I am just delving into a Christmas (gift) book called “Fault Lines”, about “How hidden fractures still threaten the world economy”. It was written by Raghuram G. Rajan, head of India’s Central Bank. This is not the first book I have read from an author born in India and it won’t be the last. I believe India is going to carry the torch of Western civilization but that is another topic for another day.
As with most books I read, I perused through the chapter headings. Chapter One, “Let them Eat Credit”. We can guess where that’s going, makes sense. Chapter Four, “A Weak Safety Net”. I know where he’s going with this on and according to Foreign Affairs “Rajan blames the country’s weak social safety net: unemployed Americans get modest unemployment compensation for only six months and often lose their employer-based medical insurance, and they can hardly afford private medical insurance (if they can get it) on their meager unemployment benefits. Thus an important part of the solution to global imbalances, Rajan argues, is improved provisions for low-income Americans.” Before I have even read the chapter I can guess that “if there was more safety net, all would be better”. But how much of a safety net does China have? According to the Wikipedians they do have one. Carnegie Endowment says not so much and it’s one reason the Chinese save so much. I’m with Carnegie. I can’t imagine they have much social safety in a country of 1.5 billion, but I will read the chapter. My argument against Social Welfare and Safety Nets are they sound great from a humanitarian standpoint and there should be some, but only some. Welfare was suppose to be a helping hand, not a way of life. Rajan believes we need to remove the anxiety of losing healthcare and possible starvation to get people to improve themselves and stay in the workforce. Unfortunately, fear is a great motivator, and though Rajan is a really smart guy it does not make his opinion fact. We all need a certain amount of fear to keep us on the edge of our seat. Too much anxiety can send someone into depression and into non-action.
So what is the humanitarian level of welfare to provide the poor and huddled masses but just enough so as not to be too comfortable so they just might get up and go get a job? If I was given the task of redesigning the welfare system, in a week, there would be just enough money for food and shelter, but no cable TV or cell phone. WAIT! They need a cell phone to get a job. I’ll take my chances on that one. There would be no cash/food cards. We’re getting ripped off big time. I would have Costco deliver a box of food to last the welfare recipients a week. Inside there would be milk, OJ, no soda. No cookies or snacks. America’s safety net is vast enough that our poor live better than many in the world today. As referenced above, Rajan is talking about America’s safety net and is not proposing one for India. Not unusual, most all the money spending solutions in the world are reserved for American taxpayers.