Friday, December 21, 2007

Real "change"

Government programs do not work for well known reasons. Advocates of a strong state role typically favor a welfare state and even welfare programs do not do what they are supposed to do. Charles Murray demonstrated the flaws of welfare as we knew it (and still do) in Losing Ground and now he has a fix, well presented as The Plan in his In Our Hands.

Murray updates and elaborates the 1960s Milton Friedman Negative Income Tax proposal. In the new version, give every American over twenty-one $10,000 a year ($20,000 for a married couple if both are of age) for life and dispose of all the existing welfare programs. The grants are phased down via a surtax when incomes get high enough. Read the book for the details.

Anything has to be better than the existing patchwork of programs. Murray renews his discussion of the link between welfare programs and the underclass. He devotes a good part of his book to describing how The Plan has a better chance of getting some of these people to change their ways for the better. (Talk about externalities (!), the favorite topic of left-leaning economists.)

Murray begins with "Ground Rules" where he writes that he is no fool and has no expectations that The Plan can be adopted. But he ends on an upbeat note: we have the resources to actually end poverty and here is how. This undermines the chorus whose members only see "underfunded" programs and "neglect."

In this very depressing election year, most candidates make the news by coming out for "change." It is obvious that none of them mean it. Murray offers the prospect of promising change but not the sort that anyone can find in the platforms of the two parties.

Besides if there were, say, income tax reform in the form or a flat tax, but with NIT-progresivity of the sort that Murray describes, what would politicians do all day? It's a serious question. Most rent-seeking and rent-extraction opportunities would have been retired.