nathan Glazer, one of those who helped to formulate these welfare policies, summarizes the difficulties in his 1988 book The Limits of Social Policy. Sentences such as “It didn’t work” and “[W]e seemed to be creating as many problems as we were solving” (2) are a leitmotiv of his account.

Students can look deeper into the history, economics, and politics of welfare state/means-tested benefits programs in the Atlas Network/Students for Liberty collection of essays, After the Welfare State. See especially chapters in Section II: The History of the Welfare State and What It Displaced:

• Bismarck’s Legacy By Tom G. Palmer
• The Evolution of Mutual Aid By David Green
• Mutual Aid for Social Welfare: The Case of American Fraternal Societies By David Beito

See also, “Basic Income and Negative Income Tax: Alternatives to Means-Tested Benefits”