WEBVTT

NOTE 8. Welfare and the Welfare State

1
00:00:00.000 --> 00:00:09.000
Chapter 8. Welfare and the Welfare State. Why the Welfare Crisis?

2
00:00:09.000 --> 00:00:19.000
Almost everyone, regardless of ideology, agrees that there is something terribly wrong with the accelerating runaway welfare system in the United States,

3
00:00:19.000 --> 00:00:29.000
a system in which an ever-increasing proportion of the population lives as idle compulsory claimants on the production of the rest of society.

4
00:00:29.000 --> 00:00:35.000
A few figures and comparisons will sketch in some of the dimensions of this galloping problem.

5
00:00:35.000 --> 00:00:40.000
In 1934, in the middle of the greatest depression in American history,

6
00:00:40.000 --> 00:00:48.000
at a nadir of our economic life, total government social welfare expenditures were $5.8 billion,

7
00:00:48.000 --> 00:00:54.000
of which direct welfare payments, public aid, amounted to $2.5 billion.

8
00:00:54.000 --> 00:01:09.000
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,

9
00:01:09.000 --> 00:01:21.000
government social welfare expenditures totaled $331.4 billion, of which direct welfare amounted to $48.9 billion.

10
00:01:21.000 --> 00:01:37.000
In short, total social welfare spending rose by the enormous sum of 5,614% in these four decades, and direct welfare aid increased by 1,856%.

11
00:01:37.000 --> 00:01:50.000
Or, put another way, social welfare spending increased by an average of 133.7% per year during this 1934 to 1976 period,

12
00:01:50.000 --> 00:02:12.000
If we concentrate further on direct welfare, we find that spending stayed about the same from 1934 to 1950, and then took off into the stratosphere, along with the post-World War II boom.

13
00:02:12.000 --> 00:02:23.000
In the years from 1950 to 1976, in fact, welfare aid increased by the huge sum of 84.4% per year.

14
00:02:23.000 --> 00:02:32.000
Now, some of these enormous increases can be accounted for by inflation, which diluted the value and purchasing power of the dollar.

15
00:02:32.000 --> 00:02:39.000
If we correct all the figures for inflation by putting them in terms of constant $1958,

16
00:02:39.000 --> 00:02:46.000
That is, where each dollar has roughly the same purchasing power that the dollar could command in 1958.

17
00:02:46.000 --> 00:02:49.000
Then the relevant figures become as follows.

18
00:02:49.000 --> 00:02:56.000
1934, total social welfare spending $13.7 billion.

19
00:02:56.000 --> 00:03:00.000
Direct welfare aid $5.9 billion.

20
00:03:00.000 --> 00:03:07.000
In 1976, total social welfare spending $247.7 billion.

21
00:03:07.000 --> 00:03:13.320
dollars, Direct Welfare Aid, $36.5 billion.

22
00:03:13.320 --> 00:03:18.480
Even if we correct the figures for inflation then, social welfare spending by the government

23
00:03:18.480 --> 00:03:29.880
rose by the vast amount of 1,798% or 42.8% per year over these 42 years, while Direct

24
00:03:29.880 --> 00:03:39.060
Direct Welfare Aid rose 519% or 12.4% per annum. Furthermore, if we look at the figures

25
00:03:39.060 --> 00:03:47.040
for 1950 and for 1976 for Direct Welfare Aid, corrected for inflation, we find that welfare

26
00:03:47.040 --> 00:03:58.200
spending went up during the intervening boom years by 1,077% or 41.4% per annum. If we

27
00:03:58.200 --> 00:04:02.720
We adjust the figures still further to correct for population growth.

28
00:04:02.720 --> 00:04:11.400
Total American population was 126 million in 1934, 215 million in 1976.

29
00:04:11.400 --> 00:04:17.800
Then we still get an almost ten-fold increase in total social welfare expenditures, from

30
00:04:17.800 --> 00:04:27.320
$108 to $1152 per capita in constant $1958, and a more than tripling of direct public

31
00:04:27.320 --> 00:04:36.520
Aid, from $47 in 1934 to $170 per capita in 1976.

32
00:04:36.520 --> 00:04:38.600
A few more comparisons.

33
00:04:38.600 --> 00:04:47.640
From 1955 to 1976, years of great prosperity, the total number of people on welfare quintupled,

34
00:04:47.640 --> 00:04:52.000
from 2.2 to 11.2 million.

35
00:04:52.000 --> 00:05:01.140
From 1952 to 1970, the population of children 18 years old and younger increased by 42%.

36
00:05:01.140 --> 00:05:06.280
The number on welfare, however, increased by 400%.

37
00:05:06.280 --> 00:05:11.720
The total population remained static, yet the number of welfare recipients in New York

38
00:05:11.720 --> 00:05:20.000
City jumped from 330,000 in 1960 to 1.2 million in 1971.

39
00:05:20.000 --> 00:05:24.920
Clearly, a welfare crisis is upon us.

40
00:05:24.920 --> 00:05:30.680
The crisis is shown to be far greater if we include in welfare payments all social welfare

41
00:05:30.680 --> 00:05:39.500
aides to the poor, thus federal aid to the poor nearly tripled from 1960 to 1969, leaping

42
00:05:39.500 --> 00:05:45.720
from $9.5 billion to $27.7 billion.

43
00:05:45.720 --> 00:05:54.600
State and local social welfare expenditures zoomed from $3.3 billion in 1935 to $46 billion,

44
00:05:54.600 --> 00:06:04.920
a 1300% increase. Total social welfare expenditures for 1969, federal, state and local, amounted

45
00:06:04.920 --> 00:06:14.480
to a staggering $73.7 billion. Most people think of being on welfare as a process external

46
00:06:14.480 --> 00:06:21.020
to the welfare clients themselves as almost a natural disaster like a tidal wave or volcanic

47
00:06:21.020 --> 00:06:27.140
eruption that occurs beyond and despite the will of the people on welfare.

48
00:06:27.140 --> 00:06:34.180
The usual dictum is that poverty is the cause of individuals or families being on welfare.

49
00:06:34.180 --> 00:06:40.540
But on whatever criterion one wants to define poverty, on the basis of any chosen income

50
00:06:40.540 --> 00:06:52.540
It is undeniable that the number of people or families below that poverty line has been steadily decreasing since the 1930s, not vice versa.

51
00:06:52.540 --> 00:07:00.540
Thus, the extent of poverty can scarcely account for the spectacular growth in the welfare clientele.

52
00:07:00.540 --> 00:07:06.580
The solution to the puzzle becomes clear once one realizes that the number of welfare recipients

53
00:07:06.580 --> 00:07:11.580
has what is called in economics a positive supply function.

54
00:07:11.580 --> 00:07:17.340
In other words, that when the incentives to go on welfare rise, the welfare rolls will

55
00:07:17.340 --> 00:07:23.620
lengthen and that a similar result will occur if the disincentives to go on welfare become

56
00:07:23.620 --> 00:07:25.020
weaker.

57
00:07:25.020 --> 00:07:31.380
Oddly enough, nobody challenges this finding in any other area of the economy.

58
00:07:31.380 --> 00:07:36.020
Suppose for example that someone, whether the government or a dotty billionaire is not

59
00:07:36.020 --> 00:07:42.540
important here, offers an extra $10,000 to everyone who will work in a shoe factory.

60
00:07:42.540 --> 00:07:47.920
Clearly, the supply of eager workers in the shoe business will multiply.

61
00:07:47.920 --> 00:07:51.740
The same will happen when disincentives are reduced.

62
00:07:51.740 --> 00:07:58.540
for example, if the government promises to relieve every shoe worker from paying income taxes.

63
00:07:58.540 --> 00:08:03.980
If we begin to apply the same analysis to welfare clientele as to all other areas of

64
00:08:03.980 --> 00:08:10.300
economic life, the answer to the welfare puzzle becomes crystal clear.

65
00:08:10.300 --> 00:08:16.800
What then are the important incentives, disincentives, for going on welfare, and how have they been

66
00:08:16.800 --> 00:08:17.800
changing?

67
00:08:17.800 --> 00:08:28.800
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.

68
00:08:28.800 --> 00:08:40.800
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.

69
00:08:40.800 --> 00:08:46.800
Suppose also that the income to be obtained from welfare is $3,000 a year.

70
00:08:46.800 --> 00:08:54.400
This means that the average net gain to be made from working before taxes is $4,000 a year.

71
00:08:54.400 --> 00:09:04.600
Suppose now that the welfare payments go up to $5,000, or, alternatively, that the average wage is reduced to $5,000.

72
00:09:04.600 --> 00:09:15.000
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.

73
00:09:15.000 --> 00:09:20.500
It stands to reason that the result will be an enormous increase in the welfare roles,

74
00:09:20.500 --> 00:09:33.500
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 virtually non-tax-paying welfare clientele.

75
00:09:33.500 --> 00:09:43.000
We would then expect that if, as of course has been the case, welfare payment levels have been rising faster than average wages,

76
00:09:43.000 --> 00:09:47.800
An increasing number of people will flock to the welfare rolls.

77
00:09:47.800 --> 00:09:54.600
This effect will be still greater if we consider that, of course, not everyone earns the average.

78
00:09:54.600 --> 00:09:59.280
It will be the marginal workers, the ones earning below the average, who will flock

79
00:09:59.280 --> 00:10:01.560
to the welfare rolls.

80
00:10:01.560 --> 00:10:07.960
In our example, if the welfare payment rises to $5,000 a year, what can we expect to happen

81
00:10:07.960 --> 00:10:14.560
to the workers making $4,000, $5,000, or even $6,000.

82
00:10:14.560 --> 00:10:21.680
The $5,000-a-year man who previously earned a net of $2,000 higher than the welfare client

83
00:10:21.680 --> 00:10:28.180
now finds that his differential has been reduced to zero, that he is making no more, even less

84
00:10:28.180 --> 00:10:33.740
after taxes, than the welfare client kept in idleness by the state.

85
00:10:33.740 --> 00:10:37.900
Is it any wonder that he will begin to flock to the welfare bonanza?

86
00:10:37.900 --> 00:10:45.900
Specifically, during the period between 1952 and 1970, when the welfare rolls quintupled

87
00:10:45.900 --> 00:10:52.140
from 2 to 10 million, the average monthly benefit of a welfare family more than doubled

88
00:10:52.140 --> 00:11:01.620
from $82 to $187, an increase of almost 130% at a time when consumer prices were rising

89
00:11:01.620 --> 00:11:11.580
In 1968, the Citizens Budget Commission of New York City compared the 10 states in the

90
00:11:11.580 --> 00:11:17.920
Union having the fastest rise in welfare rolls with the 10 states enjoying the lowest rate

91
00:11:17.920 --> 00:11:19.640
of growth.

92
00:11:19.640 --> 00:11:24.580
The commission found that the average monthly welfare benefit in the 10 fastest-growing

93
00:11:24.580 --> 00:11:30.420
states was twice as high as in the 10 slowest states.

94
00:11:30.420 --> 00:11:40.420
Only welfare payments per person averaged $177 in the former group of states and only $88 in the latter.

95
00:11:40.420 --> 00:11:45.680
Another example of the impact of high welfare payments and of their relation to wages available

96
00:11:45.680 --> 00:11:53.460
from working was cited by the McCone Commission investigating the Watts Riot of 1965.

97
00:11:53.460 --> 00:11:59.660
The Commission found that a job at the minimum wage paid about $220 a month, out of which

98
00:11:59.660 --> 00:12:05.140
Which had to come such work-related expenses as clothing and transportation?

99
00:12:05.140 --> 00:12:14.300
In contrast, the average welfare family in the area received from $177 to $238 a month,

100
00:12:14.300 --> 00:12:19.660
out of which no work-related expenses had to be deducted.

101
00:12:19.660 --> 00:12:25.020
Another powerful factor in swelling the welfare rolls is the increasing disappearance of the

102
00:12:25.020 --> 00:12:29.780
The various sturdy disincentives for going on welfare.

103
00:12:29.780 --> 00:12:35.100
The leading disincentive has always been the stigma that every person on the welfare dole

104
00:12:35.100 --> 00:12:36.900
used to feel.

105
00:12:36.900 --> 00:12:44.180
The stigma of being parasitic and living off production instead of contributing to production.

106
00:12:44.180 --> 00:12:49.900
This stigma has been socially removed by the permeating values of modern liberalism.

107
00:12:49.900 --> 00:13:01.900
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.

108
00:13:01.900 --> 00:13:13.900
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.

109
00:13:13.900 --> 00:13:22.900
For welfare clients, the aim of social workers used to be to help them get off the welfare roles as quickly as possible.

110
00:13:22.900 --> 00:13:33.900
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.

111
00:13:33.900 --> 00:13:38.900
The result has been a continuing easing of eligibility requirements,

112
00:13:38.900 --> 00:13:44.620
A Reduction in Red Tape and the withering away of the enforcing of residency, work or

113
00:13:44.620 --> 00:13:48.580
even income requirements for being on the dole.

114
00:13:48.580 --> 00:13:54.340
Anyone who suggests, however faintly, that welfare recipients should be required to accept

115
00:13:54.340 --> 00:14:00.420
employment and get off the dole is considered a reactionary moral leper.

116
00:14:00.420 --> 00:14:06.380
And with the old stigma increasingly removed, people now tend more and more to move rapidly

117
00:14:06.380 --> 00:14:10.860
toward welfare instead of shrinking from it.

118
00:14:10.860 --> 00:14:17.260
Irving Kristol has trenchantly written of the welfare explosion of the 1960s.

119
00:14:17.260 --> 00:14:24.180
This explosion was created, in part intentionally, in larger part unwittingly, by public officials

120
00:14:24.180 --> 00:14:31.060
and public employees, who were executing public policies as part of a war on poverty.

121
00:14:31.060 --> 00:14:35.720
And these policies had been advocated and enacted by many of the same people who were

122
00:14:35.720 --> 00:14:39.920
were subsequently so bewildered by the welfare explosion.

123
00:14:39.920 --> 00:14:44.160
Not surprisingly, it took them a while to realize that the problem they were trying

124
00:14:44.160 --> 00:14:49.400
to solve was the problem they were creating.

125
00:14:49.400 --> 00:14:54.200
Here are the reasons behind the welfare explosion of the 1960s.

126
00:14:54.200 --> 00:14:55.760
1.

127
00:14:55.760 --> 00:15:00.880
The number of poor people who are eligible for welfare will increase as one elevates

128
00:15:00.880 --> 00:15:04.820
the official definitions of poverty and need.

129
00:15:04.820 --> 00:15:08.380
The war on poverty elevated these official definitions.

130
00:15:08.380 --> 00:15:13.700
Therefore, an increase in the number of eligibles automatically followed.

131
00:15:13.700 --> 00:15:15.140
2.

132
00:15:15.140 --> 00:15:20.960
The number of eligible poor who actually apply for welfare will increase as welfare benefits

133
00:15:20.960 --> 00:15:25.180
go up, as they did throughout the 1960s.

134
00:15:25.180 --> 00:15:30.420
When welfare payments and associated benefits, such as Medicaid and food stamps, compete

135
00:15:30.420 --> 00:15:35.900
compete with low wages, many poor people will rationally prefer welfare.

136
00:15:35.900 --> 00:15:41.280
In New York City today, as in many other large cities, welfare benefits not only compete

137
00:15:41.280 --> 00:15:44.660
with low wages, they outstrip them.

138
00:15:44.660 --> 00:15:46.180
3.

139
00:15:46.180 --> 00:15:51.700
The reluctance of people actually eligible for welfare to apply for it, a reluctance

140
00:15:51.700 --> 00:15:58.740
based on pride or ignorance or fear, will diminish if any organized campaign is instituted

141
00:15:58.740 --> 00:16:00.940
to Sign Them Up.

142
00:16:00.940 --> 00:16:07.560
Such a campaign was successfully launched in the 1960s by a. various community organizations

143
00:16:07.560 --> 00:16:14.720
sponsored and financed by the Office of Economic Opportunity, b. the welfare rights movement,

144
00:16:14.720 --> 00:16:20.580
and c. the social work profession, which was now populated by college graduates who thought

145
00:16:20.580 --> 00:16:26.900
it their moral duty to help people get on welfare, instead of, as used to be the case,

146
00:16:26.900 --> 00:16:29.900
helping them get off welfare.

147
00:16:29.900 --> 00:16:36.020
In addition, the courts cooperated by striking down various legal obstacles, for example,

148
00:16:36.020 --> 00:16:37.660
residence requirements.

149
00:16:37.660 --> 00:16:44.220
Somehow, the fact that more poor people are on welfare, receiving more generous payments,

150
00:16:44.220 --> 00:16:49.100
does not seem to have made this country a nice place to live, not even for the poor

151
00:16:49.100 --> 00:16:56.100
on welfare, whose condition seems not noticeably better than when they were poor and off welfare.

152
00:16:56.100 --> 00:17:01.980
Everything appears to have gone wrong. A liberal and compassionate social policy has bred all

153
00:17:01.980 --> 00:17:07.620
sorts of unanticipated and perverse consequences.

154
00:17:07.620 --> 00:17:12.340
The spirit that used to animate the social work profession was a far different and a

155
00:17:12.340 --> 00:17:19.820
libertarian one. There were two basic principles. A, that all relief and welfare payments should

156
00:17:19.820 --> 00:17:26.220
should be voluntary by private agencies rather than by the coercive levy of government,

157
00:17:26.220 --> 00:17:31.540
and b, that the object of giving should be to help the recipient become independent and

158
00:17:31.540 --> 00:17:34.820
productive as soon as possible.

159
00:17:34.820 --> 00:17:41.460
Of course, in ultimate logic, b follows from a, since no private agency is able to tap

160
00:17:41.460 --> 00:17:47.700
the virtually unlimited funds that can be molted from the long-suffering taxpayer.

161
00:17:47.700 --> 00:17:53.580
Since private aid funds are strictly limited, there is therefore no room for the idea of

162
00:17:53.580 --> 00:18:00.060
welfare rights as an unlimited and permanent claim on the production of others.

163
00:18:00.060 --> 00:18:05.220
As a further corollary of the limitation on funds, the social workers also realized that

164
00:18:05.220 --> 00:18:10.740
there was no room for aid to malingerers, those who refused to work, or who used the

165
00:18:10.740 --> 00:18:12.860
aid as a racket.

166
00:18:12.860 --> 00:18:17.940
Hence came the concept of the deserving as against the undeserving poor.

167
00:18:17.940 --> 00:18:25.020
Thus, the 19th century laissez-faire English agency, the Charity Organization Society,

168
00:18:25.020 --> 00:18:32.620
included among the undeserving poor, ineligible for aid, those who did not need relief, imposters,

169
00:18:32.620 --> 00:18:38.120
and the man whose condition is due to improvidence or thriftlessness, and there is no hope of

170
00:18:38.120 --> 00:19:08.120
English laissez-faire liberalism, even though it generally accepted poor law government 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 ensure that workhouse relief would be a strong deterrent rather than an attractive opportunity.

171
00:19:08.120 --> 00:19:28.120
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 labor test or residence in a workhouse.

172
00:19:28.120 --> 00:19:35.120
While a strict deterrent is far better than an open welcome and a preachment about the recipient's rights,

173
00:19:35.120 --> 00:19:43.120
the libertarian position calls for the complete abolition of governmental welfare and reliance on private charitable aid,

174
00:19:43.120 --> 00:19:52.120
based as it necessarily will be on helping the deserving poor on the road to independence as rapidly as possible.

175
00:19:52.120 --> 00:19:59.620
There was, after all, little or no governmental welfare in the United States until the depression of the 1930s.

176
00:19:59.620 --> 00:20:07.120
And yet, in an era of a far lower general standard of living, there was no mass starvation in the streets.

177
00:20:07.120 --> 00:20:15.620
A highly successful private welfare program in the present day is the one conducted by the three-million-member Mormon Church.

178
00:20:15.620 --> 00:20:30.620
This remarkable people, hounded by poverty and persecution, immigrated to Utah and nearby states in the 19th century, and by thrift and hard work, raised themselves to a general level of prosperity and affluence.

179
00:20:30.620 --> 00:20:39.620
Very few Mormons are on welfare. Mormons are taught to be independent, self-reliant, and to shun the public dole.

180
00:20:39.620 --> 00:20:46.620
Mormons are devout believers and have therefore successfully internalized these admirable values.

181
00:20:46.620 --> 00:20:52.620
Furthermore, the Mormon Church operates an extensive private welfare plan for its members,

182
00:20:52.620 --> 00:20:59.620
based again on the principle of helping their members toward independence as rapidly as possible.

183
00:20:59.620 --> 00:21:05.620
Note, for example, the following principles from the welfare plan of the Mormon Church.

184
00:21:05.620 --> 00:21:14.120
Ever since its organization in 1830, the Church has encouraged its members to establish and maintain their economic independence.

185
00:21:14.120 --> 00:21:19.620
It has encouraged thrift and fostered the establishment of employment-creating industries.

186
00:21:19.620 --> 00:21:24.620
It has stood ready at all times to help needy, faithful members.

187
00:21:24.620 --> 00:21:33.620
In 1936, the Mormon Church developed a Church Welfare Plan, a system under which the curse of idleness would be done away with,

188
00:21:33.620 --> 00:21:40.000
The evils of a dole abolished, and independence, industry, thrift, and self-respect be once

189
00:21:40.000 --> 00:21:43.260
more established amongst our people.

190
00:21:43.260 --> 00:21:47.660
The aim of the Church is to help the people to help themselves.

191
00:21:47.660 --> 00:21:53.820
Work is to be enthroned as the ruling principle of the lives of our Church membership.

192
00:21:53.820 --> 00:21:58.780
Mormon social workers in the program are instructed to act accordingly.

193
00:21:58.780 --> 00:22:03.660
According to this principle, welfare workers will earnestly teach and urge church members

194
00:22:03.660 --> 00:22:07.900
to be self-sustaining to the full extent of their powers.

195
00:22:07.900 --> 00:22:14.380
No true latter-day saint will, while physically able, voluntarily shift from himself the burden

196
00:22:14.380 --> 00:22:16.440
of his own support.

197
00:22:16.440 --> 00:22:21.620
So long as he can, under the inspiration of the Almighty and with his own labors, he will

198
00:22:21.620 --> 00:22:25.920
supply himself with the necessities of life.

199
00:22:25.920 --> 00:22:32.160
The immediate objectives of the Welfare Program are to 1. Place in gainful employment those

200
00:22:32.160 --> 00:22:39.360
who are able to work. 2. Provide employment within the Welfare Program, insofar as possible,

201
00:22:39.360 --> 00:22:45.760
for those who cannot be placed in gainful employment. 3. Acquire the means with which

202
00:22:45.760 --> 00:22:53.080
to supply the needy, for whom the Church assumes responsibility with the necessities of life.

203
00:22:53.080 --> 00:22:59.920
Insofar as possible, this program is carried on in small, decentralized grassroots groups.

204
00:22:59.920 --> 00:23:06.140
Families, neighbors, quorums and wards, and other church organizational units may find

205
00:23:06.140 --> 00:23:13.360
it wise and desirable to form small groups for extending mutual help one to the other.

206
00:23:13.360 --> 00:23:19.940
Such groups may plant and harvest crops, process foods, store food, clothing and fuel, and

207
00:23:19.940 --> 00:23:23.540
and carry out other projects for their mutual benefit.

208
00:23:23.540 --> 00:23:29.780
Specifically, the Mormon bishops and priesthood quorums are enjoined to aid their brethren

209
00:23:29.780 --> 00:23:31.980
to self-help.

210
00:23:31.980 --> 00:23:37.420
In his temporal administrations, the bishop looks at every able-bodied needy person as

211
00:23:37.420 --> 00:23:43.420
a purely temporary problem, caring for him until he can help himself.

212
00:23:43.420 --> 00:23:49.460
The priesthood quorum must look at its needy member as a continuing problem until not alone

213
00:23:49.460 --> 00:23:54.180
His temporal needs are met, but his spiritual ones also.

214
00:23:54.180 --> 00:24:00.340
As a concrete example, a bishop extends help while the artisan or craftsman is out of work

215
00:24:00.340 --> 00:24:02.000
and in want.

216
00:24:02.000 --> 00:24:07.460
A priesthood quorum assists in establishing him in work and tries to see that he becomes

217
00:24:07.460 --> 00:24:12.880
fully self-supporting and active in his priesthood duties.

218
00:24:12.880 --> 00:24:18.080
Concrete rehabilitation activities for needy members enjoined upon the priesthood quorums

219
00:24:18.080 --> 00:24:25.120
Quarums include placing quorum members and members of their families in permanent jobs.

220
00:24:25.120 --> 00:24:30.740
In some instances, through trade school training, apprenticeships, and in other ways, quorums

221
00:24:30.740 --> 00:24:38.320
have assisted their quorum members to qualify themselves for better jobs, assisting quorum

222
00:24:38.320 --> 00:24:43.420
members and their families to get established in businesses of their own.

223
00:24:43.420 --> 00:24:48.420
The prime objective of the Mormon Church is to find jobs for their needy.

224
00:24:48.420 --> 00:24:54.220
To this end, the finding of suitable jobs under the welfare program is a major responsibility

225
00:24:54.220 --> 00:24:56.900
of priesthood quorum members.

226
00:24:56.900 --> 00:25:01.740
They and members of the Relief Society should be constantly on the alert for employment

227
00:25:01.740 --> 00:25:03.340
opportunities.

228
00:25:03.340 --> 00:25:09.340
If every member of the Ward Welfare Committee does well his or her work in this respect,

229
00:25:09.340 --> 00:25:14.980
Most of the unemployed will be placed in gainful employment at the group or ward level.

230
00:25:14.980 --> 00:25:18.420
Other members are rehabilitated as self-employed.

231
00:25:18.420 --> 00:25:23.600
The Church may aid with a small loan, and the member's priesthood quorum may guarantee

232
00:25:23.600 --> 00:25:26.740
repayment from its funds.

233
00:25:26.740 --> 00:25:32.260
Those Mormons who cannot be placed in jobs or rehabilitated as self-employed are to be

234
00:25:32.260 --> 00:25:38.740
given, insofar as possible, work at productive labor on Church properties.

235
00:25:38.740 --> 00:25:43.740
The Church is insistent on work by the recipient as far as possible.

236
00:25:43.740 --> 00:25:49.120
It is imperative that people being sustained through the bishop's storehouse program work

237
00:25:49.120 --> 00:25:53.920
to the extent of their ability, thus earning what they receive.

238
00:25:53.920 --> 00:25:58.860
Work of an individual on welfare projects should be considered as temporary rather than

239
00:25:58.860 --> 00:26:00.940
permanent employment.

240
00:26:00.940 --> 00:26:05.520
It should, nevertheless, continue so long as assistance is rendered to the individual

241
00:26:05.520 --> 00:26:08.660
through the bishop's storehouse program.

242
00:26:08.660 --> 00:26:13.980
In this way, the spiritual welfare of people will be served as their temporal needs are

243
00:26:13.980 --> 00:26:15.740
supplied.

244
00:26:15.740 --> 00:26:19.220
Feelings of diffidence will be removed.

245
00:26:19.220 --> 00:26:24.400
Failing other work, the bishop may assign welfare recipients to aid individual members

246
00:26:24.400 --> 00:26:29.420
who are in need of help, the aided members reimbursing the Church at prevailing wage

247
00:26:29.420 --> 00:26:30.980
rates.

248
00:26:30.980 --> 00:26:36.100
In general, in return for their assistance, the welfare recipients are expected to make

249
00:26:36.100 --> 00:26:42.580
make whatever contributions they can to the church welfare program, either in funds, produce,

250
00:26:42.580 --> 00:26:45.300
or by their labor.

251
00:26:45.300 --> 00:26:50.220
Complementary to this comprehensive system of private aid on the principle of fostering

252
00:26:50.220 --> 00:26:57.820
independence, the Mormon Church sternly discourages its members from going on public welfare.

253
00:26:57.820 --> 00:27:03.040
It is requested that local church officers stress the importance of each individual,

254
00:27:03.040 --> 00:27:08.640
Each family and each church community becoming self-sustaining and independent of public

255
00:27:08.640 --> 00:27:09.640
relief.

256
00:27:09.640 --> 00:27:17.040
And, to seek and accept direct public relief all too often invites the curse of idleness

257
00:27:17.040 --> 00:27:20.120
and fosters the other evils of dole.

258
00:27:20.120 --> 00:27:26.560
It destroys one's independence, industry, thrift, and self-respect.

259
00:27:26.560 --> 00:27:33.020
There is no finer model than the Mormon Church for a private, voluntary, rational, individualistic

260
00:27:33.020 --> 00:27:35.180
Public Welfare Program.

261
00:27:35.180 --> 00:27:40.520
Let government welfare be abolished and one would expect that numerous such programs for

262
00:27:40.520 --> 00:27:45.440
rational mutual aid would spring up throughout the country.

263
00:27:45.440 --> 00:27:50.300
The inspiring example of the Mormon Church is a demonstration that the major determinant

264
00:27:50.300 --> 00:27:57.220
of who or how many people go on public welfare is their cultural and moral values rather

265
00:27:57.220 --> 00:27:59.920
than their level of income.

266
00:27:59.920 --> 00:28:06.540
Another example is the group of Albanian-Americans in New York City. Albanian-Americans are an

267
00:28:06.540 --> 00:28:13.180
extremely poor group, and in New York they are almost invariably poor slum dwellers.

268
00:28:13.180 --> 00:28:18.240
Statistics are scanty, but their average income is undoubtedly lower than that of the more

269
00:28:18.240 --> 00:28:24.920
highly publicized blacks and Puerto Ricans. Yet there is not a single Albanian-American

270
00:28:24.920 --> 00:28:32.040
on Welfare. Why? Because of their pride and independence. As one of their leaders stated,

271
00:28:32.040 --> 00:28:37.480
Albanians do not beg, and to Albanians taking welfare is like begging in the street.

272
00:28:39.000 --> 00:28:45.080
A similar case is the decaying, poor, largely Polish-American and almost totally Catholic

273
00:28:45.080 --> 00:28:52.280
community of Northside in Brooklyn, New York. Despite the low incomes, blight, and old and

274
00:28:52.280 --> 00:28:57.480
and deteriorating housing in the area, there are virtually no welfare recipients in this

275
00:28:57.480 --> 00:28:59.880
community of 15,000.

276
00:28:59.880 --> 00:29:01.480
Why?

277
00:29:01.480 --> 00:29:06.380
Rudolf J. Stobierski, president of the North Side Community Development Council, supplied

278
00:29:06.380 --> 00:29:11.340
the answer, they consider welfare an insult.

279
00:29:11.340 --> 00:29:17.180
In addition to the impact of religion and ethnic differences on values, Professor Banfield

280
00:29:17.180 --> 00:29:22.220
Banfield in his brilliant book The Unheavenly City has demonstrated the importance of what

281
00:29:22.220 --> 00:29:29.560
he calls upper-class or lower-class culture in influencing the values of their members.

282
00:29:29.560 --> 00:29:35.640
The definitions of class in Banfield are not strictly income or status levels, but they

283
00:29:35.640 --> 00:29:40.660
tend to overlap strongly with these more common definitions.

284
00:29:40.660 --> 00:29:46.880
His definitions of class center on the different attitudes toward the present and the future.

285
00:29:46.880 --> 00:29:54.360
Upper and middle class members tend to be future-oriented, purposeful, rational and self-disciplined.

286
00:29:54.360 --> 00:30:00.440
Lower class people, on the other hand, tend to have a strong present orientation, are capricious,

287
00:30:00.440 --> 00:30:08.280
hedonistic, purposeless, and therefore unwilling to pursue a job or a career with any consistency.

288
00:30:08.280 --> 00:30:14.640
People with the former values therefore tend to have higher incomes and better jobs.

289
00:30:14.640 --> 00:30:20.380
and lower class people tend to be poor, jobless, or on welfare.

290
00:30:20.380 --> 00:30:26.600
In short, the economic fortunes of people tend, over the long run, to be their own internal

291
00:30:26.600 --> 00:30:33.600
responsibility, rather than to be determined, as liberals always insist, by external factors.

292
00:30:33.600 --> 00:30:39.200
Thus, Banfield quotes Daniel Rosenblatt's findings on the lack of interest in medical

293
00:30:39.200 --> 00:30:46.080
Social Care due to the general lack of future orientation among the urban poor.

294
00:30:46.080 --> 00:30:52.440
For example, regular checkups of automobiles to detect incipient defects are not in the

295
00:30:52.440 --> 00:30:56.000
general value system of the urban poor.

296
00:30:56.000 --> 00:31:01.720
In similar fashion, household objects are often worn out and discarded rather than repaired

297
00:31:01.720 --> 00:31:05.400
at an early stage of disintegration.

298
00:31:05.400 --> 00:31:11.280
Not buying is easily accepted without an awareness of the length of payments.

299
00:31:11.280 --> 00:31:17.800
The body can be seen as simply another class of objects to be worn out, but not repaired.

300
00:31:17.800 --> 00:31:21.040
Thus, teeth are left without dental care.

301
00:31:21.040 --> 00:31:26.280
Later, there is often small interest in dentures, whether free or not.

302
00:31:26.280 --> 00:31:30.080
In any event, false teeth may be little used.

303
00:31:30.080 --> 00:31:35.560
Corrective eye examinations, even for those people who wear glasses, are often neglected,

304
00:31:35.560 --> 00:31:38.200
regardless of clinic facilities.

305
00:31:38.200 --> 00:31:42.860
It is as though the middle class thinks of the body as a machine to be preserved and

306
00:31:42.860 --> 00:31:49.240
kept in perfect running order, whether through prosthetic devices, rehabilitation, cosmetic

307
00:31:49.240 --> 00:31:55.080
surgery, or perpetual treatment, whereas the poor think of the body as having a limited

308
00:31:55.080 --> 00:32:11.300
Benfield points out furthermore that lower class death rates are, and have been for generations,

309
00:32:11.300 --> 00:32:14.620
far higher than for upper class persons.

310
00:32:14.620 --> 00:32:20.100
Much of the differential is caused not by poverty or low incomes per se, as much as

311
00:32:20.100 --> 00:32:24.020
by the values or culture of the lower class citizens.

312
00:32:24.020 --> 00:32:34.020
Thus prominent and particularly lower class causes of death are alcoholism, narcotics addiction, homicide and venereal disease.

313
00:32:34.020 --> 00:32:43.020
Infant mortality has also been far higher among the lower classes, ranging up to two and three times that of upper groups.

314
00:32:43.020 --> 00:32:53.020
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

315
00:32:53.020 --> 00:32:56.520
with Russian-Jewish immigrants in New York City.

316
00:32:56.520 --> 00:33:01.900
The Irish immigrants were, in those days, generally present-minded and lower class in

317
00:33:01.900 --> 00:33:07.420
attitudes, while the Russian-Jews, though living in overcrowded tenements and on an

318
00:33:07.420 --> 00:33:13.980
income level probably lower than the Irish, were unusually future-minded, purposive and

319
00:33:13.980 --> 00:33:17.820
upper class in their values and attitudes.

320
00:33:17.820 --> 00:33:22.900
At the turn of the century, the life expectancy at the age of 10 of an Irish immigrant was

321
00:33:22.900 --> 00:33:29.300
was only 38 years, whereas for the Russian Jewish emigrant it was more than 50 years.

322
00:33:29.300 --> 00:33:37.060
Furthermore, whereas in 1911 through 1916, in a study of seven cities, the infant mortality

323
00:33:37.060 --> 00:33:43.260
was over three times as high for the lowest as compared to the highest income groups,

324
00:33:43.260 --> 00:33:47.740
the Jewish infant mortality was extremely low.

325
00:33:47.740 --> 00:33:54.020
As in illness or mortality, so in unemployment, which obviously has a close relation to both

326
00:33:54.020 --> 00:33:56.540
poverty and welfare.

327
00:33:56.540 --> 00:34:02.300
Banfield cites the findings of Professor Michael J. Peori on the essential unemployability

328
00:34:02.300 --> 00:34:07.660
of many or most of the persistently low-income unemployed.

329
00:34:07.660 --> 00:34:12.380
Peori discovered that their difficulty was not so much in finding or learning the skills

330
00:34:12.380 --> 00:34:19.740
for Steady, Well-Paying Jobs, as in the lack of personal fiber in sticking to such jobs.

331
00:34:19.740 --> 00:34:26.420
These people are inclined to high absenteeism, leaving their jobs without notice, being insubordinate,

332
00:34:26.420 --> 00:34:28.940
and sometimes stealing from the employer.

333
00:34:28.940 --> 00:34:35.300
Furthermore, Peter Dohringer's study of the Boston Ghetto labor market in 1968 found that

334
00:34:35.300 --> 00:34:41.220
about 70 percent of job applicants referred by neighborhood employment centers received

335
00:34:41.220 --> 00:34:47.700
Job Offers, but that over half of these offers were rejected, and of those accepted, only

336
00:34:47.700 --> 00:34:53.460
about 40% of the new workers kept their jobs for as long as one month.

337
00:34:53.460 --> 00:34:59.420
Dohringer concluded, much of the ghetto unemployment appears to be a result of work instability

338
00:34:59.420 --> 00:35:02.860
rather than job scarcity.

339
00:35:02.860 --> 00:35:08.060
It is highly instructive to compare the descriptions of this common refusal of the lower class

340
00:35:08.060 --> 00:35:32.060
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

341
00:35:32.060 --> 00:35:34.060
Hub.

342
00:35:34.060 --> 00:35:40.780
Pondering the lack of success of welfare workers in luring these men away from a life of irresponsibility,

343
00:35:40.780 --> 00:35:46.780
sensuality and freewheeling aggression, Goldner proclaims that they judge the proffered bargain

344
00:35:46.780 --> 00:35:53.340
to be unattractive, give up promiscuous sex, give up freely expressed aggression and wild

345
00:35:53.340 --> 00:35:58.580
spontaneity, and you or your children may be admitted to the world of three square meals

346
00:35:58.580 --> 00:36:13.740
The interesting point is that from both ends of the ideological spectrum, both Banfield

347
00:36:13.740 --> 00:36:19.480
and Goldner agree on the essential nature of this process, despite their contrasting

348
00:36:19.480 --> 00:36:21.820
value judgments on it.

349
00:36:21.820 --> 00:36:28.320
That much of persistent lower class unemployment, and hence poverty, is voluntary on the part

350
00:36:28.320 --> 00:36:31.840
of the Unemployed Themselves.

351
00:36:31.840 --> 00:36:36.880
Goldner's attitude is typical of liberals and leftists in the present day, that it is

352
00:36:36.880 --> 00:36:45.080
shameful to try to foist even non-coercively bourgeois or middle-class values on the gloriously

353
00:36:45.080 --> 00:36:49.320
spontaneous and natural lower-class culture.

354
00:36:49.320 --> 00:36:56.120
Fair enough, perhaps, but then don't expect or call upon those same hard-working bourgeoisie

355
00:36:56.120 --> 00:37:02.880
to be coerced into supporting and subsidizing those very parasitic values of idleness and

356
00:37:02.880 --> 00:37:08.480
irresponsibility which they abhor, and which are clearly dysfunctional for the survival

357
00:37:08.480 --> 00:37:11.120
of any society.

358
00:37:11.120 --> 00:37:16.360
If people wish to be spontaneous, let them do so on their own time and with their own

359
00:37:16.360 --> 00:37:22.560
resources, and let them then take the consequences of this decision, and not use state coercion

360
00:37:22.560 --> 00:37:39.440
If the major problem with the lower class poor is irresponsible present-mindedness, and if

361
00:37:39.440 --> 00:37:46.920
it takes the inculcation of bourgeois future-minded values to get people off welfare and dependency,

362
00:37:46.920 --> 00:37:55.920
and Pache the Mormons. Then, at the very least, these values should be encouraged and not discouraged in society.

363
00:37:55.920 --> 00:38:07.920
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.

364
00:38:07.920 --> 00:38:13.920
Furthermore, the easy availability of the welfare check obviously promotes present-mindedness,

365
00:38:13.920 --> 00:38:20.000
business, unwillingness to work and irresponsibility among the recipients, thus perpetuating the

366
00:38:20.000 --> 00:38:23.360
vicious cycle of poverty welfare.

367
00:38:23.360 --> 00:38:29.200
As Banfield puts it, there is perhaps no better way to make converts to present-mindedness

368
00:38:29.200 --> 00:38:33.280
than to give a generous welfare check to everyone.

369
00:38:33.280 --> 00:38:38.640
Generally, in their attacks on the welfare system, conservatives have focused on the

370
00:38:38.640 --> 00:38:45.200
and the ethical and moral evils of coercively mulking the taxpayers to support the idol,

371
00:38:45.200 --> 00:38:50.640
while the leftist critics have concentrated on the demoralization of the welfare clients

372
00:38:50.640 --> 00:38:55.640
through their dependency on the largesse of the state and its bureaucracy.

373
00:38:55.640 --> 00:38:59.440
Actually, both sets of criticisms are right.

374
00:38:59.440 --> 00:39:02.160
There is no contradiction between them.

375
00:39:02.160 --> 00:39:07.640
We have seen that voluntary programs such as those of the Mormon Church are keenly alive

376
00:39:07.640 --> 00:39:19.640
and, in fact, earlier laissez-faire critics of the Dole were just as concerned with the demoralization as with the coercion over those forced to pay for welfare.

377
00:39:20.640 --> 00:39:31.640
Thus, the 19th century English laissez-faire advocate Thomas Mackay declared that welfare reform consists in a recreation and development of the arts of independence.

378
00:39:31.640 --> 00:39:42.640
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.

379
00:39:42.640 --> 00:39:57.640
And McKay 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, that is, the tax, extorted from his neighbors,

380
00:39:57.640 --> 00:40:03.080
from his neighbors, to multiply the occasions of stumbling set before the crowd who are

381
00:40:03.080 --> 00:40:06.820
only too ready to fall into dependence.

382
00:40:06.820 --> 00:40:13.100
McKay added that the legal endowment of destitution implied by the welfare system introduces a

383
00:40:13.100 --> 00:40:19.060
most dangerous and at times demoralizing influence into our social arrangements.

384
00:40:19.060 --> 00:40:22.420
Its real necessity is by no means proved.

385
00:40:22.420 --> 00:40:27.460
Its apparent necessity arises mainly from the fact that the system has created its own

386
00:40:27.460 --> 00:40:30.140
on Dependent Population.

387
00:40:30.140 --> 00:40:32.620
Elaborating on the theme of dependence,

388
00:40:32.620 --> 00:40:35.140
McKay observed that the bitterest element

389
00:40:35.140 --> 00:40:39.100
in the distress of the poor arises not from mere poverty,

390
00:40:39.100 --> 00:40:41.180
but from the feeling of dependence,

391
00:40:41.180 --> 00:40:44.580
which must, of necessity, be an ingredient in every measure

392
00:40:44.580 --> 00:40:46.460
of public relief.

393
00:40:46.460 --> 00:40:49.620
This feeling cannot be removed, but is rather

394
00:40:49.620 --> 00:40:54.300
intensified by liberal measures of public relief.

395
00:40:54.300 --> 00:40:59.660
McKay concluded that the only way in which the legislator or the administrator can promote

396
00:40:59.660 --> 00:41:05.680
the reduction of pauperism is by abolishing or restricting the legal endowments provided

397
00:41:05.680 --> 00:41:07.640
for pauperism.

398
00:41:07.640 --> 00:41:12.780
The country can have, there is no doubt of it, exactly as many paupers as it chooses

399
00:41:12.780 --> 00:41:14.820
to pay for.

400
00:41:14.820 --> 00:41:20.260
Abolish or restrict that endowment, and new agencies are called into activity.

401
00:41:20.260 --> 00:41:26.220
England's natural capacity for independence, the natural ties of relationship and friendship,

402
00:41:26.220 --> 00:41:33.180
and under this head I would include private as distinguished from public charity.

403
00:41:33.180 --> 00:41:38.300
The Charity Organization Society, England's leading private charity agency in the late

404
00:41:38.300 --> 00:41:45.020
19th century, operated precisely on this principle of aid to foster self-help.

405
00:41:45.020 --> 00:41:52.100
As Mallet, the historian of the society, notes, the COS embodied an idea of charity which

406
00:41:52.100 --> 00:41:58.700
claimed to reconcile the divisions in society, to remove poverty and to produce a happy,

407
00:41:58.700 --> 00:42:00.900
self-reliant community.

408
00:42:00.900 --> 00:42:06.100
It believed that the most serious aspect of poverty was the degradation of the character

409
00:42:06.100 --> 00:42:09.580
of the poor man or woman.

410
00:42:09.580 --> 00:42:12.180
Indiscriminate charity only made things worse.

411
00:42:12.180 --> 00:42:14.020
It demoralized.

412
00:42:14.020 --> 00:42:19.180
True Charity demanded friendship, thought, the sort of help that would restore a man's

413
00:42:19.180 --> 00:42:24.420
self-respect and his ability to support himself and his family.

414
00:42:24.420 --> 00:42:30.780
Perhaps one of the grimmest consequences of welfare is that it actively discourages self-help

415
00:42:30.780 --> 00:42:35.220
by crippling the financial incentive for rehabilitation.

416
00:42:35.220 --> 00:42:40.820
It has been estimated that, on the average, every dollar invested by handicapped persons

417
00:42:40.820 --> 00:42:48.100
in their own rehabilitation brings them from $10 to $17 in the present value of increased

418
00:42:48.100 --> 00:42:49.980
future earnings.

419
00:42:49.980 --> 00:42:55.220
But this incentive is crippled by the fact that, by becoming rehabilitated, they will

420
00:42:55.220 --> 00:43:01.860
lose their welfare relief, social security disability payments, and workman's compensation.

421
00:43:01.860 --> 00:43:09.020
As a result, most of the disabled decide not to invest in their own rehabilitation.

422
00:43:09.020 --> 00:43:14.260
Many people, moreover, are by now familiar with the crippling disincentive effects of

423
00:43:14.260 --> 00:43:20.620
the social security system, which, in glaring contrast to all private insurance funds, cuts

424
00:43:20.620 --> 00:43:26.780
off payments if the recipient should be brazen enough to work and earn an income after age

425
00:43:26.780 --> 00:43:29.180
62.

426
00:43:29.180 --> 00:43:35.500
In these days, when most people look askance at population growth, few anti-populationists

427
00:43:35.500 --> 00:43:40.140
have focused on another unfortunate effect of the welfare system.

428
00:43:40.140 --> 00:43:45.140
Since welfare families are paid proportionately to the number of their children, the system

429
00:43:45.140 --> 00:43:49.820
provides an important subsidy for the production of more children.

430
00:43:49.820 --> 00:43:55.660
Furthermore, the people being induced to have more children are precisely those who can

431
00:43:55.660 --> 00:43:57.540
afford it least.

432
00:43:57.540 --> 00:44:03.600
The result can only be to perpetuate their dependence on welfare and, in fact, to develop

433
00:44:03.600 --> 00:44:08.760
generations who are permanently dependent on the welfare dole.

434
00:44:08.760 --> 00:44:12.920
In recent years, there has been a great deal of agitation for the government to supply

435
00:44:12.920 --> 00:44:16.960
daycare centers to care for children of working mothers.

436
00:44:16.960 --> 00:44:22.600
Allegedly, the market has failed to supply this much-needed service.

437
00:44:22.600 --> 00:44:27.840
Since the market is in the business of meeting urgent consumer demands, however, the question

438
00:44:27.840 --> 00:44:33.540
to ask is why the market seems to have failed in this particular case.

439
00:44:33.540 --> 00:44:38.980
The answer is that the government has ringed the supply of day care service with a network

440
00:44:38.980 --> 00:44:42.860
of onerous and costly legal restrictions.

441
00:44:42.860 --> 00:44:48.660
In short, while it is perfectly legal to deposit one's children with a friend or relative,

442
00:44:48.660 --> 00:44:53.940
no matter who the person is or the condition of his apartment, or to hire a neighbor who

443
00:44:53.940 --> 00:44:59.380
will be taking care of one or two children, let the friend or neighbor become a slightly

444
00:44:59.380 --> 00:45:20.380
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.

445
00:45:20.380 --> 00:45:31.380
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.

446
00:45:31.380 --> 00:45:36.380
Remove these restrictions and the market will go to work to meet the demand.

447
00:45:36.380 --> 00:45:46.380
For the past 13 years, the poet Ned O'Gorman has been operating a successful privately financed daycare center in Harlem on a shoestring.

448
00:45:46.380 --> 00:45:51.340
but he is in danger of being put out of business by bureaucratic restrictions

449
00:45:51.340 --> 00:45:57.140
imposed by the New York City government. While the city admits the dedication and

450
00:45:57.140 --> 00:46:02.220
effectiveness of O'Gorman's Center, the storefront, it is threatening fines and

451
00:46:02.220 --> 00:46:07.020
ultimately the coercive closing of the Center unless he has a state-certified

452
00:46:07.020 --> 00:46:12.260
social worker present whenever there are five or more children in attendance.

453
00:46:12.260 --> 00:46:15.260
As O'Gorman indignantly remarks,

454
00:46:15.260 --> 00:46:24.260
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 daycare center?

455
00:46:24.260 --> 00:46:29.260
If I'm not qualified after 13 years in Harlem, then who is?

456
00:46:29.260 --> 00:46:35.260
The example of daycare demonstrates an important truth about the market.

457
00:46:35.260 --> 00:46:44.260
If there seems to be a shortage of supply to meet an evident demand, then look to government as the cause of the problem.

458
00:46:44.260 --> 00:46:49.260
Give the market its head and there will be no shortages of daycare centers,

459
00:46:49.260 --> 00:47:00.260
just as there are no shortages of motels, of washing machines, of TV sets, or of any of the other accoutrements of daily living.

460
00:47:00.260 --> 00:47:04.260
Burdens and Subsidies of the Welfare State

461
00:47:04.260 --> 00:47:09.260
Does the modern welfare state really help the poor?

462
00:47:09.260 --> 00:47:15.260
The commonly held notion, the idea that has propelled the welfare state and maintained it in being,

463
00:47:15.260 --> 00:47:21.260
is that the welfare state redistributes income and wealth from the rich to the poor.

464
00:47:21.260 --> 00:47:24.260
The progressive tax system takes money from the rich,

465
00:47:24.260 --> 00:47:30.260
while numerous welfare and other services distribute the money to the poor.

466
00:47:30.260 --> 00:47:41.260
But even liberals, the great advocates and abetters of the welfare state, are beginning to realize that every part and aspect of this idea is merely a cherished myth.

467
00:47:41.260 --> 00:47:50.260
Government contracts, notably of the military, funnel tax funds into the pockets of favored corporations and well-paid industrial workers.

468
00:47:50.260 --> 00:47:59.260
Minimum wage laws tragically generate unemployment, especially so among the poorest and least skilled or educated workers.

469
00:47:59.260 --> 00:48:06.740
In the South, among teenage Negroes in the ghettos, and among the vocationally handicapped.

470
00:48:06.740 --> 00:48:11.860
Because a minimum wage, of course, does not guarantee any worker's employment, it only

471
00:48:11.860 --> 00:48:18.380
prohibits, by force of law, anyone from being employed at the wage which would pay his employer

472
00:48:18.380 --> 00:48:20.200
to hire him.

473
00:48:20.200 --> 00:48:24.440
It therefore compels unemployment.

474
00:48:24.440 --> 00:48:28.800
Economists have demonstrated that raises in the federal minimum wage have created the

475
00:48:28.800 --> 00:48:34.740
and the well-known Negro-White Teenage Employment Gap and have driven the rate of male Negro

476
00:48:34.740 --> 00:48:40.760
teenage unemployment from an early postwar rate of about 8 percent to what is now well

477
00:48:40.760 --> 00:48:47.760
over 35 percent, an unemployment rate among teenage Negroes that is far more catastrophic

478
00:48:47.760 --> 00:48:55.300
than the massive general unemployment rate of the 1930s, 20 to 25 percent.

479
00:48:55.300 --> 00:49:01.180
We have already seen how state higher education redistributes income from poorer to wealthier

480
00:49:01.180 --> 00:49:02.180
citizens.

481
00:49:02.180 --> 00:49:09.060
A host of government licensing restrictions, permeating occupation after occupation, exclude

482
00:49:09.060 --> 00:49:13.180
poorer and less skilled workers from these jobs.

483
00:49:13.180 --> 00:49:19.140
It is becoming recognized that urban renewal programs, supposedly designed to aid the slum

484
00:49:19.140 --> 00:49:24.800
Some housing of the poor, in fact, demolish their housing and force the poor into more

485
00:49:24.800 --> 00:49:31.300
crowded and less available housing, all for the benefit of wealthier subsidized tenants,

486
00:49:31.300 --> 00:49:37.020
construction unions, favored real estate developers, and downtown business interests.

487
00:49:37.020 --> 00:49:43.540
Unions, once the pampered favorites of liberals, are now generally seen to use their governmental

488
00:49:43.540 --> 00:49:48.700
privileges to exclude poorer and minority group workers.

489
00:49:48.700 --> 00:49:54.260
Some price supports, jacked ever higher by the Federal Government, mulked the taxpayers

490
00:49:54.260 --> 00:50:02.140
in order to push food prices higher and higher, thereby injuring particularly the poor consumers,

491
00:50:02.140 --> 00:50:09.280
and helping not poor farmers, but the wealthy farmers commanding a large amount of acreage.

492
00:50:09.280 --> 00:50:15.660
Since farmers are paid per pound or per bushel of product, the support program largely benefits

493
00:50:15.660 --> 00:50:22.380
The Wealthy Farmers. In fact, since farmers are often paid not to produce, the resulting

494
00:50:22.380 --> 00:50:28.180
taking of acreage out of production causes severe unemployment among the poorest segment

495
00:50:28.180 --> 00:50:33.740
of the farm population, the farm tenants and farm workers.

496
00:50:33.740 --> 00:50:38.740
Zoning laws in the burgeoning suburbs of the United States serve to keep out the poorer

497
00:50:38.740 --> 00:50:44.500
citizens by legal coercion, very often Negroes who are attempting to move out of the inner

498
00:50:44.500 --> 00:50:48.500
The Federal Bureau of Reclamation subsidizes irrigation water to well-to-do farmers in the West,

499
00:50:48.500 --> 00:50:52.500
thereby depriving the urban poor of the natural resources they need.

500
00:50:52.500 --> 00:50:56.500
The U.S. Postal Service charges high monopoly rates on the first-class mail used by the general public

501
00:50:56.500 --> 00:51:00.500
in order to subsidize the distribution of newspapers and magazines.

502
00:51:00.500 --> 00:51:04.500
The FHA subsidizes the mortgages of well-to-do homeowners.

503
00:51:04.500 --> 00:51:08.500
The Federal Bureau of Reclamation subsidizes irrigation water to well-to-do farmers in the West,

504
00:51:08.500 --> 00:51:12.500
thereby depriving the urban poor of the natural resources they need.

505
00:51:12.500 --> 00:51:19.380
by depriving the urban poor of water and forcing them to pay higher water charges.

506
00:51:19.380 --> 00:51:25.080
The Rural Electrification Administration and the Tennessee Valley Authority subsidize electric

507
00:51:25.080 --> 00:51:30.020
service to well-to-do farmers, suburbanites and corporations.

508
00:51:30.020 --> 00:51:35.980
As Professor Yale Brozen sardonically observes, electricity for poverty-stricken corporations

509
00:51:35.980 --> 00:51:41.420
such as the Aluminum Corporation of America and the DuPont Company is subsidized by the

510
00:51:41.420 --> 00:51:44.820
The tax-free status of the Tennessee Valley Authority.

511
00:51:44.820 --> 00:51:53.620
27% of the price of electricity goes to pay the taxes imposed on privately operated utilities.

512
00:51:53.620 --> 00:51:59.560
And the government regulation monopolizes and cartelizes much of industry, thereby driving

513
00:51:59.560 --> 00:52:05.580
up prices to consumers and restricting production, competitive alternatives, or improvements

514
00:52:05.580 --> 00:52:07.020
in products.

515
00:52:07.020 --> 00:52:15.020
For example, railroad regulation, public utility regulation, airline regulation, oil proration laws.

516
00:52:15.020 --> 00:52:25.020
Thus, the Civil Aeronautics Board allocates airline routes to favored companies and keeps out and even drives out of business smaller competitors.

517
00:52:25.020 --> 00:52:33.020
State and Federal oil proration laws provide for absolute maximum limits on crude oil production,

518
00:52:33.020 --> 00:52:39.020
and thereby driving up oil prices, prices that are further kept up by import restrictions.

519
00:52:39.020 --> 00:52:47.020
And government throughout the country grants an absolute monopoly in each area to gas, electric and telephone companies,

520
00:52:47.020 --> 00:52:54.020
thus protecting them from competition and sets their rates in order to guarantee them a fixed profit.

521
00:52:54.020 --> 00:52:58.020
Everywhere and in every area, the story is the same,

522
00:52:58.020 --> 00:53:04.020
A Systematic Molting of the Mass of the Population by the Welfare State

523
00:53:04.020 --> 00:53:11.020
Most people believe that the American tax system basically taxes the rich far more than it taxes the poor,

524
00:53:11.020 --> 00:53:18.020
and is therefore a method of redistributing income from higher to lower income classes.

525
00:53:18.020 --> 00:53:26.020
There are, of course, many other kinds of redistribution, for example, from the taxpayers to Lockheed or General Dynamics.

526
00:53:26.020 --> 00:53:42.020
But even the federal income tax, which everybody assumes to be progressive, taxing the rich far more than the poor with the middle classes in between, does not really work that way when we take into account other aspects of this tax.

527
00:53:42.020 --> 00:53:52.020
For example, the Social Security tax is blatantly and starkly regressive, since it is a soak the poor and middle class tax.

528
00:53:52.020 --> 00:54:05.020
A person making the base income, $8,000, pays fully as much social security tax, and the amount is rising every year, as someone making $1 million a year.

529
00:54:05.020 --> 00:54:14.020
Capital gains, mostly accruing to wealthy stockholders and owners of real estate, pay far less than income taxes.

530
00:54:14.020 --> 00:54:24.020
Private trusts and foundations are tax exempt, and interest earned on state and municipal government bonds is also exempt from the federal income tax.

531
00:54:24.020 --> 00:54:34.020
We wind up with the following estimate of what percentage of income is paid overall by each income class in federal taxes.

532
00:54:34.020 --> 00:54:43.020
In 1965, those earning under $2,000 paid 19% of their income in federal tax.

533
00:54:43.020 --> 00:54:44.740
Federal Tax.

534
00:54:44.740 --> 00:54:53.120
Those earning between $2,000 and $4,000 paid 16% of their total income in Federal Tax.

535
00:54:53.120 --> 00:55:01.380
Those earning between $4,000 and $6,000 paid 17% of their income in Federal Tax.

536
00:55:01.380 --> 00:55:09.340
Those earning between $6,000 and $8,000 paid 17% of their income in Federal Tax.

537
00:55:09.340 --> 00:55:16.940
Those earning between $8,000 and $10,000 paid 18% of their income in federal tax.

538
00:55:16.940 --> 00:55:24.720
Those earning between $10,000 and $15,000 paid 19% of their income in federal tax.

539
00:55:24.720 --> 00:55:32.440
And those earning over $15,000 paid 32% of their income in federal tax.

540
00:55:32.440 --> 00:55:40.480
The average percentage of income paid in federal tax during 1965 was 22%.

541
00:55:40.480 --> 00:55:46.760
If federal taxes are scarcely progressive, the impact of state and local taxes is almost

542
00:55:46.760 --> 00:55:49.680
fiercely regressive.

543
00:55:49.680 --> 00:55:56.920
Property taxes are a. proportional, b. hit only owners of real estate, and c. depend

544
00:55:56.920 --> 00:56:00.980
on the political vagaries of local assessors.

545
00:56:00.980 --> 00:56:11.980
The following is the estimate of the percentage of income extracted overall by state and local taxes.

546
00:56:11.980 --> 00:56:20.980
For 1965, those earning under $2,000 paid 25% of their income in state and local taxes.

547
00:56:20.980 --> 00:56:28.980
Those earning between $2,000 and $4,000 paid 11% of their income in state and local taxes.

548
00:56:28.980 --> 00:56:37.980
Those earning between $4,000 and $6,000 paid 10% of their income in state and local taxes.

549
00:56:37.980 --> 00:56:47.980
Those earning between $6,000 and $15,000 paid 9% of their income in state and local taxes.

550
00:56:47.980 --> 00:56:55.980
Those earning over $15,000 paid 7% of their income in state and local taxes.

551
00:56:55.980 --> 00:57:04.980
The average percentage of income paid in state and local taxes in 1965 was 9%.

552
00:57:04.980 --> 00:57:14.980
Following are the combined estimates for the total impact of taxation, federal, state and local, on income classes.

553
00:57:14.980 --> 00:57:23.980
In 1965, those earning under $2,000 paid 44% of their income in all taxes.

554
00:57:23.980 --> 00:57:32.980
Those earning between $2,000 and $6,000 paid 27% of their income in all taxes.

555
00:57:32.980 --> 00:57:41.980
Those earning between $6,000 and $8,000 paid 26% of their income in all taxes.

556
00:57:41.980 --> 00:57:50.980
Those earning between $8,000 and $15,000 paid 27% of their income in taxes.

557
00:57:50.980 --> 00:57:59.980
And those earning over $15,000 paid 38% of their income in all taxes.

558
00:57:59.980 --> 00:58:08.980
The average percentage of income paid in 1965 in all taxes was 31%.

559
00:58:08.980 --> 00:58:15.980
Still more recent 1968 estimates of the total impact of taxes on all levels of government

560
00:58:15.980 --> 00:58:25.980
Amply confirm the above, while also showing a far greater relative rise in the three years of the tax burden on the lowest income groups.

561
00:58:25.980 --> 00:58:34.980
In 1968, those earning under $2,000 paid 50% of their income in taxes.

562
00:58:34.980 --> 00:58:42.980
Those earning $2,000 to $4,000 paid 35% of their income in taxes.

563
00:58:42.980 --> 00:58:50.980
Those earning $4,000 to $6,000 paid 31% of their income in taxes.

564
00:58:50.980 --> 00:58:57.980
Those earning $6,000 to $8,000 paid 30% of their income in taxes.

565
00:58:57.980 --> 00:59:05.980
Those earning $8,000 to $10,000 paid 29% of their income in taxes.

566
00:59:05.980 --> 00:59:14.980
Those earning $10,000 to $25,000 paid 30% of their income in taxes.

567
00:59:14.980 --> 00:59:22.980
Those earning $25,000 to $50,000 paid 33% of their income in taxes.

568
00:59:22.980 --> 00:59:30.980
And those earning $50,000 and over paid 45% of their income in taxes.

569
00:59:30.980 --> 00:59:45.980
Many economists try to mitigate the impact of these tell-tale figures by saying that the people in the under $2,000 category, for example, receive more in welfare and other transfer payments than they pay out in taxes.

570
00:59:45.980 --> 00:59:55.980
But of course, this ignores the vital fact that the same people in each category are not the welfare receivers and the taxpayers.

571
00:59:55.980 --> 01:00:00.980
The latter group is socked heavily in order to subsidize the former.

572
01:00:00.980 --> 01:00:10.980
In short, the poor and the middle class are taxed in order to pay for the subsidized public housing of other poor and middle-income groups.

573
01:00:10.980 --> 01:00:18.980
And it is the working poor who are socked a staggering amount to pay for the subsidies of the welfare poor.

574
01:00:18.980 --> 01:00:24.740
There is plenty of income redistribution in this country, to Lockheed, to welfare recipients,

575
01:00:24.740 --> 01:00:33.220
and so on and on. But the rich are not being taxed to pay for the poor. The redistribution is within

576
01:00:33.220 --> 01:00:41.380
income categories. Some poor are forced to pay for other poor. Other tax estimates confirm this

577
01:00:41.380 --> 01:00:47.780
chilling picture. The Tax Foundation, for example, estimates that federal, state and local taxes

578
01:00:47.780 --> 01:00:55.940
extract 34% of the overall income of those who make less than $3,000 per year.

579
01:00:55.940 --> 01:01:01.700
The object of this discussion is not, of course, to advocate a really progressive income tax

580
01:01:01.700 --> 01:01:07.780
structure, a real soaking of the rich, but to point out that the modern welfare state,

581
01:01:07.780 --> 01:01:13.580
highly touted as soaking the rich to subsidize the poor, does no such thing.

582
01:01:13.580 --> 01:01:19.100
In fact, soaking the rich would have disastrous effects, not just for the rich, but for the

583
01:01:19.100 --> 01:01:22.300
poor and middle classes themselves.

584
01:01:22.300 --> 01:01:28.020
For it is the rich who provide a proportionately greater amount of saving, investment capital,

585
01:01:28.020 --> 01:01:33.060
entrepreneurial foresight, and financing of technological innovation that has brought

586
01:01:33.060 --> 01:01:39.060
the United States to by far the highest standard of living for the mass of the people of any

587
01:01:39.060 --> 01:01:41.820
country in history.

588
01:01:41.820 --> 01:01:47.340
Killing the rich would not only be profoundly immoral, it would drastically penalize the

589
01:01:47.340 --> 01:01:53.840
very virtues, thrift, business foresight and investment that have brought about our remarkable

590
01:01:53.840 --> 01:01:55.540
standard of living.

591
01:01:55.540 --> 01:02:01.660
It would truly be killing the goose that lays the golden eggs.

592
01:02:01.660 --> 01:02:04.600
What can government do?

593
01:02:04.600 --> 01:02:08.800
What then can the government do to help the poor?

594
01:02:08.800 --> 01:02:14.880
The only correct answer is also the libertarian answer, get out of the way.

595
01:02:14.880 --> 01:02:20.300
Let the government get out of the way of the productive energies of all groups in the population,

596
01:02:20.300 --> 01:02:26.160
rich, middle class and poor alike, and the result will be an enormous increase in the

597
01:02:26.160 --> 01:02:31.620
welfare and the standard of living of everyone, and most particularly of the poor, who are

598
01:02:31.620 --> 01:02:36.540
the ones supposedly helped by the miscalled welfare state.

599
01:02:36.540 --> 01:02:42.300
There are four major ways in which the government can get out of the way of the American people.

600
01:02:42.300 --> 01:02:49.660
First, it can abolish, or at the very least drastically reduce, the level of all taxation,

601
01:02:49.660 --> 01:02:56.460
taxation which cripples productive energies, savings, investment, and technological advance.

602
01:02:56.460 --> 01:03:01.820
In fact, the creation of jobs and increase of wage rates resulting from abolishing these

603
01:03:01.820 --> 01:03:07.720
Inequality in these taxes would benefit the lower income groups more than anyone else.

604
01:03:07.720 --> 01:03:12.980
As Professor Brozen points out, with less attempt to use state power to compress the

605
01:03:12.980 --> 01:03:19.420
inequality in the distribution of income, inequality would diminish more rapidly.

606
01:03:19.420 --> 01:03:25.680
Low wage rates would rise more rapidly with a higher rate of saving and capital formation,

607
01:03:25.680 --> 01:03:31.140
and inequality would diminish with the rise in income of wage earners.

608
01:03:31.140 --> 01:03:37.740
The best way to help the poor is to slash taxes and allow savings, investment and creation

609
01:03:37.740 --> 01:03:41.360
of jobs to proceed unhampered.

610
01:03:41.360 --> 01:03:47.100
As Dr. F. A. Harper pointed out years ago, productive investment is the greatest economic

611
01:03:47.100 --> 01:03:48.100
charity.

612
01:03:48.100 --> 01:03:54.660
Wrote Harper, According to one view, sharing a crust of bread is advocated as the method

613
01:03:54.660 --> 01:03:56.280
of charity.

614
01:03:56.280 --> 01:04:02.000
The other advocates savings and tools for the production of additional loaves of bread,

615
01:04:02.000 --> 01:04:05.400
which is the greatest economic charity.

616
01:04:05.400 --> 01:04:10.760
The two views are in conflict because the two methods are mutually exclusive in absorbing

617
01:04:10.760 --> 01:04:16.320
one's time and means in all the choices he makes day by day.

618
01:04:16.320 --> 01:04:21.240
The reason for the difference in view really stems from different concepts about the nature

619
01:04:21.240 --> 01:04:23.560
of the economic world.

620
01:04:23.560 --> 01:04:29.120
The former view stems from the belief that the total of economic goods is a constant.

621
01:04:29.120 --> 01:04:34.280
The latter view is built on the belief that expansion in production is possible without

622
01:04:34.280 --> 01:04:36.880
any necessary limit.

623
01:04:36.880 --> 01:04:41.760
The difference between the two views is like the difference between a two- and three-dimensional

624
01:04:41.760 --> 01:04:44.600
perspective of production.

625
01:04:44.600 --> 01:04:50.680
The two-dimensional size is fixed at any instant of time, but the third dimension, and therefore

626
01:04:50.680 --> 01:04:57.280
Therefore the size of the total is expandable without limit by savings and tools.

627
01:04:57.280 --> 01:05:03.820
All the history of mankind denies that there is a fixed total of economic goods.

628
01:05:03.820 --> 01:05:10.120
History further reveals that savings and expansion of tools constitute the only way to any appreciable

629
01:05:10.120 --> 01:05:12.900
increase.

630
01:05:12.900 --> 01:05:18.800
The libertarian writer Isabel Patterson put the case eloquently, as between the private

631
01:05:18.800 --> 01:05:24.240
What philanthropist and the private capitalist acting as such take the case of the truly

632
01:05:24.240 --> 01:05:30.160
needy man who is not incapacitated, and suppose that the philanthropist gives him food and

633
01:05:30.160 --> 01:05:35.480
clothes and shelter when he has used them, he is just where he was before, except that

634
01:05:35.480 --> 01:05:38.760
he may have acquired the habit of dependence.

635
01:05:38.760 --> 01:05:44.120
But suppose someone with no benevolent motive whatever, simply wanting work done for his

636
01:05:44.120 --> 01:05:48.720
own reasons, should hire the needy man for a wage.

637
01:05:48.720 --> 01:05:54.800
The employer has not done a good deed, yet the condition of the employed man has actually

638
01:05:54.800 --> 01:05:56.640
been changed.

639
01:05:56.640 --> 01:06:00.760
What is the vital difference between the two actions?

640
01:06:00.760 --> 01:06:06.520
It is that the unphilanthropic employer has brought the man he employed back into the

641
01:06:06.520 --> 01:06:12.920
production line on the great circuit of energy, whereas the philanthropist can only divert

642
01:06:12.920 --> 01:06:19.240
Energy in such manner that there can be no return into production, and therefore less

643
01:06:19.240 --> 01:06:24.640
likelihood of the object of his benefaction finding employment.

644
01:06:24.640 --> 01:06:30.440
If the full role of sincere philanthropists were called from the beginning of time, it

645
01:06:30.440 --> 01:06:35.520
would be found that all of them together by their strictly philanthropic activities have

646
01:06:35.520 --> 01:06:42.200
never conferred upon humanity one-tenth of the benefit derived from the normally self-interested

647
01:06:42.200 --> 01:06:47.400
and Efforts of Thomas Alva Edison, to say nothing of the greater minds who worked out

648
01:06:47.400 --> 01:06:51.200
the scientific principles which Edison applied.

649
01:06:51.200 --> 01:06:57.200
Innumerable speculative thinkers, inventors and organizers have contributed to the comfort,

650
01:06:57.200 --> 01:07:04.320
health and happiness of their fellow men, because that was not their objective.

651
01:07:04.320 --> 01:07:11.320
Second, and as a corollary to a drastic reduction or abolition of taxation, would come an equivalent

652
01:07:12.200 --> 01:07:15.280
Reduction in Government Expenditures.

653
01:07:15.280 --> 01:07:20.800
No longer would scarce economic resources be siphoned off into wasteful and unproductive

654
01:07:20.800 --> 01:07:26.600
expenditures, into the multi-billion dollar space program, public works, the military

655
01:07:26.600 --> 01:07:29.520
industrial complex, or whatever.

656
01:07:29.520 --> 01:07:34.960
Instead, these resources would be available to produce goods and services desired by the

657
01:07:34.960 --> 01:07:37.960
mass of the consuming population.

658
01:07:37.960 --> 01:07:42.920
The outpouring of goods and services would provide new and better goods to the consumers

659
01:07:42.920 --> 01:07:45.320
at far lower prices.

660
01:07:45.320 --> 01:07:50.040
No longer would we suffer the inefficiencies and the injury to productivity of government

661
01:07:50.040 --> 01:07:52.120
subsidies and contracts.

662
01:07:52.120 --> 01:07:57.240
Furthermore, the diversion of most of the nation's scientists and engineers to wasteful

663
01:07:57.240 --> 01:08:02.760
military and other governmental research and expenditure would be released for peaceful

664
01:08:02.760 --> 01:08:08.320
Social and Productive Activities, and Inventions Benefiting the Nation's Consumers.

665
01:08:08.320 --> 01:08:13.960
Third, if the government also cut out the numerous ways in which it taxes the poorer

666
01:08:13.960 --> 01:08:20.680
to subsidize the wealthier, such as we have named above, higher education, farm subsidies,

667
01:08:20.680 --> 01:08:26.520
irrigation, Lockheed, etc., this in itself would stop the government's deliberate exactions

668
01:08:26.520 --> 01:08:28.120
upon the poor.

669
01:08:28.120 --> 01:08:34.040
By ceasing to tax the poorer in order to subsidize the richer, the government would aid the poor

670
01:08:34.040 --> 01:08:38.160
by removing its burdens from their productive activity.

671
01:08:38.160 --> 01:08:43.920
Finally, one of the most significant ways in which the government could aid the poor

672
01:08:43.920 --> 01:08:48.680
is by removing its own direct roadblocks from their productive energies.

673
01:08:48.680 --> 01:08:56.240
Thus, minimum wage laws disemploy the poorest and least productive members of the population.

674
01:08:56.240 --> 01:09:01.320
The privileges to trade unions enable them to keep the poorer and minority group workers

675
01:09:01.320 --> 01:09:04.680
from productive and high-wage employment.

676
01:09:04.680 --> 01:09:09.980
And licensing laws, the outlawing of gambling, and other government restrictions prevent

677
01:09:09.980 --> 01:09:14.880
the poor from starting small businesses and creating jobs on their own.

678
01:09:14.880 --> 01:09:20.640
Thus, the government has everywhere clamped onerous restrictions on peddling, ranging

679
01:09:20.640 --> 01:09:24.980
from outright prohibition to heavy license fees.

680
01:09:24.980 --> 01:09:30.860
Investing was the classic path by which immigrants, poor and lacking capital, were able to become

681
01:09:30.860 --> 01:09:35.180
entrepreneurs and eventually to become big businessmen.

682
01:09:35.180 --> 01:09:41.140
But now this route has been cut off, largely to confer monopoly privileges on each city's

683
01:09:41.140 --> 01:09:47.100
retail stores, who fear that they would lose profits if faced with the highly mobile competition

684
01:09:47.100 --> 01:09:49.780
of street peddlers.

685
01:09:49.780 --> 01:09:54.500
Typical of how government has frustrated the productive activities of the poor is the case

686
01:09:54.500 --> 01:10:04.500
In the mid-1960s, Dr. Matthew, over the opposition of the New York City government, established a successful interracial hospital in the black section of Jamaica, Queens.

687
01:10:04.500 --> 01:10:14.500
He soon found, however, that public transportation in Jamaica was so abysmal that transportation services were not available.

688
01:10:14.500 --> 01:10:18.660
Medical Hospital in the black section of Jamaica, Queens.

689
01:10:18.660 --> 01:10:24.300
He soon found, however, that public transportation in Jamaica was so abysmal that transportation

690
01:10:24.300 --> 01:10:29.660
service was totally inadequate for the hospital's patients and staff.

691
01:10:29.660 --> 01:10:34.960
Finding bus service inadequate, Dr. Matthew purchased a few buses and established a regular

692
01:10:34.960 --> 01:10:41.180
bus service in Jamaica, service that was regular, efficient and successful.

693
01:10:41.180 --> 01:10:46.780
The problem was that Dr. Matthew did not have a city license to operate a bus line.

694
01:10:46.780 --> 01:10:51.740
That privilege is reserved to inefficient but protected monopolies.

695
01:10:51.740 --> 01:10:57.320
The ingenious Dr. Matthew, discovering that the city did not allow any unlicensed buses

696
01:10:57.320 --> 01:11:03.640
to charge fares, made his bus service free, except that any riders who wished could buy

697
01:11:03.640 --> 01:11:09.700
a 25-cent company bond instead whenever they rode the buses.

698
01:11:09.700 --> 01:11:14.260
So successful was the Matthew bus service that he proceeded to establish another bus

699
01:11:14.260 --> 01:11:16.180
line in Harlem.

700
01:11:16.180 --> 01:11:21.740
But it was at this point, in early 1968, that the New York City government took fright and

701
01:11:21.740 --> 01:11:23.380
cracked down.

702
01:11:23.380 --> 01:11:28.340
The government went to court and put both lines out of business for operating without

703
01:11:28.340 --> 01:11:30.460
licenses.

704
01:11:30.460 --> 01:11:36.320
A few years later, Dr. Matthew and his colleagues seized an unused building in Harlem owned

705
01:11:36.320 --> 01:11:38.380
by the city government.

706
01:11:38.380 --> 01:11:43.620
The New York City government is the city's biggest slumlord, owning as it does a vast

707
01:11:43.620 --> 01:11:49.260
amount of useful buildings abandoned because of non-payment of high property taxes and

708
01:11:49.260 --> 01:11:53.900
rotting away, rendered useless and uninhabitable.

709
01:11:53.900 --> 01:11:59.620
In this building, Dr. Matthew established a low-cost hospital at a time of soaring hospital

710
01:11:59.620 --> 01:12:03.360
costs and scarcity of hospital space.

711
01:12:03.360 --> 01:12:08.960
The city finally succeeded in putting this hospital too out of business, claiming fire

712
01:12:08.960 --> 01:12:11.160
violations.

713
01:12:11.160 --> 01:12:17.360
Again and again, in area after area, the role of government has been to thwart the economic

714
01:12:17.360 --> 01:12:19.760
activities of the poor.

715
01:12:19.760 --> 01:12:24.040
It is no wonder that when Dr. Matthew was asked by a white official of the New York

716
01:12:24.040 --> 01:12:30.800
City government how it could best aid Negro self-help projects, Matthew replied, Get out

717
01:12:30.800 --> 01:12:39.880
Another example of how government functions occurred a few years ago, when the Federal

718
01:12:39.880 --> 01:12:45.840
and New York City governments loudly proclaimed that they would rehabilitate a group of 37

719
01:12:45.840 --> 01:12:47.580
buildings in Harlem.

720
01:12:47.580 --> 01:12:52.960
But instead of following the usual practice of private industry and awarding rehabilitation

721
01:12:52.960 --> 01:12:59.040
contracts on each house individually, the government instead awarded one contract on

722
01:12:59.040 --> 01:13:02.560
on the entire 37-building package.

723
01:13:02.560 --> 01:13:07.800
By doing so, the government made sure that small, black-owned construction firms would

724
01:13:07.800 --> 01:13:15.600
not be able to bid, and so the prize contract naturally went to a large, white-owned company.

725
01:13:15.600 --> 01:13:17.280
Still another example.

726
01:13:17.280 --> 01:13:23.800
In 1966, the Federal Small Business Administration proudly proclaimed a program for encouraging

727
01:13:23.800 --> 01:13:26.800
New Black-Owned Small Business

728
01:13:26.800 --> 01:13:30.800
But the government put certain key restrictions on its loans.

729
01:13:30.800 --> 01:13:35.800
First, it decided that any borrower must be at the poverty level.

730
01:13:35.800 --> 01:13:40.800
Now, since the very poor are not apt to be setting up their own businesses,

731
01:13:40.800 --> 01:13:46.800
this restriction ruled out many small businesses by owners with moderately low incomes,

732
01:13:46.800 --> 01:13:50.800
just the ones likely to be small entrepreneurs.

733
01:13:50.800 --> 01:13:56.500
To top this, the New York Small Business Administration added a further restriction.

734
01:13:56.500 --> 01:14:05.300
All blacks seeking such loans must prove a real need in their community for filling a recognizable economic void.

735
01:14:05.300 --> 01:14:13.500
The need and the void to be proved to the satisfaction of remote bureaucrats far from the actual economic scene.

736
01:14:13.500 --> 01:14:27.500
A fascinating gauge of whether or to what extent government is helping or hurting the poor in the welfare state is provided by an unpublished study by the Institute for Policy Studies of Washington, D.C.

737
01:14:27.500 --> 01:14:44.500
An inquiry was made on the estimated flow of government money, federal and district, into the low-income Negro ghetto of Shaw Cardozo in Washington, D.C., as compared to the outflow that the area pays in taxes to the government.

738
01:14:44.500 --> 01:14:58.500
In fiscal 1967, the Shaw-Cardozo area had a population of 84,000, of whom 79,000 were black, with a median family income of $5,600 per year.

739
01:14:58.500 --> 01:15:07.500
Total earned personal income for the residents of the area for that year amounted to $126.5 million.

740
01:15:07.500 --> 01:15:29.500
The value of total government benefits flowing into the district, ranging from welfare payments to the estimated expenditure on public schools during fiscal 1967, was estimated at $45.7 million, a generous subsidy amounting to almost 40% of total Shaw-Cardozo income.

741
01:15:29.500 --> 01:15:37.060
Perhaps, but against this we have to offset the total outflow of taxes from Shaw-Cardozo,

742
01:15:37.060 --> 01:15:47.420
best estimated at $50 million, a net outflow from this low-income ghetto of $4.3 million.

743
01:15:47.420 --> 01:15:52.700
Can it still be maintained that abolition of the entire massive unproductive welfare

744
01:15:52.700 --> 01:15:56.900
state structure would hurt the poor?

745
01:15:56.900 --> 01:16:03.420
That could then best help the poor and the rest of society by getting out of the way,

746
01:16:03.420 --> 01:16:09.340
by removing its vast and crippling network of taxes, subsidies, inefficiencies, and

747
01:16:09.340 --> 01:16:11.680
monopoly privileges.

748
01:16:11.680 --> 01:16:16.100
As Professor Brozen summed up his analysis of the welfare state,

749
01:16:16.100 --> 01:16:21.240
the state has typically been a device for producing affluence for a few at the expense

750
01:16:21.240 --> 01:16:22.780
of many.

751
01:16:22.780 --> 01:16:28.540
The market has produced affluence for many, with little cost even to a few.

752
01:16:28.540 --> 01:16:34.180
The state has not changed its ways since Roman days of bread and circuses for the masses,

753
01:16:34.180 --> 01:16:40.020
even though it now pretends to provide education and medicine, as well as free milk and performing

754
01:16:40.020 --> 01:16:41.100
arts.

755
01:16:41.100 --> 01:16:47.040
It still is the source of monopoly privilege and power for the few, behind its facade of

756
01:16:47.040 --> 01:16:50.260
providing welfare for the many.

757
01:16:50.260 --> 01:17:05.260
The Negative Income Tax

758
01:17:05.260 --> 01:17:11.180
Unfortunately, the recent trend, embraced by a wide spectrum of advocates with unimportant

759
01:17:11.180 --> 01:17:16.420
modifications from President Nixon to Milton Friedman on the right to a large number on

760
01:17:16.420 --> 01:17:22.380
the left, is to abolish the current welfare system not in the direction of freedom but

761
01:17:22.380 --> 01:17:25.060
toward its very opposite.

762
01:17:25.060 --> 01:17:32.020
This new trend is the Guaranteed Annual Income or Negative Income Tax or President Nixon's

763
01:17:32.020 --> 01:17:34.940
Family Assistance Plan.

764
01:17:34.940 --> 01:17:40.340
Writing the inefficiencies, inequities and red tape of the present system, the guaranteed

765
01:17:40.340 --> 01:17:45.540
annual income would make the dole easy, efficient and automatic.

766
01:17:45.540 --> 01:17:50.740
The income tax authorities will pay money each year to families earning below a certain

767
01:17:50.740 --> 01:17:52.620
base income.

768
01:17:52.620 --> 01:17:58.980
This automatic dole to be financed, of course, by taxing working families making more than

769
01:17:58.980 --> 01:18:01.020
the base amount.

770
01:18:01.020 --> 01:18:08.020
The estimated costs of this seemingly neat and simple scheme are supposed to be only a few billion dollars per year.

771
01:18:08.020 --> 01:18:12.020
But there is an extremely important catch.

772
01:18:12.020 --> 01:18:20.020
The costs are estimated on the assumption that everyone, the people on the universal dole as well as those financing it,

773
01:18:20.020 --> 01:18:24.020
will continue to work to the same extent as before.

774
01:18:24.020 --> 01:18:27.020
But this assumption begs the question.

775
01:18:27.020 --> 01:18:33.740
For the chief problem is the enormously crippling disincentive effect the guaranteed annual income

776
01:18:33.740 --> 01:18:41.340
will have on taxpayer and recipient alike. The one element that saves the present welfare system from

777
01:18:41.340 --> 01:18:47.980
being an utter disaster is precisely the red tape and the stigma involved in going on welfare.

778
01:18:48.780 --> 01:18:55.100
The welfare recipient still bears a psychic stigma, even though weakened in recent years,

779
01:18:55.100 --> 01:19:01.100
and he still has to face a typically inefficient, impersonal and tangled bureaucracy.

780
01:19:01.100 --> 01:19:08.100
But the guaranteed annual income, precisely by making the dole efficient, easy and automatic,

781
01:19:08.100 --> 01:19:14.100
will remove the major obstacles, the major disincentives to the supply function for welfare,

782
01:19:14.100 --> 01:19:19.100
and will lead to a massive flocking to the guaranteed dole.

783
01:19:19.100 --> 01:19:29.100
Moreover, everyone will now consider the new dole as an automatic right, rather than as a privilege or gift, and all stigma will be removed.

784
01:19:29.100 --> 01:19:45.100
Suppose, for example, that $4,000 per year is declared the poverty line, and that everyone earning income below that line receives the difference from Uncle Sam automatically, as a result of filling out his income tax return.

785
01:19:45.100 --> 01:19:49.900
Those making zero income will receive $4,000 from the government.

786
01:19:49.900 --> 01:19:54.900
Those making $3,000 will get $1,000, and so on.

787
01:19:54.900 --> 01:20:02.600
It seems clear that there will be no real reason for anyone making less than $4,000 a year to keep on working.

788
01:20:02.600 --> 01:20:08.300
Why should he, when his non-working neighbor will wind up with the same income as himself?

789
01:20:08.300 --> 01:20:12.600
In short, the net income from working will then be zero,

790
01:20:12.600 --> 01:20:17.800
and the entire working population below the magic four thousand dollar line will quit

791
01:20:17.800 --> 01:20:21.560
work and flock to its rightful dole.

792
01:20:21.560 --> 01:20:23.320
But this is not all.

793
01:20:23.320 --> 01:20:28.660
What of the people making either four thousand dollars or slightly or even moderately above

794
01:20:28.660 --> 01:20:30.340
that line?

795
01:20:30.340 --> 01:20:35.380
The man making forty five hundred dollars a year will soon find that the lazy slob next

796
01:20:35.380 --> 01:20:40.400
door who refuses to work will be getting his four thousand dollars a year from the Federal

797
01:20:40.400 --> 01:20:41.760
Government.

798
01:20:41.760 --> 01:20:49.820
His own net income from 40 hours a week of hard work will be only $500 a year.

799
01:20:49.820 --> 01:20:53.880
So he will quit work and go on the negative tax dole.

800
01:20:53.880 --> 01:21:00.420
The same will undoubtedly hold true for those making $5,000 a year, etc.

801
01:21:00.420 --> 01:21:03.600
The baleful process is not over.

802
01:21:03.600 --> 01:21:10.360
As all the people making below $4,000 and even considerably above $4,000 leave work

803
01:21:10.360 --> 01:21:16.480
Work and Go on the Dole, the total dole payments will skyrocket enormously, and they can only

804
01:21:16.480 --> 01:21:23.160
be financed by taxing more heavily the higher income folk who will continue to work.

805
01:21:23.160 --> 01:21:29.440
But then their net after-tax incomes will fall sharply until many of them will quit

806
01:21:29.440 --> 01:21:32.480
work and go on the dole too.

807
01:21:32.480 --> 01:21:36.420
Let us contemplate the man making $6,000 a year.

808
01:21:36.420 --> 01:21:42.200
He is, at the outset, faced with a net income from working of only $2,000, and if he has

809
01:21:42.200 --> 01:21:48.720
to pay, let us say, $500 a year to finance the dole of the non-workers, his net after-tax

810
01:21:48.720 --> 01:21:52.640
income will be only $1,500 a year.

811
01:21:52.640 --> 01:21:59.500
If he then has to pay another $1,000 to finance the rapid expansion of others on the dole,

812
01:21:59.500 --> 01:22:04.360
his net income will fall to $500, and he will go on the dole.

813
01:22:04.360 --> 01:22:19.360
Thus, the logical conclusion of the guaranteed annual income will be a vicious spiral into disaster, heading toward the logical and impossible goal of virtually no one working and everyone on the dole.

814
01:22:19.360 --> 01:22:30.360
In addition to all this, there are some important extra considerations. In practice, of course, the dole, once set at $4,000, will not remain there.

815
01:22:30.360 --> 01:22:43.360
Irresistible pressure by welfare clients and other pressure groups will inexorably raise the base level every year, thereby bringing the vicious spiral and economic disaster that much closer.

816
01:22:43.360 --> 01:22:54.360
In practice, too, the guaranteed annual income will not, as in the hopes of its conservative advocates, replace the existing patchwork welfare system.

817
01:22:54.360 --> 01:22:59.360
It will simply be added on top of the existing programs.

818
01:22:59.360 --> 01:23:04.960
This, for example, is precisely what happened to the state's old age relief programs.

819
01:23:04.960 --> 01:23:10.000
The major talking point of the New Deal's federal social security program was that it

820
01:23:10.000 --> 01:23:17.400
would efficiently replace the then existing patchwork old age relief programs of the states.

821
01:23:17.400 --> 01:23:22.820
In practice, of course, it did no such thing, and old age relief is far higher now than

822
01:23:22.820 --> 01:23:25.400
it was in the 1930s.

823
01:23:25.400 --> 01:23:32.600
An ever-rising social security structure was simply placed on top of existing programs.

824
01:23:32.600 --> 01:23:38.080
In practice, finally, President Nixon's sop to conservatives that able-bodied recipients

825
01:23:38.080 --> 01:23:42.700
of the new dole would be forced to work is a patent phony.

826
01:23:42.700 --> 01:23:48.640
They would, for one thing, only have to find suitable work, and it is the universal experience

827
01:23:48.640 --> 01:24:00.920
The various schemes for a guaranteed annual income are no genuine replacement for the

828
01:24:00.920 --> 01:24:04.880
universally acknowledged evils of the welfare system.

829
01:24:04.880 --> 01:24:09.640
They would only plunge us still more deeply into those evils.

830
01:24:09.640 --> 01:24:16.000
The only workable solution is the libertarian one, the abolition of the welfare dole in

831
01:24:16.000 --> 01:24:22.000
in favor of freedom and voluntary action for all persons, rich and poor alike.