Trying to understand why wealthy California would have the highest Supplemental Poverty Measure, which includes cost of living, Kerry Jackson describes what I’ve been calling the “government plantation“:
Self-interest in the social-services community may be at fault. As economist William A. Niskanen explained back in 1971, public agencies seek to maximize their budgets, through which they acquire increased power, status, comfort and security. To keep growing its budget, and hence its power, a welfare bureaucracy has an incentive to expand its “customer” base. With 883,000 full-time-equivalent state and local employees in 2014, California has an enormous bureaucracy. Many work in social services, and many would lose their jobs if the typical welfare client were to move off the welfare rolls.
The change, since 1971, is that this tendency of social welfare bureaucracies has metastasized to the entire government. The leverage isn’t just one agency as opposed to others, but government itself, as a sector in society. Whether elected or appointed, government officials’ incentive is to create new services to provide and to increase the number of people receiving them. This expands their base of support while ratcheting up the amount of money they can extract from others.
The well-advertised benefits available attract people interested in collecting them, even as the increased costs and restrictions on private-sector life drive away the people whose work is supposed to grow the economy that pays for it all. California started from an enviable position, which put in place some massive wealth centers, but even so, a growing tumor will eventually kill even the healthiest animal.