October 14, 2004

Many bad things can be said about the welfare state - the political arrangement, as the 19th-century French liberal Frédéric Bastiat wrote, by which "everyone seeks to live at the expense of everyone else." But one largely unnoticed feature is that it rewards people for suspending their moral sense. Frankly, it makes winners out of liars.

How so? If it is to endure, a welfare state must instill an entitlement ethic in people, a feeling that the money government dispenses is "rightfully" claimed by recipients. Teaching this perverse morality is key because most people, when they think about it, understand that government can give away only what it first takes from someone else by threat of violence. (That's called taxation.)

Common moral sense would ordinarily make most of us uncomfortable accepting money that other people were forced to surrender. Our parents teach us not to take other people's things, and most of us observe that rule as adults. That poses a problem for the welfare state: how to make sure that we don't apply the "thou shalt not steal" rule to its activities. The government solves that problem mostly through its schools, where children are subtly taught that what the government does is not stealing and that being a recipient of government benefits is not receiving purloined property. The lesson is reinforced in myriad ways throughout the culture. Matthew Lesko's annoying commercials are only the most vulgar reinforcements. (H.L. Mencken knew better. He defined an election as an "advanced auction sale of stolen goods.")

Once people believe there is nothing wrong with accepting tax-financed largess, they are eager to line up to get "their share": After all, the money's there; if person A doesn't take it, person B will. But that's a problem too. As powerful as it is, the government is limited in how much wealth it can extract from the country's producers. It can't fulfill every wish and need. So there must be criteria. Government programs spell out qualifications to determine who may and may not get on the dole. In a sense, the rules set up a game: Who Wants to Be a Welfare Recipient? (I use "welfare" broadly for any government handout.)

Once the game is in progress, a lot rides on whether one qualifies for benefits or not. The system creates an incentive to define oneself or one's situation just so - even if that requires some fudging (that is, lying). Someone wishing to get the misnamed Earned Income Tax Credit might decide not to mention some cash income on the application. A middle-class family might get creative on a student-aid form. Sure, there are penalties for lying. But fudging isn't really lying, and besides, someone else will get the money if I don't.

The starkest examples can be found not in a formal government program, but rather in an area of life that has been largely shaped by government intervention: medical care. Laws and regulations have made it attractive for people to get health "insurance," apparently for free or at low cost, through their employers. It's not really insurance; instead, it is a massive cost-shifting mechanism that covers even routine medical events - and nonmedical events as well. The first question people ask when getting advice from a doctor is: will my insurance cover that? And the creative juices begin flowing whenever the answer is no. The challenge is to have the doctor code the patient's problem so that it qualifies for coverage. Truth is not the primary consideration at a time like this. Creative coding (often mistaken for diagnosis) can make the difference between having expenses paid by others or not. A lot of money is at stake. No wonder medical costs are so high. Few people have to be cost-conscious.

A political system that rewards people for pushing their costs on to others makes lying practical and fosters irresponsibility. Could there be a more serious indictment of the welfare state?

James Bovard is author of The Bush Betrayal and serves as a policy advisor for The Future of Freedom Foundation

Benedict LaRosa is a historian and writer and serves as a policy advisor to The Future of Freedom Foundation

Bart Frazier is program director at The Future of Freedom Foundation.

Sheldon Richman is senior fellow at The Future of Freedom Foundation in Fairfax, Va., author of Tethered Citizens: Time to Repeal the Welfare State, and editor of The Freeman magazine.

Mr. Hornberger is founder and president of The Future of Freedom Foundation. Send him email.

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