"I HEARTILY ACCEPT the motto, — "That government is best which governs least";(1) and I should like to see it acted up to more rapidly and systematically. Carried out, it finally amounts to this, which also I believe, — "That government is best which governs not at all"; and when men are prepared for it, that will be the kind of government which they will have. Government is at best but an expedient; but most governments are usually, and all governments are sometimes, inexpedient." (Emphasis added)
I am not against government for a very limited number of things, just skeptical that if we get too exuberant in figuring out how much more government can do, we risk profound unintended consequences (although I suspect some of the consequences are intended by those who would extend governmental power).
My daughter and her husband base their expressions of support for government on two premises. First, is an assumption about improving equity in society. While my wife and I have been relatively successful in life, there are those in society that have not and in a just society we need to as Dickens says in a Christmas Carol "it is more than usually desirable that we should make some slight provision for the Poor and Destitute, who suffer greatly at the present time. Many thousands are in want of common necessaries; hundreds of thousands are in want of common comforts, sir." Who could be against that? Well, me for instance.
A just society should make provision for the poor and destitute, but there are what economists call moral hazards when you err too much in one direction. People react to incentives and if you diminish the benefits of prudent behavior people may be less prepared to make provisions for themselves. Social security is a prime example where a well intentioned program distorted individual choices ending up eliminating possibilities for some benefits to society and even reducing the possible individual benefits that most people could expect to receive.
There are plenty of ways to make provision for people who are either unable to invest for themselves or who are simply unlucky. But the bottom line is that the private alternative would provide greater security while at the same time producing a huge capital pool for investments that society needs. IF you do not believe it, simply look at the transformation in places like Chile.
But there is a second argument raised by both my daughter and her husband. There are a lot of people who receive government assistance, even me and my wife. And indeed we do receive payments. But again lets look at the facts. My return on the Old Age Survivors and Disability Insurance have been mildly negative when compared to a reasonably diversified portfolio of investments. As demographics continue to turn against the younger participants in the system, they believe they will never receive benefits. That is a bad deal for all.
There is also the question of Medicare. And indeed the math here is also negative. Over my working life I paid in just under $100,000 in tax payments to the health insurance part of Social Security. (Again remember to at least double the amount paid in based on an assumption that had the money been invested to term we would have a capital pool that would at least match some reasonable investment index.) But Medicare is not free to recipients. My wife and I now pay a monthly premium for parts A-D and advantage coverage of about $1000 per month. When I left my last full time employer, my health insurance coverage was costing my employer (for covering both of us) a bit more than $1500 per month. Add in the money already paid in and the cost of coverage is at best about equal to what I would pay in a market based solution.
Market based solutions need not be harsh to the less fortunate. I come back to my original point, the risk of relying too much on government is that in the words of Thoreau government run solutions can be "inexpedient" for both the individuals and society.