Judd W. Patton, Ph.D. (Biography) Bellevue University Online
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Welfare Is Wrong In Principle
by
Dr. Judd W. Patton

(Originally Written for The Bottom Line, Winter 1996)

A consensus exists among Americans that our nation needs to “end welfare as we know it.”  But most Americans, when they think of welfare, think of food stamps and relief programs such as AFDC (Aid to Families with Dependent Children).  Ironically, few Americans seem aware of the extent, pervasiveness and general acceptance of welfarism - also know as the welfare state - in our nation and in our own values.  Do Americans want to end the Welfare State as we know it?  That is the real question.

What is the welfare state and what are the fundamental moral and economic principles upon which it is based?  How extensive is welfarism in the United States today?  If welfare is wrong in principle, as our title asserts, what idea or principle should replace it?  Let’s consider these questions.

Welfare State Defined

Welfare, of course, is something all humans desire - health, happiness and prosperity.  Our Founding Fathers established the Constitution to “promote the general Welfare, and secure the Blessings of Liberty…”   The Constitution gave us limited government committed to the “production of security;” that is, a government whose purpose is to protect the lives and property of its citizens.

Click picture to enlargeWelfarism, on the other hand, or the welfare state,1 is the very essence of big government.  It is a government that has taken responsibility for individual welfare “from cradle to the grave.”  Such a government purports to have deep compassion and care for the poor, elderly, homeless, unemployed, sick, children, students, shaky businesses, and even to manage the economy for full employment and economic growth.  The specific programs carry out this “compassion” are known as transfer payments (payments by government to individuals and institutions that are not in payment for goods or services rendered), redistribution, subsidies, and entitlements (welfare programs made into a legal right).

The welfare state, then, is one form of state intervention in a capitalist, free market economy.  It is a form of socialism.  Its citizens come to expect and lobby for “political income” as opposed to “marketplace income,” the latter earned in the market through service to others.

The financial mechanism of the welfare state is “taxing Peter to pay Paul.”  The government obtains revenue from taxpayers (and also from fiscal policy deficits and “easy money” policies of the Federal Reserve) and redistributes the monies to the “needy” and the “politically influential.” 

But a critical and significant distinction must be made between government “giving” and private charity.  Private charity is an act of giving to those whom the giver deems needful for deserving.  Charity is a voluntary act that expresses and demonstrates a person’s compassion.  By contrast government “giving” is an oxymoron.  Before government can “give,” it must first take by coercion, that is by taxation.  Taxation is not voluntary!

Compassion is never demonstrated by coercion.  Government is not Santa Claus!  Welfare state advocates seem unaware that “there ain’t no such thing as a free lunch.”  The beneficiaries of government programs require victims.

Legal Plunder

It was an eminent French economist, Frederic Bastiat, who clearly identified the moral underpinning of the welfare state as legal plunder.  Here is Bastiat’s explanation:  “How is this legal plunder identified?  Quite simply, see if the law takes from some persons what belongs to them, and gives it to other persons to whom it does not belong.  See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime.”

Click picture to enlargeBastiat continues:  “Now, legal plunder can be committed in a infinite number of ways.  Thus we have an infinite number of plans for organizing it:  tariffs, protection, benefits, subsidies, encouragements, progressive taxation, public schools, guaranteed jobs, guaranteed profits, minimum wages, a right to relief, a right to the tools of labor, free credit, and so on, and so on.  All these plans as a whole, with their common aim of legal plunder, constitute socialism.”

Bastiat concludes:  “This question of legal plunder must be settled once and for all, and there are only three ways to settle it:  1) The few plunder the many.  2) Everybody plunders everybody.  3) Nobody plunders anybody.  We must make our choice among limited plunder, universal plunder, and no plunder.  The law can follow only one of these three.”2

Our founding fathers categorically rejected Numbers 1 and 2.  They embraced freedom, a free society, where nobody plunders anybody.  They rejected the (im) moral principle of a democratic welfare state:  that “you shall not steal unless by majority vote.”  They believed Exodus 20:6, “You shall not steal.”  Period!  Indeed, our founding fathers rejected the welfare state of their day, known as mercantilism with its monopoly privileges and government regulation of the economy.  As proof, review the 27 Biblical violations of King George III as listed in the Declaration of Independence.

Federal Entitlements

The pervasiveness of welfare in our nation is staggering.  It exists at all levels of government:  federal, state, and local.  Notice the $1.1 trillion - that’s $1,100,000,000,000 - of U.S. government entitlements in Table 1.  Entitlements represent almost 72% of total Federal expenditures in 1995!  But even this is not a complete accounting of welfare expenditures.  Our government has other “discretionary” outlays, such as housing subsidies, and grants to disadvantaged and migrant students, foreign governments etc.

For those who might question the inclusion of Social Security and Medicare as transfer payments, due to the payroll tax that finances them, it needs to be pointed out that current revenue from these payroll taxes is paid out to the retirees and beneficiaries, and any surplus is replace with government bonds. Thus future beneficiaries must be paid from the payroll taxes of future workers.  That is, the Social Security system is not actuarially sound – the funds are consumed, not saved and invested to generate income for future obligations.  (Veteran’s benefits, military, and civil service retirement are likewise transfer payments).

The redistributive nature of Social Security is readily seen.  A current retiree in 1996 with a normal life expectancy is projected to collect $180,000 more than he paid in taxes.  On the other hand, a young person entering the labor force today may be lucky to get his “contributions” back in benefits. 

Corporate Welfare – FADC

Another area of Federal welfare and largess is what might be called Federal Aid to Dependent Corporations (FADC).  In a remarkable study by the Cato Institute, authors Stephen Moore and Dean Stansel identified 129 programs that subsidize private business, corporate welfare, to the tune of $87.3 billion in 1995.3

Here is just one example.  The Department of Agriculture recently spent $2.9 million advertising Pillsbury muffins and pies, $10 million for Sunkist oranges, $465,000 for McDonald’s Chicken McNuggets, $1.2 million for American Legend mink coats, and $2.5 million for Dole pineapples, nuts, and prunes.4

Legal plunder takes many forms!

Anecdotal Evidence

The author’s personal experiences also demonstrate the pervasiveness and acceptance of legal plunder as a way of life in our nation.

A recent phone call from a “free-enterprise” colleague is particularly telling.  He wanted my support and participation in a conference on International Business.  He informed me, after I asked, that he hoped to fund the endeavor by a grant from the U.S. Department of Education.  My  response was, “As you know, neither I personally nor the Entrepreneurial Leadership Center nor Bellevue University will knowingly put our hand in the public trough.  We believe to do so is morally unprincipled.”  Further discussion did not convince him to change his mind.  This incident is, in the author’s view, a sad commentary on how ingrained the welfare mentality is in America.  Even some free enterprise advocates do not have the conviction to live what they profess to believe in.

Americans Opposed To Legal Plunder

click picture to enlargeSamuel Adams, father of the American Revolution opposed legal plunder:  “The utopian schemes of leveling, and a community of goods, are as visionary and impracticable as those which invest all property in the Crown are arbitrary, despotic, and in our government, unconstitutional,” (1768).  Likewise, James Madison very clearly made the case for the proper role of government in 1792:  “Government is constituted to protect property of every sort….This being the end of government, that alone is a just government which impartially secures to every man whatever is his own.”

Davy Crockett - yes, even the Davy Crockett - understood the distinction between government welfare and true charity.  One day in the House of Representatives a bill was proposed to appropriate $10,000 for the benefit of a widow of a distinguished navel officer.  Congressman Crockett’s logic swayed the vote.  Breaking into his speech, “We cannot, without the grossest corruption, appropriate this money as the payment of a debt.  We have not the semblance of authority to appropriate it as a charity.  Mr. Speaker, I have said we have the right to give as much money of our own as we please.  I am the poorest man on the floor.  I cannot vote for this bill, but I will give one week’s pay to the object, and if every member of Congress will do the same, it will amount to more than the bill asks.”5  The bill was voted down.  Later, Davy explained his great disappointment to one of his constituents that Congress did not respond to his proposal.  Apparently they were willing to be “compassionate and charitable” with other peoples’ money, but not their own.

Conclusion

Henry David Thoreau once remarked, “There are a thousand hacking at the branches of evil, to one striking at the root.”  Yes, the root of welfare and the welfare state is legal plunder.  It is wrong in principle.  It is immoral.  It is not charity nor an expression of compassion.  Therefore, welfare ought not to be reformed.  It must be ended and replaced with true charity. 

Long-time readers of The Bottom Line understand that any economic policy or program that violates moral principles is inherently flawed; it will not attain its intended purpose.  That is the way our world works.  Virtue produces harmony and good fruit while vice, violation of moral law, produces evil fruit.  Moral laws rule the world of human action.

Economically, legal plunder welfare programs produce more of a subsidized activity.  Subsidizing the poor generates more poor; subsidizing the unemployed generates more unemployment; and subsidizing medical care generates more demand for medical care.  Moreover, welfarism evokes continual clammering and political strife; it creates government dependency by removing personal responsibility; it hinders true charity and thereby weakens the bonds of a common brotherhood; it causes a “chilling effect”

on the development of private charitable institutions; it encourages consumption at the expense of investment; and it replaces entrepreneurs with bureaucrats and bureaucracy.  Is it really any wonder welfare programs fail to produce real welfare?

A welfare state is a society living well below its economic potential.  General Douglas MacArther had it right:  “History fails to record a single precedent in which nations subject to moral decay have not passed into political and economic decline.  There has been either a spiritual awakening to overcome the moral lapse, or a progressive deterioration to ultimate national disaster.”

A society that will not awaken from its welfare statism, its surely in a state of moral decay.  Americans need to first recognize their plight and then reject the transfer society.6  They need to initiate a benefit rebellion!  A real lasing revolution is based on moral principles.  As Henry Ward Beecher observed, “Expedients are for the hour; but principles are for the ages.”  Are there any Bottom Line readers who will commit themselves to this revolution?  Let me hear from you.

Footnotes

1The term “welfare state” first entered the English language in 1941 when Archbishop Temple coined the phrase to distinguish Britain’s economy from the “warfare state” of Nazi Germany.

2Frederic Bastiat, The Law (Irvington-on-Hudson, NY:  The Foundation for Economic Education, Inc.), pp. 21-23.

3Stephen Moore and Dean Stansel, “Ending Corporate Welfare As We Know It,” Cato Institute Policy Analysis, May 12, 1995, p.17.

4Ibid., p.3.

5Davy Crockett, “Not Yours To Give,” Publication of the Freedom School, College of the Southwest, 1995, p.3.

6Recommended reading:  The Tragedy of American Compassion by Marvin Olasky.

See Table 1 below:

Table 1:  FEDERAL ENTITLEMENTS (FISCAL 1995)

Billions of Dollars 

MEDICARE
This health program provides insurance to an estimated 37 million elderly recipients..............................

176


MEDICAID

Funded jointly by Washington and the states, this health program offers insurance to the poor.................

90


CIVIL-SERVICE RETIREMENT
Provides pensions to nearly 2.5 million retired and disabled federal employees and their survivors..........

38


VETERANS BENEFITS
Former military personnel are eligible for a number of programs including disability and hospitalization 

35


MILITARY RETIREMENT  
More than 1.5 million military retirees collected federally funded pensions in 1994
.................................

28


SUPPLEMENTAL SECURITY INCOME

Aids elderly, blind or disabled low-income citizens...................................................................................

27


FOOD STAMPS

Provides low-income households with coupons for the purchase of groceries............................................

25


UNEMPLOYMENT COMPENSATION

Funded by Washington and the states, this program provides temporary
compensation to the unemployed.............................................................................................................

24


EARNED-INCOME TAX CREDIT

Offers monetary assistance through tax credits to low-income working families with children....................

17


FAMILY SUPPORT PAYMENTS

Known as AFDC, this program offers benefits to about 14 million people a month...................................

17


FARM INCOME STABILIZATION

This program compensates farmers for commodity-price drops, helping to support over 700,000 farms....

10


SOCIAL SECURITY

This broad-based entitlement program delivers benefits to 94 percent of all elderly families...................

334


NET INTEREST

Includes federal interest payments to the public and, as an offset, government interest income on loans

235


OTHER

Incorporates all other mandatory federal spending programs..................................................................................................................................................

43

TOTAL:     

 $1,099

                                          

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