Here’s some more on what is wrong with Steve Roth’s article “Why Welfare and Redistribution Saves Capitalism from Itself.”[i]
Roth’s next main claim is this:
Now contrast these [massively collectivist] countries to all the countries that have eschewed those freedom-sapping, serf-ifying government programs, and that have emerged as thriving, prosperous utopias of liberty.
Why hasn’t it happened? Not even once.
First, observe that Roth has put the cart before the horse. Massively collectivist countries can be massively collectivist only because they have become wealthy enough to become massively collectivist. Mozambique, Niger, and Burundi have no chance of joining the rich countries’ club by adopting massive redistribution programs. (Roth admits as much later in the article.) First of all, they do not have massive amounts of anything to redistribute. Attempting to redistribute more than they currently do would make the countries even poorer (because the redistribution of wealth always involves taking money from those more capable of producing wealth and giving what is left over after “the system” skims off[ii] a significant amount for political and other unproductive uses). On the contrary, their only chance of becoming prosperous is to adopt the most pro-free trade policies that the populous will stand.
Put succinctly, no country can emerge from relative poverty and join the rich club without keeping freedom-sapping programs sufficiently at bay over a long enough period so that it can create the wealth to become massively collectivist.
Then, realize that, in two respects, Roth has moved the goal posts he established in the preceding paragraphs. In his opening salvo, Roth holds up as the optimum standard “massive doses of redistribution, and universal government programs for social support and financial security.” Note that he refers only to “massive doses.” He did not say that the wealth of the country must be completely redistributed (so that everyone had identical levels of income as well as social and financial security). Therefore, implicit in his claim is that, to some degree, the current members of the rich and prosperous club have and currently do “eschew” full implementation of “freedom-sapping, serf-ifying government programs.”
Note also that nowhere does Roth claim that any of the rich collectivist states he reveres are utopias. He has not taken upon himself the challenge of naming even one collectivist government-run utopia. Nevertheless, Roth suggests that he is proving some point by asking his readers to name a “utopia of liberty” that has thrived and become prosperous. Asking a preposterous question that you would not ask of yourself proves nothing.
While I cannot claim that England, America, Germany, and all of the other current members of the rich countries’ club were or are now utopias, I can claim (and in the immediately preceding post did claim) that they all became members of the club when they eschewed to a very considerable degree the “freedom-sapping, serf-ifying government programs” that Roth is touting.
In short, had Roth set the same standards of measurement (goal posts) for his opponents as he set for himself, it would have become clear that not only one, but many if not all of the current members of the club became members because they sufficiently eschewed “those freedom-sapping, serf-ifying government programs.”
To not engage in half-truths,[iii] Roth should have named all countries that became too massively collectivist and either fell out of the rich club[iv] or cut back on collectivist policies in order not to fall out of the rich club.[v] He also should have noted how much less rich and technologically advanced most of the members of the rich club would be if America did not provide most of the innovations, defense, and funding for the collective state action (e.g., the U.N. and NATO, trying to keep bad actors in the world at bay) upon which they rely. America could not carry such a heavy load and would not be the world’s fountain of innovation if it were to become even more collectivist.[vi]
China is a glorious example of a country joining the club only after it eschewed much of its quintessential “freedom-sapping, serf-ifying government programs” in favor of free markets and less redistribution. How does Roth reconcile this gigantic contradiction to his thesis? Crickets.
In short, the second claim does not prove that “Welfare and Redistribution Saves Capitalism from Itself.”
Perhaps he will get around to actually advancing his thesis later on in the article. (Don’t hold your breath.)
[i] If you haven’t already done so, please read the article, but please also suspend any belief that it makes a lick of sense until you’ve read my several posts about the article.
[iv] E.g., Latvia (which went from reasonably non-collectivist to almost completely collectivist as part of the USSR), Venezuela, Greece, Portugal, and Spain remain in the club only because they are being bailed out by the EU (and relying on the U.S. for innovation, defense, and other benefits).