Thursday, July 28, 2011

The Entitlement State

The Wall Street Journal provides what they call "a short history of the entitlement state."  Unsurprisingly, the essay concludes, "The looming debt downgrade only confirms what everyone knows: Congress has made so many promises to so many Americans that there is no conceivable way those promises can be kept."

The Journal is right to peg so much of our dire fiscal straights on the over-inflated welfare state.  Beginning under FDR in the 1940s, the WSJ tracks the growth of entitlements through LBJ's Great Society and the Social Security problems of the 1970s and then onto Obama's profligate spending today.  While correctly arguing that the left's counter-argument of military spending is a red herring ("But national defense spending was 7.4% of GDP and 42.8% of outlays in 1965, and only 4.8% of GDP and 20.1% of federal outlays in 2010. Defense has not caused the debt crisis."), the editorial is fair to pin some of the blame on the GOP.
Mr. Bush and Republicans did prove after 9/11 that the Washington urge to spend and borrow is bipartisan. Republicans launched a Medicare drug benefit, record outlays on education, the most expensive transportation bill in history, and home ownership aid that contributed to the housing bubble. The GOP's blunder was refusing to cut domestic spending to finance the war on terrorism. Guns and butter blowouts never last.
Whatever nuanced disagreements one has with this argument, the fact is clear that the federal government is spending far beyond its means.  Much of this is arguably the by-product of a process that encourages a lack of forward-thinking.  The American system - and to some degree human nature - encourages politicians to dole out perks today while placing the costs on future citizens.  As time progresses, entitlements are increasingly piled on and rarely are forward-looking politicians able to remove these newly constructed "rights".  Political and moral arguments are marched out to defend these handouts and so the fiscal burden grows.

To be fair, the blame cannot solely lie with politicians, but must also lie with the electorate who votes for politicians who swing perks their way.  Individuals and groups across the political spectrum lobby politicians for special treatment, not realizing or simply not caring that someone else will have to pay for it.  Even the most stalwart small-government folk are resistant to relinquishing the handouts that they receive (Medicare?).

This is a losing mentality - a short-sighted and fatal way-of-life.  Americans have, for far too long, thought about the benefits they receive from the government separately from the costs that are required to pay for these perks.  It has always been someone else or some other generation that will pay.  But this model of government has proven it cannot endure for any prolonged period of time.

The fiscal sanity of our government and the future of the state demands that we, as a nation, rework our way of thinking.  We have become far too comfortable, as individuals and a society, living beyond our means, but it cannot continue.  Citizens need to reevaluate what they expect to have and what they want others to provide for them.  Remember the government does not produce anything.  Whatever is provided by the government comes in one end and, with some loss along the way, goes out the other.

Government should be restructured to perform the essential duties for which a government is needed; namely providing certain common goods (roads, defense, rule of law) that all citizens benefit from and are unsuccessfully provided by the private market.  It should largely cease its role as a wealth re-distributor, both across time and class.  Whatever the argument one has about this program or that program, the fact is they are unsustainable in our society.  The welfare state has only been maintained over the past seven decades because of the wool over America's eyes - it has been stomached because nobody has been paying for the full extent of the entitlement state.  This ultimate grand bargain has allowed politicians to appease both those who want more and those who do not want to pay more (oftentimes the same people).  But the free lunch has ended and Americans must reconcile themselves to reality - we can never over the long-run get more than we produce.  Americans must realize that government is not a magical tool to solve society's woes or to enact some vision of morality, but a limited means of coordinating essential services that a society needs.


  1. The 'Entitlement' mentality isn't completely the problem - as an outsider I would argue it's an 'Entitlement without wanting to pay for it (ie. taxes)' problem.

    And while I doubt any Americans are really gung-ho about paying taxes - by looking at the current GOP presidential candidates, I can see they have all signed Norquist's pledge - your right-wing sect seems to have a dangerously entrenched ideology of taxes.

  2. Narian~

    Well I think there are two issues, at least, at work here. You're right to argue that there is a problem between the mismatch between expenditures and revenues. I think this is really the crucial problem - there seems to be a serious misunderstanding (at least in practice) of what the government can do. It can redistribute and coordinate, but it cannot really produce anything. This is just a valueless statement of what a government can "physically" do. It is an intermediary that is able to coordinate actions amongst individuals and provide for some by taking from others. I think this is often missed in America and its hurting us. Too many people view the government as something that can provide or produce and this is largely erroneous.

    Once we understand it in its proper context we can then move to the other issue which is more value-laden and involves "who gets" and "who pays". This is where you'll certainly see a left-right divide. But regardless of whether you want more entitlements and more taxes or less entitlements and less taxes, the functional nature of the government still is the same. The current mentality allows people to believe that more entitlements, less taxes is a feasible option (b/c presumably the government steps in to "fill the gap") but this is just untenable.

    Thanks for reading.

  3. Do you find it interesting that so many liberal rich folk stand up and beat their chests, saying stuff like "I don't mind paying more taxes"...and yet not one of them actually does that? Not one of them has actually donated money to the Government in order to help the cause that they "don't mind paying for"?

    The reality is that nobody wants to pay more....and those people who say they do, lie just as the President does.


  4. Devereaux~

    Unfortunately it is not overly surprising. This is what separates charity from taxes; if people really felt compelled to provide for others they would turn to charity. The fact that some prefer to call for higher taxes, implies they believe others should pay more for certain programs. I think this is a key part of the American problem; we're so focused on deciding what our neighbors should or should not do, rather than just focusing on what we think we want to do (as individuals). And certainly, far too often, want our neighbors to do something that we don't want to do.

    Thanks for your comment.

  5. For every action there is an equal and opposite reactions as evidenced by the promises of the politicians and the expectations of the voters. This country was founded on meritocracy and for the last 50 or so years that has become the foundation for demonizing the producers of this country. To quote Ben Franklin: "The Constitution does not guarantee happiness only the pursuit of it. You have to catch up to it yourself."

  6. Thanks Leanne.

    I'm not sure why we have this demonization mentality that you talk of us, but it is unfortunately true. There is this way of thinking that automatically thinks the so-called underdog is morally superior and right to those that have power - the "overdog". The world, in my opinion, simply does not work that way.


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