welfare state

The State in education – Part II: Social Warfare

Mary Lucia Darst Liberty , , , , , ,

In the article The State in education – Part I: A History, we examined Friedrich Nietzsche’s opinion of the Prussian public school system and his concern when it became the model framework for public schools, both in Germany and in the world. To summarize quickly, the philosopher held that state-funded schooling was an act of social warfare – students, taught to aspire beyond their capabilities, would become resentful and angry, making them susceptible to propaganda and manipulation. Although Nietzsche did not use the term “welfare state” in the educational context, his predicated his denouncement of public education on the idea that it was a form of welfarism and increased state control.

For historical placement, it is important to understand what resources existed for parents pre-public schools. More importantly, it is also important to understand the difference in curricula and their final goals. Before the late 18thcentury, Jean Jacques Rousseau, and the advent of educational “experts,” there were only privately funded schools – many of which were free to those in need – which provided a classical education.

There are two definitions, both equally correct, of “classical education.” The first literally signifies an education based on Latin and Ancient Greek and all the literature in those languages; associated with this definition are skills in music, art, drama, declamation, oratory, and debate, all of which the Romans considered essential to a well-rounded education and which they included as formal subjects in their schools. By the early 19thcentury, this education also carried the expectation that the student could easily acquire most modern European languages since to varying degrees they were all based on the classical languages.

The second definition of “classical education” focuses on the acquisition of a mental toolkit with the goal of enabling the student to think deeply and carefully throughout his life. This system is divided into the trivium and the quadrivium, roughly corresponding to the primary and secondary school levels of the modern system.

As Dr. Peter Lynch of University of Dublin explained,

The organisation of the quadrivium was formalised by Boethius, and this structure endured for more than a millennium. It was the mainstay of the medieval monastic system of education, which had a structure of seven subjects – the seven liberal arts – comprising the quadrivium and the trivium. The trivium was centered on three arts of language: grammar, for ensuring proper structure of language; logic, for arriving at the truth; and rhetoric, for the beautiful use of language. Thus the aim of the trivium was goodness, truth, and beauty.

Dorothy L. Sayers (1893 – 1957), an Oxonian classicist and author, explained in her 1947 essay “The Lost Tools of Learning” that the trivium is the more crucial of the two since it provides all the skills needed to be an independent thinker and learner. In her essay, she also detailed a scheme whereby the modern institutional schools could implement the trivium in place of contemporary curricula. She recognized, though, the unfortunate tendency of 20thcentury society to prefer for “education” to have a concrete banality, with parents focusing on what their children could “do” with a subject.

The quadrivium, though elucidated by Boethius (480 – 524 AD), was based on the writings of the philosopher Proclus (412 – 484 BC), whom the Renaissance men and women relied upon when they incorporated the quadrivium into formal education.  The subjects of the quadrivium are: arithmetic, music, geometry, and cosmology (sometimes listed as astronomy). As Dr. Lynch noted, mathematician Morris Klein described these subjects as “pure,” studying as they do, the abstract and the relationship between the concrete and the metaphysical. In philosophical terms, the trivium is aristotelian and the quadrivium is platonic.

Before turning to the subject of Nietzsche’s Cassandra-like predictions and the loss of classical learning in America, we must briefly look at the history of institutional education since it is the primary component of the American version. As Dr. Lynch remarked, the classical education remained alive in the European Catholic monasteries and convents, which acted as an early form of boarding school.

The schools associated with religious houses were open to all, regardless of rank or income, and did not necessitate a commitment to religious life at the end. That said, it was primarily the nobility who took advantage of the monastic and convent schools, more, in all honesty, because the principle of religious sanctuary meant that the children were secure from predation in times of unrest than from any love of learning. Although there was no prestige associated with this type of education, under these conditions, it became a noble prerogative but not necessarily ennobling in itself. Despite aristocratic mamas and papas seeing education as much less important than sanctuary, the result of this symbiotic relationship was that the upper classes really were better educated than the middle and lower ones, laying the foundation for the educational class war that Nietzsche identified in the 1800s.

Let us fast forward past the Renaissance, the Reformation, and the Enlightenment, all of which had profound effects on education, though always within the classical framework, and look at the roots of American public education. The concept of publicly funded education occupied Thomas Jefferson, who initially supported it unilaterally, then opposed it, then compromised (Hegel would be proud) by suggesting that grammar schools might be locally funded and universal but anything beyond that had to be either private or competitive entry, if publicly funded. In general, the Founding Fathers took a laissez-faire view on education, focusing on the aspects of freedom and personal choice. This truly enlightened attitude did not last.

By the 1830s, progressives, including Horace Mann, fell under the spell of the Prussian system. In the 1840s, Mann used his position as Secretary of the (Massachusetts) Board of Education to introduce public schooling. Post-Civil War, in the 1860s, he used his position as a US Congressman to make public schooling compulsory, while homeschooling his own children in a stunning display of “for thee but not for me” hypocrisy. In 1848, as Secretary of the nascent Board of Education, Mann opened his report with these words:

According to the European theory, men are divided into classes, – some to toil, others to seize and enjoy. According to the Massachusetts theory, all are to have an equal chance for earning, and equal security in the enjoyment of what they earn. The latter tends to equality of condition; the former, to the grossest of inequalities. Tried by any Christian standard of morals, or even by any of the better sort of heathen standards, can any one hesitate, for a moment in declaring which of the two will produce the greater amount of human welfare, and which, therefore, is more conformable to the divine will? The European theory is blind to what constitutes the highest glory as well as the highest duty of a State …

The truth is that Mann openly declared that the public school’s purpose is to render control to the state. The awful truth is neatly dressed in a virtue signaling garb that makes reference to religion and God (I challenge anyone to find a single passage in the Bible where God says “go build a public school.”). Buried in this paragraph is one of the major fallacies that afflicts contemporary American society: linking formal education to earning power and social worth. This particular problem we will address in a subsequent article, but it is important to know that promoting this fallacy was a crucial part of the mandate of state-run education.

At the same time as Mann was advocating mass education and social equalization on one side of the Atlantic, on the other side, Nietzsche exposed its flaws:

Let me tell you what I think characterizes the vital and pressing educational and pedagogical questions of today. It seems to me that we need to distinguish between two dominant tendencies in our educational institutions, apparently opposed but equally ruinous in effect and eventually converging in their end results. The first is the drive for the greatest possible expansionand disseminationof education; the other is the drive for the narrowingand weakening of education. For various reasons, education is supposed to reach the widest possible circle – such is the demand of the first tendency. But then the second tendency expects education to give up its own highest, noblest, loftiest claims and content itself with serving some other form of life, for instance, the state (Anti-Education, Lecture I).

The conflation that most concerned Nietzsche was that mass literacy did not equal mass education since the connection between reading and thinking was lost. For him, nothing epitomized this more than newspapers and journalism – “Journalism fulfills its task according to its nature and as its name suggests: as day labour.” Everyone learning to pretend to the laurels of the literate, through simply being able to decipher words on a page, created a societal need for professional intellectual caulkers:

It is in journalism that the two tendencies converge: education’s expansion and its narrowing. The daily newspaper has effectively replaced education, and anyone who still lays claim to culture or education, even a scholar, typically relies on a sticky layer of journalism – a substance as sturdy and permanent as the paper it’s printed on – to grout the gaps between every form of life, every social position, every art, every science, every field. The newspaper epitomizes the goal of today’s education, just as the journalist, servant of the present moment, has taken the place of genius, our salvation from the moment and leader for the ages.

Systemic education was the death of the Renaissance man. It created a strange world where everyone could read but no one was learned. This intellectual world is the United States today.

After Mann forced compulsory education on the American people, the literacy rate, previously rising, declined, an event which occurred in Europe as well when Great Britain and France followed Germany’s lead. When angry parents, appalled at the poor quality of the new “free” education, withdrew their children to place them in private schools, Mann launched a media war against them, branding them un-American elitists and/or social malingerers and starting a social shouting match that continues to the present. Discovering that parents, naturally, disregarded name-calling when their children’s future was at stake, the progressives brought the state apparatus in the form of taxation to bear.

Today, the United States ranks in the middle percentiles in education internationally. The nation is behind all of east Asia, even very poor countries like Vietnam, and most of Europe, including poor Eastern European countries. According to the report, over 40% of American high school seniors rate “below basic” for science and mathematics, which by extension indicates an inability to read and reason adequately (both subjects are more tests of those two skills than anything else at that level). Yet the nation houses the greatest number of elite universities and institutions of higher education in the world. The American people have known since the early 20thcentury that public school graduates could not enter these institutions and thrive – Sinclair Lewis’ book Babbitt describes beautifully the dichotomy existing between 1920s middle-America and the push for an elite education – yet only now has the public decided that this is a problem, but only on superficial grounds. No one is interested in discussing the foundational flaws that result in American students lagging behind their European and Asian counterparts.

We are aware through personal experience that the skills of the seven liberal arts of the trivium and quadrivium are gone. We can cry in vain after the American reading public, which, before the advent of public schools and their version of literacy, created one of the first best seller phenomena with James Fenimore Cooper and later devoured the works of Edgar Allen Poe – during his life writing high literature was lucrative. Just as extinct is the British public that devoured Jane Austen with such an insatiable hunger that she could not keep up. The people whose appetite induced Charles Dickens to exploit it with publishing deals that paid him by the word are gone; for that matter, the ability of the reading public to recognize and delight in Dickens’ colorful language and skillful use of words is moribund – alas the trivium! The rage for reading and, by extension, autodidacticism in Britain reached such a pitch that, in the words of a Mises Institute commentator,“England eventually passed a paper tax [raising the cost of books] to quell a public the leaders felt was too smart.” A public too interested in books is not a contemporary problem.

In his inaugural speech, President Donald Trump described the public school system as having “failed so many of our beautiful young people.” In context, the sentence implied that the public school is supposed to turn out competitive, educated smart people. There is a question to this statement, though: Is it really a failure if a system cannot accomplish that which it was never designed to do? On the contrary, if one takes Mann’s opening report as a plan of action, the American public school has succeeded fantastically. Now everyone is equal in mediocrity and lack of knowledge. One of its missions has not been achieved: forcible creation of a classless society. We will examine the causes of this failure next since it relates to Nietzsche’s predictions of unhappiness for those who believed in state-mandated educational equality.

The State in education – Part I: A History

Mary Lucia Darst History, Philosophy , , , , , , , ,

In Beyond Good and Evil, written after breaking with composer Richard Wagner and subsequently rejecting hyper-nationalism, Friedrich Nietzsche proposed the existence of a group of people who cannot abide to see others successful or happy. Appropriately, he dubbed these people and their attitude “ressentiment,” or “resentment” in French. His profile of the resentful is most unkind, bordering on the snobbish – though Nietzsche had very little personal cause to feel superior (he was part of the minor nobility but always insisted that, due to his father’s premature death and his mother’s lack of connections, his legal rank was never of much benefit to him). Insanely proud of his classical education and remarkable, even for that time, fluency in Ancient Greek and Latin, the philosopher latched onto these languages as symbolic variables in his descriptions of society and its woes.

Much like the French philosopher Simone de Beauvoir who, a century later, attempted to prove that history was made by socio-cultural gender dynamics (Le deuxième sexe), Nietzsche proposed that all of (European) history since the fall of the Roman Empire was a battle between the cosmopolitan, classically-educated aristocracy and the technician, parochial lower classes. Unlike de Beauvoir who saw the world as oppressor-oppressed, the German believed that the lower orders, motivated by jealousy and feelings of exclusion, tried to pull their superiors down, creating a peculiar situation in which those who believed themselves the oppressed engaged in oppressive behavior.

As evidence of his theory, Nietzsche suggested in The Genealogy of Morals that the Protestant Reformation was the ultimate achievement of the resentful classes; functionaries, unable to understand the Latin of the Roman liturgy, read the writings of the ancient and medieval philosophers, or participate meaningfully in the conversations and society of the Renaissance, responded by turning the Church into the personification of all they hated – not unlike a voodoo doll – and then ousted it from their lives and countries. At least, this is what Nietzsche thought had occurred, adding that the cloddish nationalism that he had rejected would not have been possible without first banishing the Catholic Church and the refinement it introduced through fostering Latin, Greek, and Classical literature and philosophy.

On the practical plane, Nietzsche’s primary concern, post-Wagner, was the advent of Prussian hegemony and the loss of autonomy among the German member states. Before his friendship with Wagner, Nietzsche gave a lecture series on education which he intended to collect and publish as a book. The book never materialized [until 2016, when the Paul Reitter compiled the notes and lecture transcripts into book form under the title Anti-Education], but the philosopher did write a preface that he gifted to Cosima Wagner under the title “Five Prefaces to Five Unwritten Books,” which helped precipitate the quarrel since Nietzsche signaled clearly that he rejected the Wagnerian philosophy of the innate nobility of the (German) savage.

Much of Anti-Education is harsh and unyielding, moreover because there is much in it that is true. In it, one can see the early kernels of Nietzsche’s identification of ressentiment and the genesis of ideas concerning individuality and nobility that he returned to later in life. There is also much that is applicable today.

Nietzsche asked,

Why does the state need such a surplus of educational institutions and teachers? Why promote popular enlightenment on such scale? Because the genuine German spirit [that of the Renaissance princes] is so hated – because they fear the aristocratic nature of true education and culture – because they are determined to drive the few that are great into self-imposed exile, so that a pretension of culture can be implanted and cultivated in the many – because they want to avoid the hard and rigorous discipline of the great leader, and convince the masses that they can find the guiding path for themselves … under the guiding star of the state! Now that is something new: the state as the guiding star of culture!

Nietzsche wrote / spoke this on the takeover by the state of the education system, also known as the Prussian public school system, which “reformer” Horace Mann promptly imported to the United States. The false promise of public education, as Nietzsche saw it, was that state schools claimed the laurels and legitimacy of private gymnasia through deceit – speaking to a university audience, he expected everyone to know that pre-state control, there were two types of secondary schools: gymnasium, where the student received a classical education and prepared to enter university, and realschule, where the student learned the three Rs, along with some science, and entered the workforce immediately after graduation. Nietzsche claimed that while the gymnasium curriculum needed a significant overhaul, the only products of the realschule were conformity, obedience, and an inflated sense of achievement. Hence, he believed, when the government took over the education system, officials chose to model the public school on the old realschule, while claiming that graduates had the knowledge and skills of the gymnasium.

It is important to note at this juncture that Nietzsche bore a very visceral hatred of the Prussians in general and of Otto von Bismarck in particular. Viewing the former as unintelligent clods whose threat lay in their stupidity, the philosopher deemed the latter and his eponymous Bismarckian welfare state a greater threat to personal freedom. From 1888 until his nervous breakdown and descent into madness in 1899, Nietzsche called for the trial of Bismarck for treason, along with the removal of Kaiser Wilhelm II, in a sequence of letters and essays which his sister and executors suppressed, both to accommodate their own agendas and to avoid the attention of the censors.

The treason of Bismarck lay in his creation of a nation whose people were unwittingly dependent on the state. The state provided education during infancy and a pension in old age. As Nietzsche correctly saw, when the state controls the beginning of the pipeline and the end, everyone is in its employ. As he also foretold, the situation would end in violence (for Germany specifically; hence his interest in preempting war by removing its figurehead king) and heartbreak for those who placed their faith in the anti-individualistic state.

At a very fundamental level, Nietzsche believed that the public school system, with is inadequate education and contempt for classical learning and languages, was a conspiracy designed to drive a wedge among the social classes, enabling the state to increase control in the ensuing vacuum. The other aspect he identified was the use of public opinion to strip the individual of drive or thirst for a better life through a mixture of flattery and subversion of ambition. The outcome would be war and resentment, he predicted, for any country foolish enough to have faith in the Prussian system. Next week, we will examine whether Nietzsche’s predictions have come true in modern American education.

Welfare Costs are not a Good Argument Against Immigration

Zachary Woodman Current Events, Economics, Law , , , , , , , ,

Note: A version of this was initially posted on my old, now defunct blog. However, has become increasingly relevant in the age of Trump, and is worthy of reconsideration now.

It’s one of the most common arguments against looser immigration going back to Milton Friedman to Donald Trump. It is commonly claimed that even though loosening immigration restrictions may be economically beneficial and just, it should be opposed due to the existence of the welfare state. Proponents of this claim argue that immigrants can simply come to this country to obtain welfare benefits, doing no good for the economy and adding to budget deficits.

Though this claim is on its face plausible, welfare is not nearly as much of a compelling reason to oppose immigration as so many argue. It is ultimately an empirical question as to whether or not the fiscal costs of immigration significantly outweigh the fiscal benefits of having more immigrants pay taxes and more tax revenue economic growth caused by immigration.

Before delving into the empirical studies on the matter, there is one very important fact that is too often neglected in these discussions: there are already heavy laws restricting all illegal immigrants and even the vast majority of legal ones from receiving Welfare. As the federal government itself–specifically the HHS–notes:

With some exceptions, “Qualified Aliens” [ie., legal immigrants] entering the country after August 22, 1996, are denied “Federal means-tested public benefits” for their first five years in the U.S. as qualified aliens.

If we were to allow more immigrants, there are legal mechanisms stopping them from getting welfare. There are some exceptions and even unlawful immigrants occasionally slip through the cracks, but this is already a major hole in the case that welfare means we should hold off on immigration reform. The vast majority of immigrants cannot receive welfare until years after they are legalized.

However, for the sake of argument, let us ignore that initial hole in the case against increased immigration. Let’s generously assume the majority of immigrants–legal and illegal–can somehow get their hands on welfare. There is still little reason to expect that additional immigrants would be any more of a fiscal drag on welfare programs for the vast majority of our population simply because they are not the type of people who typically wind up on welfare. Our welfare programs are primarily designed to protect a select few types of people: the sick and elderly (Social Security and Medicare), and women and children (SCHIP, SNAP, TAMPF, etc.) If one looks at the demographics of immigrants coming into the country, however, one finds that they do not fit in the demographics of those who typically qualify for welfare programs. According to the Census Bureau, the vast majority (75.6%) of the total foreign-born population (both legal and illegal immigrants) are of working age (between 25 and 65).  Most immigrants, even if they were legal citizens, would not qualify for most welfare programs to begin with.

On the other hand, poverty rates are higher among immigrants and that means more would qualify for poverty-based programs. However, most immigrants are simply not the type to stay in those programs. Contrary to common belief, immigrants are mostly hard-working innovators rather than loafing welfare queens. According to Pew Research, 91% of all unauthorized immigrants are involved in the US labor force. Legal immigrants also start businesses at a higher rate than natural born citizens and file patents at almost double the rate of natives. As a result, immigrants have fairly high social mobility, especially intergenerationally, and so will not stay poor and on welfare all that long.

Put it together, and you find that immigrants generally use many major welfare programs at a lower rate than natives. Immigrants are 25% less likely to be enrolled in Medicare, for example, than citizens and actually contribute more to Medicare than they receive while citizens make Medicare run at a deficit. From the New York Times:

[A] study, led by researchers at Harvard Medical School, measured immigrants’ contributions to the part of Medicare that pays for hospital care, a trust fund that accounts for nearly half of the federal program’s revenue. It found that immigrants generated surpluses totaling $115 billion from 2002 to 2009. In comparison, the American-born population incurred a deficit of $28 billion over the same period

Of course, nobody would advocate restrictions on how many children are allowed to be born based on fiscal considerations. However, for some reason the concern becomes a big factor for immigration skeptics.

If you are still not convinced, let us go over the empirical literature on how much immigrants cost fiscally. Some fairly partisan studies, such as this one from the Heritage Foundation (written by an analyst who was forced to resign due to fairly racist claims), conclude that fiscal costs are very negative. The problem, however, is that most of these studies fail to take into account the dynamic macroeconomic impact of immigration. Opponents of immigration, especially those at the Heritage Foundation, generally understand the importance of taking dynamic economic impacts of policy changes into account on other issues, e.g. taxation; however, for some (partisan) reason fail to apply that logic to immigration policies. Like taxes, immigration laws change people’s behavior in ways that can increase revenue. First of all, more immigrants entering the economy immediately means more revenue as there are more people to tax. Additionally, economic growth from further division of labor provided by immigration increases tax revenue.  Any study that does not succeed in taking into account revenue gains from immigration is not worth taking seriously.

Among studies that are worth taking seriously, there is general consensus that immigrants are either a slight net gain fiscally speaking, a very slight net loss or have little to no impact. According to a study by the OECD of its 20 member countries, despite the fact that some of its countries have massive levels of immigration, the fiscal impact of immigration is “generally not exceeding 0.5 percent of G.D.P. in either positive or negative terms.” The study concluded, “The current impact of the cumulative waves of migration that arrived over the past 50 years is just not that large, whether on the positive or negative side.”

Specifically for the United States, another authoritative study in 1997 found the following as summarized by David Griswold of the Cato Institute:

The 1997 National Research Council study determined that the typical immigrant and descendants represent an $80,000 fiscal gain to the government in terms of net present value. But that gain divides into a positive $105,000 fiscal impact for the federal government and a negative $25,000 impact on the state and local level (NRC 1997: 337).

Despite the slight negative impact for states, as Griswold notes, there is no correlation between immigration and more welfare for immigrants:

Undocumented immigrants are even more likely to self-select states with below-average social spending. Between 2000 and 2009, the number of unauthorized immigrants in the low-spending states grew by a net 855,000, or 35 percent. In the high-spending states, the population grew by 385,000, or 11 percent (U.S. Census 2011; NASBO 2010: 33; Passel and Cohn 2011). One possible reason why unauthorized immigrants are even less drawn to high-welfare-spending states is that, unlike immigrants who have been naturalized, they are not eligible for any of the standard welfare programs.

The potential fiscal impact of immigration from the Welfare state is not a good reason to oppose it at all. There are major legal barriers to immigrants receiving welfare, immigrants are statistically less likely to receive welfare than natives for demographic reasons, and all the authoritative empirical evidence shows that immigrants are on net not a very significant fiscal drag and can, in fact, be a net fiscal gain.

Where the state came from

Bruno Gonçalves Rosi History, Liberty, Philosophy, Politics , , , , , , ,

One of the questions that led me to libertarianism was “what is the state?” More than that: Where did it come from? How it works? What’s the use? Analogous questions would be “what is politics?” and “what is economics?” If my classroom experience serves as a yardstick for anything, the overwhelming majority of people never ask these questions and never run after answers. I do not blame them. Most of us are very busy trying to make ends meet to worry about this kind of stuff. I even sought an academic training in politics just to seek answers to these questions. For me it’s nothing to have answers, after all, I’m paid (albeit very poorly paid) to know these matters. Still, I wish more people were asking these types of question. I suspect that it would be part of the process to review the political and economic situation in which we find ourselves.

Many times when I ask in the classroom “what is the state?” I receive in response that Brazil is a state. In general I correct the student explaining that this is an example, not a definition. The modern state, as we have it today, is mainly the combination of three factors: government, population, and territory. The modern state, as we have it today, can be defined as a population inhabiting a specific territory, organized by a centralized government that recognizes no instance of power superior to itself. Often, in the academic and popular vocabulary, state and government are confused, and there is no specific problem in this. In fact, the two words may appear as synonyms, although this is not a necessity. It is possible to distinguish between state and government thinking that the state remains and governments go through.

The state as we know it today is a product of the transition from the Middle Ages to the Modern Age. I believe that this information alone should draw our attention enough: people have lived in modern states only in the last 500 years or so. Throughout the rest of human history other forms of political organization have been used. I am not saying (not here) that these other forms of organization were better than the modern state. I am simply saying that the modern state is far from being natural, spontaneous, or necessary. Even after 1500 the modern state took time to be universally accepted. First, this model of organization spread throughout Europe at the beginning of the Modern Era. It was only in the late 18th century and early 19th century that this model came to be used in the American continent. The modern state spread globally only after the decolonization movement that followed World War II. That is: the vast majority of modern states are not even 70 years old!

What is the purpose of the state? At least in my experience, many people respond by “providing rights” or “securing rights.” People think about health, education, sanitation, culture, security, etc. as duties of the state towards society. It is clear that many people think about health, education, housing, etc. as rights, which in itself is already questionable, but I will leave this discussion for another time. The point I want to put here is that empirically states have only cared about issues like health and public education very recently. In the classic definition of Max Weber (late 19th century), the state has a monopoly on the legitimate use of violence. In other words, virtually anyone can use violence, but only the state can do it legally. That is: the primordial function of the state is to use violence within a legal order. Other functions, such as providing health and education, came very late and only became commonplace with the welfare state that strengthened after World War II.

I find it always interesting to see how we live in a young world. Basically the entire world population today lives in some state and expects from this state a minimum level of well-being. However, this reality is only about 70 years old. The idea that we need to live in states that provide us with a minimum of well being is not natural and far from obvious. To understand that the modern state is a historical institution, which has not always existed, it is fundamental to question its validity. Moreover, to note that the functions of the state that seem obvious to us today did not exist 70 years ago leads us to question whether it is valid to expect things such as health and education from the state.

My personal perception is that the modern state (defined by territory, population, and government) is better than any alternative that has already been proposed. However, the state of social well-being is only a sugar-watered socialism. Socialism, by definition, does not work, as Ludwig von Mises very well shows. Partial socialism is as likely to function as full socialism. Expecting the state to use violence within legal parameters is valid and even fundamental. But to expect that this same state may successfully diversify its activities entering the branches of health, education, culture, etc. is a fatal conceit.

Would a Universal Basic Income Increase Poverty?

Zachary Woodman Economics, Liberty , , , , , , , , , , , , , ,

Switzerland has recently overwhelming voted against a proposal that would establish a universal income guarantee (sometimes called a “basic income guarantee” or the similar Friedman-influenced “negative income tax”[1]). Though I myself am a supporter of BIG as a nth best policy alternative for pragmatic reasons,[2] I’m unsure if I myself would have voted for this specific policy proposal due to the lack of specifics. A basic income is only as good as the welfare regime surrounding it (which preferably would be very limited) and the tax system that funds it.[3] However, the surprising degree of unpopularity of the proposal—with 76.9% voting against—was quite surprising.

The Swiss vote has renewed debate in the more wonkish press and blogosphere, as well as in think tanks, about the merits and defects of a Basic Income Guarantee here in the States. For example, Robert Goldstein of the Center on Budget Policy and Priorities[4] has a piece arguing that a BIG would increase poverty if implemented as a replacement for the current welfare state. His argument covers three points:

  1. A BIG would be extremely costly to the point of being impossible to fund.
  2. A BIG would increase the poverty rate by replacing current welfare programs like Medicaid and SNAP.
  3. A universal welfare program like a BIG—as opposed to means-tested programs—is politically impossible right now due to its unpopularity.

For this post, I’ll analyze Goldstein’s arguments in detail. Overall, I do not find his arguments against a BIG convincing at all.

The Political Impossibility of a BIG

Goldstein writes:

Some UBI supporters stress that it would be universal.  One often hears that means-tested programs eventually get crushed politically while universal programs do well.  But the evidence doesn’t support that belief.  While cash aid for poor people who aren’t working has fared poorly politically, means-tested programs as a whole have done well.  Recent decades have witnessed large expansions of SNAP, Medicaid, the EITC, and other programs.

If anything, means-tested programs have fared somewhat better than universal programs in the last several decades.  Since 1980, policymakers in Washington and in a number of states have cut unemployment insurance, contributing to a substantial decline in the share of jobless Americans — now below 30 percent — who receive unemployment benefits.  In addition, the 1983 Social Security deal raised the program’s retirement age from 65 to 67, ultimately generating a 14 percent benefit cut for all beneficiaries, regardless of the age at which someone begins drawing benefits.  Meanwhile, means-tested benefits overall have substantially expanded despite periodic attacks from the right.  The most recent expansion occurred in December when policymakers made permanent significant expansions of the EITC and the low-income part of the Child Tax Credit that were due to expire after 2017.

In recent decades, conservatives generally have been more willing to accept expansions of means-tested programs than universal ones, largely due to the substantially lower costs they carry (which means they exert less pressure on total government spending and taxes).

I agree that Goldstein is right on this point: universal welfare programs are extremely unpopular right now, like the Swiss vote shows. I imagine that if a proposal were on the ballot in the States the outcome would be similar.[5] However, this is no argument against a Basic Income. Advocating politically unpopular though morally and economically superior policies is precisely the role academics and think tank wonks like Goldstein should take.

If something is outside the Overton Window of Political Possibilities, it won’t necessarily be so in the future if policymakers can make the case for it effectively to voters and the “second-hand dealer of ideas” in think tanks and academia get their ideas “in the air,” so to speak.[6] It wasn’t that long ago that immigration reform or healthcare reform seemed politically impossible due to its unpopularity, yet the ladder has popular support and the former was actually accomplished.[7]

If anything, the unpopularity of a BIG is precisely why people like Goldstein should advocate for the policy.

The Fiscal Costs of Funding a Basic Income Guarantee

Goldstein points out, rightly, that a Basic Income Guarantee would be extremely expensive:

There are over 300 million Americans today.  Suppose UBI provided everyone with $10,000 a year.  That would cost more than $3 trillion a year — and $30 trillion to $40 trillion over ten years.

This single-year figure equals more than three-fourths of the entire yearly federal budget — and double the entire budget outside Social Security, Medicare, defense, and interest payments.  It’s also equal to close to 100 percent of all tax revenue the federal government collects.

Or, consider UBI that gives everyone $5,000 a year.  That would provide income equal to about two-fifths of the poverty line for an individual (which is a projected $12,700 in 2016) and less than the poverty line for a family of four ($24,800).  But it would cost as much as the entire federal budget outside Social Security, Medicare, defense, and interest payments.

Where would the money to finance such a large expenditure come from?  That it would come mainly or entirely from new taxes isn’t plausible.  We’ll already need substantial new revenues in the coming decades to help keep Social Security and Medicare solvent and avoid large benefit cuts in them.  We’ll need further tax increases to help repair a crumbling infrastructure that will otherwise impede economic growth.  And if we want to create more opportunity and reduce racial and other barriers and inequities, we’ll also need to raise new revenues to invest more in areas like pre-school education, child care, college affordability, and revitalizing segregated inner-city communities.

Of course, Goldstein is right that a BIG would be fairly expensive and we are already having serious issues funding our existing welfare state. However, he grossly oversells the difficulty in funding it. In particular, it is not necessary to raise taxes to pay for it or for current welfare expenditures.

Goldstein likely gets the $10,000 figure from Charles Murray’s proposal for a BIG. Personally, I’m no fan of Murray’s proposal as it goes too far and he proposes financing it by increasing payroll taxes, which are economically inefficient. However, let’s assume that the relevant proposal is around $7,000 dollars.[8] Multiplying that by the US population of 320 million makes for a total cost $2.24 trillion per year.[9] This could be paid for by using the BIG to replace the following current welfare programs and cutting discretionary spending:[10]

  1. $65.32 billion annually in discretionary spending on Veteran’s benefits
  2. $66.03 billion in discretionary spending on Medicare and other healthcare benefits
  3. $69.98 billion in discretionary spending for education.[11]
  4. $13.13 billion in discretionary spending for food and agriculture (eg., SNAP).[12]
  5. $1.25 trillion in mandatory spending for Social Security.[13]
  6. $985.74 billion in mandatory spending for Medicare and Healthcare.
  7. $95.3 billion in mandatory spending for veteran’s benefits.[14]

Spending a UBI Could Replace

That’s a total of $2.542 trillion in savings annually, more than enough to fund the proposed BIG with another $300.3 billion to spare that could be used for tax credits for low-income households to use on healthcare,[15] education,[16] retirement,[17] and/or basic necessities like food.[18] Funding the program would be a huge challenge, but it is possible to do it without tax increases.

Additionally, Goldstein ignores the fact that similar proposals, such as Friedman’s negative income tax, would have a much lower cost while having a similar effect. The Niskanen Center’s Samuel Hammond has estimated that a NIT could cost only $182 billion annually.[19] From Hammond’s analysis:

Just how much of a cost difference is there between a UBI and NIT? To get a rough idea, I used the Census population survey’s Annual Social and Economic Supplement, which has the distribution of individuals over the age of 15 by income level in $2,500 intervals (I subtracted retirees). I then calculated the transfer each quantile would receive based on a hypothetical NIT which starts at $5,000 for individuals with zero income and is phased out at a rate of 30%. Multiplying the average transfer by the number of actual individuals in each grouping and summing, I arrived at total cost of $182 billion—roughly the combined budget for SSI, SNAP and EITC.

The Effect of Replacing Welfare with a BIG on Poverty

Goldstein would object to my line of reasoning by saying cutting all that spending would harm the poor and increase the poverty rate. He says as much in his piece:

UBI’s daunting financing challenges raise fundamental questions about its political feasibility, both now and in coming decades.  Proponents often speak of an emerging left-right coalition to support it.  But consider what UBI’s supporters on the right advocate.  They generally propose UBI as a replacement for the current “welfare state.”  That is, they would finance UBI by eliminating all or most programs for people with low or modest incomes.

….Yet that’s the platform on which the (limited) support for UBI on the right largely rests.  It entails abolishing programs from SNAP (food stamps), which largely eliminated the severe child malnutrition found in parts of the Southern “black belt” and Appalachia in the late 1960s, the Earned Income Tax Credit (EITC), Section 8 rental vouchers, Medicaid, Head Start, child care assistance, and many others.  These programs lift tens of millions of people, including millions of children, out of poverty each year and make tens of millions more less poor.

Some UBI proponents may argue that by ending current programs, we’d reap large administrative savings that we could convert into UBI payments.  But that’s mistaken.  For the major means-tested programs — SNAP, Medicaid, the EITC, housing vouchers, Supplemental Security Income (SSI), and school meals — administrative costs consume only 1 to 9 percent of program resources, as a CBPP analysis explains.  Their funding goes overwhelmingly to boost the incomes and purchasing power of low-income families.[20]

Moreover, as the Roosevelt Institute’s Mike Konczal has noted, eliminating Medicaid, SNAP, the EITC, housing vouchers, and the like would still leave you far short of what’s needed to finance a meaningful UBI.  Would we also end Pell Grants that help low-income students afford college?  Would we terminate support for children in foster care, for mental health, and for job training services?

This is by far and away the weakest part of Goldstein’s argument.

First of all, as my analysis above showed, Konczal’s and Goldstein’s idea that eliminating the current welfare state “would still leave you far short of what’s needed to finance a meaningful UBI” is just false. Even a relatively robust UBI of $7,000 a year is doable by significantly cutting current welfare programs.

But more importantly, Goldstein’s assertion that replacing the welfare state with a UBI would increase poverty is fully unwarranted. He seems to take a ridiculously unsophisticated idea that “more means-tested programs immediately reduce welfare.” His assertion that the programs in question “lift tens of millions of people, including millions of children, out of poverty each year and make tens of millions more less poor” is, at best, completely erroneous. For three reasons: first, individuals know better what they need to lift themselves out of the than the government, and these programs assume the opposite. Second, the structure of status quo means-tested programs often creates a “poverty trap” which incentivizes households to remain below the poverty line. Finally, thanks to these first two theoretical reasons, the empirical evidence on the success of the status-quo programs in terms of reducing the poverty rate is, at best, mixed.

The way our current welfare state is structured is it allocates how much money can go to what basic necessities for welfare recipients. So if a household gets $10,000 in welfare a year, the government mandates that, say, $3,000 goes to food, $3,000 goes to healthcare, $3,000 goes to education, and $1,000 goes to retirement.[21] This essentially assumes that all individuals and households have the same needs; but this is simply not the case, elderly people may need more money for healthcare and less for education, younger people may need the exact opposite, and poorer families with children may need more for food and education than other needs. It’s almost as if our current welfare system assumes interpersonal utility function comparisons are possible, or utility functions of poorer people are fairly homogenous but they’re not. It also ignores the opportunity cost of the funding for helping individuals and households out of funding; a dollar spent on healthcare may be more effectively spent on food for a particular individual or household.

In sum, there’s a knowledge problem involved in our current welfare policy to combat poverty: the government cannot know the needs of impoverished individuals, and such knowledge is largely dispersed, tacit, and possessed by the individuals themselves. The chief merit of a UBI is, rather than telling poor people what they can spend their welfare on, it just gives them the money and lets them spend it as they need.

Second, universal programs are superior to means tested programs precisely because the amount of transfer payments received does not decrease as income increases. Our current welfare programs too often make the marginal cost of earning an additional dollar, above a certain threshold, higher than the benefits because transfer payments are cut-off at that threshold. This actually perversely incentivizes households to remain in poverty.[22] For example, the Illinois Policy Institute while analyzing welfare in Illinois found the following:

A single mom has the most resources available to her family when she works full time at a wage of $8.25 to $12 an hour. Disturbingly, taking a pay increase to $18 an hour can leave her with about one-third fewer total resources (net income and government benefits). In order to make work “pay” again, she would need an hourly wage of $38 to mitigate the impact of lost benefits and higher taxes.

SingleMomWelfareCliffChart

Or consider this chart (shown above) from the Pennsylvania Department of Public Welfare showing the same effect in Pennsylvania

UBI does not suffer from this effect. If your income goes up, you do not lose benefits and so there are no perverse incentives at work here. Ed Dolan has analyzed how the current welfare state with its means-tested benefits is worse in terms of incentivizing work and alleviating poverty extensively. Here’s a slice of his analysis:

P140810-11

The horizontal axis in Figure 1 represents earned income while the vertical axis shows disposable income, that is, earned income plus benefits. To keep things simple, we will assume no income or payroll taxes on earned income—an assumption that I will briefly return to near the end of the post. The dashed 45o line shows that earned and disposable income are the same when there are no taxes or income support. The solid red line shows the relationship between disposable and earned income with the MTIS policy.

This generic MTIS policy has three features:

A minimum guaranteed income, G, that households receive if they have no earned income at all.

A benefit reduction rate (or effective marginal tax rate), t, indicted by the angle between the 45o line and the red MTIS schedule. The fact that t is greater than zero is what we mean when we say that the program is means tested. As the figure is drawn, t = .75, that is, benefits are reduced by 75 cents for each dollar earned.

A break-even income level, beyond which benefits stop. Past that point, earned income equals disposable income.

When these two factors are taken into account (that individuals know better than the government what they need to get out of poverty and there are significant poverty traps in our welfare state), it is no surprised that the empirical evidence on the effectiveness of these anti-poverty programs is far less rosy than Goldstein seem to think.

After reviewing the empirical literature on the relationship between income and welfare improvements for impoverished households, Columbia University’s Jane Waldfogel concluded “we cannot be certain whether and how much child outcomes could be improved by transferring income to low income families.” The Cato Institute’s Michael Tanner wrote in 2006:

Yet, last year, the federal government spent more than $477 billion on some 50 different programs to fight poverty. That amounts to $12,892 for every poor man, woman, and child in this country. And it does not even begin to count welfare spending by state and local governments. For all the talk about Republican budget cuts, spending on these social programs has increased an inflation-adjusted 22 percent since President Bush took office.

Despite this government largesse, 37 million Americans continue to live in poverty. In fact, despite nearly $9 trillion in total welfare spending since Lyndon Johnson declared War on Poverty in 1964, the poverty rate is perilously close to where it was when we began, more than 40 years ago.

Tanner’s point remains true today. The chart below shows that, despite a massive increase in anti-poverty spending since the war on poverty was declared under Johnson’s “Great Society,” Poverty rates have remained woefully stagnant. In fact, the reduction in poverty that was occurring prior to Johnson’s interventions stopped soon thereafter.

US Poverty Spending

Also, the point is that UBI is a replacement for current welfare benefits. Most households probably would not see a decrease in amount of benefits under a UBI, depending on the specifics of the proposal, and some might even see an increase, contrary to Goldstein’s analysis. Further, they’d be able to actually spend this on what they know they need rather than what government bureaucrats thin they need.

UBI lacks the flaws of the current welfare state, and would likely decrease poverty far more effectively than Goldstein thinks, especially when compared to his favored status-quo.

[1] Though there are some technical differences between Milton Friedman’s proposal for a “negative income tax” and most Basic Income Guarantee proposals, they essentially have the same effect on income. See the Adam Smith Institute’s Sam Bowmen on this point.

[2] See Matt Zwolinski for the “Pragmatic Libertarian Case for a Basic Income,” it should be noted that “pragmatic reasons” here does not refer to my pragmatist philosophical views. Zwolinski has also made a moral case for the basic income on Hayekian grounds that a BIG could reduce coercion in labor negations. I am unsure to what extent I am convinced by this line of reasoning, but it is a valid argument nonetheless.

[3] The Niskanen Center’s Samuel Hammond has made the case that universal transfer programs like a Basic Income cannot be analyzed outside of the tax system that pays for it.”

[4] Or, as my think tank buddies jokingly call it, the “Center for Bigger Budgets.”

[5] Having said that, polls have shown that it is popular across the pond in the Eurozone. The Swiss proposal would call into question this point but it could be argued that the vagueness of the Swiss proposal is why it was turned down not necessarily the spirit of it.

[6] My colleague Ty Hicks of Students for Liberty has made this point well. See also Hayek’s “Intellectuals and Socialism.”

[7] Granted, the Affordable Care Act was not really what most on the left or the right wanted in the first place and has been a disaster.

[8] This number is selected because, according to the CBO, $9,000 is the average amount in means-tested welfare benefits per household for 2006. But that’s for households and a BIG discussed here is for individuals, so it is understandable to make a BIG slightly less than the current average. Goldstein would object that this is far below the poverty line, but BIG is not meant to be a replacement for total income on the labor market at all, so it is unclear why this is an objection in the first place.

[9] This is admittedly a crude and naïve calculation but it is virtually identical to the method Goldstein himself uses to estimate the cost.

[10] All figures for this section are for the 2015 budget and are taken from here.

[11] Goldstein is sure not to be happy with cutting education, and I myself would like to replace this spending with few-strings-attached funding for local education or private school tax vouchers. I’ll address this point more later in this piece.

[12] Much of this is food stamps, which would be rendered obsolete by a BIG anyways. Goldstein would object, more on that in the next section.

[13] Not all of this could be cut, and there would be legal and detailed nuances on how to treat financial obligations for Social Security, veteran’s benefits, and Medicare. The specific legal complexities of mandatory welfare spending are not my areas of expertise, admittedly, and is outside the scope of this paper. I’m just illustrating that it is possible to cut at least some of this spending, perhaps even the majority of it, to fund it.

[14] Many people would object to cutting veterans benefits. First of all, BIG could act in place of these benefits

[15] I have in mind expanding tax-exempt Health Savings Accounts here. I also think funding this by eliminating the employer-based deduction would be a step in the right direction and reduce cost fragmentation in the healthcare market, as Milton Freidman argued.

[16] I have in mind a private school taxpayer voucher system like what is in Sweden.

[17] I have in mind something similar to this proposal to reform social security from the Cato Institute.

[18] I have in mind something like the pre-bates proposed in the Fair Tax.

[19] For this reason, I prefer an NIT to a BIG, but I prefer both to our current welfare state.

[20] This point is Ironic considering the fact that CBPP’s own research shows that government benefits in America overwhelmingly goes to households above the poverty line, in the middle and upper classes. See this chart (source):

1-SOlzSwsxa08Cno7PiQ9R7A

[21] The real-world numbers are probably different and vary a little bit from household to household, but this is just a hypothetical to illustrate a more general point.

[22] It should be noted, however, that the EITC, and some other programs, is largely free of this defect. This is because the EITC itself is modeled after Friedman’s NIT.

Note: The first chart has been edited since this was initially posted for readability.

Socialism(s) – Part Two

Jacques Delacroix Liberty , , , , , , , ,

Sweden’s Imaginary Socialism as a Non-Model

Part One of this essay was posted a couple of days ago. In it, I reviewed some of the avatars and zombies of the vague words “socialist” and “socialism.” I arrived at the inescapable conclusion that Sen. Sanders “democratic socialism” means only Scandinavian and, specifically, Swedish “socialism.” I look at that social and fiscal arrangement below.

First, let me say that Sweden is a good place to live; it’s a very civilized country. I just don’t know in what sense it’s “socialist.” Center-left parties took part in governing the country for most of the 20th century, true. Yet, little of Swedish commerce or industry is nationalized, or in any way public property. The Swedish government tends not to be invasive with regulations or direct intervention. Sweden even ranks a little higher than the US in “business freedom” on the 2016 (international) Index of Economic Freedom. Swedish companies are thriving, at home and abroad. Swedish capitalism is obviously alive and well.

I suspect that what confused Sen. Sanders and those of his supporters who have even thought about it is that the Swedish government offers extensive and high quality services to its citizens, many of which services that would belong to the private sector in other advanced societies. Let me say it again because this is an important point: The Swedish government is a quality service provider. But Swedes pay for these services with very high taxes. Swedish workers, on the average receive less than 50 of the income they earn. Careful: micro aggression coming. This is to me an unbearable negation of personal freedom, no matter how high the quality of services Swedish citizens receive “in return.”

Thus, even in moderate, impeccably democratic Sweden, “socialism” proves to be liberticide, it blocks on a massive scale and routinely the realization of individual wishes, the pursuit of happiness, in other words. To take an example: Those Swedes who would rather earn less money and spend more time reading philosophy, for example, practically are prevented by high taxes from even trying lest they starve. Incidentally, the share of GDP taken by Swedish taxes has been declining since the 90s. It would make sense for socialist Sen. Sanders to ask why. Hint: This decline was accompanied by a strong rise in GDP growth.

Sweden is a well managed capitalist welfare state. It would have been more ingenuous for Sen. Sanders to say this clearly rather than drag out the soiled word “socialism.” This assumes that he knows the difference, of course. His followers evidently do not.

I want to make a detour here about Swedish income inequality because inequality is a topic dear to Sen. Sanders’ supporters. As you would expect, and as is intended, Sweden has one of the lowest income inequality on Earth (Gini Index: 0.25 vs the US about 0.44). However, its wealth inequality is very high (Gini Index: 0.85). This curious divergence is compatible with several scenarios including this alluring possibility: Socialist-inspired schemes designed to procure income equality had the effect – probably unintended – of freezing wealth disparities to where they were before “socialism.” It’s almost impossible to get ahead from near the bottom of the economic ladder when your income is seized before you even see it. For one thing, high taxes make it difficult or impossible to accumulate capital to create a new small business and therefore, new jobs. In other words, in many years of Swedish socialism, the restaurant waiter remained a restaurant waiter, the local Rockefeller remained Rockefeller, while the former was earning $12/hour and the latter only $24 (figures made up). As I said, other scenarios can account for divergence between income inequality and wealth inequality. Play at imagining them. Good luck.

Whether or not one considers the objectives of Swedish-style “democratic socialism” desirable, there are considerable obstacles in the path of realizing it in America. Sen. Sanders and his followers semi-consciously assume that given the right legislation – not to forget far-reaching executive orders since the path has been open by President Obama – the United States could be turned into a kind of Sweden. There are three-plus things about American society that make this dream unrealistic.

First, until right now, Sweden was a thoroughly middle-class society. I mean by this that nearly everyone, except for a few skinheads, shared an understanding of the good life, and the same ethical system. We, in the USA, by contrast have a whole Third World inside our boundaries. I refer, of course, to all of Louisiana, to Chicago and its suburbs, to some parts of Texas and New Mexico, and to nearly all black inner-city ghettos. (Read carefully: I did not say “predominantly black areas.”) Third World conditions breed predatory behavior. That makes the job of civil servants difficult. It also sucks up public resources for policing.

Second, and at the risk of breaching the etiquette of political correctness, Swedish society if fairly restrained as compared to most others, certainly as compared to American society. It’s a collective trait. It does not mean that most Swedes are restrained but that many Swedes are. I mean by this, for example, that on the average Swedish drunks are more polite, less noisy and less dangerous than American drunks. Collective restraint makes all government functions easier to perform obviously.

Third, Sen. Sanders assumes implicitly that given a victory, his administration would easily generate the first-class federal civil service that makes the Swedish welfare state function effectively and smoothly. That is an unrealistic assumption. Think the IRS, of course, and TSA (that’s never caught a terrorist ever, or ever stopped a terrorist action). Think of the Bureau of Alcohol, Tobacco, Firearms, and Explosives that generously donated hundred of firearms to Mexican drug cartels. Think of the Environmental Protection Agency that declared CO2 – the main plant food – a noxious gas subject to its regulation. I could go on.

Good civil services are rooted in a broad social  tradition whereas smart, well-educated people chose careers in government in preference to a business career. There is no such American tradition. It would take many years of bad private employment before preferences of such individuals would shift away from business. Here is the question: can so-called “socialist” policies be implemented so quickly in America that private employment will worsen soon enough to serve the requirements of a quality civil service necessary to the implementation of the same-self “socialism”?

I must add a fourth obstacle to the success of Swedish style welfare state in the US, one that I don’t necessarily believe in myself. Swedes and also Danes keep telling me the following: Their form of welfare “socialism” involves a high degree of forced sharing. The acceptance of such taking from Peter to give to Paul is well served by the fact that Paul is a lot like Peter and even looks a lot like him. According to this view, the high population homogeneity of Sweden until now is a necessary condition to the confiscatory taxes imposed on ordinary wage earners that is at the heart of its “socialism.” Needless to say, the US population is low on homogeneity (a fact I celebrate myself).

So, a gifted, honest, competent civil service is central to the welfare capitalist supposedly “socialist” Swedish model (which the Swedes themselves explicitly do not propose as a model). My unavoidably subjective judgment is that a United States Sanderista civil service would, with some effort, with much reform, place somewhere between the French and the Brazilian. To think otherwise is the height of ignorant wishful thinking bordering on hubris.

I am not hugely alarmed at the prospect of a new American capitalist welfarism though, for the simple reason that we are already half-way there. Sen. Sanders’ more-of-the-same would not be Armageddon. It only promises an accelerated decline of this vibrant, inventive, culturally brilliant society accompanied by more short-term equality, less equity, and more poverty- and therefore less freedom – for all.

PS Incidentally, I am not much opposed to Sen. Sanders’ proposal to make state universities and college tuition-free. I think the proposal has the same justification as publicly supported elementary and secondary schooling. I would be willing to bet such a measure would have the same overall beneficial economic results as the GI Bill did right after WWII. Finally, there is just a chance that government management would put a brake on the unconscionable rise in the cost of tertiary schooling, of what universities charge without restraints. It’s not as if the current system that largely separates the decision makers from the payers, from the beneficiaries, has worked really well!

BC’s weekend reads

Brandon Christensen Links , , , , , , , , , , , , , , ,
  1. The Two Asian Americas
  2. Is Hawai’i an occupied nation?
  3. A federal system for Britain
  4. Capitalists from Outer Space
  5. The Physics of Extraterrestrial Civilizations
  6. Humane Canada

New Issue of Econ Journal Watch: Economists on the Welfare State and the Regulatory State: Why Don’t Any Argue in Favor of One and Against the Other?

Brandon Christensen Economics, Politics , , , , , , , , ,

For those of you who don’t know Fred is an Editor for the Journal and Warren is its math reader, so this occasion is very much a family affair. Here is the low-down:

Economists on the Welfare State and the Regulatory State: Why Don’t Any Argue in Favor of One and Against the Other?

The symposium Prologue suggests that among economists in the United States, on matters of the welfare state and the regulatory state, virtually none favors one while opposing the other. Such pattern is a common and intuitive impression, and is supported by scatterplots of survey data. But what explains the pattern? Why don’t some economists favor one and oppose the other?

Contributors address those questions:

Dean Baker: Do Welfare State Liberals Also Love Regulation?

Andreas Bergh: Yes, There Are Hayekian Welfare States (At Least in Theory)

Marjorie Griffin Cohen: The Strange Career of Regulation in the Welfare State

Robert Higgs: Two Ideological Ships Passing in the Night

Arnold Kling: Differences in Opinion Among Economists About Government and Market Efficiency

Anthony Randazzo and Jonathan Haidt: The Moral Narratives of Economists

Scott Sumner: Moral Differences in Economics: Why Is the Left-Right Divide Widening?

Cass Sunstein: Unhelpful Abstractions and the Standard View

There is a lot more here. You can find Econ Journal Watch‘s home page here, on our ‘Recommendations’ page.

Ideology and the Alliance for Progress: Charting the Boundaries of the Welfare State

Kyle Dix Liberty , , , , , , , , ,

This Fall I took a course on the history of the Welfare State at Penn. I also used to work “in the system,” teaching English and job skills to Spanish-speaking TANF recipients at an NPO in North Philadelphia, so it was a nice complement to that experience. Overall the course was great given the volatility of the subject and the difficulty of understanding an abstraction like “welfare.”  I thought the course fell short in contextualizing the welfare state within the broader scope of government, so I wrote a paper about how the welfare state and foreign aid interacted in Kennedy’s policy and rhetoric.

The perils of globalization and modernization have largely been attributed to “neoliberalism” and neoliberal American global hegemony, which I think has some merit. The American welfare state has historically been such a strange beast that it’s really difficult to point fingers–few nations have seen a clash between principles of general welfare/security and personal liberty on the scale of the USA. Yet today it seems that “foreign development” (generally taking place under neoconservative, globalist institutions) and “domestic” or “community development” (generally taking place from the American “left”) are at odds with one another. The consensus on foreign aid at best rests on our duty to help the global have-nots and at worst is a less-risky way to build global security in the post-911 world. But both of these reflect a Bismarckian idea of State building to me… So is there a historical link?

My paper looks for answers in JFK and his Alliance for Progress. This project was a foreign analogue of the New Frontier that got Kennedy elected and seemed to be the future of the American Welfare State until his untimely assassination. Due to resistance at home, the Alliance for Progress was much further along than any New Frontier domestic reforms, despite complementary rhetoric and Kennedy’s constant comparison of the two. The Alliance provided millions in aid to Latin America in the name of developing economy and–as many historians neglect to mention–society. It died out by the mid-70s (largely due to neoliberal push-back and underfunding, or so the story goes) but what was the ideological basis of the reform? What did Kennedy want out of the millions he was lobbying to send abroad?

Overall, the Alliance was multifaceted: It sought to strengthen perceptions of America, grow international political ties, and generally create a buffer against the Cold War Communist threat. But these aspects were presented as international extensions of domestic policy by both outward rhetoric and by internal Congressional and diplomatic correspondence. Agrarian reform (ie, away from communal landholding, especially in Mexico), income redistribution, and a more just hemispherical society were also included as benchmarks.

The program eventually aimed to directly map Tennessee Valley Authority river basin development on top of Colombian valleys, hoping to make a Tupelo or Knoxville out of Cali or Buenaventura. The founder of the TVA, David Lilienthal, won a contract to develop Colombia under the Alliance for Progress after abortive plans to similarly shape the Mekong Delta and the Nile. And while big business was the engine running the machine, rubber met road with promises of social reform, workforce development, and increased social equality for the poor, uncivilized masses susceptible to Communist dogma.

While globalization’s detractors cry capitalist overreach, authoritarian power grab, or something in between, proponents of foreign aid still need to explain why hunger, malaria, and TB are so prevalent given global wealth–and be honest about the beginnings of these international institutions. I can’t make prescriptive calls to action, but I can say that the foundation of the current international aid regime was laid by the example of domestic welfare state-building, by ideals of a strong state guiding a “free” market to achieve affirmative social outcomes

If you want to read the paper: Here’s a full (18 pp. with references) and 10-page version.

Refugies dans l’ irrealite?

Jacques Delacroix Comments, Politics , , ,

Pour des raisons techniques mysterieuse, je n’ai pas reussi a afficher une reponse au commentaire sur mon essai du 16 Novembre, “Une culture politique du n’importe quoi.” envoye par celui que j’ai nomme “Le Chouan.” J’en ai fait un essai a la place que voici:

Le chouan:

Bien sur, je suis tributaire de l’etroit menu en Francais disponible ici. Ce n’est pas grand-chose. D’ailleurs, j’interroge plus que j’affirme quand il s’agit de la France. J’aime bien “On N’est pas couche” pour une raison: Cette emission interroge en profondeur les homme politiques de maniere que je n’ai jamais vue ici, aux E.U. Et son presentateur me semble bien faire son boulot, quoique ce soit qui fasse flotter son bateau. (Traduction de l’Anglais.)

Le pessimisme de ton analyse force a se poser cette question: Comment est-ce qu’un pays de 60 millions, dont peu d’analphabetes, jouissant d’un plein acces a l’Internet, en est arrive a dependre d’un classe politique aussi nulle? S’agit-il d’une consequence d’une culture francaise plus ou moins constante ou plutot d’un deraillement. Dans le second cas, le deraillement daterait de quand?

Ou alors, assistons- nous a la gueule de bois qui suivrait trente annes de grandes vacances bien arrosees? Est-ce que la structure meme de la societe francaise rendrait l’acte de gouverner tres difficile?(Je mets en cause l’etat-nounou, bien sur, et le tout-subventionne.)

Voici une observation qui est peut-etre (peut-etre) liee a mon interrogation: Je suis en rapport avec un blog de lyceen parisiens intelligents. Ils s’expriment pourtant comme des militants communistes de 1953. On dirait qu’ils vivent dans une film, dans un mauvais film.

La societe francaise me donne d’ailleurs souvent l’impression d’etre une sorte de feuilleton. Je suis tous les jours absaourdi, par exemple, de constater les emprunts a la langue anglaises par des gens qui ne connaissent pas l’Anglais et qui possedent d’ailleurs une langue parfaitement viable. J’ai entendu avec mes propres oreilles un Francais plutot creatif utiliser le mot “gun.” dans une phrase en Francais. Cela m’etonne, bien sur, la langue francaise ne manque pas de vocable pour dire “arme a feu.” On dirait que beaucoup de Francais trouvent leur propre realite irreelle, qu’ils essaient de se refugier dans le monde des ecrans etrangers a leur proproe culture. Et ou les idees, exprimees dans une langue peu ou mal connue, sont mal saisies parceque elles sont rendues par la-meme insaisissables.

Je dis ca, moi, c’est pour causer.

The French revolution

Jacques Delacroix Current Events, Politics , ,

The French are rebelling in large numbers. They wear red wool hats as a signal of rebellion (elegant, this!) and to rally one another. I am told by French connections I trust much of the time that the rebellion is not along political lines, that it includes left, right and center.

There seems to be two main targets. First, on the surface, it began as a manifestation of opposition against an “ecotax,” a tax on big trucks intended to fight global warming. (Good for the French! See my many essays on this blog on the myth of global warming. More coming.)

Second, but this is an interpretation, there seems to be a widespread feeling that the French nanny state is finally coming to an inglorious end. This is an interpretation because the French media do not articulate clearly this link:

generous free social services→ high taxes→ stagnant economic life, high unemployment, poor everything, sense of doom, low fertility, etc.

Many ordinary French people are simply disgusted with the poor quality of everyday life in their country, and, especially, with low employment with no end in sight. Many envision no future for their children. Many of their children say they want to emigrate, leave France for good.

It does not mean that the French are poor, overall. They are much richer than say, Mexicans. Yet, impressionistically, subjectively, urban Mexicans are much merrier than urban French people. It seems to me that it’s because the ones, living with reasonable economic growth, have hope, while the others, living at a higher level but with no growth, despair.

You can’t fool all the people all the time. And the people can’t even fool themselves forever, not the French, not anyone!

Islam and Free Speech

Brandon Christensen Current Events, History , , , , , ,

Dr Gibson and Dr. Delacroix have both staked out their positions on the matter, and Dr. Delacroix has promised more, but I thought I’d add my own two cents to the matter.

I’ve already shared my thoughts here before, and nothing that I see in the Middle East or elsewhere changes my argument.

Among observers of all political stripes, there have been two broad categories into which they have gravitated. One of these has been the Islamic societies are still in the middle ages argument. This is a legitimate point, too. As Dr. Gibson points out: Continue reading →

Breakfast Spoiled by “Liberal” Paean

Warren Gibson Politics , , , , ,

This morning’s Wall Street Journal had an op ed piece (may be gated) by one Alan Colmes whose book “Thank the Liberals for Saving America” is just now coming out.  It’s a paean to the “liberal” policies of Lyndon Johnson and his successors, featuring a big photo of LBJ and Lady Bird under a “great society” banner.  I had to turn the page quickly as I was in the middle of breakfast, but have now reopened and read the whole thing.  Since the chances of the Journal publishing a rebuttal from me are essentially nil, I decided to inflict my response on my readership.  Both of you.

The piece brought back memories of the visceral disgust I used to feel at the sight of LBJ when he was in office even though I wasn’t much attuned to politics in those days.  I would be hard pressed to say who’s worse, Obama or Johnson.

To begin with, Johnson was a blatant criminal.  He and his wife got rich by manipulating radio and television licenses in Texas.  He stole the primary election in 1948 which got him into the Senate.  He may have been complicit in stealing Texas electoral votes in 1960.

But what of the article?  Most of it is a recitation of the accomplishments of “liberal” programs including food stamps, health care, bailouts, marriage equality, and women’s rights.  In essence, he tells us that the beneficiaries of “liberal” welfare programs benefited from them, and they’re not all lazy bums.

Well, duh.  This is the sort of shallow thinking that characterizes “liberal” discourse.  No recognition of short-term or long-term consequences.  No acknowledgement of public-choice insights into the perverse incentives of welfare administrators whose primary motive is to retain and expand their empires.

An overlooked consequence: the erosion of incentives to take responsibility for one’s own life; instead these programs have instilled a world-owes-me-a-living attitude which by now spans multiple generations of welfare recipients.

An overlooked consequence: the massive buildup of debt.

An overlooked consequence: the loss of personal freedom that must follow the loss of economic freedom as Hayek so eloquently showed in “The Road to Serfdom.”

An overlooked consequence: the insight of Mises that interventions invariably lead to outcomes contrary to the intentions of the intervenors, who then call for yet more interventions.  In our mixed economy, a blend of free markets and government force, markets take the blame for every problem.  And so the market takes the blame for everything.  As Jeff Hummel says, market failures are to be cured by more government; government failures are to be cured by more government.

Thanks to the “liberals” and the conservatives who have failed to mount a principled opposition in domestic affairs, and thanks to both parties who have launched disastrous foreign wars, we are hurtling toward an American brand of fascist dictatorship.

Occupy Wall Street; Don’t Attack Grandma: The New Class Struggle

Jacques Delacroix Current Events, Liberty , , , , , ,

Behind the verbal incoherence, behind the posturing, behind the bad children’s tantrum, behind the trash, behind the grotesque self-regard of those who would borrow $120,000 to earn a degree in “German Studies,” there may be legitimate resentment in the “Occupy” movement. It’s true that it’s difficult to get from the demonstrators an answer to a straight question that does not make you laugh or cry, or both. However, you may not have to await their answer to understand.

To the extent that you can trust television cameras at all, they seem to show largely demonstrators between their mid-twenties and their mid-thirties. That would be people born between 1975 and 1985. Those cohorts had only known ease and prosperity until 2008. They were brought up by easy-going parents who sent them, or allowed them to attend schools that nurtured self-indulgence more than intellectual curiosity. I have two children near the younger edge of these age groups. I am guilty too. When they were playing soccer, they never heard anything from coaches except “Good try.” I remember clearly one little kid ( not one of mine, God forbid!) garnering this very accolade after he had marked a goal against his own team. (Would I make this up?) These American cohorts were not in any way prepared for a world where jobs are difficult to get because companies are not hiring and where the jobs you get don’t pay well because companies don’t have to pay well since they won’t invest in you for the long-term because there is no long-term they can see. Continue reading →