Abstract

State provision of “merit goods” and of narrowly targeted cash payments has higher priority than large universal cash grants. Analysis of the Swedish budget shows that advanced countries do not have the taxing capacity to do both at once. Other problems with cash payments schemes include the disincentive to work for pay, reducing taxpaying capacity, and retrograde effects on gender equality. After the achievement of a welfare state, rises over time in productivity may gradually open up room in the national budget for universal cash payments.