I imagine that Yuval will respond to David Frum’s criticisms of “Beyond the Welfare State.” I’ll just make a few quick notes:
(1) Frum argues that Yuval’s call for a means-tested social safety net rejects the universalism backed by Irving Kristol, James Q. Wilson, Daniel Patrick Moynihan, and Gertrude Himmelfarb, among others. I have no doubt that Yuval might disagree with Kristol, Wilson, Moynihan, Himmelfarb, and other luminaries. It is also true, however, that we’ve learned a few things about social policy in the decades since the 1970s.
(a) David Alexander, who served as an advisor to Peter Costello in Australia’s center-right Liberal-National government, has described how a means-tested approach has flourished in Australia, a country that has a lower tax burden than the United States, more success in using public programs to combat child poverty, and less wage and wealth dispersion.
(b) Lane Kenworthy’s forthcoming Progress for the Poor describes the extraordinary success of means-tested programs in a number of advanced market democracies, and he suggests that the arguments from universalism are weaker than is widely understood. I look forward to writing about Lane’s book upon its release this fall.
(c) The Swiss politicial scientist Giuliano Bonoli has also described the success of means-tested reform efforts, contrasting them favorably with other approaches to paring back the cost of expensive social insurance programs.
This isn’t dispositive, but recent research should enrich our perspective. Frum notes the danger posed by the implicit marginal tax rates created by means-tested programs, a legitimate concern we’ve raised in this space. There are, however, ways to mitigate this problem, as Britain’s argued in its report on “Dynamic Benefits.” I know Yuval well enough to know that he is very sensitive to this problem.
Frum believes that Yuval has advanced contradictory goals: Yuval wants to reduce administrative discretion, yet means-testing raises the risk of fraud, and so it demands more administrative discretion. This puzzle is easily solved: Medicaid block grants that vary with the size of the eligible population, defined at the center, are deployed to state governments, which are better placed to engage in caseload management. Subsidiarity is the basic principle. The appropriate federal role is to engage in certain kinds of smoothing roles, across the business cycle and across regions, that state governments can’t fulfill quite as well. And state and local governments are empowered to adapt to local conditions, etc.
(2) In a longer post, “Two Cheers for the Welfare State,” offers a number of interesting points, some of which I agree with and many of which I don’t. My main concern is that I think he is mistaking Yuval’s effort to recast the safety net as a reflection of an “Ayn Rand moment” rather than a fairly straightforward effort, very much in tune with parallel efforts in Britain, Australia, and other advanced market democracies, to preserve economic dynamism in an era of rising old-age dependency ratios.
Frum also argues that he held something like Yuval’s views in the 1970s and 1980s, only he’s moved beyond it in the years since, chastened by experience. Having read almost all of David Frum’s books — I didn’t read The Right Man or An End to Evil — I think it’s safe to say that there are significant differences that reflect changed circumstances.