Libertarianism vs. the Welfare State, Round 1

The welfare state is alive and kicking, not just in Europe but in the United States as well. We are at different stages of welfare state evolution (or decline), with Europe being one or two major reforms ahead of us, but the path is inevitably the same.

In fact, during the Great Recession, when the European welfare state was subjected to downsize-to-save-it austerity policies, the American welfare state kept growing. Both the federal government and the states kept hiking spending in typical welfare-state areas such as welfare, health care and education. Irresponsibly ignoring its deficit, U.S. Congress allowed the welfare state to expand, impervious to the general macroeconomic conditions of the nation’s economy.

Ironically, even though the United States is a more decentralized structure than the European Union – and many European member states – the American welfare state is actually more centralized. The federal government spends more than half-a-trillion dollars every year on entitlement programs that are formally run by the states. Medicaid is a well-known example. This means that the states de facto become agents of the federal welfare state, and it really does not matter what state you live in – you get the welfare state no matter what. My own home state, Wyoming, is a case in point: even though Wyomingites pride themselves of being rugged individualists, our welfare state is among the more generous in the country. Of total state government spending, 66 percent is for entitlements and income redistribution.

Again, the welfare state is still smaller here than in Europe, and the efforts of the Obama wing of the Democrat party to expand it further seem to have fallen flat to the ground. Nevertheless, government is big here, and the fact that it remains big – even expands during recessions – raises an important question:

Has libertarianism been marginalized to the outer rim of the American political universe?

The answer, scary as it is, appears to be affirmative. Even if the term “libertarian” is still used frivolously, its content seems to be adrift at best, void of meaning at worst.

In a recent podcast Cato Institute research fellow Emily Ekins suggested that some 20 percent of all Americans harbor libertarian values. Her definition of “libertarian values” is that a person is fiscally conservative and socially liberal. The fiscal conservatism, in turn, is defined as preferring a lower corporate tax to a higher corporate tax, and less government spending to more government spending.

In a Policy Analysis for Cato, Ekins and FreedomWorks vice president David Kirby shed a bit more light on what “economic conservativsm” means in this context. Analyzing the libertarian roots of the Tea Party movement, Ekins and Kirby move a bit deeper into the issues. However, their attempt at identifying where Tea Party libertarians stand on individual issues remains within relatively traditional frames: more or less government spending; higher or lower taxes; for or against TARP; for or against Ron Paul as presidential candidate.

In a nutshell, according to Ekins and Kirby the actual policy content of the term “libertarianism” has been reduced to one end point on a yardstick that runs from “more” government to “less” government. At no fault of theirs, Ekins and Kirby avoid entirely the principled questions that have defined libertarianism over at least the past four decades.

The foundation of the modern libertarian movement was laid by Harvard philosophy professor Robert Nozick in 1974. His monumentally important Anarchy, State and Utopia provided a solid philosophical definition – and defense – of the minimal state. The identifying boundary of that state was a ban on redistributive government spending. Summarized very briefly, Nozick says that under the minimal state:

1. Life is sacrosanct;

2. Because life is sacrosanct, so are all the proceeds of “life”, i.e., work;

3. Because the proceeds of work are sacrosanct, no one can forcefully take your property – income, wealth or other belongings;

4. The absolute ban on coerced collection of property is a universal ban on taxation;

5. Together, the ban on taxation and the sacrosanctity of property preclude forceful redistribution, i.e., a welfare state.

The only exception is taxation to provide for an impartial judiciary; if courts are private, as in the ultra-minimal state, Nozick credibly argues that excation of compensation will be biased. That point aside, the argument Nozick makes against the welfare state is as forceful as it is challenging. It also provides the core of the modern definition of libertarianism, namely a society in absolute economic freedom. Forced income redistribution is immoral, and therefore the welfare state is antithetical to libertarianism.

When Ekins and Kirby present libertarianism as it is understood today, both in the Tea Party and in American politics in general, the gap between Nozick’s definition and the term’s common contemporary useage is quite frankly Gragantuan. At least 80 percent of the $4.5 trillion of federal, state and local government spending in today’s United States is of the redistributive kind, yet we never hear libertarians argue for the abolition of those spending programs. Even firebrand libertarian and former Congressman Ron Paul wants to preserve America’s most costly, most intrusive entitlement programs: Social Security and Medicare.

Undoubtedly, the balance point of what classifies as “libertarianism” has moved away from Nozick’s origin, toward the center of the political spectrum and thereby within territory where you accept the welfare state as a phenomenon. But it is not just the political meaning of libertarianism that has changed – long before Nozick made his stellar contribution there were obstacles put in the way of ideas like his. For example, in Article 7 the Wyoming constitution prescribes entitlement spending in the form of government spending on education.

What does this mean for libertarians? What does it mean for Wyoming – and for America? Is libertarianism, real libertarianism, dead and gone? Has the ideology of the welfare state conquered not just America and Wyoming, but even the term “libertariainsm” itself?