cheque in the mail 2
What I'm suggesting would give enterprising business upstarts a bit of a break from paying high wages. It would give people more of an incentive to work. And it would help to ensure a constant supply of consumers. Lets not forget the original purpose of welfare was to help avoid another recession.
spook - After owning a business here in Asia for nigh on six years now you'd have to hold a gun to my head to get me to run a business in the U.S. or Europe. From this vantage point both economic systems and their various formulations seem to be slow but inexorable forms of economic suicide.
Hobbes - Opinions differ on what socialism means. Personally, I don't think that what bob and Friedman have advocated is socialist.
Even if one does deem it to be socialist, however, I think it is significantly *less* socialist than the current system, which --by and large-- professes to help the poor by building up departments, government agencies etc. which we are for some reason expected to believe will act altruistically, rather than to maximize their own power, influence, and annual budgets.
Straight-up giving cash to poor people (or cheques or checks, but not Czechs or Chex) involves far less corruption and waste, involves far less government interference in the market, and is in basically every other way far less "socialist" than what we've got right now.
As for why someone would prefer work over poverty... well, I'm not sure I understand that question. Li'l help JD?
in, I am often wrong..."
Thomas Hobbes, The Leviathan
guangtou - Interesting line of thinking Bob, Hobbes and Comrade Friedman. But given that most governments find it either politically difficult or economically counter-productive to tax much more than about 25-30% of GDP (OECD average is on the upper end of this scale I think), I wonder if your average country could actually afford it? I'm willing to crunch the numbers if someone wants to offer (1) an annual figure for the welfare czeqckex, and (2) some population figures for an example country (say, everyone over 18 in the US?). I consider myself a social democrat, but am very sceptical that this one could fly. There was a bunch of work done on negative taxation when that idea became popular in the early 1980s, and that demostrated pretty conclusively that if you want to keep work incentives intact particularly at the lower end of the scale (i.e. so people aren't hit with a nasty welfare-work tradeoff like most are now), negative taxation is wildly expensive. Does the same rule apply to the universal welfare model you'all discussin' here? I suspect so, but will run a test just to be sure. Objectivity would dictate of course, that someone else offer-up the stats...
jdsmoth - Quote: As for why someone would prefer work over poverty... well, I'm not sure I understand that question. Li'l help JD?
Seems to me that many people about this world ARE given checks, and they remain in a poverty called the welfare class, rather than set out to work, basically because the work they are qualified to do...in a word, sucks.
Have you ever seen public housing in the US? Every house has cable TV and a fridge full of TV dinners.*
* Metaphorically speaking, in some cases.
bob - I don't know if this is still true but at one time in British Columbia at least if you were on welfare and working part time or on a temporary basis you were required to declare that income and it would be deducted from your cheque. The system was actually concocted in such way that it was possible to work and actually make "less" than the 500CD per month that was allocated to a single person. Subtract from that the expenses involved in getting and holding a job (new clothes, transportation etc.) and you would end up with considerably less than if you just stayed home. Needless to say few of the under employed were particularly motivated to seek employment under those circumstances and so would frequently turn to less legitimate and socially productive means of earning a bit of extra income. Nobody could survive on 500CD a month and indeed nobody expected them to. There was always some scam. And of course there was a virtual army of minor bureaucrats administering this program on the basis of god knows what formula one uses to determine whether or not someone needs 500 dollars a month to survive and whether or not to add or subtract some pittance for whatever reason. It seems to me that small business owners, merchants, the general public and the unemployed themselves would have all been much further ahead if people had been allowed to ease their way back into the work force gaining skills, confidence and motivation as they did so. Of course there would remain some individuals, artists and other dreamers, for whom a monthly cheque and the income from part time and temporary employment would be enough. They would however still be participating in the economy as consumers and might perhaps write the next great novel or come up with a plan for removing Bush from power before he commits his next big blunder. Anyway something along those lines.....
Hobbes - Guangtou: First off... -- absolutely excellent post.
Certainly the incentive issues and cost are very much at the core of any negative income tax style welfare program. And the problems you point out are very real.
On the flip side, there are the costs associated with maintaining a paternalistic welfare state to consider, which by almost anyone's measure are higher than those associated with a straight cash transfer model. It is also relevant to point out that none of us --so far as I am aware-- have mentioned any specifici dollar values that would be assigned to our suggested proposals. If you were, for example, to give everone Chex/Czhechs in their mailboxes equal to US$100,000 per year then I suspec that bob and I would agree with you. If you set the value significantly lower than than, then the answer becomes less clear.
In any event, if cost is you conceren, then the relevant question must certainly become: "For any given expenditure of resources, how can we best advance the goal that we are trying to achieve." For bob and Milton and myself, the answer is to give those resources directly to those who are supposed to be benefited by them -- rather then having those resources syphoned away by individuals or agencies who would seek to further their own self interests rather than the interests of those whom the program is intended to help. *shrug*
JD: Yes, I have seen public housing. I used to live withing walking distance of what The Economist called "the most hellish place in America."
That is exactly the point. Rather than paying government officials to take kickbacks to give their buddies sweet contracts to build poorly constructed flats, and then making it a rule that anyone who got a job had to move out of those flats (leading to everyone who *did* get a job moving out, and resulting in fires in garbage cans to keep warm, and routine gunshots between apartment buildings every night -- both of which I personally saw) -- why not skip the corrupt middlemen and counterproductive incentives and give the money directly to the people who need it?
Regarding your underlying point that those who are given checks are less likely to seek employement in the first place ... fine.
I agree with you that this is a problem. But what we are faced with is a choice of which policy option is *worse*. In my view the worse option is to give X dollars to a federal agency and tell them "Spend this on housing for those in need" (because they won't -- I promise you they won't). And the *better* (although still not perfect) option is to give a check to those who need housing, and tell them "Here's some money -- go get yourself somewhere livable to raise your family."
spook - What would be the result if one day we agreed that henceforth corporations could no longer own any portion of America's vast natural resources and an individual could only own that portion necessary for personal use?
The vast balance would become assets of America Inc. and every American citizen would by birthright become a shareholder in those assets and receive monthly dividend checks. The corporations would be hired and fired to manage and exploit the minerals, energy sources, arable and habitable land, water and other considerable natural assets of the nation and generate the dividends to distribute to shareholder-citizens. A small portion of these dividend payments would be held back as taxes.
Simultaneously value created by labor would be declared completely off-limits to the state -- non-taxable -- so every dollar earned by effort alone would remain the property of the person who created the value from nothing.
Since land could only be owned for personal use, everyone would automatically own their place of residence and the 50% on average of a lower income person's salary which goes towards rent would stay in their pockets. After a generation or two young people would scoff at the claim that their forebears actually had to pay someone else for living space.
Any bidding up of the value of the natural resources of the country would be a rising tide which would float all boats equally, leaving no one behind.
Any sort of real solution to poverty has to be structural and not predicated on existing systems because every variation on these existing systems has been tried by now and found structurally wanting.
spook - After owning a business here in Asia for nigh on six years now you'd have to hold a gun to my head to get me to run a business in the U.S. or Europe. From this vantage point both economic systems and their various formulations seem to be slow but inexorable forms of economic suicide.
Hobbes - Opinions differ on what socialism means. Personally, I don't think that what bob and Friedman have advocated is socialist.
Even if one does deem it to be socialist, however, I think it is significantly *less* socialist than the current system, which --by and large-- professes to help the poor by building up departments, government agencies etc. which we are for some reason expected to believe will act altruistically, rather than to maximize their own power, influence, and annual budgets.
Straight-up giving cash to poor people (or cheques or checks, but not Czechs or Chex) involves far less corruption and waste, involves far less government interference in the market, and is in basically every other way far less "socialist" than what we've got right now.
As for why someone would prefer work over poverty... well, I'm not sure I understand that question. Li'l help JD?
in, I am often wrong..."
Thomas Hobbes, The Leviathan
guangtou - Interesting line of thinking Bob, Hobbes and Comrade Friedman. But given that most governments find it either politically difficult or economically counter-productive to tax much more than about 25-30% of GDP (OECD average is on the upper end of this scale I think), I wonder if your average country could actually afford it? I'm willing to crunch the numbers if someone wants to offer (1) an annual figure for the welfare czeqckex, and (2) some population figures for an example country (say, everyone over 18 in the US?). I consider myself a social democrat, but am very sceptical that this one could fly. There was a bunch of work done on negative taxation when that idea became popular in the early 1980s, and that demostrated pretty conclusively that if you want to keep work incentives intact particularly at the lower end of the scale (i.e. so people aren't hit with a nasty welfare-work tradeoff like most are now), negative taxation is wildly expensive. Does the same rule apply to the universal welfare model you'all discussin' here? I suspect so, but will run a test just to be sure. Objectivity would dictate of course, that someone else offer-up the stats...
jdsmoth - Quote: As for why someone would prefer work over poverty... well, I'm not sure I understand that question. Li'l help JD?
Seems to me that many people about this world ARE given checks, and they remain in a poverty called the welfare class, rather than set out to work, basically because the work they are qualified to do...in a word, sucks.
Have you ever seen public housing in the US? Every house has cable TV and a fridge full of TV dinners.*
* Metaphorically speaking, in some cases.
bob - I don't know if this is still true but at one time in British Columbia at least if you were on welfare and working part time or on a temporary basis you were required to declare that income and it would be deducted from your cheque. The system was actually concocted in such way that it was possible to work and actually make "less" than the 500CD per month that was allocated to a single person. Subtract from that the expenses involved in getting and holding a job (new clothes, transportation etc.) and you would end up with considerably less than if you just stayed home. Needless to say few of the under employed were particularly motivated to seek employment under those circumstances and so would frequently turn to less legitimate and socially productive means of earning a bit of extra income. Nobody could survive on 500CD a month and indeed nobody expected them to. There was always some scam. And of course there was a virtual army of minor bureaucrats administering this program on the basis of god knows what formula one uses to determine whether or not someone needs 500 dollars a month to survive and whether or not to add or subtract some pittance for whatever reason. It seems to me that small business owners, merchants, the general public and the unemployed themselves would have all been much further ahead if people had been allowed to ease their way back into the work force gaining skills, confidence and motivation as they did so. Of course there would remain some individuals, artists and other dreamers, for whom a monthly cheque and the income from part time and temporary employment would be enough. They would however still be participating in the economy as consumers and might perhaps write the next great novel or come up with a plan for removing Bush from power before he commits his next big blunder. Anyway something along those lines.....
Hobbes - Guangtou: First off... -- absolutely excellent post.
Certainly the incentive issues and cost are very much at the core of any negative income tax style welfare program. And the problems you point out are very real.
On the flip side, there are the costs associated with maintaining a paternalistic welfare state to consider, which by almost anyone's measure are higher than those associated with a straight cash transfer model. It is also relevant to point out that none of us --so far as I am aware-- have mentioned any specifici dollar values that would be assigned to our suggested proposals. If you were, for example, to give everone Chex/Czhechs in their mailboxes equal to US$100,000 per year then I suspec that bob and I would agree with you. If you set the value significantly lower than than, then the answer becomes less clear.
In any event, if cost is you conceren, then the relevant question must certainly become: "For any given expenditure of resources, how can we best advance the goal that we are trying to achieve." For bob and Milton and myself, the answer is to give those resources directly to those who are supposed to be benefited by them -- rather then having those resources syphoned away by individuals or agencies who would seek to further their own self interests rather than the interests of those whom the program is intended to help. *shrug*
JD: Yes, I have seen public housing. I used to live withing walking distance of what The Economist called "the most hellish place in America."
That is exactly the point. Rather than paying government officials to take kickbacks to give their buddies sweet contracts to build poorly constructed flats, and then making it a rule that anyone who got a job had to move out of those flats (leading to everyone who *did* get a job moving out, and resulting in fires in garbage cans to keep warm, and routine gunshots between apartment buildings every night -- both of which I personally saw) -- why not skip the corrupt middlemen and counterproductive incentives and give the money directly to the people who need it?
Regarding your underlying point that those who are given checks are less likely to seek employement in the first place ... fine.
I agree with you that this is a problem. But what we are faced with is a choice of which policy option is *worse*. In my view the worse option is to give X dollars to a federal agency and tell them "Spend this on housing for those in need" (because they won't -- I promise you they won't). And the *better* (although still not perfect) option is to give a check to those who need housing, and tell them "Here's some money -- go get yourself somewhere livable to raise your family."
spook - What would be the result if one day we agreed that henceforth corporations could no longer own any portion of America's vast natural resources and an individual could only own that portion necessary for personal use?
The vast balance would become assets of America Inc. and every American citizen would by birthright become a shareholder in those assets and receive monthly dividend checks. The corporations would be hired and fired to manage and exploit the minerals, energy sources, arable and habitable land, water and other considerable natural assets of the nation and generate the dividends to distribute to shareholder-citizens. A small portion of these dividend payments would be held back as taxes.
Simultaneously value created by labor would be declared completely off-limits to the state -- non-taxable -- so every dollar earned by effort alone would remain the property of the person who created the value from nothing.
Since land could only be owned for personal use, everyone would automatically own their place of residence and the 50% on average of a lower income person's salary which goes towards rent would stay in their pockets. After a generation or two young people would scoff at the claim that their forebears actually had to pay someone else for living space.
Any bidding up of the value of the natural resources of the country would be a rising tide which would float all boats equally, leaving no one behind.
Any sort of real solution to poverty has to be structural and not predicated on existing systems because every variation on these existing systems has been tried by now and found structurally wanting.
posted by david at 6:26 AM
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