Of Human Design but not of Human Intent
By Arnold Kling
Christopher Howard writes,
Some of the largest tax expenditures today appeared as early as 1913…few people actually benefited…The original income tax applied only to the wealthiest 2 percent of Americans. By the late 1930’s, only about 6 percent of Americans paid income tax. Most individuals could not benefit, for example, from the tax deductions available for home owners.
This is from p. 65 of The Welfare State Nobody Knows. Howard argues that the American welfare state is larger and less coherent than most people realize. He includes in it all sorts of redistribution measures, such as the mortgage interest deduction, the exemption of employer-paid health insurance, the earned income tax credit, and government regulation and guarantees of private pensions.
Howard is basically in favor of a welfare state, and he is not an economist. The book has some interesting facts and perspective, but there is much to dislike about it.
Hayekians describe spontaneous order as “of human intent but not of human design.” Nobody designs market outcomes, but those outcomes reflect human intent.
The American welfare state is sort of the opposite. Each program was designed. But together they add up to something than no one would have intended–a hodgepodge of subsidies and credits that allow some poor people to fall through the cracks and provide many subsidies to the affluent. I think Howard and I would agree on that diagnosis, although we would differ in our prescriptions.