Blog Archive

Saturday, August 3, 2013

Bizarro America:

Recently PBS offered a solution of giving every unemployed American a guaranteed job at $20,000 a year with health care benefits.  It said this program would cost no more than the current welfare we're giving to the same people, so would be a pure upside because A) useful work would get done and B) people would have more dignity than they have as welfare recipients.

This just goes to show how much waste there is in the system.  Why are we spending $30,000 per person (when you take into account the value of the benefits the hypothetical job program would give) on welfare when we could just give them a job and let them earn the money directly?  Or even better, if we gave them the money directly, they would do just fine on $12,000 a person, like the citizen's dividend I recommend.  But because we don't give them money directly, or a job directly, but instead give them various coupons like 'medicaid,' 'housing subsidies,' 'school lunch programs,' 'food stamps,' 'disability insurance,' (you get the idea), all of which is run by a massive bureaucracy that must continuously decide if you qualify for 'x' program or not, the money just dissipates into thin air, not actually benefiting anyone but still costing at least a trillion dollars to the taxpayer.  The receivers of the coupons don't get to spend the money where they would like to and would find most useful, and the givers must employ millions of middlemen who have nothing to do with helping the poor before they can get even a single dollar into the hands of the poor.  In fact, most of these subsidies benefit not the poor but the super-rich, who, because there are coupons for health insurance, college educations, food and housing, can jack up their prices to a much higher than market affordable level, and still get paid at these new higher prices because the government is footing the bill.

If you let the market determine prices, by giving the poor money instead of coupons, then vendors wouldn't be able to raise prices on the poor because they aren't a captive market anymore.  They can spend their real money anywhere, on anything, but the play money they receive from the government can only be paid into the 'company store' which has a heyday plundering them for all they are worth.  Either a real income from a guaranteed federal job or a citizen's dividend would empower the poor, but currently they're helpless victims of monopoly capitalism.  That is why the cost of health care and education continuously increases above the rate of inflation in the country, the coupons that fund these industries are worthless for anything else, so you may as well just turn them in for the high priced goods and get something out of them.

But even with this policy suggestion, commenters with names like "John Galt" were quick to angrily swarm in and demand that nothing be done to help the poor.  They argued that government jobs would disrupt the free market, while ignoring the fact that coupons are even more disruptive.  They said they didn't want their tax money going to the poor, when in fact it is already going to the poor and this program would be revenue neutral.  They said all sorts of things, which were obviously stupid and illogical, but the point was they were the majority.  Whenever anyone introduces an innovative and effective solution to poverty and unemployment in America, this hive of killer bee commenters comes swarming out to inform them that they want America to be full of poor and unemployed people.  They do not consider this a bug, but a feature in their lives.  Without the poor and unemployed to look down upon, their lives won't be as fulfilling or enjoyable.  Take that away, and what do you leave them to be sanctimonious over anymore?  In a way, by outlawing 'hate' in civil society in terms of race, gender, sexual orientation or ethnicity, the haters have all flocked to Ayn Rand's banner and decided to hate, hate, hate the lower classes, because that's still permitted and even praised by the outside world.  It's pathetic, because these people cannot point to a single thing the poor have ever done to them (unless you're in the top 20%, you're a net tax eater, not tax payer, so you cannot say the poor are taking your tax dollars), and yet they are determined to make their lives as miserable as possible.  They want them to be starving, homeless, cold, sick, and to die of easily preventable causes, even the children who were born into this world helpless to prevent their conditions.

The worst of human nature is revealed on these comment threads, that wish torture and death on people they've never met and who have never done them any wrong.  Basically, people could not care less about those that A) are outside their designated circle and B) are not any benefit to them personally.  This is short-sighted, in that it eliminates a large number of potential allies who could have helped you in your time of need.  But it also is just petty, because it only cares about people's subjective value, "what good are they to me?", without ever considering their objective value, "What good are they to themselves, or those around them?"  No one imagines a wolf to be valuable to their own lives, but the majesty of its life out in the wild cannot be denied.  The wolf is valuable to itself and that is enough to give it a right to exist in this world.  The same is true of any good person on Earth, whether they are rich or poor.  And by good I don't mean 'successful,' like these Randians like to define.  I mean virtuous.  If he doesn't have any vices, doesn't do any crime, is happily pursuing his own interests, and is kind to the people around him, he's a good person, whether he's productive or not.  In an age of robots, computers, and cheap fossil fuels, the idea that productivity could measure anyone's worth is hopelessly obsolete.

It's true that many poor people are also criminals, thugs, and jerks.  But that doesn't mean you should persecute them on account of their being poor.  That is unjust.  You should persecute them specifically for their bad behavior and nothing else, and separate the wheat from the chaff.  You should show the poor that their is an avenue for them to lead a good and rewarding life, and that they aren't condemned no matter what they do.  This would allow us to crack down even harder on the criminal class, while saving tens of millions of children who grew up in bad circumstances but have hearts of gold.  By giving them a choice, you give them back their humanity and free will.

After July's job numbers came out, workforce participation dropped to a new modern low (by modern I mean ever since women seriously entered the workforce, which renders all older data moot because suddenly workforce participation doubled when they did enter, making all modern numbers higher than ancient numbers) of 63.4%.  Meanwhile, the CIA World Factbook has updated America's per capita GDP all the way up to $50,700.  That's $50,700 per person floating around, the richest America has ever been by far.  However, normal Americans are now making lower wages than they did in 1999.  It's bizarro America.  We have, simultaneously, the richest and best economy ever (we're even richer than the oil magnate United Arab Emirates now, who are famous for their useless luxury spending simply for a lack of knowing what to do with how much money they have), and the worst economy since the Great Depression.  For the poor and the middle class, this is the worst it's ever been.  But for the rich, this is better than the 1800's.  Average them together and America is rich, rich, rich!

$50,700 per capita is an astounding number.  We are now, all 320 million Americans, almost as well off as the inhabitants of Hong Kong, a tiny super-rich city-state.  We're almost as rich as Brunei, a tiny oil princedom.  But unlike them, we also possess half a continent's worth of land, enormous natural resources of all types, the most powerful military on Earth, so on and so forth.  In other words, their precarious wealth which relies on their more powerful neighbors permitting them to live on and trading them the natural resources they need is very different from our wealth, which needs nothing from anybody and in fact the whole world lives in trembling awe against.  I wouldn't trade America's economic circumstances for any other country's on Earth.  We have the highest possible income with the best possible geopolitical position on the planet.  Though I do wish we'd invade and conquer Canada already.  They have more landmass than the USA, which is intolerable.  The land is going to get more useful as global warming moves along, and we'll need it to relocate all our southerners to more temperate climates.  In addition, Canada currently makes $43,400 per capita and is the second richest 'real' nation on Earth.  If the two of us combined we'd be invincible!  We were supposed to have conquered Canada in the war of 1812 and it was just a historical accident that our united destinies didn't prevail.  >.<

But I digress.  The point is America can afford a little something for its poor.  We can afford $700 more per person than we could just a year ago.  If we gave those windfall earnings from just this year in GDP growth to the poor alone (let's call them the bottom 25% for simplicity's sake), that would mean we could give, for free, just out of our economic growth, $2,800 to every poor person in America this year, while maintaining the same quality of life for everyone else that they enjoyed last year.  If a poor family is a family of four, that would mean giving them $11,200 each just out of the windfall profits of this year's GDP growth alone.  In a stroke of a pen, just skimming off the cream of our profits this year, we could solve poverty in America.  Just imagine how much we could give, at no real cost to ourselves, if we were serious?

Let's say, for the sake of argument, that $30,000 per capita is all the wealth you could conceivably spend on yourself to meet all your basic needs.  A nice house, nice food, college education and health care, etc.  A middle class family of 4 would then be earning a household income of $120,000 a year, well above the actual median household income in America.  Therefore, I refuse to believe you would ever 'need' more than this figure of $30,000 a year.  In that case, if we sequestered all the remaining income people made above $30,000 a year for social purposes, we could turn around and give $20,700 to everyone in America above and beyond their personal earnings.  So if you earned $50,700 a year, you would be taxed $20,700 off the top of your salary, and receive $20,700 back from the government -- and your two children would receive $20,700, and your wife would receive $20,700, giving you a profit of $62,100 in a single year.

In other words, if you're the head of a household, in order to lose money in this deal, you would have to earn $112,800 or more a year.  That's when you lose your first dime to the government.

This is just a hypothetical setup, there are dozens of other ways to set up the citizen's dividend.  For instance, we could leave all current social programs in place, with all their stupid inefficiencies, and on top of it impose a further 10% tax on anyone's income above $30,000 a year.  This would generate $2,070 per capita in tax revenue.  We then redistribute this money as a citizen's dividend to the poorest 25% of Americans, which quadruples the value of the tax money and gives us $8,280 per capita to poor households, which, if in a family of 4 would give us $33,120 per household, well above the federal poverty threshold (and this in addition to keeping all current programs alive, like medicaid and HUD and food stamps etc.)

IE, a 10% income tax on only rich people could eliminate poverty in America without any additional change in the laws.  As an obvious alternative, we could reroute the tax money from social security and medicare into a new, means-tested poverty relief program and solve poverty overnight.  (Elderly who actually needed the money would receive it under the new program instead of the old one, and would see no real change, whereas poor young people would be taken care of for life.)

My favorite alternative is the citizen's dividend though.  $12,000 a year to every American regardless of wealth, paid for by a 25% sales tax that replaces the entire rest of the tax code, and all of the previous benefits that used to go towards poverty relief.  If the federal government needs more money for defense spending and NASA and whatnot, they can increase the tax to 35%.  But the largest portion of the US budget already goes to poverty relief so you'd be surprised how little money would be needed beyond the citizen's dividend handout.  Most of the defense department is already just a handout to the poor by giving them jobs.  We haven't been in a real war since WWII, and most soldiers never see any real action or serve any real purpose throughout their careers.  If we didn't need to give poor people jobs, the defense department could be radically cut, and that's the only other major expense in the federal budget after poverty relief.

As the US economy grows, the tax burden could gradually shrink to an ever less noticeable sum.  And the economy would grow as a result of these reforms.  A sane, simple tax code would save the US hundreds of billions of dollars right off the bat.  No more economic distortions as companies try to dodge taxes, no more long filing days to satisfy the IRS in April.  No more paperwork, no more headaches.

In addition to the benefits of a new tax system, the new spending system would generate massive returns to the economy.  With the abolishment of coupons, the price of subsidized goods would drop like a rock, as they have to enter into the competitive market like everyone else.  Health care, education, food and housing would all drop in price overnight.  In addition, hundreds of billions of dollars would be saved from medicare fraud, medicaid fraud, disability insurance fraud, etc.  Now everyone gets an exact amount and no more, so they can't finagle any money from the federal coffers by making up their fantasy stories any longer.  Hundreds of billions of dollars saved!  This is real money, and it would flow into the economy every year.  Lastly, since this is a consumer driven economy and the people who would like to consume most but haven't yet are the poor, an influx of money into their wallets would mean an immediate increase in consumer spending which, voila, would revitalize the economy overnight.

Newly rich poor people would suddenly buy everything they ever dreamed of.  New cars, new houses, health care, dental care, iphones, whatever.  And all that consumer spending would spur economic growth and new jobs as companies rushed to cater to these new sources of revenue, and the people with jobs would then be earning money and paying taxes instead of just sitting at home all day, and the virtuous cycle would go on to infinity.

We're in a situation where poverty and unemployment are at record highs, as is the US per capita GDP.  It shouldn't be rocket science to combine the two ideas and use one to solve the other.  The fact that this still hasn't happened, even though we just made $700 per person this year alone, indicates that there's something wrong spiritually with Americans.  It's no longer the inability to see the obvious, it's the malicious will not to see the obvious -- "hey, one of our numbers is so high it can solve all the others at no cost!"  And when it comes to malice, any amount of math I show that proves the economic worth of the citizen's dividend will never convince them.  I don't know how to heal people's hearts.  I haven't found the words for that argument, it just seems insane to want other people to suffer.  How do you even argue against that?  But for those who do care, the intellectual argument is a closed case.  There's simply no way you can reasonably oppose the citizen's dividend of some sort in an America this rich.  I defy anyone to even attempt to do so.

No comments: