We Are All Welfare Queens Now
Yes, even you
Usually, I disguise my cultural and other references, leaving them as Easter eggs for those in the know. But in this case, I'm going to be explicit. My title refers to a quote popularly attributed to President Nixon but more accurately attributed to Milton Friedman: "We are all Keynesians now."
Yes, you too have become a welfare queen. Our government has become so big, so pervasive, and so strong that its invasions into the private world has made us all subjects. The passage of the one big beautiful Bill Act (OBBBA) is just the latest iteration in the long progression of our joint socialism. Bastiat's prophetic words that "The state is the great fictitious entity by which everyone seeks to live at the expense of everyone else" are ringing quite true.
Don't think so?
Social Security, Medicare, and Medicaid are just a few of the big programs that belie the common citizen's position. These were all intended as safety net programs to prevent or alleviate poverty. The first two have evolved into the world’s largest transfer programs that take money from the young and relatively less wealthy and provide it to the old, who are as a group the wealthiest cohort ever. Not only that, Social Security benefits grow disproportionate to inflation with a positive correlation to earnings—the wealthier you are, the more you get.1 Of course, this can’t go on forever.
Consider corporate welfare at the state and local level from sport stadiums and other subsidies to relocation inducements to film/movie subsidies and at the federal level from the Export-Import Bank to, again, Medicaid money laudering to farm subsidies to tariffs in general. The recent nationalization of U.S. Steel is not one of a kind but rather one of this kind for which there are many.
Regulation too is a source of largess supporting the large and established at the expense of startups and disruptors. This is true in the more obvious case of regulatory capture, but it is also true at the individual level. Minimum wage laws and union protection and special privileges are illustrative, on-going cases.
The subsidization if not outright nationalization of lending for everything from small-business loans to higher education to mortgages has led to predictable distortions and excesses.
With only minor exaggeration, we have the following contradictions at play. Nobody wants this much government spending in general, but everyone wants government spending, specifically. And no one wants to pay for it. We all think we deserve a tax break. The political power of increasing SALT deduction limits and populist policies like no tax on Social Security, tips, and overtime show an incoherence indicative of the have your cake and make other people eat it too mentality.
I could go on and on. Some would likely say I already have. But until we come to grips with Bastiat’s warning, we will continue down this road that is both financially and morally bankrupting.
And for those who insist, “BUT I PAID INTO IT!”, there are two replies:
It is not a retirement program whereby you own any asset or are promised any return. It is a pay-as-you-go welfare transfer program.
You likely are getting more out of it than you contributed albeit not considering your investment opportunity cost.