Chapter 18: The Role of Government

SHOULD THE GOVERNMENT TAKE POSITIVE MEASURES IN THE EFFORT to eliminate or alleviate poverty? If so, what should these measures be?

This is the most troublesome problem that the student of poverty is called upon to solve.

A large part of our previous discussion has been devoted to explaining what the government should not do in the effort to mitigate poverty. It should refrain from adopting measures that impede or discourage the full functioning of the free competitive enterprise system -- the system that tends to maximize production, to distribute that production among the tens of thousands of commodities and services in the proportions in which these are socially demanded, to maximize the accumulation of capital and new investment, and so to maximize wages and employment and open up opportunities to all.

Now nine-tenths of the economic regulations that governments have adopted and are still adopting today are at best shortsighted measures that do tend to impede or discourage the functioning of the market. Hence they tend to increase or prolong poverty rather than reduce it. If we could get governments simply to refrain from inflationary, socialist, and destructionist policies we might solve nine-tenths of the problems of poverty that are responsive to political action. Yet the question whether the government should undertake "positive" measures -- and if so, which -- would remain.

The answer we give to this question must depend in part upon our answer to much broader questions: What is the legitimate province of government? What are the desirable limits to that province?

The most necessary function of government is to protect its citizens against force and fraud; but it does not follow that this is the sole legitimate function. John Stuart Mill in his Principles of Political Economy in 1848 ⁽¹⁾ made an instructive distinction between the necessary and the optional functions of government. The term "optional" was not meant to imply that it is a matter of indifference or of arbitrary choice whether the government should take these functions upon itself, "but only that the expediency of its exercising them does not amount to necessity, and is a subject on which diversity of opinion does or may exist."

Among these "optional" functions Mill cited the laws of inheritance, the question of succession in the absence of a will; the definition of property; the obligation imposed on people to perform their contracts; the enforcement of contracts; the determination of what contracts are or are not fit to be enforced (for example, if a man sells himself to another as a slave, or binds himself to lifelong employment in the service of an other); the establishment of civil tribunals, of rules of evidence, of prescribed forms of contracts and requirements of witnesses; the registry of births, deaths, marriages, wills, contracts, and deeds; the provision of guardians for infants and lunatics; coining money; prescribing a set of standard weights and measures; making or improving harbors, building lighthouses, making surveys in order to have accurate maps and charts, raising dykes to keep the sea out, and embankments to keep rivers in; paving, lighting, and cleaning the streets.

Most readers today would accept not only the existence of such "optional" functions of government but the usefulness of the specific examples that Mill cites. Yet few libertarians will follow him when he goes on to declare that these examples "might be indefinitely multiplied without intruding on any disputed ground," and that the only justification needed for any specific government interference is its own individual "expediency."

There are, on the contrary, the strongest general reasons why every proposed extension of governmental interference or power should be scrutinized with jealous vigilance. We know that the more things a government, like an individual, attempts to do, the worse it is likely to do any one of them. We know that all power tends to be abused, and that the greater the power the greater the liability to abuse. We know that power begets power -- that the more power a government already has over the lives and activities of its citizens, the more they can be intimidated, and the more easily can it seize still further powers.

Is Relief a Duty of Government?

A book on poverty is of course not the appropriate place to pursue at excessive length the question of the proper sphere of government. But at least some consideration of this broader problem seems a necessary preliminary to an answer to the narrower and relevant question, whether the government should itself provide any assistance or relief to the destitute or starving, or whether it should leave all this to private charity.

The history of the answers to this question is less instructive than one could wish. We find instances of government relief to the needy almost as far back as written history extends. We find systematized state relief in ancient Rome, and in England since the days of Elizabeth. And we find that, for almost as long as this, thoughtful men have been questioning the wisdom of this relief.

In the early nineteenth century economists like Malthus and Ricardo denounced the poor laws of their day on the ground that they tended to bring overpopulation and to undermine production. In 1817 we find Ricardo writing:

"The clear and direct testimony of the poor laws is... not, as the legislature benevolently intended, to amend the condition of the poor, but to deteriorate the condition of both poor and rich; instead of making the poor rich, they are calculated to make the rich poor. ... No scheme for the amendment of the poor laws merits the least attention which has not their abolition for its ultimate object."⁽²⁾

When we come to the middle of the nineteenth century, how ever, we find even the usually uncompromising French economist Bastiat giving guarded approval to emergency government relief:

"If the socialists mean that under extraordinary circumstances, for urgent cases, the state should set aside some resources to assist certain unfortunate people, to help them to adjust to changing conditions, we will, of course, agree. This is done now; we desire that it be done better. There is, however, a point on this road that must not be passed ..." ⁽³⁾

In the early twentieth century we can be confident that F. W. Tossup was speaking for the overwhelming majority of contemporary economists when he wrote: "Some provision for the relief of the indigent there will always have to be." ⁽⁴⁾ And when we get to 1960 we find even a strong libertarian like Professor Hayek writing: "In the Western world some provision for those threatened by the extremes of indigence or starvation due to circumstances beyond their control has long been accepted as a duty of the community. ... The necessity of some such arrangement in an industrial society is unquestioned -- be it only in the interest of those who require protection against acts of desperation on the part of the needy."⁽⁵⁾

A Mid-nineteenth Century Answer

The report of the royal commission on the amendment of the poor laws in 1832, and the subsequent law of 1834, mark a turning point in English thought on the subject; and John Stuart Mill's discussion in the mid-nineteenth century probably summarizes the orthodox view then prevailing among economists. It may make an instructive take-off point for discussion even today.

The difficulty of leaving relief entirely to private charity, as Mill pointed out, is that such charity operates "uncertainly and casually... lavishes its bounty in one place, and leaves people to starve in another." ⁽⁶⁾

Mill's argument has great weight. In some emergencies help ought, if possible, to be certain and immediate, not left to chance. Take a case of common and almost daily occurrence in any great city. A child playing in the street is hit by an automobile, seriously injured, and knocked unconscious. Are we, before doing anything, to wait until he has been identified, until his parents have been located, until they have guaranteed payment for his treatment, or until some passing stranger magnanimously offers to assume the burden? Or should we have made provision for such cases in advance, so that a police car or an ambulance can be immediately summoned, and he can be rushed off to a hospital, public or private, with the question of payment to be settled later, even if it should eventually fall on the taxpayers? Very few persons would hesitate, I think, about which answer to give to these questions.

Most persons would also agree that in the event of some natural disaster, such as a tornado, a flood, or an earthquake, the government should rush emergency help to the victims, with the burden of its cost falling on the whole body of the taxpayers.

But then, what about individual cases that involve not merely temporary emergencies, but long-term or even life-long emergencies? What about the person who has fallen seriously ill, or has suffered an injury that will take long to heal, and is without resources? Or what about the blind, or the totally disabled, or the feeble-minded or insane, or those so old and weak that they are no longer able to support themselves and have run out of resources? Perhaps in most cases near relatives could be held legally responsible for their care. But what of the cases where this could not be done, or where the relatives could not be found? Once more, I think, the overwhelming majority of men and women would agree that these persons should not be al lowed to starve or die, that their individual fates should not be left to the accidents of haphazard private charity, but that systematic provision should be made for such cases at the public expense.

But now we come to the more difficult cases. What about the able-bodied destitute? What about those who are physically able to work but are out of jobs because they are incompetent, or because they have just been laid off for some reason beyond their control, or because they have not found a job that utilizes their acquired skills, or with the conditions and prestige and pay that they would like, or because they just don't like work -- or for a hundred reasons in between? Help in such cases could be "deserved" or "undeserved"; but the first question to be answered is whether able-bodied persons should be given public relief at all.

Mill offers a powerful argument why they should be: "Since the state must necessarily provide subsistence for the criminal poor while undergoing punishment, not to do the same for the poor who have not offended is to give a premium on crime."

Another reason he offers for providing subsistence to the destitute able-bodied by law is that if the poor were left to individual charity a vast amount of mendicity would be inevitable.

But if the destitute are to be provided for by the state, how great should this provision be? Here Mill expressed his agreement with the principles embodied in the Poor Law Amendments of 1834. The help should be enough to provide subsistence, no more, no less:

"The state must act by general rules. It cannot undertake to discriminate between the deserving and the undeserving indigent. It owes no more than subsistence to the first, and can give no less to the last."

The task of distinguishing between the deserving and the undeserving, Mill continues, must be left to private charity, which can make these distinctions because it is bestowing its own money, and is entitled to do so according to its own judgment. But:

"The dispensers of public relief have no business to be inquisitors. ... [They] ought not to be required to do more for anybody, than that minimum which is due even to the worst. If they are, the indulgence very speedily becomes the rule, and refusal the more or less capricious or tyrannical exception."

There are other reasons why the amount of public charity extended to any individual must be held to a minimum. Any state help is bound to be harmful that leaves an idle able-bodied man as well off as he would be if he were working at the market wage for unskilled labor. Government relief should al ways leave a man with a strong motive to do without it if he can. This was the explicit principle emphasized by the Royal Commission that proposed the 1834 Poor Law. As Mill put it, "If the condition of a person receiving relief is made as eligible as that of a laborer who supports himself by his own exertions, the system strikes at the root of all individual industry and self-government."

Therefore, consistent with providing a minimum for subsistence, the condition of those who are supported by legal charity should be kept considerably less desirable than the condition of those who support themselves.

In keeping with this principle, the Poor Law of 1834 stipulated that relief for the able-bodied could only be provided in workhouses. The people in these workhouses were to be set to monotonous and unattractive work, whether useful or not. This requirement was believed to provide a test that would separate those really in need from those who were not. It was assumed that any man in actual fear of starvation would accept these conditions, and that if he refused to do so it was because he thought a more acceptable alternative -- perhaps even taking a "menial" private job -- was open to him.

Public opinion today refuses to consider the return of the workhouse. But what is the practicable alternative? As we have already seen in the chapter on "The Fallacy of 'Providing Jobs,'" the government should not attempt to guarantee useful and profitable work, nor provide it directly, nor compel it. (It may require a relief recipient to "register" for a job, or bribe him to take a "job-training" course, but in practice these have proved to be in the main perfunctory gestures.) The only effective way the government has of putting pressure on a relief recipient to keep seeking work is to keep its relief level significantly below what he could earn from taking even a "menial" job.

The Dilemma of Relief

Government relief is on the horns of a dilemma. On the one hand it must try to provide "adequate" subsistence. On the other hand, this should not be so "adequate" that the recipient is content to accept it as a way of life in preference to working. As Mill stated the problem:

"In all cases of helping, there are two sets of consequences to be considered: the consequences of the assistance itself, and the consequences of relying on the assistance. The former are generally beneficial, but the latter, for the most part, injurious. ... The problem to be solved is therefore one of peculiar nicety as well as importance: how to give the greatest amount of needful help, with the smallest encouragement to undue reliance on it."

It is my own reluctant conclusion that this problem will never be satisfactorily solved. The more "adequate" we make relief, the more people we are going to find willing to get on it and stay on it indefinitely. The more we try to make sure that everybody really in need of relief gets it, the more certain we can be that we are also giving it to people who neither need nor deserve it. The more we try to make sure, on the other hand, that no loafers or cheaters get on the relief rolls, the more certain we can be that we are also keeping some of the really needy off the relief rolls. A relief system, at best, is bound to be an uneasy compromise between too many and too few, too much and too little.

If I have cited the Poor Law of 1834 or have been quoting from older writers so much -- particularly from Mill -- it has been to show that our forebears of more than a century ago recognized the two sides of the problem; and that our modern reformers, who so preen themselves on their superior "compassion" and "social conscience," have discovered nothing new, but have merely chosen to shut their eyes to one side of the problem, with increasingly ominous consequences.

Some Ways to Minimize Abuses

If there is no fully satisfactory solution, the problem remains of finding the least unsatisfactory or perhaps it would be better to say, the least unsatisfactory package of solutions. Let us look at some of the more awkward problems.

Much the fastest growing relief program in the United States today has been Aid to Families with Dependent Children (AFDC), on which a mother and her children, legitimate or illegitimate, become eligible for AFDC relief if there is no employed father present. This program has probably encouraged more cheating than all the others put together. It promotes both a real and a feigned break-up of families. Many fathers only pretend to "desert" so that the mothers can collect the relief check.

Yet the program goes on growing because of the difficulties of detecting and proving fraud, and on the argument that in any case children must not be made to suffer for the sins of the parents. On the same argument women get just as much relief for the support of their illegitimate as of their legitimate children. One consequence is to subsidize, encourage, and reward bastardy and the breeding of more children than pauper parents could otherwise support. In 1971, in New York City, more than 70 percent of births to mothers on welfare were outside of wedlock. ⁽⁶⁾

The problem is a difficult one, but at least one or two provisions suggest themselves that would restrict its extent. One would be to limit any welfare payment to no more, and preferably less, than a father could earn if he were employed at low-skilled work. Or for the state to make no additional payment for the support of any child beyond, say, the second or third. Or to reduce the definition of a dependent child from the present age of 18 to 16 or 14. Or some combination of such cut-off points.

If it is replied that such restrictions would inflict great hardship in some cases, the answer is that to retain some incentive to self-help, and to avert national bankruptcy, some limit, somewhere, must be put on eligibility to relief and on the amount paid to any single family.

Any relief payment above the minimum necessary for subsistence, or any relief to meet specially "deserving" cases, should be left to private charity. In fact, some private charitable organizations could well make it their special function to encourage public agencies to refer to them relief cases that might require supplementary aid, to allow the private group to deal with each such case on its merits. And the reformers who are most distressed by these cases would then have an opportunity to contribute their own voluntary funds for this supplementary help.

Another major welfare problem. Should the burden of relief fall solely on the cities and localities, or should the states or even the Federal government assume part or even the whole of it?

This question has increasingly been answered in the last three or four decades in favor of transferring more and more of the burden to the Federal Government. The result has been that eligibility for relief has been constantly widened and the level of relief constantly raised. Obviously every time eligibility is broadened and every time welfare payments are increased, more people become relief clients.

Far from relieving the states and localities from part of the relief burden, "revenue-sharing" tends to increase it enormously. We have already seen in Chapter 9 that though the Federal contribution to direct relief increased from only 5 per cent in 1936 to 53 percent in 1971, the burden on the states and cities went up from $330 million in 1936 to $8,700 million in 1971 -- a 26-fold increase.

All this could have been foreseen by elementary economic deduction or a little knowledge of the history of the problem. As Ricardo wrote in 1817:

"It would not only be no improvement, but it would be an aggravation of the distress which we wish to see removed, if the fund [from which the poor are supported] were increased in amount or were levied according to some late proposals, as a general fund from the country at large. The present mode of its collection and application has served to mitigate its pernicious effects. Each parish raises a separate fund for the support of its own poor. Hence it becomes an object of more interest and more practicability to keep the rates low than if one general fund were raised for the relief of the poor of the whole kingdom. A parish is much more interested in an economical collection of the rate, and a sparing distribution of relief, when the whole saving will be for its own benefit, than if hundreds of other parishes were to partake of it. It is to this cause that we must ascribe the fact of the poor laws not having yet absorbed all the net revenue of the country; it is to the rigor with which they are applied that we are indebted for their not having become overwhelmingly oppressive. If by law every human being wanting support could be sure to obtain it, and obtain it in such a degree as to make life tolerably comfortable, theory would lead us to expect that all other taxes together would be light compared with the single one of poor rates." ⁽⁷⁾

One of the arguments against leaving the payment of relief entirely to the cities or the states is that the payments are then not "uniform" throughout the country. But this is precisely what they should not be. According to official estimates the median money income of families in Mississippi is only 42 percent of the median in Connecticut -- or, to put it the other way, the median family income in Connecticut is nearly two and a half times that of Mississippi. A relief payment level suitable to Connecticut and most other Northern states might be so high in the Southern rural states as to tempt millions off their more poorly paid jobs and permanently onto the relief rolls.

But existing public opinion, existing Federal legislation, and court decisions holding it "unconstitutional" even for cities to impose their previous residential requirements on relief applicants, now make it politically all but impossible to go back to the old system under which cities and counties were responsible for their own relief programs.

To come to another major problem: Should applicants for relief be obliged to prove unemployment or poverty -- in other words, submit to a means test? The answer is Yes. The argument that such a test is "demeaning and humiliating" will not hold water. It is no more demeaning and humiliating than the investigation that income-taxpayers are routinely and systematically put through to prove they did not lie or cheat in making out their reports. The absence of a means test opens the door to almost unlimited fraud. Reformers often tell us that people should be allowed to apply for and stay on relief "without loss of dignity or self-respect." Of course they should never be subjected to any unnecessary loss of dignity. But if there is to be no loss whatever of dignity or self-respect in getting and staying on relief, then there can be no gain in dignity or self-respect in making some sacrifices to keep off.

Still another problem of relief is whether it should be given in cash or kind. Most present opinion seems to favor giving practically all of it in cash. The argument is that the poor know their own relative needs better than anybody else, and know how to apportion their own expenditures accordingly. The further argument is often added that to restrict the poor mainly to relief in kind is to put an unwarranted restraint on their liberty.

Both of these arguments are fallacious. The sad truth is that one of the reasons people have to go on relief in the first place is that they have been as incompetent or heedless in spending money as in earning it. The worst thing one can give a spend thrift, a drunkard, a drug addict, or a compulsive gambler is cash. The taxpayer has at least the right to an assurance that his money will be used to rehabilitate the pauper and to help his wife and children. Administrative practicalities have to be considered, of course, but so far as possible relief should be paid not in cash, but in the form of non-transferable food stamps, clothing coupons, and the like, with the pauper's rent paid directly to his landlord, leaving him a minimum for liquor, cigarettes, sex, or TV and stereo sets.

Until quite recently, "liberals" would have considered such a proposal shocking; but in 1972 even the Human Resources Administrator of New York City, Jule M. Sugarman (never previously accused of lack of sympathy for relief applicants), pro tested that the disruption and expense generated by the rapidly expanding number of drug addicts on welfare threatened to "paralyze" the city's welfare system. Many of these addicts, in addition to harassing and committing acts of violence against both welfare administrators and other welfare recipients, were using their relief checks to support their drug habits. As one way to cut back on fraud and drug purchases, Mr. Sugarman said his agency was considering paying addicts in nonnegotiable scrip and food stamps. ⁽⁸⁾

The argument that the relief recipient has some sort of "right" to get his relief entirely in the form of cash, and should have complete "freedom to spend," is wholly misdirected. It is the liberty of the taxpayers who are having part of their earnings seized to support the reliefers that deserves some consideration.

Case of the Permanent Pauper

Still another problem: What is to be done about the able bodied pauper and his or her family who tend to stay on relief indefinitely?

(It seems to me not only desirable but necessary, in the interest of clarity and precision, to revive the word pauper in its specific eighteenth- and nineteenth-century sense, which was, according to the Oxford English Dictionary, not merely a poor person, but [since 1775] "a person in receipt of poor-law relief." Our politicians and many of our newspapers today, searching for euphemisms, habitually refer to persons on relief simply as "the poor." This is not only misleading, but unjust to the self supporting poor, many of whom are even less well off than many on relief.)

We noted in the chapter on "Welfarism Gone Wild" that AFDC families are on relief for an average of twenty-three months, that a third of them have been on for three years or more, and that some families have been on relief for three generations. When we are dealing with the blind or the disabled, indefinitely prolonged help may seem unavoidable; but when we are dealing with the able-bodied, such prolonged dependence is a violation of the sound rule that public support should at most be temporary and confined to emergencies.

Suppose we have an able-bodied pauper (with a wife and children, to make the problem harder) who has been on relief for more than a year, who has refused to look seriously for work, who has turned down jobs offered to him on the ground that the pay was too low, or that the jobs were "menial" or vaguely "unsuitable." Can we simply drop him from relief, and take the chance that he and his family will "starve"? No one likes to answer a blunt Yes to this question, and it is long since any politician has dared to do so. But unless a welfare program is allowed to grow utterly beyond control, this is the answer that at some point we are compelled to give. Where is that point to be?

First, it ought to go without saying that there should be a constant re-examination by the relief administrators of the condition of relief recipients and their eligibility for continued assistance. This might be only once a year for, say, the blind or totally disabled, but much more often for the able-bodied on general assistance. If an able-bodied man has been on relief, say, for six months, and has repeatedly shown no inclination to look for or accept work, he should be dropped from the rolls and referred to some private charity. The private charity organization, and the man himself, would then have an opportunity to examine his case afresh and see what could be done to make him self-supporting. If, after a few weeks, the private group could find no other solution, they might or might not recommend that he be reinstated on public relief. Some similar process might be applied to Aid to Families with Dependent Children. At the very least, even such a temporary removal from the relief rolls might help to shake the pauper and his family out of a complacent and chronic acceptance of public support in idleness.

Many students of the problem would no doubt like to see even more drastic measures to terminate indefinite relief to the able-bodied. I suspect myself that even if all the proposals I have been making here were adopted -- for a means test and other protections against fraud; for payments in kind, where possible, instead of in cash; for stricter limitations on the size of the relief payment to any individual and of the period over which such a payment is made -- the reforms even collectively might still prove inadequate to halt the now ever-growing burden of relief.

Perhaps it is even a mistake for a book on the general problem of poverty to discuss the details of relief administration. Those who ought to be best qualified to suggest such reforms are the relief administrators themselves, who are daily immersed in the problems. But their chronic preoccupation seems to be wholly with the immediate interests of their "clients," with hardly a thought to the long-term interests of the economy, of the taxpayers, or of the paupers themselves. The serious student of the problem of poverty must keep in mind that relief is never a solution, but at best a makeshift, and he must continuously devote part of his attention to the most promising ways of minimizing its amount and duration.

Should Relief Recipients Vote?

There is one political change that is practically imperative if a nation is not to be driven toward bankruptcy by relief and redistribution programs completely out of control. This is to suspend the right-to-vote of anybody on public relief.

The argument for this reform was succinctly stated by John Stuart Mill in his Representative Government in 1861:

"I regard it as required by first principles that the receipt of parish relief should be a preemptory disqualification for the franchise. He who cannot by his labor suffice for his own support has no claim to the privilege of helping himself to the money of others. By becoming dependent on the remaining members of the community for actual subsistence, he abdicates his claim to equal rights with them in other respects."

Mill even went further, and argued that no one should have the right to vote unless he paid direct taxes:

"It is also important that the assembly which votes the taxes, either general or local, should be elected exclusively by those who pay something towards the taxes imposed. Those who pay no taxes, disposing by their votes of other people's money, have every motive to be lavish and none to economize. ... It amounts to allowing them to put their hands into other people's pockets for any purpose which they think fit to call a public one."

A century more of popular government has completely verified Mill's fears.

His argument could be extended. There is a crucial difference between an unrestricted "right to vote" and the right, say, peaceably to conduct one's own life without outside interference. For one man's vote may affect not only his own future but that of others. Through it he exercises power over the whole community, a power that ought not to be granted to those who have shown incapacity to provide for even their own elementary needs. Few people today consider it an intolerable abridgment of freedom to restrict the issuance of driving licenses to those who have demonstrated both the skill to drive a car and the responsible use of it. The community is warranted, on the same grounds, in restricting the right to vote to those who have shown sufficient intelligence and responsibility not to steer the ship of state on to the rocks. Nearly every country does, in fact, insist that every voter should meet certain qualifications regarding age, literacy, law-abidance, and sanity. Demonstrated ability to support oneself by one's own efforts would simply add one more essential qualification to the list.

I have one modification to suggest in Mill's proposal. This is that all public aid, whether given in cash or kind, be extended nominally in the form of loans. The recipient would be under no legal obligation to repay such a loan, but until it was repaid he would not be entitled to vote. As an added pressure for reasonably prompt repayment, the loan would bear interest at a rate as high as the government itself was obliged to pay.

This plan would have several advantages. It would help to preserve the self-respect of the applicant for relief. A person who repaid the loan would be able to vote again with his self-esteem intact. He would feel that he had carried his own weight, and had not been a net burden on the community.

For the government too the plan would have several advantages. It would make people more reluctant to go on relief if they could get along without it. It would also make them eager to get off relief as soon as possible so that their debt would not become excessive. For the same reason many would even be willing (which they are not now) to take jobs that paid them very little more than their relief allowance. In brief, they would have more incentive to work. If they were getting, for example, a relief allowance of $60 a week, and were offered a job at $70, they would be less likely to ask themselves (as they do now), "Why should I work for only $10 a week?"

Of course there would always be some people who, perhaps through little fault of their own, had been on the relief rolls so long that repaying their accumulated "loan" and its interest would look like a hopeless task. Any incentive for them to repay in order to be eligible to vote again would be close to nonexistent. It would be advisable, therefore, to provide that anybody who had stayed off relief completely for, say, four or five years, would be eligible to vote again, whether he had repaid his relief loan or not. This would still leave a repayment incentive to anyone whose incurred obligation was so small that he could without great hardship pay it off in less than a year or two.

I am fully aware that, in the present state of public opinion, either Mill's proposal or my suggested amendment of it will be dismissed as "politically impossible." But unless limitations and safeguards similar to those I have been suggesting are soon adopted, the welfare burden will rise to a level that will prove catastrophic.

An Expensive Failure

In the last generation the tendency in the United States and elsewhere has been to try (as President F. D. Roosevelt put it in his message of 1935) to "quit this business of relief" by substituting various forms of "social insurance."

This whole effort has proved a fantastically expensive failure. The so-called "insurance programs have not only grown at an exponential rate, but degenerated into disguised relief programs -- and into relief programs which, in fact, distribute billions of dollars to millions of people in no need of relief. The total national welfare burden has grown more than twenty-nine times since 1935 (from less than $7 billion a year to more than $170 billion in 1971). Yet instead of any of these programs' taking the place of straight relief, that program itself has grown twenty-six times (from $350 million in 1936 to $18,632 million in 1971).

If it were "politically possible," it would be better if all the social welfare programs instituted in the United States since 1935 could be dismantled, and only a reformed relief system remained. We have spent 38 years going in the wrong direction, and getting deeper and deeper into the welfare state quagmire.

The Duty of Providing Education

There is, however, one welfare obligation, older than any except straight relief, that I believe no modern state can escape. It is in fact assumed today by all but a handful of the poorest and most backward nations. This is the effort to provide an education for every child up to at least some minimum level of literacy.

This is in the interest of every citizen of the state. It helps to increase the productivity and wealth of the whole nation. It makes it easier to teach everyone a skill. When people can at least read signs and elementary directions, it greatly facilitates enforcement of the law. It also makes law abidance more general, when fewer people, because of lack of skill or opportunity, are left in hopeless or desperate circumstances. An educated child is far less likely to be a future relief burden as an adult. Universal education increases equality of opportunity. The education and good nurture of children, far from doing any thing to reduce their incentives, tends to increase them. The education of the children of the poor is a true national investment.

There will always be unsettled problems of detail -- of the content and length of time of public education. At present, in most of the states, parents are compelled to send children to school from the ages of six or seven to sixteen or seventeen or until they have finished the work of a specified grade, which ever comes first. This education is of course paid for out of general taxation. All states provide elementary and high schools for minors, which they may generally attend at no cost until they graduate or reach the age of twenty-one.

The present tendency has been to carry this even further. Practically all states maintain one or more state universities, sometimes with free tuition. Today the Federal Government grants public money even to most private colleges. The tendency everywhere is to carry public education too far. It is hard to see the justification of providing taxpayers' funds for a higher education that only a small percentage of the population can take advantage of, either intellectually or economically. (In 1968, there were only 30 college students for every 100 persons 18 to 24 years of age.)

The case is strong, in fact, for not carrying state-provided education beyond the grammar-school level, and even stronger for not carrying it beyond the high-school level. As Humboldt pointed out, as long ago as l792,⁽⁹⁾ government-provided education tends at best to hinder variety of individual development, and to impose a deadening uniformity. What he could not fore see, but what is becoming increasingly evident, is that it also tends to encourage or impose the spread of a statist and socialist ideology. Should it be surprising that teachers whose livelihood is dependent on public funds should be prejudiced in favor of the increase in state subsidies and state powers rather than their careful restriction?

Government education, in fact, gets us into the same dilemma as government relief. Once we concede that it ought to be provided at any level, where in principle can we draw the lines between what is indispensable, what is enough, and what is too much? And even if we could draw sharp borders theoretically, how, in practice, in democratic countries, can we prevent politicians from appropriating grossly excessive funds for grossly unwarranted purposes?

The Paradox of Relief

The compromise proposals I have been putting forward regarding relief and education are likely to satisfy few. To some they will seem niggardly and lacking in compassion. Others will contend that it is not the proper function of the state to do anything in either field, which should be left wholly to the market or to private charity. I confess I am not too satisfied with my proposals myself. I wish I knew of some indisputable principle which would enable us to draw an exact boundary between what the state should and should not do in these fields, a boundary that would leave no need or room for the exercise of discretion or practical judgment. But I have not been able to find any such precise boundary.

Perhaps the problem is that we face here, in fact, a conflict of principles. I have accepted the conclusion (held today by the overwhelming majority not only of the public but of professional economists) that the matter should not be left solely to the uncertainties of haphazard private charity, but that the community has a duty to make some systematic provision for those threatened by the extremes of indigence or starvation owing to circumstances beyond their control. But when we accept the principle that "the State cannot allow anyone to starve," are we not accepting along with it the dubious principle that the State has the right to seize from Peter to compel him to support Paul? And once we concede as a principle that the State may seize money from some to give it to others, what ground of principle have we left to prevent the process from being carried to the point of confiscating all wealth and income above the average in the attempt to bring about full equality -- which would only mean, in the end, equality of destitution?

These are troublesome questions, but it may be objected that they are troublesome because of the way they are framed. Does not practically everybody concede that the State does have a right to seize from Peter to pay Paul, when it levies necessary taxes, say, on Peter, a businessman, to pay Paul, a policeman? Is not the real question whether or not Paul is performing necessary and legitimate services in return for payment? Or, even more broadly, is not the real question the long-run political and social consequences of the whole process?

Today, of course, most people would dismiss all these as academic problems. The need of government relief of poverty is generally accepted, and the practical question around which discussion revolves is what form this relief should take and how far it should go.

Regarding the answer to this no two economists seem to agree. My own answer is that government relief, to keep it from getting out of bounds, should be reserved only for catastrophic situations. All relief (except that to the blind, totally disabled, feeble-minded, or very aged) should be only of a temporary and emergency nature.

This relief should never be so low, on the one hand, as to undermine the recipient's health, nor so high, on the other, as to undermine his incentives to self-help and self-support. But these aims will never be completely reconcilable. To the extent that we achieve the one we are unlikely to achieve the other.

Moreover, even a compromise program that may reasonably suit the conditions in one country may prove wholly inapplicable in another. Reformers talk constantly about what governments should do about poverty without first asking themselves what a specific government can do about poverty. Any relief program must be adjusted to the relative wealth of the country for which it is proposed. It would be quite impossible for India, for example, to adopt a public relief program feasible in the United States. An attempt to ensure everybody in India an income as high as the official U.S. "poverty line" minimum would probably put at least nine-tenths of the Indian population on relief; but there would be no class capable of paying such relief.

This brings us to what I shall call "The Paradox of Relief":

The richer the community, the less the need for relief but the more it is able to provide; the poorer the community, the greater the need for relief but the less it is able to provide.

A less paradoxical way of stating this is that an "adequate" relief system is possible only in a country that is already affluent.

But this takes us back once more to the conclusion that the real solution to the problem of poverty does not lie in any government relief system, in any "welfare program," in any scheme to redistribute wealth or income. It lies in increased production.

One is ashamed to keep repeating anything so obvious, but the only real cure for poverty is the production of wealth.

Notes

1. Vol.11, Book V, Chs. I and IX.

2. David Ricardo, Principles of Political Economy and Taxation, 1817. Everyman's Library, pp. 61-62.

3. Frederic Bastiat, Selected Essays on Political Economy, Princeton, N.J.: Van Nostrand, 1964, p.120.

4. F. W. Taussig, Principles of Economics, Macmillan, 1921, Vol.11, p.369.

5. F. A. Hayek, The Constitution of Liberty, University of Chicago Press, 1960, p.285.

6. This and other quotations from Mill in this chapter are from Principles of Political Economy, 1848, etc. II, Book V, Chapters 8 and 11.

6. Study reported by New York Times, March 21, 1972.

7. Op. cit., pp. 62-3.

8. New York Times, March 16, 1972.

9. Wilhelm von Humboldt, The Limits of State Action, Cambridge University Press, 1969.

This e-text is made available by the The Henry Hazlitt Foundation in cooperation with The Foundation for Economic Education. The Hazlitt Foundation is a member-supported 501(c)(3) non-profit corporation whose mission is to make the ideas of freedom more accessible. Please visit our flagship Internet service .

© 1973 Henry Hazlitt. For permissions information, contact The Foundation for Economic Education, 30 South Broadway, Irvington-on-Hudson, NY 10533.