Austrians and Libertarians for Central Planning and Welfare

Saturday, December 30, 2006
Posted in category Uncategorized
Comments Off

Once again, Tyler Cowen disappoints. His piece in the New York Times is a defense of the latest welfare proposal from the central planners – universal 401k accounts for the poor, with the rest of us providing the “match” through government redistribution.

Of the current proposals to address income inequality, the universal 401(k) is the most likely to bring general prosperity.

The core idea is simple. The federal government creates tax-free retirement accounts for lower-income Americans, supplementing private accounts where they already exist, and matching personal contributions to those accounts. The amount of the match would depend on the income of the family and how much they save.

This comes from a libertarian, as he is often described. Mr. Cowen has done some very fine work – especially concerning the arts – however, after his post on the glories of the Swedish state, and now his glorification of redistribution, we see that Mr. Cowen applauds the gangster state as replacement for commitment to work, earning, and saving.

Then he goes on to note that this plan would provide the necessary safety elements to allow for assets to be “protected from creditors,” thus, of course, assuring more poverty-inducing behavior such as poor decision-making (really messed up priorities), free-for-all indebtedness, and high-time preference disease. Anyone ever heard of moral hazard?

Cowen goes on to look for a libertarian “vindication” here…..he says “there is an obvious way to pay for a universal 401(k) plan. For every dollar spent on the universal 401(k), the federal government could spend one dollar less on Medicare and Social Security benefits.” Thus he considers the juggling game “revenue neutral,” because as the government giveth the government also taketh away. But we know the recipients of 401k matches and medicare/SS won’t be all the same people. So again, another layer of redistribution to add to the zillion layers that already exist.

Also, what Cowen doesn’t seem to worry about is how this revenue neutrality can possibly ever be guaranteed. Surely government doesn’t consistently raise welfare benefits, and won’t do so because it was “promised” that when the universal 401k welfare was introduced, medicare/SS would be equally cut? Only delusional thinking produces such a notion. In addition, what about the more abstract and oppressive effects of the state and central planning replacing self-direction and the family? How is that compatible with any kind of freedom? Then there’s this statement:

America would move closer to President Bush’s vision of an ownership society, while addressing income inequality.

I’m sure glad that Austro-libertarians – you know, those that value self-ownership as a worthwhile principle – can agree that Herr Bush is a man of similar principles. Cowen goes on to blah, blah, blah through much more awful, policy wonking with substantiations for central planning on the basis that the poor are being left behind and it will take theft, followed by government-granted savings bonuses, to convince them to save and get ahead. A last remark I shall point out is just unimaginable:

Just as the earned-income tax credit pays poor people to work, the universal 401(k) would pay poor people to save. The idea is to bring the benefits of markets and investing to the poor.

Perhaps Mr. Cowen should explain why certain people should get “paid to work” and others should work and pay others to work or not work. Sounds like the ideal society to me – like Sweden. The message I get from this – and have often observed (see Virginia Postrel) – is that one cannot be published in the New York Times without applauding the use of theft, force, and redistribution in the name of “helping” the poor. When you are libertarian, however, you spin the story to make it appear that the universalization of unearned benefits is actually “reducing” welfare. In fact, where have we heard THAT before?

Two last points that Mr. Cowen might ponder are why many of the so-called “poor” are that way in the first place – their consumption and debt habits are self-inflicted. Comedian Chris Rock (I think it was him) once said these are the kind of folks that buy $300 sunglasses today knowing that the rent is due tomorrow. In addition, consider how much taxes – all added up – are paid by a man making $35k/year while trying to support a wife and child. Surely it’s not because of ponzi schemes like the one he advocates?

Lastly, “libertarian” Arnold Kling likes the whole idea of more central planning and redistribution. Folks, when supposed free-market economists/libertarians start agitating for this kind of oppression, things are looking a might bit gloomy.

Be Sociable, Share!
Both comments and pings are currently closed.