Wednesday, May 26, 2010

The Entitlement Culture

Recently in the news: Europeans may have to scale back their generous welfare state benefits which have included six weeks of vacation per year, retirement often at age 60 etc. France is seriously considering raising the retirement age. As a result, the Greeks are rioting and many French are preparing their standard response of major demonstrations and strikes.

That is a sad situation for the Europeans, predictable though it was. They are having to give up what they consider their entitlements. It is human nature to think that we are entitled to what we have. Nobody likes to accept a lower salary, shorter vacations, or a delay in planned retirement. However the laws of economics neither know nor care about our preferences. Those laws just apply the consequences of our actions (and often of luck) – and they apply to the U.S as well as to Europe.

The situation is simple in concept. People think they are entitled to a certain standard of living and that they are entitled not to have to work very hard to maintain that standard. However the benefits of all those entitlement programs now exceed the resources being used to provide said benefits. Though the concept is simple, people resist understanding that concept. After all, understanding why they must cut back implies that they will accept the cut-backs.

The fact is that we cannot generate entitlements without some means to provide for them, at least if we expect to deliver on those entitlements. In nearly all cases that means that someone has to work to produce what people are “entitled” to. Europe is now seeing the results of having created entitlements to goods and services while at the same time creating entitlements to leisure time and early retirement. That essentially means that they consider themselves entitled to not to have to work very hard to provide those entitlements.

We are on the same road in the U.S. though we have not traveled as far down that road. Many think they are entitled to decent living quarters, good food, medical care etc. but they fail to think of where those “entitlements” come from. Who will build the housing? Who will raise and transport the food? Who will provide the medical care? Who will pay the people who do all that? If you say “government,” you get a zero on the test. Government is not some magic creator of goods and services, though some seem to think it is. Government can dispense nothing without first taking it from the citizens.

That is the important point many Europeans and even some in the U.S. are overlooking. Government cannot magically create goods or services; it must get them from the people. When the Greeks or French riot to protest the need to cut back on benefits, they are simply ignoring fundamental laws of Nature. Goods and services must be produced, they are not created by a wave of a magic wand or by government decreeing that they shall exist.

If we want early retirement we must either work more effectively while young or accept fewer benefits in retirement.

If we want medical care, someone must work to train medical personnel and to provide them with the tools of their trade plus what they need to live.

If we want decent housing, someone must work to provide the building materials and to build that housing, then to maintain it in good condition.

Any “entitlement” requires production. The reasonable conclusion is that we are entitled only to what we earn by honest work. As I wrote earlier, we have a right to nothing. (

We must realize that in general entitlements are nonsense. We are not entitled to the fruits of someone else’s labor, any more than a slave owner is entitled to the fruits of the labor of the slave.

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