Saturday, April 28, 2012

Give everybody start-up money?
A relatively open-ended lump-sum grant given to young people as a high school graduation gift could be an attractive option. You can use it to pay for college. But you could also roll it over into a retirement account. Or use it to launch a business. Or as the down payment on some real estate. And we could say that whatever you still have on hand at the age of 25 becomes yours to use as a totally unrestricted grant. Go spend it on some (increasingly cheap) cocaine if you like. The idea is to ensure the affordability of higher education while preserving the idea that higher education providers should be able to offer low prices as a meaningful selling point to people.
The problem is that if you are government funded, sooner or later you become government regulated. Maybe the costs regulation will be less than the benefits of government start-up money, but don't ignore these costs. Maybe you'll be allowed to use your money to start a business, but not a business that sells, say, unhealthy foods. Will you be allowed to use your government start-up money to fund yourself as a missionary for a few years? What about using your start-up funds to make a risky investment in a friend's business, or to start your career as a day-trader? What about paying for grandma's assisted living apartment for the next several years? feeding and educating many poor children in another country? paying for your big wedding and honeymoon? And if what you want to do is prohibited until age 25, will you be allowed to promise to give all your government start-up money to lender when you turn 25? If not, presumably there will be a lot of black market lending designed to achieve exactly this. Also, won't making high school graduation a prerequisite for government $$$ pressure high schools to lower standards, and pressure weaker students to cheat?

The potential for political bickering is endless. One could try to avoid that with an unrestricted grant on, say, the 18th birthday, combined with a strong social stigma against squandering the grant. But even then, expect news stories about young adult's grants lost to swindlers and extortioners, and demands for government to Do Something.

All that said, universal start-up money would probably be a net plus for individual freedom. I don't know if universal start-up money is a good idea or a bad idea, but if it's a bad idea, then the reason is probably anti-modern and communitarian: for better or for worse, economic dependence that is personal, as opposed to dependence on an impersonal state, strengthens interpersonal bonds.

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