It was implemented because it got votes. It's not a coincidence that it was restricted to people who could vote.
You get welfare whenever you expand the franchise too far.
So, pray tell, what was the step too far (in no particular order):
- women
- slaves
- non-property owners
- non-poll-tax payers
- 18 year olds
... and in which of those categories do you fall?
Still, the effect is the same. A large proletariat with very little income demanding to be fed by the state. With significant political power, based on making up a large percentage of the population in the capital.
What effect the dole had on the economy seems to be somewhat disputed. Clearly, far-left/marxist academics will want to downplay any effect and liberterian/right wing academics will probably overstate the effect.
Descriptively, it is a fact that inflation started to become a big problem not long after Marcus Aurelius added wine and pork to the dole.
Clearly, there were other factors involved, especially corruption. In fact, I think all factors were contributing to the same net effect, they all reduced the number of people (especially free people) contributing to economically to the economy and specifically the economy of the state.
- Slavery drove down the price of labor, laborers lost their jobs.
- The dole kept the laborers from re-joining the labor market, either as workers or by starting businesses.
- Corruption limited tax income from the upper clases.
- The governement introduced an increasing number of inefficiencies in the economy, by debasing the currency, allowing tax-farming and limiting economic freedoms (for instance, workers were turned into serfs and price controls on goods were introduced). All of which reduced the supply side of the economy.
- A mercenary based military was expensive to maintain, and very unreliable when not paid.
Another way to see the factors above, is that as the population (both upper and lower classes) were granted privileges during good times, these were seen as irrevocable rights by an increasingly entitled populace, while the comprehension of what goods and services were needed to make these benefits possible was lost to most people.
Gradually, the state was running out of money, and had to debase the currency and increase taxes to remain solvent. Both types of actions would only privide temporary relief. The debasement caused inflation, and tax increases led to corruption going up and production going down.
Eventually, the government ran out of ways to continue to pay the mercenaries. At that point, it was too late to convince the idle citizenry to go back to productive work or to serve in the army, as that part of Roman culture had died out.
Eventually, the collapse had to come. As barbarians took control at the borders, the economy collapsed, causing massive unrest in the entitled population. Partisan groups started clashing in the streets. Invasions, civil wars, utilities (such as aquaducts) shutting down and eventually an unstable food supply caused disease, hunger and death. At first, the population was going down slowly, then quickly. Over a few centuries the population of 1 million had become 30000.
In a 1000 years, maybe historians will have the same discussions about Western Civilization's collapse. Was it smog from coal plants, corruption of the leaders, mass migrations or simply the whole population becoming lazy and entitled that caused the collapse?
Instead of drafting these poeple into the empire, Rome recruited foreigners for the army, while the productivity of the domestic population kept going down. Eventually the state, needing to pay both the welfare receipients and the army, ran out of economic capacity to provide for both groups. Stopping the dole was if possible more dangerous short term than not paying the provicial armies, since the proletariat in Rome/Constantinople could riot instantly, and overthrow any emperor.