The Case Against the Welfare State
I just published in Symposium the first article with which I substantially disagree: Samuel Hammond's case for a free-market welfare state. (No points for guessing which half of that case I disagree with.)
I hope no one is shocked, because publishing pieces from a more 20th Century "liberal" perspective, one that advocates a greater economic role for government, was part of the whole concept of Symposium from the beginning. The point is to engage with these views in order to debate them.
It's also about choosing which arguments to engage with. I sought out Sam Hammond for a couple of reasons. The first is because he is with the Niskanen Center, a onetime libertarian think tank that has inched toward the "center." This is a trend I've been noticing in the past few years: a whole cohort of (mostly) young libertarians who for a variety of reasons have lost the faith and are trying to come in from the cold, so to speak, and adopt a more mainstream agenda. The upside is that someone from this background is going to be familiar with free-market arguments and not immediately dismissive of them. (Notice, for example, how Sam throws Hayek at us right off the bat). Also, these writers are not going to defend the welfare state reflexively. They are not going to refuse to acknowledge any possible flaws or reforms, nor are they going to portray critics as people who want to throw granny off a cliff.
But most of all, I wanted to publish this piece in order to promote the concept of a "free-market welfare state." The debate on these issues is often crowded with people like Bernie Sanders who insist that when they say they want "socialism," all they want is what people have in a handful of well-off Scandinavian countries. But what those countries have is not socialism, as they will tell you. It is a market economy with a welfare state, and these countries often have more economic freedom in some respects than we do in the United States. It's helpful to have a name or a label to describe this, but the ones that have been proposed, like "social democracy," are vague and emphasize the wrong issues. A "free-market welfare state" is the best label I've come across.
This also captures what was nominally the mainstream "liberal" ideal in the US: a largely free economy with a small welfare state only intended to rescue people from the most dire circumstances. It didn't stay that way, for reasons I will discuss below, but that was how it was frequently sold to the American people in the middle of the 20th Century. In more recent years, the only remaining exponents of this ideal were "reformist" conservatives like Paul Ryan, who talked about how "we don’t want to turn the safety net into a hammock." (I could have sworn that line originated with Reagan, but I can't find a references for it.)
So the idea of a "free-market welfare state" is one that would be worthwhile to inject back into the discussion—and it's also worthwhile to ask how it got kicked out of the discussion in the first place.
So don't worry that I am somehow making peace with the welfare state by publishing Hammond's article. This is the beginning of the discussion, not the end.
In that spirit, I want to address a contribution to this discussion from Ari Armstrong, another person who started out libertarian (and strongly influenced by Objectivism) and went a bit more to the center. Ari wrote in response, not to this most recent piece, but to my Symposium interview with George Will and Steven Pinker, where the issue of the welfare state briefly came up.
The main schism within the broadly "liberal" movement today is over the welfare state. That statement might sound strange to some people, given that most Americans (in the US) associate the term "liberal" with its leftward variants. In many people’s minds, welfare statism is practically synonymous with 'liberalism' or at least integral to it.
Yet, in the broader sense, the liberal movement includes classical liberals, libertarians, and Objectivists (advocates of Ayn Rand’s ideas). And quite a few libertarians, and all Objectivists, still oppose the welfare state. But those are tiny groups. So, practically, there’s not much of a schism within modern liberalism; almost all self-described liberals advocate the welfare state in some form, so much so that opponents of welfare barely register in public debate.
He goes on to list a number of reasons why we ought to be having that debate, including the fact that "Advocates of the welfare state have grown lazy and nonresponsive in their arguments." Boy, is that ever the case. I had to work pretty hard to find someone who would even bother to make the case for the welfare state.
At any rate, he then responds to the opening salvos from Symposium.
I've listened to three recent discussions that prompted me to write this article.
The first is a discussion moderated by Robert Tracinski between George Will and Steven Pinker. Most remarkable to me about this exchange is that the rightward Will and the leftward Pinker agree that the welfare state is so obviously a great idea that it’s barely worth debating. Tracinski, who comes out of the Objectivist tradition, throws up a flag but postpones further discussion of the issue. (I’ve heard from some Objectivists who are unhappy with Tracinski over this, but his purpose here was to facilitate a broader exchange about liberalism between Will and Pinker, not to debate the welfare state with them.)
I haven't heard any criticisms of that interview myself, but I suspect that's because my regular readers know me better, and Ari's explanation is essentially correct. I had actually been hoping that George Will would offer a criticism of the welfare state; I don't think he regards it as "obviously a great idea" but perhaps instead regards the argument as a lost cause. When he declined to raise any objections, I thought it was important, as Ari puts it, to "throw up a flag," to not let the implication hang there that no one opposes the welfare state. But there were other fish to fry, and as the host I had one eye on the clock, so I did not feel it was necessary to do more. Like I said, this is the beginning of the discussion and not the end.
For his part, Ari presents a list of philosophical "challenges" to the welfare state that I found somewhat inadequate. But rather than criticize his list, this strikes me as a good impetus to take the next step in the discussion and set down an overview of the philosophical case against the welfare state.
Interestingly, I don't know that this has really been done in a systematic way before, not even by Objectivists. It struck me, for example, how little attention Ayn Rand devoted to criticizing the welfare state. It is clearly incompatible with her philosophy and with her whole outlook on life, but Atlas Shrugged focuses much more on what you might call "corporate welfare" rather than welfare for the poor. Welfare in the trailer park is parasitism writ small, and given her literary premises, she was much more interested in parasitism writ large.
So to fill that gap, here is my preliminary summary of five arguments that lay out the basic case against the welfare state, working down as I go to get at what I think is the most fundamental issue.
The reason Ari Armstrong states for classical liberals opposing the welfare state—that it is funded by coercive taxation—is too obvious to be interesting. I'll work around to that eventually, but let's start by pointing to the deleterious impact of the welfare state on the very people it is supposed to help.
1. The welfare state institutionalizes perverse incentives.
President Johnson launched the modern welfare state with this pledge: "Our American answer to poverty is not to make the poor more secure in their poverty but to reach down and to help them lift themselves out of the ruts of poverty and move with the large majority along the high road of hope and prosperity." By that standard, though, the welfare state failed and was designed to fail. As I noted on the 50th anniversary of the War on Poverty, poverty rates have not really dropped in the many decades since then. The only way welfare's defenders can manage to get the numbers to look good is if they count all the people who are still poor, but whose poverty is alleviated by government payments. In other words, they have made the poor more comfortable in their poverty instead of helping them move with the large majority along the high road of prosperity. They have alleviated some of the symptoms of poverty while freezing its underlying causes in place.
All of this was predictable. Take the one aspect of the welfare state that seems to have been definitively given up as a failure and abandoned: the high-rise public housing complex. They were all around us when I was young—miles and miles of them stretching along the Dan Ryan Expressway on Chicago's south side. The deal was simple: You could have free housing, but only if you lived in the specific buildings provided by government, which turned out to be bare, crime-infested high-rises, concentrated super-ghettos in which you lived exclusively in and among the chronically unemployed, isolated from the rest of society. You may have lived right by the freeway, but it was very far from the "high road of hope and prosperity."
The political scientist Charles Murray initially made his name as an apostate from the welfare state, pointing to the way it created perverse incentives that discouraged work and marriage and thereby kept its wards dependent on the state. He coined this as a law: "Any social transfer increases the net value of being in the condition that prompted the transfer." In other words, shower people with money for being out of work or homeless or pregnant outside of marriage, and you will suddenly find more people who are out of work or homeless or pregnant outside of marriage. This realization led to the big push for welfare reform in the 1990s, which the Democrats are assiduously trying to undo.
Ironically, Murray ended up being an advocate for cash benefits (rather than in-kind benefits like public housing), which would supposedly be more neutral and have less of a distorting influence on behavior, and he became an advocate for the universal basic income. Yet this just creates a simpler and possibly stronger version of the same problem. As I have argued, this is a great way to "lure a large group of people into withdrawing from the economy and living in a state of economic helplessness and stagnation, separate from a technological elite who enjoy wealth and influence."
All of this should lead us to question, not just whether all these good intentions have led to unintended consequences, but how good the intentions are.
2. The welfare state is "pathological altruism."
The problems I have just described above have been condemned as "paternalism"—assistance offered at the expense of surrendering control over your own life. But that doesn't quite cover it. The greater danger of the welfare state is the scope it gives to "pathological altruism."
Ayn Rand, of course, argued that all altruism is pathological, but the term "pathological altruism," along with "toxic charity," is the closest this idea has gotten to making it into the mainstream. It describes what happens when somebody does something ostensibly for the good of others but is so intoxicated with his sense of the virtuousness of his motives that he is blind to everything else—including the actual effect he has on the person he is supposedly helping. What is more, the pathological altruist makes this sense of self-righteous virtue central to his personal identity and uses it as an excuse to regard anyone who disagrees with him as a bad person.
This is how we got people patting themselves on the back for their virtue because they voted for pro-welfare-state politicians, while inmates of high-rise public housing projects festered in squalor for decades. It's how we got ads with Paul Ryan pushing grandma over a cliff. It's how we get practically every column written by Paul Krugman. It is the essence of the psychology of the "smug liberal."
One consequence is that welfare is nearly impossible to reform, even if the reforms are intended (as in Paul Ryan's case) to preserve the welfare "safety net" by making it more economically tenable. Whether the proposed reforms are a good idea or not is beside the point. What is important is that the defender of the welfare state gets to feel virtuous. That's "pathological altruism."
3. The welfare state is an expression of envy.
I said above that pathological altruism is about maintaining one's own sense of personal virtue, by contrast to the wickedness of one's critics or opponents. The nastiest aspect of this is that the welfare state becomes an outlet for the psychology of envy, in which tearing down the prosperous is more important than raising up the poor.
So much of the rhetoric of the welfare state is couched in Bernie Sanders-style hatred of "millionaire and billionaires." It is expressed in terms of who needs to be soaked with high taxes for the crime of daring to be rich. And in practice, of course, it's not just about soaking "the rich." It's about soaking the comfortable middle class for the sin of being comfortable.
It would be possible to fund a relatively small welfare state, the kind that serves only as a safety net and not as a hammock, without imposing extremely onerous taxes. You know what isn't required? A 75% marginal tax rate which ends up raising less money because it chases away high earners and discourages investment.
That such confiscatory tax rates tend to form the central agenda for the welfare statists indicates that the confiscation is the real point, that welfare-state politics is driven more by hatred of the rich than compassion for the poor.
4. The welfare state is unnecessary.
I mentioned that we could have a relatively inexpensive welfare state if it were limited to a bare minimum for the truly destitute. (Then again, such a "safety net" would also be small enough to fund through private charity.) But that's not what we have, nor is it what anybody wants. No, we have a giant welfare state because most of its spending is directed toward the same people whose taxes pay for the welfare state in the first place: the middle class. How dumb is that?
This a something I spend a bit of time on in my podcast interview with Sam Hammond. In his article, he mentions Wagner's Law, a rule in political science which indicates that countries tend to embrace a larger welfare state as they become wealthier. But notice the paradox. A society spends more on welfare precisely to the extent that welfare becomes less necessary. With the rise of industrial capitalism—and now high-tech, information-age capitalism—we have far fewer poor people, certainly in absolute terms. With plummeting costs for basic needs, fewer are starving, fewer need to be homeless, fewer are condemned to wear rags. We also have far fewer people who are legitimately incapable of working due to physical handicaps. Between advances in medicine, advances in automation, and the growth of white-collar jobs, work is both less dangerous and less dependent on the ability to perform heavy physical labor.
Yet we see around us the truly bizarre spectacle, in my mind, of the largest and wealthiest middle class in the world—the wealthiest in all of human history—pouring vast amounts of money into welfare programs that they largely pay back to themselves. And they do it at a loss; Social Security is notorious for providing far less in benefits, for most of its recipients, than they could have gotten by investing money in their own private accounts. Advocates of the welfare state like to describe it as "social insurance," in which you make small payments during good times to insulate yourself against the risk of falling on hard times. But the insurance calculation does not add up. You would not pay a third to a half of your income as "insurance" against a relatively unlikely event. Nor would anything remotely similar to an insurance program be designed to pay out benefits to everyone as a natural matter of course, whether they have fallen on hard times or not.
No, the welfare state cannot be explained as a mere pragmatic or economic calculation. It is instead a reflection of moral values. You will notice this in Sam Hammond's argument. He sincerely believes that he is making a purely pragmatic, non-ideological argument. Yet notice that he starts by accepting that the desire for government protection against the vicissitudes of a dynamic economy is a natural and unavoidable demand that must be accommodated—yet later on, he dismisses the desire for greater independence from government as a mere "mood" not to be taken seriously as a basis for public policy.
The welfare state is based on a moral choice to regard greater equality of outcomes, a guarantee of security, and dependence on government as more desirable than independence and self-reliance. And that leads us to the most fundamental case against the welfare state, the one argument that really subsumes all the others.
5. The welfare state is the opposite of the basic goal of human life.
Why did President Johnson's promise about not merely making the poor more comfortable in their poverty fail so spectacularly? The answer is a fundamental incompatibility between ends and means. You do not lift people up into the world of work by making it easier for them to avoid working. You do not instill in them the habits of industry, self-discipline, and resourcefulness necessary to rise in the world by providing them with a refuge in which none of these qualities are necessary.
I've written before about "The Rungs of the Ladder," the steps by which we know people can reliably "lift themselves out of the ruts of poverty": things like work, marriage, education, savings. But these are all of the things the welfare state has a history of actively discouraging.
In politics, people tend to start discussions in midstream, focusing on the details of the latest proposal or controversy. That's one of the reasons we tend not to have well-formed arguments for and against the welfare state. It is such a fixture of life that we don't even argue over it any more and instead we sweat the small stuff by arguing over the latest proposal for a minor reform or minor expansion.
But political discussions should always be grounded in first principles. I’m working on a review of Brad Thompson's book, America's Revolutionary Mind, and I have a lot to say about it, but what struck me most about the "revolutionary mind" is its radically different epistemology. The Founders habitually went back to first principles. When asked about a tiny little tax on sugar or on tea, they would hardly bother mentioning the size of the tax or its impact on commerce, which they regarded as a distraction. Instead, they immediate launch into a discussion of man in the state of nature, the reasons for which men established the institution of government in the first place, and the source of government's legitimate authority—and then address the question of a tax on tea by asking how it bears on those fundamental questions.
We could definitely use more of that approach to thinking today, and if we direct this to the welfare state, we would first ask: What is the purpose of human life? What is its essential goal, and what are the most basic requirements for achieving that goal?
As for the goal, we might take our cue from the Founders and say, "the pursuit of happiness." But happiness obviously includes some degree of prosperity: the ability to provide adequately for our material needs, to enjoy the refinements and luxuries made possible by economic and technological progress, and to save up enough extra wealth to enjoy those things with security.
As for the means to achieve these goals, we might name the "rungs of the ladder": a process of work, growth, enterprise, and self-reliance. Then we would ask ourselves: Is any of that fostered, encouraged, or achieved by going on the dole?
Don't bother answering, it's a rhetorical question.
In this view of life, dependence on others is the exception rather than the rule. There are a very few people who, through lack of basic mental or physical capabilities, truly have no choice but to depend on other. For those of able body and mind, dependence is a temporary condition in response to some unusual crisis or disaster. It is not a normal way of life.
The real secret of the welfare state is that its advocates do not view work and growth as the purpose of human life. They view it as a distraction, and the purpose of the welfare is precisely to excuse us from the necessity of work. Even Lyndon Johnson himself made this argument if you look closely. In a speech introducing the idea of the "Great Society," he tried to appeal to "idealistic" young hippies by sneering at "unbridled growth" and "soulless wealth" and doling out some woozy stuff about being "spiritually elevated."
Today this has become more explicit. In Switzerland, advocates of the basic income asked us to consider, "What would you do if your income was taken care of?" The welfare state in its fully consistent form is not helping people lift themselves up into the middle-class world of work. Instead, it's a fantasy of democratized aristocracy in which we all get our shot at being the "idle rich." It's about permanent liberation from productive work as the goal of human life.
That's why efforts like Sam Hammond's ultimately seem quixotic to me. He thinks we can make pragmatic calculations about an optimum welfare state that would be compatible with a free and productive society and avoid pathological consequences. But he doesn't realize that the reasonable, middle-of-the-road welfare state he wants is not a stable equilibrium but merely a viciously fought stalemate between two opposing philosophies of human life.
That is the most fundamental case against the welfare state, and it's why we do need to have the debate over welfare that we're not having right now. I have laid out the case here to get it clear in my own mind for the future as I try to ignite just such a debate.