Is The Welfare State Kind?

by John Goodman,

Uwe Reinhardt, writing at The New York Times economics blog the other day, made two points: (1) we’re not as kind as other countries are and (2) even if we were just as kind we couldn’t do as much for the needy because health care prices in this country are so much higher.

… for a quick reality check on healthcare pricing see here.

On the first point, he writes:

My interpretation is that opposition to the Affordable Care Act largely reflects the age-old reluctance among many of the nation’s haves and the healthy to help purchase for America’s lower-income families and the chronically ill the super-expensive health care that the haves enjoy themselves.

Hmmm. My own view is the exact opposite: That Americans are kinder (much kinder) than Europeans, as is evidenced by our long history of charitable and eleemosynary activities. There simply isn’t anything like that in Europe. If you are injured by the side of the road, looking for help from a Good Samaritan, I would guess that you will be much better off if the next passerby is American rather than European. (And if American, your odds are much better if the passerby is conservative rather than liberal!)

We don’t throw sick people out on the street if they can’t pay for their medical care. And uninsured patients in this country get more preventive care than insured patients in Canada. In fact, I would say that even if we didn’t enact a single reform, we will continue to outperform Canada by most measures.

Here’s what virtually everyone in the health policy community misses. In Dallas, thousands of people go to hospital emergency rooms every year to get care that they can’t get anywhere else. The same thing happens in Toronto and in London. The difference? In Dallas we call these people “uninsured.” In Toronto and London, they are called “insured.” Other than the labels, there is no difference in the underlying problem — except that the “uninsured” in Dallas are probably getting better care.

As for kindness, it has nothing to do with the policies of other developed countries. Throughout Europe, social welfare spending is paid for by regressive taxes. In essence, those governments tax people and then give them back their money in the form of social insurance. This isn’t about redistribution. It’s about collectivism.

But…and here is where the rubber meets the road…Is there anything “kind” about the welfare state?

Consider that the federal government has spent $15 trillion fighting poverty since 1965 and currently spends about $1 trillion a year on 126 means tested welfare programs. That amounts to almost $22,000 for every poor person in America, or $88,000 for a family of four. Yet after all that spending, the poverty rate in this country is close to where it was 50 years ago when the War on Poverty began.

Absent the welfare state, economic growth alone should have virtually eliminated poverty by now!

Clearly (at least it is clear to anyone with any common sense) we are subsidizing, encouraging and enabling dysfunctional lifestyles. When you are in trouble, it’s easy to get private sector relief, but hard to remain for a long time on that relief. In the public sector, it’s hard to sign up, but once you are enrolled you can stay there forever. The private sector is focused on changing behavior so that need for relief will be temporary. The public sector reinforces the behavior that makes the need for relief permanent. The private sector is ameliorating misery. The public sector is subsidizing and expanding misery.

To repeat, private sector charity is kind. The welfare state is not kind.

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