Resolved: The Welfare State Should Be Abolished

Authored by Jeffrey Tucker via The Foundation For Economic Ecucation,

That the welfare state is for the purpose of helping the poor is one of the great fictions of our time...

I was honored to be the guest speaker of the Yale University Political Union last week, addressing the need to abolish the welfare state. The structure of the union breaks down students into “parties” based on political ideology. The guest speaks and then the students challenge. This is followed by minor speeches and challenges from students. The entire event lasts two hours, and the guest gets the final word.

A word on the students themselves: I was amazed at the erudition, decorum, and adult-like collegiality among them. It seems almost out of some movie I’ve seen, something set in the 1920s. I’m not entirely sure the students fully realize just how special they are. With a student body like this, I suspected that they learn more from engagement with each other than from their classes. Several students confirmed this. And, to be clear, this was true regardless of political outlook.

I, of course, was speaking on behalf of the pure free-market position on the welfare state, going further even than F.A. Hayek to say that the whole thing ought to be scrapped. There is nothing that the welfare state contributes to our lives that couldn’t be replaced by the normal operations of the market and civil society. In the end, I lost the debate, two to one, which is not a surprise, but I hope I planted plenty of seeds of doubt about the merit of the welfare state.

Command and Control

This whole topic is widely misunderstood. People think of the welfare state as a system of redistribution to help the poor improve their lot in life. Those who oppose it, we are told, are greedy advocates for the interests of the rich.

My contention is that this is just a story we tell ourselves that has nothing to do with the history and current reality of the welfare state. The welfare state is a system of command and control, imposed by the political elites, that targets politically marginalized groups in a way that, through both bad and good intentions, excludes them from participation in mainstream society.

The grim history is undeniable. Going back 100 years, controls on wages, working hours, marriage, migration, and professions were heavily influenced by eugenic and white supremacist ideology and pushed forward with the intention to mold population demographics in a way approved by political elites.

This is not the story anyone is taught in class. Mostly this history is suppressed, especially by champions of the welfare state. We are supposed to believe that the purpose of the welfare state was to help people. But I explained that the US already had a huge and growing structure of private welfare in place, particularly as provided by religious institutions dedicated to helping widows, orphans, and new immigrants.

A great example is Mother Cabrini of the Missionary Sisters of the Sacred Heart of Jesus. They opened orphanages all over the East and West Coasts, managing hundreds of properties including hospitals and schools. But for the “Progressive” intellectuals of the period, these institutions were considered unprofessional and entirely too undisciplined, and they sought to displace these institutions with secular and publicly funded services. They succeeded.

Between 1905 and the mid-1930s, the welfare state was built and came to replace private provision. Funding sources dried up following the double blow of the income tax and estate tax, together gutting the fortunes that had been so generous to charitable institutions. Public provision did not make up the difference. But the big change was regulatory. A great example of early efforts is the minimum wage. When it was first presented, it was designed not to raise the wages of the poor but to raise the bar of entry into the workforce as high as possible so as to exclude “unfit” portions of the population (for more on this, see my full article.)

The same story can be told about maximum hours legislation, immigration restriction, marriage licenses, public schools, business regulation, and so much more. The rationale was slightly different in each case but the main goal was the same: to control and manage the population through coercion.

Where do we get this idea that the welfare state is designed to help people live a better life? It began to emerge during the New Deal, but that was just a cover. The New Deal was really about creating large-scale business cartels. The story repeats itself: the people who construct and manage the institutions of the welfare state are not the poor; they are privileged intellectuals working with power elites in industry and government. It has always been so.

Not What We Think

But let’s look today at the workings of the modern welfare state. The idea that it actually helps the poor is unsupportable. It is funded by vast payroll and excise taxes that harm the poor and middle class disproportionately (the rich pay most of the income taxes). Of the more than $1 trillion of spending that today constitutes what people call the welfare state, most of the dollars end up in the hands of the cartelized medical industry, which results in higher prices, less competition, and lower quality service.

There is a reason why obtaining medical insurance and service is so difficult as compared with buying groceries or software. It is precisely because of so much state involvement. It has ended up restricting, not expanding, access.

Or consider food stamps. These aren’t for the poor. The program is administered by the Department of Agriculture to create a guaranteed market for big agriculture.

Imagine if the big three automakers could back “car stamps” so that taxpayers were forced to pay for cars for people in a certain demographic. It’s nice work if you can get it.

I concluded my speech by calling for a complete end to the welfare state as a necessary part of ending the hegemonic control by the ruling class. If you want to see what the state really does to the poor, visit the traffic court, the jails, the prisons, or see how policing works in poor communities. The state is not the friend of the poor.

The Responses

As you can imagine, my presentation confounded many of the people on the left–which probably constituted fully two-thirds of the people present. Following my speech, speaker after speaker pleaded for the need for the state to take from the rich and give to the poor as if this had never been tried. It’s like a narrative that some minds just cannot shake, despite all the evidence.

Still, I found their speeches fascinating because of the pervasive mistakes in their thinking.

First, not one speaker on the left seemed to connect the issue of poverty alleviation with the solution of wealth creation. Failing to address the issue of where wealth comes from–the zero-sum mindset here is pervasive–they have yet to learn the basic lesson that Adam Smith tried to explain two and a half centuries ago. He explained that wealth comes from the expansion of the division of labor, trade, innovation, and a flourishing commercial society. The dramatic decline in poverty around the world over the last 20 years comes not from more welfare but from expanding markets.

Second, not one speaker on the left seemed interested in the problem of granting the state power over people’s lives, which is very strange. An underlying assumption of their comments was that the state is a benevolent institution that is wise enough to pass and implement legislation that promotes social justice. It seems to be completely lost on these people that political establishments operate according to self-interest and end up advancing themselves most of all. Certainly, no state is interested in the precise political vision of Yale students.

Third, not one speaker on the left seemed particularly interested in the real history and experience of the welfare state as it has been practiced. Indeed, they seemed unwilling to defend any aspects of the status quo, even though policy has been striving for 100 years to implement precisely what they claim to favor. Why the lack of interest in the failures of the past? I suppose it is somewhat analogous to how today’s socialists are uninterested in the history of the Soviet Union or Mao’s China.

Welfare, Diversity, and Fascism

In my concluding remarks, I drew attention to the complex political dynamics between welfare and diverse population groups living under the same regime. People genuinely resent having their money taken and transferred to groups with which they feel no integral relationship. The welfare state, then, ends up exacerbating religious, racial, gender, and language conflicts, giving rise to populist movements that trend fascist. The advocates of the welfare state bear some responsibility for the rise of authoritarianism around the world.

These remarks were obviously unwelcome by the “social justice” crowd in attendance. Though I faced a lot of opposition, I do have to credit the students for not shutting me down and instead keeping the debate civil. As I mentioned, I was voted down by a margin of 2 to 1, but my hosts were thrilled with this result.

Your speaking appearance yesterday evening at Yale was memorably phenomenal! I was so very grateful for all of the substantive content and energetic explanations which you provided to our Yale Political Union assembly! Having brought in [other speakers], I can say proudly that in terms of intensive argumentation you topped the list!

In my perspective your arguments at yesterday evening’s debate were unrivaled; none of the opponents of your views who spoke during the debate actually provided convincing ideas and arguments that could match your own….This afternoon you were the subject of many campus conversations.

This is what it is all about: advancing good ideas, furthering the conversation, promoting engagement, and encouraging people to rethink the ideologies of top-down social management.

I had a wonderful experience. In some way, I lived my dream: to advocate the abolition of the welfare state at one of the places where the ideology of welfarism was born.


toady Thu, 11/30/2017 - 21:50 Permalink

No more FSA? Say it ain't so!No more ghettos full of North American Pavement Apes? No more mothers with twelve kids by twelve different dads?Nothing for me to complain about?NOOOOOOOOOOOOOOO!

overbet toady Thu, 11/30/2017 - 21:52 Permalink

Just like any parent knows of raising their children, giving them somthing freely doesnt instill values. Sterilatizion and mandatory parenting classes would be a good requirement for welfare.  Corporate welfare is the real issue. Subsidizing walmarts wages. 

In reply to by toady

SoDamnMad Overfed Fri, 12/01/2017 - 02:24 Permalink

.This is The tax incentive package lawmakers handed Tesla was 13 times larger than the state’s previous record-breaking deal awarded to Apple for a data center project in 2012. The deal included:

  • $725 million in sales tax abatements over 20 years.
  • $332 million in real and personal property tax abatements over 10 years.
  • $195 million in transferable tax credits.
  • $27 million in payroll tax abatements over 10 years.
  • $8 million in electricity rate discounts over eight years.

If all goes to plan, Tesla will operate essentially tax free for a decade and at a substantial tax discount for another 10 years.what Tesla got for building it's factory. 

In reply to by Overfed

Caloot overbet Thu, 11/30/2017 - 22:41 Permalink

Sooo... No offense to the trustees and the doctors son's, lawyers kids,  bnksters and money changers, and anyonethat knew what University they were going to in 3rd grade.  Probably not so apparent as you stare comfortably at your 13 ft Xmas tree... most of the serfs are really lustful of your shit...  and just about the only thing keeping them from literally kicking you out of your house and squating in it, is that you are printing money like a fire hydrant to pay them off.  If you think for one minute that you can shut off their EBT card without being led to a guillotine, you may be in for a rude rude awakening.  They will come take your crap.   The police won't be able to stop them.  They are armed to the teeth and are venomous to your stature.  Marshal law won't stop them.   They are seething for a neomarxist revolution, andwould rather have an excuse for it.   So beware well off.   as you print money to force your interst rates, and speculate with your 'earnings'  ,we are way too far down the rabbit  hole to talk incentives and righteousness, be very very careful what debt you decide is unworthy.   

In reply to by overbet

Peak Finance Caloot Thu, 11/30/2017 - 23:19 Permalink

The problem is that they are actually not smart enough to go and take (((THEIR))) crap, the crap of the people that are actually doing the fucking. If they were, I would be like "Go for it man, yea!"Truth is they are fucking retarded savages, burn their own stupid hoods, and lash out against those closest to them, which unfortunately is you and me. (Well not me really since I live in a bunker in the middle of the fucking swamp like Mogambo guru)  

In reply to by Caloot

Caloot Peak Finance Thu, 11/30/2017 - 23:37 Permalink

I'll take that possibility.   If I'm more right, we get the revolution, billions starve.  If your more right billions starve.  Sure there is always some possibility,  turning hydrgen into water and feeding the masses, who procreated on the expansion of debt; with free energy.  But given history my bet is billions starve.

In reply to by Peak Finance

Mazzy Thu, 11/30/2017 - 21:49 Permalink

Having backstops in place only encourages dirtbagism.Get rid of the welfare system and less of the population will be wasteful, frivilous, irresponsible, stupid, or lazy.  Then you won't have much need for a welfare system.Ok, you got me.  There will still be plenty of stupid people out there, but they'll have no option to choose to be lazy or wasteful.

besnook Mazzy Thu, 11/30/2017 - 23:06 Permalink

the welfare system is all about riot control. revolution is fought on an empty belly. as long as the people who feel they have been marginalized by society are well fed and housed they are as docile as can be expected and they are expected to be docile, all this talk about the utopian idea of free markets notwithstanding. the social upheaval caused by the poor from union organization to the 60s riots was all fueled by empty bellies. the other side of that are the debt slaves who prioritize their mortgage payment over any real action that changes the status quo that put them into that position, or fear of starving, in other words.if you think the .1% are going to give up control of .gov to maximize their self interest for the free market fantasy, you are wrong.

In reply to by Mazzy

Caloot besnook Thu, 11/30/2017 - 23:24 Permalink

Amazes me that folks don't seem to understand this.   You either pay off the mob or get mobbed.   Yea great, welfare is bs.  Yea sure a free market would be better freer fairer healthier wealthier... But we don't have that. Never have. And I'm not so sure humanity has evolved the intelligence for it.    Nation states evolved from the strongest tyrants.   Do any intelligent morons actually think the British monarchy earned it's billions. Deserve Buckingham palace?   They took it.   Just as those same elite who took power in the new world took it.   Bought it with blood. Inherited by the blood on the hands of their fore fathers. Generation after generation of mite. And they were smart enough to know...either pay off the mob or lose it.  Land grants, titles, government authority.   You buy that fking throne with blood. Wealthiest nation on Earth?    You best be ready to pay for it. 

In reply to by besnook

DaveA besnook Fri, 12/01/2017 - 01:25 Permalink

"the welfare system is all about riot control."

When the welfare system collapses, we'll go back to the cheaper solution of controlling riots with bullets.

"to the 60s riots was all fueled by empty bellies."

Bullshit. A British reporter witnessing the Watts Riots marveled at how strong and healthy the Negroes looked, carrying looted TV sets as if they were loaves of bread.

In reply to by besnook

CatInTheHat Mazzy Fri, 12/01/2017 - 00:00 Permalink

Where is this welfare state? Further, this man says nothing about those who really need these SMALL services and what happens to them should his 'welfare' state no longer exist You're description of people who receive services (bill Clinton killed most of it in the 90's, with each subsequent Administration cutting more) is NOT reality.This idiot is a fascist.

In reply to by Mazzy

RKae Thu, 11/30/2017 - 21:49 Permalink

But, gee whiz, a welfare state is so delightdul when combined with other brilliant leftist ideas like open borders and shrinking the white population to "save the planet!"

RKae besnook Fri, 12/01/2017 - 00:53 Permalink

Not a tenet to be proud of. That's just taking your concept and driving it off a cliff because "This is the direction we go!"It's brainless.Any believer who thinks "moderation of our concept is disloyalty to our concept" is insane. If you can only believe in your idea if it's full-bore, petal to the metal, 100% or nothing, then you're in a cult.

In reply to by besnook

nmewn Thu, 11/30/2017 - 21:49 Permalink

The entire system is designed to...KEEP YOU DEPENDENT.The progs really need to wrap their heads around this and come to terms with it and in how they are being abused as human beings.You can thank me later ;-)

Mazzy Normalcy Bias Thu, 11/30/2017 - 22:17 Permalink

Lets examing JUST ONE Section 8 voucher.Lets say that money stolen from a middle class taxpayer is a simple $3,000.2k goes toward the voucher.  1k consists of overhead costs and paying some bureaucrat cunt.That 2k then goes to the landlord which ends up either as equity, profit, or perhaps interest to a bank.  Banks love this. The landlord loves that a tenant is paying off a house for him and/or providing a little spending cash. KA CHING.  A small bit gets paid in taxes, going to the MIC or to other bureaucrats or whatever other black hole.The voucher recipient is still a brokewad at the end of the month and will be next month and the month after that.  End result is $0 and zero change in behavior, less still the desire to change their lifestyle.  They are still dependant on the handout, and more importantly they WANT to continue this status quo.Lots of winners here, but the middle class who pay the real taxes in our county is the one big loser that everyone else is taking a ride on.

In reply to by Normalcy Bias

Peak Finance Mazzy Thu, 11/30/2017 - 22:32 Permalink

dude, it's actually WORSE than what you are sayingThey are using Section 8 as a weapon, putting these savages into nice white areas as a means to destroy us. Think about how much white money is lost in housing value alone once the area goes to shit.Really these government fuckers have to hang, it's long overdue. 

In reply to by Mazzy

Caloot Mazzy Thu, 11/30/2017 - 22:59 Permalink

Without the central bank printing into a global oil vacume, the middle class would not be driving that sweet 7 year auto loan.   They would not be living in that 2000+ sqft house.   The idea that the middle class pays for 2.8 % interest rates is bullshit.   Yea you pay taxes.  They don't pay for the mic and they don't pay for welfare.   It might even be the very existence of the middle class is just as dependant on Central Bank welfare as the morons EBT card.   It's all a fking central bank illusion.  Great while it lasts. 

In reply to by Mazzy

Peak Finance Caloot Thu, 11/30/2017 - 23:40 Permalink

You MUST be a young one and don't know about the old days.Personally, my family's standard of living was VASTLY higher in the 70's, even with the shitty economy and oil fights and such. We lived in a 2000 sq ft home for, what, literally 1/8 of what the average is now? And the rents were only 1/3 of a monthly salary on average, now it's close to 1/2?Food was cleaner, clothes were better than the threadbare shit that even mid-tier clothing shops try to pass off? Didn't even need health insurance? Free clinics for the poor, remember that? Where did those go? I mean like every measure that mattered things were better. This was BEFORE the CB printing presses were fired up. So it REALLY PISSES ME OFF when someone thinks we benefit in ANY WAY from the central banks printing. 

In reply to by Caloot

RKae Thu, 11/30/2017 - 21:52 Permalink

Good luck getting millenial idiots to abandon the welfare state when they're actually discussing "guaranteed basic income."

insanelysane Thu, 11/30/2017 - 21:54 Permalink

Apparently in Massachusetts there is a cap on assistance if you have too many kids.  The crazies want to lift the cap because they find it punishes people that have too many kids.I get into this discussion and ask these people that support lifting the cap, how many kids do you have?  Why did you stop having kids after that many?  Of course these people said finances and amount of time to commit to their children.  They are making the proper choices when it comes to their families but when it comes to voting for the government to support people on welfare they somehow believe people on welfare don't need to make better choices.  It is unbelievable.

HRH of Aquitaine 2.0 Thu, 11/30/2017 - 21:56 Permalink

I hate LBJ.

I fail to understand why every colored person in the US doesn't share that hatred.

Welfare is probably the stupidest thing any nation could do. This will not end well. It will end in tears, starvation, and rivers of blood.

I really hope I am wrong. I doubt it but I try to stay positive.