What the Government the Government
Taketh Away
Welfare State Mindset
By Peter Saunders
In the 20th century, the growth of the state was a worldwide phenomenon. Now in the 21st century, having second thoughts is a worldwide phenomenon, too. Following is a report from Australia. —Ed.
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Giveth,
T
he welfare state developed to support it seems almost everybody relies on governpeople who could not afford to look after ment hand-outs in one form or another. If it themselves: old-age pensions for elderly people isn’t middle class parents enjoying subsidised with no savings; help for widows; child pay- school fees, it’s affluent patients claiming ments for families; allowances for unemployed Medicare rebates or young professionals getpeople who couldn’t find jobs; financial help ting taxpayers to share their child care costs. with health costs for those who fall sick. Even the wives of millionaires now claim famBut Australia is now a much richer country ily payments. We have become a nation of than it was when these paysupplicants. ments and services were first It didn’t used to be like introduced. Economic growth this. For most of our hisXxxxxxx instinct nowadays Our first has more than doubled livtory, ordinary people whenever we become aware of a ing standards in the last 40 xxxxx looked after themselves xxxxxx is not to solve it ourselves, and cared for their families problem years (indeed, real incomes have risen 25 percent just in xxxxxx but to demand that the government from their own resources. the last 10 years). Rates of do something about it. If they needed help they growth this high have delivturned to their families, ered a level of affluence that churches, and charities, or our grandparents could only have dreamed they banded together in friendly societies and about. We buy houses that are bigger and bet- trade unions to create mutual aid societies. But ter equipped than ever. We run cars. We take most of the time they expected to look after exotic holidays, and we think nothing of tele- themselves and their families without seeking phoning the other side of the world or flying financial support from others. The norm was to the other side of the continent. family self-reliance, and people were proud of This increased affluence should mean that their independence. most of us can afford to cover the basic necesOver the last 40 or 50 years, as government sities of life that our grandparents struggled spending has spiraled upwards, we have lost to attain—things like private health insurance, this spirit of self-reliance. We have learned personal unemployment savings or a retire- instead to rely on politicians to give us the ment annuity. But here’s the puzzle: things we used to organise for ourselves. Our Given that the welfare state came into exis- first instinct nowadays whenever we become tence to provide necessities for those who aware of a problem is not to solve it ourselves, couldn’t afford them, and since we are all but to demand that the government do somemuch better off now than we were a couple of thing about it. generations back, why is the welfare state still The federal government has come to be seen getting bigger? If more people are in a posi- by many people as a giant cash machine whose tion to look after themselves than ever before, principal purpose is to spray money at them. shouldn’t the welfare state be shrinking? We see this at federal budget time, when we In recent decades, the welfare state has ask what handouts the Treasurer has given us, become one of Australia’s biggest growth and we see it during elections, when politicians industries. For example, 40 years ago, just one compete for our votes by promising this or that working-age adult in 30 lived on welfare ben- group more goodies. Our democracy has come efits. Today it is one in six. But the extraordi- to look less like the Athenian polis and more nary expansion doesn’t end there. Nowadays, like a bunch of spoiled children squabbling
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over their presents on Christsion we should have, what mas Day morning. kind of health treatment we Of course, the governshould get. Like children, we ment has no money of its are rendered dependent on a own to dispense. Every dolhigher authority to determine lar that Prime Minister Howmany of the most important ard directs at one section of decisions affecting our lives. the population, Treasurer Yet we actually need the The federal government has Peter Costello has to take government less today than from another. As demands come to be seen by many people ever before. Most of us as a giant cash machine whose and expectations escalate, today could afford to buy this means governments rob principal purpose is to spray income insurance, health Peter to pay Paul, and then money at them. insurance, and a retirement mug Paul to compensate pension—if only we didn’t Peter. The net result is that have to give so much of our many of us end up no better off than we would income to the government in taxes. have been had the government simply left us So we are trapped in a vicious circle. Because alone. What we receive in benefits, subsidies we give so much of our cash to the government, and services we lose in higher taxes. Everybody we don’t have enough left to buy the services is paying for everybody else’s handouts. we need, and because we don’t have enough This is why the welfare state keeps getting left to buy these services, the government keeps bigger, even though the need for it is declining. raising taxes to provide them for us. We have developed a “welfare state mindset” To break out of this circle, government must that assumes any problem and any need has to leave more of the money we earn in our own be resolved by government. We therefore keep pockets. That way we can provide for ourselves demanding that government do more for us, rather than relying on politicians to look after and politicians respond by taking even more us. Earlier generations (who lived in a world taxes out of one pocket in order to stuff the incomparably less affluent than our own) were money back into another. perfectly capable of running their own lives There are few winners from this continuous with little support from the state. Given our expansion of government other than politi- level of affluence, we should at least be able to cians and bureaucrats. High welfare spending emulate their example. It is time to take back (and the high taxes that go with it) empowers responsibility for running our own lives. them, for it puts our cash in their hands. But almost everyone else loses. Mr. Saunders is Social Research Director When we hand money to the government, of The Centre for Independent Studies and we relinquish our ability to make our own author of Australia’s Welfare Habit and How decisions and choices about how it should be to Kick It. This article is a transcript from spent. We allow career politicians and bureau- “Counterpoint,” a program of the Australian crats to decide what schools our children Broadcasting Corporation’s Radio National, should attend, what sort of retirement pen- November 27, 2006.
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