Edited and written by David Gordon, senior fellow of the Mises Institute and author of four books and thousands of essays.

Welfare State: Pro and Con

Spring 2001

Social Welfare and Individual Responsibility by David Schmidtz and Robert E. Goodin (Cambridge University Press, 1998; xviii + 222 pgs.)

Most readers of this journal will, I suspect, find the arguments of David Schmidtz much more congenial than those of his coauthor in this discussion of welfare. (The book contains two separate essays. Each author has seen the other's contribution, but there is no series of replies, as in a debate.) With Robert Goodin as our guide, we enter a bizarre world. In his view, welfare recipients have a right to receive subventions from the state. We may hope that they will look for work, but we cannot require this. To do so threatens what is rightfully theirs. To cut someone off from aid entirely is to be guilty of mortal sin.

As Mr. Goodin puts it: "Is there nothing we can expect of welfare mothers, in return for the public assistance they receive? Not sexual abstinence? Not a sincere effort to find a job? Not even a word of thanks? . . . do we really think we should make our assistance conditional on any such performances? . . . most surely recognize that it is the nature of safety nets and last resorts that, in order to perform their residual safety net function at all, they simply must be unconditional in form" (pp. 113-14).

Of course, this argument as it stands is worthless. Mr. Goodin has simply defined a last resort grant so that it must not be given with conditions. It cannot then be a reason for refusing to impose conditions that the grant is one of last resort. If the mean-spirited welfare office were to require that the grant not be spent on narcotics, it would not be making a last resort grant, in Goodin's sense. But why is this a reason against imposing restrictions? 

Oddly enough, Mr. Goodin recognizes the fallacy perfectly well when he does not choose to perpetrate it. He claims elsewhere that advocates of personal responsibility have adopted "moralized" definitions of that term. With the details of his contention, we are not here concerned. Rather, the relevant point here is that Goodin identifies a fallacy in which "[m]oralizing the definitions of these key terms prevents them from doing the work that those deploying them want them to do in their arguments. . . . Of course, there is nothing wrong in simultaneously asserting both halves of a tautology . . . [but] it does not provide any independent reason for the proposition in question. Asserting a tautology is simply to repeat oneself, to stutter" (pp. 139-40). Has not Goodin refuted Goodin?

Perhaps, though, I have interpreted our author uncharitably. He may mean that, once one thinks about it, it is obvious that people have unconditional rights of the sort he suggests. If this is his claim, I can say only that its self-evident character altogether eludes me. Let us try to put Mr. Goodin's case at its strongest.

Surely he is right that some people, through no fault of their own, cannot provide for themselves. But why does the sad condition of these people entitle the state to seize the assets of others for their benefit? If those in more fortunate circumstances have obtained their assets justly, is it not up to them how much they choose to give to charity?

Someone of Mr. Goodin's persuasion might claim that people have property rights only subject to claims by the destitute. Arguments of this sort that have come my way strike me as unpersuasive, but we need not delve into them now. Our author says nothing whatever about property rights. Only the fact that the poor need money concerns him; that others have a prior claim to the money seems not to have crossed his mind.

David Schmidtz, an excellent philosopher of libertarian bent, says much that is true and important: but he does not fully destroy his antagonist at the decisive point. He begins by adducing Garrett Hardin's famous "tragedy of the commons." Unless individuals can acquire personal property, they will have little incentive to use resources efficiently. Even those who do not own property benefit from the institution, since everyone suffers when the commons is wasted. "The argument is not merely that enough is produced in appropriation's aftermath to compensate latecomers who lost out in the race to appropriate. The argument is that the bare fact of being an original appropriator is not the prize. The prize is prosperity, and latecomers win big, courtesy of those who got here first" (pp. 30- 31).

This is well said and convincing, but Schmidtz has left Goodin an escape. Schmidtz has argued that society should have the institution of private property, for the decisive reason that everyone gains by this. But his point, however true, does not suffice to show that individuals have a moral right to the property they have appropriated. To claim, as Schmidtz does, that it is efficient if everyone has the legal right to acquire property is not at all the same thing. Goodin can answer that even if Schmidtz is right, legal rights to property should be limited by the needs of the unfortunate. Under a welfare state of the proper sort, we can obtain the efficiency advantages of private ownership without sacrificing the interests of the poor. Had Schmidtz argued directly for moral rights, Goodin's move is blocked from the start. If you have a moral right to your property, you cannot be compelled to surrender it, even for poor relief. (We shall soon see, though, that Schmidtz has a cogent reply of his own to the argument I have imputed to Goodin.)

Before going further, I pause for a digression that allows me to make one of my much-beloved hairsplitting points. Mr. Schmidtz suggests that because common use wastes resources, "leaving resources in the commons does not leave enough and as good for others. The Lockean proviso, far from forbidding the appropriation of resources from the commons, actually requires appropriation under conditions of scarcity" (p. 35).

Not so. The proviso restricts removal of resources from the commons but says nothing about use when nothing is appropriated. So long as private property does not exist, it is not individually efficient to leave as much and as good for others. Why then do people stand subject to an analogue of the proviso in the commons?

Though Goodin is left an escape by the strategy Schmidtz has adopted, the escape is in truth a narrow one. Goodin claims that the poor need welfare; in a system of unhampered free enterprise, what happens to those who cannot by themselves keep up? Schmidtz ably argues that this question rests upon a false assumption. At a particular time, some people will under a free market do badly. Perhaps they might obtain more from the government than from private charity. But the passage of time soon changes the situation.

A free enterprise economy will grow much more rapidly than its welfare state rival, owing to the draining effects of high taxes on incentives to produce. But rapid growth makes nearly everyone, including the poor, better off. Contrary to Goodin, capitalism does not leave the poor to a dire fate.

But, Goodin replies, why need we choose between growth and governmentally-imposed welfare? Surely the incentive effects of carefully chosen programs will not be great. Can we not then have the best of both worlds? Only fanatics will insist on growth to the exclusion of all else.

Schmidtz's response seems to me the best point in the book. Even a small effect on growth will rapidly assume great significance. In an earlier publication, Goodin argued that welfare programs lessen productivity only to a small extent. Schmidtz comments: "Really? Consider this: if the annual growth rate of America's gross domestic product (GDP) had been 1 percentage point lower between 1870 and 1990, America's per capita GDP would be less than one-third its present level, which would put it on a par with Mexico" (p. 61).

Schmidtz's point drives Goodin into a corner. He can, if he wishes, insist that any temporary inconvenience for those now on welfare outweighs the gains of everyone, including the poor, a short time later. But this strikes one as implausible: and Goodin's case does not improve when he brings up the bogey of "structural unemployment." The idea that machines drive people out of work has been with us at least since Aristotle. Given the manifest failures of such claims historically, surely Mr. Goodin owes us an argument to show that some laborers have no services that the market values. What is his reply to the standard contention of economic theory against him? About all this he says not a word. Readers who do not share Goodin's distaste for theory should consult the illuminating remarks of Ludwig von Mises (Human Action [Auburn, Ala.: Mises Institute, 1998], pp. 136-37).

Neither argument from rights nor from economic growth, it is safe to predict, will induce Mr. Goodin to change his position in the slightest. I fear that he is a lost cause. He informs us, without the hint of a smile, that those who criticize welfare mothers for getting pregnant to increase their benefits are not "properly circumspect" over "notoriously vexed" questions of population policy. The desire to impose "punitive" measures on such women obviously finds its motive in racism. With such a true believer, nothing avails.

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