A Handout, Never a Hand Up

My dear friend Henry Olsen has a recent piece that I believe to be gravely mistaken. Inasmuch our disagreement bears on public matters that will be of vital importance in the years ahead, we’ve mutually agreed to noodle over it in these pages. I go first; Henry will comment when and as he sees fit.

Henry notes that Mr. Romney lost by a whopping 81-18 margin among voters who wanted a president who, foremost, “cares” about people like them. No doubt, that has something to do with the candidate’s blue-blood pedigree and the dog on the car roof, but Henry argues that it also reflects the public’s (or at least this voting bloc’s) discontent with a GOP message that is perceived as indifferent to ordinary folk’s aspirations. The GOP, he urges, should remember that “The Republican Party was founded in opposition to slavery, but it was also founded in support of the idea that government can give average people a hand up to achieve the American Dream.” By way of example, the Homestead Act and the Morrill Land Grant College Act provided subsidies for the millions of farmers who dominated mid-19th century America. That still is a model. Americans, Henry notes,

don’t want a government that is “hands on” in their lives, regulating, taxing and commanding their every move. When they need help, they don’t want handouts, and they don’t think others should get them either, whether titans of Wall Street or moms on welfare. And they don’t want government to be simply “hands off.” …  Americans want what conservatives have always said they want to give them, a hand up. 

The distinction between handouts and a hand-up is not always very clear, but I will follow Henry Olsen’s implicit presumption that there is a difference and, moreover, that voters can tell it. Also,  I have no idea whether a “hand-up” agenda would or would not spell electoral success (although I’m inclined to trust Henry on that score: he’s my go-to man for all things electoral). My question is whether the agenda is coherent and plausible for the country. My answer, in a word, is “no.”

When you have a dinner, a famous Gospel passage says, don’t invite friends and family. Not that there’s anything wrong with conviviality (the man who said it shared lots of meals, including his last, with friends); it’s that the invitees might be able to pay you back, and that corrupts them and you (unless you happen to be the Son of God). Instead, invite and feed the folks who can’t possibly pay you back—the poor, the crippled, the lame.

I don’t mean to mobilize the Gospel  to derive maxims of political conduct and organization. I do mean to suggest that politics partakes of the dinner paradox.

We provide for end-of-life care, homeless shelters, and emergency aid for disaster areas, no (or very few) questions asked. These are pure handouts. We’d like them to be provided through private charity to the extent possible; but  when that isn’t enough, government routinely provides additional assistance.

With the possible exception of off-to-the-gas-chamber, die-in-the-tunnel Randians, no one finds anything wrong with that—for excellent reasons. The programs do not (or at least need not) ask very much of government: just send the check.  While the handouts can be expensive (as with end-of-life care), the richest society ever on earth can surely find the means to fund them at a reasonable level. More important, pure handout programs carry relatively little risk of contagion and corruption. A program for the blind won’t willy-nilly come to cover the short-sighted. And while a few programs may have small incentive effects, by and large people don’t maneuver themselves into desperate situations to angle for government relief. Nor do the programs establish any viable precedent or model for K-Street artists. Funding homeless shelters does not entitle GE to park itself under the same umbrella: everyone knows the difference.

Hand-up programs are the polar opposite in all dimensions. Under those programs we ask, because we must, whether people deserve assistance (lest the hand-up become a mere handout or anybody show up). Such situational, discretionary judgments about people’s character and competence are vexing and difficult even for parents, who will often get them wrong; yet hand-up programs entrust government case workers with thousands of such decisions, with respect to unknown people. Moreover, one program leads to another: a small business loan produces a solar power loan produces a grant to Jeffrey Immelt.  “Julia” clambers from one program to the next; there never seems to be a time when she does not need, or receive, a hand up. And adverse incentive effects become pervasive and pernicious. People borrow to study when they should work; buy homes on credit when they should rent; rely on government “insurance” when they should save for old age; build windmills and $100,000 electric cars that burn up on New Jersey docks.

All this is nearly unavoidable. Hand-up programs, political economists have noted, can work without nasty incentive effects only under exceedingly narrow circumstances. They are like monetary inflation: the desired results transpire if, and only if, you can spring it on the country as a surprise and, at the same time, credibly promise never to do it again. That’s the Homestead Act and (for more recent examples) the GI Bill and the first deduction for home mortgage interest.  However, we are light years beyond that. Any additional hand-up program would simply be an add-on to an existing program. Even if one could think of a “new” program, everyone would expect it to be expanded, regardless over whether or not it succeeds.  Under these circumstances, a hand-up agenda spells the ruin of the country.

Take (for a random example) higher-ed hand-ups: the GI Bill expanded college access for awhile, until  colleges priced the subsidy into their product. Once they did, the “success” of the initial program prompted one expansion, and then another. Higher-ed support now produces a sea of blank faces who shouldn’t be in classrooms, a trillion dollars in unpayable student debts, a bloated higher-ed bureaucracy, and a taxpayer-fed, resentful intellectual class.  And yet the hand-up agenda says: more of the same.

If higher ed doesn’t do it for you, would housing? Every one of the programs that produced the bubble and its collapse was a hand-up program: the Community Reinvestment Act, the home mortgage deduction, subsidized loans and mortgages, Fannie and Freddie and FHA. This array of programs nearly brought the economy to its knees and dragged down millions of people, regardless of morally relevant distinctions among them. Cynical speculators lost, but so did folks who never wanted a hand up but whose mortgages are under water, courtesy of the government’s effort to expand homeownership. Needless to say, the politicians who did this to us feel no compulsion to say “sorry.” They have deflected the blame, and they have another hand-up program in stock: mortgage relief, by any means necessary. When and where will this end?

My point is not that hand-up programs can get out of hand, or that our institutions are incapable of administering them efficiently: all that is true, but it’s true of any government program. My point is that hand-up programs have gotten out of hand; that we cannot afford them; and that the country’s future depends on mowing them down. Tax reform, health care reform, entitlement reform, regulatory reform:  every single item depends on decimating hand-up programs. Any responsible party or political force in American politics will have to explain the situation and its urgency, and it will have to act on it. I’m not the world’s greatest political strategist, but telling the truth might be a better bet than a perennial “we don’t really mean it” refrain. It would in any event be more realistic and honorable.

The deeper point, which I am sure Henry Olsen appreciates, is the Lord’s paradox. Invite the crippled and the lame to the banquet that is America, but never your friends—not because you don’t like them; not because they don’t deserve it; not because anyone is acting on bad motives; but precisely because you like them and they may deserve it and you’re acting on good motives—and because once you’ve done it, nothing good can come of it.

Michael S. Greve

Michael S. Greve is a professor at George Mason University School of Law. From 2000 to August, 2012, Professor Greve was the John G. Searle Scholar at the American Enterprise Institute, where he remains a visiting scholar. His most recent book is The Upside-Down Constitution (Harvard University Press, 2012).

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Comments

  1. libertarian jerry says

    You can’t have freedom and free handouts. The government has no money, someone has to pay the bill. Its either or,no third way. Because once you allow the socialist genie to escape from the bottle there is no way of putting him back. Eventually the society tears itself apart with everyone scrambling to get their “fair share” before the money runs out. In the end,you have a nation of dependency and a police state to decides who gets what. Best to let the Market,the Family and Private Charity to do the job of a “hand up.” In the end you will have a more civil society that truly progresses forward.

  2. Ken Masugi says

    Michael turns Henry Olsen’s “hand up” function of government into a “hands-up” or surrender to expanding bureaucracy. Any government program can be exploited, but some are more exploitable and corrupting than others.
    But I’m not even sure that the government argument was key to Obama’s win or to Henry’s point. Romney’s “trust the market” answer is more correct than Obama’s “trust the bureaucracy” assumption, but not enough people trusted the businessman.
    Remember too the parable of the workers in the vineyard and the parable of the talents. In the latter, God wants us to gamble with our ultimate investment of our souls, but in risky economic conditions that becomes even more challenging.

  3. Charles says

    There is not one bit of public ‘assistance’ favored by Democrats that isn’t itself a self-funding and self-protection scheme to help the Democratic Party. Each and every one of them demands the right to write regulations to which then restrict conservative and independent interests and fund loyal leftist subgrantees. Most of them operate through a public workforce, which is then forced to pay dues to organizations loyal to the Democratic Party. Over time the very operations are impacted to reduce options for the service population to privilege the Democrats’ other allies. Help? No, it’s about control.

  4. VA Teacher says

    The problem isn’t that hand-up programs don’t work. The problem is that government is uniquely ill-suited to run those kind of programs. Government is about rule books and rights and entitlements and one-size-fits-all. It does a terrible job with things that require nuance and discretion and judgement.

    A government system is easy to game, and the people who game it are exactly the people who DON’T need help. The “truly needy” can’t navigate the bureaucracy or don’t fit into the check boxes and end up with very little real benefit. “Progressives” either deny this in the face of all evidence to the contrary, or claim that the waste is trivial and the reason the program doesn’t work is because it is inadequately funded. They assert that if only we shoved enough money into the hopper…the benefits would make it to those who need help.

    What we really get is destructive incentives, administrative bloat, and not much to show for it. But just like the military-industrial complex drives a military budget that does little to add to our national security, the welfare-nonprofit complex drives a social services budget that does little to improve the lives of the people it is supposed to help. But it does fund a self-perpetuating political machine, so it doesn’t go away.

    Eventually, the economy won’t be able to support all this superstructure and one of two paths will be taken. Either we will cut the funding of the programs, or we will have to restrict the freedom of people to make “bad choices” (take away children from people who can’t afford them. Force people to take jobs they don’t want to do. Force people to take classes they don’t want to take. Force people to take their meds and live in supervised situations. A whole authoritarian complex of watchers and managers and nannies…all for your own good, of course. Obamacare is a step down that road.

    Which way does this “New America” want to go? I don’t know. Freedom with less security or Security with less freedom? I know which way I’d prefer to go, but the last election made abundantly clear that people who think like me are just along for the ride. Other people are going to make this decision, and I have no idea which way it’s going to end up.

    Batten down the hatches…rough seas ahead.

  5. David R. Henderson says

    “Off-t0-the-gas-chamber Randians?” OMG. You too, Professor Greve? I’ve enjoyed your work and insights in the past, and also in this article, but really, you felt the need to take that cheap and, incidentally, incorrect shot? I’m disappointed.

    • Micha Elyi says

      I’ve never heard of any such “Randians” as Greve describes. I conclude he’s one of them and outed himself.

  6. LordJiggy says

    A huge part of the reason Obama was elected had nothing to do with the GOP itself. It was because the Ministry of Truth (Wash Post, NY Times, Hollywood, JournoList, ABC/NBC/CBS) protected Obama at all times and in all places from the very real failures of his presidency and his policies. Had an evil republican been President, they would have been hammering him 24/7 on joblessness, poverty, gas prices, Fast and Furious, homelessness, Libya, cronyism. As it is, the Fourth Estate has become a Fifth Column.

  7. Ed says

    Hands up can work if structured correctly. Just treat it as a loan with penalties for arrears. IOW, you can get the money to go to college, feed and house yourself during emergencies, etc. but you’re expected to pay it back. Persons who’re behind repaying can’t vote.

  8. Jerry the other libertarian says

    The reason I voted Johnson is Obama lite is not the solution. Suffering is the problem you have noted that needs the salve and we got the honey laden concoction complete with government trained masseuses. I mean the alternative is the gas chamber, no?

    Perhaps the richest country in the history of the world would have the morality to privately manage the compassion to help those who suffer. Of course suffering is always only a matter of degree, and therein lies the bugger.

    Regardless, the fiat inflation fiasco is playing out according to the observations of Marx. I was happy to have seen its heyday and its sunset. It really was predictable all along.

    Republicans may have lost the election because they suck at pandering, I guess that’s one take, or perhaps all they had to offer was a slower spiral down the drain. I say let’s go for the most fun ride. Front row seats at the chamber are going fast.

  9. Joe Mack says

    Please don’t call the most indebted country in the world “the richest country in the world.”
    We are not rich, we are broke.

  10. Ron says

    Interesting article, and I should be thinking about the points it raises, but instead I can’t erase from my mind the picture from the linked article. No wonder Greve brings up New Testament stories, given this perfect illustration of the Rapture.

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