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Tuesday, March 28, 2006

An interesting idea

An interesting idea, one with no chance of being implemented, comes from Charles Murray:

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.

I admire the efficiency of this proposal. But eliminating winners and losers in the current system would strip power from politicians, and you know how much they like that.

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.

Murray outlines a key advantage:

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.

Of course, some people will screw up, and then call upon the government to bail them out. And others just won't do enough. It's a moral risk that we'll never be able to completely eliminate.

And here's an interesting segue into another hot topic: illegal immigration. I would hope that if Murray's plan were implemented, that only legal residents and citizens would receive benefits. Would being in America as an illegal be as attractive when everyone is assumed to have $10,000 for basic needs, and you don't?


At 11:06 AM, Blogger Dave Justus said...

This obviously would not work for military spending.

It also has trouble in regard to replacing other entitlements, particularly medicare and social security. We pretty much have to payback social security to those who have already contributed to the program, especially those who are at or near retirement age. I highly doubt that seniors would be happy with only getting 10K a year.

Therefore, if we are going to give everyone the same it would probably have to be around 50k. Maybe more.

Giving everyone 50K would of course require massive tax increases and disincentise work. If I can get 50K for not working and maybe 70K after taxes with working I will probably not bother to work at all.

We could of course do 'the plan' taking out military and entitlement spending, but that would leave us with pretty small change and would kind of ruin the whole point.


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