Steven Krivit wrote:
>
> At 09:34 AM 5/7/2006, you wrote:
> Haven't you heard of crash-testing "workfare" Steve? :-)
>
> Workfare? Actually, no. But now I have.
> Seems your answer is somewhat tongue in cheek, which I actually enjoyed, but
> my original question was indeed literal and not rhetorical.
> (p.s. I don't get the "crash-testing" part.)
>
>
> Weakipedia:
>
> Workfare is an alternative model to conventional social welfare
> <http://en.wikipedia.org/wiki/Social_welfare> systems. Traditional welfare
> benefits are available with little required of the recipient, save their
> continued search for employment, if that. Under workfare, recipients have to
> meet certain participation requirements to continue to receive their welfare
> benefits. These requirements are often a combination of activities that help
> to improve the recipient's job prospects (such as training, rehabilitation and
> work experience) and those that allow them to contribute to society (such as
> unpaid or underpaid work). These programs, now common in the United States
> <http://en.wikipedia.org/wiki/United_States> , Australia
> <http://en.wikipedia.org/wiki/Australia> (under the guise of mutual
> obligation) and Canada <http://en.wikipedia.org/wiki/Canada> have generated
> considerable debate and controversy.
>
This proposal interesting.
Harry
http://www.aei.org/include/pub_print.asp?pubID=24092
A Plan to Replace the Welfare State
By Charles Murray
Posted: Wednesday, March 22, 2006
ARTICLES Wall Street Journal Publication Date: March 22, 2006
ARTICLES Wall Street Journal Publication Date: March 22, 2006
This much is certain: The welfare state as we know it cannot survive. No
serious student of entitlements thinks that we can let federal spending on
Social Security, Medicare and Medicaid rise from its current 9% of GDP to
the 28% of GDP that it will consume in 2050 if past growth rates continue.
The problems facing transfer programs for the poor are less dramatic but, in
the long term, no less daunting; the falling value of a strong back and the
rising value of brains will eventually create a class society making a
mockery of America's ideals unless we come up with something more creative
than anything that the current welfare system has to offer.
So major change is inevitable--and Congress seems utterly unwilling to face
up to it. Witness the Social Security debate of last year, a case study in
political timidity. Like it or not, we have several years to think before
Congress can no longer postpone action. Let's use it to start thinking
outside the narrow proposals for benefit cuts and tax increases that will be
Congress's path of least resistance.
The place to start is a blindingly obvious economic reality that no one
seems to notice: This country is awash in money. America is so wealthy that
enabling everyone to have a decent standard of living is easy. We cannot do
it by fiddling with the entitlement and welfare systems--they constitute a
Gordian Knot that cannot be untied. But we can cut the knot. We can scrap
the structure of the welfare state.
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. We're rich enough to do it.
Consider retirement. Let's say that we have a 21-year-old man before us who,
for whatever reasons, will be unable to accumulate his own retirement fund.
We accumulate it for him through a yearly contribution for 45 years until he
retires at age 66. We can afford to contribute $2,000 a year and invest it
in an index-based stock fund. What is the least he can expect to have when
he retires? We are ridiculously conservative, so we first identify the worst
compound average growth rate, using constant dollars, for any 45-year period
in the history of the stock market (4.3% from 1887-1932). We then assume our
21-year-old will be the unluckiest investor in American history and get just
a 4.0% average return. At the end of the 45-year period, he will have about
$253,000, with which he could purchase an annuity worth about $20,500 a
year.
That's with just a $2,000 annual contribution, equivalent to the Social
Security taxes the government gets for a person making only $16,129 per
year. The government gets more than twice that amount from someone earning
the median income, and more than five times that amount from the millions of
people who pay the maximum FICA tax. Giving everyone access to a comfortable
retirement income is easy for a country as rich as the U.S.--if we don't
insist on doing it through the structure of the welfare state.
Health care is more complicated in its details, but not in its logic. We do
not wait until our 21-year-old is 65 and then start paying for his health
care. Instead, we go to a health insurance company and tell it that we're
prepared to start paying a constant premium now for the rest of the
21-year-old's life. Given that kind of offer, the health insurance company
can sell us a health care policy that covers the essentials for somewhere
around $3,000. It can be so inexpensive for the same reason that life
insurance companies can sell generous life insurance cheaply if people buy
it when they're young--the insurance company makes a lot of money from the
annual payments before eventually having to write the big benefit checks.
Providing access to basic medical care for everyone is easy for a country as
rich as the U.S.--if we don't insist on doing it through the structure of
the welfare state.
There are many ways of turning these economic potentials into a working
system. The one I have devised--I call it simply "the Plan" for want of a
catchier label--makes a $10,000 annual grant to all American citizens who
are not incarcerated, beginning at age 21, of which $3,000 a year must be
used for health care. Everyone gets a monthly check, deposited
electronically to a bank account. If we implemented the Plan tomorrow, it
would cost about $355 billion more than the current system. The projected
costs of the Plan cross the projected costs of the current system in 2011.
By 2020, the Plan would cost about half a trillion dollars less per year
than conservative projections of the cost of the current system. By 2028,
that difference would be a trillion dollars per year.
Many questions must be asked of a system that substitutes a direct cash
grant for the current welfare state. Work disincentives, the comparative
risks of market-based solutions versus government guarantees, transition
costs, tradeoffs in health coverage, implications for the tax system, and
effects on people too young to qualify for the grant, all require attention
in deciding whether the Plan is feasible and desirable. I think all of the
questions have answers, but they are not one-liners; I lay them out in my
book.
* * *
For now, let me turn to a larger question: Assuming that the technical
questions have answers, do we want a system in which the government divests
itself of responsibility for the human needs that gave rise to the welfare
state in the first place? I think the reasons for answering "yes" go far
beyond the Plan's effects on poverty, retirement and health care. Those
issues affect comparatively small minorities of the population. The more
profound problem facing the world's most advanced societies is how their
peoples are to live meaningful lives in an age of plenty and security.
Throughout history until a few decades ago, the meaning of life for almost
everyone was linked to the challenge of simple survival. Staying alive
required being a contributing part of a community. Staying alive required
forming a family and having children to care for you in your old age. The
knowledge that sudden death could happen at any moment required attention to
spiritual issues. Doing all those things provided deep satisfactions that
went beyond survival.
Life in an age of plenty and security requires none of those things. For the
great majority of people living in advanced societies, it is easily possible
to go through life accompanied by social companions and serial sex partners,
having a good time, and dying in old age with no reason to think that one
has done anything significant.
If you believe that's all there is--that the purpose of life is to while
away the time as pleasantly as possible--then it is reasonable to think that
the purpose of government should be to enable people to do so with as little
effort as possible. But if you agree with me that to live a human life can
have transcendental meaning, then we need to think about how human existence
acquires weight and consequence.
For many readers of The Wall Street Journal, the focus of that search for
meaning is bound up with vocation--for some, the quest to be rich and
famous; for others, the quest to excel in a vocation one loves. But it is an
option open to only to a lucky minority. For most people--including many
older people who in their youths focused on vocation--life acquires meaning
through the stuff of life: the elemental events associated with birth,
death, growing up, raising children, paying the rent, dealing with
adversity, comforting the bereaved, celebrating success, applauding the good
and condemning the bad; coping with life as it exists around us in all its
richness. The chief defect of the welfare state from this perspective is not
that it is ineffectual in making good on its promises (though it is), nor
even that it often exacerbates the very problems it is supposed to solve
(though it does). The welfare state is pernicious ultimately because it
drains too much of the life from life.
The Plan returns the stuff of life to all of us in many ways, but chiefly
through its effects on the core institutions of family and community. One
key to thinking about how the Plan does so is the universality of the grant.
What matters is not just that a lone individual has $10,000 a year, but that
everyone has $10,000 a year and everyone knows that everyone else has that
resource. Strategies that are not open to an individual are open to a
couple; strategies that are not open to a couple are open to an extended
family or, for that matter, to half a dozen friends who pool resources;
strategies not open to a small group are open to a neighborhood. The
aggregate shift in resources from government to people under the Plan is
massive, and possibilities for dealing with human needs through family and
community are multiplied exponentially.
The Plan confers personal accountability whether the recipient wants it or
not, producing cascading secondary and tertiary effects. A person who asks
for help because he has frittered away his monthly check will find people
and organizations who will help (America has a history of producing such
people and organizations in abundance), but that help can come with
expectations and demands that are hard to make of a person who has no income
stream. Or contemplate the effects of a known income stream on the young man
who impregnates his girlfriend. The first-order effect is that he cannot
evade child support--the judge knows where his bank account is. The
second-order effect is to create expectations that formerly didn't exist. I
call it the Doolittle Effect, after Alfred Doolittle in "My Fair Lady."
Recall why he had to get to the church on time.
The Plan confers responsibility for dealing with human needs on all of us,
whether we want it or not. Some will see this as a step backward, thinking
that it is better to pay one's taxes, give responsibility to the government
and be done with it. I think an alternative outlook is wiser: The Plan does
not require us all to become part-time social workers. The nation can afford
lots of free riders. But Aristotle was right. Virtue is a habit. Virtue does
not flourish in the next generation because we tell our children to be
honest, compassionate and generous in the abstract. It flourishes because
our children practice honesty, compassion and generosity in the same way
that they practice a musical instrument or a sport. That happens best when
children grow up in a society in which human needs are not consigned to
bureaucracies downtown but are part of life around us, met by people around
us.
Simply put, the Plan gives us back the action. Institutions and individuals
alike thrive to the extent that they have important jobs to do and know that
the responsibility to do them is on their heads. For decades, the welfare
state has said to us, "We'll take care of that." As a result, we have
watched some of our sources of life's most important satisfactions lose
vitality. At the same time, we have learned how incompetent--how
helpless--government is when "taking care of that" means dealing with
complex human needs. The solution is not to tinker with the welfare state.
The solution is to put responsibility for our lives back in our hands--ours
as individuals, ours as families, and ours as communities.
Charles Murray is the W. H. Brady Scholar in Culture and Freedom at AEI. He
is the author of In Our Hands: A Plan to Replace the Welfare State (AEI
Press, 2006). Related Links In Our Hands: A Plan to Replace the Welfare
State Press Release: In Our Hands Human Accomplishment Also by Charles
Murray Recent Articles A Plan to Replace the Welfare State The $10,000
Solution The Plan to Replace the Welfare State Latest Book In Our Hands A
Plan to Replace the Welfare State AEI Print Index No. 19833
