The social safety net

Several times each year, John Allison President and CEO of the Cato Institute circulates a memorandum to the Directors, Sponsors, and Friends of the Institute.  In his July/August 2013 Report John makes the following statements:

A trend that disturbs me is the effort by some of those who want to change political results to try to appeal to egalitarianism for the purpose of electing "compassionate" conservatives to Congress. On several occasions, I have heard the leaders of conservative policy organizations lead with the comment "We all agree about the need for a social safety net" (of course, government financed and controlled). Well, not me. In fact, once we agree the government has the right to use force to redistribute wealth (which is mandatory to create a government-based safety net) the fight is over. The only logical stopping point for this argument is equal outcomes. Equal, that is, except for the elitists in the government and power positions who control the redistribution of wealth.

As libertarians, we believe the sole role of government is to protect individual rights. Our position is logically defendable across all political activities and demands a limited government.

In addition, we are the true advocates of human flourishing. In fact, as libertarians we are the defenders of the pursuit of happiness in the Aristotelian concept of happiness. Happiness earned by a life well lived. Hard work, blood, sweat, and tears happiness. The type of happiness we advocate is only possible in a free society where each individual has the personal responsibility for his life and has the right to live that life consistent with his beliefs and values as a free and independent person.

I believe the welfare state creates very destructive incentives in multiple ways. Mike Tanner's recent study, The Work versus Welfare Tradeoff: 2013, outlines the significant economic incentives that the welfare state provides.

On the noneconomic front, many (most) long-term welfare recipients are not happy as evidenced by high rates of alcohol consumption, drug use, domestic violence, etc. They are numbed into a destructive state of dependency that destroys personal responsibility, undermines a sense of purpose, and makes the true pursuit of happiness impossible.

What if the welfare state had not been created? Would markets have solved the welfare problem better than governments, based on private contributions? I believe the answer is unequivocally yes. In fact, there were many private mutual-support societies that provided voluntary assistance to the poor before the government welfare state was created.

A current example is Goodwill Industries, which relies primarily on donations of used goods (clothing, etc.). Their philosophy is to teach people how to be personally responsible, to teach them work skills, and to help them understand the healing power of work. Goodwill has many inspiring success stories. Compare this outcome to the results of government-based welfare. Unfortunately, organizations like Goodwill have a difficult challenge competing against a free lunch from the government.

If the welfare state had not been created, I am confident the pre-welfare private charitable organizations would have experimented and learned radically different solutions to many social issues. The market-discipline process would have supported innovation that would have led to significantly better outcomes for many beneficiaries (victims) of the current welfare system.

So, I do not agree that a government-financed and controlled safety net is a morally defendable idea. When government expands beyond its important but very limited role, it crowds out private institutions that are far more effective. History teaches us that when force is used to achieve so-called "positive" goals, instead of in the proper role of defending individual rights, the "good intentions" practically always produce bad results.