The welfare state exists to transfer resources from those who produced them to those who did not. There can be countless motives for effecting a transfer: to equalize incomes; to feed and house the poor; to eradicate drug use; to promote exports; to inhibit imports; to subsidize business and agriculture; to certify the safety of food, medicines, toys, and appliances; to make buildings sturdy; to discourage smoking or drinking; to preserve wetlands and animal habitats; to ensure retirement income; to guarantee safety in the workplace; to advance research; to educate children; to provide affordable medical care; to control rents; to end racial discrimination; to plan residential development.
Whenever the state attempts to do those things, by definition it accumulates and exercises power. The power of government always comes down to physical force. Someone is either compelled to do something he wishes not to do, whether it is paying taxes or complying with decrees, or stopped from engaging in the peaceful pursuit of his choice.
Since the welfare state is built on devices that increase the power of government at the expense of the liberty of individuals, it contradicts basic moral precepts. The issue isn’t whether people ought, in some sense, to donate money to good causes. It is rather whether they should be legally compelled to do so. Who would have the state compel everything that “ought” to be done?
Thus the welfare state is immoral. It also is destructive of processes that create wealth and prosperity.
Why then did America turn to the welfare state from its individualist and libertarian origins? That is a complex question with a large range of correct answers. It is surely the case that people, wishing to economize on their scarce time and effort, look for the path of least resistance. If they can get what they want through political transfers, many people are happy to do so.
Collecting tax-financed benefits doesn’t feel like receiving stolen property, although that’s what it is. Citizens find themselves in a seemingly amoral arena in which they might as well get what they can before someone else takes it. In the animal jungle the rule is eat or be eaten. In the political jungle it’s subsidize or be subsidized.
Another motive propelling the welfare state is insecurity about change and ignorance of the future. One’s economic position ultimately depends on the tastes and preferences of free and fickle consumers. Someone making a high income today can be living paycheck to paycheck tomorrow—and vice versa. No one is guaranteed a particular position in the marketplace. That can be discomfiting. But there is a bright side. “In an unhampered market economy the absence of security, i.e., the absence of protection for vested interests, is the principle that makes for a steady improvement in material well-being,” Ludwig von Mises wrote. The freedom that permits change and failure is also what makes innovation, discovery, and inventiveness possible. Those things improve everyone’s welfare.
Related to the fear of uncertainty is the fear of what is called atomism. This is the concern that in the unfettered marketplace of individualists, with no government safety net, too many people will be left to fall by the wayside. In 1997 President Clinton tempered his declaration that the era of big government was over by adding that we couldn’t go back to the time when “people fended for themselves.” Juxtaposing the two points implies that big government was established so that people wouldn’t have to fend for themselves. Clinton undoubtedly had in mind the second definition of the term “fend” in the American Heritage Dictionary, third edition: “to attempt to manage without assistance.”
If to fend is to attempt to manage without assistance, it has little relevance to the free market. The marketplace is characterized by the division of labor and exchange for mutual benefit: you make shoes, I’ll make bread, and we’ll trade. Does that sound like fending for oneself? One becomes suspicious of capitalism’s enemies when their model of an individualist resembles Theodore Kaczynski, who was hostile to everything associated with capitalism.
The conjured-up era of fending is simply part of the anti-capitalist folklore designed to make us fear liberty and look to the state for protection. Atomistic individualism is a straw man. It was never part of the classical liberal, or libertarian, picture of the world. That world is better described as embodying “molecular individualism.”
The Primacy of Property
The antipode of the welfare state is the system of private property. If subsidy tethers, property liberates.
It is hard to overstate how radical the idea of private property is. According to the Scottish Enlightenment writer Adam Ferguson, man ceased to be a savage when the idea of property occurred to him. Mises has shown that without property in the means of production, there is no trade; that without trade, there are no prices; and that without prices there can be no economic calculation, which is indispensable for determining how to get the most value from resources. Thus central planning is impossible, and property rights are required for people to prosper.
Although opponents of private property have rhapsodized about freedom, it is difficult to know what they mean. What would freedom without property rights look like? When government owns the presses, ink, and newsprint, freedom of the press is impossible.
Similarly, enemies of property have advocated personal autonomy and self-determination. Yet how can those things be realized without private property? In a world of collective property—which in fact would mean state-controlled property—everyone is a tenant and employee of a monopoly landlord and employer. That’s serfdom. It is true that in a market society, many people are both tenants and employees. The difference is that in a market, multiple landlords and employers compete to attract tenants and employees. And every tenant and employee has the freedom to work to become a homeowner and an independent entrepreneur.
Some will ask: But must we go to extremes? Sure, socialism is bad and unworkable, they will continue, but a complete free market—laissez faire—cannot be the only alternative. Isn’t there a third way?
State and market are opposites, embodying, respectively, force and creativity. That is why the search for a third way is misconceived. There can be no such thing. We live in the digital age, in which powerful devices accomplish their wonders through electronic switches that have only two positions: on or off. There is no middle position. It is time we brought our political thinking into the digital age.
This article is excerpted from Mr. Richman’s new book, Tethered Citizens: Time to Repeal the Welfare State (Future of Freedom Foundation, 2001).