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What Did the Welfare State Displace? And Where Is It Going? Dr. Tom G. Palmer Atlas Economic Research Foundation Cato Institute.

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Presentation on theme: "What Did the Welfare State Displace? And Where Is It Going? Dr. Tom G. Palmer Atlas Economic Research Foundation Cato Institute."— Presentation transcript:

1 What Did the Welfare State Displace? And Where Is It Going? Dr. Tom G. Palmer Atlas Economic Research Foundation Cato Institute

2 I have lived in France long enough to know that the faithfulness of most of the French to their government….is largely connected with the fact that most of the French receive a state pension. – Otto von Bismarck The Welfare State Was Rooted in Power, and Changed European Politics and the Nature of the State…

3 Whoever has a pension for his old age is far more content and far easier to handle than one who has no such prospect. -- Otto von Bismarck Bismarck Created Rights that Are Dependent on the State

4 How was welfare and social security provided before the welfare state? Friendly Societies Mutual Aid Commercial Insurance Charity

5 Prior to the welfare state in Europe and America Friendly Societies Savings Clubs

6 To Provide Mutual Aid, Many Associations of Workmen Were Established, Including Sickness and Burial Benefits and Much More Such Groups Expanded Rapidly Around Europe, North America, Australia, and Elsewhere in the 19 th Century

7 They Often Used Rituals, Symbols, and Uniforms to Create Bonds Among Members Such Groups Were Deliberately Targeted by the Advocates of the Welfare State for Destruction

8 Some Numbers: UK Registered Friendly Society Membership milion million million million (plus 2.5 million in unregistered societies and 2.5 million in cooperatives, for a total of 11.1 million members 1911 National Health Act imposed compulsory insurance on almost 12 million workers; friendly society membership started to fall, as people had to pay twice for the same service

9 We have accepted, so to speak, a second Bill of Rights under which a new basis of security and prosperity can be established for all -- regardless of station, or race or creed. --Franklin D. Roosevelt, 11.Jan.1944 A Second Bill of Rights

10 Among these are: The right to a useful and remunerative job in the industries, or shops or farms or mines of the nation; The right to earn enough to provide adequate food and clothing and recreation; The right of (every) farmers to raise and sell their (his) products at a return which will give them (him) and their (his) families (family) a decent living; The right of every business man, large and small, to trade in an atmosphere of freedom from unfair competition and domination by monopolies at home or abroad; The right of every family to a decent home; The right to adequate medical care and the opportunity to achieve and enjoy good health; The right to adequate protection from the economic fears of old age, and sickness, and accident and unemployment; And finally, the right to a good education. A Plethora of new Social Rights

11 Germany will be at its greatest when its poorest citizens are also its most loyal. --Adolf Hitler

12 If Rights Are Good, Arent More Rights Better? If I have an interest in something dont I have a right to it? The State Can Dispense Rights to the People The Welfare State (Social Democratic) Approach to Rights

13 The results of state pensions and welfare statism: Dependence, instead of Independence Incoherent Systems that mix Insurance and Redistribution resulting in massive Unfunded Liabilities Displacement of Civil Society Organizations Social Fragmentation

14 And its definitely in the news today, as the World is Suffering from Mountains of Debt mainly to finance growing welfare states

15 That takes the form of UNFUNDED LIABILITIES, which are characteristic of democratic welfare states: = the difference between expected expenditures (almost always underestimated) and expected tax revenues (almost always overestimated)

16 In 5 years of a conservative New Democracy government, 100,000 new employees were added to the state and government spending (almost entirely on welfare state entitlements) went from 42% of GDP to 51% of GDP Youve seen Greece in the news….they reached their fiscal crisis earlier than most

17 Unfunded liabilities set the stage for fiscal collapse. Its not just Greece, but every EU country, Japan, Canada, etc., etc. (and Russia, too….) For example: The average EU country would need to have more than four times (434 percent) its current annual gross domestic product (GDP) in the bank today, earning interest at the governments borrowing rate, in order to fund current policies indefinitely.

18 There is a better way Abandon pay as you go welfare policies Institute personal savings accounts to replace state pensions Cut back severely on state expenditures to avoid fiscal collapse and inter-generational warfare Allow civil society to fill the space occupied by statism….and to do so on the basis of enterprise, mutual aid, charity, and experienced solidarity

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