Tuesday, May 10, 2011

A short observation on poverty and programs

Here is a short student paper with my response.

            Why are so many people in our country living below the poverty line? Is the poverty line not set a reasonable level?
            I think that our country has flaws in the system currently that make it almost impossible for many people to get out of poverty once they enter it. It is obviously not a desirable option for anybody. Unfortunately many people do not know where they can go to get assistance or are denied the accessibility. It is than likely whenever a person applies for disability assistance, they are denied the first time and must apply multiple times. Alright, so they are already disabled, yet they must wait and go through the process multiple times before they get any help? That sure does not make any sense to me and is only one of many flaws in our system. Why are we not trying to help the people that need it?
            In addition to the problems of our system denying help to some people who clearly need it, we also have the problem of people getting assistance when they do not need it.  It seems to me that in many cases we need to more tightly control how we help people. There are people who use their LINK card to buy alcohol or trade with others. I am also aware of people who are using SSI or other forms of assistance to buy drugs. I do not support this in any way, but that is how the people are trying to survive. Maybe drug tests needs to be put into effect to get specific forms of aid.
            Poverty is difficult, this is a fact. There are ways to get out of poverty and to help yourself, but people do not where to go or what to do. There are also people receiving aid that probably should not. Our government system needs to be fixed so that we can help those that need it.

As we squeeze those who receive benefits so that we catch the undeserving ones who cheat, we will increase administrative costs and inconvenience the ones who are honest and do need the money, and we are likely to deny some benefits to those who really deserve it.  Likewise, if we make it easier for people to get benefits, and deny fewer claims for programs such as SSI, we are likely to allow more dishonest and unworthy applicants to get benefits. This is the way the world works.  Given a willingness to allocate a certain percentage of program costs to administration and regulation, we can choose to be tight-fisted and deny more worthy applicants or use a more open hand and allow more undeserving to get benefits. Spending more on administration and regulation might reduce both types of problems, but at some point it becomes ridiculous to devote too much money that could be helping worthy applicants to hunting for the less worthy.  This is sometimes called the “unavoidable error” problem in social welfare policies.  Given large and complex systems that give out benefits to people, error will occur.  Which error do we prefer, the error of too much regulation and control, or not enough regulation and control?  Are we more concerned with being too generous and having cheaters take advantage of us, or of being too stingy and denying help to those who deserve it and would greatly benefit from it?  If we spend 20% of some welfare budget to administer and control it, is that somewhat like stealing from those who should be getting benefits to support swarms of parasitic bureaucrats, social workers, investigators, and paper-pushers, or is 20% a reasonable amount?  What about 10%, or 30%?  At some point we have to accept a bit of sloppiness and a bit of error. You can’t have a perfect system.  A system that denies a few worthy applicants and allows a few cheaters may be the optimal system, so long as a very small percentage of worthy applicants are wrongly rejected, and a very high percentage of would-be cheaters are discouraged or caught, and all this is achieved with a very low percentage of program expenses going to administrative costs and a very high percentage 

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