For a New Liberty: The Libertarian Manifesto

Almost everyone, regardless of ideology, agrees that there is something terribly wrong with the accelerating, runaway welfare system in the United States, a system in which an ever-increasing proportion of the population lives as idle, compulsory claimants on the production of the rest of society. A few figures and comparisons will sketch in some of the dimensions of this galloping problem. In 1934, in the middle of the greatest depression in American history, at a nadir of our economic life, total government social welfare expenditures were $5.8 billion, of which direct welfare payments (”public aid”) amounted to $2.5 billion. In 1976, after four decades of the greatest boom in American history, at a time when we had reached the status of having the highest standard of living in the history of the world with a relatively low level of unemployment, government social welfare expenditures totalled $331.4 billion, of which direct welfare amounted to $48.9 billion. In short, total social welfare spending rose by the enormous sum of 5614% in these four decades, and direct welfare aid increased by 1856%. Or, put another way, social welfare spending increased by an average of 133.7% per year during this 1934-1976 period, while direct welfare aid increased by 44.2% per annum.

If we concentrate further on direct welfare, we find that spending [p. 143] stayed about the same from 1934 to 1950, and then took off into the stratosphere along with the post-World War II boom. In the years from 1950 to 1976, in fact, welfare aid increased by the huge sum of 84.4% per year.

Now some of these enormous increases can be accounted for by inflation, which diluted the value and purchasing power of the dollar. If we correct all the figures for inflation by putting them in terms of “constant 1958 dollars” (i.e., where each dollar has roughly the same purchasing power that the dollar could command in 1958), then the relevant figures become as follows: 1934 — total social welfare spending, $13.7 billion; direct welfare aid, $5.9 billion. In 1976 — total social welfare spending, $247.7 billion; direct welfare aid, $36.5 billion.

Even if we correct the figures for inflation, then, social welfare spending by the government rose by the vast amount of 1798%, or 42.8% per year over these forty-two years, while direct welfare aid rose 519%, or 12.4% per annum. Furthermore, if we look at the figures for 1950 and for 1976 for direct welfare aid, corrected for inflation, we find that welfare spending went up, during the intervening boom years, by 1077%, or 41.4% per annum.

If we adjust the figures still further to correct for population growth (total American population was 126 million in 1934, 215 million in 1976), then we still get an almost tenfold increase in total social welfare expenditures (from $108 to $1152 per capita in constant 1958 dollars), and a more than tripling of direct public aid (from $47 in 1934 to $170 per capita in 1976).

A few more comparisons: from 1955 to 1976 — years of great prosperity — the total number of people on welfare quintupled, from 2.2 to 11.2 million. From 1952 to 1970, the population of children eighteen years old and younger increased by 42%; the number on welfare, however, increased by 400%. The total population remained static, yet the number of welfare recipients in New York City jumped from 330,000 in 1960 to 1.2 million in 1971. Clearly, a welfare crisis is upon us.1

The crisis is shown to be far greater if we include in “welfare payments” all social welfare aids to the poor. Thus, federal “aid to the poor” nearly tripled from 1960 to 1969, leaping from $9.5 billion to $27.7 billion. State and local social welfare expenditures zoomed from $3.3 billion in 1935 to $46 billion, a 1300% increase! Total social welfare expenditures [p. 144] for 1969, federal, state, and local, amounted to a staggering $73.7 billion.

Most people think of being on welfare as a process external to the welfare clients themselves, as almost a natural disaster (like a tidal wave or volcanic eruption) that occurs beyond and despite the will of the people on welfare. The usual dictum is that “poverty” is the cause of individuals or families being on welfare. But on whatever criterion one wants to define poverty, on the basis of any chosen income level, it is undeniable that the number of people or families below that “poverty line” has been steadily decreasing since the 1930s, not vice versa. Thus, the extent of poverty can scarcely account for the spectacular growth in the welfare clientele.

The solution to the puzzle becomes clear once one realizes that the number of welfare recipients has what is called in economics a “positive supply function”; in other words, that when the incentives to go on welfare rise, the welfare rolls will lengthen, and that a similar result will occur if the disincentives to go on welfare become weaker. Oddly enough, nobody challenges this finding in any other area, of the economy. Suppose, for example, that someone (whether the government or a dotty billionaire is not important here) offers an extra $10,000 to everyone who will work in a shoe factory. Clearly, the supply of eager workers in the shoe business will multiply. The same will happen when disincentives are reduced, e.g., if the government promises to relieve every shoe worker from paying income taxes. If we begin to apply the same analysis to welfare clientele as to all other areas of economic life, the answer to the welfare puzzle becomes crystal-clear.

What, then, are the important incentives/disincentives for going on welfare, and how have they been changing? Clearly, an extremely important factor is the relation between the income to be gained on welfare, as compared with the income to be earned from productive work. Suppose, to put it simply, that the “average,” or going wage (very roughly, the wage open to an “average” worker), in a certain area is $7,000 a year. Suppose, also, that the income to be obtained from welfare is $3,000 a year. This means that the average net gain to be made from working (before taxes) is $4,000 a year. Suppose now that the welfare payments go up to $5,000 (or, alternatively, that the average wage is reduced to $5,000). The differential — the net gain to be made from working — has now been cut in half, reduced from $4,000 to $2,000 a year. It stands to reason that the result will be an enormous increase in the welfare rolls (which will increase still more when we consider that the $7,000 workers will have to pay higher taxes in order to support a swollen and [p. 145] virtually nontaxpaying welfare clientele). We would then expect that if — as, of course, has been the case — welfare payment levels have been rising faster than average wages, an increasing number of people will flock to the welfare rolls. This effect will be still greater if we consider that, of course, not everyone earns the “average”; it will be the “marginal” workers, the ones earning below the average, who will flock to the welfare rolls. In our example, if the welfare payment rises to $5,000 a year, what can we expect to happen to the workers making $4,000? $5,000? or even $6,000? The $5,000-a-year man who previously earned a net of $2,000 higher than the welfare client now finds that his differential has been reduced to zero, that he is making no more — even less after taxes! — than the welfare client kept in idleness by the state. Is it any wonder that he will begin to flock to the welfare bonanza?

Specifically, during the period between 1952 and 1970, when the welfare rolls quintupled from 2 to 10 million, the average monthly benefit of a welfare family more than doubled, from $82 to $187, an increase of almost 130% at a time when consumer prices were rising by only 50%. Furthermore, in 1968, the Citizens Budget Commission of New York City compared the ten states in the Union having the fastest rise in welfare rolls with the ten states enjoying the lowest rate of growth. The Commission found that the average monthly welfare benefit in the ten fastest-growing states was twice as high as in the ten slowest states. (Monthly welfare payments per person averaged $177 in the former group of states, and only $88 in the latter.)2

Another example of the impact of high welfare payments and of their relation to wages available from working was cited by the McCone Commission investigating the Watts riot of 1965. The Commission found that a job at the minimum wage paid about $220 a month, out of which had to come such work-related expenses as clothing and transportation. In contrast, the average welfare family in the area received from $177 to $238 a month, out of which no work-related expenses had to be deducted.3

Another powerful factor in swelling the welfare rolls is the increasing [p. 146] disappearance of the various sturdy disincentives for going on welfare. The leading disincentive has always been the stigma that every person on the welfare dole used to feel, the stigma of being parasitic and living off production instead of contributing to production. This stigma has been socially removed by the permeating values of modern liberalism; furthermore, the government agencies and social workers themselves have increasingly rolled out the red carpet to welcome and even urge people to get on welfare as quickly as possible. The “classical” view of the social worker was to help people to help themselves, to aid people in achieving and maintaining their independence and to stand on their own feet. For welfare clients, the aim of social workers used to be to help them get off the welfare rolls as quickly as possible. But now social workers have the opposite aim: to try to get as many people on welfare as possible, to advertise and proclaim their “rights.” The result has been a continuing easing of eligibility requirements, a reduction in red tape, and the withering away of the enforcing of residency, work, or even income requirements for being on the dole. Anyone who suggests, however faintly, that welfare recipients should be required to accept employment and get off the dole is considered a reactionary moral leper. And with the old stigma increasingly removed, people now tend more and more to move rapidly toward welfare instead of shrinking from it. Irving Kristol has trenchantly written of the “welfare explosion” of the 1960s:

This “explosion” was created — in part intentionally, in larger part unwittingly by public officials and public employees who were executing public policies as part of a “War on Poverty.” And these policies had been advocated and enacted by many of the same people who were subsequently so bewildered by the “welfare explosion.” Not surprisingly it took them a while to realize that the problem they were trying to solve was the problem they were creating.

Here . . . are the reasons behind the “welfare explosion” of the 1960s:

1. The number of poor people who are eligible for welfare will increase as one elevates the official definitions of “poverty” and “need.” The War on Poverty elevated these official definitions; therefore, an increase in the number of “eligi-bles” automatically followed.

2. The number of eligible poor who actually apply for welfare will increase as welfare benefits go up — as they did throughout the 1960s. When welfare payments (and associated benefits, such as Medicaid and food stamps) compete with low wages, many poor people will rationally prefer welfare. In New York City today, as in many other large cities, welfare benefits not only compete with low wages; they outstrip them. [p. 147]

3. The reluctance of people actually eligible for welfare to apply for it — a reluctance based on pride or ignorance or fear — will diminish if any organized campaign is instituted to “sign them up.” Such a campaign was successfully launched in the 1960s by (a) various community organizations sponsored and financed by the Office of Economic Opportunity, (b) the Welfare Rights Movement, and (c) the social work profession, which was now populated by college graduates who thought it their moral duty to help people get on welfare — instead of, as used to be the case, helping them get off” welfare. In addition, the courts cooperated by striking down various legal obstacles (for example, residence requirements). . . .

Somehow, the fact that more poor people are on welfare, receiving more generous payments, does not seem to have made this country a nice place to live — not even for the poor on welfare, whose condition seems not noticeably better than when they were poor and off welfare. Something appears to have gone wrong; a liberal and compassionate social policy has bred all sorts of unanticipated and perverse consequences.4

The spirit that used to animate the social work profession was a far different — and a libertarian — one. There were two basic principles: (a) that all relief and welfare payments should be voluntary, by private agencies, rather than by the coercive levy of government; and (b) that the object of giving should be to help the recipient become independent and productive as soon as possible. Of course, in ultimate logic, (b) follows from (a), since no private agency is able to tap the virtually unlimited funds that can be mulcted from the long-suffering taxpayer. Since private aid funds are strictly limited, there is therefore no room for the idea of welfare “rights” as an unlimited and permanent claim on the production of others. As a further corollary of the limitation on funds, the social workers also realized that there was no room for aid to malingerers, those who refused to work, or who used the aid as a racket; hence came the concept of the “deserving” as against the “undeserving” poor. Thus, the nineteenth-century laissez-faire English agency, the Charity Organisation Society, included among the undeserving poor ineligible for aid those who did not need relief, impostors, and the man whose “condition is due to improvidence or thriftlessness, and there is no hope of being able to make him independent of charitable . . . assistance in the future.”5

English laissez-faire liberalism, even though it generally accepted [p. 148] “Poor Law” governmental welfare, insisted that there be a strong disincentive effect: not only strict eligibility rules for assistance, but also making the workhouse conditions unpleasant enough to insure that workhouse relief would be a strong deterrent rather than an attractive opportunity. For the “undeserving poor,” those responsible for their own fate, abuse of the relief system could only be curbed by “making it as distasteful as possible to the applicants; that is, by insisting (as a general rule) on a labour test or residence in a workhouse.”6

While a strict deterrent is far better than an open welcome and a preachment about the recipients’ “rights,” the libertarian position calls for the complete abolition of governmental welfare and reliance on private charitable aid, based as it necessarily will be on helping the “deserving poor” on the road to independence as rapidly as possible. There was, after all, little or no governmental welfare in the United States until the Depression of the 1930s, and yet — in an era of a far lower general standard of living — there was no mass starvation in the streets. A highly successful private welfare program in the present-day is the one conducted by the three-millon-member Mormon Church. This remarkable people, hounded by poverty and persecution, emigrated to Utah and nearby states in the nineteenth century, and by thrift and hard work raised themselves to a general level of prosperity and affluence. Very few Mormons are on welfare; Mormons are taught to be independent, self-reliant, and to shun the public dole. Mormons are devout believers and have therefore successfully internalized these admirable values. Furthermore, the Mormon Church operates an extensive private welfare plan for its members — based, again, on the principle of helping their members toward independence as rapidly as possible.

Note, for example, the following principles from the “Welfare Plan” of the Mormon Church. “Ever since its organization in 1830, the Church has encouraged its members to establish and maintain their economic independence; it has encouraged thrift and fostered the establishment of employment-creating industries; it has stood ready at all times to help needy faithful members.” In 1936, the Mormon Church developed a “Church Welfare Plan, . . . a system under which the curse of idleness would be done away with, the evils of a dole abolished, and independence, industry, thrift and self-respect be once more established amongst our people. The aim of the Church is to help the people to help themselves. Work is to be enthroned as the ruling principle of the lives of [p. 149] our Church membership.”7  Mormon social workers in the program are instructed to act accordingly: “Faithful to this principle, welfare workers will earnestly teach and urge Church members to be self-sustaining to the full extent of their powers. No true Latter-Day Saint will, while physically able, voluntarily shift from himself the burden of his own support. So long as he can, under the inspiration of the Almighty and with his own labors, he will supply himself with the necessities of life.”8  The immediate objectives of the welfare program are to: “1. Place in gainful employment those who are able to work. 2. Provide employment within the Welfare Program, in so far as possible, for those who cannot be placed in gainful employment. 3. Acquire the means with which to supply the needy, for whom the Church assumes responsibility, with the necessities of life.”9  Insofar as possible, this program is carried on in small, decentralized, grass-roots groups: “Families, neighbors, quorums and wards and other Church organizational units may find it wise and desirable to form small groups for extending mutual help one to the other. Such groups may plant and harvest crops, process foods, store food, clothing and fuel, and carry out other projects for their mutual benefit.”10

Specifically, the Mormon bishops and priesthood quorums are enjoined to aid their brethren to self-help: “In his temporal administrations the bishop looks at every able-bodied needy person as a purely temporary problem, caring for him until he can help himself. The priesthood quorum must look at its needy member as a continuing problem until not alone his temporal needs are met but his spiritual ones also. As a concrete example — a bishop extends help while the artisan or craftsman is out of work and in want; a priesthood quorum assists in establishing him in work and tries to see that he becomes fully self-supporting and active in his priesthood duties.” Concrete rehabilitation activities for needy members enjoined upon the priesthood quorums include: “1. Placing quorum members and members of their families in permanent jobs. In some instances through trade school training, apprenticeships, and in other ways, quorums have assisted their quorum members to qualify themselves for better jobs. 2. Assisting quorum members and their families to get established in businesses of their own . . . .”11  [p. 150]

The prime objective of the Mormon Church is to find jobs for their needy. To this end, “The finding of suitable jobs, under the Welfare Program, is a major responsibility of priesthood quorum members. They and members of the Relief Society should be constantly on the alert for employment opportunities. If every member of the ward welfare committee does well his or her work in this respect, most of the unemployed will be placed in gainful employment at the group or ward level.”12  Other members are rehabilitated as self-employed, the church may aid with a small loan, and the member’s priesthood quorum may guarantee repayment from its funds. Those Mormons who cannot be placed in jobs or rehabilitated as self-employed “are to be given, in so far as possible, work at productive labor on Church properties . . . .” The Church is insistent on work by the recipient as far as possible: “It is imperative that people being sustained through the bishops storehouse program work to the extent of their ability, thus earning what they receive . . . . Work of an individual on welfare projects should be considered as temporary rather than permanent employment. It should nevertheless continue so long as assistance is rendered to the individual through the bishops storehouse program. In this way the spiritual welfare of people will be served as their temporal needs are supplied. Feelings of diffidence will be removed . . . .”13  Failing other work, the bishop may assign welfare recipients to aid individual members who are in need of help, the aided members reimbursing the Church at prevailing wage rates. In general, in return for their assistance, the welfare recipients are expected to make whatever contributions they can to the Church welfare program, either in funds, produce, or by their labor.14

Complementary to this comprehensive system of private aid on the principle of fostering independence, the Mormon Church sternly discourages its members from going on public welfare. “It is requested that local Church officers stress the importance of each individual, each family and each Church community becoming self-sustaining and independent of public relief.” And: “To seek and accept direct public relief all too often invites the curse of idleness and fosters the other evils of dole. It destroys one’s independence, industry, thrift and self-respect.”15

There is no finer model than the Mormon Church for a private, voluntary, rational, individualistic welfare program. Let government welfare be abolished, and one would expect that numerous such programs [p. 151] for rational mutual aid would spring up throughout the country.

The inspiring example of the Mormon Church is a demonstration that the major determinant of who or how many people go on public welfare is their cultural and moral values rather than their level of income. Another example is the group of Albanian-Americans in New York City.

Albanian-Americans are an extremely poor group, and in New York they are almost invariably poor slum dwellers. Statistics are scanty, but their average income is undoubtedly lower than that of the more highly publicized blacks and Puerto Ricans. Yet there is not a single Albanian-American on welfare. Why? Because of their pride and independence. As one of their leaders stated: “Albanians do not beg, and to Albanians, taking welfare is like begging in the street.”16

A similar case is the decaying, poor, largely Polish-American and almost totally Catholic community of Northside, in Brooklyn, New York. Despite the low incomes, blight, and old and deteriorating housing in the area, there are virtually no welfare recipients in this community, of 15,000. Why? Rudolph J. Stobierski, president of the Northside Community Development Council, supplied the answer: “They consider welfare an insult.”17

In addition to the impact of religion and ethnic differences on values, Professor Banfield, in his brilliant book, The Unheavenly City, has demonstrated the importance of what he calls “upper-class” or “lower-class” culture in influencing the values of their members. The definitions of “class” in Banfield are not strictly income or status levels, but they tend to overlap strongly with these more common definitions. His definitions of class center on the different attitudes toward the present and the future: upper- and middle-class members tend to be future-oriented, purposeful, rational, and self-disciplined. Lower-class people, on the other hand, tend to have a strong present-orientation, are capricious, hedonistic, purposeless, and therefore unwilling to pursue a job or a career with any consistency. People with the former values therefore tend to have higher incomes and better jobs, and lower-class people tend to be poor, jobless, or on welfare. In short, the economic fortunes of people tend over the long run to be their own internal responsibility, rather than to be determined — as liberals always insist — by external factors. Thus, Banfield quotes Daniel Rosenblatt’s findings on the lack of interest in medical care due to the “general lack of future orientation” among the urban poor: [p. 152]

For example, regular checkups of automobiles to detect incipient defects are not in the general value system of the urban poor. In similar fashion, household objects are often worn out and discarded rather than repaired at an early stage of disintegration. Installment buying is easily accepted without an awareness of the length of payments.

The body can be seen as simply another class of objects to be worn out but not repaired. Thus, teeth are left without dental care; later there is often small interest in dentures, whether free or not. In any event, false teeth may be little used. Corrective eye examinations, even for those people who wear glasses, are often neglected — regardless of clinic facilities. It is as though the middle class thinks of the body as a machine to be preserved and kept in perfect running order whether through prosthetic devices, rehabilitation, cosmetic surgery, or perpetual treatment, whereas the poor think of the body as having a limited span of utility: to be enjoyed in youth and then, with age and decrepitude, to be suffered and endured stoically.18

Banfield points out, furthermore, that lower-class death rates are, and have been for generations, far higher than for upper-class persons. Much of the differential is caused not by poverty or low incomes per se, as much as by the values or culture of the lower-class citizens. Thus, prominent and particularly lower-class causes of death are alcoholism, narcotics addiction, homicide, and venereal disease. Infant mortality has also been far higher among the lower classes, ranging up to two and three times that of upper groups. That this is due to cultural values rather than to income level may be seen in Banfield’s comparison of turn-of-the-century Irish immigrants with Russian Jewish immigrants in New York City. The Irish immigrants were, in those days, generally present-minded and “lower class” in attitudes, while the Russian Jews, though living in overcrowded tenements and on an income level probably lower than the Irish, were unusually future-minded, purposive, and “upper class” in their values and attitudes. At the turn of the century, the life expectancy at the age of ten of an Irish immigrant was only thirty-eight years, whereas for the Russian Jewish immigrant it was more than fifty years. Furthermore, whereas in 1911-1916, in a study of seven cities, the infant mortality was over three times as high for the lowest as compared to the highest income groups, the Jewish infant mortality was extremely low.19  [p. 153]

As in illness or mortality, so in unemployment — which obviously has a close relation to both poverty and welfare. Banfield cites the findings of Professor Michael J. Piore on the essential “unemployability” of many or most of the persistently low-income unemployed. Piore discovered that their difficulty was not so much in finding or learning the skills for steady, well-paying jobs as in the lack of personal fibre in sticking to such jobs. These people are inclined to high absenteeism, leaving their jobs without notice, being insubordinate, and sometimes stealing from the employer.20  Furthermore, Peter Doeringer’s study of the Boston “ghetto” labor market in 1968 found that about 70% of job applicants referred by neighborhood employment centers received job offers — but that over half of these offers were rejected, and of those accepted only about 40% of the new workers kept their jobs for as long as one month. Doeringer concluded: “Much of the ghetto unemployment appears to be a result of work instability rather than job scarcity.”21

It is highly instructive to compare the descriptions of this common refusal of the lower-class unemployed to engage in steady work by the frostily disapproving Professor Banfield and by the highly approving leftist sociologist Alvin Gouldner. Banfield: “Men accustomed to a street-corner style of life, to living off women on welfare, and to ‘hustling’ are seldom willing to accept the dull routines of the ‘good’ job.”22

 Pondering the lack of success of welfare workers in luring these men “away from a life of irresponsibility, sensuality, and freewheeling aggression,” Gouldner proclaims that they judge the preferred bargain to be unattractive: “Give up promiscuous sex, give up freely expressed aggression, and wild spontaneity . . . and you, or your children, may be admitted to the world of three square meals a day, to a high school or perhaps even a college education, to the world of charge accounts, of secure [p. 154] jobs and respectability.”23  The interesting point is that from both ends of the ideological spectrum both Banfield and Gouldner agree on the essential nature of this process, despite their contrasting value judgments on it: that much of persistent lower-class unemployment, and hence poverty, is voluntary on the part of the unemployed themselves.

Gouldner’s attitude is typical of liberals and leftists in the present day: that it is shameful to try to foist, even noncoercively, “bourgeois” or “middle-class values” on the gloriously spontaneous and “natural” lower-class culture. Fair enough, perhaps; but then don’t expect — or call upon — those same hard-working bourgeoisie to be coerced into supporting and subsidizing those very parasitic values of idleness and irresponsibility which they abhor — and which are clearly dysfunctional for the survival of any society. If people wish to be “spontaneous,” let them do so on their own time and with their own resources, and let them then take the consequences of this decision, and not use State coercion to force the hard-working and “unspontaneous” to bear those consequences instead. In short, abolish the welfare system.

If the major problem with the lower-class poor is irresponsible present-mindedness, and if it takes the inculcation of “bourgeois” future-minded values to get people off welfare and dependency (pace the Mormons), then at the very least these values should be encouraged and not discouraged in society. The left-liberal attitudes of social workers discourage the poor directly by fostering the idea of welfare as a “right” and as a moral claim upon production. Furthermore, the easy availability of the welfare check obviously promotes present-mindedness, unwillingness to work, and irresponsibility among the recipients — thus perpetuating the vicious cycle of poverty-welfare. As Banfield puts it, “there is perhaps no better way to make converts to present-mindedness than to give a generous welfare check to everyone.”24

Generally, in their attacks on the welfare system conservatives have focussed on the ethical and moral evils of coercively mulcting the taxpayers to support the idle, while the leftist critics have concentrated on the demoralization of the welfare “clients” through their dependency on the largesse of the State and its bureaucracy. Actually, both sets of criticisms are right; there is no contradiction between them. We have seen that voluntary programs such as those of the Mormon Church are keenly alive to this problem. And in fact, earlier laissez-faire critics [p. 155] of the dole were just as concerned with the demoralization as with the coercion over those forced to pay for welfare.

Thus, the nineteenth-century English laissez-faire advocate Thomas Mackay declared that welfare reform “consists in a re-creation and development of the arts of independence.” He called “not for more philanthropy, but rather for more respect for the dignity of human life, and more faith in its ability to work out its own salvation.” And Mackay poured his scorn on the advocates of greater welfare, on “the vicarious philanthropist who, in a reckless race after a cheap popularity, uses the rate [tax] extorted from his neighbors to multiply the occasions of stumbling set before the . . . crowd who are only too ready to fall into dependence . . . .”25  Mackay added that the “legal endowment of destitution” implied by the welfare system “introduces a most dangerous and at times demoralising influence into our social arrangements. Its real necessity is by no means proved. Its apparent necessity arises mainly from the fact that the system has created its own dependent population.”26  Elaborating on the theme of dependence, Mackay observed that “the bitterest element in the distress of the poor arises, not from mere poverty, but from the feeling of dependence which must of necessity be an ingredient in every measure of public relief. This feeling cannot be removed, but is rather intensified by liberal measures of public relief.”27

Mackay concluded that “the only way in which the legislator or the administrator can promote the reduction of pauperism is by abolishing or restricting the legal endowments provided for pauperism. The country can have, there is no doubt of it, exactly as many paupers as it chooses to pay for. Abolish or restrict that endowment . . . and new agencies are called into activity, man’s natural capacity for independence, the natural ties of relationship and friendship, and under this head I would include private as distinguished from public charity . . . .”28

The Charity Organisation Society, England’s leading private charity agency in the late nineteenth century, operated precisely on this principle of aid to foster self-help. As Mowat, the historian of the Society notes: “The C.O.S. embodied an idea of charity which claimed to reconcile the divisions in society, to remove poverty and to produce a happy, self-reliant community. It believed that the most serious aspect of poverty was the degradation of the character of the poor man or woman. [p. 156]

Indiscriminate charity only made things worse; it demoralised. True charity demanded friendship, thought, the sort of help that would restore a man’s self-respect and his ability to support himself and his family.”29

Perhaps one of the grimmest consequences of welfare is that it actively discourages self-help by crippling the financial incentive for rehabilitation. It has been estimated that, on the average, every dollar invested by handicapped persons in their own rehabilitation brings them from $10 to $17 in the present value of increased future earnings. But this incentive is crippled by the fact that, by becoming rehabilitated, they will lose their welfare relief, Social Security disability payments, and workmen’s compensation. As a result, most of the disabled decide not to invest in their own rehabilitation.30  Many people, moreover, are by now familiar with the crippling disincentive effects of the Social Security system, which — in glaring contrast to all private insurance funds — cuts off payments if the recipient should be brazen enough to work and earn an income after age 62.

In these days, when most people look askance at population growth, few antipopulationists have focussed on another unfortunate effect of the welfare system: Since welfare families are paid proportionately to the number of their children, the system provides an important subsidy for the production of more children. Furthermore, the people being induced to have more children are precisely those who can afford it least; the result can only be to perpetuate their dependence on welfare, and, in fact, to develop generations who are permanently dependent on the welfare dole.

In recent years, there has been a great deal of agitation for the government to supply day-care centers to care for children of working mothers. Allegedly the market has failed to supply this much needed service.

Since the market is in the business of meeting urgent consumer demands, however, the question to ask is why the market seems to have failed in this particular case. The answer is that the government has ringed the supply of day-care service with a network of onerous and costly legal restrictions. In short: while it is perfectly legal to deposit one’s children with a friend or relative, no matter who the person is or the condition of his apartment, or to hire a neighbor who will be taking care of one or two children, let the friend or neighbor become [p. 157] a slightly bigger business, and the State cracks down with a vengeance. Thus, the State will generally insist that such day-care centers be licensed and will refuse to grant the license unless registered nurses are in attendance at all times, minimal playground facilities are available, and the facility is of a minimum size. There will be all sorts of other absurd and costly restrictions which the government does not bother to impose on friends, relatives, and neighbors — or, indeed, on mothers themselves. Remove these restrictions, and the market will go to work to meet the demand.

For the past thirteen years the poet Ned O’Gorman has been operating a successful, privately financed day-care center in Harlem on a shoestring, but he is in danger of being put out of business by bureaucratic restrictions imposed by the New York City government. While the city admits the “dedication and effectiveness” of O’Gorman’s center, The Storefront, it is threatening fines and ultimately the coercive closing of the center unless he has a state-certified social worker present whenever there are five or more children in attendance. As O’Gorman indignantly remarks:

Why on earth should I be forced to hire someone with a piece of paper that says they’ve studied social work and are qualified to run a day-care center? If I’m not qualified after thirteen years in Harlem, then who is?31

The example of day care demonstrates an important truth about the market: if there seems to be a shortage of supply to meet an evident demand, then look to government as the cause of the problem. Give the market its head, and there will be no shortages of day-care centers, just as there are no shortages of motels, of washing machines, of TV sets, or of any of the other accoutrements of daily living.

• 1The Statistical Abstract of the United States, in its various annual editions, has the basic data for the nation For the local figures and some earlier analysis, see Henry Hazlitt, Man vs the Welfare State (New Rochelle, N Y Arlington House, 1969), pp 59-60
• 2See Roger A Freeman, “The Wayward Welfare State,” Modern Age (Fall, 1971), pp 401-02 In a detailed state-by-state study, Professors Brehm and Saving estimated that over 60% of the number of welfare clients in each state in 1951 could be accounted for by the level of welfare payments in that state, by the end of the ‘50s, the percentage had increased to over 80% C T Brehm and T R Saving, “The Demand for General Assistance Payments,” American Economic Review (December 1964), pp 1002-1018
• 3Governor’s Commission on the Los Angeles Riots, Violence in the City — An End or a Beginning? December 2, 1965, p 72, quoted in Edward C Banfield, The Unheavenly City (Boston Little, Brown & Co , 1970), p 288
• 4Irving Kristol, "Welfare: The best of intentions, the worst of results," Atlantic Monthly (August 1971), p. 47.
• 5Charity Organisation Society, 15th Annual Report, 1883, p. 54; quoted in Charles Loch Mowat, The Charity Organisation Society, 1869-1913 (London: Methuen & Co., 1961), p. 35.
• 6Charity Organisation Society, 2nd Annual Report, 1870, p. 5; quoted in Mowat, Ibid., p. 36.
• 7Welfare Plan of the Church of Jesus Christ of Latter-Day Saints (The General Church Welfare Committee, 1960), p. i.
• 8Ibid., p. 4.
• 9Ibid., p. 4.
• 10Ibid., p. 5.
• 11Ibid., p. 19.
• 12Ibid., p. 22.
• 13Ibid., p. 25.
• 14Ibid., pp. 25, 46.
• 15Ibid., pp. 46, 48.
• 16New York Times, April 13, 1970.
• 17Nadine Brozan, in New York Times, February 14, 1972.
• 18Daniel Rosenblatt, “Barriers to Medical Care for the Urban Poor,” in A. Shostak and W. Gomberg, eds., New Perspectives on Poverty (Englewood Cliffs, N.J.: Prentice-Hall, 1965), pp. 72-73; quoted in Banfield, The Unheavenly City, pp. 286-87.
• 19See Banfield, op. cit., pp. 210-16, 303. Infant mortality comparisons can be found in O. W. Anderson, “Infant Mortality and Social and Cultural Factors: Historical Trends and Current Patterns,” in E. G. Jaco, ed., Patients, Physicians, and Illness (New York: The Free Press, 1958), pp 10-22. The seven cities study is in R. M. Woodbury, Causal Factors in Infant Mortality A Statistical Study Based on Investigation in Eight Cities, U. S. Children’s Bureau Publication #142 (Washington, DC US Govt Printing Office, 1925), p 157. On Irish and Jewish life expectancy see James J Walsh, “Irish Mortality in New York and Pennsylvania,” Studies: An Irish Quarterly Review (December 1921), p 632. On the necessity for changing values and life styles in order to reduce infant mortality, see C. V. Wilhe and W. B. Rothney, “Racial, Ethnic and Income Factors in the Epidemiology of Neonatal Mortality,” American Sociological Review (August 1962), p. 526.
• 20Michael J. Piore, “Public and Private Responsibilities in On-the-job Training of Disadvantaged Workers,” MIT Dept. of Economics Working Paper #23, June 1968 Cited in Banfield, op. cit., pp 105, 285.
• 21Peter B Doeringer, Ghetto Labor Markets — Problems and Programs, Harvard Institute of Economic Research, Discussion Paper #33, June 1968, p. 9, quoted in Banfield, op. cit., pp 112, 285-86.
• 22Banfield, ibid., p. 105. Also p. 112.
• 23Alvin W. Gouldner, “The Secrets of Organizations,” in The Social Welfare Forum, Proceedings of the National Conference on Social Welfare (New York: Columbia University Press, 1963), p. 175; quoted in Banfield, op. cit., pp. 221-22, 305.
• 24Banfield, op. cit., p. 221.
• 25Thomas Mackay, Methods of Social Reform (London: John Murray, 1896), p. 13.
• 26Ibid., pp. 38-39.
• 27Ibid., pp. 259-60.
• 28Ibid., pp. 268-69.
• 29Mowat, op. cit., pp. 1-2.
• 30Estelle James, “Review of The Economics of Vocational Rehabilitation,” American Economic Review (June 1966), p. 642; also see Yale Brozen, “Welfare Without the Welfare State,” The Freeman (December 1966), pp. 50-51.
• 31“Poet and Agency at Odds Over His Day-Care Center,” New York Times (April 17, 1978), p. 82.