The Theory And Practice Of A Welfare State

 

In a welfare state, wealth is transferred from those who have wealth to those who don't.  Ideally, the recipients of welfare state charity are those who are needy through no fault of their own and who are making an effort to become self-sufficient.  Too often, however, the modern welfare state provides support for those who have no ambition to become self-sufficient, and which is a primary factor in how they became 'needy' in the first place.  A modern industrial society can actually tolerate a certain number of able-bodied slackers, although it's never a good idea since it tends to encourage others to take that low road.

In a modern industrial society, those with ambition and talent can live in comfort not generally available to welfare beneficiaries.  This is, in fact, the primary element that makes the welfare state possible: some people are producing wealth far beyond what is actually necessary for subsistence, and that extra wealth can be tapped in order to provide for those whose wealth-generating ability is below what is necessary for subsistence.  Voila!  A source of wealth and a place to use it.

If the recipients of welfare largesse are encouraged, cajoled, or coerced to end their reliance on public charity, a welfare state can operate for a very long time, and the more robust the underlying economy, the longer the game can be played.

We know, however, that entropy always increases, and this is true even in a modern welfare state.  As benefits become more lush, more people find themselves comfortable with the idea that they are wards of the state.  Eventually, that group becomes a powerful voting bloc, and at that point, the system, like a star that has run out of fuel, is on the path to a spectacular end.  In fact, without a mechanism that forces welfare recipients off the dole after a limited time, that path begins when the welfare state is first established.  As the number of participants who produce no wealth grows, the burden on the actual wealth-producers becomes more and more onerous.  If the number of wealth-producers is also falling (as it is in America today) the collapse of the system is easy to foresee.

Things get out of control when newborns are eligible for state-supplied welfare because there is an incentive, usually in the form of larger payments than are strictly necessary for the newborn's survival.  That is: having a baby becomes profitable and the incentive to become productive and leave the welfare rolls decreases, even if only slightly.  This also moves society toward the point where welfare recipients constitute a voting majority.

In Minnesota recently, a modern scam involving their welfare system threatens to bankrupt their economy.  Working mothers whose income is under a certain figure are eligible for $1,000 per child per month for child care expenses.  A company is formed for the purpose of delivering 'child care' and subscribes a group of families.  It then hires those mothers as 'attendants', and pays them minimum wage for 25 hours per week to watch their own children!  The company bills the state for the 'care' at the maximum allowable rate and, it appears, funnels the excess offshore.  It should not come as a surprise that the proceeds of this scam are used to bring Mom's relatives over from the home country so that they can apply for and get welfare benefits here.

Meanwhile, the sources of the funds for doing all this are having children at a much decreased rate.  The next generation will be much smaller, but supporting a much larger group of welfare clients.

This can't go on.