November 14, 2013

ONE THING WE KNOW FOR SURE, WE DON'T WANT TO TRANSFER CASH:

What are some of the biggest problems with a guaranteed annual income? (Tyler Cowen, November 14, 2013, Marginal Revolution)

As long as we are moving toward more cash transfers, why don't we substitute cash transfers for some or all of Medicare and Medicaid health insurance coverage benefits, especially for lower-value ailments?  But then we are paying more cash to the sick individuals.  That doesn't have to be a mistake, but it does mean that an initially simple, "dogmatic" payment scheme now has multiplied into a rather complex form of social welfare assistance, contingent on just about every relevant factor one might care to cite.

You can see the issue.  Whether on grounds of justice, practicality, or just public choice considerations ("you can keep your current welfare payments if you like them"), we should not expect everyone to be paid the same under a guaranteed annual income.  And with enough tweaks, this version of the guaranteed income suddenly starts resembling...the welfare state, albeit the welfare state plus.  Unemployment insurance benefits wouldn't end.  More people could get on disability, and without those pesky judges asking so many questions.

The potential problem is that we inherit and in some ways magnify the problems with the current welfare state, rather than doing away with those problems.

In exchange for more generous welfare the least we can require is that some portion of transfers go into savings accounts that will fund the particular problems of old age, like health care.
Posted by at November 14, 2013 11:35 AM
  

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