Mittwoch, 5. Oktober 2011

Welfare State - VII: The Welfare State - Its Unintended Consequences

This paper argues that the debate about the Welfare State should not focus only on its financial viability (even though - in the shorter term - that aspect is its most obvious flaw). Of course, no society can go on forever if more services are demanded of the state than the citizens of the state are prepared to pay for. Eventually, the institutions of the Welfare State will become insolvent (and many Welfare States are having to cope with that problem already). However, a good Welfare State will find ways to repair such financial problems, at least temporarily. The well-known repairs are: reduce the quantity and quality of services provided and increase the cost thereof. A private business that behaves in such a manner in a period of financial crisis will accelerate its demise for the simple reason that its customers have a free choice to buy elsewhere. The customers of the Welfare State do not have that free choice. As a result, the Welfare State enjoys the unique luxury of fixing its financial problems by forcing the customers to pay for the repairs and in the process it even strengthens the customer relationships because the customers become even more dependent on the Welfare State. As long as the citizens of the Welfare State can be convinced that, without the Welfare State, they would be „left out in the cold“, there will be no material change.

This paper argues, however, that the debate about the Welfare State should be over its sociological aspects and consequences. A society that nurtures in its people a mindset of ignoring economic realities will over time deteriorate in quality and will lose competitiveness in the world. The deterioration in quality cannot easily be measured quantitatively. The loss of competitiveness in the world can easily be measured: financial and human capital (i. e. investment and jobs) will gravitate to those societies that are more competitive.

This paper argues that the most undesirable (and possibly the most unintended) consequence of the Welfare-State-Mentality is the deterioration in quality of the society. A society that de-emphasizes the reasonable competition of thought and performance in the process of achieving results and benefits will tend to reduce the element of fairness as one of its basic values. No one needs to (or can) guarantee that life will always be fair; that would be utopic. However, one can propose that fairness should be a predominant theme in a society’s code of conduct and, regrettably, fairness can not be decreed by law. The reasonable competition of thought and performance and adequate rewards for those that fare better in that competition are the most effective regulatory mechanisms to achieve fairness (as long as those who fare less well are not unduly penalized for that). The most repulsive human reactions can be observed in situations where people feel treated unfairly. In everyday-life, those reactions are envy, mistrust, cheating, etc. - in short, a negative attitude towards other members of society. In history, the reactions to unfairness have included wars and revolutions.

In a Welfare-State-Mentality, one can easily be lead to feel successful when one can „fix one’s benefits“; to feel happy when one has access to privileges; to feel secure when one controls dependencies. With such a mentality - and with almost daily proofs that it is the called-for mentality - one is unlikely to develop a yearning for a sense of fairness and fair play. One is unlikely to develop a sense of respect for the honor of the neighbor. And without those social values, a society is unlikely to be successful over time.

Proponents of the Welfare State will claim that, without it, life would be a brutal battle of survival among the fittest with the less strong being „left out in the cold“: people could not afford to be ill because they would not be able to afford medical treatment; people who lost their job would face starvation because society would not take care of them; etc. It is a gross misrepresentation to suggest that opponents of the Welfare State are left untouched by human misfortune and by human weaknesses. Any responsible spokesman for Welfare Government will promote the need for a „safety net“, a system where the needy can count on society’s help when they are in need. However, opponents of the Welfare State can also paint a frightening picture of its negative consequences: a society, where an ever-increasing portion of its members shares in the rewards for competitive behavior without having to share in the risk and effort that goes along with them; the contrast between (a) a 50-year-old factory worker who has hardly ever taken sick-days in his career and who has never been to a spa (and who is now worried that his job might be „exported“ to low-wage countries), and (b) a 35-year-old retired high school „professor“ who, despite many sick-days and several recuperations in spa’s, could not handle the stress of facing students roughly 20 hours every week (not counting the 12 weeks per year that he was on vacation) and who, therefore, had to be granted early retirement for health reasons (and who is now earning substantial additional - and untaxed - income through private tutoring). Excessive distortions of this nature provide fertile ground (and many votes!) for politicians who cleverly promise to „clean out the mess“ which the Welfare State allegedly created.

The period of Enlightenment encouraged man to break out of self-imposed dependencies and inferiorities. It encouraged man to assume responsibility for his own destiny. The Welfare State tends to accomplish the opposite. „Without my party I would be nothing“, an Austrian political leader allegedly once said. „Without the Welfare State I would be nothing“, a good citizen of the Welfare State might feel. Such sentiments reflect nothing other than the total denial of one’s worth as an individual, the total submission to organizations and institutions to provide for one’s security and well-being. And what, if - some day - these organizations and institutions wither away in the storm of change that turns the world into a global village? And what, if - some day - the Welfare State indeed can no longer uphold all those illusions that it created? How did the East Germans feel when they found out that big cars and color TV’s were not presents distributed by the state but, on the contrary, the rewards for effort and stress? Did they comfortably adjust to those new rules of the real world or did they perhaps feel that they were no longer emotionally equipped to deal with the real world?

The Welfare State tends to „create“ jobs by mandate. Welfare Government will, instead, create the economic framework - the legal and regulatory environment and the spiritual leadership - so that jobs „come into existence“ in the interplay of customer needs and suppliers’ capabilities. The Welfare State feels responsible for all (and tends to limit those that would rather be left on their own). Welfare Government will, instead, feel responsible for those that need support (and will provide opportunities for the others). The Welfare State requires the citizens to comply with its rules irrespective of individual needs and interests, and it is not very efficient in adapting to changes taking place in the world. Welfare Government will, instead, warn the people that - in times of change - nothing should be taken for granted (except basic welfare for the needy, of course); it will motivate people to believe in their own ability to take care of themselves and to put that ability to use. The Welfare State proposes a better world that will come about as a result of laws and regulations. Welfare Government will, instead, propose a better world that will come about as the result of honest effort and fair play. In short, Welfare Government will nurture a desire on the part of the baker to pay for his own lunch in the restaurant so that the restaurant owner can continue to buy bread from him. Perhaps the Welfare State had originally set out to achieve those very same results. The writer believes that it probably has and this belief attaches validity to the title of this paper, namely, that the negative consequences of the Welfare State that are now seen and felt in many places are unintended (and not intended) ones.

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