The Social Welfare State, Compassion, and Political Self-Interest

The siren song of Socialism contains the seeds of destruction that now threaten the very foundations of civilization.  Socialism as a disease progresses slowly, but it has been underway for more than a hundred years.  The malignancy is now metastasizing.  Unfortunately, ours are the generations that will experience its pernicious outcomes.

Feckless politicians blame anyone and everything but themselves for the impending tragedy.  They are responsible for the condition of the world.  Ultimately, "we the people" are also responsible.  We allowed these political opportunists to create this world threat.

What Went Wrong?

Deterioration in the quality and orientation of government is a long story which has been a long time developing.  No one political villain can be blamed.

The decline began not with the rants and ravings of Karl Marx, nor with those of any of his disciples.  The fountainhead was Otto von Bismarck in the late 19th century.

Bismarck is considered the founder of the welfare state, which is modern-day Socialism.  In fact, Bismarck detested Marxian Socialism -- he was a pragmatist, not an ideologue, and is considered the founder of realpolitik, which translates to "practical politics."  He was not an idealist trying to improve people's lives.  He acted purely in his own best interest.

The motive behind Bismarck's concept of a social welfare state was simple: to placate the masses in order to obtain votes and solidify his hold on office.  As he expressed it (emphasis added):

My idea was to bribe the working classes, or shall I say, to win them over, to regard the state as a social institution existing for their sake and interested in their welfare.

Bribery to create an illusion designed to expand the wealth and power of the State at the expense of productive people is hardly an admirable course of action or objective.  Bismarck's simple deception provided powerful means for subsequent political classes.  Specifically, it provided the means for politicians to grow and expand their power and wealth while solidifying their tenure in office.

Despite the pious claims of current welfare state advocates, Bismarck never espoused noble purposes beyond that of his political self-interest.

Politicians in Western democracies saw the power in Bismarck's idea and patterned their careers on winning election and re-election via the Bismarckian bribe.  Convincing the public that government existed for their sake and their welfare enabled expansion into areas previously considered off-limits.

Tradition and law were eventually brushed aside.  The U.S., constrained by a magnificently sculpted Constitution and a predisposition toward liberty,  held out longer than its European counterparts.  Its later start and slower progression is a fact often cited as a reason why the U.S. economy was able grow from a backwoods beginning to a colossus by the early 1900s.

Progressives in the U.S. initially used the "general welfare" clause of the Constitution as justification for a social welfare state.  Deliberate ignorance and distortion of the Founders' original intent was an important aspect of their attacks.  Subsequent attacks used the argument that the Constitution was a "living document" meant to be changed to reflect modern-day "needs."

Eventually, tradition and law succumbed to the incessant battering of progressive activists in the U.S.  The people's defense against government tyranny was weakened.  Government was then emboldened to redefine itself in almost whatever fashion it chose.

Bismarck's method of bribery was the model that altered the nature of politics practiced in democracies.  With voter bribery, government as Santa Claus was possible.  The people loved this myth and the initial effects.  Politicians loved buying votes, as evidenced by political campaigns where competing political factions tried to outbid each other with more "freebies."

The Advance of Socialism

For almost one hundred years, Bismarckian bribery, via an expanding welfare state, has been the predominant political strategy.  Over time strategies grew bolder, ratcheting to higher levels each election cycle.

Today, modern economies are being destroyed by Socialism as practiced via the welfare state.  After generations of propagandizing Statism, the goodness of government, intervention as a necessary means to equity and prosperity, and the need to invade and manage virtually every aspect of our lives, a majority of voters believe the myth.

Even the term "welfare state" is phony.  It was a marketing euphemism to avoid the proper, but pejorative, description "Socialism."  The euphemism conveniently conveyed the Bismarckian myth that government cares for and can take care of its citizens.

In reality, the social welfare state was backdoor Socialism.  The euphemism also provided convenient cover for what amounted to political enrichment and job security.

The Effects of Socialism

A good description of the effects of current Socialism was provided by Joseph A. Harriss.  Although Mr. Harriss described France and Sarkozy's re-election chances, these  conditions apply to most other leaders in European states as well as the U.S.:

What no politician had the courage to say was that the French are witnessing, in slow motion, the end of their welfare state, known locally as the French Social Model. For the last 30 years it has been sustained through political sleight of hand and financed on credit. The French were assured they were entitled to work only 35 hours a week, take five weeks vacation, have single payer health care, pocket generous unemployment benefits, and enjoy a cornucopia of handout programs. As a result, they work on average six fewer weeks a year than the Germans, fewer hours even than the laidback Greeks.

Let the good times roll was the implicit program of politicians both left and right. Now the inevitable bill is coming due right at election time. There's no way Sarkozy can avoid paying the political price.

Countries have now run out of both time and money.  The malignancy of Socialism nears its ugly end, in the manner predicted by Margaret Thatcher:

The trouble with Socialism is, sooner or later you run out of other people's money.

All welfare states have attained her "sooner or later" point, with most at the "sooner" end of the spectrum.

Sarkozy is in political trouble for the same reason why politicians in all social welfare states are in trouble.  Whether he is the right or wrong man for the job is irrelevant.  He, like his peers, is a victim of history.  He just happens to be the unfortunate one holding the bag when the music is ending.  There is no right man for the job in France or anywhere else.  The Socialist scam is imploding.

The three-legged stool that supported the fantasy of the social welfare state for the last hundred-plus years was based on the following:

  • Prosperity is available without effort.
  • Government creates prosperity.
  • Government will take care of its people.

Politicians were able to support this hoax only with "other people's money."  It is now apparent to many that none of these premises are true.

The money obtained to sustain the myth has seriously damaged economies.  Some of it was obtained by destroying the seed capital provided by previous generations.  Some of it was obtained via obscene levels of taxation.  Much of it was obtained via borrowing funds that were never intended to be paid back.  The ability to obtain additional funds from these sources is dubious, particularly the last one.

The funds were obtained via coercion and under false pretences.  Inarguably, the social welfare state has crippled modern economies.  The game is about over as the scam becomes more apparent by the day.

The damage done to our political system is likely irreparable.  Consider current-day politicians as compared to our Founders.  George Washington was offered a kingship and turned it down.  How many current politicians would reject a similar offer?

Current politicians are indistinguishable from clever street hustlers with inflated self-images of their importance and wisdom.  They pass laws in areas they cannot possibly understand, often not even bothering to read the bills on which they vote.  One wonders whether they would even understand them.

Self-aggrandizement has transformed into pay and perquisites that even some well-to-do are unable to obtain.  The immoral economic rewards of public office, both above and below the table,  have turned politics into a career rather than public service.  The political class have set themselves apart as elites in every regard, including protection from laws the rest of us must follow.

As bad as the changes to the political system and the character of politicians have been, the effects of Bismarckian bribes have ruined modern-day economies.  Here are a few examples:

  • The incentive structure and work ethic for large sections of each country's population have been destroyed. Instead of having citizens with the natural human spirit to progress, all countries now have a zombie class -- untrained, unmotivated citizens living off government handouts.
  • The regulatory state and its onerous taxes have destroyed productivity. Entrepreneurs and risk capital have fled to climes where they are treated fairly. Much of the manufacturing base has been outsourced to emerging countries, where jobs and not snail darters are appreciated.
  • The zombie class is growing. The "takers" rather than "makers" find it more comfortable (or lucrative) not to work, but instead to collect welfare. This class have forgotten or never learned work habits and consider themselves entitled to live at the expense of others.
  • The shrinking productive sector is forced to support the growing zombie class. Up 'til now, much of this support came via enormous government borrowings, sheltering the productive class from the real costs that they will eventually have to bear. The era of leverage is ending, and with it will come a lack of support for the government-created and supported zombies.
  • Developed economies have been crippled and hollowed out to the point where decades of slow or no growth is the best that can be expected. Many of these economies will implode.
  • Standards of living are decreasing and have been for a while. Bill Bonner points out that the average real hourly wages of non-high school graduates has declined by 47% over the last 32 years! Separately it has been shown that the average weekly earnings in this country, again in real terms, are below where they were in 1966.
  • Governments have bankrupted themselves, their financial systems, and their central banks. They attempt to continue the charade by having bankrupt central banks bail out bankrupt financial systems so that they can purchase bankrupt government securities.

Despite all the propaganda from the Statist machine, government produces nothing; indeed, government has never produced anything.  It depends upon a thriving private sector and bond market to play Santa Claus and continue the pretension that it is the source of prosperity.

The fraud cannot go on much longer because governments have crippled the golden goose via onerous rules, regulations, and taxes.  For three or four decades, government was able to hide the problem by spending more than it took in.  Governments around the world have reached the point where spending levels can no longer be sustained via tax revenues and bond markets.  The latter source has practically dried up for some governments.  Eventually it will for all. 

France and other social welfare states (including the U.S.) are virtually tapped out.  Living standards are going down, and insolvent governments can no longer hide this fact via the charade of "debt" prosperity.

The dirty secret of Socialism and the social welfare state has become apparent: it was never anything more than a political gimmick to gain or retain office and power.  Politics has turned into what Bismarck envisioned -- an elaborate scam of voter bribery. 

As a result, the world faces sovereign defaults, financial system collapse, civil unrest, and a Depression that will make the 1930s look mild in comparison.

Thanks, Otto von Bismarck, for providing your clever idea for our modern-day criminal class posing as politicians.  Hopefully civilization will not be destroyed in the coming financial apocalypse.

The siren song of Socialism contains the seeds of destruction that now threaten the very foundations of civilization.  Socialism as a disease progresses slowly, but it has been underway for more than a hundred years.  The malignancy is now metastasizing.  Unfortunately, ours are the generations that will experience its pernicious outcomes.

Feckless politicians blame anyone and everything but themselves for the impending tragedy.  They are responsible for the condition of the world.  Ultimately, "we the people" are also responsible.  We allowed these political opportunists to create this world threat.

What Went Wrong?

Deterioration in the quality and orientation of government is a long story which has been a long time developing.  No one political villain can be blamed.

The decline began not with the rants and ravings of Karl Marx, nor with those of any of his disciples.  The fountainhead was Otto von Bismarck in the late 19th century.

Bismarck is considered the founder of the welfare state, which is modern-day Socialism.  In fact, Bismarck detested Marxian Socialism -- he was a pragmatist, not an ideologue, and is considered the founder of realpolitik, which translates to "practical politics."  He was not an idealist trying to improve people's lives.  He acted purely in his own best interest.

The motive behind Bismarck's concept of a social welfare state was simple: to placate the masses in order to obtain votes and solidify his hold on office.  As he expressed it (emphasis added):

My idea was to bribe the working classes, or shall I say, to win them over, to regard the state as a social institution existing for their sake and interested in their welfare.

Bribery to create an illusion designed to expand the wealth and power of the State at the expense of productive people is hardly an admirable course of action or objective.  Bismarck's simple deception provided powerful means for subsequent political classes.  Specifically, it provided the means for politicians to grow and expand their power and wealth while solidifying their tenure in office.

Despite the pious claims of current welfare state advocates, Bismarck never espoused noble purposes beyond that of his political self-interest.

Politicians in Western democracies saw the power in Bismarck's idea and patterned their careers on winning election and re-election via the Bismarckian bribe.  Convincing the public that government existed for their sake and their welfare enabled expansion into areas previously considered off-limits.

Tradition and law were eventually brushed aside.  The U.S., constrained by a magnificently sculpted Constitution and a predisposition toward liberty,  held out longer than its European counterparts.  Its later start and slower progression is a fact often cited as a reason why the U.S. economy was able grow from a backwoods beginning to a colossus by the early 1900s.

Progressives in the U.S. initially used the "general welfare" clause of the Constitution as justification for a social welfare state.  Deliberate ignorance and distortion of the Founders' original intent was an important aspect of their attacks.  Subsequent attacks used the argument that the Constitution was a "living document" meant to be changed to reflect modern-day "needs."

Eventually, tradition and law succumbed to the incessant battering of progressive activists in the U.S.  The people's defense against government tyranny was weakened.  Government was then emboldened to redefine itself in almost whatever fashion it chose.

Bismarck's method of bribery was the model that altered the nature of politics practiced in democracies.  With voter bribery, government as Santa Claus was possible.  The people loved this myth and the initial effects.  Politicians loved buying votes, as evidenced by political campaigns where competing political factions tried to outbid each other with more "freebies."

The Advance of Socialism

For almost one hundred years, Bismarckian bribery, via an expanding welfare state, has been the predominant political strategy.  Over time strategies grew bolder, ratcheting to higher levels each election cycle.

Today, modern economies are being destroyed by Socialism as practiced via the welfare state.  After generations of propagandizing Statism, the goodness of government, intervention as a necessary means to equity and prosperity, and the need to invade and manage virtually every aspect of our lives, a majority of voters believe the myth.

Even the term "welfare state" is phony.  It was a marketing euphemism to avoid the proper, but pejorative, description "Socialism."  The euphemism conveniently conveyed the Bismarckian myth that government cares for and can take care of its citizens.

In reality, the social welfare state was backdoor Socialism.  The euphemism also provided convenient cover for what amounted to political enrichment and job security.

The Effects of Socialism

A good description of the effects of current Socialism was provided by Joseph A. Harriss.  Although Mr. Harriss described France and Sarkozy's re-election chances, these  conditions apply to most other leaders in European states as well as the U.S.:

What no politician had the courage to say was that the French are witnessing, in slow motion, the end of their welfare state, known locally as the French Social Model. For the last 30 years it has been sustained through political sleight of hand and financed on credit. The French were assured they were entitled to work only 35 hours a week, take five weeks vacation, have single payer health care, pocket generous unemployment benefits, and enjoy a cornucopia of handout programs. As a result, they work on average six fewer weeks a year than the Germans, fewer hours even than the laidback Greeks.

Let the good times roll was the implicit program of politicians both left and right. Now the inevitable bill is coming due right at election time. There's no way Sarkozy can avoid paying the political price.

Countries have now run out of both time and money.  The malignancy of Socialism nears its ugly end, in the manner predicted by Margaret Thatcher:

The trouble with Socialism is, sooner or later you run out of other people's money.

All welfare states have attained her "sooner or later" point, with most at the "sooner" end of the spectrum.

Sarkozy is in political trouble for the same reason why politicians in all social welfare states are in trouble.  Whether he is the right or wrong man for the job is irrelevant.  He, like his peers, is a victim of history.  He just happens to be the unfortunate one holding the bag when the music is ending.  There is no right man for the job in France or anywhere else.  The Socialist scam is imploding.

The three-legged stool that supported the fantasy of the social welfare state for the last hundred-plus years was based on the following:

  • Prosperity is available without effort.
  • Government creates prosperity.
  • Government will take care of its people.

Politicians were able to support this hoax only with "other people's money."  It is now apparent to many that none of these premises are true.

The money obtained to sustain the myth has seriously damaged economies.  Some of it was obtained by destroying the seed capital provided by previous generations.  Some of it was obtained via obscene levels of taxation.  Much of it was obtained via borrowing funds that were never intended to be paid back.  The ability to obtain additional funds from these sources is dubious, particularly the last one.

The funds were obtained via coercion and under false pretences.  Inarguably, the social welfare state has crippled modern economies.  The game is about over as the scam becomes more apparent by the day.

The damage done to our political system is likely irreparable.  Consider current-day politicians as compared to our Founders.  George Washington was offered a kingship and turned it down.  How many current politicians would reject a similar offer?

Current politicians are indistinguishable from clever street hustlers with inflated self-images of their importance and wisdom.  They pass laws in areas they cannot possibly understand, often not even bothering to read the bills on which they vote.  One wonders whether they would even understand them.

Self-aggrandizement has transformed into pay and perquisites that even some well-to-do are unable to obtain.  The immoral economic rewards of public office, both above and below the table,  have turned politics into a career rather than public service.  The political class have set themselves apart as elites in every regard, including protection from laws the rest of us must follow.

As bad as the changes to the political system and the character of politicians have been, the effects of Bismarckian bribes have ruined modern-day economies.  Here are a few examples:

  • The incentive structure and work ethic for large sections of each country's population have been destroyed. Instead of having citizens with the natural human spirit to progress, all countries now have a zombie class -- untrained, unmotivated citizens living off government handouts.
  • The regulatory state and its onerous taxes have destroyed productivity. Entrepreneurs and risk capital have fled to climes where they are treated fairly. Much of the manufacturing base has been outsourced to emerging countries, where jobs and not snail darters are appreciated.
  • The zombie class is growing. The "takers" rather than "makers" find it more comfortable (or lucrative) not to work, but instead to collect welfare. This class have forgotten or never learned work habits and consider themselves entitled to live at the expense of others.
  • The shrinking productive sector is forced to support the growing zombie class. Up 'til now, much of this support came via enormous government borrowings, sheltering the productive class from the real costs that they will eventually have to bear. The era of leverage is ending, and with it will come a lack of support for the government-created and supported zombies.
  • Developed economies have been crippled and hollowed out to the point where decades of slow or no growth is the best that can be expected. Many of these economies will implode.
  • Standards of living are decreasing and have been for a while. Bill Bonner points out that the average real hourly wages of non-high school graduates has declined by 47% over the last 32 years! Separately it has been shown that the average weekly earnings in this country, again in real terms, are below where they were in 1966.
  • Governments have bankrupted themselves, their financial systems, and their central banks. They attempt to continue the charade by having bankrupt central banks bail out bankrupt financial systems so that they can purchase bankrupt government securities.

Despite all the propaganda from the Statist machine, government produces nothing; indeed, government has never produced anything.  It depends upon a thriving private sector and bond market to play Santa Claus and continue the pretension that it is the source of prosperity.

The fraud cannot go on much longer because governments have crippled the golden goose via onerous rules, regulations, and taxes.  For three or four decades, government was able to hide the problem by spending more than it took in.  Governments around the world have reached the point where spending levels can no longer be sustained via tax revenues and bond markets.  The latter source has practically dried up for some governments.  Eventually it will for all. 

France and other social welfare states (including the U.S.) are virtually tapped out.  Living standards are going down, and insolvent governments can no longer hide this fact via the charade of "debt" prosperity.

The dirty secret of Socialism and the social welfare state has become apparent: it was never anything more than a political gimmick to gain or retain office and power.  Politics has turned into what Bismarck envisioned -- an elaborate scam of voter bribery. 

As a result, the world faces sovereign defaults, financial system collapse, civil unrest, and a Depression that will make the 1930s look mild in comparison.

Thanks, Otto von Bismarck, for providing your clever idea for our modern-day criminal class posing as politicians.  Hopefully civilization will not be destroyed in the coming financial apocalypse.

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