When Work Is Punished: The Tragedy Of America's Welfare State

Tyler Durden's picture

Exactly two years ago, some of the more politically biased progressive media outlets (who are quite adept at creating and taking down their own strawmen arguments, if not quite as adept at using an abacus, let alone a calculator) took offense at our article "In Entitlement America, The Head Of A Household Of Four Making Minimum Wage Has More Disposable Income Than A Family Making $60,000 A Year." In it we merely explained what has become the painful reality in America: for increasingly more it is now more lucrative - in the form of actual disposable income - to sit, do nothing, and collect various welfare entitlements, than to work. This is graphically, and very painfully confirmed, in the below chart from Gary Alexander, Secretary of Public Welfare, Commonwealth of Pennsylvania (a state best known for its broke capital Harrisburg). As quantitied, and explained by Alexander, "the single mom is better off earnings gross income of $29,000 with $57,327 in net income & benefits than to earn gross income of $69,000 with net income and benefits of $57,045."

We realize that this is a painful topic in a country in which the issue of welfare benefits, and cutting (or not) the spending side of the fiscal cliff, have become the two most sensitive social topics. Alas, none of that changes the matrix of incentives for most Americans who find themselves in a comparable situation: either being on the left side of minimum US wage, and relying on benefits, or move to the right side at far greater personal investment of work, and energy, and... have the same disposable income at the end of the day.

Naturally, the topic of wealth redistribution is paramount one now that America is entering the terminal phase of its out of control spending, and whose response to hike taxes in a globalized, easily fungible world, will merely force more of the uber-wealthy to find offshore tax jurisdictions, avoid US taxation altogether, and thus result to even lower budget revenues for the US. It explains why the cluelessly incompetent but supposedly impartial Congressional Budget Office just released a key paper titled "Share of Returns Filed by Low- and Moderate-Income Workers, by Marginal Tax Rate, Under 2012 Law" which carries a chart of disposable income by net income comparable to the one above.

But perhaps the scariest chart in the entire presentation is the following summarizing the unsustainable welfare burden on current taxpayers:

  • For every 1.65 employed persons in the private sector, 1 person receives welfare assistance
  • For every 1.25 employed persons in the private sector, 1 person receives welfare assistance or works for the government.

The punchline: 110 million privately employed workers; 88 million welfare recipients and government workers and rising rapidly.

And since nothing has changed in the past two years, and in fact the situation has gotten progressively (pardon the pun) worse, here is our conclusion on this topic from two years ago:

We have been writing for over a year, how the very top of America's social order steals from the middle class each and every day. Now we finally know that the very bottom of the entitlement food chain also makes out like a bandit compared to that idiot American who actually works and pays their taxes. One can only also hope that in addition to seeing their disposable income be eaten away by a kleptocratic entitlement state, that the disappearing middle class is also selling off its weaponry. Because if it isn't, and if it finally decides it has had enough, the outcome will not be surprising at all: it will be the same old that has occurred in virtually every revolution in the history of the world to date.

But for now, just stick head in sand, and pretend all is good. Self-deception is now the only thing left for the entire insolvent entitlement-addicted world.

* * *

Full must read presentation: "Welfare's Failure and the Solution"


Some other thoughts on this topic: DOES IT PAY, AT THE MARGIN, TO WORK AND SAVE?

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blunderdog's picture

A psychological phenomenon, not unlike hysterical blindness.  There's a lot of hostility here towards the idea that big gummit money giveaways to rich guys are a bad thing.

Obviously, SMALL money giveaways to the poor (and especially poor MINORITIES) are a bad thing, but if it's trillions to protect banker bonuses and failing defense-contractors, it's rationalized as "free market capitalism."

LawsofPhysics's picture

In other words, cognative dissonance.  Many people rail against this fascist kleptocracy, then after careful reflection and examining the facts realize that they are in fact dependent on that government largresse.  See Tom's comment below.  America is in fact now more socialist/communist then Russia was pre-collapse.  The outcome will be no different.

I remain long black markets and anything that The Fed cannot devalue or steal.

blunderdog's picture

The empire will certainly end when the checks stop flowing, but it will be VERY different than the collapse of the Soviet Union. 

Americans have a romantic fascination with dying in a blaze of glory. 

Eastern Europe hasn't has much in common culturally with "the West" since the Catholic/Orthodox schism.


Aurora Ex Machina's picture

The major difference is that Soviet Citizens knew their system was corrupt, broken and had at its heart a fear-driven paranoid core.


America? Not so much. Imagine the affront that will occur when the (invisible) hand is revealed.


(They also had a fully-formed grey economy, but now I'm stealing other people's ideas; Orlov's 5 stages and all)

Cathartes Aura's picture

I got yer cognitive dissonance:

voting to enForce childbearing, and simultaneously voting to remove any assistance the precious baybee might need to survive.

right, Right Team?

it's all about the precious baybee BEFORE birth. . . or wait, is it about control and punishment??

hmm. . .

and if you want to argue abstinence, make the story fit the sperm donor, who is absolutely ignored in the equation.

Henry Hub's picture

***if you want to argue abstinence, make the story fit the sperm donor***


Wait a minute. Are you challenging my right to ride bareback. How dare you!

Cathartes Aura's picture

I reckon you could ride bareback through your neighbourhood/town, and few here would do more than cheer your rights and riding skills.

BlackholeDivestment's picture

Trying to escape the image of the woman and the man risen in the mirror cannot be done by aborting yourself, but you will die trying. LMAO. Yeah, the new CNBC fiscal cliff dive motto ''Rise Above'', LMAO, they forgot to put ''Made In China'' next to those lofty words. How many people ''labored'' so they could buy that Black Friday lie with their own earning? LMAO. Hmmm, earnings in the black hole, wonder what that looks like? Maybe as dark as the womb where the little chinese girl was aborted?


Almost Solvent's picture

Also, some on this board take a shoot the messenger approach for posters that have pissed them off in the past.


nantucket's picture

because wars aren't paid for with cash on hand; and the fact that defense of the nation is a constitutionally defined legitimate function of the federal govt, while redistribtuion of wealth is not.  that's the something.


i don't support bailouts.

LawsofPhysics's picture

Where the fuck is America geographically asshole?  Now where exactly are the majority of our forces stationed again?

Don't bring that weak ass shit around here and talk about the constitution.  Where in the fucking constution does it say America must be the world's fucking police?  You weak little pussy, I'll take care of my security just fine you dumb fuck.

viahj's picture

he didn't say that they supported the wars, you're just being your typical asshole self.

CaptainObvious's picture

LawsofPhysics is absolutely correct in this.  The USSA has over 900 foreign bases that cost god knows how much, because it's all part of the black budget we simple taxpayers don't ever get to see.  The Constitution mentions defending our borders and maintaining a militia/army for that purpose.  It says nothing about empire building and murdering hapless brown peoples throughout the land.  Go back and reread the document.

Navymugsy's picture

They murder non-white people too as our government is all about equal opportunity.

Zap Powerz's picture

Waging illegitimate wars for the MIC is not a legitimate function of the federal government because its redistribution of wealth from future generations TO the top .1% living now.

Im all for self defense, but blowing countries up all over the globe so a few dicks can make a shit ton of money seems immoral to me, but I could be wrong.

Incubus's picture

But when you need a perpetual war for a military-profit-machine that needs conflict, and you have religious nuts who'll fight for thousands of years, is it not a match made in heaven?


They need each other. Sheep just need purpose.  Manufacture purpose and send them to fight.


We're going to get our manufactured purpose soon enough.  And all of you will love it, too. 

Cathartes Aura's picture

"manufacture purpose" is a very descriptive meme.

give 'em a belief system to defend, a flag to wave while playing with their guns - that's a culture that will work for you, eh.


blunderdog's picture

    that defense of the nation

When was the last war the US engaged in that was defensive?

The War of 1812, maybe? 

ebworthen's picture

And how will the bankers and politicians carry on with their bonuses and cushy income, healthcare, and retirement if they aren't keeping the masses complacent with food stamps and welfare?

Riots aren't good for maintaining the kleptoligarchy, therefore the bread and circuses will NEVER be cut.

Bicycle Repairman's picture

If the bankers can park their wealth off shore, what makes you think that they can't park their asses off shore.

BTW if the USA government wanted to tap some of that wealth, I suspect a Caribbean island or two could be invaded by the Marines.

MachoMan's picture

Could be, but if it's ethereal and digital, then it can probably be transferred quicker than boots can be on the ground...  not than any secret of that size would be kept from the money.

NotApplicable's picture

If it's so simple, how come that's the exact opposite of what's happening?

The Bernank, that's why.

LawsofPhysics's picture

End the fucking Fed.  There is a very real cost for capital.

PGR88's picture

Indeed.  The FED is the first pillar of progressive plans for Gov't.  With out the ability to tax through inflation, debasement and ZIRP, the entitlement and welfare state would be completely impossible.

ElvisDog's picture

Hah, common sense. You are one funny, little hobo. The 2012 election cycle sealed the deal. The strip-mining of the working middle class will continue by the oligarchs and the welfare class until there is no more wealth in the working middle class to stripmine. My take home pay just went down by $800 a month due to health insurance premium increases for 2013. In 8 or 9 months I start paying for my oldest son to attend college, which will literally take all of my non-food/utilities/tax/insurance income to avoid student loans.

EndTheMedia's picture

Word of advice. Stop wasting money on a worthless degree.

Skateboarder's picture

Easy for you to say. It's his kid that's gotta try to find a job in four years, and a bachelors degree is the new high school diploma, except now it costs two arms, two legs, and your life savings.

ElvisDog's picture

Oh believe me, I've vetted his degree choices. He wants to major in either chemistry or physics. If he wanted to study Contemporary French Literature, that would have been fine, but he would have gone to community college.

BTW, my wife has a relative who not only majored in Contemporary French Literature but got a PhD in it ... from Harvard.

babylon15's picture

There are no jobs for chemistry or physics majors.  70% of 2012 physics PhDs (YES, PhDs.  Not undergraduates) went on to do low paying post-doctoral work which pays about $15 an hour and is a TEMPORARY POSITION.  And it often requires moving to the middle of nowhere.

Uncle Remus's picture

"And it often requires moving to the middle of nowhere."

You say that like it's a bad thing...

CaptainObvious's picture

You'd be better off to send him to trade school, and once he is earning a living wage, then he can piss away his OWN money on a college degree if he so chooses.  Keep your fiat for yourself and use it to buy something useful for the upcoming collapse.

catacl1sm's picture

If he's not getting a degree in agriculture or husbandry then it's a waste to send him.

MachoMan's picture

Agree with the sentiment, but those "degrees" are best done through apprenticeships from old school farmers.  The school of hard knocks is vastly better than any university.  School would probably give someone a better idea of the theory behind what they're doing (why X chemical causes Y plant to do Z), but it's really not necessary to have a theoretical understanding in order to be a successful farmer. 

I'd also add repairmen and vocational skills of virtually every sort to the list, e.g. HVAC, plumbing, mechanics, welding, etc.

OpenEyes's picture

MachoMan I don't think there are very many 'old school farmers' left anymore and even fewer opportunities for a young person starting out to become an 'old school farmer'.  The reality is corporate agri-business for the vast majority.  So, in that reality, I would encourage a young person to look at a technical degree in agriculture so that they might have a fruitful career working for one of those hideous agri-business conglomerates like Monsanto or Archer Daniels Midland etc. These companies normally have minimum educational requirements for any position above janitor and they will be where the jobs are.


MachoMan's picture

This is complete and total nonsense.  Does a corporation ride a tractor?  Dig spillways?  Disc the field?  There are a lot of old school farmers...  however, there are not a lot of replacements.  This provides an opportunity for enterprising lads.

People have to separate the owners of the land as well as those who own intellectual property rights on the seed...  from the people that actually work the soil and grow the crops.

Look at it this way, you have to pay to waste your time in school...  what if you agreed to tag along with a farmer for free as an apprentice?  Sure, some have children that are farmers too and are expected to take over the family business, but I'm confident you'll find someone to put you to work and give you an education.

Chaos_Theory's picture

Mechanical engineering and chemistry will always be of value, even in Bartertown.  Two big dogs weren't Farmer Ted and Rancher Rick; it was the Amazon military leader and the midget engineer/oversized down-syndrome muscle!

Note to self...study engineering, marry Amazon with mad ninja skills and a mohawk

LFMayor's picture

It's good to have goals.  I think I'll set up a stable of window-licking retards and rent them out for transportation.  Sort of the Avis of the new era.

darteaus's picture

Oh, so you're going to head up the government workers?

Cathartes Aura's picture

first go I read that as "goats" - they'll lick yer windows too, and you can rent them out to clear brush, etc.

soo many uses for goats. . .

darteaus's picture

Just make sure the Amazon is not a guy before sealing the deal.

darteaus's picture

In the same boat.  All I hear from the Obamunnists is: "Shut up and work harder.  You owe me."

Crtrvlt's picture

replace the word "entitlement" with "war" and then watch those leeches over at lockheed martin for example, who derive 95% of their ~40 bln in revenue from the fed govt,whither away  

Kobe Beef's picture

another good idea. Predators above, parasites below, and the productive are their feast. End the Warfare/Welfare State!

LFMayor's picture

LOL.  End it?  How?

You must be talking about more war, because they're not going to just up and walk away from the trough simply because you asked politely, in your "firm" voice.

Malthus was correct.  We just need to be the first ones to the button.  Winner takes all.

Kobe Beef's picture

Yes, war-- if necessary. Would that our differences could be settled peacefully, but if not, then American Revolution II, Civil War II, call it what you will. I do not shy from our responsibilities as Free Men. If we wil not fight for our lives, freedom, and posterity, then we are unworthy of our ancestors who did the same. Should I meet them in an afterlife, shall I hang my head in shame, or embrace them as kindred souls?

Does any animal not fight for its life against a predator? Does any organism not fight against infection? Facts of Life. Tell me technological modernity has not so cocooned us among the accoutrements of ease that we shall forget life's own imperatives, nor the glory of living as Free Men, in possession of ourselves and our labor. I have not. I will not.

AGuy's picture

"Does any animal not fight for its life against a predator?"

No most run away. Pray animals aways run from predators. Most of Europe surrendered to the Nazis and the Soviets. No sure why you think  today is any different.