As a follow up on my previous post, I would like to discuss how systemic problems can cause individual problems. This can happen when a systemic problem introduces incentives for people to behave in a way causing individual problems. For example, generous unemployment benefits or welfare systems make poverty tolerable. Although tolerating poverty may seem like a noble outcome, it actually alter the incentives for poor people.
Imagine a world where people have to save for a rainy day or else they have to ask for help from friend or family if they had to go through a rough period. If a person loses a job, he will have to either spend his savings until he finds a new one or ask for help from friends or family. Savings are limited and friends and family will pressure the person to find a new job or switch to an alternative career.
In a world of unemployment benefits and social safety net, the person can tolerate staying unemployed for a while. He can even stay like that forever if he can meet certain criteria of disability. Although these benefits don’t restore the same level of income before the job loss, people can easily adapt to a lower standard of living. Also, people prefer leisure, so they people on welfare can spend their times watching TV and fighting with their kids and spouses. They will also have higher resentment of everyone because they think that they owed something due to the fact of being American. People with free time and resentment towards society can easily move to criminal activities or push their kids to that direction by the abuse the inflict on them. Here we will see many private problems happening because many people can afford to make bad choices.
Many of our welfare systems are designed with biases for minorities and single mothers. This causes many of the minority families and single mother headed families to get into this welfare trap. The bad individual choices resulting of the systemic problem of having welfare translate to higher criminality statistics and higher interaction with the police.
Systemic problems can be causes for individual problems. Tracing the systemic problems that cause the bad personal choices is not easy or suitable for our political system which depends on short attention span and kicking the can down the road. Our politicians are all about empty speeches and handouts. We cannot depend on them to tackle the systemic problems they cause.