Sunday, June 19, 2011

What Would Happen Without Welfare?

Begin a thought process with me. Let's just look at medicare and medicaid. In 2010, the US government spent $793 billion on these programs. There is a lot more than medicare and medicaid to welfare, but let's just look at this. Now, imagine that instead of the government taking that money from business and people and giving it away that the money instead was left in the hands of those to whom it belongs. What then?

First and foremost, to be sure, many people would be left without health insurance. Even as the extremist libertarian that I am, I can admit that this is a bad thing. All other things being equal, people having health insurance is much better than them not having health insurance. Fortunately for libertarians, though, all other things are not equal in this case. We have to remember that money. What does this other money do? What is its purpose?

The extra money will either be spent or invested. The spent money increases profit margins and the increased investment provides the capital with which to furnish new jobs. So the people who have lost health insurance can now find new jobs because of that capital now being freed up.

But is this alternate scenario worthwhile? Is it better that the money is providing jobs instead of just directly going to pay for health insurance? From the point of view of the person who was taxed, the situation is much better, because now he is getting more for his money. From the point of view of the person who was getting the health insurance, he is now getting the money for insurance plus some spending money for himself. His situation is improved because of the change.

Yes, it is a simplistic analysis, but what do you think of it? Is this a worthwhile idea?


  1. Good subject for discussion, Tony. Here is my take:

    I'd did my best to teach my children (both my American and my Venezuelan children, all of whom are adults now) that their first responsibility in life was to themselves and their own families. I told them that no matter how big or small was their monthly income, their first duty was to put aside at least 10% in a savings account for rainy days, They then had to figure out how they and their family could live on the 90% remaining.

    Welfare of any kind is to me a foolish waste of money. Forgetting for the moment that welfare takes away a person's dignity and destroy their motivation to make a better life for themselves, let' just focus on a dollar of tax money that goes to support welfare. The Federal bureaucracy set set-up to administer the program probably consumes forty cents of that dollar. State and local bureaucracies probably consume another twenty cents. The welfare recipient at best receives forty cents of that tax dollar. The bureaucrats are the true beneficiaries of these programs.

    Leaving those dollars in the hands of the taxpayers is far better for everyone in my opinion.

  2. Great points, Jim. I didn't even mention how much we would save by forcing these bureaucrats to do something productive for society.

    And I really like the mention of dignity. Back in the 30's, people were embarassed to be on these programs. Now, people feel that it is their right. They have been raised with these programs and feel that they deserve the money that productive people earn. It's a shame. How can morality and self-reliance survive in spite of these programs?

  3. I can't improve upon this post and the comments. We have lost all sense of dignity, which is what happens when you become incontinent and content with others paying your freight.

    Another affect of government getting out of the healthcare market is that the market would rationalize, as price signals would once again serve to stabilize the market. Prices would most likely go down.

  4. govt. welfare -in any guise-takes from the producers of wealth and gives to those who do not produce-until those noh producers out number the producers...
    ADC and other welfare programs 'killed' the -once- great city of Detroit -
    Have a grand July 4th -

  5. Here's another problem: since the government caps their payments to healthcare providers, the providers consequently overcharge everybody else to make up the shortfall. Then there's the hundreds of thousands of reimbursements denied by the government because the claims were not coded properly upon submission. Guess who gets to make up that shortfall as well. All in all, everybody gets screwed by the system except the bureaucrats who run it.

  6. Clever post. Its worth to spend money to health insurances. Its beneficial, and knowing that its not just for medicare but for government as well. We all have our responsibilities to our country, so I think it's sensible.

  7. welfare under any guise is the death of a society-
    take a look at Detroit- one of the the first 'welfare' cities-
    an house for a dollar-anyone!!

    let's get govt out of our pockets-and reward the work ethic-

    or - are too far gone!?

  8. thought I had made a comment-
    my comment-
    look at Detroit- one of the first 'welfare ' cities--
    an house for $1.00 anyone...

    and-who would want to live there anymore...
    the once beautiful "Parlor City" is trash!!

    taking from the productive-giving to the 'victims' NEVER works-

  9. thought I had made a comment using Detroit as an example--
    Detroit is a prime example of govt. 'welfare' NOT Working!!!

  10. let me know when you post again-

    BTW-one of the first welfare areas was Detroit-now look at her-an house for $1.00!