liberal moral economics

8/10/2019 Liberal Moral Economics

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The Rise of

Governmentand the

Decline ofMorality

by James A. Dorn


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is a series of distinguishedessays on political economy

and public policy. The CatoInstitute takes its name from an earlier series ofCatos Letters, essays on political liberty writtenby John Trenchard and Thomas Gordon in the18th century, which were widely read in theAmerican colonies and played a major role in

laying the philosophical foundation for theAmerican Revolution.

Catos Letter #12

The Rise of Government and the Decline of Moralityby James A. Dorn

Copyright 1996 by theCato Institute

Additional copies of this booklet can bepurchased by calling toll-free 1-800-767-1241 (noon9:00 p.m. eastern time). Singlecopies are $1. Ten to 100 copies are 50 each,and more than 100 copies are 40 each.


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Government and Morality

The growth of government has politicized life

and weakened the nations moral fabric.Government interventionin the economy, inthe community, and in societyhas increasedthe payoff from political action and reduced thescope of private action. People have becomemore dependent on the state and have sacrificed

freedom for a false sense of security.The most obvious signs of moral decay in

America are the prevalence of out-of-wedlockbirths, the breakup of families, the amorality ofpublic education, and the eruption of criminalactivity. But there are other signs as well: the

decline in civility, the lack of integrity in bothpublic and private life, and the growth of litiga-tion as the chief way to settle disputes.

One cannot blame government for all ofsocietys ills, but there is no doubt that economicand social legislation over the past 50 years has

had a negative impact on virtue. Individuals losetheir moral bearing when they become depen-dent on welfare, when they are rewarded forhaving children out of wedlock, and when theyare not held accountable for their actions. Theinternal moral compass that normally guides

individual behavior will no longer functionwhen the state undermines incentives for moralconduct and blurs the distinction between rightand wrong.

More government spending is not theanswer to our social, economic, or cultural prob-lems. The task is not to reinvent government orto give politics meaning; the task is to limit gov-ernment and revitalize civil society. Governmentmeddling will only make matters worse.

If we want to help the disadvantaged, wedo not do so by making poverty pay, by restrict-ing markets, by prohibiting school choice, by dis-couraging thrift, or by sending the message thatthe principal function of government is to takecare of us. Rather, we do so by eliminating social

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James A. Dorn is Vice President for Academic Affairs at theCato Institute. This essay is based on his ChautauquaInstitution lecture of August 18, 1995, and is reprinted, withminor revisions, from The Freeman, March 1996.


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engineering and welfare, by cultivating free mar-kets, and by returning to our moral heritage.

Early 20th Century Virtue: Lessons from theImmigrantsAt the turn of the century, there was no welfarestate. Family and social bonds were strong, andcivil society flourished in numerous fraternal

and religious organizations. Total government

spending was less than 10 percent of GNP andthe federal governments powers were narrowlylimited.

Immigrants were faced with materialpoverty, true, but they were not wretched. Therewas a certain moral order in everyday life, which

began in the home and spread to the outsidecommunity. Baltimores Polish immigrants pro-vide a good example. Like other immigrants,they arrived with virtually nothing except thedesire to work hard and to live in a free country.Their ethos of liberty and responsibility is evi-

dent in a 1907 housing report describing thePolish community in Fells Point:

A remembered Saturday evening inspectionof five apartments in a house [on] ThamesStreet, with their whitened floors and shin-

ing cook stoves, with the dishes gleamingon the neatly ordered shelves, the piles ofclean clothing laid out for Sunday, and thegeneral atmosphere of preparation for theSabbath, suggested standards that wouldnot have disgraced a Puritan housekeeper.

Yet, according to the report, a typical Polishhome consisted of a crowded one- or two-roomapartment, occupied by six or eight people, andlocated two floors above the common watersupply.

Even though wages were low, PolishAmericans sacrificed to save and pooled theirresources to help each other by founding build-

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The growth of government has politicizedlife and weakened the nations moral fabric.


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ing and loan associations, as Linda Shopes notedin The Baltimore Book. By 1929, 60 percent of

Polish families were homeownerswithout anygovernment assistance.

Today, after more than 50 years of the wel-fare state, and after spending $5 trillion on anti-poverty programs since the mid-1960s, Baltimoreand other American cities are struggling for sur-

vival. Self-reliance has given way to dependenceand a loss of respect for persons and property.

The inner-city landscape is cluttered withcrime-infested public housing and public schoolsthat are mostly dreadful, dangerous, and amoralwhere one learns more about survival than

virtue. And the way to survive is not to takeresponsibility for ones own life and family, butto vote for politicians who have the power tokeep the welfare checks rolling. Dysfunctionalbehavior now seems almost normal as people areshot daily and the vast majority of inner-city

births are to unwed mothers receiving Aid toFamilies with Dependent Children. In additionto the moral decay, high tax rates and regulatoryoverkill have driven businesses and taxpayersout of the city and slowed economic develop-ment. Its not a pretty picture.

In sum, the growth of government and therise of the transfer society have undermined

the work ethic and substituted an ethos of depen-

dence for an ethos of liberty and responsibility.Virtue and civil society have suffered in theprocess, as has economic welfare.

The Role of Government: Conflicting Visions

Market-Liberal VisionThe Founding Fathers recognized that the natureof government is force, and they sought to limit

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The internal moral compass that normallyguides individual behavior will no longer

function when the state undermines incen-tives for moral conduct and blurs the dis-tinction between right and wrong.


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that force to the protection of life, liberty, andproperty. Markets, both formal and informal,

could then be relied on to bring about economicprosperity and social harmony.

In a free society, the relationship betweenthe individual and the state is simple. ThomasJefferson stated it well: Man is not made for theState but the State for man, and it derives its just

powers from the consent of the governed. Thefact that the Founders never fully realized theirprinciples should not divert attention from theimportance of those principles for a free societyand for safeguarding the dignity of all people.

Behind the U.S. Constitution lies the tradi-tion of natural rights: individuals have certaininalienable rights, the most fundamental of whichis the right to be left alone, to be free, with the cor-responding obligation to respect the freedom andproperty of others. Under the higher law of the

Constitution, justice requires equal protection ofpersons and property. As James Madison, thechief architect of the Constitution, wrote, thatalone is a just government, which impartiallysecures to every man, whatever is his own.

From a classical-liberal perspective, the pri-

mary functions of government are to secure theblessings of liberty and establish justicenotby mandating outcomes, but by setting mini-mum standards of just conduct and leaving indi-viduals free to pursue their own values withinthe law. The sum of good government, wrote

Jefferson, is to restrain men from injuring oneanother, to leave them . . . free to regulate theirown pursuits of industry and improvement,and to not take from the mouth of labor thebread it has earned.

The Jeffersonian philosophy of good gov-

ernment was widely shared in 19th-centuryAmerica. Indeed, Jeffersonian democracy be-came embodied in what John OSullivan, editor

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The task is not to reinvent government orto give politics meaning; the task is to limitgovernment and revitalize civil society.


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of the United States Magazine and DemocraticReview, called the voluntary principle or the

principle of freedom. In 1837, OSullivanwrote,

The best government is that which governsleast. . . . [Government] should be confinedto the administration of justice, for the pro-

tection of the natural equal rights of the cit-izen, and the preservation of the socialorder. In all other respects, the voluntaryprinciple, the principle of freedom. . .affords the true golden rule.

During the 19th century, most Americanstook it for granted that the federal governmenthas no constitutional authority to engage in pub-lic charity (that is, to legislate forced transfers tohelp some individuals at the expense of others).It was generally understood that the powers of

the federal government are delegated, enumerat-ed, and therefore limited, and that there is noexplicit authority for the welfare state. In 1794,Madison expressed the commonly held view ofthe welfare state: I cannot undertake to lay myfinger on that article of the Constitution which

grant[s] a right to Congress of expending, onobjects of benevolence, the money of their con-stituents. From a classical-liberal or market-liberal perspective, then, the role of government

is not to do good at the taxpayers expense, butto prevent harm by establishing rules of justconduct and a rule of law.

The general welfare clause (art. 1, sec. 8) ofthe U.S. Constitution cannot be used to justify thewelfare state. That clause simply states that the

federal government, in exercising its enumeratedpowers, should exercise them to promote thegeneral welfare, not to promote particular inter-

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The role of government is not to do goodat the taxpayers expense, but to preventharm by establishing rules of just conductand a rule of law.


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ests. The clause was never meant to be an openinvitation to expand government far beyond its

primary role of night watchman.With respect to the words general wel-

fare, wrote Madison, I have always regardedthem as qualified by the detail of powers con-nected with them. To take them in a literal andunlimited sense would be a metamorphosis of

the Constitution into a character which there is ahost of proofs was not contemplated by itscreators.

Yet, what Madison feared happenedas

his vision of government was overtaken by theviews of people who sought to use government,not to prevent harm, but to do good at the tax-payers expense.

Modern Liberal Vision

The transformation of the Framers constitution-al vision began with the Progressive Era, acceler-ated with the New Deal, and mushroomed withthe Great Societys War on Poverty, which creat-ed new entitlements and enshrined welfarerights. Today, more than half the federal budget

is spent on entitlements, and social welfarespending is 14 percent of GNP.

During the transition from limited govern-ment to the welfare state, freedom has come tomean freedom from responsibility. Such free-dom, however, is not true freedom but a form of

tyranny, which creates moral and social chaos.The modern liberals vision of government

is based on a twisted understanding of rights andjusticean understanding that clashes with theprinciple of freedom inherent in the higher lawof the Constitution. Welfare rights or entitle-

ments are imperfect rights or pseudo-rights;they cannot be exercised without violating whatlegal scholars call the perfect right to private

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When democracy becomes unlimited, thepower of government becomes unlimited,and there is no end to the demands on thepublic purse.


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property. Rights to welfarewhether to foodstamps, public housing, or medical carecreate

a legal obligation to help others. In contrast, theright to property, understood in the Lockeansense, merely obligates individuals to refrainfrom taking what is not theirsnamely, the life,liberty, or estate of another.

For the modern liberal, justice refers to dis-

tributive justice or social justice. But social jus-tice is a vague term, subject to all sorts of abuseif made the goal of public policy. Indeed, whenthe role of government is to do good with otherpeoples money, there is no end to the mischiefgovernment can cause.

Many Americans seem to have lost sight ofthe idea that the role of government is not toinstill values, but to protect those rights that areconsistent with a society of free and responsibleindividuals. We have a right to pursue happi-ness, but there can be no legal guarantee that we

will obtain it without depriving others of theirliberty and their property.

When democracy becomes unlimited, thepower of government becomes unlimited, andthere is no end to the demands on the publicpurse. Democracy then becomes crude majoritar-

ianism in which the winners are allowed to

impose their will and vision of the good soci-

ety on everyone else. In such a system politicsbecomes a fight of all against all, like theHobbesian jungle, and nearly everyone is a netloser as taxes rise, deficits soar, and economicgrowth slows.

Bankruptcy of the Welfare StateMost voters recognize that the welfare state isinefficient and that there is a built-in incentive to

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Under the pretense of morality, politiciansand advocacy groups have made the rightto welfare the accepted dogma of a new

state religion, in which politicians are thehigh priests and self-proclaimed benefac-tors of humanity.


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perpetuate poverty. It should be common sensethat when government promises something for

nothing, demand will grow and so will the wel-fare state. Indeed, total government spending onsocial welfare is now over $1 trillion per year. Yetonly $1 of every $6 of social welfare spendinggoes to families with less than poverty-levelincomes. For all the money spent on fighting

poverty since 1965, about $5 trillion, the officialpoverty rate has remained roughly the same,about 14 percent. Government waste, however, isonly part of the problem; the welfare state is alsointellectually, morally, and constitutionallybankrupt.

Intellectually Bankrupt

It is intellectually bankrupt because increasingthe scope of market exchange, not aid, is the onlyviable way to alleviate poverty. The best way tohelp the poor is not by redistributing income but

by generating economic growth. Poverty ratesfell more before the War on Poverty when eco-nomic growth was higher.

The failure of communism shows that anyattenuation of private property rights weakensmarkets and reduces choice. Individual welfare

is lowered as a result. The welfare state has atten-uated private property rights and weakened theinformal rules of manners and morals that makelife worthwhile. Real growth has slowed as a

result. From 1889 through 1919, real growth aver-

aged 4 percent per year while government con-sumed 10 percent of GNP. From 1973 through1992, however, real growth averaged only 2.3percent while government consumed 36 percentof GNP.

Morally BankruptIn addition to being inefficient and intellectuallybankrupt, the welfare state is morally bankrupt.

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Public charity is forced charity, or what thegreat French liberal Frederic Bastiat calledlegal plunder; it is not a virtue but a vice.


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In a free society, people are entitled to what theyown, not to what others own. Yet, under the pre-

tense of morality, politicians and advocacy

groups have made the right to welfare theaccepted dogma of a new state religion, in whichpoliticians are the high priests and self-proclaimed benefactors of humanity.

But the emperor has no clothes: politi-cians pretend to do good, but they do so with

other peoples money. Politicians put on theirmoral garb, but there is really nothing there.Government benevolence, in reality, is a nakedtaking. Public charity is forced charity, or whatthe great French liberal Frederic Bastiat calledlegal plunder; it is not a virtue but a vice.

Constitutionally Bankrupt

The welfare state is also constitutionally bank-rupt; it has no basis in the Framers Constitutionof liberty. By changing the role of governmentfrom a limited one of protecting persons and

property to an unlimited one of achieving socialjustice, Congress, the courts, and the presidenthave broken their oaths to uphold theConstitution.

In contrast, Congressman Davy Crockett,who was elected in 1827, told his colleagues, We

have the right, as individuals, to give away asmuch of our own money as we please in charity;but as members of Congress we have no right toappropriate a dollar of the public money.

What Should Be Done?

Polls show that three out of four Americans dis-trust government and that more young peoplebelieve in UFOs than in the future of Social

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By changing the role of government from alimited one of protecting persons and prop-

erty to an unlimited one of achieving socialjustice, Congress, the courts, and the presi-dent have broken their oaths to uphold theConstitution.


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Security. Those sentiments express a growingskepticism about the modern liberal state. What

should be done?First, and foremost, we need to expose the

intellectual, constitutional, and moral bankrupt-cy of the welfare state. We need to change the

way we think about government and restore anethos of liberty and responsibility. The politicalprocess can then begin changing the direction ofgovernment and rolling back the welfare state.

We also need to impose term limits onCongress and return government to the people,

rather than settle for the status quo of specialinterests and professional politicians.

Furthermore, we need to hold members ofCongress accountable if they overstep their con-stitutional authority. Before considering new leg-islation, members of Congress should ask, Is this

legislation consistent with the enumerated pow-ers of the federal government and with the spiritof the Constitution as a charter of freedom?

Although Americans have grown accus-tomed to the welfare state, the disappearance ofwelfare would strengthen the nations moral fab-

ric and reinvigorate civil society. We should endthe parasitic state, not because we want to harmthe poor, but because we want to help them helpthemselves.

America has a great future, but that futureis endangered by a federal government that has

become bloated and unable to perform even itsrudimentary functions. The collapse of commu-nism and the failure of socialism should havebeen warning enough that it is time to changedirection.

It is time to get government out of the busi-

ness of charity and to let private virtue, responsi-bility, and benevolence grow along with civilsocietyjust as they did more than 150 years ago

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It is time to get government out of the busi-ness of charity and to let private virtue,responsibility, and benevolence grow alongwith civil society.


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when Alexis de Tocqueville, in his great study ofDemocracy in America, wrote,

When an American asks for the coopera-tion of his fellow citizens it is seldomrefused, and I have often seen it affordedspontaneously and with great good will. . . .If some great and sudden calamity befalls a

family, the purses of a thousand strangersare at once willingly opened, and small butnumerous donations pour in to relieve theirdistress.

Welfare reform is in the air, but the elimina-

tion of the welfare state is still considered heresyby most politicians. They consider themselvesbenefactors, albeit with other peoples money.Yet the role of government is not to legislatemoralityan impossible and dangerous goalor even to empower people; the role of gov-

ernment is to allow people the freedom to growinto responsible citizens and to exercise theirinalienable rights.

During the past 50 years, the welfare state(the modern liberals conception of good gov-ernment) has divorced freedom from responsi-

bility and created a false sense of morality. Goodintentions have led to bad policy. The moral stateof the union can be improved by following twosimple rules: Do no harm and Do good atyour own expense. Those rules are perfectlyconsistent in the private moral universe. It is only

when the second rule is replaced by Do good atthe expense of others that social harmony turnsinto chaos as interest groups compete at the pub-lic trough for societys scarce resources.

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