The First State Welfare Program
At the core of Bismarck’s welfare plan were three new programs:475
Health Insurance (1883): The costs for basic health-care premiums were divided between the workers who paid 1/3, and their employers who paid 2/3rds. Minimum payments for sick leave were set by law. If health problems forced a person out of work, benefits would begin after two weeks and continue for up to 13 weeks.
Accident Insurance (1884): This picked up where health insurance left off—beginning in the 14th week of absence from work. A pension of 2/3rds of earned wages was now guaranteed. However, employers had to pay the whole bill for this coverage, so they were motivated to get their employees back to work.
Old Age and Disability Insurance (1889): The premiums for retirement were split between employees and employers, and were designed to support workers with a pension when they reached age 70. It’s a myth that Bismarck invented the retirement age of 65. Many years after Bismarck’s death, Germany lowered the mandatory retirement age to 65, and America copied it. Did Bismarck’s insurance scheme work? Absolutely. By 1898, emigration had plummeted to 17,000, and continued to shrink from that time forward.476
Power, Not Philanthropy
Were the socialists happy that Bismarck’s ideas precisely mirrored what they wanted? Not at all. They hated his socialistic programs.
They believed that his handouts took all the foam and steam out of their great proletariat uprising. The socialists wanted discord to spread. They were anticipating Marx’s prophecy that one day the angry and frustrated workers would rise up in spontaneous revolution against capitalism and set up the new socialist society. How could that great change in society ever materialize if “evil” leaders like Bismarck made life too soft and too easy? How could they convince German workers to rise up and fight against cushy security and handouts and safety nets like that?
Even though Bismarck’s compulsory insurance was socialism in action and should have been celebrated by the socialists, it wasn’t. Their actions betrayed a true desire—a desire to acquire power under the guise of helping the common man with fantastic government handouts.
As a result, whenever the socialists could win seats on the Reichstag, they would go to work to defeat Bismarck’s programs. It was their goal to smother Bismarck’s attempted bribe of the working class.
Bismarck’s government labored for six years to implement his state welfare ideas. For the rest of Europe, Germany became the model. Its compulsory insurance laws were emulated all over the continent, and eventually, the world. They became the foundation for today’s modern welfare state.
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473 See for example, Stephen J. Kunitz, Making a Long Story Short: A note on men’s height and mortality in England from the first through the nineteenth centuries,” 1987; and Felinah Memo Hazara Khan-ad-Din, Common Misconceptions about Medieval England, 2003.
474 See citation in Fritz Dross, The Price of Unification—The Emergence of Health & Welfare Policy in Pre-Bismarckian Prussia, footnote 21 and 22, pp. 31-32.
475 Hajo Holborn, A History of Modern Germany—1840–1945. 1969. pp. 291–93.
476 U.S. Dept. of Commerce, Historical Statistics of the United States, Colonial Times to 1970, ser. 95, at 105 and 106 (1975).
Chapter 72: The Roots of American Welfare
The creeping temptation to extract the cost of welfare from the ordinary citizen found an early home in the land of the free.
There was a day in early American history when the government kept its distance. Those in charge left the people alone to go about their business and take care of themselves. If business made someone successful, he or she was free to buy and hire, sell, and invest. The money flowed down from the “haves” to the “have-nots” in the form of jobs, buying, selling, investing—in short, America’s government stood back so the free market and capitalism were left to themselves to grow and shrink, to adjust and re-tool as needed in freedom, endurance and efficiency.
The spirit of the times was pioneering: Stand on your own feet, make your own way, create your own value, work hard, work harder, and rise as high into the economic and social stratosphere as your creativity could lead you.
Self-sufficiency was viewed as a mandate from God—to earn your bread by the sweat of your face; to support those dependent on you; to give liberally to strangers in need. Strong Christian principles governed the spirit and tenacity of many early American settlers.
Letting Go of Freedom
A major shift in that American culture took place when the Civil War erupted in 1861-1865. For a long time there were unresolved questions about the proper role of government—did the federal government have authority to draw its own lines in the sand separating its powers from the states?
After the war, any lingering questions about the supremacy of the federal government were answered. States couldn’t secede, and the federal government could wield heavy control.
The balance of power had shifted. No longer was it hands-off management, but it grew toward direct involvement in local responsibilities. Suddenly, the federal government had to have its hand everywhere—stretching the Constitution’s original intent to paper thin.
At first there were only a few innocent intrusions over that line, intrusions that seemed safe and were not challenged.
In 1861, for example, the government established the U.S. Sanitary Commission to help sick and wounded Union soldiers. The Commission had all the trappings of a private organization—it was self-funded, was run by thousands of volunteers, and was effectively filling in where the military fell short. It raised $5 million and delivered another $15 million in donated supplies. It help saved untold thousands of lives. For all of this valuable good, no one felt threatened that the federal government had violated states’ rights.
Uneven, Unfair, Unconstitutional Land Grants
In 1862, another precedent was set by way of the Morrill Land Grant Act. The Act set aside 30,000 acres of federal land for every senator and representative in each state. The federal goal was to get this land into the hands of the states so they could sell it to build colleges. The larger states loved this idea—it gave them a great deal more to work with.
It was a huge shot in the arm for better access to higher education, but the grants were unequal. For example, states with too little federal land were authorized to take their 30,000 or more acres from another larger state—usually in the west—and sell it off for cash. Westerners howled over this unfair federal usurpation.
The Land Grant Act was first passed by Congress (1859) during President James Buchanan’s administration. He vetoed it as unconstitutional and as an unfair redistribution of national resources. And then came new elections. The Land Grant Act was re-submitted, and President Lincoln signed it into law on July 2, 1862.
By the time all the dust settled, the Land Grant Act had re-distributed 17,400,000 acres and raised $7.55 million.477
Another subtle federal encroachment into states’ rights was the Freedman’s Bureau (1865-1872). This was a federal welfare program established to care for freed slaves. Lincoln wanted it to last only a year, but it proved so valuable by supplying food, housing, education, health care, employment, and badly needed resources to reunite families that the expiration date was extended.
How could so much positive be considered negative? The problem wasn’t the fact the programs were supposed to support the war, build college campuses, or feed and house freed slaves and their families. The problem was the federal government stepping into areas it was forbidden to touch—economic and cultural issues reserved to the States.
The transition from “business as usual” and a hardly-noticed federal government into a totally new creature, was snowballing by the turn of the century. Suddenly, people expected and demanded the federal government to provide all the answers to all their problems.
The Old Ideas Return As New
Swirling beneath the upheavals and evolutions and disruptions across nations and war-torn America in the later 1800s was a budding new philosophy that promoted top-down government control to force, manage, and regulate all resources toward common goals.
People thought this was a new idea, a great idea, an evolved idea well suited to the industrial revolution underway around the globe. The political science seemed new and the books and pamphlets all said it was new. Strong central governments controlling the resources of prosperity—yes, socialism as usual—was sold as the new way of the future.
Can’t Trust the People
Running parallel to this thrust toward Ruler’s Law was an undercurrent of finger pointing. There was a growing sense that “it can’t be my fault.” Agitators pushed the perspective that the world’s woes were no one’s fault—individuals couldn’t possibly be at fault for the miserable nightmares unfolding to their left and right. At fault, the new philosophy declared, was the “system.” The system was broken. The system must be changed. The system must be overthrown and replaced.
Socialists of all stripes and backgrounds were calling for change, many of them pointing to the “enlightened” teachings of socialists Bentham, Mill, Marx, the Fabian Societies, and finally the Progressives in 1900, for economic and moral guidance. These new prophets of prosperity had risen to take their places in the world, all of them chanting in unison, change the system. But, change it to what? The first step to answer that was to gain control of the economy, and that lever rested with just one thing: national welfare.
Learning to Recognize Socialism
What is compulsory care? List three reasons why government assistance of any kind becomes addicting. How does it turn hearts cold in those who should be doing more to help the poor?
Was Benjamin Franklin in favor of doing good for the poor? Why? What was his suggestion to help the poor?
List the four flaws in state welfare, according to Franklin. Give one example of each that are present in our society today.
According to Bastiat, what do the socialists believe is the main job of the government? Why does he say this is completely impossible? Whom does he say eventually become the “petitioners”?
After Rome fell, who took the role of civic humanitarians? List five services these organizations provided to help the needy.
What schism in the Church spawned an uprising and reformation? Why were people angry with the Church? What new invention helped that reformation develop?
What two kings became the voice for the poor in the late 1400s? What did these two help instigate against the Church?
When did Martin Luther publish his dismissal of the monasteries? What reasons did he use? How did Europe’s monarchs respond? How many nations initially joined together in this effort?
What were the Poor Laws?
Who led the attack against the Church in England? How many monasteries were closed by 1541? Who was hurt the most by this? Whose job did human welfare then become?
When did England’s Parliament replace voluntary donations to the churches with mandatory taxes to support the poor?
In 1811, how did Bavaria deal with disease among its poor? How many years later did the Prussians copy Bavaria? When did Germany’s Bismarck install national health insurance?
How did the German socialists respond to Bismarck’s socialization of medicine and insurance? Why?
After the Civil War, how did power shift between the federal government and the States? Was this constitutional? How did this action soften up the States for more federal intervention?
Part XII--THE LAST TEMPTATION, PART 2: HEALTH CARE
“All modern dictators believe in coercing people into governmentalized medicine.”
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477 Michael L. Whalen, A Land-Grant University, 2001.
Chapter 73: Death by National Health Care
“All modern dictators have at least one thing in common. They all believe in Social Security, especially in coercing people into governmentalized medicine.”—Melchior Palyi
Providing health care is not an enumerated power of the U.S. government. It is not on the list of permissible activities in Article 1.8. Regardless, the U.S. began around the New Deal period (1930s), to go down the path of welfare, health care, and the perpetual economic upheaval and suffering such ideas always bring.
Dr. Melchior Palyi, an American of Hungarian descent, astutely observed, “In democracies, the Welfare State is the beginning, and the Police State the end. The two merge sooner or later, in all experience, and for obvious reasons.”478
The “obvious reasons” Dr. Palyi cites include:
Political Power: The most personal intrusion into privacy that any society can inflict, besides a bullet to the head, is regulating the people’s health care. This gives government the power to decide who gets what treatment—in essence, who lives and who dies—and to tax everybody to support its decisions on health care.
Fear Tactics: Becoming dependent on the government scares people into supporting government programs, even if they’re expensive. There is less fear of unemployment, for example, thanks to welfare that stands ready to rescue the unfortunate victims. There is less fear should a trip to the hospital become necessary because national health care will rescue everyone, theoretically. Never mind the trillions this costs, it’s a small price to pay to prevent and avoid fear.
National Sickness: Universal health care is the perfect national virus. Its infectious allure makes it universally desired, easily justified, and sold to the public as completely necessary to prolong life.
Taxes Are the Answer: The enormous tax burdens for health care are sold to the public as simple redistribution of wealth. Those with the most pay the most, and this goes to help those with the least. Is that fair? Under socialism, of course it is, that’s how it works.
Motivated by Crisis: Planned chaos is how nations are thrust into socialistic ideas. In an emergency, everything, anything seems easily justified. “We have millions suffering without health insurance, we must rescue them. We’ll need more of your money.” Really? How many “emergencies” does it take to show that compulsory care just doesn’t work? Evidently, there are never enough.
Tax Increases Normal: Raising the taxes to meet the ever-increasing costs of health care is reported across the media as the only compassionate solution—and people put up with it.
Hiding Out-of-Control Spending: Shifting around budgets to cover the inevitable shortfalls in health care has become routine in America and most of the industrialized world. Tax-funded health care has built-in incentives to become more costly—it’s free, so people flock to it, expecting a standard of living essentially handed to them that prior generations had to work and save for. Until the pressure of the free market is brought to bear, the governmentalized health industry has no incentive to streamline, reduce waste, or improve services.
Routine Crises: Creating a crisis around health-care funding becomes a rallying cry every election cycle. “Vote for me and I will keep you secure” is the election-year slogan. Such bribery prevents positive changes from regularly cleansing government of waste and fraud. Health care is not a right, it is a luxury. The private market does a far superior job of providing the highest level of health care because it has built-in incentives. The better the services, the more likely the patients are to visit a modern facility and spend their insurance dollars there. Hospitals and clinics where mistakes, inefficiencies, outdated equipment, aging facilities and antiquated processes go unchecked or ignored will discourage foot traffic and keep the affluent people away—and their dollars.
The inequalities are what socialized medicine seeks to rectify. The very process of seeking equality with national health care gives government enormous power over national economies. It is indeed the last and greates
t gateway whereby Ruler’s Law can impose the will of the rulers to the most extreme degree.
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478 Melchior Palyi, Compulsory Medical Care and the Welfare State, 1949, pp. 13-14.
Chapter 74: Top Six Flaws of Universal Health Coverage
The flaws are inborn, inescapable and fatal.
The frantic cultural dash that begins with government medicine and ends with the welfare state is too long and too slow to recognize—and that’s the trap.
For years—maybe a couple of generations or more—the positives of universal health coverage appear to outweigh the negatives. Enthusiasm charges the decision makers with resolve to edge ever-closer to the brink of some fantasy world of health-care utopia.
An amazing phenomenon unfolds along the way: everything becomes unimaginably more expensive. The people want more, the doctors want more, the managers want more. The resources shrink, the quality suffers, the complaints increase, the dissatisfaction grows, and then the system’s bloated, seething, unwieldy enormity—unable to collapse, explode, exhaust or congeal—simply imbloats.479
When this happens, politicians sound the alarm and threaten to raise taxes, cut expenses, reduce services, screen out the extremes, and finally settle on the typical, usual, normal default solution: Get out your wallets, everyone, you must pay more.
Missed in these frequent fire drills is the best solution of all: let the free market prevail—it solves issues faster, better, and with more innovation, better service, and competition that drives the costs down.
Unfortunately, suggestions such as free-market solutions are anathema and sacrilege to the socialist’s brain. Instead, a cacophony of assurances is persistently foisted on the national dialogue, seeking cultural triteness through blissful slogans and chants: “New Deal!” “Great Society!” “Hope and Change!” “Forward!”
The Naked Socialist Page 41