Politics

" The Welfare State'

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WELFARE

STATE

In recent months anew phrase hascropped up inAmerican politics.That phrase, ofcourse, is" the wel-fare state." It wasintroduced proudlyby people who likedthe idea behind it,and is now used mostly, and abusively,by those who don't. Since the welfarestate seems to be coming to occupy adominant role in our domestic politicaldiscussions, it may be well for us to tryto figure out what it really means.

such a system could harm. Handoutscould easily create a dependence onthe state that might sap the individualinitiatives upon which free society de-pends, and, if the handouts were calcu-lated, not according to economic plan,but according to political blackmail,they might well result in a grave weak-ening of the financial structure. Theold- age pension schemes in California ,Oregon , and Washington, for example,seem to be an example of a handoutsystem running amuck.

In general, recent usage suggeststhat the welfare state is definitely abad thing. Herbert Hoover usefullysummed up conservative thinking onthis point in an address in August, onhis seventy- fifth birthday." The sloganof' the welfare state,'" he declared,"... has emerged as a disguise for thetotalitarian state by the... route ofspending." The welfare state, for Hoo­ ver , is the awful climax of the follies ofKeynesian economics and New Deal social policy. Mr. Hoover , indeed, wasable to add that our pursuit of the wel-fare state has already put us" on thelast mile to collectivism." Almost everyRepublican in good standing has ech-oed Mr. Hoover ; the Southern Demo-crats have rushed to join the cry; andthe phrase in recent months has be-come so discredited that even FairDealers now avoid it.

" Think it over," Mr. Hoover re-peated in his seventy- fifth birthday ad-dress...." Think it over." This is goodadvice for Americans who have beentreated to an undue amount of confus-ing oratory on the subject.

The most spectacular form of hand-out was the protective tariff, whichpreserved favored business undertak-ings from the hazards of free enter-prise and gave them a huge annualsubsidy levied on the American people.The grant of public lands to privaterailroad companies was a form ofhandout only slightly less appalling.The great conservative publicist of thatday, Edwin L. Godkin , protested elo-quently against the handout system.He warned the businessmen who werefeeding so hungrily at the publictrough that they ought not to complainif the farmers and workers eventuallygot the idea and followed their hoggishexample. But men like Godkin wereignored; the system developed, andreached one of its climaxes in 1930.with the Smoot- Hawley tariff. Thattariff was converted into law by thewilling signature of the President, Her­ bert Hoover .

Yet, if such a system of governmenthandouts does represent, as Mr. Hoo­ ver suggests, our greatest internal dan-ger, it may be permissible to ask howthat system got started. History pro-vides an unambiguous answer. Itstarted when Alexander Hamilton wrote his famous reports on public fi-nance, the national bank, and manu-factures in the early years of the repub-lic. Hamilton argued that the nationcould not survive and prosper unlessspecial government favors gave thebusiness community a large stake inthat survival and prosperity. UntilAndrew Jackson destroyed the early-nineteenth- century Federal improve-ments system, with the Maysville veto-which forbade the use of nationalfunds for a Kentucky highway- theHamiltonian handout theory remainedsubstantially dominant in Washington.And the Maysville veto did not affecthandouts by the states, where localgovernments provided lavish aid andfacilities to private business throughthe first half of the nineteenth century.Oscar Handlin and Louis Hartz , intheir admirable economic histories of,respectively, Massachusetts and Penn­ sylvania , have shown conclusively themythical nature of the alleged goldenage of laissez- faire.

Certainly if, as the conservatives say,the welfare state is just a system of gov-ernment handouts to any groups polit-ically powerful enough to insist uponthem, then even the most extremeliberal would be foolish to deny that

The handout system, once startedby Hamilton , was irrevocably imbed-ded in government tradition by theRepublican Party after the Civil War .

This history raises the interestingquestion of why Hoover and the otherenemies of the welfare state shouldfind favors so reprehensible when be-stowed by government upon farmersor workers, and so beneficial whenbestowed upon business. The answer,of course, is that the Hoover caseagainst a system of government hand-outs is based on the comfortable theorythat government aid to business is wiseand virtuous, while government aid tothe nonbusiness groups is vicious, andleads to collectivism. It is based, inother words, on the most abominablehypocrisy.

The only consistent position againstthe handout system was that held byGodkin -- that government should donothing for any special group. This po-sition has had no reality in American experience, and has certainly neverbeen advocated by the American busi-ness community.

Thus far most people have consid-

The Reporter, October 11, 1949

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