Disadvantaged Minority: Non-Beneficiaries of Government

The Hill reports that “The Commerce Department is considering naming Arab Americans a socially and economically disadvantaged minority group that is eligible for special business assistance” through its Minority Business Development Agency. I would argue that the federal government should not favor people of one particular ethnic backgrounds over others. However, I think the bigger issue here is that a Commerce determination in the affirmative would be yet another step in the direction of greater government dependency.

Citing Census Bureau data, the Wall Street Journal’s Phil Izzo recently reported that 49.1 percent of the U.S. population “lives in a household where at least one member received some type of government benefit in the first quarter of 2011.” According to Izzo, that’s up from 30 percent in the early 1980s.

More troubling figures come from economist Gary Shilling. The October 2009 edition of Shilling’s Insight investment newsletter (not available online) provided updated figures for government dependency that he has been calculating for decades. Shilling separates Americans into two categories, government beneficiaries and non-beneficiaries, and defines the former as people who “depend on government, directly or indirectly, for a major part of their income.” As of 2007 (before the recession), Shilling estimated that 58.2 percent of the population were government beneficiaries. That figure would have certainly risen through the recession and, as he notes, the upward trend in government dependency “is ominous because it’s only a taste of what lies ahead when the postwar babies retire and move heavily into Social Security, Medicare and Medicaid.”

Assuming that Shilling’s numbers are remotely accurate—and I suspect that they are—then perhaps it’s time to recognize a new disadvantaged minority: those private sector producers who pay the taxes to support the majority of Americans dependent on government. Why would these people be considered “disadvantaged”? Because to the degree that they have a voice, it’s typically drowned out by the myriad special interests and constituencies that dominate Washington, the state capitals, and the city halls. That’s a problem because the more that people depend on government, the more difficult it becomes to get government spending under control. And as we are starting to see in Greece and other countries, that situation can’t go on forever.