The Right Opinion

Battling a Bailout Culture

Fostering subservience results in dependency

By Edwin J. Feulner · Nov. 27, 2012

Some Americans believe in the founding principle that individuals are responsible for their own well-being and will voluntarily aid those in need. Others believe that people should be required to take care of their fellow citizens.

This latter group aims to use the power of the state to enforce its belief.

Thus, one group believes in personal responsibility and private charity. The other imposes “charity,” with the threat of prison behind it, on the productive sector of the economy through taxation and the redistribution of wealth.

This second approach constitutes a threat to liberty, to be sure, but there's another problem. Giving someone something for nothing on a regular basis ends up hurting the very person it was meant to help.

Once someone loses the habit of fending for himself, it becomes difficult for him to reacquire it. He can easily become dependent on the state for the rest of his life.

What's true for individuals is also true for corporations. Once they start looking to the government for bailouts, they, too, lose their ability to compete in the free market and become wards of Washington. The threats to our liberty, economy and future from this bailout culture can hardly be overstated.

Moral hazard occurs when decision-makers are insulated from the consequences of their decisions. People behave differently when they are not held responsible for their actions. These morally hazardous actions can impose huge costs on the people involved, to be sure, but also on the rest of us.

A large-scale example of this occurs in our welfare system. Starting in the 1960s, the federal government declared a war on poverty. Instead of functioning as a safety net, a temporary helping hand to those in need, it wound up creating negative incentives.

Instead of encouraging the growth of healthy families, the welfare system broke up families. Mothers could receive larger payments from Uncle Sam if they remained single than if they married the father of their child.

Over time, many fatherless children entered the world. The welfare checks showed up month after month, regardless of how the mothers and fathers spent their days.

This situation continued for three, even four generations, until 1996, when a Republican Congress passed historic welfare reform legislation over President Clinton's veto – twice. Participants in the new Temporary Assistance for Needy Families were required to perform at least 20-30 hours per week of work or job-preparation activities in exchange for the cash benefit.

The result? Overnight, welfare agencies became job-placement offices. People who had been trapped in dependence began seeking employment. Between 1996 and 2009, caseloads dropped from 4.5 million families to 1.7 million. Employment for single mothers also increased dramatically.

There's still much work to be done – and thanks to the Obama administration, the number of federal welfare programs with work requirements is down to two – but it was an important step in the right direction.

By the same token, conservatives oppose corporate bailouts. Companies should be allowed to fail. If government agrees to the special pleading of corporate lobbyists and ensures corporations against irresponsible behavior, it only encourages more irresponsible corporate behavior – and more corporate bailouts.

We need to return to some very old, very basic truths. Welfare programs should create no sense of entitlement to an endless stream of handouts. Business laws and regulations should cause no expectation of future bailouts. Otherwise, the soaring costs will eventually ruin us, both morally and financially.

A “something for nothing” approach begets a culture of subservience and dependence and undermines self-reliance, self-discipline and self-respect – traditional virtues that have always been vital components of the American spirit.

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9 Comments

Carol in SC said:

Exactly right!!! Especially the last paragraph! Not only are these entitlement "handouts" - which should be considered "temporary helping hands" - unsustainable, but there is rampant fraud throughout all of them, no matter what the liberals will try to say. These programs are just too large now to effectively audit the recipients. The government could create a lot of jobs if it would hire more auditors for them - and I'd bet the auditors would also pay for themselves within months with the money recovered from fraudulent claims. Of course, then the President would lose his "base constituents", so that will never happen...

Tuesday, November 27, 2012 at 8:42 AM

wjm in Colorado said:

What the entitlement state leads to is total dependence on government, slavery to the state, and a colapse of the system. This is what America voted for in the last election as the takers outnumber the makers, and massive voter fraud by the Marxists. It is by design to colapse the system, with the end result government by the elites over the masses. It is the Marxist statits agenda. FORWARD. Shared Misery for all.

Tuesday, November 27, 2012 at 9:40 AM

Billy in IL said:

Two sentences JUMPED out to me. "Once someone loses the habit of fending for himself, it becomes difficult for him to reacquire it. He can easily become dependent on the state for the rest of his life. What's true for individuals is also true for corporations." I immediately thought about USPS, Amtrack, as well as the STL Metro system (which I suspect is the same in other cities with a metro service) - these 'corporations' have been feeding at the tax payers table so long, they have no idea how to turn a profit, they have no concern to the impact of the contracts with their unions on their bottom line since the tax payers make up the difference. It is time to give all these corporations a requirement to work for their survival.

Tuesday, November 27, 2012 at 11:39 AM

Robinius in Broomfield, Colorado replied:

Billy in Illinois, the USPS is not a privately owned corporation - it is an entity required by the Constitution of the United States of America and it is required to deliver mail at low cost to any and every address in the country. It is unlike UPS or Fed EX who don't deliver letters everywhere and who can charge whatever they like. Congress constantly tries to micromanage the USPS, meddling in management, telling management what it may or may not do to cut expenses. Amtrak is a creation of the United States government - the members of its Board of Directors are appointed by the President and are subject to confirmation by the U.S. Senate. STL Metro is funded by tax dollars - unlike a corporation in the traditional sense. You need some better examples.

Tuesday, November 27, 2012 at 1:12 PM

Wayne in Hinesville, GA replied:

The biggest problem with the USPS in not only the government interfering its also the Postal union with their inflated hourly wages.

Tuesday, November 27, 2012 at 8:31 PM

MNIce in Minnesota replied:

"You need some better examples." On the contrary, they are perfect demonstrations of why it is a bad idea to let the government fund or control everything.

Some things are just too important to leave in the hands of government, such as our personal welfare.

Tuesday, November 27, 2012 at 10:12 PM

RLS in Oklahoma said:

Dennis Prager posted a commentary on the same date as this one by Edwin Feulner. Mr Prager said, "Democratic presidential nominees went from 25 percent of the Cuban-American vote in 2000, to 29 percent in 2004, to 35 percent in 2008 to 48 percent on 2012. We obviously have a dramatic trend here. Now, why would that be? There are two reasons: No experience of evil and American education."

Mr Prager correctly identifies the reason for patterns of change in United States political perspectives over generations. We are fat, happy, and at peace and few of the current generation has any knowledge of how this happened for our country. I am at a loss about how to change the course of government controlled schools molding our society's beliefs about the relationship of government and the individual. I home schooled my children and wish everyone could. It's easier than people think if you set your priority on your children. The government DOES NOT have the FUNDAMENTAL RIGHT to the education and upbringing of your children - you do! But, if your children are educated by the government, you are not likely to gain their agreement on such issues. They are taught over and over again, "Think not what your government can do for you, think what you can do for your government". "Government for the people"? I no longer see that.

Tuesday, November 27, 2012 at 1:37 PM

Stephen in NH said:

At least Putin understands the error of their ways...

http://english.pravda.ru/opinion/columnists/19-11-2012/122849-obama_soviet_mistake-0/

Tuesday, November 27, 2012 at 2:41 PM

Tod the tool guy in brooklyn ny said:

Downsizing TO DO list for patriots: Eliminate housing/realty, autos, student loans, H.C., toilets, light bulbs, chimneys, fossil fuels, lunchboxes, and fatty/salty foods from govmint. Transfer these entities back to the private sector-where wealth/prosperity come from. Thankyou Heritage Foundation President -Edwin.

Wednesday, November 28, 2012 at 5:42 PM