On Incentives and the Welfare State

Bret Stephens looks at Biden’s proposals to expand the welfare state and frets they will turn us into . . . France! Sure, it’s a great place to visit, with its cafes, museums, and all. But the French are miserable! They have high unemployment, lots of right-wing extremists, low growth, and an ineffective government. This is all due, of course, to the massive size of their welfare state, which we would be highly unwise to emulate.

Is any of this true? The relatively high unemployment figures probably have a slight nexus to the size of the welfare state, although they are more attributable to unnecessary, stifling labor regulations that are not really part of the safety net (see, e.g., Denmark). The rest of Stephens’ concerns either aren’t logically tied to the size of the welfare state or are common to other countries, including ours. So, by and large, the answer is no.

But there is a larger point here. Stephens appears to believe that national happiness is tied to chronic insecurity. With no welfare state, almost everyone is always a few small steps from destitution throughout their lives. The Stephens theory is that if everyone hustles every day out of a sense of perpetual desperation, high levels of growth and personal excellence ensue, and everyone is happy.

As the resident of a nation with a very limited safety net, does that sound right to you? Is the story of America over the last 40 years one of rising growth levels and increasing satisfaction with life and our political system? How willing to take risks is someone who lives on the edge of disaster? You know the answers to those questions only too well.