Suchergebnisse

This paper presents the conclusions of observation, not research, and is therefore expressed as personal opinion. It seems to me that much that has been said about "social security" has been subject to two influences tending to hallucination. First, it is a matter in which young men have seen visions, and old men have dreamed dreams and nightmares. Secondly, the machinery of legislative and administrative procedures, and the very magnitudes of money involved, encourage preoccupation with apparatus. Between rhetoric and jargon there has been too little room for matter-of-fact appreciation of what these arrangements in our national housekeeping really amount to. I thought I might therefore take this opportunity of discussing these arrangements as I see them in plain functional terms.As to economic consequences, I have no discoveries to offer. There is indeed a very large field of research here, inviting work that will have to proceed by gradual and piecemeal results. Very little is yet known, for example, about the distribution of incomes below the income tax exemption limits, or about the families that depend on them, although such families comprise a large proportion of the population. On such questions as these one can only speculate. But speculation will perhaps be nearer the mark if it starts from a view of our present policies that is reasonably free from emotional or institutional obstructions.

I propose a model of income redistribution in an open-economy environment. The world consists of a finite number of countries whose governments seek to maximize the welfare of their low-skilled populations by taxing skilled workers' labor income. While tax competition limits the extent to which redistribution is possible—as compared to the closed-economy outcome—when skilled people are internationally mobile, I argue that race to the bottom does not necessarily occur, even if the number of countries becomes arbitrarily large. The asymptotic sustainability of the welfare state crucially depends on the statistical properties of the probability distribution of skilled people's location preferences.