Eliminating Welfare

When I first became interested in economic policy, I found Milton Friedman’s advocacy of a “negative income tax” appealing. As I recall (and I read about it a long time ago), the idea was that people making more than a set amount–presumably, an amount sufficient to live on–would pay taxes, and those making less would receive a supplement bringing them up to sufficiency.

One virtue of such an approach would be to cut out the costs of the significant bureaucracy devoted to administering complicated systems of public assistance.

As I say, I read this a long time ago, and my recollection of the details is hazy at best. What brought it to mind was reading about a proposal currently under review in New Zealand.

New Zealand’s Labour Party is considering the concept of a basic “citizen’s wage.” Andrew Little, leader of the Labour Party, confirmed this as the result of the potential for higher unemployment in in the coming months and years. “Citizen’s income” is also known as Universal Basic Income (UBI). The idea is that everyone gets a basic amount of money to live off of, like a wage, and benefit systems are gotten rid of.

Switzerland and Finland have introduced similar systems.

I haven’t seen studies comparing the costs of such systems to the patchwork, cumbersome and demeaning welfare programs we currently administer, but I suspect a citizen’s wage would save considerable tax dollars.

Of course, I’m sure the very idea would raise howls of protest from the self-righteous legislators who want to punish people for being poor, and who seem to enjoy telling welfare recipients what they can buy at the grocery…

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Explaining Why “It Depends”

These days, commenting on public policy and the political environment is a mostly depressing slog through various bigotries, misunderstandings, inadequate communications—in a nutshell (and boy, sometimes it is a “nut” shell!), a hot mess.

When I look for an explanation, a common thread that might shed some light on the place we find ourselves, I keep coming back to the unsettled, fragmented and frequently unreliable sources from which Americans get our information, and the seeming loss of what we used to call the journalism of verification.

Obviously, the information landscape is not wholly responsible for all of our various crises of governance, but it sure is implicated in much of it.

The Brookings Institution recently issued a report on the importance of what it called “explanatory journalism.” After noting the wealth of information now available online, and the fact that the internet has enabled unprecedented access to millions of people who didn’t previously have such access.

The digital revolution has laid waste to the 20th century business models of news reporting and publication but even in these early days of the digital revolution, citizens seeking information about politicians, public policy, and government performance have resources never before imagined.

But that, of course, raises the pertinent question:

But how many such model citizens take advantage of these resources to exercise the popular sovereignty and democratic accountability at the core of our democracy? Most citizens are inadvertent consumers of news about politics and government, limited mostly to local television news dominated by crime, traffic and weather, with mere snippets of news related to public affairs, along with emails from family and friends forwarding materials that sound plausible but often are the opposite. Their lives are filled with responsibilities and interests that draw their attention away from election campaigns and policy battles. What little they know and learn about politics is often laden with misinformation and provides little basis for coming to public judgment beyond group identities, tribal loyalties and fleeting impressions of candidates and officeholders.

What citizens know ultimately depends upon the credibility of the information sources they access. If my students are any indication, most of us lack skill in evaluating such credibility–and the opinions of assorted “crazy uncles” and radio shock jocks suggest that  a substantial number of Americans are uninterested in information that contradicts their preferred world views.

The results aren’t pretty. These paragraphs from the report say it better than I could:

American democracy has come under severe strains in recent years. We’ve seen a precipitous decline of trust in its central political institutions, the radicalization of one of its two major political parties, a vehement oppositional politics in Congress that has turned divided party government into a graveyard for nominations, while turning legislative initiatives and congressional oversight into little more than a weapon of partisan warfare. All of this has been capped off with the emergence of a frontrunner for the Republican presidential nomination uniquely miscast for the office whose election would constitute a threat to American democracy and make a mockery of the U.S. leadership position in the world.

The roots of America’s dysfunctional politics are deep and complex. For our purposes here, it is sufficient to say that the media has done little to help the public understand what is amiss. An aggressively partisan talk radio, cable news, web and social media community has fueled a tribal politics that traffics in lies and conspiracies. The mainstream media has handcuffed itself out of fear of charges of partisan bias into antiseptic balanced treatment of both sides in spite of their obvious asymmetries. This pattern of false equivalence has served to reinforce a generalized, inchoate public distemper, one that is vulnerable to radical and anti-democratic appeals.

The question is: what can we do about it?

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Flavors of Freedom

There is a book review in the latest issue of the Washington Monthly of “No Freedom Without Regulation: The Hidden Lesson of the Subprime Crisis.”  It was written by a Professor Singer of Harvard Law School, and in it, he considers a type of freedom that gets short shrift from the various special interests who are constantly insisting that any and all government regulation constrains our liberties.

I found this passage illuminating:

When the state sets minimum standards of safety and transparency for the manufacture and sale of consumer products, it affords me the freedom to buy a toaster oven without first hiring a lawyer to read the fine print and an electrician to look over the specs to make sure it won’t catch on fire. Other restrictions protect us from negative externalities. Building codes may limit my neighbor’s ability to contract for the construction of a house with cheap material and bad wiring, but it protects my house from the fire likely to erupt in his.

As I have noted in previous posts, I’m grateful for the Food and Drug Administration that relieves me of the need to test that chicken I bought at Kroger for e coli. (Before the recent news from Flint, Michigan, I used to be more grateful for the EPA’s monitoring of water quality–now, I’d like to see those regulations stiffened up a bit…)

The ongoing debate about government regulatory activity displays all the deficiencies of American policy arguments generally: it oversimplifies, assumes an “either/or” answer, and focuses on the wrong questions.

Can regulation be too stifling? Can a “nanny-state” approach impose unnecessary costs on businesses and consumers? Sure.

Can the lack of appropriate regulation endanger innocent people, and impose additional costs on those same businesses and consumers? You betcha!

The questions we should be addressing are the “how” questions: is this particular regulation necessary? Is it “narrowly tailored” to accomplish its goal? Does it make sense from a cost-benefit standpoint?

We’ll still disagree, still argue about the extent and substance of regulatory activity. But at least we’d be arguing about the right things.

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Why Indiana’s Economy Lags

Indiana’s Institute for Working Families conducts research on Indiana’s economy–more specifically, the ways in which the state’s economy is or is not working for low-income Hoosiers who work.

The news, you will not be shocked to discover, is not good.

Recently, the Institute posted a list of 16 reasons why Indiana’s minimum wage should be raised. I encourage you to click through and read them all, but I want to highlight some of the most compelling.

  • There is not one county in Indiana where where working full time at the minimum wage of $7.25 per hour is sufficient to support even a single adult.
  • Waiters and waitresses in Indiana are paid $2.13 per hour by their employers (29% of the minimum wage). The last time they saw a raise was a quarter-century ago (1991), even as the industry has seen strong growth and profitability.
  • In Indiana, the median number of work hours at the minimum wage for a single adult to become self-sufficient is 48 hours per week. The number of hours increases significantly to 108 hours for a single adult with one preschooler and one school-age child. For a family with two adults, a preschooler, and a school-age child, each adult would need to work 64 hours for the family to be self-sufficient.
  • Standard and Poor’s cites rising income inequality as “contributing to weaker tax revenue growth”, making it more difficult for state and local governments to invest in education and infrastructure.
  • Children whose parents work for the minimum wage live below the federal poverty line. Research has found that children being raised in poverty have lower academic achievement, poorer nutrition, fewer job prospects as adults, and worse physical health than their more affluent peers.

The usual objection to raising the minimum wage makes superficial sense: if businesses have to raise what they pay, they will hire fewer workers. Logical as that seems, the evidence from decades of research says otherwise. As the Institute notes,

Two recent meta-analyses of research on minimum wage increases during the 1990s found that “the minimum wage has little or no discernable effect on the employment prospects of low-wage workers.”

There is a reason for this seemingly counter-intuitive result: when the minimum wage goes up, the buying power of low-wage workers also goes up. Unlike wealthier Americans, low-wage workers spend those extra dollars, and that increased spending boosts the economy. Increased buying power translates to increased sales of goods and services; employers who see improved bottom lines hire more workers.

A raise in the minimum wage to 10.10 per hour would affect 637,000 Hoosiers (23.4% of the workforce). That number includes 436,000 who are currently making less than $10.10 and another 201,000 whose wages would be pushed up due to pay scale adjustments. That’s a lot of additional buying power.

And as an added bonus, paying a living wage to hard-working Americans might ameliorate some of the rage and resentment currently fueling our toxic politics.

Just a thought.

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Words Fail–Edition Number Zillion…

Every day, it seems, Americans are waking up to new expressions of punitive hatefulness erupting in state legislative chambers, mostly but certainly not exclusively in the South.

From The New Civil Rights Movement, we learn that

Led by Republican Speaker Tim Moore (photo), Republican House lawmakers in North Carolina have just passed a sweepingly broad anti-gay bill in a special session called just for this one bill. The bill will void all local nondiscrimination ordinances. It will also mandate that all public accommodations ordinances, all minimum wage ordinances, and all employment discrimination ordinances come only from the General Assembly – state lawmakers – effectively banning any localities from protecting citizens in any of these areas.

The bill, HB 2, passed by a huge margin, 83-24, after less than three hours of debate and just 30 minutes of public comment.

HB 2 now heads to the Senate, who will take it up immediately.

It is expected to pass and Governor Pat McCrory, who called for the bill, is fully expected to sign it.

So–as long as we are striking back at LGBT citizens who have had the nerve to demand equal treatment before the law and the right to use a gender-identity-appropriate bathroom–let’s also pile on and punish the working poor, minorities, women….It is really hard to fathom what could impel an elected official to vote for a measure this hateful.

It’s worth noting that this North Carolina eruption is yet another illustration of the growing divide between urban and rural Americans; this special legislative session is a response to the passage of a nondiscrimination measure in Charlotte. In North Carolina–like other states, including Indiana–rural areas wield disproportionate influence in the statehouse.

It may also be that these lawmakers feel free to act on their bigotries because they are confident they will not have to defend their votes in a democratic election. After all, it can’t be coincidental that North Carolina is the most gerrymandered state in the country, and is currently embroiled in litigation over that fact, and over the state’s other assaults on voting rights.

I refuse to believe that this measure is an accurate reflection of North Carolina voter sentiment. This despicable behavior is what you get when the legislators choose their voters, rather than the other way around.

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