Why a welfare state will fail eventually.

 Let us consider the notion a welfare state.

A welfare state is a condition whereby the government provide us with all we needs without us doing anything in return. This is known as a free lunch. 

In economic, there is no free lunch. If someone get it for free, someone had to pay for it. 

Why welfare state would eventually fail?

Welfare state would fail because welfare state is akin to robbing Paul to pay Peter or what we say as robbing the rich to pay the poor. 

As the poor, get welfare, more people will be demotivated and unproductive to be characterize as the poor to get welfare. 

This will kill productivity as the rich and productive workforce decided to work less as the more they work, the more they will be tax.

Let us see the effect of welfare exam. Say a class in middle school have a bell shaped distribution of 50 percent in the median and 20 percent top scorer and 20 percent low scorer and the teacher tried to do a social experiment on welfare marks so that everyone will past eventually. So, after the exam the teacher said everyone pass without disclosing the low scorer and high scorer. As a result, in the next exam the high scorer will be demotivated and stop studying for the exam and spend more time for leisure and easy going life. While, the low scorer will be more easy going and does not care about the exam anymore. As a result, the school national exam result will drop from the national standard and the student will be demotivated to study anymore. 

Back to a country, if we practice welfare state, the country productivity will drop based on international standard as the rich and productive part of society will be demotivated and not productive anymore and lower productivity leads to lower GDP, higher debt and eventually the country economy will crumble as the rich and productive earn less and the poor demand more, leading to deficit or what we say the country expenditure for welfare will outpace the country income like what happen currently to Sri Lanka and Pakistan. 

Therefore, a welfare state would soon eventually evolved into a socialist country whereby the country will try to tax the rich more and make the asset in the country state own as more resources is needed to creat a safety net for the poor and when this crumble in a country due to debt and hyperinflation such as in China and Russia this can eventually leads to communism as the poor or the masses blame the rich for the economic disaster and wanted everyone as equal without any strata or differentiation in a commune. This, would kill productivity and the country will enter dark ages until the day someone in the country succesfully increase productivity.

Rather than to have a welfare state, what is the way forward?

The way forward is to encourage, the citizens to be more productive. As the citizen is more productive, the citizens will earn and be motivated, while the country produce better result, better GDP and improved their standing in the world. 

With higher productivity, will come higher income and debt will be more manageable whether it is for the citizen or the country.

In summary, make sure our productivity is high and debt lower than income and income lower than productivity so that debt is manageable and our country is competitive in the world economy. 

Fate favoured those who are prepared, 

Dr. Lion.