A Suggestion on the Positive Theory of Redistribution.

by Joseph P. Newhouse

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Addresses the question: Since economists hold that it is more efficient to redistribute income than goods and services, why is Congress so much likelier to pass laws redistributing in kind? Consensus is necessary for programs to be adopted--more than a simple majority, if the minority holds strong opposing views. It is easier to agree on needs for specific goods and services than for money; families cannot consume unlimited amounts of food, medical services, and other specific goods. Other reasons that have been advanced: The public desires to increase the poor's consumption of specific goods and fears that money grants might be spent on liquor rather than necessities. The bureaucracy favors redistribution in kind because it creates more jobs. (Reducing such jobs is one of Friedman's arguments for the negative income tax.) Redistributions in kind cause fewer distortions than cash grants. 7 pp. Bibliog. (MW)

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