Trouble with the Welfare State: Additional Notes on “‘Us’ vs. ‘Them’”


Earlier on, I wrote an article entitled Us vs. Them in an attempt to demonstrate how the tactics employed by the State in times of war are also used domestically. The creation of the dichotomy allows the State to see who are its allies and who are its dissenters. Its all-seeing eye allows it to either stop or exterminate those in the opposition when the time comes.

Why is it that the State never gets booted out of power? It was only answered briefly in my previous article after quoting Dr. Robert Higgs. Here, we shortly expound on how the State enables that using what seems to be a positive tool: welfare. The road to hell is paved with good intentions.

What is a welfare state? Merriam-Webster defines the welfare state as “a social system based on the assumption by a political state of primary responsibility for the individual and social welfare of its citizens”. This should be a fair-enough definition to work with.

Earlier conceptions of the welfare state can be traced to German sociologist and economist Alexander Rüstow, who said in his book Das Versagen des Wirstschaftsliberalismus that,

We neoliberals agree with the Marxists and socialists in that capitalism is impossible to achieve and has to be overcome. We also believe that they have demonstrated that an excess of capitalism leads to collectivism.

Dr. Juan Ramon Rallo points out that Rüstow saw neoliberalism as the “third-way” between capitalism and socialism, with Rüstow even creating the term the “social market economy.” In Rallo’s words,

The state’s creation of schools and research centers, free state education at every level, temporary subsidies to salaried workers, mandatory unemployment insurance, public employment service, state direction of industrial activity, regulation to check the unbounded growth of business, and the fight against inequality by means of high inheritance taxes… [The social market economy] refers to a political program which is based on regulating competition, fighting against inequality, interfering in industrial production, forcing citizens to buy insurance, and financing state education.

To my Filipino audiences, even our former president and dictator Ferdinand E. Marcos shared the same sentiments. His time as president was his way of implementing his obsessed vision of the ‘New Society.’ He wrote in page 84 of Notes on the New Society of the Phillipines,

the New Society government regards itself as being responsible for leading our people in achieving their aspirations. Responsibility for a mission carries with it the inherent right to have all authority required for its fulfillment. Responsibility without authority is meaningless; only responsibility with authority is useful.

He saw authoritarianism as a necessary tool in order to implement his New Society. Without the obedience of the citizenry, his mission would fail. One can already see, in part, how he and his supporters would later on justify both the authoritarianism and atrocities that happened during the Martial Law period. Furthermore, he writes in page 102 in An Ideology for Filipinos that,

We have… selected as our means to bring about social equality a steady and determined bid to redistribute national wealth through better tax efforts, coupled with the use of such taxes and other revenue-raising means (such as government bonds) to build the public works needs of our people and to stir up economic activity in our towns and barrios. Of course, we at the same time buttress these economic efforts with laws and enforcement that channel both private and government resources to social usefulness, and that maintain the social order essential to all our plans for development.

The welfare state combines the redistributive properties of socialism with the private property-esque based institutions of free market capitalism. I say “esque” because the State extracts wealth through taxation or asset forfeiture. Your supposed property claim becomes void when the State decides to forcefully seize it away from you. It seeks to redistribute these stolen assets to promote a “more just and fair society.” People are incentivized to be made dependent on the goodies given by the State when this practice is continued.

Then there is State monopolization, or nationalization, of industries. What becomes of one’s healthcare when this is monopolized by the State? What happens when electricity gets monopolized? Or what about when internet providing services gets monopolized? There is danger here. For the last point, one only needs to look at how restricted the Chinese are.

All things considered, what happens in times of internal warfare? Once the State creates the dichotomy, it keeps everyone in check by providing them with the goodies it promises — goodies which were stolen. Some dissenters might look past this and continue with their agenda. However, for the supposedly “non-crazy” ones, how can they revolt or dissent against the same organization that keeps them dependent on it? It is as if any form of dissent is biting the hand of the provider. Quite disrespectful, some would even say.

The damage becomes more severe when the market is weakened. The monopolization of some industries makes choice non-existent. If there is only one healthcare provider, how can one voluntarily abstain from one provider in order to go to another? Competition is what keeps private goods and service-providers afoot because they get their money voluntarily. Acting in ways that does not attract customers will eventually lead to their demise in the marketplace. On the other hand, the State extracts its wealth by force, distinguishing it from goods or service providers in the market since it does not obey this voluntaryist practice.

When the State assures itself that it will give you the goodies promised, and that it is the only one providing it, will you really dissent from it? It is a good question to ponder on.

I will conclude by quoting Higgs yet again. He wraps up the point excellently in his short essay entitled The Welfare State Neutralizes Potential Opponents by Making Them Dependent on Government Benefits, saying that,

As the ranks of those dependent on the welfare state continue to grow, the need for the rulers to pay attention to the ruled population diminishes. The masters know full well that the sheep will not bolt the enclosure in which the shepherds are making it possible for them to survive. Every person who becomes dependent on the state simultaneously becomes one less person who might act in some way to oppose the existing regime… In these circumstances, it is hardly surprising that the only changes that occur in the makeup of the ruling elite resemble a shuffling of the occupants in the first-class cabins of a luxury liner.