Opponents Of Transfers Are Not Serious

Stephanie Slade wrote this piece arguing that conservatives don't oppose material security. They just think there are better ways to get at it than transfers. She doesn't offer any better ways to get at it, which makes sense because there aren't any. Any cursory look at the numbers reveal transfers to be the most successful anti-poverty, anti-inequality, and pro-material-security institutions to ever be tried in advanced economies at the technological frontier.

Unmitigated Success

We know all about the greatness of transfers right here in the United States. In 1960, our nation's elderly poverty rate was 35 percent. In 2012, it was 9.1 percent. That's a decline of 74 percent. What happened? Ramped up Social Security payments is what happened. In 2012, Social Security payments pulled 22 million people out of poverty, without which the elderly poverty rate would have been 44.4 percent. This is the most successful anti-poverty program in the history of this country.

Further, the only thing to have reduced overall poverty in America since 1967 has been transfer payments. Between 1967 and 2012, the market income poverty rate rose from 27 percent to 29 percent. During that same period the disposable income poverty rate fell from 26 percent to 16 percent. That is purely due to transfers. Over this period of no market traction on poverty reduction, transfers reduced impoverishment by 1.2 billion people-years.

But we make a mistake to contain our inquiry to domestic happenings. A look elsewhere shows that countries with rock-bottom poverty rates get that way through transfer programs. This is especially true of child poverty rates, which the US is a developed-world leader in, shamefully. Even the much-maligned and hated single mothers find themselves largely relieved of poverty in these countries (something conservatives here seem to believe is impossible):

Source of Confusion

Slade's contention that market income distributions will somehow solve poverty is a carry over from an extremely brief period in our history where there was optimism that this would happen. In the middle of the century, income gains were share broadly and the notion that a rising tide would lift all boats was so common that conservative propaganda films were even made with that as the centerpiece. But there is no iron law of capitalism that income gains will be shared broadly, as we've seen in the last four decades (and prior to that). Had growth been distributed the way it was in the 1960s (as optimists at the time thought it would be), poverty as we define it in the US would have been wiped out years ago. But that's not reality:


Conservatives sometimes will concede all of the above (as they must), but then argue that these transfers will mean less growth. But do transfers actually cut efficiency? Cross-country data tell us the answer is no. Over the last few decades, developed countries with extremely different systems and levels of transfers have grown at basically the same per capita rate (see Lane Kenworthy, see Thomas Piketty, see the OECD data for yourself). In fact, according to a massive cross-country data set the IMF has been probing of late to answer questions about growth, tax-and-transfer schemes appear to increase growth somewhat.

These efficiency arguments you hear against transfers are not well-grounded. Those exposed only to simplified introductory economics seem to walk away from the experience thinking growth is driven simply by labor and capital increases, when the reality is that TFP-related growth elements steer most of the growth ship, especially in developed economies at the technological frontier. Innovation can be sustained in high-transfer, egalitarian countries, and thus so too can growth.

What's Really Going On With Conservatives?

Everything I said above is basically useless here because conservatives pretended skepticism regarding transfers ability to cut poverty, cut inequality, and increase material security does not actually motivate their opposition to them. Parts of Slade's piece tell you what is really going on in their minds: they are opposed to "forced redistribution of wealth by the government."

Regular readers know by now that this phrase is perhaps the most incoherent thing ever uttered by human beings. It is built upon this comical libertarian delusion that denies against all reason that all distributions of wealth are imposed by force. But they are! If you don't believe me, please do wander into the house next to yours and see what happens. Or better yet, have a look at this gif:

Property institutions are the most violent, statist, anti-libertarian, forceful institutions in the history of the world. They are the biggest government program in this country and any other country. They involve the state determining, through its laws, what belongs to who and then violently imposing that determination on everyone else whether they agree with it or not. That is forceful distribution of wealth by the government.

In actual reality, conservatives do not oppose forceful distribution of wealth by government (that is what property law is). They just prefer their forceful distribution of it over other forceful distributions over it. In all cases of distribution, you have the government declaring, through its institutions, that X can use the thing, and that violence will be acted on all not-X people should they do so. The disagreement between those who support transfers and oppose transfers is simply on who X should be.

But because conservatives buy in to this silly philosophy that says their preferred scarcity allocation system doesn't operate off of forceful wealth distributions, they end up supporting setting up our scarcity allocation scheme in a way that causes babies to be poor even though they don't have to be. That's the reality of what's going on here philosophically and that's the corrupt intellectual fuel that sustains conservative opposition to transfers.