Free Money for The Children

Some people deserve to be poor: they are lazy and or irresponsible. Other poor people are truly victims of circumstance, and deserve our sympathy. Poor children fall into the latter category. “For the children!” is a worthy battle cry for advocates of the welfare state.

Alas, if we give free money to children, we create the mother of all moral hazards. Some people will have children for the express purpose of receiving more government money. These people will be net tax recipients. Over time net tax recipients will multiply faster than taxpayers. The arrangement is not sustainable Without intervention – genetic engineering, benevolent robot overlords, importation of productive people, etc – we end up with a society like in the movie Idiocracy.

Even so, it is still monstrously unfair to punish the children of the poor in the name of eugenics!

Our politicians have worked out a compromise to deal with this dilemma. They are stingy with cash benefits and much more generous with targeted largesse: food stamps, public housing, Medicaid, progressive taxation and public education. These benefits scale up with family size without providing extra money to party. (Actually, food stamps are a bit fungible; buy groceries and sell them to someone who has cash…) The arrangement works somewhat, but it is horribly complicated and the need based programs trap people in poverty. When largesse is based on need, it pays to do things which keep you needy.

Public education is the unconditional government aid given as a service instead of money. You don’t get more public education benefit by being poor, so it pays to earn money, save money, stay married, etc. In that respect public education is progressive. It is also socialism, government ownership of a means of production, and has all the efficiency of the Soviet Empire. (Or maybe even less. The Soviets had real socialists in charge. We have a more divisive government scientifically designed to be inefficient.) We can afford some socialist inefficiency as long as we have a big enough private sector to pay the bills. Public schools are pretty good in our better suburbs. In poorer urban areas, however, public education is not pretty.

More Money for the Poor Children

We propose a system that is less socialistic, more cash based. While we realize we cannot give away cash based on the number of children, the more generous proposal gives enough unconditional money so that the poor can afford a pair of children per couple and still be above the poverty line – without having to work. If you want more kids, or don’t like the bother of being married, you would still need to get a job to avoid poverty. This proposal would lift many of the poor out of poverty without encouraging people to have children out of wedlock. Marriage, family planning, saving, work, etc. pay. We can expect the poor to improve their behaviors substantially.

But not entirely. And we already have unwed parents with multiple children to care for. Furthermore, the official poverty rate figures presume free elementary through high school education. Finally, a low guaranteed income may be fine to live on while life is good, but if severe sickness strikes, we are back to poverty and misery.

So, in addition to unconditional money for all adult citizens, we can support the children without moral hazard by also providing free assistance for school and free assistance for health insurance. However, this assistance would be in the form of coupons, more like food stamps, only available to all children. While this looks expensive, these additional free programs would offset money currently spent on public schools and Medicaid, as well as an assortment of tax expenditures.

We replace socialism with free money and coupons. We shrivel up the welfare state while still providing plenty of largesse for the children.