Government safety nets are a good idea, but so is personal responsibility.
CNBC just had several corporate America guests including someone from Manpower (large temp worker agency). One company looking to hire mentioned that the day unemployment benefits were extended, 3 people canceled interviews. The guest from Manpower said it is common for people to say they are not available until their unemployment benefits end.
I am not saying that all unemployed people are gaming the system (hopefully it is a small minority), but considering the debts we are running up, we should be looking for ways to reduce this kind of activity.
One way to try and reform Government safety net and entitlement programs would be to have more monitoring, hoops to jump through, etc. BUT WHY INCREASE ADMINISTRATIVE COSTS WHEN THERE IS AN EASIER ANSWER.
The solution? Divide Unemployment, Social Security & Medicaid/Medicare into two parts
Part 1: A program similar to those that currently exist, but with smaller benefits (and smaller paycheck deductions for this part).
Part 2: Your own personal safety net account tied into your SSN. Contributions would be automatic so that total paycheck deductions would remain similar to what already exists (with one possibility to allow for greater contributions at your own discretion). Withdrawals would be restricted to safety net situations (unemployment, medical bills, etc). Any unemployment and other pre-retirement benefits that you did not use would roll into your Social Security retirement account.
Having individual safety net accounts will:
1. Reduce the number of people who try to game the unemployment system (which should lower administrative costs as well as reducing fraudulent benefit payments).
2. Reduce Medicare and Medicaid overuse and outright fraud- less people will go along with unnecessary procedures and bogus claims when part of the payment comes from their own account.
3. Allow responsible people with surpluses in their accounts to get increased benefits when they really need them.
I received an email recently that said “In 1887 Alexander Tyler, a Scottish history professor at the University of Edinborough, had this to say about the fall of the Athenian Republic some 2,000 years prior:
‘A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse over loose fiscal policy, (which is) always followed by a dictatorship.’
I plan to elaborate on the Alexander Tyler email I quoted above more in another post. According to Snopes, it is mostly false, but I thought it made a lot of sense and was applicable here.
Bottom Line- Give people incentive to do the wrong thing, and that is what they will they will have a tendency to do more of. Isn’t it time that we give people the incentive to do the right thing and be more responsible for themselves?