Minnesota welfare fraud exposed $9B loss in egalitarian sector. Rothbard's challenge persists as costs mount. What confirms the ideology's resilience.
Alpha Score of 45 reflects weak overall profile with moderate momentum, poor value, weak quality, weak sentiment.
The egalitarian sector–a broad grouping of welfare schemes, anti-poverty organizations, and state redistribution programs–suffered a $9 billion fraud exposure in Minnesota. The scandal, perpetrated by a group of mostly Somalian immigrants, involved daycare centers, feeding programs, and support for homeless and mentally challenged individuals. Rather than triggering a reassessment of the underlying ideology, the public outcry has focused entirely on the fraud itself, not the premise that such programs should exist at all.
Roughly half of the $18 billion in total federal funds provided to Minnesota-run services since 2018 were fraudulent claims. That 50% fraud rate is the single largest cost event in recent egalitarian sector history. The objection from observers was not to the $9 billion spent on the programs–it was that half the claims turned out to be fake. This mirrors a pattern common across state-run welfare: costs are tolerated until corruption is exposed; the ideological foundation remains untouched.
The Southern Poverty Law Center, an anti-poverty organization with $732 million in endowments, faced a similar scandal. It worked closely with the FBI and the Biden administration to eradicate “hate” from society. The outrage came when it was revealed that the SPLC spent millions paying anonymous informants to fabricate racism. Very few critics challenged the principle that a poverty law center should be in the business of helping the state eradicate hate. The organization’s defense in court included evidence that its informant work helped the Justice Department during President Trump’s first term secure a six-month prison term for a white supremacist group member. Cross-party collaboration extended back to the Bush administration’s “Civil Rights-Era Cold Case Initiative.”
The sector benefits from what economists call “deeply-entrenched propaganda”–the ideal of equality is treated as axiomatically correct. Progressives treat any challenge to egalitarian values as a demand to prove that inequality exists, not as a demand to justify the values themselves. As Murray Rothbard observed in his essay “Egalitarianism as a Revolt Against Nature,” egalitarians treat their value judgments as “tablets from above that are not themselves subject to intellectual criticism and evaluation.”
Private sector insurers reported that the Black Lives Matter riots–described by insurers as “mostly peaceful”–cost the industry up to $2 billion in claims. Again, the objection was not to the principle of the protests but to the cost of the damages. The pattern holds: egalitarian schemes only come under public fire when fraud or corruption are exposed. The premise itself is never challenged on cost-benefit grounds.
Rothbard argued that a moral and ethical challenge to egalitarianism is necessary, not a practical cost-benefit analysis. He insisted that egalitarians should be required to defend their value judgments rationally, instead of treating them as axiomatic. In his words: “It is not enough for an intellectual or social scientist to proclaim his value judgments–these judgments must be rationally defensible, and must be demonstrable to be valid, cogent, and correct: in short, they must no longer be treated as above intellectual criticism.”
Social scientists who claim to be value-free often do not engage with the egalitarian premise because they do not recognize it as a value judgment. They treat the statement “excessive inequality is evil” as a fact, akin to “man must eat to live.” This erosion of the fact-value distinction, combined with educational decline in general reasoning and logic, has made the quest for truth meaningless. Many intellectuals now accept that “their truth” is that inequality is bad and must be eradicated. Attempts by economists like Walter E. Williams to show that discrimination does not explain economic outcomes were bypassed by arguing that so long as inequality exists, efforts must continue.
The egalitarian sector shows no price discovery from cost events. Fraud scandals do not lower demand; they only shift attention to the specific perpetrators. The $9 billion Minnesota fraud and the $732 million SPLC endowment are valuation data points that the market ignores. To confirm a shift in sector sentiment, one would need to see a public figure explicitly challenge the premise that reducing inequality is a desirable goal–not just expose wasteful programs. Rothbard’s call for a moral challenge remains unanswered. The sector persists because its ideological foundation is treated as a fact of nature, not a value judgment open to debate.
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