Monday, March 20, 2017

How to Weaken the Welfare State

The difficulties Republicans are experiencing as they attempt to "repeal and replace" Obamacare remind us that the most difficult thing in the world is to cut a government program.

That is why the history of government domestic spending over the last century was described by Margaret Thatcher as a "ratchet effect." The best that conservatives have achieved is to stop government programs expanding, and when they are replaced by a liberal government, the progressives give another tug on the ratchet to increase the amount of free stuff.

Is there nothing we can do? Will liberals take their pipe wrenches to society and keep ratcheting away until the pipe breaks, as in Venezuela?

The fact is that our era is an age of neo-feudalism. Most people, most of the time, are content to be subordinate peasants, tugging their forelocks, and expecting in return to be protected by the lord of the manor from harm. In return for their loyalty to the Big House they expect to be taken care of. In the old days the lady of the manor went around the village handing out flannel. These days the lord of the manor hands out Social Security and Medicare to his grateful tenants.

For years, conservatives thought they would get to reform and reduce and "privatize" the welfare state, some day. But the nomination of Donald Trump ended that.

The old Republican Party was the party of the middle class and its culture of personal responsibility, to obey the law, go to work, and follow the rules, and for 30 years it failed to close the deal with the white working class that the Democrats cast out into outer darkness in 1971 when they decided that working class Archie Bunker was a racist, sexist bigot.

The reason the Republicans couldn't close the deal with the white working class is the that white working class decades ago sold themselves into welfare-state slavery with its labor unions, its pensions, its health care. It was great! But it couldn't last. And so the welfare state model imploded on the white working class. No longer could they walk out of high school into a well-paying life-time factory job. No longer was the welfare state a light burden on the workers, paid for by the middle class, for now the cost of the social benefits docks workers 25-35 percent of their wages. Once a slave, always a slave.

But Republicans hate all that stuff. We want to save for our own pensions. We want to direct our own health care. And as for education, we are slowly leaving the government education system for home-schooling. We want to privatize the welfare state, not enlarge it with the ratchet.

Too bad. Now Donald Trump has demolished the old Republican Party, and brought the white working class in by endorsing the working-class agenda. Restore the good old days of good jobs at good wages and no cuts to Social Security and Medicare.

So what are we libertarian conservatives to do?

I'd say that the key is to keep the market alive in pensions and health care. The principle is a simple one. It goes back to Ludwig von Mises back in 1918 and his dictum that socialism couldn't work because it couldn't compute prices.

But really his point is a much bigger one. He is saying that any attempt to subvert the market, by socialism or by the administrative state or buy special interest handouts, is bound to end in red ruin, because the market and its prices are nothing less than a daily reality check, and government programs are always and everywhere an attempt to ignore the reality principle.

That is why I keep reiterating my definition of government as: an armed minority, occupying territory, taxing the inhabitants thereof to reward its supporters. You can see that every act of government, and every promise of a politician can easily be fit onto this Procrustean bed. Everyone wants free stuff, a relief from the rigors of life, and everyone fights like mad to avoid the reverse experience, the horror of losing any of that free stuff and having to go out and get a job.

That is why government is always and necessarily a ratchet. There is always some new free stuff that can be conjured up and offered to the voters. And it is always electoral poison to withdraw any benefit from the ungrateful beneficiaries.

That is why Obamacare could be bullied through Congress, and why "repeal and replace" is going to be horribly painful.

But surely we can create some place, some niche of politics where we can create a space to say: OK, I'll pay my share of FICA taxes, but I want my pension from my savings and my investment. And OK, I'll pay my share of Medicare taxes, but I want to exchange my benefit for a market-based health care experience, where prices are public and ubiquitous, just like they are at Target's in-store medical clinics.

Yeah, imagine. Target has health clinics at its stores and a price list right outside! Last I checked, most everything was $99.

The benefit will be twofold. First, cranks like me will have the satisfaction of ordering our own lives without the company store owning our souls. Then, the fact of market prices for pensions and healthcare will possibly keep enough of a reality check on the government and its administrative state, and keep the whole thing from going Greek, or Soviet Union, or Venezuela.

But maybe not. If the ratchet effect is a law of nature then maybe nothing can be done, that the ratchet of compulsion will slowly extend its force over more and more aspects of life until it throttles the air we breathe.

Every civilization ends in red ruin, with the barbarians killing the men and enslaving the women, and I fear that our own beloved civilization will prove no exception.

But at least we can dream that we are not just victims of history, where the arc of civilization tends in the end towards oblivion.

And surely there is something higher and better than the clunking fist of the welfare administrative state.

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