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Work disincentives hit the near-poor hardest (2022)

niskanencenter.org

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

#91
post #71

Earlier quoted context omitted.

DOGE tried, and despite it’s best efforts still couldn’t do more than make a dent

DOGE was a Potemkin organization. They destroyed USAID, smashed up a bunch of other institutions, then went home. Very little of which complied with Federal funding law, either.

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

#92

Earlier quoted context omitted.

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…

I wouldn't go so far - I would just raise the minimum wage to a level where a person can actually make ends meet.

Sure some folks would be fired, and their jobs automated, but they could be redirected towards better paying opportunities.

If all else fails, then the money saved by such approaches could be used for welfare. It's just putting things from one pocket into the other for the government.

As things stand, these corporate subsidies are just for enshrining inefficiencies in the system.

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

#93

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.

I like my cliff. I earn enough that I and my family are ineligible for most welfare schemes. I do not want even 6 cents worth of SNAP. I spent my entire childhood on that, and it disgusts me. Thus, were this policy ever seriously proposed, I would do what I can to dissuade my legislators from voting it into law. There are others like me, too, I am not unique.

Would you like a golden sticker?

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

#94

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…

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 extrem…

I'd be curious to read more about that, because none of what you've written makes any sense to me right now. (Why would we want zero marginal tax on top earner who already get zero marginal utility for her money in the first place ?).

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

#95
post #43
post #29

Earlier quoted context omitted.

Monotonic is what we have, and it allows cliffs. Suppose, e.g., that you can get $5k/yr in benefits if you make less than $10k/yr in other revenue and $0 otherwise. Unless you have a viable strategy for pushing past $15k/yr it's a strong financial disencentive against actually working, and even then your incremental ROI isn't very good past that cliff (if it takes an extra hundred hours to push to $15.1k/yr, then com…

This doesn't sound monotonic. This sounds like a mapping from pre-benefit income to post-benefit income which sends just under $10k/yr to just under $15k/yr, but sends just over $10k/yr to just over $10k/yr. So it sends a larger input to a smaller output.

I think I see the definitions we're disagreeing on. I'll lay out what I meant and then address your thing.

1. A couple levels up, the function somebody requested being continuously differentiable was the "benefits." You seem to be looking at the total post-benefit income instead.

2. It's not totally clear, but you _might_ also be using "monotonic" to refer to "monotonic increasing" or "strictly monotonic increasing" instead (the total income function in my example isn't even monotonic, so this is just me reading between the lines in the wording of your reply).

The cliff issue still exists though (and still exists in the differentiable version -- you want bounds on the derivative ideally to prevent the cliff issue, and for unrelated reasons you probably want other properties like the benefits not increasing as a function of pre-benefit income). Suppose you have a strictly monotonic increasing function mapping pre to post benefit income. That function can still, e.g., have a long region with a high slope, followed by a long region with a low slope, and some curvy thing connecting those. It's still continuously differentiable and strictly monotonic increasing, but the incremental value of work in the low-slope region is low (by definition). You might make a dollar in pre-benefit income and $0.10 in post-benefit income, so at minimum wage you're back to a <$1/hr situation unless you can make enough money to push substantially past the right side of that low-slope region (which we're assuming exists, else it basically says you have a 90% tax rate if you make too much money, and in-context "too much" would be near poverty levels, so even people wanting that sort of thing for the ultra rich wouldn't think that to be a good idea).

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

#96

Earlier quoted context omitted.

I used to think the welfare system had a few bad apples. Later, while working for a charity, I realized the truth. Literally no one is immune to the character-destroying nature of entitlement programs.

How does an executive such as yourself find empathy and compassion for people who did not simply lift themselves up by their bootstraps?

FWIW, charity and voluntary assistance differ from legal entitlements.

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

#97
post #2

I remember reading this book called 'The Losers' ( https://www.goodreads.com/book/show/2114133.The_Losers ) about a privileged man who has a car accident, becomes disabled and comes to rely on government support. The book looks at the lives of the working poor and actually poor, who rely on welfare cheques and other subsidies and highlights the social and psychological impacts of these systems of support. It was very…

I haved lived the majority of my life in working class communities (as an electrician). Despite sporadic eligibility, I've never applied for the benefits that many of my near poor neighbors receive (I am a simple homebody, with zero dependents).

>negative incentives for people receiving support, it doesn't uplift and enable success, it keeps people trapped in poverty and a mindset of helplessness.

For the majority of my recipient neighbors, I would disagree: [single] parent households simply are too expensive to operate without temporary community support.

Conversely, I have a few childless neighbors that simply ride out "disability" payments while working cash jobs part-time, typically along the lines of handyman and/or dealer. This bothers me.

Few of my neighbors are incentivized to work harder (at least on paper), out of fear of losing healthcare/housing/dining benefits.

Several of my wealthier clients had PPP loans "pre-emptively forgiven," and pay my neighbors cash for housework, so I know all sides are gaming this system...

----

But it just seems so obvious that single-payer healthcare and subsidized childcare would solve most of society's problems (much more simply than our current failures of welfare). These are the legitimate grievances of my working class neighborhood.

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

#98
post #85

Earlier quoted context omitted.

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…

> It's not that they can't outvote the farmers

Japan is a parliamentary system, and the amount of Single Member Seats in the House of Representatives needed to flip an election are primarily small towns or rural.

This is what happened in the 2009 election when the LDP lost the farmer vote.

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

#99
post #74

Earlier quoted context omitted.

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…

There's actually plenty of examples out in the real world with competent administration to learn from. Especially if you generalise enough to look at how pockets of competence work even in an otherwise abysmal system, instead of demanding overall competence.

What you end up seeing is those cases of "competence" only worked in cases where administration and legislation was aligned. But even in those societies you'd still see problems which are distinct, but problems nonetheless.

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

#100
post #65

Earlier quoted context omitted.

I like my cliff. I earn enough that I and my family are ineligible for most welfare schemes. I do not want even 6 cents worth of SNAP. I spent my entire childhood on that, and it disgusts me. Thus, were this policy ever seriously proposed, I would do what I can to dissuade my legislators from voting it into law. There are others like me, too, I am not unique.

Right, so people who would use their trauma to prevent themselves from thinking logically about the problem and helping those in the middle instead of some arbitrary line your mind made up?

>so people who would use their trauma to prevent themselves from thinking logically

You're using your trauma here. You keep yearning for the kindergarten lessons to be true, that we're all the same people and we should all share and all the other nonsense that was only taught to you so that the elemntary school teachers didn't have a city-burning-down-riot on their hands every day.

Even if you insist that I'm the one being illogical here, it's wired pretty deeply into my brain, and I'm not going to change. Not only am I not going to change, I'm raising children to be like me, and one of the early and fundamental lessons is that fertility rates are top priority. Be fruitful and multiply. There will always be more like me than more like you, and it's only going to get worse (for you and those like you).

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