The Fate of Every Welfare State

…global debt levels are now so high, and the economic structure is so fragile (because it relies on continuing, unproductive government spending to keep its head above water), that a seemingly minor economic slowdown could morph into something far more drastic.[1]

Welfare states have been with us since the days of the Caesars. The crowds then said “give us bread and circuses,” and that’s what they got, and more: national economic ruin.

Some things never change. What do crowds want? Immediate gratification. Are they interested in the long-term, based on steady, solid work, frugality and investment? Of course not. It’s “I want it, and I want it, now!”

Christians must be aware of this attitude, that western governments now pander to. While the West has generally done well economically for three hundred years, this could be coming to an end.

Why is this? When people walk away from God and His Word, they turn to man and his promises, and in particular, government promises. Think of these:

We’ll look after you.

Education? No problems.

Health? Yes, we can deal with that.

Welfare? That’ll be fine.

The disabled? We can care for them too.

Money for all this? Don’t you worry about that. Oh, and there’ll be justice too.

But when governments attempt to meet all these commitments, it comes at a massive price to the community. Governments make grand but unrealistic promises, and if there isn’t sufficient money to go around, rather than take the politically unpopular route of raising taxes, they borrow the money, saying, “we’ll deal with that later.”

The welfare State needs welfare people. In fact, it actually encourages them, people who are dependent on it for their livelihood. Recently, I read a true story of an American woman, written by her former employer:

She was pre-screened by an employment service for a bookkeeper position, who said she knew Quickbooks. She had gone out and birthed four kids and sent the father packing out of state so she could collect rent subsidy checks, medicaid cards, and food stamps (worth in my guesstimation about $50k a year), and then she made a few bucks doing bookkeeping. She spent extra money going dancing (even out-of-state trips to dance contests) as well as an ocean cruise every year, but didn’t have money to replace the bald tires on her car. I could only think she was going to kill her kids from a tire blow-out and had her work a few extra hours and had my company buy a set of tires for her (God knows, if I gave her the money for the tires if she would have bought them).

I often advised her to acquire new skills and get off welfare. Her parents, who were church-going, were appalled their own daughter would become dependent on government dole outs like she did. When she tried to rent a house and the landlord refused her, she was thinking of suing. I advised her to get a credit card for emergencies, like sudden auto repairs or doctor bills. I had her apply for a card. She was given a $10,000 credit limit. As soon as the card arrived she maxed out the card, thinking it was a “pay raise” (her own words).

Eventually, one day she called to say her car broke down and she couldn’t get to work. It was the gear box. That meant expensive repairs. On the telephone I advised her to rent a car, the company would reimburse her, so she could get to work and do the needed bookkeeping. She couldn’t rent a car because her credit card was maxed…

The next day she drove the car to my office and did the bookkeeping and I told her we would discuss the details about the car another day. So a couple days later I called her on the telephone and said the car wouldn’t be free, the car payments were about $350/month and I would take that out of her check. I asked her if she could afford that. She said no. So I asked if she could even afford auto insurance. She said no. So I made her a deal. She resign from her job and the car was hers plus a small severance check.[2]

Let’s be conservative, and say that 20% of the population lives like this. In Australia, that means 4.4 million people. For them, welfare is the norm. They will not change their attitude to welfare until they are compelled to. For such people, an economic collapse would be calamitous. Why? Over time, they have been trained to be dependent on the welfare State.

But the Bible warns us: “do not be deceived, God is not mocked; for whatever a man sows, this he will also reap” (Gal.6:7). This principle has individual application, but a national one as well. Of Israel, God said “they sow the wind and they reap the whirlwind…” (Hos.8:7).

I am more worried than I have ever been about the clouds gathering today (which may be the most wonderful contrary indicator you could hope for…). I hope they pass without breaking, but I fear the defining feature of coming decades will be a Great Disorder of the sort which has defined past epochs and scarred whole generations.[3]

The welfare State will not be with us forever. It will collapse under the weight of its own contradictions and indebtedness, and that will be very painful. But in the long-term, it will be the best thing for every society. Christians must make plans for what they’ll do when the collapse comes, because they’ll be needed.

                                           Humpty Dumpty sat on a wall

                                           Humpty Dumpty had a great fall

                                          All the king’s horses and all the king’s men,

                                          Couldn’t put Humpty together again

[1] Greg Canavan, “Sound Money. Sound Investments,” 10/10/2012

[2] Bill Bonner, quoted on Gary North’s website, “The Financial Outlook of an Alimony/Child Support Mum,”   9/10/2012.

[3] Dylan Grice, of Societe Generale, “Popular Delusions,” in Greg Canavan’s article.