The modern welfare state has been criticized on economic and moral grounds from all ends of the political spectrum. Many have argued that the provision of tax-funded services or transfer payments reduces the incentive for workers to seek employment, thereby reducing the need to work, reducing the rewards of work and exacerbating poverty. On the other hand, socialists typically criticize the welfare state as championed by social democrats as an attempt to legitimize and strengthen the capitalist economic system which conflicts with the socialist goal of replacing capitalism with a socialist economic system.
Conservative criticism
In his 1912 book The Servile State, Anglo-French poet and social critic Hilaire Belloc, a devout Roman Catholic, argued that capitalism was inherently unstable, but that attempts to amend its defects through ever-more burdensome regulation could only lead to the rise of what he calls the "Servile State". According to Belloc, this servile state resembles ancient slavery in its reliance on positive law as opposed to custom or economic necessity by themselves. Austrian-born economist Friedrich Hayek mentions Belloc's Servile State favorably in his book The Road to Serfdom. Along with others such as G. K. Chesterton and Eric Gill, Belloc advocated abolishing profit-making banking in favor of credit unions and replacing capitalism with a system they called distributism which they believed would preserve private property and revive the dignity of work exemplified by the small craftsmen and property holder of the Middle Ages.
Some conservatives in the United Kingdom such as James Batholomew and Theodore Dalrymple claim that the welfare state has produced a generation of dependents who prefer to remain on assistance and make no real effort to find employment, even though assistance is officially only available to those unable to work or who are temporarily unable to find work. The welfare state in the United Kingdom was created to provide certain people with a basic level of benefits in order to alleviate poverty, but these conservatives believe that it has fostered irresponsible and immature attitudes in many of its recipients.
Some British conservatives such as Conservative Party co-chairman Sayeeda Warsi also criticize the "'something for nothing' culture" of the welfare state, claiming that the high extent of the welfare state "discourages the unemployed from finding jobs". 55% of people in England and 43% of people in Scotland believe that "benefits for unemployed people are too high and discourage them from finding jobs".
According to political scientist Alan Ryan, "[m]odern conservatives argue that liberalism promises a degree of personal fulfillment that the welfare state cannot deliver and that attempts to deliver it will inevitably lead to disillusionment". Additionally, citizens' resentment of paying taxes to create benefits for others creates "hostility between more and less favored groups that is wholly at odds with what modern liberals desire". Ryan also argued: Moreover, the welfare state must employ an extensive bureaucracy whose members are granted discretionary powers and charged by law to use those powers for the welfare of their clients. This means that classical liberals' concern for the rule of law and the curtailing of arbitrary discretion is ignored: bureaucrats are given resources to disburse to their clients. [...] The liberation the welfare state promises – liberation from anxiety, poverty, and the cramped circumstances of working-class existence – is easily obtained by the educated middle class and is impossible to achieve for most others. There is thus a grave risk of disillusionment with liberalism in general as a result of its failure when it overextends itself. Some writers suppose that the worldwide popularity of conservative governments during the 1980s is explained by this consideration.Conservative and libertarian groups such as The Heritage Foundation and the Cato Institute argue that welfare creates dependence, a disincentive to work and reduces the opportunity of individuals to manage their own lives. This dependence is called a "culture of poverty", which is said to undermine people from finding meaningful work. Many of these groups also point to the large budget used to maintain these programs and assert that it is wasteful.
In the book Losing Ground, Charles Murray argues that welfare not only increases poverty, but also increases other problems such as single-parent households, and crime.