Nobel Laureate Milton Friedman writes,

Hardly anyone today, from the far Left to the far Right, regards socialism in the traditional sense of government ownership and operation of the means of production as either feasible or desirable. Those who profess socialism today mean by it a welfare state.

Over the same period, the actual role of government in the US also changed drastically — but in precisely the opposite direction. In the first post-war decade, 1945 to 1955, government non-defence spending, federal, state and local, equalled 11.5 per cent of national income, varying from a high of 16 per cent in 1949 to a low of 8.5 per cent in 1952. From then on, spending rose rapidly. By 1983, government non-defence spending reached 30 per cent of national income, nearly triple the average amount in the first postwar decade.

…To summarise: After World War II, opinion was socialist while practice was free market; currently, opinion is free market while practice is heavily socialist. We have largely won the battle of ideas; we have succeeded in stalling the progress of socialism, but we have not succeeded in reversing its course.

It is true that the term “socialism” has much less positive connotations than was the case half a century ago. When the Russians had defeated Hitler and launched the first spacecraft, and memories of the economic collapse of the 1930’s were still fresh, it was easy to question the viability of the free market system. Not so today.

However, the tendency that Friedman notes for government to expand and for the scope of the market to shrink seems destined to continue. Another Nobel Laureate, Robert Fogel, points out that the biggest increases in consumer demand for this century are likely to be found in education, health care, and leisure time (including retirement). With public schools, Medicare, and Social Security, government is the dominant player in each of these sectors.

I do not think that we have have won the battle of ideas. The Left has not conceded defeat; it has merely become passive-aggressive. Simply by holding on to public provision of schooling, Medicare, and Social Security, those who distrust markets can ensure that government will play an ever-larger role in our lives.

My sense is that the vast majority of citizens are indifferent, confused, or content regarding the expansion of the welfare state. They neither understand the economic argument for the benefits of a smaller profile for government nor appreciate the philosophical argument for freedom and responsibility.

Thanks to Glenn Reynolds for the pointer.

For Discussion. What are the most compelling arguments for scaling back the welfare state? What are the most compelling arguments for maintaining or expanding it?