Social Capital and Public Policy

Progressives and social democrats in America have espoused the virtues of comprehensive social insurance, universal healthcare, universal college, universal housing, among other things. I believe generally liberals and socialist have two different core reasons for their support of public programs like these, and I’d like to discuss my views and approach to public policy with respect to social welfare.

The first important thing to note is the distinction between a liberal and a socialist view on social welfare. For most liberals and in the modern context, some conservatives, social welfare is fundamentally something people ought to secure for themselves, given they are able. This is because the lack of productivity and self-sustenance of one individual is necessarily a burden on someone else or society. That being said, everyone is entitled to adequate assistance in development and maturation. A child cannot be expected to flourish in adulthood if they were raised without adequate healthcare, socialization, parenting, nutrition, and educational opportunities. We cannot sustainably help people who do not help themselves, but we can get people started and guide them on the path to self sustenance.

The difference between my more liberal approach and the more populist left-wing approach to social welfare is I do not support just any nice sounding program which makes any arbitrary service or commodity free for all. I support profitably investing in public education, health, and other domains, not only to enhance the nation’s productivity and well-being, but to come ever closer to fulfilling the promises of meritocracy and equal opportunity. The idea that everyone is entitled to all sorts of luxuries and privileges by virtue of existence is a component of European social-democratic ethos, not American ethos.

I believe the aim of public policy concerning social welfare should be to meet the immediate critical needs of all people, but make rigorous and value-based investments in social capital. We want people capable of excelling in the workforce, who will attain for themselves and their children a permanent cycle of general well-being.

Now that the more philosophical stuff is out of the way, let’s talk about some examples of public policy and how we should approach designing them.

Preschool is an interesting policy issue for a few reasons. It’s often said that preschool enhances later-life outcomes for young children and maybe even increases IQ’s. I’m skeptical about the strength and reliability of these sort of effects, which wouldn’t matter, except that with preschool, we’re talking about a lot of money. Full time childcare and preschool is often running in range of $1000 a month, especially in more expensive parts of the country.

Another impact preschool and childcare may have is enhancing the socialization of young children, which could yield more extroverted or socially skilled adolescents and adults. That’s a little more speculative. What’s not speculative is the economic impact of universal preschool. When the District of Columbia introduced universal childcare, they saw a double-digit point increase in the labor force participation among mothers, a substantial benefit not only to those households, but to the district’s economy. Other parts of the country, and especially foreign countries have observed similarly large increases in maternal workforce participation.

Given that with workforce training and a couple years experience in the workforce, the median full-time working woman is generally able to earn between $30,000 and $45,000, a targeted childcare and preschool program could pay for a not-insignificant portion of itself through tax revenue growth. While a system of universally ‘free’ childcare payed for with increased taxes would be very expensive and perhaps inefficient, subsidies that make it affordable for low and middle income families will permanently increase labor force participation, boost short-term GDP, and make universal for all children the potentially profitable investment in their lifelong welfare and development.

Bernie Sanders and Elizabeth Warren ran on a platform that included making college free for all, which I think is frankly silly. University does not provide a positive return on investment for every graduate, let alone all attendees (most of whom will not graduate). We know that college attendance increases incomes, but right now that affect is measured in the few individuals that attend and graduate college. If you invited the left half of the academic bell curve into university, you would probably see very high attrition, poor performance, and very low graduation rates. All-round, a waste of money.

In my view, the optimal system for higher education is to cover a portion of the the cost of college attendance (from 0 to 100 percent) on a sliding scale based on academic merit (as measured through some array of prior academic performance, test scores, or class rank) and expected family contribution, which is used for determining eligibility for and amount of assistance from Federal Pell Grants. The rest of high school graduates and other young people who are not shuffled into colleges and universities would receive financial assistance via a similar system of subsidization so that they may attend vocational and technical schools, which allow them to quickly receive highly employable skills that translate to self-supporting wage income.

I do want to note that the system for shuffling people into college ought to be flexible. People who mature or age a bit, or those with equivalent diplomas and other certificates should have a reasonable shot at admission to university, as well as eligibility for this proposed financial aid system. Essentially what we want is for every single person to attain the highest level of education that they are both capable of obtaining, and which will net a positive return in lifetime earnings.

It’s important to note that making profitable investments is not always as simple as making a decision. We have to conduct controlled studies of the effects of policies on outcomes. We can’t simply assume our way to policy success. If policy makers are too lazy or impatient to study and design functioning policies, they will make costly mistakes, some of which will sabotage public support for government investment efforts.

When we consider public works, high speed rail, new entitlements, among other things, we have to carefully consider the costs and savings, and whether or not programs provide society of a positive return on investment. Anything less is malfeasance.

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