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Give the Poor Money? It Doesn’t Work
By Shlomo Maital
OK, so – I am a liberal. But my favorite erudite NYT columnist David Brooks is not! He says so in the heading of his latest column (Sept. 5): “Why I am not a Liberal”.
And, why indeed is he not a liberal? Because, apparently, liberals believe in giving poor people money – and the data show it does not work.
We’ve known this for a long time. Ever since Susan Mayer’s 1997 book, “What Money Can’t Buy: Family Income and Children’s Life Chances.” “Even if you double people’s incomes”, Brooks summarizes, “the evidence is that it would have a limited effect on their children’s dropout and teenage pregnancy rates or other outcomes.”
What DOES matter? Their parents’ characteristics. Values. Education. Social skills. Family setting. Etc.
But progressives doubled down, insisting on creating and supporting a welfare state, which simply…gives the poor money.
This, at a time, as Brooks observes, when “most of our problems are moral, relational and spiritual more than they are economic.”
And, as I boringly observe often, in the 1930’s Economist Lionel Robbins argued that “normative economics (involving right and wrong, good and bad) was wholly unscientific and should therefore be cast out of the field”. Thus making economics utterly irrelevant, for almost a century.
What does work for the poor? Investing in great schools, for a start. Narrowing the huge gap between, say, educational performance in Southern US states and those in the Northeast.
Many of my Jewish ancestors came penniless to North America – and rose to upper middle class standing, through hard work and aspiration. They weren’t given money. But they did instill key values in their children, i.e. myself and my sister.
At a time when ‘evidence-based’ is an accepted gold standard of policy, how is it that the liberal supporters of the welfare state continue to back it? When the evidence is against it.
Nothing is Rotten in Denmark
By Shlomo Maital
Copenhagen: The Little Mermaid
Shakespeare’s famous line, “something is rotten in the state of Denmark”, from Hamlet, needs amendment. These days, very little is rotten there, and other countries can learn much from it. But are they? Paul Krugman’s latest New York Times column doubts it.
What is Denmark’s story? It is a welfare state with enormous social benefits, that takes care of its children, homeless, ill people, and others. It pays for it with heavy taxes, also on the wealthy, but at the same time maintains a vibrant economy. Here is how Krugman, a Nobel Laureate in Economics, decribes it:
Denmark maintains a welfare state — a set of government programs designed to provide economic security — that is beyond the wildest dreams of American liberals. Denmark provides universal health care; college education is free, and students receive a stipend; day care is heavily subsidized. Overall, working-age families receive more than three times as much aid, as a share of G.D.P., as their U.S. counterparts. To pay for these programs, Denmark collects a lot of taxes. The top income tax rate is 60.3 percent; there’s also a 25 percent national sales tax. Overall, Denmark’s tax take is almost half of national income, compared with 25 percent in the United States. Describe these policies to any American conservative, and he would predict ruin. Surely those generous benefits must destroy the incentive to work, while those high taxes drive job creators into hiding or exile. Strange to say, however, Denmark doesn’t look like a set from “Mad Max.” On the contrary, it’s a prosperous nation that does quite well on job creation. In fact, adults in their prime working years are substantially more likely to be employed in Denmark than they are in America. Labor productivity in Denmark is roughly the same as it is here, although G.D.P. per capita is lower, mainly because the Danes take a lot more vacation. Nor are the Danes melancholy: Denmark ranks at or near the top on international comparisons of “life satisfaction.”
How many times does this have to be said? A nation CAN take care of its people – its unemployed, jobless, skill-less, college students, children, sick, mentally ill – while paying for it through taxes (not deficits), and maintain a happy growing economy. The rich? They will pay taxes and not change their behavior on jot. There is no reason for any political system to pander to the rich, even though they use their funds to buy political influence.
Nothing is rotten in Denmark. Is anybody watching and listening? American conservatives? The last word goes to Krugman:
It’s hard to imagine a better refutation of anti-tax, anti-government economic doctrine, which insists that a system like Denmark’s would be completely unworkable.
TIMnovate 