Inhibiting institutional inertia: squaring iron triangles while reforming welfare.

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Inhibiting institutional inertia: squaring iron triangles while reforming welfare.

ABSTRACT

The enduring slogan preceding the passage of the 1996 Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) was "to end welfare as we know it." Common political wisdom is that, measured in caseload numbers and by welfare-to-work efforts, the reform was an unmitigated success. This paper takes a look into what Blank (2002) calls the "black box" of policy adjustments at the level of the welfare managers and the frontline bureaucracy. An analysis of their incentive structure reveals explanations of how the institutional resistance to change was defused. It also implies a specific policy toolbox for situations in which the reduction of the bureaucracy itself is part of the objective of welfare reform. A combination of block-grants, devolution to the smallest feasible structural level and vigorous competition by private sector providers would ensure a higher likelihood of success under this scenario.

Power has only one duty--to secure the social welfare of the People.

(Benjamin Disraeli (1804-1881), British statesman) (1)

Welfare is hated by those who administer it, mistrusted by those who pay for it and held in contempt by those who receive it.

(Peter C. Goldmark Jr, NY State Budget Director, as quoted in the New York Times, 24 May 1977) (2)

1. INTRODUCTION

The purported remarks by Director Goldmark seem to suggest the perfect avenue for Welfare Reform. One only has to design a system that is loved by its administrators, held in esteem by its benefactors and seen with affection by its recipients. Alas, almost two decades of reform projects have revealed the futility in attempting to fulfill all those aspirations simultaneously.

Securing the social welfare of the People is such an uncontroversial goal because it leaves it to the fine print to determine the tools and methods applied towards that objective. The eternal and still unresolved conflict revolves around the question of whether or not the means should merely include the provision of a framework for success (here, individual social security) or the supply of that very safeguard itself.

During the 20th century, the United States has often been the follower rather than the innovator with respect to welfare programs. Frequently, modernizations--regula...

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