Privatized welfare

[Brackis]

I'm going to start the discussion based on a book I justed finished called "American Dream" by Jason DeParle that provides an interesting history of Welfare programs in America, with a focus on the last 20 years and a few case studies of single black mothers from Chicago who moved to Milwaukee because of higher welfare paychecks and less expensive rent:

TANF is a national block grant program for each state to provide welfare to poor people, but privatized welfare agencies with government money have also run welfare programs in return for a cut of the money they are given. Do you believe that privatized welfare companies are a good idea for the welfare system to improve efficiency thru competition and private non government employees, or is it another way for people to invest in the suffering of poor people. Companies like this already exist such as Maximus, which is a publicly traded company that has provided welfare management in Wisconsin among places.
Others are Lockheed Martin, which handles child support payments in Wisconsin after winning a government contract to sort payments from fathers and dole out payments to single mothers.
These companies are typically given some escalating restriction on the profit they can make on a contract, which some argue makes them apathetic to improving efficiency beyond what is necessary to make their alloted profit (hearkening back to the idea that government exists to protect citizens from each other's human nature). Others would say that it gives the programs more freedom to operate.

Discuss.
I'm not endorsing either side at the moment although I have a strong opinion, but wanted to see what peoples opinions were or if anyone who had more background in this area wanted to elaborate.

edit: This thread was intended to be about need based social insurances, not social security is another wonderful debate in many P&N threads, but currently the administrative costs of the program are under 2% of revenue making hard to even debate privatization without going into investment strategies etc...

 

[Stunt]

This is the first I've ever heard of this...
I suppose financial institutions would be more efficient at distributing welfare but I find it hard to believe you'd get significant benefits. The whole reason behind privatizing public services is to give the citizen choice and reduce prices through competition. Welfare is a straight up handout; where is the choice or reduced cost?

 

[imported_Aelius]

I have worked a fair bit on contracts for the government. All this talk about saving money is a load of BS.

What does a gov employees make a day? Lets say $180 for the front line work force. That's accurate. Add an extra $10 a day to cover benefits etc. That's super Liberal with the cash.

Want to take a wild guess as to how much companies charge to do the same thing on a contract? 160? No... ok how about 150? One last guess... 180 but they don't give benefits!... no. They don't give free benefits, if you are lucky you may get some reduced cost ones. So how much?..... try roughly 400% more on average and that's the lowest bidders that don't always win. Big companies? Add another 200-600% on top of that.

That Bell guy who has to climb a cell tower to fix a police radio makes more in a few hours when he is called then what I have ever made in a month. Don't get me started on server support that provides a couple of people. They charge more in one month then what I will make in 5 years.

Food for thought.

 

[ProfJohn]

I think the idea here is that you offer the companies who manage these programs financial incentive to help people get off welfare.
Think of it as a "cost plus" plan for welfare.
The government gives these companies money for welfare and for job training. The companies are then in charge of getting the people who collect welfare into these job training programs and out into the "real" world where they collect money and become productive members of society.

The government then 'rewards' the companies with bonuses based on the number of people they get off welfare.

In theory these programs are a win-win situation for everyone.
The people on welfare get job training and get off welfare.
The companies turn a profit.
The government saves money in the long run by not having to pay welfare AND by not having to provide other social services to these people.

You have got to love our free market system. If given a chance it will find a solution for everything

 

[Stunt]

Aelius,
I find it hard to believe private companies bidding on contracts are just as expensive as government. Even if this is true and a company charges $180 a day; this includes profits which the government will collect taxes from both the corporation and investors. Government gets way more out of corporations than its own employees.

 

[Brackis]

Originally posted by: ProfJohn
I think the idea here is that you offer the companies who manage these programs financial incentive to help people get off welfare.
Think of it as a "cost plus" plan for welfare.
The government gives these companies money for welfare and for job training. The companies are then in charge of getting the people who collect welfare into these job training programs and out into the "real" world where they collect money and become productive members of society.

The government then 'rewards' the companies with bonuses based on the number of people they get off welfare.

In theory these programs are a win-win situation for everyone.
The people on welfare get job training and get off welfare.
The companies turn a profit.
The government saves money in the long run by not having to pay welfare AND by not having to provide other social services to these people.

You have got to love our free market system. If given a chance it will find a solution for everything

ProfJohn,

In my limited reading on private programs, I know the Maximus group had a contracted 4.7 million dollar profit, and beyond that earned 10% of every dollar that went unspent once the services of the contract contract were fulfilled (such as training programs, welfare payments, and administrative costs). This left the company doing what many for profit companies do which is increase spending instead of being "taxed" (in this case 90%) on profits.

After reading your sig, I think you would be interested in reading the book, as a lot of it has to do with mid 90's newt-Clinton battling over welfare when not chronicling the small case study of welfare moms. I would consider it more liberal than what your sig implies your politic views are, but covers a lot of very conservative ideas of thought that got me really thinking too.

 

[Craig234]

The private and public sectors each have their place. Many people on the right, though, are brainwashed about 'efficiency' of the private sector, when in fact some things the private sector wants to 'privatize' would just make them rich and the public poorer.

For example, Social Security is administered *very* efficiently, and the administrative costs would go up by multiples if privatized; but Wall street could make a killing.

I want the private sector making my cars, and I want the government running welfare (and wars. Hear the example of Halliburton cost-plus contracts where, if a truck gets a flat tire, it's more profitable for them to destroy it and buy another than repair the truck, because they get the cost plus profit for the new truck?)

 

[ntdz]

Originally posted by: Craig234
The private and public sectors each have their place. Many people on the right, though, are brainwashed about 'efficiency' of the private sector, when in fact some things the private sector wants to 'privatize' would just make them rich and the public poorer.

For example, Social Security is administered *very* efficiently, and the administrative costs would go up by multiples if privatized; but Wall street could make a killing.

I want the private sector making my cars, and I want the government running welfare (and wars. Hear the example of Halliburton cost-plus contracts where, if a truck gets a flat tire, it's more profitable for them to destroy it and buy another than repair the truck, because they get the cost plus profit for the new truck?)

The government is the most inefficient thing on Earth. The private sector could easily run the government with a 20% profit margin and still do it cheaper than our bloated bureaucracy. I bet we could get rid of half the government workforce and end up getting MORE work done.

 

[smashp]

unfortunately, privatization of government and military services is nothing more than corruption in government at work. It Cheats the american taxpaper and and rapes the coffers of the treasury.

Privatization has become the tool of the best organized ccrime ring in the history of the USA. Because paying a government or military person 10 widgets to do a job is government waste, but spending 100 widgets for that same job to be performed by a private company is good.

Rome will fall due to its overreliance on mercanaries.

 

[dmcowen674]

Originally posted by: Brackis
I'm going to start the discussion based on a book I justed finished called "American Dream" by Jason DeParle that provides an interesting history of Welfare programs in America, with a focus on the last 20 years and a few case studies of single black mothers from Chicago who moved to Milwaukee because of higher welfare paychecks and less expensive rent

Interesting.

One would think that resident Republicans would be thrilled that the mothers did that because they are always advacating how people should move to where they can afford to live.

 

[kingtas]

The Air Force has a program in development called A76. This is my understanding of the program. It is an indepth study of what it costs for any base function to be accomplished by the base. Once the study comes up with the figure, the base submits the figure as a bid to keep the service inhouse. If a private company can beat the government bid, they will be awarded the contract instead of the base.

Why shouldn't welfare be handled in a similar manner?

 

[desy]

Stunt
private companies contract out WAY more than in house gov't service. I've worked both, private companies aren't more effecient than govenment, usually more timely but its hard to measure, difference is bad companies fold up where bad gov't depts soldier on but that process can take yrs or decades to weed out a bad company.

Personally I'm not in favor of privatized welfare, IT IS exactly the type of service we expect gov't to provide. I do support making recipients more accountable 'work fare' and enabling people to get off and weed out the people who spend generations on it but I don't think private is the way.

 

[Genx87]

Originally posted by: Stunt
This is the first I've ever heard of this...
I suppose financial institutions would be more efficient at distributing welfare but I find it hard to believe you'd get significant benefits. The whole reason behind privatizing public services is to give the citizen choice and reduce prices through competition. Welfare is a straight up handout; where is the choice or reduced cost?

This is the crux of the matter when it comes to big govt programs. Who really benefits? Clearly in the United States with its massive expansion of social programs but no move in the poverty rates in 40 years, it isnt the people the programs are designed to help.

Instead the money is gobbled up by the beauracy or outsourced to companies who are run by friends of the politicians.

This is exactly the reason why I say the govt should be limited in size and scope. Provide a safety net but not a dependence.

 

[sandorski]

Originally posted by: Genx87

Originally posted by: Stunt
This is the first I've ever heard of this...
I suppose financial institutions would be more efficient at distributing welfare but I find it hard to believe you'd get significant benefits. The whole reason behind privatizing public services is to give the citizen choice and reduce prices through competition. Welfare is a straight up handout; where is the choice or reduced cost?

This is the crux of the matter when it comes to big govt programs. Who really benefits? Clearly in the United States with its massive expansion of social programs but no move in the poverty rates in 40 years, it isnt the people the programs are designed to help.

Instead the money is gobbled up by the beauracy or outsourced to companies who are run by friends of the politicians.

This is exactly the reason why I say the govt should be limited in size and scope. Provide a safety net but not a dependence.

No. Government Beauracracy is very efficient, generally more so than Private Beauracracy. It certainly can be a problem, but for something like Welfare or even Healthcare a Single Beauracracy is much easier to fix.

The reason Poverty rates remain the same has nothing to do with failures of the Social Safety Nets, it is due to failures within the Private Sector. The Economic Benefit keeps flowing up towards the Wealthy, leaving the Middle, Worker, and Lower Classes behind.

 

[Stunt]

Originally posted by: sandorski
No. Government Beauracracy is very efficient, generally more so than Private Beauracracy. It certainly can be a problem, but for something like Welfare or even Healthcare a Single Beauracracy is much easier to fix.

The reason Poverty rates remain the same has nothing to do with failures of the Social Safety Nets, it is due to failures within the Private Sector. The Economic Benefit keeps flowing up towards the Wealthy, leaving the Middle, Worker, and Lower Classes behind.

I disagree.
That's like saying Microsoft should be the only operating system because it's easier and cheaper. Or forcing everyone to take the bus routes. Having one universal system limits choices and tries to create a cookie cutter solution to every complex problem in a diverse nation.

Take child care for example. The pro-government camp's solution is a massive national program publicly funded and administered. In reality most Canadians perfer to stay home, have a friend or grandparent look after their kid during working hours. So now Single income families who want to devote one parent to the child's development and learning gets slapped with another tax bill they have to pay. (because of a national program)

A single beauracracy is never easy to "fix" because every person in the nation has a different idea of what the service should provide. Some people think a bike is sufficient for transportation, some think a bus, some a compact car, and some a luxury vehicle. I have no problem helping those who can't afford transportation to buy a bike or getting a bus pass but forcing everyone to take the bus or helping poor pay for a luxury car is just absurd. Even more so when we are helping the wealthy buy a bus pass or a compact car!

As for the poverty rates, they have been created through a culture of entitlement where people always want something for nothing. Look at how many people play the lottery, advocate more spending by government and more tax cuts. Everyone is out to make a quick buck from doing absolutely nothing and our infrastructure supports this. Free healthcare, welfare, hourly (non-performance based) pay, free education, etc. People spend far more time b!tching about who can/should be helping them than just plain helping themselves.

Look at illegals for example, they come to the country with absolutely nothing, not even registered papers, yet they work their asses off and provide for themselves. Americans with access to some of the best support for education fail to educate themselves, sit around and watch TV all day, collect welfare and have the nerve to say illegals are stealing 'their jobs'. I call this survival of motivated ... entitlement absolutely kills motivation.

 

[Brackis]

Originally posted by: Stunt

Originally posted by: sandorski
No. Government Beauracracy is very efficient, generally more so than Private Beauracracy. It certainly can be a problem, but for something like Welfare or even Healthcare a Single Beauracracy is much easier to fix.

The reason Poverty rates remain the same has nothing to do with failures of the Social Safety Nets, it is due to failures within the Private Sector. The Economic Benefit keeps flowing up towards the Wealthy, leaving the Middle, Worker, and Lower Classes behind.

I disagree.
That's like saying Microsoft should be the only operating system because it's easier and cheaper. Or forcing everyone to take the bus routes. Having one universal system limits choices and tries to create a cookie cutter solution to every complex problem in a diverse nation.

Take child care for example. The pro-government camp's solution is a massive national program publicly funded and administered. In reality most Canadians perfer to stay home, have a friend or grandparent look after their kid during working hours. So now Single income families who want to devote one parent to the child's development and learning gets slapped with another tax bill they have to pay. (because of a national program)

A single beauracracy is never easy to "fix" because every person in the nation has a different idea of what the service should provide. Some people think a bike is sufficient for transportation, some think a bus, some a compact car, and some a luxury vehicle. I have no problem helping those who can't afford transportation to buy a bike or getting a bus pass but forcing everyone to take the bus or helping poor pay for a luxury car is just absurd.

As for the poverty rates, they have been created through a culture of entitlement where people always want something for nothing. Look at how many people play the lottery, advocate more spending by government and more tax cuts. Everyone is out to make a quick buck from doing absolutely nothing and our infrastructure supports this. Free healthcare, welfare, hourly (non-performance based) pay, free education, etc. People spend far more time b!tching about who can/should be helping them than just plain helping themselves.

Look at illegals for example, they come to the country with absolutely nothing, not even registered papers, yet they work their asses off and provide for themselves. Americans with access to some of the best support for education fail to educate themselves, sit around and watch TV all day, collect welfare and have the nerve to say illegals are stealing 'their jobs'. I call this survival of motivated ... entitlement absolutely kills motivation.

Stunt, I didn't read and analyze your whole statement because of time constraints, but wanted to acknowledge the great topic of childcare that you brought up. Is having a friend stay home a good idea? If someone lives in a very poor area and has friends who may not be very good influences on their children, is this an acceptable form of childcare?
Another facet to this gem, is having a single mother out working a 60 hour week to make ends meet too great a sacrifice to the quality of care she can provide her children, and thus it is better investment to keep this woman on welfare? Is there a happy medium of welfare benefits and work that even exists?

 

[sandorski]

Originally posted by: Stunt

Originally posted by: sandorski
No. Government Beauracracy is very efficient, generally more so than Private Beauracracy. It certainly can be a problem, but for something like Welfare or even Healthcare a Single Beauracracy is much easier to fix.

The reason Poverty rates remain the same has nothing to do with failures of the Social Safety Nets, it is due to failures within the Private Sector. The Economic Benefit keeps flowing up towards the Wealthy, leaving the Middle, Worker, and Lower Classes behind.

I disagree.
That's like saying Microsoft should be the only operating system because it's easier and cheaper. Or forcing everyone to take the bus routes. Having one universal system limits choices and tries to create a cookie cutter solution to every complex problem in a diverse nation.

Take child care for example. The pro-government camp's solution is a massive national program publicly funded and administered. In reality most Canadians perfer to stay home, have a friend or grandparent look after their kid during working hours. So now Single income families who want to devote one parent to the child's development and learning gets slapped with another tax bill they have to pay. (because of a national program)

A single beauracracy is never easy to "fix" because every person in the nation has a different idea of what the service should provide. Some people think a bike is sufficient for transportation, some think a bus, some a compact car, and some a luxury vehicle. I have no problem helping those who can't afford transportation to buy a bike or getting a bus pass but forcing everyone to take the bus or helping poor pay for a luxury car is just absurd. Even more so when we are helping the wealthy buy a bus pass or a compact car!

As for the poverty rates, they have been created through a culture of entitlement where people always want something for nothing. Look at how many people play the lottery, advocate more spending by government and more tax cuts. Everyone is out to make a quick buck from doing absolutely nothing and our infrastructure supports this. Free healthcare, welfare, hourly (non-performance based) pay, free education, etc. People spend far more time b!tching about who can/should be helping them than just plain helping themselves.

Look at illegals for example, they come to the country with absolutely nothing, not even registered papers, yet they work their asses off and provide for themselves. Americans with access to some of the best support for education fail to educate themselves, sit around and watch TV all day, collect welfare and have the nerve to say illegals are stealing 'their jobs'. I call this survival of motivated ... entitlement absolutely kills motivation.

Welfare, and to a large extent Healthcare, is not a product of choice. It's not something you shop around for or can afford to shop around for due to time or financial constraints. Add in that Welfare has no Profit benefit for the Provider, unless of course Governments fund it. So why should Governments pay multiple Private Providers each with their own Beauracracies and skimming a Profit off the top when the Government can provide it cheaper themselves?

Certain services within Welfare can and are contracted out to others. Job Training for example, but the basic dissemenation of money is most efficiently done by a single entity.

Re my inclusion of Healthcare: Certainly some Healthcare can be shopped for, say Cancer Treatment or other Medical conditions where an Emergency situation has not yet developed, but for most people their concern is what happens if they are in an accident or when they clench their chest having a heart attack. Those people don't care much about having Dr. X or Hospital Y, they just want treatment ASAP.

 

[Stunt]

Originally posted by: sandorski
Welfare, and to a large extent Healthcare, is not a product of choice. It's not something you shop around for or can afford to shop around for due to time or financial constraints. Add in that Welfare has no Profit benefit for the Provider, unless of course Governments fund it. So why should Governments pay multiple Private Providers each with their own Beauracracies and skimming a Profit off the top when the Government can provide it cheaper themselves?

Certain services within Welfare can and are contracted out to others. Job Training for example, but the basic dissemenation of money is most efficiently done by a single entity.

Re my inclusion of Healthcare: Certainly some Healthcare can be shopped for, say Cancer Treatment or other Medical conditions where an Emergency situation has not yet developed, but for most people their concern is what happens if they are in an accident or when they clench their chest having a heart attack. Those people don't care much about having Dr. X or Hospital Y, they just want treatment ASAP.

The vast majority of healthcare is cronic and requires diagnostics, long term care, significant drugs. Heart attacks and emergency services make up a very small percentage of healthcare costs (even though people use emerg as a walk in clinic). Most healthcare services can be shopped for and should be as there's a wide variety of care available but Canadians cannot access because we are again stuck with the cookie cutter mold we have forced ourselves into.

Government because it has no performance metrics or motivation to improve like a corporation will inherently be less efficient. In this situation with welfare, I question the potential gains of subcontracting a handout. You give government far too much credit when it comes to opportunity costs of various services.

 

[dmcowen674]

Originally posted by: Stunt
The vast majority of healthcare is cronic and requires diagnostics, long term care, significant drugs.

Oh please.

You think people actually like to go to the doctor or hospital?

 

[Stunt]

Originally posted by: dmcowen674

Originally posted by: Stunt
The vast majority of healthcare is cronic and requires diagnostics, long term care, significant drugs.

Oh please.

You think people actually like to go to the doctor or hospital?

Where did I say that
Most heathcare costs are the items you quoted...

 

[Jaskalas]

You want to make welfare cheaper? Completely REMOVE welfare along with its taxes and simply raise the minimum wage dramatically. That is the most efficient taxation on businesses which redistributes wealth. It leaves no room for government to steal a percentage of the redistribution.

 

[Brackis]

Originally posted by: Jaskalas
You want to make welfare cheaper? Completely REMOVE welfare along with its taxes and simply raise the minimum wage dramatically. That is the most efficient taxation on businesses which redistributes wealth. It leaves no room for government to steal a percentage of the redistribution.

This argument, in my opinion of course, is like saying that instead of having a safety rope on a rock climbing wall, you just make the wall easier to climb by reducing the angle or increasing the number of good handholds. Does this assure that all people are able to climb the wall on the first attempt? What happens if they slip?

I do not consider this allegory perfect by any means, but I hope it construes my point.

 

[Craig234]

Which party has blocked increases to the minimum wage for 10 years again?

 

[Vic]

Corruption and fascism, pure and simple. Taxes are extorted from the people for the benefit of private individuals, i.e. robbing Peter to pay Paul.

 

[slash196]

Giving government contracts to companies is just ASKING for corruption. The more the government keeps things in the family, so to speak, the less corruption there will be.