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The Welfare State Rewards Liars

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Many bad things can be said about the welfare state the political arrangement, as the 19th-century French liberal Frdric Bastiat wrote, by which everyone seeks to live at the expense of everyone else. But one largely unnoticed feature is that it rewards people for suspending their moral sense. Frankly, it makes winners out of liars.

How so? If it is to endure, a welfare state must instill an entitlement ethic in people, a feeling that the money government dispenses is rightfully claimed by recipients. Teaching this perverse morality is key because most people, when they think about it, understand that government can give away only what it first takes from someone else by threat of violence. (Thats called taxation.)

Common moral sense would ordinarily make most of us uncomfortable accepting money that other people were forced to surrender. Our parents teach us not to take other peoples things, and most of us observe that rule as adults. That poses a problem for the welfare state: how to make sure that we dont apply the thou shalt not steal rule to its activities. The government solves that problem mostly through its schools, where children are subtly taught that what the government does is not stealing and that being a recipient of government benefits is not receiving purloined property. The lesson is reinforced in myriad ways throughout the culture. Matthew Leskos annoying commercials are only the most vulgar reinforcements. (H.L. Mencken knew better. He defined an election as an advanced auction sale of stolen goods.)

Once people believe there is nothing wrong with accepting tax-financed largess, they are eager to line up to get their share: After all, the moneys there; if person A doesnt take it, person B will. But thats a problem too. As powerful as it is, the government is limited in how much wealth it can extract from the countrys producers. It cant fulfill every wish and need. So there must be criteria. Government programs spell out qualifications to determine who may and may not get on the dole. In a sense, the rules set up a game: Who Wants to Be a Welfare Recipient? (I use welfare broadly for any government handout.)

Once the game is in progress, a lot rides on whether one qualifies for benefits or not. The system creates an incentive to define oneself or ones situation just so even if that requires some fudging (that is, lying). Someone wishing to get the misnamed Earned Income Tax Credit might decide not to mention some cash income on the application. A middle-class family might get creative on a student-aid form. Sure, there are penalties for lying. But fudging isnt really lying, and besides, someone else will get the money if I dont.

The starkest examples can be found not in a formal government program, but rather in an area of life that has been largely shaped by government intervention: medical care. Laws and regulations have made it attractive for people to get health insurance, apparently for free or at low cost, through their employers. Its not really insurance; instead, it is a massive cost-shifting mechanism that covers even routine medical events and nonmedical events as well. The first question people ask when getting advice from a doctor is: will my insurance cover that? And the creative juices begin flowing whenever the answer is no. The challenge is to have the doctor code the patients problem so that it qualifies for coverage. Truth is not the primary consideration at a time like this. Creative coding (often mistaken for diagnosis) can make the difference between having expenses paid by others or not. A lot of money is at stake. No wonder medical costs are so high. Few people have to be cost-conscious.

A political system that rewards people for pushing their costs on to others makes lying practical and fosters irresponsibility. Could there be a more serious indictment of the welfare state?

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    Sheldon Richman is vice president of The Future of Freedom Foundation and editor of FFF's monthly journal, Future of Freedom. For 15 years he was editor of The Freeman, published by the Foundation for Economic Education in Irvington, New York. He is the author of FFF's award-winning book Separating School & State: How to Liberate America's Families; Your Money or Your Life: Why We Must Abolish the Income Tax; and Tethered Citizens: Time to Repeal the Welfare State. Calling for the abolition, not the reform, of public schooling. Separating School & State has become a landmark book in both libertarian and educational circles. In his column in the Financial Times, Michael Prowse wrote: "I recommend a subversive tract, Separating School & State by Sheldon Richman of the Cato Institute, a Washington think tank... . I also think that Mr. Richman is right to fear that state education undermines personal responsibility..." Sheldon's articles on economic policy, education, civil liberties, American history, foreign policy, and the Middle East have appeared in the Washington Post, Wall Street Journal, American Scholar, Chicago Tribune, USA Today, Washington Times, The American Conservative, Insight, Cato Policy Report, Journal of Economic Development, The Freeman, The World & I, Reason, Washington Report on Middle East Affairs, Middle East Policy, Liberty magazine, and other publications. He is a contributor to the The Concise Encyclopedia of Economics. A former newspaper reporter and senior editor at the Cato Institute and the Institute for Humane Studies, Sheldon is a graduate of Temple University in Philadelphia. He blogs at Free Association. Send him e-mail.