"An argument we hear even now is that a hundred years ago..."

"An argument we hear even now is that a hundred years ago, when the federal government was far smaller than it is today, people were much poorer and worked in less desirable conditions, while today, with a much larger federal government and far more regulation in place, people are much more prosperous.  This is a classic case of the post hoc, ergo proper hoc fallacy.  This fallacy is committed whenever we carelessly assume that because outcome B occurred after action A, then B was caused by A.  If people are more prosperous today, that must be because government saved them from the ravages of the free market. 

But that is nonsense.  Of course people were less prosperous a hundred years ago, but not for the reason fashionable opinion assumes.  Compared to today, the American economy was starved for capital.  The economy's productive capacity was miniscule by today's standards, and therefore very few goods per capita could be produced.  The vast bulk of the population had to make do with much less than we take for granted today because so little could be produced.  All the laws and regulations in the world cannot overcome constraints imposed by reality itself.  No matter how much we tax the rich to redistribute the wealth, in a capital-starved economy there is an extremely limited amount of wealth to redistribute. 

The only way to increase everyone's standard of living is by increasing the amount of capital per worker.  Additional capital makes workers more productive, which means they can produce more goods than before. When our economy becomes physically capable of producing vastly more goods, their abundance makes them more affordable in terms of dollars (if the Federal Reserve isn't inflating the money supply).  Soaking the rich works for only so long:  the rich eventually wise up and decide to hide their income, move away or stop working so much.  But investing in capital makes everyone better off.  It is the only way we can all become wealthier.  We are wealthier today because our economy is physically capable of producing so much more at far lower costs.  And that's why, just from a practical point of view, it is foolish to levy taxes along any step of this process, because doing so sabotages the only way wealth can be created for everyone."  -Pages 93 & 94 of The Revolution, A Manifesto

"In the days before Medicare and Medicaid...."

"In the days before Medicare and Medicaid, for instance, the poor and elderly were admitted to hospitals at about the same rate they are now, and receive good care. As a physician I never accepted Medicare and Medicaid money from the government, and instead offered cut-rate or free services to those who could not afford care. Before those programs came into existence, every physician understood that he or she had a responsibility toward the less fortunate, and free medical care for the poor was the norm. Hardly anyone is aware of this today, since it doesn't fit into the typical, by-the-script story of government rescuing us from a predatory private sector. Laws and regulations that inflated cost of medical services and imposed unreasonable liability standards on medical professionals even when they were acting in a volunteer capacity later made offering free care cost prohibitive, but free care for the poor was common at a time when America wasn't so "governmentish" (to borrow a word from William Penn). We have lost our belief that freedom works, because we no longer have the imagination to conceive of how a free people might solve its problems without introducing threats of violence- which is what government solutions ultimately amount to."  -Page 85 of The Revolution, A Manifesto

"Our out-of-control welfare state also helps account for..."

"Our out-of-control welfare state also helps account for the scope of our illegal immigration problem.  When you subsidize something, you get more of it, and by offering free medical care and other services, as well as the prospect of amnesty, we get more illegal immigration.  Meanwhile, hospitals have begun closing as our states and localities struggle to pay the bills.
...
When, thanks to government policy, the economy is shaky, as it is now with the housing bubble bursting and inflation on the rise, it is all the easier to hold up immigrants as the scapegoats for the people's economic woes, thereby letting the incompetents and shysters who make our economic policy off the hook." -Pages 83 & 84 of The Revolution, A Manifesto

"Now, plenty of politicians talk a good game..."

"Now, plenty of politicians talk a good game about low taxes, and some even claim to want to decrease spending as well.  Few seem to mean it, if their voting records are any indication.  But if we want more economic freedom and a healthy and robust economy, serious inroads need to be made into federal spending.  Otherwise, tax cuts will simply lead to more borrowing, more inflation, and the continued decline of the dollar.  As I write [2008], we are paying about $1.4 billion every day just for the interest on the national debt.  Because our government refuses to live within its means, every single day we spend $1.4 billion and receive absolutely nothing in return." -Pages 80 & 81 of The Revolution, A Manifesto

"Alexis de Tocqueville was very impressed..."

"Alexis de Tocqueville was very impressed, when he visited our country in the nineteenth century, to see how many voluntary associations Americans had formed in order to achieve common goals.   "The political associations which exist in the United States are only a single feature in the midst of the immense assemblage of associations in that country," he wrote.  "Wherever, at the head of some new undertaking, you see the Government in France, or man of rank in England, in the United States you will be sure to find an association." De Tocqueville admired "the extreme skill with which the inhabitants of the United States succeed in proposing a common object to the exertions of a great many men, and in getting them voluntarily to pursue it."

That may be all well and good for the arts and the like, some may say, but private efforts could never substitute for gigantic government budgets for various forms of welfare.  But private assistance would not need to match these budgets dollar for dollar.  As much as 70 percent of welfare budgets has been eaten up by bureaucracy.  Moreover, government programs are far more easily abused, and the money they dispense more readily becomes a destructive habit, than with more local or private forms of assistance. 

Why would we expect a system based on legal plunder, as ours is, to be a net benefit to the poor or middle class, in whose name so many government schemes are enacted?  Every one of the special benefits, on behalf of which hundreds of millions of dollars are expended on lobbyists every year, makes goods more expensive, companies less efficient and competitive, and the economy more sluggish.  Given that the politically influential and well connected- neither of which includes the middle class or the poor- are the ones who tend to win privileges and loot from government, I do not understand why we take for granted that the net result of all this looting is good for those who are lower on the economic ladder.  And when the loot is paid for by printing more money and causing inflation, which (as I show in the chapter on money) disproportionately harms the most vulnerable, the suggestions that the least prosperous are helped by all this intervention collapses into outright farce." -Pages 75 & 76 of The Revolution, A Manifesto