Paternalism and Poverty

Niklas Blanchard further explores the case for cash transfers:

I’m guessing that I have a much weaker paternal instinct than Matthew, such that once it was identified the socially optimal level of transfer, then I say just simply give people money — which is the cheapest thing to do from a deadweight loss perspective. I am guessing that Matthew would much prefer a system of voucher payments, in order to exert more control over how poor people spend money.

I . . . don’t really know that I have a systematic answer to give to this. I’m actually not very sympathetic to our main existing “voucher”-type programs—namely SNAP (“food stamps”), housing vouchers, and things like LIHEAP (a really odd energy consumption subsidy)—and think replacing them all with cash grants would be a step in the right direction. But I don’t think I would even call what’s going on with these vouchers paternalism. Instead, it’s a form of subsidy to politically privileged housing, agriculture, and energy sectors.

If you really want to talk about paternalism and giving things to the poor, then I think that if you imagine a country where education has been fully voucherized it would be a mistake to turn the vouchers into cash transfers. But that’s because children and their parents are actually separate free and equal human beings whose welfare it makes sense to consider separately. The other thing is that I think it makes sense to make special provision for poor people’s retirement security, for both practical and Parfittian reasons.

In terms of broader paternalism, I think there’s something ugly about targeted anti-poverty paternalism but I’m all for broad-based solution. Tax booze and cigarettes, subsidize vegetables (as a first step don’t subsidize partially hydrogenated soybean oil), etc. But I don’t think these are really “poverty” issues.