A Framework for Thinking About Welfare Policies

Image credit: texaswic.org

If you’ve read much of this blog, you already know that my brain makes sense of the world via exhaustive, mutually exclusive categorizations. And here is that applied to welfare.

Speaking specifically of financial situations, there are three categories of people . . .

  1. Self-sufficient: They currently don’t need external financial support
  2. Temporarily dependent: They need some degree of financial support now, but they have the potential to shift into the self-sufficient category
  3. Permanently dependent: They need some degree of financial support for life

I believe people want to be in the self-sufficient category. Being self-sufficient is fulfilling; it’s an achievement obtained through effort that leads to growth, and humans obtain fulfillment from personal growth.

But humans also want to get the most for the least amount of effort. If it’s unquestionably proven and everyone knows that you can get equally great-looking and strong abs with the Seven-Minute Abs workout or the Eight-Minute Abs workout, nobody would choose the latter unless they get some ancillary benefit from working out for an extra minute.

Welfare efforts, either private or public, need to take into account those two features of humans as they seek to achieve the goals of (1) helping people who are in the self-sufficient category to stay there, (2) financially supporting the people in the temporarily dependent category in a way that promotes their movement into the self-sufficient category, and (3) providing sufficiently for the permanently dependent in a way that preserves their dignity.

But this is only half of the discussion. Remember, there are two groups of people involved in welfare efforts: those to whom the wealth is being provided (the recipients) AND those from whom the wealth is coming (the benefactors). My simple framework above only deals with considerations about the recipients.

And what of the benefactors? Talking specifically about government welfare programs (forced giving “at the point of a gun,” as libertarians would put it), there are several impacts on them that should not be ignored. Forced giving takes away the increased societal cohesion and shared empathy that comes when a benefactor gives to a needy neighbour. Beneficiaries may give more of themselves when they do it voluntarily and when they have more control over how their donation is used (because they are giving in a way that they feel is most efficient and best for the recipients). And when high taxation is instituted for the sake of wealth redistribution (especially if it’s progressive), beneficiaries’ incentives change–their marginal willingness to work and create more jobs and wealth (which will probably end up being used by others rather than themselves if they are already wealthy) is diminished, although the macroeconomic impacts of that are unclear.

There are many other considerations and values that come into play when deciding how best to provide welfare in a society, and I will not try to go through them exhaustively. But I do have a couple other points to make on this topic.

First, it’s ok for people to have different values that lead to different decisions about how best to support those in need. I don’t feel like people generally come to their preferences about this topic based on bad motivations, of which probably the most common accusations are greed and selfishness–“liberals want free stuff from the rich,” and “conservatives don’t care about the poor.” On the contrary, they all seem to be trying to figure out what the right thing to do is, but there are multiple values at play, and it just depends on how you prioritize those values.

Second, people forget that there is a difference between inequality and poverty. The is especially relevant to my post last week about socialism. Is the goal to eliminate wealth disparities, or is it to eliminate poverty? There’s a huge difference. That same question, put a different way, might help clarify the distinction: Is a society morally objectionable if it has eliminated poverty but still allows for significant wealth inequality (assuming the society’s policies are such that it also supports people’s freedom of opportunity to move between classes)? Your answer depends on your core values and beliefs about the goals of a society.

And now you know a little more about why I said I’m torn about where I sit on the welfare spectrum.

What Is Socialism?

Image credit: Daria Kochetova

The term socialism has been a popular one this election season, but people are using it in many different ways. Some say most Democrats (including Joe Biden) are socialists. Others disagree and reserve that term for Bernie Sanders. And still others reserve the term for the policies more akin to Cuba and Venezuela. Then there’s the question of whether the Scandinavian countries are socialist, and even Canada gets thrown into the mix. (I have enjoyed reminding conservative friends lately that I grew up in a “socialist” country and that it was a great life!)

The difficulties people have in defining socialism arise, in large part, from not realizing that the they are entangling multiple distinct aspects of government into a single term. They need a framework to categorize the major aspects of government.

To elaborate on what I wrote in that linked post (which you should read first if you haven’t lately), socialism is strictly defined as a system where the “means of production” (i.e., the companies producing the goods and services) are owned socially. Social ownership could mean a few different things, but usually these days we interpret that to mean that the government owns them and runs them.

As an aside, this is where the term “socialized healthcare” comes from–the government owns and runs the health insurance industry, plus or minus the provider organizations as well. I guess if it only owns the health insurance side (e.g., Medicare for All), it can only be considered half-socialized healthcare. And if the government owns the provider organizations as well (like in the U.K.), then it’s fully socialized healthcare.

Anyway, based on that strict definition of socialism, the term only encompasses a single spectrum out of the five–the economic spectrum. It says that the locus of decision making about the use and distribution of resources/goods/services is closer to the centralized end of the spectrum.

But people don’t commonly use that strict definition, and that’s where things get messy.

When I studied socialism in social studies class in my Canadian public high school, the term was used a little bit more broadly to include government ownership of the means of production AND a great degree of wealth redistribution to ensure a relatively high minimum standard of living for all citizens. In other words, the term encompassed two spectra–the economic spectrum and the welfare spectrum.

Using that definition, we appropriately didn’t see Canada as a truly socialistic country: The Canadian and provincial governments only own a few industries’ means of production, and they provide generous but not expansive (socialism-level) welfare programs. That’s why we studied other countries’ governments to learn about socialism.

And now, with this talk of Cuba and Venezuela, people seem to be adding in a third spectrum to their definition: the liberty spectrum. This definition of socialism, then, includes government ownership of the means of production, extensive welfare programs, AND severely limited liberties (i.e., totalitarianism).

There’s no sense in arguing over which definition is correct. People are allowed to use whatever definition they want (thanks, First Amendment!), so debates over definitions of terms get us nowhere. Instead, people need to clarify the definitions of ambiguous terms they are using so the focus can remain on the substance of the conversation rather than the words being used to convey that substance.

So, is President-Elect Joe Biden a socialist?

Well, if your definition of a socialist is someone who will push our government toward more centralized economic decision making (via a mixture of policies that (1) regulate the free market and (2) increase government ownership over some aspects of the economy) and toward more wealth redistribution, then, YES, he is a socialist.

But if your definition of a socialist is someone who will enact extensive central planning, near-total wealth redistribution, and maybe some totalitarianism as well, then he’s nowhere near a socialist. Or, if you think his true policy preferences fit that description and that his policies are calculated to get us to that point, I guess you could say he’s a closet socialist, or maybe a progressive socialist.

Either way, define your terminology and then let’s move on to substantive discussions about the merits and limitations of his policies and alternatives to them.