Passages like this one from The Humane Economy by Wilhelm Roepke make me think that the Mises.org store should be carrying this book, despite its failings otherwise. It’s from the 1971 LibertyFund edition, pp. 168-70:
Very many people imagine that taxation of the higher income brackets merely implies restriction of luxury spending and that the purchasing power skimmed off from above is channeled into “social” purposes down below. This is an elementary error. It is quite obvious that larger incomes (and larger wealth) have so far mainly been spent for purposes which are in the interests of all. They serve functions which society cannot do without in any circumstances. Capital formation, investment, cultural expenditure, charity, and patronage of the arts may be mentioned among many others.
If a sufficient number of people are wealthy and if they are dispersed, then it is possible for a man like Alexander von Humboldt to pay out of his own pocket for scientific ventures of value to everyone or for Justus von Liebig to finance his own research. Then it is possible, too, that there should be private teachers’ posts and thousands of other rungs on the ladder on which the gifted can climb and the very variety of which makes it much more likely that some help will be forthcoming somewhere, whereas in the modern welfare state their fate depends upon the decision of one single official or upon the chances of one single examination.
If, then, the higher income groups are crushed by progressive taxation, it is obvious that some of their functions will have to be dropped and, since they are indispensable, taken over by the state— even if it is only the maintenance of some historic monument which used to be private property. To this extent, at any rate, the purchasing power taken from above is not at the disposal of the welfare state. It must be reserved for the purpose of paying, with public funds, for private services made impossible by taxation. This nullifies the aim of the welfare state. If the welfare state should claim any merit for educating, say, a genius like Gauss at public expense, the answer is that in the actual case of Gauss the task was discharged excellently and quite unbureaucratically, not only by the Duke of Brunswick, but also by a lot of others who would today be prevented from doing so by the welfare state’s taxation or would, at any rate, be left with little incentive or inclination to spend their money in this way.
In this case, then, the upper income groups’ loss of purchasing power is not matched by any gain on the part of the lower income groups. The benefit goes not to the masses but to the state, which waxes in power and influence. At the same time, a powerful stimulus is given to modern state absolutism, with its centralization of decisions on very important matters, such as capital formation, investment, education, scientific research, art, and politics. What used to be personal and voluntary service is today at best state service, centralized, impersonal, compulsory, crudely stereotyped, and bought at the price of curtailed freedom.
Inevitably, such socialization of income uses for socially important functions must make a country’s moral climate oppressive. Kindliness, honorary office, generosity, quiet conversation, otium cum dignitate, everything which Burke calls by the now familiar name of the unbought graces of life—all of that suffocates under the stranglehold of the state.
Everything—paradoxically in a welfare state—is commercialized, everything an object of calculation, everything forced through the state’s money income pump. Hardly anything is done on an honorary basis any more because few can afford it; civic sense and public spirit are transformed into vexation at the top and envy at the bottom. In these circumstances everything that is done is done professionally and for money. There is a narrower margin of income available for free gifts, voluntary sacrifice, a cultivated way of life, and a certain breadth of spending, and for this reason the climate is not congenial to munificence, diversity, good taste, community, and public spirit. Civilization is blighted.
