Breaking the Entitlement Addiction

Charles Krauthammer once said, “you cannot retract an entitlement once it has been granted.” But entitlements are much easier to grant than to pay for. Entitlements and interest on the national debt account for over 70% of the annual budget according to the Congressional Budget Office and are continuing to increase inexorably. They are also becoming an ever increasing portion of the national economy. The Keynesians on the left will tell you that these payments will increase aggregate demand and therefore contribute to economic growth. But these payments come from only two sources; 1) taxes, or 2) government debt. Those same Keynesians will also tell you that because taxes are paid by the wealthy who spend only a small fraction of their income and the payments go to the poor who spend almost all their income, the economy benefits from this increased demand.

But the wealthy have only two things to do with their money: 1) spend it, and 2) invest it (very few wealthy people have huge vaults of gold and cash like Scrooge McDuck). Therefore, what you are actually doing is taking money that was going to be invested for the future and using it for current expenses. The only alternative is to borrow the money and pay it back in the future. Either way the future (and the people living in it) gets the short end of the stick.

And as entitlements become an ever-larger portion of GDP, our ability to grow in the future is ever more constrained. The plans of the progressive left to further expand the scope of entitlement benefits will condemn future citizens (our children and grandchildren) to increasing poverty (although supposedly more evenly distributed) and the potential for national bankruptcy.

And the cost of the welfare state is not limited to only financial dependence of its citizens on the government. It also includes psychological dependence on the government (as if you could separate the two). The violent reaction of these dependent people at the thought of losing their cherished benefits is very similar to the reaction of an addict at the thought of not having their drug of choice.

Therefore, in order to secure the blessings of liberty and the freedom of the spirit that results for ourselves and our Posterity (who were much on the mind the Founders) we must end this cycle of dependency and free ourselves from the entitlements of the social welfare state.

But it is not easy to break an addiction, any addiction. And the entitlement addiction is an especially virulent and malevolent form of addiction. New York Congresswoman Ocasio-Cortez (along with Bernie Sanders) likes to point to Sweden as a good example of her vision of social democracy. But Sweden is, in reality, a recovering social welfare addict (it actually ranks higher than the United States on the Index of Economic Freedom). After diving deep into socialist policies beginning in 1966 that generated a period of slow growth (see above) and rising national debt (also see above) the Swedes have been slowly retracting the supposedly unretractable entitlements over the last twenty-plus years (as well as cutting corporate taxes in order to be more competitive). As a result, their economy has performed over one percent better than their European Union peers and has the highest per capita GDP in the EU. In the meantime, their public debt as a percent of GDP has fallen to 41%.

Recovering from addiction is difficult and recovering from over eighty years of ever-increasing entitlements in the United States will be exceedingly difficult. But the recovery process cannot even begin until we admit to the addiction and the need to change. And listening to Ms. Ocasio-Cortez and Mr. Sanders along with their hordes of young followers it appears we are a long way from making that admission.

We can talk about all the problems that plague socialism until we are blue in the face. But it will have little impact unless we can address some of the problems that plague our society that make socialism appear as a plausible solution.

We have homelessness, relative poverty, unemployment, unaffordable healthcare and inadequate retirement savings. And, like opiates for patients dealing with chronic pain, entitlements ease the pain of these social ailments. But opiates, while easing the pain, do not address the root causes of the pain. And in addition to not addressing the cause of the pain, the opiates have side effects that create new and sometimes worse medical conditions than the original malady causing the pain.

Likewise, entitlements provide surcease from the pain of societal problems without addressing the root causes of those problems. And the side effects of the entitlement system have been enormous. The welfare system and determining who qualifies for welfare payments is weakening of the family structures that support our society resulting in teenage pregnancies, single parenthood and children without fathers all of which are creating an underclass fit only for the welfare state. Entitlements ease the burden of unemployment but also make it unprofitable to go back to work, thus stealing the dignity that work provides.

While the American Social Contract does not guarantee equality of outcomes, the root cause of many, if not most, of our societal problems is that people, corporations, unions and other institutions constantly keep trying to distort the pathway to the American Dream in their favor or the favor of their client, company, ethnicity, gender, group or special interest to the extent that the American Social Contract does not function very well. The result has been that the American populace is being bifurcated into a well-educated, well-off, healthy, socially adept upper class and a poorly educated, impoverished or borderline poor, unhealthy class of people vulnerable to the blandishments of identity spouting community leaders or blowhard populists (the latter two usually being from the upper class).

The lower classes may have little ability to achieve the American Dream, but they do have votes. And because of the precariousness of their predicament they feel justified in trading those votes for entitlements to ease their predicament. Americans used to feel ashamed to accept charity. But now they feel helpless to deal with our complex modern society and when people lose hope they also lose their pride and dignity. The only way to bring hope to these people and all our people is to restore the American Social Contract to its original principles and make sure that no one tilts the path to the American Dream in their favor.

Public Education is one of the institutions that have been captured to serve private interests instead the public good. The only way to restore the American Social Contract is to make sure that American children are educated to the highest standards. Education is the dividing line between the well-off elite and the poor hoi polloi. It was against the law to teach a slave to read and write in the antebellum South. And the supposedly separate but equal schools during Jim Crow were definitely separate but also definitely not equal. A free people need to be literate.

Despite spending more on education than any other country, the output coming from our schools is mediocre at best, ranking far behind other developed countries. We need to stop using schools to test unproven social theories (actually they have been proven to be failures) and transform social theory laboratories into meritocratic academies that would make Plato proud.

True education is an essential but not sufficient step to raise America from its current malaise. Our existing slap-dash social welfare system has been put together piece by piece over eighty years based on political considerations without thought to its future impacts or unintended consequences. It will take a generation to dismantle the complex and contradictory monstrosity we have created. But that is only half (and the easy half at that) of the work we need to do. The only way to get rid of the welfare system is to make it unnecessary by restoring our nation to its Founding Principles.

And while we are at it:

Viewing the current political landscape, it is hard to envision where we will find the political leadership that will lead this effort to create a Great Restoration of the American Dream. Both the Republican party and the Democratic Party appear to have been captured by populists of the left and right that are leading America ever farther from our Founding Principles.

But before we despair, we must remember that just before the Civil War the ineffective Whig Party disintegrated in the face of the Southern-dominated Jacksonian Democratic Party. A new political party had to be formed to confront the Democrats on the issue of slavery. That party, the new Republican Party that came into existence in 1854, was able to elect a great leader, Abraham Lincoln, president in 1860.

If disaffected Whigs, such as Lincoln (who served as a Whig legislator for 12 years), can come together with other like-minded people, to create a new party, then that is the task set before us. Political parties come and go as time and circumstances change. New parties have come to power in Greece, Italy and France. And the Republican Party and the Democratic Party, while durable, are not eternal.

Many Republican elected officials and party leaders have left the party or retired early just as happened to the Whigs in the 1850s. More and more people in the United States identify as independents (42% in 2017), much more than either party. These people are vilified by the populists wing nuts on the left and right but could form the core of a new centrist party based on America’s Founding Principles. Think about it.