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The welfare state is responsible for two current crises: the financial crisis that has slowed down or even reversed growth and stalled economies around the world, and the debt crisis that is gripping Europe, the United States, and other countries. It has piled mountains of debt on the shoulders of the most vulnerable among us—children and young people—and has issued promises that are impossible to fulfill. The crisis of unfunded obligations is approaching. It won’t be pretty.
The essays in this volume are hardly the last word on the subject of the past, present, and future of the welfare state. Quite the contrary. They are presented in the hope that they will stimulate more thought, more study, and more soul searching on the subject. Accordingly, some are presented in a more academic style and some are presented in a more journalistic style; they draw on various intellectual disciplines. It is hoped that they will offer something of value to every reader.

Origins of the Welfare State

The welfare state in its modern form originated in the late nineteenth century in Germany in the political maneuvering and “state building” of the German statesman Otto von Bismarck, the Iron Chancellor who defeated France and Austria militarily and unified the other German states into the “Second Reich” on the basis of “Iron and Blood.”
Bismarck waged a lengthy political war on the free-trade classical liberals in Germany; they preferred peaceful means for the creation of a prosperous nation, as well as peace with Germany’s neighbors, rather than war, colonization, and militarism. As a part of his state-building program in Central Europe, Bismarck pioneered the welfare state, which has since come to colonize much of the political space of the globe. Bismarck ushered in the German welfare state through a series of compulsory insurance schemes for accidents, health, disability, and old age, which he promoted and enacted in the 1880s. The militaristic Chancellor Bismarck called his measures “State Socialism,” and stated in 1882 that “Many of the measures which we have adopted to the great blessing of the country are Socialistic, and the State will have to accustom itself to a little more Socialism yet.”
The historian A. J. P. Taylor explained that, “ Bismarck wanted to make the workers feel more dependent on the state, and therefore on him.” It was, above all, a political stratagem to create a dependent population imbued with an ideology of national collectivism.
Bismarck confirmed that the purpose of his “State Socialism” was to generate the dependency, and thus loyalty, that a powerful Germany needed to dominate Europe:
Whoever has a pension for his old age is far more content and far easier to handle than one who has no such prospect. Look at the difference between a private servant and a servant in the chancellery or at court; the latter will put up with much more, because he has a pension to look forward to.

Tom Palmer

Tom Gordon Palmer (born 1956 in Bitburg-Mötsch, Germany) is a Senior Fellow at the Cato Institute, director of the Institute's educational division, Cato University, Vice President for International Programs at the Atlas Economic Research Foundation, and General Director of the Atlas Global Initiative for Free Trade, Peace, and Prosperity.

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