The welfare-industrial complex

Long ago, as a reporter for his college newspaper, Ron covered city hall, including Urbana township, which provided public aid to poor residents.

Monthly, he’d hear low-paid town board members discuss particular challenges faced by needy folks and the amounts of aid to provide them. The widow Roberts had unexpected doctor bills and could use an extra $75 this month. Disabled Mr. Brown had found part-time work as a hotel deskman and could get along on $45 less now; the town clerk said Mr. Brown expressed his deep appreciation to the people of Urbana.

It was real. It was human. True compassion balanced with fiduciary responsibility to taxpayers. America in the 1970s. No Title This, Section That, Article the Other, or even case workers.

Caring for folks destitute or unfortunate is accepted as a moral obligation of “society” by nearly everyone, even without formal political or social theory. For most folks, it’s rooted more in theology or even their basic humanity and instinct than theory.

People may disagree about the extent to which it should be done by individuals and volunteer groups versus government. During much U.S. history, most aid came from private charity, not government. And they disagree about the methods and means. Indeed, that’s what we should discuss and debate.

But most people accept that it’s a moral obligation. They recognize that the cost of meeting the real human needs of such folks is really rather modest for our society. And they do not begrudge the deserving poor people the aid they get.

Nobel-prize free-market economist Friedrich Hayek said, “There is no reason why in a society which has reached the general level of wealth which ours has attained … that some minimum of food, shelter, and clothing … [shouldn’t] be assured to everybody.”

That’s even truer today with incomes much higher than in his time. But the amounts of money American taxpayers pour into welfare and the amounts of it that are diverted and do not reach the poor are outrageous.

Thirteen federal agencies run 126 anti-poverty programs. States also contribute toward some programs. In 2013, federal and state governments spent roughly $1 trillion on anti-poverty programs. That’s up from $160 billion on an inflation-adjusted basis since 1973, although the population in poverty didn’t grow nearly as much.

Overall, American taxpayers spent $63,339 on anti-poverty programs for each family of three living in poverty in 2013. But the poverty level for such a family was $18,769. In addition to poor families’ own earnings, half of that total public poverty spending could have raised all such families to middle-class incomes.

Yet, most poor families that get aid remain poor. Despite spending a cumulative $19 trillion fighting poverty since 1973, the poverty rate is higher today than it was then. However, the average living conditions of the poor are much better today than they were then.

With welfare spending higher than ever, why do poverty rates remain persistently high?

Start with staffing of 126 often overlapping federal programs, some with state counterparts. The federal Department of Health and Human Services employs nearly 63,000 people. At the state and local levels, roughly 688,000 people work full-time in anti-poverty programs, according to U.S. Census Bureau data.

As public employees ourselves, we know many bright, hard-working colleagues who truly put the public interest first. But given human nature, there’s a constant danger the provider bureaucracy will subjugate the public interest and the interests of the intended beneficiaries of public support to their own interests.

President Eisenhower warned of the military-industrial complex, a provider and crony bureaucracy that entrenched and enriched itself by hiding behind the public interest in national defense. The education-industrial complex: administration and teacher unions consuming endless tax dollars in ways that don’t benefit students. There’s also a welfare-industrial complex.

We don’t have complete answers for poverty, but when taxpayers could literally put every poor household into the middle class for much less than they’re now paying, we know something is wrong. Nobel-Prize economist Milton Friedman said a guaranteed minimum national income would be better than the array of programs we currently have. Maybe.

In any event, helping the poor should be about helping the poor, not feeding the bureaucracy.

Ron Knecht is Nevada’s elected controller and Geoffrey Lawrence is assistant controller.