Welfare State Crash

According to recent reports, the US Social Security system will start paying out more in benefits than it receives in taxes next year. The US is hardly alone in having stresses on its old-age pension programmes. This raises the larger question, can society afford to pay people not to work?

It is ironic to ask this question at a time millions are being thrown out of work, and there doesn't seem to be enough to do. Of course, there always is plenty to do - it's just that it is uncertain what are profitable undertakings, and what are not.

The basic premise of the Welfare State is that those who are lucky enough to stumble upon something profitable to occupy their time should 'share' a portion of their wages (or winnings) with the portion of the populace who are not so lucky. This 'sharing' is enforced through taxation and the coercive power of the State.

During the growthy era from World War II to the end of the last century, there were plenty of profitable occupations in the Industrialised Nations and the dependent class was a minority. In recent years the dependent class has been growing much faster than the productive one. How many non-productives can society support? And at what level?

In a saner world, these questions would be coming to the front of public debate. But as that is not the case, we expect an overburdening of the productive sector and an accelerating economic decline. The end state is likely to involve the OECD nations little better off than the more advanced of the developing nations. In that case, there will be essentially no public resources for the disadvantaged and unmotivated to draw upon. Expect to see shocking poverty once again where it was supposed to have been eradicated.