How much do social programs help the poor? If they help the poor more than they hurt them, then these programs could be good. At first glance, some programs seem to provide a net benefit. Public education seems good, because it will teach future children the skills they need to succeed. Using government funds for charity seems good, because it will help the needy. Minimum wage seems good, because workers who get lower wages gain a bigger paycheck. Unfortunately, these programs create other problems for the poor, and are not worth the cost.
First of all, the public education system is a bad idea. It provides poor quality education, as the school system is mostly designed to cater to the dumbest kids. Instead of giving poor kids equal opportunity to rich kids, the public school system gives them a handicap. The rich kids can simply go to the best schools and get the best education, while the poor are simply stuck with a bad quality school.
Another bad policy is the minimum wage. While it ensures that some workers have a higher, “locked-in” wage, employers simply respond by firing workers. While it increases the wage of some workers, the price floor causes some to be unemployed. This is bad, because these workers are a resource that could fulfill more wants, but are untapped.
Because of unemployment, the government does “public works” projects in order to provide jobs for people. However, the government cannot “provide jobs” for free. As a person gains a job from the state, another is lost, as the Government diverts capital to provide this job.
Fearing that the old would be poor, the State tried Social Security. Unfortunately, this caused some people to live poorly in retirement, because people didn’t get much from Social Security. Also, an aging population in
In order to pay for things, the State needs to tax people, inflate the currency, or borrow money to do this later. This is a “zero-sum” game, where the Government benefits, but the people taxed do not. Unfortunately, this has grave consequences. When taxation, or inflation of the currency, hits the economy, people take fewer risks with their wealth, as they have less. Also, taxation has additional costs needed to make sure people are being taxed the right amount and the costs to catch tax evaders. Inflation also has costs, as it takes resources to print more money. Also, the creation of more money from thin air can lead to a boom and bust cycle.
An additional problem is the inability to calculate where best to use the resources. Without the profit incentive (Government just takes what it wants), Government cannot figure out how to allocate its resources in the most efficient way. In addition, there is no incentive for efficiency. Yet, there is often an incentive for inefficiency, as it can lead government to fund the program more. For example, if the public schools show that they are failing, it will cause an increase in funding through programs like the No Child Left Behind Act.
As a result of this, the whole economy is hurt. People have lower standards of living. Production, investment, consumption, and technological development are stunted, as people bear the costs of Government’s money-making scheme.
Instead of this, it is better for there to be a strict separation of poor and State. Instead of State intervention, the best solution is a free market economy. In this ideal, Government’s role is limited to protect people and their property, from crimes like murder and theft.
A free market system has effective solutions to help the poor. First, businesses are driven by the “invisible hand” of mutual exchange to help the poor. In the free market, poor people can easily gain jobs, and obtain the goods and services that are low cost, but really wanted. Also, people with good intentions will donate more to help these poor people. For these reasons, a policy of separation of poor and state is the best way to help the poor.
