Income Equality -- Three Models

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secretwealth
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Post by secretwealth »

No--my point was you're wrong and your logic is flawed.
My point was also that getting rid of the welfare system will produce an aesthetic problem. We'll have a lot of street beggars, sex workers, and maids. Let me just repeat what I've already written above:
If we got rid of minimum wage and had more police corruption, we could let the poor sell their daughters to the wealthy as maids and prostitutes. Then, as they do in Southeast Asia, the girls could send money back to their poor families and we could abolish food stamps and Social Security. Problem solved!


ICouldBeTheWalrus
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Post by ICouldBeTheWalrus »

Tangentially:
I find it somewhat distasteful how much energy is put into notions of right/wrong or fair/unfair when it comes to welfare systems. While it is understandable that one would not want wastefulness to occur with such a public project, it seems that the typical rhetoric is a lot of outrage like, "I hate those <ethnicity which is not my own> which are getting to lie around making babies and watching television while getting paid by the government to do it."
This is why I find myself far more in favor of ideas like a Basic Income Guarantee -- it takes a lot of the bureaucracy and politics out of these things by reducing the problem of who gets the handout to a simple calculation based on income, nothing else. Also, more complicated welfare systems seem to reduce to a divisive system of social control. (e.g. Work is good, raising children is good, etc.)


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C40
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Post by C40 »

I don't see Seneca arguing for elimination of minimum wage and increased police corruption. ??


pooablo
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Post by pooablo »

Great input everyone. This thread is getting my brain working. I am thinking that a government could incorporate the good points of system A and B to overcome the drawbacks of each model.
Reduce Work Hour Requirement Under the Singaporean/Hong Kong Model
I like the idea of the work welfare system but it does not need to be so extreme as in Hong Kong or Singapore. A government could put in a rule in place that a person only needs to work 20 to 30 hours a week to qualify for public housing, health care, and services.
Negative Income Tax
As to the system in Denmark, I think one way to fix the issue is to change the means requirement from "actively looking for a job" to number of hours worked which would ensure that all the minimum wage jobs need to be taken care of. The test could be 20 hours a week again; enough to ensure that there is sufficient labour supply to take care of the menial tasks but not too much that it takes away from one's personal development or leisure time.
And then, rather than doling out support in the form of welfare payments, the government could implement a refundable income tax contingent on hours worked (negative income tax).
For example, let's say I am a minimum wage worker in Canada that works for a total of 2,000 hours (40 hours*50 weeks) for $9.75 an hour. That means that I would make $19,500. Under the current tax system, I would be able to keep $19,500 in my pocket. However, with a negative income tax, I could get a tax refund, say $10,500 (or $5.25 per hour worked), that would bump up my income to $30,000. The extra refund would give me room to save for the future.
(I just used the $10,500 amount as an example. It'll probably be high for this forum's members but I used that number because I think I remember reading somewhere that $15 an hour is a living wage. Also, having a negative tax rate that is too high would probably result in no one paying taxes to the government and everyone receiving a tax refund!)
I like the negative income tax because it is much easier to administer than making people run around in circles to different welfare offices in order to quality for welfare. In other words, it is a much more efficient way of welfare delivery.
In addition, by using a hours worked requirement, it ensures that a country does not have a pile of people sitting around looking for the perfect job!
I also like the negative income tax because it still leaves room for the market rather than the government to decide where the labour need is and it rewards immigrants for taking the jobs that no one else wants to take.
*We already have a basic tax credit in Canada that we get for being employed; though it is non-refundable meaning you only get the refund if you had paid tax.
Small Nation/Homogenous Population Argument
As to the small nation argument, I do not think that it is so much of a problem that Canada and America are too big but rather I think the issue is that there is too much centralization in Canada and America.
I think one can make Canada and America "smaller" by decentralizing government. I do not understand why the majority of my taxes goes to the federal government while the majority of the government services that I receive are provided by the provincial (health care) and local government (education, roads, and police).
I think the majority of funds should be kept at the local level which is best able to deal with local issues. One success story that I can think of is the Edmonton Public School system. Schools in my city are funded based on the number of students that a school can attract. In addition, each school is given broad freedom in how it wants to deliver education services and provide school programs which allows a competitive market system to exist in a public-funded system. We have one of the most diverse selection of education programs among North American municipalities including bilingual Arabic, Spanish, French, Mandarin language programs, a military academy, sports schools, etc.
Arnold Schwarzenegger actually came up to our city to study our public education system!
Of course, I think I am biased towards decentralization after reading Antifragile by NNT. :)


Seneca
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Post by Seneca »

Secretwealth. Why do you think people who disagree with you don't understand?
There are more beggars per capita in San Francisco and Berkeley than Boise. Come walk around Boise downtown, there's no place you'd feel unsafe at any time of any day.
CA has about the highest per capita welfare spending, Idaho the lowest.
http://www.utsandiego.com/news/2012/jul ... of-the-us/
Berkeley is downright dangerous, the third most dangerous college in the US. Crooks walk in to Starbucks in teh middle of the day and start grabbing laptops. When the cops come, the "victims" start heckling the cops for chasing the thief down! Wanna guess why it's so damned dangerous there?
http://www.businessinsider.com/most-dan ... ca-2012-11
So is your argument Idaho is making up for a lack of government safety net with sex workers? Compared to SF or Berkeley? Really?
Besides, why do you keep bringing up sex workers as a downside argument? A post I read recently in a journal:
"I never understood why this one type of physical labor--sex--is seen as such a taboo. Must be because it threatens the structure of agrarian cultures. We don't criticize people for selling their bodies to clean toilets, but when they sell their bodies for sexual pleasure, suddenly we naysay it? Makes no sense at all..."
Wanna guess whose post I quoted there?


pooablo
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Post by pooablo »

@ICouldBeWalrus +1
Hehe, you phrased my thoughts much more concisely. I'll just copy your comments and put them under my negative income tax paragraph. :P


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C40
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Post by C40 »

I haven't found anything specific on the welfare working stuff, but Singapore's housing is pretty interesting to read about... some quotes:
"Increase in savings rate

At the inception of the CPF home ownership scheme in 1968, the Gross National Saving to GNP ratio was less than 20 percent (see Table 2.1) and insufficient to fund the country’s investment needs (32 percent of GNP). The increase in CPF mandatory contribution rates to a peak of 25 percent of wages for employees and 25 percent for employers by the mid 1980s contributed to a significant leap in the savings rate to more than 50 percent of GNP by 2000 – certainly the highest savings

rate in the world and more than sufficient to meet the country’s investment needs."
From their Prime Minister, on welfare:

"We must not breed a culture of entitlement, encouraging Singaporeans to seek Government support as a matter of right, whether or not they need it. .. . The better-off must help the poor and the disadvantaged – the sick, the elderly, the disabled and the unemployed. In many developed countries, the state takes on this responsibility, but his is invariably financed by high taxes and levies on businesses and those who are working.

Our social compact is rather different. It is based on personal responsibility, with the family and community playing key roles in supporting peopled through difficulties. The state will provide a safety net, but it should be a last resort, not a first resort, and should focus on the minority who need help the most. We thus avoid state welfare, which will erode our incentive to achieve and sap our will to strive. Our social compact enables us to keep taxes low, and lets people keep the fruits of their labour and businesses the rewards of their enterprise. And when we do well and have budget surpluses, we can distribute some of them back to Singaporean"
Another from a previous Prime Minister, on public housing and home ownership:

"My primary preoccupation was to give every citizen a stake in the country and its future. I wanted a home-owning society. I had seen the contrast between the blocks of low-cost rental flats, badly misused and poorly maintained, and those of house-proud owners, and was convinced that if every family owned its home, the country would be more stable (page 116)…I had seen how voters in capital cities always tended to vote against the

government of the day and was determined that our householders should become homeowners, otherwise we would not have political stability. My other important motive was to give all parents whose sons would have to do national service a stake in the

Singapore their sons had to defend. If the soldier’s family did not own their home, he would soon conclude he would be fighting to protect the properties of the wealthy. I believed this sense of ownership was vital for our new society which had no deep roots in a common historical experience"
(these quotes are from http://ink.library.smu.edu.sg/cgi/viewc ... e_research)
I believe their home ownership rates are now over 90%. Income taxes are low (max around 20%).


Seneca
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Post by Seneca »

Every Singaporean male has to serve in the military. If they are too fat and/or can't run fast enough during their reserves year, they get sent off to fat camp. One of my colleagues had to go off to fat camp and caught hell often.
Home ownership (as opposed to a gov't flat) there is hard, it's pricey. But it is possible in a dual income professional household with careful budgeting. A lot of the Asian cities/states that are kicking butt (Singapore, Taiwan, etc) don't really have common home ownership. They tend to trade in 99yr leases, which the gov't appears to count as ownership.
Ex- http://www.condoexpert.sg/blog/2011/12/ ... ear-lease/


Seneca
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Post by Seneca »

@ICouldBeTheWalrus "I find it somewhat distasteful how much energy is put into notions of right/wrong or fair/unfair when it comes to welfare systems. While it is understandable that one would not want wastefulness to occur with such a public project, it seems that the typical rhetoric is a lot of outrage like, "I hate those <ethnicity which is not my own> which are getting to lie around making babies and watching television while getting paid by the government to do it."
This is why I find myself far more in favor of ideas like a Basic Income Guarantee -- it takes a lot of the bureaucracy and politics out of these things by reducing the problem of who gets the handout to a simple calculation based on income, nothing else. Also, more complicated welfare systems seem to reduce to a divisive system of social control. (e.g. Work is good, raising children is good, etc.)"
I don't care if people sit at home and watch TV, and I don't care if someone has kids or not. I don't like it if people are encouraged to vote for a self-styled Robin th' Hood politician because he promises to send people with guns to take money from someone else who has chosen to fairly earn it if they vote for him. But that's not even my biggest point...I can (and have) certainly make legal personal choices to pay less in taxes.
To me the best national policy should be such that people are encouraged to earn their own living because it is good for them and the stability of the nation. Getting FI does include earning your own living, and I am pretty sure when we get there I'll spend a few really lazy months (though I prefer books to TV). There should not be an allowance given just because you won life's lottery and were born in the United States. My kids definitely won't be given an allowance either, they'll get paid for executing valuable tasks.
I say this knowing a solid workfare program costs more to set up than it does just to do the simple negative income tax idea. (and teaching my kid to do dishes/cut grass/change oil is harder too) However, I think the long term benefits are well worth the costs.


rube
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Post by rube »

@C40:

"..Another welfare setup which I'd be curious to hear about if it has ever existed is: if the amount of assistance increases with the number of children someone has,.."
In the netherlands you will get more if you have children, but the number of children makes normally no difference.
"..as a condition of receiving the welfare, their children are available for adoption by families that can support them without needing assistance. It could be that once an adoption offer is made, the incremental assistance for that child ends and it is up to the parents whether they allow the child to be adopted, or keep the child without any more assistance. (No idea whether something like this would actually work -- if there aren't enough families wanting to adopt it might not work so well. I'd also wonder how much people would freak out about a policy like this)"
This kind of adoption policy would freak me out.
Besides, the idea behind welfare should be that it's temporarily. What you suggest to do with the kids when the parents only need welfare for 12 months? Move kids back after 12 months? And what if the same situation happen 3 years later? Move them forward and backward again?
Apart from my opinion that this is inhuman, it might create other costs (or benefits are lost) for the society because I'm pretty sure lots of them will get mental problems sooner or later.


skintstudent
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Post by skintstudent »

What strikes me is the loyalty to the political idealogies outlined by pooablo's first post. Few people, especially politicians, seem to either have the imagination or will to accept radically different welfare systems. There are welfare reforms underway here in the UK and all we ever hear is how one group or another will be worse off under the reforms. Nothing is ever said about how it will benefit those who work to fund the payments.
I personally believe that those who cannot find work should be looked after and that they should not be allowed to "fail". However, I believe that this means that they should be fed, have access to healthcare and education, and provided with basic shelter. It does not mean that they should be provided with a house and enough money to run a car, satellite/cable TV and mobile phones.
I do not agree, in general, with welfare for work schemes. Here in the UK we have recently had a high profile court ruling saying that the current implementation is illegal. Forcing people to work for private companies (for work experience, no pay) is, in my opinion, immoral and a huge disencentive to companies to create paid low skill work. Why bother paying somebody minimum wage, when the government will supply somebody for free? I do, however, think that it is reasonable to force people to work some hours every week for public services that they use by being in receipt of welfare.
Whatever the aims of a welfare system, how the benefits are delivered is another matter. Means testing can be very unfair. I prefer the idea of negative income tax as proposed by pooablo, but it still seems unfair that two people can work vastly different hours and be guaranteed an equal income. My favoured option is the idea of a citizen's income, sufficient to live a very basic lifestyle, with a flat rate higher tax rate on all income earned. Only in exceptional cases would further welfare be paid. This would remove the welfare trap, always benefitting those who do paid work. Does any country have a system like this?


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C40
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Post by C40 »

Rube:
1 - I'm not saying this should happen.. Only thinking about it hypothetically
2 - The adoption would be permanent. Not talking about foster care or orphanages. In most cases the child should (theoretically) be better off both mentally/emotionally and economically. Their original family is probably more likely to have issues such as drug addiction (including alcoholism), abuse, poor education, and a lack of role models with good ethics, critical thinking, etc..
3 - It could be set up as only new children who are conceived and born all since starting welfare, or it could only happen after a family has been on welfare for a certain duration. I'm not talking about taking away someone's children as soon as they get laid off and start getting unemployment, I'm talking about people on long term assistance.
This should help to get poor/disadvantaged children into better families, and discourage people from having (more) children when they cannot support them.


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Ego
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Post by Ego »

Bangkok and Berkeley have more homeless than Boise for a few reasons.
The residents of Bangkok and Berkeley are more similar to one another with regard to beggars than either are to the residents of Boise. If you get up early in the morning in Bangkok you will see the monks out begging. Thais are more inclined to give to beggars because they don't see begging with the same social stigma as Boisians.

Also, Boise looks like this much of the year.

Lovely but being frozen to death is not conducive to begging.


JohnnyH
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Post by JohnnyH »

@Ego: Because of the cold?... Missoula, MT (U of M) is similar but there is a surprising number of homeless people. Despite the cold, perhaps they go there because they are tolerated by the government and also given aid by various organizations.


secretwealth
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Post by secretwealth »

Ego is completely right. Plus, I would add that those who would normally beg in Boise migrate to Berkeley, because it's easy and they can. Both Honolulu and NYC have had a spike in their homeless population as blue-state poor migrated. So, cities like Boise should thank Berkeley for taking their homeless problem off their hands!
Plus, I should point out that Idaho receives a substantial federal subsidy from the federal government, so really everyone in Idaho is essentially on government welfare: http://www.ritholtz.com/blog/2012/02/is ... ral-taxes/
So, to return to your question: "So is your argument Idaho is making up for a lack of government safety net with sex workers? Compared to SF or Berkeley? Really?"
No--I am not saying that at all. I'm saying Thailand does, Idaho does not, because it is already a recipient of a government safety net (that it seems to be a tad ungrateful for), and because its extreme poor leave and go to Berkeley, which you seem to have a personal hatred for.
I think that's a bit better than a system such as Thailand's, or Hong Kong's, or Singapore's, where the extreme poor are forced into difficult manual labor or sex work.


Seneca
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Post by Seneca »

@ Ego, I went for a motorcycle ride on a in a t-shirt and leather jacket Friday when it was 60º and totally clear roads in Boise. But I prefer everyone think we're up to our ass in snow most of the year because I like smaill-ish towns, so keep it up!
I've been to Chicago and NY which, believe me, have worse winter weather than Boise, and the same comparison would be valid.
We're losing the forest for the trees in this discussion. Here's what I was responding to:
"I never understood the libertarian view. I remember seeing countless beggars, street vendors, and similar struggling poor on the streets of Bangkok and it made me appreciate first-world welfare if only on aesthetic grounds alone" -Secretwealth
I used Boise and Berkeley as I've lived in and around these places/areas, and they have about as stark a difference in welfare and social spending as is possible in the United States. Boise is about as libertarian as it gets in the US and the streets aren't filled with beggars. Berkeley is insanely devoted to the liberal ideal and the streets are full of unbelievably bold beggars.
My point was/is, libertarian social ideals don't lead to streets filled with beggars (or sex workers!).
I agree with you there are other, FAR more complex reasons for the differences in quantity of beggars and the poor. I don't think either Secret or I had Buddhist monks in mind with our conversation...certainly not the only beggars there.


JohnnyH
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Post by JohnnyH »

You're right, sw!... Those greedy Idahoans do not deserve the teet! They can keep their federal income taxes and dole out their own welfare.
Haha, good luck doing it as effectively as the Feds!


secretwealth
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Post by secretwealth »

"they have about as stark a difference in welfare and social spending as is possible in the United States."
Yes, but that range is very narrow and quite irrelevant when looking at a global scale.
"My point was/is, libertarian social ideals don't lead to streets filled with beggars (or sex workers!)."
Except Idaho is far from the libertarian paradise you think it is, as its status as a net recipient of federal aid demostrates.
I'd like to suggest your point of view is far too provincial; the world is much bigger than the U.S., and looking abroad gives us better examples of much more liberatarian places (Thailand, Philippines, Somalia) and much more liberal (in the American sense of the word) places (Scandinavia).
Limiting yourself arbitrarily to one nation where everyone is a welfare recipient skews the results. FInland has 150 homeless people and is casually referred to as a socialist state. Thailand is a place where you can get away with killing people if you have enough money and has zero social welfare. They're much better real-world examples of liberalism and libertarianism than Berkeley and Boise, and completely contradict your point of view.


JohnnyH
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Post by JohnnyH »

"Except Idaho is far from the libertarian paradise you think it is, as its status as a net recipient of federal aid demostrates."
In case you haven't noticed every citizen of the US is forced to file federal income taxes. Why is it a citizen of Idaho's fault how DC chooses to redistribute?
I'm perfectly content to let the state of NY do whatever the hell it wants when it comes to welfare. Why are you only content if ID cannot?


secretwealth
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Post by secretwealth »

Again, JohnnyH, you're being too emotional. I'm not placing fault anywhere. I'm just pointing out that Seneca's premise is wrong, and his evidence--the case study of Boise and Berkeley--is very flawed and does not support his premise.


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