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If you think social safety net is generous, look again

By Fred Smith
Special to the Observer

Fourteen years ago I won the lottery. Not the lottery where you win millions of dollars, but a job lottery. The economics department at Davidson College was hiring two economists; I got one of the jobs. I did well in graduate school, and I was a strong candidate for the position I now hold. My students would tell you I’m a decent teacher and an active member of the Davidson community. I hope I’ve demonstrated I was worthy of being hired. But make no mistake, I was lucky. More than 300 people applied for the two jobs and I can assure you that there were at least two dozen candidates who would have been great additions to the Davidson community.

I tell this story to my students almost every semester. I hope to remind them that hard work and preparation are key ingredients to success, but what I really want them to understand is that there are forces beyond our control that can alter our lives in an instant. I find myself shocked by the number of people in this country who want to deny the role that good (or bad) fortune can have in determining how our lives turn out. These folks seem to think that any success they have enjoyed should be attributed solely to their own hard work. Moreover, they seem to believe that they’ve received little or no help from the government and that being born into affluence provides you with no meaningful advantages over a person born into poverty. Ultimately the beliefs held by these individuals can lead them to unfortunate conclusions – unemployment insurance causes people to sit at home, perfectly content to be unemployed; dollars spent on Medicaid or “food stamps” (SNAP) coddle lazy individuals who haven’t worked hard enough to pay for their own medical care or food; and progressive tax rates punish the entrepreneurs and business people who create the jobs that serve as the engine of our economy.

As an economist, I’m trained to look at the benefits and costs of policies that affect our economy. Social safety net programs such as unemployment insurance, Medicaid, and SNAP need to be designed with care or they will distort incentives. If benefits are too generous, then, yes, people will choose not to work. But, if you think that our social safety net is excessively generous, then I’d invite you to look more carefully. Visit the Ada Jenkins Center in Davidson or the HealthReach Community Clinic in Mooresville. At these two institutions you will find proud, hard working, responsible people who have fallen on hard times due to a devastating recession and the implosion of the housing market. You will not find people abusing our social safety net, and you will certainly not find folks living a life of luxury due to excessively generous benefits from social safety net programs.

I’m not suggesting that all of our social safety programs are well designed. Some should be overhauled completely. Moreover, our tax code is a complicated mess. I’m also sad to say that there are some who cheat and abuse the opportunities afforded to them by our social safety net. The vast majority of individuals who benefit from these programs, though, have simply had bad luck. They need a helping hand to get back on track.

None of us wants excessive government regulation, nor do we want to pay any more in taxes than we have to. But I don’t think we want to live in a society where back luck can cause a person to lose her home or the ability to put food on the dinner table, or where people who work low wage jobs are forced to retire into a life of poverty or live without health care. To pay for our social safety net those of us who have been more fortunate will have to make sacrifices. We will have to pay taxes and we will be unable to accumulate wealth as quickly as we might like. As we begin a new year, we should acknowledge the role that good luck has had in producing our successes, and we must always remember those who have not been so fortunate.

Fred Smith is a professor of economics and chairman of the economics department at Davidson College.

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