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The Immoral Foundation of the Welfare State

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Permit me to propose a welfare program that will expose the foundation of immorality and wrongdoing that undergirds the welfare state way of life. Here’s my proposal: The federal government gives every single American adult an annual dole of $10,000. The money will be free, with no strings attached.

No doubt both conservatives and liberals would enthusiastically embrace my proposal. “You’re a genius, Jacob! That’s an awesome idea! What better way for the federal government to help everyone? And once everyone starts spending the money, there will be an economic revival! This is awesome!”

Well, except for one thing. The federal government is not like firms in the private sector. Unlike Google, Microsoft, or Starbucks, it doesn’t earn its money by selling goods and services to people. How does it get its money? By seizing wealth from people in the private sector. It does this through taxation.

So, in order to send everyone a free $10,000 grant, the federal government must first seize the money from people in the private sector. Here is what I propose: The federal government imposes a tax of $11,000 on every single American adult to collect the money to fund the free grants.

Why $11,000 instead of $10,000? Because the federal officials who collect the taxes and administer the program have to be paid for the services they are providing. They don’t work for free.

Now, at this point you might be feeling a bit uneasy about my welfare program even if you don’t exactly know why. Some of the more astute among you might say, “Jacob, even though we are receiving $10,000 in free money under your plan, we aren’t really excited about that $11,000 tax. Can we instead forget the tax?”

But the problem remains: before the government can send each of us the free $10,000 dole, it must first collect the money through taxes. If it doesn’t collect the money, it has nothing to send us.

So, how about this: Let’s divide everyone into two age groups in such a way that the two groups are equal in number.

Let’s say that the dividing line is 35 years old. Everyone over 35 will receive the free $10,000 grant and will have to pay no taxes. Everyone under 35 will also receive the free $10,000 grant but will also be required to pay $22,000 in taxes — to fund his own $10,000 free grant plus the free $10,000 grant for someone over 35, plus $2,000 in administrative expenses.

What do you think? Brilliant, right?

Well, except for the fact that the younger crowd might not be overly enthusiastic about the plan and might decide to oppose it. The older crowd could try to convince the younger crowd of the benefits of the plan — how they too are getting a free $10,000 grant, how the free $10,000 grants for everyone are going to increase prosperity and create jobs, and how the younger crowd will be tax-free when they reach 35. Nonetheless, there is a possibility that the younger crowd might oppose the plan and put its passage into jeopardy. Thus, we need to come up with a good reform that gets those young people on our side.

I’ve got it! How about this? Everyone gets the free $10,000 grant and everyone is also tax-exempt, except the rich. We’ll just impose on the richest people in society whatever tax is needed to fund all the $10,000 grants. I suggest we start with the top 20 percent of income-earners and the top 20 percent of net-worth people and impose whatever taxes are necessary to fund all the free $10,000 grants (including those of the rich) plus all the administrative expenses. If we need more, we can work our way down to the next 10 percent.

What if the rich oppose the plan? So what? We outnumber them. This is a democracy, right? Majority rule, right? If the rich don’t like it, they can run for office and try to change things. Of if they don’t love America, they can leave it. Anyway most people would undoubtedly agree that the people who form the bottom 80 percent of income-earners and net worth can do a lot more good with the money than the rich.

And so there, in a nutshell, is how the welfare state operates. The system is based on people’s using the federal government to get their hands on money that belongs to other people while, at the same time, doing their best to protect their own money from people who are trying to do the same thing to them. It would be difficult to find a more immoral and conflict-ridden system than that.

 

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Jacob G. Hornberger is founder and president of The Future of Freedom Foundation. He was born and raised in Laredo, Texas, and received his B.A. in economics from Virginia Military Institute and his law degree from the University of Texas. He was a trial attorney for twelve years in Texas. He also was an adjunct professor at the University of Dallas, where he taught law and economics. In 1987, Mr. Hornberger left the practice of law to become director of programs at the Foundation for Economic Education. He has advanced freedom and free markets on talk-radio stations all across the country as well as on Fox News’ Neil Cavuto and Greta van Susteren shows and he appeared as a regular commentator on Judge Andrew Napolitano’s show Freedom Watch. View these interviews at LewRockwell.com and from Full Context. Send him email.