Welfare-State Dependency in America
by Jacob G. Hornberger
How pathetic to see the executives of American automobile companies on their knees before the members of Congress, begging them to use taxpayer monies to bail them out of their financial difficulties. What a fine example of what the welfare state has done to Americans.
Self-reliance? Alas, a quaint and obsolete term that has no place in the modern-day welfare-state society. What now characterizes so many Americans is dependency on the government. Over a period of many decades, the political class has made Americans dependent on the state for their retirement, healthcare, unemployment pay, education, food, subsidies, loans, and much, much more.
The entire package of goodies that government provides to the citizenry could easily be described as welfare-state heroin.
Even more damaging than the dependency itself is the mindset of dependency that the welfare state has inculcated in the modern-day American. So many people honestly believe that they would never be able to survive, prosper, and get educated without the state.
One sees this phenomenon in all age groups.
Among the elderly, the mindset is: “I could never survive without Social Security. I am totally dependent on the government. I would starve to death if the state didn’t send me my Social Security check every month.”
We see it also within the younger crowd. “My children would never get educated if the state didn’t provide schooling for them. And how would the poor ever get educated if the government didn’t provide it?”
Modern-day dependents on government have convinced themselves that the absence of a welfare state means the absence of government entirely. Thus, oftentimes they are shocked to learn that our American ancestors lived without a welfare state for more than 125 years and yet still had federal, state, and local governments. That’s right: no welfare, Social Security, Medicare, Medicaid, subsidies, public (i.e., government) schooling, income taxation, and the like. Americans were once free to keep everything they earned and to decide for themselves what to do with it.
Despite all the maligning of 19th-century Americans that takes place in American schools and colleges (e.g., “They obviously hated their children because they sent them to work in dismal factories for long hours.”), the fact is that when Americans were free to keep everything they earned and to decide what to do with it, the result was the most prosperous and charitable society in history.
The reason for this was that people were saving large portions of their income, thereby producing the capital that is necessary to raise standards of living, and voluntarily donating other portions of their income to worthy causes. The savings built the businesses and industries that provided the jobs, and the charity built the churches, museums, and opera houses.
Among the chief characteristic of our American ancestors were self-reliance and a can-do spirit. The thought of looking to government to help them solve their problems would not even have occurred to most of them.
Ironically, in the latter part of the 19th century and early 20th century, thousands of immigrants were flooding American shores, fleeing the socialism of Europe in order to come to a land where it was “root hog or die” — a land where people were on their own, where government lacked the power and the means to provide sustenance to them or bail them out of their difficulties.
This is what our American ancestors defined as freedom. It was a concept of freedom that was totally contrary to the dependency-on-government concept that today’s Americans define as freedom.
Our ancestors rejected socialistic measure not just because they favored a free, self-reliant, and voluntary society. They also rejected it on moral grounds.
In a free society, consumers decide which businesses are going to stay in business and which ones are not. U.S. automobile companies have the right to ask people to buy their cars. They have the right to issue bonds asking people to loan them money. They have the right to raise money through the issuance of stock.
The automobile companies, however, have no moral right to do is to force people to buy their products, fund their loans, and give them money. For that matter, no one else has that right either.
Yet, as they get down on their knees before the members of Congress, that’s precisely what U.S. automobile executives are doing. How shameful. How immoral.
Is it possible to restore a free society to our land, given the deep sense of dependency that the welfare state has produced within the citizenry?
Absolutely. All it takes is faith in ourselves, in others, in freedom, and in God, and an unwavering commitment to restore moral principles to our land.
How is it dependency when I fork over tax money out fo my check every week? Some of us may be dependant, but not all.
In fact...if anyone is dependent on anyone it would be the government. The government is dependent on stealing money from it's constituents. If I want a little reciprocation when I'm in dire straits, it may not be dependency...more like, the government paying back what is owed.
Perhaps we as a people should cut the purse strings.
Well, let's at least take a look at the alternative view before genuflecting to more of the tonic salesmanship of Ron Paul and his ilk. I won't dwell on the fact that the Austrian school is a bit kooky, amounts to a faith rather than a science, as it echews all econometric models as inadequate and then replaces those models with textbook logic, banal psychologizing, and verbiage, or that only a handful of Austrian concepts have been held up by examination (see Friedman's assessment of the Austrian theory of the business cycle). Vilma may be a preacher in the Paulist school, and that's his perogative, but he's on the margins along with the tribe of Von Hayek....
Are higher taxes and strong social "safety nets" antagonistic to a prosperous market economy? The evidence is now in
By Jeffrey D. Sachs
One of the great challenges of sustainable development is to combine society's desires for economic prosperity and social security. For decades economists and politicians have debated how to reconcile the undoubted power of markets with the reassuring protections of social insurance. America's supply-siders claim that the best way to achieve well-being for America's poor is by spurring rapid economic growth and that the higher taxes needed to fund high levels of social insurance would cripple prosperity. Austrian-born free-market economist Friedrich August von Hayek suggested that high taxation would be a "road to serfdom," a threat to freedom itself.*
Most of the debate in the U.S. is clouded by vested interests and by ideology. Yet there is by now a rich empirical record to judge these issues scientifically. The evidence may be found by comparing a group of relatively free-market economies that have low to moderate rates of taxation and social outlays with a group of social-welfare states that have high rates of taxation and social outlays.
Not coincidentally, the low-tax, high-income countries are mostly English-speaking ones that share a direct historical lineage with 19th-century Britain and its theories of economic laissez-faire. These countries include Australia, Canada, Ireland, New Zealand, the U.K. and the U.S. The high-tax, high-income states are the Nordic social democracies, notably Denmark, Finland, Norway and Sweden, which have been governed by left-of-center social democratic parties for much or all of the post World War II era. They combine a healthy respect for market forces with a strong commitment to antipoverty programs. Budgetary outlays for social purposes average around 27 percent of gross domestic product (GDP) in the Nordic countries and just 17 percent of GDP in the English-speaking countries.
Friedrich Von Hayek was wrong
On average, the Nordic countries outperform the Anglo-Saxon ones on most measures of economic performance. Poverty rates are much lower there, and national income per working-age population is on average higher. Unemployment rates are roughly the same in both groups, just slightly higher in the Nordic countries. The budget situation is stronger in the Nordic group, with larger surpluses as a share of GDP.
The Nordic countries maintain their dynamism despite high taxation in several ways. Most important, they spend lavishly on research and development and higher education. All of them, but especially Sweden and Finland, have taken to the sweeping revolution in information and communications technology and leveraged it to gain global competitiveness. Sweden now spends nearly 4 percent of GDP on R&D, the highest ratio in the world today. On average, the Nordic nations spend 3 percent of GDP on R&D, compared with around 2 percent in the English-speaking nations.
The Nordic states have also worked to keep social expenditures compatible with an open, competitive, market-based economic system. Tax rates on capital are relatively low. Labor market policies pay low-skilled and otherwise difficult-to-employ individuals to work in the service sector, in key quality-of-life areas such as child care, health, and support for the elderly and disabled.
The results for the households at the bottom of the income distribution are astoundingly good, especially in contrast to the mean-spirited neglect that now passes for American social policy. The U.S. spends less than almost all rich countries on social services for the poor and disabled, and it gets what it pays for: the highest poverty rate among the rich countries and an exploding prison population. Actually, by shunning public spending on health, the U.S. gets much less than it pays for, because its dependence on private health care has led to a ramshackle system that yields mediocre results at very high costs.
Von Hayek was wrong. In strong and vibrant democracies, a generous social-welfare state is not a road to serfdom but rather to fairness, economic equality and international competitiveness."