I’m a lifelong Republican. One of the party faithful’s favorite themes has long been the scourge of welfare. You know, the way Democrats use our hard-earned money to bribe inner-city slackers. Attend any grassroots Republican gathering, you’ll hear it.
Trouble is, I’m on welfare. Most of those grousing Republicans are also on welfare. In fact, there aren’t many Americans who aren’t on welfare, and most of it doesn’t go to crack mothers and pimps.
If subsidizing food purchases through food stamps is welfare, aren’t import quotas on cheap, foreign sugar, which keep American sugar prices high and American sugar producers rich, also welfare — a tax on many, to enrich the few?
What about the Dodd-Frank financial “reform” that allows a Goldman-Sachs to borrow money cheaper than its smaller competitors — isn’t that welfare?
Isn’t all the property government takes from one person to give to another effectively welfare for the beneficiary? And looked at realistically, isn’t most welfare “upstreamed” — through laws taking money from people who have less and channeling it to people who have more?
Sometimes government upstreams welfare directly by taking someone’s money and giving it, or a service it buys, to someone richer, like taxing my former secretary to pay for my health care through Medicare.
Often welfare is upstreamed indirectly through laws that force people to pay more for something than they would have to pay if competitive, free markets set the price. The price difference is welfare for the seller.
Indirect welfare takes many forms, such as controlling market access to protect some favored constituency from competition. This is why a kid getting $10 for setting a friend’s hair is a criminal unless he or she first gets a license, which in New Hampshire can cost $15,000. This barrier to entry causes higher prices, which is welfare for established hairdressers, opportunity denied for the kid.
The understandable desire of established players to keep prices up by keeping supply down is why law school is three years, rather than two, and why doctors demand the exclusive right to do things techs could do as well for less. By distorting markets in their favor, the laws enforcing these norms deliver welfare to lawyers and doctors.
Last year, Republicans and Democrats in Concord passed a “Car Dealers Bill of Rights.” This legislation, by extending limitations on intrabrand competition, funds a de facto $150 million to $200 million a year welfare payment to car dealers in the form of elevated prices.
It shouldn’t surprise anyone that those with assets get the most welfare. No, not because of that perennial leftist hobgoblin, “money in politics.” Nor does this reflect “greed.” It is merely natural, almost universal human self-interest. In free markets, self-interest forces relentless profit-shaving and innovation, to stay ahead of the competition.
However, rational players prefer avoiding constant, downward price pressure and are disinclined to see their business wiped out by innovation. So they invoke endless reasons why the public “needs” laws suppressing competition and keeping prices up. And who can blame them, if we make that avenue available? The result is an inherently reactionary, “last man standing” tangle of conflicting benefits.
Consider the Carroll County farmer. The Cooperative Extension Service provides excellent, subsidized services to help that farmer. This is welfare, charged against our taxes. Except this small subsidy is immediately swamped by the billions we provide agribusiness through federal farm programs, which make it harder for small, local farmers to compete.
Then, piling on, the county government runs a farm, using tax receipts for which it pays nothing, and prison labor, which also comes free. The subsidized output forecloses close to $100,000 a year in potential business for the local farmers, who don’t get “free” money or labor. Finally, just to make sure our local farmers understand where they fit in the pecking order, that “Car Dealers Bill of Rights” coming out of Concord last year also applies to farm equipment dealers, so struggling farmers pay more for both cars and tractors.
It is hard to unravel this rat’s nest of competing welfare programs, but we could start by adopting a simple mantra: “Don’t upstream welfare.” Don’t support laws driving prices above free market levels, laws that almost always reward the few at the cost of the many. Confine government’s redistributive power to its only legitimate role: insuring adequate, basic care for those unable to care for themselves. Demand to know of any proposed law: “Who benefits? Who pays?”
In the meantime, if you want to see a welfare queen, look in the mirror.
Maynard Thomson is a retired attorney in Freedom.