The antisocial social contract
A modern tragedy
Picture this: you pass a homeless person on the street. Twenty years ago, you might have stopped, reached into your pocket, maybe even asked their story. Today? "I already pay taxes for that," you think, walking by. This small moment captures a profound transformation in how we relate to each other—one that empirical research confirms is happening across society.
Studies show that government welfare programs crowd out 30-50% of private charitable giving. For every dollar the government spends on social programs, private charity shrinks by thirty to fifty cents. But it's not just about money—it's about the human connections that disappear along with those charitable dollars.
Consider what happened in China when the government introduced rural pensions. Researchers found that elderly parents stopped living with their adult children, becoming "more independent economically" but losing the daily interactions, shared meals, and intergenerational wisdom transfer that had defined Chinese family life for millennia. The check arrived monthly, but the grandchildren visited less.
This pattern repeats everywhere extensive welfare systems emerge. Austrian economists ran natural experiments showing that extending unemployment benefits by just a few months increased unemployment duration far more than increasing benefit amounts. People weren't just responding to economic incentives—they were adapting to a new social reality where not working became normalized, even expected.
The dependency isn't just financial; it's cultural. Research tracking welfare families across generations found that a mother's welfare participation significantly increased her daughter's likelihood of later welfare dependency. The stigma faded, replaced by detailed knowledge of "how to work the system." What economists call "intergenerational transmission of welfare dependency" is really the passing down of diminished expectations.
Ayn Rand captured this moral dimension through her character John Galt, whose oath—"I will never live for the sake of another man, nor ask another man to live for mine"—represents more than libertarian ideology. It's a recognition that human dignity requires both giving and receiving to be voluntary acts between equals, not transactions between supplicants and bureaucrats.
The bureaucratic nature of welfare fundamentally changes these relationships. Max Weber warned about the "iron cage" of bureaucracy, but even he might be surprised by how prescient his concerns proved. When you need help today, you don't turn to neighbors or family—you fill out forms. You become a case number, your unique circumstances reduced to checkboxes on standardized documents.
Before the welfare state, we had different solutions. By 1920, one-third of adult males belonged to fraternal societies—the Elks, the Odd Fellows, the Knights of Pythias. These weren't just social clubs. They provided life insurance, health coverage, and unemployment benefits. More importantly, they created networks of mutual obligation. If you fell on hard times, Brother Johnson from the lodge didn't just write you a check—he'd help you find work, check on your family, make sure your kids stayed in school.
African American communities, excluded from white charitable organizations, built particularly robust mutual aid networks. The Knights and Daughters of Tabor, the African Union Society—these organizations provided comprehensive social services while reinforcing cultural values of community responsibility and mutual support. Help came with expectations, accountability, and genuine human connection.
The transition to government welfare seemed logical during the Great Depression. Private charity couldn't match the scale of need. But something subtle happened as programs expanded: we stopped feeling responsible for each other. Why help your neighbor find a job when there's an unemployment office? Why support your aging parents when Social Security exists? Why donate to local charities when your taxes already fund welfare programs?
Friedrich Hayek explained why this matters beyond sentiment. Charitable giving uses what he called "dispersed knowledge"—the intimate understanding of local circumstances that no bureaucracy can replicate. Mrs. Chen at the church food bank knows that the Johnson family needs baby formula more than canned goods this week. The unemployment office just knows they qualify for $400 monthly.
The corruption of these systems adds insult to injury. While ordinary citizens see their charitable impulses crowded out, politically connected corporations feast on corporate welfare. The Export-Import Bank subsidizes Boeing and General Electric. Agricultural programs meant for struggling farmers flow primarily to agribusiness giants. What economists call "regulatory capture" means welfare for the wealthy while the poor navigate byzantine bureaucracies.
Nordic countries offer a complex counterpoint. Despite extensive welfare states, they maintain relatively high social trust and cohesion. But look closer: they also show declining work hours and have moved from top rankings to middle rankings on measures of reluctance to claim undeserved benefits. Even in these "successful" welfare states, something is shifting in the social fabric.
The COVID-19 pandemic revealed both our latent capacity for mutual aid and how atrophied it had become. Neighbors who hadn't spoken in years suddenly organized grocery deliveries for the elderly. Mutual aid networks sprouted on social media. But these required a global crisis to emerge, and many participants expressed surprise at their own communities' hidden reserves of compassion and capability.
Modern innovations suggest possible syntheses. The Earned Income Tax Credit makes work pay without creating bureaucratic dependency. GiveDirectly's unconditional cash transfers remove middlemen while preserving dignity. Employee assistance programs and social enterprises address social needs through market mechanisms rather than government bureaucracy.
But these remain exceptions in systems designed around bureaucratic control rather than human connection. The fundamental tension persists: programs designed to support society often make it less social. We've traded the messiness of human relationships for the cold “efficiency” of institutional support.
The research consistently shows this isn't just nostalgic romanticism. Work disincentives are measurable and significant. Family bonds demonstrably weaken when government assumes traditional family responsibilities. Private charity doesn't just decline—the networks and relationships it created disappear.
This doesn't mean abandoning all safety nets. Basic protections for the truly vulnerable remain morally necessary. But recognizing the social costs of extensive welfare systems is essential for designing better alternatives. The goal should be supporting those in need while strengthening rather than replacing the human connections that make society worth preserving.
Perhaps the path forward requires asking not just "How can government help?" but "How can we help each other?" The answer might look like time-limited benefits that encourage work, tax policies that incentivize rather than crowd out charitable giving, and programs that strengthen families rather than substitute for them.
The ultimate irony of the welfare state is that in trying to engineer a more social society—one that cares for all its members—we may have created a less social one, where caring becomes someone else's job. Breaking this paradox requires remembering that true social support comes not from systems but from each other.
References
- Austrian study on unemployment benefit duration and work incentives
- China's rural pension scheme and intergenerational relationships
- Intergenerational transmission of welfare dependency
- Government spending crowding out charitable giving
- Historical mutual aid societies in America
- Objectivist critique of welfare rights
- Comparison of government welfare vs private charity efficiency
- Nordic model welfare state analysis
Another great read Sir!
Of course, the Great Depression and the Covid-19 pandemic were global catastrophes. As much division and distrust was fomented, as was random acts of spontaneous generosity.