The short answer to this question is “No”. The long answer to this question – in summary – is “it depends”. It depends on the circumstances in which a welfare state exists, the aims of the welfare state and the success in achieving those aims. Most who are familiar with libertarianism will likely be aware that those on the far right of the libertarian spectrum are the anarcho-capitalists that would argue in favour of total abolition of of any state supported safety net. I, and others, do not support this view, and would agree that there is scope for a welfare safety net, although this should take as simple and as small a role as possible. This view is supported in Friedrich Hayek’s work, Road to Serfdom: 

“Nor is there any reason why the state should not assist the individuals in providing for those common hazards of life against which, because of their uncertainty, few individuals can make adequate provision. Where, as in the case of sickness and accident, neither the desire to avoid such calamities nor the efforts to overcome their consequences are as a rule weakened by the provision of assistance – where, in short, we deal with genuinely insurable risks – the case for the state’s helping to organize a comprehensive system of social insurance is very strong… Wherever communal action can mitigate disasters against which the individual can neither attempt to guard himself nor make the provision for the consequences, such communal action should undoubtedly be taken.”

Such a welfare safety purported to by Hayek is also supported by Milton Friedman, another man regularly cited for his free-market philosophy, and is in fact considered to be the architect of one of the most successful welfare systems ever created. A previous blog of mine took aim at the current UK welfare state and the purpose for its existence, I proposed a change of course for our welfare and wish to refine that argument. Some, of the more right-wing persuasion, argue without any sort of empathy, for the total abolition of state welfare on the grounds that all of those who need welfare are in some ways savages and have lacked any forethought as to potential catastrophes that may occur and have not guarded against them, and as a result of this, they should effectively be left to rot. I have admittedly made similar arguments myself in the past, but hindsight is a wonderful thing, and I was very wrong on this issue, yet I still hold many of the positions I always have and will on the basis that the current welfare state needs a massive overhaul.

Friedman argued in his proposal of state assistance, that each person who is in a situation through no fault of their own, which means they are not able to meet basic economic needs such as food or basic shelter, should receive a basic payment to allow them to meet these needs. This is the view of a compassionate society, and one I would agree with to an extent as this does not take the position that welfare exists to bring people out of poverty, rather it exists to help people survive, and if those people wish to get out of poverty, then they must do so of their own volition. Various tax credits for low earners encourage this, and do away with the bureaucracy of an overly complicated welfare system. It is a fact that when we live in a capitalist nation, there are those who do not have the same freedoms as others because their economic situation does not allow it. The key point of welfare is not to provide wealth, it is to provide liberty for those who may not have it because of their economic situation. How can any individual expect to get themselves a job when they are living in a cardboard box? The lunacy of the current UK welfare state is not that it does not assist those who need assistance, it has become a system which assists those who do not need such assistance, and has become a system of state dependency and legally buying votes. Politicians will claim that they will reform welfare to make it more fair and equitable, yet what this means is “vote for me, and I’ll give you money”. To the ears of the individual, this is great, yet what the individual fails to recognise and what the politician should acknowledge is that such a system is unsustainable and cannot last.

To prevent the spread of national contempt of those who seek welfare assistance, it should be up to local authorities to manage their own welfare systems whichever form that may take. These should not be state monopolies over the lives of an individual, and to avoid the excessive bureaucracy of the state managing such a system, perhaps a system of tax credits for charitable contributions should be introduced as suggested by the Libertarian Party in the USA. In brief, for every pound a person donated to charity, they would receive that back in tax deductions from the state. There is simply no reason why the state should be managing a universal health system or welfare blanket which is accessible by those who can afford their own way in the world. There is a culture of state dependency bread by the current system of welfare that has existed for a number of decades which needs to be immediately brought to an end. People must be encouraged to find work, the only way to do this is to make work seem more financially beneficial than being on the unemployment line. The introduction of tax credits for low earners is a positive step in the right direction and thankfully, the government’s cap on benefits, currently going through Parliament (although facing difficulty) puts us back on the right track. It is absurd that it be seen by some as acceptable that a family in which nobody works can potentially claim entitlement to more in state handouts than the average income of a working family. This should NEVER be the case, as a welfare safety net should exist only to help people get on their own two feet and not exist to provide a comfortable living for those who simply cannot be bothered.

The question was “Is libertarianism compatible with the welfare state?” My short answer was “no” at the start of the blog, because it is not compatible with the current system of welfare which the UK operates. I don’t believe in our current system of welfare as it’s been proven that it does not work in helping people help themselves. Rather than encourage people to go out and get a job or set up their own businesses or whatever, it encourages individuals lining up in a queue every few weeks begging the state for their weekly or monthly income for doing nothing productive. Once the welfare system is reformed to a significant degree, the short answer will go from “No” to a resounding “YES”

Cross posted from The World Through My Specs.