Putting aside the morality of trying to bankrupt the state through the use of welfare, is it actually possible to withdraw so much in welfare, that the state will collapse before it reforms, or resets the access to entitlements and other subsidies?
I understand people will offer opinions, but I am more interested in whether anyone has thought through this notion of shriveling the state by causing it to implode under its own weight. Have we seen examples of this before? Has the state actually disappeared, or has it just been replaced with a new state that does everything the old state did, without the entitlements (specifically thinking of the USSR here)?
Looking for feedback from people willing to give this topic some thoughtful considering.
Do you want possibilty or likely hood? Do you think that it is an example of case or class probability?
Where there is no property there is no justice; a proposition as certain as any demonstration in Euclid
Fools! not to see that what they madly desire would be a calamity to them as no hands but their own could bring
Has the state actually disappeared, or has it just been replaced with a new state that does everything the old state did, without the entitlements (specifically thinking of the USSR here)?
Living in the intersection of the ex-USSR and the EU, I see a lot of people feeling entitled to this and that. It is really amazing how people who have been living under socialism before still want more of it.
Maybe I didn't understand your question, but the state is still there, and the main differences are: private business is legal (but quite often demonized), you fear much less about being arrested for speaking your mind, and there are many parties to vote for (instead of just one).
Here is one hypothetical situation I can conceive.
There is an independent central bank which holds the personal accounts of the government, the state governments, and the other banks.
Assuming that the current account of the government, or the treasury as we normally call it, has $5 trillion in it, and there is an immediate request for $6 trillion in entitlements and subsidies...
all that happens is that the banks simply makes an entry in the checking books. It will bring the government's overdraft to $1 trillion, and various bank accounts of people on welfare will see balances rise by a sum total of $6 trillion. So what happened? Nothing. The checks simply got handed out.
Now, the problematic issue here is whether people start withdrawing the cash from their bank accounts, to the point that banks find themselves without the cash needed to redeem demand deposits. What does the government do? It does what it did in Argentina during the Argentine financial crisis. It simply declares that you can not draw out money from the bank.
Nothing will happen. Insolvent governments work differently from insolvent households.
For modern day examples, I would think that Greece makes a good example of a welfare state that reached that breaking point of "collapse or reset/reform". Italy and Spain could be others, but they are attempting reforms to avoid repeating the problems that Greece incurred from its welfare programs.
Thinking about it from a theoretical standpoint, I would think that any government would want to maintain power. Those people involved in government directly would probably do their best to institute whatever changes were necessary in order to maintain their positions. Naturally, special interest groups would attempt to influence whatever reforms might be instituted to gain an advantage or lessen any impact from losing advantage.
I don't know if a State has ever disappeared. I would even venture to argue the point that the State in former Soviet Russia did not disappear, but merely reorganized.
"All men having power ought to be distrusted to a certain degree." -James Madison
"If government were efficient, it would cease to exist."
If most of people are still statists, then state will return. So problem is not bankrupting-strategy, it's that people just love their welfare-states.
Bankrupt in the legal sense of a state having to restructure a bit, sure. But in terms of putting a state out of business, considering its ability to tax and support from organizations such as the EU in the case of Greece and the UN etc, no. It's in the interest of other states to make sure that one of their own doesn't go out of business.
Oh, just remembered: On August 17, 1998, the Russian government devalues the ruble, defaults on domestic debt, and declares a moratorium on payment to foreign creditors.
Would you call that a bankruptcy? Years after that, Russia is still a welfare state.
Possible? Inevitable, rather. The problem is that that does not cause the state to disappear, but creates chaos for some time, and than allows for its reemergence. It’s not a good, long-run prospect, I’m afraid.
But there is a chance that after the implosion, the state will fracture in smaller, leaner states, possibly even city-states. After all, in hard times the guys of the City of London are likely to think: “why should we be paying for the rest of the UK?”. Add in the fact that, for the first time in history, we have the technology to allow even the smallest of city-states to defend themselves against attack, and there could be hope of a renewal of decentralization.
@OP:
I'm inclined to say no because the State's revenues are gathered by force. Hence, a revenue "shortfall" is just a matter of applying more force. That said, the limiting factor is the disposition of the rabble to riot. To me, it seems like there is a parallel between a popular toppling of a regime and bankruptcy of a market firm.
If de la Boetie is correct, the true purpose of welfare transfers is to buy off a portion of the rabble with bribes... "The mob has always behaved in this way—eagerly open to bribes that cannot be honorably accepted, and dissolutely callous to degradation and insult that cannot be honorably endured." The portion of the rabble thus purchased is to be the State's ally when the productive sector becomes restless and threatens to stop producing (and, perhaps, riot). But I think the Egyptian revolution shows just how fickle such bribed friends can be.
Clayton -
The state can only become bankrupt when its currency is no longer considered legitimate, which usually is a product of some attempt by the state to use its currency as a method of monetizing ever-growing debt. In other words, the only avenue to "bankruptcy" is hyperinflation, because as long as the state's currency is worth something then it is not revenue constrained. As we know from history, countries that have faced hyperinflation have continued to exist by simply developing new mediums of exchange.
liberty student:is it actually possible to withdraw so much in welfare, that the state will collapse before it reforms, or resets the access to entitlements and other subsidies?
Welfare is a form of interventionism. Interventionism is not a stable and permanent system of social cooperation. The system eventually always liquidates itself. Putting aside morality, I think the answer must be Yes then. However, bankrupting the State and bankrupting the idea of the State are not the same thing. The idea itself can only be bankrupt by other ideas.
Personally, I cannot conceive of any possible way for the State to ever go away without first going through a total fiscal collapse. Something that will render whatever is left of the government as totally dysfunctional and untrustworthy. This is one event that I think (unfortunately) must occur. Pointing this out is not to advocate for this or that welfare program.
nirgrahamUK:Do you want possibilty or likely hood? Do you think that it is an example of case or class probability?
Great responses guys. High quality discussion so far.
My take is that de la Boetie was correct, and that it's a matter of mass consent, and when people remove consent, the state is gone. It could be a crisis which brings the loss of consent around, but as some indicated, if people aren't ready for statelessness or liberalism, then it will be statism again, just a little less over the top, but marching right back into oblivion.
I see overcoming the state as part of the evolution of the species. It could take 10 generations. It could take 100. Until man wants different, and recognizes the state for what it is, just as we eventually identified overt slavery for what it was, nothing can change. People have to recognize that the state is fundamentally irrational, contradictory and very dangerous.
I think the Republican Party has been trying this for 30 years now. Do you think the US state is any closer to collapse?
You probably CAN collapse the state thru bankruptcy. But it will take a very long time, and will probably be a total systemic collapse akin to the fall of Rome, something Im sure none of us want to see.
In States a fresh law is looked upon as a remedy for evil. Instead of themselves altering what is bad, people begin by demanding a law to alter it. ... In short, a law everywhere and for everything!
~Peter Kropotkin
Quebec is bankrupt.
My view is that we know the socialist state will collapse once economic calculation becomes unsolveable. I am also of the opinion that fiat money makes economic calculation near impossible and maybe even impossible. The greater the amount of intervention the more chaotic things become. The more chaotic it becomes the greater the chance some event will happen that ultimately destroys the whole damn scheme, wakes people up to what is really going on.
It would not be difficult for all of you to learn to leech the system and maintain your current standard of living. How would things change if you were making 100k had a taxable income of 20k and were able to qualify for all the government programs? How many people would have to game the system before it would fail to be able to support itself and collapse?
TANSTAAFL:It would not be difficult for all of you to learn to leech the system and maintain your current standard of living.
It would be difficult for me because I don't believe causing chaos or collapsing a welfare state with millions addicted to welfare is going to lead to a libertopia or ancapistan. I have seen no arguments which indicate this is likely to happen except as some coincidence or random chance.
Is the nature of a state is that it continually expands through time eventually it has to reach some point where it will begin to consume itself and collapse?
Is the only thing that can prevent this increased produtivity and capital accumulation, lengthening the period of production?
If the collapse is inevitable it is impossible to undo the state through the internal mechanisms of the state. You may be able to temporalily slow the rate of growth or quite possible regress the power of the state for some period of time, but the state will eventually resume growth. In the end the only way for a state to die is at its own hand.
liberty student: TANSTAAFL:It would not be difficult for all of you to learn to leech the system and maintain your current standard of living. It would be difficult for me because I don't believe causing chaos or collapsing a welfare state with millions addicted to welfare is going to lead to a libertopia or ancapistan. I have seen no arguments which indicate this is likely to happen except as some coincidence or random chance.
Mao once said that an all out nuclear war would be preferable, because it would weaken the capitalist world so effectively that the Communist bloc could hit back harder and take complete control. That was a speech that made many Russian officials very concerned when they heard it, even though many of them had ordered killings and liquidations themselves.
It takes a very rare person to delight in disaster to get his way. The hippies of the 1960s rebelled against The Man and the idea of a soulless life in the workplace, with grinding work all day long. But now that millions are unemployed in the post-recession world, we don't see or hear any of the former 1960s hippies rejoicing that people out of work can now join them in their naturalistic life.
Basically, one has to be Mao in order to desire disaster to change the world to one's own liking.
PS: I guess you are already familiar with the Cloward Piven strategy.
Prateek Sanjay:Basically, one has to be Mao in order to desire disaster to change the world to one's own liking.
I was waiting for someone else to bring up the fact that this notion of collapsing or withering a state to get to a Utopia is a very Marxist perspective.
I think it is either supreme arrogance or supreme ignorance to think that you have to hurt other people to improve their lives, or to shock them into an understanding they cannot reach through reason. It doesn't speak well for the development of a liberal commercial society when the way to get there is welfare and subsidies.
I've had a rough idea bouncing around in my head for some time (primarily inspired by this) that we may be experiencing an unprecedented bifurcation of society a bit like feudalism but even more extreme. Basically, what I'm thinking is that economic and technological progress have created a situation where people are generally wealthier even despite the massive redistribution of Leviathan and this is creating a de facto anarchism... humans are becoming more and more ungovernable precisely because they're too interested in the multitude of ways they can achieve satisfaction of their own wants outside of the religious feeling of duty to government and Country... distaste for civic duty is becoming more and more respectable.
At the same time, political orders are being aggregated. However, I think we may be misreading the tea leaves to see this as a consequence of a consolidation and intensification of power at the top but, rather, an unintended result of the increasing difficulty of governing. As the population becomes more difficult to govern, fewer and fewer people are good enough at governing to hold onto the bucking bronco of State power. Whereas it was once good enough to be a county rodeo champion, now you have to be at least a State rodeo champion and most of those are losing power to the National rodeo champions and, eventually, only a few international rodeo champions will be skilled enough to hold on to the reins of power. But this doesn't mean they're more absolutely powerful than they used to be, it just means the bull is bucking a lot harder than it used to. That is, the general public is getting harder and harder to govern over time. An ex-LAPD friend of mine told me there are neighborhoods in LA where the local gang patrols the rooftops of apartment buildings entering the neighborhood (choke point) with rifles - not a sub-machine gun, pistol or shotgun but a rifle. A round from a 30 .06 will go through a police cruiser top to bottom like it's not even there. When the police do have to go into these neighborhoods to serve search warrants they do it in a rolling caravan of armored vehicles. How much power does the government really have over such neighborhoods? You might say, well, the cops CAN go in any time, so they have the upper hand but then, do they really? Look at the 1992 riots.
liberty student:I think it is either supreme arrogance or supreme ignorance to think that you have to hurt other people to improve their lives, or to shock them into an understanding they cannot reach through reason. It doesn't speak well for the development of a liberal commercial society when the way to get there is welfare and subsidies.
Pressing that Red [fictitious] button to instantly annihilate the State also has consequences. You will "hurt other people". Are you saying you won't press it? Because the above sounds a bit of the consequantialist type argument. It doesn't hold very well in my opinion. It can be used to justify the State almost indefinitely.
There is a difference between advocating to remove the State (ASAP, instantly if it were possible) and to deliberately use statist measures of violence to somehow "overload" the system. Both measures have consequences, many of them negative (at least for some time) for many people. But so what? It's the method that should be condemned, and not the consequences per se.
The biggest issue I have with your argument is this: That you are implying that to take from the State is to support the State. If I send my kids to public school, then I am somehow supporting the public school system. That's like saying that if the hostage eats the meals of his kidnapper, he somehow supports his enslavement?
DD5:Pressing that Red [fictitious] button to instantly annihilate the State also has consequences.
I am not arguing for that. On the contrary, I am saying that ending the state without a people ready for it won't last. If my goal is a long term libertarian future, then its probably not in my interest to push the button (maybe to maintain the threat though), but if my short term goal is to end the state, then yeah, I guess I could push it and sort out the consequences later.
DD5:There is a difference between advocating to remove the State (ASAP, instantly if it were possible) and to deliberately use statist measures of violence to somehow "overload" the system. Both measures have consequences, many of them negative (at least for some time) for many people. But so what? It's the method that should be condemned, and not the consequences per se.
I didn't want to, but I am making moral arguments in the other thread now, and I was hoping to speak the language of the pro-welfare people which is pragmatism (ends not means). I believe the means are very important, and have to be aligned with the ends, hence the thread topic. Can means X lead to result Y?
DD5:The biggest issue I have with your argument is this: That you are implying that to take from the State is to support the State.
One this is not my position, and two this is not the approach I am taking in this thread. I loathe a lack of precision in debate, so perhaps you want to double check your premises and locate your argument in the right place.
DD5:If I send my kids to public school, then I am somehow supporting the public school system.
You certainly aren't supporting the private school system.
DD5:That's like saying that if the hostage eats the meals of his kidnapper, he somehow supports his enslavement?
I like how everyone ends up at two places. Either comparing education welfare to food, or making a "what about the roads?" argument in this context of this debate. It's quite funny really.
Pressing that Red [fictitious] button to instantly annihilate the State also has consequences. You will "hurt other people". Are you saying you won't press it? Because the above sounds a bit of the consequantialist type argument. It doesn't hold very well in my opinion. It can be used to justify the State almost indefinitely. There is a difference between advocating to remove the State (ASAP, instantly if it were possible) and to deliberately use statist measures of violence to somehow "overload" the system. Both measures have consequences, many of them negative (at least for some time) for many people. But so what? It's the method that should be condemned, and not the consequences per se. The biggest issue I have with your argument is this: That you are implying that to take from the State is to support the State. If I send my kids to public school, then I am somehow supporting the public school system. That's like saying that if the hostage eats the meals of his kidnapper, he somehow supports his enslavement?
I believe the Hoppean approach (gradual privatization) is superior to the Rothbardian approach (overnight liquidation) because so many aspects of the State are imitative of genuine property. Public lands, public roads, public beaches, etc. are handled by the State just as they would be handled by a private owner (exclusivity) - except they are taken poor care of. The unintended consequence of the French Revolution approach to disbanding the State is that it simultaneously breaks down the social fabric that keeps respect for private property strong. In the course of smashing out the windows to the King's palace, rioters are emboldened to smash out the windows to the surrounding private houses, many of which were built on pure, old-fashioned, honest elbow-grease. Now that I think about it, perhaps this is why the State is so careful to make itself appear like any other property holder... to force all other property-holders to act in its defense out an indirect concern for their own property.
liberty student:You certainly aren't supporting the private school system.
But you certainly aren't not supporting them, because this isn't exactly fair market competition where an exchange demonstrates that one values the benefit of the "service" higher then its costs. So I don't fully understand what you are implying here.
liberty student:Either comparing education welfare to food, or making a "what about the roads?" argument in this context of this debate. It's quite funny really..
It's not so funny. Education is not food, but as far as the principle at hand is concerned, they are different only in our minds that value them differently. You know this perfectly well. There isn't necessarily an inherent contradiction between taking from that you are also seeking to end when choice is not free from coercion. What the vital necessity of using the roads is for one person, using the public school system is for another. I actually don't think you will disagree with this.
I'm not going to help people be miserable. They do a great job of that alone. I'm not going to waste energy trying to help people that don't want it. People dumb their selves to death by the day. So, may as well cut to the chase and ask whether should we shoot everyone that disagrees.
@Caley Mckibbin
I think you were the one who said that Quebec is a "leech province". I live there, and I'm aware that Quebec is going through a huge debt, I think around 222billion$.
I wasn't aware they are leeching of other provinces. Then again, I don't know much on the subject., except that they want to secede. Now that you mention it, how on earth can they secede if they need Canada?
That is the conundrum that nobody ever asks. How do they emulate France when they can't lean on Toronto and Calgary? Must have been the 51% that voted no that realized this.
Any serious attempts at secession were dropped after the passing of the Clarity Act, which was basically a codification of the earlier Supreme Court ruling instituted on behalf of Chretien. The Clarity Act sets out a number of conditions to be met if a province wishes to secede from Canada. It's practically impossible for Quebec to come even close to fulfilling them, however, since (if I recall correctly) they also require the consent of the other provinces or a majority of them to even begin looking at the issues. Besides the myriad of other near impossible conditions, obtaining that kind of consent makes the whole thing a dead issue.
Besides, as you pointed out, all Quebec can do is play the role of getting for Quebec what it can get, which in more recent times has been the demand: "Give us a ton of money and pay for a hockey rink or we'll refuse to pass the budget and force an election."
So, yes, in that sense they are a bigger leech than the rest of the provinces. Talk of secession is just bluster and rhetoric; they need Canada badly to remain solvent.
DD5:It's not so funny. Education is not food, but as far as the principle at hand is concerned, they are different only in our minds that value them differently. You know this perfectly well. There isn't necessarily an inherent contradiction between taking from that you are also seeking to end when choice is not free from coercion. What the vital necessity of using the roads is for one person, using the public school system is for another. I actually don't think you will disagree with this.
I've addressed this in another thread. I tire of repeating myself, so please hit me up in the appropriate spot.
Prateek Sanjay: PS: I guess you are already familiar with the Cloward Piven strategy.
Thanks. I was trying to find the name for that strategy.
For anyone who may not have heard about it here is a link to the Wikipedia article:
http://en.wikipedia.org/wiki/Cloward%E2%80%93Piven_strategy
and the article they penned that started the controversy:
Bankruptcy in terms of a state applies only to it's dealings with other states. In that sense you could impact a state through excessive expenditures via welfare, other entitlement programs, military, science projects, cash for clunkers, etc. The U.S. Government has done it's best to put itself in this position, but what it presently has going for it is it's currency's status as the world reserve currency and a very large consumer market. Should this change, it would be a pretty rapid decline to pauper status among other states.
Now bankruptcy doesn't prevent a state from squeezing every bit of life out of it's citizenry, or those who reside within the borders. The state will continue to print money for as long as it can get away with it. The nation will decline. Some states do rebound, depending on the severity of it's debts. Others continue in a state of decline akin to some post-apocalyptic movie. Decades of pain for those who live there, and the years of work to get back to some degree of a respectable lifestyle could in the end just return back to the same situation as the start - a State the same as before.
Getting to the heart of the original question, I think it is possible.
Jeffrey Miron claimed that Friedman had it backwards when he said open borders would be proper on principle, but the welfare state would make that disasterous. Miron claims that "we should open borders in order to eliminate the welfare state".
I couldn't believe he could be so short-sighted. He actually says that if lots of people start coming and living off the public dole, the populous will realize it doesn't want to spend all this money supporting people and they'll vote to reduce all these welfare measures. I seriously don't get it. It's like a Krugman argument. It's like he forgets the fact that all these immigrants he's talking about will vote as well.
It is entirely possible for the majority of the people to continue to vote themselves more and more benefits until, as Jonathan pointed out, the only option is to print the money. Hell, this is what is happening now.
Isn't Cal;ifornia bankrupt as well? I understand the unemployment IOU's there were declared legal tender to pay rent, etc.
I think the power of a State, even if only a province of a greater government, far exceeds the likelyhood that mere bankruptcy could desolve it.
California issued IOU's to unemployment recipients and ordered them legal tender in such matters as overdue rents and perhaps mortgage payments. If in turn the landlords and property owners pay their taxes to California with these IOU's, when will California collapse?
Again, as others have mentioned, it would be nice if you would acquaint yourself with some basic economics...but definitely some history.
Here's a few great resources:
The New Deal in Old Rome
Early Speculative Bubbles and Increases in the Supply of Money
"Welcome to Zimbabwe"
"Currency Failures from Argentina to Zimbabwe"
Thank you..