Lessons for Welfare Reformers; L. W. Reed

Moreover, reformers are right to call for a revival ofprivate social welfare initiatives. When private individuals resolve to help the needy, recipients get something different from a government welfare check and the demoralizing dependency that comes with it. They get the one-on-one mentoring, spir itual guidance, character training, or other forms of personal attention so necessary to tum most troubled lives around. Ridding ourselves of the harmful pathologies spawned by the welfare state means trusting once again to people to help people from the goodness of their caring hearts. Getting to a situation of privatized welfare is not going to be easy or riskless. "Society owes me a living" is a hardened sentiment in many comers of America, requiring a fundamental change in thinking and behav ior. New private organizations are needed to help clean up the mess that government welfare programs have created, but many overtaxed Americans feel they have already given all they can afford.

In the national discussion about ending Lawrence W. Reed, economist and author, is president of The Mackinac Center for Public Policy, a free market research and educational organization headquartered in Midland, Michi gan. government welfare, one danger looms large but isn't getting the attention it deserves the danger that private groups may them selves become "welfare recipients" at the expense of their freedom and effectiveness. Some reformers are actually calling for lo cal, state, and federal governments to "end" welfare by directly subsidizing or contracting with private groups. Some charities are already on the dole and the experience teaches important lessons for today's debate. The United Cerebral Palsy Association gets 80 percent of its fundingfrom the federal government. Sixty five percent of the budget of Catholic Char ities is appropriated in Congress. Not sur prisingly, these groups lobby for the status quo, spend money more wastefully than if they raised it themselves, and are buffeted by the winds of political pressure.

Kimberly Dennis, executive director of the Philanthropy Roundtable, makes this point when she says, "Government support changes charities' incentives, giving them reasons to keep caseloads up instead of getting them down by turning people's lives around. It distorts their missions. It turns lean, cost-effective organizations into bloated bureaucracies and dilutes their spir itual or religious message." Those charities that become dependent upon government, says Dennis, "no longer represent a way out of welfare." (See "Why Charities Can't Replace Government," USA Today, March 5, 1996.) Two cases from Detroit dramatize the 434 danger of dependence upon government funding. One involves the work of Cass Community United Methodist Church and the other involves the nation's best known charity, the Salvation Army. Cass Community serves one of the most blighted neighborhoods in the country, full of drug addicts, prostitutes, thieves, and homeless drifters. The church runs emer gency food and clothing distribution pro grams, a senior center, a homeless shelter, a medical clinic, and programs for the dis abled. But because it receives a large amount of funding from government agen cies, it spends a tidy sum on bureaucratic functions.

For instance, the church is compelled to keep the public money in 14 separate check books. Each program that receives public funds has a different reporting schedule with a myriad of forms to fill out. "We are subjected to a total of 40 audits each year, ' , says the frustrated pastor. For its noble efforts to house the home less, the Salvation Army recently was re warded with a new gaggleof guidelines from the Detroit city council. The council felt it had the authority in part because the Army is collecting $10 per shelter resident per day from the taxpayers of Michigan. Among other things, the city now requires that • all .staffers at the shelters be trained in resident complaint and grievance proce dures and the special needs of the homeless; • ages of the homeless must be ascer tained, with special requirements for mi nors, including the requirement that home less shelter staff ensure that all school-age minor residents are enrolled in, and have the opportunity to attend school. Operators of homeless shelters must also' 'make every effort" to provide minor residents with rec reational activities.

435 • all meal menus must be approved by a dietitian registered with the American Die tetic Association. For any violation of these rules, the or dinance prescribes fines of up to $500 and up to 90 days in jail. According to the Army's Len Krugel, some shelters in the city have already closed because they couldn't afford the added expense, which means that some homeless people are now spending nights in abandoned and unheated buildings instead of on warm beds. "All these requirements cost money, and our budget is $10 a day per person," says Krugel. The lesson here? You take the money, you take your chances. Under founder William Booth in the last century, and for most of this century as well, the Salvation Army was concerned with giving aid solely to present a spiritual mes sage to the urban poor. Its funding was entirely private. Can the organization's founding purpose and core mission continue untainted as public funds are, figuratively speaking, tossed into those red kettles?

Kimberly Dennis reports that nationally 15 percent of the Salvation Army's revenues now come from government sources. Should it be a surprise, then, that in those areas where the Army uses public funds, it no longer requires church attendance as a condition of its assistance? For many of those the programs are supposed to help, this means mission compromised, not ac complished. True welfare reform would make wards of the state of neither individuals nor charita ble organizations. In the drive to rid society of destructive government programs, let us not be blind to the painful lessons that dependence upon government has already taught us. D THEFREEMAN IDEASON UBERTY A SpeculatorTalks About Free Markets by Victor Niederhoffer F rench Finance Minister Michel Sapin recalled that during the French Revolu tion, speculators were beheaded. He spoke approvingly, since he blamed his govern ment's recent financial troubles on specula tors.