A Small Government Approach to Fighting Poverty

The Niskanen Center has emerged in recent years as a unique voice in the think tank landscape. The libertarian-leaning Center retains a traditional commitment to individual liberty, while also often challenging widely held conservative beliefs on a range of issues. Spotlight recently spoke with Will Wilkinson, Niskanen Center vice president for policy, about the Center’s theory of change and policy priorities around poverty and economic opportunity. The conversation has been lightly edited for length and clarity.

What is the core vision or mission that underlies the work of the Niskanen Center?

We’re focused on making the entire system work well for everybody. We have a vision of social and economic justice with high economic growth and a safety net and set of public institutions that ensures everyone’s human capital is cultivated to the utmost potential.

How specifically are you thinking about the issues of poverty and economic opportunity from within that framework?

In terms of poverty and welfare policy, we stress the value of cash transfers. The welfare state largely operates as a voucher system; there are so many different programs and people have trouble taking full advantage of them. Different families have different needs and these needs can vary from month to month; cash gives more flexibility to meet these varied needs.

We are advocates of a child tax credit. We would like to see an increase in the refundable child tax credit to at least $2,500, which would benefit even the poorest Americans with no tax liability. It is in many ways a first step to a miniature universal basic income (UBI). The amount of money is not substantial, but it can make a huge difference in a child’s life.

Education is important as well. Mobility depends massively on education and skills, but we have a very uneven system. There is huge potential and creative ability and energy that is left completely fallow in our society and economy. This is inefficient for everyone, we are missing out on innovation and technology by leaving a huge number of people behind.

We want to stress to people on the right that you aren’t necessarily better off when your tax rate is slightly lower. If you paid a little more in taxes, the corresponding investments in those living in poverty can bring benefits for everyone.

You have said that conservatives need to make peace with the safety net. What does that mean?

I talk a lot about Wagner’s law, which says that as a country grows richer citizens demand a higher portion of GDP be spent on social services and government.

The right often equates “big government” with a big spending government. However, an overly managerial public sector with heavy regulation and bureaucratic hassle is different from a big spending government.

Big spending governments can be hands-off. Cash transfers, a universal basic income, and a child tax credit are very easy to administer efficiently compared to the complications of vouchers. Making sure people have the resources they need to be participating members of our society can be done in a simple and efficient way.

How do you see the role of the Niskanen Center in terms of advocacy? I realize it’s not an either or, but are you trying to influence policy in the short run or lay the groundwork for a broader rethinking of the role of government?

The Center was started by veterans of the Cato Institute. Institutions like Cato are devoted to selling an ideology. We aren’t in that business. We just want to impact policy on the margin in a way we feel connects with our vision of making people freer and more prosperous.

The political science literature is clear that trying to sway public opinion and then getting voters to pressure legislators is not the most effective model. Rather, we are directly engaging the policy elite and making them think something is a good idea. If party leadership pushes an idea, voters will follow. Public opinion is more lead by parties than leading the parties.

Beyond the writing you see online, we spend a lot of time on Capitol Hill. We advocate for policy proposals that seem feasible at the given moment. We are working hard on the child tax credit since UBI isn’t going to be feasible in the short run. There is a lot of political appetite for child tax credit reform, and if designed in the right way, it could potentially scale up to something like UBI.

We are deeply embedded in political wrangling around legislation because that’s how policy change happens. We will have to compromise if we want to get anything in the agenda to match our priorities.

Your personal politics at the moment line up more closely with the Democratic Party, but the fundamental theory of government you are proposing can be seen as conservative. Do you see the Republican Party as the long-term home for the sort of vision you are proposing?

Parties are the vehicle for policy change and so you want to be involved with a party. But right now, the Republican Party is an abysmal disaster.

You could eventually imagine a Republican Party that’s ok with a welfare state and just makes markets work better and doesn’t threaten to take away the services people like.

I think a more inclusive Republican Party could be viable if they picked up a slightly larger share of minorities every year. Canada’s Conservative Party has done well in the past with courting immigrant voters and minorities. They were never beating the Liberal Party in nonwhite votes but they were consistently picking up enough votes to get a majority coalition despite the declining share of the white population.

The Republican Party could do the same thing if they made peace with a multicultural America. Nothing is written in stone; my father remembers when the Democrats were the party of Jim Crow. These things can shift.

You see signs of a growing distrust of a market economy both on the left and the right. What would you say to someone who’s struggling and is questioning whether the free market system is in their best interest?

People are right to be pissed off if the system isn’t benefiting them. The justification for an open market system is that it produces wealth that makes everyone better off. If you’re struggling and the system isn’t making your life or your community better you can and should be pissed.

At the same time, we won’t be better off if you close off the economy from trade and just throw a bunch of regulations on top of the system. It’s hard to articulate how a free economy works. But, it certainly doesn’t work when we have poor social insurance institutions and no basic income guarantee to make sure that everybody is above a certain threshold and benefiting from the social surplus. We don’t have the institutions that allow everyone to get enough resources to fully participate in the system.

It’s not the immigrants, it’s not free trade. The rest of the world is developing and becoming more competitive. And the world is getting richer. We want there to be institutions so Americans benefit from this rather than hurt by it.

Will Wilkinson is vice president for policy at the Niskanen Center