Why the Welfare State Evolved From Church Mutual Aid: Economist Samuel Hammond

Samuel Hammond [00:00:00] Why is government intervening in health insurance markets, but not necessarily the provision of healthcare directly? And moreover, why aren't they intervening as much in like the food market?

Vance Crowe [00:00:12] I'm Danica plu, a grad student living in Fort Collins, Colorado, and you are listening to the Vance Grow Podcast. Welcome back to the podcast. I'm glad you're here. Today, I speak with Samuel Hammond of the Nesin Center. There. He focuses on social policy, and I have to say, his way of looking at the world runs smack into mind. And when I first found him, I thought, Hey, this is a libertarian, but not really. He's wearing a socialist sheepskin over top of him. And as we started talking, I found myself wanting to jump on his ideas. But what I discovered through this conversation is that no, he has an entire philosophical model where he's saying, look, we can't just rip out the system that we have. We have to deal within the world that we're living in. And if we don't like the options that are presented to us, perhaps we should come up with very different ones in this conversation. I find myself disagreeing with him and then all of a sudden coming around and being like, wait a second, there's some real value to thinking about the problem in this way. I really enjoyed this conversation, and I'm so glad that Samuel was willing to come on at the last minute. One of the reasons we've been doing online interviews as opposed to the ones in person that we've done normally is because the Legacy Interviews are growing. We had to build out new space because we've been doing so many of these interviews where people send mom and dad in together, and I sit down with dad for a session, then I sit down with mom, then we break for lunch and sit down with mom and dad together.

Vance Crowe [00:01:47] Now, because of this, this has meant that we've had to build out our space to have a waiting room we've had to build out, so we have editors and make it all work together. I am so excited about how Legacy Interviews is growing, that I hope you'll take the time to think about who this might be a good gift for in your life. If you're a business owner, you can know that some people have been using these to build up their relationships with important clients. Clients that they see the value in having them go out and talk well of something that you did for them. It's way better than a hunting trip or a nice bottle of wine. This is something that deeply communicates that you care about that client and you want to capture their memories for their family to pass on. If you're interested in learning more about Legacy Interviews, go to Legacy Interviews dot com to find out more. All right, without further ado, let's head to the interview with Samuel Hammond. Samuel Hammond, welcome to the podcast. Thanks

Samuel Hammond [00:02:44] For having me.

Vance Crowe [00:02:45] Why should the state be involved in helping poor people at all?

Samuel Hammond [00:02:51] This is a, this is a big question. So for, for, for background, I came from, I come from a

Vance Crowe [00:02:56] More

Samuel Hammond [00:02:57] Libertarian intellectual pedigree. And so, you know, I had much more conventional libertarian opinions, say 10 years ago. One of the ways I change began to change my mind on the value of a welfare state, and not just any welfare state, but a particular form of welfare state was through a kind of reconstruction of why the welfare state developed in the first place, right? And so if you flash back to, you know, the 18 hundreds, the first industrial revolution there was already going on this sort of breakdown of traditional modes of social protection and social security. So traditionally, if you grew up on, you grew up on the firm, you, you, your community sort of was your safety net at some point, you know, you inherited the firm, you took care of your, your parents. And so it was all sort of self-contained with, with the first industrial revolution you saw a, a kind of great, great migration, right? And so people began spreading out, going to urban centers, taking advantage of the early manufacturing economy and so forth. And so that led to an initial breakdown of those kind of kin networks, networks of family and, and friends. And what arose in its place were these like mutual aid societies, fraternal orders, and, and tho those sociologists sometimes call those fictive kin kinship networks because they were, you know, if you're, if you're, you're a band of brothers, but you're not actually brothers, you're just people who've all moved and are, you know, doing things within a community context. But, but sort of the, the subtext is that it's a form of social insurance that, you know, you're, you're maybe part of a band and you have all these activities that you're doing, but fundamentally being part of those mutual aids groups was being part of a, a, a kind of support group.

Samuel Hammond [00:04:42] A lot of my thinking on this evolved by trying to understand what, why did the mutual aid societies peak and then decline at the turn, turn of the 20th century? And one way you can think about this was by the time the second industrial revolution arrived, there were so, so mu, so much, so many more new economies of scale. One of the biggest sources of innovation at the time was in insurance markets themselves. So, you know, prior to the early 18 hundreds, there was no, like actuarial science, people didn't know how to price risk. And so these mutual aid societies kind of operated on a, on a flat rate sort of membership basis where you can think of it, you know, implicitly everyone is paying a flat premium, right? And then with the development of commercial insurance, suddenly there was this arbitrage opportunity or sort of adverse selection problem that arose where large scale insurers, you know, they built, they both both built national networks, so they had much larger networks to pool risk across than you could within a, a fraternal order of like a hundred people. But they also had the ability to price risk in a way that was actuarially sensible. So if you're a high risk type, you would have a higher premium on your life insurance or whatever. And so this ended up in some ways undercutting the traditional mu mutual aid model, right? And so there's a, there's, there's an older libertarian story that it was really the government building the welfare state that crowded out mutual aid, and there's a, a portion of that that that is true, but it was also the development of commercial insurance.

Samuel Hammond [00:06:18] And these things sort of happen at the same time. And so it's hard to disentangle, but in essence, this, this more libertarian model of social security became economically untenable. And one, one of the, one of the, the sort of conceptual things that I try to push for is to not think of what the welfare state does as purely through the lens of poverty and, and redistribution. Think of it rather in terms of, of social insurance. Meaning what are, what are the sort of common risks that we, we can pool across society? And one of the earliest ones was, you know, the risk of living or savings. So that's why social security developed pension systems developed early on. And these things, you know, they, they look redistributive ex post because, you know, if you have fire insurance, your house burns down, we're redistributing from people whose houses didn't burn down, but ex auntie, they're, they're more positive. Some they're, they're, because you buy insurance because you, you, you feel like you're, you're getting a protection against downside risk. And the kind of, the fact that there's redistribution next post is sort of, is sort of missing the point. And, and so one of the ways I think about this is that the, the rise of the, of the welfare state was really the rise of the mutual aid nation, that the, the concept of mutual aid went from being something that was very local and communitarian to something that gets scaled up along with the, the scale of the economy. Yeah,

Vance Crowe [00:07:41] And it's interesting because if you are scaling up and you're, you're putting in this redistribution system

Samuel Hammond [00:07:47] And

Vance Crowe [00:07:48] You're giving away money to help people that you don't meet, you're not like encountering them all the time, it definitely feels on an individual level, like it's unfair and it's like not necessarily doing any good. Like, you know, you look at that, whereas as you were talking about the AIDS society that occurred before the industrial Revolution, I was thinking about a concept that was common in Kenya where I lived for a little while called Harbi. So Harbi would be like a group of, of neighbors that would all get together and they would pool their money and each, I dunno, once a month it would be a different neighbor's turn to take that money. And if something came up, somebody could skip ahead. And any economist that looked at this would be like, this is a terrible system. If you were instead just investing in yourself and putting it away in a savings bond, you, you would be able to make more money. But the, the consequence of people being involved in the Rabi was they were way more connected with each other's problems. So if somebody was sick, it wasn't just the money that they were getting, it was that people would stop by. It was that people would come and contribute by helping them harvest in their garden. But when you start to scale that up, any of these contributions become anonymized. You don't get credit for helping people out above and beyond. And so then it becomes like a, what is the minimum amount I have to contribute in order to be able to participate in the system?

Samuel Hammond [00:09:08] Yeah, exactly. I think this is in some ways, like the recurring theme through all my work is trying to reconcile the efficiencies of scale and scope that we get in the 20th century with, with what, what gets lost in the process and meaning the social capital, the kind of binding and bonding community that gave, that was sort of piggybacking on the functional role of social insurance, right? So this is, this is this really, it grew out of my academic work when I was in studying economics in, in grad school, my, my thesis was on secularization what drove the US to Secularize beginning really in the nineties. And moreover, why, how do you explain the sort of pattern of secularization nation worldwide where, you know, Europe secularized before the US and so forth. You know, if you look at the early sociology literature on this, there's, there's all this stuff about around modernization and, you know, dis disenchantment and these sort of vague terms that it is really hard to, you know, operationalize. My thesis was that social insurance and the development of the welfare state was actually one of the, the core drivers because if you look across nationally, some of the least religious places on earth are, you know, the Scandinavian countries. And they also have some of the most well developed na cradle to grave welfare states. And it certainly makes sense if, if, if one of the functions of religion is to provide a kind of rudimentary form of social insurance in the context of this community, and there's all these ancillary things that come from that, like you, like you were saying around, you know, reputation and all, all kinds of community activities that come out of maybe this core functional role.

Samuel Hammond [00:10:56] If you, if you sort of nationalize that functional role, you, you will get the unraveling of, of all those, those ancillary benefits and at, at, at, at some point you end up with a completely sort of deracinated disintermediated public. And I think we see that in the US context in particular. So I've done a little bit of writing on social capital and the welfare state, and one of the surprising things if you look at the Nordic countries, for instance, is they, they both have large welfare states and they're both not very religious, but they also have very high rates of social capital, like belonging to associations and membership, membership organizations and things like that. And one of the reasons,

Vance Crowe [00:11:35] Yeah, I guess there's something like, it sounds really reminiscent of the Canadians, right? It's cold, they're isolated, at least the ones living in rural areas. The, if you go up to a Canadian small town like Lloydminster,

Samuel Hammond [00:11:46] Everybody's

Vance Crowe [00:11:47] In a hockey league. Everybody's engaged in like getting the curling rink going, whether it's sports or not. There's even more than that. And I assume it's the same in other Nordic countries.

Samuel Hammond [00:11:57] Totally. I I mean I'm from rural Canada myself, so I can attest to that from Nova Scotia. But one of the, so one of the reasons is because if you, if you retrace the development of the Nordic model and the Scandinavian model, it really is kind of bottom up. They emerged through like in some ways rather than the mutual aid society being like usurped and substituted for like their, their welfare systems developed organically bottom up out of these mutual aid societies through, through, you know, collective bargaining through these employer associations. And so in, as a result, you know, this is one of the reasons why, you know, Scandinavians also have, you know, 60, 70% unionization rates, right? Like they're not adversarial unions, they're actually just part of like the infrastructure of community and society that led to the development of their welfare systems. And so there wasn't as much of a, there wasn't as much of a destruction of those community groups because those, those community groups continue to exist now in a kind of secular form. But, you know, if you look at the provision of like healthcare in Sweden for example, it's very decentralized. It's run at the municipal level. And so one of the, one of the, you know, I think themes in, in my thinking on social policy is how do we reconcile these two things? How do we both get the benefits of scale that modern states provide with the sort of intangible community benefits? So I I I told you a little bit about like a series on the LDS and the development of their, of their sort of church security program, which is like their really parallel welfare state.

Samuel Hammond [00:13:33] And I, I I I, the reason I've, I've studied that a lot is because I, they've, they've managed to do this, they've managed to both maintain kind of the structure of mutual aid that in some ways was like explicitly modeled on like the Freemasons and like, it's really like a, a communitarian, hierarchical communitarian structure. And yet there are like highly modern, you know, technophilic religion and and are com are, are working in a way that like is compatible and in some ways reinforces what the government is doing.

Vance Crowe [00:14:04] So let's talk more about the LDS for people that may be like a little further away from it. These are the Mormons. When you talk about this system they've set up, gimme some groundwork, like what, how is this different than say the regular Catholics or, or Lutherans or whatever else? Not religiously, but from their social structure.

Samuel Hammond [00:14:24] So I mean, one of the most important facts about Mormons and what make them unique is that they, they're, they're in some ways the most modern religion. Like if you don't count like New Age and Scientology and some of these other things, like there really hasn't been like a new religion since the LDS and you know, comes outta the 1830s when Joseph Smith was, you know, moving around in upstate New York and there was this, you know, ferment in the air with the second great awakening all the, you know, the, the, all these new sex and, and Protestant non-conformists and all these other groups that are popping up. And at the same time, so at, at the same time, you know, the LDS were diverged a bit from that, those sort of Protestant low church movements because those, those sort of process non-conformists were against mediation, against hierarchy, against being told how to interpret the Bible and stuff like that. So what was really interesting with the LDS is because Joseph Smith modeled the institutional structure off of the Masons and these mutual aid sy structures is that it kind of combined the hierarchy and priesthood structure of like the Catholic church with the sort of theological themes of mainline Protestantism, you know, with all the different theological innovations that that that, you know, you know, the, the Protestants that this, they're in secondary awakening got really into temperance and not not drinking alcohol. And likewise the LDS you know, abstain from alcohol, from hot drinks and all these other things. So there, there's like these, it's just like this blend of like the best of Protestantism with, with the structural hierarchy that you need to maintain an institution across generations and to sort of resist the acid, the institutional asset of secular secularism.

Vance Crowe [00:16:09] It's fascinating to hear you talk about this because I find that in almost every conversation that I have wi about Mormons that are outside of me communicating with the Mormons that I know, it's like, oh, look at their goofy beliefs and they kind of put down all these things. But like,

Samuel Hammond [00:16:23] You're

Vance Crowe [00:16:24] Absolutely right. The structure that comes from the Mormon faith has enabled them to have community, huge families, like I would say a large percentage of the people that do these things called Legacy Interviews with me, right? Interview their families.

Samuel Hammond [00:16:39] A

Vance Crowe [00:16:39] Big percentage of them are Mormons because they have so many kids that are like, oh, we want to capture mom and dad and like, you just don't see this in the same way with other faiths, but it's hard to find anybody in the non-Mormon world that that even really gives them any kind of respect for, for the way they're set up or how they work.

Samuel Hammond [00:17:01] Yeah, well, you know, for starters, I'm not myself religious. And so from that baseline, like I can understand if there, if you have a sort of mainstream evangelical Christian that, you know how they've been brought up, you know, they there, there's definitely a debate within Christianity, but whether even to consider Mormons Christian, right? And for me that's like totally above my pay grade. 'cause I, to me it's just all different belief systems. And I'm also at the same time sort of a philosophical pragmatist. So, you know, I I sort of think there's this division between ra and Ra within rationality, between epistemic rationality, believing what is true and having, you know, true justified beliefs and practical or instrumental rationality. Like how do you align your behavior and your motivation with the good life? And it's not obvious that these two things should be compatible, right? Like in some ways leaning in on I've, in my life, I've leaned in on epistemic rationality. I care about believing, you know, what is true and I'm a materialist and rationalist and all these things, but in some ways it's undermined my practical rationality, right? Because like believing in the sacred or believing in these, I don't wanna call them myths 'cause that's pejorative, but things that, you know, costly signals of, of commitment, right? That you, you know, famously the Jehovah's Witnesses don't accept blood transfusion. And one of the ways I can sort of e as an economist sort of explain that from the eco economics of religion is that the stronger the sacrifice that you make and the more stigma that's attached to like defecting from the group, the the tighter your bonds will be and the faster your church will grow, right?

Samuel Hammond [00:18:47] And so that may end up correlating with things that are like really good for your life and for society as a whole and the sort of cohesiveness of, of your community, even if it, so it's sort of like this exchange rate you give an ounce of epistemic rationality for, for a pound of practical rationality. So that, that's also sort of explains sort of why I am more open to religion as a social technology, right? Like that when I look around, a lot of the social problems in America today seem to come seem downstream from this kind of disintermediation of social life where, you know, in the past the Trump voters used to be, would've been in a, in a union or something like that, or would've been in church and now they're sort of like, they're sort of disorganized or maybe they're organized on Facebook.

Vance Crowe [00:19:40] Yeah, I mean, I think of it as like the, like imagine you have a government program designed to help drug addicts and the the government program is like, here, we're gonna hand out some clean needles and we're gonna come by and make sure you have enough money for food. So these are all very pragmatic things,

Samuel Hammond [00:19:56] But

Vance Crowe [00:19:56] That when a drug addict actually gets invited into a church, for example, all of a sudden they have people

Samuel Hammond [00:20:02] That

Vance Crowe [00:20:02] Are there checking in on them, right? And saying, no, like, come to this thing. And and you may even say like, Hey, why don't you volunteer and hand out food with other people and now all of a sudden you're building bonds and it is those bonds of friendship that give you the, the ability to be able to pull yourself out of the situation as opposed to the incredibly like checklist oriented, did we give them clean needles? Did we make sure they were, had the exact amount of money that we could give them for food,

Samuel Hammond [00:20:32] Right? This is the classic, you know, James Scott seeing like a state, you know, how do, how do governments see things, right? You know, they, they see things through these bureaucratized processes because that, that that's what makes them legible, these outcomes legible. And so that, that, that's another big theme in my work is is you know, if the, if the first part of it is like how do we reconcile scale with the, with the imperatives of, of community, you know, one of the, one of the functions of community from a purely like technocratic lens is it was a check on moral hazard effects, right? Like if you give some, if you give someone a fish, they'll eat for a day. If you teach em how to fish, they'll eat for life, that sort of thing. You can have a social worker that's being paid, you know, $30,000 a year to have like a monthly check in with the, with, with their, with their whoever's on their caseload. But that is like qualitatively different from having somebody who maybe is a volunteer who you see at the potluck, right? And it, it's, it's both different at the, at the phenomenological level of like your lived experience of, you know, it's clearly more, more edifying than having to talk to a bureaucrat, but it's also more effective in driving the outcome, right? So a a a a micro example of this in Medicaid and Medicare, there's a innovation program where they're allowed to pilot new models and run like a controlled trial and see if it works and they can scale it up. And one of the most successful models that they've tried so far was for diabetes prevention and management where they worked with the YMCA to refer Medicare recipients to these meetings of, of diabe of diabetics where they discuss their diet plan and stuff like that.

Samuel Hammond [00:22:16] And it had these enormous effects because you're meeting up with a group of people, peers, other other people with a similar condition, and you're checking in on each other. You come to the next meeting and say, well, how, how's your weight improved? How's your, have you fallen off the wagon? And so there's, there's, there's at least this is a glimmer of hope, there's a potentiality that we can have the sort of financial scale of government with the, with the intangible soft touch human touch of community. It is a kind of, it is a kind of sporty and knot, like how do you do both at the same time? But there are examples of it happening in micro and I think one of the challenges for, for conservative social policy makers is how do we, we can't, we can't just like go against the new deal like that that ship has sailed, right? Like we have to sort of accept that there are some structures that are in place and how do we actually make them functional with how humans actually work in, in, in the real world. It's

Vance Crowe [00:23:16] Funny that you, like you are starting from the premise of the new deal. The ship has already sailed. And I like my instantaneous reaction not being as immersed in this as you are is, well we've, that ship has sailed until the system becomes so onerous that it crashes, right? That it, that it crumbles down and creates a system that's not viable. Like you have, you know, the amount that you're giving out is far more than you're taking in as a, as a government. Like are you sure that that ship has sailed and is is on its way to the other, the new world?

Samuel Hammond [00:23:52] So one of my like gut checks for this is just to look across nationally and you know, there's this enormous bias in, in American public policy to only look, you know, it's very parochial only to look at the Americas as if like we can't learn from, from Europe and other countries. And there's just like the stylized fact that, you know, post-industrial revolution all basically all developed countries adopted some kind of national pension system, right? And you can try to understand why that is. Well, one, one reason is because there's like a market failure in annuities. It's hard, it's hard to 'cause of adverse selection. It's hard to have a private market in annuity. So one way you can understand like social security say, is it's a collectively purchased annuity and we rein, we sort of reinstate the, the flat rate, premium structure of the old mutual aid societies via taxes. So, so there's a sense in which it's necessary. The question is, so another thing I I would just add to this is like I I I, I strongly distinguish between sort of the kind of more universalistic mutualist structures like social security with from like targeted anti-poverty programs that are, that are, that, you know, came out, came around like in the great society era where we're, we're like, poverty is like a social problem that we're, we're gonna have experts come and solve, right? Like I think that even though that some in some ways is like not as big a fiscal footprint, I think it has much more, has, can create much greater harms in what it crowds out, right?

Samuel Hammond [00:25:31] Because if, if I, if we have a child benefit, right? So I, I've written a lot about child allowances. If we send parents money per child, you know, it solves this kind of, you can call it a market failure of the fact that if you have more dependents, the market, the government, the, the, you know, capitalism doesn't pay your parents more if you have kids. And so there's a, you know, having kids is, is is in itself a huge risk factor for be being in poverty. But if we give parents money, does that money could, that money in some ways crowd in civil society because of you have like the family in Provo, Utah that is, you know, reinvesting that that surplus back into their local community into church daycares, so on and so forth, versus the kind of great society ethic where we're going to create a, a federal program maybe with some state buy-in and you're, we're gonna have like a professionalized class of people who are like the social workers and they're going to in some ways substitute for, you know, the church daycare, right? And we see this explicitly with some of the pushes for like national daycare, right? Like it's not national, have money to afford daycare is national center-based daycare with all these quality regulations that are gonna be run by the kind of people we want to run them. And, and by the way, like, you know, church, churches and religious providers are ineligible because, because we designed it that way, right? So, you know, part of my plea to more libertarian types is to just to say let, let's, let's define what we, what we mean by big government.

Samuel Hammond [00:27:07] Do we mean it purely in a fiscal sense or do we also do we really mean it in, in the sense of what strictures and regulations and bureaucracies are inner, inner seeding in our life plans and, and our ability to construct the life that we want, right?

Vance Crowe [00:27:25] Yeah. I mean, when I think about the government being involved in children, raising children of any kind, like, you know, even the school, something as basic as like how education is done basically as a socialist enterprise, it's hilarious that we frame ourselves as being this capitalist society. And then we have mandatory school that is paid for by, by taxes and every, you know, it's like this very weird socialist system. But I also think like when the government got so involved in school, it must have inherently forced out

Samuel Hammond [00:28:00] All

Vance Crowe [00:28:00] Of the innovation that happens in school. Maybe not all of it. 'cause clearly there's private schools and there's parochial schools, but to do that on the, the daycare level is, is even more alarming. But they already are doing that in the sense that they create all these regulations about who can be a teacher, what are the, the things that you have to do in order to be able to be a daycare? How many people can one stay at home mom, watch these kinds of things.

Samuel Hammond [00:28:26] Yeah, totally. I have an article on unwinding the great, the Long Great Society. So the Long Great society is a term that some political scientists used to, to indicate that the great society era wasn't just LBJ, it really like began with Kennedy and kind of ended with Ford. It was like this multi administration process. And what it was, was the decline of mass membership politics where, you know, prior to the late sixties, early seventies, American politics was typified by, you know, large labor federations, churches with like mass membership across, you know, geo geography and class, right? Like these fraternal type societies, the kind of Knights of Columbus and so forth. And those were the kind of stakeholders that, you know, gave rise to their many of the early new deal programs, right? There was, you know, in the case of like some of the farm support systems, like there's a, there were, you know, tons of back and forth with, with actual like organized farming interests. What really takes place, you know, the real regime change, so to speak in the seventies was with the decline of organized labor with the beginning wave of secularization and the dis disintegration first of the mainline church and then later the Catholic church. You know, you see this move away of politics from organized membership driven organizations. Even the p the political parties were also much more highly member driven to something that is much more technocratic and driven from the top, top down through this like governing elite, right?

Samuel Hammond [00:30:06] And that's, that's why in the seventies you get all this like fa faddish social policy that emerges. So an example I give in a recent piece is New careers for the poor. It was this program in the seventies where the federal government would make grants, federal government working with like large foundations would make grants to cities to employ poor people in, you know, human services, education and human services. And the idea was, you know, these soci these cities are de industrializing and you know, in the older days you probably would, if there was like more labor driven, you'd probably have people wanting to like re industrialize the city or something like that. But because it was driven by this more technocratic overclass, it, their idea was let, let's put, let's give these people sort of make work jobs in the human services sector. And that's going to be their pathway into the professional class. But what actually happened was it created a kind of ceiling, a career ceiling for a lot of, especially poor black women. And this sociologist Claire Dunning has documented this. She's not a, she's a, she's not right wing by any means, you know, documented that this actually reinforced racial stratification in urban America, right? So there, there, there's like this explosion of tinkering and social engineering that went on in that era and that that that orientation.

Vance Crowe [00:31:27] So what types of jobs were they doing to go go more explicit there?

Samuel Hammond [00:31:32] Well, in many cases, like managing nonprofits essentially tho those, those sort of, and I, you know, I talk about this in my essay on nonprofits. Like there's, this is also when you see the explosion of the sort of nonprofit industrial complex, right? Where the kind of authentic beneficent society kind of model of charity that we associate with that mutual aid sort of ethic is replaced by like professional service delivery nonprofits and advocacy networks and legal, legal advocacy groups and stuff like that. So it's a very different form of politics, right? And, and because it's sort of vicarious, it's like we're trying to solve the poorest problems rather than organic. Like we have a mass membership organization that includes many poor people and many people with different kinds of actuarial risk that are demanding for demanding a certain sort of, you know, relatively flat platform to, to build a family on. You get a very different, the, the policies that emerge have a very different character, right? You know, the programs like wic, the Women's Infants and Children program, which applies half of the baby formula for the, for in for the country, you know, it's just ins it's this insane industrial policy that emerged in the seventies for baby formula where, where there are monopoly manufacturers, the states, every state has to have an exclusive contract with a baby form formula manufacturer, right? In, in return the, the manufacturer gets a rebate on every sale.

Samuel Hammond [00:33:04] And so the idea is, oh, we can have a low cost supply of baby formula because we read a study sometime in the sixties that like, you know, infant nutrition is really important for brain development or something like that, right? And then suddenly we have this whole architecture based around this one social policy idea and it becomes very sticky, becomes very difficult to reform because it's sort of this coalition between sort of bleeding hearts on the one hand who, you know, want to help low income pregnant women and you know, special interest groups like the monopoly manufacturer. And there's one in every state. And so it sounds good on paper, but then you look at it different, you look, you look at it and the political economy is totally different. So it's a political economy that creates a kind of institutional rot and sclerosis and eventually led up to the baby formula shortage that we had last year where, you know, one of the major manufacturers had a contamination that devastated a lot of baby formula. And the reason for that is because there were a legal monopoly,

Vance Crowe [00:34:12] Meaning that there just wasn't anybody else to come in and fill that void because there's just been, you know, just one or two

Samuel Hammond [00:34:17] Big

Vance Crowe [00:34:18] Players

Samuel Hammond [00:34:19] Exclusive contract with the state

Vance Crowe [00:34:21] And likely very little innovation, right? Because if you've already got the contract with the the state, you don't really wanna rock the boat. You don't want to come up with some new better formula or how that works.

Samuel Hammond [00:34:33] Yeah. You, you can't really innovate because, you know, number number one like the FDA blocks us from importing European baby formula. 'cause it doesn't meet our standard, you know, I, I'm not an expert in baby formula per se, but I assume that German babies are, aren't like dying by the millions because of their baby formula. So there's a protectionist element to it as well. But, but moreover, like, I think the more important thing from my perspective as a kind of like classical liberal is it creates a kind of architecture or permission structure for social engineering right? In instead of like, let's have a unemployment insurance system because we know that in an industrial economy people have diversified, you know, jobs and like risk is idiosyncratic. And so if you lose a job, we want to have a system in place to catch you when you fall and get you back to work. And it's relatively like, like technologically neutral. Like that's, that's just to me qualitatively so different from having some, you know, experts in public health arguing over whether women should be breastfeeding more or using a formula more and is there enough vitamin A in the formula or Right. It creates this, it creates a kind of structure where social engineering is not just permitted, but almost like part of the job, right?

Vance Crowe [00:35:54] But it, when I go and read your stuff, you're talking a lot about, hey, I wanna give the choice to the individual. I wanna make it so if we're gonna give out aid, we're gonna give it to a specific person and then that person can go out into the system and use it.

Samuel Hammond [00:36:09] And

Vance Crowe [00:36:09] On the one hand I think like, hey, that's probably a better idea than creating another bureaucracy. You know, if you've ever gone to see

Samuel Hammond [00:36:16] In

Vance Crowe [00:36:16] Washington DC a like the HUD building, it is just giant sprawling thing and it is not helping housing or urban development in any way. In fact, it's making it far, far worse. So

Samuel Hammond [00:36:27] Giving

Vance Crowe [00:36:28] It to the individual sounds good on its surface,

Samuel Hammond [00:36:31] But

Vance Crowe [00:36:31] I'm also really reluctant, like if you start, for example, giving people just cash straight up for having children, aren't you now allowing the government to financially incentivize childbirth? And doesn't that go to some pretty dark places pretty quickly?

Samuel Hammond [00:36:52] Well, I mean, if, if listeners have heard your Mel Malcolm Collins interview from last week, it may be, you know, it may be it may become a necessity soon, sooner rather than later. You know, I would distinguish between, you know, first, first of all, the prenatal effects of child benefits are they're, they exist, but they're relatively modest. It definitely is these more cultural factors that drive like fertility decisions, not just purely like economics. But to me, I think the issue of childcare, we know that having kids is expensive. We know childcare is one of the biggest costs, especially if you have trade offs with like working in the labor force and there's a huge like democratic bottom up demand to do something, right? Like that, that's how, that's how democracies like process stuff. It's like we, there's people want us want the government to do something, but they don't, you know, they're the experts. One way you can, you can help. And this, you know, being Canadian, I'm, I was kind of inspired by the conservative party in Canada. 'cause the conservative party in Canada faced this debate in the two thousands, Quebec being a more sort of European want tobe welfare state. You had a provincial childcare program that that they rolled out in the, in the late nineties, early two thousands. And one of its first order effects was to crowd out home and family based childcare provision.

Samuel Hammond [00:38:23] And it was really like this extension of secularization where, you know, in the sixties, Quebec and with the boomer generation went over this like rapid cultural change where it was a very Catholic province, French Catholic, and suddenly, like within a decade was extremely secular. And part of that program was sort of a left nationalist program was to nationalize a lot of the communitarian services that were being provided by the Catholic church, right? And childcare was the iteration that arose in, in the late nineties. And the conservative party in Canada said quite straightforwardly, you know, this is an issue of pluralism and, and sort of liberal neutrality. Like we're not trying to per prescribe a sort of value set to people. In fact, Canada is incredibly, you know, diverse both ethnically and culturally. So let's just give parents money and leave the decision to them. And it's, it's more than just like a consumer sovereignty argument, right? It's, it's, there's a difference between whether you like Pepsi and Coke versus whether you're Catholic or Protestant, right? There's a huge, huge world difference and we need to respect the pockets of, you know, traditional culture rather than trying to wipe them out, right? And, and cash is a much more neutral medium to do that. And so, you know, you can always say, you can always present some other counterfactual like if we just did nothing.

Samuel Hammond [00:39:55] But given the democratic demand that's on that it is that exists and is, you know, pushing for in, in last year built back better, the Biden agenda, this would've been a massive national takeover of the childcare sector. You know, conservatives need to have a proactive counter offer to that. And in some ways they can, you know, harken back to a more FDR style of social policy by saying, you know, we have social security for, for retirees, we could, we should have like social security for kids. It's this flat, universal, universal ish program. And because it's universal or nearly universal, it's hard to tinker with, it's hard to, you know, no one would take social security and say, let's get rid of old age pension, old age social security benefits and replace it with a voucher for a nursing home and maybe an EBT card for groceries and, and you know, going down the line and, you know, the A A RP would revolt, right? And that's 'cause the a RP is a big membership organization that had that cuts across class and geography. And so

Vance Crowe [00:41:02] That's, that's a fascinating connection. I hadn't really thought about it. That that social security, it's not saying, Hey, we're gonna tell you exactly what you can use it with these like,

Samuel Hammond [00:41:11] You

Vance Crowe [00:41:11] Know, coupons for things. It is, it is straight up cash and then you let the, the people and everybody that put into it gets out of it, gets to spend their cash in that way.

Samuel Hammond [00:41:22] But

Vance Crowe [00:41:23] It is also not a solvent program over the long term. Right?

Samuel Hammond [00:41:28] I mean, it has, it has a, a gap. I think the solvency issue with social security has been overstated. We could d we could dive into that if you, if you wanted. I think

Vance Crowe [00:41:39] Yeah, by all means,

Samuel Hammond [00:41:39] They're, they're going to do, there's so many plans to fix social security that would work. It's the, the what's been missing has been the willingness to take a political hit. Because whether you're raising taxes or cutting benefits or some mixture of the two, there's gonna be people that get mad at you. Right? And you know, this is a bigger problem with the US government over the last 30 or 40 years is, you know, the, the exorbitant privilege of being the world reserve currency means we're able to run massive deficits and avoid making hard choices. And even if that's macro macroeconomically sensible, it's bad for democracy because if you have weak budget constraints, you're able to, you know, as Biden did in the American rescue plan, bail out union pension funds to the tune of 80 mil, $80 billion, right? Like that's $80 billion wealth transfer that basically no one noticed because it's

Vance Crowe [00:42:33] The first time I'm hearing about it,

Samuel Hammond [00:42:35] Right? It's deficit financed. So, you know, if if even if it separate from the macro issues, like if you had to raise taxes to pay off the unions, people would notice and then there would be a democratic debate about it, right? And so this has been, this has big been a bigger issue than just soc social security. You know, if you look at like Denmark, you know, Denmark's pensions are fully funded. They have like, they're really well managed or even Canada Canadian pensions are, are like some of the world, like world class pension management, right? It's totally different from like Detroit or whatever. And so I would distinguish between like questions of should this program exist at all? Do we need a pension system at all from are there institutional constraints and other institutional factors that have led American, that have led the American system to fall under sort of mismanagement and, and disrepair, right? You say the same thing with the private pensions like, or state pension pro programs, right? Like there's a huge difference between having like a well run, fully paid for actuarily fair state pension system and like whatever Illinois got because it ain't, it ain't actuarial fair, right? So it's, that's really an issue of state capacity and rule of law and whether our government is actually working in the best interest of people in a way that enables them to make hard decisions that even if it comes at a political cost for some particular constituency,

Vance Crowe [00:44:17] When you put forward these ideas like, Hey, maybe we should, instead of giving out vouchers or, or these like plastic cards that allow you to get things like food, let's do a cash transfer to individuals that have children. Do you see anybody having the political capital and the political will to be able to make something like this happen?

Samuel Hammond [00:44:41] Yeah, it did happen. So it happened in 2021 temporarily, one of the bigger provisions in the Biden American rescue plan was a expansion of the child tax credit. So historically, the, the child tax credit or CTC has, was a partially refundable tax credit per child. Meaning you had to have, you know, significant income to get, if you had a few kids, more than a few kids, you had to have a lot of income to get the full credit per child because it offset your taxes. What the Biden administration did in 2021 and the screw out of a proposal that I worked on called the American Family Family Act, was reform the child tax credit to be fully refundable, meaning like a flat benefit worth $3,600 per child, $503,000 per child or older than five, five to 17. You know what the first order effect of that was? It cut the sort of headline child poverty rate by 40% and

Vance Crowe [00:45:44] Wait, why?

Samuel Hammond [00:45:48] Because poverty isn't fun is in some part a function of income.

Vance Crowe [00:45:54] So you're saying like when the, all of a sudden people didn't have to pay $3,500 for all their children under five, then the amount of money that they ca kept

Samuel Hammond [00:46:04] Put

Vance Crowe [00:46:05] Them over what would've been the poverty line, right? If they had been putting that money in on taxes. Yeah. But then this is like something I, so I don't, taxes are such a weird thing because most of the time people that pay taxes,

Samuel Hammond [00:46:17] They

Vance Crowe [00:46:17] Don't even really understand that they're paying them. Right. It's just totally taken out of their paycheck. And so when you say that it comes as a refund, it just means at the end of the year at when they file their taxes in April or whatever, then they get a much larger refund check and then that's how they get their, the, that's how that money would be returned to them.

Samuel Hammond [00:46:37] Yeah. Correct. Traditionally, one of the other innovations that they did in 2021 was make it monthly so that it, this is all sort of like a jerry rig system because we're doing it through the tax code, right? So you have to, in these laws, you know, write it as if it's a, a refund on your taxes, like you is as if you overpaid your taxes and the government is, is sending you a check. And then if you wanna do it monthly, it's, it's like an advance, right? You know, this is a different problem. I have a colleague, Josh McCabe, who wrote a book called The Ization of Social Policy, and it's about, you know, the extent to which we've moved so much social policy into the tax code, which the IRS is not, you know, designed to, to administer, you know,

Vance Crowe [00:47:22] Ideally why 80,000 more, more IRS agents?

Samuel Hammond [00:47:27] Well, at least four or 5,000 of them are going towards like customer service and stuff like that. And I think that's actually good because, you know, there's, there's one version of libertarianism that sort of wants to like, make government suck on, on the theory that if government sucks, people vote for less of it. But what actually happens is people vote for like authoritarians that will, that will make the trains run on time. And, and so like, you know, I would rather us like get to Estonia, right? Where like Estonia has like a, such a, an efficient e-government that they can cut their civil service by 80%, but yet everything works really well because it's all electronic.

Vance Crowe [00:48:09] It's, I mean, I'm struck by the idea that you, you put yourself in the band of libertarianism, right? Because when I think of libertarianism, and I'm probably talking more small l libertarian as opposed to the,

Samuel Hammond [00:48:21] The

Vance Crowe [00:48:21] Ones that are voting, like these are people that are like, I want national defense

Samuel Hammond [00:48:25] And

Vance Crowe [00:48:26] I want like, pretty much nothing else. Like, so maybe somebody to kind of coordinate, you know, a little bit of the, the taxes. But that's about it. And you're here being like, I'm a libertarian, but also I think we should give actual cash dollars to individuals that is other people's money.

Samuel Hammond [00:48:48] Well, there's a lot to unpack there. What o other people's money? I I would say, you know, I'm more of a social co contrarian. Okay, so, you know, I'm very influenced by, there's a, a paper by Joseph Heath called Free Normative Models of the Welfare state, where he talks about the welfare state being through this sort of public good model rather than this like egalitarian model. Like where, where do, where does the libertarian belief in property rights stem from, right? Like, you try to reconstruct it, you know, the left, you know, people on the left will say, well, property is theft. What gave you the right? Like, and, and, and their people like Robert Nok who would say, actually maybe there's a case for reparations. Because if you're a strict Arian and you follow the, the violation of contract all the way back to the, to the slave days, you could say this is like, you know, a, a kind of a procedural justice. I I kind of reject that brand of libertarianism. I'm more, because I'm more of a arian, I try to reconstruct where did property rates come from in the first place, right? And so there's all this work done on, on the move from de facto to Deju property law in frontier societies where, you know, in, in, in Australia and in the Americas and Brazil places that were sort of frontiers for immigrants when people arrived, there wasn't like a government superstructure defining property rights, right? Like, but nonetheless property rights developed organically and, and de facto through something that resembled like what John Locke talked about, right?

Samuel Hammond [00:50:22] It it was kind of a homesteading principle. You you improve the land as long as you're improving the land and making something out of it, and you, you occupy it for long enough, it, it becomes yours. Right? And, and in some ways that's like a shelling point that's like a, a nash equilibrium in the game theory of of, of early settler societies. But if you try to unpack, you know, reconstruct what, what was the implicit norm, the underpin property rights, it wasn't like this strong natural, right? Because it didn't exist. You land it in empty territory, maybe you killed the Indians and then took it, it it emerged through a kind of positive sum sort of preto improvement, right? Like, and, and in some ways, if you unpack what Locke says in his, in his treaties on this, he's like describing the conditions for preto improvement. As long as you make someone better off without making anyone else worse off, there's a, a win-win outcome. Right? And so my view is that you can extend that sort of positive sum logic of property to the mutual society, right? And this is why I I make a sharp sort of almost normative distinction between government as a, as a mutual insurer versus government, as, as a entity that's trying to solve like egalitarian justice.

Vance Crowe [00:51:40] And as a mutual insurer, their role is just to make sure that people don't fall through the cracks. They don't die unnecessarily. They, they live certain, like, I mean, because an insurance policy could be, if your leg is broken, we will set it or it could be we, we will set it and make sure you have physical therapy and make sure that you're,

Samuel Hammond [00:52:00] You know,

Vance Crowe [00:52:00] Able to go and, and have your, you know, all these other ancillary things. You have to at some point determine once you have that insurance, like what is that baseline level we're making sure nobody goes below.

Samuel Hammond [00:52:14] Right? Exactly. So, you know, look around the world at Take Healthcare, where does government most intervene in healthcare? Overwhelmingly in the insurance market side of it. You know, there are countries like the UK where they have literal government run healthcare, the NNHS, but for the most part, you know, in Canada we have a single payer system, but, but the actual practice of medicine is still private or nonprofit. In other countries like Switzerland, they have sort of mixed, mixed systems. So it, the, there's a like sort of an explanatory burden of trying, if you have a theory of the welfare state, like why is, why is government intervening in health insurance markets, but not necessarily the provision of healthcare directly? And moreover, why aren't they intervening as much in like the food market? Like there's no government bread. You could maybe say snap and food stamps is a version of that, but like, because there's no market failure in bread, right? But there are, there are market failures in insurance markets classically the kind of adverse selection and, and asymmetric information problems. And you know, if you, you take the agricultural example, if your listeners know would know a lot about that, like farm support systems, whether, whether you're for them or against them, they're not because farmers are poor people, it's because there are seasonal and all kinds of agricultural risks that are hard to self-insure against.

Samuel Hammond [00:53:45] Right? And so there's, you could make it a case that there's a market failure and if you care about maybe over the long term having like a stable supply of X, y, z, agricultural good or good or output that you'd want some kind of insurance system, right? My my view is that

Vance Crowe [00:54:04] We have to, well, let's pause here real quick like on, on that one, like the immediate reaction that I have to, that is one of the biggest problems with ensuring farmers from, you know, crop failures or weather disasters,

Samuel Hammond [00:54:16] Is

Vance Crowe [00:54:17] That you don't have a clearing function. You don't have something that comes in and says, Hey, the people that were really inefficient,

Samuel Hammond [00:54:23] They're

Vance Crowe [00:54:24] Gonna get knocked out of here. Instead, what you have is as long as the last three or five year look back, you've had a certain, you know, amount of productivity on your crops,

Samuel Hammond [00:54:33] Then

Vance Crowe [00:54:34] Next year you're gonna be fine. And the year after that and the year after that, and so there's like a,

Samuel Hammond [00:54:38] What

Vance Crowe [00:54:39] Ends up happening is people that maybe should have been knocked out that their land should have gone up for sale don't get knocked out. Yeah. And so you, you have this like stagnation that occurs in agriculture

Samuel Hammond [00:54:50] Zombie firms.

Vance Crowe [00:54:51] Yeah. And, and then, and then furthermore people realize like, hey, the more that we can put together our

Samuel Hammond [00:54:58] Lobbying

Vance Crowe [00:54:59] Power to influence the insurance, to influence the, the price of corn even when it's going down because we're, we're creating a government mandate for ethanol, then you have all of these other things that happen, right? Where, where

Samuel Hammond [00:55:14] Now

Vance Crowe [00:55:14] Huge swaths of land get pointed towards corn. Yeah. As opposed to trying out new crops because who would take that risk? Because the insurance won't cover it and the insurance won't cover it because the government is involved in it and it's way too slow and laborious to change it.

Samuel Hammond [00:55:31] I I you're preaching to the choir on this. I'm not for egg subsidies overall. I'm giving it as a offering, as an example of an important distinction between social insurance and redistribution. And I think it's actually important, the, the points here make are, are really important to understand my perspective because I have a paper with the, the free market welfare state where, you know, one of the, one of the best arguments I think for more universalistic programs is that they avoid these kind of gilded models of, of social protection, right? So like people would there, if there's a demand for say, you know, job protection and and demand for like stability in unemployment and job dislocation, there are of that policy could respond to that. One way is to make it impossible to fire people. Right? And another way is to have like robust unemployment insurance with at-will employment. Right? And my claim is that countries that, that there's a, that there's a kind of conventional axis between big and small government that runs sort of like top left, top to bottom right. But in reality, if you actually chart countries and different regime types, they run orthogonal to that. You have countries that are, have high transfer and robust sort of more universalistic social insurance systems, but very low red tape and regulation and, and, and high, high rates of labor market flexibility, business dynamism and so forth.

Samuel Hammond [00:57:12] And then the other quadrant, you have the kind of Greece model of kind of more reactionary populist models where it's impossible to get fired. Your company never goes outta business. And so you're getting a form of social protection, but it comes at the cost of dynamism. Right? And so, you know, I think the kind of narrow interest group politics around like egg subsidies is a, is a good example of why I'd much rather have a more universal system, right? Like instead of, instead of bailing out a particular company, instead of bailing at the UAW, if we had like universal pension programs that were more robust, who cares if the UAW if, if, if, who cares? If, if Ford or GM go under, maybe it's good that they go under. 'cause then they'll, they'll restructure, right?

Vance Crowe [00:58:02] So are you, I mean, like as I hear your arguments for where you think things should go, the direction things should go, you, you get to things like universal basic income, which to me becomes indistinguishable from socialism.

Samuel Hammond [00:58:18] Well, I wouldn't go that far. I I'm not a big UBI guy. It may become necessary in some sci-fi future, but you know, to me, to me socialism means like government control the means of production and like the nationalization of industry. Not everyone has a base baseline level of income.

Vance Crowe [00:58:40] Well, I mean, if everybody has a baseline of income, regardless of whether they work or not, then you are having some kind of control over the means of production because you are controlling the most important part of the means of production, which is

Samuel Hammond [00:58:53] The

Vance Crowe [00:58:53] Labor force by how much you, you give them

Samuel Hammond [00:58:56] Based

Vance Crowe [00:58:57] On the, you know, the government doesn't generate any money. It, it, the only thing the government can do is take money from other people. Or in our rare system where, because we have the reserve currency, you know, you can just print your way for a while, but ultimately you're just taking that from the future to be able to pay people.

Samuel Hammond [00:59:15] Sure. I mean, let, let's just let, let, let's, let's take a comparison case to maybe unpack this a bit. Like which would you say is more socialistic Sweden or Venezuela?

Vance Crowe [00:59:30] Oh gosh, I don't know enough about the either one. You know, my sense is that Venezuela takes oil money and uses it to give the people what they need in order that the current,

Samuel Hammond [00:59:41] You

Vance Crowe [00:59:42] Know, government system can stay in power. And Sweden is the people that didn't force people to mask up or stay. So they're probably less, you know, authoritarian.

Samuel Hammond [00:59:53] But

Vance Crowe [00:59:53] I don't know about their social system other than that.

Samuel Hammond [00:59:56] Right. So IIII, I use that as an example to, to distinguish between two, two kinds of socialism, if you want to use the word socialism. In Sweden, they had this idea of the people's insurance or the people's home. Sometimes it's translated as, and so, you know, Sweden was actually like highly capitalistic throughout its modern history, right? Like they, they had fully privatized forestry, hyper capitalist country, and it's also a small open economy. So it's like very open to like global trade and stuff like that. And then if you, but, but because they had these like mutual societies that like became collective bargaining and, you know, sectoral bargaining units and stuff like that, they, they negotiated their way to a large, to a large social insurance state. But they still remained highly market driven, highly capitalistic to this day, right? They even have universal school vouchers, right? The, I think like something like 90% of the roads in Sweden are privately owned and operate by toll, right? So like they're, in some ways they're like closer to like anarcho capitalist utopia than, than the US is, right?

Vance Crowe [01:01:06] Sounds like heaven to me. Yeah.

Samuel Hammond [01:01:08] But, but they also have, they spent, they have a value added tax and they spend a lot on, on social insurance versus a country like Venezuela where they have price controls and everything. You know, they try, you know, they have line lines to buy food. They have hyperinflation, they're try to nationalize the energy sector. They have ex preparatory taxes. You know, that's, that's a, that's the road to serfdom that Hayek warned against, right? It's that that kind of socialism, that kind of degenerate system of government versus a kind of high functioning society that, that ranks at the top of every economic freedom index yet has old age pensions. Right? And in some ways I think there, it is not an accident. It's not, it's not a hypocrisy that we have countries that both have, you know, large child benefits and old age pensions, but yet are super highly ranked in economic freedom. It, they, they actually, it actually makes sense because both the social insurance and the stability and efficiency of the market are undergirded by this logic of positive sum, win-win social dynamics.

Vance Crowe [01:02:20] I'm thinking about the,

Samuel Hammond [01:02:21] The

Vance Crowe [01:02:22] Optimization for the individual, the individual that wants to have a business and to start it and to be able to successfully add something to the economy and be able to then benefit from that at the, at the maximum level that they, that they figured out how to do something. And the downside that I hear with the, you know, certainly don't wanna be in Venezuela, but the downside to the Swedish model that you're describing in my limited understanding

Samuel Hammond [01:02:49] Would

Vance Crowe [01:02:50] Be that like, even if you are successful, you are giving a huge percentage of that up to the, the government to be able to then redistribute it to other people that didn't have

Samuel Hammond [01:03:00] That

Vance Crowe [01:03:01] Innovation, that didn't take that risk. And so, to me, whether or not we're parsing which one is more socialist, the idea of higher taxes seems like the, the, the disablement of the, the person that's taking the risk to be able to add new good things to the world.

Samuel Hammond [01:03:21] And, and I'm totally that, you know, that resonates with me. 'cause I do think there is a kind of tall poppy syndrome, especially in contemporary America, where like, like the goal of taxing Elon Musk is because he made too much money, not because we need to have like a efficient source of revenue, right? And you know, one of the points I keep making is like the social insurance model is, it's, it's not an egalitarian model, right? In some ways it's, it's completely orthogonal to whether it's about like taking from the makers to give to the takers, right? It's, it's about ensuring kinds of common risk when you look at, you know, some of these countries, you know, scan I'm, and by the way, I'm not saying that America should become Scandinavia. I don't think it's actually possible, you know, I'd rather us become a little bit more like Canada just as a start. But you know, they have lower ca lower corporate taxes. You know, they, they have their value added taxes while they're high. They are broad, they're efficient. They don't have a lot of dead weight loss because they're taxing consumption and because they're more, they're, they're, they're actually more regressive in their tax structure than the United States. 'cause the US is very reliant on these like highly progressive income taxes. So I would just, I would just say like, have an open mind about like what's possible. So, you know, my, my model is like, there, there's going to be demand for economic economic security of some form. And you know, in one case you, you could either ensure the income of the person, say through unemployment insurance or a cash benefit, or you could ensure the job itself, right?

Samuel Hammond [01:05:02] Through making it hard to fire people through propping up companies with that should fail. And I, and if that's the Sophie's choice that we're presented with because of real de democratic political economy, that there's gonna be demand for one or the would much rather us having relatively universalistic social insurance systems that catch people while they fall. And by the way, enable the company or whatever, which is, should just be an epi phenomena to go away and to come back in a new form. Be because what really matters are household incomes not particular jobs.

Vance Crowe [01:05:41] So if people wanted to like, find out more about the way that you think about these things, where should they go? Because I would say that you, you are presenting a model that I don't or I don't agree with, but I will say like, you know, you have a fair point and at the end of the day, it is Sophie's choice right now. Like we can either live in, you know, Vance world where it's like, no, let's just rip everything out and just start new, or we can live in reality, which is what it sounds like you're doing. So people wanted to read more about what you're talking about. Where would they go?

Samuel Hammond [01:06:16] I have a, a blog, a substack second best do ca and I write currently for the SCA center, DC based think tank. So if you search my name in ACA center, the, a lot of the stuff we talked up, talked about today was sort of, you can find in my paper the free market welfare state where I try to sort of defend a version of the welfare state from a libertarian perspective and I, and get much deeper into these, these points.

Vance Crowe [01:06:41] Well that's fascinating. Why second best Why is that your name?

Samuel Hammond [01:06:46] The, the, it's a comes from economics. There's a, it's called the theory of the second best. And it's kind of a, a folk theorem in economics that if you have a, let's say you have a regulation that creates a distortion in the market, and so you have one market failure, often introducing another distortion will actually get you closer to optimal, right? And so the theory of the second best is basically saying, given bounded rationality, given the cons, political constraints that we have, if the first best solution may technically be infeasible. And so that forces you to think about what, what are the second best solutions to things? And we're talking about that right now.

Vance Crowe [01:07:30] You mean like the second best being, Hey it maybe we can't wipe out the welfare system, but we could do it in this other way. And it, yes, it has some drawbacks, but it's better than what, it's better than the system that we have.

Samuel Hammond [01:07:43] Correct. And or, and moreover, if you lean, if you push against more universalistic rule of law based social insurance, you'll, you will get the next, you'll get the third best alternative, which is like protectionism and propping up companies and, and making it impossible to evict your, your your bum tenant and stuff like that, right? So like a good example of this since I mentioned tenants, there's a paper on this that came out last year, late last year, an econ an empirical model of tenant protections. So, you know, many, many cities and states will have tenant laws that provide a right to counsel, right? So if you're being evicted or risk of being evicted, you have a legal right to expert counsel. And obviously there's a lot of people on the left who love this because, you know, this is like pro pro-tenant kind of stuff, right? This mo this model, the, this empirical model looked at like what were the actual effects of these tenant tenant protections? And they actually increase equilibrium homelessness quite significantly, right? Because you're raising the cost of housing somebody, especially housing somebody who's, who's high risk. But, but what they found, and what they also found was that eviction, emergency eviction income support didn't have this effect, right? And so like the, the real issue with eviction is people face income shocks, like unbeknownst to them, their grandma falls down, they need to take care of them, they leave work, there's all all this sort of risk at play and that temporary income shock leads them to, to being delinquent on rent and then they get evicted.

Samuel Hammond [01:09:31] It doesn't matter if they have legal counsel in that case, but if you solve the, the, the, the root problem, which is income volatility, you get a much better outcome than if you try to go after the superficial adversarial context of landlord versus tenant. Right? And so I would, I would, like in my world, maybe I'm like 80% of your world, I would like strip all this sort of regulatory stuff, you know, at will employment evict, whoever you want, anytime you

Vance Crowe [01:10:01] Want, pay people whatever they're willing to work for. Yeah, yeah.

Samuel Hammond [01:10:03] No minimum wage, whatever. But we, but there are still going to be sources of risks that are hard for any individual to self-insure against.

Vance Crowe [01:10:14] You know what, that is the best closeout I've ever heard anybody do because you brought me full circle on this. I'm, I'm, I'm like very interested to learn more. So thank you so much for coming on. You know, one thing that can be said is I found you because you just started tweeting about things on Twitter and I think that's a, that's a great knock for, for Twitter, like to engage in conversations. 'cause that's how I found you and I'm glad we had this conversation.

Samuel Hammond [01:10:42] Yeah, it's been fun. I've been a fan of the show and I'm glad to be on. And

Vance Crowe [01:10:45] If people were gonna find you on Twitter, where would they find you?

Samuel Hammond [01:10:48] Ham, Hammond Cheese. Like the sandwich.

Vance Crowe [01:10:52] Alright. Samuel Hammond, thank you so much for coming on.

Samuel Hammond [01:10:56] Thank you again.