March 26, 2006
THE PLAN (via Patricia Moo Garnaas):
A Plan to Replace the Welfare State: The government should give every American $10,000--and nothing more. (CHARLES MURRAY, March 26, 2006, Opinion Journal)
This much is certain: The welfare state as we know it cannot survive. No serious student of entitlements thinks that we can let federal spending on Social Security, Medicare and Medicaid rise from its current 9% of gross domestic product to the 28% of GDP that it will consume in 2050 if past growth rates continue. The problems facing transfer programs for the poor are less dramatic but, in the long term, no less daunting; the falling value of a strong back and the rising value of brains will eventually create a class society making a mockery of America's ideals unless we come up with something more creative than anything that the current welfare system has to offer.So major change is inevitable--and Congress seems utterly unwilling to face up to it. Witness the Social Security debate of last year, a case study in political timidity. Like it or not, we have several years to think before Congress can no longer postpone action. Let's use it to start thinking outside the narrow proposals for benefit cuts and tax increases that will be Congress's path of least resistance.
The place to start is a blindingly obvious economic reality that no one seems to notice: This country is awash in money. America is so wealthy that enabling everyone to have a decent standard of living is easy. We cannot do it by fiddling with the entitlement and welfare systems--they constitute a Gordian Knot that cannot be untied. But we can cut the knot. We can scrap the structure of the welfare state.
Instead of sending taxes to Washington, straining them through bureaucracies and converting what remains into a muddle of services, subsidies, in-kind support and cash hedged with restrictions and exceptions, just collect the taxes, divide them up, and send the money back in cash grants to all American adults. Make the grant large enough so that the poor won't be poor, everyone will have enough for a comfortable retirement, and everyone will be able to afford health care. We're rich enough to do it. [...]
The Plan returns the stuff of life to all of us in many ways, but chiefly through its effects on the core institutions of family and community. One key to thinking about how the Plan does so is the universality of the grant. What matters is not just that a lone individual has $10,000 a year, but that everyone has $10,000 a year and everyone knows that everyone else has that resource. Strategies that are not open to an individual are open to a couple; strategies that are not open to a couple are open to an extended family or, for that matter, to half a dozen friends who pool resources; strategies not open to a small group are open to a neighborhood. The aggregate shift in resources from government to people under the Plan is massive, and possibilities for dealing with human needs through family and community are multiplied exponentially.
The Plan confers personal accountability whether the recipient wants it or not, producing cascading secondary and tertiary effects. A person who asks for help because he has frittered away his monthly check will find people and organizations who will help (America has a history of producing such people and organizations in abundance), but that help can come with expectations and demands that are hard to make of a person who has no income stream. Or contemplate the effects of a known income stream on the young man who impregnates his girlfriend. The first-order effect is that he cannot evade child support--the judge knows where his bank account is. The second-order effect is to create expectations that formerly didn't exist. I call it the Doolittle Effect, after Alfred Doolittle in "My Fair Lady." Recall why he had to get to the church on time.
The Plan confers responsibility for dealing with human needs on all of us, whether we want it or not. Some will see this as a step backward, thinking that it is better to pay one's taxes, give responsibility to the government and be done with it. I think an alternative outlook is wiser: The Plan does not require us all to become part-time social workers. The nation can afford lots of free riders. But Aristotle was right. Virtue is a habit. Virtue does not flourish in the next generation because we tell our children to be honest, compassionate and generous in the abstract. It flourishes because our children practice honesty, compassion and generosity in the same way that they practice a musical instrument or a sport. That happens best when children grow up in a society in which human needs are not consigned to bureaucracies downtown but are part of life around us, met by people around us.
Simply put, the Plan gives us back the action.
It's telling that the chief argument against the Third Way is that it might be too successful. I don't get though why Mr. Murray wastes the opportunity afforded by those first 21 years of life. Posted by Orrin Judd at March 26, 2006 8:18 AM
Interesting and still thinking about it. Would like to see this post and eventual comments filed somewhere for some length of time to see what develops.
Don't know if we have the guts to do something like this or Oneil's plan because of the risk of unintended consequences but they're certainly worth thinking about. Great assignment for a college course and/or continuing education program. In fact I may try to introduce it/them as such for a discussion group.
Posted by: Genecis at March 26, 2006 9:33 AMThe problem is that our best opportunity to makesuch changes came with a Democrat president and Republican Congress, but Clinton was too crav en to go for the whole enchilada.
Now we need either a McCain landslide big nough that Democrats can't stop such reforms or a gradual shift of blacks and other minorities to the party that actually wants to make them wealthy and independent from the one that wants them dependent on government programs.
Posted by: oj at March 26, 2006 9:38 AMAs Gen said, the comments here will be interesting.
My reaction as I read the intro, was to laugh thinking of the wolves salivating about fleecing the sheep and how most lottery winners were broke again in a few years and back to needing assistance.
O'Neil's suggestion of starting an investment account for babies is a better idea I think. Kids would know it's coming and be taught how to invest wisely when they come of age.
Giving the products of our pubic schools a guaranteed income and expecting that they will budget and pay their expenses instead of buying expensive toys on credit is literally giving them more credit than they deserve.
Posted by: erp at March 26, 2006 10:57 AMerp:
Actually, one of the keys is to not give folks much leeway over what they invest in.
Posted by: oj at March 26, 2006 11:01 AMCan the author seriously think that this would make any difference? Once people blew through their $10K and were desperate again, we'd be in the same situation we are now, only having spent an extra $10K. Like the "peacemakers" in Iraq, we'll get stuck with the bill no matter how self destuctive the recipients are.
Posted by: Annoying Old Guy at March 26, 2006 11:52 AMNot if they can't get their hands on it until at least age 21 - maybe ladder disbursement dates - 1/4 at each age.
21
25
27
31
Posted by: Sandy P at March 26, 2006 12:38 PMPerhaps couple the 10K idea with the baby investments and implement a sales tax on ALL products including food and clothes along with a marginal progressive flat tax as a base, using the flat tax to realize the total tax base required by the annual national budget.
Oh yes, almost forgot ... tax the hell out of gasoline.
Posted by: Genecis at March 26, 2006 2:07 PMYou would have to couple this with a strict ID requirement, to avoid double- and triple-dipping. And, of course, limit it to citizens, or all of Mexico would move here.
Posted by: PapayaSF at March 26, 2006 5:11 PMGood, we'll need them all with a savings rate this high.
Posted by: oj at March 26, 2006 5:24 PMI think there will be a backlash to the circus in LA. Too bad.
Posted by: erp at March 26, 2006 6:17 PMGasoline taxes end up subsidizing our global rivals making it more expensive to do business here while providing cheaper oil to them - not to smart.
Posted by: Perry at March 26, 2006 7:22 PMWhy is putting everybody on welfare a good idea? Not collectingthe taxes in the first place and letting anyone starve who is too dumb or lazy to make 10 grand in a year makes much more sense.
Posted by: Perry at March 26, 2006 7:30 PMIt's not about sense.
Posted by: oj at March 26, 2006 7:37 PMMaking them more dependent on an antiquated and self-destructive energy source while we innovate new ones is good geopolitical strategy.
Posted by: oj at March 26, 2006 7:39 PMExcuse me Perry but gasoline taxes are a deductible business expense of doing business.
Posted by: Genecis at March 26, 2006 8:36 PMHere are end-user gasoline prices per liter, in dollars, in February '06:
UK: $1.569
Germany: 1.514
Italy: 1.495
France: 1.449
Spain: 1.178
Japan: 1.158
Canada: 0.774
USA: 0.609
This is intriguing and should be debated. However, the key would be to replace ALL welfare/entitlement programs with it. A prime benefit is that such a simple distribution would eliminate a vast amount of bureaucracy. Having any other program still existing would be counterproductive.
There may be some people who blow the entire $10,000 on booze or drugs or silly expenditures, but I don't think it would be a big problem. $10,000 a year is not a big sum of money to go crazy with when it comes down to it - especially if it is distributed in increments (say quarterly) throughout the year and not in one large lump sum. I don't think it would put more people into moral jeopardy that winning million of dollars would do. (However, I do think it be important that it not be provided monthly otherwise the money WILL disappear as expenditures naturally rise to meet income - at least not monthly before age 65).
It will not disincentivize work because $10k per person is too low an amount to survive on. However, it may be enough to convince a family that one breadwinner is enough and one parent can stay home to provide care for the children, or that they can get by with their current income and not sacrifice family life by working more. Not everyone will make that decision, but it's family friendly for those who do.
An extra $10,000 a year would help people get to the next level - having the down payment on a house, putting kids in private school, being able to afford a nursing home or catastrophic medical care for an elderly parent.
I also think that people will not seek new programs to provide for those who blow their $10,000. Since no matter what the person's condition or fate is, since they would have gotten the $10k - other people's natural reactions will be, "You're homeless? Dude, what did you do to your $10,000?" There will be no "deserving" poor that need a hand out in the form of another program.
There will be SOME sort of service - but provided locally and perhaps through private charities. It will not be any Federal program. If do gooders want to provide a service to them, then they have their $10,000 to do just that.
Because the $10k will come, no matter rain or shine, it is an effective replacement for Social Security as well. It does not depend on the fortune of the stock market for retirees. They'll have the stable income they need.
I think this type of BOLD proposal is what we precisely need right now. Maybe it won't be the right policy after discussion, but if we want fundamental reform of government, it's this type of thing which will get people to think about the issue and generate the debate we need as a nation.
Posted by: Chris Durnell at March 27, 2006 12:58 PMadd on a provision for free circuses and we will have come full circle.
Posted by: toe at March 27, 2006 1:33 PMPerry is correct.
While this plan could work well in theory, in practice it would be subject to considerable pressure to increase the benefit.
The one-time disbursement feature of the O'Neill plan makes that a much better proposition.
Posted by: Michael Herdegen![[TypeKey Profile Page]](http://brothersjuddblog.com/nav-commenters.gif)
at March 28, 2006 5:14 AM
Also, Mr. Murray's thought that we can't "let federal spending on Social Security, Medicare and Medicaid rise from its current 9% of gross domestic product to the 28% of GDP that it will consume in 2050 if past growth rates continue" is pure rubbish.
While spending on those programmes will certainly rise, projecting a straight-line continuation of past trends is a mug's game, suitable only for frightening small children and leftists.
After all, thirty-five years ago they were projecting, based on "past growth rates", that by now we'd be eating the dead to survive, and choking on polluted air and water.
Posted by: Michael Herdegen at March 28, 2006 5:30 AM