A review of In Our Hands: A Plan to Replace the Welfare State, by Charles Murray

Remember George McGovern's "Demogrant"? During his ill-fated 1972 presidential campaign, he proposed a government grant of $1,000 to every American. Conservatives quickly derided the handout, which became another nail in the coffin of McGovern's quest for the presidency. 

Now the plan is back, this time promising $10,000 annually to every citizen over the age of 21. And strangely enough, the champion of this new guaranteed income proposal is Charles Murray, the author of Losing GroundWhat It Means to be a Libertarian, and The Bell Curve. Despised by latter-day McGovernites, Murray has in his latest manifesto borrowed a page from the Left's old playbook. Like liberals of the 1960s and 1970s, he sees universal grants as a great way to kill the paternalistic, intrusive, and self-serving welfare bureaucracy, and to eliminate the inherently complex "means test" that creates so many perverse incentives while stigmatizing welfare clients. The point of his proposal, Murray explains, is to take money from the government and give it directly "to the people." Although he relies primarily on libertarian arguments, he hopes "to extend a hand across the political divide between libertarians and social democrats, offering a compromise that provides generous assistance for dealing with human needs without entailing the suffocating and soulless welfare state." 

The main elements of Murray's proposal, which he dubs, somewhat unimaginatively, "the Plan," are deliberately simple. Every American citizen over age 21 would receive $10,000 annually from the federal government. When a recipient's earned income reached $25,000, a 20% surtax would be imposed on the grant—which means that the grant would be reduced by $1,000 for every $5,000 of earned income over $25,000. The surtax would be capped at $5,000, leaving everyone earning more than $50,000 with a $5,000 grant. He would require all recipients to purchase health insurance, which he claims would cost about $3,000. In order to make health insurance available at this cost, he would institute wide-ranging changes in the American health care system, including eliminating all medical licensing laws and substantially reducing opportunities to file medical malpractice claims. He suggests, too, that the government might require recipients to put $2,000 of the annual grant into a retirement plan. 

To finance the Plan, which he estimates would cost about $2 trillion per year, Murray would eliminate the entire American welfare state. To make sure that it did not grow back he would enact a constitutional amendment declaring that the government—federal, state, and local—"shall make no law nor establish any program that provides benefits to some citizens but not to others." Among the programs slated for elimination are the big-ticket contributory programs, Social Security and Medicare, along with unemployment compensation, workers' comp, and veterans' benefits. Murray would bid a not-so-fond adieu to all means-tested programs as well: Medicaid, TANF (Temporary Assistance for Needy Families), food stamps, the Earned Income Tax Credit, Supplemental Security Income, Pell Grants, general assistance, housing aid, and much more. And he would kill off other programs he dislikes, including all agricultural subsidies, the Corps of Engineers, the Bureau of Indian Affairs, and most of the "corporate welfare" programs of the Departments of Commerce, Energy, and Transportation. According to Murray, our government has become so bloated and inefficient that we can make everyone in the country financially secure by writing checks rather than running programs.

In Our Hands is a stimulating and useful book because it confronts a basic question: what do we want from the welfare state? Murray emphasizes that we want not only to provide a "safety net" for those facing temporary or involuntary setbacks, but also to promote certain personal habits and character traits (especially industriousness, self-restraint, and willingness to take responsibility for our own lives and for our children). Indeed, the most interesting chapters of the book are those in which he explains how the Plan will provide economic security to all without discouraging work or encouraging out-of-wedlock births. It is in these chapters, in particular, that Murray compels us to think through the connections between economic incentives, social outcomes, and individual character traits. Many readers might disagree with Murray's conclusions, but they will undoubtedly be fascinated and impressed by his many clever arguments.

In Our Hands demonstrates Murray's special knack for explaining complex matters in simple, engaging prose. One example of this is his discussion of what he calls the "Doolittle Effect," named after the lovable Alfie Doolittle character in Pygmalion and My Fair Lady. Murray explains that under the Plan, benefits are structured so as to "lure people into working until they are making so much money that they cannot afford to quit." Recipients face no reduction in their grant until they earn $25,000. Who would give up a $26,000 job because his grant was reduced by $200? That would mean going from a total income of $35,800 to $10,000—quite a drop in one's standard of living. Similarly, Murray argues that because no one gets a payment until turning 21, and because young women without children receive as much as those with children, the Plan will reduce the number of young, unmarried mothers.

* * *

Despite its many virtues, Murray's book is not without serious flaws. His proposals are vulnerable to many practical and economic objections. More fundamentally, Murray seems to forget what Daniel Patrick Moynihan called the "central conservative truth," namely that "it is culture, not politics, that determines the success of a society." And he embraces an exaggerated version of "the central liberal truth" that "politics can change a culture to save it from itself."

Murray's book will stimulate a lively debate among budget experts over whether his numbers add up. He makes a plausible argument that by the year 2011 the cost of the programs eliminated will exceed the cost of the Plan. He points out that it will be much easier to control spending under the Plan than with existing programs, especially those pertaining to health care. The success of Murray's scheme for lifting everyone out of poverty, though, rests in large part on the consequences of his proposal to deregulate health care. A great deal of what Murray denigrates as "wasteful government spending" pays for Medicare, Medicaid, and veterans' health benefits. Yet if health care costs continue to soar, notwithstanding Murray's proposed deregulation of health care, most of the Plan's $10,000 grant would go to buying health insurance alone. 

Of course, the truth is that we will never learn how well the Plan will work, since as a political matter it has no chance whatsoever of being enacted. It is guaranteed to generate enormous political opposition: every interest group, public administrator, and legislator would oppose it, insofar as the Plan would drastically reduce their ability to serve their clients and constituents. And who would support the Plan? Not current or future recipients of Social Security and Medicare. Not farmers or Native Americans or veterans or employees of the medical-industrial complex. If you thought it was hard selling partial privatization of Social Security, wait until you try persuading them to eliminate Social Security and Medicare and everything else! 

Early in the book Murray concedes this point and urges the reader "to suspend disbelief and play along." He presents the book as a useful "thought experiment" rather than as a political program. By the end of the book, though, he claims that "something very like the Plan is politically inevitable—not next year, but sometime" (emphasis added). Why? Because the more government expands, the more evident its incompetence becomes: "By the time the government begins trying to administer to complex human needs, it is far out of its depth…. The limited competence of government is inherent. At some point in this century, that too will become a consensus understanding." 

Those who belong to the church of libertarianism will no doubt find this argument convincing. Those of us not dedicated to that faith must ask for more evidence. Given the centrality of Murray's claim that government bureaucracies are inherently ineffective and wasteful, one would expect a careful comparison of public bureaucracy with what he calls "private philanthropy." But on this topic Murray offers only slogans. The pejorative term "bureaucracy" is conveniently reserved for public agencies. The United Way, Catholic Charities, and the Ford Foundation, he seems to imply, seldom suffer from the pathologies of bureaucratization. Anyone who has worked for a large corporation or private university (or for that matter read Max Weber) knows that non-governmental organizations can be "bureaucratic," too. 

In his brief discussion of public bureaucracy, Murray claims that "bureaucracies must by their nature be morally indifferent." Really? To be blunt, this claim is preposterous. American welfare programs for years were decried as "moralistic"—which meant they imposed a form of morality disliked by critics. In his well-known study of police departments, James Q. Wilson demonstrated that many "street-level bureaucrats" cannot avoid making moral judgments on a daily basis. One reason for the success of the 1996 welfare reform act is that it allowed state and local welfare bureaucracies to impose norms, not just neutrally hand out money "as a matter of right."

* * *

Murray's deep-seated distrust of government not only drives him to endorse policies previously championed by the Left, but also leads him to part company with conservative advocates of "paternalistic" post-1996 welfare reform. Those interested in understanding divergent strains of contemporary conservatism should compare Murray's libertarian attack on the welfare state with Lawrence Mead's vigorous defense of Wisconsin's welfare-to-work program in Government Matters: Welfare Reform in Wisconsin (2004). Relying on extensive empirical evidence, Mead argues that Wisconsin's highly competent, innovative, and morality-imposing welfare bureaucracy succeeded in turning thousands of long-term welfare recipients into active participants in labor markets, giving them skills and support not provided by the private sector. Ironically, Murray's first book, Losing Ground, played an important role in building political support for the paternalistic welfare regime that Mead celebrates and that has become a hallmark of contemporary conservative efforts to reform the welfare state.

Conservatives should also find Murray's proposal to institute his plan through constitutional amendment disconcerting. His constitutional revision would strip state and local governments of their most important functions and powers, fundamentally changing the nature of American federalism.

Underlying Murray's notably un-conservative proposal to remake American government is his belief that almost every problem in modern life is a product of the perverse incentives created by the welfare state. How to explain the decline of religious belief so apparent in Europe? Blame the welfare state, says Murray: "Give people plenty and security, and they will fall into spiritual torpor." Ditto the decline of marriage: "The current decline in marriage is not a function of modernity, but of the welfare state. The welfare state systematically competes with the natural attraction to marriage." Declining social capital? He finds a "causal connection of great importance" between growth of the welfare state and decline of private philanthropy and neighborliness. 

Not surprisingly, Murray claims that once the Plan replaces the welfare state "the effects on civil life will be transforming." The "momentous effect of the Plan" will be "the revitalization of the institutions through which people live satisfying lives." Religion and marriage will flourish again. Once individuals are given the minimum resources needed to succeed in life and are forced to recognize that their fate is "in their own hands," our cultural malaise will come to an end. 

Well, perhaps. But many conservatives will be less confident that a change in the welfare state—even a change as radical as Murray proposes—will so fundamentally and abruptly transform our social mores. Here it is instructive to compare him with the most famous student of American mores, Alexis de Tocqueville. Like Murray, Tocqueville believed that the rise of a centralized, powerful, and bureaucratic nanny state would go hand-in-hand with the decline of religion, private associations, and the family. But for Tocqueville—unlike Murray—this "soft despotism" was not the primary cause of the corruption of morals, which lay rather in the thoroughgoing democratic individualism of our age. 

According to Tocqueville, the United States managed to avoid the worst diseases that afflict Europe not because its government was small but because it was decentralized (and thus encouraged citizens' participation) and never united church and state (which inevitably corrupts and discredits religion). For Tocqueville, individualism was a dangerous modern conceit, one that religion, government institutions, families, and customs must together seek to tame and redirect. Murray's sole objective, in contrast, is precisely to unleash individualism. To be sure, he discusses the role of virtue, self-restraint, and responsibility to others, but unlike Tocqueville he is supremely confident that families, markets, and informal social networks will take care of such things if government just gets out of the way. Indeed, according to Murray, we need not even worry about the lingering effects of welfare state mores: the incentives provided by the Plan combined with the natural goodness of man will quickly right our culture. In marked contrast to Tocqueville, Murray is a populist at heart. 

In Our Hands is a provocative book that will help us all to think more clearly about things we usually take for granted. No one need worry about the Plan becoming government policy. But liberals should ponder why parts of Murray's proposal seem so attractive to them. And conservatives should think hard about how much of Charles Murray's underlying analysis they are willing to credit.