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Saturday, August 27, 2005

Bleeding-Heart Libertarianism

Arnold Kling discusses "bleeding-heart libertarianism":
Of the roughly $3 trillion that government in the United States at all levels collects in taxes of all kinds, close to two-thirds goes to pay for Social Security, education, and health care. This is the Welfare State.

The conventional wisdom is that the intent of the Welfare State is to reduce the disparity between the unfortunate and the well-off. The Welfare State supposedly redistributes income and reduces poverty. In fact, I believe that the Welfare State redistributes poverty and reduces income. As Karl Kraus once said of psychoanalysis, the Welfare State is the disease which it purports to cure.
Is Professor Kling's assertion hard to believe? Well, then, you have to read all of his short essay to understand why he concludes:
However, the scheme I outlined above would provide a better alternative. If it were adopted, there would be improved overall living standards, as a result of encouraging the activities that lead to growth. Overall higher living standards, combined with the efficiency of the redistribution mechanism, would drive out poverty. The working poor would see their effective tax burdens plummet. Thrifty people would live very comfortably in their retirement. Access to a good education would be more equal.

All things considered, it seems to me that the risk involved in embarking on a course to abolish the current Welfare State is actually rather small. I think that there are much better alternatives available, along the lines of the bleeding-heart libertarian model. Committing ourselves to the Welfare State as it exists today amounts to robbing the poor.

Kling makes some very interesting points. His examples are concise and have merit. However I struggle with his statements from our Value Judgement (Normative Economics) point of view.

Would the transition into a more Libertarian government construct fall under the definition of Efficiency?

Under full realization of this construct, would it be seen as one gigantic Pareto Optimal improvement? Or would it in fact go against the primary goal of being efficient?
No I wouldn't say his "bleeding heart libertarian" would be efficiency.

The normative approach of individual liberty is distinct from the normative approach of efficiency. Each is an alternative normative framework we might use to define the role and purpose of government. Yet, there are issues for which the policy alternatives favored by each of these normative approaches would be consistent. That is, each of the approaches might imply the same policy choice, but they would do so for different normative reasons.
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