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The Rise Of The Welfare State
Zero Hedge ^ | 9-11-13 | Lance Roberts

Posted on 09/11/2013 3:52:47 PM PDT by RKBA Democrat

It is interesting to note that while the unemployment rate has been falling, currently at 7.3%, it has not been because of a strongly increasing workforce. Rather it has been a function of people leaving the workforce. This, of course, brings up the obvious question of how these people are live if they aren't working. A recent trip to Walmart answered that question.

As I was standing in line, with an assortment of items on my "back to school" shopping list, there was a Hispanic gentleman in front of me with two shopping carts full of groceries and other items. The cashier deftly handled the scanning and quoted the final price to the gentleman who reached into his pocket and pulled out his wallet. What caught my attention was that his wallet was literally about to explode from the amount of cash that was stuffed into it. My first thought was "Wow, this guy is doing alright for himself." However, my moment of admiration quickly turned to admonishment as instead of using some of his hoard of cash - he whipped out his supplemental nutrition assistance card. I literally watched in amazement as the cashier rang up the purchase, handed him the receipt and thanked him for his patronage. Really? This guy just loaded up on groceries using my tax dollars and he gets thanked for "his" patronage. He should be turning around and thanking me instead.

For me, I was stunned. My first thought was to follow the gentleman out into the parking lot and mug him to get my tax dollars back. However, quickly realizing my first option was unrealistic and illegal, I turned to the cashier and asked a simple question. "How often do you see people using food stamps to buy groceries?" The answer: "Just about every other person."

Welcome to 'Merica, The Welfare State.

This experience came to mind when I read a great article by Diana Furchtgott-Roth at E21 entitled "When It Pays Not To Work." In this article she cites some alarming statistics:

"Lawrence Lindsey, president and chief executive officer of The Lindsey Group, estimates that if the labor force participation rate were the same today as it was before the recession began, the unemployment rate would be 11.2 percent, rather than 7.3 percent.

One reason for this continuing trend is the panoply of government benefits, including unemployment insurance, now available up to 73 weeks, depending on the state. On average, unemployed Americans can receive 53 weeks of unemployment insurance, up from 26 weeks before the recession.

Over 8.9 million adults received disability insurance from the Social Security Administration in July 2013, the latest data available. The number of people receiving benefits is 23 percent higher compared to five years earlier and 55 percent higher than 2003. Benefits are higher, too. Recipients get an average of $1,129 monthly, 12 percent more than in 2008 and 35 percent more than in 2003.

Over 47 million Americans receive benefits from the Supplemental Nutrition Assistance Program (formerly food stamps), Other elements of the federal safety net include mortgage relief, and Temporary Assistance to Needy Families. The provision of subsidized health care for those earning below 400 percent of the poverty line under the Affordable Care Act, beginning in 2014, will exacerbate this.

These programs have expanded in two ways. Eligibility has increased, and the programs have become more generous."

The chart below shows the rise in social benefits as a percentage of real disposable income which is currently near the highest level on record.

(graph embedded in artice)

The next chart shows the current number of food stamp participants through June of 2013 at 47.8 million with an estimate of cots that will likely exceed $81 billion.

(graph embedded in article)

The reality is that when an individual can make more living on welfare than working it is quite easy for a mass number of individuals to simply disappear from the work force. The problem is that such a structural transformation of the workforce is economically damaging long term.

Diana summed the problem up well.

"The shrinkage of the labor force has profound implications for future economic performance. Reduced economic growth will lead to steadily higher tax burdens on existing workers, which will in turn discourage labor force participation. This race to the bottom needs to be stopped."

She is absolutely correct. As I showed in my recent missive on long term economic growth we are already experiencing the lowest rate of annualized economic growth in history. With an aging population rapidly moving towards retirement; the structural employment imbalance will lead to far more economic ills in the not so distant future as the drain on welfare programs intensifies as people continue to leave the workforce. As Diana correctly stated "The race to the bottom has to stop." However, as long as the current administration continues to push more support programs, bailouts and extensions of benefits; it simply makes it more profitable to stay at home and live off "government cheese."


TOPICS: Editorial
KEYWORDS: hopeandchange; welfare; welfarestate
In case any of y'all are curious as to why amnesty is pretty much a sure bet, here is why...

"...instead of using some of his hoard of cash - he whipped out his supplemental nutrition assistance card. I literally watched in amazement as the cashier rang up the purchase, handed him the receipt and thanked him for his patronage. "

Yeah sure, amnesty is about cheap labor and getting new voters for the 'rats. But those are just the fringe benefits for the kakistocracy. Mostly, though, it's about trying to get 14 million plus people who are surviving and and many cases thriving on the underground economy to please join the official economy.

1 posted on 09/11/2013 3:52:48 PM PDT by RKBA Democrat
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To: RKBA Democrat

7.3 is pure manufactured government spun BS. All it takes is looking around at your ommunity to see the droes of people losong their jobs or being downgraded to the point that it almost costs them more to work if they have to drive any distance. Again that number is pure Obama spun BS manipulation.


2 posted on 09/11/2013 3:59:03 PM PDT by jsanders2001
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To: RKBA Democrat

3 posted on 09/11/2013 4:00:08 PM PDT by Travis McGee (www.EnemiesForeignAndDomestic.com)
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To: RKBA Democrat; Travis McGee

‘Travis’ - good article but it’s about one book and half an anthology behind you.


4 posted on 09/11/2013 4:02:21 PM PDT by Blueflag (Res ipsa loquitur: non vehere est inermus)
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To: Travis McGee

LOL You are too fast.


5 posted on 09/11/2013 4:03:12 PM PDT by Blueflag (Res ipsa loquitur: non vehere est inermus)
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To: jsanders2001

“7.3 is pure manufactured government spun BS. All it takes is looking around at your ommunity to see the droes of people losong their jobs or being downgraded to the point that it almost costs them more to work if they have to drive any distance. Again that number is pure Obama spun BS manipulation.”

the question then becomes, when does the system implode.


6 posted on 09/11/2013 4:03:18 PM PDT by willywill
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To: RKBA Democrat

When you don’t have a robust manufacturing base, you are left with a lot of low-skilled people with nothing to do except flip burgers and exclaim “welcome to Wal Mart.”


7 posted on 09/11/2013 4:04:13 PM PDT by steelhead_trout (MYOB)
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To: Blueflag

Thanks. Appreciate that. We do what we can.


8 posted on 09/11/2013 4:05:08 PM PDT by Travis McGee (www.EnemiesForeignAndDomestic.com)
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To: jsanders2001

This article is stpot on. But it doesn’t go far enough.

The real unemployment numbers don’t factor in the part time and under-employed workers in America. There are millions of folks trying to get by on part time wages simply because that’s all there is.

And what with Obamacare punishing employers who have no other recourse but to hire part timers and not full timers...

Its only gonna get worse.


9 posted on 09/11/2013 4:05:24 PM PDT by Responsibility2nd (NO LIBS. This Means Liberals and (L)libertarians! Same Thing. NO LIBS!!)
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To: Travis McGee

silly me; trying to ping YOU!


10 posted on 09/11/2013 4:06:38 PM PDT by Blueflag (Res ipsa loquitur: non vehere est inermus)
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To: willywill
The question then becomes, when does the system implode.

Three days after the power goes out, for any reason.


11 posted on 09/11/2013 4:07:30 PM PDT by Travis McGee (www.EnemiesForeignAndDomestic.com)
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To: Blueflag

I just happened to be sitting here at the moment.


12 posted on 09/11/2013 4:08:04 PM PDT by Travis McGee (www.EnemiesForeignAndDomestic.com)
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To: Travis McGee; Kartographer

“The Day the EBT Died” is coming. And probably sooner than we think.


13 posted on 09/11/2013 4:10:53 PM PDT by RKBA Democrat (Power disintegrates when people withdraw their obedience and support)
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To: Travis McGee

“Three days after the power goes out, for any reason.”

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

That reminds me. Is the power still out in Detroit?

jus sayin.


14 posted on 09/11/2013 4:11:45 PM PDT by Responsibility2nd (NO LIBS. This Means Liberals and (L)libertarians! Same Thing. NO LIBS!!)
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To: Responsibility2nd

Not that I know of.
If it was, the EBT machines would not work, and the city would be on fire.


15 posted on 09/11/2013 4:12:24 PM PDT by Travis McGee (www.EnemiesForeignAndDomestic.com)
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To: RKBA Democrat
It's high time for us to face the truth, and to stop referring to entitlement programs like Social Security, Medicate, Section 8 housing and "supplemental nutrition assistance" as taxpayer-funded programs.

The reality is that, with the U.S. government running on an annual deficit in excess of $1 trillion, the beneficiaries of these programs are using money that isn't costing the U.S. taxpayer a dime. This is how these programs have managed to perpetuate themselves at all.

16 posted on 09/11/2013 4:15:38 PM PDT by Alberta's Child ("I've never seen such a conclave of minstrels in my life.")
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To: Travis McGee
From a few hours ago...

 

The Power Has Gone Out In Downtown Detroit

Wednesday, September 11, 2013 3:53:29 PM · by lbryce · 48 replies
Business Insider ^ | September 11, 2013 | Adamn Taylor
Downtown Detroit was hit by a power outage at around 1 p.m. today. Multiple buildings appear to have lost power including city hall, Detroit News is reporting. CBS Detroit reports that the Frank Murphy Hall of Justice and the People Mover in downtown Detroit have also lost power, while Local 4 News reports that some Wayne State University buildings lost power and there were reports of people stuck in elevators. We recently reported how the city was racing against the end of Daylight Savings Time to restore reliable service to thousands of street lights. The city's office of emergency management...

 

17 posted on 09/11/2013 4:16:46 PM PDT by Responsibility2nd (NO LIBS. This Means Liberals and (L)libertarians! Same Thing. NO LIBS!!)
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To: RKBA Democrat
we are already experiencing the lowest rate of annualized economic growth in history. With an aging population rapidly moving towards retirement; the structural employment imbalance will lead to far more economic ills in the not so distant future as the drain on welfare programs intensifies as people continue to leave the workforce.

The cost of the welfare state is due to the diversion of funds from capitalists, businessmen, and the rich to government officials, government employees and to recipients of welfare and redistribution. The aggregate results are:

1) decreases in profits
2) decreases in savings
3) decreases in net investment
4) decreases in demand for capital goods
5) decreases in demand for labor of workers
6) decreases in money wage rates for workers
7) decreases in supply of labor hired
8) decreases in net consumption of capitalists, businessmen, and the rich
9) decreases in demand for consumers' goods by workers
10) decreases in productive expenditure
11) decreases in investment of capital
12) decreases in capital invested
13) increased demand for consumer goods by welfare recipients and bureaucrats
14) decreased ratio of demand for capital goods / demand for consumers' goods
15) decreases in total productive ability
16) decreased capital accumulation
17) lower standard of living for the average wage earner

18 posted on 09/11/2013 4:25:34 PM PDT by mjp ((pro-{God, reality, reason, egoism, individualism, natural rights, limited government, capitalism}))
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To: Alberta's Child

do not associate social security with Medicaid and section 8

the recipients of the latter put NOTHING into the system

social security - some recipients AND their employers have paid SS taxes for 20-30-40 years - with NO CHOICE to opt out and invest privately- and trusted “the govt” to invest or manage the money as their retirement supplement

big difference between welfare and SS even though they are govt programs


19 posted on 09/11/2013 4:31:12 PM PDT by silverleaf (Going to war without the French is like going hunting without an accordion.)
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To: willywill

“the question then becomes, when does the system implode.”

I’m predicting right after the 2014 election so it can be blamed on the republicans.


20 posted on 09/11/2013 4:38:51 PM PDT by IMR 4350
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To: RKBA Democrat
"After having been in the investing world for more than 25 years from private banking and investment management to private and venture capital; Lance has pretty much "been there and done that" at one point or another."

But has he produced anything that's useful?


21 posted on 09/11/2013 4:44:54 PM PDT by familyop (We Baby Boomers are croaking in an avalanche of corruption smelled around the planet.)
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To: RKBA Democrat

No mystery there. The Hispanics on welfare/food stamps always have undeclared jobs on the side, such as running a small landscaping business. They pocket all that cash, but conveniently forget to mention it at the welfare office. Meanwhile, American recipients who fell on hard times and are honest about their income are routinely turned down because they’re the tiniest bit over the poverty line. The system is stacked against honest people.


22 posted on 09/11/2013 4:58:57 PM PDT by lbtbell
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To: RKBA Democrat

Most incomes are dependent on government debt/revenues (government employment, NGOs, contractors, services including financial, etc.). Even the agricultural industry is trying to use government to outlaw small farms. Energy might be one of the more independent private sector fields of work, but even that is closely linked with government in many ways. The last I saw figures, (couple of years ago), the whole food stamp program consumed nearly $100 billion from the yearly pile of debt (about 1/10th of the yearly deficit). Meanwhile, most government employees continue to have uninhibited labor unions (most of them without doing labor).


23 posted on 09/11/2013 5:02:36 PM PDT by familyop (We Baby Boomers are croaking in an avalanche of corruption smelled around the planet.)
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To: RKBA Democrat

My grandma and parents were all full blown democrats. Why? Because in the fifties they could get government cheese. A guy in town would drive his pickup truck to the county seat to pick up “commodities” for several people in town. The people would give him some of the food. He’d then sell it. Fraud has been a part of welfare since it started.

And by the way, powdered milk and powdered eggs will gag a maggot.


24 posted on 09/11/2013 5:04:55 PM PDT by VerySadAmerican (".....Barrack, and the horse Mohammed rode in on.")
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To: RKBA Democrat

I think he may have made an incorrect assumption.

If a person has a lot of money in their wallet, yet they are buying groceries with food stamps, do you assume they are wealthy enough to buy their food with that cash?

What if they pay their rent with cash? And buy gasoline with cash? And pay for everything with cash? It is likely they do not have a credit card, or a bank account, and they are carrying around all the money they have in their wallet.

Lots of people, with many more joining their ranks, are now living on the cash economy. Whatever job they can get, they are paid in cash. Everything they buy they buy with cash. They do not have enough wealth to use “the system.”

People who have credit cards don’t as often carry that much cash in their wallets. It is in their bank accounts, their investments, etc.


25 posted on 09/11/2013 5:06:06 PM PDT by yefragetuwrabrumuy (The best War on Terror News is at rantburg.com)
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To: RKBA Democrat

Where are so many people finding work in the underground economy?


26 posted on 09/11/2013 5:12:16 PM PDT by tbw2
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To: RKBA Democrat

Great Article! Thanks!


27 posted on 09/11/2013 5:13:56 PM PDT by Graewoulf (Traitor John Roberts' Commune-Style Obama'care' violates U.S. Constitution AND Anti-Trust Law.)
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To: RKBA Democrat
However, as long as the current administration continues to push more support programs, bailouts and extensions of benefits; it simply makes it more profitable to stay at home and live off "government cheese."

I don't care about the excuses. It always must go back to the people and their lack of self respect. None of this sh!t would work if people had any self respect. They want to be slaves, they deserve to be slaves. I'm very angry about their desire to be effin worthless pieces of protoplasm at the expense of those have real value in life.

But as far as their unhappy lives and worthless, unfulfilling existence(s), I don't care. I have several in the extended family and I honestly don't give a damn what happens to any of them. They get nothing from me (us).

28 posted on 09/11/2013 5:26:49 PM PDT by ChildOfThe60s (If you can remember the 60s.....you weren't really there)
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To: tbw2

Running their own businesses on the side, doing day labor, working off the books jobs, crime, whatever. Not an easy life and not one I’d choose, but one that it would appear many people can survive on.


29 posted on 09/11/2013 5:33:16 PM PDT by RKBA Democrat (Power disintegrates when people withdraw their obedience and support)
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To: tbw2
"Where are so many people finding work in the underground economy?"


30 posted on 09/11/2013 6:10:01 PM PDT by familyop (We Baby Boomers are croaking in an avalanche of corruption smelled around the planet.)
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To: tbw2
Sorry. Here's a resend.

"Where are so many people finding work in the underground economy?"

Probably doing jobs for state and local government employees.


31 posted on 09/11/2013 6:11:22 PM PDT by familyop (We Baby Boomers are croaking in an avalanche of corruption smelled around the planet.)
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To: RKBA Democrat

If one state like Louisiana,Texas, or a Southern State secedes then many Americans who love freedom, small government and self reliance will move to that seceded state. And many democrats would move out. then with the greater majority of self reliant people we would remove the welfare state which would send any remaining democrat and illegal fleeing to the liberal states where they can get welfare and a handout. That new state will with freedom and capitalism outshine all the remaining states that will descend into a a hell of socialism. It would be like Ayn Rand’s Galt’s Gulch. All that has to happen for this is for one state to do it. Knowing the courage and the love for freedom of the people here in Louisiana my bet is on Louisiana. Although I think Texas , Alabama and a few of the other Southern states are also great.


32 posted on 09/11/2013 6:25:55 PM PDT by Democrat_media (IRS rigged election for Obama and democrats by shutting down tea party)
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To: Responsibility2nd

Wow, good catch, I didn’t see it before your post.


33 posted on 09/11/2013 6:48:35 PM PDT by Travis McGee (www.EnemiesForeignAndDomestic.com)
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To: silverleaf
I understand that, but from a financial standpoint it doesn't really matter whether it's "welfare" as you've described it.

My point is that the government is bankrupt, to the point where even the taxpayers aren't on the hook for a big chunk of government expenditures.

34 posted on 09/11/2013 10:07:36 PM PDT by Alberta's Child ("I've never seen such a conclave of minstrels in my life.")
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To: RKBA Democrat

If you work and pay taxes, you are screwed.

If you work and pay taxes and voted for Obama, you are insane.

I know some insane people. I don’t understand how they can work and pay taxes and have voted for Obama.


35 posted on 09/12/2013 12:56:44 AM PDT by Freedom_Is_Not_Free (Free goodies for all -- Freedom for none.)
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To: Democrat_media

I generally disagree with the seceshers because I think they’re probably going to get themselves and a lot of other innocent people killed if their movement actually gets some legs. Take a look at what’s going on with Syria. The political powers that be are seriously considering allowing dear leader to start a war so he can save face. If they’re willing to consider that, imagine what they’d be willing to do if some movement, like secession, actually challenged their domination?

But I do agree that LA has a better chance of pulling it off than TX should it choose to go that way. TX has a problem in that it’s so large and has so much in the way of resources. It’s too big of a prize to allow it to get away. Also, the Odd Confederacy of Texas Seceshers tends to think of glorious Texas history instead of remembering that the ones with the biggest guns usually win. No state will get to secede unless the political powers that be decide it’s in their best interests to allow it.

That said, LA is less of a prize due to it’s smaller population and resource base. And let’s face it: it’s considered a redneck backwater by most of the elitists so they’re less inclined to want to hang onto it. And since LA doesn’t have the same history as TX, it might be able to take a more pragmatic approach over time. I’m still not a fan of secession, but I think the argument is more easily made in states like LA or AL or VT.


36 posted on 09/12/2013 2:18:42 AM PDT by RKBA Democrat (Power disintegrates when people withdraw their obedience and support)
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To: Responsibility2nd

> And what with Obamacare punishing employers who have no other recourse but to hire part timers and not full timers...

This is becoming the new norm. You will have to work two part-time jobs to get full pay because of the idiot in chief.


37 posted on 09/12/2013 5:49:57 AM PDT by jsanders2001
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To: silverleaf

First Social Security recipient - Ida May Fuller - paid $22 in FICA taxes over the course of her working life - collected $22,000 in Social Security payments.

She was a welfare recipient.


38 posted on 09/12/2013 5:56:35 AM PDT by DuncanWaring (The Lord uses the good ones; the bad ones use the Lord.)
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To: lbtbell

> No mystery there. The Hispanics on welfare/food stamps always have undeclared jobs on the side, such as running a small landscaping business. They pocket all that cash, but conveniently forget to mention it at the welfare office. Meanwhile, American recipients who fell on hard times and are honest about their income are routinely turned down because they’re the tiniest bit over the poverty line. The system is stacked against honest people.

I’ve seen this so many times with my own eyes for years and know a Hispanic landscaper who pays no taxes, receives government assistance, and now owns two homes, a big landscaping truck that almost resembles an 18 wheeler, and his own personal truck which he paid for in cash. I think his first house is paid off, and is always packing a wallet that looks like its about to explode. I asked him how many lawns he cuts a day and he said it was around 20 and many if them are larger lots where he makes about $70 to cut so you do the math. I’d guesstimate anywhere from $1000 - $1200 a DAY. He typically works 5 - 6 days a week so I’m guessing he makes anywhere from 250K - 350K a year TAX FREE.

I know they work hard but it just ain’t right that people who earn much less than they do have to pay for benefits for people like that. This is not an isolated situation either its everywhere.


39 posted on 09/12/2013 6:09:09 AM PDT by jsanders2001
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