Saturday, March 2, 2013

Bruce Bartlett: A Conservative Case for the Welfare State -

Bruce Bartlett: A Conservative Case for the Welfare State -

In the 40th anniversary edition of his book, “Capitalism and Freedom,” Milton Friedman advised conservatives to use crises as opportunities to advance their agenda. “Only a crisis – actual or perceived – produces real change,” he contended.

Iv-B economies have two crises, one when hitting the ceiling and one when hitting the floor. This causes a change in direction of momentum in that society.

Thus Republicans are now using the fiscal impasse to try to raise the age for Medicare and reduce Social Security benefits by changing the index used to adjust them for inflation. They know that such programs will be easier to abolish in the future if the number of people who qualify can be reduced and benefits are cut so that privatization becomes more attractive

The Iv part of the V-Iv Republicans are libertarians and so profit from the chaos of reducing V-Bi insurance in society.

This is foolish and reactionary.

Iv is counter innovation or counter revolutionary by nature, they react rather than act.

Moreover, there are sound reasons why a conservative would support a welfare state. Historically, it has been conservatives like the 19th century chancellor of Germany, Otto von Bismarck, who established the welfare state in Europe. They did so because masses of poor people create social instability and become breeding grounds for radical movements.

V governments and industry often do better with V-Bi where Bi unions and social insurance create stability at the risk of stagnation. B people can become R revolutionaries and terrorists as a lack of insurance makes them act alone. 

In postwar Europe, conservative parties were the principal supporters of welfare-state policies in order to counter efforts by socialists and communists to abolish capitalism altogether.

Bi insurance is based on randomness and the normal curve, it quenches the chaos of collapses in capitalism caused by low wages.

The welfare state was devised to shave off the rough edges of capitalism and make it sustainable. Indeed, the conservative icon Winston Churchill was among the founders of the British welfare state.

American conservatives, being far more libertarian than their continental counterparts, reject the welfare state for both moral and efficiency reasons. It creates unhappiness, they believe, and inevitably becomes bloated, undermining incentives and economic growth.

It can become bloated and stagnant when Iv-B growth is lost, incentives are weakened when people have to be more normal and conventional. However this is caused by weak I-O policing creating a disconnect between the two.

One problem with this conservative view is its lack of an empirical foundation. Research by Peter H. Lindert of the University of California, Davis, shows clearly that the welfare state is not incompatible with growth while providing a superior quality of life to many of those left to sink or swim in America

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