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December 11 2012

Why So Many Safety-Net Programs Go Bad

Charlotte Hays

The American Enterprise Institute’s Charles Murray has become the latest to comment on Nicholas Kristof’s column last week in which the prominent New York Times scribe had an interesting epiphany: safety-net programs sometimes harm the very people they were ostensibly designed to help.

Kristof’s column, which has already been noted on Inkwell, began memorably:

This is what poverty sometimes looks like in America: parents here in Appalachian hill country pulling their children out of literacy classes. Moms and dads fear that if kids learn to read, they are less likely to qualify for a monthly check for having an intellectual disability.

Many people in hillside mobile homes here are poor and desperate, and a $698 monthly check per child from the Supplemental Security Income program goes a long way — and those checks continue until the child turns 18.

“The kids get taken out of the program because the parents are going to lose the check,” said Billie Oaks, who runs a literacy program here in Breathitt County, a poor part of Kentucky. “It’s heartbreaking.”

Murray praises Kristof for being willing to write a column that acknowledges a problem others who share the columnist’s liberal political views might refuse to see. Murray goes on to ask: Why do such government programs backfire?

Murray draws on Losing Ground, his 1994 book on welfare programs, to answer the question. Interestingly, the processes by which these programs backfire are not random. Murray sets up three laws. Here are the first two:

The Law of Imperfect Selection. Any objective rule that defines eligibility for a social transfer program will irrationally exclude some persons.

This law accounts for the reason that programs like Food Stamps and the Supplemental Security Income program constantly expand. Whenever the people who administer the programs run into a case of a genuinely needy person who has been excluded under a current rule, they tend to redefine the rule or otherwise alter the program’s administration to be more inclusive, which in turn brings more people who don’t need the social transfer under its umbrella.

The Law of Unintended Rewards. Any social transfer increases the net value of being in the condition that prompted the transfer.

Kristof referenced the increased net value of being illiterate because of the “intellectual disability” payment of $698 per month that leads parents to withdraw their children from literacy classes. But the same thing is true of every payment of any kind that requires people to demonstrate that they have a problem before they qualify for the payment. It is not a defect in program design. It is inescapable whenever you give rewards for having a problem.

The third law is perhaps the most alarming. Murray calls it The Law of Net Harm. According to this law, the less likely it is that behavior will change the more likely it is that the program will do harm.  Murray suggests a thought experiment: people are paid to quit smoking, but they don’t actually stop unless the rewards are significant. If the reward is large enough, people will take up smoking in order to be paid to quit. So people are likely to take up bad habits so that government programs will—theoretically—pay them to quit. But they don’t quit and we keep paying them.

As long as we’re in a Charles Murray mode, I’d like to recall that in his more recent book Coming Apart Murray argues that society must adopt a more judgmental attitude towards those who engage in bad habits (such as having children out of wedlock). So I am giving a Charles Murray Award to this University of Texas professor

Independent Women’s Forum’s mission is to improve the lives of Americans by increasing the number of women who value free markets and personal liberty. Sister organization of Independent Women’s Voice.
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