The end of Socialism but not the end of Social Welfare
Conclusion
James Madison warned that “factions,” now called “interest groups,” are a threat to democratic governance. His fears are now reality. The social welfare state has become the prisoner of interest groups that demand ever increased benefits and resist any changes that lower their benefits.
That puts the social welfare state on an unsustainable path leading to its eventual collapse.
Experience in the European Union and the United States shows these political unions headed for a crisis. But it will not end the welfare state. Political pressure for redistribution carried out in the name of equality is always present. The most we can expect is enough less spending to maintain democratic capitalist governance. And perhaps we can convince governments that changing incentives and adopting policy rules, not exhortation and direction, is the effective method for bringing lasting change.
* For the September 2012 Mont Pelerin Meeting, Prague
References
Grabell Michael, (2012). Money Well Spent? New York: Public Affairs
