The Freeman 1972 - The Ludwig von Mises Institute

1972 THE BALLOONING WELFARE STATE 231the workers do not even make adirect contribution to it (thoughin the long run it must tend to reducethe real pay of the steadyworker). Like so-called governmentold-age "insurance", it is infact a confused mixture of insuranceand handout. Those who arecontinually urging an increase inthe percentage of the previouswage-rate paid, or the extensionof the benefit-paying period (toavoid undisguised relief), forgetthat it violates ordinary welfarestandards of equity by payinglarger sums to the previouslybetter-paid workers than to thepreviously lower-paid workers.But apart.from these shortcomings,what we are primarily concernedwith here is the tendencyof unemployment compensation,once adopted, to keep growing bothas a percentage of weekly wagesand in the length of idle time forwhich it is paid.Just what success, if any, theincreasingly costly Social Securityand unemployment compensationprograms have had in enabling theFederal government to "quit thisbusiness of relief" we shall see ina subsequent article. ~• FOOTNOTES •1 Encyclopedia Britannica, 1965, article"Bismarck", Vol. 3, p. 719.2 Colin D. Campbell and Rosemary G.Campbell, "Cost-Benefit Ratios under theFederal Old-age Insurance Program,"U. S. Joint ECQnomic Committee, Old-ageIncome Assurance, Part III (Washington,D. C., U. S. Government PrintingOffice, December 1967), pp. 72-84.3 Much of the foregoing material onSocial Security and unemployment compensationis derived from studies by theAmerican Enterprise Institute, Washington,D. C.4 W. H. Hutt, The Theory of Idle Resources(London: Jonathan Cape, 1939),p.129.Leisure Is Not FreeIDEAS ON$LIBERTYLEISURE IS NOT FREE. To the extent that we choose it rather thanproductive work, we exchange it for real income. Longer vacations,more holidays, and other time-off practices - like a shorterwork week - must all be charged against real income. The averageworker has gained about 50 hours in additional vacationtime since 1960. The ten-hour, four-day week may not reducework time; it may even add to the productive use of resources andequipment. But by emphasizing leisure instead of work it is likelyto point in an unhelpful direction.HERBERT R. NORTHRUP, professor of industryand. director, Industrial Research Unit,Wharton School of Finance and Commerce.