Incentives Matter

      Here is a lesson from one of my heroes, Dr. Milton Friedman, that I heartily wish all lawmakers would learn: “Incentives Matter!”  And he followed that truism up with one more, which is that “You get more of what you subsidize and less of what you tax.”  You would think those truisms would be self-evident, but with the laws and government programs existing today it is obvious that they are not.  So if we give money and benefits to people who are seen as victims, more people will compete to show greater victimization than their neighbors, thus getting more freebies.  As a result we will be sponsoring a nation of victims instead of a nation of people striving to get ahead.  As such, this culture that sponsors victimization harms everyone, except the government officials, who see themselves as “doing something” about our nation’s poor.

      But what about the poor people – shall we just let them starve?  No, once again a proposal from Dr. Friedman, which he calls a Negative Income Tax.  (I don’t like the word “negative,” so I call it a stipend program.)  And what is that?  With these numbers just used for illustration, no one in our country would pay income taxes on their first $44,000 in earnings.   Then people who are over 18 years old and who are either citizens or here legally with a Green Card who made no money would receive a government stipend of $22,000 per year, probably broken down into monthly payments of $1,750.  And it wouldn’t matter if they had just lost their job, decided to go back to school, or were just plain lazy.  The government would not inquire.  But, importantly enough, for every dollar they earned, their stipend would be reduced by 50 cents.  Thus everyone would always have an incentive to earn the extra dollar – which is totally missing in our welfare system today!  Furthermore, all other welfare systems would be abolished, except for those people with truly special needs (with the understanding that programs such as Social Security and Medicare would not be affected).  Just think of the savings and the reduced bureaucracy, fraud, and intrusion into our lives!  In fact, everyone will win, except the bureaucrats!  So please pass along Dr. Friedman’s wisdom to your circle of friends who vote.  Because if there is a groundswell of support, our lawmakers will hasten to lead the charge!

Story for the week: Did you know that once just before Prime Minister Winston Churchill was going to give an address to Parliament he went into the men’s room to relieve himself so that he would not be uncomfortable while giving his speech.  But while he was standing there doing his business, his political nemesis  Clement Attlee came right to the urinal next to him. So Churchill stopped doing his business and moved to a urinal as far away from Attlee as he could.  “Feeling standoffish today, are we Winston?”  Attlee said.  “That’s right,” said Churchill.  “I know you Clement, and every time you see something that is big, works well and private you want to nationalize it.”