How the Welfare State Promotes Nativism By David Henderson

Two of the best writers in economics, and among the best thinkers, are Alan Blinder and his mentor, Robert Solow. They seem to share a common view of justice. It’s a distributive view whereby the government takes from the well-to-do and gives to the poor and near poor. In other words, their view of justice leads them to a belief in the welfare state.

Here’s what I find interesting: how their belief in the welfare state seems to lead them to be nativists.

Consider Alan Blinder’s justification for the welfare state in his book, Hard Heads, Soft Hearts:

The soft-hearted attitude holds that we ought to soften the blows for those who play the economic game and lose, or who cannot play it at all. That objective can be served by making the game less vigorous and risky–which is the rationale for Medicare, Social Security, and unemployment insurance. Or it can be done by making the victors share some of the spoils with the vanquished–via welfare benefits, public housing, Medicaid, and progressive taxation. Liberals generally favor such public generosity. But, of course, society as a whole has no Daddy Warbucks. If benefits are to be provided to the underdogs (or losers), the favorites (or winners) must foot the bill.

A few pages later, he writes:

For the new approach to economic policy to succeed, economic issues must be cast in a less adversarial mode. We must all recognize that we live in one nation and that the broad national interest is not a meaningless abstraction, but something concrete.

In context, Blinder is saying that what matters most is people who live in “one nation,” i.e., the United States. And it makes sense that his belief in the welfare state leads to nativism. If the U.S. government were to provide Medicare, Social Security, unemployment insurance, public housing, and Medicaid for the world, virtually all Americans would be at or near poverty. So notice that his belief in soft-heartedness towards poor Americans leads him to have a heart of stone for poor foreigners.

Or consider what Bob Solow writes in his New Republic review of Alan Greenspan’s latest book:

Students of economics are taught that the outcome of a system of free competitive markets is (under certain conditions) “efficient.” That means only that no rearrangement can make one participant better off without making some other participant worse off. They are also taught that the actual outcome, including the relative incomes of participants, depends on “initial endowments,” the resources that participants bring when they enter the market. Some were born to well-off parents in relatively rich parts of the country and grew up well-fed, well-educated, well-cared-for, and well-placed, endowed with property. Others were born to poor parents in relatively poor or benighted parts of the country, and grew up on bad diets, in bad schools, in bad situations, and without social advantages or property. Others grew up somewhere in between. These differences in starting points will be reflected in their marginal products and thus in their market-determined incomes. There is nothing just about it.

This is Solow’s basis for his belief in the welfare state. But did you notice something interesting in his formulation? It’s the most important word in the paragraph: the word “country.” Some people were unlucky because they had were relatively poor and had bad diets and no social advantages. Really? No social advantages? I’ll tell you the most important “social advantage” they have: their U.S. citizenship. But again, Bob Solow is a smart numerate economist who understands that if he tried to get the U.S. government to provide the welfare state for people around the world, he would be advocating that most Americans have the same standard of living that those who are close to poverty have. So he doesn’t go there.

What would be interesting would be to see if Blinder and Solow are willing to substantially relax immigration restrictions to give people who really don’t have “social advantages,” that is, people who are born in poor countries, a better chance. I don’t know the answer.