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Social Welfare Programs

Nic Tideman:  Global Economic Justice, followed by Creating Global Economic Justice

WOULD THERE be enough revenue for the public sector? To address this question, one should consider different types of public activities separately. The type of public activity that can most readily be financed by charges for exclusive access to natural opportunities is local public services. When these are desired by voters and provided efficiently, they tend to raise the rental value of land by enough to pay for themselves, since a local public service provides a benefit in a limited region, and people will bid up the rental value of that land by the value of access to the service.2 Thus local services can be financed without even beginning to draw on the value of opportunities provided by nature.

Another broad area of public spending is national defense. While defense increases the value of land in a dangerous world, one might reasonably hope that the need for defense spending would be greatly reduced in a world that had adopted a general norm of acknowledging the equal rights of all persons to natural opportunities.

To the extent that defense costs are raised when a nation becomes a more attractive target-- because of increases in its stock of capital or in the productivity of its citizens--it would be efficient and not unreasonable to have an annual charge on capital and on talent (an asset protection fee) to defray these costs. Such a fee could be collected by a self-assessed tax. For capital, the tax could be enforced by an obligation to sell the capital at the self-assessed price. For talent, the tax could be enforced by a rule that if a person was injured in an accident and wished to sue for loss of earning power, the self-assessed value of the person's talent would be the upper limit on the damages that could be claimed. It is likely that a tax rate of two or three tenths of one percent per year would suffice to fund the current level of U.S. defense spending. But I would hope and expect that defense spending would fall substantially. Between the reduced need for defense spending and an efficient asset protection fee for the extra defense costs generated by increases in capital and talent, it should be possible to finance defense without exhausting the rental value of exclusive access to natural opportunities.

The next major area of government spending to consider is social welfare programs-welfare, social security, unemployment compensation, health insurance, etc. These would tend to raise the rental value of land to some extent, but they would generally not raise land rents by enough to pay for themselves, because their perceived value to individuals tends to be highly disparate, so that those who value access to such programs generally do not need to offer the full value of such programs in rent premiums in order to get access to them. Thus one cannot count on financing such programs by increases in rent. The disparate value of public education to families makes this public service subject to the same analysis.

Social welfare programs often have an insurance component, requiring payments by potential beneficiaries. If a program is so close to a true insurance program that virtually everyone receives an expected benefit that is as great as his or her assigned contribution, then it can be financed by the assigned contributions, and few will find the program objectionable. But social welfare programs rarely approximate true insurance programs.

The difficulty with financing social welfare programs with rent arises because those who design such programs usually seek to require some people to pay more than the expected value of their benefits. In a world that recognizes the equal rights of all persons to natural opportunities and the right of any person to emigrate, social welfare programs of this sort will be possible only to the extent that they reflect shared community values. If such a program draws on shared feelings of community responsibility, then people will be happy to contribute part of their shares of the value of natural opportunities, or even part of their earnings to such programs. If an attempt is made to implement social insurance that exceeds what people are prepared to pay for out of a sense of community, people will tend to emigrate or secede. Thus in a world that operates on principles of global economic justice, people will not be required to pay for social insurance that they object to. If people have potential needs that exceed what their fellow citizens are willing to provide, they will have to buy their own insurance before the need arises or rely on friends and family. If those who are never able to provide for themselves are to be provided for in a just world of limited generosity, parents will need to buy insurance against having children with special needs before they conceive those children. But I believe that feelings of community are sufficiently extensive that those who need help would receive it. Unlike the present situation, in a just world every person would have a share of the value of exclusive access to natural opportunities, which would provide a guaranteed income that would provide for many contingencies....  Read the whole article.

Nic Tideman:  Improving Efficiency and Preventing Exploitation in Taxing and Spending Decisions

An even greater share of the federal budget is used for various programs that provide help for people with special needs--welfare, Medicare, Medicaid, Social Security, unemployment insurance, disaster assistance, etc. Some of these programs (social security, Medicare, and unemployment compensation) are funded in part by payments by prospective beneficiaries. But all incorporate substantial elements of deliberate redistribution.

In a world that adhered to a classical liberal understanding of justice, there would be three sources of funding for people with special needs:

1) insurance that those with special needs had bought for themselves prior to the onset of their special needs,

2) donations from family, friends and other compassionate persons, and

3) local public expenditures that would be non-coercively financed, because anyone who objected to the financing could leave the locality.

In a just would, people would ensure, prior to conceiving children, that any expensive special needs that their children might have would be paid for, either by insurance that the parents would buy, or by voluntary conventions in their communities that the community would pay the costs of such needs.

Perhaps you object that some people would not be able to afford such insurance for all their children. If this is true, it implies one of two things.

  • Either the parents of such children are behaving unjustly by conceiving those children, who will either lack what they ought to have or will be able to receive it only by the imposition of unjust taxes.
  • Or else the parents have been treated unjustly by having started life without enough resources to provide for the children that they ought to have had the chance to bring into the world. I would guess that sometimes the first is true, sometimes the second, and sometimes both.
The possibility that prospective parents might be unable to afford to provide for the children that they ought to have the chance to bring into the world highlights the possible need for a one-time redistribution that would give everyone a fair starting point. This does not mean equality for ever. It does not necessarily even mean equality at the starting time. What it means is allocating initial rights in such a way that we do not mind requiring people to pay the costs of their choices, including the choice of conceiving children (unless they belong to communities that agree to pay the costs of some of their choices).
Whenever a one-time redistribution is proposed, a reaction of many economists is, "Yeah, right. Why would anyone one believe that it would be only one time?" What would make it reasonable to believe that such a redistribution would be a one-time event is its rationale: The recognition that some persons have had unfairly inadequate starting positions in life, and the determination to end that. If the purpose is achieved, there is no rationale for further redistribution, unless, at some future time, our society attains a new moral insight that implies that further redistribution is required.    ...  Read the whole article

Nic Tideman:  The Ethics of Coercion in Public Finance

Nic Tideman:  The Political Economy of the Gospels

The message of the Gospels is that our sins are forgivable, that death is not to be feared because our true lives are spiritual rather than physical, and that participation in the kingdom of God -- a new and better life in this world as well as the next -- is accessible to all who orient themselves to God.

Drawing on the Old Testament, Jesus taught that our first commandment is that we love God with all our heart, and all our soul, and all our mind, and all our strength, and that our second commandment is that we love our neighbor as ourselves.1 When asked who our neighbor is, he replied with the parable of the good Samaritan, implying that anyone we encounter is our neighbor. 2 Jesus taught an ethic in which there are no bounds on our obligations to others:  ...

When asked by Peter, "Lord, how oft shall my brother sin against me, and I forgive him? till seven times?" Jesus replied, "I say not unto thee, Until seven times: but, Until seventy times seven."  In other words, we are to forgive indefinitely.

This unbounded obligation to others is reconciled with the need to survive through the introduction of the idea that it is not through our own anxious efforts, but through God's provision for us that we survive: ...

The message of the Gospels denies the validity of concern for material scarcity. This is made particularly clear in the accounts of the feeding of the multitudes with just a few loaves and fishes.

comprehending this counterintuitive idea, that material scarcity is not to concern us, is brought out by the accounts of how even Jesus' disciples did not understand the message: ...

Without a concept of material scarcity it is difficult to construct an economic theory, as material scarcity is central to economic theory. And yet, even without a concept of material scarcity there is an allocation problem to be solved--the allocation of our efforts.

In the parable of the talents we are told that we will be expected to accomplish something with the resources that are put into our hands. 8 This parable is followed in Matthew by a teaching that may be taken as an indication of what constitutes accomplishment: ...

In other words, every person is a manifestation of God, and anything that we can do to help anyone is to our credit.

There is thus an unlimited task for each of us. No one of us will ever be able to say, "I have done every last thing that might be required of me. I have no further obligations." But neither are we to be concerned that that which we have left undone might be held against us. For if we refrain from judging others, we ourselves will not be judged:  ...

With this message of the Gospels in mind, turn now to the problem of political economy, the problem of what principles ought to govern the organization of the production of goods and their distribution.

One might first ask whether the requirement that we abandon concern for scarcity would preclude production. The answer is no, it is not production that we are cautioned to avoid, but anxiety. There are any number of reasons why we might allocate some of our time to production, without being anxious about our own material requirements. We feel called to undertake a particular kind of work, so we do it, trusting that any material needs we may have will be satisfied. If we want to undertake our productive activities in conjunction with others, that's fine, too. Associating with others provides us with opportunities to be useful to them.

Among those who are close to us there is no need for prices and markets, because we can see easily enough how we can be of service to them. But human discernment is limited, and prices and markets help us to be aware of what is valued by people who are less close to us. ...

Refraining from the use of force is a recurring theme in the political economy of the Gospels. We are called to refrain from the use of force in defense of property. We are called to refrain from the use of force in financing public activities. We are called to refrain from the use of force in providing for those who might otherwise lack. And we show our love for those who do not wish to participate in our political economy by leaving for them the same per capita value of land and natural resources that we claim for ourselves.

Consider now how this framework bears on some traditional questions of economic ethics. Take first the problem of the just price. This simply is not an issue. If two people have the opportunity to trade--to cooperate--on terms that are mutually agreeable to the two of them, it is not for us to say that they ought to be trading on other terms. Between people who love one another, the problem of settling on the terms of trade is no more difficult than the problem when friends eat lunch together of deciding who will pick up the tab, or how it will be split.

That those outside a relationship are not called upon to prescribe its terms is supported by a passage from Luke: ...

Relations between employers and employees are a special case of relations between traders. ...
The problem of worker management is not a problem either. ...

Corporate responsibility may be more of an issue for a Gospel-based political economy. The corporate form of organization permits us to participate in the establishment and management of firms while knowing very little about the other people with whom we are involved or the actions that are taken on our behalf. If this leads us to support implicitly actions of managers in their concern for the bottom line that we could not in good conscience take ourselves, then there is something troubling about our participation in corporations. We need to find ways of managing the resources under our control that do not lead us to endorse implicitly and to profit from actions that we would not endorse directly or take ourselves.

The grand question of economic ethics, the question of whether capitalism or socialism is the more appropriate form of political economy, is another non-question from the perspective of the Gospels. Everyone who wants to live under socialism should be free to live under socialism, and everyone who wants to live under capitalism should be free to live under capitalism. In whichever group we fall, we will want to insure that those who want to organize their lives by different principles of political economy have their share of land and natural resources with which to do so.

A political economy based on the Gospels is a political economy based on love. As the First Epistle of John says, "There is no fear in love; but perfect love casteth out fear."17 To construct a political economy of the Gospels we must be free of fear: free of fear that others may rob us; free of fear that others may not contribute to the provision of public goods or to provision for those who might otherwise lack; free of fear that our incomes will be too low or the prices we face too high; free of fear that if we don't do something, someone will be exploited. Only when love has replaced all fear in our hearts will we be able to construct the political economy of the Gospels. Read the whole article

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Wealth and Want
... because democracy alone hasn't yet led to a society in which all can prosper