How State Help Destroys Help=Help; W. H. Chamberlin

HOW STATE HELP DESTROYS SELF-HELP IT WOULD NOT MAKE either good sense or good morals to leave a long stretch of sidewalk dangerously slippery with glazed ice while spending the money that might have been used for snow removal on ambulances and hos pital beds for passersby who might break their arms or legs on the slippery ice. Yet, in essence, this is what the welfare state in Amer ica and elsewhere does. While making a parade of hu manitarian purposes, the ever-expanding practice of of fering state handouts for every emergency, from getting a house or apartment to paying for medical aid, is de stroying an extremely valuable American tradition that it is up to the individual to provide for the well-being of himself and his family. For it is a most pernicious although widespread illu sion that the state can create any wealth of its own. When a government announces some new expensive social welfare program, the point is usually carefully ob scured that this program must be paid for through some form of increased taxation (it is immaterial whether this takes the form of heightened "social security" payments 177 178 WILLIAM HENRY CHAMBERLIN or of direct federal or state taxes) or through the most cruel and harmful tax of all, inflation.

It may seem humane and benevolent to provide free medical care for the aged by taxing the general popula tion. But a much more practical and realistic form of benevolence would be to leave people in their produc tive years enough of their earnings so that they could save for medical care and other emergencies in their years of retirement. From the standpoint of personal satisfaction, self-help beats state help every time. It is indeed shocking and distressing that in a coun try like the United States, where wage and salary levels are comparatively high, where no serious depression has been known for more than a generation, so many "senior citizens" have such low personal incomes. The reason is pretty obvious: the tremendous increase in the burden of taxation at all levels. Many of the indigent aged could take a pencil and paper and calculate accurately how many more opportunities for comfortable living, includ ing ability to meet their medical bills, they would have enjoyed if so much of what they earned had not been siphoned off by federal, state, municipal, and other tax gatherers, to say nothing of the steadily increasing bite of the payments required to maintain some semblance of solvency for the social security system.

There are many fields in which the ever-expanding process of state help is destroying individual capacity for self-help. Take housing, for instance. Whenever a fed eral housing project is launched, with rents below the cost of production, the taxpayer who must foot the deficit HOW STATE HELP DESTROYS SELF-HELP 179 is rendered less capable of purchasing or renting his own housing. Take the case of a young man, newly married, who is supposed to be taken care of, if he wants a middle~ income house, by a 40-year, no-dawn-payment mortgage plan. But, if his income were less heavily taxed, he might well be able to save enough for a conventional down payment and have enough of his paycheck left to payoff his mortgage on a 20-year basis. Some Fundamentals The fundamental truths that the state, by its very nature, can create no real wealth, that whatever it gives to one group it must take away from another (or per haps from the same group), should be hammered in with the remorseless iteration of which only commercial advertising seems capable. For history is full of examples of healthy national communities that gradually shriveled up, lost vitality, and perished as the people were bribed by the will-o'-the-wisp of state handouts and fell more and more into the meshes of an all-encompassing bureaucracy.

It is one of the best established laws of history that, as government activity expands, individual activity and enterprise contract, until what was once a vigorous, self reliant society becomes a hollow, bureaucratized shell, easily cracked by external attack or internal decay. This whole drama of rise, growth, decay, and ultimate fall has been played on many stages in world history, the most dramatic being that. of ancient Rome.

180 WILLIAM HENRY CHAMBERLIN Gibbon has immortalized the fate of Rome in what is probably, if only for its literary style and philosophical quality, the greatest of all histories, The Decline and Fall of the Roman Empire. A Canadian professor of classics, W. G. Hardy, in a lecture entitled "Why Rome Fell," published in a paperback work on Greece and Rome, sums up in briefer form many of the causes of decline and fall which Gibbon analyzed at more length. The Roman Republic, which had triumphed over Hannibal and many lesser enemies mainly because of the self-sacrificing patriotism and devotion of its proud citi zens, had become an absolute empire in which the state, working through a huge imperial bureaucracy, tried to do everything for everybody, relieving everybody of his surpl us cash in the process. The financial burden of keeping up an increasingly mercenary army and of pro viding the panem et circenses, the "bread and circuses"

which the idle Roman populace demanded, steadily increased. Roman financial policy became one of creeping and not-so-creeping inflation. The most common Roman coin, the sestertius, lost about 98 per cent of its value between the time of Augustus, at the beginning of the Christian Era, and the reign of Diocletian some three centuries later. Diocletian, who brought some temporary order and stability into the declining empire, might well be honored as the patron saint of all planning and regu lating agencies. He issued an edict fixing a maximum price for all goods on the market and for wages in all trades. The penalty for violation was death. But ecoHOW STATE HELP DESTROYS SELF-HELP 181 nomic laws proved stronger than the imperial decree and this supreme experiment in economic regimentation ended in a fiasco. The clammy dead hand of bureaucracy more and more strangled individual initiative. The empire became a bound society. The more well-to-do citizens in every com munity were made collectively responsible for bringing in the taxes. The natural result was that they ceased to be well-to-do. Farmers were tied to the soil; their sons had to be farmers. Similarly the sons of artisans had to follow their fathers' trade. As Professor Hardy sums it up: "There was no escape from this relentless regimen tation. For regimentation was the end-result of the ab dication of political freedom and of the pursuit of ma terialism. The welfare state had become a despotism."

Ever higher taxes, an ever-increasing bureaucracy, the growth of an omnipotent state, the paralysis of local in itiative, a growing reliance on a faraway central au thority that started with some features of the welfare state and ended with full-fledged totalitarianism-here are some very obvious forces making for the decline and fall of Rome. Does it require much exercise of the imag ination to see in our own country and our own time some germs, at least, of these ultimately fatal diseases? A Trend Away from Freedom Surely, the saying that all one learns from history is that men learn nothing from history is borne out by the lack of awareness of the symptoms that have foretold the 182 WILLIAM HENRY CHAMBERLIN decline and fall of great societies in the past. For more than a generation the trend has been steadily in the di rection of increasing the power of the central govern ment and diminishing the self-reliance and independence of the individual, and his ability to provide for his own future. This trend has been faster under some Admin istrations, slower under others; but it has never been de cisively arrested, much less reversed.

By far the best kind of social security is provided by individual saving. But the healthy impulse of the normal individual to put aside for "a rainy day" has been given no positive encouragement and much discouragement. The principal discouraging factors have been inflation, the steady erosion in the purchasing power of the dollar, and taxes at federal, state, and local levels so heavy that little margin is left for saving. There are several feasible ways in which the govern ment could encourage individual saving and thereby rid itself of the almost unlimited obligation which it as sumes when it is taken for granted that the state has some obligation to bail out the individual from any mis fortune he may suffer. Both deposits in savings banks and interest on savings bonds, within a reasonable limit, say $25,000, could be freed from taxation. In view of the steady decline in the purchasing power of the dol lar, this would only be elementary fiscal justice.

But neither these nor any other measures calculated to stimulate individual saving have received effective support in Washington. One of the most familiar forms of saving in America, in contrast to Europe, where corpoHOW STATE HELP DESTROYS SELF-HELP 183 ration stocks are usually held by a rather narrow circle, is investment in common stocks. There are now some thirteen million owners of common stocks in the United States, most of them people of quite modest means. There has been much vague talk about "economic democracy"; but this increasingly diffused ownership of America's industrial enterprises is the most effective means of distributing profits widely that has ever been devised. Many companies have employee stock owner ship plans on favored conditions-an excellent means of creating a sense of personal interest in the performance of the company. One factor that has discouraged stock ownership is the double taxation of money paid out in dividends. A corporation is first taxed 52 per cent on its profits. Then a second tax is levied on whatever is paid out in divi dends, depending on the tax status of the dividend re cipient. In other words, the same money is taxed twice a gross and obvious inequity. In logic there should be either a corporation tax or a tax on individual income from dividends, not a combination of the two.

A slight alleviation of this injustice went into effect some years ago when the practice of allowing a $50 de duction and a 4 percent credit for income from divi dends was introduced. Now it has been proposed to do away with these small concessions and restore the full undiluted injustice of double taxation of the same in come. An extremely cumbersome and difficult system of withholding taxation for dividends and interest seems designed as another discouragement to savers.

184 WILLIAM HENRY CHAMBERLIN Soak the Poor Even when it is recognized that the state can create no wealth of its own, it can only take from some if it is to give to others, it could still be argued that state spend ing programs are financed on the Robin Hood principle of taking from the rich to give to the poor. But this con tention loses force at a time when the maximum rate of the steeply graduated federal income tax is 91 per cent. Taxes designed to "soak the rich" have reached the point of small and diminishing returns. Most of the money for additional government spending projects will be ex tracted from taxpayers in the medium and low brackets, whose ability to provide for their own social security will be correspondingly reduced. It has been the general experience in Great Britain and other countries where the welfare state has been pushed even farther than it has been in the United States that the end of the process is for the government to take out of one pocket what it puts into another, with the inevitable high overhead costs of bureaucracy as an extra loading charge. Perhaps some day, when the futility of this process becomes more apparent, there will be more recognition of the simple truth that the best service government could render to the peace of mind and the true social security of its citizens would be to cut down both spending and taxation to a point where the individual could fairly be expected to look out for his own "social security."

The state in America has become an omnicompetent HOW STATE HELP DESTROYS SELF-HELP 185 provider, a purveyor of housing and of various social services, a regulator and, if the "liberals" have their way, a large-scale financier of a public school system that was formerly left to local administration and local resources. For this new role of the central government there is no warrant in the letter and spirit of the Ameri can Constitution, which is mainly concerned not with offering a grab bag of promised material benefits to all and sundry, but with telling the government what it may not do in abridging the liberties of the individual citizen. It is time to cut through the underbrush of detail and face up to the basic question in this issue of state help versus self-help. What kind of society do we want? One of independent self-reliant citizens, prepared to take care of themselves and their families, asking from the state only to leave them alone and get off their backs?

Or a society of government pensioners, willing to sign away their political and economic liberty in exchange for ever bigger handouts? Which is the more desirable type of citizen-the chronic recipient of relief or the sturdy hardworking Amish farmer who had his horses confiscated and sold by order of some local bureaucrat because he wanted to contract out of both the benefits and the payments involved in the social security system? The good society is surely one in which people are allowed to keep enough of what they earn so that they can pay for their homes, medical aid, and other needs without government assistance. And it is foolish to say that such a society is visionary; fifty years ago it existed 186 WILLIAM HENRY CHAMBERLIN in these United States. But it is receding farther and farther into the distance and it is part of the corrupting effect of the welfare state that resistance to it tends to weaken as the individual is able to keep less and less of what he earns because of its exactions.

Long before communism, socialism, and collectivism were more than abstract theories, a great political thinker conceived a vision, or a nightmare, of what might well be the logical final form of the welfare state. As Alexis de Tocqueville writes in one of the more striking pas sages of his Democracy in America: .Above this race of men stands an immense, and tutelary power, which takes upon itself alone to secure their gratifica tions, and to watch over their fate .... For their happiness such a government willingly labors, but it chooses to be the sole agent and the only arbiter of that happiness; it provides for their security, foresees and supplies their necessities, fa cilitates their pleasures, manages their principal concerns, di rects their industry, regulates the descent of property, and subdivides their inheritances-what remains, but to spare them all the care of thinking and all the trouble of living? ... The will of man is not shattered, but softened, bent, and guided; men are seldom forced by it to act, but they are constantly restrained from acting; such a power does not destroy, but it prevents existence; it does not tyrannize, but it compresses, enervates, extinguishes~ and stupefies a people, till each na tion is reduced to be nothing better than a flock of timid and industrious animals) of which the government is the shepherd.

[Italics supplied.] If the American Republic takes the final irrevocable turn down the road of statism and collectivism, it will not be for lack of warnings in the pages of his tory and in the ever-living ideas of prophetic thinkers.