Welfare Cases

Daniel Shapiro from the June 1999 issue

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In medieval times, for instance, private ownership of land during growing season gave way to village ownership of land during the grazing season. This worked because custom prevented the ruin of the commons by practices such as "tinting," owning livestock only in proportion to one's growing season holdings.

But the positive effects of intense monitoring, small numbers, and local control are destroyed by guarantees of a share of the product independent of contribution. Consider colonial Jamestown, Virginia, where the guarantee of an equal share nearly killed off the settlement. Despite near starvation, almost no one was willing to plant the crops, and settlers caught wild animals at night, when they wouldn't have to share them with their neighbors. For Schmidtz, Jamestown and other disasters in collective property demonstrate what happens when collective responsibility and externalization come together.

That bad combination, he argues, has been replicated in the welfare state. By giving people a right to extract benefits from productive ventures without contributing to them, the welfare state has turned production into a commons problem. The results aren't as bad as Jamestown, of course, but the same principle applies, whether it be unconditional assistance to the poor that reduces work efforts or social insurance programs that foist the cost of unfunded benefits on later generations.

But how, Schmidtz asks, can we collectivize responsibility without externalization? While most libertarians and conservatives would probably suggest charity, Schmidtz persuasively argues that, historically, this has not been the main answer. Prior to the welfare state, welfare services were voluntarily provided largely by mutual aid societies (or "friendly" societies, as they were called in Britain).

Membership in these groups was often based on ethnicity or occupation, and their guiding principle was reciprocity, not charity. They offered death benefits and, as they evolved, low-cost medical care, assistance during times of unemployment and other misfortunes, and so forth, in exchange for dues and attendance at the society's lodge, which also functioned as a social center. In Britain, something like 75 percent of all workers belonged to a friendly society by the early part of the 20th century. The numbers were lower in America, but strikingly high percentages of certain ethnic groups, especially blacks, Jews, and Italians, belonged to these societies prior to the Great Depression.

The welfare state effectively put the mutual aid societies out of business, leaving open the question of how best to revitalize them. Schmidtz, unfortunately, offers no real guidance. He points to market-based solutions for social insurance, such as private pensions and medical savings accounts, but says little about how best to reintroduce the spirit of mutual aid for the chronically poor.

If Schmidtz's contribution to Social Welfare and Individual Responsibility reads more like it was written by a social scientist than a philosopher, that may be because he has degrees in both philosophy and economics. Schmidtz's style of argumentation reflects his interdisciplinary background. But Schmidtz's argument style may reflect more than his interdisciplinary background.

One way of understanding a classical liberal approach to social and political philosophy is to see it as beginning with the basic facts and constraints of human nature, and then seeing how normative arguments about justice can fit into that empirical frame. Thus, Schmidtz is constantly reminding his fellow philosophers about truths that may be second nature to REASON readers: Commerce is not a zero-sum game; fraternal feeling functions best in small, voluntary groups; helping the disabled or those unable to work should not break the link between income and contribution for those can work.

Only in his last chapter does Schmidtz take up the question, "But Is It Just?"--the query that would be the starting point for most political philosophers. While Schmidtz does not offer a theory of justice, he does have some useful and insightful things to say. Justice--giving each person his due--is a "cluster" concept, he says, meaning that different ideas of what a person is due are appropriate in different circumstances. Schmidtz sees egalitarian views of justice, which are rampant in philosophy, as overgeneralizing from contexts where equal shares or equal opportunity are appropriate default rules, such as when prior production is irrelevant (say, dividing up a cake at a party) or when one aims to measure excellence (as in a game or contest).

Whatever conception of justice is most appropriate in a particular context, Schmidtz says, one should not prefer a conception that tends to produce destitution over prosperity. This may sound obvious, but as Schmidtz rightly notes, many philosophers' thought experiments start with a default rule of equal shares--which is often a prescription for making people worse off.

Despite its many virtues, two features of Schmidtz's argument are worrisome. First, his discussion of responsibility is insensitive to the distinction between whether one was morally or casually responsible for getting into a mess in the first place: Schmidtz defines externalization as not taking responsibility for the messes one makes or finds oneself in, and he employs the same disjunction when discussing internalization. He does this because he thinks the issue of blame is beside the point--for him, what makes people better off is their taking responsibility for their future. But what if blaming people is essential for getting them to take responsibility? This issue is not addressed by Schmidtz, and I think it is an important omission. It is out of fashion to champion "stigmatizing" people, but perhaps we have placed too great a stigma on stigmatization.

Second, the case Schmidtz makes--and this is generally true of libertarian arguments against the welfare state--is tied too closely to the failures of the American welfare state. This is no small point because there is a widespread sense that at least some European welfare states have not worked as poorly. Since Schmidtz's arguments link the moral flaws in the welfare state with its practical problems, if the latter are not inherent in all welfare states, then neither are the former.

Sweden, for example, has been the pinup model for the welfare state since the 1960s, and while the financial burden of its welfare state has caused economic problems, it is note-worthy that even such a writer as P.J. O'Rourke described Sweden as "socialism that works" in his recent book, Eat the Rich. O'Rourke may in fact be wrong, but the case against the welfare state is incomplete until one addresses the claim that the welfare state can work reasonably well in a smaller, more culturally homogeneous society where people do view the state as a vehicle for internalizing responsibility.

Still, there is no question that Schmidtz's essay is, overall, an excellent piece of work. It is written with an air of sweet reasonableness to it, and his discussion ranges smoothly from work in political philosophy to recent work in law and economics. His way of framing the issues is intuitively appealing and may, if it gets the attention it deserves, make political philosophers realize that they cannot theorize about justice in an institutional vacuum that ignores basic facts about markets, human motivation, and history.