Safety Nets vs. Entitlements

WSJ: What about the role of taxation? … For the most part, the way I look at your tax policy, seems to me that you look at it and say, tax policy over the past decade, and maybe even before that, has produced an outcome that has benefited people mostly at the top, and your goal is to try to redistribute it in a different fashion.

Sen. Obama: Here’s what I would say: I do believe the tax policies over the last eight years have been badly skewed towards the winners of the global economy. And I do think there is a function for tax policy in making sure that everybody benefits from globalization or at least the benefits and burdens are shared a little more easily. If, as some talk about, we’ve got a winner-take-all economy where the highly skilled, highly educated are reaping huge rewards and the unskilled or even semi-skilled are getting a much smaller share of the economy, then our tax policies can help cushion some of the blow through providing health care. So if people lose their jobs they’re not losing their health care as well. That actually makes a more flexible work force that makes workers more mobile and less resistant to change.

While I agree with Obama on the basic point that “cushioning the blow” can be the role of government, he doesn’t seem to understand the difference between entitlements and safety nets. Welfare prior to its reform is a perfect example of good intentions gone bad – when you permanently remove an incentive to work and grow, productivity falls. It is a dependence on government services that causes the workforce to become more resistant to change, not less.