What should a welfare state redistribute?
What Should the Welfare State Redistribute?
Nathanson’s argument that a welfare state is the best form of government seems indisputable to me. Any form of welfare state is superior to either libertarian capitalism or socialism, because the former is too harsh and the latter provides little or no incentive to innovate. However, I do not agree with Nathanson in that a comprehensive welfare state is automatically better than any other type of welfare state at ensuring wellbeing and both positive and negative freedom. Generally speaking, free markets are faster, cheaper, and better at driving innovation and growth in an industry than government. This means that in a welfare state, the things that will no longer have any natural advancement (food, water, housing), would be prime subjects for government redistribution. By contrast, in a highly innovative industry such as medicine, direct government funding would put a stopper in innovation, compared to if it had been left as a free market. Thus, a welfare state should redistribute those things which are not innovating, while either leaving highly innovative fields to the domain of free markets or finding some other way of redistributing them rather than directly paying for them.
Why are Free Markets Better at Innovation?
The first objection to my point above will be no doubt be that free markets are no better at innovation than the government or that even if they are sometimes, they are not always. However, I intend to prove in this section that nearly universally, free markets are better at innovation.
My first appeal is to the empirical historical record. As Nathanson said, not even socialists will deny that capitalism (or the free market part of a welfare state) has brought about economic prosperity unlike any other era in human history.[1] Despite any of its faults, capitalism is good for producing a great quantity of goods and increasing the efficiency of the means of production. Even if the socialist claim that these goods are distributed too unequally were true, capitalism has still increased the living standards of the average citizen. Capitalism excels at increasing wellbeing because of free market competition and because people generally work harder whenever they are offered, to use Nathanson’s example, a carrot rather than a stick.[2]
The Exception to the Rule: Police and Other Core Government Services
“Corporations are a good thing. But corporations should not be running our government… [because] some corporations don’t want free markets, and they don’t want democracy. They want profits.” ~Robert F. Kennedy[3]
In the industries where the services are traditionally funded by the government and they do not draw a profit, privatizing them is not an option. Police forces make an excellent example. For private industry to become police, there must be profit in it. However, to make the citizens of a nations pay for police protection alone seems unjust; why should they bear a significant one-time cost rather than pay a small amount of their taxes (an average of $176 per person) to the same purpose?[4]
Additionally, privatizing the police or any emergency service would mean they would cater more to the wealthy and well connected, rather than in the poor neighborhoods that they are most needed in. It is inherently unjust to give citizens varying levels of crime or fire protection based on their financial success when they are entitled to them by virtue of being human. Furthermore, the rich could, depending on the system, ‘buy’ the police force, which is a slippery slope to the rule of the privileged few, as Robert Kennedy recognized.[5]
However, police are not the only example. It would cause pandemonium if industries such as coining money, engaging in warfare, or settling court cases were privatized. (Just imagine if Apple could literally go to war with Samsung over market saturation.) This is an exception to the rule of innovation because even if there is innovation available in these industries, it would be extremely detrimental if they fell into the hands of private corporations.
On Universal Healthcare
As stated before, industries that have room for innovation should not be directly paid for by the government. However, this does not mean that a welfare state cannot influence the cost or availability (especially in an emergency, such as COVID-19 vaccinations) of medicine for the better. It is clear why, from an ensuring human well-being perspective, a welfare state should strive for universal healthcare. It keeps people alive and allows people to have significantly more resources to do other things with, thus increasing their, as Nathanson called it, positive freedom, or the ability to do as you wish.
It is also clear why private healthcare does not work. America is the starkest example of this. In America, medical expenses are prohibitive for a large segment of the population. For example, there are 1.3 million people in America that require insulin to stay alive.[6] The cost of insulin has now ballooned to over $1,500 a month, or $18,000 dollars per year.[7] This means that with an average income of $68,703 per year,[8] the average diabetic pays 26% of their income for their insulin. It’s very difficult to argue that this is not a significant detractor to wellbeing or positive freedom..
There are several ways the welfare state could fix the extreme cost of healthcare that private markets generate. The first is by placing a cap on the cost of certain procedures or medicines. However, this would cause issues because it would change the profit margin of the private corporations. This is dangerous because it could cause the company to lose money and if it did, the company would stop producing its medicine, and thus that medicine would either become unavailable or it would have an extremely expensive resell market, which would not fix the original issue.
The second option would be what Andrea Christopher, a Harvard Medical School MD, calls a single payer healthcare system (SPH).[9] Christopher defines an SPH as, “rather than multiple competing health insurance companies, a single public… agency takes responsibility for financing healthcare for all residents.”[10] This would shift health insurance costs to the government rather than the citizens, while not hurting the innovation-driving medical companies because the amount of money they would receive remains constant, only the name on the metaphorical check changes. Additionally, an one payer system has a reason to pursue spending towards public health measures. If there is a way to promote awareness about the dangers of drunk driving for example, an OPS would take that opportunity because it decreases their costs and helps their customers.
Conclusion
In conclusion, the welfare state should redistribute industries and goods which are not innovating or that have no profit potential, while leaving highly innovative fields to the domain of free markets; or if that is not an option, find some other way of redistributing them without directly paying for them. Core services the welfare state include police, firefighters and other emergency services, while also transferring some of the cost of industries like healthcare from the citizen to the government while being careful not to affect the revenue of the innovative corporation when doing so.
[1] Nathanson, S. (1997b). Economic Justice. In the Case for Libertarian Capitalism (1st ed., pp. 26–27). Pearson.
[2] Ibid, pp. 44
[4] USDOJ. (2003, January). Local Police Departments 2000. Link.
[5] Ibid.
[6] Furst, J. (2020, January 2). High cost of insulin has life-or-death implications for diabetic patients. Link.
[7] Torres, K. (2021, January 19). Insulin prices: How much does insulin cost? The Checkup. Link.
[8] US Census Bureau. (2020, September 15). Income and Poverty in the United States: 2019. The United States Census Bureau. Link.
[9] Christopher, A. S. (2016). Single payer healthcare: Pluses, minuses, and what it means for you. Link.
[10] Ibid.