Lane Kentwory and the Failure of Generous Welfare States
Kenworthy’s argument is mainly that overly generous welfare programs present a number of conflicting situations that contribute to the rise of absolute poverty within a nation. One of the keys to his argument is that while the post tax-post transfer rates of overly generous welfare programs results in lowering the nation’s production. So while the income of those considered below a nation’s relative poverty line may in fact rise, this process may actually increase the number of people experiencing absolute poverty because other nations are producing more money, thereby making the over generous welfare programming nations relatively less wealthy. Kenworthy goes on to say that the lower production and lower incomes of nations where the welfare program is very generous is a result of several things. One of those factors being that people with upper class incomes may have less incentive to work because of they will be making less money anyway due to high taxes. If people begin to work less, people also have less to spend, and thus the demand for certain things drops, and thus the demand for labor to make these things drops; which means the drop in incentive, causes a drop in work, which causes a drop in demand, ultimately resulting in a lower gross national product. A drop in work can also come from those in the lower tax bracket, because people in generous welfare states may have less incentive to work because they know they can make just as much money or more by living off of welfare benefits.
Among his other arguments that defend the point that generous welfare states ultimately increase absolute poverty, is that because of the natural inclination to work less in such states, generous welfare systems ultimately go through a cycle where they can no longer afford to be generous. If people in generous welfare states have less incentive work, Kenworthy would say that ultimately they will work less, take more sick days of which some are compensated by the generous government, and ultimately they would have a lower income. When the people in the higher tax brackets start to make less, there is less money to hand out to the poverty stricken. Such a cycle does not even really increase equality within the society because people’s earnings are at best still relatively the same due to the fact taxes are based on a percentage, and at worst, inequality grows in a graduated tax system because people are making less and then therefore do not have give as big a percentage of their money to the government. Although the generous welfare systems may achieve equalization of classes in the beginning, it is clear that it does not work in the long run when taking reciprocity of it into account.
To touch more on Kenworthy’s example of labor issues contributing to the failure of generous welfare systems, one thing he does not quite dive into is the issue of where the labor is coming from. The source of labor is very important in determining a number of things, namely; wages, hours and expectations of workers. In the there is a huge influx of immigrants coming into the nation, and more so than just about anywhere else. The influence that immigrants have on the economy is that they are often willing to work for lower wages, more hours due to their low wages, and expect to live lesser lives than the average American (because of education, skills, or customs), all because they come here for the prospect of social mobility (which I will address later). And when immigrants who transfer to the arrive, their absolute poverty level rises from their previous status with the acquisition of a job because of the higher cost of living. And while that may benefit the immigrant, the overall poverty status of the nation rises because certain groups desire to settle for poverty wages.
The endless pursuit of money is another possible issue that could explain poverty rates in different countries. This idea, or way of making money, is a strong capitalistic principle that may exist more in some countries than others. Citizens of the are working more than 6 more weeks than the average Swedes citizen each year. So factors such as this would contribute something more to the discussion of poverty rates, because the hours people work are the determinants of the people’s income. One reason that people may work more hours is because they are working at poverty wages, and thus need more hours in order to be able to end up spending all but some of it on the necessities of life. And people who have to spend a bigger percentage of their earned income are more inclined to invest in getting an education because of the desire to not have to overwork themselves, especially if the idea of the endless pursuit of money is a part of their society. Thus working under poverty wages may inspire poverty rates to drop. Working under poverty wages, and not attempting to give people welfare to make up for the gap between them and the non-poverty stricken members of society, also keeps the poor from driving up the wages to the point where businesses cannot afford to pay the poverty-stricken.
Social mobility is a huge reason for immigrants traveling to the to start new lives. Social mobility allows people to move up out of poverty. As said before, people who spend a large percentage of their income out of necessity will aspire to move up in social rank through education or the acquirement of skill in hopes that it will lead to a better life. That simple and natural occurrence is also referred to as the American dream. If it is possible for some one under the absolute poverty line to come to , learn a trade, skill, or gain an education, and then manifest that into a well-paying career of some sort, than many people will try to do that. But in a country where that is less possible, it is also less likely that people will even try to move up the social ladder. In countries where social mobility is more flexible, the poverty rate can drop with out too much generosity from the welfare system. While in countries where the social mobility is a lot less flexible, it takes more incentive from the government to inspire people to rise out of destitution. This suggest that a generous welfare system alone cannot keep poverty rates on the rise for sustained period of time, and that social mobility is more important to the rise of people in their particular country.
Kenworthy’s point that too much generosity from a welfare system cannot sustain a long run of continued success is very well presented. While countries like the seem to believe that equality is less important than national production, nations like are more inclined to give more money to the poor than to have the success of the nation raise them out of poverty. But it is the national success and production that allows for more income, more spending, more demand, and therefore more demand for labor. It is through that labor that people raise from poverty in a socially mobile society; while welfare can only guarantee that the gap between the rich and poor is shrunken after a substantial amount of time. For if the nation’s gross product shrinks, then their absolute poverty level will rise even if their relative poverty level is on the decline just because the government is taken the money from the rich who would invest and do more with it, and giving it the poor who would spend a large percentage of it on bare necessities.
