A paper by Domenico da Empoli of the University of Rome:
The welfare state is one of those arrangements to which the theory of the unintended consequences of human actions applies. From the first, in fact, it has been argued against the welfare state that its effects might be diametrically opposed to its objectives. The author contends that the taxes needed to finance welfare programmes have discouraged economic activity, as they are borne by employers and consequently by workers, in the form of lower wages and higher unemployment. And he notes the inefficiency of expenditure, especially of spending on services. The article then proceeds to an evaluation of the overall effects of the welfare state, examining its real ability to achieve its fundamental purpose, namely the redistribution of income. After reviewing some of the main theories of redistribution, both normative and positive, the author surveys some recent empirical studies suggesting that the welfare programmes of recent decades in Italy and other industrial countries have failed to produce adequate income redistribution. In conclusion, the author finds that the theory of unintended consequences continues to apply and calls for a radical change in welfare benefits with the elimination or reduction of spending on universalistic programmes and an increasein those directly benefitting the poorest.
Source link: http://archive.mises.org/1976/the-welfare-state-and-income-redistribution-in-democracy/
The Welfare State and Income Redistribution in Democracy
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