Thursday, July 10, 2008

A libertarian welfare state?

Far from the ignorance of the Naomi Klein's and Barbara Ehrenreich's of the world lie the libertarian thinkers of the world like the Cato Institute's Will Wilkinson, who seek to reconcile libertarian notions of individual freedom and free markets with the modern liberal notion of a social safety net. As Wilkinson makes the case here in his blog, economic policy is really distinct from tax policy, despite the fact that they often seem interconnected.

The structure and regulation of an economy is conceptually separable from tax and transfer policy. Of course, it is really all one system, and taxes and transfers affect economic performance by affecting labor supply, etc., but this is relatively distinct from the body of law that defines the parameters and rules of the economic game. You could in principle have buck-wild laissez faire together with fairly high taxes and lavish social insurance. Nobody does do this, exactly, but it’s possible. Optimize the basic economic structure for maximizing wealth creation, not for creating a pattern of distribution, and then use the political institutions to take care of redistribution after the wealth is created. Because then there will be more wealth.

Here Wilkinson blogs more on his "liberaltarian" notions of a libertarian welfare state. As I've gotten older and perhaps more thoughtful, I've often wondered about the idea of accepting the idea of some form of government welfare back into the libertarian fold. To accept such an idea though, one must reject some of the more radical notions of libertarian thought. Most importantly, the state has to be accepted as legitimate, along with the state's ability to tax it's citizens. If you're a "taxation is theft" type, then you're probably none too happy with where this discussion is going. But if you tend to look at libertarianism as a realistic and not merely idealistically political philosophy, then maybe you can accept the notion of a libertarian welfare state.

It's important to note that a libertarian welfare state isn't about redistribution of wealth, which, if you think about it, is the real road to socialism. Libertarian welfare is merely about providing a minimal level of economic security for the poor. Essentially, it's what Milton Friedman advocated when he proposed a negative income tax that would guarantee every citizen a minimum income. Part of the problem of the current welfare system is the complexity and disincentives which put poor Americans under the care of government. A libertarian system would encourage independence, not foster dependence. Rather than having separate government agencies that handle dispersals for food, housing, and medical care, a libertarian system would help to alleviate the problem of poverty by literally providing cash to the cash poor. Such a system would get rid of the liberal paternalist mindset that requires government to step in and insure that poor people make the right decisions.

The important thing about a libertarian system of welfare is that it ultimately fits into libertarian notions of free markets and individual freedom. As Wilkinson discusses, you don't need a regulated economy or restrictions on trade in order to impose taxes and distribute welfare. In fact, as Wilkinson notes, such a society may be able to provide more for it's poor than it would if the economy were highly regulated.

For my money though, the clincher has to be the freedom of the poor to make their own decisions with the money they receive. Obviously, this is all hypothetical and unlikely to become reality any time soon, but it is a far more convincing argument they any anarcho-libertarian of actually ending the state and changing the world as we know it. This is a template, a workable idea that can maybe- hopefully- be used to sway liberals and conservatives opposed to big government toward a more libertarian way of thinking. Sure, it's a sort of libertarian-lite, without the harsh reality of pure free market economics, but I challenge any libertarian to come out and say such a system- where the size of government is reduced drastically, regulations are repealed, and welfare is possibly increased, but simplified to cash handouts- isn't vastly preferable to the system we have today.


Post a Comment

<< Home