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Tuesday, November 8, 2022

Otto von Bismarck: The Man Behind the Modern Welfare State

Putting his countrymen on the dole was an unforgivable legacy of Otto von Bismarck, and it’s high time we learn from it.

Image Credit: Public Domain

The late political humorist Tom Anderson once said that the welfare state was so named because the politicians get well and the rest of us pay the fare. Economist Walter Williams claimed it was like “feeding the sparrows through the horses.” Someone else defined it as “a lot of people standing in a circle and each one has his hands in the next guy’s pocket.” Personally, I think it’s a scenario in which politicians offer security but ultimately deliver bankruptcy—financial and moral.

Perhaps the most eloquent critiques of the welfare state come from economist Thomas Sowell. In various places, he has described it thusly:

The welfare state is the oldest con game in the world. First you take people’s money away quietly, and then you give some of it back to them flamboyantly...It has always been judged by its good intentions, rather than its bad results...It shields people from the consequences of their own mistakes, allowing irresponsibility to continue and to flourish among ever wider circles of people...It is not really about the welfare of the masses. It is about the egos of the elites.

That’s a lot of wisdom packed into a few pithy sentences, but the welfare state’s track record has always been a far cry from its promises. It begins modestly, then the bills pile up. To pay for it, deficits, taxes, debt and inflation rise. Robbing Peter to pay Paul, demagogues wage class warfare and buy votes with it. The long-term fiscal health of a country is sacrificed for short-term gratification. Incentives get skewed away from self-reliance and personal initiative and toward dependence on concentrated power. People become less charitable, figuring the State will take care of things they used to handle themselves at half the cost. Sooner or later, if the welfare state isn’t reversed, the takers outnumber the makers.

And why should we expect anything but bad outcomes from a fundamentally immoral practice rooted in legalized plunder? Not even the animal world is dumb enough to embrace it, as I wrote in this article about lessons that animals can teach us.

So where did the idea come from that the State should be the national nanny, that dependence upon politicians should displace personal responsibility and private institutions?

Welfare states are not new to history. The ancient Roman Republic degenerated into one before it lost, not by coincidence, both its liberties and its life.

One man is known as the Father of the modern versions. That would be Otto von Bismarck (1815-1898), chancellor of Germany for nearly 20 years.

Through no fault of his own, Bismarck was born on April Fools’ Day. For pranking an entire country into a welfare state, however, he is culpable. Did he do it because he loved people and just wanted to help them out? That’s the naïve and non-historical perspective. The truth is that he was far more cynical and self-serving than that. He was not Mother Theresa.

The Iron Chancellor, as he was known in his day, united 25 separate principalities, kingdoms and city-states into a federated German Empire in 1871. With Wilhelm I as the Empire’s sovereign, Bismarck moved in subsequent years to consolidate his own power over German politics and society. Within a decade, he saw the socialists as a major and growing threat. He decided the best way to stymie them was to bribe the electorate before the socialists possessed enough seats in Parliament to do the very same thing, and worse.

Ismael Hernandez of the Freedom & Virtue Institute notes that Bismarck’s welfarism was sold as an antidote to insecurity:

The insecurity that drives individuals into action was seen as a hindrance and a threat to human dignity. Insecurity creates a sense of helplessness and entitlement was proposed as the solution…Bismarck affirmed that the state should offer the poor “a helping hand in distress….Not as alms, but as a right.” He called his system Staatssozialismus, or “state socialism.”

In 1883, Bismarck secured passage of national health insurance. He followed up a year later with accident insurance, then disability insurance a few years later. To his credit, Bismarck did not introduce government monopolies in these areas of life; rather, he compelled everyone to pay into compulsory, government-administered insurance schemes. He was a practitioner of the school of long-term thinking called “feed the alligator so he’ll eat you last.” The socialists came to power anyway, not long after Bismarck died in 1898 at the age of 83.

The modern German welfare state began not as a utopian vision of altruism and compassion, but as nothing more than a political ploy for one man to keep himself and his allies in office. It was a relatively modest start for a welfare state, but to use another animal analogy, the camel’s nose was now under the tent. Bismarck’s initiatives imparted a confidence to 20th Century welfare statists that they could do so much more (and wreak so much more havoc in the process).

Bismarck had earned his nickname, the Iron Chancellor, for good reason. He demanded that others bend to his will. “He raged and hated until he nearly killed himself” and “lost his temper at the slightest provocation,” writes Steinberg. To Bismarck, lying was a compulsive obsession. Exercising power was his raison d’etre. If Emperor Wilhelm II hadn’t insisted on his resignation in 1890, Bismarck would have bullied the German people until his dying day.

In his masterful biography, Bismarck: A Life, historian Jonathan Steinberg offers this assessment of the Iron Chancellor’s legacy:

When Bismarck left office, the servility of the German people had been cemented, an obedience from which they never recovered.

What a terrible endowment for future generations!

How refreshing and noble it would be for a man in office to leave his people freer and more independent than they were when he first took the job! Bismarck did not do that. And not even the “free stuff” his welfare state provided was ever truly free. It was, in the end, very expensive. Insecurity proved ultimately to be the least of the German people’s worries.

In America’s recent mid-term elections, many candidates who promised to “address” reckless government spending won. To deliver on those promises, they must not simply “reform” and “restructure” the welfare state, leaving it essentially intact to grow again. They must drive a stake through it.

Putting his countrymen on the dole was an unforgivable legacy of Otto von Bismarck, and it’s high time we learn from it.

For Additional Information, See:

No Such Thing as a Free-Market Welfare State by Kai Weiss

12 Reasons to Oppose the Welfare State by Bryan Caplan

John B. Calhoun’s Mouse Utopia and the Welfare State by Lawrence W. Reed

The European Welfare State is Small Compared to What Bernie Sanders Proposes by Ryan Bourne

An earlier version of this essay appeared at El

  • Lawrence W. Reed is FEE's President Emeritus, having previously served for nearly 11 years as FEE’s president (2008-2019). He is also FEE's Humphreys Family Senior Fellow and Ron Manners Global Ambassador for Liberty. His Facebook page is here and his personal website is