Tuesday, August 04, 2015

How the Welfare State Begins and What the Welfare State Evolves Into

The welfare state starts with small programs targeted at a handful of genuinely needy people
writes Dan Mitchell, referring to the artwork of Cato's Silvia Morandotti.
But as  politicians figure out the electoral benefits of expanding programs and people figure out the that they can let others work on their behalf, the ratio of producers to consumers begins to worsen.

Eventually, even though the moochers and looters should realize that it is not in their interest to over-burden the people pulling the wagon, the entire system breaks down.

Then things get really interesting. Small nations such as Greece can rely on permanent bailouts from bigger countries and the IMF, but sooner or later, as larger nations begin to go bankrupt, that approach won’t be feasible.