Monday, January 20, 2014

Immorality of the Welfare State

This is the craziest party that could ever be
Don't turn on the lights 'cause I don't wanna see
--Three Dog Night

Jacob Hornberger sketches the immoral structure of the welfare state.

Initial proposal: The federal government sends all US adults $10,000 annually. Unfortunately, since the government does not produce economic resources on its own, it must seize those resources from people in the private sector who do produce them. It must tax each adult $11,000 ($10K for the subsidy + $1K administrative expense to the government) in order to raise the grant money.

Most people don't like this plan, since they'll be out more than they'll gain.

Revised proposal I: Rank all people by age from oldest to youngest and divide them into two groups equal in number. Suppose that the age that divides the population in half is 35. All people over 35 will receive the $10,000 annual subsidy. All people under 35 will pay annual taxes of $22,000 ($10K grant for himself + $10K grant for someone over 35 yrs old + $2K in govt admin expense).

The older half likes the proposal, naturally. But the younger half dislikes it since it will be paying out more than they are getting. Passing such a proposal via democratic vote will be difficult.

Revised proposal II: Everyone will be tax exempt except the rich. Start with the top 10% of wage earners and tax them to the degree that it will pay for all individual subsidies plus the government administration expense. If more is needed, then tax the top 20%, then the top 30%, and so forth.

Not surprisingly, everyone likes the proposal except the rich. Because far more people will get more than they put in, the proposal has an excellent chance at passing by democratic vote.

Proponents of revised proposal II tell the rich that they can try to get elected and change the rules. Or, they can leave the country. Until then, their wealth will be confiscated to subsidize others.

It is difficult to conjure a more immoral system than this.

1 comment:

dgeorge12358 said...

In a democracy the poor will have more power than the rich, because there are more of them, and the will of the majority is supreme.