Welfare and Poverty

France and other European nations are often held up as shining examples of nations that look after their poor, unlike the dog-eat-dog world of the USA. But is welfare really preventing poverty? Here's the legacy of the generous French welfare system:

First, the poverty rate: In 1990, 13.8 percent of the French population was poor; in 2009, the percentage was almost unchanged at 13.5 percent. In 20 years, poverty did not decrease, despite all the welfare payments.

Second, the “Active Solidarity Income,” which symbolizes France’s welfare system: It has replaced a previous payment called the “Minimum Income for Insertion.” These two are the same thing; only the name has changed. The latter was implemented in 1989, when 370,000 people benefited. In 2009, this “income” was given to 1,697,357 people. That is a huge increase. Failure must be acknowledged.

The third indicator is a nationwide philanthropic organization called the “Restos du Coeur.” It was created in 1985 to fight poverty. It provides meals during the winter to the very-low-income population. During the winter of 1985-86, 8.5 million meals were given. Since then, it has never stopped increasing. During the winter of 2010-11, about 109 million meals were given—a 1,282-percent jump in 25 years.
 
In practice, France’s welfare system is a failure, and there is an economic explanation for this. Welfareship does not create wealth; there are no incentives to create wealth. Despite its good intentions, welfareship has created a “poverty trap.”