It has worked for 70 years, so why not continue?

KC Rao's overwhelming victory, winning 88 out of 119 seats, in the assembly elections in Telengana this month has been attributed to the large number of social schemes started by him. Accepting that "the state is responsible for maintaining market efficiency as well as equity", Prof S Mundle analyses "freebies, subsidies and, income supplements" distributed by Rao "eschewing emotional indignation about the selfishness of ambitious politicians". Apart from central schemes, like MGNREGA and 2-bedroom apartments for Rs 750,000 each, Rao presented Rs 100,000 as wedding gift to women, ordered ambulance service to transport pregnant women to hospital for delivery, and paid an income supplement of Rs 4,000 per acre per crop to farmers. Mundle finds, "None of these schemes distort the market or impair market efficiency." Some improve equity, others improve productive capacity, while "All of them contribute to the spending power of the disadvantaged with multiplier effects on local incomes in Telengana's rural sector." Handing money to the poor is nothing new. In 2003, President Lula da Silva started 'Bolsa Familia' which pays mothers for every child provided the children attend school and have regular health check ups. When Dilma Rousseff became president she increased minimum wage, reduced prices of food, fuel and bus fares and forced state-run banks to lend more. Brazil went into a deep recession and is beginning to limp out of it today. Hugo Chavez of Venezuela was even more extreme, combining handouts with price controls. Today inflation is at 83,000% and people are fleeing the country in search of food. Inflation will soon reach 1 million percent. Politicians of all parties are resorting to loan waivers to farmers in, what Prof A Gulati calls, "a race to the bottom". Total loans to the agricultural sector is Rs 12-13 trillion. Obviously, such a huge amount cannot the waived because of the disastrous effect on fiscal deficit. He recommends a program like Telengana but giving more money to farmers with smaller farms. Any child can understand that giving handouts to the poor helps them in many ways, but do they work long term? Why are 38.4% of children stunted and 21% wasted after 70 years of socialist charity? Do handouts increase the number of the poor by encouraging more childbirth? Even in the US, where unemployment is at the lowest rate of 3.7% in 50 years, about 76.4 million people, or 44.4% of workers, earn too little to pay federal income tax. In 2016 41 million people in the US were living in poverty. The biggest danger of handouts is that it allows politicians to throw taxpayer without any accountability, under the cover of helping the poor. It may lead to severe problems, as Brazil and Venezuela found out. They are great for winning elections. Like Rao did.