In case you haven’t heard, Obamacare sort of rolls out today. In particular, this is the day when you can first register for health insurance within the public exchanges set up by the Affordable Care Act. Basically, this is the day ‘we all lose our freedoms’ – a sentiment that is in no way hyperbolic and disconnected from reality. (Speaking of which.)
Which reminds me: by a show of hands, how many people remember the “keep your government hands off my Medicare” signs from a few years ago? At the time, those of us who supported healthcare reform mostly either laughed or cried – seriously, how up hill do you think the climb is when people decry and champion single-payer healthcare on the same poster? But lately, those posters have been coming back to bug me. For such a poorly reasoned argument, it seemed to resonate with a lot of people.
Why was that?
The answer, I think I’ve finally figured out, is that it tugs on a very tightly wound American string: the line that divides the deserving poor from the undeserving poor. If you pay much attention to the political conversation, then you know a lot of Americans are disinclined towards social welfare spending. But you also know that a lot of these same Americans are really fond of a lot of government expenditures that they don’t think of as social welfare but that are functionally equivalent: the mortgage interest deduction, the tax exclusion for employer paid health insurance, and so on.
These are a lot of the same people who think government run healthcare is bad for other people, but somehow really good for them. Ask them what the difference is, and they’ll gladly tell you: they’ve earned their healthcare. They’ve paid into the system, and now they’re entitled to their pay out. They’re the deserving – and if they’re also past retirement age, this sort of government spending might very well be exactly what’s keeping them out of poverty.
The undeserving poor, on the other hand, are lazy and unmotivated. These are the sort of individuals who are highly liable to moral hazard – the distortion of behavior that happens when you protect people from the consequences of their actions. Why would they work if they’re going to get healthcare anyway, or if they’re going to get access to food stamps, or unemployment benefits? If the undeserving poor don’t have enough, let them get a job. If they don’t have health insurance and they get sick, then let them die.
Rick Santorum put this idea into a pithy 3-step formula for staying out of poverty: graduate from high school, work hard, and wait until you’re married to have kids. (This is pretty good personal advice, but it’s not clear it’s such great social policy. As it turns out, it’s hard to “work hard” if you don’t have a job.)
To be clear, I’m not disputing that moral hazard is a real thing. If you doubt it, then just take a look at what happened to our banking sector when people knew they could reap the benefits of risky investments without having to bear a proportional amount of the risk. The problem isn’t with being worried about incentives or with distinguishing between good and bad behavior – in fact, those concerns are exactly what makes public policy so difficult. The problem is in setting the demarcation between the deserving and the undeserving based on a fiction – a fiction that erases the full range of the human experience and leaves in its place a child’s view of a world divided between the good and the ugly.
This is ethics and politics as morality play and it’s a dangerous game.
What do I mean? Simply this: if you don’t believe that people who make reasonable decisions can still end up battling poverty, then you’re not very likely to want to see your taxes go to help them out. Most decent people are willing to help out in a pinch, but no one wants to see their hard work pay for someone else’s largesse.
(Granted, a lot of the political conversation has become a tad-bit more nuanced than it was in the days of the ‘Welfare Queen’ – at least now it sounds more like the poor are caricatured as asocial rational actors. More akin to the likes of Wall Street bankers than petulant children – I suppose that’s improvement.)
Here’s an exercise: take your monthly budget and then cut it in half. Then do this again, and then again until you hit the federal poverty level for a family of your size. Then ask yourself, “if I made the local minimum wage, would I make enough to stay out of poverty?” Now look at your imaginary budget and think about putting money aside for college, retirement, health insurance, or a family crisis.
Remember, this assumes you have a full-time job at the minimum wage. If you can work a full time job and still live in poverty, it might be time to think long and hard about how we think personal choices and character divide the poor from the middle-class in America.
The only way you can reasonably imagine that the reality of poverty and social welfare spending is primarily about a lack of work ethic and poor incentives is if you don’t actually know too many poor people. (Or, interestingly enough, if you only know poor people – then you can tell yourself that the better off really are systematically making fewer mistakes, rather than being systematically better buffered against economic risks.)
None of this settles anything about how much to spend on social welfare – and the critique that the safety net needs to be constructed to minimize moral hazard is well taken. So, by all means, fight about Obamacare until the cows come home. But you do have to ask yourself, what does it say about a politician when they rail against food stamps but don’t seem to have a problem with giving wealthy people a tax break to subsidize their purchase of a second home?
One more thing about the deserving/undeserving view of the world: it’s morally untenable when you try to account for the fact that children exist. You cannot at the same time believe that everyone should be fully exposed to the economic consequences of their actions, that parents should be able to fully leverage their wealth for the benefit of their children, and that all people in a society should have the same opportunity to succeed. Being a grownup means recognizing that something somewhere has to give.
Follow Pedro on Twitter @IamPedroA.
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