Wolfgang Kasper on the welfare state

Many readers of this blog will be aware of the tireless advocacy work for liberty in this country since the 1970s by Wolfgang Kasper, emeritus Professor of Economics at the University of New South Wales and former Senior Fellow of the Centre for Independent Studies.

He has painted on the intellectual canvas of Australian classical liberalism with broad brush strokes, writing on topics ranging from the institutional foundations of free markets right through to applied public policy controversies such as industry protectionism, labour market regulation, activist macroeconomic policies and many more.

His retirement of a few years ago to the picturesque southern coast of New South Wales appears to have had a negligible effect on Kasper’s appetite to produce quality intellectual output.

Some examples that readily spring to my mind include his comprehensive pamphlet The Merits of Western Civilisation: An Introduction, produced for the IPA Foundations of Western Civilisation Program, a critique of neoclassical economic orthodoxy, and writings about the troublesome Euro. There are also promises of more quality contributions to come, including an eagerly anticipated second edition (with Peter Boettke) of his classic book Institutional Economics.

In the latest edition of Quadrant magazine (online copy available through subscription only), Kasper delivers a withering critique of the welfare state which, to my way of thinking, represents perhaps the finest piece of writing one can find anywhere on this topic so far in 2012.

Kasper chides the numerous proponents of the welfare state stating that they ‘should by now realise that redistribution policies have not worked.’

He not only points to the fact that the poor are still among us, despite countless taxpayers’ funds conscripted to support a widening array of ‘needs,’ but that the welfare state has distorted the very nature of government itself (brilliant quote alert!):

the essential primary government function of protecting life, liberty and property has been white?anted by more and more confiscation to bankroll socialised welfare. To the extent that the state takes property rights away to give to others, it contravenes its protective function.

For Kasper, a fundamental determinant of the seemingly ceaseless growth of the Western welfare state is the principal?agent problem applied to the majoritarian democratic setting. In addition to the well?known rational ignorance problem faced by the voting public, the immediate beneficiaries of the welfare state (viz. bureaucrats and public sector unionists, tax?financed social welfare NGO lobbies) have every incentive to ensure layers of welfare payments and social programs accumulate over the top of each other.

Needless to say, it is the financially beleaguered taxpayer who is continuously hounded by the travellers of the welfare state gravy train to cough up more funds so that the ride continues. But even the welfare state has to reach its ‘Malthusian limits’ (as Frederic Bastiat once described it), as the distortionary effects of taxes and regulations to maintain the rising?cost welfare state impairs self?reliant behaviours, the exercise of entrepreneurial creativity and, consequently, economic growth. Witness Europe and the United States in their smoky fiscal ruins, with Australia surely following behind on current trends.

In typical style Kasper goes beyond the critique and provides numerous suggestions for reform, in this case to allow voters to regain the mantle of their runaway governments and substantially reduce the welfare state in the process. While I shall leave the detailed suggestions for those who wish to read the article, the following quote is representative of Kasper’s views on the nature of the reforms that must take place:

the best general prescription for restoring genuine democracy and a robust, free economy is to privatise wherever possible, to foster competition and to devolve activities to lower levels of government (subsidiarity). There is much international evidence that this not only saves the welfare state from itself, but also reignites a can?do attitude among citizens.

Australia is fortunate to have in its midst a resolute champion of human freedom in Wolfgang Kasper. His latest contribution in Quadrant magazine is yet another example of this very point, and his latest contribution should be compulsory reading for all lovers of liberty.

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18 Responses to Wolfgang Kasper on the welfare state

  1. Blogstrop

    Thanks Julie – I’ll follow up and read more of his output. Meanwhile there will be a few of those who hang around here vexatiously that will just assume anyone writing in Quadrant is a rightwing reactionary, and fail to learn.

  2. David

    Re your final sentence, the contribution should be compulsory reading for social democrats. Generally, they are not lovers of freedom.

  3. Thumbnail

    Thanks very much. I think I have his book sitting on the table, waiting for me to read after I have finished the one I am reading now.

  4. Julie Novak

    David – yes, agreed, also required reading for the socialists of all political parties!

  5. He doesn’t hold back much:

    Generations of neoclassically blinkered lightweights have now been trained in the orthodox tradition. They occupy university chairs, editorial committees of professional journals, government offices, research outfits and the media. In other words, they have gained sufficient weight to mutually reinforce each other and promote a certain consensus about how the economy works and people ought to behave. To be part of the neoclassical tribe is comfortable and good for one’s career. And for the political elites and commentariat, who lack a deeper understanding of economics, it is also safe to accept the conventional consensus.

  6. coz

    cue Land of Hope and Glory.

  7. Rafe

    Tell us what you really think about them Wolfgang!

    If academics can bury the most important philosopher of the 20th century, almost in his own lifetime, anything is possible among over-specialized, professionalized and politicized intellectuals and second hand dealers in ideas.

  8. I had the priviledge of being one of Wolfgang’s students many years ago.

    I loved his passionate lectures and tutorials although I did not understand then I was in the company of a giant.

    The scales quickly fell from my eyes.

    Thanks for the piece Julie, I’ll seek out his recent work.

    What a honour it was.

  9. Julie Novak

    Hi Grigory – I had the very great pleasure of being a member of the early cohort of CIS Liberty & Society student conferences, in which Wolfgang spoke to us about economic freedom. I’ve been a fan of his works ever since!

  10. coz

    More on the UK conservatives ‘great idea’


    Probably NSFW

  11. LacqueredStudio

    [… to privatise wherever possible …]

    Sorry, but I’m quite happy for my tax dollars to ensure our police, hospitals, schools, roads, communications, and any other national interest infrastructure remain answerable to the people, thanks.

  12. Louis Hissink


    I assume you are illiterate in the sense that your quote

    [… to privatise wherever possible …]

    is unlinked to previous arguments.

    I, for one, am, under these circumstances, uninterested in following your arguments when you can’t even manage to link a document using archaic, in internet terms, methodologies.

    Not a recent Digital Dinosaur?

  13. coz

    Don’t want to derail Julies’ homage, don’t know the guy she refers to but the days of ‘great men’ and ‘great ideas’ are over, we all need to deal with the reality of crony capitalism and a corrupt political/legal elite.

  14. LacqueredStudio

    @Louis Hissink

    Instead of launching yourself in a reactionary lather, try evolving a tad and read the fucking article.

    Again, if you have to.

    Julie quite clearly quoted Kasper as writing as I selected. But if your point regards nothing more than petty discrepancies in HTML protocols between blogs, then obviously my point still stands.

  15. Julie Novak


    I happen to think that Kasper’s recommendation to privatise is a very fine idea, and superior to other ideas he expressed in his piece (namely tax-financed vouchers which run the risk of increasing fiscal burdens and encouraging more regulation).

    You say you want the tax dollars confiscated from your wallet by force to remain answerable to “the people.” hmmm…. interesting.

    To help us understand where you’re coming from, please define “the people,” and then explain (a) how politicians magically divine the “will” of “the people,” and (b) how the incentive structures inherent within politics ensures compatibility between what “the people” want (i.e. your answerability condition) and appropriate delivery of all the tax-financed goodies you nominated.

    I’d dare say you’re getting yourself trapped under murky intellectual waters when you invoke superstitious arguments.

  16. johno

    remain answerable to the people


    Two problems with this proposition.

    In theory, using tax dollars to provide these services is suppose to make them ‘answerable to the people’, but in practise, the providers are NOT answerable to the ‘people’. At best they are answerable to some bureaucrats and politicians. But bureaucrats and pollies are NOT the people.

    Many of these providers are powers unto themselves and answerable to no one. And that is how they like it.

    Second problem. I don’t want the people responsible for delivering MY services to be answerable to the ‘people’; I want them to be answerable to ME. The only way to achieve that is if I am their direct paymaster and only market delivery can make that happen.

    There are good reasons for the police and some roads to be funded by taxpayers, but schools, hospitals and communications should all be privatised.

    I am happy for my taxes to be used to help the genuinely poor or otherwise needy pay for these services, but the services themselves should provided by markets, not governments. The poor and needy shouldn’t be victimised by being forced to use government provide services.

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