A Facebook friend was enthusing about Bernie Sanders and arguing for “direct wealth transfer” to compensate Americans whose wages are stagnant and/or who lose jobs to robots.
I’m wondering if that isn’t already built into the U.S. system. Consider the labor force participation rate (chart), falling steadily since 2009. People who don’t work are eligible for subsidized and/or free housing, food stamps, free health care, a variety of free services for their children, and a free mobile phone (see the Redistribution Recession review). All of these are paid for primarily by high-income Americans because those are the people who pay the most in taxes (if not at as high a rate as Bernie Sanders would like to see collected).
So aren’t we already set up for increasing wealth transfer? The recipients of these transfers receive services, of course, rather than cash, but the function is the same.
Philip — while I’m not planning on voting for Bernie Sanders, i think there’s an argument buried in the whole “wealth transfer” argument which is worth giving some consideration. The claim is that by giving people services, we (a) make it very difficult for them to actual jobs (i.e. if you have to spend 20 hours a week running from government bread line to bread line, you have 20 fewer hours to look for a job / train for one / take care of the kids), and (b) the cost of delivering the services is very high due to the large number of government employees required to administer them.
Perhaps your facebook friend was arguing for the following: take the government dollars allocated to all assistance programs, fire all of the people administering the programs, and then just send the recipients a check. They can then decide where to live and how to spend the money. Presumably this would have the benefit of giving more actual benefits to the recipients, without various market distortions in places like the housing market and so forth.
Of course, the reality is that this undermines the government project of building a vast bureaucracy as a way to create make-work for the millions of state and federal employees who administer the benefits. So would those people then end up getting the cash directly as well?
There is also the Earned Income Credit.
Why no libertarian liberal? By that I mean, strong proponent of limited government and yet liberal on social issues. Stop fighting no win wars. Stop all subsidies (corn/ethanol/solar/wind.. yadda). Stay out of people’s bedrooms and a women’s uterus. And keep your 1st century myths to yourself (religion). Why are there no candidates with these views? Am I that far from the mean on the bell curve of American political thought? Many, more or less rational, people I follow closely via the net seem to have similar views as me: Sam Harris, Lawrence Krauss, Richard Dawkins (brit), Christopher Hitchens (dead).
While I’m glad he’s in the race, Sanders knows he’s not electable in a general election. Doesn’t he? Sanders adds a little hot ginger to Hillary’s run, but free collage is nothing more that corporate welfare for academics with less ROI than Solyndra.
Izzie: good point. Warren Buffet wrote about it here:
http://www.wsj.com/articles/better-than-raising-the-minimum-wage-1432249927
His general view is increasing the EITC dominates raising the minimum wage.
@paul kramarchyk. I have over time gradually shifted from pure libertarian into something perhaps as “libertarian liberal”. The ideal model could be Germany’s social market economy – aka ordoliberalism – designed to be a third way between laissez-faire economic liberalism and socialist economics. But we could tweak it slightly in the libertarian direction to better guarantee personal and economic freedoms but still requiring some bare minimal socialism (obligations the individual has to the common good of society) in order to keep the less fortunate from being exploited too much by the more fortunate.
After watching several episodes of The Profit, where a billionaire goes around rescuing small businesses, it surprised me how dumb some of these businessmen/entrepreneurs running small companies really are. I am talking about basic math/microeconomics of running a business. Without a doubt, many have gotten successful by hard work but also sheer luck and in spite of their obvious deficiencies in rational decision making. Looking at these people makes me doubt more that the free market economy is truly able to self-regulate itself naturally and not go into wild swings.
Having lived in Austria, I realized that living in a society that subsidizes the poor heavily is in some sense of valuable because it meant that I didn’t have to fear walking out on the streets and getting mugged. The reduced inequality meant public transportation was safe at all hours and I could walk freely in any part of the city at any time of night. That truly is some freedom of value to me. In contrast, living in St Louis made me feel very vunerable.
PN’s argument above is I believe essentially the same that Milton Friedman made, in defending social security and also favoring a sort of basic income guarantee, both on the grounds at being more effective at reducing poverty and at limiting government bureaucracy.
But then what employment do the bureaucrats have?
The data data from this website ( http://www.usgovernmentspending.com/year_spending_2016USbn_17bs2n_40#usgs302 ) indicates that government welfare spending increased from 2.0% of GDP to 2.6% over the period 1970 – 2016.
Increased healthcare spending (distributed relatively evenly via government programs and private insurance) accounts for about 25% of the increase in GDP over that period.
Increasing non-income transfers do appear to be part of the story, but a relatively small part of the story.
Phil,
I have a question: what’s a “decent life”? That’s how Buffett describes what he thinks should be available to every Amerucan (at the end of his WSJ column).
I think if you asked the average person in the U.S. that simple question, you’d get many different answers. But if you added the entire world population to that opinion poll, you’d probably get an answer that describes what 95% of Americans already have currently.
The real question then becomes: who gets to decide the definition of a “decent life”?
EVERY immigrant I’ve met has said we have the greatest country on the planet and they were universally glad to be here and did not want to return to their native land.
There are truly folks out there who care, but IMO the vast majority of the liberal pols would NEVER be satisfied that all Americans were being afforded a “decent life”. Why? They’d have lost their biggest platform from which to garner votes)