Paul Ryan's Poverty Plan: Good on Incarceration, Licensing, Perverse Incentives; Not So Good on Paternalism

What's worthwhile in the Wisconsin congressman's proposals, and what's not


Trying to change his image from "Leonard Peikoff" to "Jack Kemp."
U.S. House of Representatives

After Paul Ryan's proposals for fighting poverty were released late last week, the Wisconsin congressman's plan was heavily criticized as paternalistic. Those critics are correct: If you don't like the way the welfare state opens the door for bureaucrats to interfere in their clients' lives, you'll recoil from Ryan's notion that providers should "work with families to design a customized life plan to provide a structured roadmap out of poverty," with "sanctions for breaking the terms of the contract" and "incentives for exceeding the terms." I'm no fan of welfare-state paternalism, so I'm siding with the critics on that one.

But there's some good stuff in Ryan's plan too. Recognizing the substantial role that prison plays in the persistance of poverty, the congressman has endorsed reforms aimed at rolling back America's ridiculously high incarceration rates. He also wants to root out the sorts of red tape that disproportionately affect low-income Americans, with a special focus on the ways licensing laws are used to protect established businesses from upstart competition. And his draft makes a good point about the perverse incentives that can result when different transfer programs phase out at uncoordinated rates: "At key points on the income scale, the drop in aid is so abrupt that it creates an incentive to earn less in order to remain eligible." To ease that problem, Ryan wants to experiment with consolidating many of those programs into a single Opportunity Grant. I'm not persuaded by his ideas about how that grant would work, but the basic idea of a merger is sensible.

These ideas aren't as far-reaching as they could be. Ryan says we should reduce the use of mandatory minimum sentences for nonviolent offenders; he doesn't say we should end the war on drugs. He wants to consolidate certain programs into a block grant sent to the states; he doesn't want to combine them all into a negative income tax sent to individuals. But I don't expect radicalism from elected officials, and I appreciate steps in the right direction. If we can come out of this with fewer people behind bars, fewer dumb licensing laws, and fewer bizarre bureaucratic incentives, Ryan will have done some good. If we can do all that while avoiding his more paternalist proposals, so much the better.