Tuesday, January 17, 2012

The Harms of Welfare

More and more I'm coming to accept the conclusion that not only does welfare harm those who are robbed to support others, but it also harms the recipients of those stolen goods. This is true both at the individual level and when one looks at groups of individuals. This story on the failures of massive subsidies to the city of Buffalo is a good example of the latter.
Buffalo may be the paradigmatic example of why expensive government revitalization efforts often fail. Back in 2004, the Buffalo News estimated that the city had garnered more federal redevelopment aid per capita than any other city in the country, a total of more than half a billion dollars since the 1970s. Yet, the paper noted, the city had virtually nothing to show for the money.

Officials squandered millions granting loans and subsidies to projects that went bust. There was a proposed trade center near the famed Peace Bridge that was never completed even after the city granted it federally backed loans; a failed shopping plaza on William Street; and several hotels that defaulted on their government loans. Among the past three decades' failures have been a dozen or so businesses in the theater district—"one of Western New York's most heavily subsidized stretches of real estate," said the Buffalo News.


Sometimes these schemes have done real harm. In the 1970s, the federal government decided to invest $530 million to build a 6.2-mile light-rail system through downtown Buffalo. It was supposed to further spur redevelopment, of course.

Opened in 1985 and anchored by a transit mall that banned cars, the rail line fell well below ridership projections—and downtown businesses suffered mightily from the lack of traffic. As Buffalo landlord Stephen P. Fitzmaurice wrote in 2009: "Walk down Main Street on the transit mall; aside from a few necessities like drug and cell phone stores, blight dominates." Last month the city received a $15 million federal grant to restore traffic to Main Street.

These massive investment subsidies failed partly because officials were ill-suited to select the right projects and often instead gave money to favored insiders. Even former Mayor Anthony Masiello described the federal government's redevelopment funds as "a politically motivated system trying to please everybody."
Read the whole thing to see how taxes and regulations also play into Buffalo's poverty.


Blogger Richard said...

From the 1980s, when Ontario's Socialized Medicine began, I have been pointing out that all welfare programs hurt the people they were designed to help.
[What follows has not been proof read; have to go, sorry.]

First, the recipients experience a boom as the unearned money makes their lives better. But, those who were productive and creative with the money had less 'seed' money to continue increasing production & creation. At the same time, more and more socialized projects are created because they look good.

As spending gets out of hand, the government taxes more, and prints more, money. Money is worth less!

Soon the older, half forgotten, social programs need more of the less valuable money. But money is going to new programs, so the older ones become ever more derelict. All this drags down business, which also becomes stagnant, pay scales freeze, minimum wage laws force higher pay so jobs become scarce.

Those who suffer most will be the poor. To prevent so shameful a result from being visible, the rich must be further taxed forced into the same welfare services as the poor (no private health care).

The above is precisely what took place in Ontario. The rich flee to the US to get health care that is unavailable in Canada. Recently, frustrations in Ontario were so high that money has been added to the system... so it's pretty good . . . if the hospital president knows the right people in the Ministry of Health!

8:31 PM  

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