In a time of growing inequality, some nations are beginning to experiment with direct payments of various forms - albeit to a limited number of citizens. Finland is the latest for instance, to implement an experimental universal basic income program. Among the incentives for this approach, are uncertainties regarding the long term effects of automation, on employment. Others view such payments as potential means to simplify the confusion, of too many overlapping welfare systems.
While direct payments are an understandable response, the "not like us" rationale may nonetheless undermine some of these efforts. Recently, Chris Blattman highlighted an article which noted how British taxpayers were supposedly "doling out" money for Pakistani families. It's an unfortunate reaction, given the efficiency and effectiveness which might have been gained from the policy approach. And Blattman's post title illustrates the broader meaning of the problem faced by economists and policy makers alike: "This is why politicians fear cash transfer programs."
So long as economies are dynamic and (seemingly) reliable, populations are far less likely to complain about many forms of government redistribution. But when the economic pie is scarcely growing, various constituents become more intent on taking action, should they discover that money is going to the "wrong people", whoever they might be. While Blattman's example exemplifies problems for foreign aid and developmental policy, domestic policy may well be the larger struggle in this regard.
How to think about redistribution problems, especially when they appear as though magnified with economic stagnation? Or, what's the "worse" trade off: so called "deadbeats" who live off the taxes of others, or individuals who make a living "unfairly" from utilizing knowledge which already "belongs" to others? It's a valid question, since the use of knowledge has become central to economic vitality. Even those who invest in knowledge based skills, may still lack economic access to some extent.
Granted, unemployment issues aren't often framed in these terms. But doing so, might help to think about differences in the trade offs involved, between money and/or knowledge use as redistribution. Especially since the latter has the potential to expand the economic pie as a whole. Ultimately, the question really comes down to: would we rather pay people for doing nothing, or would we rather pay people for becoming more willing to assist one another? And even here, the framing for the latter is actually better than the choice implies. Because people could organize their time in ways that allow mutual self assistance to also become new wealth.
When money is the sole form of redistribution, people can't buy services (simultaneously) that don't actually exist. When important forms of knowledge use remain off limits to large segments of the population, less wealth in aggregate is possible, and hard choices have to be made. In such circumstance, it is also difficult for nations to provide important time based services for all would be comers. Only consider that Medicaid in the U.S. for example, is almost 20% of all healthcare spending - a factor which particularly stands in the way of finding effective means to replace Obamacare. More than 70 million enrollees have too few means, by which to fully reciprocate, for the health based services they may actually need.
If little is done in terms of supply reform, restrictions on the use of knowledge might increasingly mean more closed societies in the near future. Whereas an ability to utilize knowledge to build new wealth capacity, could help preserve open societies and relations between nations. A greater supply of knowledge based services activity, would mean fewer individuals appear as though "takers" of the wealth of others. Until vital knowledge use becomes a more important part of the economy, too many will appear as "outsiders", as populations organize to trim their budgets by excluding those who are "not like us".