Dependency Class: Too Many in the Wagon

Stephen Kershnar
The New America: The Dependency Class Versus the Productive Class
Dunkirk-Fredonia Observer
May 1, 2011

More and more Americans are living off others. Not only will this darken the U.S.’s future, but it’s also offensive.

First, less of American’s income is coming less from paid work (wages) and more of it from government redistribution. According to the USA Today, wages made up 51% of personal income, the lowest in the nation’s history. In contrast, government payments hit a record high of 18.3% of personal income (90% comes from the federal government). These payments consist of Social Security, Medicare, Medicaid, unemployment benefits, food stamps, and so on. Roughly, for every five dollars in income employers paid out, the government paid out two. This is a 46% increase from the 2000 level. In inflation-adjusted dollars, the average American got $7,400 in government payments, way up from $4,800 in 2000.

The number of people living off the government is so high it’s frightening. Ed Morrissey, writing on the Hot Air website, points out that one in six Americans receives help from the government, a record 44 million on are food stamps (roughly, 15% of the population), and more than 8.4 million are collecting benefits for being jobless. Among states, generous New York gives the most, paying an astounding $9,400 per person. Only West Virginia approaches that amount and it siphons a significant portion of its revenue from federal government.

Second, less people are working. The USA Today, doing breakthrough work, found that the share of the population that is working fell to the lowest level since women started entering the work force three decades ago. Less than one in two Americans (45%) of Americans had jobs in 2010. This is the lowest rate since 1983 and an 8% drop since 2000. The pattern for men is particularly surprising. In 2010, just two out of three (66.8%) had jobs, the lowest on record. As of 2009, the USA Today reported, women were on the verge of outnumbering men in the workforce, a historic change.

Third, less people make things and more work for the government. Writing in the Wall Street Journal, Stephen Moore points out that there are nearly twice as many people work for the government (23 million) as in manufacturing (12 million). This is, roughly, a reversal of the situation in 1960. Ask yourself whether it is healthy to have so many workers living off taxes and so few making things. He also points more that some states have even higher ratios. New Jersey’s ratio is 2.5 to 1 ratio and New York’s is 3 to 1. Moore states that more Americans work for the government than for manufacturing, construction, utilities, mining, farming, fishing, and forestry. This is a recipe for disaster. Nearly half of the $2.2 trillion cost of state and local governments is for compensation for government workers.

Fourth, the least productive citizens pay increasingly less income taxes. Income taxes are increasingly born by the most productive citizens. In 2008, the bottom 75% of taxpayers (incomes equal or less than $67,000) made 34% of income, but paid only 14% of income taxes. Income here is adjusted gross income. The bottom 50% of taxpayers paid only 3% of all income taxes and a measly 3% of their income went to income taxes. In 2009, according to the New York Times, 47% of American households owed no income taxes, although most of them paid other federal taxes (for example, payroll and gas taxes).

The above facts suggest more and more people are riding in the wagon, less are pushing (Phil Gramm’s analogy). This appears to be offensive, an interesting question is why? One theory is that it is inefficient. Having so many people live off redistributed wealth transfers resources from the more efficient private sector to the less efficient public one. Studies, for example those by the Heritage Foundation, show that economic freedom (lack of government interference and lower taxes) strongly correlates with a society’s overall amount of wealth as well as other measures of well-being, such as health, education, and personal freedom. Having a dependency society will likely make us poorer.

However, inefficiency is the wrong sort of explanation because it is a problem for a whole society, and an abstract one, whereas the dependency society insults each individual the government treats as an ATM.

A second theory is that the country faces big problems and the above pattern will surely exacerbate things. George Bernard Shaw famously said, “A government that robs Peter to pay Paul can always depend on the support of Paul.” The country faces a massive debt. It is approaching the yearly output of the whole economy. According to www.usgovernmentspending.com, the government in 2010 at all three levels now spends more than 40% of what is produced in this country (that is, more than 40% of the GDP).That is, they spend more than 4 cents for every dime the economy produces. As people become increasing dependent on welfare programs and government wages, an increasing large segment will be unwilling to make necessary cuts in government spending. Those living off a sugar daddy are unlikely to want him to stop his free-spending ways.

This theory does not explain the offensiveness of the dependency society because the threat is a future one, namely that the country’s economy will be stuck in the doldrums, if not tank, while the dependency society is offensive today.

A third theory is that the dependency society is offensive because the attitude it takes toward more productive citizens. When the government takes so much of the fruits of their labor, it treats them merely as a means to an end. It treats them as mere ATMs, that is, as beasts of burden whose lives can be hijacked for the benefit of others. How else could one make sense of requiring some people to work at least one out of every three minutes for the government so that it can divvy out the benefits to favored groups? Decades ago, Harvard philosopher Robert Nozick argued that sacrificing some for the benefit of others is wrong because of the profound disrespect it involves. Just as it is true of slavery and a wartime draft, it is also true for a dependency society, albeit to a much lesser degree.

A progressive defender of this redistribution, for example, President Obama, might argue that as long as the majority of voters chose to yoke productive citizens in the above way, democratic values provide a good reason for the yoking. This rests on a misunderstanding of democracy. Democracy is valuable in large part because it tends to produce better results than other types of government. It is also more respectful of the citizenry as free and equal people than undemocratic systems. Both values are compromised if the majority decides to use its voting power to harass and oppress others. This might be done, for example, when governments impose Sharia law on unwilling women, oppress blacks via Jim Crow laws, or silence unpopular opinions. Making the productive class pay through the nose for an increasingly unappreciative and demanding group of dependents is offensive, even if the majority of Paul-like voters support it.