selves better off at the expense of all others, including the poor. The use
of political markets to transfer income to the poor is fraught with incentive
problems and political considerations, which may harm the poor in the long
Perkins concludes that government "has a serious responsibility to the
poor. But given its poor record of ineffectiveness, it is foolish to expect
our government to lead the way in providing creative, constructive and
nurturing social services."
747 The federal government is ill-equipped to
help poor individuals -- it does not use categorization and discernment, it
is too far away from the problem to pose effective solutions, and it lacks
the incentives that accompany private and voluntary efforts.
But supporters of the status quo will fight substantial reform because
they will be made worse off; entrenched bureaucracies will be among the
biggest impediments to reform. Unfortunately, with compassion currently
defined as "more spending," with a still-strong faith in government's ability
to fix social and economic problems, and with bureaucrats who will defend
their turf, welfare reform is unlikely to occur.
The views expressed herein are solely those of the author and do not reflect
the views of the other contributors to this volume.
John Rawls, A Theory of Justice ( Cambridge, MA: Belknap Press, 1971).
Moreover, Rawls proposes that people would choose a "maximin" strategy --
to maximize the minimum level of income in society. While highly questionable,
his more general result of a taste and preference for greater income equality seems
Pure utilitarianism values the collective over the individual and requires the
assumptions that (1) utility and income are positively correlated and (2) the relationship between utility and income is equivalent among all individuals.
Beverly Bartlett, "Racial Imbalance Forces 10 Blacks to Leave Central," Louisville Courier-Journal, September 23, 1994, p. A1.
Arthur Okun, Equality and Efficiency ( Washington, DC: Brookings Institution, 1975), p. 4.
Gary Burtless, "The Economist's Lament: Public Assistance in America," Journal of Economic Perspectives, 4, no. 1 (Winter 1990), 57-78.
Similarly the earned income tax credit provides the equivalent of a 40 percent wage-rate subsidy up to $8,425 in earned income, and a lump-sum transfer
up to $11,000 and then imposes a 21 percent benefit reduction rate. The subsequent cut-off point is $27,000, extending the income transfer well into the middle
Edgar Browning, "Effects of the Earned Income Tax Credit on Income and
Welfare," (Working paper, Texas A&M University, 1994).