The Social Welfare System is the Government's Trojan Horse

Governments rely on two monopolies to bolster their position – (1) the monopoly of force and (2) the monopoly of legal tender – and it is the latter that is more fundamental, and yet more vulnerable. This is because if enough people understood the real meaning of “money”, and would switch just a small portion of their savings from “fiat money” into physical gold, the ability of governments to expand and become omnipotent would be severely curtailed, to the benefit of each of us individually and society collectively.

“By [means of inflation], government may secretly and unobserved, confiscate the wealth of the people, and not one man in a million will detect the theft.” – John Maynard Keynes

To the two afore-mentioned monopolies, I will now add a third – the monopoly of the people’s loyalty and obedience. In order to maintain their absolute power over society, governments will not tolerate the existence of any source of authority which could attract the loyalty of the people. Indeed, one way of looking at history is to view it as a long process in which the central authorities sought to destroy competing sources of authority, beginning with the authority of the tribal leaders, followed by that of the local magnates, and that of religious leaders of non-official churches, and that of clan elders, culminating in the removal of authority from even parents over their own children. In the process, they have destroyed political systems, e.g., feudal and oligarchic, where power was more diffused and balanced, and replaced them with an increasingly absolute and monopolistic authority.

History reveals the relentless march of the kleptomaniac state towards its ultimate goal of becoming omnipotent, under the guise of benign paternalism and the provision of universal welfare. In the last twenty odd years, this ongoing attack on alternative sources of loyalty has reached even the bond that unites spouses. Today’s social welfare system and laws on divorce do not just facilitate, but encourage divorce rather than reconciliation and the preservation of marriage. But, beware,

“A government big enough to give you everything you want is also big enough to take away everything you have.” – Thomas Jefferson

The state is an organism, and like any organism, it is in its nature to expand and to extend its reach. This is why I believe that the modern idea of “democracy” as a means of “holding governments accountable” is a myth and a toothless watchdog. Even worse, the modern form of representative democracy and its concomitant concept of the welfare state, facilitate the expansion of governmental power. “Welfare” is an irresistible lure, because it has high-sounding moral rhetoric, and because it appeals to a less savory side of human nature – envy and greed. The end result is that the provision of welfare has been used to justify an ever greater encroachment by the state on society, the economy, and individuals. This is why political parties vying for power can never act as a check on state power, for their leaders and their supporters all have a vested interest in even greater power for government, so as to ensure sufficient resources to buy the voters’ goodwill, and line their pockets during their term in office. But,

“You can't give the government the power to do good without also giving it the power to do bad - in fact, to do anything it wants. It is not so much the abuse of power which is a concern. It is the power to abuse.” – Harry Browne

“The problem with socialism is that you eventually run out of other people's money.” – Margaret Thatcher

Apart from the appeal to the moral high ground and the less savoury aspects of human nature, the onward march of the state has also been facilitated by the periodic advent of crises, either real or fabricated. The state is a parasitic virus that bides its time and waits for the opportunistic moment when it could invade and expand in the body politic. Wars are the most often exploited opportunity. Wars have been responsible for the greatest inroads by governments into civil liberties – increased taxation, greater control over private lives, greater legislative and executive powers, more monopolies. Never had these intrusions receded even when the conditions generated by the crisis no longer exist.


A more recent opportunity for power-grabbing was the so-called “9/11 Terror Attack on America” and Saddam Hussein’s non-existent “Weapons of Mass Destruction”. Now that these two pretexts have exhausted their usefulness, the government is in the process of cooking up the next crisis in the name of “Iran’s Nuclear Arsenal”. The net result is that in less than ten years, the state has granted itself near absolute power to stop, strip, search, arrest, detain, torture, suspend civil liberties, spy on individuals, obtain information, censor, etc., all in the name of protecting society. The 2007 movie “Rendition” (Reese Witherspoon, Meryl Streep) has managed to capture the full horror of our age. And all this has been achieved while America is touted as the premier “democratic” nation!

"The more corrupt a republic, the more laws" – Tacitus

“Emergencies have always been the pretext on which the safeguards of individual liberty have eroded” - Friedrich von Hayek

Modern-day “democracies” and dictatorships are merely two versions of totalitarianism, two sides of the same coin – the only difference being that the former is sugar-coated (more suited to governments which can print money and borrow at will), while the latter is jack-booted (more suited to governments which are unable to print money at will). Is it any wonder that America and China have found greater entente and more grounds for co-operation?


Economic crises are another opportunistic moment for the state to grab more power. The Great Depression of 1929 saw the private U.S. Federal Reserve elevated to the status of a Central Bank. The crisis was seized on by the government of Franklin Roosevelt to make the possession of real money – gold – illegal for U.S. citizens, and to grant itself the power to print money, in contravention of the U.S. Constitution.


The more recent financial crisis of 2008 saw the U.S. government grant itself greater power to channel tax-payers’ money to its cronies on Wall Street, and greater leeway to print additional trillions of money. Meanwhile, more and more Americans are unemployed and in dire economic conditions.

“The Central Bank is an institution of the most deadly hostility existing against the Principles and form of our Constitution. I am an enemy to all banks discounting bills or notes for anything but coin. If the American people allow private banks to control the issuance of their currency, first by inflation, then by deflation, the banks and corporations that grow up around them will deprive the people of all their property, until their children will wake up homeless on the continent their Fathers conquered.” – Thomas Jefferson

Notice that our Hong Kong government has not been tardy in following America’s example in these respects. Our police state has become more omnipresent in our daily lives – the ubiquitous surveillance cameras, forced drug-testing in schools, the various smart cards, both private and public, which carry our personal data and which make available that data to the government, and which can effectively track our activities and whereabouts. At the same time, taxpayers’ money has been liberally distributed to the grassroots to buy their support. Meanwhile, banks are allowed to fleece depositors and enslave “home-buyers”, while the big property-developers and utility-providers are free to make humongous profits. And “public servants”, whether active or inactive, happily live off the ever more taxed few who can still be coerced into paying up.

“Where the welfare state marches, the police state is not far behind.” – Anon

The only effective safeguard against the expansion of state power is to deny the state the monopoly on legal tender, thus taking away its ability to confiscate, manipulate, censor, and terrorize. Such happy circumstances existed in feudal Europe, and as recently as in Victorian England, where the landed gentry kept the monarch in check. It was only the advent of the two World Wars that gave the Crown the pretext and popular support to annex all power to itself.


Fortunately, as the novel “The Water Margin” puts it – “世事合久必分分久必合”. Nothing is permanent. When conditions have reached an extreme, extreme momentum will have been built up for their destruction. This is what Hegel meant by “dialectism” in which an idea generates a conflicting counter-idea, and eventually the conflict has to be resolved by the synthesis of both ideas into a new idea. This is also what Karl Marx meant when he stated that existing conditions generate contradictory conditions, until the tension has to be removed, giving birth to a new set of realities.

What we are experiencing today is a condition in which the problems generated over the past century by capitalistic finance, modernization, the welfare state, and globalization – the depletion of earth’s resources, over-consumption, over-indebtedness, over-population, chronic unemployment, loss of livelihood for people in poorer countries, mass displacement, extreme pollution, asphyxiation of the private sector, extreme inequalities in wealth, and extreme volatility everywhere –  have become intractable. Against this backdrop, “terrorism” and “separatism” should be seen as reactions to the current iniquities, misery and frustration. This is why America’s “War on Terror” and China’s “War on Separatism” will never prevail, because they address the symptoms while denying their root causes.