 Sheldon and I go back a ways. I don't know why I'm telling this story to this audience. Sheldon was the first person besides me to know that my wife was pregnant with our first child. Remember that, Sheldon? We were on the phone, this was, I think, just after losing ground to come out. We were on the phone about something and my wife walked into the room waiting the strip that she had tested that had turned pink or something and I immediately blurted into the phone, Catherine's pregnant. And she was a little taken aback that I spread the news that quickly. Another story I would like to tell about Sheldon is I think apropos for this polarized age. After losing ground came out, I was considered by the Reagan administration as a candidate for the Assistant Secretary for Planning and Evaluation at the Health and Human Services Agency, department. And I went over and interviewed and then the then secretary of HHS actually read portions of the losing ground and got scared. And Sheldon called me up and said he'd heard that they were not going to nominate me because I was politically too controversial and they were afraid they'd have trouble with the confirmation. And Sheldon said that he would be willing to come up and testify on my behalf and say that I would be an honest broker. And I tell that story, partly out of gratitude to Sheldon because I thought it was a wonderful offer to make. I told him to please keep quiet because by that time I decided I did not want to become a bureaucrat. And the other aspect that I think is worth mentioning is that Sheldon was right. I would have been an honest broker. And in a day when it seems that it's necessary to assume that people on the other side of the political divide are hateful or bent on the destruction of America, it needn't be so. And Sheldon offered a good example of how it need to be so. Today I'm going to talk about the new book in our hands, A Plan to Replace the Welfare State. And I'm going to tailor my presentation appropriately, I think, to the nature of this audience because it's a self-selected audience. Some of you are here because you have no choice. It's part of your classwork. The rest of you are self-selected but you're also self-selected, I imagine to be policy wonks in one form or another. And you have either professional interest of your graduate student or a professor or if you're an undergraduate you have an unusual interest in the arcana of policy. Social policy. And there's another aspect of this audience that I think I'm probably right in saying which is that it's overwhelmingly social democrats. I'm a libertarian. I don't know how often you actually get to hear in person a libertarian or a member of the right. And it seems to me to be useful to take advantage of that because the nature of the differences go way beyond ordinary questions of practicality or policy, cost effectiveness analysis and go to some very basic issues of how people ought to live together. And so I will take it upon myself as one of my tasks this afternoon to give you a good view of how a person like me thinks about these issues. The backdrop for the discussion is the train wreck in slow motion that we are watching most dramatically in Europe but one that will also come to the United States namely that we do know all of us of whatever political perspective that the welfare state as we currently know it cannot survive for more than a few decades. There will have to be major change. And the only question is what the nature of these changes will be. If the United States is a less dramatic example than Europe right now because we have a less advanced welfare state even so the projections of the proportion of GDP that Social Security, Medicaid and Medicare are going to take up which is currently about 9% of GDP, already a huge number. Projections based on linear extrapolations of current spending trends is 28% of GDP in 2050. That's the CBO's projection and obviously that can't happen. Europe however presents a much more interesting and immediate situation whereby the changes in their welfare state which is much more advanced are going to have to be quite dramatic because one of two things has to happen. Given the fact that fertility rates in Europe are far below replacement either they have to slash the welfare state because they aren't going to have enough workers to pay for the services they're committed to or they're going to have to have massive immigration of young workers to take their place but that also is going to mean radical transformation of the nature of their welfare states because you cannot import, you can't even import Italians into Sweden and make the Swedish welfare system work let alone Armenians and Albanians and Pakistanis and Nigerians and so forth. The cultural consensus that allows the welfare state to work is too deeply embedded in Swedish characteristics that are not shared by other people and that leads me to a second way in which I think the welfare state is in decades of collapse not financial collapse but social collapse throughout Western Europe and again less dramatically in the United States. In the beginning when the welfare state first began to evolve in the early part of the 20th century, latter part of the 19th century it all seemed very simple and it all seemed obviously the right thing to do. The indigent elderly depend on charities so let the government provide a decent pension for them. The unemployed father and husband can't find work so provide unemployment insurance. Some people are sick and cannot afford to go to a private physician so let the government pay for medical care. It turned out not to be quite so simple after all. The act of giving pensions increases the probability that people reach old age needing them. The fact is that governments have a hard time finding useful work for unemployed people and are terribly ineffectual employers when they do. The demand for medical care always outstrips the supply but despite these complications these were the easy tasks and the countries that performed them best were Scandinavia and the Netherlands, small, ethnically homogeneous. They had traditions of work, thrift, neighborliness and social consensus and they worked pretty well. Traditions decay when the reality facing a new generation changes. The habit of thrift decays when thrift is no longer needed. The work ethic decays if there is no penalty for not working. Neighborliness decays if there is no need for neighbors and social consensus decays with immigration. So even the easy tasks became harder as the 20th century went on and then in the second half of the 20th century new kinds of phenomenon began to emerge in which new social problems that had been unknown in many of these countries began to develop that fall under the rubric of what some of us including me refer to as the underclass. That the easy tasks of the welfare state get harder and that underclasses are growing throughout the Western world, including Scandinavia, is not a matter of coincidence. The welfare state produces its own destruction. The process takes decades to play out but the process is inexorable. First, the nature of the welfare state degrades the qualities of work, thrift, neighborliness and so forth that enabled the society to work at the outset and then it spawns these new problems that it hasn't the least idea how to solve. Now, we are not at the end of that process but I think we are approaching it and those of a certain age in this room can calibrate the speed with which we are approaching it by using the case of Sweden. When I published Losing Ground in 84 I could be absolutely certain that during the questioning period I would be asked about Sweden and didn't Sweden prove that I was wrong? That doesn't happen very often anymore because the problems that Sweden faces are too obviously much more severe in 2006 and they were in 1984. Actually in a lecture in Stockholm just a few years ago I observed that any system of government will work for a while if you're governing Swedes and it got a laugh which is not an easy thing to do with a Swedish audience but I think that the laughter was in part rueful because in Sweden I think it is also much more thoroughly understood than it was 20 years ago that the systems worked not because the system was so great but because it was the culture that was so great. Well, if there are going to have to be major changes of whatever sort, what are we to do? And here is where I think that a grand compromise is possible. I don't know how many of you in this room have read The Bell Curve. Usually not very many people have read The Bell Curve, it is a very long book. In a way, The Bell Curve provided the basis for in our hands. In our hands represents the social policy extension I came away thinking about the problems we face. On the one hand, I am a libertarian and if I could wave a magic wand and make society however I wanted it, I would say leave the money where it begins and watch the ways that it is used to solve problems much more effectively than the government will. That dog won't hunt, I understand that. But I also sympathize with the position of the left which says people are born with the short end of the stick. That's not their fault. That makes it much more difficult for them to compete with economic success in a global economy and that in a country as rich as the United States everyone should have access to a decent standard of living. I find that very hard to argue with as a practical matter, no matter how much I think might think philosophically that there's a better way to do business. On the other hand, I remain committed to the idea that a successful life means much more than a decent standard of living. That the deep satisfactions of life, I'm going to come back to this topic later in the presentation, the deep satisfactions in life come from making a life and that making a life involves being able incrementally to make mistakes, to learn from those mistakes and over a period of time with many false starts to find a valued place in your business, in your profession, in your job of any kind, in your community and in your family. And the catch in all of this is that to do so requires both the freedom to act and responsibility for the consequences of action. You can't do it any other way. And so I remain committed to the idea that when people of my belief say you've got to maximize freedom and responsibility we also have hold of the truth. The plan I present in our hands represents a way to say let's make a deal. We of the right will agree to generous support of people with low incomes. And you on the left, we ask you to let us give this support without the apparatus of the welfare state. The plan itself is real simple. I'm not going to spend a lot of time on the technical details of it. We can talk about those in the questioning period. I will lay out the structure and then I'm sure you will think of many of the questions to ask about those technical details. The plan goes like this. You take all of the money we currently spent on transfers. That means all the big ticket items like social security, Medicaid, Medicare, you name it. It includes all of those programs that are in that statistical abstract table called programs for supportive people with low incomes or something of that effect. That means all welfare programs of any kind. It also means by the way all corporate welfare. It also means agricultural subsidies, things like that. Transfer payments go. We have, I assume, the same revenue stream. I don't do anything with the tax system at all. I just say one way or another we will generate the same amount of revenue. But what we will do with all these transfer payments is that we will take them to Washington and we will redistribute them to the population. All American adults age 21 and older who are American citizens and not incarcerated get $10,000 a year. It's deposited electronically, monthly in a known bank account. No bank account, no grant. A detail, by the way, which has a variety of consequences we can talk about later. There is a payback, but it's a very high payback point. So if you are a low income person and you go to work at a job you do not immediately have the amount of your grant reduced by a surtax. You keep everything you make up to $25,000 of earned income. So at that point you have a net of 35. And then you start to pay a surtax which maxes out at $50,000. So at $50,000 you have a net of five. Everyone gets this regardless of the income of other people with whom they are living whether they are married or not. So as people are fond of saying or asking me you mean that the wife of Bill Gates gets $10,000 a year and the answer is yes. She does, if she doesn't hold a paid job we're making more than $25,000. That is the, oh, one other detail. I was reluctantly, for I wanted to leave this just as free as possible for people to spend exactly as they saw fit. I was reluctantly forced to the conclusion that $3,000 a year has to be earmarked for medical care. I would argue that that figure with some reforms that I presented in the book would provide for quite generous medical care. Without the reforms it would provide a pretty stripped down package. But you have to earmark again for reasons we can talk about in the questioning period you have to earmark that much for medical care. As for whether you have to earmark any more money for retirement, I prefer not to. If someone wanted to say, we're going to require people to put $2,000 a year into some sort of retirement fund and if that's what would bring you around to supporting the plan I would sigh heavily and say okay we can do it that way. And in fact the calculations in the book where I'm talking about the effects on poverty and on other outcomes assume that you have a net of $5,000 that you can use for things other than retirement and medical care. So that's the plan. It would have a few very direct immediate effects which are not trivial. For one thing it would end in voluntary poverty. By involuntary poverty I mean the poverty that occurs when people are trying hard doing everything right and they're still poor. This does not mean that some people will not continue to live in squalor because some people will choose ways to spend their money which leave them there. But it enables a wide variety, very wide variety of people with a very wide variety of circumstances to stay well above the poverty line. The obvious example is if somebody is working at a minimum wage job and nobody stays at the minimum wage very long if they stay in the labor market but we'll assume minimum wage and let's say they're laid off six months out of the year. They're still well above the poverty line. A couple. One person with a minimum wage job working full time brings home about $10,000 a year. Let's say that it's a couple, they're married and the woman does not work at all. That's a net of $30,000. Way above the poverty line. Or suppose that people are unable or don't want to work at all. Well, if you get five people together who don't want to work at all that's $50,000. Five people with $50,000 can live at a standard of living that's way above the poverty line. And in fact you can even use the European definition of poverty which is half the median income. You can still demonstrate it is really easy to stay above poverty even defined that way. The second effect is that indeed it would provide medical care to everybody, universal. Third set of immediate effects are harder to spin down. They involve the people that I refer to as the underclass. I suppose I should define that term. By underclass I don't mean people who are just poor. I mean people who do not participate in mainstream society. The most obvious way to not participate in mainstream society is to be a chronic criminal. But I also classify in this people who are young, able-bodied, particularly males, and are nonetheless not even in the labor force. Not even looking for work. And I also classify, and this is the kind of thing which gets me in trouble with audiences like this, I also classify low income young women with children and no fathers to be likely members of the underclass even though we're not talking about binary yes, no classifications in this case. Here I think that the spinning out the effects of the plan get especially interesting. And they get especially interesting because we're talking about expectations that can be made of people who have an income stream that cannot be made of people who do not have an income stream. I call it the do little effect. Remember my fair lady, Alfred do little, a good member of the underclass. Didn't bother to marry the mother of Eliza do little. He is frequently and happily unemployed. And then Henry Higgins recommends him to an American philanthropist as being the most original moralist in England. And he receives a large bequest. And as he then points out with great bitterness to Eliza, he now has 50 realities he never knew he had before and not a decent income among them. And worst of all, his longtime girlfriend is now demanding to be married. And that's why he has to get to the church on time. Well, the same thing is going to play out in some form in communities in America. Let's take the young man who is living with his girlfriend and not contributing anything to that arrangement. And he can't sit too bad, can't find a job. They're the only jobs that are available or if it jump change, they're beneath his dignity. And so he's living with it. Now he may not actually enjoy living with it that much but it's a lot cheaper than not living with it. All at once he has an income stream. The girlfriend knows he has an income stream. Expectations can be laid on him that could not be laid on him before with interesting secondary and tertiary effects. And I will simply mention the most obvious of all effects. A young man who fathers a child and does not want to support it who now can disappear and not be found or have no visible income, now has a known income stream going into a no bank account that a judge can tack with a simple court order every single month. And every boy age 19 years old will be looking at older brothers or older friends age 21, 22, 23, some of whom are spending their money for further education or for things they want to spend the money on and others of whom are having a substantial portion of that grant you're marked for care of a child you're sired. That is what I think they call an incentive effect. There will be other incentive effects that have to be considered in the plan and that are the most important involved workers incentives. A very serious issue with any kind of income support plan. A problem that sank the SIMDIME experiences of the, sorry the SIMDIME experiment for the negative income tax in the 1970s. I try to deal with that with two buffers. The first is the buffer of a high payback point. If you are not paying back anything from the grant until $25,000 of earned income, that means in effect you have been lured into work to continue to can't afford to quit. Very few people will trade a $35,000 income for a $10,000 income. There will be effects on work effort in terms of hours work, but the effects on holding a job versus not holding a job are minimized by this. A second buffer is the age at which you graduate from high school and the age at which the grant begins. I deliberately make it 21 years old, not 18 years old. I want people thrown out in their own for three years. The average high school graduate who goes to work immediately after graduation is making $20,000 by the time he's 21 so that once again you have a situation in which people become accustomed to working and enjoy working and plus they have income to lose. Okay, those are the immediate effects. Those in my view are the least important reasons for installing the plan, even though ending poverty and providing for universal healthcare, et cetera, et cetera, is they're not trivial accomplishments. The more important reason that I want to spend the rest of the discussion on is what I consider to be the real problem facing advanced Western societies and it has nothing to do with poverty or comfortable retirement or medical care because the truth is the vast majority of us don't have any problem with any of these things. For all of us, whether we are rich and poor, the real problem in advanced Western societies is how to live a meaningful life in an age of plenty and security. One of the things about pre-modern societies or pre-20th century societies was that the meaning of life pretty much took care of itself because you had to survive. That means that if you wanted to survive, you had to be part of a community that accepted you because if you weren't part of a community, your chances of survival went way down. Forming a family and having children became very important because that was a way to provide for security in your old age. And for that matter, the prospect of dying at any time and knowing you could die at any time required attention to spiritual issues. Today we don't have to do any of those things. We, meaning those of us who are not poor and disadvantaged throughout the West, can very easily go through life with a pleasant and not too onerous job, a comfortable standard of living, some social friends, a few serial sex partners and pass the while quite pleasantly but also reach the end of life without any reason to believe we have done anything significant with it. And as I look at Europe, the thing of that strikes me most forcibly about what's going on there is not that their welfare states are running into the financial and social problems I discussed earlier. What strikes me most forcibly is that Europe, by and large, seems to have bought into the notion that the purpose of life is to while away the time as pleasantly as possible. You can think of all the symptoms. The obsession with long vacations in Europe. The obsession with the shortest possible work week. Within France for a while, I don't know if the law is still in effect, a prohibition against working more than 35 hours a week. You were breaking the law if you worked more than 35 hours a week. I'd go nuts if I couldn't work more than 35 hours a week and I imagine some, many of you in this room would too. The very low fertility rates are a symptom of the Europe syndrome. Children are no longer the central expression of a marriage and of life itself for that matter. They are kind of pain and what good are they really? You read interviews about young people in Europe and why they aren't having children and a lot of times the answer you get is, well, what good are they anyway? The secularization of Europe is another symptom. No advanced society, no civilization, no advanced civilization in the history of the world has been close to as secular as Europe has become. It's not simply a matter of modernity. The United States, religion is still alive and well in the United States. In Europe, it has collapsed. Now, if it is correct that that's all there is, that the purpose of life is to wile away the time as pleasantly as possible, then the welfare state makes perfect sense. You use government to make life as secure as possible and make it possible to go through life with as little trouble as possible. If, however, you think that there is something more there that to live a human life can have transcendental meaning, then you have to ask yourself, well, how does it acquire that kind of meaning? And I will propose a few, what seemed to me fairly commonplace, facts about how it acquires meaning, that I invite you to judge against your own lives. I guess I will, I have more confidence that people of a certain age will agree with me than people of another age will, but the over folks in the audience, I ask you to judge the judge when I was about to say that. That your life takes on meaning and weight and consequence to the extent that you extended doing important things. Important things generally revolve around three institutions, although an institution may not be precise to the idea, one is vocation. And for those of us in this room, that is probably the principle way in which we initially, at least, see ourselves spending our lives, whether it's with our ambitions to become rich and famous or whether it is more worthily our ambitions to become really, really good at our chosen profession. And we are likely, particularly in our younger years, to define how we're doing very much in those terms. It's important to realize that is not an option open to everybody. You are very, very lucky if you are in a position that your work can become deeply satisfying to you. That doesn't mean that only people who have college degrees can find that by no means, on the contrary, I think that to be a skilled craftsman is probably a lot more satisfying than to be a middle-level white collar manager. So I'm not restricting it in that sense, but you still have to be really good at something to find that kind of satisfaction in life. And not everybody is really good at something. By and large, I'm perfectly happy with human inequality of all kinds. It does not bother me that people's IQs are different, even though IQ, as has been argued in certain books, is important to predicting certain outcomes in life because there are lots of other things that are important as well. So one person has really high IQ, but is not particularly charming. Another person is really charming and not particularly industrious. Another person is really industrious, but so forth and so on. Most of us are bundles of qualities, and we have a few things that we're really good at, and we can parlay those. Some people are born not particularly smart, not particularly industrious, not particularly charming, not particularly, and I go down the rest of the list. They're below average in everything. I have in the past occasionally gotten booed in college campuses for saying that 50% of the population is below average in intelligence, but the fact is, it's true. It's true, and people who have gotten the short end of the stick in those senses ought to have access to a satisfying life just as much as everybody else. That's what to me is the real meaning of equality of human dignity. The question then becomes, well, what important things do they spend their time on? And the answer is that they don't have a lot of choices, but the choices they do have are every bit as good as the ones available to the rest of us, and they involve family and community. In fact, I will say parenthetically, that as one gets older, I think a general phenomenon is the satisfactions associated with family and community tend to loom larger for those of us who spent our younger years working 90 hours a week at our job, but I will pass over that. The satisfactions of family and community are deep and real and meaningful for everybody. That means that one of the central measures of the success of social policy is the extent to which those institutions are vital, filled with stuff that they can do. And here comes my complaint about the welfare state. It is not that it spends too much money, though it does. It is not that it spends it ineffectually, though it does. It is not even that it often creates more problems than it solves, though it does. The real problem is that the welfare state drains too much of the life from life. I'm referring here to the stuff of life. And by stuff of life, I mean the elemental stuff, the things involving birth and death and raising children and paying a rent, the things that involve celebrating with the people around you when good things happen and commiserating with them when bad things happen. It involves all the ways in which friendships become more than just social pleasantries and become deep. It involves all the ways in which being a parent is not just biologically siring another human being, but becoming intimately involved with their lives. It involves all the ways in which the stuff of life is to borrow the title of the book in our hands. Those people who live in the top part of society pretty much have exactly the same situation with regard to family as they've always had, which is to say there is no government program involving the family that has the slightest effect on anything I do with regard to my kids. There are lots and lots of ways that what the government does takes a lot of the functions involved with parenting and so forth in lower income communities and does take some of the stuff of life out of that. As far as community is concerned, people in the upper part of society, their communities are defined in very strange ways. So Sheldon Danzig, or even though I don't see him very often, is part of my community, my professional community. My community is scattered out all over the world actually, as are my friendships and my networks and so forth. The physical community in which I live isn't that big a deal, but for most people it is. The physical geographic community in which they live and those particular people constitute a great deal of what makes up the world that matters to them. So it's really important that the community have important things to do. Once again, the problem with the welfare state is it takes so many of the functions of community and says, we'll take care of that. And in the process of doing that, guess what? We let them and it's a very natural human reaction. If somebody comes to the door and says, will you come out and feed the hungry? And I ask, well, if I don't do it, who will, and the answer is well, we've got a $25 billion food stamp program. I say, go ahead and use the food stamp program. If somebody comes to my front door and says, will you help us go feed the hungry? And if you don't do it, no one will. I'm a lot more apt to respond. It's also a matter of the locality of it. If I am told that the person in my neighborhood needs food, the chances that I will respond is 100%. If I am told that there is a food bank being run by my church or by another local organizational community, the chances that I will help are just about 100%. If it's a system of food kitchens for the homeless, for the mid-Atlantic area, I'm less likely to help, even though I might. And again, if it's voluntarily contributing my taxes, extra money on top of my taxes, the food stamp program, the probability is zero. A great deal has to do with how close the problems are to home. So the combination of is the responsibility put on our heads, is the problem local, and if I act, will I have any, will I make any difference? All of these are absolutely crucial to the extent to which we become engaged in our communities. And in all of these ways, welfare state, she strips too much of the life from life. What the plan does in a way that I think would transform civil society is to take all of those functions, remove them from the bureaucracies and put them back out in communities and with families. It's a kind of thing which does not lend itself to multivariate analysis. I mean, you can do it a little bit. You can look at the displacement of philanthropic activities when government programs come into an arena, and there is an econometrics which has dealt with those issues. There are other ways in which you can take bits and pieces of this problem and get some sense of what the vectors of the relationships are and maybe even their magnitude. But I've really been talking to you about issues which by and large did not go to the nuts and bolts and the tools of the trade that we use, but rather go to our sense of the way the world ought to work. And I imagine that in all of this, no, I can barely imagine all the ways in which people in the audience are mentally disagreeing with me. I'm sure there are many. But if you have taken anything at all away from this presentation, I hope it is the necessity of thinking about what it is that you think goes into living a meaningful human life and how it is that those resources are to be made available to everyone and the relationship between civil society and the government in that process. Here in summation is the way I look at it. I think government is inherently incompetent. It's not because bureaucrats are lazy. It's because of the nature of what happens when people are able to act in ways without eliciting the voluntary cooperation of others. Even if you take the most basic functions of government, providing for a legal system, for enforcement of laws so that people don't harm each other, for national defense, even those most basic of tasks, the number of nations that have managed to do those well is remarkably small. And the number that have managed to do it well over a long period of time in a democratic context is smaller still. And those are the most basic of all. As soon as governments move into trying to deal with more complex human needs, they get over their heads really rapidly. And again, the reasons are inherent and not susceptible to manipulation by clever social policy. Bureaucracies by their very nature must be bound by rules that are applied to everyone and the ability to tailor those very small. So a bureaucracy does not have it within its power when it's providing help to somebody in trouble of saying this person really needs a pat in the back and this person really needs a kick in the pants, even though we all know that some people will fall in both of those categories. Bureaucracy cannot do that. Indeed, I'm told by social democrats, that's a great virtue of doing these kinds of services through bureaucracies because bureaucracies are not in a position to stigmatize. And I say, no, no, no, no. That when you're dealing with complex human needs, it has to be as individually tailored as possible and that can only be done at a retail basis, not a wholesale basis. So bureaucracies are by their nature in my view unable to deal effectively with complex human needs around them. But they can displace the efforts of other people to do that. This limited competence of government or the inherent incompetence of government in dealing with these problems is still not an issue that has been settled. I have been doing my very best to contribute to one side of it, first with losing ground and subsequently with other of my work. But I think that history is on my side in this regard. And it goes back to this point that when you don't have to get the voluntary cooperation of someone else when you can use the police power of the state to enforce your will, you are automatically prevented from engaging in the kind of interactions that you have to engage in if you don't have the police power on your side. I'm also confident that as time goes on, more and more people will realize that the programs they are for, when they are for other people, are not programs they would like applied to themselves. I had a friend who went to the Soviet Union back in the early 1980s, a libertarian. And he came back and I asked him how it was. And he said, well, it wasn't that oppressive. It wasn't frightening. I didn't feel like I was in a totalitarian society so much. He said, it's sort of as if an entire country were run by the Virginia Department of Motor Vehicles. And that, I think, is the essence of the reality that is going to become increasingly obvious as time goes on. There is never a public service provided by the government that we choose over a private service in any place where the private service is subject to being forced to elicit the voluntary cooperation of others. You don't go to a government cafeteria if there's any kind of restaurant around the building because the food is gonna be better at the private restaurant. You don't, you call up on the phone to a government department trying to get help from them. Will you ever find people who are friendly and helpful? Yeah, I have occasionally. Doesn't happen very often. More often, it's very hard to get through. You tell them they're a problem. Takes them two weeks to get back to you and when they get back to you, they still haven't solved it. Call just about any corporation, any corporation that is successful, and you will get fast, effective, responsive results. This kind of disjunct between what happens when we deal with private agencies and what happens when we happen to public agencies. I'm confident over time it's gonna become obvious. And some of us, it will occur to some of us, gee, if I don't like public services whenever they impinge in my life, maybe they aren't so hot for everybody else here. And the other thing that will become obvious over time is that money cannot be the problem. As wealth continues to increase and the American economy, if you plot real GDP over the last century, we've got a very nice little exponential growth curve, there's no reason to think that won't go on. We're going to become richer and richer. We're already washing money, we're going to be more washing money 10, 20, 30 years from now. If you take the amount of money we're spending and divided by the number of people who need help, the amount is going to be so absurd that to still see out there that people are poor and people don't have adequate healthcare and people don't have comfortable retirement, everybody will understand it's not because we aren't spending enough money, it's because we are spending it badly. And so at some time during the 21st century, I doubt while I'm still around, though I wish it were. I think the way will be opened for something very similar to the plan I proposed. That we will see that the American project had as its essence of its genius that each person should be free to live his own life as he saw fit as long as he accorded the same freedom to everyone else. That we could not achieve that goal as long as the fatal flaw of slavery persisted. That as we rose above that and got close to the goal, we lost our focus in the last half of the 20th century and lost ground. But that in the 21st century, we will see that the way is open once again for us to once again enable people to run their lives as they see fit by putting the resources to do that in their hands, in their hands as individuals, in their hands as families, and in their hands as communities. Thank you for listening. Thank you. Now questions? Why don't I follow them? Okay. Well, education is a rich source of examples. Now, most of you are paying a little bit of money to come to this school, right? So it is a public institution, but you are paying money for it in a way that you don't pay money for public schools. And an interesting question is, well, what's different about universities from public schools? Because the public schools have big, major problems as you all know. Public schools are pretty much effectively sheltered from competition of any kind in a way that the University of Michigan is not. The University of Michigan competes for students. It competes for reputation. It is exposed far more than public institutions usually are to other people making judgments about it relative to other things and having the ability to go elsewhere if the University of Michigan doesn't perform. So I suppose I could say, gee, if you took private institutions even in higher education with public ones you could still make a case, but I'm happy saying public education when it is subjected to competition can work for exactly the same dynamic that to some extent the University of Michigan is forced to act in ways that compel the voluntary cooperation of other people in the way that the public elementary and secondary schools aren't. He's not better wearing a public school. Funny, you should choose England as the example. I first went to England in 1989 at the behest of the Sunday Times in London to look at was there an English underclass? And at that time I looked at my three primary indicators in underclass, which is children living without fathers and young men out of the labor force, not because they're in school, they're just out of the labor force and criminality. All three of these had been soaring. And I said, yeah, you got an underclass, it's still small, but it's growing. So then I went back and I was greeted with complete derision by a familiar response from myself and told, no, no, no, we don't really have more crime, people are just reporting it more. No, no, no, it's not a problem that single women having babies because they can be just as good parents as the two parent family if only they have a decent level of support. And these young men are out of the labor force because we had long-term unemployment and they just aren't looking for work anymore because they're discouraged. So then I went back in 94 and I took the same numbers again and they'd all gotten much worse. Only in 1994, they weren't laughing at me anymore because it had become obvious that English civil life had begun to change dramatically. You're talking about a country which in most of the 20th century was one of the most peaceful civil places to live in the world, in history. Then when I went back at the end of the 1990s, England saw itself then and sees itself now as in the midst of a social upheaval that there are now large parts of London you cannot go into which 20 years ago, 30 years ago, everybody could go into. It is a country that has higher crime than the United States, higher crime in the United States. It is a country in which now 40% of all children are born to single women. And it is a country in which large numbers of young men are out of the labor force, not even looking for work. England is in social crisis. Be careful about confusing the policies that England has taken, which yes, they've had changes in the child support system and this, that, and the other thing. That doesn't mean they're accomplishing anything. That a program exists does not mean good things are happening. Just what I needed. I'm sorry about genetically. Yeah. I guess I'm asking is how can you divide the line between that kind of bad stuff? I am very conflicted about life extension. I mean, I would think it would be really neat if I could live to the same age as my father but not suffer the same physical debilitation as you did and then the flame is suddenly snuffed out. As I look ahead to the prospect, which is very likely that we're looking maybe 150 year life spans within, you know, some time. And I say, to what extent does the human life kind of depend on a rhythm and to what extent does that change? To what extent is life going to be depleted when there are far fewer children around as will have to be the case if people are living 250. So I'm kind of, I think that we're probably monkeying with things where we don't know what the outcomes are going to be. As far as something like physical suffering from illnesses and so forth, I'm pretty much in favor of less pain and suffering in that regard. I think that the kinds of things that are necessary, and if you want to talk about pain and suffering, are learning from mistakes. You know, having cancer is not a mistake. But a lot of the ways that we get wiser as we get older, that we move from ways of life that are not very satisfying to ways of life that are more satisfying involve mistakes which cause us a lot of pain. Emotional, psychological, whatever. And I look upon that as a necessary part of life and that's, we're not gonna get rid of by genetic engineering. However, you have named the second of the great areas which is the great thing to watch in terms of what's gonna happen in policy. You know, my feeling is that the future of the welfare state which is gonna change radically and the neurogenetic revolution which is also gonna happen during this century are so huge in terms of how they will impact the way our society's run. That ought to be the sole focus of our concern at this point. Are you in Sheldon and Cahoots? Because at lunch, that's the first thing Sheldon asked me about that. Boy, there are several answers at several levels. At the first level, I think it's, you know, the amount of money that is channeled from private sources into any particular function is driven in part by who else is doing it. And so both people who give to universities and the universities themselves are gonna change their scholarship policies if Pell Grants aren't available anymore. I can't prove it's gonna be a one for one replacement but it's gonna be a substantial effect. Another thing is that if you have a guaranteed income stream coming in at age 21, you can get a loan on that. You know, a bank will, this will be so guaranteed, banks will get loans on that. But that's not really the main point. And also, you can go to community college, you can get along just by working your way through. But that's not the main point. I disagree with your initial statement. I think 18 to 21 is an awful time to go to college. And this is not just rhetoric in my part, I have encouraged all of my children to delay going to college. They've ignored it, but I've encouraged them. My, actually, my fourth child, a son, is headed off to Cambodia this summer and may never come back, but he is going to delay. And I will also add another piece of anecdotal evidence and I would invite any teachers in the room to give me your impressions too. My wife used to teach English at Rutgers. And Rutgers has a lot of kids who go out, they go into the military, or they go out and they work, and then they come back in their 20s. She says the difference between those students and the kids in their 18, 19, 20 was huge. And part of it was that they were paying for it themselves. They valued that education a lot more. Also, they had a few years on them. You know, my wife was a specialist in Henry James, and she points out Henry James wasn't really writing for 18-year-olds. Well, maybe he wasn't even writing for 23 or 24-year-olds, but that's a lot closer to it, and you're much more likely to get something out of Henry James in 23 or 24 than you are at 18 or 19. If the effect of the plan, I see two possible effects. One is that it will delay college for a number of people, which I think is a great thing. And the other thing is it might encourage a lot of people who've just gotten out of college to take a year or two off and just live off the grant before they go on to graduate school. Think of the tens of thousands of innocent children this would say from law school. Because after they'd been out for a couple of years, they'd say, no, I don't wanna go to law school. And they would, by that time, have found something they did wanna do. So I'm afraid, ma'am, on this issue we fundamentally disagree. This was not as deceitful since I made it sound, by the way, I really believe all that. Public goods. Libertarians draw a distinction between public goods classically construed and transfer payments. With a transfer payment, you take money from certain citizens and you shift it over to other citizens so that the government has decided we need it more than you do. With a pandemic, you have a public health problem where you cannot protect somebody in one block without protecting somebody in another block. It's even more true with the environment. You can't provide clean air for Ann Arbor without also providing clean air for Detroit in some sense. And so you've got public goods in which the things that you accomplish, law enforcement's another good example, national defense is another good example, that when you spend public monies, they provide goods that are available to all and the consumption of the good by one person does not diminish the consumption of it by another person. And all those things are perfectly legitimate functions of government. Libertarians have no problems with those at all. Not very good, no. But it's a kind of thing, it's like the police power. It's a case where there are certain kinds of things which it's almost impossible to figure out any way that they can be done privately. And government is the one entity in which you can organize to do that. So you don't want to privatize the use of deadly force. That doesn't mean government is still a good way to go. It's a necessary evil. If there's an appendix where I sort of go through trying to figure out what the answer to that question is, obviously you've got to have a transition system. And the principle of the transition would be people get to choose which they want. And after you're beyond a certain age, you're too way too invested in Medicare and I'm 63. No way I'm gonna shift over to the plan. And you have to give them that choice. And the transition cost will be quite high by the way. Very high. On the other hand, the projected costs of the current system and the projected costs of the plan. And I'm using conservative projections of current costs. They'll cross in 2011. And by 2020, the current systems projected costs are half a trillion dollars higher per year. By 2028, they're a trillion dollars higher. So you've got a lot of money to play with. I'm not saying that that's not available for tax breaks. You're gonna have to use it to pay very high transition cost, but obviously transition has to be done. He's back. The anguish of late modernity and the non-stop of, in a totally secular society, is an enormous literature on this subject. Related to both of them, but the literature on this topic is full. During the time, essentially people have been talking about the emptiness of the contemporary world. And it seems to me, you're reading the subject up, and it's enormously different. I guess it's a question about it. It gets your arms around it. Beyond this, this event, I do wanna know one more thing. I did mention in your concern about the state of horrible conditions and the failed promises and the failed systems, making a problem hot. And new, in my impact, what you're proposing. What you're proposing not always very clearly? Well, a couple of quick comments. I think that in looking at the nature, enemy, and alienation, and the other things which you rightly say have been discussed now ever since the Industrial Revolution, it's instructive to look at where the problem was first discussed, and where it seemed to grow fastest, and where it has become most severe. And I would argue that it is precisely in those places where modernity was accompanied by ways in which what I've called the stuff of life was removed from localities and given to larger entities, whether it's Germany under Bismarck, in the beginning, or others. And I also suggest that one of the really instructive places to look is America during the Industrial Revolution. And I don't want to be to understand too quickly here. I'm not saying that there was not all the poverty and so forth that we're familiar with from Jacob Reese's pictures and the rest of it, there was. You also had one of the most incredible economic dislocations in history going on, and you also had a level of national wealth in which there was not enough to go around no matter how evenly divided it up. But I think what is instructive about the American experience there, and I include places like New York City and the largest megalopolises, was the dynamism of the local neighborhoods involved. There is a very interesting literature, an extensive literature there too, which I think is optimistic, and which speaks to American exceptionalism, and is one of the reasons why I think this would actually work in the 21st century. I do not think that anime is a function of the modernity itself. I think anime is a function of having life impersonalized, and life is impersonalized in some of its most important, although not exclusively, directions by the state. And as for American foreign policy, if I were to talk about that, you'd be getting one more voice giving his personal opinion. I think I have some special expertise on the subject of the book, and I have no special expertise on that. Well, the money is being spent now. So we're not talking about suddenly flooding the economy with brand new money, where we have to run the printing presses. We're taking it away from the bureaucracies which are spending it, and we're giving it to people to spend. And in a free economy, I think that when you have a higher demand for houses, a whole bunch of people are gonna go out and build more houses. So I don't think that inflation results from more demand. I think inflation results when you have more demand and restraints on how that demand is met. So I don't see that as being a problem. First, let me respond to your comments about Europe because there's no place I'd love to go for vacations more than Europe. Great playground. And for that matter, well, I have to go in short ones, of course, since I don't live in Europe. For that matter, there was a Jeremy Rappkin just had a book last year called The European Dream, something like that. And then the subtitle was How the European Dream is Displacing the American One, which was just rapturous about Europe. And I just say, sorry, I don't wanna actually live in Europe all my life. I love to visit. It's a lovely place to visit. But talk to, for example, all the European young scientists who are coming to the United States, not because they don't enjoy living in Italy, because it's fun to live in Italy, but because they can't pursue vocation there because they've gotta creep up the bureaucratic chain because of the way that the state has clamped down on the freedom of action. It's a fascinating issue. And for those of you who want to say you think that living life, quiling away the time pleasantly, is your preferred way to do it, that's fine with me, but I'm saying that there is a different quality of life and a demoralized quality of life among especially many of the young people in Western Europe, where life just doesn't seem to have much meaning anymore. I'll just leave it there because either one of us can pull up journal articles to prove our point in this kind of setting. In terms of the, the second part was about losing ground and remind me of the... Equal opportunity. Equal opportunity. Oh, okay, got it. Now I'm back with you, thank you. I knew I was gonna forget the second half of it. I left education alone. On grounds that education is a public good. However, I do have to tell you a little story about this that I wrote a book called In Pursuit in 1988, which by the way, many of the themes in In Pursuit are ad-embrated in this book. But I also treated education there as a public good, calling upon Milton Friedman's discussion of it and his externalities and the functioning of democracy. You've gotta have public education, so it's a real public good. And I got a page and a half single spaced letter from Milton after the book came out, saying, well, you quoted me correctly, but I've changed my mind. And he went on to describe why it was no longer necessary to have free public education. And I said, Milton, this is one case where I can't argue with you, but I think I'll stick with my position, so I have in this book as well. I just don't deal with that. In case of children, I distinguish between cases of neglect and abuse. I do not buy the proposition that things that are good for children automatically constitute public goods. But if you have things that rise to the level of criminal neglect and abuse, and the criminal justice system finds that, I think that they are obligated to provide services for the children and living arrangements for them in the same way that they're obligated to provide prison cells if they're gonna sentence people to prison. And so those I leave untouched. That wasn't such a bad swipe you took at me, actually. It's not as bad as I thought it was gonna be when you stood up. I actually learned things about art. If this isn't what you're saying, I know the immigration and they're curtailing it and it's getting more rigid. But for the most part, if you look at it being free, successful compared to other countries in the world. Consciousness, it's emphasis on working class consciousness, vocational systems. And they look at it in a highly very idealistic, but there are absolutely some, there is some general appreciation. So I guess I'm wondering how there is such diversified research out there. One of my major functions in coming to the University of Michigan and in particular this school is to let you know there are other ideas out there. And that your syllabus doesn't necessarily include a full range of the things that you need to read about what's going on. So if you take a look at in our hands or you look at losing ground or you look at in pursuit, in all of those cases you will have extensive bibliographies. And I encourage you to plunge in and read extensively. In terms of philanthropy, gee, there's so many ways in which I disagree with you on this or you disagree with me. The amounts of money that rich people contribute is extremely large. And they do it in different ways depending on what society isn't doing. So there was a major shift in contributions from things that directly addressed problems of poor people and so forth in the 1920s and teens over to other kinds of giving after the New Deal. But the amounts of money they give away are very large. But that's not really the main point. I don't think that neighborhoods work and communities work because of big outside funding from the Bill Gates's of the world. They work because of all sorts of much smaller kinds of efforts that go on within the community. And money is only a fairly small part of that total effort. One of the pages, a couple of pages that I would like you to read and just think about is when I talk about the level of effort that was going on in New York City at the height of its late 19th century poverty. And when I have these lists of just how many different things were going on from different, from one set of Protestant churches, ignoring the Hebrew charities, ignoring the secular charities, ignoring the Catholic diocese, ignoring, it's just amazing. And the proposition I have at the end of that is that given the tax base of New York City as of the end of the 19th century, I cannot prove this because the data just aren't out there. I submit as a very plausible proposition the tax base could not have conceivably supported the level of social services that being provided by private agencies. And my proposition to you is, or not my proposition, my request for you to think imaginatively is, suppose the same level of effort were being made at today's levels of national wealth. So I just think the American record on communities responding to their own needs was very accurately identified by Tocqueville in the 1830s and has remained true pretty much ever since falling off with the potential of coming back again. But I don't think I've entirely persuaded you of my position. You want a very civil audience, right? Or a civil audience, yes.