So, are you ready for a rave review of Charles Murray’s latest book, In Our Hands, on Crooked Timber (yes, that Charles Murray)? Its a book that just about anyone interested in policy ideas ought to be read; I recommend it highly and without reservation. There, that’s that out of the way.
So here goes. Before writing about it I did a quick google search, and was glad to see it being attacked by some of his colleagues on the right; it confirmed my sense that there’s a lot of good stuff in it, and that the wool is not being pulled over my eyes. More than that, I found that some of the criticisms seemed dead on as comments, but not as criticisms. One blogger points out that whereas “flat tax” reform builds in a constituency that will always press to keep taxes as low as possible, a universal basic income grant of the kind Murray proposes builds in a constituency that will always pressure to make the benefit as large as possible. That sounds right, and good, to me. Liberals also attack it, but my sense of all those criticisms is that they are simply ad hominem. I’ll suggest a way to avoid ad hominem responses later. But, I’m running ahead of myself.
The central proposal is for a basic income grant of $10,000 per year for every citizen aged 21 and above.
There are two catches. The first is that everyone must spend $3000 of that grant on a basic health care package, which insurance companies will be forced to offer to everyone at that price with no exclusions for pre-existing conditions, age, etc (the sum $3000 is negotiable for Murray—what is not negotiable is that there should be a residual grant of $7000, so that if the insurance costs more the grant would be more). The second is that all other government welfare programs (including TANF, Social Security, Medicare, etc, and all corporate welfare but not spending on genuine R&D or compulsory public schooling) would be abolished to pay for the grant.
You can imagine why he wants to abolish all other welfare programs; he thinks they are extremely inefficient (not just in the sense that they are highly bureaucratized but also in that they constitute a very expensive way of addressing the problems they are designed to address) and in many cases constitute undue government interference in the lives of the beneficiaries. Why not just abolish them, and leave it at that, then? He does, in fact, say that he would prefer to do that than to institute an unconditional basic income grant, but thinks both that this would be unfeasible and that there is a strong (though evidently not decisive) moral reason to do some redistribution:
To the extent that inequality of wealth is grounded in the way people freely choose to conduct their lives I do not find it troubling…. in a free society these choices are made voluntarily , with psychic rewards balanced against monetary rewards. Income inequality is accordingly large. So what?
Inequality of wealth grounded in unequal abilities is different. For most of us the luck of the draw cuts several ways—one person is not handsome, but is smart; another is not as smart but is industrious; still another is not as industrious, but is charming. This kind of inequality is enriching….But some portion of the population gets the short end of the stick on several dimensions. As the number of dimensions grows, so does the punishment for being unlucky.
Some of you will recognize that Murray holds a version of what political philosophers have come to call luck egalitarianism. The unconditional basic income grant is a non-stigmatizing and non-paternalistic (if imprecise) way of recognizing and repairing this unfair inequality.
The book is a beautifully written defense of this simple proposal, arguing that it will have benign effects on poverty alleviation, marriage, family life, and work-life balance and, unusually, putting some figures on the proposal. If his figures are right then not only would the static-state consequences reduce poverty, but they would also reduce inequality.
I’ve several comments to make, if in a scattered way.
First, and most glaringly, it is surprising that Murray makes no reference at all to the mostly left-wing academics who have developed and defended the unconditional basic income grant over the past 20 years or so—I’d be especially miffed if I were, say, Philippe Van Parijs. I’d be even more miffed that no-one commenting on the book seems to know that the idea has been around for years. This is a case of the left having the ideas, and the right adopting and selling them. Even Lexington seems blissfully ignorant that lots of ink has been spilled about this. (You might take a look at this discussion in which Steve Burton first says “The reactionary left of today simply has nothing to compare with this man. And no plan half so cunning” and then, in comments, claims to have no interest in who came up with the plan—if he thinks that Murray is so brilliant then presumably he thinks the socialists and liberals who came up with the plan are pretty smart too). I doubt that Murray is unaware of the ancestry of his proposal, and have a suspicion that he suppressed it precisely because he wanted to speak truth to power—in other words he is addressing the right, not the left (certainly the book reads that way) and does not want to prejudice them against him (in fact, he claims Friedman’s negative income tax as the main ancestor of his proposal, and makes perfectly sensible public choice type objections to it, enhancing the sense that this is addressed to the right rather than the left). Liberal commentators who reject Murray’s proposal out of hand should ask themselves if they would have the same reaction if it had been made by a group of respected left-wing academics—and then read Real Freedom For All, The Civic Minimum, or The Stakeholder Society (Ackerman and Alstott’s proposal is structurally different from the others, but it’s not clear how different it would be in practice. For a great book comparing basic income grants with capital of stakeholder grants see Redesigning Distribution; if none of the other books assure you that the left has thought all this stuff through, this one will).
More substantively, there are obvious transitional problems, and these become more obvious as his discussion proceeds. Some of the commentary focuses on these, but to do so is unfair; Murray isn’t offering this as something that will be done here independent of thinking about transitional costs and how they can be managed. Any worthwhile reform faces these problems.
Second, I’d like to see the reform amended in various ways.
i) Murray contemplates forced savings for retirement but, in the end, decides against (remember social security has been abolished, but everyone will have $7000 a year in retirement, and adequate health insurance). I’d argue for a compromise; force everyone to save $2,000 per annum for retirement till their 31, both to deal with the myopia of youth and instill the saving habit.
ii) Nothing is provided for health insurance for children; I’d argue for basic primary care for all children.
iii) it seems to me that he doesn’t have adequate provision for the very seriously disabled. His confidence that voluntary associations would revive under his proposal may be well-placed (he draws extensively on David Beito’s interesting book From Mutual Aid to the Welfare State: Fraternal Societies and Social Services), but I’m too skeptical to take comfort; something more needs to be said about this.
Next, I think anyone reading the book will have the same experience as me; objections arise in your head, and although Murray addresses almost every one of them, calmly and sensibly, you can’t help feeling that there is a fair amount of conjecture, and it is easy to counter-conjecture. This is one of several reasons that liberal commentators have rejected it out of hand (other reasons perhaps including in some cases complete lack of intellectual seriousness). Murray goes to great lengths to explain how it is that the basic income grant transforms the incentives in the so-called underclass so that there would be a great deal less out-of-wedlock birth to younger women in that class; the effects he claims would be good, and I’m inclined to agree that the social environment (which includes the tax-benefit system) produces the behavior he deplores, but because of the lag between changes in social structure and changes in behavior, I worry that the effects would be a long time coming, and might be deflected by other changes. There is no discussion of the possibility that the value of the grant will be eroded because of the effects of the grant on the price of various goods that lower-income people buy.
My own particular worry concerned the effects on fertility and child welfare (because, as is probably no surprise to regular readers, I am obsessively pro-natalist). Nobody receives the grant until they are 21, so, in particular, no child benefit is built in. Murray explains that this will increase the economic penalty for mothers under 21 and, he hopes, increase the pressure from all sides on teenagers (especially poor teenagers) not to have children. He also points out that the grant increases the incentive for teenaged boys to refrain from having children. The grant establishes a known source of income which is immediately accessible to the state, from which child support payments can be garnished; although a 17 year old father does not yet receive the grant, he can begin to owe the payments, and they can be deducted with interest from his grant at a later stage.
But, he argues, the grant should encourage married couples over 21 to have children, or at least remove one important barrier to their having children early in their lives together, by increasing quite considerably the resources available to them at that early stage in their lives, and providing a floor below which they know they will not fall: “it seems a sure bet that births to low-income and working class married couples will go up”. The grant doesn’t do much (in my view) to address the low fertility of high-earning couples, the barriers to fertility of whom are more complicated than mere financial issues, and, in fact, if Murray is right that it will alleviate policy it might even lower the fertility rate for higher income couples by raising the cost of childcare.
I’m more or less persuaded by all this, but, as with many claims in the book, I’m ready to be dissuaded by clever counter-conjecture.
One final substantive comment; Murray is very attentive to the paternalism and perverse incentives built into benefit policy but says almost nothing about the same when it is built into tax policy. The mortgage interest deduction is the most striking feature. Its main effect is probably to raise house prices, thus benefiting first occupants, but its aim is to encourage home ownership. Why? If there are good reasons to own homes people will do it; if not they won’t. But it’s not the only oddity in the tax code (to put it mildly); the childcare deduction provides an incentive for people to pay other people to look after their children rather than doing it themselves; the education deduction provides an incentive for people to invest in higher education rather than other ways of developing their human capital (which might, in some cases, be more efficient)…etc. I can’t see the rationale for abolishing Pell grants but leaving in place the tax deduction for tuition fees. I understand that some libertarians see all deductions as good because they think that taxes should be lower tout court, and in practical politics that makes sense (I disagree with them, being a fan of taxes), but Murray can’t take that tack; given the ambitiousness of his own reform proposal he should just argue for lowering taxes across the board, and abolishing the complex system of deductions.
The title of this post asks “right or left”? Perhaps that’s not a fair question or even, for many of our readers, an important one. In evaluating a reform it’s often worth asking whether, discounting transition costs, you think the world of the reform (once stably and securely implemented) would be better than the status quo. As someone on the left, I ask four basic questions of a proposed reform:
1) Can it be sustained over time, once it has been implemented securely?
2) Will it reduce inequality in a meaningful way?
3) If the answer to 2) is “yes”, is the extent to which it reduces inequality worth whatever the cost is in terms of basic liberties, a sense of community, and other important values?
4) What dynamic does it set in motion?
I think the answer to each of the first 3 questions is yes (the third is easy because Murray’s plan involves no cost in terms of other important values, contrary to David Gordon’s rather silly assertion that it compromises liberty). The fourth is harder. Here I am with David Gordon and with the blogger mentioned earlier; I think that the reform would set in motion an egalitarian dynamic that libertarians have very reason to fear. But also a move away from a mean-spirited and often self-defeating welfare state that liberals should welcome. So I’m inclined to place the proposal on the left. But, left or right, again, it’s a book that pretty much everyone who is seriously interested in political ideas should be reading.