Monty Pelerin's World

Economics, Finance and Politics Through The Prism of Classical Liberalism

Saving the Needy or Creating the Needy?

Saving the Needy or Creating the Needy?

When a graph like the following develops, one has mixed emotions:

On the one hand, there is the obvious sorrow and empathy for the less fortunate. This economic downturn is serious and probably has a lot further to run both in terms of unemployment and in terms of those requiring help. It is not improbable that the economy will be in a rut for a long time, perhaps a decade or so. Thus, continued need for assistance to the needy is highly likely.

On the other hand, one knows how devastating the longer-term impacts of welfare and assistance can be.

I am for doing good to the poor, but I differ in opinion of the means. I think the best way of doing good to the poor, is not making them easy in poverty, but leading or driving them out of it. In my youth I traveled much, and I observed in different countries, that the more public provisions were made for the poor, the less they provided for themselves, and of course became poorer. And, on the contrary, the less was done for them, the more they did for themselves, and became richer. Benjamin Franklin

For a sub-set of the economy, the welfare system has become a lifestyle choice. The siren song of assistance, once accepted, easily corrupts subsequent generations. How many lives have been negatively affected, if not ruined, by the perverse incentives? How many people now accept it as a way of life? How many talented children failed to bloom into scientists, businessmen, doctors and geniuses because of its corrosive effects?

Real needs will grow more severe as this economy continues to deteriorate, and a compassionate people will and should meet them. But it is a fine line between helping the needy and creating the needy.

Newspapers recently reported that there is no longer a stigma attached to food stamps, as if that were a good thing. If true, the loss of stigma is terrible, because it makes it easier to rationalize away the traditional habits and values that produce success. If true, our welfare system will continue to destroy the potential and lives of additional generations.

Ben Franklin advocated a form of “tough love.” To many, that approach is unthinkable and cruel. Ultimately, which approach is more compassionate?