The Welfare State Doesn't Work?

The Welfare State is pushing the globe towards worldwide economic collapse?  Go figure? 

Robert J. Samuelson writing in the Washington Post:

The welfare state's death spiral

What we're seeing in Greece is the death spiral of the welfare state. This isn't Greece's problem alone, and that's why its crisis has rattled global stock markets and threatens economic recovery. Virtually every advanced nation, including the United States, faces the same prospect. Aging populations have been promised huge health and retirement benefits, which countries haven't fully covered with taxes. The reckoning has arrived in Greece, but it awaits most wealthy societies...(emphasis added)

...The welfare state's death spiral is this: Almost anything governments might do with their budgets threatens to make matters worse by slowing the economy or triggering a recession. By allowing deficits to balloon, they risk a financial crisis as investors one day -- no one knows when -- doubt governments' ability to service their debts and, as with Greece, refuse to lend except at exorbitant rates. Cutting welfare benefits or raising taxes all would, at least temporarily, weaken the economy. Perversely, that would make paying the remaining benefits harder.

Greece illustrates the bind. To gain loans from other European countries and the International Monetary Fund, it embraced budget austerity. Average pension benefits will be cut 11 percent; wages for government workers will be cut 14 percent; the basic rate for the value-added tax will rise from 21 percent to 23 percent. These measures will plunge Greece into a deep recession. In 2009, unemployment was about 9 percent; some economists expect it to peak near 19 percent.

If only a few countries faced these problems, the solution would be easy. Unlucky countries would trim budgets and resume growth by exporting to healthier nations. But developed countries represent about half the world economy; most have overcommitted welfare states. They might defuse the dangers by gradually trimming future benefits in a way that reassures financial markets. In practice, they haven't done that; indeed, President Obama's health program expands benefits. What happens if all these countries are thrust into Greece's situation? One answer -- another worldwide economic collapse -- explains why dawdling is so risky. (emphasis added)

The riots in Greece are a stark example of what happens when the population becomes dependent on government for their most basic needs.  When the money runs out, and it always does, people rebel at that thought of doing for themselves what they should have been doing all along. 

Once people get the notion that the government is going to pay their mortgage and put gas in their car and pay for it all with some magical "stash" the don't let go of that "free" money without a fight.  Afterall, they're entitled to it.  That is exactly the future our children have to look forward to unless we decide to pass on the stash now rather than force our children to pay to piper later.

Redefining kindness

Saturday I wrote Moral Imperatives and Freedom.  My point was that under the guise of "moral imperative" our government tries, and often succeeds, in convincing people to trade freedom for personal security.  Dan Riehl, wrote yesterday about a possible unintended consequence of government provided health care.

Dan correctly points out that many people have health insurance through their employer and that if you sever the relationship between health insurance and employment there is one less reason to work.  Does this mean that if ObamaCare becomes law that we will suddenly see a flood people leaving the job market?  No, social changes come over time.  Consider this from Dr. Helen's post "These women are not so much welfare queens as matriarchal dynasties..."  that discusses this article:

Are men surplus to requirements? The answer, after more than half a century of feminism and the welfare state, depends largely on class. Men from the employable and educated classes are still in strong demand among women. But much lower down the socioeconomic scale, among the least privileged, men have become — or have come to seem — entirely optional.

As many of these women become grandmothers, a new pattern has emerged of three generations of mothers without a man in the house — lone granny, lone mum and fatherless children, all expecting the state to stand in for daddy, as of right. These women are not so much welfare queens as matriarchal dynasties of welfare Amazons...

We currently have various social "safety net" programs, AFDC, WIC, Food Stamps, Medicaid, Section 8 housing, that at the time the programs were created we were told that each was a moral obligation.  But as a result, we have children for whom there is no relationship between employment and basic needs.  Education has no relevance in these young people's lives. The cycle of dependence expands because of the false notion that a "kind" nation takes care of its own.  From the comments on Dr. Helen's post:

 "People and governments who care about the poor will make them uncomfortable in their poverty. Countries who spend the most on their poor have the most poor to spend money on."

- Benjamin Franklin.

The more entitlement programs we enact the poorer our general welfare becomes.  Even worse than the debt that we are passing on to our children is the independence we are robbing them of.  It is time we redefine kindness.