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Guarantees*

Published online by Cambridge University Press:  13 January 2009

David Schmidtz
David Schmidtz
Affiliation:
Philosophy, University of Arizona
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Extract

People have accidents. They get old. They eat too much. They have bad luck. And sooner or later, something will be fatal. It would be a better world if such things did not happen, but they do. There is no use arguing about it. What is worth arguing about is whether it makes for a better world when people have to pay for other people's misfortunes and mistakes rather than (or as well as) their own.

Type
Research Article
Information
Social Philosophy and Policy , Volume 14 , Issue 2 , Summer 1997 , pp. 1 - 19
Copyright
Copyright © Social Philosophy and Policy Foundation 1997

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References

1 Baker, Edwin, “Utility and Rights: Two Justifications for State Action Increasing Equality,” Yale Law Journal, vol. 84 (1974), p. 52.CrossRefGoogle Scholar

2 Someone could say that redistributive taxation is a government's way of internalizing responsibility – it sees people from whom it takes as part of the same group as people to whom it gives. That is not how I use the term, but I do not want to quibble about definitions. Our task is to explore what makes people better off, not to explore what counts as internalization.

3 I borrow the phrase from Rawls, John, A Theory of Justice (Cambridge: Harvard University Press, 1971), p. 4Google Scholar, but I do not claim to be interpreting the phrase in a Rawlsian way.

4 My reference to the welfare of “the people around them” is not a throwaway line. Whether a person learns to be self-supporting or learns to expect free access to the fruits of other people's labor will affect the whole community.

5 Part of this thought is that even people who do need help (children, for example) get the help they need from their families, friends, and neighbors. That is part of the social structure and social process that we should try not to disrupt.

6 See Mead, Lawrence M., Beyond Entitlement: The Social Obligations of Citizenship (New York: Free Press, 1986).Google Scholar

7 Danzinger, Sheldon, Haveman, Robert, and Plotnick, Robert, “How Income Transfer Programs Affect Work, Savings, and the Income Distribution: A Critical Review,” Journal of Economic Literature, vol. 19 (1981), p. 1020.Google Scholar

8 Goodin, Robert E., Reasons for Welfare (Princeton: Princeton University Press, 1988), p. 233.Google Scholar

9 Why do they drop out? There is no simple explanation, but part of the explanation is that AFDC payments, together with food stamps and other benefits that go to AFDC recipients, add up to a pre-tax hourly wage equivalent of $14.76 in New York, $12.45 in Philadelphia, $11.35 in Baltimore, and $10.91 in Detroit. See Tanner, Michael, Moore, Stephen, and Hartman, David, “The Work vs. Welfare Trade-Off,” Policy Analysis, vol. 240 (1995), p. 27.Google Scholar

10 Goodin, , Reasons for Welfare, p. 177.Google Scholar

11 Ibid., p. 196. This characterization will suffice for my purposes, but Goodin himself offers several others (pp. 124, 147). See also his discussion of when dependents are exploitable (pp. 175–76).

12 Ibid., p. 19.

13 Ibid., p. 165n.

14 Ibid., p. 177.

15 Ibid., p. 221 ff.

16 Ibid., p. 223.

17 Okun, Arthur, Equality and Efficiency: The Big Tradeoff (Washington, DC: Brookings Institution, 1975), p. 99Google Scholar. Presumably, one of the dials Okun had in mind was the tax rate. When contemplating tax hikes, even people who know better routinely make budget projections on the assumption that raising tax rates by 20 percent will raise tax revenues by 20 percent as well. But twisting the revenue dial is not so easy. While some people deny that tax rates affect investment decisions, others question whether raising tax rates has much effect on government revenues. Hauser, W. Kurt, “The Tax and Revenue Equation,” Wall Street Journal, 03 25, 1993Google Scholar, says that between 1949 and 1993, top marginal personal income tax rates were as high as 92 percent and as low as 28 percent, but federal tax receipts never went higher than 21.5 percent of gross domestic product (in 1981, when the top tax rate was 50 percent) and never went lower than 17.9 percent of GDP (in 1964 and 1965, when the top tax rate was 77 percent).

18 Goodin, , Reasons for Welfare, p. 234.Google Scholar

19 Ibid., p. 223n.

20 For those concerned about rich people exploiting poor people, though, one obvious remedy would be to eliminate a program like Social Security. Retired people in the United States today are, as a group, far wealthier than young workers, yet the pay-as-you-go system employed in the United States transferred $334 billion from the latter to the former in 1995 alone, amounting to 22 percent of the entire federal budget. The cost of the system as currently constituted is projected to increase to $566 billion (in constant dollars) by the year 2005, according to the Congressional Budget Office, Baseline Projections for Mandatory Spending (Washington, DC: Congressional Budget Office, 04 1995).Google Scholar

21 Supporting oneself is not to be equated with living like Robinson Crusoe. What people mean when they speak of supporting oneself is living on one's earnings, however cooperative and interdependent the enterprises may be from which those earnings derive.

22 Goodin, , Reasons for Welfare, p. 271.Google Scholar

23 I thank Dan Russell for discussions of this point.

24 Fukuyama, Francis, Trust: The Social Virtues and the Creation of Prosperity (New York: Free Press, 1995), p. 29.Google Scholar

25 Green, David G., Reinventing Civil Society: The Rediscovery of Welfare without Politics (London: IEA Health and Welfare Unit, 1993), p. 3.Google Scholar

26 Green, David G., Working-Class Patients and the Medical Establishment: Self-Help in Britain from the Mid-Nineteenth Century to 1948 (Aldershot: Gower Publishing Co., 1985) pp. 1, 4–5.Google Scholar

27 Ibid., p. 1.

28 Beito, David T., “The ‘Lodge Practice Evil’ Reconsidered: Medical Care through Fraternal Societies, 1900–1930,” Journal of Urban History, vol. 23 (07 1997).CrossRefGoogle Scholar

29 Green, David G. and Cromwell, Lawrence G., Mutual Aid or Welfare State? Australia's Friendly Societies (Sydney: George Allen and Unwin, 1984), pp. 76–80.Google Scholar

30 Green, , Working-Class Patients, p. 95.Google Scholar

31 Voluntary hospitals provided free care. Provident dispensaries charged nominal fees. “[T]he provident dispensaries aimed to enable the poor to make as much of a contribution as they could afford to the cost of their health care. It was felt that the beneficiaries would feel greater self-respect if they were able to pay at least something towards their own health care. They therefore paid a low annual contribution, felt to be within the means of the very poor, and the balance was supplied by the honourary members.” See Green, , Reinventing Civil Society, p. 73.Google Scholar

32 England's Poor Law Amendment Act of 1834 sought to limit access to (and desirability of) government poor relief, so as to ensure that it would indeed be treated as a last resort. The general idea was that the standard of living made possible by public assistance ought to be less desirable than that available to the humblest of self-supporting laborers. See Himmelfarb, Gertrude, The De-Moralization of Society (New York: Alfred A. Knopf, 1994), ch. 4.Google Scholar

33 Green, , Working-Class Patients, p. 179.Google Scholar

34 Ibid., pp. 19–21.

35 A Royal Commission assigned to investigate whether the poor were systematically deterred from joining friendly societies found that, in 1901–1902, “registered friendly society membership was highest in rural areas where wages were lowest” (Green, , Reinventing Civil Society, p. 68).Google Scholar

36 Green, , Reinventing Civil Society, p. 99.Google Scholar

37 Beito, , “The ‘Lodge Practice Evil’ Reconsidered,” p. 30.Google Scholar

38 Given the lack of modern actuarial and accounting techniques, it is easy to imagine how nineteenth-century friendly societies could have run into financial difficulties. Yet none of them, to my knowledge, ever appealed to financial hardship as a reason for refusing to provide promised benefits.

39 As recently as the 1960s, though, the Taborian Hospital of Mound Bayou, Mississippi, provided basic medical coverage for as little as $30 per year, according to Beito, David T., “Our Temple of Health: Black Fraternal Hospitals in the Mississippi Delta, 1942–1967,” paper presented to the American Historical Association, 01 1996.Google Scholar

40 Private unemployment insurance was once available in Michigan, and insurance companies spent decades fighting against laws prohibiting wider selling of unemployment policies. See Rappaport, Michael B., “The Private Provision of Unemployment Insurance,” Wisconsin Law Review, vol. 61 (1992), pp. 61–129.Google Scholar

41 Lawrence Mead, in conversation, acknowledges that friendly societies were once effective providers of health care to the poor, but questions whether welfare recipients today have the competence to do for themselves what poor people did a century ago. If Mead is right, then we are left with a question of how to instill competence. One might begin by observing that we acquire competence in any particular activity through practice. We are not born with it. One of the ways in which our social environment contributes to our developing competence is by making it clear that we are expected to become competent. An environment that does not present us with such expectations is likely to hold us back.

42 There is some evidence, though, that the advantages of communal management as a form of collective responsibility tend to decrease as an economy matures. See Ellickson, Robert C., “Property in Land,” Yale Law Journal, vol. 102 (1993), pp. 1315–1400, esp. p. 1342ffCrossRefGoogle Scholar. See also my chapter on property rights in Schmidtz and Goodin, Social Welfare as an Individual Responsibility: For and Against.

43 In conversation.

44 I thank James Buchanan for this point.

45 The proposal is not to appeal exclusively to self-interest so much as to appeal to interests that people actually have. There is also sometimes a place for appealing to latent interests (in their community, say) that people could have reason to develop and pursue under the right conditions.

46 Alan Wolfe suggests (in conversation) that we could distinguish between positive and negative guarantees. An adequately enforced system of property rights, for example, provides a negative guarantee to the extent that it secures people against interference with their productive efforts. Positive guarantees secure access to the fruits of other people's productive efforts. Negative guarantees help make for a peaceful and productive society; positive guarantees help make for the opposite.

47 A similar theme is suggested by Husock, Howard in “Standards versus Struggle: The Failure of Public Housing and the Welfare-State Impulse,” elsewhere in this volume.Google Scholar

48 Goodin, , Reasons for Welfare, p. 237.Google Scholar

49 Short-run trends are harder to discern, of course. It is often claimed that wages for the poor and middle classes have stagnated since 1980, but data for the United States do not support this claim:

The Census Bureau keeps statistics separately for “families” and “unrelated individuals.” Census Bureau figures show that between 1980 and 1989, real income for the middle quintile of families increased by 8.3 per cent, while real income for the middle quintile of unrelated individuals increased by 16.3 per cent. The CBO [Congressional Budget Office] manipulated this Census Bureau data by combining “families” and “unrelated individuals” into the single category of “families.” Since demographic trends produced more rapid growth in the number of unrelated individuals in the 1980s, and since families headed by two adults on average have far higher incomes than unrelated individuals, combining these groups into a single category of “families” greatly depressed average “family” incomes.

Thus, even though the incomes of middle-quintile families increased at a rate of 8.3 per cent and the incomes of middle-quintile individuals increased by 16.3 per cent, middle-quintile “families” in the CBO's new sense saw their total incomes decline by 0.8 per cent over the same period. (Hinderaker, John H. and Johnson, Scott W., “Wage Wars,” National Review, 04 22, 1996, p. 35)Google Scholar

Robert Samuelson suggests a further explanation for the misperception of statistical stagnation. “The notion that most people's incomes and living standards are stagnating is simply false. Not only is it contradicted by the outpouring of new consumer products and services. It is also contradicted by official statistics, which, once corrected for slight overstatement of inflation, show sizable gains. No one knows precisely the extent of the overstatement of inflation. A good guess is ten to twenty percent over the past two decades.” Samuelson, Robert J., “Great Expectations,” Newsweek, 01 8, 1996, p. 32.Google Scholar

50 Nagel, Thomas, Equality and Partiality (New York: Oxford University Press, 1991), p. 64.Google Scholar

51 Reported by Schansberg, D. Eric, Poor Policy (Boulder: Westview Press, 1996), p. 8.Google Scholar

52 My source for these figures is Census Bureau data reported in Cox, W. Michael and Alm, Richard, “By Your Own Bootstraps,” Annual Report of the Federal Reserve Bank of Dallas (1995), p. 8.Google Scholar

53 See Schansberg, , Poor Policy, p. 8.Google Scholar

54 See Cox, and Alm, , “By Your Own Bootstraps,” p. 8.Google Scholar

55 About 9 percent of U. S. families earn under $11,000 in 1996 dollars. (These are Congressional Budget Office numbers, so a graduate student counts as a family, as per Hinder-aker and Johnson; see note 49.) A household bringing in two graduate student salaries is still (just barely) in the bottom quintile. See Boroughs, Don L., “Workers Take It on the Chin,” U.S. News and World Report, 01 22, 1996, p. 50.Google Scholar

56 Hardie, Ann, “Why We're Living Longer,” Atlanta Journal/Constitution, 08 28, 1995, p. A3Google Scholar. Hardie does not list original sources, but Samuelson, , “Great Expectations,” p. 27Google Scholar, says that, according to the U.S. Census Bureau, average life expectancy increased from 65.9 years in 1945 to 75.7 years in 1994.