Saturday, September 13, 2008

Re: The Welfare State -- Japan and France


We are talking nuance here. I was taking issue with Lefty who claimed I believed Order trumped Liberty. If he favored the Welfare State then he was in that case favoring Order over Liberty to a degree. All the Liberal Democracies are derived to some extent from the U.S. example; so you can’t argue in absolute terms. All you can say is that one Liberal Democracy does something slightly better than another. But Welfare-State theory calls for what can only be described as a more intrusive form of bureaucratic control (in order to properly care for its citizens) than the small-government approach we have thus far striven for in the U.S.

It is a fact that the Welfare State theory would provide more control over its citizens, more than that provided by the practice of the U.S. form of government. Those nations which strive after the Welfare State ideal have much more central control – a stronger central bureaucracy, than we have in the U.S. More power and control from a central government means less power and control for the individual. To argue as you do that the Japanese government (more of a welfare state than the U.S.) is caring for you more than the U.S. government (less of a welfare state) is caring for its citizens, is unnecessary. The nature of a Welfare state is to care for its citizens. Citizens decide how much liberty they want to give up in exchange for this care.

Different discussion:

It is a different discussion to argue as you do, Marty, that Japan provides superior entitlements to the U.S., but let’s leave the theory of the Welfare State and look at the actually states we have in existence today. No nation has a thorough-going welfare State. They may tend more toward the Welfare State as France does or less toward it as the U.S. does, but both states provide care for their citizens. The American emphasis has assumed that the more successful our economy, the better off its citizens will be; so it favors economic success over entitlements. Entitlements are good, but they must not be so expensive that they interfere with economic success. France on the other hand (in effect) favors entitlements over economic success. The French government has realized for some time that it can’t afford all the entitlements it is giving its citizens. Its economy isn’t successful enough to do that, but every attempt to cut back on entitlements has been rejected by French voters.

France has a decreasing birth rate (something Japan also has) and an aging population which means fewer workers to be taxed and therefore less money to pay for entitlements. It wasn’t logical for the French voter to in effect say, we don’t care whether France can afford these entitlements or not. We are not willing to give them up. France could compensate for a falling birthrate with increased immigration, but it doesn’t do immigration very well. Rather than integrate, the immigrants form enclaves with high unemployment rates and hurt the economy more than they help. It can be observed here that Japan isn’t any better at integrating immigrants; so it will have to deal with the same problems France is facing.

The birthrate of U.S. citizens is falling much like it is in Western Europe and Japan, but we are much better at integrating immigrants. Our immigrants do become productive members of society; so in that respect we have a long term advantage over European nations and Japan. Our work force shall be growing whereas the Japanese and European workforce shall be declining as more old people leave it. Among other benefits of a growing work force, we shall have more tax money to pay for our entitlements. We shall be able to afford our entitlements longer and be less likely to have to cut them back.

Another benefit of smaller less-intrusive government is that entrepreneurs have greater liberty to start up new businesses. An entrepreneur has much less opportunity in France than he does in the U.S. With more new business starting up, more people will be employed, more taxes collected and (among other things) entitlements more easily afforded. That’s why the current administration has cut tax rates. The volume of taxes paid by a larger work force makes up for higher taxes imposed on a smaller work force (as occurs in France).

In short, the model we are using (emphasize the economy and pay for entitlements you can afford) is working better than the French model (emphasize entitlements and don’t worry so much about the economy). I should qualify this by saying the French government today is vitally concerned about the French economy, but the French model, that reflected in the French constitution, favors entitlements over economic success and that is what I’m referring to. To put it another way, the French constitution guarantees their entitlements but it doesn’t guarantee that it will be able to afford them. It guarantees these entitlements and does not make them contingent upon being able to pay for them.

By the way, with a dwindling work force, as any aging population will have, expect the unemployment rate to go down.

Lawrence Helm

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