Wednesday, February 8, 2012

Arnold Kling on Governments Failure to Efficiently Help the Poor

Arnold Kling posts about the fact that Governments programs are more targeted at the middle class than the poor and that these programs, that are let's face it are just a transfer from middle class people to themselves, are pushing the deficit ever higher.

My comments:

The irony is that in the end even the middle class do not benefit, they just think that they do. Take schooling, I sent my children to a private school that costs half what my county spends per student (the education may be slightly worse but you cannot tell that by me), so if we were all charged directly for each child that we send to the Government schools we would be better off, but try convincing people that charging them is better than them "getting it for free".

Even SS which is a simple transfer may not be so utility maximizing or even neutral.  SS has changed our culture such that more older Americans live on their own than otherwise.  So a simple transfer from children to their retired parents must reduce utility.  I think the same is true for medicare and low deductible insurance in general. When we have medicare or low deductible insurance we use more care than we otherwise would and if we are middle class or rich surely most of us (i.e. those of us without exceptionally high life time medical spending) of us pay the full costs either way.