The Rule of Law Kneels Before the Welfare State

January 17, 2010

by Mario Rizzo

The rule of law always suffers before the political exigencies of welfare state legislation. This is because, contrary to its name, the welfare state has little to do with the general welfare. It is essentially a vehicle by which some groups benefit at the expense of others. 

The latest is the sweetheart deal struck with labor unions and government workers to exempt them until 2018 from the 40% taxation of so-called Cadillac healthcare plans. This is quite obviously an effort to buy the support of largely Democratic labor unions who have given much money to Obama and other Democrats and whose support is needed to pass ObamaCare.  

The claimed justification is to give labor unions an opportunity to renegotiate their contracts. This is because unions often agreed to improved medical coverage in lieu of wage increases. Yes, that is true. But it is also true for the compensation packages that even non-unionized workers receive. 

As an obvious violation of the ideal that the same rules be applicable to all, it will not, however, find any strong opposition in the courts. This is because the courts will defer to any veneer of a rational purpose for the exemption. 

The problem is fundamentally that any time the State goes beyond legislation that benefits each and all, it must buy off the politically well-connected interests. This is not peculiar to this healthcare legislation nor to the Democrats. (Of course, Obama promised a differ kind of politics – a kind that was and is patently impossible in a welfare state.)  

I am not naïve enough to believe that the ideal of the rule of law has ever been followed with the rigor I would like. However, more and more, our politicians care little about even approximating this ideal.

UPDATE: Paul Krugman:  “And meanwhile, Democrats have to do whatever it takes to enact a health care bill. Passing such a bill won’t be their political salvation — but not passing a bill would surely be their political doom.”  (Emphasis added.)  Does the rule of law also kneel before the Democrats’ political advantage?

7 Responses to “The Rule of Law Kneels Before the Welfare State”

  1. Troy Camplin Says:

    Isn’t your title a b it redundant? Hasn’t the rule of law always knelt before the welfare state? How can you have equality under the law with wealth redistribution? How can you have equality under the law if the government is giving money to one group and not another? Certainly Hayek argues that if you technically can enter into a given group given preferential treatment, that rule of law is not violated, but I’m a little more hard-nosed on the issue of rule of law. To my mind, for there to be rule of law, all laws must apply to all people equally at all times.

    One wonders what the laws would look like if the lawmakers couldn’t exempt themselves from their own laws. One wonders what the health care bill being crafted would look like if lawmakers had to be subjected to it equally with everyone else, and couldn’t have their own sweetheart plans.

  2. Mario Rizzo Says:

    It kneels because it always kneels since it inherently must kneel.

    Hayek’s argument in the Constitution of Liberty on welfare provision ignores fundamental public choice insights. However, if the idea is to provide a very low minimum or basic-survival welfare, it is much less likely that the rule of law will be violated, or at least in any significant way.

    I do not think anything like the current healthcare bill could be constructed without violating the rule of law. It is not simply a matter of logrolling; it is a matter of going beyond the functions of government that benefit almost everyone in society (something akin to Wicksell’s Unanimity Principle).

  3. Bob Murphy Says:

    Please keep up the good posts, Mario. I realize it’s a biased sample but it really concerns me when I read the “right on!” comments at Krugman’s blog. Especially the one where he called it “chutzpah” for bankers to challenge the constitutionality of a tax on bankers.

  4. Bill Stepp Says:

    Bob,

    Did you see Krugman’s most recent (today or yesterday?) column in which he writes that in 1981 Reagan’s tax cut accompanied a rise in unemployment to, I think, the 10%+ range?
    Nowhere does he mention Volcker raising interest rates to “kill” inflation, and the effect that had on unemployment.
    I didn’t read any of the 800+ comments, or however many there are.
    Greg Ransom once called him the most dishonest economist in America. Maybe, but surely his competence has to be called into question as well.

  5. Eric H Says:

    I think there is some kind of dysfunctional cycle at work that starts with democracy: the welfare state expands by vote, the rule of law is bent; the welfare state expands further, the rule of law bends until it is broken, and each citizen is condemned to petitioning the government for the wealth of others instead of creating it on his own.

    Democracy shoves us all back into Hobbes’ state of nature.


  6. […] As I have previously blogged, the ideals of the rule of law are degraded by the exigencies of the welfare-state, not only in the process of logrolling but in the process of making arbitrary, special-interest exceptions to rules of all kinds. Mega-states necessarily go beyond the proper realm of government: the general welfare – the benefit of each and all.   […]


  7. […] I have previously blogged, the ideals of the rule of law are degraded by the exigencies of the welfare-state, not only in the […]


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