Edgar K. Browning, professor of economics at Texas A&M University, has a new book aptly titled "Stealing from Each Other." Its subtitle, "How the Welfare State Robs Americans of Money and Spirit," goes to the heart of what the book is about. The rise of equalitarian ideology has driven Americans to steal from one another. Browning explains that certain kinds of equality have been a cherished value in America. Equality under the law and, within reason, equality of opportunity is consistent with a free society. Equality of results is an anathema to a free society and within it lie the seeds of tyranny.
Browning entertains a discussion about when inequalities are just or unjust. For example, college graduates earn income higher than high-school dropouts. Some people prefer to work many hours and earn more than others who prefer to work fewer. Students who spend 25 or more hours a week on classroom preparation earn higher grades than students who spend five hours. Most would agree that these inequalities are just. There are other sources of inequalities that are unjust, such as: when incomes result from fraud, corruption, stealing, exploitation, oppression and the like. Such sources of inequality play an insignificant role in producing income inequality in America. Most economists agree that income is closely related to productivity.
Much of the justification for the welfare state is to reduce income inequality by making income transfers to the poor. Browning provides some statistics that might help us to evaluate the sincerity and truthfulness of this claim. In 2005, total federal, state and local government expenditures on 85 welfare programs were $620 billion. That's larger than national defense ($495 billion) or public education ($472 billion). The 2005 official poverty count was 37 million persons. That means welfare expenditures per poor person were $16,750, or $67,000 for a poor family of four.
Browning's concluding chapter tells us what the welfare state costs us. He acknowledges the non-economic costs such as infringements on liberty and strains on the political process, but focuses on the quantitative economic costs. The disincentive effects of Social Security have reduced the GDP by 10 percent, the federal income tax (as opposed to a proportional tax) by 9 percent and past deficits by 3.5 percent for a total of 22.5 percent. He guesses that welfare programs have reduced GDP by 2.5 percent. The overall effect of redistributionist policies has created incentives that have reduced GDP by a total of 25 percent. Without those, our GDP would be close to $18 trillion instead of $14 trillion.
For years I've used Professor Browning's and his colleague Mark A. Zupan's excellent textbook "Microeconomics: Price Theory and Applications" in my intermediate microeconomics class. "Stealing from Each Other" is a continuation of his academic excellence.