The Death Of The "welfare State"

[Hjalmar]

Too much redistribution undermines stability

The biggest cause of the current increase in inequality in North America, and in some other advanced countries as well, is the slow speed at which poorly educated segments of society have adjusted to the dramatic fall-off in jobs that require a strong back rather than a brain.... In the 1950s, in both America and Western Europe, 70 percent of people were employed in jobs where they used their hands.... Just 30 percent were "use-of-brain" workers.... Now the ratio has almost reversed.... In 1973 college graduates made only 15 percent more than mere high school graduates.... By 1982 the differential was 49 percent.... Narrowing the income gap requires narrowing the gap in education and skills between the poor and rich.

Unhappily, however, this has been very slow to happen... Part of the reason is that there is too much income redistribution.... Too many programs and unachievable political promises have not only slowed the speed of adjustment to the new realities, they have subsidized the growth of a counterproductive slum culture..

Another part of the gap in income is due to overindulgence in current consumption, another facet of life in the 1980s that could not be redressed by more income redistribution.... Part of the reason many people save so little is the assurance that they will be protected from many of the high-cost contingencies, like

retirement security and medical care in old age, that induce savings in the first place.... Too much income redistribution and too much income equality can actually undermine stability.

The poor and even much of the middle class, unlike the thrifty pioneers who laid the foundation of North American prosperity, spend every penny that comes into their hands.... This is not a life-style that will stand the test of time.

In most cases, even today's poor enjoy a standard of real

consumption many times higher than that of the rich of a few centuries ago.... And the poorer they are, the worse they tend to do.... The poorest people in Western societies indulge in crime, drug abuse, and alcoholism more than productive citizens.

The most urgent need in the 2000s is to increase the payoff from accomplishment and law-abiding behaviour.... The countries that will best adapt to this new Revolution of the 2000s are those with the most productive citizens ... like Switzerland and Japan.... Rather than penalizing the successful, and making it more difficult to become and remain affluent, a rational policy for North America would aim for the opposite result..... It would reduce taxes.... And reduce the unsustainable burdens of transfer payments, income redistribution, and guarantees against failure that are the essence of the welfare

state..... When you subsidize poverty and failure, you get more of both.

[Michael Hardner]

Hjalmar:

Since you didn't address the points I made above, can I assume that you concede them ?

Your post:

The biggest cause of the current increase in inequality in North America, and in some other advanced countries as well, is the slow speed at which poorly educated segments of society have adjusted to the dramatic fall-off in jobs that require a strong back rather than a brain.... In the 1950s, in both America and Western Europe, 70 percent of people were employed in jobs where they used their hands.... Just 30 percent were "use-of-brain" workers.... Now the ratio has almost reversed.... In 1973 college graduates made only 15 percent more than mere high school graduates.... By 1982 the differential was 49 percent.... Narrowing the income gap requires narrowing the gap in education and skills between the poor and rich.

Unhappily, however, this has been very slow to happen...

Also, it's unclear that some people will ever be suited to "use-of-brain" work. You can't just retrain a 50-year old manufacturing plant worker to be a computer programmer, obviously.

Part of the reason is that there is too much income redistribution.... Too many programs and unachievable political promises have not only slowed the speed of adjustment to the new realities, they have subsidized the growth of a counterproductive slum culture..

Another part of the gap in income is due to overindulgence in current consumption, another facet of life in the 1980s that could not be redressed by more income redistribution.... Part of the reason many people save so little is the assurance that they will be protected from many of the high-cost contingencies, like

retirement security and medical care in old age, that induce savings in the first place.... Too much income redistribution and too much income equality can actually undermine stability.

Before CPP existed, before the social safety net, old people often lived in poverty. Unfortunately, humans do not always take the prudent tack.

CPP effectively prevents people from becoming a burden on society later in life.

I think a society with a healthy and cared-for population is more stable than one without.

The poor and even much of the middle class, unlike the thrifty pioneers who laid the foundation of North American prosperity, spend every penny that comes into their hands.... This is not a life-style that will stand the test of time.

In most cases, even today's poor enjoy a standard of real

consumption many times higher than that of the rich of a few centuries ago.... And the poorer they are, the worse they tend to do.... The poorest people in Western societies indulge in crime, drug abuse, and alcoholism more than productive citizens.

True. Louis XIV didn't have a CD player. And substance abuse has always been the bane of the poorer classes, mostly because they can't afford it.

The most urgent need in the 2000s is to increase the payoff from accomplishment and law-abiding behaviour.... The countries that will best adapt to this new Revolution of the 2000s are those with the most productive citizens ... like Switzerland and Japan.... Rather than penalizing the successful, and making it more difficult to become and remain affluent, a rational policy for North America would aim for the opposite result..... It would reduce taxes.... And reduce the unsustainable burdens of transfer payments, income redistribution, and guarantees against failure that are the essence of the welfare

state..... When you subsidize poverty and failure, you get more of both.

Only a quick glance at the past is needed to see that this system would never work. When there was no social safety net, there was more misery. There was still alcohol abuse, and vice.

Ideal systems such as communism, and the one you're proposing will undoubtedly fail because they deny the basic facts of human nature.

[Hjalmar]

Michael Hardner

Before CPP existed, before the social safety net, old people often lived in poverty. Unfortunately, humans do not always take the prudent tack.

CPP effectively prevents people from becoming a burden on society later in life.

I think a society with a healthy and cared-for population is more stable than one without.

I fully support the social safety net for 3 groups in our society. They are [1] The aged] [2] The sick [3] the handicapped amongst us. It ends there.

Have you noticed that social programs, once introduced, are virtually impossible to rescind or scale back? I think leaders of this country are offering too much social spending, all in the interest of electoral gains. I find it very irresponsible. Furthermore I do not agree with paying healthy people for doing nothing. It has already created a dependency in this country.

[Hjalmar]

Citizenship is obsolete

So say James Dale Davidson and Lord William Rees-Mogg in their book "The Sovereign Individual"... To optimize your lifetime earnings and become a Sovereign Individual you will need to become a customer of a government or protection service rather than a citizen.. Instead of paying whatever tax burden is imposed upon you by grasping politicians, you must place yourself in a position to negotiate a private tax treaty that obliges you to pay no

more for services of government than they are actually worth to you

[Hjalmar]

Some predictions by James Dale Davidson and Lord William Rees-Mogg

They are far-sighted and many of their long range predictions have come true... For example in 1987, in "Blood in the Streets" they predicted:

[1] The fall of Communism

[2] The bankruptcy of the S&L on a massive scale

[3] The real estate crash

[4] The sweeping military disarmament, foretold at the height of the Reagan arms buildup

[5] The falling standard of living of blue-collar workers and middle managers

[6] The devolution and downsizing of corporations in the 1990's

In early 1991 in "The Great Reckoning" they predicted

[1] The supplanting of Marxism by Islam as the main ideology of confrontation

[2] The racking secession and civil war in Yugoslavia

[3] That the breakdown of the Soviet Union central command structure would expose the world to unprecedented dangers of weapons proliferation and nuclear accidents

[4] What life would be like after the Cold War

[5] The real estate bust in Tokyo

[6] Widespread layoffs in Fortune 500 companies

[7] The dangers of rioting in big cities due to growing racial

antagonisms

In 1997 in "The Sovereign Individual" they predicted

[1] The collapse of the welfare state

[2] The overhaul of the US tax system, which will in the future be based on consumption rather than on earnings

[3] That the map of the world, including the United States and Canada will look dramatically different

[4] That governments will lose their capacity to arbitrarily regulate economies

[5] That banks will suffer through an ever larger crisis than that of the 1980's

[6] That the US government will diminish to the size it was in the nineteenth century

[7] That the US government - primarily the IRS, CIA and NSA, will declare war on groups that try to circumvent the income tax through cyberspace

[8] That organized crime will grow in scope as central economies break down

[9] That central banks will lose the power to inflate and control the money supply as paper money is supplanted by cybercash

[10] That individuals will gain more autonomy and financial

capability than ever before as markets deepen around the world

[11] That morality will make a comeback

[Michael Hardner]

Hjalmar:

I fully support the social safety net for 3 groups in our society. They are [1] The aged] [2] The sick [3] the handicapped amongst us. It ends there.

Doesn't that contradict this statement you made above:

.... Part of the reason many people save so little is the assurance that they will be protected from many of the high-cost contingencies, like

retirement security and medical care in old age, that induce savings in the first place

And:

I do not agree with paying healthy people for doing nothing. It has already created a dependency in this country.

What are you referring to here ?

[Hjalmar]

Michael Hardner

What are you referring to here ?

I am referring to the welfare state Canada has become ever since Trudeau came to power. The list is endless but for starters think back to the early 70's when Trudeau quadrupled UI [now EI] payments overnight.

There are no contradictions in what I have said. I support help for people that really need it such as the ill, the aged and handicapped. I don't think any other benefits should be available here in Canada.

Compare Canada today with some of the Oriental countries where welfare is virtually unheard of and children are taught personal responsibility at an early age. I think it's a darn shame the way Canada has gone downhill ever since 1968. As the student from Iceland who had been in Canada for 2 years going to university and was now back home working during the fishing season said to an interviewer on television a few years ago - quote "I don't know how you people in Canada expect anyone to work when you pay them for doing nothing"

[Michael Hardner]

I am referring to the welfare state Canada has become ever since Trudeau came to power. The list is endless but for starters think back to the early 70's when Trudeau quadrupled UI [now EI] payments overnight.

But what specifically are you referring to ? What current policies ?

There are no contradictions in what I have said. I support help for people that really need it such as the ill, the aged and handicapped. I don't think any other benefits should be available here in Canada.

Then why did you state this:

Part of the reason many people save so little is the assurance that they will be protected from many of the high-cost contingencies, like

retirement security and medical care in old age, that induce savings in the first place....

It sounds like you're arguing against retirement security and old-age medical care.

Compare Canada today with some of the Oriental countries where welfare is virtually unheard of and children are taught personal responsibility at an early age. I think it's a darn shame the way Canada has gone downhill ever since 1968. As the student from Iceland who had been in Canada for 2 years going to university and was now back home working during the fishing season said to an interviewer on television a few years ago - quote "I don't know how you people in Canada expect anyone to work when you pay them for doing nothing"

I understand your general unhappiness with our culture, but for the purposes of discussion here ( rather than just broadcasting) you should be specific with your criticisms and, hopefully, with your proposed solutions to these problems.

And it still seems to me that you're giving an emotive response to all of these things that frustrate you rather than a reasoned one. You seem to be saying that we should reward hard work in Canada yet on another thread, you want to "reward" hard-working unionized labourers with a pay cut. Do you think such a policy would encourage people to work harder ?

I too think that social and economic changes in Canada will necessitate people to work harder for less, and to take more responsibility for their actions but I would like to use positive means to guide people to those behaviors.

[Hjalmar]

I too think that social and economic changes in Canada will necessitate people to work harder for less, and to take more responsibility for their actions but I would like to use positive means to guide people to those behaviors

Any suggestions what those positive means should be?

Then why did you state this:

QUOTE 

Part of the reason many people save so little is the assurance that they will be protected from many of the high-cost contingencies, like retirement security and medical care in old age, that induce savings in the first place.... 

It sounds like you're arguing against retirement security and old-age medical care

Not at all. But by offering total protection from cradle to grave for everybody, that in itself creates a disincentive for people to take more responsibility for themselves. What I said is true .. a lot of people would save more towards their retirement if it were not for retirement security etc. but that's not saying that these protections for retired people are bad. There are a lot of people that save towards retirement in order to improve their living standards after retirement. And a lot of people that don't because they know they will be taken care of financially. By stating a fact regarding incentives etc does not mean that I am against these protections.

[Michael Hardner]

Any suggestions what those positive means should be?

Incentives to retrain, investment in our decaying infrastructure, and general government support in any area that hires higher wage jobs.

Not at all. But by offering total protection from cradle to grave for everybody, that in itself creates a disincentive for people to take more responsibility for themselves. What I said is true .. a lot of people would save more towards their retirement if it were not for retirement security etc. but that's not saying that these protections for retired people are bad. There are a lot of people that save towards retirement in order to improve their living standards after retirement. And a lot of people that don't because they know they will be taken care of financially. By stating a fact regarding incentives etc does not mean that I am against these protections.

Ok.

[Hjalmar]

Incentives to retrain, investment in our decaying infrastructure, and general government support in any area that hires higher wage jobs.

Not going to happen Michael.. To stay competitive today we must become more productive and do it with a smaller paycheck.

Ok.

At last we agree!!!

[Hjalmar]

Another Depression?

What will happen to Canada if a depression were to occur again? .. I feel convinced that a depression would not lead to a return to socialism as a popular solution... The weaker the balance sheet of the country when the slump begins, the more the reaction is likely to carry politics to the right... The left wing in Canada has become a museum of old rhetoric and worn out ideas.... The NDP in Canada has become yesterday's men/women... They continue

to push solutions that were tried, with very little success, in most cases... There is a lack of connection between their arguments and the needs of the time that is quite striking... An economic crisis will hardly make their mummified arguments live again.

And who is it that weakens the balance sheets of our country if it isn't the socialist mindset in the first place?

[August1991]

Since no one else seems ready to confront you, Hjalmar, let me try:

To stay competitive today we must become more productive and do it with a smaller paycheck.

Are you a Lutheran? A Shiite? It's good to suffer? The future means that I will have to give more but receive less? Well, why don't we just stop and stay where we are?

But by offering total protection from cradle to grave for everybody, that in itself creates a disincentive for people to take more responsibility for themselves.

....

By stating a fact regarding incentives etc does not mean that I am against these protections.

So, your point?

I am referring to the welfare state Canada has become ever since Trudeau came to power. The list is endless but for starters think back to the early 70's when Trudeau quadrupled UI [now EI] payments overnight.

I gather you don't like Trudeau. (True, he was rather a snob, arrogant, SOB.) But that's not the question. Canadian real GDP per capita is double now what it was in 1968. Canada is still in the top ten, or twenty.

I support help for people that really need it such as the ill, the aged and handicapped. I don't think any other benefits should be available here in Canada.

Interesting list. What about kids? What kind of parents did you have? That's the real lottery of life.

Compare Canada today with some of the Oriental countries where welfare is virtually unheard of and children are taught personal responsibility at an early age. I think it's a darn shame the way Canada has gone downhill ever since 1968.

I agree the weather is probably better in Phuket than Moose Jaw but quite frankly, if I were a new soul in God's hands, about to be born, and God asked: "You can go to a family in Moose Jaw or a family in Phuket. What do you want?" All things considered, chance of being girl/boy, smart/stupid, handicapped/not, rich/poor parents, No 1 son/ not, I'd choose Moose Jaw. And one reason would be the way government is organized in Canada.

What would you choose, Hjalmar?

[Michael Hardner]

What will happen to Canada if a depression were to occur again? .. I feel convinced that a depression would not lead to a return to socialism as a popular solution

Hmmm...

Hjalmar, many many people were unemployed for YEARS during the depression. It's hard to envision the electorate enduring such suffering without expecting help from the government.

Such help could take the form of extended EI benefits, early retirement, workfare, government investment in capital projects and so forth. I don't know if these things are socialistic or not but they definitely involve state intervention in the economy.

[playfullfellow]

It seems to me that I do pay for a lot of these welfare programs through EI, Canada Pension and my general taxes. I have never had to use them luckily but it is kind of nice to know they are there if need be. Since I do pay for them evey month, then I should be able to use them when need be. Being from Alberta, I also pay my fair share for Health Care every 3 months. I try to do my best to keep my family healthy and not be a burden on the system. Having a European back ground, I hear from my family in Denmark what it is like to live in a Welfare State and Canada is definately not considered so. But you do see a lot of these welfare states changing their ways because it was bankrupting their countries. I do not believe that people should be able to recieve welfare when they a prefectly able to work and there is work available. Welfare should be for people who are in genuine need of help. I think there could be a lot more programs out there for people to get them back into the work force through re-training and maybe even re-location help. If we figure the system is broken, let's come up with solutions that may help. We can talk until we a blue in the face but with no viable ideas, then what is the point.

[Hjalmar]

August

Are you a Lutheran? A Shiite? It's good to suffer? The future means that I will have to give more but receive less? Well, why don't we just stop and stay where we are?

Yes I am a Lutheran.. how did you guess? I have a question for you .. when is enough? Our standard of living is reasonably good .. many throughout the world are worse off... I don't think we should expect living standards to increase perpetually.

I gather you don't like Trudeau. (True, he was rather a snob, arrogant, SOB.) But that's not the question. Canadian real GDP per capita is double now what it was in 1968. Canada is still in the top ten, or twenty.

We would be further ahead had Trudeau never entered the scene.

Interesting list. What about kids? What kind of parents did you have? That's the real lottery of life.

I had good parents.. taught me to work on the farm at age 5... best education a person can get. My mother taught by example .. she was a school teacher.

I'd choose Moose Jaw. And one reason would be the way government is organized in Canada.

What would you choose, Hjalmar?

I would choose anywhere in Canada but Moose Jaw.. Why? Because it's NDP territory. I believe Alberta is perhaps the best run province in Canada today and the reason being that Alberta has always had good governments... free enterprise as it was meant to be. Why is Alberta in the forefront of all other provinces? Because it has the kind of government that attracts the kind of voter that will ensure that the status quo continues.

[Michael Hardner]

Yes I am a Lutheran.. how did you guess? I have a question for you .. when is enough? Our standard of living is reasonably good .. many throughout the world are worse off... I don't think we should expect living standards to increase perpetually.

Why shouldn't we ? Progress seems to happen continually, and with progress we have improved productivity and more surplus goods.

Living standards have generally increased throughout history. Why should we stop now ?

[Black Dog]

hat will happen to Canada if a depression were to occur again? .. I feel convinced that a depression would not lead to a return to socialism as a popular solution... The weaker the balance sheet of the country when the slump begins, the more the reaction is likely to carry politics to the right... The left wing in Canada has become a museum of old rhetoric and worn out ideas.... The NDP in Canada has become yesterday's men/women... They continue

to push solutions that were tried, with very little success, in most cases... There is a lack of connection between their arguments and the needs of the time that is quite striking... An economic crisis will hardly make their mummified arguments live again.

And who is it that weakens the balance sheets of our country if it isn't the socialist mindset in the first place?

A nice bit of historical revisionism. Throughout history, right-wing economic policies have corresponded with stagnation, recessions and generally poor economic performance. The greatest periods of prosperity where when quasi-socialist ideas (ie. high taxes for the rich) were implemented. It's the dinosaurs of the right that lack anything when it comes to new ideas.

Why shouldn't we ? Progress seems to happen continually, and with progress we have improved productivity and more surplus goods.

Living standards have generally increased throughout history. Why should we stop now ?

Because the current lifestyle that North Americans (who consume a ridiculous amount of resources) is simply unsustainable. The mantra of "growth is good" fails to take into account that we have limited resources and that the planet has a carrying capacity.

If anything, we need to slow down and find better ways of balancing well-being with environmental and social realities.

[Michael Hardner]

BD:

Throughout history, right-wing economic policies have corresponded with stagnation, recessions and generally poor economic performance.

I would say that that is a tough argument to make. I do think that concentrations of wealth in the hands of a few leads to more devastating boom-and-bust cycles. This makes sense because our consumer economy depends on consumers having earning power.

Hjalmar has consistently ignored this point, alternately stressing that "we need to reduce union wages" and "union wages will inevitably be reduced". One only has to talk to people who lived through the depression and the war to realize that the social institutions that arose after those disasters were responses to popular demands for a better life for all.

EDITED TO ADD: And also a response to that large part of the world that had embraced communism as a solution to improve the life of workers.

[Hjalmar]

Michael Hardner

many many people were unemployed for YEARS during the depression. It's hard to envision the electorate enduring such suffering without expecting help from the government.

Such help could take the form of extended EI benefits, early retirement, workfare, government investment in capital projects and so forth. I don't know if these things are socialistic or not but they definitely involve state intervention in the economy.

And who is going to pay for these benefits? I believe in a system whereby people get to keep more of what they earn and take responsibility for their own livelihood as long as they are well and healthy. If you're unemployed you look for a job.. failing that you create your own employment... failing that you raise and grow your own food. I doubt a depression in this day and age would ever come close to the severity of the last one in the 30's.

Progress seems to happen continually, and with progress we have improved productivity and more surplus goods.

Living standards have generally increased throughout history. Why should we stop now ?

Our country needs to constantly keep up to date with our changing world.... It's called progress. Living standards is an entirely different thing and are not really lagging here in Canada, the USA or Western Europe.

[Hjalmar]

playfullfellow

But you do see a lot of these welfare states changing their ways because it was bankrupting their countries

My point exactly.

[Michael Hardner]

And who is going to pay for these benefits? I believe in a system whereby people get to keep more of what they earn and take responsibility for their own livelihood as long as they are well and healthy. If you're unemployed you look for a job.. failing that you create your own employment... failing that you raise and grow your own food. I doubt a depression in this day and age would ever come close to the severity of the last one in the 30's.

This is fine, but the labour market needs to be managed as well.

QUOTE 

Progress seems to happen continually, and with progress we have improved productivity and more surplus goods.

Living standards have generally increased throughout history. Why should we stop now ? 

Our country needs to constantly keep up to date with our changing world.... It's called progress. Living standards is an entirely different thing and are not really lagging here in Canada, the USA or Western Europe.

You've run away from your initial statment, though. Why shouldn't living standards increase as productivity and progress does ? Isn't that the the point of an economy - a rising tide lifts all boats etc. ?

[Hjalmar]

Michael Hardner

You've run away from your initial statment, though. Why shouldn't living standards increase as productivity and progress does ?

We're talking about two different things. I'm referring to progress for the country as a whole. You're tieing progress to living standards for the people. Our country can very well progress even though living standards for the people don't improve.

[August1991]

"The West won the world not by the superiority of its ideas or values or religion but rather by its superiority in applying organized violence. Westerners often forget this fact, non-Westerners never do."

--Samuel P. Huntington

Black Dog, I am really irritated by that quote of yours. It has been bothering me for some time now.

First, who says the West has won? Only a smug, presumptious Westerner who has short-term memory - someone like Huntington or you - would believe the West has won. Let's wait and see who truly wins.

Second, organized violence versus ideas. Non-Western people have no fear of American violence (remember Vietnam?). Their fear is different. They want to protect what they have. But you BD, you are a typical westerner, missionary variant, who seems to want to open people's minds, show them the truth. Well, BD, non-Westerners want to maintain their own truth, their own culture, their own traditions. They do not want people such as you, BD, presenting arguments. To non-Westerners, the threat of the West is not violence - it is satellite dishes, free arguments, new ideas, easy travel, advertising, free thought, the Internet - all the things you use and enjoy.

BD, you have a good argument to make. But please change your signature quote. It simply advertises you as another foolish western missionary.

[theloniusfleabag]

Dear August1991,

I see BlackDog's tagline as being damning to the 'right', not for it. All cultures see truth according to their idiomatic value system. I see BD's quote as pointing this out, not validating it.