25 November 2011

Welfare

I’ve been meaning to comment on this for a very long while:

 Many people think life without the welfare state would be chaos. In their minds, nobody would help support the less fortunate, and there would be riots in the streets. Little do they know that people found innovative ways of supporting each other before the welfare state existed. One of the most important of these ways was the mutual-aid society.
Mutual aid, also known as fraternalism, refers to social organizations that gathered dues and paid benefits to members facing hardship. According to David Beito in From Mutual Aid to the Welfare State, there was a "great stigma" attached to accepting government aid or private charity during the late 18th and early 19th centuries. Mutual aid, on the other hand, did not carry the same stigma. It was based on reciprocity: today's mutual-aid recipient could be tomorrow's donor, and vice versa.

One critique of libertarianism is that it has no regard for poor people, as if only the government is capable of showing concern for poor people.  Of course, governments have historically ignored the plight of the poor, and thus it is an historical anomaly in the first place that the government even offers any aid to poor people.

That aside, the historical norm, at least in America, is that poor people were generally helped by mutual aid societies.  Or, stated another way, welfare was primarily a market function.  In keeping with this, the market served admirably in this capacity, encouraging poor people to engage in thrift and to comply with certain social norms.  In many ways, then, mutual aid societies are superior to their state-run alternatives because they encourage positive behaviors instead of subsidizing counterproductive behaviors.

The current system does indeed leave much to be desired.  It does not go far enough in tying aid to productive behaviors.  Even with the recent reforms, there are still some who successfully game the system.  Welfare workers are understaffed, preventing them from policing recipients as they should.  Recipients, then, are able to get money without having to work or in some way improve their life.  The government is, in many ways, impotent to address this problem because there are many interest groups who would charge the government with targeting minorities by requiring that they change their culture.  In essence, the government is hamstrung by multiculturalism.

As such, the current form of welfare is not only expensive, but it is considerably inferior to its free market alternative because it cannot offer near the same amount of accountability that market-based forms of welfare do.  Thus, the libertarian doctrine that welfare should not be a state activity is actually quite reasonable for the free market has actually done a better job at charity than the government has.

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