The Welfare State, part 2

“A rich man can always find someone to tell him what he wants to hear; a poor man will always find someone to tell him what he doesn’t!”

The first part of this essay ends with these words: “Once it is fully realized that the wealthy, even those with social responsibility, have acquired their abundance by fraudulently taking from the efforts of a great many and, without proper compensation, from an environment which ‘belongs’ to all life, then the question is not whether to have a welfare state, but how to organize a state in which the contributions of all the citizens are appreciated and compensated.”

To further clarify our present condition, it is important to realize that the dominant belief systems do not realize the fraudulence of wealth accumulation, but remain deeply impressed with the sophistries developed over the years to explain what are – when viewed from sufficient distance and objectivity – unjustifiable inequities. We will never get it right until we think about it correctly.  As long as the sophistries of the rich form the basis of our thinking, the conclusions are foretold.  Since the first priests and kings began to create the explanations for their special privilege, ways of thinking have been honed that diminish the many in favor of the few.

The essence of our present situation is that a small group of people have taken advantage of essentially random opportunity to collect to themselves an inordinate amount of the community product – and then used that undeserved largesse to preserve and increase both their ability for gain and their justifications for that gain.  The greatest number in the community, in such a situation, have their powers diminished as greater and greater amounts of the community product is collected by the few. 

That a disproportionate amount of the gain goes to a few is related only to a combination of chance and a willingness to exploit the opportunity; it has no other natural explanation regardless of the post hoc justifications.  When laid out plainly such justifications ring hollow: God given right, more talent than others, really a hard worker, “our” sort are just better, more clever, sly and stealthy.  And then the always appreciated, “I’ll take what I want or kick your ass.” Any critical analysis always comes back to random opportunity, cleverness, ass-kicking and a willingness to act in self-interest over community interest, all allowed and supported by community infrastructure, social organization and the general environment.

Humans have the capacity to recognize opportunity, but not generally, especially as individuals, to recognize the need to compensate all the contributors, including the environmental resource base.  This results from the ability to see positive force, but not so easily realize the power of the loss of the services of the community or the environment, which are somehow seen as eternal.  The consequence is that human societies have been going through faster and faster cycles of growth and decline.  The sociopathic segment of a society gathers community wealth until the community (and/or the environment) refuses to continue supplying uncompensated services; at which time the society goes into decline with all the destruction that has become familiar to those with a knowledge of history.  A properly designed welfare state is, therefore, not a luxury, but a necessity if we are to slow the cycles of social disintegration which now endanger our relationship with the ultimate biophysical support of life itself.

Our present situation is further exacerbated by a new addition to the “game” being played by corporatists and their marionettes, that, for a variety of reasons, the little wealth given back to the masses is desired by the elites who are running out of places to gather wealth that is not well protected (also the ascendancy of that part of the economic elite that directly preys on the masses using the tax system and the structuring of the political system as a wealth concentrating device).  To this end the ‘self-reliant argument’ is accentuated: the pittance returned from the original theft is called a handout, the willingness to accept it is called moral turpitude and the anger and fear created by the threat of ending the “handouts” are being criminalized.

Self-reliance is made to mean that one should not ask to be compensated for what has already been stolen or what continues to be stolen by the economic elites.  It is a simple paradigm: I come to your house, take things you need to make a living and then yell at you for not being competent to take care of yourself.  I then give you back some little percentage of what has been taken from you, just enough for you keep going, and claim that your acceptance of the pittance is proof of your degradation.  It gets lost in the machinations of these processes that the originating engine is the theft of work in the first place.  It is this theft and the concentrating of wealth into a few hands that creates both the sense of and the reality of power to manipulate the economic system for even greater gains.

These facts leave us in considerable difficulty.  It is necessary to begin any attempted changes from presently existing designs and beliefs; there is simply no way to engage a number of people in structures that are entirely new.  Yet the present designs are almost all terrible distortions of the realities that have to be realized and built from.

The present design of the distribution of the community product is almost completely distorting of the incentive structures that would satisfactorily organize community life.  The antisocial rich gather an inordinate share without doing direct work in the production.  The actual producers have been led to feel that their contribution is insignificant – this as a way to justify the theft of their labor.  Those in the community who have been driven into extreme poverty are told that they are worthless, a drain on the rest of the community and are “given” what they themselves see as a grudging ‘handout’ that has no sense of compensation for their actual and existential contributions to the community product.  This is about as royally screwed up as any situation could be.

“The obstinate two-sided problem we face is this: how can we mitigate the penalties of misfortune and failure without undermining the incentives to effort and success?”  This is Henry Hazlitt’s (a founding board member of the Mises Institute) formulation of the issue from 1969.  The statement lays out the problem in the underlying bias of that and this time.  The chapter [1]from which it comes points out, not only the faults with the Negative Income Tax solution to welfare (which will be looked at in a moment), but, without intending it, the faults that are created by the bias itself.

Reframing the issue gives it quite a different complexion: How do we institute in common thought the clarity that the community product is contributed to by the whole community, that the distribution of the benefits of that product must be spread to everyone?  Misfortune and failure, as are effort and success, a misunderstanding of how the community product originates.

Hazlitt is certainly correct that it is the distortions of incentive that create these problems, but the incentive to get something for nothing attributed to those in poverty is not the real concern, it is the incentive to get and keep to one’s self, and private uses, the community product that drives the dilemma.

This clarification, however, doesn’t solve the problem; we are still left with all the issues that plague us. We have disconnected the natural relationship between the support that the many give to the production of community products and the wealth created by those products.  Wages and prices are the bones of the economic creature, but offer none of the flesh and nuance of the fully functioning economic animal.  Humans function as complex motivational systems, not as single function economic variables driven by greed (only economists and psychopaths seem to fulfill the conditions required of economic theory).

When the natural compensation due to people for their contribution to community production is withheld, siphoned off by an elite as their own wealth, and some small part given back as either the beneficence of the rich or as some grudging pittance to rectify the ‘incompetence’ of the poor, then the system is broken and cannot be expected to have ameliorative outcomes.

Because of these distortions, the critiques of the welfare state are often true, at least in the narrow perspective, though sweeping indictments of the poor are obviously false.  And the attempts at solutions consistently create disincentives for life success in one way or another.  The Hazlitt chapter cited above goes into detail pointing out the structural and incentive failures of the Milton Friedman version of the Negative Income Tax “free market” welfare proposal, the essence of which is a base income paid to everyone from taxes at about ½ of survival levels.  As the recipients of the payment do work to add to their income, the welfare payment is reduced in a progressive fashion that allows for an increasing income up to somewhat above poverty at which point the payments end; there is, in this plan, no minimum wage, unemployment or healthcare, and eventually all social services would be reduced to the bare minimum possible or ended.  It is the ultimate anti-welfare plan presented as a welfare proposal.

Current welfare systems all suffer from some form of potential for fraud, bureaucratic complexity and intrusiveness and disincentive for what is called productive work.  But these critiques are not all equal.  We have allowed productive work to be defined by the economic elite; work has come to mean an activity that increases elite wealth.  A family garden, repairing your own car, walking to store or work, performing as entertainment for friends and a whole host of other activities are not considered productive work no matter how beneficial to personal and community life.  An equitable distribution of the community product would allow such work to increase, reduce dependence on so-called productive work and make employers more likely to have to ‘sell’ their jobs to the masses; and so, are actively not supported in the options for welfare design.

The conclusion that I have come to is that there is no way to design our way to a reasonable welfare state without significant shifts in our underlying beliefs and understandings of work and the origins of production. Social Security, Medicare and a number of healthcare programs in other countries come about as close as we can get in the present paradigm – which is why they are under such unrelenting attack.

The corporate elites have gone to extreme lengths to control these ideas in the public space.  Economists and social scientists who understand these things must become like the climate scientists as they are beginning to move toward public activism.  Socialism and Marxist economics have to become again part of the common currency of ideas, to be measured and tested in the free flow of ideas.  This is primarily a matter of fearlessly speaking them as valid and meaningful contributions to the debate.

The welfare state is the only kind of state that can sustain: a community that is organized to support the welfare, the wellbeing, of all of its members.  We know how to do these things.  All the ideas are there.   We must understand, yet again, that individualist, free market economics is an aberration, an insanity that forms naturally in the human brain during an unnatural time of exponentially increasing excess, but that must wither and die when growth ends.  These transitions have always been and apparently will continue to be horrific.  The next essay will look more closely at our present transition.

[1] Man vs. The Welfare State (New Rochelle, NY: Arlington House, 1969, pp 84–100; available in PDF