Welfare States in Miniature

(Pixabay)
Our social-welfare strategies should be designed to create more opportunity for people to avail themselves of the benefits of the free market.

NRPLUS MEMBER ARTICLE ‘D on’t put all of your eggs in one basket,” advises the proverb.

Why not?

Anyone who ever has spoken with an investment adviser has heard the sermon about diversification of risk. And most people understand that in the context of an investment portfolio. But in other contexts, we respond to risk with the opposite of diversification: centralization. Many progressives, for example, believe that the best way to mitigate the personal financial risks associated with buying health insurance and medical care is the imposition of a single-payer system, in which the government not only pays for medical care but also regulates it and organizes doctors and other providers into closely managed cartels, as in the United Kingdom under the National Health Service. After 9/11, many in government came to believe that U.S. counterterrorism efforts would be improved if functions entrusted to different agencies across different departments were placed under the central management of a Department of Homeland Security, which they set about creating.

The bureaucratic mind prefers uniformity, conformity, homogeneity, and centralization, because these qualities make processes more amenable to bureaucratic management. We Americans often use “bureaucratic” and “bureaucracy” as pejorative terms, but they should not be understood as such: Effective bureaucracies make functioning modern states possible, and they are a big part of the success of countries as different as Denmark, Switzerland, and Singapore; in the same way, lack of effective administration is a big part of why U.S. governance remains relatively ineffective even on those rare occasions when we get the policy right.

The bureaucratic preference for homogeneity and centralization is what is at work when you hear someone saying that some important thing such as health care or education “is too important to be left to the free market.” When I look at a mobile phone from 1988 and compare it with a mobile phone today — not only its capabilities but its price and its accessibility — and then I compare a public school from 1988 with a public school from today, I think that education is far too important not to be left to the free market, which has a very good record of making important things (food, clothing, communication) better and cheaper and more widely available consistently over long periods of time.

Free-market processes are not perfect, and they no more closely approach perfection than any human arrangement should be expected to; the error (or the political stratagem) is comparing the real-world outcomes of the free market with the theoretical ideal outcome produced by the centralized bureaucracy in education or health care or controlling air pollution.

And even with the famous eggy proverb to guide us, we consistently fail to appreciate the risks associated with centralization.

Back to the schools, for an obvious example: One of the American Left’s major projects in the post-war era was converting the public-school system from a loose collection of locally controlled educational institutions into a tightly governed state-and-national network of welfare centers that serve a variety of functions from providing direct social services to engaging in political indoctrination and ensuring above-market compensation in noncompetitive jobs for members of progressive political constituencies.

On the social-welfare front, schools act as free day-care centers, provide some health-care services, and feed children to such a great extent that millions of students rely on school meals for the majority of their daily food. None of those endeavors is in and of itself an obviously bad policy, but they do show the imprint of the bureaucratic mind: Millions of families doing millions of things in millions of different ways with millions of different outcomes cannot, from the bureaucratic point of view, possibly be the best possible arrangement. Better instead to enact centralized programs in the facilities in which children are legally compelled to spend their days, with the agents of social welfare ministering to a captive clientele.

That this imposed certain risks became a source of some concern when the schools had to be shut down because of the coronavirus epidemic. Suddenly, students and their families were not shut off only from such education as happens in these facilities but also from their de facto subsidized child-care arrangements, free or subsidized food (more than half of the children in our public schools are eligible for subsidized meals), and much else. Working parents of modest means were left scrambling for substitutes in an environment in which few were to be found.

Put another way: They had become excessively dependent on a single institution for a variety of needs that are only tangentially related to the notional purpose of that institution. And if you believe that the goodwill of the public sector and the whip of democratic accountability will necessarily produce outcomes preferable to those associated with the cold heart of the profit-seeking market, consider those Americans who are entirely dependent on the public institutions that most closely resemble the public schools: our jails and prisons, through which the coronavirus epidemic is raging uncontrolled, in many cases in an environment in which the responsible authorities are not even prepared to guarantee such rudimentary needs as regular running water and soap. Prisoners are, by necessity, utterly dependent on the institutions in which they are incarcerated — an American prison is what you get when you extend the assumptions of an American kindergarten as far as politics will take them.

There are some important cultural differences between the schools and the prisons: Our attitude toward public-school students is largely one of indifference, whereas our attitude toward prisoners more often is marked by cruelty and viciousness. But in both cases the institutions often have settled on the same basic solution: throwing out as many of their inmates as they can, making them someone else’s problem.

What happens in a single-payer system when the single payer will not or cannot pay? Prisoners know. Kindergarteners, too.

The welfare state is not going away. But there are many ways to design a program. And one of the distinctions that should be kept in mind is that there is a world of difference between government funding consumption and government directly providing goods and services. The food-stamp program surely has its shortcomings, but can you imagine a system under which the U.S. government attempted to operate farms, distribution centers, and grocery stores for the poor and hungry? The great benefit of food stamps and other voucher programs is that they allow beneficiaries to avail themselves of the benefits of the same market system in which the affluent get their goods and services.

You can take your SNAP card to Whole Foods, but you can’t take your kids and the money earmarked to educate them to Choate no matter what you pay in school taxes. Do you think that is for the benefit of your children or for the benefit of the actual big-money donors in American politics? (In the 2016 cycle, the teachers’ unions spent 36 times what the “big money” National Rifle Association spent on contributions.)

Getting priced out of the market for this or that is a risk for lower-income people, albeit a risk that can be managed in a relatively straightforward way, most obviously by giving them vouchers that bridge the distance between the consumption they can afford and the consumption we think they should have. Institutional failure is a different kind of risk, one that can be very difficult to solve when there is monopoly power at play, as with the prisons and the public schools.

Our social-welfare strategies should be designed to create fewer monopolies and less centralization. (Public-sector monopolies are no less monopolistic for being public.) With apologies to Senator Sanders, choice is not only a matter of having 23 different brands of deodorant — it is a matter of risk, of whom we put at risk and why, a matter of alternatives and who is entitled to them, and a matter of whether people who are not rich and powerful are to have some control over their own lives or whether their proper role is to take what is put in front of them — and to shut up and be grateful for it.

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