Welfare Option 3: Free Services for Everyone
Some people are poor not just because of low income, but because they spend what they have poorly. Beer is not very nutritious. Lottery tickets are a poor investment. Big screen television is less important than education. Buying luxuries at 20% or higher interest rates is bad money management.
One way to prevent these unwise people from wasting what they are given is to give them essential items: things like food, medical care and education. This is paternalistic, but so what. If you want choice and luxuries, get a job. Such is the philosophy behind such programs as Food Stamps and Medicaid, and these have been fairly successful, especially Food Stamps; I have personally witnessed many fat people making purchases at the grocery store using Food Stamps. That's success!
The problem with programs like Food Stamps and Medicaid is that you have to prove poverty in order to qualify. This encourages bad behavior, which leads to more poverty. One way to get around this is to give out free essential services to everyone. Public education is a big example in the U.S. In some countries the free services include medicine and child care.
Such an approach fixes the perverse incentive problem, but creates a whole new set of problems. The size of government needed becomes gigantic. Taxes become enormous, with most of the value returned to those who paid the taxes. The net transfer to the poor is small compared to the amount of tax money collected.
It is programs like these that drive freedom lovers away from the Left and into the arms of the Right. Paternalism for those who cannot take care of themselves is one thing; paternalism for everyone but the rich is quite another.
The loss of choice is unacceptable. Consider schools. There are many approaches to education: Whole Language or phonics, arithmetic or New Math, Shakespeare or science, secularism or religion, patriotism or political correctness, military school or self-esteem psycho-snuggles, lectures or self-study, classroom or apprenticeship, liberal arts or practical arts, and more. With a government monopoly on education, the choices become severely constricted. No matter what the government chooses, many people will be left angry.
Such “free services” result in losses of privacy. Surely medical records should be considered intimate knowledge not suitable for government perusal! Indeed, the personal nature of doctor-patient relationship was the basis for legalizing what many consider murder: abortion. Roe vs. Wade made abortion legal because of concerns with privacy. A government run health system eliminates all medical privacy. And government run medicine runs into religious issues. Either the government funds abortions, which is against the religion of many, or it doesn't, imposing this religious decision on those more concerned with convenience. This is not a harmonious situation.
Universal government services corrupt the democratic process. Such services create huge numbers of government employees and contractors — large voting blocks of people who have a conflict of interest.
If the idea is taken to the extreme, the government becomes dangerously powerful, frequently resulting in cult of personality dictatorships that would make the god emperors of old jealous.
Such free services destroy the market process, making wise innovation difficult (the public schools excel at unwise innovation). When services are free or highly subsidized, people over consume, resulting in shortages and lines. Long lines were a trademark feature of Marxist countries. Long waits are common in countries with socialized medicine, especially for expensive procedures. Long lines are common on public roads – we call them traffic jams. (Environmentalists take note!)
Some of these problems, such as lack of competition and choice, and the concentration of power, can be fixed by privatizing such services. These problems could be reduced by providing for and paying for such services at the local instead of the federal level. However, the huge expense make these options problematic except in special circumstances – self limited services – that I will get to later.
A critical component of getting progressives and freedom lovers on the same page is to find other options for taking care of the poor than the ones discussed so far. Fortunately, such options exist.