Every political campaign is filled with promises to rectify previous government errors and provide a variety of social benefits to multiple subgroups of citizens in an attempt to garner their votes. Once in office the politician is faced with the reality that there are only so many dollars in Washington that are available to satisfy those campaign promises and each dollar can only be spent once. A great many members of Congress are all competing for those dollars.
Both Democrats and Republicans are responsible for the increasing costs of social programs originating in Washington. Both parties have increased the size and scope of the federal government by enacting or expanding social programs and thereby increasing total government spending. Currently, our government expenditures greatly exceed revenues and those in Congress still want to spend more to fulfill their campaign promises.
Something is clearly amiss. A few questions need serious attention. Are we better off today as a result of increased government spending? Some will say yes on an individual basis because a specific government social program meets their personal needs. Keep in mind the number of government programs is immense and literally all of us are receiving some level of government benefit in our everyday lives. We tend to focus on the personal benefits and for some reason ignore the individual costs associated with these programs. The aggregate cost, the annual federal budget is becoming a concern to some, but not yet all, members of our society.
This is not a discussion about politics; it is a discussion about economics, philanthropy and humanitarianism. William Graham Sumner wrote an essay published in 1883 that addressed essence of the issue. He tells us about "the Forgotten Man", the member of society who must bear the costs associated with the philosophical and humanitarian efforts of do-gooders who expect the rest of us to pay for their generosity. Sumner tells us that:
A and B put their heads together to decide what C shall be made to do for D. The radical vice of all these schemes, from a sociological point of view, is that C is not allowed a voice in the matter, and his position, character, and interests, as well as the ultimate effects on society through C's interests, are entirely overlooked. I call C the Forgotten Man.
Progressives are those who believe government is the panacea; a solution to all problems because government has the power to compel the Forgotten Man to pay the cost of these social programs. They justify enactment of social programs on the basis that "D" is in need and not able to care for himself. The progressives rationalize increasing government spending on the basis that a failure in any social program is always attributable to insufficient funding. Unfortunately, not one single government-sponsored social program has actually helped "D" to become a better citizen. Nor is it ever considered that private charity or local government could more efficiently meet the needs of "D" while also monitoring his situation so as to determine when assistance is no longer required.
To deliver those federal government social benefits, a large bureaucracy must be established to provide oversight in the delivery of benefits. The bureaucracy is only concerned with delivering the benefits; not ensuring those payments actually benefit the recipients.
My dad used to remind me that good intentions are not always a valid justification; he said, "The road to Hell is paved with good intentions". Sumner reminds us the true costs associated with this type of third-party humanitarianism:
The friends of humanity start out with certain benevolent feelings toward "the poor," "the weak," "the laborers," and others of whom they make pets. They generalize these classes, and render them impersonal, and so constitute the classes into social pets. They turn to other classes and appeal to sympathy and generosity, and to all the other noble sentiments of the human heart. Action in the line proposed consists in a transfer of capital from the better off to the worse off.
The bureaucrats justify their existence by the number of clients they serve, so it is in their individual interest to serve as many citizens as possible; in essence, they actively seek out potential beneficiaries and in some cases convince them they are better off after accepting government relief than they would be by continuing to accept personal responsibility to provide for their needs. I cannot fault parents for wanting to better provide for their children. If a government program can accomplish that, a logical parent will sign up for the relief.
Are we actually better off as a result of those social programs? The government is acting in a "parental" role by directing our activities toward or away from a particular behavior; that is why these are called social programs; they are geared toward changing social behaviors. We are being influenced by the prospect of government largesse and taxes. The assistance encourages some behaviors and the taxation inhibits others. In essence, the social programs divide us into one of two categories; those who receive benefits and those who pay for those benefits. It is true that an individual can at times be in both groups. Today's reality is that only about half of us actually pay federal incomes taxes while the other half does not.
How can that income tax revenue pay for all of the federal benefits? It cannot. The federal government needs many more dollars than income tax revenue provide; so it borrows by issuing Treasury Bonds. To be able to avoid default on those loans, our federal government embarks on a course of perpetual inflation to make sure that it can borrow dollars today at face value and then repay those loans in the future with dollars that are worth much less. That is exactly what inflation is: a devaluing, or debasement, of the currency. This act of intentional debasement of our currency has the same effect on our monetary system as counterfeiting and should bear the same consequences. When a counterfeiter is caught he is severely punished because he causes harm to all members of our society. We need to declare those in Washington, especially, the Federal Reserve Chairman what they are; counterfeiters and apply the appropriate justice!
When the value of our currency is reduced, who benefits as a result? A counterfeiter produces bogus money and immediately spends it at face value, thereby receiving full benefit of his acts. As that money begins to circulate through the merchants who provided the goods and services to the counterfeiter, the increased money supply begins to exert the effect of causing price increases as more money is not trying to buy the same amount of goods and services. With each successive round of money circulation, the prices continue to rise a bit more. In an ideal situation, doubling the money supply will eventually double the price levels. We think we are better off because we have more money, but our wealth remains the same since we have the same amount of purchasing power. Very few people seem to be able to adequately grasp the concept of inflation.
Those who originate the bogus money benefit most, and those who are exchanging the bogus dollars early in the monetary expansion benefit more than those who are exchanging dollars late in the expansion. Who are the late players? The people on fixed incomes and households who are on subsistence levels that require every dollar earned to provide for their families. The very people the progressives publicly claim to be helping are the ones most injured by their schemes to finance those social programs!
They call themselves progressives because they claim to be moving forward and advancing greater benefits. The reality is that their actions force our economy to slow down and actually punish those who are most in need by taking value from their money in the form of inflation. Higher income citizens are better able to absorb the consequences of inflation as they do not need to spend every dollar earned to meet the needs of their households.
Our federal income tax system is a progressive system in that the higher one's money income is, the higher the average tax rate is. Most people believe this is a fair concept and the only real discussion is related to the appropriate rates applied to higher income levels. Obviously, those with lower incomes would like to see the wealthiest among us pay as high a rate as possible and the wealthy feel they should be able to keep more of what they earn by paying lower rates. Keep in mind that the federal income tax revenue is no where nearly enough to fund the federal government programs.
Inflation, the largest component of government revenues, is a regressive tax in that the lower one's income is, the greater the burden that must be borne. A wealthy individual will be inconvenienced by increased prices but will still have money remaining after household consumption expenses have been met. That remaining money is saved or invested and a return on that investment that is at least equal to the inflation rate will further soften the future effects of inflation. Those will low incomes find that their dollar incomes will just barely meet their consumption needs or maybe fall a bit short. The government steps in with food subsidies and other types of relief to make up that shortage.
How does that benefit the poor and the lower economic middle class? Are they better off than they were before the government decided to transfer the wealth from those who earn more? Again, perception is the reality; the poor "think" they are better off because they have more money. The money is worth less because of inflation and their situation is practically unchanged. The problem is that they are working harder to get ahead and find themselves staying the same or even going backwards as higher income means they begin paying federal income taxes or move up to a higher income tax bracket and see their after-tax income being reduced.
Do the progressives deliver on their campaign promises? Yes and no. Yes, because they provide relief to those in need. No, because that relief does not materially alter the condition of those receiving it. What it does create is a "welfare" class of citizens who are trapped into accepting government payments to subsist with little hope of breaking free from their current situation. Progressives actually created a caste system in our republic in which all are supposed to have an equal opportunity to succeed.
One should also keep in mind that the government cannot spend a single dollar that it does not first take from someone who earned it. A wealth distribution plan cannot make the poor better off without taking capital away from the rich. The distribution cannot result in "more" wealth in our nation; it can only achieve less income inequality. The net effect is that our nation becomes increasingly "poorer" as capital is being diverted from investment in the future to present consumption under the guise of humanitarian relief. A household cannot become more financially stable by giving away its wealth; and neither can a nation! Giving wealth away only leads to a poorer economic condition.
Would we not be a better society if individuals and communities offered a "hand-up" to those in temporary need so that individuals could better themselves and the community as a whole, rather than required every member of society to fund government social "hand-out" programs that have a dubious record of fixing the social ills they address?
For those in permanent need, the community must take responsibility and provide for their relief. All of out states have programs to support those in permanent need and all of those programs are monitored through the community in which the recipient resides. Some type of oversight is necessary and Washington D.C. is simply too far removed from the beneficiary to effectively monitor the results.
Gary Harper
Orrville, Ohio
