The effect of social welfare on poverty is controversial. Since the goal of welfare programs is to reduce poverty, it has been debated, primarily in the United States, whether or not welfare programs achieve this goal.
Proponents argue welfare has reduced poverty in developed countries while opponents argue welfare creates a negative incentive to not find work and thus sustains or even creates poverty.
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Proponents of welfare reducing poverty
Studies have shown that in welfare states poverty decreases after countries adopt welfare programs. Empirical evidence suggests that taxes and transfers considerably reduce poverty in most countries whose welfare states commonly constitute at least a fifth of GDP. In 2013, the Organisation for Economic Co-operation and Development asserted that welfare spending is vital in reducing the ever expanding global wealth gap.
Table of welfare effect on poverty reduction
Timothy Smeeding used data from the Luxembourg Income Study to determine the effectiveness of anti-poverty and welfare programs on poverty reduction. The data for all the countries was from the year 2000 with the exception of the United Kingdom and the Netherlands for which the data was from 1999.
Table of poverty levels pre- and post-welfare
Two studies compare countries internationally before and after implementing social welfare programs. Using data from the Luxembourg Income Study, Bradley et al. and Lane Kenworthy measure the poverty rates both in relative terms (poverty defined by the respective governments) and absolute terms, (poverty defined by 40% of US median income) respectively. Kenworthy's study also adjusts for economic performance and shows that the economy made no significant difference in uplifting people out of poverty.
The studies look at the different countries from 1960 to 1991 (Kenworthy) and from 1970 to 1997 (Bradley et al.). Both these periods are roughly when major welfare programs were implemented such as the War on Poverty in the United States. The results of both studies show that poverty has been significantly reduced during the periods when major welfare programs were created.
A study done by Columbia University found that since the beginning of the War on Poverty, the American poverty rate was reduced "from 26 percent in 1967 to 16 percent in 2012." However Kevin Drum has criticized the study for combining elderly (in which most of the reduction happened) with non-elderly poverty reduction which was much less significant.
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Opponents of welfare reducing poverty
In the United States, members of both the Republican and Democratic Party (as well as third parties such as the Libertarians) have favored reducing or eliminating welfare. The landmark piece of legislation which reduced welfare was the Personal Responsibility and Work Opportunity Act under the Clinton administration.
Conservative and libertarian groups such as the Heritage Foundation and the Cato Institute assert that welfare creates dependence and a disincentive to work, and reduce the opportunity of individuals to manage their own lives. This dependence is called a "culture of poverty" which is said to undermine people from finding meaningful work. Many of these groups also point to the large budget used to maintain these programs and assert that it is wasteful.
In the book Losing Ground, Charles Murray argues that welfare not only increases poverty but also increases other problems such as single-parent households, and crime.
Some socialists and Marxists argue that welfare states and modern social democratic policies limit the incentive system of the market by providing things such as minimum wages, unemployment insurance, taxing profits and reducing the reserve army of labor, resulting in capitalists having little incentive to invest; in essence, social welfare policies cripple the capitalist system and increase poverty. By implementing public or cooperative ownership of the means of production, some socialists believe there will be no need for a welfare state.
Public opinion
In 2013, a NBC News/Wall Street Journal poll found that a plurality of Americans (24 percent) said "too much government welfare that prevents initiative" was the leading cause of poverty.
A January 2014 Pew Research poll found that 49% of Americans believe government aid to the poor does more good than harm as people can't escape poverty until basic needs are met, and 54% believe taxes should be increased on the wealthy and corporations to expand anti-poverty programs.
Source of the article : Wikipedia
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