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December 13, 2010 / marios

Efficient Welfare: Not necessarily a contradiction

Food stamps is by definition a social welfare program. Nevertheless, few conservatives oppose the program. The main reason is that the program is not only working very efficiently, with low waste, fraud and overhead cost, but also helps local business and reduces the likelihood that a family will go into more expensive welfare programs. Why? Because families in need of food will spend the money immediately, which creates business, which creates local jobs; it is a virtuous cycle. This is a great welfare program.

Contrast this with unemployment benefits. If you give people a salary while they are looking for a job, lazy people (that is, most of us) will spend a small percentage of money for basic needs and put the rest of the money in the bank while they sit at home watching TV. Everybody is talking about high unemployment lately, but everyday on my commute to work I see signs for open positions. Today I saw a sign at a garage store saying that drivers were needed. The other day I saw a sign requesting applications for various positions in a new restaurant. I don’t know about you, but if I received 36% of my previous salary in unemployment benefits (let’s assume around $1000 on average), I ‘d rather stay at home and watch TV than work either as a driver or in the kitchen.

So, here is my question. I understand that unemployment benefits are important, at least for a limited amount of time. So why doesn’t the federal government try to make the program more efficient by introducing checks and balances? Simple examples: 1. Require that a certain percentage of money is spent on a monthly basis (this creates business); 2 Require proof of effort to find a job (e.g., at least one interview per month with proof from potential employer). Now, there might be higher administrative overhead in order to achieve these goals, but if it is possible for food stamps it must be possible for unemployment benefits as well.

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