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Work disincentives hit the near-poor hardest (2022)

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Re: Work disincentives hit the near-poor hardest (2022)

#81

Post by ehnto »

drekipus wrote: post #25

I usually get downvoted on any of my commentary on poverty or welfare, despite my lived and continued experience in it, but I'll punt again. My family, from grandparents downwards (siblings, aunts, uncles, cousins, across 3 family lines) have all relied on government handouts for a majority of their lives, and had their character destroyed by the system. All rely on a meager amount of welfare to stay alive, not healt…

I appreciate your willingness to keep trying to communicate your experiences. It's obviously a huge spectrum of possible lived experiences and incredibly hard to legislate in a way that does the best for everyone. Do you think having a trained case worker evaluate each person's circumstances and coming up with a pathway to success makes some sense?

I think it totally could for people in just the right position and timing, but I also feel like for many it would be advice and help that could end up unreceived.

Re: Work disincentives hit the near-poor hardest (2022)

#82

Post by zozbot234 »

littlestymaar wrote: post #47
ternus wrote: post #12

I can't find the original tweet, but someone (half?) jokingly proposed a law that all benefits must be defined as continuously differentiable functions (thus making cliffs impossible). "Yeah, I made $1M last year. Here's my SNAP check for six cents."

It's not sufficient to make cliffs impossible, you just never want the effective marginal tax rate go above a certain threshold. It's insane that we cap marginal tax rates for the wealthy below 50% “because they need incentives to work harder” yet the working class family is facing an effective marginal rate near 100% because of reduced benefits. The solution would simply be to stop making benefits decrease when sala…

Actually, optimal taxation models tend to show that a base transfer at zero income with an initially "high" marginal rate for clawing back the transfer at the lowest end (but still no higher than 100%, and falling very quickly as earnings increase!) works very well. (Marginal rates then rise progressively for higher incomes, and paradoxically become lower again at the very top end, trending towards zero at the extreme top-end of the scale. This is actually a consistent result in non-linear incomes taxation models; the very top earner should face zero marginal tax on the very last cent she earns!)

The intuition is that you only "feel" the high marginal rate if you earn very little, which impacts very few people; but the effect of making the break-even point more manageable with lower marginal rates for most earners is felt throughout the incomes scale. What really screws up things is higher-than-100% marginal rates, which are regrettably common in real-world systems amd completely useless.

Re: Work disincentives hit the near-poor hardest (2022)

#83

Post by m_fayer »

truelson wrote: post #37
conception wrote: post #23

Earlier quoted context omitted.

They should be. And for the great majority of citizens, they should be calculated automatically along with taxes without the need for filing/paperwork. But we must think of the Intuit shareholders and the harm that that would cause them.

If someone in the coming years ran on taking down regulatory capture and returning that as social safety net funding, public goods, and lower taxes, and had the chops to actually deliver, they'd do well. Though best to start local government first, obviously. We're reaching breaking points in so many places...

Most people don’t even know what regulatory capture really means. There’s no “brand” to rally around and I don’t know how you’d go about building one.

And without the concept spread through the population, where would you find the grass roots support you’d need for resisting the avalanche of interest-group pushback?

“Draining the swamp” or “revolving door” were sorta in the neighborhood, but still ineffective and counterproductive.

Re: Work disincentives hit the near-poor hardest (2022)

#84

Post by littlestymaar »

dgoldstein0 wrote: post #59
littlestymaar wrote: post #47

Earlier quoted context omitted.

It's not sufficient to make cliffs impossible, you just never want the effective marginal tax rate go above a certain threshold. It's insane that we cap marginal tax rates for the wealthy below 50% “because they need incentives to work harder” yet the working class family is facing an effective marginal rate near 100% because of reduced benefits. The solution would simply be to stop making benefits decrease when sala…

> The solution would simply be to stop making benefits decrease when salary goes up. That's an option, and I'd be interested in how the math works especially with predictions of how the economy would respond. That said I don't think not decreasing benefits is an important requirement. But net income (benefits + earned income - taxes) should be strictly increasing with earned income, and probably at a rate of at least…

> That's an option, and I'd be interested in how the math works

The math works because the derivative of a constant is zero, it's that simple.

> That said I don't think not decreasing benefits is an important requirement. But net income (benefits + earned income - taxes) should be strictly increasing with earned income, and probably at a rate of at least 50% but ideally higher than that up to some reasonable definition of middle class income.

Exactly, it doesn't need to be fixed, we could also have decreasing benefits, simply with a much lower rate of decrease (ideally the rate of decrease should be the marginal tax rate for this income). But in practice such a system would be much more complex than a flat benefit system for little gain (the more limited the decrease rate is, the closer to a flat rate your public spending would be).

Re: Work disincentives hit the near-poor hardest (2022)

#85

Post by pjc50 »

alephnerd wrote: post #62
jaredklewis wrote: post #58

Earlier quoted context omitted.

“They’d do well.” That is not the lesson I’ve taken from the past 15 years of politics in the US and abroad. Political candidates actually interested in taking on the very difficult and nuanced task of governing are routinely drubbed by edge lord culture warriors or candidates that simply promise the world without any regard to annoying facts like existing laws, budget deficits, or basic tenets of economics. I defini…

As someone who formerly worked in this space, the issue is administration is orthogonal to legislature. Administration and implementation is inherently technocratic in nature, but legislation is is often driven by short-term electoral needs. This isn't to say autocracy is the answer (it isn't), but the dysfunction arises when people assume that every single administrative decision needs to be made by "elected officia…

Japan is 93% urban. 25% of the population lives in Tokyo! It's not that they can't outvote the farmers, it's a more complicated mix of agrarian nationalism that supports farm subsidies in a lot of countries, plus outright bribery with literal sacks of rice.

> administration from local to federal becomes politicized

Administration is politics. It's a mistake to go full technocrat and proceed without the consent of the administered. The problem comes when techocrats get rings run round them by misleading populists.

Re: Work disincentives hit the near-poor hardest (2022)

#86

Post by potato3732842 »

m_fayer wrote: post #83
truelson wrote: post #37

Earlier quoted context omitted.

If someone in the coming years ran on taking down regulatory capture and returning that as social safety net funding, public goods, and lower taxes, and had the chops to actually deliver, they'd do well. Though best to start local government first, obviously. We're reaching breaking points in so many places...

Most people don’t even know what regulatory capture really means. There’s no “brand” to rally around and I don’t know how you’d go about building one. And without the concept spread through the population, where would you find the grass roots support you’d need for resisting the avalanche of interest-group pushback? “Draining the swamp” or “revolving door” were sorta in the neighborhood, but still ineffective and cou…

"The swamp" and "evil big corporations" are the left and right's respective brands for this.

Re: Work disincentives hit the near-poor hardest (2022)

#87

Post by paganel »

eru wrote: post #79
paganel wrote: post #70

Earlier quoted context omitted.

If you continue with the idea of transfers, which is, in effect, the current government buying off parts of its constituents, then "democracy", whatever has remained of it in the West, will die for good. What happens if I receive money from the Government but in the same time I'm also actively opposed to said Government's actions? Will I be allowed to speak against the Government that is, as a matter of fact, paying…

You are mixing up lots of different ideas. You can have net transfers to the poor without turning most of your country's into net recipients. I also don't understand why you assume that people who are net recipients would stop complaining or voicing their opinion? That's not at all what happens in practice.

You're turning the "poors" into slaves, into slaves to the Government that is keeping them (the "poors") on the Government's payroll. I'm not "mixing" anything, so if we can please leave that condescending tone behind that would be best.

> who are net recipients would stop complaining or voicing their opinion

Why? You're asking why the "poors" will have second thoughts about openly criticising the hand that, literally, feeds them?

Re: Work disincentives hit the near-poor hardest (2022)

#88

Post by kannanvijayan »

paulddraper wrote: post #18
kannanvijayan wrote: post #15

Earlier quoted context omitted.

A considerable part of this is the fact that in a society where utilizing these programs is stigmatized to the degree that the USA does, people who see themselves as honest tend to avoid utilizing them. And even those who are less than honest, but have a sense of propriety, would understand that the correct, culturally approved time to engage in these activities is AFTER one acquires a significant amount of wealth, w…

> entitlements are knighted to become "economic incentives" I have no patience for corporate welfare and bailouts.

I'm sure you don't. But culturally, the things you are permitted to have influence over are the non-corporate welfare and bailouts.

The culture is that you get to speak against both, but only act against one.

Re: Work disincentives hit the near-poor hardest (2022)

#89

Post by littlestymaar »

rob74 wrote: post #66
littlestymaar wrote: post #55

Earlier quoted context omitted.

No it's not. Not all benefit is “income” and not all such income is universal. And it also has nothing to do with socialism (socialism is about forbidding the private property of the means of production ! Please stop calling every kind of public intervention “socialism”, that's as ridiculous as calling all Republicans “fascists”). For the non-income version see countries with free schools or free hospital, and for an…

Ok, those are valid examples (also, how about free roads for everyone? Everyone seems to take that for granted and wouldn't dream about calling it "socialist"), but in your original post you wrote about "a flat benefit for everyone" that doesn't reduce with income level, and the examples you gave are either non-income or not for everyone (e.g. not for families with less than two children, not for people who didn't pa…

> Ok, those are valid examples (also, how about free roads for everyone? Everyone seems to take that for granted and wouldn't dream about calling it "socialist")

This exactly.

> but in your original post you wrote about "a flat benefit for everyone" that doesn't reduce with income level

Yeah, my writing was confusing. By “for everyone” I meant “no matter the income”, not that we should give children's allowance to single adults. Just that we stop index these things on income. By the way I also think we should give more in nature (“the medical operation is free”), and less in cash, but that's independent.

Re: Work disincentives hit the near-poor hardest (2022)

#90

Post by fzeroracer »

torginus wrote: post #80
terminalshort wrote: post #32

Earlier quoted context omitted.

The system in its current insane state serves the purposes of multiple groups of people: 1. The bureaucrats administering the system because the more complex and insan the system is, the more bureaucrats you need. 2. The politicians who can promise $X of benefits to N people while knowing all along that due to the complexity of the system the actual cost of the program will be well under X*N due to failure to claim t…

3. has always bothered me - if you run a McDonalds, you have to pay market price for the building, kitchen equipment, both when buying and maintaining it. If you don't pay enough to maintain the fridge, it won't unionize - it will break down. The idea proposed by these 'free market types', that somehow people working there below sustenance salaries 'deserve it' - that the cost of labor needs to be essentially subsidi…

Agreed, 3 is the one that consistently annoys me in arguments I see across the internet. The reason why our welfare programs exist and are in such a disasterous place is partially because they are literal corporate subsidies so they can buy workers at a premium. If you were to kick out the ladder and fully remove the minimum wage and remove our welfare systems it would outright collapse the economy because A) working would be a full net negative in income generation and B) corporations would crash and burn realizing that they can no longer hire workers at their subsidized price.

The sane way to approach a system like this is just UBI + socialized healthcare but I think we'll approach labor collapse before we see movement in this direction by out of touch bureaucrats.

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