There is nothing historically native about the American welfare state. It was a German import in the Progressive Era, built with full confidence that the experts could create population security and solidarity better than philanthropy or religious charity.
Creating and funding what became a huge industry in the United States was also a luxury of a newly prosperous society, a gift of Gilded Age wealth to the 20th century. Such a thing would have been inconceivable a century earlier.
To be sure, there have been various revolts against the system that have shown themselves in election results. The American ethos that people should not be beholden to a system of welfare keeps reasserting itself. This happened in 1968, 1980 and 1984, and also in 1992 and 1996. Each time, the system was reformed on the margin but never finally gutted.
The American system is now deeply embedded not just in direct funding by the states and federal government but also in insurance mandates and payroll benefits. With it has come inevitable proof of rampant waste, fraud, and abuse. Everyone swears to fix the problem, but it only seems to get worse.
All of this was built up over a century, but the system is far from enjoying wide population support. There remains the perception that its main contribution has not been the provision of economic security but rather the building of bureaucracy and vote-buying with a humanitarian gloss.
The revelations coming out of Minnesota—a state that prides itself on generous welfare benefits and good government—highlight a level of scandal that not even the darkest cynic could invent. The independent journalist Nick Shirley has documented hundreds of fake child care businesses and transportation companies run by a network of Somali nationals, many of whom also happen to be donors to political causes.
The revelations concerning why we are only now learning about this keep pouring in. It turns out that many citizens have attempted to take fraudulent businesses to court but judges have consistently dismissed the cases. If the courts won’t help and politicians are happy to look the other way, what recourse do the long-suffering taxpayers have?
During the COVID-19 period, many trillions were transferred from the people through the states to qualifying institutions that promised to provide all kinds of services. Subsequent investigations have revealed vast abuse of this money with insufficient oversight—enough to raise profound questions about how these systems work in a time when the middle class is struggling financially.
Another especially striking feature of what’s unfolding now gets to the heart of a truth known in academic literature but hardly spoken about in the media. Namely, such a vast welfare system is only politically viable as long as demographics are relatively homogenous. The welfare state is premised on the idea of social solidarity.
The tax-paying people do a Rawlesian “behind-the-veil” mental experiment and come to believe, more or less, that the people they are supporting with their tax dollars—whether administrators or recipients—are like themselves, members of the family; there but for the grace of god go I. They too would like a “safety net” in the event of an emergency.
Once you mix things up with random people who are not like the paying population—different values, language, religion, ethnicity, national origin—who also seem to be gaming the system, you breed resentment that ends up overthrowing the entire machinery. This is why welfare states in heterogenous societies proved less sustainable. Again, this is well known among scholars of the subject. The literature has consistently documented this pattern.
To summarize in plain English, there is no population fury that compares with the sense that foreigners are ripping off the productive domestic population, within their own borders. That combination is politically explosive. We know this from long history. In short, societies are pretty much in the position of choosing to have a large and sustainable welfare state or to welcome radical demographic diversity, but there is a profound tension between the two.
This is why these revelations from Minnesota and beyond are so politically explosive. People can tolerate some degree of inefficiency and even abuse. They will not tolerate vast networks of exploitation by non-native populations who have learned to game the system while the political elite looks the other way. Every bit of evidence from history suggests that the disclosure of such practices drives politically explosive realignments.
We already live in times of deep distrust. Back in 1960, polls indicated that 80 percent of people had confidence in government to do the right thing. That figure has slipped dramatically over the decades. Today, only 17 percent of those polled express confidence in government. That is crisis levels of distrust, strongly suggesting failed states. The welfare state in particular is now under the microscope in ways never before seen.
All of which speaks to the midterms and this Minnesota disaster. If the Republicans do not exploit this news to the hilt, with calls and actions for dramatic budget cuts and accountability for the scammers and those who have enabled them, they have truly lost the greatest opportunity in the history of the party.
These times might actually end up producing the most significant rebuke of welfare-state policies in 100 years. This stands to reason. In a society without trust, in times when people no longer believe the legacy media or trust the bureaucracies and courts—and even elections themselves are seen as corrupt—the population consensus for redistribution collapses. Social solidarity—essential for a viable welfare state—vanishes.
Is that where we are? Events of the coming year will reveal all.
