The New York Times has done a long article about how tea-party types actually rely on government benefit programs, extensively and increasingly. This is a key progressive political argument, and it has engendered a lot of blogospheric commentary. (Some of the best is Will Wilkinson from a libertarian perspective, and Mike Konczal from a progressive perspective.)
Much implicit fun is had in the article at the expense of people who own small businesses or work construction, and self-identify as conservative and as self-reliant — but nonetheless get large government payments for disability support, school lunches, and expensive surgical procedures. Wilkinson is much more humane than the NYT reporters in his reaction to what he calls “ordinary folks who would rather go without government assistance, but are anxiously baffled about how they would manage without it.”
Partially, of course, this bafflement is willful blindness. Like all of us, the people in this story justify their receipt of benefits by focusing on those conceptual parts of these programs that they feel they have earned, without focusing on all of the implicit transfers going on beneath the surface. But these bundled, subterranean (or really, just very complex) transfers of value make this avoidance of reality far easier to do. The various programs of the welfare state serve, purposely or not, to baffle people in just this way.
This unease is evidence of a problem with the programs, not the people. I think it might be valuable to unbundle these programs in order to enable us to reform and modernize them.
I argue in an upcoming book that each of the major programs of the welfare state — Social Security, Medicare, Medicaid, public education, unemployment insurance, welfare, etc. — is actually composed of up to five theoretically independent components. First, they often provide a true safety net: a fail-safe provision of consumption of important goods that represents some roughly agreed-upon minimum baseline of existence for any member of the society. Second, they incorporate some element of risk-pooling. Third, they may redistribute wealth beyond what the first two goals require. Fourth, these programs also may require recipients to behave prudently. Fifth, the government may provide relevant goods or services directly.
Take Social Security as an example. It combines the first four elements: (1) guaranteed provision of some old age income; (2) protection against unforeseen setbacks that might prevent any one of us from having enough money or relatives for subsistence in old age; (3) redistribution through implicitly progressive benefit schedules; and, (4) the requirement that recipients behave prudently by avoiding some consumption today to provide funds for retirement.
Why not have three separate programs?
First, have a government-sponsored defined-contribution pension program, within which individuals must contribute a reasonable proportion of income (though some flexibility even in amount should be allowed) to an array of retirement investment vehicles to which they hold property rights. As I’ll argue at length in the book, worrying about whether we want to call these highly-regulated private savings accounts, or Social Security accounts within a flexible government program, is mostly a question of semantics.
Second, much as it does for people of all ages, the government should offer a separate program that provides a safety net for those who end up penniless or nearly so in old age without either private savings, savings under this defined-contribution version of Social Security, or relatives who will offer support. Unlike such a safety net provided to those during working years, it should not have a work requirement. It should also not attempt to replicate the income of those who have prudently saved for retirement, but instead be a true minimum safety net.
Third, if desired, there should be a separate explicit income-redistribution program for the elderly. Whether the government should engage in pure redistribution of wealth for reasons of equity, justice, or other moral concepts beyond the requirements of welfare-system programs is an enormous philosophical question. In practice, the answer partially depends on the specific beliefs and attitudes of the people in any given society. Certainly in contemporary America support for such an idea is limited — this is part of the unease that the people in the NYT story express. But to the extent such redistribution is desired, it should be done explicitly, and outside the vehicle of the welfare system.
I believe that the same basic approach can be taken to each program in the welfare state. My hope is that this would help to redesign them to be appropriate for the world of 2012–2042, rather than the world of 1935–1965.
I'm a libertarian, and my daughter is on Medicaid due to a genetic condition she has. As a result, all of her medical bills are paid for by the government, and the largest expense is her speech therapy, which runs about $1200 per month.
Does this make me a hypocrite? I guess it comes down to the fact that I realize I'm "taking" from other people to pay this speech therapist, but the only reason I do it is because I'm not willing to sacrifice my daughter's ability to one day be a functional adult because I'm uncomfortable with wealth redistribution.
But, of course, why is the speech therapy so expensive? It's a grand total of eight hours per month of a single speech therapists' time, maybe 12 including her commute time. It's because the only people who buy speech therapy are rich people and the government. And all of us who are stuck in the system essentially have a "you first" mentality. In other words, I'll quit the program, but only when enough people quit that there are affordable alternatives which aren't paid by the government.
Reply to this commentLinkReport Abuse"Does this make me a hypocrite?"
Yes, it does. All the government spending that matters to our deficits falls into this kind of spending: Social Security, Medicare, Medicaid, Defense, Education, and so on. Bridges to Nowhere and Mob Museums are the exception, not the rule. Mostly, it's a lot of very mundane expenditures like speech therapy for your kid.
When you wonder why we have so much trouble cutting spending in this country, the answer is staring at you in the mirror every morning.
Reply to this commentLinkReport AbuseGregory, you ask why speech theropy is so expensive? Or more broadly, why is just about every element of the health care system so expensive? I'll give you a hint: the answer is libertopians like you, who cannot get past their religious faith in mythical "free markets".
Every other rich nation on earth has nationalized health care, and pays much less than we do as a result. Their lower costs are essentially completely because they pay less per service, not because they consume less.
Reply to this commentLinkReport AbuseGovt subsidies are in so many places these days, it's almost impossible to go through life without encountering some.
Beyond that, so long as they are forced to pay the taxes to support these programs, why shouldn't they benefit from them along with everyone else?
Reply to this commentLinkReport AbuseIt's not only that, but they criticize "Tea Party" people for being on Social Security. AFAIK it is the law that you participate in Social Security, is it not? If they have paid 6% of their paychecks every week to a program their whole lives, it's asking alot to abstain from that program out of ideological purity. Given the option to to abstain altogether from the system, and maybe you'd hear different stories, but that isn't an option. Same with unemployment insurance, medicaid and medicare, public schools, etc etc. You are forced into the system by law.
Reply to this commentLinkReport AbuseWhen the government decides to take-over an area in your life, usually alternatives flee. Are there any more mutual aid societies to help the poor and old with their bills, food, and medicine, or is there only welfare, social security, and medicaid? And let's suppose you do want to do everything on your own, live frugally, educate your own children, save for the future. Your efforts are hampered at every turn. Medicine and Medical Care cost so much more now that the government has deformed the markets in these areas. Housing is more expensive now for the same reason. It's impossible, nearly so, to live free of these social programs, because they are the built-in reality of the market today. That doesn't make them RIGHT. And they need to be phased out over time.
Reply to this commentLinkReport AbuseI don't know if you are "right every time" (;-D) but you are very right on this.
Whether or not the American public in general and our elected officials will ever have the gumption to actually phase anything of the welfare state out over time is another question.
I have a feeling we'll end up like Greece - having to abandon it, but still clinging to it, like a bunch of passengers on the sinking Titanic swearing that it's still unsinkable.
Reply to this commentLinkReport AbuseIt's a play on words, it doesn't really mean correct every time, but Right every time. I try to be conservative in my thinking, always.
Reply to this commentLinkReport AbuseIf you get a chance, take a look at the comments on the NYT column page. The discussion here is on an incredibly higher level.
Reply to this commentLinkReport AbuseOne reason government programs in general are bundled is not just to befuddle their recipients, as you suggest, but to 'befuddle' their contributors - the classic case being local taxpayers contributing to local school systems they have no children attending.
At both ends is an implicit "for the greater good" argument. We support the school systems that will theoretically turn out citizens capable of going on to benefit our local communities directly or indirectly through their own taxes, etc.
I'm not sure what net effect you're after here. If you unbundle larger Federal programs do you think elderly people and those in need are going to say in a flash of enlightenment, "Oh, I now see what a parasite I'm being to society and it would be far better if I forgo my benefits and just die in the street"?
Reply to this commentLinkReport AbuseMy school district made a much more explicit argument - good schools make the area desirable, and a desirable school district increases property values. So even if you have no kids in the schools, you do reap a benefit from the taxes when you sell your house for more than you would be able to if the school district were sub-par.
Reply to this commentLinkReport AbuseIf all public schools were equally good, this argument wouldn't work. People want to live in certain districts because of a belief that the schools that serve that district are better than the other schools.
The problem of course is that everyone in the city pays the same property tax rates, regardless of whether they live in one of these "good" districts or not.
Of course if property taxes were lowered, then more people would have the money to send their kids to private schools, and the whole argument would be moot.
Reply to this commentLinkReport AbuseThis is not accurate. In Southern California (i.e. Greater LA) the various districts regularly try to institute new property tax assessments at the city level. So La Canada has a property tax assessment, and a few years back, Pasadena voted down a similar tax increase. At the time, Pasadena Public Schools was making the exact argument: sure you pay more in property taxes, but if this fixes the schools your property values will go up.
And by and large, there is a grain of truth to this. A house in La Canada compared to a house 2 blocks away in La Crescenta will have a $50,000 - $75,000 premium due to the difference in school boundaries (and La Crescenta actually has good schools compared to Pasadena!).
Reply to this commentLinkReport AbuseI point out that everybody in the same city pays the same tax rate. And you counter by giving an example of how two different cities have two different tax rates?
Reply to this commentLinkReport AbuseI think your school district has that backwards. School districts don't do anything for property values. I should know: I live in an area where we have no less than six schools within a ten mile radius, two in my own neighborhood. Property values have been dropping like a rock and there are many vacant and foreclosed homes in my neighborhood.
Secondly, as MarkW pointed, not all school districts are equal. The districts in my neighborhood are pretty lackluster save for the charter school that my kids attend: The best school in the Goodyear area is about ten miles away. I reckon that the property values in both areas are declining, but at the same time both schools are in pretty good neighborhoods. I don't think there is a correlation between good schools and rising property values.
Reply to this commentLinkReport AbuseI think you missed his point--GOOD schools make valuable neighborhoods. Not quantity--quality. We probably live in the best school district in the state--fabulous secondary schools. Houses in our district have held their value, because when people have to come to anywhere near central Indiana, they are willing to drive extra in order to have their kids in our school system.
Reply to this commentLinkReport AbuseThe original claim was that one shouldn't object to high property taxes, because they create good schools which increase property values.
There is not much evidence that more taxes creates good schools.
Reply to this commentLinkReport AbuseNo, I don't think that would happen very much (although actually a little of it probably would).
I think that this would make it easier to have less restrictive rules on how pension money is invested (ie., personal savings accounts are very difficult to really get done when the money is being put into a pot with what are really welfare programs), greater vigilance about management of the program, and a reduction in pure income redistribution that today is much easier to do because it is hidden behind the veil of complexity.
Reply to this commentLinkReport AbuseAs usual, the liberal commentators don't appreciate the "early adopter" penalty at work even in the motivations of conservatives who *eagerly* wish to dismantle the welfare state.
For example, I'm completely comfortable paying higher taxes in exchange for broad-based tax reform.
I'm also comfortable in giving up my (quite substantial) mortgage deduction in exchange for a flat tax.
I'm also comfortable in means-testing Social Security, Medicare and Medicaid in exchange for lower overall payments into such systems.
But I'd be *insane* to volunteer for these things WITHOUT getting what I want in return.
Perhaps that makes me the spiritual compatriot of Warren Buffet, who begs for his taxes to be raised but refuses to write a check. Perhaps instead my open acknowledgment of my "selfish" motivations makes me an honest, rather than dishonest, rational actor.
In my long dealings with Tea Party conservatives and libertarians, I've seen this perspective replicated many times: we actually would be quite happy to see these benefits disappear... as long as they disappeared for everyone. That is, we want *systemic reform* of entitlements, not new regimes that create politically favored winners and losers to replace last year's (or last century's) politically favored winners and losers.
While I certainly would prefer a world where families and private charities were the first and even the *last* line of defense for the impoverished and infirm elderly in this nation, I recognize that such an ideal may no longer be possible to achieve. Recognizing this, then fine, let's create an entitlement system that can at least protect those least able to protect themselves, but do so with a minimum of distortion to economic incentives, AND one that's far more affordable for that nation-- and simultaneously, less of a burden on taxpayers of *all* stripes.
Most conservatives aren't against a safety net-- that is an awful Leftist caricature. We're instead against a safety net that *doesn't work*, and worse, one that binds and strangles those it's ostensibly there to assist: the disincentivized poor, and the innocent bystanders of the better-off middle class or wealthy rich.
Reply to this commentLinkReport AbuseBeing against a govt run safety net is not evidence that one is against safety nets.
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