Value and the Welfare State; B. Summers

The ideas that nurture and sus tain the welfare state are in numerable, but a few basic con ceptions run through them all. And one such notion is that wel fare programs somehow "increase the general welfare." In conventional usage, "general welfare" is taken to mean some sort of sum of the welfares of the individuals composing society. To form any such sum, one must as sume that the welfares of individ uals can sornehow be measured. The "welfare of the individual" is a subjective value judgment. Mr. Summers is a member of the staff of The Foundation for Economic Education. 692 Unless one considers himself somehow superior to his fellow men, he will readily assert that the only judgment of the welfare of the individual that matters is the judgment of the individual himself. Can a person measure his own welfare and then report the re sulting number back to the state? Welfarism is based on the assump tion that an individual not only can do this for himself, but a case worker can do it for him.

The measure used, of course, is the material well-being of an in dividual - in rough terms, how much money he has. That is, the material wealth of a person is taken as the measure of his wel fare. The state, using these fig ures, then forcibly takes from those with "too much" wealth and gives to those with "too little." Thus are the actions of the wel fare state founded on the assump tion that ·an individual· can mea sure the values he places on ,goods and services. That is, state wel1974 VALUE AND THE WELFARE STATE 693 farism is based on the notion that personal values can be measured and that the appropriate measure is money. Subjective Values Change This notion is false. For money to be a measure of value, the value an individual places on a unit of money, say a dollar, would have to be constant. In reality, as an indi vid ual changes, and as his economic circumstances change, the value he places on each dollar also changes.

To confirm this, merely reflect on your own experiences. If you received a raise, did not the value of each dollar in your eyes de cline? Were you not more willing to spend these dollars for luxuries you wouldn't have bought in the past? Also, as prices change, does not the value of each dollar in your eyes also change? Reflection upon your own experiences, and your own changing tastes and val ues, will show that a unit of mon ey is no more a standard of mea surement than is an elastic ruler. Thus is it seen that the welfare of the individual is not amenable to measurement. This reveals the folly of egalitarian leveling schemes, for they are based on the assumption that individual wel fares can be measured and com pared, usually in terms of dollars. There is no reason to believe that equally wealthy people are "equally happy" people. In fact, one has only to look among his acquain tances to find graphic evidence to the contrary.

The immeasurable nature of hu rnan welfare also demonstrates that there is no way of determin ing if the welfare state helps bene ficiaries more than it harms tax payers because there is no way to measure the help and the harm. That is, there is no way of telling if welfare programs "increase the general welfare." In fact, "general welfare" - viewed as a sum of the welfares of the individuals com prising society - is a meaningless expression. One may thus conclude that the welfare state has no meaningful criterion to judge its effects on the welfares of the people. Voluntary Charity As Alternative to Welfarism Fortunately, welfare is not the only way that people may give di rect aid to the needy. There is one alternative: charity. Charitable acts are voluntary acts. An indi vidual accepts charity because he feels he is better off doing so than not. That is, he feels his wel fare is improved. A bestower of charity does so because he betters his own standing in his own eyes.

That is, he experiences a psychic profit. Hence he also feels that his 694 THE FREEMAN November welfare is improved. Thus in charitable transactions, as in all free market transactions, each party feels that he is better off. If both parties didn't feel this way, they wouldn't have made the transaction. We may thus conclude that in charitable acts all parties involved improve their own welfares from their own points of view - the only points of view that matter. The voluntary nature of char ity, in contrast to the coercive "pay these taxes or else" nature of welfare, convinces me that charity is far the better alterna tive. ~ IDEAS ON LIBERTY Hope for the Oppressed ONLY when the state is restricted to the administration of justice, and economic creativity thus freed from arbitrary restraints, will conditions exist for making possible a lasting improvement in the welfare of the more miserable peoples of the world. It is often this very lack of justice in the poorer countries that keeps the people in their low economic state. An English economic advisor to an African state was shocked at the prevalent low wages and suc ceeded in securing a minimum wage law for the land. The result was that the thousands of workers who had earned forty to fifty cents a day were put out of work. Only the more efficient and essential workers remained and the whole economy suffered. It had been interventions in the market by the government, a lack of justice, that had kept the wages down in the first place by pre venting capital accumulation and investment. Further interven tion, in the form of the minimum wage law, only aggravated the situation, removing the one chance many had for some economic improvement. Were justice present in these lands, there would be no shortage of investment capital, for there would then be no fear of unjust confiscation or nationalization. Justice is the one condi tion that will lead to economic improvement. Where there is little justice, there is little charity. Only where there is justice and freedom will there be the opportunity for extensive charity.

FRANCIS E. MAHAFFY, "Social Justice A REVIEWER'S NOTEBOOK JOHN CHAMBERLAIN WHAT IS the justification for the United Nations? It is hard to see what it has done to further any interests that might be helpful in preserving the values that have made western civilization what it is. Clarence Streit's "Atlantic un ion" would have done better. The UN, as it has evolved, has become the happy hunting ground of all the two-bit bully boys who talk about liberty and use stolen prop erty to bolster their one-party re gimes. So why do the inheritors of the Judeo-Christian-Greek tradition put up with it? Abba Eban, the civilized Israeli who was Golda Meir's Foreign Minister, when pressed to explain why he made his periodic visits to the UN slab in New York City, put it wittily when he said that "if one is to work behind the scene, one must have a scene to work be hind." That just about sums it up: the UN is a scene.