On the Damaging Side Effects of the Welfare System: How, Why and What to Do
The welfare system, the system of entitlements and mandates aimed at protecting citizens from poverty, occupies a distinctive place in political economy. Most of the programs are relatively new as economic institutions go, the earlies ones having taken form only a century ago, and they have spread like wildfire, far ahead of economists’ capacity to understand the range of their costs alongside their benefits. As I see it, however, recent advances in theoretical understanding offer a warning that many welfare programs, in their present design and scale at any rate, are doing serious damage to western economies. At the same time these advances point to a reform in the tax financing of welfare programs and to further initiatives toward increased wages and employment that would serve to control the damage.
KeywordsWelfare System Median Voter Unemployment Insurance Welfare Program Private Insurer
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