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When will liberty's day arrive?
Life without socks would be... "undignified," but no one recommends government provision or even sock vouchers. Relative to income, socks are sufficiently cheap. There is some inequality of socks, but it seems that just about everybody -- even the poor -- "has enough." We don't even force people to buy socks for their kids.
Might there come a time when health care and education fall under the same rubric?
Yes, I know that, due to rising labor costs, health care and education might continue to eat up an increasing percentage of national income. But still, can't "rich enough" people make do? Living in Aspen might cost half your income, but if you're a multi-millionaire no one weeps for you.
Of course today's poor aren't rich enough for us to remove government aid. But when will the splendid era of libertarian freedom be possible? Today's poor are much richer than the poor fifty years ago, and the poor of the future are likely to be richer yet. Won't the welfare state, at some point, simply become unnecessary?
Readers, please tell me in the comments when the time will come for dismantling the welfare state. Will you sign your name to a pledge:
"I am a left-winger, but only until 2078"?
More elegant would be:
"I'm a 2096 libertarian."
Social democracy is but a mere transitional strategy.
If this were 1890, what Year of Libertarian Freedom would you have named?
Posted by Tyler Cowen on March 28, 2007 at 07:36 AM in Economics | Permalink
Comments
Never (using that measure). Preferences change over time and so does the perception of what is undignified.
Posted by: Robert at Mar 28, 2007 7:44:30 AM
good news
thank you for infos
Posted by: barbie oyunları at Mar 28, 2007 7:49:22 AM
Never ever. While there are people in the U.S. who do actually live in squalor, the label "the poor" covers an enormous number of people who are amazingly rich by historical standards. Tons of interesting-tasting food to eat, powered transportation, broad variety of entertainment, etc.
The label does not properly refer to an objective reality. Rather, it is politically useful in triggering group association based on envy and greed.
Posted by: Mark Nau at Mar 28, 2007 8:04:37 AM
Funny thing. One of our readers at Angry Bear (we're left of center) had a proposal that should get us to that ideal Libertarian point much sooner. To summarize (more here):
The right claims ... that economic mobility is alive and well in the US. ... I propose that we increase taxes on high income individuals (income taxes, payroll taxes, social security taxes) and lower them for the low income individuals since the right claims that these are just the same folks at different periods of their lives. It therefore all balances out since a single individual gets the benefits of low taxes early in life, which allows them to accumulate capital quickly so as to be more productive and engage in risk taking/wealth-generating activities earlier than they would otherwise.
Posted by: cactus at Mar 28, 2007 8:09:19 AM
I'm on board for dismantling it today on moral and Constitutional grounds, if not economic ones!
Posted by: Chris Meisenzahl at Mar 28, 2007 8:10:00 AM
The time has come to dismantle at least most of the welfare state, although it might take 5?, 7? years to ween people off of it. I guess that makes me a push the button libertarian more or less. In 1890 England I would have been an 1870 liberal.
We did well enough before the welfare state, even during the revolutionary days of industry.
Posted by: John Goes at Mar 28, 2007 8:10:58 AM
The poor have gotten a lot richer, which is good, but in a lot of cases they haven't gotten less miserable (crime, addiction, social exclusion, etc.). I don't know exactly why this is, nor do I know when it will stop being true, if ever. But I'm not OK with getting rid of the welfare state until it does, though the kinds of programs we need might change over time.
Two questions for your list:
1. How much different would things have turned out if Abraham Lincoln had lived?
2. What's the best restaraunt in the DC area for someone who is not an adventurous foodie, but just wants a really, really high quality nice meal?
Posted by: David J. Balan at Mar 28, 2007 8:22:26 AM
Readers, please tell me in the comments when the time will come for dismantling the welfare state.
"Propertarian." AFAIK, there's more to being a libertarian than being anti-tax.
Posted by: SomeCallMeTim at Mar 28, 2007 8:22:28 AM
Might there come a time when health care and education fall under the same rubric?
Both (especially health care) are labour intensive and so surely fall prey to Baumol's cost-disease at various levels
The ability to solve this relies on increased automation - so draw your own conclusions.
Posted by: Chris Stiles at Mar 28, 2007 8:36:47 AM
Health care is a unique case. The idea that our bodies are so special as to justify any expense in keeping them healthy and well functioning, and doing any less is undignified, puts it in a different category than socks. We don't fret that the wealthy may purchase $200 cashmere leggings while the poor make do with Hanes that cost $3 for a six pack because it's not a matter of our sacred bodies.
Likewise, in developed states we are less concerned about hunger, because very few go hungry. This despite the fact that the wealthy can enjoy luxurious food that the poor cannot even imagine; they savor $500 bottles of wine while the poor swill their Natty Light. This doesn't strike us as tragic because the poor, while fed with less tasty and interesting food, are not being physically injured the way they were when they were hungry. Notably, most concern about the inequality of food in the U.S. now revolves around the way the poor are experiencing health problems from eating cheap fast food and processed snacks.
But of course hunger used to be an issue, until technology and better law and institutions brought us above the substistence level of calories per capita, and now the inequality seems less troubling to most, and we are less apt to use government intervention to end that inequality. Will technology and instutions do the same for health care, make it so cheap that we won't care about the inequality?
I am skeptical. There is no natural "good enough" point for health care. Unlike socks and other clothing, there is no "no longer naked and cold" point. Unlike food, there is no "no longer hungry, emaciated, and bloated" point. Unlike housing there is no "no longer shivering on the street" point. At least not that I can think of. As long as a given procedure or drug has a nontrivial better chance of saving a life, it will seem uncomfortable to most people that your chances at a healthly life are determined by your wealth.
A related observation is the way we view conspicuous consumption. Even if we are against strong redistribution, most view popping a Jeroboam of Veuve or buying a $5000 handbag with a bit of distaste. But far less people would complain about someone getting the best, most expensive heart surgery or treatment for brain cancer.
The only other thought is that there may be some point where we reach a point of diminishing returns in health care so dramatic that the new drug is actually trivially superior if at all the the old, public domain, one; the new imaging device does not provide any advantage in diagnosis over the previous. We may reach this point as we bump up against the limits of the human body. But I wouldn't count on it.
Posted by: Brant at Mar 28, 2007 8:44:18 AM
We've already seen a move from talking about poverty to talking about equality. People will find a way to tell other people what to do while making themselves feel righteous.
Posted by: josh at Mar 28, 2007 8:47:34 AM
I vote for the welfare state to stay! As long as there is radical uncertainty and decreasing reliance on families, I don’t see anything wrong with reserving an option to have a little padding from the state.
Posted by: Yan Li at Mar 28, 2007 8:48:35 AM
"It therefore all balances out since a single individual gets the benefits of low taxes early in life, which allows them to accumulate capital quickly so as to be more productive and engage in risk taking/wealth-generating activities earlier than they would otherwise."
Um, Cactus, did nobody ever teach you about distortionary costs of taxation? Those would still exist under this scheme. In this case, the person early in life then wouldn't have the same incentives to save and invest and accumulate capital given their high future tax burden.
Posted by: Keith at Mar 28, 2007 8:51:07 AM
The comparison makes no sense because we do make people obtain socks for their kids. Growing up in rural NY state (I left school 15 years ago, so it's not a long-long-ago story), parents whose kids showed up to school without adequate clothing were usually threatened with a visit from Social Services. If the family didn't have and couldn't afford sufficient clothing, arrangements would be made through local charities and agencies, but the threat of legal action was always there.
The people who can't afford socks may be extreme outliers, but it's those outliers that you have to account for to successfully change policies in a society that believes in anecdotes more than actual evidence.
Posted by: James Clippinger at Mar 28, 2007 8:53:17 AM
um, cactus,
Economists wouldn't exactly expect increasing the price of social mobility to increase the quantity of social mobility.
Posted by: josh at Mar 28, 2007 8:53:29 AM
Actually, how much does health care suffer from Baumol's cost disease?
Pharmaceuticals don't appear to suffer from Baumol's cost disease, and neither does diagnostic software. It looks like medical care will simply become more automated over time.
Posted by: Keith at Mar 28, 2007 8:54:25 AM
Think "Star Trek": Health care costs too can be reduced by letting machines do more of the work. For starters, think of a nanodevice that can do hundreds of different blood tests in a second. It might only be when it comes to surgery that you need a highly skilled human.
I tend to ask people "Is Star Trek capitalist and socialist?" and it's hard to give an answer. Things would look the same either way. Politics, indeed, are dependent on our circumstances.
Even in 2078 someone can still be left-wing, but the issues of the day will be very different.
Posted by: Macneil at Mar 28, 2007 8:57:56 AM
I think we define acceptable as a subset of the possible. I think at some point things like traveling, long vacations, child car.
Posted by: Michael Foody at Mar 28, 2007 9:06:45 AM
welfare state cannot end until warfare state ends. fascism and communism are two sides of the same coin.
warfare state can only end if (1) people wake up and demand it and government policies are enacted accordigly (highly unlikely in my opinion, given the amount of apathy, misinformation, disinformation, and corruption) or (2) the government collapses or self-destructs.
Posted by: kid mercury at Mar 28, 2007 9:11:40 AM
When should it be dismantled? Yesterday. When will it be dismantled? Never. The poverty industry is too powerful and well-entrenched to ever get rid of it.
Posted by: Ned at Mar 28, 2007 9:16:23 AM
Health care yes, education no. Education is mostly about signaling and status, so good slots will always be expensive. I could learn more today from reading blogs than I did from my private high school, but I'm not going to get a job with a resume that says "6 years of reading blogs."
Health care, OTH, is scalable and we have already seen a shift of health care spending from doctors (labor intensive) to drugs (not labor intensive), which decline in price as they go off patent and as better drugs become available. How many of today's surgeries and hospitalizations will be unnecessary when we have a good weight loss drug and a stem cell injection to fix diabetes?
I'd give health care 50 years to reach this point for the non-elderly, although many people who grew old before superdrugs were available will continue to need expensive care.
Posted by: DK at Mar 28, 2007 9:18:14 AM
I think the key difference in Star Trek is that transaction costs have been greatly reduced by zero cost energy and replicators (which function by reversing E=MC^2 so energy must be free to make more than an atom or two). In a world with low transaction costs does the poilitical assignment of rights matter as much as it does in our world?
Posted by: nelsonal at Mar 28, 2007 9:19:42 AM
The poverty industry is too powerful and well-entrenched to ever get rid of it.
That's probably the funniest thing I've read all month.
Posted by: hayden at Mar 28, 2007 9:44:12 AM
I don't think it’s a matter of static material wealth at some point in time T(x), but of a "wealth growth rate" if you will. In other words we will ALL have to get REAL RICH, and do it REAL FAST over a short time interval. Otherwise adaptation will kick in. You can see this adaptation in Austin right now with the low income housing bond measure that passed last fall. For 160g's a "low-income" family can buy a $600,000 house. That’s adaptation for ya'.
So to your question of “when do the shackles come off?” - Well to paraphrase a response I absolutely loathe - “Its not a matter of time tables, it's conditions the on the ground”. And that condition would be an explosion in wealth across the board.
That’s the best I got.
Posted by: steveintheknow at Mar 28, 2007 9:47:41 AM
Ah, were it so that practical material comforts was the defining criteria in determining when to scale back the redistributive state--rather than the relative and comparative differences between the members thereof.
A democratic harbor filled with everything from multiple rowboats to the Queen Mary ensures those in the smaller vessels will vote themselves their share. Similarly, a democratic harbor filled with yachts of varying degrees of creature comforts will also find that those with the slightly less well-appointed will vote themselves a share of the grandiose.
Posted by: downeast at Mar 28, 2007 9:51:30 AM
