Trump Administration Seeks To Solve Economic Dysfunction by Slashing Public Welfare Funding: the Right Solution?
The Trump Administration’s first budget proposal reflects the partisan priorities of Republicans, which includes reduced taxes and social welfare spending as well as increased defense spending. For communities that rely on defense spending to fuel their local economies, the additional redistribution of tax dollars will help secure jobs and consumer spending. For communities that rely on non-defense government spending, including public assistance to support their unemployed and underpaid populations, Trump’s embrace of the Republican “scarcity mentality” translates into a loss of funding that helps maintain the citizens and businesses residing outside of America’s decreasing number of wealthy communities.
If the 3% growth rate predicted under the Trump budget proposal is achievable, economic growth alone would be enough to help reduce the cost of social welfare spending by decreasing the need. Instead of waging war on social welfare spending, the focus should be on underdeveloped areas. Economic development is the best way to address the needs of the American People and reduce dependency on government programs. One counterargument is public assistance offers greater benefits than low-wage work, which actually highlights a key economic issue: the widespread lack of income growth. Another is that public assistance trains people to be dysfunctional, which has some validity, yet actually supports the need for social welfare spending.
From bad habits to mental health issues, poverty results from both dysfunctional behavior and encourages dysfunctional behavior. Certainly, education can help people learn to be more functional, which is something schools and colleges often do, but emotional and psychological issues must be addressed as well. This is not to say the poor should be criticized to death for all of their quirks and offensive behaviors. After all, over-analyzing simply overwhelms an individual and makes them defensive. What the poor need is help identifying what critical issues are preventing them from achieving financial success and help addressing those issues.
Rising costs, growing levels of poverty, fewer well-paying jobs, increased competition on a globe scale, and scarcity in general mean there is an opportunity gap that prevents people in developed countries and underdeveloped countries from achieving healthy, sustainable lifestyles. There are, however, still opportunities available. A great deal of the problem is that most people do not have access to opportunities. Another part of the problem is that people, especially the poor, do not seize upon opportunities when they are presented with them. At times, there is a material reason, i.e. they do not have the finances to start a business or reliable transportation to get a job. Other times, it is due to personal dysfunction.
All people suffer from dysfunctions that prevent them from seizing opportunities. Dysfunctional people can be given opportunities and everything needed to succeed, but their dysfunctions will always stop them from pursuing those opportunities. Where the Middle Class and wealthy have sufficient incomes to either forgo opportunities they want to pursue or avoid the consequences of their dysfunctions, the dysfunctional nature of the poor prevents them from achieving financial success and a sustainable lifestyle. In order to help address poverty, as well as help others pursue their goals in life, these dysfunctions must be identified and addressed.
People will tend to make decisions that they perceive are in their best interests. When the poor make decisions, they are not simply selecting a rational course of action; they are making decisions within a limited number of choices due to the constraints of their incomes. If they enjoy a consistent, sustainable income capable of paying for all of their basic necessities, choices mean forging necessities for other necessities and wants. When they face disruptions in their incomes or unrealized expenses, such as emergency medical bills, car repairs, or spikes in utility bills, their limited budgets force them to intentionally neglect needs.
Face with a persistent shortage of income and other resources, the poor are forced to make decisions that favor low-cost, short-term options. This often means taking on higher long-term costs. In term of debt, they take on high-interest, long-term debt, which means they pay a lot more than what their purchases are worth. Payday loans and credit cards are two examples where the poor borrow money to make up for their limited incomes, yet create long-term debt they cannot easily pay off. For this reason, they tend to find themselves trapped in cycles of debt. If they do not embrace debt or do not have access to credit, they find themselves in cycles of neglect.
Eating inexpensive, nutrient-deficit junk foods, which leave people feeling full, is another way in which the poor exchange short-term food costs for long-term health costs. Ignoring a broken sink or leaky roof is also a way to avoid spending money, yet the inconvenience and structural damage is far more costly in the long-term. Although all people tend to make short-term decisions, the limited resources and opportunities of the poor prevent them from addressing the long-term costs they are accruing. Because their incomes rarely grow, and actually tend to shrink in relative terms, even minor short-term costs can become crippling long-term costs. Where the poor are trying to balance their constrained budget by forgoing expenses, they are actually taking on higher long-term costs that they cannot afford to repay.
Another way in which the poor avoid expenses in the short-term and cost themselves in the long-term is by risk-taking. It is necessary to take measured risks in order to succeed. It is tempting to conclude the poor are risk averse and avoid risk-taking whenever they do not seize upon an opportunity to improve their situation, i.e. apply for a job, ask for a raise, or open a small business. Considering the poorest of households “invest” nearly 10% of their incomes into the lottery, the poor consume high-cost, deadly tobacco as a cheap luxury, and the poor often go without healthcare, it is clear the poor are actually making high-risk, low-reward choices. They are not risk averse; the value of risk-taking for the poor is just distorted. Investing a hundred dollars into a stock, for example, is far more risky to the poor than the middle class, so they invest one dollar into the lottery, which just happens to be less likely to deliver a profit.
Furthermore, people are not just economic creatures. Those who act solely on their economic interest have a mental defect, i.e. they are sociopaths. As such, people will tend to make decisions that they perceive are in their best economic, emotional, and social interests. Like everyone else, the poor do not just make rational economic choices. Their decisions are also governed by their emotional responses and the responses of their social circles. Because the poor have failed to achieve their economic interests, they tend to compensate by pursuing their emotional and social interests. In other words, they learn to be motivated by social and emotional opportunities while, economic opportunities become demotivational.
All people avoid discomfort. Most learn to embrace lesser discomforts to avoid greater discomforts. Because the poor have experienced greater failure when it comes to financial decisions and they are unable to comfortably participate in high-cost activities, the poor learn to experience opportunities, which could help them increase their incomes or network with people who could offer them financial opportunities, as uncomfortable situations to be avoided. Poor, middle class, and wealthy individuals find things like paperwork and job interviews uncomfortable, or even frightening, but the avoidance of these things is particularly problematic for the poor.
Among the numerous dysfunctions that the impoverished share, their demotivated nature is probably the most detrimental. Because the poor work to simply survive, their attempts to improve their lives are generally met with a lack of reward while they tend to face continually worsening situations, thus they become discouraged, instead of encouraged, when opportunities arise. Between a combination of broken aspirations and the avoidance of discomfort, i.e. failure is the most likely prospect, the poor learn to feel discouraged by opportunity. It is, therefore, helpful to build viable financial opportunities that offer strong social and emotional benefits.
Furthermore, social welfare spending helps sustain the poor, but it is not enough to spark business and job creation. Although reforms to welfare can shift a social safety support net from a straightforward subsidy program to include, what a businessman might call, a “budget-enhancing” mission, social welfare spending is no substitute for economic development nor is it an adequate solution to the environmental and behavioral dysfunction that deeply entrenched poverty and excess reliance on government spending breeds.
Jobs exist, because employers have work that needs done and they have the money to pay workers. In turn, businesses exist, because consumers, with sufficient incomes, demand the services and products of those businesses. In an economically dysfunctional environment, adequate demand does not exist, demand is addressed by outside labor, i.e. outsourcing, imports, nationally sourced businesses etc, and/or the interests of the employees are not balanced with those of the employers, e.g. too low of wages. As poverty is often a geographical problem, the solution to addressing poverty and ending dependency on government support must revolve around fixing the growing number of economically suppressed regions.
Unfortunately, the economies of the world have been engineered to cater to global interests by creating a lower bidder economy where cost-cutting measures, including suppressed wages, tax cuts, etc, are prioritized. Instead of building national economies to serve the needs of the People first, then using the excesses of the local and national economies to participant in the national and global economies, economies are designed to enrich the few living in concentrated areas of the world. That said, simply cutting people off from social welfare programs will not make the need go away. Doing so will damage the economy by decreasing demand for basic goods and services of the business that do exist while driving people to crime.
Regrettably, those who push a nuclear option for social welfare spending also tend to support “market solutions” that erroneously assume incentivizing the poor to get jobs and increasing demand for jobs by cutting the safety net will somehow lead to job creation. Because job seekers are not job creators, the problems of the unemployed and impoverished employed cannot be solved by some “rationale choice” model that is used to justify punishing the poor and avoiding the problem. Poverty must be solved by fostering sufficient business and job creation.
Until dysfunctional environmental factors are addressed through better tax, trade, and economic policies, poverty will remain a persistent problem that only a minority can overcome by seeking education and moving to regions that are more prosperous. On the other hand, the dysfunctional behavior of individuals also contributes to poverty. The word choice, for example, is a powerful term, which can be grossly misleading and is not well understood by the advantaged, who often use it as an excuse to avoid their positional responsibilities as social leaders.
People of privileged backgrounds have the ability to make near instant and direct choices; whereas, the less affluent must correctly make a series of smaller choices to achieve the end result of the one choice that the more affluent individuals had the opportunity to make. Because choices cost in terms of resources, including money, time, missed opportunities, energy, and emotion, the disempowered can quickly become exhausted when dealing with seemingly minor barriers. In other words, the poor are essentially set up to fail by their circumstances and the effect those circumstances have had on them, thus they will most likely fail.
In many respects, poverty is a phenomenon of modern civilization. Before bartering, markets, and economies, people were hunter, gatherers and/or farmers. If they could not sustain themselves through their own efforts, they died. People came together to form civilizations to protect themselves from the brutality of nature. With around 7.5 billion people competing for the limited resources of planet Earth, few can thrive, or even survive, as hunter, gatherers and/or farmers. Most people must be able to participant in either formal or informal economies.
Instead of facing death when their crops fail, participation in a formal or informal economy means individuals are protected. As such, poverty can be defined as the inability to financially access the formal economy on a regular basis to provide for one’s needs. Social welfare programs, which feed, house, and cloth the improvised, ensure people without jobs or businesses can participant in the economy. The lifestyles of the dependent poor can be sustainable, but they struggle to improve their living conditions and achieve some degree of financial independence.
Living in sustained state of poverty, the impoverished rely on incomes from businesses, employers, and/or governments, which allow them to maintain their living conditions, yet do not help them overcome their impoverished state. As economies grow and prices increase, fixed-incomes are strained, thus the inability of the poor to increase, or adequately increase, their incomes means their incomes are strained. Because financial needs tend to increase, those who cannot increase their incomes find their incomes stressed to the point they struggle to provide for their basic necessities. From there, the impoverish fall into a state of distress where they face the prospects of destitution.
The nearly 600,000 or so homeless in the United State are examples of destitute individuals, but there are also destitute people who have some form of housing. What the destitute lack is any ability to regularly access utilities, such as sanitation, water, heating, electricity, modes of communication, transportation, etc. This matters, because the destitute do not have regular access to basic necessities nor the ability to access a regular source of income, i.e. a viable job, which would allow them to rebuild a sustainable standard of living. The 11 million residents of Brazil’s so-called favelas, for example, are essentially living makeshift housing, which means they cannot access the formal economy. They must rely on government support, day-labor, scavenging, criminal activity, and/or go without.
Moreover, poverty can be more adequately addressed by tackling the environmental and personal issues that prevent people from achieving financial success. It is, however, important to remember poverty is the result of many factors; therefore, dealing with the issue of poverty requires solutions that address all factors that come into play. It is most important to recognize when a solution is applicable to an individual’s situation and when it is not. The wrong diagnosis will never lead to the right cure. Meanwhile, the right solutions must be applied correctly or they will fail as well. Finally, governments need to be smarter in how they address poverty and social welfare spending in order to actually address poverty.
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