Monday, April 10, 2006

Charles Murray's Grand Plan

Charles Murray -- he of The Bell Curve fame -- recently unveiled his grand plan to overhaul the welfare state. His plan, which Murray outlines in his new book, In Our Hands : A Plan To Replace The Welfare State, amounts to this: Cut out the government middleman and give everyone who is older than 21 and not in jail $10,000 a year (or less, depending on income). The idea, I guess, is to accomplish three things:

  • Eliminate the "house cut," that is, the cost of maintaining the multitude of bureaucracies, consultants, and contractors. In addition to wasting money, they often are effective self-promoters.
  • Eliminate myriad special-interest programs -- each of which has a vocal constituency -- because these are seldom cut or eliminated individually, in spite of an aggregate cost to which most taxpayers object. Make the welfare state an all-or-nothing proposition in which every free adult has an equal stake.
  • Let individuals decide for themselves how best to use their "gift" from other taxpayers. On balance, they will make better decisions than bureaucrats, and those decisions (e.g., more education) will yield higher incomes. Thus the cost of the program will go down in the long run, and support for its expansion will be harder to come by.

Here are excerpts of Murray's interview with Kathryn Jean Lopez, editor of National Review Online:

Kathryn Jean Lopez: First things first. $10,000? Who’s getting and when? And can I use it on my credit-card debt?

Charles Murray: If you've reached your 21st birthday, are a United States citizen, are not incarcerated, and have a pulse, you get the grant, electronically deposited in monthly installments in an American bank of your choice with an ABA routing number. If you make more than $25,000, you pay part of it back in graduated amounts. At $50,000, the surtax maxes out at $5,000. I also, reluctantly but with good reason, specify that $3,000 has to be devoted to health care. Apart from that, you can use the grant for whatever you want. Enjoy. . . .

Lopez: How can even low-income folks have a “comfortable retirement” under your plan? Is that foolproof?

Murray: Someone turning 21 has about 45 years before retirement. The lowest average real return for the U.S. stock market for any 45-year period since 1801 is 4.3 percent. Round that down to 4 percent and work the magic of compound interest. Just a $2,000 contribution a year amounts to about $253,000 at retirement. A low-income couple that has followed that strategy retires with more than half a million dollars in the bank plus $20,000 continuing annual income from the grant. Sounds comfortable to me. As for “foolproof,” think of it this way: All of the government’s guarantees for Social Security depend on the U.S. economy growing at a rate that, at the very least, is associated with an historically worst average return of 4 percent in the stock market (actually, it needs a much stronger economy than that). Absent economic growth, no plan is foolproof. With economic growth, mine is. . . .

Lopez: Under your plan, the government spends more first, but saves money in the long run, right? But is there any guarantee folks in the future abide by the plan? Can't a few pols wanting to restore an entitlement here or there ruin things?

Murray: I leave the size of the grant to the political process, but there is a built-in brake. Congress can pass hundreds of billions of dollars in favors for special groups, because no single allocation is large enough to mobilize the opposition of a powerful coalition opposing it. A change in the size of the grant directly effects everyone over the age of 21. Every time Congress talks about changing the size of the grant, it will be the biggest story in the country.

The one thing that can’t be left to the political process is the requirement that the grant replace all other transfers. That has to be a constitutional requirement, written in language that even Supreme Court justices can’t ignore. Assuming such a thing is possible.

And there's the rub. Coalitions of special-interest groups will band together in defense of the status quo because each of them will seek to preserve "its" program. The fact that they and their constituencies are paying each other's freight won't matter. They'll believe (or pretend to believe) that they're soaking the rich and "big business," when -- in reality -- they are burdening the poor by disincentivizing the inventors, innovators, and entrepreneurs who are the mainspring of economic growth. Murray's grand plan is therefore more likely to be implemented as an add-on to the welfare state than as a substitute for it.

Nevertheless, unlike the anarcho-capitalist contingent, I won't characterize his proposal as unlibertarian. If it were adopted as an alternative to the present system it probably would lighten the weight that government places on us. That would be great progress, but anything short of the abolition of government is unacceptable to Rothbardians, for they dwell in a wonderland of impossibility. (See this post, for example, and follow the links therein.)

One commenter -- a columnist at by the name of Andrew Ferguson -- has a different objection to Murray's plan:

His larger goal is to revive those social institutions, particularly the family, the workplace and the local community, which the welfare state has weakened and supplanted and "through which people live satisfying lives."

If you want to see the enervating effects of the all- encompassing welfare state, he says, look at Europe, where marriage and birth rates have plunged and work and religion have lost their traditional standing as sources of happiness and personal satisfaction. . . .

In Europe, he says with evident disdain, "the purpose of life is to while away the time as pleasantly as possible."

Here the reader of "In Our Hands" may suddenly pull up short. What began as a wonkish policy tract enlarges into an exploration of how people live lives of meaning and purpose.

Who knew? It turns out that Charles Murray, the nation's foremost libertarian philosopher, is a moralist.

In the end, though, moralizing and libertarianism make for an uncomfortable fit.

On the one hand, Murray says he wants to liberate citizens from the welfare state so they can live life however they choose. On the other hand, by liberating citizens from the welfare state, he hopes to force them back into lives of traditional bourgeois virtue.

Mr. Ferguson once wrote speeches for President George H.W. Bush. And it shows in the shallowness of his analysis. Murray is not "moralizing." Murray is explaining that when individuals are liberated from the welfare state they are more likely to adopt -- voluntarily -- those mores that keep the welfare state at bay. Murray isn't hoping to "force" people "back into lives of traditional bourgeois virtue" (the condescenscion drips from that phrase), he is saying that liberty rests on what Ferguson chooses to call "traditional bourgeois virtue." (For an extended analysis of that proposition, read this, and especially this segment.)