We live in the worst time ever. Many millennials are worse off than their parents at the same age and children will not attain the same level of prosperity as their parents. We will all lose our jobs to machines and inequality and poverty are on the rise. Of course, globalization, deregulation, financial capitalism, and antisocial politics are to blame.
This is the snapshot of the social debate in many countries, especially rich ones. Analyses like these give rise to calls for more social welfare, redistribution, and intervention. Social justice is the rallying cry which has the more or less charming attribute that can mean everything and nothing at once, that can be loaded with all possible content to appear most fluffy. It serves as a semantic antithesis to neoliberalism. If you question the sense of the validity of even the most outrageous suggestions under the social justice label be prepared to be branded as anti-social. The most popular measurement in society seems to be wealth distribution and highlighting poverty.
Well, kind of.
As countries like Germany, pre-corona, but after a massive influx of asylum seekers still had hard numbers to back up progress. Taking the classic definition of poverty – material hardship – the German Federal Statistical Office announced in 2018 that poverty fall to a low of 3.1%, a trend we have seen worldwide.
But no solution without inventing a new problem. Especially in western countries, poverty is no longer the yardstick, having been replaced by “poverty risk.” Those who have to live with less than 60% of the median income are already affected. Those of us who have read past the headlines or who had to suffer through statistics lectures can spot the problem. Even if we all became millionaires overnight, 60% would still be “relatively poor.” The suggested solution is distribution via welfare which leaves us with another problem connected to justice and its debate.
Welfare is increasingly constructed as a right that the individual holds over society that can be used against the state or to ask for a certain degree of protection, benefits, or services. These rights are varied: the right to work, the right to an adequate standard of living, to health or housing, to education. They can now be found in most legal instruments governing fundamental rights, in Europe and globally, for instance, the European Union’s Charter of Fundamental Rights.
This may seem natural to us. Who doesn’t think that everyone should have access to healthcare, education, be provided food, and have a roof above one’s head? However, the reality is that these rights represent a major departure from fundamental rights as originally constructed by the enlightenment philosophers.
Second-generation rights must be distinguished from first-generation, civil, and political rights, which are very close to the liberal tradition. These are the rights found in the British Bill of Rights of 1689 and the French Declaration of the Rights of Man and the Citizen of 1789. Among them, freedom of thought and speech, of association, protection against undue restraint, right to property, and above all, right to liberty.
The main difference between the first and second generation of rights, which explains why the latter has never been central in liberal thinking is that while the first only requires abstention from others and the state, the second requires positive action and more problematic, the potential infringements of the first. To say that we have the right to food and shelter means that someone else has the duty to provide you with such food and shelter. Usually, the state should step in, meaning, at the end of the day, another individual or all of us. Hence, there is an inherent clash between these rights. A right to welfare for one means a breach of property rights or freedom for another.
It is not to say that education, welfare, or housing are not important for people’s dignity. But considering them as rights gives rise to more problems than it answers. The idea of welfare as a right is inherently linked to the idea of social justice, whose basic assumptions have been formidably criticized by Friedrich August von Hayek throughout his career and his writing. The main flaw with the idea of social justice is that it sees society in its myriad of interactions as if it was unfolding in accordance with a certain plan, pursuing a certain objective, or following a certain intention.
This of course is a constructivist fallacy. Society has no plan. It is only a result of free action, coordinated mostly by voluntary exchange. Hence, it makes no sense to treat the results of these interactions as just or unjust as you would do for human action. However, this is exactly what welfare as a right does. By claiming that individuals have a right to a certain division of the welfare that comes out of the society by claiming that society at large has the inherent responsibility to take care of you, to protect you from social risk, that you need someone to take care of you because you clearly cannot.
This is not to say that liberals cannot defend the welfare state or at least a certain version of it. Nothing prevents us from saying that we have a moral duty to help at least the least well-off. The democratic deliberation can decide to finance a number of public goods. This is even more important from a liberal perspective that takes account of positive liberty as constructed by Isaiah Berlin – not only the protection from interference but also the capacity to lead one’s life to be autonomous, to make choices. If we want equality of opportunity, these opportunities have to be enabled, especially for those who still have all the life ahead of them.
This is just important to stress inside the liberal family and our opponents that liberalism is not and should not be ignorant of hardship or basic social-economic needs. This is also the case from a more utilitarian perspective of welfare maximization. In order to function, societies need people who feel secure and are in good health. In order to unlock equality of opportunity, they need to be educated. This is even more true in today’s knowledge economy. We have an interest in evolutionary social cohesion based on an opportunity as it makes society more stable.
Unfortunately, the debate on social justice rarely goes beyond the benial demand for redistribution from top to bottom. It is not talking about human potential. It is about equalizing and having the semantics right to justify the work of the welfare industry at the political narrative of social intervention. This again uncovers fundamental different understandings of people and society between socialists and liberals, between paternalistic proponents of a nanny state, and those who believe in the potential of people. While the armchair socialists of the old were sitting in coffee houses, dreaming of liberating the working class from capitalist ownership, the new Twitter socialists are dreaming of liberating the working class from work altogether.
Take the example of the proposal for universal basic income. The UBI flows directly from the idea of welfare as a right. The idea is that we hold society to provide us with an income regardless of our contribution to this society. This makes conceptually little sense because the wealth of any society only comes from the contributions made by its individuals. If some have the right to a sum of money without any counterpart, this means that some have the duty to work for others. This is a strange vision of the equal dignity of humans. It is dangerous for society. Rather than seeing each other as humans equal in dignity, we start seeing each other as providers and beneficiaries.
This is not to say that no safety net should exist, but that it should simply be a safety net, something temporary to help those fallen, and alleviate the fear of losing one’s livelihood overnight. One may say: what does it change? And one might reply: it is not only a matter of principle, but it is also important not to create the attitude of entitlement, benefits, and protection.
There is no shame in requiring the help of society, but there is no pride in it either. Without proper incentives to work, these kinds of schemes result in solidifying unemployment, not in the most productive brackets of society but in those who are indeed most vulnerable. A system like this would tip the utility of recipients towards staying at home over having a job that creates additional stress. This makes the recipient fully dependant on the state for their livelihood. Worse than that, it has the potential to also solidify a precarious class and thereby stifling social cohesion. Instead of creating opportunities for families and children, it makes them rely on the carer, the social service provider, your nanny.
The total requirement to fund such initiatives across the European Union would be in trillions of euros and we must ask ourselves how this will be funded. Many would argue that tax increases are the way to go. Yet, it would be impossible to fully fund this program only this way, without significantly increasing the taxes across the board. It becomes a giant redistribution machine, again, infringing on your first-generation rights. For the benefit of UBI governments might be forced to cut other programs including the most effective measure for social cohesion – education. Besides creating a quality of opportunity as much as possible, welfare benefits should push those who receive them to go back to work. They should be generous but limited in time and conditioned to an active search for work in order to avoid situations of an “inactivity trap.”
At the same time, one must be cautious to not develop a “poor hunt” where those entitled and in need of benefits can simply not access them due to the complexity of the procedures and are therefore penalized. Rather than inventing new complicated schemes we should radically reform our welfare state and implement what had been very well-argued for by Milton Friedman: a flat tax on all incomes combined with a negative income tax for those whose revenue falls short and are under a certain threshold.
This is the best way to ensure that work always pays more than inactivity and to avoid putting the charge of financing the system on companies like with the case with a minimum income. For liberals, it is crucial that we combine our belief in people and opportunity creation. We all benefit from a society where people are safe and feel secure for their livelihood. We all benefit from well-off societies where people regardless of their social status, of their parents, their creed, their color, or their sex, feel that they have a better life ahead of them and can make it on their own, on their own merits.
The nanny that tells them what they don’t have they don’t have to, takes away all the risk and makes them dependent on a nanny that also takes away their freedom. The freedom to create and to challenge is fundamental to progress.