FORUM: THE VALUE OF THE WELFARE STATE

The Welfare State as a Failed Experiment

John Pugsley model has evolved, the state has been to make their own economic and social drafted by the voting public to be re- choices and are responsible to provide sponsible for a third aspect of the lives for themselves through good times and INCE THE DAWN OF RECORDED HIS- of its citizens, defined vaguely as the bad? Or a welfare state, in which the tory, mankind has searched for requirement to provide government influences S a system of social organisation for the “general welfare” the private choices of which promotes the highest of individuals. Under this As more public individuals through a degree of economic prosperity, umbrella falls a vast and money is spent on system of taxation, sub- opportunity and progress for all individ- ever-growing list of ser- education, the sidy and legal restric- uals in society. One of the most impor- vices, such as the guaran- tions, and simultane- tant long-term objectives of all intelli- tee of retirement and dis- schools turn out ously guarantees all a gent, well-meaning individuals has been ability security, basic worse students.As minimum standard of to discover and create such a system. health care, the insur- living? Indeed, recorded history shows that ance of safe working con- more public money Clearly, most people humans have been continuously exper- ditions, adequate hous- is spent on support believe that the welfare imenting with social organisations in ing and food, safe food, state is the best method search of this goal—starting with tribal drugs, air and water, for single mothers, of promoting overall hierarchies, then feudal systems, wildlife preservation, and more families prosperity and progress. monarchies, dictatorships and, eventu- so on. Evidence of its domi- ally, democracies. Democracy appears Underlying this “wel- break up. nance is ubiquitous. Sim- to stand at the higher-end of this Dar- fare state” is the view ply look at the growth winian process of political evolution. that all individuals in a society are enti- in the level of government spending on Having survived the tribal, feudal and tled to share, to some extent, in the pros- social programmes in the world’s monarchical forms of government, the perity enjoyed by the middle and upper democracies. As my counterpart in this major nations of the world have arrived classes. This belief, in turn, rests on the debate has pointed out, government out- at various forms of democratic govern- premise that many of those at the lower lays for OECD countries in 1997 are ment. end of the economic spectrum are vic- between 40% and 50% of national The theory of democratic government tims of bad luck, while many of those at income, having risen on average some rests on the premise that certain ser- the upper end owe their prosperity to a 15 percentage points in the past three vices cannot adequately be provided by more fortunate toss of life’s dice. This decades. free competition among premise is firmly rooted Failure, But Still Victory? individuals in the mar- Is the evidence of in our culture. Thus ketplace and must there- today’s debate centres not The victory of the welfare state over fore be provided by the history insufficient on whether the govern- the laissez-faire state is puzzling to those state. The primary ser- to discourage even ment should provide for of us who believe in the power of the free vices falling into this cat- the needy, but rather on market. Is the evidence of history insuf- egory are defence from the most die-hard exactly how much (and of ficient to discourage even the most die- external aggression, po- advocates of the which needs) it should hard advocates of the welfare state? lice protection from do- supply. Invariably, as any government has mestic criminals, and a welfare state? The design of some increased its role as provider and guar- justice system for arbi- social system that pro- antor, the size of that government has tration of disputes. It is further believed vides for the prosperity of individuals in grown and the inequities that its pro- that there are a variety of other goods our society is a noble cause. Empathy grammes were supposed to have and services beyond the practical abili- for the suffering of others is rooted in redressed have increased. As more pub- ty of private enterprise to provide, such our nature and gives rise to our com- lic money is spent on education, for as roads, canals, postal services, mon desire to provide for those in need. example, the schools turn out worse stu- schools, and management of the air- But which variation of the democratic dents. As more public money is spent on ways and airwaves. As the democratic state will best promote prosperity and support for single mothers, more fami- progress? A laissez-faire state, in which lies break up and more children are born The author publishes John Pugsley’s Journal, a monthly investment newsletter. His e-mail address individuals—as long as they do not use out of wedlock. As more public money is [email protected]. force or fraud against others—are free is spent on low-income housing, the

WORLD ECONOMIC AFFAIRS ● SPRING 1998 15 FORUM: THE VALUE OF THE WELFARE STATE

housing problem worsens. As more pub- Some argue that not all aspects of that have tested pure communism stand lic money is spent on socialised medi- these communist experiments failed. as historical monuments to the destruc- cine, the quality and quantity of care For example, it was pointed out to me tion of production and progress when falls. It seems that whenever the state that there was great improvement in the welfare state is advanced to its steps in to alleviate a problem, the effect education and health care in Cuba under inevitable conclusion. is to make the problem worse. the state-run programmes. However, my Abject poverty is the bitter reward of The most blatant examples of these personal tours of schools and medical the total welfare state. But what about failures, of course, are the ultimate facilities in Havana a few years ago led the “partial” welfare state, in which welfare states—those me to conclude that these some proportion of wealth is left in the countries that embraced 40% of all institutions were promot- hands of those who produced it, while a communism. After the ed to gain public support, more modest level of redistribution and Second World War, the Americans today and could never have sur- regulation is overseen by the state? Evi- Soviet Union, East Ger- are net recipients vived except by being dence suggests that the level of prosper- many, Poland, China and heavily subsidised by ity and progress in any nation is rough- Cuba followed paths to of government the Soviet Union. By the ly proportional to the degree to which economic disaster by aid—and this ratio time I arrived, those sub- economic decisions are left in the hands attempting to bring pros- sidies had ended and the of individuals rather then state bureau- perity to all by abolish- will reach 50% medical-research facili- cracies. Studies such as the Index of Eco- ing wealth of a few. Stan- over the next ties were idle. There was nomic Freedom, published by the Her- dards of living fell, cities barely enough electricity itage Foundation, indicate that countries decayed, industrial out- couple of decades. to operate an occasional in which individuals retain control of the put slumped, pollution light, let alone their wealth they create stand at the higher increased. In all these countries, equipment. And while they boasted of end of the scale in progress and pros- walls, barbed wire, and machine guns their schools, and the teachers preached perity, in stark contrast to the lethargic had to be used to keep citizens from the greatness of the state, the students economies of welfare states in which fleeing. went without lunches. Those countries governments commandeer the resources

PUBLICITÉ Strategic Alliance

WORLD ECONOMIC AFFAIRS ● SPRING 1998 16 FORUM: THE VALUE OF THE WELFARE STATE

and then redistribute them to achieve Why is this issue never raised? It is zines and television shows if the welfare political goals. ignored by most people because the con- apparatus were eliminated. When gov- As each welfare state fails to achieve sequences of disproving it are too costly ernment collects and then spends 25% or success, its defenders argue that the fail- to bear. An enormous segment of the 50% or more of the incomes of its citi- ure is because the programmes of taxa- population, and particularly the segment zens, it creates economic dependents tion, subsidy and regulation were either that comprises the social thinkers and that have every reason to blind them- poorly designed or poorly administered. opinion makers, has now become depen- selves to the obvious. See no truth, hear The programmes would work, they claim, dent on the benefits bestowed by the wel- no truth, speak no truth. if only there were “reforms.” Sadly, the fare state. For example, Stanford econo- argument that these failures have been mist Michael Boskin calculated that Is Need a Just Claim? due to poorly designed programmes fully 40% of all Americans today are net Let us take up this challenge, and con- focuses attention on the minutia of recipients of government aid—that is, sider the premise. Is my need a just claim design, and diverts us from having to they take more from the federal trough on your property? First, consider the examine the verity of moral implications. the entire premise on Let me present a which the welfare state thought-provoking is built. hypothetical situation which I first heard A Faulty when it was used by Premise instructor Jay Snelson In light of the evi- in course “V-50” given dence that prosperity by the Free Enterprise is greater where people Institute in Los Ange- are left free to enjoy les, California. the rewards of their Imagine that you labours and suffer the own a nice television consequences of their set. I live across the failures, why has the street, and one night I concept of the welfare knock on your door, state triumphed in tell you that I do not minds of intellectuals have a TV, explain why around the world? Part I desperately need of the reason is that yours and ask you to the premise on which give it to me. You pon- the welfare state has der my request and been built is never even feel some com- opened for debate. passion for my plight.

Every law, regula- THE ECONOMIST But you turn me down. tion, and programme I leave. Later, after you of every democratic government rests than they contribute. Boskin calculates have gone to bed, I sneak in your back squarely on the acceptance of a single that this ratio will reach 50% over the door and take the TV. premise: One person’s need is a just next couple of decades. In the US, one Most people would call this theft. After claim on the property of another. The half of the population will be underwrit- all, that is how we define theft—taking underlying justification of every state ing the other half. someone’s property without their con- programme—education, food stamps, It is the beneficiaries who will lose if sent. Are there any extenuating circum- medical care, child care, unemployment their need-based claim is ever chal- stances that would cause my act of tak- compensation—is need. One person or lenged. And the beneficiaries are legion. ing your TV set without your consent to group has a need; another person or Millions are employed directly by the be considered anything other than theft? group should be forced to provide for it. federal government, the vast state-gov- Are there any situations in which it Sadly, this premise, which is truly the ernment bureaucracies, primary-school would be reasonable? ultimate foundation for the welfare systems, public universities, government For example, suppose that when I state, is never debated, and never ques- agencies, government contractors, in first knocked on your door I had tioned. It is rarely even articulated. Yet addition to all of the recipients of busi- explained that I was hungry, and had it is the issue that should be debated ness subsidies, rent subsidies, food not eaten in three days, and needed to first. If it is wrong, then all of the great stamps, welfare, medical care, retire- sell the TV to get money for food. Would debates raging in society over the ques- ment income, disability income, and so my need for food have meant that my tions of which needs are genuine needs, on. Even the members of the media taking the TV was no longer an act of and whose property will be forfeited to would find themselves stripped of 90% of theft? Or would it still be stealing? Or, supply those needs, are totally moot. the content of their newspapers, maga- suppose that when I first met you I had

WORLD ECONOMIC AFFAIRS ● SPRING 1998 17 FORUM: THE VALUE OF THE WELFARE STATE

told you that my daughter was ill, and I The welfare state, a situation in which argue that it is unfair for some people to needed to sell the TV to get the money the state takes from some to provide for enjoy higher standards of living than for medicine to save her life. Under the needs of others, is firmly rooted in others, and therefore “theft” (though he these circumstances, if you refused me the concept of theft. would not call it that) is the only alter- and I took the TV without your consent, native. is it no longer theft? Or, suppose that, Taxation is Theft, With or Since both the advocates of the wel- after you had refused me the TV, I had Without Representation fare state and the advocates of a laissez- walked next door and talked to your The “taxation is theft” argument is faire society are both seeking to create a neighbours on each side. I explained my usually dismissed when first considered, society that achieves the maximum pros- need and told them that you had since we are taught to believe in democ- perity and progress, and therefore the refused to give the TV to racy. For example, school minimum of suffering for its citizens, let me. They both told me to If taking property children are taught that us arbitrarily define as “right” or “moral” take the TV. If I have the the American Revolution the system that leads to our common permission of two of from someone was fought over the prin- objective. This leads us to the obvious your neighbours, would without that ciple that taxation with- question: “Is any society likely to become it still be stealing? What out representation is more prosperous and progressive if one if I had talked with person’s consent is unjust, but that somehow person’s need is a justifiable reason for everyone in town, and theft, then when taxation with representa- stealing another person’s property?” with only one exception tion is appropriate. How- (guess who?) everyone the government ever, in the situation Taxation Reduces in town had agreed that takes anything described above, I asked Overall Prosperity… I should take your TV? for your vote before I A prosperous society is one in which Would it still be stealing? from a person took your television. You individuals have access to the goods and What if I had asked without that said—that is, you voted— services that they feel are necessary to everyone in the whole no. Thus, you were “rep- make them comfortable and happy. country, and again (with person’s consent, it resented” in the final Progress is measured by the growth in the exception of you) must also be vote. How does the act of quantity and quality of those things. absolutely everyone had giving you the right to Goods and services, our material yard- agreed I should take the considered theft. vote change the fact that sticks of prosperity and progress, only TV. Would it still be your property was taken come from human effort. And herein lies stealing? Would it change things if, by force? You have already agreed that the reason that stealing is wrong or instead of selling the TV after I took it, being outvoted by your neighbours did immoral. I set it up in the local park and invited not give me the right to take your prop- Why do we work as hard as we do? For everyone in town, including you, to erty—or you should have. only one reason: because we believe that watch it? If you were given equal oppor- We now confront the central contra- we will benefit by the effort. The prima- tunity to use the TV along with every- diction in what we have all been taught ry human motivation for taking any one else, would this mean my act of tak- over the years. On one hand we are action is self-centred. We expect to wind ing the TV was no longer stealing? taught that stealing is wrong and there- up better off. I plant a garden to reap the By now the point of the story is clear. fore immoral. On the other hand we are harvest for myself and my family. You go It does not matter what the thief’s “need” taught that taxation with representation to work because you believe it will pro- may be, it is still theft. It does not mat- is right and therefore vide for yourself and your ter how many other people give a thief moral. How can we rec- Every successful family. Each person permission to take your property; if he oncile this contradiction? tends to put forth effort takes it without your permission, he is Taking property without act of taxation has proportional to the bene- stealing. It does not matter if the prop- the owner’s consent can- a detrimental fits he expects to gain. erty is then used by all the community, not be both moral and And since society is com- including you. It is still theft. immoral. It cannot be effect on the posed of individuals, the If taking property from someone with- both right and wrong. prosperity and sum of benefits achieved out that person’s consent is theft, regard- The resolution can by any society must be less of the need and regardless of how only be found by exam- progress of society. proportional to the sum many people agree that it should be ining what we mean by of the efforts of the indi- taken, then when the government takes right and wrong, moral and immoral. I viduals in that society. anything from a person without that per- will not be successful in convincing a This obvious truth serves as a pream- son’s consent, it must also be considered welfare-state advocate that taxation is ble to the argument that all acts of theft theft. Involuntary taxation is theft. Of immoral simply by calling it what it is— are destructive, whether based on pri- course, voluntary taxation is not taxation theft—or even by calling on a higher vate theft—such as when a mugger robs at all. Perhaps some rare individuals vol- authority and pointing out that God you to satisfy his own needs—or based untarily pay taxes, but most people cer- commanded, “Thou shalt not steal.” on group theft—as when government, tainly do not view taxation as voluntary. The welfare-state advocate will simply under the guise of providing for the wel-

WORLD ECONOMIC AFFAIRS ● SPRING 1998 18 FORUM: THE VALUE OF THE WELFARE STATE

fare of all citizens, taxes you to meet cannot help in achieving the goal of a general public. But since human nature those needs. prosperous society. Taxation is therefore insures that both the politician and the First, consider the effect any act of “wrong” (by our definition above). bureaucrat will be compelled to seek theft has on individual incentives to pro- Moreover, the damage caused by a wel- ways in which they themselves can ben- duce. Suppose A and B live on an island, fare-state system of taking from A to efit, handing them the power to steal will and A works hard to tend his garden meet the needs of B exceeds the obvious inevitably lead to their corruption. while B idly wiles away the days. If B damage it does to the incentives of On the other side, voters will also be sneaks over and steals A’s harvest, the either the victim or the recipient. compelled to use their power at the event has a profound effect on both indi- Because politicians and bureaucrats are polling booth to help themselves at the viduals’ incentive to public trough. They will work, and thus on the band together into spe- prosperity of the society cial-interest groups, as a whole. First, B has each group intent on found that it takes less electing politicians who effort to steal than to promise to subsidise it produce. He will natu- while taxing and regu- rally direct his energies lating other groups. to becoming a more With every group carry- effective thief. On the ing the banner that “Our other hand, A has not need is a claim”, the been rewarded for his state inevitably expands effort, and this surely its grip on individual reduces his incentive to producers as it doles out work. But he does see goods and services to the payoff to preventing meet an ever-growing theft, and so he will nat- list of needs. urally devote part of his The Welfare State

productive time, energy GEORGE GROSZ and thought to building v Human Nature fences or setting traps. With less time left human, handing them the power to steal In 1875, Karl Marx stated the principle for production, total production to the is handing them an irresistible tempta- underlying the welfare state quite suc- community falls. If, in spite of A’s efforts tion to corruption. The very act of plac- cinctly: “From each according to his at self-defence, B continues to succeed in ing the power to steal in any person’s abilities, to each according to his needs.” stealing A’s output, A will stop producing hands provides the explanation for both The welfare state is founded on the altogether. No pay, no work. the inefficiency and corruption that proposition that it is necessary to take Every successful act of taxation has a accompanies almost all government the property of those who have it to meet detrimental effect on the prosperity and programmes. the needs of those who do not. As Marx progress of society. Moreover, the higher The reason that state- and Engels said in the level of taxation, the greater the loss administered welfare A tax system under The Communist Mani- to the society. Establish a taxation sys- programmes of all kinds festo, “…the theory of tem under which one individual can are less efficient than which one Communists may be claim his neighbour’s goods based on his private voluntarily ad- individual can summed up in the single own needs, and no matter how such a ministered welfare sys- sentence: Abolition of system is adjusted, re-designed, or mod- tems—whether to pro- claim his private property.” But the ified, it will always lead to lower output vide the needy with neighbour’s goods state does not create for the society as a whole. Granted, there medical care, education, property. Property is cre- will be some individuals who are better child care, food, or any- based on his own ated by individuals. And off (the recipients of government hand- thing else—is not a mat- needs will always while there may be no outs), but the benefits to the recipients ter of bad luck, bad tim- “God-given” right to keep will always be less than the losses to the ing, or flaws in the ways lead to lower what you produce, our victims. Taking the fruits of the labour of they are administered output for society basic human nature A and giving them to B, whether we call or applied. They are inef- guarantees that any sys- it taxation or stealing, is not a zero-sum ficient because they as a whole. tem which uses force to game. forcibly take property take property from those away from the person who produced it who produce it and give it to others will …and Leads to Corruption and place it in the hands of the politi- result in not only a lower level of pro- Since the act of taxation diminishes cian or bureaucrat. duction and progress, but also a higher productivity, prosperity, peace and Politicians and bureaucrats are level of social conflict. It is no mystery progress, appointing B to steal from A expected to act in the best interests of the why the welfare rolls grow when welfare

WORLD ECONOMIC AFFAIRS ● SPRING 1998 19 FORUM: THE VALUE OF THE WELFARE STATE

is offered. It is no mystery why govern- human nature. … Individual behaviour, act in their own self interest. Given ment subsidies beget more government including seemingly altruistic acts the nature of humans, it cannot be subsidies. It is human nature. bestowed on tribe and nation, are direct- done. When you attempt to build a sys- These days, the communist system is ed, sometimes very circuitously, toward tem that violates the laws of nature, rarely defended in Western academic cir- the Darwinian advantage of the soli- human or otherwise, you are guaran- cles. The collapse of the Soviet Union tary human being and his closest rela- teed to fail. and the abject poverty of tives. The most elaborate This leads to a curious confusion in the other communist forms of social organisa- our culture. When you tell the average countries are too difficult All attempts at tion, despite their out- person that it is not necessary or efficient for even the most die- creating a ward appearance, serve for the state to look after the welfare of hard communist econo- ultimately as the vehicles the poor and less fortunate, he will most mists to explain away. Yet workable welfare of individual welfare.” often argue that, because of man’s selfish despite the failure of state have failed Simply put, individual nature, the person with wealth will not communism, its underly- man always acts in his help the less fortunate, and therefore the ing premise—that society because all own self-interest. At our state is necessary to look after the needs is better off if property is systems for core, we are programmed of the poor. produced according to to be selfish, although we The truth is just the opposite. Because ability and distributed redistributing may not always be con- of the selfish nature of man, it is utopi- according to need—has wealth require that scious of the fact. an to give A authority over the life and won the battle for minds. Individual humans property of B, particularly if they are The majority of the “cap- individuals have evolved and have strangers to each other. Because all italist” or “free-market” contravene human survived as a species for humans are genetically programmed to nations of the world are one reason: the normal first consider their own well-being, no firmly committed to the nature. individual places his own man can be given authority over anoth- redistribution of wealth interests (and those of er without being tempted to find ways in according to need. his family) above the interests of all oth- which to use that authority to his own Though the failure of communism is ers. Human beings are self-centred. We advantage. The idea that a government evident, the cause of this failure is not. are universally selfish. Evolution built us bureaucracy composed of human Communism and all other attempts at this way. Give man the choice between beings would put the well-being of the creating a workable welfare state have devoting his efforts to himself and his population before its own well-being is failed and will fail, because all systems for family versus the welfare of strangers, utopian. redistributing wealth require that individ- and he will choose to help himself. And Historians have rewritten history, uals contravene human nature. it is not “bad” or “evil” for making it appear that The only effective way to reach any individuals to act in self- As individuals political leaders have objective is to first understand the nature interested ways. The acted in the interests of of the materials with which you are species exists because are made to nations, rather than in working. Scientists search to refine a set genes that impelled the understand that their own interests. In of axioms that describe the basic mech- individual toward per- truth, behind every law anisms of physical nature and, working sonal survival were repli- they cannot rely on promoted to help the from these axioms, engineers design cated more frequently government to ignorant, the poor and devices to reach objectives. If an engi- and survived in the fol- the disadvantaged, care- neer wants to build a plane that will fly, lowing generations more meet their needs, ful examination will he first must understand the principles often than genes that the natural reveal that the law’s pro- governing the nature of the materials impelled the individual moters are gaining some involved. He then tries to design the toward unsuccessful instincts of advantage. Protective tar- plane according to those principles. If he behaviour. Man’s genetic self-interest will iffs benefit domestic violates one principle of physics, the programming compels industries at the expense plane will not fly. him to be self-centred. channel them of consumers. Minimum- Just as the axioms of physics are Man is not bad or good toward self- wage laws benefit the determined by the nature of physical because of his individual unions by preventing objects, the axioms of human action are selfishness; he exists responsibility. competition for jobs. determined by the nature of man, a because of it. Securities laws protect nature that has emerged over thousands Yet all of the systems of government the established firms in the competition of generations through the process of so far devised, and particularly those for capital. Medical licensing protects natural selection. As sociobiologist promoting the idea of a welfare state, the established doctors from low-price Edward Wilson argues so eloquently in suggest that it is possible to find a vast competition. his Pulitzer Prize winning book, On number of politicians, bureaucrats and For individuals elected to positions of Human Nature, “mankind viewed over public servants who will selflessly serve authority, acts of altruism are almost many generations shares a single the interests of strangers rather than non-existent. Lord Acton’s famous

WORLD ECONOMIC AFFAIRS ● SPRING 1998 20 FORUM: THE VALUE OF THE WELFARE STATE

maxim, “Power tends to corrupt and and fine-tune the mechanism of the wel- ance premia will be built into my month- absolute power corrupts absolutely,” is fare state by adjusting the powers given ly budget. If there is no government-pro- an astute observation about the nature to those in government. In fact, it is just vided safety net, I will realise that I must of man. While the failures of welfare- the opposite. Rather than handing save for my own retirement and for my state programmes are often attributed power to government to take property own medical care. to bureaucratic inefficiency or political from one group and dole it out to anoth- There are others who truly cannot care corruption, the truth is that politicians er, the answer is to eliminate power and for themselves. What about them? For and bureaucrats are just normal indi- leave property in the example, what about the viduals responding rationally to oppor- hands of those who pro- The alternative unfortunate child who tunities to pursue their own self-inter- duce it. is born disabled? In a est. What about the disad- to the failed nation of individuals who The “ideal” welfare state could never vantaged? First, as indi- experiment of the are made to be responsi- exist. Professor David Friedman, son of viduals are made to un- ble for themselves, par- Nobel laureate Milton Friedman, made derstand that they cannot welfare state is to ents would buy insurance the point succinctly: “In the ideal [wel- rely on government to try a dramatically against birth defects to fare] state, power will not attract power meet their needs, the nat- cover expenses and care. freaks. People who make decisions will ural instincts of self-inter- new experiment— But what if they did not show not the slightest bias toward their est will channel them a truly free market. do so? What about those own interests. There will be no way for a toward self-responsibility. who, by bad luck or bad clever man to bend the institutions to Second, once the regulatory walls that planning, simply have no way to care for serve his own ends. And the rivers will are part and parcel of the welfare state themselves? Those who are genuinely run uphill.” are dismantled, disadvantaged individu- disadvantaged would find more than suf- als will be in a much better position to ficient altruistic feelings among the Leave it to the Market help themselves. Vast opportunities will advantaged—there would be adequate The fallback argument of advocates of be opened. Government, under the mask private charities to handle the truly the welfare state is that, while the system of protecting them, will no longer unfortunate. may not be perfect because of the falli- impede their own productivity. In other words, the alternative to the bility of humans, if the government Third, as more individuals are weaned failed experiment of the welfare state ignores the needs of the young, the old, of state subsidy, private alternatives will is to try a dramatically new experiment: the poor, the sick and the unemployed, naturally and quickly develop. Private a truly free market. Push government these people are doomed. The welfare- insurance products are the market alter- aside, and let competing individuals in state advocates argue that private indi- native to most risks, from old-age retire- an unhampered market be completely viduals are simply too selfish to help; ment and medical needs, to unemploy- free to satisfy each other’s needs. Where income must therefore be redistributed ment, disability and even birth defects. If the state dwindles in power, individual from rich to poor. Yet, both the evidence I recognise that I am responsible to enterprise and prosperity flower. Where of history and the nature of man suggest house, feed and clothe myself and my government transfer of wealth is min- that forcing one segment of the popula- family without expectation of a govern- imised, individuals are free to produce tion to be responsible for another group ment safety net, I will be much more and trade, and are simultaneously left does not work. likely to respond to advertising from pri- with the responsibility for their own What is the solution to the dilemma of vate firms that offer insurance against lives. Prosperity and progress is the the needy and less fortunate in our soci- life’s pitfalls. Until I have saved enough result. The invisible hand of a free mar- ety? It is certainly not to continue to try to pay for these services myself, insur- ket lifts everyone. ࡗ

PUBLICITÉ Mendelsohn

WORLD ECONOMIC AFFAIRS ● SPRING 1998 21