57. The Welfare State

(From the Free Market Foundation Correspondence)

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The apparent problems of the European welfare state may be a politically hot issue, however, they are definitely not new. Since its introduction in the 1880s, supporters of the welfare state have pushed its seductive agenda for decades on end and continue to do so. Serious scholars on the other side also have warned us for decades on end of its dangerous fiscal and social problems. They all should have known that the dynamic growth of public obligations leads to the production of collective goods that in turn will not only overload any government’s fiscal responsibilities, but also culturally spin out of control. And Adolph Wagner’s "Law of Increasing State Spending" (1863) continues to be politically disregarded. The convenient and irrepressible assumption that every social problem can be resolved by ‘social engineering’ and throwing government money at them has no theoretical base and ignores both the dynamics of markets and of culture. As a result, and despite elegant Pareto efficiency models and politically attractive slogans, the unintended consequences of the Welfare State’s ever-increasing flood of assumed entitlements are apt to seriously disrupt the social and moral fabric of European democracies.

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 Prof Kurt Leube is a Professor of Economics (emeritus) and Research Fellow (emeritus) at the Hoover Institution, Stanford University, USA, and an expert at the Austrian School of Economics, Law and Economics. In addition, Prof Leube holds recurrent guest professorships in LUISS (Rome, Italy) and several major universities of Guatemala, Chile and Argentina. Educated in Germany and Austria, Leube also serves as Academic Director of the European Centre of Austrian Economics Foundation (ECAEF), a research and public policy institute based in Vaduz (Principality of Liechtenstein). He is currently the Editor-in-Chief of the bilingual book series “ECAEF – Studien zur Wirtschafts- und Gesellschaftsordnung”, published in Vaduz. Leube is the editor of numerous books and frequently contributes to leading publications with translations into several languages. “Kurt R. Leube is internationally recognised as a leading authority in the tradition of the Austrian School of Economics, and is one of the closest collaborators and disciples of Friedrich A. von Hayek (Nobel Prize 1974)”.