Like most of us, sometimes when I read about the welfare state, with all of its bureaucracy, all of its endless hoops people have to jump through, all of the paperwork, I think, “Why not just end it all? Just hand out checks and be done with it.”
That’s the premise of a provocative op-ed in the Washington Post by Rutger Bregman, a reporter with the Dutch online outlet Decorrespondent.nl. “The trend from ‘welfare’ to ‘workfare’ is international,” he writes, “with obligatory job applications, reintegration trajectories, mandatory participation in ‘voluntary’ work. The underlying message: free money makes you lazy. Except that it doesn’t.”
Bregman cites a lot of research to support his claim. His principal piece of evidence is a study conducted by the Joseph Rowntree Foundation, a respected left-wing British think tank, in 2009. The foundation supported a plan by the British poverty-fighting nonprofit Broadway where 13 homeless men (or what the British call “rough sleepers”) were given 3,000 pounds and told they could do what they wanted with it. None of the men asked to use the money for booze, drugs, or gambling. A year later, 11 of the men had permanent accommodations in small apartments or in hostels. Their lives had been turned around. (Here’s The Economist’s summary of this research.)
Another expert Bregman cites is Charles Kenny, a fellow with the New America Foundation, who, in this Bloomberg Businessweek op-ed from 2013, cites several studies that show that giving poor people money is better than other alternatives. For example, a research team led by Columbia University political scientist Chris Blattman examined a 2008 decision by the Ugandan government to give a large number of adult men under age 35 a one-year grant of $382, equivalent to a year’s wage in that country, to start a business. Four years later, Blattman’s team found that recipients of the 2008 grant earned 40 percent more than equivalent men who didn’t get the money. The recipients of the cash grant were also 40 percent more likely to be paying taxes than those who didn’t get the money.
Questions need to be raised about both studies. As a commenter to the Post noted, the British homeless men could have been successful as a result of the “Hawthorne effect,” the notion, first discovered in studies at Western Electric’s Hawthorne Works in the 1920s, that when people know they are being studied they tend to perform better than those who are unaware that researchers are observing them. As for Uganda, it does not have an advanced welfare state. It may well be that cash for the Third World poor does more good than aid that is actively bad, such as surplus grain produced as a consequence of farm subsidies that then eliminates the markets Third World farmers had for their products.
I’d be more skeptical of Bregman’s idea except for two things. First, in the longer version of his article on his website (but not in the Washington Post version) he calls for replacing the minimum wage with this income floor. Second, his idea is not that far removed from the argument Charles Murray made in his 2006 book In Our Hands, where Murray called for replacing the welfare state with a universal income of $10,000 per year (in 2006 dollars) wit the only restriction that $2,000 be spent on health care.
Thus the idea of a universal income has a range of supporters, from Bregman on the left to Murray on the right. Bregman wants to end “the Calvinistic reflex that you have to work for your money,” and Murray wants an income low enough to encourage people to enter the labor force. But if Bregman and Murray were ever on a panel, they’d probably agree more than they’d disagree.
I think Bregman’s article is provocative and worth thinking about. But here are two questions I have.
First, what would happen to the huge welfare bureaucracy? Who will pay for the generous defined-benefit pensions these bureaucrats receive? As Charles Murray noted in this interview with National Review Online about In Our Hands, “bureaucracies are not flexible. They are inescapably, inherently driven by their internal dynamics to maximize their budgets and the size of their staffs, not to accomplish their putative tasks.”
Moreover, the Broadway/Joseph Rowntree Foundation experiment required more supervision than a typical welfare program, since the homeless men could meet with their case workers at times and places of their choosing and could spend as much or as little time as they liked with their case workers. So Bregman’s reform might not save as much money as welfare reformers might hope—assuming that it saves any money at all.
A second point is a moral one. The welfare state’s current morality is a decadent version of the Edwardian notion (which I discuss in Return to Charity?) that you can “scientifically” differentiate the deserving from the undeserving poor and that welfare and unemployment insurance were supposed to reward those dedicated to re-entering the labor force.
If welfare was replaced by a flat cash grant, what the state would be telling welfare recipients is: You’re a hopeless loser. You’ll never amount to anything. Here’s your dole. Go away.
Is that the message we want to tell the poor? If it is, what does that say about us?