A welfare state provides assistance to the poor. This potentially gives the provider of the assistance, namely the government, tremendous power to control people through the threat of withholding that assistance, and such absolute power will corrupt absolutely.
Certain forms of assistance, for example, minimum wage laws, are difficult for the government to withhold to particular individuals. Other forms of assistance, for example, the government directly providing money, cause less distortion in the economy than minimum wage laws, but are easy for the government to withhold.
One possible workaround for the government having too much power: Instead of the government providing money directly, let it be some heterogenous collection of independent assistance providers. If one provider corruptly refuses assistance to someone, they can turn to another provider. There's the tricky problem of people taking from multiple providers, which if the government were the sole provider, they can ban multiple identities. Instead of efficiently providing money as assistance, they can provide material assistance of things it does not make sense to take more than one of, e.g., food.
If this heterogenous collection of providers gets is funds from private donations, then the model precisely captures the privatized welfare system favored by conservatives. It has flaws, most basically people want to donate to help One Of Us, and not One Of Them.
The original inspiration was crimes committed by people at the bottom of the social pyramid who have nothing to lose. Welfare policies are often directed at decreasing such crime. On one hand, it seems sinister to be altering behavior by threatening to withhold welfare assistance, treating people like puppets. On the other hand, will welfare assistance with guarantees it cannot be withheld be effective in changing behavior, or will it continue to perpetuate a class of people with nothing to lose?
More generally, when does "good" monoculture happen? "Good" meaning people don't see others as One Of Them (and then committing crimes against them).
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