The War Between Government and Free Markets

Our economy has been staggering under the dual burdens of paying the growing direct costs of supporting the welfare state, as well as the indirect costs of its intervention in the economy.

On one hand, massive government spending programs have taken money out of the private sector, depriving the "invisible hand of the free market" of its full potential to create jobs and fuel a robust economy. The growth of these programs since the official beginning of the recession in December 2007 has been breathtaking.¹

The number of economically significant rules (costing more than $100 millino a year) in the prerule, proposed or final stages, published each fall and spring in the Unified Agenda

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• The number of Americans now on Medicaid jumped to 50 million since December 2007, a rise of 17 percent.
• Food-stamp recipients rose to more than 40 million, an increase of nearly 50 percent.
• During this same time, those receiving unemployment insurance grew by nearly four times, now approaching 10 million.
• The original unemployment insurance benefit of 26 weeks has been extended eight times, now providing 99 weeks of benefits to the long-term unemployed.
• One in six Americans is now served by government anti-poverty programs.

Of course, the cost to fund these programs has risen to meet the demands of these expanded programs. Consider:

• The cost of Medicaid rose 36 percent in twoyears to $273 billion.
• The cost of providing food stamps has jumped 80 percent to $70 billion.
• Jobless benefits have sky-rocketed from $43 billion to $160 billion.

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The important thing to remember is that welfare state programs give people money to do nothing. If those same resources were being paid to the same people to do productive work in the market economy, they would be creating economic value. So, whether these programs are funded from taxes, borrowing, or printing money, it is money that is not available to the market to create real, economy-growing jobs.

There is a ray of hope, however, for this drain on the economy. It now appears that attitudes are shifting away from this destructive welfare spending, both in the U...

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