Becker argued government welfare spending paradoxically raises equilibrium inequality

Evidence

Becker had a very similar position to Friedman but as a microeconomist was always much more attentive to the intimate, domestic underpinnings of human capital investment and therefore has the merit of rendering explicit what remains unsaid in the work of the other neoliberals. Free public education, Becker argued, could be critiqued on the same grounds as the progressive income tax, which (in his words) “initially narrows inequality” but ends up raising the “equilibrium level of inequality … because families reduce their investments in descendants.” If we could only turn off the spigots of government spending, then families would spontaneously rediscover their natural altruism and start investing in their children again. The argument was improbable and at odds with the evidence but it enabled Becker to identify private credit markets as a logical alternative. In Becker’s ideal world, students would once again look to the family as a source of economic support, and yet the old stratifications of family wealth would simultaneously be deferred and elasticized by expanding opportunities for private debt. — Dieter Plehwe, Quinn Slobodian & Philip Mirowski (eds.), Nine Lives of Neoliberalism, 253

Categorization

• XREF: Connects to critiques of welfare-state crowding-out; the ‘spigots’ claim parallels the moral-hazard critique of state spending elsewhere in the neoliberal canon.
• QUESTION: Worth checking what evidence Becker actually marshaled for the claim that public education makes families invest less in children, which the author dismisses as improbable.