How much should the safety net grow? (and when?)

by on January 27, 2011 at 4:49 am in Economics, Political Science | Permalink

Lane Kenworthy thinks there is much more to be done.  For instance:

Early education (preschool, child care), beginning at age one, is a very good idea. Not all states have full-day kindergarten; few have preschool for four-year-olds; none have much in the way of public funding of education for kids age one to three.

Paid parental leave is available in only a few states and covers a relatively short period.

Sickness insurance: ditto.

Unemployment insurance covers too few of us.

Unemployment insurance should be supplemented by or folded into a new wage insurance program.

Social assistance benefits have been decreasing steadily over the past generation.

If markets are now structured in such a way as to severely limit real earnings growth for those in the bottom half of the distribution, we may need to massively expand the EITC.

We ought to do more for children, working-age adults, and elderly persons with assorted physical, cognitive, emotional, and social disabilities.

These questions could and should be debated with thousands of pages.  But, in the meantime, may I offer my little squib/splat of doubt?

At what wealth level are these protections supposed to arrive?  Now?  One also wonders which risks are considered to be insurable at the individual and family level, either through insurance proper or through social norms, savings, and other voluntary institutions.  What will be the implicit marginal rate of taxation on earning additional income in this new arrangement?  Has it been estimated?  What will happen to the savings rate?  What coercions will accompany these protections?  What will the pressures be, legal or otherwise, to send your kid away at one year of age?  Will job creation for women go down if there is mandatory paid parental leave?  Probably so. Will women end up better off?  Quite possibly not.  How many people would count as falling under these disabilities?  Is this all to be financed by higher taxes on the rich?  We probably can't even pay for our current bills in that manner.  If it is all done by VAT, how many people would prefer to have the government spend the money for them, as opposed to spending it themselves?  Just asking.  How about just sending the needy people some cash?  What is the likelihood that such benefits will, in the longer run, discourage our willingness to take in immigrants, the most effective form of aid we know?

Another way to ask the question is to look for the low-hanging fruit, when it comes to social welfare.  Let's take Social Security as more or less given, though it will see marginal adjustments.  Are the big gains to be had from some new social welfare program, or from showing that Medicare and Medicaid and other regulated health care institutions can work better than the public health systems of other wealthy nations, without running the United States into insolvency? 

In my view it is the latter, and I don't think that fruit is hanging especially low.  Can we agree on a truce, and first improve the programs we already have?  Will the new programs have the problems of the old?

If I were to pick some other piece of low-hanging fruit, I would cite the still-neglected problem of pandemic preparation.

On the Kenworthy post, here are comments from Matt.

1 Andrew January 27, 2011 at 1:16 am

These people spend a lot of time thinking about what they want.

2 Rich Berger January 27, 2011 at 1:41 am

I looked at the referenced article by LK and found this howler

"The aim is not, let me emphasize, to expand government for its own sake. Government should play an integral role in providing these supports and protections because they are underprovided by private markets, and because in some instances government can do so more efficiently than private actors."

Where do you dig this stuff up?

3 Andrew January 27, 2011 at 2:33 am

So giving mothers time off penalizes mothers. I see now.

What about lesbians?

4 Andrew January 27, 2011 at 2:45 am

"What is the likelihood that such benefits will, in the longer run, discourage our willingness to take in immigrants, the most effective form of aid we know?"

It may be effective, like the guy throwing the starfish back into the ocean, but it's not scalable, in fact, it's at least partly the opposite and noone knows on net (Dirk doesn't know, and Steve Sailer doesn't know either). The only thing that is scalable is for them to implement what has worked for us in their country.

5 dearieme January 27, 2011 at 3:02 am

"don't have children": well, quite.
http://en.wikipedia.org/wiki/Lieserl_Einstein

6 anon January 27, 2011 at 4:18 am

Instead of worrying about how much the safety net should grow, shouldn't we focus on cosolidating the programs we already have? Most social insurance programs could be replaced by a basic income (possibly adjusted for age, disability, number of dependents etc.) plus a consumption or payroll tax (and of course other taxes such as income, LVT, ecotax etc).

Preschool daycare is not obviously superior to home-based parenting, so I can't see the reason for subsidizing it. Unemployment insurance should be greatly limited in duration and supplemented by parametered adjustments based on e.g. local unemployment rates.

Healthcare is a mess, but ideally it ought to be based on vouchers, HSA's and catastrophe insurance.

This doesn't say much about the overall level of social insurance, which is a largely poltical matter. But given existing budget constraints, it makes sense to focus on efficiency rather than merely creatng new programs or changing the scope of existing ones.

7 Lord January 27, 2011 at 4:52 am

Funny how these technological optimists keep thinking Social Security is in trouble. I guess they have a hard time believing their own press.

When people say we must leave a better world for our children, what makes them think that is in our control? (Though there are reasons to hope so, even if it turns out to be not the case.)

8 Andrew January 27, 2011 at 5:01 am

I guess this is the thousands of pages part, but the way people talk I don't think they really understand know how workplaces and families actually work.

Not to get personal, but having two people take two years off each is not going to be optimum for the home or the career or society for that matter, even if it were any my business to decide these arrangements for them.

9 Cliff January 27, 2011 at 5:31 am

College is low-hanging fruit? We have too many people going to college as it is. Preschool could be low-hanging fruit, but I have not seen evidence to that effect, so maybe we should gather some evidence before we spend a few hundo bill on that program.

How are the results of U.S. healthcare and education "appalling"? Considering the people in the system, the available evidence seems to show the U.S. outperforming most Western European counterparts. Obviously it is not cost effective (healthcare anyway), but that's because there is very little demonstrable marginal benefit to healthcare, so you can just force people to use less and it will look more cost-effective.

Regarding child care, why not just make child care a deduction? Isn't it absolutely necessary in order for a parent to work? Wouldn't this change dramatically increase parents' ability to work and GDP? As it is, it hardly makes sense for even a high-income mother to work after 2 or 3 kids.

10 Floccina January 27, 2011 at 5:31 am

Or we could do Charles Murray's idea and send each adult US citizen a check for $X each week and just argue about the amount. An hourly wage subsidy would be even better if it could be policed. It would I think hurt immigration but not so much else.

Lane Kenworthy writes as if religious people do not exist or would not be enraged by some of his plans.

He also assumes that unrelated teachers would do better with children that poor parents who naturally love their children, I think he is wrong on that. In my experience poor people are not as bad parents as some people seem to think.

11 Andrew January 27, 2011 at 5:36 am

Begin left-wing cause-effect FAIL in minus 1…2…3

12 Floccina January 27, 2011 at 5:56 am

I once did a small informal poll on the value of state paid for day care for single mothers. The value was way below the cost. It was valued low because most left their children with relatives or traded off with friends.

13 Andrew January 27, 2011 at 6:49 am

Bill,

In case you haven't heard, people don't like insurance companies getting between them and their doctor either. Most people don't hate government just because it's government.

As if to say, 'medicare is a popular program, we just need to start doing things people hate about private insurance.'

"most of this exists in Europe"

If "most of this exists in Europe" then why does he cite Sweden? People drive me bonkers.

14 Nate January 27, 2011 at 7:26 am

Hi! Poor person here that had a child out of wedlock. There are already plenty of "safety nets" for us. When my son was four months old I quit the job I had and moved in with my parents to save money. His mother could go back to work. Now He's four and I've nearly finished an MS in computer science. The school hours have given me the flexibility to work with his mothers hours and raise a smart happy young boy who's almost ready for school. My best friend growing up has done nearly the same thing, only he's becoming a master mechanic. We have options, and all this free stuff is just indulgence beyond the very high level of wealth we already have access to. I know some people don't have it as good as we do, but most people have the creativity to make it work for them, and usually make it work well.

15 ladderff January 27, 2011 at 7:31 am

Of each of the stupid ideas listed, the first one offends/terrifies me the most. The single cruelest thing our government does is to 'educate' our children.

16 Six Ounces January 27, 2011 at 7:47 am

Reich is singing the same tune.

Let's talk about REAL safety nets. Hundreds of people have leapt to their deaths from the Golden Gate Bridge. Some have inadvertently fallen. SF has been debating the funding of a net. The net will cost "only" $2 million – a drop of water in the ocean of the city's budget.

Some say it's a waste of money because people will just go elsewhere to off themselves. Others think the bridge is an attractant for suicide, just like Niagra Falls.

I think the city should put up a step ladder instead.

but where is this so-called liberal compassion? We spent $6 million on new wheelchair ramps on 12 street corners. The city has 9000 employees earning over $100,000 per year.

why is emplacing a genuine safety net so difficult, but emplacing unnecessary ones, fraught with moral hazard and income redistribution, so easy. Oh, I know! Let me count the reasons. 1 vote, 2 vote, Red vote, Blue vote.

if people want "social insurance" they should move to the places that have it and where government is empowered to grant it.

17 Miley_Cyrax January 27, 2011 at 8:39 am

Why not just stop subsidizing poor women to spread their legs indiscriminately, get pregnant, and have the baby that results? That's pretty low hanging fruit, and would save money, eliminate the moral hazard to have bastard children, and halt the dysgenic trend.

18 Andrew January 27, 2011 at 9:19 am

Who do you folks think work in daycares?

And if the education system is not organized around the realities of family, start there please.

19 Carter January 27, 2011 at 10:32 am

"Early education (preschool, child care), beginning at age one, is a very good idea"

Last year the government finally admitted Head Start doesn't really do anything.

"This set of policies currently exists — in Sweden. (Denmark is similar.) Much of it has been in place since the 1970s. What has it achieved? There is virtually no poverty among Swedish families with children"

That's hilarious.

20 Meg January 27, 2011 at 10:41 am

Ah, right, relative standard of living citations. I would suggest the Inequality-Adjusted Human Development Index, since we are concerning ourselves with those who hit the safety net: http://hdr.undp.org/en/media/HDR_2010_EN_Complete… In this case, 11 countries, all European and including the Scandinavian countries, scored higher than the US, while several other European countries scored lower, including France and Spain.

The US scores better on other metrics, so I am sure there is a discussion to be had here about what we are targeting with these policies, and so which metrics are relevant. But I humbly offer this as a starting point.

21 Bill January 27, 2011 at 11:18 am

Andrew, I can see you like doctors sucking off the tit of the government if there is no utilization review.

I have no trouble with medicaid and medicare conditioning payment upon the doctor participating in Utilization review. Every Blue Cross plan does UR, and the Blues do UR for self funded employer plans.

They and others can do it for the government too. Particularly when we go the electronic records route.

There are some, like you, who say this is a matter of "freedom". I don't see it that way. It is just the government being a wise purchaser, and not a sucker.

22 Yancey Ward January 27, 2011 at 12:31 pm

Andrew, I can see you like doctors sucking off the tit of the government if there is no utilization review.

Bill, if this is your understanding of what Andrew is objecting to, then I stand by my claim that your ability to read is a crying shame.

23 Jay January 27, 2011 at 2:55 pm

Kenworthy takes a page out of the Nazi playbook. If you want obedient religious liberal sheeple you need to take them from their parents and raise the kids in government indoctrination centers starting at age 1.

Mulp: Stock/Watson says correlation proves causation. You should look up the definition of 'spurious'. Additionally, where was the U.S. economy on the Production Possibility Frontier when FDR took over, and when Bush took over? Believe it or not this matters even if DeLong/Krugman deny it.

24 Bill January 27, 2011 at 4:17 pm

Yancey, Go read the comments. You are the one who can't read.

And if you want to defend the lack of utilization review, go right ahead. It is your ideologic position that is ruining this country for the benefit of those who want to suck off the tit of the federal government by using catch phrases like death panels to reach an ignorant audience of blind and unthinking believers.

25 Sebastian January 27, 2011 at 10:36 pm

Dan H. – you're about 10 years behind on the research on this:

IQ effects indeed revert to the mean, but other effects of high quality early childhood programs are lasting, at least according to the best studies we have (lower unemployment, incarceration, etc.) http://jenni.uchicago.edu/human-inequality/
(and Heckman is certainly no flaming liberal).

@Jay – congratulation for keeping Godwin's law alive!

26 Yancey Ward January 28, 2011 at 8:01 am

Bill,

I read them, that is how I can tell that you completely mischaracterized Andrew's objection to your comment. Indeed, you are talking out of your ass once again when you wrote this:

It is your ideologic position that is ruining this country for the benefit of those who want to suck off the tit of the federal government by using catch phrases like death panels to reach an ignorant audience of blind and unthinking believers.

I challenge you to provide a single instance in which I "defend the lack of utilization review" for either government sponsored medical programs, or even for private insurance companies. Indeed, I think the payer of care should be very, very vigilant on how the money is spent and have said so many times. Again, as is your constant method, you are always trying to mischaracterize the arguments of those taking issue with what you have writeen. You are either misreading their arguments, and badly, or you are simply being shockingly dishonest.

27 Bill January 28, 2011 at 12:22 pm

Yancey: Challenge accepted.

I argued that we should have utlization review for medicare and medicaid.

Andrew responded: "In case you haven't heard, people don't like insurance companies getting between them and their doctor either."

You came back and defended Andrew and his position.

Yancey, you continue to do ad hominem. Do not address an argument, and when confronted with what you say, come back and say just the opposite: Now you're saying that you like UR.

You're not worthy of a response if you take the ad hominem approach, but deserve to be called out for it and have people directed to your earlier comments which are there for anyone to read.

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