5.4. Welfare

A common reason given to justify government spending is that it reduces inequality, by redistributing wealth from the rich to the poor.  It is said that if it were not for government welfare payments, the very poor, the aged, the disabled, etc, would starve to death. 

 

The concept of equality has been abused over the last two centuries.  The “equality” motive behind the American and French revolutions referred to equality under the law.  This is indeed a noble goal.  But it is one that is only possible in a free market.  Whenever the law starts treating people unequally, for example by government taxation favoring some people over others, we no longer have a society of equality.

 

Another type of equality that is only possible with free markets is equality of opportunities.  That is, no one should be disqualified, by law, from doing certain things.  Government can only restrict opportunities, for example by legally requiring that a person has a certain qualification and license to practice medicine or to operate a public house.

 

But ever since Marx, equality has come to mean something altogether different: equality of wealth.  The free market determines who will become wealthy and who will be poor in an entirely impersonal way.  The wealthiest people are those who provide the best services for consumers.  If wealth is forcibly taken from the rich, and given to the poor, not only does it immediately imply inequality under the law and inequality of opportunities, it also penalizes success and promotes idleness.  Welfare encourages people to live as parasites off of other people’s wealth, rather than providing their services on a free market and generating their own wealth.

 

To the question of how much wealth should be redistributed in an attempt to create equality of wealth, the socialists often have no answer.  It is impossible, and wholly undesirable, to have everyone with the same amount of wealth.  It implies complete centralized control of a society, and production will immediately decrease because there are no incentives for anyone to be productive.

 

A free market benefits the poor considerably more than any other system, because overall productivity, prosperity and growth would be maximized.

 

But what about people who are unable to provide useful services for the market?  Would they be abandoned and starve without government welfare?  The fact that so many people would object to such a situation reveals how the free market would solve this.  Suppose an individual pays £10 in taxes for welfare payments.  If that individual is entirely happy to pay for welfare then given the choice of what to do with the £10, now that he has a choice, he will choose to give it to a charity, who will give it to those in need.  Free market charities will provide welfare for the poor much more efficiently than the government welfare system.

 

Free market charities are the only true charities.  If a government steals money from one group of people, and gives it to another, is this really charity?  The situation is really no different from a mugger taking your money in order to feed his starving children.  Would this be called a charity donation from you to the mugger’s children?  If you really wanted to give that money to charity, it would not have been necessary for the mugger to mug you for it; he could have simply asked you.

 

What if the total level of welfare reduces, when people can choose not to be charitable?  Then, that reflects how charitable people really are.  If this happens, then the government must have been taxing people overall more than they would voluntarily give. 

 

Furthermore, the choice of exactly who should get welfare would be entirely up to the consumer, instead of a government bureaucrat.  If the individual believes that disabled people should receive welfare but not single mothers, he will give to a charity that gives to the disabled and not single mothers.  He will no longer have his decision made for him.

The free market would set the level and type of welfare in a society according to how charitable individuals are as a whole.  This is the only fair and ethical arrangement.