Jim Manzi has a very smart article up in National Review on ‘unbundling’ the welfare state. Essentially, Manzi believes that the welfare state, however inimical to many conservative ends, cannot simply be razed and replaced. It is ingrained into society, and even if it weren’t something else like it might very well be instead. Instead, we need to take a multi-faceted approach to thinking about, and improving, the welfare state as it is now construed.
Society, Manzi argues, has come a long ways from the days when much of the current edifice of the welfare state was constructed. People in general are vastly wealthier; living standards have gone way up; basic needs like food and shelter are available to virtually all first-world citizens. Technology has been a driving force in the rising tide, as has free trade, globalism, and higher educational achievement levels across all demographics. Perhaps the welfare state has not outlived its usefulness, but it has certainly outlived its current iteration. It’s time for evolution of the welfare state into something more flexible, into a safety-net system rather than an entitlement program for the middle class.
Furthermore, as the population changes and more elderly people rely on the productivity of fewer younger people, the system as a whole faces structural weakness. Without reforms, the tax burden on younger generations will be too much to bear.
Here’s Manzi with one of the most succinct breakdowns of the welfare state I’ve read, noting that while many things have changed, the basic rationale for a welfare apparatus has not:
First, welfare programs provide a safety net: a fail-safe provision of important goods that represents some roughly agreed-upon minimum baseline of subsistence for any member of the society. Second, they incorporate some element of risk pooling (and, more generally, economies of scale) beyond what is implied by the safety net: spreading out the costs of falling victim to some horrible disease in old age, for example. Third, these programs also may require prudent behavior on the part of beneficiaries. For example, Social Security requires that wage earners forgo some consumption today in order to provide funds for retirement. Fourth, the programs may redistribute wealth beyond what is required by the first two goals. Fifth and finally, they may be a mechanism for the government to provide certain goods directly, as in the case of traditional public schools.
Even if it made sense to bundle these functions in 1935, does it today? [emphasis added]
I agree with many of Manzi’s prescriptions to these problems. Government should provide a basic safety net for the poorest among us. The tension between capitalism and human nature has a third component: democracy. And in a democracy, the plight of the poor and dispossessed can easily translate into populism and political backlash. The last thing the proponents of free markets and individual liberty need is an uprising of leftist revanchists eager to overhaul the US system and replace it with state socialism. Furthermore, I’m dubious that private charities have ever done enough to meet the needs of the poor no matter how much good they have indeed done for the world. Part of the purpose of society is to protect and care for those who cannot protect and care for themselves. This is why we have a military; it’s also why we need safety nets. That doesn’t mean we should be providing these nets for the well-to-do, but it does mean that government has a role to play.
More broadly, Manzi’s effort to unbundle the various purposes of the welfare state is very helpful in thinking about these questions. Social Security, he argues, is in fact fulfilling two purposes: a safety net (1), and encouraging prudent behavior (3) by mandating savings. Why are these two bundled? Manzi argues in favor of personal accounts to replace Social Security – alongside a safety net for those unfortunates who end up destitute in their old age. The two would be separate programs, though certainly not incongruous. This makes sense from a practical standpoint; politically, of course, it would be very difficult to achieve.
Where I depart from Manzi is his prescription for the American educational system. While I am, like Manzi, skeptical of vouchers and more pro-school-choice in the form of charter schools, I don’t understand his desire to allow public schools to turn a profit. I don’t understand the mechanism by which they would turn a profit, nor the logic that this would somehow improve performance at these schools. Just as likely it would lead to corner-cutting and viewing the students as secondary to the returns. Schools produce human capital, not monetary capital. Even most private schools are non-profits. I would urge Manzi to consider the moral hazard of changing the mission of public schools to place profits ahead of students. While the current status-quo, dominated by powerful teachers unions and entrenched special interests may be a bad deal for students, I have grave doubts that Manzi’s alternative would be much better and could quite easily be much worse. Charters can be a huge boon to many communities, but making them corporate, profit-driven entities would not only skew public educations’ mission, it could quite easily lead to a public hue and cry that could spell the end of the school-choice movement.
For-profit colleges, largely dependent on government subsidies in the form of student loans, is my Exhibit A. Prudence and caution should guide us in our efforts to reform public education. Manzi exhibits much of these qualities in his discussion of the welfare state, but comes up short in this last part. Still, it is a welcome and thought-provoking article. Manzi is, as always, well worth the read.
