> The problem with governments creating welfare states is that other citizens (and the government) become responsible for the financial implosion of individuals which incentivizes stupid behavior.

At the same time, allowing extreme wealth inequality incentivizes stupid behavior on the part of capital (like wasting capital on unproductive speculation, or driving the working class foundation of the population to poverty). Welfare states put sensible checks on capital, and honestly capital should welcome policies that keep the population from doing rash things like nationalizing all their assets out of desperation.