Why the Welfare State is a Fraud

(Neil’s Note: I wrote this almost 10 years ago, in September 2006 to be precise. Prompted by a recent conversation between Ian B and Tom Rogers on the two IDS threads, I retrieved it from the bit-bucket in order to offer it for your delectation.)

In 1942, in the depths of war, William Beveridge authored a report. There were already state schemes in Britain for pensions, health and unemployment insurance. What Beveridge proposed to do was bring these all together into one giant, all-encompassing combine – the welfare state.

Many people liked Beveridge’s ideas. They liked the idea of a safety net to prevent them becoming poor. They liked the idea of financial security in their old age. They must have thought they were getting something for nothing. But they didn’t stop to think about the long-term costs. They didn’t think about the burden they would be storing up for people in the future.

Labour politicians, spying a chance to get themselves power, jumped on Beveridge’s scheme. Worn out by war, the people were conned. They voted for it in droves. So, the British welfare state was born.

By 1948, most of the welfare-state proposals had been implemented. Although some thinkers, even Beveridge himself, were already starting to worry what kind of monster he had sired. Since then, many other countries have set up state welfare systems, following the British model more or less closely.

In Britain at least, it isn’t just pensions, health and unemployment insurance that are provided by government, and financed through taxation. There is subsidized housing. There is “free” education. Even bus services are subsidized. The whole system is like a giant whirlpool, in which some of the money taken from us through taxation is eventually returned to us in one form or another – but a lot of it just disappears.

So, what effect has the welfare state had on our lives? Today, after almost sixty years, has it ended poverty? Has it made us all better off? Has it provided us with financial security in our old age?

The answer to the first question is clear. The welfare state hasn’t ended poverty. Far from it. It has, so the sociologists tell us, created an underclass. With no desire to work for a living, and in many cases with criminal tendencies, the underclass are unemployed, unemployable and dependent on the state for their very existence.

And it is not just in Britain that welfare has failed to end poverty. I quote from a recent article by Michael D. Tanner of the Cato Institute about welfare in the USA:

“Despite this government largesse, 37 million Americans continue to live in poverty. In fact, despite nearly $9 trillion in total welfare spending since Lyndon Johnson declared War on Poverty in 1964, the poverty rate is perilously close to where it was when we began, more than 40 years ago.”

There is worse. Fifty years ago, one working parent could support a family. Now, it takes two – and even two incomes are often not enough. Buying a home, too, has become an increasing strain for working people. How can it be that, despite the enormous advances we have made in technology in fifty years, and despite the fact that many people work harder than ever, overall we are worse off, not better?

There is yet worse. Unless there is radical change, most people now in their 50s or younger will never get pensions sufficient to live on. If we save, our savings will become worthless the next time the politicians debauch the currency, as they did in the 1970s. If we don’t save, there will be nothing left in the pot for us, no matter how much we have put in. The so-called compact between the generations, which was supposed to assure us of pensions, has failed.

The confiscatory tax burden on us has risen steeply in the last half century. Both direct aid indirect taxes have gone up and up. And the yield from these taxes is used now for purposes way beyond pensions, health and unemployment insurance, even beyond “free” education and subsidized housing. Many of these purposes bring no conceivable benefit at all to those who pay the costs. For example, it was recently revealed that a quarter of the “council tax” we pay in England – supposedly for roads, parks, police and the like – actually goes on pensions for state employees.

And those in power are for ever looking for new excuses to take our resources away from us. For example, new “green” taxes, or empowering themselves to confiscate our homes if we leave them empty for more than a few months.

Claiming to represent “the community,” the politicians, national and local, use money taken from us to seek popularity. A recent proposal to offer people regular “health MOT checks” is a good example of this. The politicians encourage people to clamour for the benefits they offer, while not thinking about the costs, or about who will be expected to pay them. And increasingly, what is taken from us is used on dubious schemes that provide for no-one’s needs, but merely reward political correctness, such as grants to install solar heating.

The re-distributive welfare state has also caused moral decay. Many people now show no shame about taking as much as they possibly can from the trough, even if they don’t either need or deserve it. If I don’t take it, they say, someone else will. It is not surprising that, if people are encouraged to behave badly like this, you get a bad society. And the virtues of independence and self-help have been all but forgotten.

We have also lost what I call the passive sanction. When people behave in a way we don’t like, we should be able, non-aggressively, to tell them so. We should be able to choose the severity of our sanction as the situation demands, from the raised eyebrow right up to outright ostracism. We should certainly have the right to deny financial help to those that behave badly towards us. But the welfare state has taken this right away from us.

And it is not just in Britain that there are problems like these. I quote Tanner again: “Government welfare programs have torn at the social fabric of the country and been a significant factor in increasing out-of-wedlock births with all of their attendant problems. They have weakened the work ethic and contributed to rising crime rates. Most tragically of all, the pathologies they engender have been passed on from parent to child, from generation to generation.”

However, some have greatly benefited from the welfare state. It has given the politicians a chance to appear generous and compassionate, while all the time spending other people’s money. And it has brought about an enormous increase in bureaucracy, with the arrogance, incompetence and waste that go with it. Those in control of the welfare state, and those that have found nice little niches in it, have done very well out of it, thank you. At our expense, of course – at the expense of the real working people.

* * *

Even a decade ago, I used to ask myself serious questions about the welfare state. One, why hasn’t it ended poverty? It’s had plenty of time to do it. Two, why do many welfare-state proponents fail to practise what they preach about caring for the poor and needy? Why don’t they put their money where their mouths are?

Three, in exchange for the large sums of money which have been taken from me over the years, why have I never had even a single word of thanks or appreciation from any welfare recipient? Not even from one of them, not even once. Ungrateful bastards.

Four, why do the politicians all offer the same solution to the problems of the welfare system – to throw more and more tax money into the pot? Five, why isn’t there a social stigma attached to receiving benefits? Why isn’t failing to pull your weight in the economy looked on as shameful?

Recently, my questioning has become more radical. What, I began by asking myself, is the moral basis, which justifies expecting people to help those in need?

I can see three possible answers to this question. The first is mutual aid. Accident, illness or disability can hit anyone, as can unemployment. And old age hits everyone who doesn’t die young. I see no reason why people should not invest in schemes of mutual aid or insurance, which provide benefits, in proportion to their contributions, to those who need them when they need them. Such schemes existed before the welfare state – for example, the friendly societies. And, by and large, they worked reasonably well.

But if a scheme is set up in such a way that the dishonest can take out more than they are entitled to, it is no longer a mutual aid scheme. It is simply a mechanism for re-distribution of wealth from the honest to the dishonest. Nor can any scheme be mutual aid, if it requires some to pay more than others for the same level of benefits. Yet this is exactly what has happened with the welfare state. So the basis of the welfare state, whatever it may be, is not mutual aid.

The second possible moral basis for helping the needy is solidarity. But solidarity with whom? Plainly, I should feel solidarity with those who share my culture and my values. But what of those that don’t share my values? And what of those that behave in ways I disapprove of, or even do things actively hostile to me?

Surely I have no obligation to show solidarity with, or to do anything to help, those that behave as my enemies? Particularly if they despise the things I hold dear – like individual freedom, civil liberties, independence, honesty, common-sense justice, tolerance, work ethic, earned prosperity, dynamism, human progress and striving for excellence?

Why, indeed, should I care about those that don’t even try to earn an honest living and to be a nett benefit to me and to other good people? Why should I waste my resources on those that are nothing but a drain on me? And why should I give anything to those that dishonestly milk the system?

I can be sympathetic towards those who cannot earn because of old age, or disability, or accident or illness, or if their opportunities to earn are limited for reasons outside their control. But not if their failure to earn is due to laziness or dishonesty. Nor, indeed, if they are hostile to business. From where do those, that hate and despise honest business, get any claim to any of the wealth it creates?

What of those that have supported re-distribution of my earnings towards others – or towards themselves? They have taken from me without asking me. They have not shown me goodwill. They have not behaved as my fellows. So why should I have any solidarity with them? They owe me compensation; I don’t owe them anything.

And what of those, that urge or approve of political policies that annoy or inconvenience me? If, for example, they call for or support draconian speed limits on the roads? Why should I give a single penny to any bastard that wants to slow me down or try to catch me out? Or if they support Labour’s bad “law” called IR35, designed to ruin my career and the careers of tens of thousands of other independent consultants? Why should I feed those that bite my hand?

Come to that, why should I help anyone that takes part in any kind of politics? Politics is a dirty game, that no self-respecting human being should ever attempt to play. Why should I help those that don’t share my disgust for politics and politicians?

I feel no solidarity with the lazy, with the dishonest, with the political, with business-haters, with those that favour re-distribution of my earned wealth. And yet, the welfare state forces me to pay for all of them. So I must conclude that, whatever roots the welfare state may be based on, solidarity is not one of them.

The third possible moral basis for helping people in need is charity. When people’s lives are devastated by an event outside anyone’s control, such as the Asian tsunami of December 2004 or Hurricane Katrina in 2005, then it makes sense for all of us to do something to help them. It is very reasonable to give enough to help them back to their feet, back to their independence. And that is the end of the matter.

But the welfare state doesn’t stop when people have been helped out of the worst of their troubles. Quite the opposite, in fact. The welfare state offers incentives for people to become dependent on it. It sucks people down into dependence. It sucks them down into permanent trouble.

No, the welfare state isn’t based on charity, either. Which leaves me scratching my head, with the question: If the welfare state isn’t about mutual aid, or solidarity, or charity, then what in hell can it possibly be about?

* * *

It is plain that something is seriously wrong with the societies we live in today. Welfare is only one part of a bigger problem. What is that problem? I think I can tell you what it is.

But I must approach the answer in a roundabout manner. Long ago, at school, I studied history like everyone else. I did not get on with the history master. Which was very fortunate for me; for it meant that I learned almost nothing of school history, except the dates of the kings of England. When, then, as an adult I came to read a little about history, I was not saddled with preconceptions.

What I found, in my reading of history, was essentially this.

Firstly, human institutions, when they meet the needs of their times, rise and flourish. When they cease to meet the needs of their times, they decay and die. Secondly, there are periods of history when there is tension between an old way and a new. These times are characterized by, on the one hand, great progress, and on the other, chaos, war, repression or a combination of the three. And thirdly, we’re in one of those times right now.

It is fashionable among the most forward-thinking people today to say that the political state, the top-down structure of institutional violence that has been the model for human societies for thousands of years, is out of date. And for me, these thinkers are dead right. The state has passed its last-use-by date; and we’re all feeling the effects.

There was a time, a little less than two centuries ago, when we were moving in the right direction. The state was losing its charm. The old ruling class were losing their grip. People were demanding a bigger say in how the societies they lived in were run. Meanwhile, the Industrial Revolution was beginning to spread, and to deliver its promise of better living standards for all.

But then – as I understand it – something went badly wrong. What should have happened is that the two new classes of the time – the capitalists, the brain-power of the new industrial age, and the workers, its muscle-power – should have banded together to bring down the old, corrupt ruling class. There should have been a class war, leading to the destruction of the top-down, violent state.

But that didn’t happen. Instead – and by what devious trickery I do not know, though I am sure it must have been devious trickery – the ruling class contrived to turn the workers and the capitalists against each other. This had three bad effects. One, the Industrial Revolution was rendered far less effective in raising the quality of human life than it should have been. Two, the ruling class and their political state managed to wriggle out of the trap set for them. Three, when Karl Marx and his friends came on the scene, they ignited class war all right – but it was war between the wrong classes. No wonder Marxism failed so badly!

From that time, the remnant of the ruling class have done everything they can to expand their own power, and the power of the institution they feed off, the state. They and their henchmen have set themselves up to be a political class, a new ruling class, albeit ruling more subtly than the bad kings of old.

And there has been little opposition to the political class and their scheming. For most people have been fooled into accepting, even into supporting, the political class and their state. Having established the sham called democracy, and the fiction that democracy makes morally right whatever sufficiently many say they want, the political class set out to hoodwink as many working people as they could into thinking that the state, and so the political class, was on their side.

They carried off the deception for quite a while, didn’t they?

* * *

What does all this have to do with welfare? When you put it into context, you see that the welfare state is merely an underhanded attempt by the political class to make people think that the political class are on their side. The welfare state is, and always has been, a giant fraud, committed by the political class against everyone else, especially the productive.

You can see, too, why they created the welfare state when they did. In the 1940s, people had had a sharp taste of what political states are really about – violence and war. No wonder the political class wanted to be seen to give people what must have looked at the time like a sweetener.

The answers to some of the questions I asked earlier now become blindingly obvious. The welfare state hasn’t ended poverty, because it was never intended to end poverty. Indeed, for the political class to keep up their pretence of being on the side of the poor, poverty has to be perpetuated, not ended.

The reason why many welfare proponents don’t practise what they preach about giving to the poor and needy, is that they don’t have any compassion for the poor and needy. That’s all a front. Instead, they have a hatred of people who earn an honest living. They hate us for being productive. They hate us for being good at what we do. They hate business. Business, to them, is money-grubbing, and is beneath them. So, welfare is just a convenient excuse for them to take as much earned wealth as they can away from productive people.

The reason why we good people don’t get any thanks or appreciation for all that we pay and have paid, is that the political class are stealing from us far more than just money. For, to whom do the unthinking welfare recipients give their thanks and their respect? Not to the people who earned the wealth they are living off, but to the political class that re-distributed it in their direction. The political class steal from good people, not only our earned wealth, but also the appreciation and respect which we deserve.

The reason why the politicians all want to throw more and more money at the welfare system, is just that they want to take more and more of our money. Oh, that was an easy one! And the reason why there is no stigma attached to receiving benefits, is that the political class actually want to encourage people to take their bribes and feed at their trough. They want as many of us as possible to become dependent on them and their welfare state.

This is the same reason why the political class don’t worry too much about the existence of the underclass. Hell, if they can haul enough people down into dependency, then the votes of the dependent, in the sham called democracy, could keep the political class in power, and their welfare state in continued existence, for ever.

The reason why, despite all the technological progress and hard work, many people today are worse off than their forebears were fifty years ago, is that today there’s a huge dead weight holding down the economy. That dead weight is the weight of the political class – and it is increasing and increasing.

Isn’t it a clever trick that the political class have played on us? Invent a scheme that takes earned wealth away from people, but fool them into thinking they are benefiting from it. Some of them will be dragged down into poverty. How great! You can use that as an excuse to take away more and more wealth from everyone! Meanwhile, you and your political-class cronies can enjoy popularity, power and spending other people’s money. Not to mention the pleasure of hurting the productive people you hate and despise so much.

So, what is it, this bigger problem I referred to, of which the welfare state is only one part? The answer is now before us. The political class are the problem.


  1. Universal insurance payment regarding Welfare has been withdrawn, more or less, so that many who have never ever paid into the pot take more and more out of the pot, more or less. The idea was that by everyone paying in a national pot one was insured for those times of need. Rather than have a hodge-podge of social insurance and health schemes, that often left those in need destitute and bereft of treatment, the idea was we ALL pay in before we take out and that it was about needs not wants or desires. There was no child benefit under Beverage. The ideal was people would work, would still save for the old age, would still live by the concept of provision and breeding through marriage and trying to secure a more secure life as best one can. As the post says the political class have used welfare as a means to keep themselves in power rather than tackle the issues of poverty and unemployment, pension provision and health care, housing and education.

  2. Neil,

    I agree with a lot of what you say here, and particularly like this passage:

    [quote]”We have also lost what I call the passive sanction. When people behave in a way we don’t like, we should be able, non-aggressively, to tell them so. We should be able to choose the severity of our sanction as the situation demands, from the raised eyebrow right up to outright ostracism. We should certainly have the right to deny financial help to those that behave badly towards us. But the welfare state has taken this right away from us.”[unquote]

    However, allowing for the fact you wrote this ten years ago, the difficulty I have is with some of your underlying assumptions and your understanding of what has caused present problems.

    1. The welfare state was not, and to a large extent still isn’t, ‘something for nothing’. As you know, the benefits have to be paid for out of general taxation and National Insurance contributions. It’s true that, in theory, people can receive benefits even if they haven’t paid any significant direct tax, and undoubtedly there are ‘free riders’ in economic terms, but overall it is not a free system.

    2. The aim of the Beveridge Report was not explicitly to end poverty or stop people becoming poor. The Five Giant Evils identified by William Beveridge were: squalor, ignorance, want, idleness, and disease. One of the reasons for the welfare state was to prevent this country turning into some kind of Third World society. We don’t (illegal immigrants aside) have people living in shanty towns, children playing and washing in sewer drains and cities with neo-Edwardian wealth disparities. So there you have one of the (invisible) achievements of the welfare state. It’s called civilisation. The alternative to civilisation is freedom, but that comes at a price as well.

    3. I don’t accept that the welfare state has caused dependency or poverty. It may have led to those things, but that can only be because governments have lost sight of the original purpose of the system. This was part of the disagreement I had with Ian B. It’s supposed to be an insurance policy, but has expanded (despite government denials and apparent ‘crackdowns’) into a lifestyle for some people – a point on which we seem to agree – however I don’t think this was inevitable, but has happened due to the mismanagement of the country and its economy, which necessitated an expansion of welfare (under Thatcher, for instance, the increase in welfare and NHS expenditure was huge). What was called the ‘welfare state’ has now become a ‘custody state’ in which the government pays off certain elements in society that can’t or won’t work, in exchange for peace and order.

    4. I think the welfare state and the prison system in the United States, which are both vast in scope, now perform a similar role to the same institutions in Britain. In the USA especially, there is also a racial dimension to it, and welfare and prisons amount to a two-handed form of liberal racial supremacism. Prison and ‘welfare’ are what has replaced slavery and factories in America and Britain respectively. This is not the purpose for which they are intended.

    5. The moral decay you refer to has occurred, but I think it is due to influences other than just having state welfare available to people, and I don’t think it takes the form of people not wanting to work. My experience is that everybody (or almost everybody) wants to work. I know that’s a generalisation, but I think it would be a strange person who actually did not want to work, but some people won’t work for certain reasons: they might not like the jobs available and know they can arrange things so their benefits continue; or they might have become lazy. I would agree that most such people should change their attitude or try harder, but none of those and similar excuses are the same as not wanting work. For a real explanation, I think you would need to look at changes in society that have made it harder for people to work on a reasonable basis. For instance, for some people, the only jobs available to them locally at their skill level are temporary with employment agencies and do not offer the same rate of income as regular workers or the same level of pay.

    • Tom, thanks for your comment.

      (1) What I said is that they thought they were getting something for nothing.

      (2) Your definition of civilization is different from mine. And – assuming you’re right that the bad things you list are now gone – how do you assess how much of that was due to the welfare state?

      (3) When you say “in exchange for peace and order,” I assume you mean “in exchange for their votes.”

      (4) I think I understand the purpose of prisons; to keep maniacs away from victims. I’m not quite sure what you are saying about welfare.

      (5) You seem to be agreeing with Ian here – and with me. The harder our enemies make it to work productively, the harder it is for people to live independent.

      • (1). So you agree that they are not getting something for nothing? I would accept that there are free-riders in the system, and some may even delude themselves into thinking they are living the life of Riley on ‘the social’, but these observations have to be qualified because in reality most of these proverbial ‘benefit scroungers’ have in fact paid into the system at some point, and most of them don’t, deep down, really want to live like that. It’s not so much a case of they could work if they would. It’s more a case of they would work if they could – even if they deny it themselves and openly sneer at anybody like me who suggests they have more in them. Very few people would actually not want to work. In the past, that small fraction of the population who really were ‘scroungers’ and meant it were quietly condoned and ‘paid-off’ by the government with long-term benefits. Everybody knew who they were and that they could work if they wanted to, but it was too much hassle to deal with them as they were so few in number, so the fraud was condoned.

        The reason I don’t agree with you, Neil, is that I don’t think it is the welfare state that causes the ‘dependency’ problem. Some of this is down to individual character and whether the individual has the will to really – and I mean REALLY – try and find work. This is where I would agree with you and disagree with Ian, that there is an element of voluntarism in long-term welfare dependency and a lot of the self-victimisation and self-righteousness we now see from the Left is nauseating. This is also why I found the childish criticisms of Iain Duncan Smith so objectionable. It is pretentious and cowardly to personalise these issues in that way. It is also intellectually dishonest.

        But I disagree with you fundamentally about the relevancy of welfare per se. The real problem is that the system has lost sight of its initial purpose, and the overarching policies on the economy, industry and employment in Britain have had the effect of turning us into a trading post rather than a real country. The current Tory policy on welfare is correct in its fundamentals. It is an attempt to return to the initial discipline that the system was established for in the first place. The reason it can’t work, and the reason the Tories are messing this up, is because the ‘monetarists’ in the Tory government and the Conservative Party refuse to acknowledge that their own economic philosophy has played a part in ruining the country and this must be fixed if their welfare reforms are to work properly. In other words, we need……national-socialism! Not columns of military men marching up and down Whitehall or youth holding torches. By ‘national-socialism’, I simply mean a government that actually works on behalf of its own people, whether in the matter of borders and immigration, industrial policy, welfare benefits, or whatever. A novel concept, I know. That would, however, require a seismic shift in thinking among the entire elite, not just the Conservative Party. The Conservatives are not the only guilty party here.

        (2). I don’t have a definition of ‘civilisation’ really. I think civilisation is largely a pretence anyway, but I made use of the word to emphasise that in order for us all to live together, we have to give up some of our important freedoms. We could make our society freer than it is, but this would not necessarily have desirable results. Somalia is a very free country, almost anarchistic in character. Ordinary people in Thailand are largely free of government intervention in their lives and can do more or less what they want (within reason). However, I don’t fancy living in either country, even though I would certainly be freer. I do nevertheless accept that our society could be freer and would be if we changed policy direction in a lot of important areas.

        (3). I agree that the current ‘welfare’ state is about clientism, but that is not the real welfare state, as I understand it. The system has been corrupted. I don’t accept that is inevitable. I think it is due to the policy decisions taken by successive governments.

        (4). You can surely see the relationship between the welfare state and other institutions such as prisons, the judiciary and the courts, social work and so on. The interrelationship that has developed between these institutions is what I call a ‘custody state’, where reliance on state institutions, government agencies, local government, charities and other state-funded bodies has become a way of life, and for suppliers, an industry in its own right, with ‘clients’ of these organisations forming a captive market.

        Of course, in a manner of speaking, we all rely on the state to an extent in one way or the other – if only for maintaining public order – but for some people this reliance has become an intimate part of their lives, with the state in effect taking on the role of keeper. This was not the intended role of the institutions referred to.

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