What would a more libertarian welfare state look like? It's a tough question. The orthodox answer is that it would look like charity does today, only it would not be crowded out by government intervention. I like that answer, but I find it unconvincing for many reasons. I cannot ensure that that system will better serve the interests of social justice, that people may fall through the cracks, and that the innovations may not lead to the long-term betterment of those in need.
But, if we are to keep in mind the ideal free charity state in mind, can we find a waystation between that place and where we are today? In other words, what would the privatization of the welfare state look like? This is the positive part of my dissertation. The libertarian critiques of welfare state institutions are pretty robust and easy to make. They are ready to go off the shelf. So to are the free charity cases made by moral philosophers. What's more difficult is coming up with some palatable policy proposals to use libertarian insights to build better institutions. I think I may have (absent the math I need) come up with the broad framework I will advocate for.
Milton Friedman, the famous monetarist economist, came up with an idea for welfare reform that would obviate the need for a welfare state. It was the negative income tax. It set a point at which, if people made below that amount, they would be entitled to a straight check from the government for the difference. Let's say we set that amount for simplicity's sake at $15,000. That's over twice what people get on SSI (government assistance to the disabled) because I am including other government programs for which those recipients qualify But, let's say Frank is part of the working poor. He only makes around $4,000 a year. He would be entitled to $11,000 from the government. Basically, we say that as a society, we cannot allow people to dip below a certain point. A Rawlsian would say that below that amount, they cease to have the ability to be enjoy their basic freedoms and be self-authors.
Let's call this value the Basic Income. All people are entitled to it. It is dispensed via a system similar to DirectExpress (a debit-card like system for SSI) every two weeks or every week. There are no restrictions on how the money can be spent. The vast majority of welfare recipients spend their money from the government in rational ways. For some, they give more weight to housing and food than to medical care and substance abuse treatment. For others, they value their drug of choice, unhealthy foods, or dangerous habits over healthier alternatives. This is part of respecting people as rational self-authors and empowering them as agents of change in their lives.
With a system in place that provides a basic income to all, a world without government intervention would require robust institutions of private charity and mutual aid. While some libertarians argue that government interference in social support institutions crowds out private investment, the most salient point against government as a redistributive mechanism is its overwhelming inefficiency and self-perpetuation sustained by the knowledge problem inherent in coordinating from the top down. I propose that whatever percentage of funds currently used to fund redistributive social support programs be liberated from government control so that people can fund organizations and causes directly. Not only would this address the knowledge problem inherent in federal control over social support institution by empowering people to become more involved with their redistributed funds, it would foster an immense amount of competition, innovation, and entrepreneurship in the social service sector by injecting market forces and prices into a previously restricted market.
Privatizing redistribution provides market forces in charity on the back-end of client service. The price of a particular social good to an individual, groups, or society as a whole is valuable information. However, the most important information in a system is contained in the prices for service. The entire point of a social safety net is that people of lesser means cannot afford the help they need, and therefore, must receive help in procuring services. If consumers of services are given a set amount of income to help themselves, they can afford to pay user fees for various services at these charitable institutions. By injecting price mechanisms on the front end, we support the inclusion of market forces (competition, innovation, and entrepreneurship) into a currently noncompetitive system and gain an objective measure of consumer satisfaction that is sorely lacking. Our back-end subsidization of the system provides information on giver satisfaction, and user fees provide information on consumer satisfaction.
That's the proposal in a nutshell. 1) Negative income tax and abolition of the welfare state institutions. 2) Privatization of redistribution. and 3) User fees in social service programs. There are many benefits to a system such as this, but I will name only a few here. This system would lead to better engagement with resources due to a sense of ownership of services (this is my therapist, counselor, food allowance). They will engage more sincerely with treatment when it is not coerced as in the current system and they will feel empowered as individuals. The system would also serve to create a class of social entrepreneurs who seek to capitalize on the new money found in low-income housing, healthcare, and other services. It would allow immense flexibility and experimentation that the current system cannot accommodate. Most importantly, it would provide for better oversight of our social welfare institutions both on the front-end through individual support recipients giving according to their conscience and knowledge and on the back-end with individual donors seeking services from competing entities. It would liberate donor, recipient, and service worker from the suffocating anti-humanism in the current system, and mold people of lesser means to become successful individuals by spending their money in their long-term best interest.
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