Its a fascinating idea but it can never work for 3 major reasons:

1.some people would blow their money and still need to be cared for. We end up back at square one- society needs to care for its citizens basic needs whatever their behavior. Not a libertarian ideal but seemingly cemented into American culture.

2.Baby boomers. 10 grand a year wont cover their medical bills alone. Not even close.

3.To mitigate #1 and #2 huge government beauracracies would have to be created to force people to spend their money 'correctly' and to clamp medical care prices down to the point the elderly can afford them. So we end up with precisely what we are trying to escape, a bloated federal system with price controls and costing more to maintain than the recipients end up receiving.

Joe:

Charles didn't exactly pull that idea out of thin air either: Politics by Principle, Not Interest -- James Buchanan

That is a really dumb idea but I can see that a lot of really dumb people would fall for it. Trade away Medicare for 10,000 per year sounds nice untill you see that the money isn't going to be there when you need it.

Why? Because the landlord, the grocer, the utility company, the barber or hairdresser, and everyone else you are now patronizing sees that you have more money to spend for their services so they will just increase their prices to get it. I know I would, and so would you.

In short this idea is an inflation nightmare.

In short this idea is an inflation nightmare.

ken: Thanks for demonstrating how clueless you are without me needing to do so. It makes my life alot easier when people like you make fools of yourself for me.

Not only do you need to take a course in economics, but even if that were true apply that same logic to our current problems with Medicare and see where it gets you.

Uh huh. Right. Next troll, please.

Ken is not totally wrong. It would depend on how the payments were financed. If it were with debt and the debt were monetized it would be inflationary, unless , etc.

Personally the idea gives me the willies. I think Micky Kaus is right to hold that money without work or strings creates a underclass. In Europe they are jihadis. I don't want to find out what this idea would do.

ceribrim, well as a landlord, I always wanted to know how much money my tenants had available to spend for renting my properties. I don't know what someone would do after taking a course in economics but every businesman I know would raise their prices. This is pretty basic stuff, especially if all your customers suddenly had 10 grand more a year in disposable income.

Robert Schwarz, I don't see that it would matter how it were financed. The idea that the guy who cleans your pool or mows your lawn or lawyers your divorce is going to just allow the bank to get that 10 grand is naive. Everybody will be able to charge more for their services, and they will. From day care to the gas pump to the grocery store checkout line that money will be swallowed up through higher prices before you can even think about how you were going to save and invest it.

I think Micky Kaus is right to hold that money without work or strings creates a underclass.

It's the downfall of Welfare theory that you can't help the poor by soaking the rich. They only see material improvement when the upper economic classes have enough money to hire them, pay them decent wages, and invest in industries that create more jobs for them. Sneers about "trickle down economics" don't help them a bit and don't change a single thing.

It is possible to soak the poor, though, for example by raising taxes on gasoline and cigarettes (the working class vice). They will work more hours and spend less on themselves. That's because the poor don't choose how to invest their money, they put it where they have to.

"It is possible to soak the poor, though, for example by raising taxes on gasoline and cigarettes (the working class vice). They will work more hours and spend less on themselves. That's because the poor don't choose how to invest their money, they put it where they have to. "

Spending you money on booze and cigarettes isnt choosing how you invest it?

Apply a little game theory and this makes perfect sense. Seriously, Buchanan's book is worth a read. The proposal is actually more general than Murray's. You institute a flat tax and a monetary demogrant at the same time that you do away with social welfare programs based on need. The government is then treating everyone equally, and the overall effect is still redistributional. You can tweak the extent of the redistribution by adjusting the percentage of the flat tax and the amount of the demogrant (after remeving operating expenses, defense, etc.)

Some years ago Buchanan proposed a legislative system based on supermajorities in order to quell government, and then realized that it would never fly politically. This "generality principle" is the second-best alternative. If you're a radical Marxist then set the tax at 100% and redistribute everything but operating expenses, and get practical experience of what that does to the economy. If you're a radical libertarian do away with all taxes and let everyone fend for themselves. Different jurisdictions will choose different formulae, and we'll get some practical experience in what works best.

"Some years ago Buchanan proposed a legislative system based on supermajorities in order to quell government, and then realized that it would never fly politically."

That actually stymied Buchannon? Never seemed to stop him trying to put Gore into the WH.

The financing of this is easy. You redirect all of the current welfare payments into one sum offeredto all citizens. I’m still waiting for my review copy but this is a version of the citizen’s basic income idea. A good one too.

This was a common economic suggestion in old science fiction novels. Every citizen was issued US “stock” at birth. The stock yielded a dividend whose size depended on US economic performance and growth. (Thus citizens would vote for policies that increased the overall pie.)

There is a problem with people selling their stock. Unfortunate circumstances could lead even a prudent person to sell their birthright. Prohibiting the sell of stock would lead to loans backed up by assigning future dividends. (Likewise in Murray’s proposal a loan shark might loan a drug addict money backed by the addict’s $10,000 grant.)

How would the grant concept affect illegal immigration? Since wages would be on top of the grant, US citizens might be willing to work for lower wages. On the other hand there would be less incentive for a US citizen to take an unpleasant, low status job.

I believe that improvements in manufacturing productivity combined with advances in robotics and AI will continue the long-term decline in the relative value of unskilled labor. It is not clear to me that education, re-training, and free market capitalism will continue providing sufficient jobs for those with limited ability. Indeed, I expect the fraction of “unemployable” citizens to rise as robotic and AI tools improve. Eventually most of humanity may be “unemployable”. (Service jobs will also be automated.)

Keeping “unemployable” people happy could be a major problem. Cultural attitudes to work might have to change.

(I don’t believe medical costs will rise indefinitely. Advanced biotech will lead to inexpensive cures for many costly ailments, e.g., Alzheimer’s Disease, cancer, heart disease, diabetes, etc. Within two decades I expect most medical expense will be for personal enhancement.)