Noahpinion, Tyler Cowen and others have recently posted about the deserving poor.
Bernard Shaw played with the idea of the deserving and undeserving poor in Pygmalion, written over 100 years ago.
Pygmalion, more familiar as My Fair Lady, tells the story of a young flower seller, Eliza Doolittle, who is transformed by the linguist, Henry Higgins, into a "lady."
Her no-good wastrel father, Mr. Doolittle, objects to Henry Higgins' adoption of his daughter, and demands appropriate compensation. Higgins, and his friend Pickering, are shocked, "Do you mean to say, you callous rascal, that you would sell your daughter for 50 pounds?…Have you no morals, man?" "Can't afford them, Governor," Doolittle replies, "Neither could you if you was as poor as me."
Doolittle then goes on to lament the plight of the undeserving poor:
What am I…I ask you, what am I? I'm one of the undeserving poor: that's what I am. Think of what that means to a man. It means that he's up agen middle class morality all the time. If there's anything going, and I put in for a bit of it, it's always the same story: "You're undeserving; so you can't have it." But my needs is as great as the most deserving widow's that ever got money out of six different charities in one week for the death of the same husband. I don't need less than a deserving man: I need more. I don't eat less hearty than him; and I drink a lot more. I want a bit of amusement, cause I'm a thinking man. I want cheerfulness and a song and a band when I feel low. Well, they charge me just the same for everything as they charge the deserving. What is middle class morality? Just an excuse for never giving me anything. Therefore, I ask you, as two gentlemen, not to play that game on me. I'm playing straight with you. I ain't pretending to be deserving. I'm undeserving; and I mean to go on being undeserving. I like it; and that's the truth. Will you take advantage of a man's nature to do him out of the price of his own daughter what he's brought up and fed and clothed by the sweat of his brow until she's growed big enough to be interesting to you two gentlemen? Is five pounds unreasonable? I put it to you; and I leave it to you.
Incentives versus needs – there are no easy answers.
Worthwhile Canadian Initiative 
Shangwen: The military comes with that little caveat where you have to go die when your boss tells you to. Not sure that the price of escaping poverty should be pledging your life.
Really surprising level of paternalism here. Nanny state gone wild, and from the righties too! I’m shocked. A lot of this is middle and upper middle class moralizing and self-rightenous. The problem is almost completely imagined. See here, for example:
http://www.hrsdc.gc.ca/eng/publications_resources/social_policy/sasr_2008/page12.shtml
In AB, the number of long term recipients of welfare was … about 3000 people. We’re talking about 0.1 % of the population. The ON numbers look to be about the same. And a quick scan suggests that disability is a big part of what puts people on the welfare roles to begin with. No doubt some of it is self inflicted, but I doubt very much that they all got there via an attempt at first prize in the Darwin awards.
So I’m with Stephen: GAI. Level the playing field a little, and then let the chips fall where they may. Give poor people money and let them figure out what they need. So what if some people make dumb decisions. There no evidence to suggest that it’ll be anything other than a tiny minority of people. And in that case call it a bribe to behave, call it respecting people’s ability to make decisions for themselves, whatever floats your boat.
The lefty in me is doing the “Crying Game” shower seen.
Seconding the recommendation for William Julius Wilson’s “When Work Disappears” (1996). Wilson: “The consequences of high neighborhood joblessness are more devastating than those of high neighborhood poverty. A neighborhood in which people are poor but employed is different from a neighborhood in which people are poor and jobless. Many of today’s problems in the inner-city ghetto neighborhoods — crime, family dissolution, welfare, low levels of social organization, and so on — are fundamentally a consequence of the disappearance of work.”
I’d suggest that policies aimed at reducing poverty should start by focusing on the working poor.
1. Minimum wage and refundable tax credits. The minimum wage is easy to enforce, but if it’s too high, it’s likely to reduce demand for low-wage labor. Refundable tax credits, like the Earned Income Tax Credit in the US, would be an alternate way to help the working poor without reducing demand. John Cheese’s article on what it’s like to be poor — when your income isn’t sufficient to meet basic needs, you spend money as soon as it comes in — suggests that quarterly payments (like the GST credit), or even monthly payments, would be better than a single annual payment.
2. Macroeconomic policy to target full employment. As Matthew Yglesias has observed, this is an urgent problem: “We had, until recently, the Great Moderation Consensus that automatic fiscal stabilizers are a good thing and then beyond that the Federal Reserve has the ability to stabilize the macroeconomy by fiddling with interest rates. Well now here we are and the Federal Reserve can’t stabilize the macroeconomy by fiddling with interest rates. That calls for the creation of a new regime. But it’s clear that despite a few stabs in the direction of Quantitative Easing and communications management that Ben Bernanke isn’t going to give it to us. It’s not simply that the current recession isn’t being brought to a rapid end, it’s that nothing whatsoever is being done about the underlying weaknesses in the American economic system that it revealed.”
3. Reduce marginal tax rates for the poor. My understanding is that in most provinces, if you’re receiving welfare and you get part-time work, your wages are subtracted from your welfare payment. In other words, your wages are taxed at 100%! John Richards talks about this problem in “Retooling the Welfare State”: reducing marginal tax rates is expensive (because you end up withdrawing the benefit at a much slower rate as you go up the income scale), but keeping them this high seems extremely short-sighted.
4. Richards also talks about family structure. I’d suggest that any programs to assist the poor should be neutral with respect to family structure (getting married shouldn’t impose a financial penalty, and neither should getting divorced).
5. Maintain good public schools and health care, so that poor families in particular have access to education and health care.
What about the non-working poor?
In the Canadian context, my understanding is that welfare rates are quite low. Robin Boadway: “Those who must rely on social assistance, especially the disabled and employable singles, receive what can only be called a pittance with which to survive. Welfare incomes, including both social assistance and refundable tax credits, remain well below poverty levels and have been falling in real terms since the mid-1990s. This is a national disgrace.”
Yes, I may have volunteered for Her Majesty’s Canadian Forces except with Type I Diabetes I am unfit to serve. Had that conversation at my first summer job actually, a coworker was a vet who upon learning I liked to travel said “join the Army, see the world!” I replied I was unfit for service. I looked me up and down and said there was nothing wrong with me. I said I was diabetic and then he shrugged. “That’ll do it.”
I knew several people in university who were taking COTC (Canadian Officer’s Training Corps, get a degree on the Forces’ tab in return for five years) and others who joined the Militia out of a desire to serve and for a bit of cash.
Second, Bob, your arguments make no mention of the fact when people’s agency is denied. What happens when you do everything right and you still end up with nothing? Your arguments seems to assume that this doesn’t happen; it most certainly does. Else I would not have an appeal before the Public Service Commission for a federal job recruitment process gone haywire. I like to think of it as overtime in a hockey game.
Your perspective of the system is generally shaped by what the system has done for you.
Russil Wong – excellent and constructive comments, but I’m afraid I’m going to have go to all world-weary and cynical on you.
“A neighborhood in which people are poor but employed is different from a neighborhood in which people are poor and jobless.”
Substitute men for people and read that sentence.
Substitute women for people and read that sentence.
Sounds different, doesn’t it? Unemployed men are way scarier.
it’s a laudable set of goals: neutrality with respect to family structure, adequate support for people with no other source of income, tax rates low enough to provide adequate work incentives. I’d love to see it, but don’t believe it’s possible.
Make up some numbers, and see what you come up with for a break-even point (e.g. if support = $1000 per year and the tax rate = 10%, the break-even income level, the point at which people start paying positive taxes, is $10,000; if support = $5,000 a year, at a 10% average tax rate the break-even income level is $50,000). Figure you’re going to have to generate enough taxes from people above that income level to pay for the transfers to people below that income level, and also factor in that that you have to pay for health care, education, old age security, law and order, roads, etc also as well.
Doesn’t add up. GAI estimates that make it add up are based on highly optimistic assumptions about labour supply elasticities.
Speaking of welfare rates, I exhausted my assets and EI and had to apply for Ontario Works.
I was eligible for $61/month as a single young male.
I was living with a relative. I was therefore entitled to a pittance.
Try running a job search on that; you can’t.
Patrick: “The military comes with that little caveat where you have to go die when your boss tells you to. Not sure that the price of escaping poverty should be pledging your life.”
Sorry Patrick, but how’s that any different from taking a job as a fisherman, farmer, miner, logger, oil fire fighter, cab driver, construction worker or any of a number of other particularly dangerous occupation. Why is risking your life in the armed forces an unreasonable price for escaping poverty but risking your life as a fisherman or miner isn’t? (And I’s be curious what the relative fatality rates for those various occupations are – I would not be the least bit surprised if some of them were higher than for the military). Seems like a fairly arbitrary distinction.
And as an aside, at least in the militaries of liberal democracies, soldiers are rarely ordered to die – generally staying alive is strongly encouraged. Countries that do order their soldiers to die are generally the ones that lose wars.
“I’d suggest that any programs to assist the poor should be neutral with respect to family structure”
Query how desirable that is. Do we really want a society that is indifferent between single parent families and two-parent families? Granted, that’s better than penalizing the two-parent family, but if you take the view (as I do) that the latter is, generally, a much more robust social institution, I’m not sure that we really want to be neutral as between the two.
Mind you, I think this is an area where the “soft” power of non-state institutions (religion, culture, societal expectations) can be more effective, more subtle and flexible, than using state power to achieve this goal (since the latter will do so clumsily and probably do as much harm as it prevents). The rise of single parent families since the 1950s probably has less to do with social programs or the tax system than it has to do with changing social values. But changing values doesn’t need to be a one way street.
Bob Smith: ” I’m not sure that we really want to be neutral as between the two.”
Which way does that go – to each according to his need, or to those that hath shalt be given?
Bob Smith,
My comment was in response to Tyler Cowan’s and Noah Smith’s post (linked above). It is implied in both Tyler’s and Noah’s post that their is a moral distinction between ‘deserving’ and ‘undeserving’ poor. Tyler states that ‘the poor, in wealthy countries at least, are responsible for quite a bit of their difficulties’ and Noah’s argument that we should help the poor is based on the premise that ‘people are poor because of their own actions’. I disagree with those premises so my definition of poverty and inequality is within that context. But generally I agree with you and our differences are semantic.
You make the comment that ‘there’s no contradiction there, because poverty, on its own, is not an insurmountable barrier to achievement, particularly in the presence of effective social institutions’. But that is my point, if you accept that institutions aren’t effective, that the status quo institutions in fact are barriers to social mobility, then taking the position that the poor because of their actions deserve to be poor is a contradiction, so I think you actually agree with me, and our differences are down to semantics of grammar composition. I agree with your last two paragraphs that any policies to deal with poverty and institutionalised inequality has to address the right issues i.e. institutions that are barriers to social mobility. Of course at the micro level with any policy it might be important to make distinction between individual characteristics such as age or capacity to work but I don’t think it’s helpful to characterise them as ‘deserving’ or ‘undeserving’ characteristics. The deserving v undeserving tag implies a moral connotation which is the issue I was trying to address.
*’[I]f you accept that institutions aren’t effective, that the status quo institutions in fact are barriers to social mobility, then taking the position that the poor because of their actions deserve to be poor is a contradiction’ because the premise implies poor have no control over institutions, and institutions is what make the poor poor.
Maybe it’s time for me to use set notation.
Bob: Don’t be obtuse. You seriously don’t see the difference between driving a cab in Toronto and being an infantryman in Helmand, or starring down the barrel of a Croatian howitzer in the Medak Pocket? I doubt very much that a soldier would agree.
Bob, it’s quaint you have a such a notion of families. It really is.
The trouble is that it was never reality. “The good old days of two-parent families” willingly ignored spousal abuse and had laws that were very unequal in their treatment of women. Not that that stopped people getting divorces if they really wanted one.
In all provinces except Newfoundland and Quebec, divorce was legalized through incorporating the English Matrimonial Causes Act into provincial common law, a barely legal tactic as divorce was specifically reserved to Ottawa under the Constitution Act, 1867. Under the Act the surest way to get a divorce was to prove infidelity. “Private Investigators” were paid witnesses to prove such infidelity. If the marriage had simply broken down and couple wanted to walk away, they could stage “infidelity” easily. There are records that show just that.
In Newfoundland and Quebec there was no equivalent to the Matrimonial Causes Act. In order to get a divorce you had to apply for a private Act of Parliament to grant you one. This would be introduced in the Senate; infidelity was the surest ground and again the use of investigators as paid witnesses and staged scenes of ‘infidelity’ were common and exist in the Journals.
The good old days weren’t that good, they were just different. Divorce was made generally available in 1968 with the Divorce Act, the first Federal act under the Divorce Power granted to Ottawa under the BNA Act.
Frances: “Doesn’t add up. GAI estimates that make it add up are based on highly optimistic assumptions about labour supply elasticities.”
Really? Where were you when we discussed this a bit over a year ago? I thought Nick made a really excellent case that it all adds up fine and is a lot more efficient to boot.
K “Where were you when we discussed this a bit over a year ago?”
Lurking and avoiding conflict. How fruitful is it to have a long debate basically goes “labour supply and demand are relatively elastic” “no, they’re inelastic” “elastic” “inelastic”?
As an economist I believe there are no $20 bills lying on the sidewalk – and that applies to social assistance reform as much as anything else.
Nick is an economist and he believes there are $20 bills lying on the sidewalk. He’s said that many times. He believes that it is the responsibility of economists, er, central banks (same thing) to find the.
Frances: “that applies to social assistance reform as much as anything else.”
Is this a corollary of the Efficient Government Hypothesis? Honestly, I have literally no idea why as an economist you would assume such a thing. The “efficiency” goal is to get the (non-voting) poor out of our faces and our middle class consciences as cheaply as possible. I don’t see where the utility of the poor figures into the political incentives.
And I apologize for the snark which I usually reserve for righties. Your cynicism about the possibility of positive change is galling to me.
K – people’s lives are complex. That’s why social assistance is complex. Sure, there are things that can be done to make it better (or worse, like the Florida drug tests featured on tonight’s Daily Show). In fact Canada has moved a substantial way in the direction of a GAI with CCTB, and is continuing to move in that general direction with WITB. (CCTB = canada child tax benefit WITB = working income tax benefit etc).
I expect we’ll see some enrichment of WITB since it’s a bit of a Harper baby. But to my mind GAI is a pretty low priority in terms of welfare reform. Child care is a big one, changing earnings exemptions is another one, rethinking asset tests is a third, providing decent support to families with children as families with children is one I’d like to see.
Look at the results of the SRDC minimum income experiment back in the 90s, that’s some of the best empirical evidence we have. Also the recent paper by Evelyn Forget in Canadian Public Policy (Sept issue, I think).
It’s like turning around a freighter – it happens slowly – but GAI isn’t some magic bullet that’s going to solve everything.
Frances: “It’s a laudable set of goals: neutrality with respect to family structure, adequate support for people with no other source of income, tax rates low enough to provide adequate work incentives. I’d love to see it, but don’t believe it’s possible.”
John Richards gives a concrete example of how clawback rates might be lowered on pages 270-277 of “Retooling the Welfare State” (1997)–by reducing current zero-earnings welfare benefits even further. Assuming the current clawback rate is 90%:
“Under this option, a province would seek to render employment more financially attractive for parents on welfare by augmenting earnings over a phase-in range. A province could partially offset the earnings supplement by reducing zero-earnings welfare benefits. To be specific, assume that annual provincial welfare benefits decline by $1,000. Simultaneously, the province would supplement earnings by 35 cents per dollar over the earnings range that permits welfare receipt ($0-$9,800), a range that effectively encompasses full-time work at minimum wage. The maximum value of the earnings supplement is $3,400, realized at earnings of $9,800. With a 25 percent average taxback rate applied to the earnings supplement and CTB in the $9,800-$26,000 range, the supplement disappears at an earnings level of $26,000.
“… the chief rationale [of this option] is to make work pay…. For those simultaneously receiving provincial welfare, the combined tax-back rate would decline from the prohibitive (90 percent) to the reasonable (55 percent, which is the 90 percent welfare tax-back less the 35 percent earnings supplement). [This option] is clearly less redistributive for the very poor. For the minority in the phase-in earnings range who do not receive provincial welfare, the supplement would augment earnings by 35 percent, effectively compensating them for the decline in real earnings among the bottom quartile and for the increase in marginal tax rates, two trends that have adversely affected the poor over the past two decades.”
Bob [regarding family structure:] “Mind you, I think this is an area where the ‘soft’ power of non-state institutions (religion, culture, societal expectations) can be more effective, more subtle and flexible, than using state power to achieve this goal–”
I’d agree with that. One factor here is that when you make benefits dependent on family structure, then the state has to know what your family structure is (and has to be able to tell if you’re lying). It seems better to try to make the system neutral.
OK. Well that sounds more like there could be big benefits to be had but it’s risky to do everything all at once. I’m fine with that, though I’m far more optimistic about the potential for non means tested programs (eg citizens’ dividend) and the potential additional benefit of reduction in deadweight loss than you seem to be. But no objection to government run childcare (public school for toddlers) or other government services where there is a likelihood of market failure. There is an excellent case for special treatment of families and others who, like children, don’t have agency. But I don’t see a reason to means test any of these programs. Just let everyone in the relevant category have them. Then tax it back in the most efficient way possible.
K ” But I don’t see a reason to means test any of these programs.”
Let’s say a minimum wage job generates just enough income for a single parent family to get by, not taking into account child care costs. Without generous child care subsidies and/or very large cash transfers it’s not possible for someone to take that minimum wage job, even if he/she wants to.
Giving everyone generous child care subsidies and/or very large cash transfers bankrupts the system (see Quebec where child care is “universal” in theory but tightly rationed in practice, current debate around OAS), without some kind of means testing the most needy will probably end up getting the fuzzy end of the lollipop.
People don’t like being given benefits and then having them taxed back – the psychology of it doesn’t work.
Now I remember why I didn’t join in that debate about GAI.
We already have a psuedo GAI. It’s called “welfare” (plus a host of other programs like OAS, disability stuff, etc.). The only difference between a true GAI and welfare is that you get a smoother Marginal Tax Rate profile. GAI is no magic bullet. It’s just a smoother bullet.
The “correct” answer to all these questions will be some (unknown) convex combination of:
1. Akerlof on “tagging”
2. Rowe and Woolley on “Universality”
One other thought:
vimothy’s comment resonates strongly with me. What percentage of the population would have to be like ‘Enry ‘Iggins before you said “enough is enough”? 1%? No worries, we can handle that. What about 10%? 50%? 90%? What if the growth of that percentage is endogenous wrt policy? What is the percentage, or the growth elasticity, at which you would join Lee Kwan Yew (Singapore chap)? Lefties from an earlier century weren’t afraid to tackle these question. I think Determinant’s (theological) ancestors weren’t afraid to tackle the distinction too.
Damn! For “‘Enry ‘Iggins” read “Mr Doolittle”.
Frances: “Giving everyone generous child care subsidies and/or very large cash transfers bankrupts the system”
High quality universal daycare (see northern Europe, France) and high quality public education in general is the opposite of bankrupting the system. It’s one of the best investments we can make in the future productivity that will fund our retirements.
And Nick’s point that we barely need to even raise anybody’s effective marginal tax rates to institute a flat tax plus a large universal cash transfer was never refuted by anyone in that thread. So labour elasticity has nothing to do with it. The point is to smooth the effective tax curve and eliminate outrageously high marginal tax rates on low income earners. It would have been nice if someone had at least made an attempt to refute the data and arguments that were put forth by Stephen and by Nick in the comments. Instead we were left with Kevin Milligan claiming in the press that it’s too expensive, but apparently unable to make any headway against Nick’s (admittedly back of the envelope but very coherent) analysis.
“People don’t like being given benefits and then having them taxed back – the psychology of it doesn’t work.”
All benefits get taxed back. That’s how we fund them.
“Now I remember why I didn’t join in that debate about GAI.”
Sorry I brought it up.
The BBC managed to dig out a modern day Mr Doolittle, to liven up the U.K.’s current debate about welfare. This family is getting welfare worth the equivalent of about £40K gross per annum. What disturbs me about lefties in the U.K. is that they see “workfare” as a return to workhouses, and they have campaigned vigorously against it. In effect the position is that welfare must be unconditional; if people are still poor, well, we must redistribute more from the bankers. I don’t know how we move on from there.
Poverty (and wealth) is strictly relative. If in some unimaginable future some people can travel freely to the stars and back due to their economic status, and some people just have a good life here on earth, then the latter are in abject and deeply immoral poverty.
I find this discussion really strange and/or backwards. I can’t think of a moral justification why the CEO and the janitor who cleans his office should make a different amount of money. Almost all the usual justifications are ex post facto (the organizational power of the former, the skill level, etc, etc). If we must have a difference for some practical reason, then let us instead discuss how big this difference ought, under the assumption that otherwise they should be the same. That discussion is going to have a very different character and assumptions from this one, where we argue over whether we should correct for differences assumed natural and therefore morally justified.
Most of the examples in your link are essentially private industry getting free labour from the government. This sort of “workfare” is very much anti-labour.
K: “And Nick’s point that we barely need to even raise anybody’s effective marginal tax rates to institute a flat tax plus a large universal cash transfer was never refuted by anyone in that thread.”
I don’t think that’s exactly what I said (or did I?). You take that very spiky 3-D graph of effective marginal tax rates (EMTR on the vertical axis, income on one horizontal axis, other attributes on the other horizontal axis/axes), and put an bulldozer on it. Scrape off the hills, and use the material to fill in the valleys. Then hope that the incentive effects allow you to do some mix of: increasing the intercept income; lower all EMTRs.
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blockquote>Most of the examples in your link are essentially private industry getting free labour from the government. This sort of “workfare” is very much anti-labour./blockquote>
In what sense is it anti-labour? Don’t welfare payments for people in work also subsidise the price of labour, or is there something special about subsidising the price down to 0?
Mandos: “Most of the examples in your link are essentially private industry getting free labour from the government.”
But this begs the questions:
1. Who is “private industry”? Is that a person?
2. Why is “private industry” getting the free labour rather than government? Might it be that public sector unions won’t allow it?
3. Would it be “pro-labour” to take some percentage of the labour force and ban them from working, to reduce the total supply of labour and increase wages for the remainder?
Mandos: “I can’t think of a moral justification why the CEO and the janitor who cleans his office should make a different amount of money.”
I can think of two:
1. Libertarian: because people should have the right to alienate their own labour at whatever prices they agree on.
2. Pragmatic: because attempts by governments to pay people according to the government’s own estimation of their moral worth or need haven’t worked out so well in practice.
Nick: “I don’t think that’s exactly what I said (or did I?).”
No you’re right. What I actually meant was that (assuming a bit of savings from elimination of dead weight losses) the top marginal rate wouldn’t have to go up very much. The other rates are, as you point out, all over the place. Some would rise, some would fall.
K: yep. The hope/expectation is that more would fall than would rise, once the incentive effects kick in.
K: though actually, since there must be a Laffer Curve out there somewhere, and EMTRs at or near 100% must be over the top of the Laffer Curve, you could presumably shave off those EMTR peaks without having to raise any other EMTRs.
Yes, but these are the ex post facto claims to which I was referring which don’t relate to a discussion of “deservingness”. The libertarian is claiming that people have the right to abjure what they deserve. Since I believe that what we call the “free” market is usually not a product of free exchange but necessarily one of relentless violence, I don’t agree—but it’s a separate discussion from deserving. The second one is orthogonal to deserving by definition.
How we approach the problem of deserving is purely a function of political preference. If you decide that there is a distinction between the deserving and undeserving poor, you have adopted a priori a particular moral and political understanding of work and wealth. Making this assumption plain puts the various proposed solutions into stark relief.
Entities whose economic decisions are set by law at a further remove from democratic review.
I’m sure that the public sector unions would be happy to allow if it were the case that the workers were hired at public sector union wages and permitted to become members of the public sector unions. I have no principled objection to that form of “workfare”.
It would be “pro-labour” (or at least neutral) to employ them at wages that do not compete with existing workers.
It’s worth noting that Doolittle’s argument is not in support of the idea that charity should “ennoble”, or require the adoption of bourgeois values. He just wants fair compensation; in other words he wants trade, not charity. Here is the rest of the exchange, where he settles on a mere 10% of his original ask:
Higgins wants to give Doolittle more than he is asking for, to compensate him for the verbally clever part of his character that signals, unexpectedly, that the poor man is more “like them”. Doolittle wants fair compensation unhitched to affiliation. Were Deirdre McCloskey arbitrating this, it’s possible she’d defend neither Higgins nor Doolittle, but she might hold out more hope for Doolittle.
“What percentage of the population would have to be like
‘Enry ‘IgginsMr. Doolittle before you said “enough is enough”? 1%? No worries, we can handle that. What about 10%? 50%? 90%? What if the growth of that percentage is endogenous wrt policy?”If the rate of doolittle-ism is independent of policy, then I don’t suppose there is much policy can do.
FWIW, as a lefty, I am sympathetic to concerns over incentives. Just driving to and from work I see innumerable examples of people engaging in all kinds of rude, anti-social, and downright dangerous behaviour, and I don’t believe the problem would be solved by gov’t giving everyone a luxury car. But in a world where economic policy is designed to thump doolittle-ism into submission, I worry about the Eliza’s who don’t have a Mr. Higgins to shield them from collateral damage.
Mandos:
1. If I and you both agree, why should the other 99% of the population get to vote on it first? Is there any private sphere in your worldview, where we can do what we want without having to get it OK’d by the whole elctorate?
2. But maybe the rest of us don’t want to hire more government workers at union wage rates. Are you saying we should? What about if union wages for unskilled labour were $50, $100, $1,000…? At what point would you say “No”?
3. But if people and firms wanted to hire more labour at existing union wage rates, they would already be doing it, so we wouldn’t be asking this question in the first place.
Labour did do that, a “Future Jobs Fund” which created public sector jobs to get people out of work, and the unions did support it. The new government is… less confident in the multiplier effects / not trying to increase public sector output at the moment / Doing Things Differently Because They Know Better, delete as appropriate.
Patrick: “But in a world where economic policy is designed to thump doolittle-ism into submission, I worry about the Eliza’s who don’t have a Mr. Higgins to shield them from collateral damage.”
Agreed. But at this point Lee Kwan Yew (sp?) would ask the question that makes us very uncomfortable: “OK, and how many more Eliza’s do you think you can handle, Mr. Higgins?”
Russil is stuck in spam.
I suppose it then becomes a test of Mr. Higgins morality. What’s more important to him: thumping doolittle-ism or protecting Elizas?
Perhaps we need a post on ‘deserving’ and ‘undeserving’ economists. After all, we need to fire someone to free up taxpayer cash in order to provide job training funds for the ‘undeserving’ poor.
I nominate the monetarists. Proven wrong and therefore ‘undeserving’. Fire ’em all and create some job-retraining programs for them. Starbucks needs baristas.
Nick:
1. I gave you a definition. I didn’t give you (directly, at least) a judgement on what I thought of private enterprises that aren’t subject to democratic review. Let’s say that that the private sphere extends to the point where we cannot determine significant externalities from human choices. However, my definition of an externality is probably much broader than yours, and is yet again dependent on political ideology and moral preferences. In the case of employing welfare recipients in a manner that competes with union wages and undermines collective bargaining, I’d say that the externalities are “quantit.
2. The fact that some people don’t vote the way I think they should doesn’t pertain to whether I think it’s good or fair.
3. See my answer to your statement about libertarians. The “want” part is extremely one-sided, where one sides wants have more weight than the other side. I don’t agree that this weight has an a priori moral case if we have anything more than the most trivial belief in the equal dignity of persons.
I forgot and didn’t finish this sentence (distracted):
1. I gave you a definition. I didn’t give you (directly, at least) a judgement on what I thought of private enterprises that aren’t subject to democratic review. Let’s say that that the private sphere extends to the point where we cannot determine significant externalities from human choices. However, my definition of an externality is probably much broader than yours, and is yet again dependent on political ideology and moral preferences. In the case of employing welfare recipients in a manner that competes with union wages and undermines collective bargaining, I’d say that the externalities are both “quantitatively” and “qualitatively” notable. (See many extant discussions on growing inequality…)
Look, there are two kinds of arguments we can use to justify the existence of relative poverty: a priori and a posteriori. The a posteriori arguments are the ones that Nick originally used to respond to me. You know, the practical reasons, it just is, and so on and so forth. If we want to focus on those, then the question of deserving or undeserving becomes irrelevant. And we’d be discussing, instead, what size of inequality we should tolerate before we need to take some form of ameliorative action. Then the discussion returns, at least partly, to the realm of the measurable and empirical.
If we want to talk about a priori reasons—whether or not someone deserves to be poor due to their own actions and errors—then we enter a completely different discussion and are at risk of begging the question: should particular actions lead to poverty and what are these actions.
But instead, because the mainstream economics profession as a group has made apparent assumptions about these things, we are instead discussing how to ameliorate the condition of the undeserving poor, and precluding a discussion of whether our current system of distinguishing deserving from undeserving has itself led to, well, systemic poverty.
Patrick: “Bob: Don’t be obtuse. You seriously don’t see the difference between driving a cab in Toronto and being an infantryman in Helmand, or starring down the barrel of a Croatian howitzer in the Medak Pocket? I doubt very much that a soldier would agree.”
Well, let’s think about the difference. According to this (http://www.latesttopten.com/top-10-most-dangerous-jobs-in-usa-highest-casualty-rate) the fatality rate for US servicemen is less than it is for fisherman, and not that much larger than the corresponding rate for loggers or pilots. And it’s easy to see why that is. The fatality rate IN COMBAT, may be higher for soldiers, but at any given time most soldiers aren’t serving in combat roles. Fort Hood, Texas, is a lot safer than the Bering sea. If one focused only on the fataliy rate of miners at the bottom of collapsed mines, I could say that that’s the most dangerous profession (and I doubt the coal miner would disagree with that proposition). Mind you, that would be misleading, but by focussing on the perspectives of soldiers in combat, that’s precisely the exercise you’re engaged in.
So again, to go back to your question, while is it intolerable for someone to take a 1 in 1000 chance with their life to be a soldier, but it isn’t intolerable to take a 1 in 1000 chance with their life to be a fisherman or logger (or a 1 in 5000 chance with their life to be a cabbie). Perhaps you can tell me the distinction between those two choices, but I don’t see it. (Not true, I do see the distinction, soldiers tend to get better benefits than fisherman, and definitely have better benefits than cabbies.)
Bob: Sorry, not buying it. When the fish start shooting back maybe we can talk. A miner or fisher have an explicit right to refuse to do anything obviously unsafe. It’s up to them. A soldier who packs it in when things get dicey … well, at least they don’t shot them anymore as far as I know, but no miner or fisher ever got life in prison for refusing unsafe work.
Nick: “1. Libertarian 2. Pragmatic”
3) Utilitarian. The welfare theorems say that there is a competitive equilibrium that maximizes utility… Subject to a lump sum wealth transfer. And notwithstanding some pretty major technical conditions such as absence of market power, information asymmetry and externalities.
But still, those are important insights. The left would say that power distorts outcomes in a way is unrecognizable as a perturbation of our toy model and that we therefore need to balance power with more brute force power, thus (possibly) rectifying some of the inequality but making little progress on output. The real answer, of course, is to go after and eliminate the sources of power such as regulatory capture, to eliminate corporate welfare (e.g. government guarantees) and to tax finite resources (land) and other externalities. And to empower labour by paying citizens an equal share of the collected rents as a citizens’ dividend. And maybe some people will work less, as Stephen pointed out in his piece, and so what, if that’s what makes them happy.
And really excellent point about the 100%+ marginal rates. Laffer’s a dirty word (and I’m pretty sure the man was totally wrong about the peak of the curve), but it’s got to kick in somewhere. That is some majorly inefficient taxation.
Bob: Fisherman have the right to quit. Soldiers, not so much. My right to change my mind after I figure out what I’ve gotten myself into is pretty valuable to me. It’s my freedom. It’s of such great value that we don’t even permit people to contract it away. Except to the military. The big toll from service is family breakdown, depression, PTSD. Not casualties. I’m sure fishing is tough, but you can always move to Fort McMurray.