August 7 2012

The Assault on Earned Success: Policies Speak Louder than Words

Charlotte Hays

First, President Obama delivered the “You didn’t build that” speech in Roanoke. In a speech shortly afterwards, he tried to snatch back the Roanoke words, telling a National  Urban League gathering in New Orleans this:

America says we will give you opportunity, but you've got to earn your success.

Arthur Brooks of the American Enterprise Institute says that the sentiments in the two talks are “inconsistent.” To find the real President Obama, Brooks looks at the actions of his administration.

From the stimulus to Dodd-Frank’s new regulations, Brooks writes in today's Wall Street Journal, the administration has placed barriers to success in business, increasingly stacking the deck against those who would be entrepreneurs. Brooks writes:

And proposed tax increases on "millionaires and billionaires" who allegedly don't pay their "fair share" (though the top 1% of earners already pay 38.7% of all federal income taxes, according to the Congressional Budget Office) seem like more of a punishment for earned success than an incentive to achieve it.

But President Obama’s real attack on the ideal of earned success isn’t at the top end of the economic spectrum: it is at a lower end of the spectrum, directed squarely at those who need the work ethic if they are to improve their lots in life. This attack comes in the form of the president's unilaterally weakening of work requirements for welfare recipients. Since 1996, the law has required that states have at least half their welfare recipients in qualified “work activities.” On July 12, President Obama changed this with an executive order.

Brooks writes:

The 1996 law was arguably the most successful policy change to help low-income Americans in the past 60 years. Welfare policies of the 1960s led generations of families to languish on the government dole at subsistence levels, never gaining the skills to work and with little hope to rise. It took more than a decade to get Congress to reverse course. But it was worth the effort.

According to the U.S. government, welfare reform helped to move 4.7 million Americans from welfare dependency to self-sufficiency within three years of enactment. The overall federal welfare caseload declined by 54% between 1996 and 2004.

Even more important, there is evidence that it improved the lives of those who moved off welfare. In the Berkeley Electronic Journal of Economic Analysis and Policy (2011), Santa Clara University's John Ifcher showed, using data from the General Social Survey, that single mothers—despite lost leisure time and increased stress from finding child care and performing household duties while working—were significantly happier about their lives in the eight years after reforms led them into the workforce.

The central insight from welfare reform is that people flourish when they earn their success, and this requires real market work. They escape poverty—and they live dignified, better-ordered lives. They don't just move out of welfare; they move up from dependence on the government.

When it comes to earned success, the administration's actions—from business regulation to taxation, and now welfare—speak louder than the president's words.

We are becoming a nation of dependent people, but, given the attack on success at the upper end of the spectrum, we someday won’t have high earners on whom to depend. But, of course, is it the moral attack on the notion of earned success that makes these destructive government policies acceptable to so many.  

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