Food stamps, medicaid, for ERE

[Spartan_Warrior]

@JL13: Thanks for bringing that full circle. That's exactly right. Not only are you supporting the company executives as they exploit both their workers and the welfare program, you as a customer are another end-recipient of that very welfare.

[Dragline]

The rules change a little when it's a program forced upon you. IlliniDave mentioned this earlier. ACA and SSI are two programs that a person must participate in, so a strategic approach is sensible and warranted. Jacob asked about whether the $40 would matter if it was a line item on a tax return instead. I would say the distinction is important because I'm forced to pay taxes, so again, if I have to play the game, I'm going to learn how to play it well.

I'm not sure this is really a meaningful bright line. There are plenty of programs/options/choices that have the effect of lowering one's overall contribution to the pot (or getting something out of it) -- including things like 401(k)s, HSAs, real estate deductions and earned income credits, that nobody is forced to participate in.

I think all the economic arguments about this are really window dressings or post hoc (after-the-fact) justifications to buttress morality-based choices or preferences that have already been made about who is deserving of what and what that something is that they deserve. And honestly, there is nothing wrong with that -- if we are honest about it. People should be allowed to have different preferences and express them with their voices and votes. But the economic arguments and search for bright lines are largely just pretense, because they are overwhelmed by externalities.

I think the reason we have so many different programs and tax deductions, and that the systems of taxation and benefits are largely incoherent, is the result of having mixtures of these preferences in society, and the fact they change over time. In addition we all know that once something is started up, its difficult to get rid of. In effect, everybody gets some of what they want but nobody is satisfied with the system as a whole. One person's "justified entitlement" is another person's "freebie", "loophole" or "unfair advantage", depending on the perspective.

These issues were well-debated and discussed by people like Milton Friedman and Daniel Patrick Moynihan back in the 1960s when the choice was made to go with specific benefits to specific people for morally specific reasons (like the foodstamp and WIC programs), as opposed to just giving them the money and letting them choose how to spend it. This is also why social security was sold as a "moral" pay-in pay-out program, as opposed to just welfare for the elderly which is ends up being since your actual payouts are determined mostly by how long you stay alive. The economics of social security has always involved a lot of goof-ball and ad hoc accounting that exists nowhere else.

Getting rid of all these specific programs and substituting guaranteed income sounds nice in theory, except we know that even well-intentioned people often can't manage money and there are a lot of morons out there who would effectively let their children starve, use it to feed addictions, etc.

I'll tell you though, if we ever go to a guaranteed income system, the place to make bank is going to be the payday lenders.

[jennypenny]

Economic arguments (regarding program sustainability, funding, et cetera) and pragmatic arguments (regarding personal freedom, nuisance of bureacracies, et cetera) should be differentiated from moral arguments.

I think all the economic arguments about this are really window dressings or post hoc (after-the-fact) justifications to buttress morality-based choices or preferences that have already been made about who is deserving of what and what that something is that they deserve. And honestly, there is nothing wrong with that -- if we are honest about it. People should be allowed to have different preferences and express them with their voices and votes. But the economic arguments and search for bright lines are largely just pretense, because they are overwhelmed by externalities.

It's hard to separate out the moral arguments from the economic arguments completely because they can drive each other. For most people, money given to them is spent differently than money they've had to earn. If someone is getting something like SNAP because they need it to buy enough food, the level of consumption involved is necessary. If someone takes money from programs when they don't need it, there's a good chance the money will be spent on *extra* consumption. I'm not trying to say any consumption beyond basic needs is bad, only that people spend 'found' money differently than earned money or needed benefits. It can drive frivolous consumption.

Another issue for me is whether the purpose of these programs is to help people in need or to promote a certain kind of behavior a la Thaler. The tax benefits that Dragline mentioned like HSAs and 401Ks are designed to encourage people to save for future needs. Tax benefits for real estate promote home ownership, which our country has decided is an important part of building a stable society. SNAP is structured as a assistance program, so I view them differently and see a pretty clear line between the two.

I guess in addition to my argument that it's not very ERE-like, I see the problem as a government giving out money it doesn't have to people who don't need it to support a 'growth' economy' that is unsustainable. It's an flawed economic argument that I think contributes to morally objectionable behavior, if that makes sense. It fuels waste and makes a growing number of people less capable of meeting their own needs. There's also something, I don't know ... authoritarian (?) about the government handing out allowances and vouchers for different needs. Why would someone volunteer to be a part of that?

I'm not opposed to assistance programs. In fact, quite the opposite--I don't think they do enough to lift people out of poverty. I'd love to see us transition to a consumption tax or at the very least a progressive flat tax, and lift the income cap on FICA contributions to increase funding for social security. I'd love to see corporations pay more in taxes and individuals pay less. In the mean time, I'm not going to contribute to the problem or sacrifice my own well-being and independence just because I'm not happy with the way the system currently functions.

[JL13]

@spartan

Aren't you supporting the workers as well?

[Scrubby]

What about the million plus workers in the U.S. that have a job because Walmart exists. Is that worth anything?

If they didn't exist then their customers would have shopped elsewhere, and that would have created about the same number of jobs. Lots of shops who probably paid their employees better have had to close down because of Walmart.

The question should be asked why tax breaks and other subsidies are offered in the first place. Could it be that the town or state benefits from the relationship as well?

https://en.wikipedia.org/wiki/Race_to_the_bottom

[jennypenny]

Why assume that if people didn't shop at Walmart that they would patronize a 'better' retailer? Customers go where the low prices are. Walmart is closing stores because it's losing business to Amazon, who also dodges taxes and only employs 1/5 the number of people.

Where's the outrage over Amazon? I guess it depends on what you see as worse for people -- low wages or no wages.

[7Wannabe5]

jennypenny I guess it depends on what you see as worse for people -- low wages or no wages.

That's what I was trying to communicate. I think low wages are bad and no wages are good. Any wage reinforces dependency and low wages for long hours is the closest thing to slavery we still have in our society. Wages should be abolished and replaced with contracts between peers. The first step any individual can take towards accomplishing this is to make an offer of labor/service/product rather or in addition to looking for a job. How a contract is offered and formed is very important. When you enter into employment with a business such as Wal-Mart, you generally sign an agreement whereby you affirm that you are an "at will employee", but, IMO, few people understand that this means that they retain the rights and responsibilities of complete free agency. IOW, they owe not one speck of "loyalty" to Wal-Mart, and they should constantly be offering and seeking to accept better contracts at the margin.

[Spartan_Warrior]

@FFJ: Yeah, this whole job creation argument isn't gonna fly. Wal-mart store openings destroy almost three local jobs for every two they create by reducing retail employment by an average of 2.7 percent in every county they enter. They are renowned for destroying small businesses across industries for miles around. It could also be argued that they cost local manufacturing jobs due to their reliance on imports from China, etc.

http://papers.ssrn.com/sol3/papers.cfm? ... _id=958704

"The question should be asked why tax breaks and other subsidies are offered in the first place. Could it be that the town or state benefits from the relationship as well?"

It could be. More likely IMO, it could also be that politicians benefit from corporate lobbyist money pushed into their palms.

P.S. Of the establishments you mentioned, I know off-hand that Costco does make a point of paying its workers a living wage and benefits. I would actually suggest it as an overall more ethical alternative to Wal-mart (or Sam's Club). http://www.huffingtonpost.com/2013/11/1 ... 75774.html (I know, I know, Huffington Post. Here's a Snopes article, too: http://www.snopes.com/politics/business/costcoceo.asp)

@Jennypenny: "Where's the outrage over Amazon?"

Don't get me started, don't EVEN GET ME STARTED! As I said earlier, Wal-mart is a particularly egregious example, but far from the only example.

"I'm not opposed to assistance programs. In fact, quite the opposite--I don't think they do enough to lift people out of poverty."

See, this is what gets me. There are multiple ways to help end poverty, but people seem to want to have their cake and eat it too. Low taxes, but no deficit. No abortions, but no assistance for low-income mothers. No minimum wage, but no assistance programs for low-income workers. Et cetera. Something's gotta give one way or the other.

I don't see how a consumption tax would help low-income people who often spend 100% or more of their income on basic necessities. I'm not sure what a "progressive" flat tax is(?), but generally, flat taxes would also disproportionately affect the poor for the same reason--they need a bigger percentage of their income.

@JL13: Customers are definitely supporting Walmart workers to the extent that the customer is contributing to the revenue from which a part of the workers' income is paid--that is, the ordinary and above-board way most customers would assume they are supporting workers at an establishment they patronize.

I'm reluctant to say that customers are also supporting the workers' being on welfare, but I can't elucidate why. Maybe because I feel like the workers are not responsible for the situation and would likely prefer to be paid wages that didn't make them eligible for SNAP in the first place.

I think of a transaction at Walmart (or any business) as a vote for the way the company is doing things. Thus, it's enabling Walmart's corporate welfare situation. And in a spreadsheet analysis, yes, the workers, as well as the owners and customers, all see "income" (or savings) go from the government/taxpayer to them as a result of the situation.

However, I'm also considering who is really "benefiting", and I'm reluctant to say it's the workers. Maybe you're right and I'm quibbling semantics.


@7Wannabe5: x2. I also don't agree, at least not prima facie, that low/slave wages are better than no wages.

[jennypenny]

@7W5--If population increases combined with technological advances reduce the amount of human labor needed and we head towards a society comprised mostly of part-time workers (wasn't there an essay about that floating around on the forum somewhere?), then more has to change besides how we fund people's lifestyles. We'd need to shift the tax burden from personal income taxes to consumption and heavy corporate taxes and move to some form of UBI. We'd also have to change the education system since it's designed to produce worker-bees, but there'd be no need for legions of Dilberts in that kind of society. We'd have to teach people how to manage themselves and their free time, and even if we did that, I wonder if humans are designed for a life of mostly leisure time. Are we healthier with or without jobs? (present company excluded, of course)

Establishing a society of mostly unemployed or underemployed people would be a grand experiment that could go very badly. My hope would be that we would revert to smaller local economies with people creating their own work, but it could easily go the other direction with people living off of their UBI in substandard conditions and spending their days in a drug-induced stupor wearing an Oculus headset. Look at people today who are on temporary or permanent assistance of some sort. Are they healthier than those with jobs? I think a LOT of re-education would be required and I'm still not convinced it would be effective. There might be too much evolutionary psychology to overcome.

@S_W--Proposals for a consumption tax usually include a standard deductible that would eliminate taxes for many people. It shifts the tax burden upward. The progressive flat tax I mean is where lower income people pay very little (2%?) and it climbs steadily from there while removing all of the deductions and other shenanigans from the tax code.

And for the record, I AM willing to pay more in taxes. I said so. And it's not just what you consider the 'other' side that wants to have their cake and eat it, too. People want low prices, but then want companies to pay higher wages. They want low-cost student loans so everyone can attend college, but then complain when the easy money drives up college tuition. They want improved public education and higher salaries for teachers, but then complain that real estate taxes are too high.

I'm not saying one side is right and the other is wrong. I'm only pointing about that most people say they want something until it comes time to pay the price for it. If Walmart doubled their salaries and also doubled their prices on everything to pay for it, would anyone still shop there? If a school district doubled its school tax and made significant improvements to its schools, would everyone be willing to pay the additional tax or would some move? The trick with all of these issues is finding the sweet spot that pleases a majority on both sides.

[7Wannabe5]

jennypenny said: We'd have to teach people how to manage themselves and their free time, and even if we did that, I wonder if humans are designed for a life of mostly leisure time.

https://en.wikipedia.org/wiki/Original_affluent_society

I believe that by constructing a technologically enhanced, creatively-designed neo-hunter-gatherer permaculture environment, the current human population could work less than 20 hours/week-towards-survival and also have their own personal choice of 90% simple, 10% luxurious lifestyle. I think if everybody else was not working, then most people would spend more time on social or community forwarding activities, and creative efforts in alignment with talents towards beauty, strength, skill and status. The 40 hour work week is a totally arbitrary and artificial construct. All you have to do is tell yourself that 40 hours is the equivalent of working everyday dawn to dusk (16 x 7 = 112 hours/week) and 16 hours is the proper amount, and start behaving in alignment with that in terms of your own practice and that which you expect of others, and you will see what I mean. For instance, if I told you that Tyson makes its workers pluck chickens from dawn to dusk, thereby forcing them to inhabit very expensive company-owned and operated bed-huts, and only allowing them one bathroom break per day, thereby necessitating the wearing of Depends while on the job (this part might be currently true), you would probably think that was inhumane, but it's really all relative and just a matter of perspective.

I think children should learn how to read and do mathematics and attain basic mastery in a variety of liberal arts and useful skills, even if they will enjoy a life of creative leisure rather than worker bee status, so I currently net around $80/per day substitute teaching. I can almost get by on the $640/month this income alone would provide for me, and my lifestyle is quite enjoyable. I do not need food stamps. I would only take them and apply them to other purposes to hasten transformation of society towards my ideal (bwah-ha-ha-ha!)

[jacob]

I could make a living by either:
1) Working as a Walmart associate for 10.8 hours per week.
2) Buying $157000 worth of WMT stock and living off of the dividend.

There are two factors at play for why such problems are almost impossible to fix:

* "You can't do just one thing". This is a general systems theory principle and quite popular in permaculture. Despite this, political discussions are almost always about just changing that one thing that will solve all problems. That one thing is usually throwing more money at it, alternatively throwing people in prison.

* https://en.wikipedia.org/wiki/Le_Chatelier's_principle ... a close cousin saying that every time you change anything, the system will try to counteract the change to bring itself back into equilibrium. This is the origin of unintended consequences. Make student loans cheaper and ... behold, tuition costs go up.

* "You can't fix stupid". Mainly a Dunning-Kruger effect. There's no ultimate fix although the scientific method and logic were nice attempts. We're currently relying on the fact that while one can ignore reality, one ultimately can't ignore the consequences of reality although the larger and more complex the situation is, the further out those consequences can be pushed. I think it's unfortunate that proposed solutions always seem to involve increased complexity because I actually don't think that many are able to handle the current levels of complexity.

[GandK]

@jp Like you, I'm willing to pay higher taxes to give the truly poor and disabled more resources. But I am not willing to pay higher taxes to fund many other things that certain facets of society favor. Still trying to figure out how to direct my tax dollars only toward the spending items that I approve of...

[jacob]

@GandK - The best way I know is to structure one's income so to pay very little taxes thus leaving surplus for approved spending. This is eminently possible within the IRS code and ERE should make it particularly easy to (re)structure one's forms of income. Last year (I worked for 10 months) our total household income was in the low-mid 100ks but we only paid some $8-9k in taxes. How? We maxed out 2x401k, 2xIRA, 1xSEP IRA, and 2xHSA (that's almost 60k in deductions) and arranged our investment such that almost all taxable capital income was in the form of qualified dividends.

[Laura Ingalls]

Or alternatively volunteer for govermental agency you like

Dh volunteered 500 hours last year for the Army Corp of Engineers improving the environment. It provided us with a camping spot and assured us of an income too low for much tax liability.

[7Wannabe5]

jacob said: I think it's unfortunate that proposed solutions always seem to involve increased complexity because I actually don't think that many are able to handle the current levels of complexity.

Right. For instance, I am too stupid to do/be perma-culture, if "handle" means something like "get a real tight grip." OTOH, if "handle" means something more like "fake it until you make it" or "jump in and ride that wave", then maybe I am not too stupid. I think what Paul Wheaton said in one of his lectures on just tossing the memes out there over and over is probably the most likely to be successful approach, EVEN or ESPECIALLY when it comes to teaching ourselves.

Also, I am likely to just sink into a state of nihilistic depression if I spend too much pondering the unintended bad consequences of teaching a 7 year old how to add fractions or planting some daffodils.

[Spartan_Warrior]

@FFJ: "But then again, hourly workers as a whole in the service industry aren't doing any better. Does Panera Bread or Starbucks pay better? Wages have been stagnant for a couple of decades and it's more complicated than evil old Walmart getting rich off of its employees."

I mean, I don't really understand why this is detracting from the points I made, if it's supposed to? As I said, Wal-mart is only an example. I don't know about Panera Bread or Starbucks in particular; some companies are better, some are worse. But I wouldn't disagree for a second that the problem is quite systemic!

Certainly, stagnant income is a complicated problem. And certainly, executive greed, corporate influence, and corrupt politics are a big contributor to that problem, as well as to problems like broken entitlement systems, broken tax systems, etc.

@Jenny: "If Walmart doubled their salaries and also doubled their prices on everything to pay for it, would anyone still shop there?"

Do people need to still shop there? Does Walmart (or any one enterprise) *need* to exist? Regardless, if the underlying system that subsidizes Walmart's low prices/wages were to change, then Walmart would not be the only corporation facing the dilemma (again, far from it), so I don't see it being anti-competitive. It would be a shake-up. I don't know that it would be unfair to anyone.

Last question: If Walmart doubled their employee salaries by cutting executive pay and leaving prices the same, would anyone who currently shopped there STOP shopping there?

@all:

If one accepts the following premises...

1. It is moral/good to direct money to moral causes;
2. The most efficient way to direct money to moral causes is to maintain the lowest tax burden possible and self-direct the funds that you have available to said causes;
3. In an objective analysis, "tax burden" is simply the inflow/outflow of money between an individual and the government.

...Then does it not follow that 7Wannabe5's plan to essentially lower her own tax burden and redistribute what is left over to personal causes would be morally permissible?

If not, which premise is wrong?

[Spartan_Warrior]

If we're going to say that it's Premise 3 that's wrong, I would argue again that it is not such a clear line between "tax write-offs" and "assistance programs".

Jenny said: "Tax benefits for real estate promote home ownership, which our country has decided is an important part of building a stable society. SNAP is structured as a assistance program, so I view them differently and see a pretty clear line between the two."

I bought my home through a USDA Rural Housing guaranteed loan available only to folks within a certain income level (that I no longer meet) and who are purchasing houses of certain values in "rural zones".

As a benefit of the program, I didn't have to put up more than 5% or so downpayment, without paying PMI (albeit at the cost of a negligibly higher loan; who cares at 3% interest).

If I hadn't opted into this government-backed assistance program, I could've afforded a house (possibly not this one). I qualified for ordinary, non-USDA loans. I just would've had to pay PMI, buy a cheaper house, and/or foot more of a downpayment.

The kicker is... my house is in the center of a town, at the intersection of two state highways, literally surrounded by restaurants and shopping venues I never use, with a walk score in the upper 60s (I believe)--but, for some reason (by virtue of zip code, or something) it was considered "rural" for the purposes of the program.

Likewise, again, I wasn't really hurting financially. I didn't NEED this particular house. I didn't NEED to not pay PMI. Et cetera.

Were my particular house and situation what legislators (or regulation drones, or whoever) originally intended for the USDA rural loan program? Maybe not... but who knows? Maybe the government just wants to promote home ownership and this is another way of doing so. All I know is I was eligible and the program was available, so I made use of it.

Was I morally wrong to take this cheaper, better loan through a government program simply because I didn't appear to match the program's original intentions?

Is this substantively different from writing off home office space where possible or deducting mortgage interest? Sure, I had to voluntarily seek out the program to get the benefits, but you have to voluntarily make those write-offs to get those benefits, too.

[IlliniDave]

If one accepts the following premises...

1. It is moral/good to direct money to moral causes;
2. The most efficient way to direct money to moral causes is to maintain the lowest tax burden possible and self-direct the funds that you have available to said causes;
3. In an objective analysis, "tax burden" is simply the inflow/outflow of money between an individual and the government.

...Then does it not follow that 7Wannabe5's plan to essentially lower her own tax burden and redistribute what is left over to personal causes would be morally permissible?

If not, which premise is wrong?

I would quibble with premise 3 and say tax burden is what is seized from the individual by the gov't only. Otherwise the highest achievement (i.e., your moral responsibility) is to milk the gov't for as much as you can (drive "tax burden" all the way negative if possible) to redistribute as you see fit, which means you are deciding how to spend your neighbor's money with the assumption that your morality is superior to theirs.

Certainly every taxpayer is justified in working within the rules to minimize the amount of their money they are required to surrender under the various tax laws. Certainly anyone who qualifies for assistance under the law is entitled to receive it. Whether it is moral to do so is a semi-independent consideration. Sometimes it is, sometimes it isn't.

[Scrubby]

Also, regarding Costco, it should be noted that they employ far less employees than Walmart: 184,000 versus 1.1 million in the U.S. and more importantly less people per square footage per store. So which is better? A million people working at $9/hour or 200,000 working at $18/hour?

Walmart's turnover is 6 times bigger than Costco's so 5 more Costcos paying $18 would be far better than one Walmart paying $9.

[GandK]

I would quibble with premise 3 and say tax burden is what is seized from the individual by the gov't only.

+1.

@SW

The reason there's a difference between tax write-offs and assistance programs is that I own the fruit of my labors, past and present. I am the rightful owner, not my government or my society. I believe I should pay the government a reasonable fee for services rendered, and I believe I should care for the less fortunate. But in cutting my taxes the government is not giving me things. It is taking fewer of my things.