In Our Hands: A Plan to Replace the Welfare State
by Charles Murray.
AEI Press, 140 pages, $20.
In his 1984 book, Losing Ground, Charles Murray attacked the welfare system for tempting the poor into dysfunction. Since welfare supported families where the adults had children without marrying or working, it was bound to create more of such families. The conclusion Murray drew was that welfare should be abolished.
In 1994, however, Murray joined Richard Herrnstein to write The Bell Curve , arguing that social problems were most common among the less intelligent and that low IQ was largely rooted in biology, including race. The authors also concluded, however, that the least competent might not be able to support themselves, so society should guarantee them an income. In the furor about the book’s racial argument, few noticed this reversal of Murray’s earlier position.
Now, in In Our Hands , Murray extends that idea of a guaranteed income into a dramatic proposal to replace the entire welfare state. All national social programs”Social Security, Medicare, Medicaid, welfare, and all other means-tested benefits”would be replaced by a single grant of $10,000 to be given annually to all adults, from age twenty-one to the end of their lives. The amount would be indexed to rise with inflation. The grant would guarantee support for those who are unable to succeed even if they work. The idea may sound expensive, but Murray calculates that it would cost less than the existing programs within a few years, chiefly due to the ballooning cost of Social Security and Medicare for the baby boom.
For those who worked, the benefit would be reduced by as much as $5,000. This feature aligns the plan with the negative income tax, first proposed by Milton Friedman and adopted by liberal welfare reformers in the 1960s and 1970s. The negative income tax gave the poor a grant and then deducted from it half of any earnings, to preserve some incentive to work. So here, remarkably,
America’s leading conservative has endorsed the very symbol of liberal entitlement.
Murray put a lot of work into the budget projections, tax incentives, and transition arrangements for his plan, and he presents his argument”as in his earlier works”in pellucid prose. Even Murray’s opponents recognize that he is a superb wordsmith.
Can we take the plan seriously? As a proposal to revamp the middle-class welfare state, yes. Social Security will soon go bankrupt unless reformed. Murray would solve that problem by abolishing the program and counting on individuals to invest for their own retirement. Since some would fail to do so, he would reluctantly allow forced saving”a requirement that people invest some percentage of their income grant in private funds. Those assets would replace Social Security and should, on average, provide better income than retirees get now. The final result resembles the proposals to privatize Social Security made by the Cato Institute.
On health care, Murray argues trenchantly that the current mix of private and public coverage generates massive incentives for waste. Since consumers pay little of the cost of care when they need it, they overconsume. Instead, Murray would require that people devote $3,000 out of their allotted $10,000 to buy private health policies with high deductibles. This way, using care would cost consumers more and deter waste. Among other changes, he would also make health insurers set premiums based on health costs in the entire community, banning insurers’ current competition to enroll only the healthy. Thus the cost of serious illnesses would be broadly shared. Some system like this seems unavoidable if Medicare is not to bankrupt the government.
On other counts, the plan is less convincing. Murray claims that it would nearly eliminate poverty. But how would it change the behaviors that do much to create poverty and that motivated Losing Ground -nonwork by employable adults, unwed pregnancy, drug addiction, school failure, and so forth? Murray’s $10,000 grant would be universal, not conditioned on whether recipients were deserving, like the beneficiaries of Social Security or unemployment insurance, who have contributed toward their benefits.
At most he can claim that the grant’s universality would eliminate some current incentives favoring bad behavior. Poor women would no longer get more money from the government if they had children out of wedlock; their grant would be the same $10,000 in any event. And poor men would face a Doolittle effect: Like Eliza Doolittle’s ne’er-do-well father in My Fair Lady, they would face more social pressure to work and take responsibility for their families because they could no longer claim to be destitute.
But the idea that such changes would knit together the fraying families of the inner city is a fantasy. The evidence suggests that having children out of wedlock or failing to support them is not caused to any important extent by economic incentives. Poor parents do not do these things because it makes economic sense for them. Acting this way is already deeply contrary to their own interests. Altering the benefit structure can, at best, make it only slightly more irrational. Dysfunction is driven by noneconomic forces”the breakdown of the family and public order in low-income areas.
Rather than change incentives, what the government has chiefly done in this past generation is to restore order. It has required welfare mothers to work, toughened up on law enforcement and child-support collections, and raised standards in the schools. Rather than universalize aid, as Murray would do, it has concentrated means-tested benefits on those who are willing to work and taken them away from those who are not. That has changed incentives and, more important, the moral signals people get about how they are supposed to behave. Since the early 1990s, crime and unwed pregnancy have fallen, and one of the reasons probably is these changes in public expectations. Poor adults now know more clearly that if they misbehave they will be held accountable. Above all, they will have to work.
Thus, Murray is deeply exercised by the moral evils surrounding poverty, but in the end he fails to confront them. His plan leaves good behavior as a choice, not an obligation. He refuses, he says, to stage-manage lives. In this he resembles the liberal theorists who crafted the negative income tax, and he differs from other conservatives who lately have used government to try to enforce values. Indeed, at a symposium on his book held at New York University in May, his plan was endorsed with minor changes by Dalton Conley, a liberal sociology professor. Murray commented that he differed less with Conley than he did with paternalistic welfare reformers.
How do we explain this incongruity? In the same symposium, Murray remarked, I am not a conservative. I am a libertarian. In this lies the answer. Conservatives are those who seek to restrain government but also to promote individual responsibility. The two goals may be consistent when dealing with the middle class: Deny them some public benefits, and they will probably do more to provide for themselves. With the poor, however, the loss of self-command seems far greater and largely immune to economics. To deny this group support or, as Murray does, to provide it without direction would perpetuate disarray. So most conservatives have accepted that, at least in antipoverty policy, promoting good behavior must come ahead of smaller government.
Libertarians, in contrast, seek smaller government tout court. Toward the end of In Our Hands, Murray makes clear that his priority is not really to overcome the dysfunctions behind poverty. Rather, it is to restore the small-government society of the nineteenth century. Then there were no government social programs. The poor were taken care of by churches and other voluntary bodies. Murray, like some other interpreters of that era (Gertrude Himmelfarb, Marvin Olasky, Joel Schwartz), thinks that this system did more to overcome poverty than government does today. He thinks that, under his plan, voluntary effort would once again arise to minister to the poor, because government agencies would no longer do so. A much more individualist and dynamic society would emerge than exists today, where political scientists find that social capital is withering. It is an appealing vision, one that harks back to Murray’s childhood in small-town Iowa. Unfortunately, today’s long-term poor, who are mostly black and Hispanic, tend to have more-serious problems”especially family problems”than the largely white poor aided by Victorian charity. Murray, like other theorists of both the Left and the Right, tends to make what I call the competence assumption. He presumes that the individuals he seeks to help behave rationally enough to advance their own self-interest, if not society’s. If they violate the collective good, that must be because it conflicts with their personal interest. Realign individual incentives so as to serve society, rationalists say, and all will be well. The middle class and business do indeed respond to such suasions. But alas, those at the bottom of society typically do not. They live largely outside the market”just as the Left once thought the whole of society should do.
There is finally a conflict between Murray’s libertarian instincts, first shown in Losing Ground, and his realization the Bell Curve. In Our Hands hat the poor cannot cope without aid, first expressed in Tshows both tendencies, and the tension between them is unresolved. On the one hand, the author recognizes that the less fortunate need help. But on the other hand, he would give that help in a form that finesses their most serious problems. For if the poor responded to guaranteed income in the sensible way he supposes, few of them would be poor for very long in the first place. Libertarians have long assumed competence, but the challenge is to create it.
Lawrence M. Mead is Professor of Politics at New York University. He is the coauthor, most recently, of Welfare Reform and Political Theory.