Ludwig von Mises wrote that socialists had twin strategies to achieve their goals: one was nationalizing industry and property, the other was “destructionism.” Mises defined “destructionism” as “destroying the social order which is based on private ownership.”1 Destructionism can be advanced through, among other means, the welfare state, high taxes, and excessive regulation. It is, for the hardened socialist, a form of social and economic sabotage. Socialists, for instance, can use the welfare state to crowd out private charity, making poor people dependent on socialist government. As Frédéric Bastiat pointed out in the mid-nineteenth century, government welfare programs are “false philanthropy,” undercutting personal charity and creating the assumption that “government” will take care of that.
Professor Marvin Olasky has called this same phenomenon in the history of the United States “the tragedy of American compassion.”2 America, from its founding through the nineteenth century, was renow-ned for its proliferation of voluntary charitable organizations. Alexis de Tocqueville famously marveled at them in his 1835 book Democracy in America.
In the latter half of the twentieth century, however, private philanthropy was increasingly displaced by government programs, which were not only far more bureaucratic but far less effective than private charity had been. Traditional American private charities focused on helping people to help themselves. Government programs, inevitably, became much more focused on creating “clients” to justify the ever increasing number (and salaries) of bureaucrats. In the process, “compassion” no longer meant self-sacrifice for the benefit of others, but merely rhetorical support for more government welfare programs; welfare programs made people forget there was any other way to “help” the poor. Political scientist Charles Murray noted in his book In Pursuit: Of Happiness and Good Government:
From the beginning of the 1940s through 1964 . . . the richer the United States got, the greater the proportion of its wealth that was given to philanthropy. Then, suddenly, sometime during 1964–65, in the middle of an economic boom, this consistent trend was reversed. The proportion of wealth being given away began to fall even though wealth continued to increase. This new and disturbing trend continued through the rest of the 1960s, throughout the 1970s. . . .3
As Murray explained it, the burgeoning welfare state prompted millions of Americans to ask themselves: “Why donate $500 of your money . . . to a local [charity] when there is a bureaucracy in your city spending $20 million on the same thing? Why give up an evening a week . . . to do something for which the city has a full-time paid staff of several hundred people?”4 However rational this might seem, wrote Murray, it had several unforeseen consequences. Not only did individuals become less involved in charity, but local charitable institutions effectively had their functions taken away. Take away the charitable functions of these institutions, churches, clubs, and whatnot, said Murray, and “you take away the community” itself. The welfare state has done a very good job of destroying voluntary neighborhood and community efforts to help the poor, rendering many low-income families dependent on government handouts not for a short while but for generations, as an entitlement, a reward for having children out of wedlock and without a job.
SUBSIDIZING POVERTY
Most economists recognize that welfare programs pose a potential “moral hazard” with “benefits,” potentially destroying the incentive to find a job and become financially independent. That’s why President John F. Kennedy declared that the purpose of welfare was to provide “a hand, not a handout.”
Welfare policy in America, however, has failed miserably in avoiding this moral hazard. A dramatic illustration of this failure was provided by Charles Murray in his landmark book, Losing Ground.5 Murray examined how the explosion of welfare benefits in the mid-and late-1960s perpetuated rather than alleviated poverty; in fact, it made it worse.
Murray found that from the 1950s until the late 1960s, thanks to America’s vigorous post-war economy, the number of people living in poverty had declined by about a third.6 But from 1968, as the massive increase in welfare benefits began, to 1980, when Ronald Reagan was elected president, poverty increased by 22 percent.
The poverty we’re talking about is “latent poverty,” which means poverty before you factor in welfare benefits. “Poverty” went up because “poverty” became attractive—or, to put it another way, welfare discouraged people from getting jobs, because the more money one earned the more one was likely to suffer reduced welfare payments, food stamps, housing subsidies, and other benefits.
In 2012, a Congressional Budget Office study found that a welfare single parent with one child who got a job faced a marginal tax rate (in terms of lost benefits) of between 66 percent and 95 percent.
A 2013 Cato Institute study found that the value of welfare benefits for a single family (taking into consideration only seven of 126 federal programs) ranged from $49,175 in Hawaii to $16,984 in Mississippi.7 A single parent in Hawaii, or in many other states, would have to secure a very well-paying job to compensate for the loss of tens of thousands of dollars in government benefits; the government has, for many welfare families, made getting a job an irrational decision. So it should be no surprise that after spending more than $4 trillion on welfare programs since 1965, the United States has seen poverty increase.8
With welfare payments so widespread, the stigma that once attached to not working has gone away, replaced by the sense that those who do work in low-paying jobs are chumps. Murray wrote: “For the first time in American history, it became socially acceptable within poor communities to be unemployed. . . .”9
Welfare programs have become an alternative to work. A 1992 study by economists Richard Vedder and Lowell Gallaway found that only 18 percent of welfare recipients moved out of poverty, compared to 45 percent of poor people who did not receive welfare.10
The welfare state has done an excellent job of crippling an important cornerstone of an enterprising, free market, capitalist society: the incentive to work. Instead, it has created a dependent class that it serves (with programs) and from whom it benefits (justifying government programs and jobs).
The welfare state has also gone a long way toward achieving another goal of many socialists, especially Karl Marx, of the “abolition of the family” (as Marx and Engels advocated in The Communist Manifesto). This is not to say that the architects of the American welfare state wanted to abolish the family, only that their policies have gone a long way toward achieving it. Between 1960 and 2000, out-of-wedlock births increased by more than 400 percent, and a big driver of that, especially in black communities, was that single parenthood brings government benefits.11 In 1950, before “the war on poverty,” about 88 percent of white families and 77 percent of black families in the United States consisted of husband-and-wife households.12 By 1980 the proportion of black families with husband-and-wife households had declined to 59 percent; among white families it was 85 percent. And the numbers continue to get worse. In 1960, 73 percent of kids lived in a traditional two-parent family. In 2013, the number was 46 percent.13 Single mothers are much more likely to be poor mothers; and all too often welfare payments have taken the place of a husband with a job. Just as there is no longer a stigma to accepting welfare and not working, the welfare state has removed the stigma of “illegitimacy” when so many millions of women give birth out of wedlock and receive child support not from fathers but from taxpayers.
Children born to single parents are three times more likely to suffer behavioral or emotional problems; girls are twice as likely to have children out of wedlock themselves; and boys are twice as likely to become involved in crime.14 In other words, welfare dependency has a “domino effect” that not only harms society but also destroys people’s lives.
Taking the advice of socialist politicians like Vermont Senator Bernie Sanders to vastly increase the size of the welfare state is bound to increase poverty; increase the incidence of child pathologies; increase the number of children who get involved in crime; increase human misery; and discourage effective, private, voluntary efforts to help the poor. No one, not even the bureaucrat, really benefits when socialism deconstructs society. In its human costs, socialism makes us all losers.