Tag: Welfare

Super Power

It might be a bit difficult to buy this picture as a model of spontaneous order. Spontaneity, perhaps, but order?

Each little bubble is a representation of an independent actor out fulfilling their purpose of the day. Bubble wrapped, as they each get to retain their skills, talent and experiences and bring those forth in the work they do.

This is in fact their super power. No matter who you know in life or where you start, you have the power to devote your time and energy to the endeavors of your choice.

Luckily, the twentieth century is full of modeling the chores done in exchange for pay. No need to review that here. Economics is most comfortable in this environment: money for goods, services, and labor. It’s countable. The measures are used in all sorts of reports and for all sorts of comparisons.

Sometimes the numbers seem off. Sometimes, people don’t end up where someone thinks they should. And Social Welfare Economics tried to get a handle on such things. As a method, it really couldn’t pull off the knowing part. How do you know when such a group is better off than the other? Isn’t a comparison contingent on all the factors that go into the moment? This is what James M Buchanan seems to argue in Positive Economics, Welfare Economics, and Political Economy (1959)

A second major problem which has concerned theorists in welfare economics has been the possible existence of external effects in individual consumption and production decisions, sometimes called “spillover” or “neighborhood” effects. But this annoying complication also disappears in the approach to welfare economics suggested here. If, in fact, external effects are present, these will be fully reflected in the individual choices made for or against the collective action which may be proposed. External effects which are unaccounted for in the presumptive efficiency criterion of the economist and the proposal based upon this criterion will negate the prediction of consensus represented in the alternative suggested. The presence of such effects on a large scale will, of course, make the task of the political economist more difficult. His predictions must embody estimates of a wider range of individual preferences than would otherwise be the case. The compensations included in the suggested policy changes must be more carefully drawn and must be extended to include more individuals who might otherwise be neglected.®

The reader might be led to believe, in this bottom-up observation of human behavior, that consumers reflect a comprehensive analysis of the entirety of their transaction, including internalizing spillovers and externalizing expenses. The market filters through individuals’ private desires and their accommodations for public or group enterprise in a complex, yet thoughtful manner.

The graphic specifies the draw of a common cause, whether it be education, peace, or public health (and there are thousands more). It is the cause that sorts the analysis. It’s not a group being told to sign up to walk for MS. It’s the desire to be on the team fighting a deadly disease that drives the worker to devote their superpower to a cause.

In review

First principles of the model are

  • 1. Actors are independent free agents.
  • 2. Actors may offer work for private benefit or toward a group goal.

The business of Public Goods

My grandmother would tell a story of giving in their rural Iowa community. Word would get out after a Sunday service at Holmes Lutheran Church that a family was in need. A gathering of kids’ clothes or staple food supplies would be left in a neutral pickup area, maybe at the end of a driveway. Then the mother in need would later pick it up. Poverty was shameful, you see. Direct contact in the transference of aid would be a disrespectful slight on their condition.

The evolution of social welfare has come a long way since the happenings along the gravel roads squaring off sections of farmland. Provision of resources funnels through formal government channels instead of being left solely to the church aid societies of the 50s. Efforts to detach stigma from acceptance of aid are ongoing. The evolution of food stamps is a credit card with funds for the purchase. Free lunches are provided in all school buildings so there is no distinguishing between families that qualify for aid and those who don’t.

It’s hard to see how public humiliation in the face of unforeseen circumstances is profitable. However these control mechanisms were developed as a means of discouraging group members from taking more out of the communal pot of resources than needed. It was a social metering of loosely held assets. Back-up reserves are not attached to one specific individual in the group. They are intended to meet the shortfalls of the worse off.

Scolding looks are used in other ways to keep up shared appearances, When the neighbor grass is getting knee high they may feel the scorn of dogwalkers as they pass on the sidewalk. Pushing and nudging with looks, back turns, and low whispers are simply how it’s done in society when it’s thought necessary to get the word out about control of shared space.

There’s a two-fold reason these norms are swept away in the face of dire poverty. The unkindness is too harsh as the victims are too vulnerable. And furthermore who wants to discourage, in any way, a mother from taking food for their child? The desire for stigma-free acceptance of benefits for kids is simply a long-term win for the group. Healthy kids make for healthy adults.

There are those who, however, may come to an erroneous conclusion about the tapping of public benefits without those disdainful social guardrails. Some will pursue as many benefits as they can find available to them with no personal calculation of need. And others still take the pursuit of public benefits as a business model. They dreamt of being an entrepreneur, they say. This claim is being made in defiance of accusations of fraud.

When public goods and resources are formalized through government metering, then funny things happen. They no longer have the appearance of a common pool resource but rather they take on a more private form under the guise of a ‘program.’ Gone are the nuances of need-based use. Instead, they are peddled and appropriated in a coin-counting manner.

Perhaps an ingredients label is required. This is a one-hundred percent publically funded resource. It is fraudulent to transact outside its intended mission.