Tag Archives: welfare state

The Welfare State is Tearing Sweden Apart, by Jon Nylander

A country can’t survive open-door immigration and a wide-open welfare state; it’s overrun by freeloaders. From Jon Nylander at mises.org:

The Swedish Welfare State and Multiculturalism

Swedes do not toil under a Communist yoke. We are thankfully a market oriented society, and particularly in rural areas, Swedes are ruggedly individualistic and responsible citizens. But we do have an enormous welfare state with which to contend — and it poisons our nation much in the same manner that full blown communism would; if perhaps not to the same degree. Doubtlessly; it sets the stage for some rather dystopian developments, both in terms of its steady consumption of productive capabilities — but also in its toxic effects on our culture. On top of this, Sweden has accepted a considerable amount of immigrants (to put it mildly) from cultures that differ wildly from the Swedish. In this text I will take a look at the welfare state through the prism of Sweden’s current multicultural challenge.

First and foremost, is multiculturalism a good thing? When multiculturalism emerges through voluntary interactions it is apparently valuable — otherwise it would not occur in a free society as it so often does. Again: in the marketplace there is, over time, the beautiful possibility that the identity of the tribe expands by including, assimilating and adapting to previously unknown things. Adaptation and cultural appropriation by means of voluntary associations cannot be a bad thing! But in such a situation; isn’t multiculturalism a misnomer? I would rather call it an emergent convergence towards a shared culture, in a pace that participants set. All in all: a desirable thing, especially compared to the alternatives.

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How Fascism Comes to America, by Doug Casey

How does fascism come to America? Gradually, and then rapidly. From Doug Casey at internationalman.com:

I think there are really only two good reasons for having a significant amount of money: To maintain a high standard of living and to ensure your personal freedom. There are other, lesser reasons, of course, including: to prove you can do it, to compensate for failings in other things, to impress others, to leave a legacy, to help perpetuate your genes, or maybe because you just can’t think of something better to do with your time.

But I’ll put aside those lesser motives, which I tend to view as psychological foibles. Basically, money gives you the freedom to do what you’d like – and when, how, and with whom you prefer to do it. Money allows you to have things and do things and can even assist you to be something you want to be. Unfortunately, money is a chimera in today’s world and will wind up savaging billions in the years to come.

As you know, I believe we’re well into what I call The Greater Depression. A lot of people believe we’re in a recovery now; I think, from a long-term point of view, that is total nonsense. We’re just in the eye of the hurricane and will soon be moving into the other side of the storm. But it will be far more severe than what we saw in 2008 and 2009 and will last quite a while – perhaps for many years, depending on how stupidly the government acts.

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The Welfare Generation: 51.7% Kids in 2017 Lived in Households Getting Govt Assistance, by Terence P. Jeffrey

How many of those 51.7 % of kids do you think will grow up to be anti-government? From Terence P. Jeffrey at cnsnews.com:

The Census Bureau has released new data that strengthens the case for calling the current generation of American children “The Welfare Generation.”

Among American residents under 18 years of age in 2017, according to the Census Bureau, 51.7 percent lived in households in which one or more persons received benefits from a means-tested government program.

That was down slightly from the 52.1 percent of Americans under 18 in 2016who lived in households receiving means-tested government assistance. (Also, because this new Census Bureau estimate is for 2017, it predates the significant economic and job growth the United States has seen in 2018).

But in each of the last five years on record (2013 through 2017), according to the Census Bureau, at least 51 percent of Americans under 18 have lived in households receiving means-tested government assistance.

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“Freedom from Want” is Slavery for All, by James Bovard

It is a logical impossibility that we can all have our “basic needs” provided by someone else. Governments redistribute; they don’t produce. Everything they give to someone they take from someone else. From James Bovard at mises.org:

Freedom from want” is one of the most frequently invoked notions of freedom in our time. However, it is a bogus freedom that politicians and socialists offer to lull people into accepting policies that destroy true freedom. Freedom from want has been most loudly advocated in this century by those who favored removing almost all limits from government power.

For example, Sidney and Beatrice Webb, two of the founders of British socialism and authors of The Soviet Union: A New Civilization?, asserted in 1936: “Personal freedom means, in effect, the power of the individual to buy sufficient food, shelter and clothing.”1

The Webbs did not specify how many millions of people government should be permitted to kill in the name of “freedom from want.” But during Stalin’s bloodiest decade, they asserted that for government economic planning to succeed, “public discussion must be suspended between the promulgation of the decision and the accomplishment of the task” and that any criticisms of the master plan should be treated as “an act of disloyalty, or even of treachery.”2

For government to be able to liberate people with food and clothing, it must have the power to execute anyone who criticizes the official economic plan. After visiting the Ukraine, the Webbs endorsed Stalin’s war on the kulaks (the least impoverished peasants), commenting that “it must be recognized that the liquidation of the individual capitalist in agriculture had necessarily to be faced if the required increase of output was to be obtained.”

(Output plummeted.)

Equating liberty with satisfactory living standards became far more common as the twentieth century went on. “Real freedom means good wages, short hours, security in employment, good homes, opportunity for leisure and recreation with family and friends,” wrote Sir Oswald Mosley, the most prominent British supporter of Nazi Germany, in his 1936 book, Fascism.3

To continue reading: “Freedom from Want” is Slavery for All

Running on Empty, by Robert Gore

They dote on their progeny, then bury them alive.

Across the land, public pension and medical funds teeter on the brink of insolvency. You can ignore pending problems until you can’t. For those who prize clarity and realistic thinking, these impossible to ignore crises should be welcomed. They focus attention on an inescapable fact: the world lacks the unencumbered assets and productive capacity to redeem the promises that have been made against them. Somebody’s going to get stiffed.

With war on everyone’s minds, public pension and medical funds delineate inevitable battles lines: governments versus taxpayers, the unproductive versus the productive, the aging versus the young. Those wars are liable to be far more consequential than the ones everyone worries about in places like the Middle East and North Korea.

Nothing calls attention to the absurdity riddling the public pension system quite like the $76,000 monthly pension drawn by Joseph Robertson, an eye surgeon who retired as president of the Oregon Health and Science University last fall.

In the good old days, government employment meant low pay, but job security and a decent pension. Now such sinecures means wages in excess of those paid in the private sector plus pensions that are far more munificent…and job security. For a lucky few like Doctor Robertson, their pensions are a triple 7 jackpot. Oregon calculates pensions based not just on recipients’ government salaries, but what they receive on any non-government gigs they had going on the side. Robertson’s pension is based on his remuneration as university president and what he made operating on eyeballs.

This is what happens when actuarial tables and actual rates of return are discarded in favor of the political power of public employees and their unions, promises that can’t be kept, and taxpayers picking up the tab who have no idea what the final bill will be. Public pension and medical crises bring into sharp relief the writing on the wall: Governments Can’t Deliver.

As Charles Hugh Smith recently noted, public retirement and medical liabilities are increasing so fast that no amount of tax increases can keep up. Long before a 100 percent tax rate turns taxpayers into slaves, raising tax rates becomes counterproductive, yielding less, not more, revenues. One of the nifty things about the public pension and medical crisis is that it’s local. As such, it’s offering real world demonstrations that when local jurisdictions raise rates to fund their pensions, productive people leave.

The poster child is Illinois. The state on down to its smallest political subdivisions—like the town of Harvey—are buried beneath underfunded pensions. Illinois’ courts have ruled pensions are inviolable, which leaves governments facing insolvency with only two options: raise taxes and cut spending.

Harvey was ordered by a court to fund its firefighters’ pension fund, which is only 22 percent funded. The town’s property tax rate is six times the average rate in nearby Indiana, and Harvey is still coming up short. The state is garnishing its tax revenues, and the town has announced 40 public safety employees will be laid off. Why would anyone paying taxes in Harvey stick around for a future of ever-increasing taxes and ever-diminishing public services?

Many don’t, and Harvey and other localities in Illinois, including Chicago, are losing people. Out-migration statistics in Illinois, California, New Jersey, Connecticut, New York, and other net-loser states don’t capture the full scope of the problem. If one productive person moves out while one unproductive person moves in and starts living off state largess, there’s been no net out-migration, but the state suffers a loss (obvious to everyone except those fools and charlatans who will plump for an open-arms and open-wallet approach right up until bankruptcy).

Out-migration will get worse for net-loser states as the federal tax limitations on the deductibility of state and local taxes (SALT) kicks in. SALT has been capped at $10,000. After that, the wealthy have to pay the full measure of their high-tax states’ income, property, and sales taxes. The migration is gathering steam. It already costs twice as much to rent self-moving truck services from high-tax Los Angeles to low-tax Dallas as vice versa, and that spread will only widen.

State and local governments, their employees, and those on the dole can’t stop the productive from voting with their feet. The number who leave the US, however, is still a trickle. The federal government’s old age and medical funding problems, orders of magnitude greater than states’ and municipalities’, are no longer looming; they’ve arrived. The government could seal the borders to lock in the productive, but it wouldn’t prevent the slow-motion, but accelerating, catastrophe now underway.

The federal government’s ability to issue virtually unlimited debt and the Federal Reserve debt monetization machine mask the rot, but only create problems far larger than the ones they putatively solve. Low interest rates have destroyed state and local funds’ ability to achieve fairly safe returns, forcing them out on the risk curve to meet their rate of return targets, which are way too high. Underfunded as they are now, bear markets in stocks and bonds would obliterate them.

Encouraged by central bank debt promotion policies, individual, corporate, local, state, and federal debt has reached new records. While low interest rates have ameliorated the debt service burden, even they can’t stymie the toll debt is taking on the economy. Look no farther than real annual GDP growth, which hasn’t hit 3 percent since Bush Jr. was in office. Less growth means less tax revenues, which only exacerbates funding problems.

The older generation is pinning its retirement hopes on a younger generation confronted with huge debt, perpetually rising taxes, a shrinking economy, and dwindling opportunity. That’s not like hoping you can draw to an inside straight, it’s going all in, exchanging your hand for five new cards, and hoping you draw four aces. Good luck with that.

Oldsters like to complain that the youngsters are too preoccupied with gadgets and social media. They wish that were true. The youngsters are already questioning their impending debt servitude. The more perceptive are homing in on their parents’ generation’s self-granted benefits and unrivaled profligacy. You don’t have to search too far on the internet and social media to see the awakening.

Doting parents and grandparents who post their darlings’ every precocious moment and wouldn’t dream of letting them walk a block to school by themselves have no compunction about burying them alive under welfare and warfare state IOUs. In a world riven with conflict, the easiest war to predict is the intergenerational one.

It’s not strictly accurate to say that the state and local public pension and medical funds’ crisis is the canary in the coal mine. It is but one in an aviary of canaries. The fund canary is in extremis and may well be the first to expire; the others will certainly follow. Picture the horror as the adult canaries and their fledglings wage mortal combat for those last few molecules of oxygen.

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The Myth of America’s “Stingy” Welfare State, by Ryan McMaken

That the US doesn’t have a big enough welfare state, and we need more benefits, benefits, benefits, is a perpetually recylced canard that’s especially revolting as the government careens towards bankruptcy. From Ryan McMaken at mises.org:

According to the usual news sources, Donald Trump’s new budget proposal “envisions steep cuts to America’s social safety net” and will “gut social programs.” Most of the cuts were proposed to pave the way for more Pentagon spending.

In truth, Trump’s proposal doesn’t matter, and Congress will set to work piling on more deficit spending for both social programs and for the Pentagon.

But, the debate of “gutting” social programs will no doubt be used to perpetuate, yet again, the myth that the United States is ruled by libertarian social Darwinists who ensure that no more than a few pennies are spent via social programs for the poor.

Now setting aside the question of whether or not social programs are the best way to address poverty, the fact is that the United States spending on social programs is on a par with Australia and Switzerland, and can hardly be described as “laissez-faire.”

Moreover, government spending on healthcare per capita in the United States is the fourth largest in the world.1

Governments in the United States pour money into social-benefits programs at rates typical to a Western welfare state. We can debate whether or not the way this is done is sub-optimal or not, but the fact remains, that if we’re going to talk about social programs, the amount of spending in the US is not low in a global context.

According to the 2016 social expenditure database at the Organisation for Economic Co-operation and Development (OECD), public social spending as a percentage of GDP in the US was 19.4 percent:

spending1_1.png

While it is true the US is hardly the highest on this list, its social spending is higher than that of Canada, Australia, Ireland, and Iceland, all of which we are often told are far more “generous” countries in terms of their welfare states. Indeed, if the typical American leftist were asked if the US should spend as much as Canada or Australia on social benefits, the response is very likely to be an emphatic “yes.”

To continue reading: The Myth of America’s “Stingy” Welfare State

State Property, by Robert Gore

Franklin D. Roosevelt’s New Deal wrung from the trauma of the 1930s a lasting legacy of economic and social reform, including the Social Security Act, new banking and financial laws, regulatory legislation, and new opportunities for organized labor. Taken together, these reforms gave a measure of security to millions of Americans who had never had much of it, and with it, a fresh sense of having a stake in their country.

From the dust jacket description of Freedom From Fear, The American People in Depression and War, 1929-1945, David M. Kennedy, Oxford University Press, (1999)

When one man’s security becomes another man’s chain gang.

The above paragraph concisely sums up conclusions about the New Deal that can be found in thousands of textbooks, histories, and articles. You can guess that the tome (it’s 858 pages, SLL has not read it) reflects the reigning academic ideology, an impression furthered by its Pulitzer Prize. Pulitzers are awarded to fans of Franklin Delano Roosevelt and the New deal, not critics. If the latter stood a chance, Amity Shlae’s fine critical analysis, The Forgotten Man, A New History Of The Great Depression, might have received one.

Putting food on the table has a large place in human history. So too do governments. More often than not, they’ve worked at cross-purposes. Governments don’t produce, they take. Whatever they take means less food, and everything else, for those from whom they take it.

One man’s government-bestowed security is another’s government-bestowed insecurity. There weren’t enough plutocrats to fund the New Deal. It reached into the pockets of people who were only an economic rung or two above its beneficiaries. The money taken from a taxpayer might have meant deferred truck maintenance or no trip to the doctor for his sick daughter.

Someone always pays, either present taxpayers or, when the government borrows the money and doesn’t default, future ones. During the New Deal many Americans wouldn’t accept assistance from private charities, but would from the government. Voluntary charity was rejected but the proceeds of involuntary forced taking were not.

The “measure of security” created an insecurity among those who funded it that went far deeper than the knowledge that the government now had first claim on their income and wealth. Income and wealth are products of how one spends one’s time and effort, of how one lives one’s life.

Roosevelt reversed America’s fundamental premise, never fully realized, that one’s life is one’s own. It was never explicitly stated, but implicitly each American’s life became state property. That is the fundamental premise of socialism and the true price of that “measure of security.” Freedom from fear for some necessarily means fear of the government for many.

Where has the idea that we are each owned by the government, our lives to be disposed of as it pleases, taken us? President Eisenhower warned of the military-intelligence complex (MIC). What he didn’t foresee, or at least didn’t warn of, was the redistributive complex.

It’s true that Eisenhower’s complex, to which we’ll add the intelligence agencies, accounts for spending of around $1 trillion and runs a global empire. However, that’s only about one-fourth of the federal budget. The redistributive complex spends most of the other three-fourths. Also keep in mind that a substantial, but hard to quantify, portion of MIC spending is nothing more than redistribution to military and intelligence personnel and contractors that neither defends the US nor projects its power.

Social Security, Medicare, and Medicaid are the three largest programs in the federal budget and account for just under half of total spending. Perhaps because its trust funds are mislabeled, many people believe that Social Security is set up like a private pension fund (Federal Old-Age and Survivors Insurance Trust Fund) or a private insurance fund (Federal Disability Insurance Trust Fund).

Nothing could be further from the truth. Private pension and insurance funds take in contributions and invest them. If their contributions and investment returns are sufficient, they can pay their obligations. The Social Security Trust Funds are strictly pay as you go: this year’s taxes fund this year’s payments. Taxes in excess of obligations go into general government funds in exchange for interest-bearing government IOUs. Without changes in existing law, payments are projected to exceed taxes in fiscal year 2020.

Taxpayers do not “earn” their Social Security benefits any more than they “earn” a refund towards the end of their life on their income taxes. Legally, Social Security taxes are indistinguishable from income taxes. They both fund the government, are not invested to earn a return, and are certainly not kept in trust for the benefit of the taxpayer.

The Supreme Court has ruled that Social Security benefits are a revocable promise from the government, not a contract like a pension or insurance policy. (Flemming v. Nestor, 363 U.S. 603 (1960)). Contracts are a hallmark of freedom. Reciprocal obligations would put a crimp in the government’s ownership of your life. Slaves don’t get contracts.

Slave might be a distasteful term for some, so they may use serf. However, medieval serfs usually only had to turn over about a quarter of what they produced. Local, state, and the federal government income, property, sales, and inheritance taxes take far more than that from many of the nation’s most well-compensated and wealthiest taxpayers.

One can quibble over actual percentages, but that obscures the most important point: the government can take 100 percent if it wants. Presumably at that point most people would call it slavery. Even with first call on the nation’s income, the government is still over $20 trillion in debt.

Nothing says state property like putting people’s health and lives at the mercy of the government. Socialized medicine gives the government life or death power. The “single payer” calls the shots. Doctors and nurses become government functionaries, practicing “medicine” in accordance with bureaucratic decree. These procedures will be followed, these vaccines administered, these treatments allowed, and these drugs prescribed. These surgeries are “necessary” and will be performed when we can schedule one of our overworked surgeons. These surgeries are “elective,” go to the back of the line. These surgeries are “cosmetic,” you’re shit out of luck. And so on…

No surprise that socialized medicine is the Holy Grail for the redistributive sect or anyone bent on bankrupting the country (there’s quite a bit of overlap). Need justifies theft, the proceeds of which are redistributed to the government and its voter beneficiaries. The producers who complain, resist, or stop producing are greedy. The politicians and bureaucrats are altruists. The beneficiaries are blameless victims. When it all falls apart, nobody saw it coming.

Here’s an eleven-word summary of the thousand-plus pages of Ayn Rand’s Atlas Shrugged: collectivism and the morality of coercive altruism are destroying the world. Rejecting that morality is the necessary first step for reversing the trend. Each individual’s life is his or her own property, not the state’s. Establishing that right means intellectual and physical battles that are quintessentially self-defensive: defending the inviolable right to one’s own soul, mind, body, and productive effort—a defense of self.

Don’t fight those battles and some day there might be another class of surgery: mandatory surgery. As you’re wheeled into the operating room, just before the anesthetic kicks in, you’re told that your vital organs are being harvested for transplantation. You’re getting on in years, there’s a shortage of transplantable organs, and yours will save the life of someone who can make a greater contribution to the collective good. If you bought into the collectivists’ morality, you have no right to complain or resist. Someone else needs your organs, after all, and it’s your duty to accept your fate.

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