The Modern Welfare State

In their book Free to Choose, Milton and Rose Friedman explain the origins of the modern welfare state. Surprisingly, the first of such nations was the aristocratic and newly united Germany of the 1880's. Otto von Bismarck, also known as the "Iron Chancellor," proposed and got enacted several social welfare programs; insurance for the workers against accident and sickness, and a pension for old age.

Why is this surprising? Because Otto von Bismarck was part of the German aristocracy. There were basically two classes of people in Germany then: the aristocrats and everyone else. However, it seems that Chancellor Bismarck implemented these programs more for political reasons than for any true concern for the working class. The Social Democrat party was just coming into being and presented a threat to the aristocratic power base.

The other surprising thing about Germany becoming the first modern welfare state is that a nation that believed in right of rule and power due to accident of birth--kings and princes and dukes and earls and that sort of thing--would be the first to introduce the basic planks of socialist political groups. But, when you consider that both the aristocracy and the socialists believed that they knew better than the average person what is best for them and everyone else, and what is in the public interest and how to get it done, then it's no surprise at all. Both groups want a strong central government and they believe that the people have to be told what to do, albeit, with their tacit consent. Therefore, both the aristocrats and the socialists end up with a paternalistic policy, promising the people that if only they are allowed to take power, or remain in power, will the people be safe and secure.

Of course, aristocracy was almost ended as a real power at that time. The First World War ended it completely except, perhaps in a few marginalized nations around the globe. But the welfare state stayed, and has only gotten bigger every since. It's gotten bigger, but not better. Otherwise, the Social Security Administration wouldn't be facing a major financial crisis, public housing would be a renter's paradise, and Canadians facing serious and immediate medical needs wouldn't be coming to the United States to get help. Further, most, if not all European nations, which are much more socialist than the United States, are having to scale back their welfare-state programs.

The modern welfare state is here to stay, I'm afraid. I don't see it being dismantled any time soon. But, if the working person just would take more interest in what really works and what doesn't, then the welfare state could be kept in check. We are losing freedoms every day to the unending regulation mills that the government bureaucracies are. There is also this to consider: As more and more people get on the government gravy train--either as an employee or a person or company receiving a subsidy or hand out--then there will be fewer people actually producing the wealth that supports the government. As Frederick Bastiat, a French political economist of the 1840's said: Everyone wants to exist at the expense of the government. They forget, however, that the government exists at the expense of everyone.

Germany was the founder of the modern welfare state. That disease was extremely contagious and infected all nations in the world. If the government is going to take care of me from "cradle to grave," then the government will have to have control over me in all that I do, in my work and in my recreation, in my food and drink, and more. And I will have to work long and hard to pay the taxes that will be due to support the ever bigger bureaucracies that will always be created and that will always grow ever bigger. Could that be one of the reasons, maybe the main reason, why it takes a working couple to adequately support a family today, but in my parents time, when I was growing up, only my father had to work to feed us, house us, and clothe us? Could that also be a reason why 44 to 45 million Americans can't afford proper health insurance, if they can afford it at all?