The Consensus Effect
There is a consensus brewing in America. The same consensus that has stagnated European growth throughout the 20th century and opened the door to the extremely damaging, redistribution promises of socialism. That consensus is the keynesian, welfare consensus. A consensus that still holds influence to this day in many western countries, but has had to undergo radical market-based reform to sustain itself.
Welfare consensus is usually born out of a period of crisis and turmoil, which creates a strong patriotic and unifying attachment towards government. The British NHS — born out of World War 2 — has won the hearts of many Britons, resulting in its permanent stay. So beloved in fact, that politicians risk their own careers when discussing the topic of NHS refom. That same consensus is evolving in the present day — through the covid pandemic.
Stimulus Shouldn’t Be Permanent
Between both the Trump and Biden Administrations, there has been $5.3 trillion spent on covid relief. Temporary welfare relief during the pandemic and recession might have been justifiable — but its continuation is unacceptable. Direct deposit checks, expanded unemployment insurance, eviction moratoriums, and the swollen public sector must be radically drawn back in order to avoid their permanent stay. People are already growing increasingly comfortable with free money — that can mean even more redistributive efforts being pushed in the future. We need to stop this yearning for welfare expansion and remind people of the debt that we will be saddled with for decades to come.
We need to stop the coming welfare consensus in its tracks, before it will create an absolute fiscal crisis.
The Libertarian Solution Is Half-Correct
How can we both stop this consensus while also preventing another one from brewing? Libertarians are so close to getting it right. However, right-libertarians only often cheer welfare cuts as the answer — but this couldn’t be more counterproductive. When you cut someone’s welfare, they are going to want that welfare even more-so than before.
We can cut welfare, but I find that to be a very shallow, temporary measure that will push back what will inevitably occur because of that solution — the rise of socialism. Welfare cuts will only let loose the rallying cry of socialism and social democracy to radically redistribute wealth from the rich to the poor. Along with that vision will come redistributive taxes and policies that will only destroy wealth, and ultimately destroy the free-market that we were trying to protect.
In order to prevent that from happening, we shouldn’t just cut welfare, we should take it over, own the debate, and control it. A radical welfare overhaul that brings a clear scope in place — don’t let anyone go living in poverty. That’s what welfare is for right? A secure safety-net fends off more radical socialism, enables a growing private sector, and prevents people from turning against the capitalist system. We don’t need a gargantuan public sector with overgenerous, universal entitlements to accomplish those principles.
The Welfare System of Social Democracy
Single-payer healthcare, free college tuition, universal preschool, public sector job guarantee, generous unemployment insurance, universal child care, higher minimum wages, nationally paid family/medical leave, expanded public housing, student debt cancellation, and expanded Social Security. This is the vision of social democracy. That’s the type of welfare system that social democracy advocates. That welfare system is gargantuan, fiscally unsustainable, and grossly bureaucratic. And it’s going to take massive middle class tax increases and extreme wealth destroying surtaxes that will fail to collect revenue — both measures that will distort and compromise the economic framework while destroying free-markets as we know it. That’s the type of welfare system that many libertarians are trying to prevent by cutting current welfare benefits. Yet, that’s what will only fuel those socially democratic promises even faster.
A Market-Based Welfare System
We need to counter those promises — not with welfare cuts — but with a robust welfare model of our own. A model centered around integrated cash assistance that is both fiscally sustainable and capable of withstanding a public crisis. Integrated cash assistance would involve a basic income, a wage subsidy, and a child allowance. All initiatives that would replace current welfare benefits, which would keep overall welfare spending roughly the same. Through that sense of welfare assurance, our free-market dynamism would be protected and even expanded through reforms previously thought of as undoable.
We can secure a minimum standard of living — without damaging welfare promises. Economies, markets, and enterprise should be able to run as freely and dynamically as possible. Therefore, it should be a calling card for free-market champions to be fine with using some of the gains of free trade and loose immigration to establish an adequate safety-net. A safety-net that compliments and functions in a pro-market fashion rather than having a massive public sector bureaucracy.
Social democracy is unsustainable, massive, and grossly bureaucratic.
What’s needed is more than just cuts — but real, revolutionary welfare reform that ingrains the free-market principles of choice and decentralization. Free-marketeers must champion the appropriate and smart welfare capable of withstanding moments of crisis and achieving universal affordability.
Now that’s how you stop a consensus.
Free marketeers should use this moment of covid recovery to chart the course for a post-covid safety net that is fiscally sustainable and crisis resistant — integrated cash assistance. By replacing the mass of our current distortion infested welfare system, we can effectively continue ensuring a basic standard of living without burning a hole in the pocket of taxpayers.
The free-market calling point on welfare shouldn’t be more cuts — but more freedom, better benefits, and less bureaucracy. Free-markets understand that welfare cuts pose a threat to the market itself by fueling the socialist vision of an even more gargantuan welfare system funded with market destroying taxation. The welfare state needs to compliment markets and only reforming the system will be able to achieve that. The libertarian vision of eliminating welfare is shortsighted and impossible. If there’s going to be a welfare system, at least put it in the free-market’s interest, not the socialist’s interest. That’s what they call free-market welfare.