Saturday, September 3, 2005
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Milton Friedman, meet Robert Reich
Milton Friedman introduced the idea of a "negative income tax" in his 1962 book Capitalism and Freedom. The idea behind it was a way to provide welfare in the most efficient and least welfare-distorting manner possible.
In the New York Times today, Robert Reich drives this point home by looking at the deleterious effects of the alternative policy possibilities -- protectionism and pork-barrel spending:
Read the whole thing -- Reich proposes a number of policy possibilities, including the expansion of the modern-day equivalent of the negative income tax, the earned income tax credit.
I'm not sure I buy all of Reich's proposed package, but his analysis of the political economy of the status quo is dead on.posted by Dan on 09.03.05 at 09:11 PM
What did he do with all thesse bright ideas during the Clinton administration?posted by: Mark on 09.03.05 at 09:11 PM [permalink]
According to Sid Blumenthal, Reich was busy strengthening the levees in New Orleans.posted by: JK on 09.03.05 at 09:11 PM [permalink]
First, it is a shame that the jobs lost due to the taxes required to fund these "job-creating" projects are never counted. In many if not most cases, the net number of jobs will likely be negative. It is a shame too, that the politicians and bureaucrats, most but not all of whom understand this, feel so comfortable lying to the public.
Second, it is important to note that the EITC is very different from the NIT because it is a conditional transfer. You have to work to get the EITC. As such, it is not a substitute for programs such as TANF (pardon all the acronyms - that is how this area works) for single parents who are unwilling or unable to work. The NIT was proposed as an unconditional transfer - you have a pulse, you get it. The economics are therefore quite different.
posted by: Jeff Smith on 09.03.05 at 09:11 PM [permalink]
If Reich told me that the sky was blue, I'd go get a spectrophotometer and check his work.posted by: Mitch H. on 09.03.05 at 09:11 PM [permalink]
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