Showing posts with label Social Welfare Policy. Show all posts
Showing posts with label Social Welfare Policy. Show all posts

Tuesday, August 30, 2011

A Rant About Responsibility

I was at a college planning workshop last week, at which financial advisors led a group of us through the labrynthine system of financial aid and tax-deferred savings for our children.

The workshop was really good, actually.  Among other things, I learned that the system of college aid is that the formula takes parental income into account to a much greater degree than parental savings.  This is good news for those who have put money into 529 college savings plans or even who have regular investments to help for college. [Sorry for the long setup here, I'll be getting to a political point eventually- stay with me]

The trainer put up an example of two hypothetical families in which the parents make $60,000 annually.  One family has $50,000 saved for college expenses, and the other family has nothing saved.  The way the system works is that the family with the large savings gets only slightly less financial aid than the family with no savings- i.e. there's good reason to save, as the college aid process takes only around 5% of your savings, compared to over 20% of your income.

A man from the other side of the room raised his hand and made a comment/ sort-of-question.  He said something like:
Wait a minute!  One of these families is being responsible and the other family is not.  Why should the responsible family, that saved for college, have to pay more than the irresponsible family, that didn't save anything?
The trainer tried to deflect the question and get back to the point, noting that, hey, this is the system, we're just telling you about it, we don't make the rules.  But I was taken aback the more I thought about this question.  I mean, the system is set up precisely to reward saving- that's the whole point of the training and presumably an intentional feature of the system.  This guy seemed upset that the system didn't reward him for saving- when it actually does so.  I guess he means that the system doesn't reward him enough for saving.

But think about the assumptions he is making from the hypothetical example.  The family that didn't save anything is irresponsible.  Is it?  His assumption is that if they didn't save it must be because they're morally deficient.  What if a parent lost a job in the last recession and they had to drain their savings? What if a hurricane destroyed their house and the deductible wiped out that savings?  What if the "responsible" family has money because of an inheritance, and hasn't saved nearly as much as they could have? 

I know this is a lot of outrage over a hypothetical example, but the underlying conservative assumption here is that people experiencing hard times must be at fault for their problems.  And sometimes they are.  But sometimes they're not.  Our public policy needs to reflect that fact- we can't even out luck, but we can ameliorate the worst of the injustices, rather than leave the poor and unlucky to their Darwinian fate.
 

Friday, June 3, 2011

Fisking Thomas Sowell

I don't know who Thomas Sowell is, but someone sent me this article.  Here's my commentary in blue:

Dependency and Votes



By Thomas Sowell
http://www.JewishWorldReview.com


Those who regard government "entitlement" programs as sacrosanct, and regard those who want to cut them back as calloused or cruel, picture a world very different from the world of reality.
To listen to some of the defenders of entitlement programs, which are at the heart of the present financial crisis, you might think that anything the government fails to provide is something that people will be deprived of. "entitlement programs" are not at the heart of the current deficit- that's the Bush tax cuts- that's what caused the current deficit. Entitlements are the issue for the long-term deficit.
In other words, if you cut spending on school lunches, children will go hungry. If you fail to subsidize housing, people will be homeless. If you fail to subsidize prescription drugs, old people will have to eat dog food in order to be able to afford their meds. Well, I hate to break it to people, but that's all true. What's ridiculous is to claim that cutting food spending on poor children will result in anything else but some children going hungry, or that cutting subsidized housing will result in anything else but an increase in homelessness. Of course that will be the result! To argue otherwise is dishonest. Now maybe it's worth it to allow those things to happen, maybe we can't afford to subsidize those things, but even so real people will certainly be affected.

This is the vision promoted by many politicians and much of the media. But, in the world of reality, it is not even true for most people who are living below the official poverty line. Straw man. I don't know what percentage of poor people will be affected by such cuts- it may be less than half, but it's certainly more than zero. I'd like to see this author quote some statistics if he's saying that the number is negligible.
Most Americans living below the official poverty line own a car or truck-- and government entitlement programs seldom provide cars and trucks. Most people living below the official poverty line also have air conditioning, color television and a microwave oven--and these too are not usually handed out by government entitlement programs. No doubt. Some people among the working poor will no longer be able to afford their truck since they'll have to spend more on food or housing, and so they won't be able to get to work, and they'll be even poorer.

Cell phones and other electronic devices are by no means unheard of in low-income neighborhoods, where children would supposedly go hungry if there were no school lunch programs. So poor people shouldn't be allowed to have phones? In reality, low-income people are overweight even more often than other Americans. What's that supposed to mean? That poor people are fat so they don't deserve support? Might it be relevant that healthy food costs more than crappy food?
As for housing and homelessness, housing prices are higher and homelessness a bigger problem in places where there has been massive government intervention, such as liberal bastions like New York City and San Francisco. That implies some sort of causation, which is unproven, and frankly ridiculous. Housing costs more on the liberal coasts because there's more demand for housing there. For this point to make any sense, one would have to describe a plausible way in which specific policies have caused homelessness in those places. As for the elderly, 80 percent are homeowners. whose monthly housing costs are less than $400, including property taxes, utilities, and maintenance. Good thing the elderly have social security supporting their housing costs.

The desperately poor elderly conjured up in political and media rhetoric are-- in the world of reality-- the wealthiest segment of the American population. The average wealth of older households is nearly three times the wealth of households headed by people in the 35 to 44-year-old bracket, and more than 15 times the wealth of households headed by someone under 35 years of age. Some elderly people are poor. Nobody said all elderly people were poor. Why are the elderly not poor? Because of social security and Medicare!!!!

If the wealthiest segment of the population cannot pay their own medical bills, who can? The country as a whole is not any richer because the government pays our medical bills-- with money that it takes from us. Before Medicare was passed in 1965, many elderly people couldn't pay their medical bills, and costs have only gone up. How can anyone argue with a straight face that the elderly will be able to afford private health insurance without government intervention considering how expensive medical care is today for people over 65?
What about the truly poor, in whatever age brackets? First of all, even in low-income and high-crime neighborhoods, people are not stealing bread to feed their children. The fraction of the people in such neighborhoods who commit most of the crimes are far more likely to steal luxury products that they can either use or sell to get money to support their parasitic lifestyle.
As for the rest of the poor, Professor Walter Williams of George Mason University long ago showed that you could give the poor enough money to lift them all above the official poverty line for a fraction of what it costs to support a massive welfare state bureaucracy. So is this arguing that we should start giving bags of money to poor people instead? I don't think that would go over too well.
We don't need to send the country into bankruptcy, in the name of the poor, by spending trillions of dollars on people who are not poor, and who could take care of themselves. The poor have been used as human shields behind which the expanding welfare state can advance.
The goal is not to keep the poor from starving but to create dependency, because dependency translates into votes for politicians who play Santa Claus. Before the modern welfare state existed, in the 19th and early 20th century, we had the Utopia of non-dependency. How did that work out? There were lots of desperately poor people all over the place. In capitalist societies there are always going to be winners and losers. Some of the losers are lazy. Some are drug-addicted. Some are unlucky. Some are mentally ill or mentally retarded. Some are not very bright. There is a right wing fantasy out there that if we stop coddling the losers, they'll all become winners. But that's not how it's ever worked- there's just no evidence of that sort of social policy working.
We have all heard the old saying about how giving a man a fish feeds him for a day, while teaching him to fish feeds him for a lifetime. Independence makes for a healthier society, but dependency is what gets votes for politicians.
For politicians, giving a man a fish every day of his life is the way to keep getting his vote

"Entitlement" is just a fancy word for dependency. As for the scary stories politicians tell, in order to keep the entitlement programs going, as long as we keep buying it, they will keep selling it. So the answer here is to return to the 1920s in our social policy. Think of all the things our society has accomplished since the modern welfare state was created starting in the 1930s. While building that state we won WW II, vaulted to the top of the nations in the world economically, won the Cold War, and emerged as the world's only super-power. Seems like we're doing OK to me.