Larry DeWitt: Review of Charles Murray's In Our Hands
Larry DeWitt is a doctoral student in public policy history at the University of Maryland, Baltimore County.
In his highly provocative 1984 book, Losing Ground, (1) Charles Murray made a clever, because oblique, assault on American social welfare policy over the course of the previous three decades. Murray's aim then was the same one announced so triumphantly in his newest book: to dismantle the American welfare state. In Losing Ground, his purposes were somewhat disguised. In his In Our Hands, (2) his long pursued agenda has finally arrived at its openly stated destination.
Murray wants to abandon the entire American welfare state which has evolved over the course of America's history. Not just welfare programs--which have long been in his gun-sights--but the entire system of governmental programs designed to protect even the middle class from what in the economic sphere Franklin Roosevelt called "the hazards and vicissitudes of life." FDR had in mind such hazards and vicissitudes as poverty, unemployment, illness, and old age. And all of this, in Murray's world, is none of government's business.
Murray's proposal is impressive for its simplicity, and breathtaking in its audacity. He wants to abolish all government programs which might have as their aspiration the relief of economic insecurity. In place of this system, Murray offers an annual $10,000 grant to every American citizen age 21 and older (who is not in prison), with which they are expected to purchase in the marketplace their own health insurance, social security, unemployment insurance, disability insurance, and anything else they think they might need to stave off those "hazards and vicissitudes of life." In short, economic security will become each individual's job, and government will no longer have any role of this type in our political economy. How did Murray manage to arrive at such an extreme "plan?" In the immortal words of the Grateful Dead song: what a long, strange trip it's been.
It Was Never About Race: Charles Murray and the Assault on the American Welfare State
Losing Ground was a seminal book--produced at a ripe historical moment during the heady early rise of the Reagan Revolution. It was an instant favorite among Reagan conservatives and Murray was even briefly touted for a major policy job in the Administration--although someone thought better of it at the last minute. The book was heavily promoted by the conservative Manhattan Institute, which had commissioned the book based on a pamphlet Murray had written for the Heritage Foundation. With the Manhattan Institute's aggressive marketing campaign--including spending $125,000 promoting the book and sending free copies to everyone from academics and editorial writers to Margaret Thatcher's cabinet--Losing Ground became an instantly influential book. Even those who vehemently disagreed with Murray were forced to address his work. His book was virtually obligatory reading within the policy circles of the Reagan Administration. The Office of Management and Budget's Counsel, Michael Horowitz, publicly praised the book in ads for the publisher, saying "Nothing more important than Charles Murray's work has come along in recent years, and his role as a morally credible spokesman for the conservative side of the debate has opened up the dialogue." (3) The Office of Personnel Management held an Executive Forum where Murray spoke to an assembly of top Reagan Administration officials, each of whom was given a free copy of his book. (4)
The heart of Losing Ground was an especially clever attack on the liberal consensus on social welfare policy, by questioning the impact of this policy on a core liberal constituency. A central premise of the liberal consensus is the expectation that governments should work to alleviate social inequality for black Americans. One might say that poor black Americans are a core constituency of liberals. Murray's book thus attempted to hit the liberals where they live.
Murray argued that if one tracks the rise of social welfare programs, and compares the growth in these programs to various indices of social inequality, that the paradoxical result is seen that increased social welfare spending leads to increased social inequality. This was demonstrated by Murray in a series of comparisons between blacks and whites on various social indices. Displaying trendlines using these indices, Murray purported to show that social welfare spending was correlated with a worsening of the relative position of blacks compared to whites. In other words, Murray's core argument was that the very programs that liberals had deployed to help poor blacks, had in fact made their situation worse. (5)
We should note that Murray's analysis was not an end in itself, but was the premise of an argument. His full thesis in Losing Ground was: the programs designed by liberals to help poor black people in fact do more harm than good; therefore, government programs aimed at improving social welfare should be abandoned. One obvious retort here is to observe that even if the premise is true, all that follows is that these particular programs--designed in these particular ways--have the alleged effect. One sanguine alternative is to fix the programs or design better ones. But Murray wanted the full conclusion to go unchallenged because his real agenda--already in Losing Ground--was to attack the American welfare state and urge its abandonment.
After this book--arguing that liberals were doing harm in their efforts to do good--Murray and a co-author, Richard Herrnstein, tried an even more blatant blow to the liberal solar plexus. In their infamous, The Bell Curve, (6) Murray and Herrnstein were attempting to construct an alternative premise, linked to the same conclusion as before. In this work Murray and Herrnstein argued that the basis of social inequality is differences in innate abilities, in particular, in intelligence. These differences, moreover, are genetically based, and hence cannot be altered by social interventions--except perhaps marginally.
Murray and Herrnstein once again focused on race and black/white comparisons. This time, their aim was to demonstrate the claim that, to put it plainly, blacks are intellectually inferior to whites and that is the reason that they suffer such disparate circumstances in life.
Here again, this argument about race was not about race at all. Race was being used as a tool in a larger agenda. It was again the attack on the American welfare state. The entire argument about genetics, race and intelligence was a mere premise in a larger argument. That larger argument was: social welfare programs cannot work because the differences they seek to ameliorate are genetic in nature, therefore, we should abandon the programs of the welfare state.
Where in Losing Ground Murray was arguing that social welfare programs paradoxically do more harm than good, in The Bell Curve he argued that such programs cannot work. In both cases, the same conclusion was being sponsored: abandon the American welfare state.
Unfortunately, almost the entire liberal response to The Bell Curve missed the point. It centered on charges of racism against Murray and Herrnstein, and became trapped in obsessive focus on the idea of innate black inferiority. Like skilled magicians, Murray and Herrnstein were waving the issue of racial differences in the air to capture the audience's attention, while the hand doing the trick was involved in something else altogether: a steady undermining of the liberal consensus on the welfare state.
All of this--the loss of faith in the liberal consensus on social welfare policy, the conservative attack on Great Society programs, the dismissal of race as a controlling factor in social inequality--was teeing it up for Murray's new book. And now in the new book, he is swinging for the fences.
The Plan in the Other Hand
This much is certain," Murray tells us in the opening line of the article-length version of his Plan, "the welfare state as we know it cannot survive." (7) He gets to this "certain" conclusion by extrapolating recent growth rates in entitlement spending to the year 2050, and thereby shows that America will be spending 28 percent of its GDP on such spending by that year. This is the future he is certain cannot arrive.
This kind of statistic is always dubious in that it makes extrapolations from trends that are unlikely to continue, even in the context of a fully functioning welfare state. Policies and programs can and are changed all the time, and adjustments in future cost factors can be made. Indeed, making ongoing judgments about the proper level of social expenditures is a central function of a modern democratic society. In place of Murray's fanciful statistic, we would do better to bear in mind the old observation by economist Herb Stein: "If a trend is not sustainable, it tends to stop."
But Murray must depict the welfare state as a kind of mindless automaton which rolls relentlessly onward and upward. Without the assumption of an endless increase in the cost of the welfare state he cannot make the case for his alternative scheme. The pecuniary among us might not be willing to fund Murray's scheme if it will forever cost taxpayers more than the current welfare state (which Murray admits it will at the outset). In order to get the benefits of his scheme high enough to be attractive, Murray has to raise more in taxes than the welfare state currently demands. The devil's bargain is that in the future the welfare state will theoretically cost so much that Murray's expensive alternative will seem a bargain by comparison. In other words: pay more today for the promise of a smaller bill years from now. Economists and actuaries may be comfortable with such bargains, but it is not so obvious that taxpayers feel the same way. (The opposite idea: get more tax cuts today with the possibility of higher tax bills in the by-and-by, is of course looked on with much more favor by taxpayers, and it has become an essential political gambit of the modern Republican Party.)
So the simple idea that we can adjust programmatic policies if we decide that social programs have become too costly, is a simple idea which must be bypassed by Murray in order to start his engine. But having made this presumption, Murray can now move directly to the claim that something must be done. But what?
No problem could be easier to solve, it turns out. "Instead of sending taxes to Washington, straining them through bureaucracies, and converting what remains into a muddle of services, subsidies, in-kind support, and cash hedged with restrictions and exceptions, just collect the taxes, divide them up, and send the money back in cash grants to all American adults. Make the grant large enough so that the poor won't be poor, everyone will have enough for a comfortable retirement, and everyone will be able to afford health care." (8) The book as well opens with what Murray labels A Short Statement of the Argument: "America's population is wealthier than any in history. Every year, the American government redistributes more than a trillion dollars of that wealth to provide for retirement, health care, and the alleviation of poverty. We still have millions of people without comfortable retirements, without adequate health care, and living in poverty. Only a government can spend so much money so ineffectually. The solution is to give the money to the people." (p. 1)
So, there you have it. The reason we have poverty in America; the reason that 46 million people lack health care coverage; the reason not everyone is able to enjoy a comfortable retirement; the reason there is an underclass and so much social inequality, is all because governments skim off so much wealth from tax revenues that not enough is left to produce this happy world of prosperity for all. (An alternative interpretation--say that the huge concentration of wealth in the hands of the richest Americans might be one factor preventing everyone from having sufficient prosperity--is a concept so far outside Murray's political paradigm that he does not even mention such a possibility.)
Lest any comfortably middle-class citizen think what Murray has in mind here is the typical conservative disdain for welfare and its clients, let me disabuse you of that happy thought right away. Murray's list of targets-for-elimination is impressive if nothing else:
- Social Security, Medicare and Medicaid
- Railroad Retirement
- Unemployment insurance and workers compensation
- Veterans medical care and veterans pensions based on need
- All welfare programs (state and federal)
- Food stamps (state and federal)
- All agricultural and housing subsidies
- Most government support of education (state and federal)
- Job training programs (state and federal)
- Energy assistance programs (state and federal)
- Most of the Army Corp of Engineers
- The Bureaus of Reclamation and Indian Affairs
- The Corporation for Public Broadcasting
- The Ex-Im Bank
- Amtrak subsides
- The Small Business Administration
- All forms of "corporate welfare" . . .
Well, you get the idea. In all, Murray's Appendix A lists 108 federal programs/agencies he wishes to see abolished. (9) Murray's Plan involves the elimination of every function of government that economists would classify as transfer payments, and he allows the government to provide only what economists call "public goods," which are such things as national defense, a clean environment, and police protection. (10) This is a traditional libertarian policy goal, and Murray is trying to take us there through a new route.
By Murray's accounting, all levels of government spent about $1.4 trillion for transfer payments in a recent year. (11) Just to be clear about it, Murray's proposal is not that we abolish these functions of government and thereby avoid $1.4 trillion each year in taxation. Rather, he wants to continue the existing taxation, (12) he just wants the revenues from this taxation to flow not to these government programs, but back to the taxpayers in the form of universal cash grants. (13)
Indeed, the realization that Murray's real agenda here is one involving income redistribution and not tax burdens comes from his insistence, early on in the book, that his Plan be enshrined in the Constitution! (p. 10) Here is the opening phrase of his proposed Constitutional amendment: "Henceforth, federal, state, and local governments shall make no law nor establish any program that provides benefits to some citizens but not to others." In other words, Murray objects philosophically--as a good Libertarian soldier--to the whole idea of government granting differential benefits to anyone--whether that be to the poor, to veterans, to businesses, etc. Although Murray makes no acknowledgment of it in his book, this Constitutional amendment would also prohibit all special interest tax breaks in the tax code. Not only will the home mortgage interest deduction go away, so will lots of corporate tax loopholes--a fact he seems not anxious to bring to the attention of the business community, since he fails to note it.
In Praise of Non-Governance
So that is Murray's book in a nutshell: Abolish all the programs of the welfare state and give the gross tax revenues directly to citizens in the form of cash grants. By cutting out the "middle-man" (i.e., government and its manifold programs) all the problems government is trying to ameliorate through the programs of the welfare state will simply disappear. Indeed, Murray is a deeply committed believer in the power of non-governance. Many wonderful and marvelous social improvements would appear, Murray assures us, if it were not for government preventing the natural blessings of Adam Smith's invisible hand.
Murray tells us, for example, that under his Plan teenage pregnancy will decline and births to married women will increase. Here is how Murray demonstrates that this little aspect of heaven would reign on earth were it not for the presence of so much government mucking up the works: "The Plan radically increases the economic penalty of having a baby for a single woman under twenty-one . . . She no longer gets any government assistance--no cash payment, no food stamps, no Medicaid, no housing subsidies, no subsidies for day care." (p. 62) In other words, if we change the economic incentives, teenagers will stop having unprotected sex. The idea that teenagers are first and foremost utility-maximizing economists seems fanciful, to say the least. As John Kenneth Galbraith liked to observe, "There are some mistakes you need a Ph.D. to be able to make."
Oozing Charm from Every Pore . . .
This book has a disarming charm. Somewhat surprisingly, Murray writes with a light touch, which makes the medicine go down more easily than expected. Indeed, Murray says the most outrageous things in pleasingly short and eminently sensible-sounding sentences, which allow their implications to go smoothly sailing by, almost without noticing the cargo they are carrying. Here, for example, is how he disposes of the whole problem of economic inequality:
People are unequal in the abilities that lead to economic success in life. To the extent that inequality of wealth is grounded in the way people freely choose to conduct their lives, I do not find it troubling. . . . Some people pursue happiness in ways that tend to be accompanied by large incomes, others in ways that tend to be accompanied by lower incomes. . . . Income inequality is accordingly large. So what? Inequality of wealth grounded in unequal abilities is different. . . . the luck of the draw cuts several ways--one person is not handsome, but is smart; another is not as smart, but is industrious; still another is not as industrious, but is charming. This kind of inequality of human capital is enriching, making life more interesting for everyone. But some portion of the population gets the short end of the stick on several dimensions. As the number of dimensions grows, so does the punishment for being unlucky. When a society tries to redistribute the goods of life to compensate the most unlucky, its heart is in the right place, however badly the thing has worked out in practice. (p. 4-5)
Let me translate this: some people are poor because they choose to be; others are poor because of the bad breaks of their genetic endowments; nobody is poor because of the distribution of political power in society; and there is nothing government can effectively do about any of this anyway. Does it still go down so easily?
One troubling aspect of Murray's book is that the work is profoundly ahistorical. It is as if Murray awoke into the early 21st century and assumes that nothing came before the moment he sees around himself. Nowhere in his book will we find any acknowledgment that the programs of the welfare state evolved because vast social inequalities and huge unmet social needs were only too evident and too persistent in our history prior to the development of the modern welfare state. One wonders how poverty, social inequality, old-age dependency, and other social afflictions ever achieved a foothold in the first place, in the era before the rise of the modern welfare state, if the welfare state is itself the cause of these social maladies.
Murray escapes this troubling inconsistency by imagining that the pre-New Deal world was a lovely place, with no underclass, no problem of teen pregnancy or divorce, and abundant mutual concern which prevented widespread poverty. He fondly recalls a world in which churches, charities and fraternal organizations provided a sense of community, and he implies that with these institutions we could easily care for one another without the aid of government (the fact that we did not actually do so when we had the chance escapes notice in Murray's fanciful version of history). One wonders: is he unaware that some of those fraternal organizations were among the groups pushing for the programs of the welfare state? The Fraternal Order of Eagles, for example, was a major lobbying force agitating for old-age pensions--which is why one of the signing pens from the Social Security Act of 1935 was given to the Eagles. Does he know that charities and maternal social organizations were behind the push for Mothers Pensions?
Murray offers the most embarrassingly simplistic kind of history, when he bothers to appeal to history at all. He says, for example, that the underclass is a phenomenon that did not exist prior to the last half of the twentieth century, and that its appearance was caused by the programs of the welfare state. (p. 3) The chronic poor and socially disadvantaged have been a constant feature of the industrial world, although, granted, the name "underclass" did not come into vogue until after 1950.
Take, as another example of Murray's tone-deafness to history, the Medicare program. As Murray blithely puts it in the opening lines of his chapter on Health Care (p. 37): "Under the Plan, people will be responsible for their own health care, as they were from the founding of the republic until 1965 . . ." So how well did that work out?
Medicare was created in 1965 because seniors could not purchase adequate health care coverage on the open market. Nothing has changed in that regard. If there were no Medicare program it is frightfully likely that millions of seniors would return to the predicament of the pre-Medicare world. Indeed, the "medigap" policies that are the only existing market-based solutions for the elderly, exist only because Medicare exists, because Medicare is the first payer, bearing the brunt of the costs of providing health care to the elderly--freeing these private concerns to offer boutique coverage with little financial risk.
Or to take another obvious example, one of the programs Murray is anxious to target for abolition is Social Security. Prior to Social Security, retirement was not a widely available option for America's workers. The investigatory study by President Roosevelt's Committee on Economic Security concluded that a majority of the elderly lived in economic dependency at the time that Social Security was adopted. (14) Indeed, in addition to adding a new phase to the expected lifecycle (retirement) the Social Security program eliminated one concept and one institution. The concept was "superannuation," which was the phenomenon of older workers being "retired on the job" because they could not afford to retire in fact. The institution was the poorhouse, thousands of which dotted the American landscape. The poorhouse as a strategy for economic security for the impoverished elderly was with us right up until the Social Security Act of 1935. (15)
The plight of the elderly in America before Social Security also had nothing to do with the economy of the Depression. Social Security long antedated the Depression of the 1930s. It arose in Europe in the 19th century, as a serious societal response to the social, economic and cultural changes induced by the Industrial Revolution. The shift from an agricultural to an urban society; the replacement of self-employed craftsmen and laborers by wage-earning job holders; the appearance of the nuclear family; the explosion in life expectancy, all were phenomena of the Industrial Revolution--well in place before America created its welfare state. The acute economic plight of the Depression is not the reason for Social Security. The connection between the Depression and Social Security in America is that the Depression was the triggering event that finally persuaded America to adopt social insurance programs.
All of this actual history is never mentioned by Murray. He is content with his bucolic visions of an America which never existed, and which is unlikely to magically appear once government stops all its efforts to protect our economic security. He seems particularly oblivious to the possibility of a selfish and callous society arising in the vacuum left by the absence of governmental programs. As if the Gilded Age was a term referring to an architectural style. As if the dimes handed out by John D. Rockefeller were an effective substitute for old-age pensions for his workers.
Murray the Moralist
Murray's vision is impressively far-reaching. In Part III of his book he puts aside the standard libertarian and conservative economic and social policy arguments and reflects on such big-picture topics as the meaning of life, and how his amazing Plan supports our spiritual fulfillment as well as our economic prosperity. The argument in this section of the book is basically that modern western societies (especially as exemplified in western European welfare states) have become soulless materialists concerned only to while away their lives in the maximum of material comfort, in "a culture of self absorption." What he calls "The Europe Syndrome." And the Welfare State--that Satan among us--is responsible for allowing them to do this. Thus if we eliminate the welfare state we will all be better people for it.
According to Murray, declining marriage rates, declining fertility among white Europeans, and a declining belief in God are all caused by the welfare state! God gets displaced in one of two ways, he reports: either one believes there is no God, hence material security becomes one's only interest; or one believes there is a God, but material security distracts one from paying attention to Him. Apparently--thanks to the welfare state--we are damned if we do and damned if we don't. And apparently, Murray shares the medieval value system by which suffering and deprivation are thought to be felicitous because they turn one's mind to God. It is also curious, one might think, that in Part III of his book Murray expends so much moral energy inveighing against material prosperity, while in the rest of the book he reassures us that his Plan will produce more of it than the welfare state ever can.
There is more. "The same absorption in whiling away life as pleasantly as possible explains why Western Europe has become a continent with neither dreams of greatness nor the means to reacquire greatness," he reports. "Even Europe's popular culture is largely borrowed from America . . . it has no contemporary high culture worthy of the name. All of Europe combined has neither the military force nor the political will to defend itself." (p. 86) This news may come as a bit of surprise to the 800 million Europeans, not to mention to all those Americans who travel to Europe in search of some of that apparently derivative culture. I suppose Murray imagines that Paris, Arkansas is the cultural superior to Paris, France.
There is more, much more, along these same lines, including some fairly plausible musings on the nature of happiness; and a fairly interesting discussion of the effects of the Plan on marriage and divorce; as well as some insightful thoughts about the nature of fulfilling work. The general theme of these discussions is that more personal responsibility would yield a better society. I find these discussions to be generally more persuasive than the rest of the book.
However, the flip side of this analysis is the attack on the welfare state, on the grounds that it undermines personal responsibility. This is the anti-government, anti-social welfare, face of the libertarian Janus. Some of us who might be inclined toward conservative takes on social values questions, find the attack on the welfare state to be misplaced. It amounts to a kind of sink-or-swim morality by which we remove the economic safety nets from society in the hope that the resulting challenges will build our character.
Granted, it would be socially desirable if marriages were more stable; if child-bearing occurred only by mature married women; if we all took more personal responsibility for our lives and our pursuit of meaningful work; if we had a stronger, more expansive, sense of community. But eliminating government from our lives in the hopeful expectation that all this will happen is to gamble our security on Murray's ideology.
One aspect of Murray's moral musings, however, has to be singled out for special treatment. His discussion of "community" is positively giddy. He imagines an idyllic pre-welfare state world in which fraternal organizations and various other forms of voluntary association distinguished the American landscape. He even begins by wistfully quoting Tocqueville on the subject. His basic vision of the future is that in the absence of government, voluntary associations will emerge like mushrooms after a Spring rain, and all our social needs will be met through voluntary mechanisms.
He argues two specific claims in this regard: giving through charities allows moral suasion to replace the moral neutrality of the bureaucrat; and private giving by its very nature inculcates virtue in the process. The idea here seems to be that charities can withhold their charity if, say, the recipient is not a good, moral Christian. He takes this to be a good thing, as it will (of course) make us all good, moral Christians. "In a society where the responsibility for coping with human needs is consigned to bureaucracies, the development of virtue in the next generation is impeded. In a society where that responsibility remains with ordinary citizens, the development of virtue in the next generation is invigorated." (p. 122)
This is positively historically dumbfounding. America never was a nation in which voluntary associations provided for the core socio-economic needs of its citizens. At best, these organizations ameliorated many of the harsher aspects of industrial capitalism. As to the cultivation of virtue: has Murray forgotten that prior to the New Deal, child labor was one major form by which "ordinary citizens" developed virtue in the next generation? When Murray learned that Progressive Era journalists felt compelled to become muckrakers to combat the corruption and social injustices of their era, did he think a muckraker was someone one hired to do the gardening? There never were any "good old days" in Murray's wistful sense.
Moreover, government is a form of community--it is preeminently the community acting in the collective. The difference, of course, is that voluntary associations are voluntary and government programs generally are not. And Murray wants what every spoiled adolescent wants: to be free to support only those undertakings of which he directly approves, and not those that society deems desirable. This is what libertarianism is always about at its core. This has nothing to do with community in any meaningful and honorable sense. On this point, Murray is simply confused.
The Devilish Details
As I said, there are lots of devils in Murray's details, and it will be instructive to mention a few of them.
Murray avoids any concern for the problem of lack of access to health care coverage by a disingenuous analysis that is breathtaking in its audacity. He argues that if everyone were to buy a health insurance policy at age 22, then nobody will ever have to face the problem of acquiring health care coverage in old age. So under his plan, everyone is assumed to spend $3,000 of their annual grant on the purchase of health insurance. (16) And he implicitly invites us to imagine this same rate into perpetuity. But of course in the real world insurers will constantly adjust rates upwards as the insured person ages, and by the time the young worker reaches old age the marketplace purchase of health coverage is likely to be prohibitive (just as it was before Medicare arrived on the scene).
Moreover, existing health care coverage exists in a marketplace in which Medicare is a major economic factor. The Medicare program does not just pay the direct and obvious costs of the health care bills of its beneficiaries. It is also a major source of funding for research and teaching hospitals; it subsidizes care in rural communities which markets are unwilling to serve; it is even a main source of the indirect subsidies which make free emergency room care possible. Removing this program from the matrix of the health care system will thus cause ripples of price adjustment and resource re-allocations throughout the health care system. It is simple-minded to assume that health care will continue to be available in the way it is now and purchasable at something like present rates, if Medicare is not part of the health care equation.
Consider Medicaid as yet another complication. The poorest of the poor currently have the benefit of essentially free health care. Under Murray's scheme, we give a poor person $10,000 and we require that he/she spend $3,000 of their grant purchasing private health insurance. But not all health insurance is created equal. Most insurers will not insure certain high-cost forms of care, like long-term care (certainly not at any rate remotely close to $3,000 per year). Medicaid is a provider of long-term care benefits for the very poor, whose residence in nursing and other long-term care facilities is funded by Medicaid. Without this program it is far from clear that this population will be able to purchase anything like the same care in the private markets. Is it too much to worry about the spectacle of sick and poor nursing home residents being on the streets because their source of funding has been eliminated by Murray's scheme? Certainly, Murray's book shows no evidence that he has ever worried about this possibility.
Another little glitch--which Murray may or may not care about--concerns lawfully admitted immigrants. Certain of these immigrants (if they are poor, and after a 5-year waiting period) can qualify for the Supplemental Security Income (SSI) program, and for Medicaid. SSI is a federal welfare program for the needy aged, blind and disabled. The eligible population consists of poor resident citizens and poor immigrants lawfully admitted for permanent residence. Since Murray's Plan only pays grants to U.S. citizens and not to any of the 7 million lawfully admitted immigrants, when he eliminates the SSI program (and Medicaid) he kicks all the immigrant recipients out in the cold, with no compensating grant to make the deal an appealing one for them. As I say, he may not care; but some of us might.
Another related point: When Murray kicks those lawfully admitted aliens off SSI and Medicaid they will likely start showing up in emergency rooms to obtain their health care (as the uninsured without governmental benefits do now). But since Murray also wants to eliminate Medicare, the major source of funding for this subsidized care will be eliminated as well. Just another of the many complex policy interactions that Murray manages to overlook.
There is a serious methodological flaw in Murray's work, one which may well matter to erstwhile supporters of libertarian policies. Murray fails to factor-in the secondary consequences on tax policy from the programmatic eliminations he proposes.
Lots of rich and influential corporations and individuals have managed over the years to litter the tax code with thousands of special-interest tax breaks, breaks which are often tied to specific government programs. The Small Business Administration, to mention just one example, provides numerous opportunities for businesses to claim various special tax exemptions. So do many other government programs--from the work of the Army Corp of Engineers to the activities of the Export-Import Bank. When these programs are eliminated, the associated tax breaks go with them. Thus, many highly influential interests will suddenly find their own personal tax bills soaring--quite apart from the general increase in the total tax bill which will be distributed among all taxpayers. It is not just a question of the size of the total tax bill--incidence rates matter too. Who pays is every bit as important as how much gets paid. And many powerful interests will find much to dislike hidden in Murray's scheme. (17)
Yet another conceptual flaw occurs right in Murray's initial assumption underlying his entire analysis. His argument is that America has enough wealth to afford prosperity for all, but that too much of this wealth is somehow skimmed-off by the activities of government. Thus, he can suggest that if all the waste from government is avoided, somehow a vast sum of money is freed to circulate in the economy, making us all happy and prosperous.
But government does not collect tax revenues for the purpose of burning the cash in large incinerators. Governments spend the tax revenues they collect (often by paying it to private sector contractors). Money is promiscuously fungible and it pays no mind to whether the person through whose hands it is passing is a bureaucrat or a corporate plutocrat. Government spending and investment is a source of wealth creation in exactly the same way as spending in the private economy. It makes no difference to the total level of income in the economy whether the $1.4 trillion in expenditures that concern Murray are expenditures by governments or by individuals. Simply shifting money from the public sector to the private sector does not by itself create new wealth. So we do not save anything from eliminating government programs. But we do powerfully alter the distribution of what wealth we do possess--which is, after all, Murray's real agenda.
Some Little CheatsThere are lots of little cheats in Murray's book. A simple example will illustrate the point.
In a discussion of eliminating the Social Security program (p. 26) Murray wants to argue that a low-paid worker would be better off if he had his payroll taxes to invest in the markets rather than giving them to the government. So he takes the case of a young worker whose salary is always $20,000 a year for 45 years. He tells us that his eventual Social Security retirement annuity will be $916 per month, in current dollars. Then he slyly reports that this worker pays $2,480 per year in Social Security payroll taxes. Next he tells us that if this worker were allowed to put $2,480 per year into a mutual fund with interest compounded at 4% per year that his private sector annuity after 45 years would be $2,029 per month.
The rub is, this young worker does not in fact pay payroll taxes of $2,480 per year--he only pays $1,240 per year. The doubling of his available investment capital is achieved because Murray counts as available to the worker the employer's share of the payroll tax--a fact he mentions in a brief footnote on page 182. This is a standard ploy in conservative critiques of Social Security, to be sure. But it is always fundamentally dishonest. To see why, imagine the Social Security program were abolished tomorrow and the payroll tax that funds it. Our young worker would immediately get a $1,240 net increase in his paycheck, and the employer would get a $1,240 reduction in his annual tax bill. IF the employer decided to use his refund to increase his employee's paycheck by another $1,240, THEN Murray's analysis would be valid. But the employer is perfectly free to spend his windfall on new plant and equipment, on a bonus for his favorite employee, or on a golfing vacation in Florida. Counting the employer's share of the payroll tax as if it belonged to the employee--as Murray does--is a deliberate cheat, designed to make the advantages of his scheme look much bigger than they really are.
Another way Murray cheats is by simply assuming that government programs he likes will work, while those that he doesn't like cannot. Thus, he argues, "If constructed with great care, it is possible to have a government that administers a competent army, competent police, and competent courts. . . . Every step beyond these simplest, most basic tasks is fraught with increasing difficulty. By the time the government begins trying to administer to complex human needs, it is far out of its depth."(p. 127) But on what grounds are we allowed to conclude that, say, the corpus of criminal and civil law is somehow easier to administer than a welfare payment? On the grounds that Murray constructs the argument by starting with these programs and then asks us to imagine that each additional task makes the job more difficult. No doubt this tautology is wholly true. As is the equally tautological argument that could be constructed by starting first with a list of welfare programs and then observing "Every step beyond these simplest, most basic tasks is fraught with increasing difficulty."
Yet another form of dishonesty by assumption comes when Murray gets to claim that government programs must necessarily always grow in cost and inefficiency, because, well, as good conservatives, we all know that is the nature of government. "Bureaucracies are also inferior to private philanthropy because a bureaucracy's highest interest cannot help being its own welfare. . . . In the business sector, that means growing by gaining new customers and being profitable. For a government bureaucracy, it means growing by increasing its budget and staff."(p. 119)
The fact is that government agencies are often motivated by the ambition to cut budgets and staff, and all large organizations in whatever sector are prone to the same kinds of stifling inefficiencies. Moreover, the ability to make a profit bears only the most tenuous of relationships to organizational performance. Marketing in the absence of real product value, stock price manipulation, questionable accounting techniques, and a whole host of dubious business practices, are now commonplace in corporate America. The ability to make a profit has about as much connection to moral merit as cost/benefit equations have to the problem of teen pregnancy.
Not only that, but one could plausibly contend that governments are in general much better run organizations than most private sector companies because government organizations are subjected to levels of oversight which are unimaginable to a private sector firm.
In any case, Murray has to assume this conservative article of faith in order to grease the skids for his cost-curves to slide past one another--in order to prove by assumption that the costs of the welfare state will always and only rise while the costs of private undertakings will tend always to decline.
There is one other little detail about a flaw in the plan. It is not a cheat exactly, since Murray admits it, although the admission is stuffed away in Appendix D (perhaps on the advice of the axiom: "If there is something you do not wish to have read, be sure to put it in an appendix").
In any case, Murray admits that the Plan will in fact involve significant transition costs. These are the costs of maintaining a dual system for some period of time while the older people in the society are gradually phased out as the younger cohorts grow up under the Plan. In other words, persons already in middle age (or indeed, who are already collecting Social Security benefits, for example) will have to be continued on these programs, as they are heavily invested in them--it is too late for them to grow up under the Plan. Alternatively, we will have to buy-out the current value of their future benefits.
Either way, transition costs are a serious issue. This is one of the reasons, for example, that President Bush was unable to get much traction with his proposal to partially privatize the Social Security system--because the $2 trillion transition cost was a price policymakers were unwilling to swallow. Murray, to his credit, acknowledges that these costs exist in his scheme, but less admirably, makes no real effort to estimate them.
This is potentially a rather serious flaw in the Plan. For an honest accounting, the transition costs of this scheme have to be added to the costs of the grants. Doing so will shift the cost curves and delay the point at which the Plan becomes less costly than the existing welfare state. Since Murray offers no estimate of these costs, we must be highly skeptical about his Plan. The way Murray deals with this shortcoming, is to wave it away: "I am not trivializing the problem of transition, but . . . If we wanted to switch to the Plan badly enough, we could do it. . . . Nothing in this perspective denies that the transition costs would be large and problematic. But neither should we stop considering the Plan because the prospective transition costs are obviously unmanageable."(p. 165-173) One hardly knows what to say.
One Other Not So Little ProblemIn addition to these troubling details, there is one other problem, which hardly qualifies as a detail one might think, and which I have already briefly mentioned.
The basic libertarian intuition as to fiscal policy is that by drastically scaling-back the role of government in the political economy, taxpayers can dramatically reduce their obligations to society. You might say the whole point of libertarian fiscal policy is to reduce one's taxes. But, as Murray rather blithely admits, his scheme will initially cost taxpayers $355 billion more per year than the total bill for the existing welfare state. That is, in the current year, Murray's scheme would result in a $355 billion increase in federal taxes! This is what it will cost to give $10,000 each year to every adult American.
Murray's apparently-clever move in his new book is not to promise the elimination of costs to the taxpayers--only a shift in the resulting revenues from the public to the private sector. In other words, Murray's plan will continue to tax American taxpayers at present levels, with a new surtax to fund his grants added on top of all existing taxation. It is just that rather than giving this money to the government and letting it allocate these resources in socially desirable ways, the money will be returned to the citizens to allocate as they see fit. That's the new wrinkle Murray is offering enemies of modern government. He is urging his fellow libertarians to stop fighting against taxation, and to focus their attention instead on who gets the money which results.
Now there is, to be fair, another claim Murray is making. He assures any avaricious libertarians that eventually, as the cost of the welfare state continues on its present upward path (by assumption), the cost curves will cross and by 2020 the Murray Plan will cost $549 billion per year less than the existing system. Taxpayers will still be paying approximately $2 trillion in federal taxes in that year for the grants in place of the now-vanished social programs, but they can be pleased as punch to contemplate the theoretical savings they are enjoying from the realization that without Murray's scheme they surely would be paying $549 billion more. This "happy outcome" (as he calls it) is based on two assumptions: the cost of the welfare state will continue to rise, and the cost of his Plan will hardly rise at all because everyone will be getting so much richer that a larger portion of the grants will be taxed-back. Given all the problems with Murray’s analysis, this “happy outcome” seems far from likely.
The Magician's Other HandThe appeal of Murray's argument is his claim that eventually this system will cost less to America's taxpayers than the welfare state, and moreover, it will maximize individual freedom and minimize government intrusion in social and economic affairs. This is the libertarian viewpoint on social inequality stripped to its naked essence. Radical individualism replaces all forms of communal responsibility mediated by government. In such a world, we truly have no one to blame but ourselves. As Murray helpfully summarizes his Plan for us: "Here's the money. Use it as you see fit. Your life is in your hands." (p. 14)
In his newest book Charles Murray at last shows us what the magician has had in his other hand all along. There are no longer any coy attempts to play blacks and whites off against each other so as to disguise his real agenda. In his In Our Hands Murray finally puts it all on the table. His argument now is that the American welfare state is, always was, and always will be, an abject failure. No longer does he bother to focus on welfare programs. Rather, he urges the wholesale abandonment of the entire structure of the American welfare state. Every citizen thus becomes empowered to provide their own economic security. No American will any longer have a claim on government benefits. Nor will welfare be an issue one way or the other, as welfare will vanish from the land. All remaining social inequalities will then be obviously and utterly the responsibility of the individuals involved. Society will be freed of any obligation to ameliorate poverty or economic inequality.
This would all, no doubt, be highly liberating. If one no longer has any obligation of concern for the social welfare of one's fellow citizens, a great many burdens are instantly lifted. The rich, powerful and privileged will be freed to enjoy their wealth, power and privilege, unburdened by any trace of a guilty conscience. If some have grown weary of race-awareness, we can now be free to be truly indifferent to the ways race shapes the phenomenon of social inequality. The poor may always be with us, but they will no longer be our problem. We will no longer have to argue over just how many millions of Americans have no health insurance, because it will no longer be any of our business. We won't even have to keep the statistics anymore. How marvelously liberating!
This is the magical America Charles Murray summons to our imaginations. Faced with the specter of Murray's brave new world, some of us might still prefer a little less freedom and a little more old-fashioned economic security.
1. Charles Murray, Losing Ground: American Social Policy 1950-1980, (New York: Basic Books, 1984).
2. Charles Murray, In Our Hands: A Plan to Replace the Welfare State, (Washington, D. C., The AEI Press, 2006).
3. Advertisement in the National Review, December 31, 1987: 7.
4. Memorandum from Jim Van Dien, Course Director, Government Executive Institute, to Participants in the Feb. 21, 1986 Program featuring Charles Murray's Losing Ground, February 1986. Copy in the Social Security Administration History Archives.
5. There were major flaws in Murray's analysis, despite its avalanche of statistics, as was pointed out at the time by Robert Greenstein (Robert Greenstein, "Losing Faith in 'Losing Ground,'" New Republic, Vol. 25, March 1985: 12-17).
6. Charles Murray and Richard Herrnstein, The Bell Curve: Intelligence and Class Structure in American Life, (New York: Free Press, 1994).
7. Charles Murray, "A Plan to Replace the Welfare State," American Enterprise Institute, 2006. Available online at: http://www.aei.org/publications/filter.all,pubID.24231/pub_detail.asp (accessed 9/29/06).
9. Technically, these appear to be budget functions, some of which are programs and some of which are the budgets allocated to specific government agencies.
10. Economists define a "public good" as one equally available to everyone and the consumption of which by one person does not diminish the value of the good for another. That is, public goods are "non-rivalrous" and "non-excludable."
11. Murray mixes figures from 2001 and 2002 to produce this total.
12. Murray's tax would be somewhat progressive. Recipients would be taxed for a portion of their grant starting at incomes of $25,000 per year. At an income of $50,000 or more, one-half of the grant would be taxed back. The balance ($5,000) would apparently be paid regardless of income.
13. This generic idea of universal grants in lieu of some social welfare programs is not entirely without historical precedent. In the early 1960s University of Chicago economist Milton Friedman proposed what he called the Negative Income Tax as a replacement for the government's income transfer payments. The Nixon Administration briefly toyed with (and ultimately rejected) a plan by Daniel Patrick Moynihan to replace most welfare programs with a guaranteed annual income in the form of a flat monetary grant. But as far as I know, no seemingly serious scholar has previously proposed eliminating essentially every social program of government and replacing them all with one annual flat-rate grant to every adult citizen.
14. Social Security in America: The Factual Background of the Social Security Act as Summarized from Staff Reports to the Committee on Economic Security, (Washington, D. C., U. S. Government Printing Office, 1937): 137-155.
15. The poorhouses first came under pressure from the 1920s movement for state old-age pensions. After the passage of the Social Security Act (which introduced partial federal funding of state old-age pensions) the poorhouses began an accelerated disappearance.
16. Murray feigns indifference as to whether this investment in health insurance will be optional or mandatory. He clearly prefers optional--which raises other sorts of problems, which Murray sidesteps by the device of professing his indifference. In other words, he suggests that if readers are worried about these other problems, then they can assume the Plan is mandatory. This a clever way to avoid having to do one's homework.
This $3,000 figure also assumes a set of health care "reforms" that Murray is advocating (p. 43-50). Absent his "reforms" this figure may rise. But since Murray pronounces himself prepared to pay whatever it costs, this is not a flaw in his Plan--except to the extent that costs substantially above $3,000 might necessitate a grant substantially larger than $10,000, which would in turn make his comparisons between his Plan and the existing welfare state that much more unattractive.
17. Murray's book does have an appendix (Appendix C) in which he discusses the tax policy implications of his plan. But the entire discussion consists simply of sample comparisons of before and after tax rates for typical taxpayers, in the context of the general surtax assessed against every taxpayer to fund his grants. The potential for Murray's Plan to affect tax loopholes, and hence incidence rates for particular taxpayers, is a topic to which he seems utterly oblivious.comments powered by Disqus
Keith Knuuti - 10/30/2006
I think you're demonstrating Larry DeWitt's point (about ignoring history) for him. How do we *know* that premarital sex would not decline radically? Well, metaphysical certainty is quite difficult, but we can make an educated guess.
One part of that guess would be based on the historical record, which shows that illegitimacy rates soared across Europe as countries industrialized. This preceded the creation of the welfare assistance, so it cannot have been caused by welfare assistance. Since that assistance did not cause the dramatic increase in illegimate births (births caused by premarital sexual activity), it is hardly reasonable to expect that the end of welfare assistance will end a behavior which it did not cause.
You are certainly welcome to a belief that, for example, welfare did not cause premarital sex, but it has perpetuated it. Unfortunately, there's no evidence for this view, and plenty of evidence against it. As the saying goes, you're entitled to your own opinions, but you're not entitled to your own facts.
Stuart Buck - 10/26/2006
Fair enough. I just wonder why there isn't at least an option to see all of the threaded comments at once, as one might see at Daily Kos (I believe).
Andrew D. Todd - 10/26/2006
In the first place, if you click on the entry which has the little solid circle, you will get back a document containing all the entries under that section. That may not be exactly what you want, but it is reasonably close. I don't know which browser you are using, but at least in Mozilla/FireFox/Seamonkey and, I believe, Opera, you can open things up in windows and tabs by right-clicking them. If you want to comment on a particular comment, you click the number after the comment title to insure that your comment will be tagged on at the appropriate place.
In the second place, when you have a large number of people commenting on an article, to an aggregate volume of 50,000 words or thereabouts, they tend to comment on each other's comments, and they don't all comment on the same aspects of the article. The result is that you can have ten different exchanges going on at once. In any case, simply navigating through 50,000 words without internal subdivisions is difficult. Most comment systems only work because no more than three people ever post more than ten comments, and half of those comments consist of little more than synonyms for good or bad. Obviously, HNN operates at a much higher level than that.
In a flat-model system, in which things are posted sequentially as they are received (eg. Kevin Drum's Calpundit/Washington Monthly, Philip Carter's Intel Dump), people are frequently commenting on things which are some distance away. Most of these people are not trained to the point of using proper citations reflexively, so there is often confusion about which comment they are referring to. I have noticed that Kevin Drum has to start a new thread on a given topic every day, just to keep the cacophony level down. Anything posted after a certain hour of the day tends to get bypassed, and people who want to hold extended side-conversations over a period of a few days tend to divert them into private e-mails.
When it was first adopted, back in the 1980's, the flat-model, as exemplified by the University of Guelph's CoSy system, was a considerable improvement over some other contemporaneous systems, notably that employed by AOL. I was part of a CoSy based community, more or less contemporaneous with the WELL, only not so famous. The system worked because there were only about two hundred people who were both signed up to post comments and reasonably comfortable using an online system, and, around the margins, people were paying long-distance calling charges to log on.
Stuart Buck - 10/26/2006
No, but I've used a lot of commenting systems that at least allow you to see all of the comments. Thus, I don't have to be a programmer to know that such a thing is possible, any more than you have to be an automotive engineer to know that something's amiss if you're told that it's impossible for cars to travel over 30 miles per hour.
Jason Blake Keuter - 10/26/2006
Your post is an important reminder that Murray, Milton Friedman and proponents of capitalism are interested in the best possible society, that gives the greatest degree of liberty and opportunity to the most people and seeks to eliminate impediments to the advancement of worthy individuals. In other words, contrary to the latent Marxist cant that free-market economics is imply an intellectual ruse to justify an ossified system of gross inequality, it is, in fact, the best redress against artifical and unjust inequality that exists.
Jason Blake Keuter - 10/26/2006
Absolutely. And the most aggressive proponents of the welfare state are to be found, not among people who actually get to live with its consequences, but affluent "progressives" who live in largely segregated communities that reflect the realities about IQ and stratification that Murray is talking about (i.e.. university towns)
Lawrence Brooks Hughes - 10/26/2006
Charles Murray's unique search for a better society is important work, and you deserve credit for reading him and thinking about his proposals... My recollection of The Bell Curve goes directly to the authors' findings about the public school system, and particularly to their conclusion that as currently structured it is failing the top 20% of students in ability, and thus the U.S.'s ability to compete in the world, but doing fairly well for the other 80%. That judgment about the schools, like much of Murray, is manifestly and irrefutably true... Your brickbats for his latest book should be leavened with a grudging respect that some of it is doubtlessly helpful in moving the ball down the field. I think you need to study the benefits of America's 1995 welfare reform, which you probably argued strenuously against, and genuinely feared would work a hardship, but which instead did just the opposite, and proved its proponents were more than right--even brilliant, a la Murray... How do we know, for instance, that pre-marital sex by teenagers would not decline radically if subsidy for it by government were withdrawn? You should be grateful there are people like Murray willing to think outside the box, or we would never have any further progress. Certainly the Great Society and War on Poverty were ignominious and costly failures. We should maintain a high prejudice against refilling any of their prescriptions.
Andrew D. Todd - 10/25/2006
Well, HNN seems a reasonably good system as it is. Under the right conditions, the HNN comments might easily amount to a hundred single-spaced pages, and it is not practical to simply dump them all in one web page. HNN is free of the tendency toward needless fanciness which turns up in a lot of sites. I've seen a good many worse blogging systems, written by people who ought to have known better. There's an old engineer's maxim which runs: KISS = Keep It Simple, Stupid.
Of course [full disclosure], I'm biased, as I did give certain advice, a couple of years ago. To be taken seriously, of course, I had to present my credentials, in the form of sizable programs, in the thousand-line range. Unless you have actually written a blog system, or a program of similar complexity yourself...
William J. Stepp - 10/25/2006
I haven't read Murray's book, but one obvious problem with the $10,000 grants (nicely alluded to by Jason Blake Keuter) is: why don't the recipients just spend some or all of them on drugs or whatever other escape vehicle that floats their boat? This, after all, is the logic of the welfare state. Just apply at the welfare office, no responsibility necessary.
This might come as a shock to Larry DeWitt, but many members of the underclass often have a problem with the basics of holding down a job--like showing up for work on time five days a week. It's amazing how the welfare culture and the lack of a father at home break down social mores, particularly in a milieu characterized by drugs and other nasty aspects of the inner city.
Then, too, there's the problem of the educational skills, or lack thereof, of welfare recipients thanks all too often to the horrible inner city public schools, which seems not to trouble Mr. DeWitt at all, but does Mr. Murray, if memory serves. This is a major reason for their lack of economic progress.
On Mr. DeWitt's reading, the market fails the poor, as if the market is an ineffable horrible blob, rather than a large latticework of voluntary exchanges between two consenting adults, an employer and and employee, both of whom hope to gain from the bargain and almost always do.
Stuart Buck - 10/25/2006
Also, whoever runs these HNN boards needs to come up with a better or comment system. I can't find any obvious way to view all of the comments on a single page. Instead, I keep having to click back and forth repeatedly. What purpose is served by wasting everyone's time like this?
Stuart Buck - 10/25/2006
I can't imagine any situation in which a "higher income" person would be better off under the Plan. Take a guy making $200,000 a year. His income tax bill goes up $15,000 a year from the loss of deductions and the need to pay for the Plan. He also no longer can look forward to getting SS or Medicare or anything else like that. But yes, he gets a "windfall" of $5,000 a year now. Do the math.
I suspect that those who would be made better off would be the working poor -- those who make just too much money to qualify for various welfare programs, but who still have a very hard time making ends meet, paying for health insurance, etc.
Stuart Buck - 10/25/2006
On the contrary, many people will be better off--namely those who now get little from the various programs of the welfare state. For them, the grant scheme will come as a real windfall. These tend, as a generalization, to be higher income individuals, but not exclusively.
This is quite unsubstantiated. Why, exactly, would higher income individuals who would be paid $5,000 under the Plan be better off? As you yourself have pointed out, they are the same individuals who would also lose mortgage tax breaks (worth quite a bit on an expensive house), corporate welfare of all types, Social Security and Medicare, etc., etc., etc., PLUS they would be financing the Plan for everyone else. So again, why would the people who are better off under the Plan be mostly "higher income" people?
Jason B Keuter - 10/25/2006
One last thing, Mr. Dewitt's article seems premised on the idea that Murray is waging some kind of end around to eliminate the welfare state. I don't think Murray is pretending otherwise. This is almost like analyzing Milton Friedman for Libertarian tendencies. I think Murray is quite upfront, and the tone of DeWitt's piece might better be suited to a 19th century tract about Papal conspiraicies, immigrant bosses and the boozification of the cities.
Jason Blake Keuter - 10/25/2006
You do a nice job of restating Murray's point and refuting DeWitt's nonsense. Regressives like DeWitt (reactionary paternalism dressed up radical garb) shudder at the thought of a government giving people $10,000 a year because it would lead to turn the debate into a straightforward question of cash. What politician could run on a platform that $10,000 is not enough? What drug addict could asswer the relative's question : what did you do with the $10,000?
Jason Blake Keuter - 10/25/2006
Socio economic status ends up exacerbating IQ differences in a meritocratic class system, which is a reality you're arguing doesn't exist. If you acknowledged that it did, your defense of redistributive social and economic policy would be recognized as patently unjust.
The evidence is in: the redistributive systems do not work in rectifying socio-economic inequalities. They do, however, create perverse incentives, the worst being illegitimate births. Again, I ask that the reader think of this demographically: a woman's educational level predicts quite well how many children she will have, and this is no different among black Americans. Add to this public policy that encourages having kids without much education and you end up creating a culture in which such behavior is legitimate and trying to simply get a decent education can seem all but impossible. Thus, for those kids who have the potential to succeed, state interventionist policies make deterimental whatever role socialization has in determining socio-economic status.
The objections to Murray's proposal are curious...well, suspicious..well, downright disingenuous. The intent of the reform proposal may very well be to draw out the fact that the welfare state is really a paternalistic state, defended by people who cry "racism" but themselves possess very little confidence in most people's capacity to act independently in their own interests - even with financial resources.
The disasters that regressives (back to state paternalism a la medieval church) envision if people are responsible for managing their own lives themsevles refute most of the premises upon which their justification for the welfare state rests: clearly, welfare has not had the desired efffect of being a temporary help in a time of need but instead an expectation that saps initiative and self-sufficiency.
Ultimately, the greatest virtue of Murray's proposal is its morality. The welfare state robs individuals of the right to exercise their own moral judgment. Instead of individuals providing help for those they know actually need it, and consequently committing their resources to helping those in need, which entails personal sacrifice, the welfare state simply establishes categories of people that are needy and gives them money.
This has the effect off shrinking resources available to help those one actually knows. Worse, it allows people to shirk their responsibilities to family and friends because the state will simply take care of it. Moreover, those who receive state assistance feel no sense of obligation to anybody, which would create pressure to change. Do bleed your relatives dry because you won't get a job, and the consequent, routine guilt trips, is enough to make you get a job.
In sum, the welfare state promotes amorality frays family and friends, discourages social and personal reciprocity and encourages viewing individuals through the imprisoning prison of social identities constructed simply to justify the redistribution of resources in homage to a political ideology: it establishes income levels at which the state determines the individual does not deserve what they have and thus can only be said to have got it immorally. It also establishes income levels at which the individual is presumed to be such a victim that one is called callous and racist if one demands of that individual that they be a responsible adult.
Having absolved one's self of genuine moral responsibility, the individual can simply chant the mantras of race, class and gender seminars as a balm for what little conscience they have left.
Larry DeWitt - 10/25/2006
Whoops. That is $10,000 per YEAR in paragraph 6.
Larry DeWitt - 10/25/2006
I appreciate your interest in my review, and your willingness to engage on these issues.
But I still think we are not communicating clearly here on a central point.
I am not claiming that everyone will be worse off under Murray’s plan. On the contrary, many people will be better off--namely those who now get little from the various programs of the welfare state. For them, the grant scheme will come as a real windfall.
These tend, as a generalization, to be higher income individuals, but not exclusively. You need to keep in mind here the list of Murray’s program cancellations. I give a short bullet-list in my review, and the full list can be found in Murray’s Appendix A. There are many more programs involved than just welfare benefits.
So anyone who can look at the list of Murray’s program cancellations and say to themselves “I do not benefit from any of these programs,” will benefit from Murray’s proposal.
The poor, in general, will be worse off because many of them get much more presently in benefits (cash payments, housing subsidies, medical care, etc.) than $10,000 a month. (There will be some poor who presently get less than $10,000 per year and for them too the plan will be dollar-positive.)
There is another whole class of individuals who will either benefit or lose based on their tax posture. This is perhaps the aspect of the plan which creates some confusion.
The confusion, I think, comes from the fact that there are two aspects of Murray’s proposal–only one of which he discusses in the book. On the one hand, there are the benefit programs, which Murray talks about at length. On the other hand, there are certain tax implications of the plan, only part of which Murray acknowledges.
Murray admits that there will be a general broad-based tax increase in the early years to fund the extra spending the grants require (the extra $355 billion per year in initial costs). He admits these tax consequences. But there is more involved here than this general increase in the tax bill for all tax payers.
The tax changes he does not talk about are those that result from his constitutional amendment. This amendment demands that “Henceforth, federal, state, and local governments shall make no law nor establish any program that provides benefits to some citizens but not to others.” I claim this provision has tax implications in that it will ban special-interest tax loopholes and all tax subsidies that do not benefit every tax payer. There are hundreds of billions of dollars of such special provisions in the current tax code. And quite specific people and companies benefit from them. This too is part of the “welfare state.” Murray does not acknowledge this effect, nor estimate its magnitude. These are people who will lose on the tax side under Murray’s plan.
So there are four classes of people affected by Murray’s proposal: 1) people who presently collect more than $10,000 per year in various forms of welfare state benefits (who will be losers under Murray); 2) people who now get little or nothing from the present programs (who will be winners on the benefit side); 3) the general taxpayers who will have a higher tax bill in the initial years because of the extra cost from the Murray plan (who will be losers in the short term and perhaps winners in the long term); and 4) specific taxpayers who will lose tax breaks they now enjoy.
We cannot just talk about the average effect, or the global effect of the proposal, we have to consider the cohort-specific effects. There will be specific winners and losers. It simply is not the case that everyone will benefit under the Murray plan, or that everyone will lose. It will have a different effect on specific sub-groups in the population. Admittedly, Murray implies that the plan will, in general, have a positive effect on society. In my judgment, it will have an overall negative impact. But whichever one of us is right about this global effect, it should be clear that the effect will not be the same on everyone.
Stuart Buck - 10/24/2006
With all due respect, this makes no sense. If Murray's plan is going to reduce the money going to the poor *and* to the rich, and it's also going to take more money from the rich in taxes and reduced loopholes and subsidies, where do you think all of this money is going to go? You're trying to have it both ways. Why not admit that if the Plan does raise taxes on the rich and reduce distributions to the rich (the $5,000 max would be considerably less than rich people can currently get from Medicare and SS), then maybe there's a good chance that all of this money might end up in the hands of poor people who are now getting $10,000 a year? Why do you feel the necessity to claim that everybody is going to be made worse off in every way?
Larry DeWitt - 10/24/2006
You ask: “Is Murray's plan objectionable because it somehow harms the poor? Or because it takes too much money from the rich (i.e., by eliminating tax breaks) to give to the poor?”
Both I would think, depending upon which group you are in. I am merely pointing out that Murray’s plan has adverse consequences for both groups. I take it both groups ought therefore to be opposed to it.
What has changed between Murray’s first book and this one are the targets of his proposal. In Losing Ground, Murray was concerned only with welfare programs. His aim was to abolish those parts of the welfare state which literally involved welfare. Now in the new book he wants to eliminate all programs of the welfare state–including many that provide benefits to the middle class and even to the well-to-do. And as I have pointed out, not everyone would be a net winner under Murray’s plan. On the tax side, anyone who currently enjoys more than $10,000 in tax deductions would see their tax bill increase under Murray’s plan–on top of the generalized increase necessary to fund the grants in the early years.
So I see Murray’s proposal as doing harm not just to the poor but to lots of middle class and even upper middle class folks as well. This is because the welfare state is actually a system of economic redistribution which includes benefits for lots of people–not just for the poor. And eliminating this system thus eliminates all these benefits for all these cohorts. And not everyone will net-out ahead with the $10,000 grant. That is a kind of average figure. Some people get considerably more than $10,000 each year from the existing welfare state, and these people will all be net losers under Murray’s scheme.
So my brief–to the extent I have one–is to defend all the benefits of the welfare state for all its beneficiaries–poor, middle class, and even the rich.
Larry DeWitt - 10/24/2006
The disconnect here is that I dispute your characterization of Murray’s plan as one which replaces welfare “with another form of welfare in a way that delivers more money to poor people.”
My claim is that Murray’s plan only APPEARS to do so, but that upon closer analysis it is highly likely that the poor will be worse off than they are under the welfare state. This is the point I was trying to explain when I said: “All Murray has shown is that we can expend the same gross amount in taxes either as welfare state programs or as a $10,000 grant to each adult. That any given cohort will be better or worse off is not demonstrated by this gross equivalence.” To determine whether a given cohort of the population is better or worse off under his proposed plan is different than merely arguing that society as a whole would be better off. There can be winners and losers in a Murray-type scheme even if the net on balance is positive.
As to Murray’s policy history: my point is precisely that you are wrong to believe he has changed his agenda. He is, in my reading, merely proposing an indirect way to achieve what he could not achieve directly (abolition of the programs of the welfare state). The fact that the tax burden remains the same is what is novel about his new approach, but the key continuity is that the PROGRAMS OF THE WELFARE STATE DISAPPEAR. This has not changed one iota from Losing Ground to the present book.
Stuart Buck - 10/24/2006
As I note in the review, there will be very significant tax impacts–not on the poor but on the prosperous–from this plan. For example, are you anxious to give up your home mortgage interest deduction? What about all the itemized deductions on your annual tax return? Do these total more than $10,000?
Which reminds me: This is another place where it would be more coherent to settle on a single objection. Is Murray's plan objectionable because it somehow harms the poor? Or because it takes too much money from the rich (i.e., by eliminating tax breaks) to give to the poor?
Stuart Buck - 10/24/2006
First, what you call a “contradiction” in my review is not a contradiction so much as a difference of opinion between us. Murray and you believe that the benefits he attributes to his scheme will in fact flow from it.
No, it has nothing to do with a difference of opinion, or whether the scheme has any benefits at all. The contradiction is in the fact that you simultaneously 1) claim that Murray wants to eliminate all welfare and leave us all to our own devices, even while 2) admitting the unavoidable fact that Murray's plan doesn't involve eliminating all welfare but replacing it with another form of welfare in a way that delivers more money to poor people.
Given that the latter point is what's accurate here, why do you begin with such a long digression about Murray's 20-year history of opposing all welfare? This gives the impression that you haven't notice that Murray has changed his mind on that point. And quite dramatically so. There's a rather obvious difference between "let's get rid of all welfare, period," [Murray's view in 1984] and "let's replace welfare and other transfer payments with a cash block grant of $10,000 per year per person" [Murray's view now].
Larry DeWitt - 10/24/2006
You do a nice job of restating Murray’s viewpoint for him.
A couple of thoughts.
First, what you call a “contradiction” in my review is not a contradiction so much as a difference of opinion between us. Murray and you believe that the benefits he attributes to his scheme will in fact flow from it. I think this belief is ill-founded–for all the reasons I discuss in the review. For one specific example, I detail how Murray has illicitly doubled the supposed return available to workers under a privatized social security regime.
You note the provision of a large sum of money to the poor, and suggest that this proves the scheme is generous to the poor. But simply offering a large sum of money to this cohort does not constitute enriching them if the market cannot yield the kind of economic security they presently enjoy in the welfare state. I think the markets will in fact desert these people, and they will be left with an annual payoff but with a huge net loss in their economic security.
So I dispute your assumption that Murray’s plan will in fact enrich the poor and those of moderate incomes. It will do so superficially, but it is far from clear that those who presently enjoy the benefits of the welfare state will be better off under Murray’s scheme. All Murray has shown is that we can expend the same gross amount in taxes either as welfare state programs or as a $10,000 grant to each adult. That any given cohort will be better or worse off is not demonstrated by this gross equivalence. It is only if you add in all the other assumptions about the costs and inefficiencies of government, and the supposed efficiency of markets, that you can–by building a long bridge of assumptions–get to any suggestion that this scheme will be a net winner for society. And even then, this does not mean that there will not be specific winners and losers in the detailed reallocation of resources that would follow from his scheme.
Second, what you and Murray describe as a new set of “choices” being presented to the poor might with equal ease be described as a new set of burdens imposed on them–to troll the marketplace searching for purchasable forms of equivalent economic security to that currently provided by the welfare state programs. My expectation–based on the historical experience–is that this will prove to be an impossible task. Key forms of that present economic security (I cite the examples of Medicare for the elderly and long-term care for the very poor) have never been available in the marketplace at anything like the rates necessary to make the deal a good bargain for the poor and the low to moderate wage worker.
Also, you have to take note of the unstated and hidden tax consequences of Murray’s plan. As I note in the review, there will be very significant tax impacts–not on the poor but on the prosperous–from this plan. For example, are you anxious to give up your home mortgage interest deduction? What about all the itemized deductions on your annual tax return? Do these total more than $10,000? If so, you will be a net tax loser under Murray’s scheme. Which is something he does not honestly acknowledge or discuss.
What I think is likely is that Murray’s scheme will benefit high-income cohorts who do not presently rely very much on the programs of the welfare state. And the claw-back affects only a maximum of one-half of the proposed grant. Even Bill Gates will get $5,000 per year under Murray’s scheme. So his plan will likely advantage the well-to-do. I think it is far from clear, however, that the plan will be to the advantage of low and moderate income cohorts.
Admittedly, the existing welfare state is a system of wealth redistribution from the wealthier members of society to the less wealthy. Some people–Murray to be sure, and perhaps yourself–object to this on ideological/philosophical grounds. I do not. So we have a difference of opinion on whether this redistribution is socially desirable. I suspect nothing can be said to breach this divide.
As to transition costs, I am afraid you are simply confused on this point. Transition costs have nothing to do with whether the deal is a good one or not. Transition costs are the tax burden imposed on taxpayers for having to simultaneously support two economic systems: Murray’s annual grants and the existing welfare state programs for those too old to grow up under Murray’s scheme.
To understand this point, consider the example of Social Security benefits. There are 48 million people currently receiving such benefits. The average retirement benefit for an individual adult is currently $12,024 per year, and more if the beneficiary has eligible children. For example, the average annual benefit under Social Security for a widow with two minor children is presently $24,588 per year. Not only that, but 4 million of Social Security’s beneficiaries are children, who currently get an average benefit of about $5,000 per year under Social Security, and who would not get the $10,000 grants–they would lose everything they now receive under Murray’s proposal. These people will not forgo their existing benefits for Murray’s $10,000 grant. So we will have to continue paying them Social Security until all of them die off–basically a generation.
A similar problem exists for Medicare beneficiaries, of whom there are about 30 million in a given year. These are old and disabled folks who cannot–in their present stage of life–purchase health insurance in the marketplace even if they spent their entire $10,000 grant on nothing but health coverage. These people will have to be continued under Medicare until their generation dies off.
These are just two examples of the transition problem that Murray is discussing in his Appendix D–although not in a very clear or honest way. And there is big money involved here. The transition costs for Social Security alone amount to about $2 trillion.
So to get to Murray’s world, for roughly a generation, there will be a double tax burden on the current generation of taxpayers. You and I and every other current taxpayer will have to pay both for Murray’s $10,000 grants AND for many of the existing benefit programs for those receiving those benefits or about to receive them. This double tax burden is the unavoidable cost of switching from an entrenched system to a radically different one. This will be a real net cost to present taxpayers even if–in the long run–Murray’s scheme is a good idea for future generations.
The point is, these costs have to be factored-in as part of any honest cost/benefit analysis as to whether or not the scheme is in fact a good deal. That Murray fails to estimate these costs is a huge flaw in the scheme and is, in my opinion, by itself sufficient grounds to reject it.
Stuart Buck - 10/24/2006
Your review suffers from a glaring contradiction: On one hand, you want to blame Murray for making it his life mission to abolish the welfare state in all its forms, such that "economic security will become each individual's job, and government will no longer have any role of this type in our political economy," or so that "welfare will vanish from the land" and all problems will be "utterly the responsibility of the individuals involved." On the other hand, you can't really avoid the inconvenient fact that Murray's latest book's central theme is not simply to abolish all welfare programs, but to *replace* them with a large transfer payment that would, for many poor people, represent enough money to raise them above the official poverty line. Faced with this fact, you turn on a dime and blame Murray for proposing an alternative welfare plan that is so ambitious that the transition costs will be too high and taxes will have to be raised!
You can't have it both ways. If, as you must concede, Murray's latest plan involves large transfers of money to poorer people (remember that the transfers are clawed back for the middle class and rich folks), then all of your rhetoric about radical individualism is completely misplaced. Murray's plan is radically individualistic only in the sense that poor people would have a choice about how to spend most of the $10,000 grant, rather than being burdened by all the limitations that are currently put upon food stamps, housing vouchers, etc.
Beyond that central contradiction in your argument, I couldn't help noticing the occasional startling statement, such as "government agencies are often motivated by the ambition to cut budgets and staff." Can you supply any specific examples of government bureaucrats that were motivated to cut their own budgets?
Also, this was misleading:
The reason we have poverty in America; the reason that 46 million people lack health care coverage; the reason not everyone is able to enjoy a comfortable retirement; the reason there is an underclass and so much social inequality, is all because governments skim off so much wealth from tax revenues that not enough is left to produce this happy world of prosperity for all.
No, the point is not that government skims off the wealth, although that happens to some extent. The point is that government spends the money ineffectually -- on the wrong people. If we spend a trillion dollars on transfer payments per year, and there are still people in desperate poverty without health insurance, what's your theory for why this is occurring? Murray would say, in part, that it's because we give so much money via Social Security and Medicare to people who are wealthy -- i.e., Bill Gates' father could get Social Security if he wanted. So Murray is proposing that we stop giving out so much money to the wealthy, and instead establish a universal welfare program that gives the most money to poorer people. Isn't this something that a liberal should applaud?
Walter D. Kamphoefner - 10/24/2006
The review overlooks another unrealistic assumption on Murray's part: that individual choice (without government oversight) will lead to an optimal allocation of the medical share of the $10,000 allocation. One problem of today's medical situation is that some of the best minds in the country are at work figuring out how to insure as many healthy people and as few sick people as possible-- something that would only be compounded in a brave new Murrayworld.
Larry DeWitt - 10/23/2006
Although my review is not really concerned with re-fighting the old arguments about The Bell Curve, I will offer a couple of thoughts.
First, my most general claim about The Bell Curve (and Losing Ground) is that neither of these books was about race, although race figured prominently in both. My claim is that both works were disguised assaults on the welfare state on ideological grounds of libertarianism. So the debate about race is a subterfuge in my view, and is not the point at all–one way or the other.
That being said, the general issue about race and social inequality is whether the observed differences in social outcomes between blacks and whites can be successfully ameliorated by public policy interventions. Arguing that they are a function of genetics rather than social arrangements is one way of arguing that public policy interventions cannot successfully ameliorate them.
In my reading, The Bell Curve says: 1) IQ is real; 2) differences in IQ exist among races; 3) IQ is the single biggest determinant of social outcomes; 4) IQ is largely genetic and cannot be affected by public policy; 5) indeed, the public policies we deploy to help poor blacks (i.e., welfare) actually hurts them by encouraging the reproduction at higher rates of more lower class blacks (i.e., those with lower IQs). Hence, the plausible reading: there is nothing by way of social policy that will help poor blacks, and the liberal efforts to help, actually hurt. In my reading, this is the argument of The Bell Curve. The second part of this argument (that welfare programs are counter-productive) is the same argument from Losing Ground. What was new in The Bell Curve was the addition of genetics and IQ as additional nails in the coffin of liberal policy interventions.
You try to rescue Murray from charges of racism by suggesting that his argument is more indirect. As you state Murray’s argument, there are multiple correlations between IQ, socio-economic status, race, and social inequality. So we notice that IQ distribution tends to correlate with socio-economic status, which correlates with race, which correlates with social outcomes, in a kind of circular relationship, where causality is unclear. The problem comes when you assert that public policy interventions are based on “an economic system that does not take intelligence into account and could thus only be called foolish.” How, exactly, do we get to this result?
One direct way would be to just assert that blacks are genetically inferior to whites–for reasons unknown. I think this is Murray’s argument, but you suggest it is not. Fair enough. In your reading, Murray is arguing that it is the socio-economic status of blacks which makes for their lower IQs, which then makes for adverse social outcomes. Thus, as you observe, the IQ distribution for higher class blacks is similar to that of higher class whites–suggesting it is not race but socio-economic status that is the controlling factor. But if this chain of reasoning is correct, then it implies that socio-economic status causes IQ differences. If so, then this means that changes in socio-economic condition can produce improved IQ, and thereby improved social outcomes. (I think this is something Murray explicitly denies in the book, but you say not.) But if we take your reading, then public policy interventions designed to change the socio-economic status of blacks can produce better social outcomes, by cascading down the chain and first producing higher IQs. Thus the liberal can still make the argument–using Murray’s own analysis as rendered by you–that liberal public policy interventions are desirable and can be effective.
But you cannot have it both ways. Either economic and political variables can affect IQ, and hence public policy interventions can work, or IQ is impervious to economic and political variables, in which case you cannot use this chain of reasoning to escape the charge that the argument is that blacks are simply genetically inferior to whites.
So either Murray’s argument is the standard racist one, or it does not work as an argument against public policy interventions. Take your pick.
Jason B Keuter - 10/23/2006
Nowhere in the Bell Curve does Murray contend blacks are genetically inferior to whites and thus consigned to greater levels of poverty. They do argue (quite well and on the basis of research as opposed to sentiment) that genetic differences in intelligence do relate to socio-economic status. Given that blacks are disproportionately poorer than whites, it thus makes sense for critics to conclude that the Bell Curve is arguing that this is rooted in genetic inferiority among blacks.
But this is not really the case. Among higher socio-economic black Americans IQ distributions are similar to those among higher socio-economic white Americans. The disproportionate number of poor blacks is due to the disproportionately higher number of children lower socio-economic black people have. As is the case with most poor, uneducated people, the birth rates among lower s.e.s blacks outstrips that among higher s.e.s. blacks. There is really nothing controversial in this conclusion. Remove race from this discussion and any demographer worth their weight will tell you that education level of parents (and mothers in particular) strongly predicts how many children they will have. The more educated women are, in particular, the few kids they will have.
It is in this sense then, that Murray's anti-welfare position makes sense: because it encourages out of wedlock birth, it encourages the very demographic developments that lend themselves to disproportionate lower IQ's among blacks and consequent disproportionate poverty which can only be redressed with an "economic" system that does not take intelligence into account and could thus only be called foolish.
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