Explaining things, Part 3 – Compassion

A couple of weeks ago over at the Agitator, guest blogger Peter Moskos asked libertarians to explain a few things to him. The Agitatortots answered him in the comments, but I thought answering him here would make for a good intro to libertarianism. First I addressed the way he framed his question, explaining why calling libertarianism an ideology isn’t helpful and why less government is so often the solution. Today I’m finally going to address his actual specific question:

Here’s my real question: What is the libertarian answer to society’s f*ck ups? What about people who — through their own ineptitude, stupidity, laziness, or drug abuse — simply fail? What do we do about the undeserving poor?

Probably the best place to start is that most free-market libertarians believe that people will respond to incentives. In particular, when you protect people from the natural consequences of bad behavior, you encourage more bad behavior. Of the behaviors that Moskos lists, two of them — laziness and drug abuse — are clearly voluntary behaviors, so it’s a pretty good bet that people will stop them if given enough incentive to do so. (Ineptitude is also voluntary, in that it can be cured through education and practice. Stupidity may be another matter entirely)

The key insight is that people who live on social welfare programs instead of getting jobs aren’t doing it because they are lazy or irresponsible. They’re doing it because they are smart enough to get what they want. They’ve figured out a way to achieve an acceptable lifestyle without having to work for it.

In economic terms, on the margin, they prefer more leisure time over greater income. And the social programs we’ve put in place around them are essentially a subsidy for leisure time. Take away that subsidy, and they’ll have to find jobs.

I don’t want to see people starve in the streets. I certainly don’t want desperate people to mug me. At some point, in a rich and civilized society, don’t we just have to be compassionate… even to people who don’t “deserve” it? Isn’t that what government is for? Isn’t it cheaper than prison?

Well, the short answer to the poor-people-starving-in-the-streets issues is that we don’t have to be that libertarian. We can choose a more gradual path to smaller government that will be less likely to harm the vulnerable in society.

However, if we were cold-hearted enough to let the undeserving poor starve, it would be a hell of an incentive for them to get off their asses. I’m not suggesting we do that, but the point is that if we did do that, the problems of poverty would immediately become a lot more severe, but fear of those problems would quickly make poverty a lot less widespread. When we take away the safety nets people will become more responsible for their own safety. So perhaps a little less safety could lead to a bit more responsibility.

Also, in the absence of government compassion, we can encourage private compassion. As Moskos points out, we are a rich and civilized people. Private charity has always been part of our makeup. Since government taxation is a drag on our economy, it reduces the amount of wealth available for all uses, including for altruistic purposes. If we can reduce that drag by cutting public social programs, it will increase our aggregate wealth, which will make private charity easier.

However, if we really want to sneak compassion into libertarianism, the traditional approach is via Rawls and his veil of ignorance. It goes like this: Imagine that you could be pulled out of your current life in such a way that you know everything you currently know now about human society, but you are ignorant of your own place in it. You could be rich, you could be poor, or you could be somewhere in the middle. You have no idea.

Now, hidden behind this veil of ignorance, what social policies would you devise to care for poor people at the expense of wealthier people, given that you could be either one when the veil is lifted?

Chances are, you would want to buy yourself some insurance. That is, you would be willing to give up a small amount of your wealth should you turn out reasonably wealthy, in exchange for a financial safety net if you turn out to be among the desperately poor. You would want to live in a society that pays a small wealth premium in order to protect those who suffer a calamity.

There is no veil of ignorance, of course. We all know where we stand. Which means that the free market cannot make such social insurance available to us, even though we would almost certainly buy some if we could. But why should we let that stop us? We can achieve the same outcome by agreeing to tax wealthier people to protect the less wealthy against misfortune.

Economists are sure we’d want such insurance because they know we buy lots of other kinds of insurance. Why would we accept the behind-the-veil risk of lifetime impoverishment when we’re unwilling to accept more than a few hundred dollars in damage when a tornado hits our house? Figuring out exactly how much insurance we’d want is a lot harder, however, and it depends on estimates of how much more poverty we’d get by making it less painful. (Somewhere, econometricians are working on this problem.)

Finally, in keeping with the spirit of gradualism, there are a lot of existing social programs that are so poorly designed or implemented that we could find a way to make them both smaller and better at the same time, usually by applying free market principles.

In fact, just the wide variety of programs to help the poor is a cause for libertarian suspicion. For example, poor people can get food stamps under the Supplemental Nutritional Assistance Program, which cost about $35 billion in 2008. But then there’s the National School Lunch Program, which cost about $9.8 billion. Do we really need separate programs to feed families at home and children at school?

The obvious libertarian-leaning solution is to combine all of these programs into a single aid-to-the-poor program which gives poor families some extra cash. Let them figure out how best to spend it.

About Mark: Mark is a computer programmer, website builder, photographer, and sometimes journalist in Chicago, where he also writes the long-running Windypundit blog.