Sunday, February 5, 2012

Why Not Just Give Poor People Cash?

Matt Yglesias links over to my post about dredging the submerged state surrounding student loans. Yglesias notes: “Why not dismantle the submerged state exactly as Konczal suggests, and give the money to poor people? Then people could use the money to buy higher education services or not according to whether or not they thought vendors of said services were, all things considered, offering a reasonable value proposition.”

It’s a good question. We were talking about the relative merits of private or public provisioning of a good. Yglesias, building on some of the other writing he’s done, argues that the more egalitarian thing to do would be, instead of the state providing certain merit goods, to just give the cash equivalence to poor people and let them use it as they see fit. We argued before on efficiency grounds why you might not what to do that, an argument similar to the original submerged state post. There’s another set of related arguments about how certain public goods require coordination, and simply giving people money will under-provision them. But what else can we point to? Read more....

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