On the Australian Libertarian Society website there is an article about the welfare state:Poverty and the Welfare State Safety Net: Thoughts on FreedomI recommend you read it, at least for an interesting perspective on the issue. However, I came away unsatisfied, the arguments in many cases did not appear to be well made. I have selected a few below.
“The economic orthodoxy behind the welfare state includes the belief that deliberate inflation of the currency by government is a legitimate instrument of policy…However even a low rate of inflation is very very destructive. For example, Australia’s current inflation rate is three percent, which, according to the economic orthodoxy is acceptably low. You divide 72 by the inflation rate to find out how long your money will last. So even at that low rate of three percent inflation, a hundred dollars saved in the bank today will be eroded to nothing in 24 years.”
I am not sure where to start with this comment, but I do not think that there is any aspect of the principles behind the welfare state that would have much to say about inflation. Obviously economic theory does, but the welfare state is not a macroeconomic theory, is a theory about Government assistance to individuals.
The example given in the article is that 3% inflation will erode savings to nothing over a period of time. and this is of course true for cash, but not for other saving methods (which would be the predominate form). So it is not at all clear that a particularly valid point has been put forward at all.
“The income tax is a tax on the employee’s income. So why should the employer have the liability of paying and administering it? The employees are not dependent children, they are adults. There is no reason why they should not have to pay and administer it themselves.”
I don’t think this is a very valid point to make. When Governments come to look at how to levy an income tax, they have to choose between putting the burden on millions of individuals with little experience with Government paperwork, or on businesses (of which there are much fewer) who are more experienced with Government paperwork, and in many cases already have systems in place for dealing with payroll. Any reasonable cost benefit analysis is going to clearly point out that it is more efficient to make business do the processing.
“It is important to understand that the project of the welfare state comes out of the socialist belief system. And it is surprising the number of educated proponents of the welfare state who do not understand that the ideas they are putting forward derive from Marxism.”
It definitely would be surprising as the welfare state does not derive from Marxism. Anyone with a passing interest in Marxism would realise that it was a theory of the economic system and the class struggle and was solely based around how the current class system would collapse through class struggle to be replaced by communism. If anything, Marxist’s opposed the welfare state as mollifying the class struggle and hindering the more to communism. If anything the welfare state flows from social democrats and social liberals, people who generally accepted the capitalist system, but saw a need to moderate some of the more vicious aspects of capitalist production (by, for example, banning child labour and creating the eight hour day).
Of course, some of the issues raised in the article, such as OHS laws and tax paperwork, are not so much derived from the intellectual history of the welfare state but are the result of the (maybe unintended) interaction of multiple Government controls accumulated over time by states operating in advanced democratic capitalists systems. It may be very well true that this has gone to far and that some form of revision, either in the specific or generally may be warranted. But blaming marxism is no substitute for clear analysis and discussion of the specific issues and the specific solutions.
If you want to understand where this kind of article comes from (theroy wise) I think you should have a look a Fred Argy’s post over at Club Troppo:What is the difference between a true economic liberal and a ‘hard’ (libertarian) liberal?