The Impending Collapse of the Immoral Welfare State

The welfare state has been sold to the public as a moral political system. In reality, it is a gigantic fraud, not only built upon unsustainable economics or the Santa Claus principle but on immoral grounds of thievery.

Professor Gary North explains, (bold emphasis added)

The welfare state is defended ethically as a system of safety nets. These safety nets are defended as ethically necessary for a good society, meaning ethically good. Intellectuals see business profits as legitimate mainly because profits provide a tax base for funding the welfare state.

These safety nets require constant and ever-increasing funding. They are going to lose this funding. Why? Because of national government bankruptcies.

There is no question that the deficits will produce a series of fiscal crises. These crises will initially be covered up by central bank inflation, but the end result of that policy will either be hyperinflation, which is a form of concealed default, or stable money, which will be followed by open default. There will be a default. The political fall-out of this default will change the nature of Western politics.

The welfare state is going to self-destruct. It is highly unlikely that we will see the complete destruction of the welfare state in any nation, but it will contract on a scale not seen since the fall of the Roman Empire. That is because we have not seen a welfare state as comprehensive as Rome's until modern times.

The bigger they are, the harder they fall.

I know of no studies of the effects of the fall of Rome on the masses of welfare recipients. It took centuries for the system to decline. We know that the central state in 400 A.D. could no longer support the welfare clients that it supported with bread and circuses in the days of Nero. Manorialism steadily replaced the central government in the Western Empire. But for centuries, welfare clients lived and died as clients.

Then the welfare state died. It did not revive until the twentieth century.

THE GREAT DEFAULT

What will make the coming Great Default different from Rome's will be the speed of its arrival and the magnitude of the contraction.

Birth rates have fallen everywhere outside the United States. The number of aged retirees in every Western nation, including Japan, is increasing relentlessly. The number of children born is falling. The end is clear. So is the politics of kick the can.

Unlike Rome, the West's intellectuals have defended the spread of the welfare state by means of a system of ethics. It rests on a variation of the Mosaic commandment against theft: "Thou shalt not steal, except by majority vote." So widespread has this revised commandment been that the electorates in every Western nation will not tolerate its rejection. Yet the economics of the deficits points to the operational failure of the welfare system.

The defenders of the welfare state will then have to explain this widespread collapse of the programs. How did such an ethically superior system fail? How did it lead millions of welfare clients to trust a self-destructive state? How did it mislead so many addicts to government handouts? How did it lead them into a ditch, devoid of skills to compete in the post-default world?

Answer: because the welfare state was ethically corrupt before it was fiscally corrupt. It is based on theft by majority vote.

We have seen what happens to the false messiahs of the messianic state. Western Marxists had a solid though small market for their fat books until the Soviet Union went bankrupt in the late 1980s and shut down in December 1991. Overnight, Marxism lost its academic defenders. They became as invisible as Baghdad Bob did on the day American troops marched in.

The Marxist system had been seen by Western intellectuals as intellectually viable, one of several legitimate perspectives. Then, overnight, it was regarded as a total failure, and – even worse for intellectuals – a fool's quest, a bad joke. Marxism was rejected in theory because of its visible loss of power. The ethics of Western Marxism – in contrast to Marx's rejection of ethics – had always been an illusion. Marxism had always been what Marx had said it was: a matter of power. Defenders who steadfastly had defended Marxism in theory if not in actual practice were no longer willing to do in public. They did not want to be identified with historical losers – losers of power.

If Marxism had been ethically based, it would not have faded overnight just because its power base collapsed. The true believers would have stayed the course. But Marxism was never about ethics. It was always about power.

So is the welfare state.

The defenders of the welfare state have come in the name of a higher ethics. When the system goes belly-up fiscally, these defenders will face the same sort of existential crisis that the Marxists faced in 1992.

They ought to be able to see that the welfare state is a fraud, a delusion, and an ethical monstrosity: charity with guns. They ought to be able to see that theft is theft, with or without majority votes. But they don't.

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The coming global debt default binge will most likely highlight the collapse of welfare state. And this would most possibly suck into the vortex the paper money system. That's because the central bank fractional reserve monetary system has enabled and facilitated the existence of the welfare state. The proverbial chickens will come home to roost.