You don’t have to be a Democrat to fret about the uninsured in America. You don’t have to be a think-tank specialist to come up with better alternatives. You don’t have to be an angry populist to feel that the system of litigation, which forces doctors to take out expensive insurance against lawsuits, and pass the costs on to their patients, needs reform. But reform should be approached within the spirit of the U.S. Constitution: that is, with the citizen, rather than the government, taking charge, and respecting the jurisdiction of the fifty states.
Instead, in March 2010, the United States opted for a federal role in directing health care. Not, that is, a federal role in paying for those who would otherwise be unable to afford treatment, but a state-administered system. True, the government option initially will sit alongside private schemes. But this is how state health care began in Canada. After a while, ministers found that, having assumed responsibility for the system, they were more or less obliged to keep expanding it at the expense of the private sector. Within a few years, the Canadian health-care system was close to being a state monopoly, with private insurance almost squeezed out. The United States is not Canada, of course, and the system adopted by the Obama administration is not the same as either the British or Canadian model. But the principle has now been established that there will be government-run provision—not simply as a safety net for the poor, but as a direct competitor to private alternatives. The system will be funded out of general taxation, with practitioners answering to state officials. I really hope you’ve thought this through, my friends. Because, believe me, there is no going back.
DON’T EUROPEANIZE WELFARE
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The expansion of the state doesn’t just reduce economic growth. More damagingly, it tends to squeeze out personal morality. As taxes rise, charitable donations fall. As social workers become responsible for vulnerable citizens, their neighbors no longer look out for them.
Euro-sophists believe that there is something intrinsically immoral about the American system because it fails the destitute. This failure is inferred from the relatively low benefit entitlements received by poor Americans, and from the conditionality of welfare payments. It is a stock phrase of virtually every European politician, regardless of party, that “a society is judged by how it treats the worst off.” Plainly, then, there must be something selfish—and possibly also racist—about a people who keep voting for a system that treats the most needy so pitilessly.
It rarely occurs to the critics that there might be better ways to measure the efficacy of a welfare state than by the size of its budget. Indeed, in a truly successful social security system, budgets ought to fall over time as former recipients are lifted into better and more productive lives.
This, of course, was the original rationale for welfare. But it has been almost entirely forgotten in Europe, where dependency has become structural. Benefits that were intended to have a one-time, transformative effect have instead become permanent, as recipients arrange their affairs around qualifying for subventions. Millions have become trapped in the squalor of disincentives and low expectations. In Britain, which is by no means as badly off as many EU members, the annual welfare budget, including the lump sum payments that, as in the United States, are called “tax credits,” comes to more than $200 billion a year. Yet this huge contribution has little impact on either poverty or inequality.
It’s the same story elsewhere in Europe: Paying people to be poor has created more and more poor people.
The United States is different, and different for reasons that, again, can be traced back to the DNA encoded at Philadelphia.
In 1996, President Clinton signed into law a reform package that had been proposed by the Republicans in Congress. It stands as the only meaningful overhaul of social security anywhere in the world, succeeding on every measurable indicator. Poverty, unemployment, and welfare budgets fell sharply, while satisfaction among former benefits claimants soared.
It is true that the 1996 act was passed at a time of strong economic growth; but this alone does not explain the almost miraculous shift from dependency to gainful work. The number of families on welfare fell from 5 million to 2 million, and 1.6 million children were taken out of poverty. And, perhaps most impressive, the reforms lifted groups who had been untouched by every previous welfare initiative: Poverty among black children fell from 42 to 33 percent; among single mothers from 50 to 42 percent.
So what was the magical formula? What wand did President Clinton wave to conjure so extraordinary a transformation? Essentially, he devolved responsibility. The 1996 Personal Responsibility and Work Opportunity Act shifted social security from the federal government to the states, and gave local authorities incentives to reduce their caseloads. Offered the freedom to experiment, the states seized it with gusto. Some incentivized employers to take on the workless; others organized schemes themselves; most made the receipt of benefits conditional on taking up job offers. Best practice quickly spread, as states copied what worked elsewhere.
At the same time, no state could afford to carry on as before, signing checks with a minimum of questions asked. Doing so would, as legislators well understood, make such a state a magnet for every bum in America. There was, in short, a measure of healthy competition.
It cannot be stressed too strongly that, without U.S. federalism, the 1996 reforms couldn’t have happened. The Gingrich Republicans were able to draw on successful examples from around the country. The policy was made bottom-up rather than top-down.
Prior to the 1996 welfare reform act, a handful of states had developed pilot projects, to which congressional Republicans could point. When critics of the legislation, led by Senator Ted Kennedy, warned that if states were granted greater autonomy, they would cut benefits and services in order to drive the impoverished across the state lines, Republicans were able to reply with one word: “Wisconsin.”
Wisconsin had seen its welfare caseloads drop by almost 70 percent between 1987 and 1997, while caseloads in the rest of the country rose steeply. By 2004 almost 67 percent of Wisconsin welfare recipients were working. Wisconsin did not deport the unemployed; it spent 45 percent more per family and found them jobs, self-respect, and a sense of personal empowerment. Wisconsin, in other words, was a living, thriving refutation of those who opposed the devolution program.
Under the Wisconsin regime, claimants were individually evaluated to measure their employability. In each category, they were held accountable for their performance; if they failed to complete their required activities, they were sanctioned. For example, if they failed to show up for work, they faced financial penalties. Appeal processes were put into place to prevent abuse of the system by either recipients or caseworkers. Rather than balking at this raised level of responsibility and accountability, a large number of recipients liked the system, reporting increased self-esteem and hopefulness for the future—to the undisguised incredulity of the European journalists who were periodically dispatched to the lake-ringed state to describe its supposedly Dickensian conditions.
Once all states were allowed to develop their own approaches, some naturally went further. Perhaps the most successful was Florida, which did not merely tweak the former system, but introduced an entirely new social contract for the poor. While the Florida reform reflected major American trends in welfare reform (including time limits on benefits and work requirements), its major contribution to welfare policy was its emphasis on local control and local accountability.
Florida legislators understood that what worked in one part of the state would not necessarily work in another. Special consideration needed to be given to each community’s particular needs. Policies designed to help those in tourism-based Miami wouldn’t work for those living in small agricultural towns like Immokalee.
Accordingly, Florida created twenty-four regional boards to develop and execute welfare services in their local regions. Floridians had applied the logic of the 1996 act, and taken the federal vision of the frame
rs to its logical conclusion. If the devolution of social security to states worked, they reasoned, its further devolution to sub-units would work better. They were right.
The advantages of localism in welfare are easily listed.
First, large bureaucracies create unintended consequences. Where states and counties can tailor their policies to suit local needs, a uniform system that covers 300 million people is bound to contain loopholes, tempting into dependency some who were never envisaged as claimants.
Second, proximity facilitates discernment. Person A may be a deserving widow who has been unlucky, while person B is a layabout. Local caseworkers may see this clearly. But if the universal rules handed down from Washington place the two applicants in the same category, they must be treated identically.
Third, pluralism spreads best practice. The freedom to innovate means that states can come up with ideas that Washington never would have dreamed of.
Fourth, non-state agents—churches, charities, businesses—are likelier to involve themselves in local projects than in national schemes, and such organizations are far better at taking people out of poverty than are government agencies.
Fifth, localism transforms attitudes. In Europe, many see benefit fraud as cheating “the system” rather than cheating their neighbors. People would take a very different attitude toward, say, the neighbor whom they knew to be claiming incapacity benefit while working as an electrician if they felt the impact in their local tax bill.
Finally, and perhaps most important, localism under-girds the notion of responsibility: our responsibility to support ourselves if we can, and our responsibility to those around us—not an abstract category of “the underprivileged,” but visible neighbors—who, for whatever reason, cannot support themselves. No longer is obligation discharged when we have paid our taxes. Localism, in short, makes us better citizens.
Which is why it is such a pity to see that the 1996 legislation has now been eclipsed. In all the fuss about the stimulus package of February 2009, its most damaging provisions were barely reported. Under the guise of contingency, Washington has casually reassumed control of welfare spending. The reforms are over. America is drifting back to dependency.
DON’T EUROPEANIZE SOCIETY
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Europeans and Americans approach social policy from different perspectives. In Europe, government action is considered morally preferable to individual benevolence. The former allows poor people to claim an entitlement that is theirs by right. The latter demeans them by obliging them to take charity.
The United States, until very recently at any rate, has remained faithful to what I identified in chapter 1 as the Miltonian vision of liberty: the belief that virtue cannot be coerced. Thus, choosing to make a donation is meritorious, whereas having your contribution forcibly taken from you through taxation and spent on your behalf robs you of the opportunity to have acted morally.
The European conception, of course, can easily descend into equating decency with high taxes. It can also make the related mistake of assuming that the level of welfare payments is the measure of a society’s collective humanity.
Both assumptions are flawed. I hope I don’t need to persuade readers that private philanthropy is generally more efficient than taxation, as well as morally preferable. Equally, though, the poor suffer from the assumption that what they need is larger handouts.
Poverty is not simply an absence of wealth. It is bound up with a series of other factors: family breakdown, substance abuse, poor educational qualifications, low expectations. It follows that you do not address the problem of poverty by giving money to the poor. To take an extreme example, giving $1,000 to a drug addict is not, in the long term, going to make him better off. Poverty is best solved holistically, by tackling its contributory conditions.
Sadly, in Europe, the poor generally have been left to the left, with consequences that, while inconvenient to the taxpayer, are disastrous for the destitute. Second-and third-generation welfare claimants are growing up without any connection to the world of work. For, just as governments were bad at building cars or installing telephones, just as they made a poor job of operating airlines or administering hospitals, so they have made a terrible mess of the relief of poverty.
In assuming monopolistic responsibility for social policy, European states have balefully redefined how their citizens relate to one another. It wasn’t so long ago that any adult, seeing a child out of school during term, would stop him and say, “Why aren’t you in class?” Now this is seen as the state’s duty. It wasn’t so long ago that we all kept an eye out for elderly neighbors, and looked to see that they were still collecting their milk bottles each morning. Now this, too, is seen as the government’s responsibility. When unusually heavy snow carpeted Europe at the end of 2009, people complained because the authorities were slow to clear their driveways and pavements. Their grandparents simply would have taken out their shovels.
The most damaging aspect of Euro-statism is neither its deleterious economic effects nor its inefficiency, but its impact on the private sphere. As the state has expanded, society has dwindled. Government officials—outreach workers, disability awareness counselors, diversity advisers, inspectors, regulators, licensors, clerks—have extended their jurisdiction. But they have done so at the expense of traditional authority figures: parents, school principals, clergymen.
The state has assumed control over functions that were once discharged within families: health, education, day care, provision for the elderly. So it is perhaps no surprise that the family itself, in Europe, is in decline.
I don’t simply mean that the nuclear family has been replaced by a broader diversity of combinations. I mean that there are fewer and fewer babies. The current population of the continent, including European Russia, is around 720 million. According to a UN forecast, that figure will have fallen to 600 million by 2050. Germany’s population will fall by 20 million, Russia’s by 30 million-a far greater loss than was suffered as a consequence of the Nazi invasion and consequent deportations. The EU’s own statistical office, Eurostat, tells a similar story. Within the next fifty years, it expects Germany’s population to fall by 14 percent, Poland’s by 18—figures that include net immigration.
Total Fertility Rate, 2008
Albania 2.20
Austria 1.41
Belgium 1.82
Bulgaria 1.48
Czech Republic 1.50
Denmark 1.89
Estonia 1.66
Finland 1.85
Germany 1.37
Greece 1.45
Hungary 1.35
Italy 1.41
Latvia 1.45
Lithuania 1.47
Luxembourg 1.61
Malta 1.43
Netherlands 1.77
Poland 1.23
Portugal 1.37
Romania 1.35
Slovakia 1.33
Slovenia 1.46
Spain 1.46
Sweden 1.91
United Kingdom 1.94
United States 2.05
Sources: Eurostat and U.S. Census data
Albania is the only European country with what demographers call replacement level fertility: 2.1 or more live births per woman. In every other European state, the population will decline except to the extent that it is offset by immigration. This is not, unlike most forecasts, based on an extrapolation of current trends. The fall in births has already happened: It’s a fact. All that remains to us is to decide how to deal with its consequences.
We can also, of course, speculate about its causes. Perhaps the babies are missing because of the spread of contraception and the legalization of abortion. Perhaps the decline has to do with lifestyle changes and the fact that women are settling down at a later age. Perhaps it is simply a function of choice, or of a fashion for smaller units.
The one thing we can say definitively is this: The problem is not nearly so severe in the United States. The number of live births per American woman is almost
exactly what demographers estimate to be the rate at which a population will remain stable: 2.1. In Europe, the figure is 1.5.
Can we connect these figures to politics? I think so. What Europeans most disdain in America, especially Red State America, is cultural conservatism. Even those who have little truck with anti-Americanism feel more or less obliged to sneer at America’s Christian Right. But I can’t help noticing that values voters seem to be keeping up their numbers. Just as the United States is outbreeding Europe, so the Republicans are outbreeding the Democrats. Mega-churches may offend European taste, but they have plenty of children in their Sunday schools.
The higher rates of church attendance in the United States are arguably themselves a product of small government. The United States was founded on the basis that there would be no state church; instead, there would be friendly competition among congregations. In most of Europe, by contrast, there is either a single state church or a number of approved religious bodies, often in receipt of state funds. In other words, religion in the United States has been privatized: There is a free market of denominations. And privatization, as we know, tends to raise standards across the board. With no state support, American churches compete for worshippers, and worshippers compete to raise their ministers’ salaries. At the same time, people tend to be more loyal to what they have chosen than to what they have been allocated.
European countries retain the outward forms of religion. Monarchs mark the key events of their reigns with religious services and bishops participate at state functions, but the cathedrals are empty.
It is perhaps no coincidence that European Muslims, who are less secularized than their neighbors, have commensurately higher birthrates. Albania, which, as I say, is the only European state sustaining its population through natural fecundity, is also the only Muslim state in Europe. I traveled often in Turkey (2.5 live births per woman) when my own children were babies. I discovered that it is quite normal there for passing strangers, of both sexes, to lift toddlers out of their strollers and hold them aloft, declaring delightedly: “Thanks be to God!” I don’t want to construct an elaborate theory of demographics on one heartwarming Turkish custom, but might there be a link between birthrates and collective optimism?
The New Road to Serfdom Page 8