Michael Greve on Why Government Hand-Outs Might Actually Be Better Than a Government Hand-Up

by Reihan Salam


More recently, Michael Greve wrote a short piece expressing skepticism regarding the viability of “hand-up” programs, as contrasted against “hand-out” programs. Many reform-minded conservatives, myself included, argue that we need to rethink the social welfare state so as to strengthen an ethic of conditional reciprocity. The idea is to continue the transition from a welfare state to a “work-ethic state” or an “enabling state” that empower citizens and civil society.

There is a problem with this vision, as Greve explains. First, he notes the relative virtues of hand-out programs, namely that they expect relatively little of the state:

We provide for end-of-life care, homeless shelters, and emergency aid for disaster areas, no (or very few) questions asked. These are pure handouts. We’d like them to be provided through private charity to the extent possible; but  when that isn’t enough, government routinely provides additional assistance.

With the possible exception of off-to-the-gas-chamber, die-in-the-tunnel Randians, no one finds anything wrong with that—for excellent reasons. The programs do not (or at least need not) ask very much of government: just send the check.  While the handouts can be expensive (as with end-of-life care), the richest society ever on earth can surely find the means to fund them at a reasonable level. More important, pure handout programs carry relatively little risk of contagion and corruption. A program for the blind won’t willy-nilly come to cover the short-sighted. And while a few programs may have small incentive effects, by and large people don’t maneuver themselves into desperate situations to angle for government relief. Nor do the programs establish any viable precedent or model for K-Street artists. Funding homeless shelters does not entitle GE to park itself under the same umbrella: everyone knows the difference. 

As Greve explains, hand-out programs are profoundly different in that they actually expect much greater wisdom and competence from the state:

Hand-up programs are the polar opposite in all dimensions. Under those programs we ask, because we must, whether people deserve assistance (lest the hand-up become a mere handout or anybody show up). Such situational, discretionary judgments about people’s character and competence are vexing and difficult even for parents, who will often get them wrong; yet hand-up programs entrust government case workers with thousands of such decisions, with respect to unknown people. Moreover, one program leads to another: a small business loan produces a solar power loan produces a grant to Jeffrey Immelt.  “Julia” clambers from one program to the next; there never seems to be a time when she does not need, or receive, a hand up. And adverse incentive effects become pervasive and pernicious. People borrow to study when they should work; buy homes on credit when they should rent; rely on government “insurance” when they should save for old age; build windmills and $100,000 electric cars that burn up on New Jersey docks. [Emphasis added]

Greve also observes that tax expenditures like the mortgage interest deduction, Fannie, Freddie, and the FHA, and the Community Reinvestment Act are all best understood as hand-up programs that use public resources and regulation to leverage the power of private enterprise:

My point is not that hand-up programs can get out of hand, or that our institutions are incapable of administering them efficiently: all that is true, but it’s true of any government program. My point is that hand-up programs have gotten out of hand; that we cannot afford them; and that the country’s future depends on mowing them down. Tax reform, health care reform, entitlement reform, regulatory reform:  every single item depends on decimating hand-up programs. Any responsible party or political force in American politics will have to explain the situation and its urgency, and it will have to act on it. I’m not the world’s greatest political strategist, but telling the truth might be a better bet than a perennial “we don’t really mean it” refrain. It would in any event be more realistic and honorable.

Greve’s post is an important challenge to champions of hand-up programs, and his line of thinking has certainly led me to be more restrained in my policy thinking. Indeed, Greve’s critique of the hand-up approach maps neatly on his provocative argument that the Affordable Care Act (ACA) is actually worse than Medicare-for-all, as the latter at least has the virtue of greater transparency and a “one problem, one sovereign” structure. ACA, in contrast, doubles down on intergovernmentalism by, among other things, creating a second Medicaid program in the form of the state-based exchanges. 

The Agenda

NRO’s domestic-policy blog, by Reihan Salam.