Welfare systems tend to create poverty rather than to diminish it, by exceeding their role of providing temporary relief to deserving unfortunates. Such systems encourage dependency and permanent entrapment.
In a time of rapid economic expansion, some nations are finding it possible to guarantee a level of economic support for citizens who are disabled, unemployed or otherwise incapable of self-support. In addition, although many inner city residents receive some kind of public assistance for food, housing, medical care, child support or aid to the aged or disabled, there is little incentive for welfare recipients to leave welfare rolls. It may be risky and often a job results in less income than public assistance offers. Welfare systems also produce their particular forms of social immobility and social strata as the individual uses special currency and special clinics. This often results in aimless activity, fraud and indolence. A committed approach is necessary to counter the long-term patterns of social welfare programmes.
In 1990 in the Netherlands, nearly one in seven members of the labour force claims to be incapacitated and unable to work. More than 100,000 extra people are so declared each year. A third of those claiming disability identify psychological reasons, including nervous exhaustion. Each receives 70% of their previous salary. A 1992 study found 13.5% of USA families on welfare in 1991, and forecasted an upward of one third of all American children dependent on welfare by the year 2010.
Existing welfare systems produce a large stratum of dependents, inclined to the drug culture and to casual relationships and therefore to illegitimacy, family breakdown and crime. They also engender an interested elite by which they are operated and which derive their income and power from them. Publicly financed welfare has meagre results and cannot create affluence.
Welfare cultures foster an entitlement mentality. This weakens the mainspring of individual striving for upward mobility.
By intervening directly and depriving society of its responsibility, the social assistance state leads to a loss of human energies and an inordinate increase of public agencies, which are dominated more by bureaucratic ways of thinking than by concern for serving their clients, and which are accompanied by an enormous increase in spending. In fact, it would appear that needs are best understood and satisfied by people who are closest to them and who act as neighbours to those in need. It should be added that certain kinds of demands often call for a response which is not simply material but which is capable of perceiving the deeper human need. One thinks of the condition of refugees, immigrants, the elderly, the sick, and all those in circumstances which call for assistance, such as drug abusers: all these people can be helped effectively only by those who offer them genuine fraternal support, in addition to the necessary care. (Papal Encyclical, Centesimus Annus, 1 May 1991).
Poverty is not an economic issue but a moral one. Welfare systems subsidize the pathological behavior that consigns people to hopeless poverty.
The OECD study "The Role of the Public Sector" challenges the view that overly generous government welfare programs are eroding the will to work, save and invest.
Reducing welfare benefits consigns people to deeper poverty in the name of saving them from debt.