Is the Welfare State Justified?10/24/2008 |
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Book Review Daniel Shapiro offers us a book-length answer to the simple question posed in the title of his latest offering: “Is the welfare state justified?” Few of his readers (or mine) will be shocked to discover that his conclusion is a confident “No.” Just as few will be surprised to learn that in defending this conclusion, Mr. Shapiro – who has established himself as one of academic philosophy’s most capable and original defenders of liberty – has offered us an importantly innovative argument. But the distinctive content of Mr. Shapiro’s answer is belied by the deceptive simplicity of his question. For what’s interesting about Mr. Shapiro’s book is that it actually answers a different question: “Is the welfare state justified, from the perspective of the dominant positions in contemporary political theory?” Few would have been surprised if Mr. Shapiro had maintained that libertarian first principles render the welfare state unjustified. But in 298 densely-argued pages, Shapiro does something importantly different: he offers original arguments to the effect that even those who endorse non-libertarian political philosophies – egalitarians (and their prioritarian cousins), communitarians, and positive-rights theorists – should converge with libertarians on a rejection of certain key welfare-state institutions, preferring instead more market-based provision of such services. Shapiro makes his case by examining three major welfare-state institutions: national health insurance, old-age social insurance (or “social security”), and means-tested benefits (or “welfare”). He concludes that egalitarians, communitarians, and positive-rights theorists should rethink their tendencies to endorse the machinery of the welfare state. Instead, he argues, they should recognize that the consistent application of their own principles would lead them to endorse institutional implications more typically – and enthusiastically – embraced by libertarians. Why? As Shapiro puts it in the book’s opening pages, it’s because welfare state institutions “do not work the way egalitarians and other defenders of the welfare state think that they do, because egalitarians and other defenders of the welfare state have misunderstood the implications of their principles, or both.” Accordingly, argues Shapiro, such theorists ought to judge that compulsory market health insurance is superior to national health insurance, compulsory private pensions are superior to social security, and privately-provided conditional charity is at least as just as (and perhaps more just than) publicly-provided welfare benefits. So Shapiro’s work is distinguished from other offerings in the classical liberal tradition by its attempt to derive market-friendly conclusions from (what are typically regarded as) statist-friendly premises. But it is further distinguished by the contents of these conclusions themselves. For unlike some of his fellow libertarians, Shapiro appears to be comfortable defending policies and institutional arrangements affording fairly wide scope for state action and regulation. Among the proposals he defends are some that, more typically, one might expect to originate from the (American) political left. For instance, Shapiro’s favored national health insurance system bears strong affinities to proposals made by this year’s candidates for the Democratic nomination. Shared features include tax credits in support of compulsory private insurance, and subsidies for those with uninsurable risks. Thus, while many of Shapiro’s conclusions are market-friendly (or, more accurately perhaps, market-based), they often countenance legitimate state action that far exceeds the strictures implicit in the classical liberal’s notion of the “night-watchman” state. Obviously, none of this is to say that, in virtue of his (relatively) “statist” conclusions, Mr. Shapiro’s reasoning is suspect. It is simply to note that the arguments may surprise those readers who come to the text expecting a standard dose of libertarian orthodoxy. Besides its reliance on non-libertarian premises and its arrival at slightly heterodox libertarian conclusions, Shapiro’s book is yet further distinguished from much classical liberal fare by its methodology. His analysis is a deliberate mixture of the normative and the empirical; it represents a marriage of political philosophy and social science. Shapiro’s “hybrid” methodology is painstakingly thorough. He begins by identifying the criteria of adequacy specified by each of the three evaluative frameworks under consideration: egalitarianism/prioritarianinsm, communitarianism, and positive-rights theory. He then adds a fourth framework, “epistemic accessibility,” which is “the idea, common to many versions of liberalism, that basic political principles and institutions must be publicly justified.” He then proceeds to apply the criteria of each framework to several carefully-specified dimensions of each welfare-state institution. On nearly every count, Shapiro finds that non-libertarian criteria of adequacy favor more market-based approaches to the provision of universal health care, universal retirement insurance, and a safety net for those unable to secure their basic needs on their own. Potential criticisms of Shapiro’s findings are then presented and (usually) rejected; sometimes the task of identifying critiques and counter-critiques proceeds through several iterations. The end result is that literally scores of distinct arguments are assembled, each one purporting to show that market-based institutions are preferable to state-administered ones. Thus Shapiro’s book, more than most, represents an assemblage of many distinct arguments; its dialectical force is, in a sense, cumulative. It would be beyond the scope of this review to examine any more than a handful of these disparate arguments in any depth. Instead, I will focus on some of the book’s important general features. I fasten on three, reflecting the “hybrid” status of Shapiro’s analysis: I first discuss the book’s empirical social science component, before proceeding to its normative, philosophical component. I then close with some reflections on its attempted integration of these two modes of analysis. Let us begin with an overview of the main substance of each of Mr. Shapiro’s proposed institutional arrangements. First, pertaining to health care: besides the previously-mentioned aspects of compulsory private insurance and subsidies for the uninsurable, the other essential feature of Shapiro’s proposal is the widespread use of “medical savings accounts” for use in discretionary, preventative, or otherwise non-catastrophic medical spending. These are accounts “into which individuals and families … can deposit pretax dollars … and then use them to pay for small bills … Money withdrawn from them to pay for medical bills … will not be taxed.” Pertaining to old-age and retirement insurance, Shapiro favors replacing current pay-as-you-go funding models with systems of compulsory private pensions. (Similar reforms have been attempted, with some success, in other nations – most notably in Chile.) The market for said pensions would be subject to some state regulation (so as to ensure that no citizen invests his or her nest egg in needlessly risky portfolios) and would be supplemented by the assurance of a minimal retirement income, funded out of the state’s general revenues. Thus, citizens are insured against the possibility (which Shapiro asserts is minimal) of losing all or most of one’s pension due to the vagaries of capital markets. Finally, Shapiro prefers the abolition of state-administered welfare programs, which he presumes will clear the way for the flowering of a rich and diverse array of private charities. Taking his cue from the historical record of late nineteenth-century British and American charities, Shapiro speculates that each of these charities will be capable of greater efficiency and greater attunement to the needs of its constituencies, relative to what we can realistically expect out of today’s vast state welfare bureaucracy. One could hardly overemphasize how impressive is Shapiro’s grasp of the nitty-gritty policy details, the empirical evidence, and the public policy literature that bears on all these issues. Readers with little antecedent knowledge of the market for private “health insurance” in the United States will come away from Shapiro’s third chapter with a much deeper understanding of the ways in which the U.S. does not actually represent such a market. (For instance, most policies on offer in the U.S. are technically comprehensive service plans, rather than the sort of casualty insurance plans available in other domains, such as vehicle insurance. Casualty insurance indemnifies “against adverse events, so that one is reimbursed for some identifiable loss one suffers,” whereas comprehensive service plans “provide coverage for the consumption of medical or health-care services.” To get a grip on the distinction, imagine for a moment how different things would be if GEICO “managed” your “vehicle care” in the same manner that your HMO manages your health care.) Furthermore, Shapiro capably sets forth the series of government interventions in the health-insurance market that brought about this state of affairs. Likewise, readers already knowledgeable about the welfare-state institutions under discussion will find cause to appreciate Shapiro’s helpful presentation and summary of the relevant policy issues. For instance, even readers familiar with the details of Social Security’ “pay-as-you-go” funding model will value the clear and straightforward discussion of this feature in Shapiro’s fifth chapter. There, he offers a frank portrayal of the misleading manner in which FICA taxes are often portrayed as “contributions” to an “insurance program.” He pulls no punches when characterizing the misrepresentation inherent in all discussion of the Social Security “Trust Fund,” which is bereft of any assets other than “Special Obligation Bonds” – mere IOUs from the Treasury. And in the book’s closing chapter, Shapiro provides an impassioned plea against the injustice – and not simply the inefficiency – of some features of the pay-as-you-go funding model. (For instance, it tends to gives rise to inter-generational inequities by requiring later generations to subsidize the retirement incomes of earlier generations.) Such honest and pithy depictions of the current status of Social Security funding are rare in the extant policy literature, and even seasoned veterans of this debate will benefit from reading them. Philosophically, several features of Shapiro’s book are striking. Foremost among them is the use of what he calls “internal arguments.” The distinction between “internal” and “external” arguments is central to his project. When offering an external argument, one uses different first principles than those accepted by one’s interlocutor, challenging the interlocutor to reconsider her commitment to those principles. When using internal arguments, by contrast, one proceeds from the first principles shared by one’s interlocutor, but challenges the interlocutor to reconsider the implications she believes to follow from those principles. This, of course, is precisely Shapiro’s strategy vis-à-vis the egalitarian/prioritarian, the communitarian, and the positive-rights theorist. But it invites an immediate reply: is not an argument constructed from false premises – no matter how valid its conclusion – of positively no value in establishing the truth of this conclusion? For example, consider an argument addressed to National Socialists, urging Nazis to support market-based institutions on grounds that they are maximally productive of a Thousand-Year Reich. (I owe this example, and this objection generally, to Gerry Gaus.) If there are no defensible grounds on which one ought to value a Thousand-Year Reich, and no defensible grounds on which one might defend the tenets of National Socialism, what merit would such arguments for market-based institutions have? And what merit, then, could Shapiro accord to any of his internal arguments, if he finds (as I suspect he does) their first principles to be likewise indefensible? However, I do not believe this objection poses much of an obstacle to Shapiro’s argument. For it can be easily avoided by slightly recasting his project. The recasting I have in mind is perhaps best illustrated by imagining Shapiro to have suspended judgment concerning the relative (de)merits of egalitarianism/prioritarianism, communitarianism, positive-rights theory, liberalism, and libertarianism. Furthermore, we might imagine this book’s intended audience to be anyone uncertain as to which of these competing political moralities to endorse. Readers who have suspended (or not yet formed) judgment on these matters will find Shapiro’s results very interesting. For if valid, his arguments establish that the philosophically-uncommitted need not ascertain their political first principles before they can arrive at institutional commitments. The whole issue of internal arguments raises another interesting possibility, however. Shapiro has endeavored to convince his readers that principles normally thought to justify the welfare state – if properly understood – actually serve to ground more market-based measures. Mightn’t it be possible, then, for the defender of the welfare state to turn the strategy of internal argumentation back against Shapiro? That is, could not a Shapiro ‘analogue’ – a capable and enthusiastic supporter of the welfare state – employ libertarian premises for the sake of justifying public institutions far more encompassing than those normally accepted by libertarians? Indeed, just such a movement is alive and well, in the form of the “left-libertarians”: theorists like Hillel Steiner, Peter Vallentyne, and Michael Otsuka, who employ roughly Lockean arguments – about self-ownership and original appropriation of property – in service of drastically redistributive state programs. And indeed, James Sterba – who has described as one of his “life projects” this very task of offering libertarian arguments for welfare- and equality-rights – even merits twelve pages of discussion in Shapiro’s chapter on means-tested benefits. That this general possibility did not merit Shapiro’s explicit response is therefore somewhat puzzling. Shapiro might claim, with some justification, that any meaningful treatment of the subject would fall outside the scope of his project – which is, after all, the “offensive” one of offering internal arguments to his opponents, rather than the “defensive” one of protecting his own position from others’ internal arguments. However, it is still something attentive readers will want to bear in mind as they evaluate the overall cogency of Shapiro’s project. For if such readers come to believe that equally valid internal arguments could be deployed against the libertarian defense of a more limited, market-friendly state, they might come to believe that the debate about the legitimacy of the welfare state ends in a draw. The previous sentence serves as the perfect prologue to my final observation about this book. Consider the rough-and-ready “weighting scheme” embodied in that sentence – approximately: “Well, that’s one set of considerations (internal arguments that might be offered against the libertarian) in favor of the welfare state, and one set of considerations (Shapiro’s own internal arguments) against the welfare state . . . I guess we have to call it a draw!” If such a weighting scheme strikes you as an unduly crude method of judging two competing sets of considerations to be perfectly balanced, then you may be frustrated with much of Shapiro’s analysis. For many of his judgments as to the decisiveness of considerations favoring market-based institutions are derived in this manner. Sometimes, competing sets of considerations will be adduced, only to have the market-favoring ones (somewhat arbitrarily) declared to be stronger. At other times, appeal is made to the fact that, in the text immediately preceding, a greater number of considerations were individuated and adduced in favor of market-based policies than were individuated and adduced in favor of welfare-state policies – with little consideration given as to the relative strengths of the considerations. Worse, there are times when rigorous, qualitative judgments seemingly are in the offing, yet Shapiro foregoes them in favor of a cruder, more purely quantitative metric. As an example of this last phenomenon, consider an argument he offers in favor of conditional over unconditional welfare benefits. Authors such as Richard Arneson have favored the latter (“no-strings-attached”) form of aid over the former (which is contingent on the recipient’s willingness to seek and accept employment in the labor force), on grounds that – due to their having life-histories replete with discouragement – some potential beneficiaries are going to be non-culpable for their unwillingness to seek or accept employment. A system of conditional aid unjustly harms such people (as they will be unjustly denied welfare benefits), while a system of unconditional aid unfairly benefits some potential recipients (who are culpable for their refusal to seek and accept employment). Shapiro, however, opposes this argument. He cites the fact that there will be in all likelihood far more individuals unfairly benefited by a system of unconditional aid, than individuals unjustly harmed by a system of conditional aid, and concludes that the system of conditional is therefore to be preferred. Even granting the uncertain empirical premise – that there will be far more “culpable slackers” than “non-culpable victims” – Shapiro’s position here appears insensitive to the different types of wrongs involved. Surely, given Arneson’s characterization of the situation, we ought to prefer erring to the benefit of those who – due to discouraging life-histories – are non-culpably incapable of conforming to conditions attached to their welfare benefits. For an analogy, consider our legal system: it is organized around the central premise that it is far worse to wrongly convict and punish an innocent party than it is to fail to convict or punish a guilty party. Ought not a similar presumption in favor of the innocent guide our welfare policy? Would we not be prepared to tolerate some unconditional benefits to those who do not deserve them, as the price of ensuring that no deserving folks are denied benefits – just as we tolerate some murderers going free, for the sake of ensuring we do not wrongfully execute any innocents? To the extent these considerations are plausible, they reveal Shapiro’s purely aggregative approach to be wanting, at least in some of the places it’s deployed. It is important to note, however, that I cite these shortcomings not to undermine Shapiro’s project, nor to question the cogency of a hybrid methodology that applies robust evaluative criteria to empirically-informed characterizations of real-world institutions. Indeed, I believe that this is exactly the project that needs to be engaged in – by political philosophers, political scientists, and policy analysts alike. I mention these weak points only as a challenge to all of us interested in the intersections of normative political theory, empirical social science, and public policy. If some of the analysis in this book appears a bit crude or unrefined (and, I hasten to add, very much of it does not), then our task for the future is to seek ways to improve and refine the sorts of evaluation and argumentation that Shapiro has most helpfully, and capably, begun for us.
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