« May Day | Main | Hailstorm! »
May 02, 2006
In Our Hands
I finished Charles Murray's new book In Our Hands: A Plan to Replace the Welfare State yesterday. This is a libertarian tract I can respect. First of all Murray recognizes that 'The Plan', as he calls it, is not going to happen (at least not soon) because too many people will be opposed to it and the inertia of Washington to radical change and fierce resistance to eliminating government programs, even to replace them with something more efficient. What is 'The Plan'? It is for the most part quite simple. Eliminate every wealth transfer federal government program in existence (TANF, Social Security, Medicare, Medicaid, farm subsidies, Corporate welfare, Pell Grants, Amtrack subsidies, etc.) and in exchange give every single American citizen 21 years or older who is not incarcerated $10,000 (indexed to inflation or another index) in cash every year. Individuals making $25,000-50,000 would have half of that gradually taxed away so that every individual making $50,000 or more would get $5,000 every year. Essentially it would be a variation on the reverse income tax.
There are three likely main benefits to this, along with other possible minor benefits. Most poor people would actually get more money than they are currently getting from the government and the working poor would especially benefit. A family with a working father with a wife and two kids where the father made $20,000 annually would all of a sudden be making a total of $40,000 (his salary plus $10,000 for each parent) most of which would be tax free. The second main benefit would be to drastically reduce the size and scope of the federal government. The final benefit is that it would likely be less costly in the long run than the current entitlement/welfare system. The first few years would cost more, but in 10-20 years we would actually be spending less than is currently projected as we would avoid the crunch coming from Medicare and social security.
As I was reading this I was constantly coming up with flaws that would make the plan not work, and usually right after I thought of them he would address them or at least say he would eventually address them. In several cases I do not think he addresses them adequately and in some cases like health care his simple plan all of a sudden becomes a lot more complicated. For instance for health care my first thought on hearing the elimination of Medicare and Medicaid is what does that do for people who are old and uninsurable outside of Medicare. In response to this objection he would require insurers to insure everyone as one pool of applicants and take away tax breaks for companies that pay for health care and would require everyone who gets the $10,000.to buy catastrophic coverage at a minimum. A follow up objection is what to do about the children (which is the most typical sound objection to libertarian policies). Single moms 20 and under would not be getting any cash or benefits and that means their children would not get any health care or food or housing unless families or state governments provided it, which I suspect most would.
Giving everyone money might have bad effects on underclass. He thinks it would encourage young males to marry and work more, but I doubt it. Look at France. One of the best things to happen to the underclass in the US was welfare reform because it encouraged the able bodied to work by not giving them cash. Murray also thinks it will encourage girls to avoid becoming pregnant under the age of 21 since they would get no benefits, but for many girls that age the desire for a baby is huge, emotional, self-defining (no one loves me, but a baby will) and not rational or wise (or at least not thought through very rationally or wisely). Here he assumes people in the underclass will act rationally, but not acting rationally is why they are often there in the first place. Possibly giving them even more money is not going to help.
Also what would happen with drug addicts and alcoholics? Would it be that different then what used to happen before welfare reform (and still does to some extent) with the money going straight up in smoke or into their arms? In many cases giving the chronically self-destructive a lot of cash will have many very bad unintended consequences. Usually that is called enabling when you do it to someone you care about.
Murray would spread the payment out on a monthly basis and would require everyone to have a bank account to get the money to avoid fraud and things like non citizens getting money. That alone would be good, but in some cases might cause trouble if no bank wants them as customers, which might include people with past bankruptcies. It might eliminate the check cashing business or else it would spring up other similar places. And speaking of bankruptcies, what would happen to those people's monthly checks? Murray earlier argues that deadbeat dads would have their checks garnished so would something similar happen there?
The actual book is quite short and the last chapter ends on page 127, but is followed by about 65 pages of charts and appendixes. And the pages are physically small while the type is big and wide spaced, so we are talking a quick read. It is a very thoughtful book and if the plan was implemented as described I suspect it would do more good than harm in the long run.
Posted by Pete at May 2, 2006 08:40 AM
Trackback Pings
TrackBack URL for this entry:
http://www.petetheelder.com/mt-tb.cgi/796