Mittwoch, 5. Oktober 2011

Welfare State - II: Lassez-faire - the Answer to Everything?

Dynamic young Europeans, frustrated by overregulated societies that prevent them from realizing their personal and professional objectives, may dream about the unlimited opportunities that the American Way of Life offers. Unemployed Americans - or Americans who fear that they may soon be without a job - may dream about the benefits and protection that European Welfare States offer. Which of the two is right?

Both are right in principle: The entrepreneurial American who believes in risks and rewards (and who can live with the consequences of that belief) would probably suffer from depressions in a European Welfare State. The traditional European, accustomed to stable and well-understood structures, might consider suicide in an environment where the only thing that is permanent is change.

„Let the markets rule!“, is the slogan of many today. „We have to control the speculators!“, is the slogan of others. Both are very good slogans; neither is a universally applicable solution.

Two of the important elements for the sustained success of a society are: first, it needs to have clear its ‘basic rules of the game’; and secondly, it continually needs to adjust these rules to the changes taking place in society and in the world. It needs to be dynamic and not static. Political and economic models tend to explain the functioning of society in a static way. They tend to suggest that a certain political and economic structure has permanent validity and applicability. The result often is a society of diminishing ability to adapt to changes taking place in the world; a society of diminishing ability to self-correct.

It would be the subject of a dissertation in the field of Political Science to discuss the question of how the ‘basic rules of the game’ of a society (in other words: its perceived or real value structure) evolve. If a national President pronounces, for example, that „the business of America is business“, and if he remains popular after having pronounced that, one can conclude that by having made that pronouncement he struck a familiar cord, a generally accepted value structure. By contrast, if a head of government pronounces that „we“, the government, that is, „have to provide welfare to everyone“, and if he gets applauded and reelected for that, then we are witnesses of a different value structure.

„Laissez-faire“ represents the value structure of a certain society at a certain stage in its development. There is ample historical evidence that a complete „laissez-faire“ approach leads to many undesirable consequences. The answer, however, cannot be a „ne pas laisser-faire“ approach because its major - and most damaging consequence - is the de-emphasis of competition of thought and performance in the process of achieving results. In its stead move the regulation of thought and performance and the power of regulators.

„Laissez-faire“ should, therefore, be considered as a mindset, a basic way of thinking in the process of determining what - within the context of the basic rules of a society - should be assigned to the category of „ne pas laisser-faire“. In theory, a „laissez-faire-mindset“ and the Welfare State should not have to be mutually exclusive concepts: there is no compelling reason why a Welfare State would not continually reexamine actual results against the original intentions. In practice, however, it does not tend to work that way.

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