Thomas Sowell has a great piece this morning on how government handouts change behavior.
He starts with a few examples of how we behave differently if there are no consequences for our actions. The government has pretty much alleviated the costs of making bad choices in so many realms of life.
It’s a must-read column:
Although “moral hazard” is an insurance term, it applies to other government policies besides insurance. International studies show that people in countries with more generous and long-lasting unemployment compensation spend less time looking for jobs. In the United States, where unemployment compensation is less generous than in Western Europe, unemployed Americans spend more hours looking for work than do unemployed Europeans in countries with more generous unemployment compensation.
People change their behavior in other ways when the government pays with the taxpayer money. After welfare became more readily available in the 1960s, unwed motherhood skyrocketed. The country is still paying the price for that – and the money is the least of it. Children raised by single mothers on welfare have far higher rates of crime, welfare, and other social pathology.
San Francisco has been one of the most generous cities in the country when it comes to subsidizing the homeless. Should we be surprised that homelessness is a big problem in San Francisco?
My hope is that things have finally gotten so bad, with a rotten economy, high unemployment, and a housing bust, that we are finally ready to rethink many of the no-fault policies that brought us to this pass.