(L45) The Welfare State

1.) What is the primary problem facing a policymaker who is trying to design a program to benefit people in unfortunate circumstances?

The biggest issue in creating a welfare-benefits program is the fact that it needs to be created in such a way that it is good enough to help people, but not so good that people never give up the help to support themselves (without welfare). This entails creating a target group; however people just outside of the guidelines of this target group are more likely to worsen their own situations, to place themselves within the guidelines in order to receive assistance. This means greater numbers of people are taking out, and less are paying in. Welfare benefits also create incentive for people within the guidelines (say, unemployed people) to stay within the guidelines, because rather than bettering their situations through work, they are handed a better situation. Even for those who originally have intentions of using welfare just to get them back on their feet again become comfortable in the situation they have been gifted. Overall, the rules of the program have encouraged those within the guidelines to stay there, and those outside of the guidelines, to get between them.

2.) In practice, what have been some of the outcomes — intended or unintended — of anti-poverty programs?

Throughout the growth of the welfare state, many disturbing side effects have been revealed. The largest of these realities being the fact that the welfare state does not actually decrease poverty! From 1967 to 1994, welfare spending quadrupled; poverty levels however, remained the same. It has also been discovered that poor people without government assistance are two and a half times more likely to escape poverty than those who are on welfare. It’s effects on family life have been absolutely devastating as well, and it has been linked to extremely high divorce rates. Children who come from families receiving government assistance typically have an IQ 20% lower than the average child coming from a non-welfare funded family. Welfare also has proven to impair young men’s earning abilities, cause behavioral and emotional issues in children three times greater than that of those without government assistance, and double the chances of a criminal future. Tax payer’s hard earned money is being drained into a system promoting broken families and lives of despair, all the while being framed as the greater good; is this something that you really want to be supporting?

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My Summer Reading List 2015 (L175)

Create a reading list (equivalent to that of roughly 8 books) for this coming summer. The books you choose should focus on either business, personal finance, and/or economics.
Each of the books I have chosen were picked from the suggested reading lists in this weeks lessons. I also left the majority of the other book suggestions (which I did not choose) at the bottom of the page.

The first book I picked (at almost 200 pages) is called Why Didn’t They Teach Me This in School? 99 Personal Money Management Principles to Live By, by Carey Siegel. I chose this book first because it covers a broad range of principles at a few pages a piece; I think it will be an impacting way to begin my summer reading.
The second book I picked is called What Has Government Done To Our Money, and like many other books on the suggestion list, it was written by Murray Rothbard. Being a short book, it doesn’t fail to cover crucial topics in understanding the gold standard, the history of money, and the barter system.
The third book I picked to read this summer was written by Bob Murphy, and while being officially titled The Great Depression and The New Deal, it is also known as the “Politically Incorrect Guide to The Great Depression”.
The fourth book I chose is How Capitalism Saved America, by Tom DiLorenzo; I am rusty in my economic history and this will hopefully be a good book to help me brush up.
The fifth book I’ve chosen is The Cause of The Economic Crisis, by Ludwig von Mises (who also appears on the suggestion list quite a few times).
The sixth book I’ve chosen is called Economic Policy: Thoughts for Today and Tomorrow, by Ludwig von Mises.
The seventh book I chose is called Trade Offs, by Harold Winter. It covers the economic “trade offs” between safety/quality, and expense.
The eighth (but not the last) book I’ve chosen to add to my reading list this summer is The Road To Serfdom, by F.A. Hayek.

Other Books On The Suggestion List Included:

  • Applied Economics by Thomas Sowell
  • A Beginners Guide to Investing: How to Grow Your Money The Smart and Easy Way by Frey, Frey and Byte (100 P)
  • Common Sense Economics by Gwartney, Stroup, Lee, and Ferrarini
  • Personal Finance for Dummies by Eric Tyson
  • America’s Great Depression by Murray Rothbard
  • The Money Book for the Young, Fabulous, and Broke by Suze Orman (400 P)
  • Economics in One Lesson by Henry Hazlitt