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naraburns  nihil supernum  1yr ago (text post)   37952 thread views

Culture War Roundup for the week of March 27, 2023

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Desmond documents how the poor are squeezed. There is a Clinton-era welfare programme called Temporary Assistance for Needy Families. In 2020, poor families received just 22 cents in every dollar it disbursed. The rest was used by states to pay for things such as job training and even abstinence-only sex education. Meanwhile, George Stigler, the Nobel Prize-winning economist, argued that a higher minimum wage would raise unemployment, but when New Jersey raised its minimum wage, and neighbouring Pennsylvania didn’t, there was negligible effect.

Intractable poverty has been blamed on family breakdown, but Desmond cites a study showing that single parents aren’t poorer in other rich countries. The right says the poor are hooked on welfare, but he estimates that hundreds of billions of dollars a year in benefits are unclaimed.

The US spends almost as much as France on welfare, but this welfare — including tax credits and employer-sponsored health insurance — favours the rich too. Overall the US tax system is barely progressive: rich families pay an effective tax rate of 28 per cent, while poor and middle earners pay 25 per cent.

I would want to see more details on a lot of these claims. I am inclined to believe that a lot of aid money doesn't go where it's "supposed" to; public choice is powerful. But how do you solve that? And is it a problem elsewhere? I think it somewhat undermines the rest of the thesis: Americans are generous, but it's hard to support more of these programs if 80 cents of every dollar doesn't actually go to the poor. If your solution is "brute force this inefficiency by raising the tax rate to 70%" then yeah, that sounds like a terrible idea.

(For the record, we actually had many more tax breaks back when the top marginal rate was 90%--as far as I know, no one really paid anything like that rate, and federal revenue as a portion of GDP is constant since the end of WW2and uncorrelated with rates anyway).

The literature on the minimum wage is complicated and inconsistent. One comparison of 2 states isn't a lot. Where I live, the minimum wage was recently increased. But as far as I could tell, pretty much everywhere already paid more than the MW was. Starbucks, Walmart, fast food, supermarkets... I don't think I saw a single advertisement that wasn't at least a few percent above MW. A handful might have offered below the new minimum. But overall, I'm not surprised if you would see a negligible increase in unemployment. Of course, you would also see a negligible increase in wages. I think Scott's review of the minimum wage literature a while back came down on the side of "probably no negative effect" but most of the studies looked at small increases, because that's what governments tend to pass. Making the minimum wage 25$ an hour in a poor town is not something that, as far as I know, we have any data on.

As for comparing single parents across countries, well, why are they single parents? And how many of them are there? If you have 1 or 2 tragically single parents in a neighborhood, then the rest of the community helps out. If a quarter of the neighborhood is single parent homes, you overwhelm their resources and potentially contribute to overall disorder (something like this happened in government housing projects in Chicago that tried to only house families with a high number of children per parent). In the US, "single parent" is likely a strong correlate with e.g. some sort of criminal activity or substance abuse, while in other countries they might be more evenly distributed across classes because it's the result of amicable divorce, accidents, etc. (Actually, divorce seems like a strong candidate--IIRC from Coming Apart, the upper class has only become slightly more likely to divorce, while the lower class has become much more likely to do so, compared to the 60s, and I wonder if the same is true in those countries). Maybe the study found a way to control for all of this, which is why I would want to see it before making a judgement. But I believe there's relatively strong evidence from within the US showing that single parenthood has a detrimental effect on both the parent and child's future economic prospects.

Similarly the "effective tax rate" is something I'm skeptical of. How is it calculated? Most sources I'm aware of have the US has having one of the most progressive tax systems in the world; even if they're counting things like sales tax, most European countries rely heavily on consumption taxes like VA, which are more regressive than an income tax. I know some forms of investment and saving, particularly if you own your own home, get tax benefits; maybe that's where the difference comes from.

I'm somewhat confused as to how employer-sponsored health insurance is welfare. I agree that there's no reason why it should work this way; I believe it started during the wage freeze of WW2 but I'm not sure why it persists beyond "employers can get a good deal on price." But no other form of insurance works this way, so I assume something weird is still going on. Aren't there laws against selling insurance across state lines or something like that?

“What if I said, what’s crazy to me is that the country does so much more to subsidise affluence than it does to alleviate poverty.”

It's certainly the case that there's a lot of subsidies for the middle class and up. Everything from mortgage tax breaks to agricultural price supports and steel tariffs should be ejected at high speed, and social security at low speed. But as already discussed, attempting to tax more money to spend is unlikely to help--you can't actually do that (you would have to reduce spending elsewhere instead) and it would be horribly inefficient.

Things that I think would actually help:

  1. End the war on drugs. We spend a lot of money on police and prison, which could be redirected to medical solutions and other social services (or returned to people. "Tax people less and let them spend their charity where they think it works and also generally improve economic growth" is an alternative to anything I suggest spending money on in this list). I think single parenthood is likely to be bad, and imprisoning lots of young men from poor places doesn't help, plus it makes it harder for them to get real jobs in the future. On the flip side, aggressively police for real crimes like robbery, assault, etc.

  2. Overrule local zoning, parking minimums, and related ordinances that prevent reasonably affordable housing and dense, mixed-use development from being built. These massively drive up the cost of housing, which is a major expense, and often force everyone to have a car, which is also expensive. Invest in transit--surface light rail is probably cheaper per passenger-mile of capacity than a highway, even in the US.

  3. Repeal trade barriers, which make basic goods more expensive and cost more jobs than they save.

  4. Open up standard public education to competition from charter schools and, especially, trade schools. Traditional school has marginal benefit for the average poor student, especially since they are likely not to complete it, but a well-run school can help the smarter and more conscientious of them actually graduate and maybe even go to college. Trade schools provide an alternative to sitting in a useless class and working a dead-end job on the side for the rest.

Just wanted to say this is a legit AF post.

Please avoid low-effort "I agree!" posts.

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