September 29, 2016

If You Want to Rebuild Civil Society, Don’t Abolish Welfare—Decentralize It

Thank you to the lovely folks at for reaching out and offering to publish my take on how the welfare system interacts with civil society, and how the U.S. can do better. The title of the piece is “A Proposal to Reform Welfare and Rebuild American Community.” You can read it in its entirety here.

In it, I argue that the way the U.S. provides public assistance has likely harmed civil society by crowding out private charity and contributing to measured declines in social capital. Yet taking a step back to look at international comparisons suggests welfare is not the culprit, per se, so much as the highly centralized and cynical way it is delivered. This suggests a way forward for reforming the U.S. safety net that gets outside the stale debate of whether social insurance should exist in the first place. As I write of Sweden, a country with both a comprehensive welfare state and high levels of social capital:

The key factor appears to be the high level of decentralization in many social programs. For example, in Sweden delivering healthcare is the responsibility of County Councils, while welfare, disability, and programs for the elderly are controlled by municipalities. Swedes also have very high rates of union membership. Yet instead of being confrontational with the employer, the norm is mutual advantage. In turn, unions are entrusted to manage stuff that in the U.S. would be cynically regulated, like unemployment insurance and parental leave.


Economists extol the virtue of this kind of decentralization, known as subsidiarity, for reasons of asymmetric information. That’s just jargon for the truism that, in tight communities, everybody knows everybody. I was astonished to learn, for instance, that 75% of Swedes report attending “study circles,” 10% on a regular basis. These are regular meetings of a dozen or so people organized by larger voluntary associations that “range from the study of foreign languages to cooking to the European Union question.”


As the political scientist Bo Rothstein wrote of the Swedish welfare state, “its main architects sought a social policy based on the idea of ‘people’s insurance’ that would supply all citizens with basic resources without incurring the stigmatization associated with poor relief.” And yet the so-called people’s insurance also found a way to co-exist with community life by assigning responsibility for provision to the local level.

What does this mean concretely for U.S. policy reform? Three examples spring to mind.

Medicaid Waivers

The first is the 1915(c) Home & Community-Based Waiver, which allows states to provide long term care under Medicaid through community based settings. An example might be an individual with severe intellectual or developmental disabilities. Traditionally, under Medicaid the individual will receive long term care through an agency and may even become institutionalized. Using the HCBS waiver, the eligible individual can self-direct their care from top to bottom, appoint a friend or family member as caretaker, and take control over their living environment. In some cases, the individual may even become the de facto employer, with the aid of a fiscal intermediary to handle payroll and other tasks beyond their capacities. So not only does the waiver redirect program delivery in a way that re-engages family and community, it also greatly enhances individual autonomy and self-determination.

Many only learned of these waivers in 2013, when Jenny Hatch, a young woman with Down syndrome, prevailed in a guardianship case against her parents. Her parents wished to keep Hatch in a group home against her wishes, but with the guardianship request rejected, Hatch was able to use the waiver program to opt-out of the group home, and designate two close friends as her temporary guardians. In short, the waiver gave her both independence and the ability to forge new, and self-selected social networks, without forgoing medical care.

Prevention Programs

A second, more recent example, is the Department of Health and Human Services’ initiative to channel Medicare spending on diabetes prevention through local YMCAs. The program launched as part of an innovation grant under the Affordable Care Act and is still being independently evaluated, but initial findings are promising. It’s a perfect case study in why community matters. By bringing pre-diabetic participants under one local roof, any direct educational benefits are reinforced by the peer-effects of other participants who may begin to form a loose network, check in on how well each is holding to their new diets, and so on.

The best part is that, in theory, peer networks can persist long after the initial intervention. That means if this particular program were ended its effects may continue to reproduce overtime. The “cultural channel” for social policy is thus underrated by many progressives who automatically associate the enforcement of social norms through shame and stigma with conformity or oppression. Yet such social structures also serve as robust mechanisms for enhancing an individual’s self-control. Think Alcoholics Anonymous. A law that simply mandated pre-diabetic individuals take preventative steps, in contrast, would be extremely fragile to being amended or revoked, at which point any behavioral improvements could very well be lost forever.

Universal Basic Income

This one is less concrete, but still interesting to consider over the longer term. As I write at LearnLiberty,

The conservative-libertarian scholar Charles Murray has proposed replacing our existing patchwork of 80 or so centralized, means tested programs with a simple lump sum transfer known as a guaranteed basic income. Murray argues that such a system would pave the way for a flourishing of families and communities, as the least well-off members of society would be compelled to come together and pool their resources.

The details of Murray’s plan are laid out in his book In Our Hands, which was just recently re-released. Critically, Murray argues that this only works if all or most other transfer programs are eliminated. It is in essence a strategy for eliminating the “hidden information” problem of poverty. With a basic income deposited monthly, it is no longer credible for someone who gambles their stipend away to claim total desperation, since their income stream is common knowledge. The remaining alternative is to appeal to friends and family. With the incentives set just right, the economies of scale and insurance benefits of pooling resources could lead to a dramatic community revival; however, Murray’s theory has yet to be put to the test.

Rebuilding Social Capital Takes Time

The moral of the story in each of these examples is that, when it comes to welfare spending’s impact on community, the details matter. If the U.S. welfare system has in fact damaged social capital, it is due primarily to the perverse way centralized public administration interacts with and crowds out private spheres of collective action. Yet using this fact to demand that expenditures be slashed runs up against a political impasse.

Worse, if social capital crowd out is real, it suggests the need for a more gradual transition strategy, rather than a strategy that pulls the rug out from under the needy as if they will land in a spontaneously emergent community safety net. Social capital can take generations to accumulate. By first incentivizing care to be transitioned from institutions and agencies into community settings we allow social networks to reemerge, at which point it becomes far easier (and more humane) to phase out public funding and phase in private charity.

Thus in the meantime, those of us who are concerned about the state of civil society should continue to explore innovative ways to enhance program delivery that allow subsidiarity and self-governance to flourish, regardless of how much we spend.