What’s Wrong with the Welfare State

November 20, 2011

Eternity Matters discusses (with illustrations) why the welfare state is bad, not just in any particular execution of the idea, but intrinsically.  It’s short; read it—if not to believe and understand the world better, then at least to understand conservatives’ point of view a little bit better.

17 Responses to “What’s Wrong with the Welfare State”

  1. Tevyeh Says:

    Please don’t hold up Ms. Morandotti’s argument as a treatise on “conservatives’ point of view” unless you want to exclude me. (Do you?)

    I want to address just one of her arguments: that tax increases invariably lead to higher spending rather than smaller deficits. Her historical argument bears a striking resemblance to the “this happened, then this happened” approach that I have roundly criticized in other contexts. She cites the following quote by Milton Friedman:

    “In the long run government will spend whatever the tax system will raise, plus as much more as it can get away with. That’s what history tells us, I think.”

    Even if we accept Friedman’s historical observation as a truism, I don’t think it makes a very good case against federal revenue increases *today*. Few people seem to be suggesting that Uncle Sam can “get away with” his present deficits in perpetuity. Even if the historical record establishes a strong correlation between revenue growth and spending growth during normal times, I don’t think the present situation lends itself to extrapolation.

    I’ll reiterate the point I’ve made elsewhere: we’re not going to get the deficit down to manageable levels without a combination of painful spending cuts and painful revenue increases. Given the current political climate, I’m not optimistic.

  2. Tevyeh Says:

    By the way, as I said above, any deficit reduction plan that actually works will inflict considerable pain on the economy in the short-to-medium term. Have you considered the political backlash that would result from inflicting all this pain through spending cuts alone? Wouldn’t you like to have a few tax hikes in the mix, to give conservatives something to comlain about and avoid throwing the whole political debate to the liberals’ side for the next decade?

    I’m only being very slightly facetious here.

  3. As has sometimes happened before, I’m not sure I understand the difference between what you’re saying is good policy and what you’re saying is politically feasible.

    I understand you to be saying (as you’ve said before) that cutting spending enough to eliminate the deficit through spending cuts alone is not politically feasible for America right now. That may well be. (In fact, I think it possible that America has already passed the point of no return against which Mr. Mitchell warns.)

    I guess Miss Morandotti is saying that it kind of doesn’t matter, because if we increase “revenue”, that won’t (or won’t only) decrease the deficit; it will lead to an increase in spending. Are you saying that you don’t think that’s likely to happen, or only that you don’t think it’s knowable, because we can’t use history that way (the world is complex, there are multiple variables, etc.)?

    You also said, “Even if the historical record establishes a strong correlation between revenue growth and spending growth during normal times, I don’t think the present situation lends itself to extrapolation.” I’m not sure I understand. In what ways are you saying the present situation is different from other times (in ways that make further increases in government spending less likely than usual)?

    • Snoodickle Says:

      The present situation is different because any revenue increases will have to be accompanied by major spending cuts in order to pass through Congress.

    • OK, I’ll agree that that’s true (at present), and maybe that’s what Tevyeh meant, but I think Miss Morandotti’s argument would be that the increased revenue would lead to increased spending in the near future, not simultaneously. This seems highly likely to me, because our system seems structurally skewed in favor of increasing spending over time anyway, and the last time House Republicans struck a deal requiring spending cuts, they weren’t very big, and were mostly “cuts” only relative to the increases in spending that would otherwise have occurred.

      • Snoodickle Says:

        What difference does it make if there are tax increases or not? If the government is irreversibly predisposed to spend, as you allege, then it doesn’t matter if there are tax hikes or not. If there aren’t, the government will simply borrow money and spend it.

      • I’m not sure I understand your question. I’m saying our system is structurally skewed in favor of increasing spending; in the absence of additional factors influencing it one way or the other, we can expect government to get bigger over time. That doesn’t mean there can’t be additional factors, which could accelerate the growth or decelerate it (or, conceivably, even reverse it for periods of time). On Miss Morandotti’s view, if I understand it, raising taxes would be a factor tending to make spending increase even more than it otherwise would in a given period of time.

      • Snoodickle Says:

        I guess my point is that under Morandotti’s view, it doesn’t matter if there are tax increases or not, because the government is on a path to self-destruction either way.

      • Depending on how events play out, it may make all the difference in the world whether we’re able to slow down that self-destruction.

    • Tevyeh Says:

      Until the will of God is done on earth as it is in heaven, I think that “political feasibility” will be an essential element of “good policy.” (That’s right, Snoodickle, go ahead and read some theocratic aspirations into that comment.)

      I don’t think revenue increases in the near future would contribute greatly to spending increases, because of the sheer magnitude of the deficit. Upon reflection, I don’t think the general observation that “fiscally responsible” tax hikes usually lead, not to balanced budgets, but to bigger government, is far off. I was being unfair to accuse Morandotti of a crude historical analysis; her point is amply supported by a reasonable assessment of political incentive structures. However, at present, nobody in Congress can get away with saying that an increase in revenues gives them a license to ramp up the spending. The ARRA was a political disaster for Obama, and those calling for additional “stimulus” are a weak minority. We’re in a crisis situation, and I don’t think it’s safe to assume normal patterns.

    • But would I be right to say that any tax increases are by their nature permanent (unless altered subsequently, which is difficult), while any spending cuts are by their nature temporary?

      • Tevyeh Says:

        Technically, no. A tax hike could very easily include a sunset provision. I’ve heard arguments that such hikes have a way of turning permanent, but I’m not familiar with the the historical record on this supposed phenomenon, nor any theoretical explanation of it. I suppose renewing an existing “temporary” tax hike might be slightly easier than imposing a new one, but would still be a political liability for the legislators imposing it.

      • Technically I’m sure almost any legislation “could” include a sunset provision, but in practice has a United States tax increase ever done so?

        Are you agreeing that, absent a sunset provision, tax increases are naturally more permanent than spending cuts?

  4. Tevyeh Says:

    I hesitate to describe political actions as “natural,” and I’m no policy historian, so I really can’t say. Nor am I likely to defer to “experts” (with an agenda) when they try to build a case, one way or another.

  5. I’m not asking you to defer to experts here. To change the tax rates, Congress has to act, which is visible and subject to leftist public shaming (“tax cuts for the rich” and all that). Spending is also done by act of Congress, but in an omnibus appropriations bill, right? So there’s a spending bill every year (except when the Democrats recently broke the rules and failed to pass one), whether spending increases, decreases, or remains the same. So naturally it always increases.

    In other words, reversing spending cuts is relatively invisible and costless, and happens every year. Reversing tax increases is relatively visible and politically costly, and the last time Bush and congressional Republicans managed to do so, it was only with a sunset provision—and we’re still fighting that battle to this day.

    I’m no expert on this stuff, either. Let me know anywhere that I’m forgetting parts of the process or failing to understand how it works.

  6. […] not structural in the same sense as, say, repealing the Seventeenth Amendment), prompted by the discussion generated by a past post: a spending […]

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