All Commentary
Friday, September 1, 1995

The Other Washington

The Welfare State Is an Idea Whose Time Has Fled

There are two Washingtons. One is in gleaming white, a magnificent sight for the tourist flying into National Airport and catching glimpses of the Capitol Building, White House, Supreme Court Building, Jefferson Memorial, Washington Monument, and so on. The other Washington is one the tourist rarely gets to see. This Washington epitomizes the Welfare State.

To be sure, there’s still a seamy side to the glistening Washington, the Shining City on the Hill, even though high officials get duly glorified in Washington’s statuary. There they stand: Noble figures in parks, circles, squares, and government buildings in the mode of Greek and Roman temples. Oversized heroic gods in bronze or stone—presidents, speakers, senators in friezes or on pedestals with eyes peering and forefinger raised.

My favorite statue is in white granite, in Mussolini modern. It stands before the Federal Trade Commission Building on Pennsylvania Avenue. The statue is a powerful 12-foot-tall horse representing “Trade” being held back by an equally powerful 10-foot-tall man representing “Government,” probably a bureaucrat. The sculptor knew his onions.

To my knowledge, though, there is no statue of a Washington official pocketing an unmarked envelope but there are many of those who have legally collected loot in the form of votes or political action committee (PAC) campaign funds for privileging somebody or some group with tax, regulatory, spending, or welfare goodies. Loot-seeking-and-bestowing far outpaces tourism as Washington’s leading industry—an industry peopled mostly by thousands of lawyers who lobby for their clients across America.

Yet it is the Welfare State that dominates Washington, that also comes in two forms. The first is the traditional one for the poor. It involves public housing, Aid to Families with Dependent Children, food stamps, Medicaid, and so forth. The second form is estimated by Washington economist Herbert Stein to be five times bigger, and it includes Social Security, Medicare, and low-cost loans to college students—welfare then for the non-poor including the rich. Welfare for the rich—truth indeed stranger than fiction.

Tax something and you get less of it, subsidize something and you get more of it. D.C., with the highest per capita property and individual income taxes in the land, causes residents and businesses to flee mainly to nearby Maryland and Virginia and lower income, property, and sales taxes. D.C.’s 1991 per capita tax burden comes to $4,037; New York City’s, in contrast, $2,190.

So taxes plus high crime and poor schools have driven 200,000 mostly middle-class people out of D.C., cutting the population by 25 percent (from 800,000 to under 600,000), shrinking the tax base accordingly. Currently, the $3.4 billion D.C. budget is short by $722 million for a 42,000 workforce in a maze of bureaucracies and programs that is not only broke, but broken.

But then D.C., with Uncle Sam’s big helping hand, richly subsidizes welfare for some 200,000, with 130,000 on Medicaid alone. Thus the welfare cornucopia’s bitter fruit: In convicts per capita, murder rate, low SAT math scores, one-parent families, infant mortality, low-birth-weight babies—in other words, in depressing category after depressing category—Washington, the capital of the United States, if not of the world, leads America. At one point, then-D.C. Mayor Sharon Pratt Kelly pleaded with President Clinton to call out the National Guard to patrol Washington’s crime-torn streets.

Ideas have consequences. The Welfare State is an idea whose time has long fled but whose misery goes on. Its authors, the distinguished members of Congress, sit atop Capitol Hill whose shadow falls across D.C.’s social dissolution—the other Washington, America’s Welfare State in microcosm. A state of utter failure.


—William H. Peterson

Dr. Peterson, a contributing editor of The Freeman, is the Distinguished Lundy Professor of Business Philosophy Emeritus at Campbell University in North Carolina.

For further information on the statistics cited, see D.C. by the Numbers: A State of Failure by Thomas N. Edmonds and Raymond J. Keating.

The Blessings of Liberty

A free market is out of the question except among a people who prize liberty and know the imperatives of liberty. Liberty is not a one-man term but, like the free market, finds its complete realization in universal practice: every man on earth is born with as much right to his life, his livelihood, his liberty as I. No one can rationally prize liberty for himself without wishing liberty for others.

To realize liberty, to tear ourselves loose from political rigging, to unshackle creative energy, to achieve freedom in transactions, does not, as many contend, require that the individual wait until all others take these steps in unison with him. Implicit in such a council of delay is the taking of no steps by anyone, and this is fatal to liberty. An individual can stand for liberty all by himself; a nation can practice liberty to its own glory and strength though all other states be slave. The blessings of liberty are conferred on all who live by her credo; and basic to liberty is the unrigged market.

—Leonard E. Read 1898-1983
Anything That’s Peaceful, 1964

  • William H. Peterson (1921-2012) was an economist, businessman and author who wrote extensively on Austrian Economics. He completed his PhD at New York University in 1952 under the supervision of Ludwig von Mises.