AEI libertarian Charles Murray has a new book advocating Milton Friedman’s bad old idea of a “negative income tax.” The feds should hand out the cash, Murray says, because “we” are so rich.
Source link: http://blog.mises.org/4835/libertarian-redistributionism/
Libertarian Redistributionism
Previous post: “Liberal” College Professors
Next post: Human Action in Polish
{ 24 comments }
C. Murray is at it again. This solution is on par with his great libertarian idea to have the federal government spending hundreds of billions on school vouchers. Why is the idea of liberty so hard for these people to grasp?
Murray’s book from a number of years ago, What it Means to be a Libertarian, surely contains some of the greatest abuses of the word “libertarian” prepetrated in the pre-9/11 era. There, he doesn’t merely call for vouchers but claims that — from a “libertarian” perspective — education is one of the state’s (many) legitimate functions.
I thought the point of that argument was more of a reductio. I thought he was saying, “Look at what it would be like if we just handed out the cash. Obviously that’s stupid. Oh, the current system is worse than that.” Or did I not understand his argument?
Sorry, Person, not so. Here is the copy for the book promo:
“This is the Plan, a radical new approach to social policy that defies any partisan label. Murray suggests eliminating all welfare transfer programs at the federal, state, and local levels and substituting an annual $10,000 cash grant to everyone age twenty-one or older. In Our Hands describes the financial feasibility of the Plan and its effects on retirement, health care, poverty, marriage and family, work, neighborhoods and civil society.
“Charles Murray, whose previous books include Losing Ground and The Bell Curve, demonstrates that the Plan is financially feasible and then uses detailed analysis to argue that many goals of the welfare state–elimination of poverty, comfortable retirement for everyone, universal access to health care–would be better served under the Plan than under the current system. Murray also challenges the Left to confront their own rhetoric about the disadvantaged: why not give real resources and responsibility to them?”
I think that excerpt proves my point: “Murray also challenges the Left to confront their own rhetoric about the disadvantaged: why not give real resources and responsibility to them?” He’s challenging the left by saying, “if you really wanted XYZ, you’d advocate this. Why don’t you?” Remember, Murray’s lifelong thesis has been “poverty is an individual decision; no benefit program will fix that”.
I haven’t seen the particulars on this, but on the surface this proposal sounds like it would function like a minimum wage, except that instead of (attempting to) force employers to pay more than they would otherwise pay, it would shift the burden for making up the difference to the hapless taxpayer. If this is the case, then it would not surprise me that, if enacted, it would drive down wages offerred by employers, since the employee’s income would end up being supplemented anyway.
I’m not sure how much I’m allowed to excerpt here but it’s clear that he means it:
“There are many ways of turning these economic potentials into a working system. The one I have devised — I call it simply “the Plan” for want of a catchier label — makes a $10,000 annual grant to all American citizens who are not incarcerated, beginning at age 21, of which $3,000 a year must be used for health care. Everyone gets a monthly check, deposited electronically to a bank account. If we implemented the Plan tomorrow, it would cost about $355 billion more than the current system. The projected costs of the Plan cross the projected costs of the current system in 2011. By 2020, the Plan would cost about half a trillion dollars less per year than conservative projections of the cost of the current system. By 2028, that difference would be a trillion dollars per year.
“Many questions must be asked of a system that substitutes a direct cash grant for the current welfare state. Work disincentives, the comparative risks of market-based solutions versus government guarantees, transition costs, tradeoffs in health coverage, implications for the tax system, and effects on people too young to qualify for the grant, all require attention in deciding whether the Plan is feasible and desirable. I think all of the questions have answers, but they are not one-liners; I lay them out in my book.”
I wonder if he adjusts the $10,000 for inflation.
- Josh
Well another bad idea. Why give every American a check. Why not let them keep what they make and solve the whole issue.
Besides, the problem is the means of getting the money not who gets it which is primarily workers at the various local, state and federal agencies that chew up on average 67 cents on a dollar received in taxes. The means here is confiscation, coersion and ultimately murder. That is the bad part that we need to stop.
makes a $10,000 annual grant to all American citizens who are not incarcerated, beginning at age 21, of which $3,000 a year must be used for health care
Ha. And what if you don’t need $3000 worth of health care in a year? I doubt I’ve spent $3000 on health care in my entire life!
I don’t think this book is for hardcore libertarians. But I think that if his plan will cost lower than current plan for the taxpayers, it will be a reduction of the State. So, his Plan is based on coercition, but he propose to reduce the amount of coercition.
Also, it delete most of public organization (this one for olders, this for young, this for etc….). So, it reduce the burden of public workers on politics in direction of more advantages. Also, this system is very simple, everyone will understand it, whereas current system is very complicated and nobody really understand how it works, how much is cost, and who benefit. So, every time I try to explain that true poor people get nothing from public redistribution, everyone ask numbers, and ultimately doesn’t get the point because of the complexity.
Also, it give people more responsability than current system. Under current system, people can get everything from the State. With this Plan, they will have to search themselves a house, food, school, insurance, etc… So, they will have more responsability than in current system.
So, I think that this system reduce the amount of redistribution, delete most of public organization and public workers advantages, simplify the redistribution scheme, and increase the responsability of people.
So, despite of based of public redistribution, (so, bad in absolut), I think this system is less bad than the current.
I’ve actually given this area quite some study. My preferred solution is actually the one worked out independently by Professor Kim Swales of the University of Strathclyde, a Negative Payroll Tax set up as an offset or reduction to a suitable carrying tax like the GST we have here in Australia. You can find out more details about that here: http://member.netlink.com.au/~peterl/publicns.html#AFRLET2 and in the other articles on that page.
But I don’t want to give the impression that I think that is a sound long term policy, just the best of a number of comparable transitions to personal independence.
Negative Income Tax churns money through the state. Negative Payroll Tax stops the state from getting it in the first place, with the catch that it still gets the carrying tax (but we have that already, so it’s an improvement). Guaranteed Income systems give people the money from the state, which gets it from taxes.
All of these are bad to the extent that the state is involved. But the subsidy to individuals means that they can price themselves into work – Guaranteed Adequate Incomes are set too high. That’s why around $10,000 works even though it’s not enough to live off (the money numbers are similar here in Australia).
What’s going on here is that the subsidy (or quasi-subsidy of NPT) is a state based, Pigovian solution to an externality that favours unemployment. That’s why there ends up being a gain even though the employer part of wages drops (and doing it via NPT speeds up and simplifies the transition).
But Coasian solutions are better. That’s why it would work best – once equilibrium had been reached on NPT – to transition to people having their own resources.
That means first monetising the NPT entitlements by implementing them via anonymous transferrable vouchers, then converting the state revenue base from taxes to an endowment base, then simply transferring it to people’s direct individual ownership, with inheritance arrangements to prevent that dissipating.
Vincent –
a “non-hardcore” libertarian is either seriously confused or a socialist trying to steal opposition’s name for his pals. They pulled that trick with the word “liberal” once.
In the immortal words of Mikhail Bulgakov, there’s no “second freshness” for a sturgeon – meaning it’s either fresh or spoiled. And so is ethics – a person either advocates respect to the natural rights of others, or doesn’t. No matter how much expropriation and redistribution one advocates, he advocates violence.
It is as simple as that.
“That’s why around $10,000 works even though it’s not enough to live off”
I live in the United States on less than $10,000 a year without state subsidies or charitable assistance. I don’t have a family or a car, but I’ve got insurance and get a good diet. I can afford a few luxuries too, like a computer and high speed internet connection. I have no debt and a modest-but-growing savings. Can’t live off of $10,000? Maybe if there weren’t a Super Wal-Mart nearby it would be harder…
Are you saying Walmart benefits its customers? You would not know this simple fact from listening to the main stream Walmart/Oil Company hating media.
You can be a hardcore libertarian and advocate a change toward a better system that would not be near anything we would recognize as freedom.
If someone is dying of a Heroin addiction, it might be better to switch to Methadone, or Marijuana, or Tobacco, or Coffee – the farther down the better.
Maybe some can go from debauchery to teatotaling vegetarian celibacy overnight, but merely having a balanced life would be a great improvement.
I would think Murray’s solution might be as much a dream as pure liberty, but it would mean far more respect for natural rights of others than what we have now. What if the head of the sturgeon is sticking out of the package and spoils, but the rest is fresh? It may not be as good as one completely fresh, but it is better than one entirely spoiled.
And if you do love liberty, and can’t provide total liberty tomorrow, but can increase it only a bit each day, month or year, do you sit there and complain that the small step doesn’t end the journey, the one lit candle doesn’t light the stadium, or do you do them anyway and hope that it will continue and others will join and build?
Everything that a libertarian advocates naturally must be entirely consistent with liberty. Although we should expect and talk only of more and bigger such steps, always with an eye for the ultimate goal, there is nothing wrong with accepting necessarily smaller steps towards liberty. But no one is justified ever in advocating a single thing that is contrary to the goal of complete liberty.
Therefore, accept any proposal that would move us toward the limitation and reduction in state power, size and influence, but never accept in its place a new incursion on our liberties in any other form. Consistency is the thing gentlemen.
“And if you do love liberty, and can’t provide total liberty tomorrow, but can increase it only a bit each day, month or year, do you sit there and complain that the small step doesn’t end the journey, the one lit candle doesn’t light the stadium, or do you do them anyway and hope that it will continue and others will join and build?”
Apparantly, tz, you would say this is only so as long as it is not applied to free trade, right? At least you and others have indicated this in other posts. Afterall, people trading freely with fiat money ‘aren’t really trading freely’ they just think they are…or some other nonsense close to that.
Silly me but isn’t free exchange with fiat money a step closer to freedom than dealing with tariffs, labor unions and other obstacles to freedom?
tz – you should know better than to claim that the ends can justify the means.
The best this proposal can bring is the accusation of hypocrisy. The worst – the co-optation of the formerly decent people to the very machinery of evil.
Besides, it just does not matter how the loot is divided. The evil is not the loot, but the violence needed to extract it.
How about making payment of taxes voluntary? Just to see how many people actually support the taxation.
Nah, I guess the only realistic course of action is to wait until the guverhment falls apart on its own accord (it is progressing nicely… heh) and in meantime to educate people so they can avoid repeating the old mistake.
What I’d love to see is a referendum asking something like “What should the tax rate be? ___%”; each person gets to fill in a number. Only after the results are collected is it revealed that each person is then obligated for the next, say, 10 years, to pay the tax rate they wrote down. If you wrote a zero, as most of us here would, you pay no tax. If you write, say, 50%, you get taxed at 50% for the next decade (after which there’s another referendum). I wonder how many idiot leftists would write like 90% or something
Hey now — that doesn’t sound very democratic!
Sorry, Ryan Fuller, I should have made it clear that I meant “not enough to live off” in a sustained, generation by generation sense. It’s like “southern limit of palms” on the map; we have palms in the part of Australia I live in, further south than that, but they were established from nurseries or whatever. A palm grove here would die out.
But I’m mainly posting again to give this link to a copy of the Charles Murray article that’s not behind a paywall: http://www.opinionjournal.com/editorial/feature.html?id=110008142.
Sadly the United States (and Britain) already has something a little like the “negative income tax” – it is called the “eared income tax credit” (or words to the effect).
To his horror Milton Friedman watched Richard Nixon try and introduce something like this more than 30 years ago – and testified against it in Congress.
Because, of course, poor Milton Friedman wanted his welfare idea to be a replacement for other welfare schemes – whereas the government (of course) just wanted to add it on as an additional welfare scheme.
But a couple of decades later the “tax credit” (which, at least in Britain, is not money off taxes – it is a welfare payment) was on the books.
There is also a “joke” in all this.
Both the negative income tax and education vouchers are put forward in the spirit of moderate compromise.
Their supporters wish to avoid the hatred directed towards evil libertarians like ourselves.
And yet they find that the “liberals” turn on them with every bit of wild hatred of which they are capable.
“The idea of getting rid of Medicare, Medicaid, Social Security, Food Stamps…….. is politically impossible”.
But so is the idea of REPLACING these things with a negative income tax.
It would be no less “politically impossible” to do one thing or the other.
And having a negative income tax (offering a “decent basic standard of life”) is not worth going into a political struggle for.
There would still be a vast underclass (perhaps bigger than it is now).
Now a person has to apply for all sorts of government benefits to have a “decent basic life” it is a time consuming and nasty undertaking.
A full “negative income tax scheme” would mean just one set of paperwork to fill in and never having to work in a boring, low paid job again.
I would not be surprised if the majority of the population found a way to apply for the negative income tax – just before it collapsed of course.
Well put, tz. To the haters, it ain’t like there’s going to be a Randian revolution tomorrow, if ever. Not only is this system better than what we have currently, it is also more ripe for becoming more libertarian. The amount of the “gifts” can simply be adjusted down by law, or can fall naturally through inflation, without having to fight to lower the myriad of “gifts” the government gives out now.
Walter Williams has told the story of what one of the libertarian greats (I forget who) said they’d make law if they had the chance to only make one law.
The law would be whatever the government does for one person, it does for everyone. If one person gets $500,000 not to grow sugar, then everyone who doesn’t grow sugar gets $500,000. I think this is in that vein.
Comments on this entry are closed.