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On Becoming More Like Sweden

May 2, 2018

Samuel Hammond released a paper on The Free-Market Welfare State. I had a few thoughts:

1. I am generally sympathetic to the idea of trading greater micro-economic freedom for a somewhat more generous income support system. I would prefer that that greater generosity come from the private sector, but even without that modification, such a trade would probably leave us better off than the status quo.

2. The studies used to support the proposed changes are remarkably weak. I don’t doubt there are improvements to be made but I would hope for better empirical data.

3. Consider whether such changes are more likely if many of these programs were block granted to the states, perhaps with some increase in funding. Then you get to use states a laboratories and potentially try many different reforms, while competition for workers encourages states to design better programs.

4. Consider dynamic scoring of the revenue effects of regulatory relaxation (i.e. more micro-economic freedom) and using those increased revenues to pay for more generous income support payments. I suspect that making such payments more generous is the only way they might be approved politically. (This is the same reason why the 2017 tax bill could not be revenue neutral, BTW.)

5. Is there any reason this needs to be linked to the state? Consider making state payments supplemental to those provided by private organizations. For example, the government could set a support level of $10K/year, that would reduce by a dollar for each dollar of private support made available, and give citizens tax credits for money given to such private support. I know this suggestion is too crude to workable, but it would be nice to avoid the state crowding out the supports of civil society further than it already has.

6. Given the magnitude of medical costs, you probably need to address those specifically in ways that don’t involve spending more money. This is bound to be politically problematic, but you might be able to do something as part of a larger trade.

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