The Futility of State Welfare

When discussing the merits or demerits of a welfare system, it is important to bear in mind the distinction between private welfare, which is voluntary, and state welfare, which is coercive.

Welfare provided by the state entails the coercive transfer of monetary earnings from taxpayers to the intended beneficiaries – which, essentially, amounts to robbing Peter to pay Paul. State welfare is obliged to operate in this manner because the state is not a producer, but a consumer of wealth. It has no other source of welfare funding besides taxpayers. If governments that dispense welfare services were honest, they would acknowledge their dependence on taxpayers in official welfare policy documents so that their country’s citizens were better informed.

State welfare is not a solution to the potentially catastrophic levels of unemployment in South Africa. The solution to South Africa’s unemployment crisis needs to be premised on the need to enhance economic productivity. Through increased productivity, high economic growth rates will be achieved, and, as a consequence of high economic growth rates, high employment levels will be attained.

AUTHOR Temba A Nolutshungu is a Director of the Free Market Foundation. This article is an excerpt from the book Jobs Jobs Jobs published by the Free Market Foundation and may be published without prior consent but with acknowledgement to the author. The views expressed in the article are the author’s and are not necessarily shared by the members of the Foundation.

FMF Policy Bulletin / 3 April 2012