Why I'm Against Welfare (or Free Money)

According to the authors of a book about how wealth destroys families, "...70% of all lottery winners will squander their money away in a few years."

Basically, instead of teaching someone how to fish, you're giving them a cannery. However, since they do not have the skills to run a business (or manage money), they eventually lose it all.

The authors also "found that when new wealth is created within a family, there is a 90% probability that all of the wealth will be gone by the third generation."

This means that rich kids and grandkids blow through their parents' money in a short time.

Recently, in a Wall Street Journal article, I read that 3 winners of Extreme Home Makeover have lost their homes. Basically, after getting their free mansion, they took out mortgages.

That was smart.

So, if you really like the homes on the show, three of them are now in foreclosure.

What's the moral of the story?

Giving someone money, without the knowledge to manage it, is a complete waste.

I am a much bigger fan of Nobel Prize Laureate Dr. Muhammad Yunus, the founder of Grameen Bank. He's one of the pioneers of microfinance/microcredit.

Although I'm not sure what the solution is, I do know that blindly handing someone cash is not the answer. If you do, you're one of those... enablers (I think that's the word that Oprah uses).