Explain why some critics claimed that the old welfare system created a "culture of poverty." Using economic reasoning, explain the negative incentive to work that results from cash assistance.

The old welfare system was heavily criticized by Milton Friedman for creating negative incentives. He argued that a negative incentive to work was created because some families could actually earn more or similar amounts money by divorcing and/or losing their jobs than by working due to government programs.

Milton Friedman then argued that a negative income tax should be used instead, which retains the incentive to work while still helping those in need. Slowly this type of gradual system was adopted in place of fixed rules. Examples of fixed rules are benefits that kick in exactly below a certain income level in full. The negative income tax is more gradual; income grows with every dollar earned privately.