Give & Take Economics Theory sheds light on how social assistance can work effectively. Social assistance should in general be a ‘social insurance policy’, used by those that have been negatively impacted by significant economic change. Individuals that are unable to currently find work in the private sector should be able to earn their assistance by providing service to society.
This ‘workfare’ approach, as it is commonly known, ensures that PTB and PTC are not significantly decoupled and allows people to obtain support benefits as needed while ensuring no excess use. In such an approach there will be no excess use of social assistance benefits, other than outright fraud, because extra benefit requires extra effort (extra PTB requires extra PTC). There will also be no shortage of support because individuals will offer up the level of effort they need to in order to ensure that they obtain the level of assistance required to meet their needs.
By contrast, policies that are ‘welfare-based’ usually create dependence and often discourage skill enhancement whenever the ratio of PTB to PTC is very high through participation in the program, especially when it nears ratios that working in the private sector would produce.
There is much social controversy around workfare type programs, with some critics asserting that social assistance should be available without strings, that it is degrading to require work for benefits. This mindset is flawed within the context of a mixed-market economy and free society, which is itself fundamentally based on the accepted principle that the work efforts of individuals contribute to the overall benefit of society. Workfare programs attach a respected productivity to those that need help, eventually replacing a perception that recipients are unproductive and not contributing to society.
A workfare approach can also contribute to key skill development. It is important however to be pragmatic with such programs, offering the opportunity to develop skills, but not retraining everyone to become a highly skilled professional on the public dime. For example, society benefits from garbage collectors, and such an occupation fundamentally contributes to society. In fact, many jobs currently held by civil servants could arguably be better suited to workfare roles rather than perceived as careers.
Programs must also provide benefits to those individuals that cannot reasonably work due to disabilities. The benefits that they receive couple to the effective PTC they face in the prospect of employment. Welfare programs can often reinforce a mindset in recipients that benefit payments received are a large PTB, that work is a high PTC, that being on social assistance is a PTC beyond their control, and that there is no large PTB to employment (perhaps due to current skill gaps etc.). This belief set results in a motivation to remain on welfare-based social assistance. The mindset differs greatly from a motivated worker/taxpayer, who will by comparison generally feel that the PTB associated with assistance payments and the PTC associated with work effort are each significantly outweighed by the large PTC attached to the limited opportunities of being on welfare and by the large PTB received from employment.
Societies that truly embrace workfare programs can produce the mindset that the PTC of being non-contributive to society outweighs the PTB of receiving welfare assistance, and that participation in workfare can be a source of pride with high PTB.
Workfare programs keep PTC and PTB coupled between individuals and result in higher societal utility. True workfare programs are optimal for society in the long-run. Workfare programs can also produce higher overall PTB to the individuals paying taxes to fund them than do welfare programs, because in the former, individuals realize that their taxes are funding productive members of society, and in the latter that they are not.
Workfare programs allow individuals to gain from society’s tax dollars while providing services to society in exchange, which is the whole basis of taxation in the first place. This line of reasoning parallels precisely to any services provided from tax dollars the government, such as government. Aside from roles with highly specialized skills in key areas of government, there should essentially be no distinction in perception between many front-line government careers and workfare participants. Each are legitimately providing basic services in exchange for tax dollars. Many government jobs that exist today could in fact deliver enhanced results if they were considered workfare opportunities rather than bureaucratic careers. This is especially true of customer service and ‘paper-pushing’ jobs.