Big-Government Welfare Crowds Out Beneficial Social Behavior

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American Institute for Economic Research

 

Many of the most important and serious conservative intellectuals today seem to have concluded that criticizing national government welfare policy spending is no longer worth the cost of being considered miserly, uncharitable, and even immoral. But what if that social policy is not only economically wasteful but is actually the major cause of suppressing productive employment, community social order, and stable family life in the US?

Reflecting upon why charitable volunteering had declined so dramatically in recent years, a large rescue mission’s executive director mused: “When your elderly next-door neighbor has a cupboard full of government-subsidized food, you are certainly less likely to volunteer preparing him a meal.” When a single mother receives welfare benefits that exceed $12 per hour, she is less likely to show up at a dress-for-job interview session, “and so are the volunteers who run it.” He concluded: “America is not losing compassion. It is just being crowded out.”

In his 1988 classic In Pursuit of Happiness, political scientist Charles Murray had explained social “crowding out” in more academic terms. Citing America’s iconic early foreign observer Alexis de Tocqueville, he noted that America had long been known for relying on volunteers and communities rather than government to promote social welfare. Subsequent Census data showed that the richer the United States became, the greater the proportion of its wealth that was devoted to philanthropy. “Then, suddenly,” Murray noted, “sometime during 1964–65, in the middle of an economic boom, this consistent trend was reversed.”

Murray identified a “causal relationship” in explaining that decline as resulting from the mass increase in national government spending under Lyndon Johnson’s “Great Society” welfare programs. With generous benefits to the needy, why would the average taxpayer not say, “I pay my taxes and the government uses it for welfare so why should I contribute to charity?” That “government spending crowds out private philanthropy,” he argued, “has been demonstrated in a number of technical analyses,” which he cited and explained. Ronald Reagan (and later Bill Clinton) work requirements did provide some mitigation of the crowding out effects. But relatively unrestricted welfare crowding out exploded again under George W. Bush, Barack Obama, Donald Trump, and Joe Biden.