Repealing America’s Welfare State

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Ever since The Future of Freedom Foundation was founded in 1989, FFF has been advocating the immediate repeal of America’s welfare-state way of life. Thirty years ago, there were those who were arguing that immediate repeal would bring economic and social chaos within American society. Today — 30 years later — there are people who are making the same argument—that an immediate repeal of these socialist programs would mean chaos and crisis, especially given that the welfare state has become an integral part of America’s political and economic systems.

There are two historical examples that prove that such is simply not the case: American slavery and the National Industrial Recovery Act.

Prior to the Civil War, undoubtedly there were those who argued that an immediate emancipation of the slaves would bring economic and social chaos to America. After all, the institution had been an integral part of America’s economy and social system since the start of the nation and even before. Plantation owners had large amounts of capital invested in slaves. The operations of plantations were dependent on slave labor. Much of the South’s economy was dependent on slave labor.

And then there were the slaves to consider. They had no formal education. Most of them were illiterate. They didn’t know how to start businesses. They had no experience with a free-market work ethic. They didn’t know how to treat customers. They were totally dependent on plantation owners for food, housing, and employment. Slavery was all they knew.

Thus, to suddenly and immediately end slavery, the argument would go, would bring economic and social chaos. Better to “phase out” slavery over a long period of time.

The National Industrial Recovery Act was enacted in June 1933 as part of President Franklin Roosevelt’s New Deal plan to address the Great Depression. Purporting to save America’s “free-enterprise” economic system, which FDR and his cohorts (falsely) maintained had caused the Great Depression, the NIRA implemented a centrally planned and regulated economic system that was the opposite of a free-enterprise system.

The NIRA placed American businesses and industries into government-supervised and centrally managed cartels, enabling them set prices and wages and other labor conditions. To “encourage” businessmen to participate in the scheme, FDR employed a propaganda campaign called the “Blue Eagle.” Given its fascistic overtones, the NIRA would have fit in perfectly in Benito Mussolini’s fascist economic system in Italy.

After a year or so, it was clear that the NIRA was only making the Great Depression worse. But the argument was that since it had become such an integral part of America’s economic system, to suddenly and immediately repeal it would bring economic chaos to America.

With the end of the Civil War, slavery came to an abrupt and sudden end. No phasing out. No gradual reduction. Just freedom, meaning no more dependency on plantation owners. From one day to the next, millions of blacks were on their own.

The result? The former slaves not only survived but also prospered. Freedom proved the resiliency of human beings. Blacks were starting their own businesses and actually out-competing whites in many economic endeavors. In fact, one of the biggest reasons that Jim Crow laws started to be enacted was because white bigots resented the fact that many blacks were doing better in the business world than whites.

On May 27, 1935 — almost two years after the NIRA was enacted — the U.S. Supreme Court declared the law unconstitutional. On that day, the law no longer existed. No phasing out. No gradualism. Just a sudden and abrupt termination of the law.

The result? No chaos or crisis. In fact, the result was the exact opposite. The dynamism of economic liberty brought an economic resurgence in that part of the economy that had been controlled by the NIRA. In fact, the immediate termination brought an end to the chaos that the law had produced.

There is no need to fear freedom. Freedom works. Freedom doesn’t produce chaos or crises. Instead, it brings an end to the crisis and chaos that socialism produces. That’s why Americans would be wise to immediate terminate the welfare-warfare state way of life that has besieged out nation for some 90 years.

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