Living as I do in Arkansas, I’m privileged to read the commentary of Bradley Gitz, a conservative columnist for the Arkansas Democrat-Gazette who occasionally makes libertarian noises. I wish there was a Thomas Sowell Award For By-the-Numbers Regurgitation Of Republican Talking Points, so I could nominate Mr. Gitz.
In his column of July 31, Gitz notes the tendency of welfare states to push themselves to bankruptcy. He quotes the old saw, attributed in urban legend to 18th century Scottish historian Alexander Tytler, that democracies only survive until “voters discover that they can vote themselves generous gifts from the public treasury.”
Politicians shower the general public with unearned benefits, rather than telling them to “find jobs, work hard, and save;” you get a lot more votes for having “compassion” than for being “cruel and heartless.”
Reading Gitz, you’d get the impression that the main beneficiaries of the welfare state are working people and the poor. But genuine welfare for the poor, like TANF and food stamps, barely amounts to a CBO rounding error. Adding up the so-called “defense” budget, two unfunded wars, “national security” spending on DHS, CIA, DOE and NASA, and interest on debt from past wars, the bulk of the federal government’s budget goes to welfare for the Military-Industrial Complex.
Indeed, the dominant feature of the American polity is welfare for big business and the rich. This welfare consists of a wide array of government interventions into the market to enforce artificial scarcities and artificial property rights.
These interventions include patents and copyrights. They include enforcement of absentee title to vacant and unimproved land, which has never been altered by human labor — the only legitimate means of appropriating land in a free market (in fact, the government pays landowners tens of billions to hold land out of cultivation). They include enforcement of entry barriers to free competition in the supply of credit. And they include enforcement of regulatory cartels, mandated artificially high capital outlays, and all sorts of other entry barriers.
The cumulative effect is to make land and capital artificially scarce, impose overhead costs and other penalties on self-employment, and raise the price of the means of production and subsistence relative to the price of labor. As a result, government intervention shifts income from those who work to those who live off the rents of artificial property rights and artificial scarcity.
That’s welfare for the rich. Every time a consumer pays $200 for a CD of MS Windows or Word, when the free market price absent copyright would be $10, she’s taxed on behalf of Bill Gates. Every time she pays $200 for a prescription that would cost $10 without patents, it’s government redistributing her wealth to Pfizer. Every time a tenant pays an extra $100 in rent because untold hundreds of millions of square miles of land are closed to development, she’s subsidizing a handout to the landlord.
The problem is that this welfare state for the rich shifts income from classes with a propensity to spend to classes with a propensity to save and invest. The rentier classes have far more investment capital on their hands than they can find productive outlets for, because there’s insufficient demand to fully utilize existing productive capacity. So government resorts to things like the perpetual warfare state, the drug war and prison-industrial complex, and boondoggles like the Interstate Highway System, to use up surplus capital and productive capacity and stave off depression. The financial sector grows steadily, and becomes increasingly prone to speculative bubbles, as investors seek outlets for excess capital.
The welfare state for the poor was actually created to solve the problems created by the welfare state for the rich. New Deal programs like Social Security and AFDC were promoted by “socialists” like GE head Gerard Swope and the Business Advisory Council in order to put a floor under aggregate demand. Government-enforced monopoly and unequal exchange redistribute wealth upward with a backhoe, and then the welfare state for the poor gives back some of it with a teaspoon.
If it weren’t for the welfare state for the rich, we wouldn’t need welfare for the poor.
Citations to this article:
- Kevin Carson, Welfare State for the Rich, Carroll County, Maryland Standard, 08/08/11
Actually the four biggest federal programs that consume two-thirds of the budget are the Military-Industrial Complex, Social Security, Medicare and Medicaid. Social Security, Medicare and Medicaid provide help to the poor and the sick. I suppose that Medicare and Medicaid would cost less if the feds ignored patents but what would compensate innovators who invested lots of money to create life-saving drugs? Yes, I know that the right exaggerates the extent to which this happens but I'm sure there are at least a few cases in which the private sector genuinely contributed to the advancement of innovation. If patents get out of control, people are priced out of life-saving drugs but if patents do not exist or are not enforced, then innovators do not get rewarded for their efforts as in the case of Eli Whitney the innovator of the cotton gin!
Oh and one more thing. You say that no one should own land unless they develop it but what about the community's interest in the continual existence of wilderness areas for ecological and recreational purposes? Surely the world would not be a better place if every patch of land was paved over for parking lots?
Good stuff, but how do you regard Social Security and Medicare?
Thanks, Chris. SS and Medicare are certainly aimed at average people, and they're obviously coercive state programs, but I would reject classifying them as "welfare" in Gitz's sense of a program for redistributing wealth to the poor. They're set up as social insurance programs funded by dedicated premiums deducted from wages, and the taxes that fund them are the most regressive around, falling entirely on wages and salaries below a certain amount. The SS payroll tax is the largest tax most working people pay.
My recent post New Book in the Works
Thomas Sowell's academic work is quite good. It's a shame his political columns reflect such vulgar Republican bullshit.
Shawn Wilbur has argued that under mutualist land ownership, things like conservation of wilderness could be considered "use". If there are enough people with common interest in preserving a certain ecological area, I'm sure they could – and would – establish rights over it. Land is one of those things where I think pure laissez-faire homesteading ethics are unlikely to succeed or be desirable – the trick is to balance conservation with development, because both have their pros and cons which differ from person to person. Perhaps a large anarchist federation would best function with a mix of tribalism and pluralism, with the conservationists moving one way and establishing strong rules over their land use, and the eager homesteaders living elsewhere and being less strict about land, but with both respecting the rights of others.
One thing that's sure to help the advancement of medicine in the future is the Internet and computer technology. If science ever reached the point where the human genome could be virtually explored, biochemical reactions reliably simulated on a computer and proteins, viruses etc. mapped relatively inexpensively (and then put into a worldwide medical database), I think we'd see an explosion of homebrew chemists/geeks with an interest in medical research doing it home. Open-source medicine, if you will – thousands of smart and educated people connected to one another, working alone or together on projects with a vast database of medical information, motivated only by philanthropy and a fascination of science and not by profit. Of course, this wouldn't remove the need for clinical trials, but it would slash the research budjet to a fraction of its current costs, plus it would shift research to actually useful drugs from cosmetic bullshit. Maybe my medical communism is technoutopian nonsense, but it's a nice thought.
I think the issue of medical R&D in a libertarian world is far from a resolved issue and I don't have an answer to it. However, if we assume that the state isn't going away any time soon and we're content with a statist solution even if it includes some taxes & whatnot, then Dean Baker's liberal alternatives to drug patents are far more preferable than the status quo. I suggest you check them out:
http://www.cepr.net/index.php/publications/report…
Hidden Author: I don't want — tr. I'm too lazy — rehash much of the drug patent debate here, but 1) patents tend to divert a lot of R&D into making "me, too" tweaks of existing formulas so they can be repatented, and 2) a major part of the cost of developing new drugs is not the cost of developing the actual formula which is marketed, but securing patent lockdown on all the major possible variants to prevent a competitor from developing a rival drug.
I would expect nullifying title to undeveloped land to actually reduce development of wilderness. The exploitation of marginal and wilderness areas typically occurs as a result of leapfrog development, where landlords hold inlying land out of development for speculative purposes, and the landless are pushed out to marginal areas. For example a lot of the destruction of the Amazon is owing to quasi-feudal land ownership patterns in Latin America, and all the vacant land held out of cultivation on the haciendas. It's the land-poor who are driven to slash-and-burn development in the rain forest. Normally it's cheaper and more productive to develop vacant inlying land where the infrastructure for developing it is already in place. According to Ricardo, people develop outlying and marginal land only when all the better, inlying land is developed — or artificially held out of use through political appropriation, as Oppenheimer put it.
KC wrote:-
This is confusing two things, exploitation and development. Slash and burn was originally used as part of an extensive rather than intensive approach, exploiting and then temporarily or permanently abandoning resources rather than developing them fully (though it can also be used as part of a transition, to get the first few crops in without previously having the larger resources needed for fuller development); it was not a matter of the land-poor being driven to it. It was used precisely where there was or appeared to be an indefinite supply of new land to move to after a few seasons, i.e. unowned and unallocated land in excess of the needs of the population, that could most conveniently be used with least work that way. The quoted scenario is one in which that applies, but only to less valuable land; it is what happens when there is a premium to getting hold of more useful land and so the scenario reverses the causality of availability of untouched land, putting the cart before the horse. Even when this premium is caused by speculative acquisition in anticipation, that only works when the speculators are correctly anticipating a resulting shortage that it would not be too much trouble to maintain – which is not the case when there really is an ample oversupply of land that cannot all be effectively controlled (when that happens, there is an incentive for slavery or serfdom to control resources by controlling people directly or by attaching them to land rather than by controlling land as such for its own sake, as Evsey Domar <a HREF="http://web.archive.org/web/20080521211106 /http://www.j-bradford-delong.net/movable_type/2003_archives/001447.html” rel=”nofollow”>showed). In historical cases like Madagascar, where slash and burn had become traditional practice and remained so even in the face of rising population levels, there was a different result: in many areas, primordial rainforest was only preserved in a few patches that had been held back by being acquired by French colons (settlers) with a personal interest in it for itself.
So, with no acquisition, wilderness would only be preserved (as against being extensively exploited, not as against being intensively developed) if it happened to be in that same relative over-supply. With acquisition, it would not be reliably preserved (apart from by the few landowners with the sort of personal interest in that, mentioned above); but it would mostly be intensively developed rather than extensively exploited – so, depending on a host of other factors, less could well be affected. The scenario just quoted is one with the worst of both worlds, with only the best and most soon wanted land acquired and the rest thrown open to even more need for extensive use (one of the outside factors is, an artificial need for cash crops for export, not inherent in population levels as such – but the same effect can result even without outside factors, when those population levels rise naturally).
Drat. Editor, could you clean up that Domar link I tried to give?
Good post. Gitz rarely ever gets anything right. Here's another example:
Bradley Gitz reinvents US economic history http://arkansasmediawatch.wordpress.com/2011/07/1…
My recent post NWA Times shooting the messenger – Updated
"If patents get out of control, people are priced out of life-saving drugs but if patents do not exist or are not enforced, then innovators do not get rewarded for their efforts"
As Rad Geek has it written, nobody owes you a living just because you discover a new intangible way to profitably use tangible stuffs. Just because you discover a way to put ink (which can belongs to any one) on paper (ditto) to create a pattern which many people will pay for it, I don't owe you any living when I create the same pattern with MY ink on MY paper.
Moreover, check out how much percentage military spending is within discretionary spending appropriated by Congress annually. Not to mention that Social Security were needed as subsidies for capitalists to pay minimum wages, and Medicare and Medicaid were needed thanks to monopolistic licenses which prevent competitions and allow government-licensed monopolists-doctors to charge grossly high prices for healthcare.