See, that's the problem with Rand. Ultimately she's forced to accept contradictions, or be rejected completely.
And if unproductive people aren't subsidized by either the willing or the forced, they quickly starve and die. Somewhere before death, they cease being happy and either become unhappy productive people, or get the point that life involves work and come to terms with their lives and become happy productive people. Or die. that is still an option for those who refuse productivity and don't have a host in which to be a parasite on.
The most ungrateful person is a happy unproductive person. Their comfort is not theirs, and they know it can be taken from them once people figure out the scam. At least they admit that if they're intellectually honest. Most aren't.
So, your premise is flawed.
I happen to agree with you. But the unanswered question still remains, what to do about it? The only workable solution is to slowly wean those unproductive people OFF their support systems. And it won't happen overnight because there are too many unknowns: High unemployment, children who are unaware of the positions of their parent(s) who rely on life-sustaining programs, etc.
First end duplication of effort. Second, start cutting redirect funds into efforts to ween them off the dole, mostly by adding work requirements to even receive government money. Then, slowly start cutting roles AND department size simultaneously.
The second part is the hard one. Getting government to work towards it's own obsolesence.
In the same time, provide small tax breaks to people who volunteer or donate money to PRIVATE charities of any type that do not receive government funds to cover those who are really in need due to disability or other very specific circumstance till private organizations come about.
The problem with eliminating dolists is to make poverty survivable but uncomfortable. Even benjamin Franklin pointed that out. So here's one extreme way.
You need housing? Fine. Don't expect an apartment. Here's a dorm room at a government Dorm you will be sharing it with another person, bathroom's down the hall. TV? Sure. Shared common room. Meals prison cafeteria style, hope you like what they cook, seconds are available. Manditory job training if you're not working. If you are working, you pay some rent. Children? They'll be attending a school in the day, and have their own dorms. Parents can visit them as needed. No booze, no cigarettes, no drugs. Internet is in the public room by appointment.
It's somewhat degrading, I agree. Humiliating to live in such a circumstance, but That is the point. They are fed, clothed, sheltered and offered a little bit of privacy, and they will get job training if needed, or put into a work program. No lingering about during the day waiting for meals. You want them motivated to leave it as soon as possible and getting their own life, home and ability to stand on their own.
And like I said... this is one extreme example, that 150 years ago, actually would have been quite common in places like England after the poverty laws and Metropolitan Police force, and Peeler reforms kicked in. A modern Dickensian aspect I guess and that could only be countered by tight regulation of the system... and even better still if you have it contracted out to private management companies that have performance based incentives to run a good facility.
Just thinking outside the box.