It's A Gray Area: The trick of current welfare system

Recently the Los Angeles Times reported that $69 million in California welfare money was cashed in by recipients in places like Las Vegas and on cruise ships. Prior to that, The Times reported that people on welfare had used their state-issued ATM cards to get money at casinos, strip clubs and massage parlors.

After those revelations, there followed the usual clamors and calls for politicians to tighten up the system, and many of the politicians responded by promising that in the future the cards could no longer be used in those types of places.

But the real problem is much more fundamental.

Yes, there are people in our society who simply cannot take care of themselves, and yes they need our help. And we will give them that help in the traditional Libertarian way – not because we have to, but because we want to. That is the type of people we are.

Thus we should have a welfare system, but not the one we have today. Why? Our welfare system has probably been the worst thing that has ever happened to a large majority of the recipients because it deprives them of both their motivation and their pride.

And that keeps them mired in poverty. As evidence, simply look at the generations of people who have not broken out of the welfare system.

So how can we still have a welfare system, but at the same time increase the incentives for the recipients to break away from it? The answer is for the welfare system to provide the necessities of life, but not to provide any money to the recipients at all.

What would such a program look like? There would be dormitory living for people on welfare (with some allowances for families), group-style meals, medical care at government-sponsored clinics, passes on public transportation and provisions to provide clothing, personal hygiene materials and other similar essentials. But in return, those people who are able would be required to help around the living spaces by doing chores such as cleaning, gardening, cooking, security and general maintenance work.

As such, this system would provide for all recipients' basic needs, and that would be appropriate. But it would also inherently provide incentives to the recipients to move beyond welfare and to improve themselves, because there would be a logical and necessary stigma of being placed to live in the public facilities.

But at the same time they would live under this stigma, the recipients would also more often have the means to be able to move away from it, because the new system would always include an incentive to get some form of job and "earn the extra dollar." Recipients would be forced to contribute money for their upkeep if they received any income, but always on a "sliding scale.

Thus, for example, if welfare recipients were to earn $200 per week in a part-time job, they would contribute only $50 for their upkeep. Thus they would be able to keep at least $150 to spend upon private purchases, including car expenses, or put it away in a savings account.

Other benefits of this new system are obvious. The taxpayer money to fund this new program would much more be spent on purchasing food, clothing and shelter for the recipients, instead of so much being spent on bureaucracy, administrative expenses and fraud. And along the way, there would be a much reduced appearance of unfairness, because everyone would be treated the same.

Today there are few incentives for people to get off welfare, because if they get a job, most of what they earn is forfeited back to the government. And if young ladies want to "form their own households," all they have to do is get pregnant, either inside or outside of wedlock, and by that act they now qualify for welfare. And, in a similar fashion, if they want their monthly check to be increased, all they have to do is to have another child for that to occur.

So once again, in this situation as well as most other human experiences, incentives matter!

Far from this being heartless, this proposed program is more humane. It provides for a reasonable existence for all recipients, but it also strongly removes the curse of our present system that causes welfare to be perpetuated, and people to remain in poverty for generations, and encourages people to progress to independence.

How would this new system of welfare be implemented? Slowly. It should start with people who are newly applying for welfare, and then slowly expanded to others who are already on the program. The dormitories would have to be constructed or remodeled, and they should always be clean, cheerful, modestly attractive and, above all, safe

Thus, in this system everyone would come out ahead, at least in the long run. The welfare recipients would have their needs met, but they would also have incentives to pursue their opportunities to have a better life. The taxpayers would receive a benefit because the system would probably cost them only half of what they are now paying, and they would also have the satisfaction of knowing that their money was being better spent for more care and less fraud and bureaucracy.

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