Wednesday, December 15, 2010

Review - Stealing from Each Other: How the Welfare State Robs Americans of Money and Spirit by Edgar K. Browning

Short review: An economist assembles an impressive array of facts to demonstrate the true cost of the welfare state, and the negative impact it has on some that it purports to help.

When the government
Tries to make us  all equal
We steal from ourselves

Full review: It is accepted wisdom that the publicly funded social support network in the United States is weak and ineffective. It is also accepted wisdom that the American welfare state is drastically underfunded. In Stealing from Each Other: How the Welfare State Robs Americans of Money and Spirit, Edgar Browning challenges this accepted wisdom in the most effective manner possible: by examining the facts. After extensive analysis, Browning concludes that the U.S. welfare state is neither weak, nor ineffective, nor underfunded. However, he persuasively argues that as currently constituted it serves as a substantial and unnecessary drag on the national economy and in many cases serves to harm the poorest among us while functioning as a massive wealth transfer to the middle-class.

While many critics of the social safety net are primarily driven by ideology, basing their conclusions on appeals to emotion. Browning is an economist, and his method of argumentation is rooted in this background. Browning relies upon census data, the results of academic studies, and other public information to make his points. He sets about evaluating the true cost of the U.S. welfare system, identifying what he considers to be the true measure of economic inequality, and evaluating the effect of the various wealth transfer programs implemented in the United States. The conclusions he draws from this data are somewhat depressing. If Browning's analysis is correct, the GDP of the United States is depressed by about twenty-five percent as a result of these programs. One might quibble with his analysis, but Browning lays his data out in a step by step fashion, so if there is a bias in his analysis, it would be readily apparent to the reader.

Of course, one could argue that even if the U.S. welfare state is a drag on the economy, it is valuable and necessary to reduce social inequality and provide for the neediest denizens of the country. This is the opposing position that Browning identifies in the book, calling those who adhere to this principle "egalitarians" (the one failing of the book is that Browning spends too much of his text railing against egalitarians, when he is much more persuasive when he simply demonstrates the paucity of the arguments that underpin the egalitarian position). Browning points out that some inequality is justified, and at the same time points out that once a number of relevant factors are accounted for, many of the alarming inequalities highlighted in lurid media articles turn out to be little more than a set of illusions. But Browning also does an able job of demonstrating that the current system has already substantially eliminated true poverty (as defined by the Federal Government) even though the official data obscures this fact by leaving out substantial wealth transfers when evaluating poverty, and that much of the wealth transfers in the U.S. are actually not to the poor, but rather to middle-class households.

Browning's two most effective arguments center around two of the most pervasive social programs in the United States: the social security system and affirmative action. Browning makes the case that social security as currently constituted is probably irretrievably broken, comparing it (accurately) to a Ponzi Scheme. This is not a particularly new observation, nor is it unique - as he notes, members of Congress have known that the Social Security system was in impending financial trouble since the 1980s. Still, Browning ably lays out exactly why the venerable Social Security system is not merely a financial disaster in the future, but how it serves as an anchor weighing down both contributors and beneficiaries right now. However, it is on the subject of affirmative action in the education system that Browning makes the most damning case. While diversity at our universities might be a laudable goal, the statistics that have resulted from the system indicate that it serves minority students quite poorly. Put simply, by effectively lowering admissions standards to accept larger numbers of minority students, admissions officers at elite institutions create a cascading effect that results in minority students frequently being mismatched with education institutions that are more academically rigorous than those students are prepared for. This practice sets those students up for failure, and the numbers bear this out. Minority students drop out of college much more frequently, are very disproportionately represented at the bottom of the class rankings, and for minority students who attend and graduate from law school they fail to pass the bar at a much higher frequency than for comparable white students. In effect, the goal of creating diversity results in academic frustration and failure for students, harming those the program is intended to help.

Even though some may find the data presented in this book uncomfortable, as it challenges a collection of accepted truths about our society and our government. While one can always argue about the analysis, it is difficult to close one's eyes to the data that is assembled in this book, and that data paints a picture that is wildly at odds with the picture presented in our media and our political campaigns. Even those who are not persuaded by Browning's analysis, and who reject his suggestions for how our welfare system could be overhauled to alleviate the negative effects he believes result from the current system will find this book thought-provoking. For anyone interested in how the welfare state functions, how it affects us, and how it might possibly be improved, this book is a must read.

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