Bismarck in California

February 27, 2010

Welfare state against itself in Athens

The father of the modern welfare state was Otto von Bismarck.  I have had trouble finding detailed explanations of this strange fact, but the outlines of the story are clear.  Bismarck was a Prussian monarchist – a Junker who lacked the most elementary faith in democracy and equality.  He feared the popularity of Marxist socialism; in an astonishing political maneuver, he appropriated the socialists’ program.

The welfare state was erected to keep Germans dependent on their government, and docile in their political demands.  The maneuver worked.  The German monarchy collapsed from its own stupidity rather than revolution – and when the socialists tried to take advantage of the moment, they were slaughtered by reactionary elements.

So the first point of interest is that the welfare state was established to keep democracy at bay – though Bismarck, not surprisingly, justified it on moral grounds, calling his social program “practical Christianity.”

Today’s welfare states, including the US, are uncomfortable compromises with liberal democracy.  Even the terminology is awkward.  Social programs are called “entitlements,” a word with a monarchic, Junkerian ring to it.  Entitlements are supposed to be untouchable when budgets get slashed:  the give and take of democratic legislation, for these programs, is out of bounds.

The reasons given are no different than Bismarck’s.  Moral duty can’t be haggled over or accounted for in dollars and cents.

So the second point of interest is that the welfare state builds a wall of aristocratic privilege within liberal democracy.  An obvious question is:  who benefits?

Advocates of the welfare state would answer:  the weak and the sick and poor, who need a helping hand to find, for example, affordable housing, or health care, or food to eat.  It is for these unfortunates that the government must engage in a secular version of “practical Christianity.”

The Bismarckian appeal to morality, however worthy, has a number of problems buried within it.  One is the definition of the dependent class.  Who counts as sick enough to engage state assistance?  Poor enough?  The choices made will be irremediably subjective.

Another problem is the expectation that wielders of power will act strictly on moral principles.  This is asking a lot from human nature.  To the question of who benefits from the enormous wealth given to a government to distribute on welfare, the answer in a democratic setting might well be:  those who run the government, and those who have the power to influence it.

The first two problems lead to a third, possibly fatal, one.  The lack of definition of the dependent class means it can expand at will.  The fact that powerful groups benefit from such entitlements means that a vested interest exists in expanding them.  Ever more citizens must be declared, in some way, dependent.  The effect is to increase the power of those in government, and the access to wealth of those who can influence it.

The third problem is where Greece and California find themselves today.  Entitlements have increased beyond the ability of the economy to sustain them – but, being entitlements, outside all negotiation, the beneficiaries, on the highest moral grounds, refuse to yield their benefits.

In Greece, according to Mark Steyn, public sector workers retire at 58, and “redefining time itself,” receive 14 monthly payments each year.  Yet the government’s feeble attempts to enforce some budgetary discipline has inspired riots in the streets.  Here is  Steyn’s judgment on the matter:

. . . as the Greek protests make plain, nothing makes an individual more selfish than the socially equitable communitarianism of big government: Once a chap’s enjoying the fruits of government health care, government-paid vacation, government-funded early retirement, and all the rest, he couldn’t give a hoot about the general societal interest; he’s got his, and to hell with everyone else. People’s sense of entitlement endures long after the entitlement has ceased to make sense.

A third point of interest is that the welfare state’s appeals to altruism, in Greece and elsewhere, have justified purely self-interested, beggar-thy-neighbor behavior.  A fourth point is that such behavior will, if left unchecked, destroy the welfare state.  Entitlements will simply continue to balloon until a financial explosion is reached.

Steyn makes the parallel between Greece and California.  In both cases the main beneficiaries of additional welfare expenditures have not been the sick or the poor but public sector unions.  Here was the situation in a California township which ultimately went broke:

So a police captain receives $306,000 a year in pay and benefits, a lieutenant receives $247,644, and the average for firefighters — 21 of them earn more than $200,000, including overtime — is $171,000. Police and firefighters can store up unused vacation and leave time over their careers and walk away, as one of the more than 20 who recently retired did, with a $370,000 check. Last year, 292 city employees made more than $100,000. And after just five years, all police and firefighters are guaranteed lifetime health benefits.

As in Greece, too, half-hearted attempts by the state government to impose fiscal order have been met with riots in the streets.  A last point of interest, then, is that the collapse of the welfare state will not change the behavior of its managers and stakeholders.  Their justifications aren’t practical or financial but moral and absolute.

Every aristocracy believes its existence is worth the enormous sacrifice of others.  Bismarck, the Junker, was willing to play socialist to save his class – but at least he could afford to do so.  Similarly, privileged groups in Greece and California seem ready to bankrupt their governments and their people to preserve their entitlements – a non sequitur, because by the financial logic of the situation they will go down along with the others.

Even in a welfare state, guided by the wisest Keynesians, it is impossible to spend money which isn’t there.

Window broken in Berkley, California protest (AP Photo/Ben Margot)

Window broken in Berkley, California protest (AP Photo/Ben Margot)