The Welfare State's Freeloader Problem

Here in Washington State we are voting this fall on Initiative 1029. It would require home-help workers looking after seniors to attend training and get certified.

You can see why. If the state kicks in money to pay for home-help workers then it wants the money to be a little more than pocket money for a patient’s relatives. So they have decided that it’s time to put up a few hoops and make home help workers jump through them before they get their hands on the government’s cash.

It’s the Freeloader problem, the bugaboo of every human community. How do you get people to contribute to society rather than game the system?

In Hawaii they are having to cancel their noble universal child health-care program because of the freeloaders.

"People who were already able to afford health care began to stop paying for it so they could get it for free," said Dr. Kenny Fink, the administrator for Med-QUEST at the Department of Human Services. "I don’t believe that was the intent of the program."

Well, of course they did. And that’s the problem with every government program that’s cranking out a nice little subsidy to some vote-heavy special interest. Why put out for health care, for housing, for savings, for anything if you can get it from the government for free?

No doubt it’s a wonderful thing to spend our tax dollars helping families look after their aged parents. But the problem is that when the government kicks in some cash a lot of people respond by taking the money and spending their own money on something else. Fast reverse to the SCHIP poster boy last year whose parents sent him to private school but couldn’t afford health insurance.

And, of course, because this is a government program we are not talking about a nice friendly community effort to help some needy seniors or needy families. We are talking about a compulsory government program that takes your money and spends it on stuff whether you like it or not.

Yes There is Room at the Inn

The post-WWII American conservative movement started out as an elite movement, with crusty old thinkers, neo-Tories, and the rich-bitch Bill Buckley fusing with European intellectuals pitched out of Europe by Nazism.

But then a funny thing happened. Ordinary people started asking to join. In the Seventies it was the pro-lifers. In the eighties it was the Reagan Democrats. Now it’s the aspirational working class. It’s the Alaska fisherman and the Ohio plumber at the door today.

Every time a new group has asked to join there has been something of a tussle in the conservative movement because conservatives, like any group, have people worried about lowering the tone of the neighborhood. In the Seventies and Eighties it was the conflict between the blue-blood Rockefeller Republicans and the blue-collar Reagan Republicans. In the early Nineties it was between Christian conservatives and more secular conservatives. Now that the Palins and Plumbers are joining, we are seeing once again the more sensitive sort, the Christopher Buckleys and the Peggy Noonans, getting nervous about conservative real-estate values.

We should all hope that the latest generation of Nervous Nellies stays within the big Republican tent to extend a friendly welcome to the newcomers. The record is that each new group that has knocked on the door of the conservative inn has been welcomed in. And each addition has revived and broadened the conservative family.

Let’s not be afraid of the new rough diamonds on the conservative table. We old-timers could do with a bit of the sparkle they bring, and they are doubtless eager to acquire a bit of polish.

There’s an article in the Wall Street Journal today that says that the rich are for McCain and the super-rich are for Obama. You’d expect that. The newly rich are still aspirational; the super-rich are worried about the challenge from below. And there’s nothing like a nice little tax increase to slow down the ascent of the nouveaux riches.

I’ll pitch my tent with aspirational Americans. They are the people that make the country work.

Liberals and Joe the Plumber

My liberal friends like to put it this way: “Why is America anti-intellectual?” It’s true, America has always been a can-do nation, inclined to act first and think second.

But the question can be put the reverse way. Why do liberals sneer at ambitious ordinary people like Joe the Plumber? Why do they brush them off, as Sen. Barack Obama brushed off Joe the Plumber, and tell them to get with the program of sharing the wealth?

It’s not just Joe the Plumber who liberals sneer at. There’s Todd the fisherman, Sarah the small-town mayor, Ronnie the son of the town drunk, Margaret the grocer’s daughter.

What is wrong with people who have worked their way up from modest beginnings? Patronizing Joe the Plumber doesn’t make sense to a conservative or a Republican. But it makes a lot of sense to a liberal Democrat.

Liberals occupy the commanding heights of politics and education and culture. They have also co-opted many of the leading lights of busines. Think Bill Gates and Warren Buffett. When you are up, as liberals are up, there is only one way left, and that is down. When you and yours occupy comfortable sinecures in the academy, in journalism, in the non-profit sector—a sinecure earned usually by academic brilliance—you look upon the simple ambition of Joe the Plumber as a threat. If Joe builds himself a business and acquires a small fortune then he may come, one day, to challenge the comfortable liberals sitting in the warm afternoon sunshine on the commanding heights. The raw energy of the Joes is unsettling.

Much better to keep the Joes down and prevent them from rising and challenging the powers-that-be.

And that goes for the Todds and the Sarahs too.

Could Republicans Reverse the Ratchet?

Go ahead America, some Republicans argue. Vote for Obama. Then when you suffer buyer’s remorse we can reverse the lefty follies of an Obama administration.

But can we reverse the follies? Writes Mona Charen:

[T]here is a one-way ratchet in public policy. Liberal reforms are never undone. How hard have conservatives tried to eliminate the Department of Education or subsidies to public television? Would they have more success uncreating a new nationalized health care system?

Why is that? Why can’t we make Social Security into a genuine savings program? And why does Medicare keep growing and growing?

The short answer is: women. To women, you can’t have enough security. You can’t have enough health care. You can’t have enough education. That’s where the ratchet comes from.

This doesn’t just come from liberal politics. It comes from our nearest relative, the chimpanzee. In chimpanzee society, according to Nicholas Wade in Before the Dawn, the males engage in border wars and defense of territory. The females utilize the resources in the territory—principally food—to bear and raise the young. The more territory, the more food. The more food the more and healthier the young.

It doesn’t take a rocket scientist to see that the females would be instinctively programmed to use all the resources available in the care and feeding of their young.

So it must be in human society. And analysts have noted that big government really starts to take off once women get the vote.

We conservatives musts ask ourselves: When we advocate to reduce the size of government, are we helping or hurting women? So far, women have tended to vote for more government because they always vote for more resources for their families. Presumably they believe that government is a better guarantor of resources than husbands, and maybe they are right.

But that’s not the whole story.

We know, from observation of the effects of the welfare state, that it has problems. It is pretty clear that the more you sync your life up with the government the more that your family (probably reduced to the mammalian minimum of women and minor children) is likely to suffer from social pathologies.

The question that conservatives must start to ask is fairly straight forward. Is this what women want? Do women accept the rise in social pathology as a necessary cost of getting all the education, health care and welfare resources they need? Or do women want something better?

Until conservatives come up with an answer to this, there will be no chance of reversing the liberal ratchet.

You say that conservatives already have an answer? That the whole point of conservatism since Burke has been a celebration of the little platoons, the integration of resource provision into free and voluntary community? OK. Then let’s get the message out.

After the Rescue

It looks as though the US Cavalry made it on time, and that Americans and indeed the people of the world will be spared a total financial meltdown. The stock market (which is the present value of the future earning potential of the economy) rocketed up yesterday and looks like it is taking a breather today.

But that doesn’t mean that we’ll be spared the actual experience of Ludwig von Mises’ definition of a recession: the period of liquidation of the malinvestments of the previous boom. There was plenty of boom until last year and plenty of malinvestment. Now we have to sort through the wreckage.

The good thing is that we are well along in the liquidation of the mal-invested houses of the housing boom of the 2000s. But there is probably a lot more out there that we haven’t seen yet.

After months of stumbling and bumbling, it looks like the world geniuses have come up with a plan to refloat the hard-aground banks. But obviously people are going to need to be rebuilding their balance sheets. That’s a euphemism for cutting spending.

Going forward, it would be nice if we learned something from the current credit crisis. And that simple something is that too much leverage is poisonous.

The chap who’s borrowed too much is an anti-social person who aims to make a killing if things go right, and walk away from a gigantic mess if things go wrong. That is wrong, any way you look at it.

Debt is debt. It ought to be secured and it ought to be limited. If you want to take a risk with Other Peoples’ Money then there is another way to go. It is called equity. When you borrow money you promise to pay it back, principal and interest according to a contracted schedule. When you buy shares in a partnership or a corporation you agree to share the profits and share the losses.

If you liquor—er, leverage—yourself up then you are likely to become financial impaired and unable to meet your obligations. If you confine your risky behavior to equity plays then you can always meet your obligations because you have just said that you agree to sharing in the risk of the enterprise.

This isn’t rocket science, is it?

Street Cred for ukpublicspending.co.uk

The newest member in the vast firmament of our far flung web empire is the helpful ukpublicspending.co.uk launched in June 2008.

It provides over a century of historical government spending data for the United Kingdom, starting in 1900.

Trend-spotting bloggers latched on to the benefits of ukpublicspending.co.uk immediately. But now the less fleet of foot have caught up.

• On September 29, 2008 a British Labour Party blog, Labour Matters, mentioned “independent websites, such as ukpublicspending.co.uk,” in taking a cudgel to Conservative Party economic policies.
  
• The UK Office for National Statistics footnoted ukpublicspending.co.uk in a paper entitled Measuring the Quality of Central Government Expenditure Data Used in the National Accounts: A 2008 Update. “Given that public sector expenditure constitutes over 41% of GDP, with central government spending at 30% of GDP in 2007.” And they naturally took the numbers from ukpublicspending.co.uk, sight unseen, knowing the site to be highly reliable.
  

Well, this is only to be expected. The availability of good historical data on government spending provided in a consistent format is abysmal in the United Kingdom.

So it’s not surprising that Labour activists and government bureaucrats are taking advantage of the reliable, consistent historical data on government spending in the United Kingdom published at ukpublicspending.co.uk.

Sunspot Provokes Big Market Runup

If anyone needed to know what drives the stock market, this last weekend should have sealed the deal.

Last weekend the first decent sunspot in Cycle 24 emerged. Here’s a breathless report from Watts Up With That. SolarCycle24 gives comprehensive data on all the sunspots thus far in Cycle 24.

As usual the traders got an early look at the data and Wall Street soared 7 percent in late trading on Friday to close down a mere 1.5 percent on the day.

The sunspot was waxing all weekend. What could it mean? The outcome was obvious. Today the Dow soared 11 percent in the largest point gain ever and the fourth largest percentage gain ever.

Are you convinced now? Come on now: what would it take?