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I've been enjoying asking basic math questions to destroy dearly held beliefs and I would like to continue. This one requires more intuition than cold basic math though, but it's in the same ballpark.
Let's talk about housing. Housing's so fucking expensive. Especially in desirable places! YIMBYs (or maybe abundance democrats) argue we should build more housing. A lot more. But what kind of housing? Who are we trying to help?
Well. Take a town of 150k people. A one bedroom in a decent part of mine is approaching $1600 a month and inventory is also frustratingly low across the board. Before we get to my actual point lets focus on an absurd toy non-solution first. Let's build 1,000,000 Connestoga huts across town and charge $450 a month in rent. This eliminates a lot of housing pressure but anyone but the most hardcore libertarian would recoil in horror at the thought because it would mean the town would be flooded with poor single people. Per capita tax revenue would plummet while per capita demand on public services would likely increase. Traffic would explode. Parks would be overrun with trash. Police would respond to calls by lottery. This would turn the town into a nightmare.
But we don't have to get this absurd! My contention is, because of progressive taxation, public services are diminished even if you build housing that the median income family can afford!
Looking at federal income tax, the top 1% pay almost 50% in federal income tax. The top 10% pay about 75%. State and local income taxes are structured in similar progressive style. What about sales tax? More tax is paid by people who spend more, and things that are considered essential (like food and cheaper clothes) are usually exempt. Property tax? Lots with higher assessed value and luxuries are taxed at higher rates. Public service spending is carried by the affluent.
For another intuitive look at this, a family with two kids in public school will consume $3000-7500 per month(!) in state expenditure. Public education costs alone dwarf the entirety of taxes most families pay (of which only a small amount is even earmarked for education).
Not just education. The Medicare and Medicaid we all know kicks in at the federal poverty line, but the thresholds for some kind of subsidies are high enough that a family can earn as much as $85,000 in a city like NYC and still qualify for some assistance.
This means every municipality has an economic incentive to refuse newcomers that aren't making potentially 90%ile household income. This means sure, build housing, but only 90%ile housing, or become poorer.
I would like to be wrong about this! It's frightening to think of every newcomer to your town as making it per capita poorer unless they're very affluent!
One weakness in this rationale is we don't have a solid accounting of all of the transfers. E.g. if 90% of education was funded through federal and state revenues, you could imagine purpose building a town just to have a lot of schools so that people with small kids move to it and pull funds from the rest of the country and state. But I think that number is more like 60% and a lot of the "state" funds are likely a matter of appropriation and will be distributed ~right back to where they came from.
I'm kind of surprised nobody else is pointing this out! Am I hitting on some truth neither side really cares to acknowledge because it doesn't support their favorite platitudes or am I just smart enough at economics to twist myself into a gnarly retarded knot?
EDIT: oh! one argument that I've heard from a grimacing YIMBY is that he is forced to admit I am correct, but that's why we can't do this on a local level. Instead we must mandate more housing be built on a nationwide basis (e.g. a federal #NoZoneZone authoritarian order) so any one town or city would be protected from all of the
poornot affluent people rushing to it at once and ruining it. This seems like a solution but I am still not convinced I am describing a true real and local deficiency.This analysis looks wrong to me too, and I think I'd go further than @fmac and say that there are ways to make anyone a net productive citizen. There are probably barriers to accomplishing it, but its theoretically possible.
Adding a homeless / jobless beggar may seem always net negative. But if you can manage to rope in federal funds, or sympathetic donations from other areas you can turn that homeless / jobless beggar into a net bringer of wealth to the town. Or at the other extreme a single billionaire living in a town of ten thousand people. The billionaire basically pays all the taxes of the town. But that tax revenue gives the billionaire enormous leverage over all policy and enforcement. They can get out of just about any legal trouble in the town. They can get any building or new business approved for their friends, or denied for people that they don't like. Those are the theoretical reasons why I think your analysis breaks down.
In practical terms the story of the billionaire is usually more indicative of why towns are happy to add more people. Policy and policy enforcement can be carefully tailored in such a way that tax contributions and government services can be very equally balanced. Wealthy neighborhoods are often full of people who know how to manipulate the levers of local government, and are also full of people that are actively running the local government. Running governments requires human capital, and human capital tends to align with wealth and resources over time. Wealthy neighborhoods get better response times from emergency services, better access to public parks, and those parks are more likely to be kept clean and patrolled by the police. Their roads get repaved and fixed sooner. The schools get more oversight and quality. Successful businesses fill in the commercial space around those neighborhoods. The effects go on and on. The common phrase "you get what you pay for" applies to local government. Its hard to quantify it, but if you live in the different areas it just becomes very noticeable.
One major and obvious problem with your analysis that I saw in the discussion with fmac is that you are way over-counting the cost of schooling for a very simple reason: people aren't in school their entire lives. You need to offset the cost of school based on the number of years of their life that they will be in school. Just like if a road needs to be repaved every three years, you don't count the one time cost of repaving on every year's budget. You divide that spending across the three years. This does method does not even assume any benefits to schooling. To make the math easy lets just say people are only in school for 1/4 of their lives. So if the per student per year cost for a district is $20,000 you should instead think of it as $5,000.
Not if they are young or old enough.
73% of Americans not in paid work are either under 18 or over the Social Security retirement age. Admittedly some of the people over retirement age could work, although blue-collar workers are getting a lot slower at this age, and "net productive citizen" is making the stronger claim that they could work enough to, in expectation, pay for their own healthcare. The other groups of non-workers are the working-age disabled (9% - again most could do some work, very few could work enough to pay for their own healthcare), students (5% - these are people who society is already investing in to make them net productive citizens in the future), SAHMs and other carers (7% - most of these people are net contributors, but not in a way that is legible to the GDP statistics), and the stereotypically unproductive (6% across "temporarily unemployed", "early retirement" and "other").
The vast majority of able-bodied working-age people already are net contributors (40 hours a week at the going rate for reliable low-skill labour is enough almost everywhere across the first world). This is obfuscated by measuring contribution at household level - a typical household contains net-contributor parents and net-leech kids.
The US has federalised the cost of subsidising olds and undergraduates, but mostly localised the cost of subsidising kids. This means it makes sense for communities to try to attract retirees and students (the "eds and meds" strategy) and the federal subsidies that go with them, but to try to keep families with children out. This isn't true in other countries where more of the cost of schools is nationalised and more of the cost of social care for the elderly is localised.
The threshhold for a net productive citizen is very low in my mind.
There is a concept in economics called the velocity of money. Basically money doesn't just disappear when it is spent, it usually get reused and spent on other things. Higher velocity things usually cause more spending and re-spending.
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