After the Welfare State

Whether or not the Tea Party and the Occupy movements are comparable, there is this about them.  They both represent discontent with the welfare state.

The Tea Party represents older Americans that experience the pressure of welfare state politics on their wellbeing.  The Occupy movement represents young people that drank the Kool-Aid, went to college, and now find that there is no payoff.

The Tea Party and Occupy are not the end of the new activism.  There will be more trouble; there always is when a ruling class starts to confront the contradictions of its raison d'etre. 

The whole idea of the welfare state was that the green eye-shade bother of social protection were better done by disinterested rational experts.

But the experts were not disinterested; they were shills for the ruling class.  And the ruling class, in its contest for votes, has promised the same money to different people.  That's why there is an unfunded deficit for Medicare and Social Security.

Also, of course, the "disinterested" experts have made 30, 40-year assumptions about economic growth and demography.  The auto companies tried that in the 1940s and the promises they made couldn't be redeemed.  So now the auto companies are in bankruptcy and the Obama administration is paying off the promises with monies from the pockets of the taxpayers.

The sensible Robert Samuelson has sensible thoughts about all this.  The welfare state was planned in an era of remarkable economic growth.

The great expansion of Europe's welfare states started in the 1950s and 1960s, when annual economic growth for its rich nations averaged 4.5 percent compared with a historical rate since 1820 of 2.1 percent, notes Eichengreen. This sort of growth, it was assumed, would continue indefinitely. Not so. From 1973 to 2000, growth settled back to 2.1 percent. More recently, it's been lower.

There is no mystery about what happens next.  There will be a fight for resources.  And I suspect that, despite its voting power, senior citizens like me will come out on the losing side.  After all, that's where the money is.  If senior citizens don't agree to a reduction in benefits then the fight will move out of the voting booth into the streets.

To me, that is the bottom line on the welfare state.  It has screwed the young generation.  It has given them lousy schools, kept them incarcerated in child custodial facilities and away from the adult world of work.  And then, when they actually get to work, they are burdened with outrageous taxes to benefit their parents. Remember them?  They are the folks that sent their kids dutifully off the the child custodial facilities. Why aren't the kids all in the streets?

The irony is that the Occupy chaps are in the streets for more of the same: subsidies, freebies, and taxes on the "rich."  Don't they realize that's what got us in this mess in the first place?

The way of social animals is that when we are faced with a problem we stumble towards a solution using trial and error.  It's not hard to figure out what the solution should be: a lot less top-down rational planning that predictably goes badly astray, and a lot more real social cooperation and social adaptation.

Fortunately we already have a system that does that.  It is called democratic capitalism, buttressed by authentic social institutions like the family, the church, the neighborhood and the member association.

The problem is, of course, that such a system leaves no role for an educated elite, disinterested experts, and compassionate politicians.  It runs on its own.

We can expect that our liberal friends, who fill important positions as disinterested experts in the educated elite, will fight any such solution to our problem to the last dollar of sovereign debt.