We know this happened in Russia where the state under Yeltsin squeezed pensioners dry, reduced them to rags if they did not have jobs or close relatives who would care for them. It's only recently when Putin's popularity started to wane that he turned good samaritan and significantly increased pensions and benefits. these benefits were always there (like free airtickets for pensioners every two years) but in 1990s they could not use them, they needed money also for hotels, taxis, food, etc.
I believe that in modern state there should be sound and just safety net system to increase demand for goods. If such system is not in place (like in Africa, India or to big extent in China) or being eroded (under prescriptions from Washington) than the whole society suffers and may be locked forever in vicious poverty trap.
It was heartbreaking to see proud old men and women, the survivors of the siege of Leningrad, reduced to begging outside churches. Someone I know gave 50 roubles (about 10p at the black market exchange rate) to an old soldier outside the Maly, and he tried to give her one of his medals in exchange.
But amongst the Russians, almost everybody gave. A rouble at a time, but everybody gave. It was pretty humbling, coming from a land where everyone had more than they needed, and the needy got stepped over in the streets.
I don't know what it's like there now, of course. Could it really be almost 20 years ago?