In Our Hands: a Plan to Replace the Welfare State Hardcover – 21 Feb 2006

This book puts forward an idea that will never (probably) be taken up by politicians but which solves a whole host of social and economic problems. It will also probably annoy those on both the political left and right alike! For me, as a policy advisor, it was a revelation and has completely changed my view on benefits systems. Charles Murray argues his case steadily and logically, the only drawback being that his examples are based on the USA, where, although the problems are applicably to the UK and elsewhere, the mechanisms are different (we have the NHS for example), so some of the ideas have to be 'translated across' (an interesting intellectual exercise). It's a core book for our times - and the 'flat benefits' idea goes will with ones on 'flat taxes' - and it is an easy read.

Charles Murray is well known author of popular yet controversial social science books (see for instance Losing Ground: American Social Policy, 1950-1980, 10th Anniversary Edition, Bell Curve: Intelligence and Class Structure in American Life (A Free Press Paperbacks Book), Human Accomplishment: The Pursuit of Excellence in the Arts and Sciences, 800 B.C. to 1950 ). He is an engaging writer and all of his books are replete with hard data and precise quantitative analysis. A large deal of what makes his ideas so controversial is the fact that they are backed precisely with this kind of objective and precise analysis, that often flies in the face of common wisdom of the times. This book too, although much slimmer and less exhaustive than the abovementioned ones, falls in that category. It's premise is simple: abolish all social wealth redistribution programs and in their place institute an annual allowance of $10,000 for all US citizens 21 and older who make less than $25,000 annually. This in fact would be a Negative Income Tax (NIT), something that has been proposed by many economists over the years. The proposal is rooted in Murray's newfound acceptance of the fact that a full-blown abandonment of all social programs is politically completely unfeasible, and his desire to make an alternative wealth redistribution scheme that would minimize many social ills that such schemes usually bring along.

Most of this book is dedicated to arguments that explore the feasibility of this new scheme, as well as providing the theoretical evidence that the scheme would in fact bring the desired outcomes. The biggest underlying assumption is that the US economy is finally large and strong enough to actually implement this plan. The other, related, assumption is that the US economy as reflected in the stock market will continue its long-term growth at the same rate it has been growing between 1800 and 2000. The recent economic crisis may or may not undermine the first assumption: on one hand there is certainly less wealth to be redistributed as compared to just a few years ago, but on the other hand the various government redistribution schemes have been larger than anything ever seen. Using a much more streamlined redistribution program has never seemed more desirable. As for the second assumption, some recent scholarship has shown that the data from the early 19th century stock values is at best not comprehensive enough. The claim of two centuries of continuous growth all of a sudden doesn't seem as convincing. However, even in the case that the US does not continue to grow its economy at the historically high rates, this only weakens but does not demolish Murray's main arguments. For in fact all other wealth redistribution schemes are even more vulnerable to the vicissitudes of future economic growth.

Overall, this is a provocative and engaging book, a kind that we have come to expect from Charles Murray. It outlines a worthy and feasible social policy that may very well be the best option that we have right now. However, I suspect that its impact on the actual policy on the ground will be largely indirect for time to come.

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