Here’s a link to the overview of the Sime/Dime study itself.
So, if you accept my proposition that welfare benfits have an inverse correlation with work effort, than I think you’d have to agree with me that these programs not only do not ameliorate poverty, they increase the propensity towards it, and are in fact a disincentive.
In other words we have a problem.
Assuming you accept that there is a problem, the big and interesting question is: what do we do about it?
So your thesis is that this is incorrect, that in a sociological context you maintain that if you feed something it will shrink and go away.
Is this your stance.
No articles of conservative faith necessary. My initial cite lists a plethora of studies supporting this allegation, and then there is the SIME/DIME report itself.
For as long as that money lasts. Once it is gone he is just as poor. You have not solved anything but have only succeeded in “feeding the hole.”
Forgive me, but I think the idea that if you feed something it will grow is the obvious principle.
My son has strep throat. I give him pennicillin. I’m feeding the strep?
Pennicillin doesn’t feed strep. It feeds white blood cells.
I understand the reluctance to accept the proposition that social aid has an encouraging effect on poverty.
Some might see it as a rationale to abandon the poor, or do nothing about poverty and simply let the suffering suffer.
That’s simply not a valid answer.
Interestingly enough, herein is contained the solution to the best way to combat poverty.
ElvisL1ves Said:
You are simply, flatly wrong. Let me repeat: The government is BORROWING money to give to people, in order to let them CONSUME more. If you think that’s wealth creation, then hell, why don’t we just borrow 30 trillion dollars, give everyone a million bucks, and let them just buy everything? The factories would be roaring, and we’d all be rich, right?
Let’s use an analogy: We have a household which isn’t doing very well. The TV is busted, and we’d like a new one. But Dad doesn’t want to go to work, because every time he goes to work a bad guy there slaps him in the head.
Now, we can:
a) borrow some money and buy a new TV today.
b) Get rid of the guy that keeps slapping dad, so that he’ll go back to work. Eventually, Dad will earn more money and we can buy a TV then.
Now, which one of those two scenarios would you describe as ‘wealth creation’? Under scenario a), the family has a new TV. But no wealth was created, because we incured a liability that directly offsets the asset of the TV. All we’ve done is mortgage our future for a present benefit, and we’re gonna pay some interest for that privilege. Under scenario B), we don’t get a TV, but Dad’s back at work, and eventually we’ll be able to buy a TV WITHOUT incurring that liability. That’s because Dad is now generating more real wealth.
Bush’s plan is like the latter. He wants to get rid of the inequitable tax liabilities that cause distortions in how business operates, so that it can operate more efficient and CREATE MORE WEALTH. That’s what business does. The government’s revenue goes down, so he’ll have to borrow extra money to pay for the cost of government.
The Democrats want to borrow some money, and just dole it out indiscriminately so people will buy things.
If you still think the Democratic plan is a GROWTH plan, while Bush’s is just a giveaway to rich people who can hide it under their beds, then congratulations - you have been thoroughly indoctrinated by the class warfare peddlers on Capitol Hill.
Wrong again. On all counts. First of all, the stimulative effect of business tax cuts is not theoretical. It happens. But you guys on the left like raise the spector of ‘voodoo economics’ and claim that we are wrong because it never worked. Of course, no one is making the claim that the tax cut will pay for itself through growth. At least, not in the short term. But even a modest PERMANENT growth increase will result in mucho wealth through the miracle of compounding. But it takes a long time. But responsible people plan for the long term, and don’t just borrow money to throw parties today. You say that borrowing money so you can write people checks is ‘to be encouraged’. So where would you stop? $1000 each must be better than $300, right? How about $10,000? By what economic principle have you decided that borrowing money and giving $300 per person represents ‘economic growth’, but borrowing 30 trillion to give everyone a million bucks isn’t? This should be fun to hear.
And you can wave your hand and dismiss corrective tax policy as ‘jiggering stock prices’, but that’s a completely meaningless argument, and just suggests to me that you really don’t understand this stuff and are relying on rhetoric.
Far more than you do, apparently.
Well, you talk derisively about the idea that you clearly want to link to us liberal folk that rich people will just hide the money under their beds and yet you speak as if the money these poorer people receive in a tax cut and use to buy things is then burned (or hidden under the bed) by those who receive the money! I mean, if you want to put money in the hands of people who can invest, you can give it to poor and middle income folks who will go out and spend it and then some of the money will get into the hands of Bill Gates and Bill(?) Walton and all those great investor folks who can then invest it.
The difference between doing this and doing the opposite is that one is percolating the money up and the other is trickling it down. My WAG is that percolate up has at least as strong a foundation as trickle down…I.e., I find it hard to believe that the money doesn’t work its way up to these rich folks, whereas the evidence that all that much trickles down is not that great. So, I would prefer to get the money into the economy at some level that allows some people who are suffering to buy some things they might need before the money gets invested.
Yes, you were pretty clear that you were sort of on the fence on that and I should have stated that I didn’t see myself as arguing against you so much there as just trying to fill in some more thoughts about a topic that came up that I had very recently looked into.
As for the SIME/DIME study, I will try to take a look at the actual study there. (My past experience with reputable studies then summarized by groups such as NCPA, Cato, and the WSJ editorial page leads me to like to go directly to the original source to get the full scoop, so thanks for providing the link.)
Well, I know that there is very strong evidence for social security having reduced poverty among the elderly, although admittedly the disincentives to work issue doesn’t apply for that program.
I also recall hearing that during the real “War on Poverty” in the 60s into early 70s, real progress was in fact made.
And, finally, I should point out that this sort of evidence cuts both ways, i.e., we also seem to have pretty good evidence that the sort of highly free market-oriented approach to the economy we’ve had at least since the early 80s hasn’t, as promised, lifted all boats…Or, at least, it has lifted some by only a miniscule amount while sending others through the stratosphere.
To be honest, it is hard to disentangle all of the effects but to give the lack of progress in poverty over the last, say, ~25 years as an indictment of social programs is rather simplistic. What might be more informative is to look at Western democracies who have done better and learn from them. (I doubt the learnings there will be to have a sparser safety net.)
Several years of work for various social agencies are my basis for generally agreeing with Scylla. I venture to guess that anyone who thinks that superior aid programs do not attract and sometimes feed poverty simply has never worked first-hand with the hard-core homeless.
As others have pointed out, though, is that most charitable organizations (including many gov’t programs) see their purpose as not reducing “poverty” but in ameliorating its immediate effects on individuals.
My question, then, is on a theoretical level, how can we design a welfare system that can aid individuals and keep people from freezing in the streets without increasing the problem as a whole? I fear that perhaps we can’t, but I’d like to hear from the economists…
As a postscript to this, here is an article in the National Review Online (which I was led to by the homepage of NCPA which I was led to by Scylla…all my life’s a circle). It notes that notes there is a new sheriff in town in regards to the CBO. Like it or not, we may well have dynamic scoring pretty soon! (As the article notes, the current head of the CBO, who’s been fighting dynamic scoring, was also a Republican appointee but Bartlett’s obvious glee with this latest appointment strongly suggests the Republicans haven’t made the same mistake twice!)
But the reluctance you’re seeing is to accept the proposition that this is an invariable result of all social aid, a proposition which requires much more stringent support than you’ve provided. Undeniably, means-tested welfare programs need to have incentives to work built into them, or they will encourage unemployment. This is a far cry from the raw proposition that “feeding” poverty perpetuates it.
In the first place, providing monetary relief to families below the poverty level is not feeding a condition, it’s feeding people. There’s no question the indolence is ecouraged in some if they perceive an inexhaustible supply of support from the state. There is also no question that these same people would be (and are) encouraged in their indolence by the availability of faith-based charities and soup kitchens, and by the generosity of passersby from whom they can panhandle. There is no condition of existence so mean that some people will not voluntarily exist in it for the sake of indolence. This is a truth unaffected by government programs.
Here’s another truth unaffected by government programs: When given the opportunity to increase their income by increasing their productivity (through learning a new job, taking more responsibility or even by just working harder) the great majority of people near the poverty level will gladly take that opportunity because they are unhappy with poverty. Government assistance which disappears when they manage to poke their heads briefly above a particular level of poverty absolutely discourages the incremental successes which people can reasonably expect through advancement at work or job searches. (It’s a brutal choice to make whether to take a slightly higher paying job and bring home less money for your family or to stay on the government dole so you can continue to heat your hovel through the winter.) But that’s not because it makes people happier with poverty.
It’s not feeding the poor which perpetuates poverty. It’s the failure of economies to provide opportunities and the actions of government which discourage pursuit of existing opportunites which does it. The successes of the 60’s and 70’s were based on government provision and economic creation of opportunities. And need I remind you (remember Alice?) that this thread is about a particular governmental plan which purports to be about growing the economy? The reason we’re even discussing homelessness, poverty and government assistance is because of the critical relationship between economic growth and the creation of opportunities.
And sorry, but I can’t seem to come up with a gardening analogy for that relationship.
Great line! 
I hope everybody gets the reference!
<singing>
You can get anything you want
At Minnesota’s welfare haunts…
</singing>
Sam, perhaps you could enlighten us all on this novel assertion that things that are consumed are somehow not produced beforehand. Then you might follow with an explanation of how increased production of things somehow does not improve the economy.
That’s before even getting into your unique assertion that borrow-and-spend is a Democratic approach. No. It’s Reagan’s, and is copied by Bush. Down here, we’re still paying for it. The stereotypical Democratic approach (not that I admit its truth) is tax-and-spend, which in fact is a pay-as-you-go approach that does not add a debt burden.
Facts are just so inconvenient to an ideologue, aren’t they?
Scylla, are there no prisons? Are there no workhouses?
As to the original thrust of the thread, vanished lo! these many years…
We didn’t get any of this conservative theory from GeeDubya, none of this stern Social Darwinism. He didn’t even notice the presence of the elephant in the living room, farting thunderously and gobbling peanuts. Now, if he would have said something like “I propose giving 266 Billion dollars to people who don’t need the money, and here’s why…” he would have at least made a passing reference to the truth. Or he could have unzipped and demonstrated for us the “trickle down” theory.
But of course, he didn’t. He filled the air with Bushwah about how his plan helps elderly retirees and vague innuendoes about “stimulus”.
What would have been honest? "I like rich folks. Hell, I love rich folks, I don’t know anybody else. I don’t know how much groceries cost, I’ve never been to Piggly-Wiggly. The closest I’ve come to a knowing a poor person is tipping. I don’t even know how much money I have, my accountant does all that. I’ve heard tell that its tiresome being poor. I’ve no idea. But I don’t much give a shit. Here, here’s how this works: I trickle down on you, and you say “thank you!”
**
I don’t think I’ve said “all,” and if I have I didn’t mean it. The SIME/DIME report makes a pretty strong case that their is strong negative correlation between social aid and work incentive, as have several other studies referrred to at my initial cite (which summarizes.)
Perhaps “feeding” is poor word choice on my part. When I see “feeding” I am referring to poverty itself. A welfare program that worked and reduced poverty, would not be “feeding” poverty it would be reducing it.
My apologies for not being clearer.
I disagree. Money is a reward. Money is an incentive. Money is a blank check. You cannot say what people will do with money if it is given to them. Giving food feeds people. Giving money inevitably feeds the condition.
Agreed.
Absolutely. That’s exactly the kind of thing that I was talking about when I said that we have to be careful about manipulating the system with our aid, so that our system is “solving” for poverty.
It is inexusable and stupid that our current programs produce this result. It demonstrates a woeful lack of intelligence in the way our programs were designed.
Such a setup is an active disincentive to self-sufficiency, and the concept it called “welfare envy” and it occurs when those who are just above the margins are doing worse than those below the margins.
Well, to get back to this dividend cut, I would think that it serves three purposes.
While we can argue that there are other methods that would accomplish #3 better, I don’t think we can come up with another that has all of these effects. And, the low end grass roots type stimulous that you seem to be in favor of was recently implemented with the rebate. So, it’s not fair to say that that kind of stimulous has been neglected. We are simply firing a variety of weapons at the target.
That’s because the seed of your creativity has fallen on rocky soil.
Till later.
No. There are not.
Well. Crap. Way to take the wind out of my sails. If your position is that social welfare is unproductive when not structured with the natural disincentives in mind, then we have no argument there.
For the life of me, I can’t remember what the “inequity” was which this is correcting. --Don’t jump in just yet, I’m sure you mentioned it earlier, and I’ll find it. I may not agree with the characterization, of course…
Let’s just say that I disagree with the particular weapons of choice so far, since the emphasis seems to be at the high income/high wealth end of the economic spectrum, with little attention to employers (e.g. reduction of payroll taxes), low-middle income workers and unemployed (e.g. longer extension of unemployment benefits, reduction in marginal rates) or state level programs (Medicare, Medicaid grants).
And my plow is hitched to a gored ox… or something.
xeno:
Well, the rebate benefits the poor primarily. I don’t think Bill Gates was too excited about his 300 smackeroos. A dividend cut does not benefit the poor.
If it helps the stock market, it should help a lot of people though. There’s a lot of retirement money in 401ks held across the income spectrum. After 3 years, opening those statements is kind of depressing.
When those statements were good, we had a wealth effect. People felt comfortable spending because they knew they had those big 401ks going for them.
Now we have the opposite effect.
I know it works this way for me. Back in 1999 I’d open those statements and I actually thought seriously about buying a Boxster, just for fun, because I deserve it.
Now I open the statements and call the cable company to cancel Starz and save $8/month.
Low and middle income people have 401ks, too.
I’d have to think that anything that gives the market a boost is good for the economy right now, and will likely increase propensity to spend.