In 2016, the US Federal Government spent $740 billion, or 19% of its budget, on overt welfare programs, (including Medicaid). It spent $1.57 trillion on Social Security and Medicare. Together these make up 60% of its budget. (Source)
A very common view today is that the government needs to provide welfare programs for the poor. This is the view that “redistribution of wealth to the needy” is a noble project, and such “government assistance” is necessary to keep people from starving in the streets.
This essay will challenge and refute this view. In Ayn Rand’s ideal society, under laissez-faire capitalism, there would be no welfare programs, and this would be a good thing.
The people who didn’t vote for welfare programs, yet are taxed to support them, did not consent to the taking of their money. They signed no “social contract,” and simply living near other people does not give those other people a right to take their money. If you doubt this, watching this short video should be helpful:
Welfare programs are immoral for the same reason that three people using guns to force a fourth to pay for all their dinners is immoral: It’s an injustice that violates the rights of the victims. It has the same moral status as a robbery.
Yet people still attempt to justify using government to “redistribute” (steal) money by force, by appealing to alleged good consequences that result from the practice. The main line of argument is that welfare benefits are needed to prevent the poor from starving, while wealthier people can “afford” to have a corresponding amount of money taken out of their incomes. Thus, the argument goes, there is a net “social benefit” to welfare redistribution.
This argument is wrong on four counts:
Welfare is not needed to keep good people from starving.
The effect of redistribution on the wealthy should not be thought of in terms of whether they can “afford” it.
There is no such thing as a “social benefit,” in the way this argument assumes.
Even if we dismiss the idea of “social benefit,” the argument falsely assumes that the “beneficiaries” of welfare really benefit, overall, from redistribution.
If a court finds a party at fault in a civil judgment, it collects a small fee from that party to help pay court costs.
Courts impose fines on those who are convicted of misdemeanors and felonies.
Imprisoned convicts work and help maintain prisons in order to receive food and luxuries above a bare minimum to keep them alive. The best-behaved might work on/maintain other government buildings.
A small annual fee might be required for someone to maintain citizenship. Non-citizens would still be protected by the government in its jurisdiction, but would not be able to vote for government officials, and wouldn’t receive US government protection when traveling internationally.
These are, of course, in addition to any straight donations, which Yaron Brook discusses in this video:
Feel free to leave any other ideas in the comments.
I’m very much pro-capitalism. However, I agree with Bernie Sanders and many of his allies on the American Left about something. I agree that cronyism is a serious problem in the US. Businesses should not get special favors and money from the government that they didn’t earn. But where Bernie and friends seem to think the solution to cronyism is more government regulation and control, I think cronyism is a symptom of too much government regulation and control. I think the solution is purer capitalism, which means freer markets. In this essay, I’ll explain why I think this, and how I think government regulation of the economy causes cronyism, lobbying and “regulatory capture.”
Let’s start by observing a correlation: Cronyism and lobbying tend to show up in the most regulated industries, not the least regulated. Finance in the US is heavily regulated–by no fewer than eight federal agencies–and the government protects and bails out big banks. Pharmaceuticals are controlled by the FDA, and the FDA often keeps smaller competitors out of the market. Whether a sports team can build a stadium is practically controlled by the city government, and team owners typically get a bonanza of special deals and subsidies from the city. Cronyism was virtually non-existent in the less-regulated tech sector, until the government pursued the anti-trust case against Microsoft. Now, Microsoft has a division in Washington D.C. for lobbying purposes. (Apple and Google now both lobby, too.) In general, retail stores are not very heavily regulated, and there’s not a significant issue of cronyism in that field.
Ayn Rand, the novelist and philosopher, really enjoyed Christmas.
She was not a materialist; nor was she a mystical spiritualist. She held that there is no conflict between genuine spirituality and the enjoyment of material things. Human beings need material products to survive, and an abundance of material wealth–used under the guidance of proper moral principles–enhances human life and happiness dramatically. Wealth allows people leisure time: Instead of working about 12 hours a day from sunrise to sunset, 6 days a week, having a short supper and going to bed as most people did before capitalism and the Industrial Revolution, most Westerners can now afford to work 8 hours a day, while pursuing hobbies, recreation and friendships after work and on the weekends. People have a greater ability to balance vocational productive work with other pursuits that also contribute to happiness and spiritual contentment.
Rand also held that voluntary trade in a free market is a good, benevolent, win-win interaction: Both parties benefit from the trade, by their own judgment (or they wouldn’t pursue it, assuming they’re not acting self-destructively.) There is no need for anyone to sacrifice the interests of others for his own supposed benefit in free-market trades. (And in fact, sacrificing others cannot bring real benefits, but is self-destructive, all things considered.)
Whether people like it or not, it is a fact that the production of valuable things requires more than physical labor. (I’m looking at you, Karl Marx, with your Labor Theory of Value and “profit as exploitation.”) This is especially true when it comes to industrial-scale mass production. To successfully deliver products at a reasonable price and quality, a company must be organized in certain ways that are effective; there must be communication and coordination between the various departments; there must be management to make sure things keep running smoothly together and that timetables are kept; there must be wealth invested for buildings, machinery and raw materials in the right amounts; any machinery and facilities must be continually maintained; there must be management of sales and distribution of the product; etc.
A collection of factory workers without power tools, without specific roles and without management direction will produce very little and very inefficiently. In any line of business, there is a tremendous amount of strategy, business planning, technical planning, management, and industry knowledge that goes into making a company productive and successful.
As I discussed in my essay, “How Business Executives and Investors Create Wealth and Earn Large Incomes,” a company’s chief executive officer (CEO) carries tremendous responsibility: he is crucial in making large-scale decisions for the company, implementing and coordinating major changes, planning long-term for the future market and technology the company will face, formulating and holding onto a large-scale vision of where the company should go, etc.
In this recent talk at the University of Texas-Austin, Dr. Yaron Brook, president of the Ayn Rand Institute, discusses the general American attitude toward success in business and how it is influenced by traditional moral ideas. But does traditional morality really make sense? Is it reasonable? Dr. Brook argues that it doesn’t and it isn’t.
For anyone who found this talk interesting, I highly recommend reading the book, Free Market Revolution, which Dr. Brook co-authored with Don Watkins.
Imagine you could genetically engineer a creature, and you chose to omit a brain, opting instead for local controls that cause each part to do whatever it does, while generally ignoring the state of the other parts. Would this creature be an effective actor in the world, capable of sustaining itself by its own action? I think you would find that it would die pretty quickly, because each part is pulling in a different direction, without any coordination between the parts.
Such would tend to be the fate of a large business without the central control of a chief executive. He/she along with other executives, serves as the “brain” of the company. He provides the overall direction of the company and works to keep its parts coordinated to accomplish major goals. Without executive guidance, the decisions and goals of the various departments would often conflict. (1) The body manufacturing division of a car company, for example, may think that the company should be producing more sports cars, and start shifting its production to sport car bodies. But the engine manufacturing section may think that vans and SUVs are on the rise in the market, and so start shifting production to big-block engines for trucks. The mismatch between the vehicle bodies and engines will waste resources and stop the company from selling as many vehicles to dealers as they otherwise would.
What is needed to avoid such problems is a party to provide overall direction and coordination to the company. This role is filled by the executives, especially the CEO.
For a CEO to guide the company effectively in a free market, he needs to have a great deal of knowledge about his industry, past and present. This knowledge, along with an active, creative mind, is necessary so that he can have a viable vision for the future of his company. He also has to have a solid grasp of the organization, attributes and capabilities of his company. He has to keep all of his company’s moving parts in mind as he makes crucial, high-stakes decisions. One wrong decision can doom the company and cost him his job, potentially making him unemployable as a CEO in the future. A series of right decisions can make the company very successful and very profitable. Being a CEO is hard, stressful, mental work and involves very long hours.