Out Of Control Entitlement Spending Will Bankrupt America – Beyond That, Studies Show That “Found Money” Makes People Less Happy – Well Being Is Increased By Personal Efforts Resulting In Earned Income

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By Paolo von Schirach

December 20, 2012

WASHINGTON – Broadly speaking everyone should acknowledge that spending priorities in a democracy are a reflection of beliefs and values. Therefore we should all be able to agree that America, just like many other advanced industrial states, has come to embrace an entitlement culture. This is to say that our value system today accepts the idea that some categories of citizens, (the elderly, the poor, some minorities, and what not), “deserve” to receive something from the Government that will help them overcome their hardships.

Entitlement spending is contentious

That said, if this is indeed so, any debate on this transformation involving values and spending can become very contentious, if not poisonous. We all remember that when Mitt Romney made the point that about half the country will vote for the Democrats no matter what, because the Democrats will guarantee current and future benefit, this assertion caused an uproar. Romney’s comments appeared insensitive. Essentially he said that too many Americans are “takers”, people who demand something for nothing, etc. Politically this was a disaster. No way to get the votes of the “takers”, on the promise that President Romney would cut their benefits.

But even if we assumed that deserving people are getting benefits, then there is the issue of affordability. The trend affecting all major industrial democracies is one of larger deficits and higher debt due to increased social spending, in part due to the fact that the elderly (they get most of the benefits) have become a larger segment of the total population.

“Found money” is in fact bad for you

That said, there is an additional, if more complex, perspective. Some would argue that receiving something for nothing, especially if this is on a semi-permanent basis, is bad for the psyche of the recipients. Arthur Brooks, the president of the American Enterprise Institute, a Washington conservative think tank, argues in a WSJ op-ed piece, (America’s Dangerous Powerball Economy, December 20, 2012), that in general people are much happier when their earnings are a direct result of their own efforts. “Found money”, be it from a lottery win or from welfare does not reinforce individual well being and any sense of self worth. Brooks argues that the issue before us is not just about the affordability of entitlement spending; but its psychological consequences.

“It is a simple fact that the United States is becoming an entitlement state. The problem with this is not just that it is bankrupting the country. It is that the entitlement state is impoverishing the lives of the growing millions dependent on unearned resources”.

Bad even if affordable

The argument is clear. Even if we could afford all this public spending on subsidies and benefits, this largess has a negative impact on our society. People accustomed to getting “stuff” may be better off economically, but they are neither happier nor more self-confident. Subsidies kill the entrepreneurial spirit of self-reliance at the foundation of so many American success stories.

Good old days of self-reliance?

The essence of the argument is that money is of course essential for all Americans; but how you get it is apparently even more important than how much you get. Brooks indicates in his essay that we may have a golden opportunity to rethink and recalibrate social spending in America so that it is both affordable and properly targeted. Very true. But the politics of all this are toxic.

Those who favor benefits will claim that they all go to deserving people and that those who want cuts are cruel and heartless. This is a politically savvy way to avoid a serious debate on the fact that growing entitlement spending created a welfare mentality that has gradually transformed America –and not in a good way.

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