The Middle Class and the Welfare State

Aristotle maintained that the best state we could, as a practical matter at least, hope for was a mixed regime. Usually translated as “polity”, this regime combines elements of elite and majority rule in the distribution of the government’s decision making authority. A central feature of this form of government is that the middle class is the dominant political group.

Aristotle holds that the rich are ambitious and seek to aggrandize themselves at the expense of the rest of society. The poor, meanwhile, are liable to envy the rich and support politicians who promise to redistribute wealth. Where a political community is divided into just the rich and the poor, class conflict is apt to destabilize the political order with alternating periods of oligarchy and mob rule. But where a sizable middle class exists between the rich and the poor holding the balance of political power, the government is apt to be more moderate. This is owing to the fact, Aristotle claims, that  middle class individuals are not as ambitious the rich, nor as envious as the poor. They are satisfied with a modest income and fortune.

In terms of class at least, it’s safe to say that Western democracies, such as Canada, fit Aristotle’s practical ideal. Most people are in the middle of the income distribution and their voting power decides elections. What Aristotle didn’t reckon with, however, is that about two and a half millennia later, politicians would erect extensive, welfare states.

For the dominance of the middle classes has meant that these welfare states principally serve their interests, while the poor benefit very little. The rich, in the meantime, are the ones who pay for much of it. Indeed, if we break it down further, it’s the older members of the middle class, being the most dependable voters, which profit most handsomely from the welfare state.  

This point is made in the current issue of The Economist, in its special report “Taming Leviathan: The Future of the State”:

Both the rich and the poor do relatively badly out of government. The rich pay for most of it. In California the top 1% by income accounted for 43% of income-tax revenues in 2008 and the top 5% paid 64%. In America as a whole the top 1% paid 38% of federal income taxes and the top 5% paid 58%; their respective shares of national income were 20% and 38%. The wealthy pay the lion’s share in most European countries too. Getting the rich to cough up so much might be a desirable social goal in a time of great inequality, but it is hard to claim that they are not paying their share.

The poor pay virtually no income taxes, and many countries, especially in Europe, have a problem with entrenched welfare dependency.

In Canada, it’s the same kind of story, as the top 10% of taxpayers here pay 45% of the government’s receipts.

Classical liberals who oppose the welfare state are typically castigated for being callous towards the poor. But if the latter do not gain from it, the tables can be turned on social democrats. We classical liberals can stress alternative voluntary mechanisms to help the poor. At the same time, we can point out that advocates of the welfare state are doing nothing more than giving intellectual ammunition to the ruling class – to repeat, the middle class.

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