The Unintended Consequences Of The Welfare State

Fellow Pilei James Otteson recently wrote a great op-ed in Forbes on the unintended consequences of the welfare state.  He was too humble to advertise it here, but I have no shame about recommending the work of my esteemed co-bloggers.  Here is a key section:

The welfare state encourages people to ignore, to violate–even to pretend does not exist–the moral principle that it is wrong to live at other people’s expense.  That is a fundamental pillar of an enlightened moral life–indeed what distinguishes a barbaric social order from a civilized one. The fact that most human societies have historically disregarded it, and many still do, does not change the fact that it is morally wrong to live off of the fruits of others’ labor.

So wonderful to see the moral case against the welfare state in print!  I recommend you read the entire piece.  Keep up the great work Jim.

8 thoughts on “The Unintended Consequences Of The Welfare State

  1. There is nothing wrong with this, except I think it’s naive to think that the welfare state ever was intended a ‘moral’ institution in the first place.

    To look at it from a more Machiavellian standpoint: people are jealous. Jealous people do crazy shit. To avoid crazy shit from jealous people, give them bread crusts in the hopes that they will leave you alone. Of course, when the welfare state was first conceived, ‘jealously’ was probably more accurately described as ‘desperate’.

    At a certain point, income inequality causes political externalities. These can be very dangerous, including the explosion of everything from communist fantasies to revolution. I would look at the welfare state from this perspective — it may make a little more sense in terms of power relations.

    Morally justified? I don’t think so, no. But perhaps necessary if you want mankind to progress past a state of perpetual jealousy and violence.

    Of course, the EXTENT to which the Western world has embraced the welfare state is in certain respects obscene.

  2. If Otteson really thinks it’s wrong to live off the fruit of other’s labor, may I suggest a 100% inheritance tax? After all someone who owns a company or stock in it is “living off the fruit of other’s labor” and if they inherited it, they don’t even have the justification of having founded the company themselves.

  3. Is his complaint that the beneficiaries of the welfare state consume more than thay produce? But then, who would consume the surplus production of the virtuous? Or should the virtuous keep it all to themselves?

    And Bill raises an interesting issue. The wealthy live of “the fruits of the other’s labor.” Already one must qualify the principle: Is this justified in all cases, some cases, only to a certain degree?

    Also, when we retire, we live off the fruits of other’s labor; the better our retirement, the more others must labor on our behalf.

  4. Bill and Greg, note that my argument was about living off the fruit of unwilling others’ labor. (The editors at Forbes omitted the word “unwilling” in the sub-head of the article, but I made my position clear in the article itself.)

    My complaint was not related to the relative productivity of the beneficiaries of the welfare state. It concerned rather the (as I argued) morally dubious practice of able-bodied adults living at the expense of unwilling others.

    The questions you raise can, I think, be fruitfully illuminated by transposing them into the context of chattel slavery. Thus:

    Is the objection that the slaveholders consume more than they produce? But who would consume the surplus production of the slaves? Or should the slaves keep it all to themselves?

    Moreover, to extend the implied criticism a bit: Do the slaveholders have a right to continued support in the manner to which they have become accustomed? No one of them created the institution, so are they not responsible for its, ahem, dubious moral status? Perhaps, then, they have formed reasonable expectations about being supported in their old age that should not be ignored?

  5. I read your commentary. You are accusing desperate people, afraid of losing their economic security, of immoral behavior. The Wisconsin public union members had already conceded the money. They just wanted to hold onto their tiny lever of power, the right to collective bargaining, a lever that most private employers have managed to take from their workers.

    But perhaps the public service unions are not the root of moral corruption here in America. After all, when it comes to wielding power here in America, they are pretty small potatoes.

    Let’s look at the wealthy, those who control our economy, those who wield the real levers of power, and who, presumably, have some interest in the welfare of the rest of us. Let’s just look at an interesting particular. After all, the increasing disparity of wealth might not be the fault of the wealthy and powerful. It might just be accidental, that those who wield the levers of power in our economy prospered so much more than the rest of us. It might be that this happened in spite of their best efforts to prevent it. Or, or they might have manipulated the system, to gain an unwarranted share of the nation’s wealth and income. They might have hacked the tax system, so that their effective tax rates are often even less than the average citizen’s.

    The particular is this: Suppose, in their manipulation of government, instead of paying taxes, they caused the government instead to borrow, and run record deficits. Who would the government borrow from, but these same wealthy who have, by purchase and propaganda, gained control of the government? And who would have to pay this money back, and the interest accrued? And who would have to labor, unwillingly, on their behalf, to pay it back, but the citizens of the United States, and their children, in perpetuity.

    So perhaps it is not the public service unions, but the wealthy, who are the corrupting influence in the United States, in both their indifference to, and eagerness to exploit, the average citizen.

  6. Greg, not all wealthy people made their money cheating and stealing. The reason a lot of people see the public unions as ‘immoral’ is because they are paid for by taxes, which you have to pay whether you receive the public service or not. This looks and feels a lot like theft. True, some wealthy people are manipulative — poor people often cheat too. However, wealthy people pay a disproportionate amount to the public service, which is mostly used by poor people. I think there are better questions that could be posited against the taxes=slavery argument than “rich people are mean”, which is what you’re basically. That just make you sound like an ignorant child.

  7. Um, yes, effective income tax for those making over $10 million 23% on average. Those making between $75K and $100K a mere 15%. But figure in payroll taxes for them, since these taxes are a much more significant share of their income, total taxes are about 22%. I see the disproportion.

    And yes, public schools, mostly used by poor people. And police, mostly used by poor people. (I assume you’re including the middle class in ‘poor people.’) Why should the rich have to pay for those? But wait. Those are paid for mostly by local and state taxes, which are known, in general, to be strongly regressive, although some states do have a significant income tax.

    I know there are fine people who are also rich. And they have the ear of the press, and of Congress. But I do not hear them speaking out against those who have earned their wealth by cheating and stealing, and otherwise abusing their privileges. I do not see Congress taking effective action against those. I must consider, then that at the least, these fine people consider these malfeasances, which have harmed tens of millions of people, acceptable behavior. And I consider this a far more pernicious lesson in moral behavior than the image of public service members standing up for themselves, and trying to hold on to what they see slipping away from them.

    I know there are fine people who are also rich. I’ll just respect them more when they get their minions in Congress to raise their taxes, and pass some regulation with backbone.

    As for the issue of debt-slavery, which these fine people are a party to…more is the pity that they are fine people, for they will become corrupted.

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