What would it mean to end the age of entitlement?

In 1992 Bill Clinton campaigned on ideal: “The ideal that if you work hard and play by the rules you’ll be rewarded, you’ll do a little better next year than you did last year, your kids will do better than you.” This was the American dream.

With the economy in recession, many Americans felt they weren’t getting the opportunities they deserved. Naturally, Clinton blamed President Bush. It was a message that fed a sense of entitlement. In his 1995 book The Good Life and its Discontents: The American Dream in the Age of Entitlement, Washington Post columnist Robert J. Samuelson wrote:

Without denying the role of individual effort, the modern view presumes that people who “play by the rules” should prosper. And because most of us do (or think we do), we are therefore “entitled” to security, stability and well-being. Entitlement means that almost everyone deserves to succeed. But not everyone does.

When reality falls short of the dream, people feel betrayed and look for someone to blame. Political leaders, bureaucracies, corporations and ‘elites’ are all pilloried for sabotaging prosperity.

Of course no government can guarantee that everyone who works hard and plays by the rules will enjoy low electricity prices, a secure job, a generous retirement income and a house that that doubles in value every ten years. As Samuelson says, “much of the recrimination obscures a deeper reality: our expectations were not realistic. We thought we were entitled, but we weren’t.”

Governments can’t ensure that everyone gets the security and prosperity they think they deserve. The economy will always have ups and downs. And some businesses and industries will collapse despite the fact that most of their employees worked hard and did the right thing.

What governments can do is create a safety net that prevents workers and their families from falling into severe poverty. They can provide almost everyone with access to basic education and healthcare. And they can maintain a framework that allows the economy to grow in the long term, even if it periodically shrinks during recessions.

Part of the trouble with the entitlement mentality is that people who feel they’ve been denied look for scapegoats. And when those scapegoats are people on welfare, the entitlement mentality can end up eroding one of the few things governments really can do — maintaining a system that protects vulnerable people against poverty.

55 thoughts on “What would it mean to end the age of entitlement?

  1. In our Australian context people who feel ‘denied’ are plentiful. Of course the situation is quite different from that in America. Over here we feel denied by politicians. They promise Nirvana and then give us Hell, instead. They promise “NO!” and when once elected say “Yes!” Surely we need to be protected from false promises and fraudulent guaranties? For consumer products I can complain to the consumer body or fair trade. Shouldn’t we also have an independent watch dog for politicians and their election promises? Perhaps then we may not take it out on the “vulnerable people” down under.

  2. “What governments can do is create a safety net that prevents workers and their families from falling into severe poverty. They can provide almost everyone with access to basic education and healthcare.”

    You’re obviously a left-wing ideologue deliberately framing the debate as if this should be taken as a-priori true. Think of how much better and cheaper the health system would run and how much better it would be if only it wern’t for government services crowding out the market for people without any money.

  3. @Jolly:

    Shouldn’t we also have an independent watch dog for politicians and their election promises?

    We do. They’re called elections, the media and a panoply of reports (I work for such a reporting arm). All of these have their shortcomings, but of you want to be an informed voter, you can be.

  4. Dan, the problem (waiting for elections)is that I don’t want to put up with empty promises for 3 looooong years and reward these politicians with monetary rewards (for life in some cases) and power to wrack havoc on the progress of our nation during their term in office.

  5. Jolly@4:

    power to wrack havoc on the progress of our nation during their term in office

    Uhm… right. So, what’s your vision here?

  6. @Dan
    My vision? My vision, really? Hmmmm…let me see.

    What can I do in a climate initiated and managed by a morally corrupt, totally untrustworthy Labor; a party that is devoid of any decency and filled with insatiable greed for power; a party that would “eat its own”; a party that publicly sullies and intensely demonises its own son (former PM Rudd); a party that includes the likes of “Brutus-Gillard”, Arbib, Shorten, Bitar, Swan and Co; a party that propped up an equally corrupt Speaker; a party that condones an equally corrupt MP (Health Services); a party that is managed by union puppet-masters behind the scene; a party that renegades on its own promises repeatedly; a party that has utterly destroyed the Labor that was synonymous with many enduring social, economic and structural changes in Australia?. So can I trust the current Labor to bring about any reforms re politicians’ excesses, their penchant for rorting the system for financial gains? I am laughing, Dan.

    My vision? Well, beside the obvious, I wish for journos to have the courage to honestly report the truth. It is moral courage and personal values that truly matter for both politicians and journos. What happens in a land that is run by a morally corrupt party is that journos suck-up to these leaders to remain in the leaders’ ‘good books’. This gives journos access to leaders who in return dish out (selectively) news that are ‘current’. Woe be tied a journo that is ostracised by the political (albeit morally courageless) elite. And so the system fails, democracy remains a meaningless word. This gives rise to the likes on A Bolt, A Jones and similar publicity-seeking media journos, devoid of any decency or conscience. A gutless group of journos and their conspiracy of silence are equally responsible for the promoting and sustaining of politicians rorting for financial gains. And so it goes unchecked, creating an insidious culture where people feel “denied” and vent out on ‘refugees’ instead. Laughable?

    The search (not for the perfect but) for the least-bad political party, courageous jurnos and individuals should not be delayed. Where are you Turnbull?

  7. So Jolly, what has that got to do with the subject of this thread?

    We had Hockey saying that we should get away from our sense of entitlement – and he mentioned Korea as a benchmark.

    We have plenty of people from the left pointing out plenty of things that amount to middle class welfare that can be cut.

    Thus far they are equal.

    So what, other than a spray, is your point?

  8. Perhaps Jolly is selflessly demonstrating the folly of not thinking through the implications of an idea before you open your trap about it.

    I think Don’s last para is spot on. How would people think about basic welfare if it was called State charity and not constantly referred to as a right? I heard somebody yesterday citing Battlelines as claiming that middle class welfare is necessary to maintain support for real welfare. I suspect that is probablky correct.

  9. Its bloody rich watching people liek Hockey decry “entitlement mentality” when they themselves have been the main beneficiaries of such a mentality. Tell us Joe – do you or do you not believe in a rich society that children are entitled to a good education? Do you or do you not believe that sick people are entitled to health care?

    But equally, framing the problem as “midde class welfare” glosses over some important points. Firstly, there are obvious incentive issues – if you pay only the poor it only pays to be poor. Tightly means-tested programs must screw the battlers – the “near poor”. That’s a fact of arithmetic that “middle class welfare” can often alleviate.

    Secondly, “middle class welfare” can sometimes be a much more efficient than tightly targeted welfare. For example, all over the world, universal health insurance delivers consistently better “bang-for-buck” outcomes than two-tier systems that depend on miserable basic care for the poor and voluntary insurance for the middle class. There’s good technical economic reasons for that (google “asymmetric information”, “adverse selction” and “supplier induced demand” if you want to know more). Similar technical reasons make universal government-provided education and even earnings-related unemployment insurance more efficent than their “targeted” alternatives.

  10. Hockey is wedging the electorate, a lot of people resent the concept of welfare because they see it is “their money” and only they are entitled to it.

  11. Umm, it is their money rog. All tax receipts start off as someone else’s money. As for your other point, I’ll bet you very few people are against paying any tax. It’s the justice of the amounts that they quibble about.

    “Its bloody rich watching people liek Hockey decry “entitlement mentality” when they themselves have been the main beneficiaries of such a mentality.”

    He has, how do you know that? I’ll agree that politicians manipulate the entitlement mentality (one way or the other) to get elected, but I don’t think that was your point. Do you think Joe would have been a failure in a libertarian state? In Canada, the public system is pretty much it, because of tight controls on there being an alternative. Do you think any Canadian who has been treated in a public hospital there loses their right to critique the system because they have benefitted from it?

    “Tell us Joe – do you or do you not believe in a rich society that children are entitled to a good education? Do you or do you not believe that sick people are entitled to health care?”

    You already know the answer to that question and you also know he wasn’t suggesting public health and education should be scrapped.

  12. You already know the answer to that question and you also know he wasn’t “suggesting public health and education should be scrapped.”

    No we don’t.

  13. You reckon conrad? Big Joe wants to scrap medicare and public education? Sheesh, if you really believe that then I suggest some new meds might be in order. No offence but you’re clearly imputing something that is beyond the pale.

  14. Pedro:

    Again I just can’t get myself around the ‘just acquisition’ thing. It’s kind of their money, but for the majority of people above (or well above) subsistence, great wads of it wouldn’t have been but for public education, infrastructure investment, health care, etc. etc.

  15. “Big Joe wants to scrap medicare and public education?”

    If he wants to get down to Asian levels of public entitlements he will (unless he wants to chop old age pensions).

    I also don’t think it’s all or nothing. The deregulation of fees for universities seems rather likely (he’s already flagged it). I also don’t see why they won’t defund primary/high school as much as they can (obviously they will have to deal with the states with this given that this is where most of the funding comes from). As for medicare — they don’t have to scrap it, but it would be rather simple to reduce its scope.

  16. To match welfare payments with those of Korea significant cuts will have to be made to the two largest sources of expense, those being health and aged. Both health and aged make for some 64% of all payments.

  17. Conrad, that’s not scrapping it. Frankly I don’t think Hockey has the guts to do anything, but deregulating uni fees or adjusting some medicare funding may be better than the alternative. These are things that reasonable people can reasonably discuss without anyone being evil or crazy.

    Dan, surely that argument is easier to make for the middle class than the really wealthy, who clearly predate the modern welfare state?

    Also, the ethical claim is affected by the nature of the one way bargain as I suggested with the Canada example. The institutions created by the state for the benefit of everyone become the justification for the extra taxation on those who make the most money even though the opportunity made available by the state was open to all. But we’ve been down this road before so I guess the argument does not need to be resurrected.

  18. Pedro,

    to get to the levels Hockey is talking about, they are going to have to get rid of a lot in anyone’s langauge, including things that would presumably cost people more overall (like ending up with a US-like healthcare system). Schools are essentially out because they are state funded (alternatively, universities are easy picking). Thus, the only way to save the type of money you want is radical changes, e.g., chopping pensions considerably and having a tiny medicare funded health service. These of course can be reasonably discussed, but that’s the reality. Places like HK, for example, that have a similar sort of health and university system as here (and no military), have almost no pensions, so if you want some pensions, then you need to get rid of health and education. That’s the reality of that sized government.

  19. Pedro@20:

    so I guess the argument does not need to be resurrected.

    That’s true and fair enough. I just thought it merited pointing out that ‘it’s you’re money!’ is almost without exception a facile claim.

  20. I think Joe is creating some reinforced liberal positions that might be necessary for when the likes of Barnaby Joyce get near the money jar. When it comes to socialists there is nothing like an agrarian.

  21. DD is on the money.

    We have a system where most of the time money go to those who are disadvantaged.

    I prefer to have a system where people who need help get it as we have here.

    Peter Whiteford has shown this is the case.

    the ALP has cut back on the most glaring of middle class welfare.

    We have no problems or potential problems with regard to Welfare.

    We do with regard to health as does the US.

  22. JB
    Charitable purposes used to be understood to be
    things like
    • the relief of poverty
    •Caring for the sick
    •the advancement of education
    •the advancement of religion

    And other purposes beneficial to the community as a whole that the courts have identified as charitable.

    In the past decades the number and range of not for profit-charitable purposes has grown like toppsy.
    For a example , in 1992 there were less than 100 DGR status cultural organisations/foundations, by now there are now more than 1600 of them and the rate of growth shows no sign of slowing. (no idea how many of these are parked entities ).
    Not a few of these entities run things that look a lot like commercial/not for profit hybrids and you do occasionally hear of people living in their DGR foundation.

    penny for your thoughts ?

  23. The information comes from Harold Mitchel’s recent report into Philanthropy and the arts.
    I should have said:
    DGR status Arts type cultural organisations/foundations

  24. JB

    This sort of got me thinking.
    Call to close every other museum raises storm in Germany
    [ quite an understatement]

    “Expenditure for culture has increased without control since the 1970s but many institutions cannot fulfil their task in an acceptable way. They lack money for research, marketing and so on.” He maintains that decreasing the number of institutions could [improve] quality with each remaining institution getting more money”
    http://www.theartnewspaper.com/articles/Call-to-close-every-other-museum-raises-storm-in-Germany/26303

  25. Part of the trouble with the entitlement mentality is that people who feel they’ve been denied look for scapegoats.

    What on earth does this have to do with Australia? There is no such “trouble” to muse about “part of”. You are trying to incite something that does not exist. Why?

  26. I thought the end of entitlement would mean that all private schools and other wife factories would be shut down, did I miss something?

    Yeah, you did. “Closing down” private schools not only implies a huge amount of state violence, but a huge jack up in taxation. Pssssttttt…private schools SAVES the state coffers money. A lot.

  27. I also don’t see why they won’t defund primary/high school as much as they can

    Then why was per student funding of government school children increased by more between 2000-2007 than at any time in Australia’s history? We have saturated public schools with money. ROI? Not so much. Money ain’t the answer.

  28. Governments can’t ensure that everyone gets the security and prosperity they think they deserve.

    Especially when those expectations are based on an unrealistic self-assessment.

    Ground zero of the present crisis contains millions of NINJAs (no income no job, assets) who believed they could afford a McMansion.

    That form of mass blindness can be explained only by a deep-seated ignorance about the material conditions of life.

    How do Americans develop their perceptions? For its own survival the rest of the world ought to know about this important topic.

  29. @Katz:

    At a macro level, you could do worse than Yanis Varoufakis’ The Global Minotaur to see how the world economy had been (until 2008) structured to sustain US trade deficits indefinitely (things have obviously become more definite now).

    Additionally, I saw in an email circular in my office a book has just come out on the more micro side of things – irrational exuberance at the levels of financiers down to householders. I’ll see if I can find the name and author of it when I’m back in the office but in the meantime, I am sure that many such books exist.

  30. “At a macro level, you could do worse than Yanis Varoufakis’ The Global Minotaur to see how the world economy had been (until 2008) structured to sustain US trade deficits indefinitely (things have obviously become more definite now).”

    I dare say you are literally correct, but surely he could do a hell of a lot better. I see Steve Keen is a fan of The Global Minotaur, perhaps he read it on his long walk.

  31. Yanis Varoufakis’ “Global Minotaur” is about failed attempts to perpetuate a particular method of perpetuating US hegemony. This is about US political and corporate elites and their failed relationships with each other and with counterpart global elites.

    Note that the word is “failed”. We are talking about US failure.

    However, this is issue is tangential to the means by which the NINJAs were allowed to unleash their fantasies to the detriment of the Global Minotaur.

  32. I had the great pleasure of being taught Intermediate Micro (hons) by Professor Varoufakis. Not only was he a Marxist teaching the standard undergrad Int. Micro course taught across the globe, but he devoted our additional honours seminar to “distributive justice”, which consisted of readings from Marx, Berlin, Hayek, Rawls, and Nozick. These readings were used to get deeper into consumer theory; GE/Welfare, Oligopoly/Monopoly competition; game theory. He told us in our first honours class that his job as a lecturer was to teach the syllabus set by the department, but he had control over the honours seminar. He promised, “I don’t care what your opinion of the coursework is, all I want to see evidence of is that you can think by the end of this semester.”

    It was one of the best uni courses I took – evidence of the type he sought nothwithstanding – and he was one of the best teachers. Actually, what initially seemed freakish – a Marxist teaching Micro and Nozick – was more that he was one of the very few economics/bidness/commerce/blah academics who was not autistic. He could write Math proofs, compare and contrast Rawls and Nozick, and show why both both were wrong using game theory, pontificate on global uneven development, and chew gum at the same time.

    But if he is STILL a Marxist in 2012? Oh my. Duuuuuudddeeeeee!!! But then again, he is Greek, and I’ve come across lots of Greek Marxists in my time. What’s up with that? There you are, with humanity’s only life-time cultural halo award for inventing democracy, 2,500 years ago, yet you piss on it with all this Marxist airheadedness. I know there have been some significant population displacements over the past 2,500 years, but is it possible Greeks in 2012 have no DNA population matches with Pericles and his bros?

  33. PP

    If you accept commonly available data that in 2004/5 Australia spent, in $A, slightly more per student than the UK and less than the US it is not hard to see that the expenditure is at best only average.

  34. rog

    1. I have never mentioned any such data. I have never even heard of it.
    2. It’s not even mentioned in any post above.
    3. You assume I “accept” one year’s data from 7 years ago shows some relationship tooooo? something, something, ‘slightly more’ blah, ‘average’ nya nya
    4. And then all that is supposed somehow to magically negate something I’ve posted?
    5. You need to change your dealer.

  35. PP

    You could always supply your own data in support of your assertions. Once that is accomplished I will respond accordingly.

  36. Katz@39:

    It’s all just different aspects of the same system: the capacity and prerogative for ongoing deficits = debt-financed growth = riskier and riskier lending = NINJAs

    PP@40:

    I think Varoufakis belongs to an Marxian/institutionalist stream that is quite a departure from doctrinaire Marxism. I’d put Roubini in the same boat.

  37. Dan @ 44

    It’s all just different aspects of the same system: the capacity and prerogative for ongoing deficits = debt-financed growth = riskier and riskier lending = NINJAs

    But there is a moment when a prerogative becomes a danger.

    Those folks who are clever enough to establish the conditions under which they can enjoy a prerogative might be expected to have sufficient insight to recognise that the prerogative constitutes an existential danger.

    Clearly, some of the important owners and operators of the US political economy failed this test.

  38. Agreed. The companion question is, if they had realised what was going on, when and under what circumstances could they have changed course? You need to be very deft to deflate a bubble without precipitating a crash.

  39. Re. my comment @35:

    That book is by Sheldon Garon and is called Beyond Our Means: why America spends while the world saves.

  40. Dan @ 46:

    Interesting question. Are financial dangers qualitatively different from other dangers — military, controlling levels in dams, conducting an election campaign — in that the sunk costs of the dangerous policy are perceived to be too high to enable a speedy and effective change in practice?

    On the contrary, Keynesians assert that a directive intelligence can impose beneficial modifications to fiscal policy, thereby making entire nation states immune from the peaks and troughs of “animal spirits”. Tell ‘em they’re dreaming?

  41. No, I don’t think that follows. Rather, countercyclic monetary/fiscal operates in many instances on a different order, or level, from gross global capital flows. You can have something that it’s possible to smooth out in the short to medium term yet unsustainable (or, for that matter, sustainable) in the long term. This is what Varoufakis is getting at when he talks about crises and Crises – the latter represents the exhaustion of an unsustainable high-level model, and thus really hard to analyse and address, whereas the former will in general be fairly amenable to textbook intervention.

  42. But Keynes and Keynsians believed that their interventions would be both sustainable and determinative.

    Your paraphrase of Varoufakis suggests that this kind of intervention is epiphenomenal.

    And because historically the “Age of Entitlement” arose during the vogue of Keynesian ideas, unless there is some other justification for entitlements, then the Age of Entitlement is indeed over.

  43. Don’t forget that, at Bretton Woods, Keynes did not get the surplus-recycling mechanism (ie. high-level arrangement) he thought was needed.

    I still think you’re talking past yourself a little. The notion that a different set of global capital flows implies an end to this particular age of entitlement may follow. But there may be other ages (or configurations) of entitlement.

  44. Well yes, the privileged estates of pre-Revolutionary France had a very firmly established mechanism of entitlement. It ended badly.

    I presume that system is dead and buried.

    What classes or orders of society can make a credible claim for entitlement these days? (Besides swinging voters in marginal electorates, of course).

  45. I expect that people in many countries will continue to expect and receive state-provided health care and education, plus subsidised transit in urban centres. I think those constitute realistic expectations of a modest, egalitarian sort of entitlement.

  46. Katz: “I presume that system is dead and buried.”

    Well 18% of French voters support a party that officially rejects the French Revolution.

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