Welfare to work
Tough love works
Jul 27th 2006
From The Economist print edition
Why America's pathfinding reform holds lessons for other countries
A DECADE ago, Americans began a bold social experiment. In August 1996,
Bill Clinton signed into law the bill that introduced "welfare to work".
From that point, poor families could no longer claim welfare
indefinitely as an entitlement. Instead, parents had to find a job.
The reform, controversial enough in America, was reviled in many parts
of Europe. Its opponents said that welfare claimants, most of them
single mothers, would be unable to find work. They and their families,
it was argued, were being condemned to destitution.
Ten years on, such dire warnings have been proved spectacularly wrong
(see article). America's welfare rolls have fallen by over half as
existing claimants have found work and fewer people have gone on benefit
in the first place. A strong economy, generating plenty of jobs, has
undoubtedly helped; but the main reason for the steep decline in
caseloads is the reform itself. Furthermore, there has been no upsurge
in the poverty rate; in fact, it has fallen over the period. ...
the poverty rate has risen in recent years (the 2000s), but of course
this kind of comparison depends on the base year used. It also ignores
the growing irrelevance of the conventionally-defined poverty level.
(it's not adjusted for changes in needs, only those in the price
index.)
Looking at the poverty graph at the Dept. of Commerce website, it's
quite clear that much of the change in the poverty rate reflects the
business cycle (as the ECONOMIST acknowledges). I think that the
recession of 2001 was moderated using monetary policy, but this simply
shoved problems into the future, by creating the housing bubble. It
looks as if the future may be now, with the bubble deflating. Then
we'll see how successful Clinton's reform was.
I wonder if the ECONOMIST uses a similar "tough love" approach to the
estate tax: cut those scions off the Nanny Family's dole, so they'll
be forced to work for a living!
--
Jim Devine / "These capitalists generally act harmoniously and in
concert, to fleece the people." -- Abraham Lincoln
