The Injustice of the Welfare State

There seems to be a rising tide of outrage sweeping the nation. It is directed at the unjust plan of President Obama and the Democrats in Congress to nationalize health care.

Whatever the merits of the plan, it will clearly not let Americans alone in their current health arrangements. It will nudge them, and pretty soon shove them, into a one-size-fits-all government program.

There are no doubt many reasons inspiring the Democrats towards this goal. Let us at least acknowledge the idealism behind the politics: the desire to give to every person, regardless of means, a decent health care free of financial worry.

We may perhaps be excused for thinking our liberal friends rather like Dorothea Brooke, for whom "every [notion] is apt to conjure up wonder, hope, belief, vast as a sky, and colored by a diffused thimbleful of matter in the shape of knowledge." It's a wonderful thing to imagine life freed of its fears and its dangers: but is it possible? Would it even be life?

The problem is that between the wish and the result is a monstrous injustice. And it is an injustice that lays heavily upon every one of us.

The welfare state is an injustice that is forced upon the rich, the middle class, and the poor.

For the rich, who shoulder most of the tax burden in these modern times--both as a fraction of their income and as an overall fraction of the taxes collected--the injustice is simple. Their money is taken away from them and spent by the political system. That means they have less money for houses, movables, objets d'art and investing in their businesses. Perhaps we should not care too much about all that. But it is true that all that money would go into jobs of one kind or another. And maybe it would be better spent by the rich than by the politicians.

The welfare state is also unjust to the middle class. It forces them to buy education from the government, and it shoves them into the health-care options, retirement provisions, and insurance subsidized or compelled by the political system. A mother might want to send her child to a special school adapted to the special needs of her child. That is hard to do when you are paying school taxes. A family might want to save up to buy a business. That is hard to do when you are forced to save for retirement using the government's Social Security system, and forced to provide for unemployment using the government's unemployment taxes. Saving up to buy a business is no different from any other saving. But the government says no. First you must pay into our system. Then, if you have anything left over, you can contribute to your own plans for the future.

But this is mere bagatelle. For the rich and the middle class, the welfare state's injustices are light to moderate. It is the poor that really suffer from the welfare state.

Perhaps the most significant burden on the poor is the one-two combination of compulsory education and child-labor laws. If we really cared about the poor we would provide simple schools that provided basic literacy and numeracy, and then we would let the kids start work at ten or twelve. And the terms of work would be simple. No complicated taxes and requirements. Just work compensated by payment in cash or in kind.

Yes but what about the poor getting into college and becoming doctors and lawyers. If they leave school at ten, they will never get to college! Look nobody is forbidding the poor from getting an education. All we are saying is that the poor shouldn't be forced to go to school, and shouldn't be prevented from working.

The poor are not like you and me. They live by informal exchange of favors and labor. Maybe this month a family has a crisis, so the kid must be pulled out of school to help his parents. But the formal economy works with rigid rules and substantial taxes. No way can an employer afford all the taxes and employment rules when operating a small business in the inner city.

But right now the poor are screwed every which way. The police don't police; the garbage isn't picked up; there are street people hustling illegal businesses all over. Businesses have to pay off the politicians to get any services at all. And people with connections get all the money for grants and subsidized loans.

There's a word to describe how we got into this frightful mess. Liberals. Liberals wrote all the laws to create social benefits that all have their unintended consequences. The trouble is that when the economy has to pay for an expensive health sector and an expensive education sector then the taxes that go to pay for it crowd out the marginal businessman and worker. You end up with an economy that works pretty well for the middle-class worker with a half-decent education. But everyone below that level finds themselves struggling, forced to live and work in the informal economy, and they can't figure out why.

This is the great Question of our age. We want everyone to enjoy the benefits of material prosperity and the health and freedom from want and fear that it provides. But surely there is a better way than the bossy, interfering way of our liberal masters.

Yet here we are, about to ratchet up the bossiness index with a huge, central, bureaucratic mess of a health program that will put the government's nose even further into our lives. It will increase the marginal tax rate on all Americans and push the poor further into the informal, underground economy.

There's got to be a better way.