A recent letter from Jason Hayward, head of the Bermuda Public Service Union, and an appeal by Charles Jeffers, of Age Concern, for a healthcare safety net seeks to make the case for the Bermuda Government to become even more involved with solving the financial and social problems arising from unemployment and a stagnant economy.

There is absolutely no doubt that many Bermudians are going through a tough financial time, as Mr Hayward and Mr Jeffers clearly pointed out.

Food banks, a large number of people who are jobless, inadequate retirement incomes, difficulties in meeting financial commitments such as utility charges ... the list goes on.

The immediate reaction to all of this bad news is that the Government should do more to help, despite the record from elsewhere that the Government invariably makes a bad situation worse.

It has been long recognised that those who seek greater Government involvement in social problems are able and eloquent in putting their case to the voters. The words they choose simply ooze with the milk of human concern.

For example, are you for or against social justice? A no brainer: who on Earth is in favour of injustice?

What about a minimum wage or a living wage? Who would not want people to have more money to live on?

I could go on and mention things such as affordable housing, and affordable healthcare. Nobody in their right minds wants people to be unable to put a roof over their heads, or be unable to go to a doctor when they are ill.

The trouble with life in the raw is that the devil is in the detail, and it always asks the all-important question: who pays?

But the whole point of appeals similar to those of Mr Hayward and Mr Jeffers is to gain immediate sympathy and not to go into specifics such as how do we pay for affordable housing, a living wage and other goodies?

Do phrases such as “level of public debt”, “private property rights”, or “where does the money come from?” make your emotions surge, or your heart beat faster, or the milk of human kindness flow?

There are several reasons to be concerned about the issues raised, but it is necessary to have more facts and an understanding of history, economics and law before concluding that something must be done by the Government.

Raising questions such as “who pays?”, “what are the long-term consequences of spending more money on social problems?”, and “how have such matters worked out in other countries?” may give the impression that ice water, not blood, flows through my veins. But let me explain further.

Bermuda is remarkable in the number of effective private charitable organisations it has. Examples are the LCCA, Salvation Army, Masonic Lodges, and churches of all denominations. They do a fantastic job and without their selfless dedication, Bermuda would be even worse off.

To answer the question of whether financial assistance (also known as welfare or socialism), would help the average person, it may help to understand how the ideas of social assistance arose in the first place.

The father of financial assistance was a German — the iron Chancellor Otto von Bismarck, who in the 1880s was concerned that socialists could take over the German state. He introduced social security as a means of winning the loyalty of the growing number of German industrial workers. Bit by bit, other benefits were added so that the state, or the government, was essentially seen to be a Santa Claus.

As Bismarck explained it to American admirer and sympathiser William D Dawson in the 1890s: “My idea was to bribe the working class or, shall I say, to win them over and to win them over to regard the state as a social institution that existed for their sake. And to vote for me and my party.”

It is important to note that right from the start, the idea was not to deal compassionately with hardship, but to consolidate political power and win votes from naive voters for unscrupulous politicians.

It was a means of fooling the electorate and it still is 130 years later. Bismarck was successful and other western governments quickly cottoned on to his political tricks.

European governments such as the UK copied Bismarck’s ideas, as did the United States in the 1930s by means of President Franklin Roosevelt’s New Deal. This was done for the same reason — to hoodwink a gullible electorate.

Indeed, one of Roosevelt’s closest political advisers, Harry Hopkins, coined the phrase “spend and spend, and elect and elect”.

Roosevelt was the only man in American history to be elected president four consecutive times.

So much for the historical background. Everywhere in the world the welfare state has expanded, so that in most countries welfare benefits such as pensions, medical care, education, and unemployment pay are provided from government funds — which means taxpayers.

What is frequently overlooked is the fact that a government has no money of its own, it has to obtain the funds from taxpayers.

Someone who has earned a dollar gets less than a dollar, and someone who has not earned a dollar gets something.

Such policies are favoured by an electorate largely unaware that their own incomes are being reduced. Elections are generally about how much the voter thinks he can get from the government.

It is not putting it too strongly to say that the economic message of politicians is always the same: vote for me, and I will steal money from your neighbours (and yourselves) and give you a cut. I will also make sure that those who work for the government are not forgotten.

What is also ignored is the question of where do the funds to do all these wonderful things come from? If you are older than 10, you know there is no Santa Claus, Tooth Fairy or Easter bunny. The only source of funds is from Bermuda taxpayers, and many taxpayers are in the same boat as those who are seeking assistance.

There is also the moral question. To say that people have a right to affordable housing, medical care and other benefits means that a government must impose an obligation on someone else, who may well object to carrying it out. Such an obligation diminishes the rights of other people and reduces their savings and earnings.

In practice, what happens is that we do not pay for our own medical care but we contribute to the medical costs of others; we do not pay for the education of our own children but contribute to the education costs of the children of everyone else; we do not pay for our own pensions but contribute to the pensions of everyone else.

It is if we are standing in a huge circle with our hands in the pockets of our next-door neighbour, and he has his hand in our pocket. Supervising the process is an army of civil servants all taking their cut in the form of salaries and benefits.

Economics is dubbed the dismal science because it is at war with one of life’s most pleasant occupations — wishful thinking and daydreaming about what the government will give us. It asks embarrassing questions such as “do we have the funds?”, “who will pay?”, and “what is the long-term effect of government policy?”.

Advocates of increasing government largesse totally ignore such questions, as a rereading of The Royal Gazette articles can attest.

Which brings me to the current financial position of Bermuda.

• Part two of this article will be printed tomorrow.

• Robert Stewart is the author of ‘A Guide to the Economy of Bermuda’. He will be part of a forum discussing social and economic circumstances to be featured on Channel 82 in the coming weeks.