Henderson on How We Dodged a Bullet
By David Henderson
Steensland would probably dislike the title of this review. The reason is that he sees the defeat in the U.S. Senate of Nixon’s proposed Family Assistance Plan, which the House of Representatives passed in 1970 by a vote of 243-155, not as dodging a bullet but, on the contrary, as a huge lost opportunity. But one doesn’t have to agree with his perspective to learn from his book.
Steensland gives a detailed account of the various proposals for some version of a GAI [Guaranteed Annual Income], starting with the Johnson administration, through the Nixon, Ford (briefly, given his two years in office), and Carter administrations. Although he is a sociologist, he exhibits a basic understanding of the effects of economic incentives on work and family dissolution. And, refreshingly, his book is relatively free of cheap shots at those with whom he disagrees. He tries hard to understand their views rather than merely dismissing them as unworthy. That makes it relatively easy to judge the arguments of the various players and come to conclusions different from Steensland’s. In particular, I found the arguments against Nixon’s proposal by some of Nixon’s own staff much more convincing than Steensland did.
This is from David R. Henderson, “How We Dodged a Bullet,” my review of Brian Steensland’s The Failed Welfare Revolution: America’s Struggle over Guaranteed Income Policy in Regulation, Spring 2008.
You can take one side or the other on each of the above issues. But, as one of Nixon’s main advisers on welfare, Daniel Patrick Moynihan, became famous for saying, “Everyone is entitled to his own opinion, but not to his own facts.” I repeat the quote because Moynihan, in pushing for one version of a plan, told Nixon a whopper. In an April 1969 letter to Nixon, Moynihan wrote, “For two weeks’ growth in the Gross National Product you can all but eliminate family poverty in America.” Um, no. The typical annual growth rate in those days was just above 3%, so two weeks of growth was about 0.12% of GNP. Even the cheapest plan would have cost well over half a percent of GNP, which is more than four times Moynihan’s estimate.
And, finally, the relevance for today’s policy issues:
Because there is a renewed push today for some form of GAI–even some libertarians advocate it–there’s a lesson to be learned from Steensland’s book. Some libertarians claim that we could have a reasonable GAI by cutting all other means-tested benefits. This turns out to be false, as I showed in “A Philosophical Economist’s Case Against a Government-Guaranteed Basic Income” (Independent Review 19, 2015). But even if it were true, the Nixon proposal was for a major expansion of welfare spending, with no offsetting cuts in means-tested programs such as housing aid and food stamps. The lesson: libertarians who push for a GAI will end up being in an alliance whose main constituents want more government spending. And that’s what they’ll probably get.