Free Markets, Free People

welfare state

Welfare State In Crisis

The bailout of Greece may not work. Spain is teetering on the edge of serious financial doom. The Euro is taking a beating. And the banks of Europe are not looking too healthy overall. Meanwhile, here in the States, unfunded government debt, already expanding at an unprecedented rate, is set to explode. What do all of these things have in common? They are the direct result of expanding the welfare state without any means of actually paying for all of it.

In truth, there is never a way to pay for expanding the welfare state because, while wealth creation isn’t a zero-sum game, the population of wealth-creators is; after all, not just anyone can create electricity, telephones, heart medications, MicroSoft, Wal-Mart, or even pencils without some know-how, sweat and inspiration. If that were possible, then wealth creation could never be retarded, regardless of the impediments. Some wise, noble, and completely selfless individual would always emerge to drive the economy forward. Alas, self-interest trumps all, without which wealth-creation is for the horses.

No matter how ingenious the plan, or divine the motives, the only way for governments to fund the welfare state is to tax the wealth-creators. As even the most Marxist of intellectuals knows, if you want less of something, then tax it. This is why cigarettes are levied against in ridiculous proportions, and why carbon taxes are considered (by some) to be the savior of our planet. Well, taxing wealth-creation works exactly the same way: tax it more, and you will get less of it. Which leads to the inexorable conclusion that, as the governments of the world sink deeper into fiscal crisis, the looters will be coming en masse.

Does that mean that we are in for another Great Depression? Not necessarily. In fact, I predict that no such thing will occur. For starters, we have many institutions in place today that didn’t exist in the 1930′s such as the FDIC, Social Security, Medicare, the IMF, and the World Bank. Some of these things are arguably beneficial in that they smooth out the rough patches that economies inevitably encounter. The U.S. economy, for example, may not have realized the devastation it did if old people, like McQ, could have survived without taxing their families’ resources so much, or the FDIC had been in place to quell bank runs. Maybe. But more importantly, in this day and age our politics and law-making bodies (and those of every democratic society) are dominated by those whose own self-interest is firmly grounded in the ability to buy votes. That ability is highly dependent upon feeding the welfare state, since the vast majority of votes are bought from those who don’t create electricity or heart medications. This is why politicians of all stripes won’t take steps that would decrease the welfare state, because to do so will cost them votes — to the politician who promises more largesse at the expense of whatever hated rival is being villainized at the time. Accordingly, the odds are rather stacked against wealth-creators continuing to employ their skills in service of the very state that punishes them.

Instead of the Great Depression, Part Deux, I would predict that the elites (those, and their friends, who hold the power to dole out goodies for votes) will shuffle the deck just enough to ensure that they stay in favor, while allowing the overall health of the economy to softly fade into oblivion. They are like Dr. Kevorkian administering to capitalism. The ability to create wealth will slowly continue to be arrogated to the governors and “experts,” while the welfare state expands in decrescendo. Eventually, we will be left with something akin to the Ottoman Empire: all power and glory in name only, inside a rotting shell, harkening back to a time so dissimilar as to be unworthy of the title. What’s left will be hopeless, farcical and cruel, and will not have the slightest ability to nurture the welfare state that started it all. Perhaps the “Long Morose” would be a better title.

Irrespective of my gloomy predictions, there simply isn’t any question that, at some point, the beneficiaries of the great welfare state will have to take a bath. Most likely, that day will come when everyone jumps in the tub together. Until that time, prepare for the politically powerful to loot the wealth-creators out of existence in order to pay off the welfare beneficiaries. Eventually the only ones left to take that bath will be the filthy and the unwashed.

Immigration and the welfare state

Immigration seems to be the topic du jour at QandO today, and I take a slightly different tack than Dale and Bruce.

Let’s run through the main problems associated with illegal immigrants: state welfare costs, crime (or is it?), lack of assimilation (particularly if they’re allowed to vote), and suppressing wages for poor natives.

I think we can mitigate a lot of these problems with solutions far more realistic (in the short-to-medium term) than mass deportation, amnesty or ridding ourselves of the welfare state.

First, let’s recognize that the security threat becomes more complicated when you place wishful restrictions on immigration.  When there’s a flood of mostly non-threatening people crossing the border outside of any official process, it’s a lot harder to pick out the few really malicious ones.  And it’s really hard/expensive to stop that flood along such a long border.

We should be striving to funnel as many of them through official processes as possible, so we know who’s here, we know their backgrounds and we can separate the villains from those who just want to observe a basic civic peace and take advantage of opportunities in a freer country.  That means offering carrots and sticks to both prospective immigrants as well as those who are already here, and I’ll get to those incentives below.

Second, minimize how much the welfare state serves and controls non-citizens.

  • Uncompensated care makes up only 2.2% of medical costs in this country, and a good chunk of that doesn’t come from illegals, so the fact that many illegals wait until they need to use the emergency room, while irritating to some, isn’t a political hill to die on.  As long as it’s mostly limited to taking care of communicable diseases and real emergencies, which can be enacted into law, it’s tolerable.
  • Education is a much bigger problem.  I recall reading that there are 1.6 million illegal immigrants under age 18 in the States, and being from Southern California, where the largest budget item by far is education, I know that they (and natural born citizens born to noncitizens) represent a big cost.  Here we can do a bit of political jiu-jitsu: target guest worker families with a school voucher program.
    • They’re already in public schools, so it’s a win if they instead form the basis for a larger private school market.  The larger the market, the more the market can work its magic.
    • It can come with strings attached, like a requirement that any school accepting vouchers be able to show an improvement in English language skills at least as good as nearby public schools.
    • It’s not like Democrats have a good argument against it: it’s nearly the opposite of cream-skimming.  And when guests get this, naturally other groups are going to want it too.
  • Transfer payments (Social Security, unemployment, welfare, etc.), obviously, should be off the table for non-citizens.  I have no problem with people who want to take risks in a freer market; a host country owes them nothing more than securing their rights.

The idea here is to weed out those who aren’t seeking opportunity so much as handouts.  Those seeking opportunity are naturally more eager to assimilate.

Third, take the prospect of adding tons of dependent immigrants to the voter rolls off the table.  Instead, we can get most of what we want by creating a liberal guest worker program that virtually all prospective immigrants and current illegal residents can join simply by identifying themselves to authorities, as long as it’s clear that they’re going to generally be paying their own way, so that people with a dependent mindset are weeded out by attrition.

So what are the carrots and sticks here?  Without doing anything that would turn stomachs (and thus make reform politically impossible), we can get rid of the bad apples while not incurring the large costs associated with trying to throw 12 million people out of the country.

  1. A program allowing people to easily enter the country without being harassed should increase suspicion of anyone who’s still trying to immigrate the hard way — and that would increase public support for border security.
  2. Deport illegals who fail to register under the guest program and then commit serious crimes — violent crimes or big property crimes like auto theft.  Those who commit petty crimes and can’t prove their status can either apply for guest status and take their punishment here or accept deportation.
    • No sweeps or “asking for papers” for those who are just here peacefully.  Only those charged with another crime can be asked to prove their status within a reasonable time frame.
    • Come to an agreement to build cheaper-run prisons in Mexico to hold illegals during their sentences — no sense in keeping them in expensive American prisons if we’re planning on deporting them anyway.
  3. Illegals can’t access the school voucher program, but guest worker families can.
    • Perhaps also allow vouchers for English-language and Civics education for adults.

I’m open to any other ideas, but that seems like a good foundation, accepting (in the neolibertarian fashion) that the welfare state won’t disappear tomorrow, but offering a positive agenda that tends to increase liberty.

Open borders, immigration and reality

So why would libertarians not be “open borders guys” as Dale admits in his post about Arizona’s new illegal immigration law?  Well, for one, for the same reason Milton Friedman understood when he said “you can’t have free immigration and a welfare state.”

I’d love to have free immigration or “open borders”. I’d like to see free people who want to work and better their lives be able to freely wander to where such opportunities exist.  In an ideal world, what I would call my moon pony and unicorn world, that’s the way it would work.

I’d also prefer not to have a welfare state.  Welfare states are, in my opinion, destructive states that kill human productivity and builds the power of the state to a degree that “citizens” eventually become vassals. Additionally, I’m not keen on my hard earned dollars going to support such a state. But they do.

If you eliminate the welfare state, the “open borders” argument has more credibility. But borders aren’t going away anytime soon. Unilaterally eliminating ours or, for the sake of argument not monitoring who comes in the country, isn’t going to change anything as regards the welfare state. Unless those coming in are required to immediately contribute to the state welfare apparatus (an anathema any open border theory) before taking advantage of it, the desire to keep illegals out and away from state welfare that the citizenry has paid for will remain high. That’s a practical concern that drives much of the anger and desire of the citizenry to keep illegals out.

Since the welfare state doesn’t appear to be going away any time soon (if ever) either, again it seems rather silly to argue that “open borders” is a viable solution. Yes, it’s an ideologically pure libertarian solution, but it denies reality. That doesn’t mean it’s not a good goal, but it does mean that in the current situation, no one is going to listen to it seriously or give it any credence.

And then, to compound the argument against open borders, there’s a second problem.  There are a whole bunch of people out there who are trying to kill us.  Not random criminals, who are bad enough, but an entire movement dedicated to the demise of those who live in this country.  “Open immigration” or open borders would only grant full and unimpeded access to those who want to do us harm. It is something they’d welcome. Imagine, if you will, not monitoring anyone who comes in or what they might bring. How long would it take for our enemies to establish themselves and strike?

Now the natural inclination of my libertarian kin at this point in a discussion like this is to say, “yeah, but if we hadn’t gotten entangled in those foreign alliances and remained isolationist, we could have …”. Could have what? Sold our products to ourselves? Avoided a religiously driven zealotry that targets nations like ours just because they’re” infidels?” Pretended Nazism and Japanese imperialism weren’t a threat to us and our way of life?

Even if that’s shrugged off, we still need to trade to live. And trade requires interaction. International trade requires international interaction. You can’t do that as an isolationist (and “open borders” seems contradictory – at least to me – to being an isolationist. How does one “isolate” themselves except behind their borders?). Those you interact and trade with have certain demands that come with trade you either negotiate or they refuse the trade. While it is wonderful to think that we could have survived quite nicely by being internally self-sufficient and trading only within our borders, it’s probably nothing more than a pipe-dream. We could no more keep the world out of here than the Japanese were able to keep us out of Tokyo bay. Simple demand of the citizenry for products from other nations would have forced that.

Open borders have only existed in times when there was no welfare state and no existential threat – and, in fact, no real government in place. Think the settling of the west and the borders of both Canada and Mexico.  People passed through them pretty much at will seeking a better opportunity or a better life.  That is an era which has passed. Even as we were warned by our founders to avoid foreign entanglements, we were becoming aware of their necessity – self-protection or mutual protection among them. And even as we wished for the ability to open our borders to all free people, we became aware of those who would use such an advantage to harm us. Or, as the welfare state developed, to take advantage of that to which they’re not entitled.

Like many laudable desires, that of “open borders” doesn’t survive reality of a changing (and smaller) world. All things being equal, I’d prefer open borders for free people. But that’s not how this world works and the disadvantages – partly our own doing, partly that of our enemies – argues pretty strongly against “open borders” – at least in the present.

All of that said, we have a problem to deal with. The welfare state isn’t going away nor are our enemies. The border situation is intolerable, we have an antiquated and essentially broken immigration system and we a very large number of illegals already here. What are we going to do about that?

Whether or not you agree with Arizona’s recent law, it points out the frustration that many of the border states are undergoing as the problem continues and grows. I’ve mentioned any number of times that while the solution won’t be simple, the general outline isn’t rocket science:

- Streamline the legal immigration system so people can more easily access it, apply, receive visas, green cards, etc. It shouldn’t take us half a lifetime or cost multi-thousands of dollars to immigrate here, prove their worth and become US citizens.

-Streamline the work visa program and the seasonal work visa program. If I can order a kindle book from Amazon with a single click and have it downloaded to the kindle within a minute , it tells me the technology is probably available to make such a program much easier than it is at present.

-Kill the “anchor baby” provision. It may take a Constitutional amendment, but whatever it takes, remove the incentive. Heck in some countries they have tour packages aimed specifically at pregnant women in other countries to come here and have their baby. Sorry – no short cuts, no breaking the line, no gaming the system.

-Deal with the illegals in the country. Require them to register by a certain date or face permanent deportation. Once registered provide them with a clear, but back of the line path to citizenship, if they so desire. Make the requirements tough but fair. My guess is we’ll find many, if not most, of them would instead prefer a work visa or a seasonal work visa rather than citizenship. Many are here illegally because they can’t get those sorts of visas now.

-Secure the border. We do have an existential treat. Throughout our history we’ve had many existential threats. As long as different ideologies exist, especially those based in religious zealotry or secular imperialism, we’ll continue to have existential threats. Until those go away, we’re always going to have borders and those borders are going to have to be guarded to protect our citizenry.

I believe in immigration. I believe, in some ways, it represents the heart and soul of this country. I believe in giving those what want to work hard and better themselves the opportunity to come to this country to do so.  But they need to come here legally through an improved system to do that. Since we do indeed have a welfare state, I want those who try to game that system by illegal entry stopped. And since we have existential enemies, I want them stopped at the border too.

It may not be my moon pony and unicorn utopia, but it is reality and it is that with which we have to deal.  Then we can work on utopia.

~McQ

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