Welfare State

Since the things man needs for survival have to be produced, and nature does not guarantee the success of any human endeavor, there is not and cannot be any such thing as a guaranteed economic security. The employer who gives you a job, has no guarantee that his business will remain in existence, that his customers will continue to buy his products or services. The customers have no guarantee that they will always be able and willing to trade with him, no guarantee of what their needs, choices and incomes will be in the future. If you retire to a self-sustaining farm, you have no guarantee to protect you from what a flood or a hurricane might do to your land and your crops. If you surrender everything to the government and give it total power to plan the whole economy, this will not guarantee your economic security, but it will guarantee the descent of the entire nation to a level of miserable poverty—as the practical results of every totalitarian economy, communist or fascist, have demonstrated.

Morally, the promise of an impossible “right” to economic security is an infamous attempt to abrogate the concept of rights. It can and does mean only one thing: a promise to enslave the men who produce, for the benefit of those who don’t. “If some men are entitled by right to the products of the work of others, it means that those others are deprived of rights and condemned to slave labor.” (“Man’s Rights” in Capitalism: The Unknown Ideal.) There can be no such thing as the right to enslave, i.e., the right to destroy rights.

It is true that the welfare-statists are not socialists, that they never advocated or intended the socialization of private property, that they want to “preserve” private property—with government control of its use and disposal. But that is the fundamental characteristic of fascism.

The gold standard is incompatible with chronic deficit spending (the hallmark of the welfare state). Stripped of its academic jargon, the welfare state is nothing more than a mechanism by which governments confiscate the wealth of the productive members of a society to support a wide variety of welfare schemes . . . .

The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.

This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the “hidden” confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.

Morally and economically, the welfare state creates an ever accelerating downward pull. Morally, the chance to satisfy demands by force spreads the demands wider and wider, with less and less pretense at justification. Economically, the forced demands of one group create hardships for all others, thus producing an inextricable mixture of actual victims and plain parasites. Since need, not achievement, is held as the criterion of rewards, the government necessarily keeps sacrificing the more productive groups to the less productive, gradually chaining the top level of the economy, then the next level, then the next. (How else are unachieved rewards to be provided?)

There are two kinds of need involved in this process: the need of the group making demands, which is openly proclaimed and serves as cover for another need, which is never mentioned—the need of the power-seekers, who require a group of dependent favor-recipients in order to rise to power. Altruism feeds the first need, statism feeds the second, Pragmatism blinds everyone—including victims and profiteers—not merely to the deadly nature of the process, but even to the fact that a process is going on.

[A] real turning point came when the welfare statists switched from economics to physiology: they began to seek a new power base in deliberately fostered racism, the racism of minority groups, then in the hatreds and inferiority complexes of women, of “the young,” etc. The significant aspect of this switch was the severing of economic rewards from productive work. Physiology replaced the conditions of employment as the basis of social claims. The demands were no longer for “just compensation,” but just for compensation, with no work required.

So long as the power-seekers clung to the basic premises of the welfare state, holding need as the criterion of rewards, logic forced them, step by step, to champion the interests of the less and less productive groups, until they reached the ultimate dead end of turning from the role of champions of “honest toil” to the role of champions of open parasitism, parasitism on principle, parasitism as a “right” (with their famous slogan turning into: “Who does not toil, shall eat those who do”).

In business, the rise of the welfare state froze the status quo, perpetuating the power of the big corporations of the pre-income-tax era, placing them beyond the competition of the tax-strangled newcomers. A similar process took place in the welfare state of the intellect. The results, in both fields, are the same.

Copyright © 1986 by Harry Binswanger. Introduction copyright © 1986 by Leonard Peikoff. All rights reserved. For information address New American Library.


Excerpts from The Ominous Parallels, by Leonard Peikoff. Copyright © 1982 by Leonard Peikoff. Reprinted with permission of Stein and Day Publishers. Excerpts from The Romantic Manifesto, by Ayn Rand. Copyright © 1971, by The Objectivist. Reprinted with permission of Harper & Row, Publishers, Inc. Excerpts from Atlas Shrugged, copyright © 1957 by Ayn Rand, The Fountainhead, copyright © 1943 by Ayn Rand, and For the New Intellectual, copyright © 1961 by Ayn Rand. Reprinted by permission of the Estate of Ayn Rand. Excerpts from Philosophy: Who Needs It, by Ayn Rand. Copyright © 1982 by Leonard Peikoff, Executor, Estate of Ayn Rand. Reprinted by permission of the Estate of Ayn Rand. Excerpts from “The Philosophy of Objectivism” lecture series. Copyright © 1976 by Leonard Peikoff. Reprinted by permission. Excerpts from Alvin Toffler’s interview with Ayn Rand, which first appeared in Playboy magazine. Copyright © 1964. Reprinted by permission of Alvin Toffler. All rights reserved including the right of reproduction in whole or in part in any form. Used by arrangement with Plume, a member of Penguin Group (USA), Inc.