Tuesday, November 29, 2011

Thinking about Welfare States

The provision of welfare or charity by government is an issue that generates a lot of passion. When there are poor or suffering people about we should do what we can to help. On the other hand are the suffering victims of bad luck or irresponsible? We don’t want to people to become a drag on the industrious and get something they don’t deserve. Then is it ethical to be charitable using other people’s money? In other words is it right for government to provide welfare, and if so how much more or less than now?

The provision of social security is very popular across the board, with the majority of people supporting higher social security spending. Only 1 in 15 or so think the USA should spend less. On the other hand the provision of welfare by the state is unpopular. Just under half want to see less spent on it and only 1 in 5 want to see more welfare. People who give to charity or volunteer for charity work are slightly less likely to be in favor of increased government welfare spending. Conservatives are very slightly more likely to give to, and volunteer for, charity than liberals and liberals to be in favor of a government role.

Are there good reasons to favor the conservative or liberal approach? Let’s look at what the Smart Vote has to say about it. Consider the graph below. It shows the Smart Vote over time for higher, lower or unchanged spending on welfare. Unfortunately it looks quite a mess, as if the Smart Vote can’t make up its mind. For the most part the Smart Vote is for government spending on welfare to remain steady. However I looked carefully at the general drift of the Smart Vote over time and it seems that intelligent opinion moves toward less spending on welfare when economic conditions get worse and toward higher spending as economic conditions improve.

In other words intelligent opinion on welfare spending is that it should be tailored to the means of government rather than the needs of welfare recipients.

To check if the pattern is due to bias or real thinking I ran a regression. This was complicated by the Smart Vote being the mid-point option so a linear regression would be useless. Instead I compared More versus Same spending, and Same versus Less spending, separately in two logistic regressions. IQ does show an independent trend toward holding welfare spending steady, even when controlling for various demographics and traits that reflect different interests. White conservatives (and to some extent the older and wealthier) tend to lean toward a reduction in welfare spending and away from an increase in welfare spending.

The Smart Vote is decidedly against wealth or income redistribution and against the view that government has any responsibility to provide for the needs of citizens in general or for the poor in particular – even after controlling for possible sources of bias (see the regression results below.) However after controlling for bias IQ does not relate to the actual amount government spends on aiding poor children. White conservatives remain anti welfare on every question. Being wealthier or older (probably a generation thing) also predisposes people against state welfare responsibilities or spending.

In general it seems that an unbiased intelligent view is that it isn’t government’s responsibility to provide for the needs or welfare of its citizens, even if they are poor. The Smart Vote is also very clearly against the government redistributing income or wealth. It is however not necessarily for less spending on welfare by government. In fact the Smart Vote appears to be for maintenance of current levels of welfare spending with minor drifts toward more or less welfare spending as economy rises or falls.

In summary the Smart Vote doesn’t think welfare is really a state responsibility but is not opposed to some welfare spending so long as the country can afford it.

What about social security? The Smart Vote trends are very much clearer here. In the graph below the Stupid Vote is consistently for higher social security spending. The Smart Vote for less social security spending starts off extremely high. It then declines steadily, falling below the Smart Vote for Unchanged Spending in recent years. In other words, the intelligent choice was decisively for the very unpopular act of reducing social security spending (and to avoid increasing it) but for some reason that policy became steadily less wise over time. Current wisdom is to keep social security spending steady.

The regression analysis below shows that the potential interest factors do not account for the Smart Vote on Social Security – the role of intelligence remains strong.

I don’t know why the Smart Vote changed its mind on lowering social security spending. There is no change in the stupidity of increasing social security spending so presumably there are good reasons for keeping costs within bounds e.g. the long term viability of social security. Maybe the fund was under pressure but has since become sounder, making the downsides of poorer old people less justifiable? Perhaps the fund didn’t need to spend as much before the baby boomers hit retirement age so it was wise to save more, but now it has more people to spend on and less room to save?

The Smart Vote favors less retirement spending by government outside of social security. The table below however shows that the Smart Vote is marginal when controls are added, and so may be the result of bias.

Notice that the Smart Vote on welfare and social security spending has been sort of in the direction of prudent politically conservative preferences. It’s wise for the government not to get carried away by the needs of the poor and elderly, and lose sight of the country’s ability to pay for welfare and social security. It also appears stupid for government to think of a social safety net as one of its core responsibilities. Such a safety net is more of a ‘nice to have’ when the country can afford it.

On previous posts the Smart Vote came out on the side of liberal preferences. The Smart Vote is in fact not for global political liberalism or conservatism per se. There appears to be wisdom and stupidity on both sides of the political divide.

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