Paying People Not to Grow; R. J. Bidinotto

This does not mean that Americans oppose all government aid or subsidy programs on princi ple. Confusing the functions of government with those of a private insurance firm, many believe that the state should provide a social "safety net" for those regarded as innocent vic tims of life's hardships. Originally, such assistance programs were in tended only for the helplessly needy: the sick and disabled, the very young and the very old, those laid low by catastrophes. The presumed beneficiaries' helpless dependency was re garded as an ethical claim upon the com munity-and thus a moral rationale for coercive redistribution of private wealth from the "haves" to the "have-nots." However, even in the most severe cases of individual need, coercive redistributionism poses irreconcilable moral dilemmas. It seeks to help some people-but necessarily at the ex pense of others. It aims to relieve those desig nated as "victims" -by creating a new class of "victims": those forced to provide the relief. It Mr. Bidinotto is contributing editor for On Principle, a po litical newsletter, and received the 1985 Mencken Award in journalismjor "Best Feature Story, Essay or Review. "

designates some people as ends-while it arbi trarily relegates other people to the servile sta tus of means. There is an unbridgeable gap between the moral intentions underlying redistributionism, and its moral consequences. Redistributionism is intended as a charitable "spreading of wealth"; in fact, it is a compulsory spreading of burdens. It is intended to solve individual problems; in fact, it universalizes hardships. It is intended to make men morally responsible for others; in fact, it obliterates any concept of per sonal responsibility. By shifting some people's personal burdens, problems, and hardships onto the backs of others, redistributionism has corrupted and un dermined the vital principle of moral self-re sponsibility. It encourages those with personal problems to neglect their moral responsibility to seek personal solutions; and it entices them to depend instead upon the coercive power of gov ernment to extort assistance from others. Si multaneously, it punishes with taxation those who have assumed their moral responsibility to work, solve their own problems, and support themselves.

Like the policy of paying farmers not to grow crops, redistributionism pays people not to grow . . . as people. In his controversial book, Losing Ground, Charles Murray formulated a "Law of Unin tended Rewards." It states that "any social transfer increases the net value of being in the condition that prompted the transfer." It does so "either by increasing the rewards or by reducing the penalties" normally associated with the condition, or behavior, which the government is trying to ameliorate. For example, Social Security is intended to insure against financial problems associated with old age. But it does so by removing the need (incentive) for many people to prepare other financial options for their retirement years. In addition, Social Security taxes siphon off their means of investing in any alternative. So, instead of adding to the security of the el derly, the program encourages many of them to ignore long-term planning-hence, to increase their vulnerability to hardship-and hence, to become overly dependent upon it as an exclu sive, rather than supplementary, source of in come. In effect, Social Security has increased the rewards and reduced the penalties of inade quate financial planning-the very problem which the program was designed to combat.

The Human Cost of Federal Aid Similarly, Aid to Families with Dependent Children was intended to help widows with small children. Murray shows, with devastating examples, I how AFDC benefits encourage poor women to have more and more illegitimate chil dren, while discouraging them from marrying their live-in lovers. The enormous proliferation of inner-city illegitimacy, generations of wel fare dependents, and attendant moral problems (such as crime, drug epidemics, and the like), is a grim testament to the Law of Unintended Re wards. In other words, AFDC increases the re wards and reduces the penalties of becoming an unmarried woman with dependent children the very problem which the program was de signed to alleviate. In the same way, Federal disaster relief is in tended to compensate victims of catastrophic losses due to various disasters. Much of this Federal money goes to victims of coastal flood ing during hurricanes-a phenomenon so pre dictable that certain areas of the country are of ficially designated as hazard zones. Federal flood insurance is offered to individuals living in these zones at only about a third of private insurance rates. Flood victims typically use their Federal insurance compensation for recon365 struction. . . right back in the hazardous zones.

In effect, the Federal assistance increases the rewards and reduces the penalties of building and living in dangerous areas. By increasing the number of people at risk, the federal govern ment thus increases the magnitude of future disasters-the very problem which the program was designed to relieve. 2 The economic consequences of redistribu tionism are well known, and are not of primary concern here. What these.examples illustrate is a different, and perhaps even more important point: the human cost of Federal "assistance." Redistributionism invariably demoralizes both its presumed beneficiaries and its involuntary benefactors. It pays people not to grow-in ability, in foresight, in productive output, in moral character. If this is so even in extreme cases of individ ual hardship, what can be said of those govern ment programs designed to assist able-bodied, normally productive people?

Because of the inverted morality of the redis tributionist welfare state,3 it was only a matter of time before the category of "needy" people expanded. With mounting incentives to become recipients, and massive disincentives to remain producers, the growth of the welfare state began to acquire its own momentum. More and more voters began to clamor for broader and less re strictive criteria for obtaining political assis tance. Politicians have met the demand for unearned benefits by increasing the supply of redistribu tionist programs. In 1950, there were 4.2 wage earners for every recipient of a Federal "trans fer payment." By 1980, there were only 1.6 wage earners per recipient. Transfer payments were 3.8 per cent of the Gross National Product in 1952; by 1982, they were 12.2 per cent. They were less than half of the Federal budget in 1962; today, they amount to two-thirds of all government outlays. By 1984, the federal gov ernment was running 400 separate programs to give subsidies to individuals. And this does not even begin to count up state and local programs and outlays.4 Fueling this proliferation of programs was the addition of the "deserving" to the category of the "needy" as eligible recipients. Even con sidering the vagaries of terminology, "needs"

366 THE FREEMAN • OCTOBER 1986 can at least be specified and somewhat de limited. But given today's ill-defined and com peting standards of justice, the notion of "de serving" is utterly elastic. And it does not nec essarily limit government assistance only to the helplessly dependent. Once helplessness was no longer the sole standard of determining who could receive government aid, more and more able-bodied people began to line up for un earned benefits. Veterans' Benefits For example, it was first argued that military veterans "deserved" compensation for injuries and traumas sustained during service to their country (a reasonable position). But no distinc tion between "compensation" and "benefits" was ever drawn. So, a vast array of "veterans' benefits" has been made available to present and former military personnel-whether or not they have seen combat, sustained service-re lated injuries, or are even "needy."

Take medical care for veterans. The Veteran's Administration maintains its own system of 172 hospitals, 93 nursing homes, 227 outpatient clinics and a variety of other facilities-the na tion's largest health care network. Its facilities are antiquated and grossly inefficient compared with those in the private sector. And though the V. A. is not obligated to do so, over 80 per cent of its care is provided for non-service-related disabilities. 5 Obviously, veterans' benefits are not strictly limited to meeting the actual "needs" of sol diers injured in the line of duty. Rather, they are intended to express public feelings of gratitude and indebtedness to all military personnel as such. Because such feelings are intangible and unquantifiable, the public can place no objec tive limit on what they feel veterans "deserve." But the unlimited largess of veterans' pro grams has a negative side. It fosters and perpet uates dependency among military personnel, providing them with a buffer and a refuge from civilian life and the private market. It pays vet erans not to grow.

Similarly, Americans tend to feel that work ers "deserve" government assistance in times of hardship. Just as military personnel ' 'de serve" unlimited compensation for taking risks for their country, unemployed workers ' 'de serve" compensation above and beyond that which they receive for their labors alone. Evi dently, they also ought to be paid for the virtues of character presumably implied in being "workers." Thus, even when they are not working, they "deserve" compensation . . . for their past record of hard work. This premise seems to be a dilution of the la bor theory of value into the popular notion that anyone exerting himself (regardless of how well he meets market needs) "deserves" to be compensated for his effort alone. The idea that it is not results, but mere efforts-or even mere good intentions-which merit some reward, is deeply ingrained in popular values. And it im plies that if "society" (the private market) fails to give a hard-working or well-meaning person his "due," then government ought to force "society" to make amends, through various in terventions.

One of those interventions, intended to allevi ate· the "undeserved suffering" of the unem ployed, is the unemployment compensation program. Since 1935, unemployment compen sation has provided jobless workers with incomes. Never mind that unemployment com pensation-in effect, a subsidy for idleness discourages workers from seeking new jobs. 6 The intentions of a government policy, as al ways, take precedence over its consequences. Thus, unemployment compensation pays work ers not to learn new skills, to seek new opportu nities, to move to better locations . . . to grow. At least unemployment compensation retains some connection to the original rationale for re distributionist programs: the unemployed are, presumably, helplessly dependent until they find new work. But thanks to the labor theory of value, the government offers aid not only to the helpless, but to those who are merely strug gling.

Consider the plight of the farmer. It is gov ernment intervention which has caused the chronic agricultural crises since the First World War. 7 Decades of price supports, protective tar iffs, government purchases of farm surpluses, subsidies for reducing production (paying farmers not to grow crops), "marketing or ders" to restrict supply, and low-interest loans have combined to produce an oversupply of farm products . . . and farmers. Beyond its economic benefits, an end to gov ernment intervention in agriculture would prompt thousands of uncompetitive farmers to abandon an anachronistic lifestyle, to learn new skills more appropriate to a modern economy, to become truly self-supporting and indepen dent. But in response to loud cries of anguish, the current Administration is continuing the same failed policies of the past. Those policies not only pay farmers not to grow certain crops; they pay farmers not to grow ... as self responsible individuals.

In fact, we are facing a mounting clamor for additional government programs to shield not only farmers, but fishermen, shoemakers, gar ment manufacturers, oil producers, and steel workers from foreign competition or disruptive market changes. Even people who usually op pose welfare schemes are campaigning for gov ernment aid to "save the family farmer" . . . loan guarantees for troubled auto manufacturers . . . tariff protection for struggling domestic steel and shoe producers . . . intervention to "revitalize" local communities dependent upon dying technologies and industries. In each of these cases, uncompetitive or ob solete professions are being salvaged from the economic scrap heaps by infusions of govern ment capital . . . capital drained from more competitive and productive sectors of the econ omy. And in each case, the alleged "victims" are demanding their "right" to be sustained, via compulsory taxation, in lines of work which consumers are unwilling to sustain voluntarily.

They are demanding, in effect, the right to be paid not to grow-the right to stagnate. 8 "Desirable" Causes Now, to the categories of the "needy" and the "deserving," has been added the category of the "desirable." Federal funds are available for every conceivable cause which sounds ap pealing, or even merely innocuous, to those holding the Federal purse strings. There is a wry joke making the rounds, which says, "If it moves, regulate it; if it stands still, tax it" -to which we may now add: "If it sounds good, subsidize it." Sounds good-to whom? Desirable-by PAYING PEOPLE NOT TO GROW 367 whose judgment? The free market rewards pro ducers to the extent that they offer goods and services which appeal to a large number of peo pie. If one wished to invent a mechanism for satisfying the broadest range of desires of the greatest number of people, one could not im prove upon the market system. At best, govern ment interventions on behalf of "desirable" en terprises would be superfluous: they would mirror those selections made by consumers, voting with their dollars.

But of course, that is not what advocates of Federal aid to "desirable" causes mean. They intend not to mirror the democratic selections of the people-but to override them. The only "desires" they intend to indulge and reward from the public treasury are their own. Unable to win public support in the marketplace, they mean to impose their values upon the public from the halls of Congress-or, at the very least, to compel the public to finance their self indulgence. This coercive elitism is most evident in gov ernment support of artists, through the National Endowment for the Arts. Those most likely to get government grants are those of high visi bility-those already successful or those who learn the corridors in Washington better than they learn their own profession. What does this mean in terms of personal growth? It means that many commercially unsuccess ful artists (whose work is frequently obscure, offensive, or of poor quality) are sustained in a profession for which they are unsuited-and are thus diverted from pursuing a more appropriate career. Commercially successful recipients, on the other hand, obtain funds they do not need, at the expense of those who do.

Meanwhile, art consumers, as taxpayers, have less to spend on the kind of art which up lifts them intellectually and spiritually. Instead, they are compelled to subsidize art they find personally unrewarding or even offensive. (The evil is compounded in the case of the National Endowment for the Humanities, where taxpay ers are forced to subsidize ideas which they may find repugnant or evil.) This means there is less money for artists whose work is moving and accessible to greater numbers of people. And thanks to redistributionism, it is not un368 THE FREEMAN • OCTOBER 1986 common that some struggling artists-too proud, independent, or politically unsophisti cated to obtain handouts-are forced to subsi dize their less scrupulous, more politically "connected" competitors. Government support of the arts pays artists not to grow. "Entitlements" Today, it is no longer helplessness . . . or need. . . or the belief that one is a "deserving"

person . . . or even "social desirability" that fuels the race for government assistance. As their tax burdens mount, as programs dispens ing assistance proliferate, as eligibility require ments evaporate, citizens are concluding that a life of self-responsibility is less and less reward ing. Mutual plunder has become the status quo. And, in such an atmosphere, taxpayers increas ingly feel entitled to the benefits of programs which they are required to support. The notion of "entitlements" is even broader than the idea of "deserving" government assis tance. "Deserving" implies that the recipient is ----;;:; being rewarded for an action, quality, or status that merits special treatment. There is at least a residual sense of justice involved. But the con cept of "entitlements" obliterates any pretext of a standard of eligibility: one is "entitled" to benefits simply because they are available. The ubiquitous phrase of our time is: "I paid into the system, so I'm going to get my share."

Not long ago, a book appeared by a man who runs a business to teach clients how to milk the Federal system for funds. Titled Getting Yours,9 the book represents the zenith of the "entitle ment" mentality. "If you want to build a house or a chicken coop, get a job, start a business, get a college degree, improve your neighbor hood, or even build a tennis court or a golf course, it is likely you can do it with funds from the federal government, " enthuses the author. "So don't believe all the headlines about budget cuts, because the federal government continues to give out more money than ever before. " Re assuring, isn't it? In an essay-review, 10 I outlined some exam ples taken from the book: "Your taxes helped the National Endowment for the Humanities give nine students $10,000 to walk 412 miles, following the exact route of the historic 'Underground Railroad.' Young scholars receive an average of $14,000 to work with Smithsonian specialists on such pathbreak ing projects as 'The 1940s in New York Radical Politics and Avant Garde Art' or the 'Socio-ecology of Venezuelan Red Howler Monkeys' . . . (or) . . . 'Feminism and Its Im pact on the Premises and Goals of Current Po litical Theory' . . .

"A Killington, Vermont, ski lodge, hurt by the 1974 fuel crisis, was saved by a $40,000 loan from the SBA while you waited in line for gas . . . The Agriculture Dept. poured seed money into Kinnen, Alabama, to help raise an unusual crop: tennis courts, a baseball dia mond, picnic ground.sand a playground. And (a famous ex-baseball star)-obviously among the nation's downtrodden-got a $100,000 loan guarantee from the SBA to buy a Dodge dealer ship ... "You also fund cutting-edge technology ... (T)he Dept. of Energy gave a Missouri genius $1,200 to design and build a solar-heated out house." Such is the dead-end of redistributionism. All the old justifications are gone; all that is left is a feeding frenzy at the public trough. It is common for some critics to view redistri butionism on strictly economic grounds-as inefficient, as wasteful of resources, as destruc tive of capital. But the real price of redistribu tionism cannot be conveyed in macroeconomic aggregates or impersonal market relationships.

The real tragedy of redistributionism lies in its stultifying impact on human development. Full Self-Responsibility Growth, development, maturation, self-actu alization: whatever one chooses to call it, it is the essence of life. In the final analysis, it means the exercise of full self-responsibility intellectually, morally, materially. The ancient Greeks put it more elegantly. The true end of human life, they said, was personal well-being, which they defined as "the exercise of vital powers, along lines of excellence, in a life af fording them scope." Redistributionism, in the guise of governPAYING PEOPLE NOT TO GROW 369 ment assistance, thwarts every element of hu man potential. It inhibits the exercise of vital powers, diverts them along inappropriate lines, shrinks their scope and scale. Of course, government assistance is always promoted on the grounds that it helps recipients to grow or develop in some manner. Critics of ten respond that if government assistance has this effect on a given recipient, it is only at the expense of someone else, whose personal growth must be sacrificed. And, as far as it goes, this criticism is true: government-fostered "growth" is inherently parasitical, even canni balistic. But that is not the worst of it.

The truth is that there are no winners under redistributionism-only losers. Everyone is di minished by the process of plunder-including the plunderer. Whatever the presumed benefi ciary gains in material advantages is more than offset by the price-in lost independence and moral self-responsibility, in lost incentives to achieve, in lost self-esteem. . . in a lost legacy of personal potential. Many observers have commented on the dis appearance of heroes from the modern world. Nothing is so characteristic of this century as the ever-shrinking stature of its leaders. There are probably many reasons why towering fig ures no longer cast their shadows across the land. Surely one of them is that a Procrustean force has been loosed upon the world-a force that punishes those who stand too conspicu ously, and rewards them for remaining bowed a force that pays people not to grow. 0 1. Charles Murray, Losing Ground (New York: Basic Books, 1984), pp. 154-166.

2. John W. Sommer, "Disasters Unlimited," The Freeman (April, 1986), pp. 135-36. 3. R. J. Bidinotto, "The Exploitation of the Virtuous," The Free man (September, 1968), p. 568. 4. J. Peter Grace, Burning Money (New York: Macmillan, 1984), pp. 107-8. 5. Ibid. See also William R. Kennedy and Robert W. Lee, A. Tax payer Survey of the Grace Commission Report (Ottawa, IL: Green Hill Publishers, 1984), pp. 79-80. 6. Hans F. Sennholz, "Unemployment Compensation," The Free man (May, 1986), pp. 188-89. 7. Dennis Bechara, "The Continuing Plight of Agriculture," The Freeman (May, 1986), pp. 178-85. 8. Frank W. Bubb, "The Right to Stagnate," The Freeman (April, 1986). 9. Matthew Lesko, Getting Yours-The Complete Guide to Gov ernment Money (New York: Viking Penguin, Inc., 1984). 10. R. J. Bidinotto, "Parasitism as a Profession," On Principle (April 29, 1985).