The War on Economic Freedom

In 1957, Ford Motor Company rolled out its new brand called Edsel. The ambition for the new brand was to help Ford outgrow General Motors. Reality, though, was different: after three years of disastrous sales Ford shut down the Edsel division.

The verdict of the free market is as merciless as it is unquestionable: if an entrepreneur does not have the right idea, he goes out of business.

Government, on the other hand, lives by different rules. Even if a government project fails like the Edsel brand did, it can keep going indefinitely.

The so-called war on poverty is a case in point. According to a Fox News report,

nearly 110 million Americans – more than one-third of the country – are receiving government assistance of some kind. … This includes welfare programs ranging from food stamps to subsidized housing to the program most commonly referred to as "welfare," Temporary Assistance for Needy Families.

The share of welfare recipients is higher in some European countries, but that really does not matter. Unlike Europe, the United States was built on the principle of liberty. That includes economic freedom: we should all be free to pursue happiness however we want to, without harming others.

In return for enjoying economic freedom, every American is expected to be self-sufficient to the best of his ability. But widespread welfare programs, created under the guise of the war on poverty, do not eliminate poverty. Instead they take the meaning out of economic freedom by removing the reciprocal self-sufficiency condition.

Does this mean that the war on poverty has failed miserably? Could well-paid government workers, academic researchers and intelligent politicians have failed for half a century to see that Americans were not getting less poor – just more dependent on government?

The simple answer to this question must be "no". But what does that mean in reality? The Fox News article gives us a hint:

The Cato Institute's Michael Tanner said that in the eight most generous states, the benefits can be tantamount to a $20 minimum wage – which would exceed the $7.25 minimum wage in most states. "So in many cases people could actually do better on welfare than they could in an entry level job," Tanner said.

When welfare pays better than work, it is the result of a deliberate strategy. Contrasting economic freedom against "economic justice", welfare statists say that the latter is worth losing the former. If viewed from this perspective, the fact that one third of the population is on welfare gets a new meaning. The war on poverty is not about eradicating poverty – it is about advancing economic justice at the expense of freedom.

So long as the share of Americans on welfare continues to grow, the welfare state will continue to draw blood from the productive sector of the economy. The end result is in no way an abstract entity.

It is Europe and a future under industrial poverty.