Tag Archives: social programs

Return On Investment

I tend to get testy when I hear people intone that government should “be run like a business.” (Granted–I’m testy a lot…) Government is very different from business–its purposes (which do not include a profit motive) are distinct. Not recognizing the substantial differences  between governance and enterprise marks those making that facile comment as–at best– uninformed.

That said, there is one concept fundamental to both business plans and investment decisions that should also guide governmental decisions: return on investment. Interestingly, however, many of the same folks who want more businesslike governance routinely ignore that calculation.

If I’m purchasing stock in a company, I want evidence that the shares I purchase will appreciate in value–or at least pay dividends. If I am a savvy/mature investor, rather than a gambler playing the market, I understand that such appreciation will likely not be immediate; I will invest “for the long haul.” 

That same calculation ought to determine America’s investments in social spending.  Although appropriate returns on government investment will not and should not be monetary, a number of studies confirm that a surprising number of programs actually do turn a fiscal profit for taxpayers.

Children who have been fed thanks to food stamps grow up into healthier, more productive adults than those who didn’t get enough to eat. That greater productivity means that government eventually recoups much of what it spent on those food stamps–and also saves money due to reduced spending on things like disability payments.

A recent study by Harvard economists found that many programs — especially those focused on children and young adults — made money for taxpayers, when all costs and benefits were factored in.

That’s because they improved the health and education of enrollees and their families, who eventually earned more income, paid more taxes and needed less government assistance over all.

The study, published in The Quarterly Journal of Economics, analyzed 101 government programs. In one way, it was a standard cost/benefit analysis–it looked at what  government’s costs were, and the resulting benefits to the recipients. However, the researchers took an extra step–they calculated the “fiscal externalities: the indirect ways that a program affected the government’s budget.”

In other words, in addition to the upfront costs, they calculated the monetary return on taxpayers’ investment.

Consider one program: health insurance for pregnant women. In the mid-1980s, the federal government allowed states to expand Medicaid eligibility to more low-income pregnant women. Some, but not all, states took up the offer. Increased Medicaid coverage enabled women to receive prenatal care and better obstetric care, and to save on personal medical spending.

For the federal government, the most straightforward fiscal impact of this expanded coverage was increased spending on health insurance. The indirect fiscal effects were more complex, and could easily be overlooked, but they have been enormous.

First, newly eligible women had fewer uninsured medical costs. The federal government picks up part of the tab for the uninsured because it reimburses hospitals for “uncompensated care,” or unpaid bills. Thus, this saved the government some money. On the other hand, some of the women stopped working, probably because they no longer needed employer-provided private health insurance, and this cost the government money.

But the biggest indirect effects were not apparent until children born to the Medicaid-covered women became adults. As shown in a study by Sarah Miller at the University of Michigan and Laura Wherry at the University of California, Los Angeles, those second-generation beneficiaries were healthier in adulthood, with fewer hospitalizations. The government saved money because it would have paid for part of those hospital bills. The now-adult beneficiaries had more education and earned more money than people in similar situations whose mothers did not get Medicaid benefits. That meant higher tax revenue.

Data on other social programs yields similar results. Researchers have found that Medicaid expansion, for example, more than paid for itself, even after accounting for the fact that future benefits are “discounted”–i.e., worth less today. 

Businesspeople understand that it usually takes time to realize profit. With government social programs, too, the fiscal “payoff” generally is delayed. That doesn’t mean it is less substantial or less real. In the cited study, 16 of the social policies that the researchers examined either broke even or actually made a profit. 

I’m certainly not suggesting that government programs be limited to those with a positive financial return–government is most definitely not a business. I am suggesting, however, that we consider government social programs investments–and that the returns on those investments aren’t limited to improving the safety and security of the communities in which we all live, sufficient as that return would be. In many cases, taxpayers also get a positive monetary return on investment.

Just like well-run businesses.



When Good Ideas Get Bad Slogans

Among so-called “woke” Americans, certain verities seem obvious–so obvious, in fact, that it becomes easy to believe that most other people see things the same way, and to dismiss folks who fail to agree as dishonest or racist. As a result, they downplay or entirely ignore the need to educate and communicate, a need they often denigrate as “PR,” with the result that they often end up undermining support for the reforms they want to see.

Perhaps the most vivid example of this phenomenon was the slogan “Defund the Police,” which gained currency after the murder of George Floyd. A March USA Today/Ipsos Poll found that voters opposed “defunding the police” 58-18.

When most Americans hear “defund,” they hear only “take money away.” They don’t hear “change funding formulas to supplement policing with social services so that police can be freed up to focus on actual criminal behavior.”

The repeated use of that unfortunate phrasing allowed a variety of political candidates– Republican and Democrat alike–to reinforce a number of widely accepted misconceptions about crime and policing. The Brookings Institution recently addressed seven of those misconceptions, which it called myths.

 The most obvious–and intellectually dishonest– was the assertion that “defunding” really meant “abolish.” Granted, the “defund” language was misleading, but only the most partisan observers actually thought the movement wanted to eliminate policing.

More understandable–if equally incorrect–was the belief that reducing the presence of police would usher in an increase in social disorder.

Another misconception is that police forces are what maintains order. However, studies have found that the best tools to establish peaceful societies are equity in education and infrastructure. Indeed, research shows that lack of education and illiteracy are some of the most significant predictors of future prison populations.

When it addressed the notion that police protect society from violence, the Brookings article included some rather shocking (at least to me) data. Evidently, research shows that 70% of robberies, 66% of rapes, 47% of aggravated assaults, and 38% of murders go unsolved each year–a rather daunting catalogue of police performance.

Research also rebuts the belief that spending money on community programs wouldn’t affect crime rates; the article links to studies demonstrating–among other things– that individuals who receive a quality education are less likely to become involved in the criminal justice system.(interestingly, the article also notes that police officers who have had more education are less likely to be the recipient of misconduct complaints.)

And although there is a widespread belief that police work is primarily focused on crime prevention, that also turns out to be a misconception.

There is minimal evidence that police surveillance results in reduced crime or prevents crime. For instance, research showed 90% of the people that were stopped in the NYPD’s controversial stop and frisk program were not committing any crime. While it is true that police do apprehend individuals that violate the law, this is one of several components of their responsibilities.

Finally, the article debunks the notion that “Defund the Police” was simply an emotional response to the appalling sight of a police officer killing George Floyd.

Some opponents of cutting police budgets view the movement as an emotional response to police misconduct rather than a well-thought-out campaign. However, a study with 60 years of data indicates that increases in spending do not reduce crime. Which begs the question, how is 60 years of a failed objective any better? Yes, the movement gained attention because of tragic events in 2020, but the evidence supporting the movement is based on hard data and proven methods.

Police reform is long overdue,  and we have had thousands of opportunities to make the appropriate changes. In 2020, the murder of George Floyd garnered national attention that has caused many to take a long, hard look at our democratic systems, cultural identities, and the necessary steps towards equal protection. We do know that more traditional policing is not the answer.

Those in the legal community who have long been aware of the research and the problems with current police culture were appalled by the “defund” slogan, knowing that–rather than calling attention to mountains of data and the necessity of different approaches–it would only antagonize police and frighten the public, rather than communicating the need to alter a currently ineffective approach to public safety.

People who really want change rather than an opportunity to pontificate understand that language matters.


An Expression of Our Shared Aspirations

Recent polling by veteran survey researcher Stan Greenberg has confirmed some conventional wisdom, albeit from a somewhat different angle.

Unsurprisingly, Greenberg found that a large majority of Americans support popular social programs like Social Security, Medicare and even the Affordable Care Act.

An equally predictable finding: a majority of us view government with a significant amount of distrust.

Greenberg concludes that it isn’t enough for proponents of social programs (mostly Democrats these days, although the partisan divide wasn’t always so sharp) to center their candidacies around their support for these programs; they also need to emphasize a commitment to specific government reforms.

Reform of government, then, means more than just getting money out: It should involve specific, plausible reforms that would reengage citizens in the process of government, creating new ways to make all our voices matter….

Above all, it should include a positive vision of reform of the political process, and the role of money, that does more than reimpose limits on the political influence of the very wealthy, but empowers citizens as donors and participants. And, the most difficult challenge of all, there has to be an effort to restore to the public face of government, the legislative process, a sense of compromise and shared commitment to the public good, despite deep disagreements.

All of this should fit into the context of a reaffirmation of the importance of government, not as a force outside of our lives, for good or ill, but as an expression of our shared aspirations.

“Government as an expression of our shared aspirations.” That sentence struck me. How long has it been since the voting public viewed their government as a mechanism for achieving our common goals and aspirations?

The fact that such rhetoric sounds quaint, if not odd, to contemporary ears is a measure of how impoverished our political discourse has become.


It Isn’t Only About the Money

One of the most time-honored adages in political life is “follow the money.” And for many issues that policymakers debate, that’s good advice. Self-interest often explains positions that are otherwise inexplicable.

Sometimes, however, a cynical approach to the political process can blind us to cultural assumptions and ideological commitments that have significant explanatory power. That’s particularly true of American debates about social programs, poverty and inequality; I would argue that some of the most passionate advocates of “market-based healthcare,” and “personal responsibility” are unaware of the roots of their perspectives on these issues.

Representative Paul Ryan is a handy example of what I’ve come to call “economic self-delusion.” Ryan is a favorite of self-styled “fiscal conservatives” who see him (as he clearly sees himself) as a hard-headed advocate of economically-responsible policies. The problem is, the anti-safety-net policies he defends as fiscally responsible tend to be more costly to taxpayers than he and his partisans are willing to admit—and often more costly than the programs he would gut.

A couple of recent studies of homelessness highlight the phenomenon.

Typically, liberal arguments for providing homeless folks with permanent housing center on morality and compassion, allowing conservatives (like Ryan) to respond that such an approach is far too costly (and somehow un-American).

The Central Florida Commission on Homelessness provides a fiscal argument as well. “The numbers are stunning,” Andrae Bailey, the organization’s CEO told the Orlando Sentinel. “Our community will spend nearly half a billion dollars [on the chronically homeless], and at the end of the decade, these people will still be homeless.”

Bailey was referring to a study by Creative Housing Solutions, which tracked public expenditures on local homeless people in the Central Florida region. That analysis calculated the costs of frequent emergency room visits, hospital admissions and repeated arrests for homeless-related crimes, and estimated that each homeless person cost taxpayers $31,065 each year. Providing the chronically homeless with permanent housing and case managers to supervise them would cost about $10,000 per person each year.

Homelessness is hardly the only area where American society is stubbornly “penny wise and pound foolish.” From early childhood education to health care, research supports the cost savings of early interventions via a strong social-safety net.

Why are so many elected officials—and the constituents who elect them—absolutely convinced that social programs are simply costly incubators of dependency? Why are they unwilling to believe credible research that dispels stereotypes like those of the “Welfare Queen” and the lazy “inner-city” social parasite?

If we really want to understand where these attitudes come from, we need to revisit some historic attitudes about poverty. In a very real sense, proponents and critics of social welfare programs are still arguing about policies dating to 1349, when England enacted the Statute of Laborers; that Statute prohibited people from giving alms, or charity, to “sturdy beggars,” that is, those who had the ability to work.

The Elizabethan Poor Law incorporated a distinction between the “deserving” and “undeserving” poor that would be carried to the colonies and reproduced in the laws of most states. It was the model that settlers brought to the New World; it was the approach adopted by the original thirteen colonies, and as people moved west, it was the approach incorporated in the Ordinance of 1787, which prescribed rules for governing the Northwest Territory.

To a significant extent, the distinction between the deserving and undeserving poor and the emphasis upon work have remained the primary framework through which Americans view social welfare and poverty issues.

That distinction was further reinforced by religion, especially Calvinism.

The belief that poverty is evidence of divine disapproval—that virtue is rewarded by material success—was held by a number of the early Protestants who settled the colonies, and that belief has continued to influence American law and culture. In the early 1900s, moral disapproval of the poor found an ally in science, and poverty issues were caught up in a national debate between Social Darwinists like William Graham Summer and their critics.

In language eerily reminiscent of earlier admonitions against rewarding “sturdy beggars,” Sumner wrote: “But the weak who constantly arouse the pity of humanitarians and philanthropists are the shiftless, the imprudent, the negligent, the impractical, and the inefficient, or they are the idle, the intemperate, the extravagant and the vicious. Now the troubles of these persons are constantly forced upon public attention, as if they and their interests deserved especial consideration, and a great portion of all organized and unorganized effort for the common welfare consists in attempts to relieve these classes of people….”

It wasn’t until the Great Depression that American lawmakers acknowledged the need for some sort of social safety net. It would be a mistake, however, to assume that the dislocations of the 1930’s or the passage of New Deal legislation changed Americans’ deeply-rooted beliefs about the relationship between poverty and moral defect.

We see the influence of Social Darwinism and echoes of Sumner in today’s “makers and takers” meme, in the arguments that welfare creates “dependency” (in the poor, but evidently not among recipients of corporate welfare) and in Paul Ryan’s proposed budget.

Research dispelling the mythology is important, but it isn’t enough. Somehow, we need to change the cultural assumptions that produce punitive policies.

We need a new Social Gospel.