The One-Way Social Contract

I believe there is a fairly simple test that ought to be applied to every political ideology and every government built upon one. It requires no elaborate economic model, no appeal to Marx, Locke, Rawls, Hayek or anybody else. It does not even require us to decide in advance what constitutes the proper size of government. It only requires two imaginary groups of people.

Call them Segment X and Segment Y.

Assume, for purposes of the argument, that the entire population possess roughly the same fundamental capacity distributed among them. They can work, make decisions, accept responsibility, plan for the future and contribute to the maintenance of the society in which they live. Obviously, individuals differ enormously, and every decent society makes provisions for children, the elderly, the seriously disabled and people temporarily overwhelmed by circumstances.

That is not what I am talking about.

I am talking about a political philosophy that divides otherwise capable people into two functional classes: those who are expected to carry responsibility and those who are increasingly relieved of it.

Segment Y works, produces, saves, invests, raises families, pays taxes and accepts responsibility for the consequences of its decisions (William Graham Sumner called them “the Forgotten Man”) even as Segment X is progressively told that some growing portion of those responsibilities properly belongs to somebody else. Housing, food, education, health care, retirement, childcare, transportation and eventually an ever-expanding catalogue of things declared necessary to a decent life become obligations not primarily of the person consuming them, but of society.

But “society” is not a separate, benevolent, munificent entity, and “society” has no bank account. Every promise made in its name eventually lands on the desk of somebody expected to pay for it. In our little thought experiment, that somebody is Segment Y.

This is where I think we can establish a surprisingly useful test of political legitimacy. No ideological movement, and no government organized around it, can remain legitimate if its operating principle becomes that one group of capable adults may systematically transfer responsibility for maintaining themselves to another group of capable adults, with the government acting as the collection agency.

Civilization has always involved mutual obligations. Today I may need you but tomorrow, you may need me.

There are plenty of examples - communities care for people who cannot care for themselves, neighbors help neighbors after disasters, families support members who fall on hard times. Governments also provide public goods that individuals cannot efficiently provide alone. None of this violates the principle because reciprocity remains embedded in the arrangement.

The problem begins when assistance ceases to be reciprocal insurance against misfortune and becomes a permanent assignment of responsibility from one class of citizens to another and at that point the mathematical reality becomes pretty brutal.

The resources, productive capacity and Its willingness to surrender the fruits of its labor of Segment Y are finite. Segment X’s potential wants, by contrast, have no natural ceiling. Human wants are infinite and once government accepts the proposition that a need, want or desire creates an obligation on somebody else, there is no obvious stopping point because another need is just around the corner.

Free food, free housing, free health care, free college, free transportation, internet, childcare, and paid leave and retirement, essentially the platform of the Democrat Party and their DSA shock troops, can all be transformed from desirable things into “rights” simply by changing the vocabulary.

Too bad just calling something a right does not make it one – if a “right” requires somebody else’s labor, property or money, then declaring that right simultaneously creates an obligation for somebody else.

That is the beginning of the death spiral.

As benefits increase, the incentive to belong economically to Segment X increases while the incentive to remain in Segment Y declines. This does not require anyone to be lazy or immoral because people respond rationally to incentives. If working an additional hour produces little additional disposable income because taxes rise and benefits disappear, some people will work less. That decision matrix already exists. If government assumes risks previously borne by individuals, individuals have less reason to avoid those risks.

Meanwhile, Segment Y isn’t just sitting idly by. A reaction Segment X hates is triggered when Y seeks strategies to keep their production - tax shelters, reducing investment, retiring earlier, moving elsewhere, restructuring their businesses. Demand has been simultaneously increased upon its productive population while weakening the incentives to produce and as a result, Y becomes increasingly hostile toward the arrangement.

What is worse is that our cynical, transactional politics accelerates the process.

There are votes to be won by promising additional benefits to X and very few votes to be won by announcing that people must assume greater responsibility for themselves. The politician offering another benefit appears compassionate. The politician asking who will pay for it appears cruel. Government therefore develops a structural bias toward expanding obligations faster than the productive economy supporting them.

Eventually the argument becomes moral rather than mathematical. Segment Y is no longer thanked for carrying the burden. It is condemned for possessing the resources from which the burden is financed. Its productivity becomes evidence of privilege. Its accumulated wealth becomes proof that it has not contributed enough. Success itself becomes the justification for another claim upon it.

It is no shocker that this cannot continue indefinitely.

There is an enormous difference between a society in which capable people accept primary responsibility for themselves while collectively caring for those who genuinely cannot, and a society in which responsibility itself has been collectivized. The first creates a safety net beneath a population expected to stand. The second gradually creates a hammock and then wonders why fewer people are standing.

The question therefore isn’t whether government should help people. Of course it should in certain specific circumstances, the question is what principle governs that help.

A legitimate social contract must contain reciprocity. Rights must be accompanied by duties, and assistance must preserve responsibility rather than extinguish it. Those capable of contributing must remain expected to contribute, because no civilization can permanently divide itself into people entitled to receive and people obligated to provide.

If that mutual responsibility is not maintained, Segment Y is eventually drained of one of three things: money, productive capacity or patience and usually, it runs out of all three.