Review of Austrian Economics - The Ludwig von Mises Institute

32 The Review of Austrian Economics, Vol. 5, No. 1
(Fuchs 1979, p. 13). Government had to hold the "safety net" when
others no longer could or no longer would.
Certainly government activities in immense profusion—countless
programs ranging from sex education to mental health care to
the federal Foster Grandparents Program—can be viewed as illustrating
this thesis. Perhaps the proposition contains more than a
grain of truth. But as an explanation of the growth of government,
the proposition by itself does not carry us far, and even that much is
partly illusory.
A serious defect of the proposition is that once the alleged process
of "vacuum filling" had got under way, if not before, the direction of
causality must have run in both directions. Yes, perhaps certain
socio-economic changes did, say, promote the breakdown of individual
responsibility among family members. But the availability of governmentally
provided substitute services lowered the cost of irresponsible
private actions and hence increased their frequency. Government
did not simply substitute for responsible private efforts; it
also crowded them out. Without narrowing the focus to a specific
activity, not much more can be said. But the crowding-out theory
itself is logically unimpeachable, and those with normal eyesight and
a little knowledge of history can see evidence of such crowding out on
all sides. (See Wagner [1989] for an extended discussion and references.)
Of course, Proposition 18, as an explanation of the growth of
government, presents us with yet another case of the black box. When
we fill the box in a theoretically and empirically warranted manner,
the nature of the explanation changes completely. Question: How do
the kinds of people who need a government safety net—presumably
those who are destitute, physically or mentally handicapped, aged
and infirm, or otherwise in dire straits—exert enough political pressure
to elicit the creation of a safety net by those who control the
political process? Short answer: They don't. But notice the millions
of middle-class administrators, school teachers, social workers, lawyers,
urban planners, doctors, nurses, professional and technical
specialists, and all the others who act as well paid providers and
facilitators of governmentally funded services for the helpless, and
then the politics of the welfare state becomes a lot plainer. Also plain
is that the rise of the welfare state involved far more than unvarnished
altruism (Weaver 1978; Higgs 1987a, pp. 248-51).
Not surprisingly, it involved a great deal of redistributive politics:
redistribution not so much from the fortunate to the unfortunate as
from the taxpayers to the bureaucrats, providers, and hangers-on. As
Lindbeck (1985, p. 327) puts it, "the original 'welfare state,'designed