Is Wrong In Principle
Judd W. Patton
Written for The Bottom Line, Winter 1996)
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
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.
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).
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.
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
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!
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.
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.”
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.”
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
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
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
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).
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
takes many forms!
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
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
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.
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.
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.
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
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
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.
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.
Bastiat, The Law (Irvington-on-Hudson, NY:
The Foundation for Economic Education, Inc.), pp. 21-23.
Moore and Dean Stansel, “Ending Corporate Welfare As We Know It,” Cato
Institute Policy Analysis, May 12, 1995, p.17.
Crockett, “Not Yours To Give,” Publication of the Freedom School,
College of the Southwest, 1995, p.3.
reading: The Tragedy of American Compassion by Marvin
See Table 1
1: FEDERAL ENTITLEMENTS (FISCAL
Billions of Dollars
health program provides insurance to an estimated 37 million elderly
jointly by Washington and the states, this health program offers insurance
to the poor.................
pensions to nearly 2.5 million retired and disabled federal employees and
military personnel are eligible for a number of programs including
disability and hospitalization
than 1.5 million military retirees collected federally funded pensions in
elderly, blind or disabled low-income citizens...................................................................................
low-income households with coupons for the purchase of groceries............................................
by Washington and the states, this program provides temporary
monetary assistance through tax credits to low-income working families with
as AFDC, this program offers benefits to about 14 million people a
program compensates farmers for commodity-price drops, helping to support
over 700,000 farms....
broad-based entitlement program delivers benefits to 94 percent of all
federal interest payments to the public and, as an offset, government
interest income on loans
all other mandatory federal spending
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