The Online Library of Liberty

A project of Liberty Fund, Inc.

• Introduction
• Part One: the Needless State (chapters 2, 3, 4 Are Not Available Online For Copyright Reasons)
• 1: Who Gave Us Order? On Exclusion, Enforcement, and Its Wherewithal *
• 5: Empirical Evidence *
• Part Two: Redistribution (chapter 7 Is Not Available Online For Copyright Reasons)
• 6: A Stocktaking of Perversities *
• 8: Disjunction, Conjunction *
• Part Three: Justice (chapters 10, 11 Are Not Available Online For Copyright Reasons)
• 9: Justice As Something Else *
• 12: Slicing the Cake Nobody Baked *
• Part Four: Socialism
• 13: Ownership, Agency, Socialism *
• 14: Market Socialism: “this Square Circle” *
• Part Five: Freedom
• 15: Right, Wrong, and Economics *
• 16: The Paretian Liberal, His Liberties and His Contracts *
• 17: The Bitter Medicine of Freedom *
• Works Cited

Part Two

Redistribution

6

A Stocktaking of Perversities *

Anti-poverty programs prolong poverty. Minimum wage legislation reduces employment and does not noticeably raise the earnings of those who do find jobs despite it. Universal educational opportunity leads to the massive erosion of standards of literacy and numeracy. Aid to families with dependent children helps to break up families and promotes childbearing by unwed teenage girls. Social Security stimulates consumption at the expense of saving, eating into the capital stock that would be called upon to help honor pension promises. Paying people when ill encourages malingering, paying them when out of a job encourages them to wait for an “acceptable” job to turn up. Rent control induces maldistribution of the available housing, penalizes the homeless, and in due course reduces the housing stock altogether. Compulsory insurance provokes more frequent occurrence of the event people are made to insure against. A redistributive fiscal system churns income flows among social groups “horizontally” but does little to redirect them “vertically” to fulfill its ostensible goal, greater equality.

For the benefit of those for whom this kind of sad litany is still news, Richard E. Wagner’s To Promote the General Welfare: Market Processes vs. Political Transfers (San Francisco: Pacific Research Institute, 1989) proceeds to a workmanlike stocktaking of the perversities of the welfare state, showing in the process that these are mostly predictable effects of a single common cause, the unrestricted power of democratic decision making.

Most of us are individually straight if not downright square, yet collectively we are nothing if not perverse. The costly failures of welfarist redistribution and their corrosive effect on the fibers of society are not seriously in dispute. Nor are many left who still believe that if a policy proves to have too many unpleasant by-products, a better one can be found that will bring only pure bliss. Yet there is little sign of any contemporary society really trying to kick the welfare habit—at best, there are periodic good resolutions to cut down on the fixes. Why is this so?—and must it be the case?

Many answers are floating about in the public consciousness. Some are on the comic strip level: “Surely You Don’t Want Jones Back?,” “Market Socialism Is the Best of Both Worlds,” and “We Can’t Have a Darwinist Free-For All.” These are not amenable to critical scrutiny. Others are less simple but just as simplistic. However, three are, to my mind, worth discussing.

Welfare Relativism

The first is the answer sophisticated American liberals and European social democrats would give under pressure. They do not seriously contest that welfarism does, in roundabout ways, call forth a shabby catalogue of perverse effects (though they do not despair that reason backed by research can in due course deal with them). Other effects of the welfare state, however, they consider indubitably positive. They tell you that good and bad effects of different kinds and affecting different people are incommensurable and cannot be balanced against one another in some logico-mathematical operation. “The welfare state is a millstone around society’s neck” and “the welfare state is the best instrument of social justice we have” are not descriptive statements, but expressions of preference, and one is no more “valid” than the other. Welfare relativism does not argue about the “right” tradeoffs between justice and efficiency, liberty and equality, and so forth, that a rational society ought to have chosen, nor does it claim that individual wishes, once fed into the political sausage machine, somehow come out in the form of the “wrong” collective choice. It accepts that the policy society does choose, perverse effects and all, is what it wants—for the allegation that it “really” wanted a different one is meaningless.

The second answer, which I would label Hayekian liberal, is that it is right and proper to stretch out a social safety net to catch those who fall, as long as this is not done in the name of social justice and with an egalitarian intent. Hayek agrees that “the amount of relief now given in a comparatively wealthy society should be more than is absolutely necessary to keep alive and in health,”1 and he accepts that the availability of such relief will induce people to let themselves go and rely on it, as well as that the state should compel all to insure against life’s hazards and should develop some institutional framework of administering welfare. “Up to this point the justification for the whole apparatus of ‘social security’ can probably be accepted by the most consistent defenders of liberty.”2 What Hayek finds unacceptable is that the apparatus should have redistribution as its avowed aim,3 though it is not obvious why it matters so much whether welfare policies are meant to be, or just are, redistributive. It seems, however, that it is redistributive intent that vitiates welfarism and should lead to its rejection if collective choice were not perverse.

Wagner parts company with Hayekian and indeed all classical liberalism when he admits arguments for the legitimacy of intentional redistribution: for example, when individual charitable giving is conditional on enough others giving, too, so that charity functions as a public good the state can Pareto-optimally provide; when people are “risk-averse” and actually like progressive taxation as a form of insurance that even those who never collect from the policy are willing to buy; or when redistribution is the price all agree to pay to secure acceptance of the existing order by those who do least well under it. Here, Wagner stands squarely in the contractarian tradition, as befits a disciple of James Buchanan and a co-editor of Constitutional Economics. The notion that redistribution is good (Pareto-superior) for both gainers and losers because it is a necessary cost of producing civil society, however, has two versions. Buchanan’s shows how redistribution may be a condition of preventing our relapse from social cooperation to pre-contract lawlessness. Rawls’s affirms that redistribution in conformity with his “difference principle” leads to willing social cooperation as distinct from social cooperation tout court. The former version is as it may be, but to believe in the latter is to believe anything. Wagner wisely keeps a safe distance from Rawls’s contractarianism.4

The Charms of Churning

The third kind of answer as to why we collectively opt for the welfare state, even if individually we disapprove of its works, emerges from public choice theory, a body of doctrine that has become part of orthodoxy in political economy. Wagner’s book is a lucid illustration of many of its themes, largely free from the suffocating jargon of so much current writing in the social sciences. His focus is “constitutional” in that it bears upon causal relations between decision rules and the decisions they help to produce. So does a large part of the literature, from the study of elections and public utility regulation to game theory. However, according to his preface, this focus makes his book “unique,” a case of academic hard sell that devalues an otherwise sober piece of work.

Summarily, public choice theory shows how a given set of social decision rules, such as “majoritarian democracy,” has as its corollary a system of incentives, such as the potential payoffs that can be won by particular voting coalitions, to which the participants in the political process respond in predictable ways. With the insights of public choice theory, it is easy to grasp how, for instance, even minority groups can obtain overt or covert transfers that, by accepted modes of reckoning, confer smaller benefits on them than the cost they impose on the community. Publicly provided goods mostly enjoyed by a particular segment of society but paid for out of general taxation are, of course, analogous to transfers in their redistributive effects. Potentially, majority rule allows everybody to profit under some heading as a member of some minority, while paying for every other minority benefit as a member of the majority; it is theoretically possible for literally each and every voter to be worse off thanks to the welfare state that each nevertheless keeps voting for. What is more appalling still, each is perfectly rational to do so.

One characteristic of public choice theory is that it gets its results by having everybody, including the politicians, play the game by the rules to his best advantage, reacting to incentives, uncontaminated by ideology and metaphysical beliefs. Classical liberals, in diagnosing the perverse ailments of the body politic, used to blame the gullibility of the electorate, the fatal conceit of social engineers, and the dishonesty of demagogues. An approach that does not need recourse to such human weaknesses is presumably better theory, though one suspects it may inspire worse historiography. This, however, is just my self-indulgent speculation, the pursuit of which would loosen our grip on the subject in hand. Back, therefore, to rules, actions, and payoffs.

The Sanctity or Profanity of Rules

What is strange in Wagner’s work, and not only in his, is the juxtaposition on the same plane of the “welfare state” and the “contractarian state” as two interchangeable possibilities that could be chosen, rather like celibacy or marriage, rail or road, sea or dry land, town or country. From this treatment comes the cohabitation, under the same intellectual structure, of the positive study of public choice and the normative precepts of “constitutionalism.” The ability to have them as bedfellows is due, as far as I can judge, to a crucial maneuver around the genesis of rules and their immutability.

In public choice, winning groups get the best available payoffs and impose worse ones on the losers. However, for some reason or other, this ceases to be true where the payoffs are indirect and take the form of alternative constitutional rules, which are but gates giving access to direct payoffs. Redistributive direct payoffs depend on collective decisions, and constitutions are systems of rules for making them. One can identify these rules as, in effect, indirect payoffs. Some rules hinder redistributive decisions, others help them. Hence some constitutions are a manifest source of better direct payoffs for the prospective beneficiaries of public largess than others. The contractarian-cum-public-choice school appears to hold that these persons and their respective groupings respond to incentives and maximize payoffs when shaping legislation and imposing policies, but not when shaping the constitution that is a determinant, both of what policies may be imposed and who is entitled to impose them.

In actual life, for ad hoc reasons there happen to be defective constitutions which are not neutral, but loaded in the sense of facilitating collective choices that are contrary to the Lockean ideal or to some notion of natural right. By the contractarian logic, however, these are avoidable aberrations, for there is, in a society with the usual divergent interests, a place to be filled by a constitution that could have been unanimously agreed upon in an original contract, if the occasion to propose one had arisen. Its terms are at worst indifferent, at best benign, in that they hold no bias and threaten no adverse consequences for any person, group, or class, and promise benefits at least to some. Such a contract is concluded, as it were, in a state of innocence, before original sin, that is to say before there can be generalized collective choice, including contested choice where the winners can carry the day over the opposition of the losers. For, as contractarians might explain, winning coalitions can impose their will on the losers once there are rules for telling who has won, but not before. Consequently, in the choice of rules there can be no imposition, but only quasi-unanimous consent, and this is the fundamental reason why the choice of the rules is invested with an aura of sanctity, as opposed to the profanity of contested choices within those rules.

An obvious down-to-earth objection to this is that momentous choices can and since time immemorial have been imposed by some people on others without benefit of agreed, formal rules. Let it be the case, however, that there is a benign constitution to begin with and the greedy gremlins who swarm around public choices had no hand in its making. Since, however, they know no taboos and are led by interest, what is to stop them from profanely starting to reshape the constitution the moment it provides them with the rule system for engineering agreement to non-unanimous choices?

Article 5 of the U.S. Constitution, providing for the manner in which “rules for choosing” may be altered, erects obstacles to constitutional change which make it more difficult to amend the rules than to apply them in ordinary legislation. But such difficulties exert their “constitutional drag” essentially through augmenting the size of the winning coalition required for carrying the rule change; a broader coalition must be in favor than is needed for passing ordinary laws. Public choice theory, if it were not imbued with the contractarian dream of redeeming the republic through prescription, would in good logic have to predict that an impartial constitution will first be changed to suit the broad winning coalition, and then be changed again to let progressively narrower coalitions despoil ever larger minorities, until the rule system finds its final resting place—the “End of History” of media gurus—in unlimited bare-majority democracy. At this “End of History,” no minority right or privilege can subsist without (at least tacit) majority consent and no potential winning coalition that could carry the day under the existing rules can hope to augment its redistributive spoils by getting agreement to change the rules any further.

Generalized Public Choice

In reality, things work more insidiously than this. Constitutional change need not pass through the straight and narrow gate of some Article 5. The transformation of the U.S. Constitution from a rule system classical liberals used to admire, into one where modern American liberalism has all the elbow room it may desire for its redistributive exercises (even though the Rehnquist Court cramps its style in other respects), took place in more diffuse and unobtrusive ways.

Statute law, even when it ranks as constitutional law, is never simply “applied”; we would need no judges nor advocates, but only bailiffs and jailers if it were. In marginal cases, the courts have to make or remake law before applying it, but in all cases they must interpret it to some degree,5 and it is flying in the face of experience to suppose that judicial interpretation—be it informed by the best in legal scholarship and honesty—can for long dissociate itself from the political climate, the pressure of society’s demands, and, most potent of all, the trend of articulate opinion.

This is how the very Fifth and Fourteenth Amendments, once seen as the cornerstones of private property rights and the freedom of contract, have since been discovered to be no obstacle at all to the elaborate regulation of business, the broad advance of eminent domain, extensive legislative intervention in the distribution of incomes, “positive” discrimination, the shift of power from state to federal authorities, and so forth. Without significant recourse to any “rule for changing rules” that the original Constitutional contract may have provided for, enough of the essentials have changed de facto to transform American politics from “constitutional” to “majoritarian” democracy. A generalized public choice theory that did not confine its scope to the special case of “choices within given rules,” but exposed all political alternatives, including the rules for choosing among them, to the maximizing hypothesis that has proved fruitful in the study of the pork barrel, the growth and tenacity of bureaucracies, the deficit, and the essential perversities of the “promotion of the general welfare,” could have predicted this outcome, too.

Putting it at its simplest, majorities choose legislation that maximizes their gains from politics, and they learn to choose a constitution that maximizes the scope for such legislation. The second part of this double proposition follows from the same premises as the first, though the relevant maximizing processes may not be equally rapid and straightforward. Public choice theory, once it relegates the happy vision of a “rights-based,” rights-conserving, and liberty-securing constitution to its proper place alongside all of the other good things we cannot have, is well enough set up to digest both.

8

Disjunction, Conjunction*

A society can, for the purpose of understanding distribution problems, be seen as the aggregate of three groups of adult residents arranged in decreasing order by income per head or per household: the Top, the Middle, and the Bottom group. Let all members of these groups have two social options: to emigrate, or to submit to a social choice rule by which two groups together decide the distribution of aggregate income among all three. Any two groups can form a coalition and cause the redistribution, to themselves or to sub-groups designated by them, of some part of the pre-tax income of the third group. The relative sizes and initial pre-tax incomes of the groups is such that the potential gain from applying this distribution rule is greatest if Bottom and Middle combine to take income away from Top. In democracy with simple majority rule, Top and Bottom are ideally each 50 percent of the electorate, and Middle is a single person, the median voter; this maximizes the size of Top, hence also the potential gain to Middle and Bottom from redistributing Top’s pre-tax income to themselves or to sub-groups they wish to favor. In real life, one may usefully relax this maximization condition, and think of Top as 40–45, Middle as about 10–20, and Bottom as about 40–45 percent of the electorate.

Under these conditions, rational use of the social choice rule results in a partial or total disjunction of benefits from costs in the politically determined domain of distribution. Benefits are unrequited cash transfers and free or subsidized goods and services in kind. Resources to meet their costs come from two sources: taxes of all kinds (including “social” insurance contributions that, being mandatory, function like taxes) and net public borrowing. The former give rise to interpersonal, the latter to intertemporal redistribution. In the former, gainers and losers are both identifiable, and their gains and losses are simultaneous. In the latter, gains precede losses, the identity of the future losers is uncertain, but it is a fair conjecture that they are, broadly speaking, the young and the unborn members of all three groups, with future members of Top bearing a more than proportionate share.

If the full cost of a benefit is not borne by the beneficiary, excess demand is likely to be generated for the benefit. If the cost-benefit disjunction were total, excess demand for transfers and benefits in kind as a whole would be infinite. (If a particular good or service were subject to saturation, a non-saturated one would be demanded in excess of supply). Partial cost-benefit disjunction may be perceived as total. This will be the case if an individual ignores the effect of his own consumption of “free” benefits in kind and transfer receipts on his own taxes—an effect that is individually negligible though it may become significant at group level.

II.

The “Mature” Welfare State

If the above mechanism, once installed and bolstered by doctrinal legitimization, requires time to operate, the demand for benefits will be met by some supply, not instantaneously, but by gradual increments. The welfare state will have relatively modest beginnings; it will then go on growing in terms of the size and diversity of the benefits provided; and a ratchet effect is liable to prevent any substantial reduction or withdrawal of a benefit once granted.

There is no obvious equilibrating tendency setting an upper limit that the growth of the welfare state may approach but not breach. Instead, it “matures” and its growth abates, and then it approaches one of two constraints.

One constraint is a complex set of dysfunctional effects that come into play as the share of incomes received in the form of unrequited transfers and “free” benefits in kind increases. These benefits are either independent of personal effort, or may indeed be inversely related to it; with other things equal, their increase reduces effort. It also reduces that part of personal saving that can be imputed to precautionary motives. Further, associated effects spring from welfare fraud, tax fraud, the erosion of the economic raison d’être of families, and a host of others that space does not permit to enumerate. When the growth of the welfare state presses against this constraint, heavy efficiency losses tend to arise.

The other constraint operates upon intertemporal redistribution through the well-known effect of the public debt trap. In as much as the public debt is not indexed nor denominated in foreign currency, escape from the debt trap is in principle possible through inflation. However, if holders of the debt understand this and anticipate inflation, this escape route will be rapidly closed. In addition, refinancing the public debt will probably require sharply higher real interest rates.

Allowing the economy to press against one of these constraints, let alone against both at the same time, entails serious material and moral losses. It is for this reason that the call arises for “reforming” the mature welfare state, instead of passively letting the above constraints do the work of limiting it, as it were, “naturally.”

III.

Collective or Individual Rationality

It is irrelevant, or nearly so, whether policy-makers or informed public opinion understand or not that society as a whole is in some sense worse off when the welfare state reaches the vicinity of these constraints. Even the more precise claim, that a reduction in the provision of welfare benefits would in fact increase potential well-being in the sense of meeting the Kaldor-Hicks compensation criterion, would not be decisive. For while reducing the benefits would presumably be “collectively rational,” it would be individually irrational, as long as by imposing an excessive, collectively irrational level of welfare provision, a majority (e.g., the Bottom and the Middle) could still obtain some gain at the expense of the minority (e.g., the Top)—quite irrespective of whether the resource loss of the losers was larger than the resource gain of the gainers.

This is saying no more than the trivial truth that a player in a distribution game can do best by maximizing his own payoff even if his doing so causes the payoff of the other player(s) to decrease by more than his marginal gain (i.e., if individual maximization decreases the game sum). There is no known method of assuring that a “social” bargain is reached that would reconcile the conflict between collective interest and individual majority interest. It is even debatable whether such a solution is conceivable in the face of the dependence of the collectively efficient resource allocation on an income-distribution that favors a minority.

Nor is there much reasonable ground for believing that collective rationality can prevail at the constitutional level if it cannot prevail in ordinary fiscal legislation. If it is irrational for a winning coalition to forego potential gains, it is equally irrational for it to adopt a constitution that would oblige it to forego potential gains. If such a constitution is in fact accepted, it is not necessary; if it is necessary, it will not be accepted (or will be circumvented).

IV.

A Fiscally Neutral Delayed-Action Reform

Recent history in both Western and Eastern Europe and the United States suggests that this logic does in fact operate most of the time, and political systems based on procedural social decision rules do not lend themselves to any radical rolling back of the welfare state. Voters do most of the time punish almost any curtailment of “free” benefits. In order to have even a minimal chance of success, a major reform attempt must for this reason meet two fundamental conditions. It must restore the conjunction of benefits and their costs at least at the margin; and it must incorporate this in an integrated, non-separable set of fiscal measures that is at least marginally favorable to a possible majority coalition, which may be the existing one or a new combination to replace it.

Is such a set of measures feasible? For feasibility, I shall assume, as minimum necessary conditions, that it must not directly clash with what seem to be political imperatives in mature welfare states (of which the Swedish political scene is probably one of the most characteristic examples); heavy progressive taxation of persons (combined with light corporate taxation to discourage the emigration of mobile factors, capital, and enterprise); egalitarian provision of welfare goods and services (no “first and second class” in health care, education, etc.); universal entitlements (no means testing) are features that, where they obtain, can only be undone at high political risk. However, should these political imperatives prove to be less compelling than expert opinion now believes, welfare reform would of course gain some degree of freedom. In broad outline, the following measures, taken together, take account of the several considerations discussed earlier in this paper, and might have some chance of attracting a majority coalition:

• a. All cash transfers are to be broadly maintained.
• b. Entitlements to welfare goods and services in kind are to be replaced by welfare credits (vouchers or credit cards). Some interchangeability between credits to particular goods or services may be admitted.
• c. The total of vouchers or credit cards issued in the initial period is to be equal to, e.g., four-fifths or nine-tenths of the expenditure on these goods in the previous period, one-fifth or one-tenth being put in a reserve to meet exceptional needs (costly illness, incapacity to earn income, and other hard luck cases).
• d. The total of welfare credits or vouchers is to be distributed to households regardless of pre-tax income, but having regard to the number of dependents and their age (infancy, school age, or retirement).
• e. The major part of a household’s vouchers is to be non-transferable and available only for the purchase of welfare goods and services; a minor part (perhaps one-third or one-quarter), however, is to be redeemable by the state at a moderate discount at face value in cash at the holder’s option. This provision aims at two effects. One is that above some fixed level the consumption of welfare goods, i.e., the non-redemption of the voucher for cash, should have a positive marginal cost; moreover, this cost is to be of the same order of magnitude as the good’s cost of production. The other intended effect is that the probable shift of consumption from welfare goods to ordinary market goods and to private saving, permitted by the redemption of the vouchers for cash, should result in some public saving by virtue of the discount.
• f. The total cost of these benefits is to be met, as before, from general state revenue. However, the mode of raising it is to be altered. A substantial part of the income tax, perhaps all of it over and above some low flat rate, is to be replaced by a number of earmarked welfare taxes levied on income at rates assuring the politically required degree of progressivity. Each welfare tax is notionally to be devoted to the (incremental) financing of a particular welfare good or service (education, health, pensions, etc.). At the margin, financing is to be met entirely by the tax in question, so that the rate of each tax becomes perceptibly responsive to any rise or fall in the cost of the welfare benefit in question. (The purpose of this provision is to reduce taxpayer indifference, and in some cases positive benevolence, towards increases of a particular benefit. There may be attendant advantages, including greater clarity and publicness about who pays what for whom.)
• g.The set of measures from a to f is fiscally neutral in a first approximation, before allowing for the behavioral changes induced by the altered mode of benefit allocation and taxation. To encourage its adoption in preference to the status quo, it may seem advisable to make it more palatable either to the existing coalition of Bottom and Middle, or to a new one of Middle and Top. Changes favoring Bottom and Middle are prima facie more apt to obtain the support of Middle than their presumably more parsimonious opposites that would favor Top and Middle. This consideration would seem to speak for playing to the existing ruling coalition, and increasing the progressivity of taxation even beyond its existing degree. However, this would be undesirable for efficiency as well as other reasons, and seems a heavy price to pay for what is initially a fiscally more or less neutral reform. The alternative, shifting some of the welfare taxes from Top and Middle to Bottom, may or may not be feasible or decisive.It is, however, quite possible that the electorally decisive element in these measures is the option to redeem some part of welfare entitlements for cash, albeit at a discount. While having the option cannot make anybody worse off, it is virtually certain to be preferred by many (by all whose preference for a freely chosen over a designated good exceeds the discount). The latter are likely to be randomly distributed over all income groups, loosening up the rigid income-determined division of interest groups, and ceteris paribus possibly tipping the electoral balance in favor of such a reform.

V.

With the Grain

Clearly, as long as politics is unrestrained by deontological taboos about property and contract, men will always use it to disjoin benefits from their costs, get the former, and make others bear the latter. The reform sketched in Section 4 would, for evident reasons, fall far short of offsetting this primordial political drive. It would, however, establish at least a few cost-benefit conjunctions. They would be less efficient and less potent than the standard marginal equalities of cost and benefit prevailing in ordinary market exchanges. But though initially modest, they should have delayed and possibly important effects. For both the individual option to switch from welfare to market goods, and the closer and more visible links between welfare benefits and their costs, are likely to operate over electoral processes in future periods to curb excess demand for “welfare” by its consumers and willingness to meet it by its providers. With such mechanisms in place, the welfare state would acquire at least a modest built-in tendency to reform itself, so to speak, with the grain, rather than against the grain under the destructive pressure of its efficiency and debt constraints.

[* ]Reprinted with permission from Critical Review (fall 1990): 537–44. © 1990 Center for Independent Thought.

[1. ]F. A. Hayek, The Constitution of Liberty (Chicago: University of Chicago Press, 1960), 285.

[2. ]Ibid., 286.

[3. ]Ibid., 289.

[4.]In particular, Wagner (34–35) is rightly unimpressed by the maximin strategy that Rawls, in order to get his result, needs to pass off as the dominant one in the pre-contract position—i.e., unanimous agreement by the parties that the “difference principle” shall govern distribution among them.

[5. ]Any law (no matter how fussy or “special” in the pejorative sense) is more general than any case to which it might apply. The judicial decision that a class of cases in fact includes a given case, involves the cognitive operation of identifying each in terms of the other. “Substantive due process,” itself an interpretation of the Fifth and Fourteenth Amendments, rules out as unconstitutional a class of legislative acts that would “deprive any person of life, liberty or property without due process of law.” Whether the fixing of minimum hours of work in bakeries or minimum wages for women fall within this class or outside it is patently a matter of interpretation, and the interpretation has undergone enormous change in the present century. However, the change was fully to be expected on “public choice” grounds.

[* ]Reprinted with permission from Can the Present Problems of Mature Welfare States Such as Sweden Be Solved?, edited by Nils Karlson (Stockholm: City University Press, 1995), 20–27.