Means-tested social assistance is now a vestigial remnant of an economy strictly dependent upon labor as its primary input for growth. As the share of economic inputs tips increasingly in favor of capital (via automation), most laborers will steadily become unemployable at a subsistence-level minimum wage. As a result, we will see dependence and abuses of means-tested social welfare by these laborers who can no longer participate in the market.
The only long term solution is a basic income system, which rewards consumption and allows the market to continuously reward innovation and efficiency. Without a redistribution mechanism to fuel consumption, the market collapses entirely as wealth is further concentrated.
That is becoming increasingly clear. When I drive through small to medium sized towns I can't help myself thinking "what do all of these people DO for a living?". They have to import everything they need and many of these places don't produce anything of value. Add into the mix that if they do have any fast food or services, more likely than not they're global franchises sucking even more money out of the town. How is this sustainable?
It seems to me that the more globalized, specialized and efficient the world becomes, a few hubs will produce pretty much everything. If in the past every town within a 100 mile radius had it's own carpenters making furniture, today there's one big Ikea in the middle of them all taking all that business away.
"Weird, I look at cities and wonder what the heck you all produce since you've closed your factories (they smell) and don't farm, ranch, mine, fish, or log."
Economics is subtle and much more complicated than what you describe. We are not heading to Mega City 1.
You're right, I mean there has to be something there or the people couldn't survive (unless they're all on disability). I would say though that 90% of these places don't have much except maybe farming. Maybe that's enough to sustain these places, but given how automated farming has become I'd doubt it. And farming is also concentrated the same way Ikea is. Modern farming tend to be much bigger scale (thus fewer players).
You probably should do some research on what farming actually means in this day and age. Farms are not self sustaining, they buy seed, equipment, fuel, and supplies. Those people buy other things. A farm is a huge input to an economy and money changes multiple hands.
My mother has lived in a couple of different up-in-the-mountains hamlets and I've met the people in nearby houses. Like you say, there's farming support work. There are also people like scriptwriters, professional wine tasters, hoteliers/B&Bers, architects, software engineers, government consultants ('what kind of consulting?' => 'consulting'...) and officials, retirees, successful artists, landlords living off rent from elsewhere, so on and so forth. There are heaps of people with 'portable' jobs that can bring money into a town, and plenty of those like the small town or hamlet life. You can't tell that a town doesn't have a well-off scriptwriter living in a back street simply by driving through it.
There is a lot more to a local economy than factories and fast food. Small towns likely have an agricultural component, and most all will have trades (plumbers, electricians, HVAC, carpenters), mechanics, general handymen, other services, doctors, optometrists, lawyers, other professionals. It may not be New York or San Francisco but there's enough work to do to get by.
It's quite common for people to reach child-raising or retirement age and move to such places, or even leave their families there and continue to work in the big city. These cities also tend to have a lot of cottage-industry scale businesses: the average small American town is probably the worldwide capital of some incredibly obscure product or service. A town needs hard-currency inflow to pay for their imports but not a terribly large amount of it.
Pay off your $60K house by the time your 30 (perhaps from commuting to some distant town) - and entertain yourself with television and playing cards, and you don't need much annual income.
I've thought the same thing, I live in a small town and when I travel out to the country and see small houses actually shacks (their pickup truck is bigger) my mind spins.
Agriculture sounds innocent enough but living in such an environment I know it's not that simple. It's seasonal which is at the moment a huge problem the Canadian government has with seasonal workers in isolated areas. People get government assistance aka employment insurance or "EI" in Canadian-ese but the government has closed down the offices people go to apply and made it web based, baffling non-techy 60 year-olds. Now "EI cops" are making unannounced visits to these rural areas to make sure they people on EI are looking for work...but where?!
Anyway it's an age-old situation, the people make our food live in the middle of nowhere get pennies per ton and when they need money the government and city dwellers sneer at them.
Admittedly, at the same time Big Farming are just the same kind of bastards as any other large manufacturing or resource-extraction capitalist titans, and are often receiving very nice breaks from the government.
826, "Farms by Size and Type of Organization" is probably the more interesting report.
There is some room at the top for your cartoon owners there, but the typical farm, by acreage and number, is a medium sized place (still hundreds of acres) that is closely held by a family.
The USA calls subsidies a different name but they're still subsidies especially sugar and corn crops. It's do as I say not as I do even if the rules are broken, but it's no shock coming from the US.
NAFTA supposedly has wording about subsidies but the US often denies it I am just going by what I hear since living in an agricultural region you hear this stuff since birth even if you're not a farmer or fisherman.
More like each country had its own furniture making factories, but your point still stands. The ideal would be a society in which quality locally produced goods would be valued over trashy throwaway goods like those sold at Ikea, but this requires a complete rethinking of what's valuable in life by individuals and the society as a whole. Past experience has shown that attempts to manipulate this bureaucratically through tariffs, fixed pricing, closed guilds or the like just cause market distortions that bring about new problems without solving the old ones. In the meantime, though it's far from ideal, at least there is a way that hardworking people with no market for their labor can avoid starvation, although at a personal loss of dignity and a societal loss of that person's potential contribution.
But what happens when Ikea sells goods of the same, or superior quality, than those "quality locally produced goods"? In fact, for many of the goods we buy, a lot of the "quality" we perceive from "locally-produced" is a figment of our imagination, or at least biased by taste.
Sure, the coffee table you paid $30 for at Wal-Mart is almost certainly inferior in every way but one (price!) to something you'd find yourself paying $400 (or $4000) for at [locally-produced furniture company]. But you could probably spend $200 and get something made in China or Vietnam that is just as good as anything you could buy locally-produced.
But you're missing an important point. "Quality locally produced goods" are very expensive. I can get a "trashy" piece of furniture from IKEA for just a few hundred bucks. That same piece of furniture, produced by a local artisan, would cost me thousands. Most people don't buy cheap furniture because they choose to, they do it because I have to.
As the population grows, more people buy more stuff. Local woodworkers and cabinet makers cannot possibly fulfill demand using locally sourced materials and hand tools. If everyone is to get chairs and tables and cabinets, production must be automated. Once automated, production can scale, which usually reduces both quality and cost. Instead of local wood, wood is imported and turned into particle board because its dimensions make automation easier. But now a nightstand can be turned out in less than an hour, where a traditional artisan might spend a week or more, driving up labor costs.
In other words, it isn't that people need to "rethink" what's valuable. They have already done the thinking, and they value more affordable, lower quality goods over limited, expensive ones. And I don't blame them.
I understand that market forces drive people's buying decisions. I also know there is nothing inherently better about "locally produced," except for lower shipping costs. I understand that hand-made stuff is available overseas from workers paid a fraction of what it would take to survive in Europe or the US, and therefore it's naturally more efficient to buy from them than make it here. There's no way any government or group can change this situation by fiat without causing huge other economic problems.
However, over the long term, the situation of a third-world craftsperson earning in a month the amount of money a minimum wage worker in Europe or the US makes in a day or two is just not going to last in the long run. Either the influx of money from foreign trade and investment will raise wages in places like Vietnam or China to where their physical labor is no cheaper than a first-world nation, or it will pay for automation that will displace laborers just like it has in Europe or the US, and the costs of production in those nations will depend less and less on unskilled labor.
A purely libertarian way of dealing with the problem this article brings up would be to tighten up disability or abolish it and eliminate minimum wage. That way those workers would have to compete against the global labor market to survive. That's not going to work because our society is not going to accept it, and things are so expensive here, they probably couldn't compete even with starvation level wages. I'm not saying the ideal is possible, I'm just trying to figure out if there is any way society can reap whatever contributions can come from people who are currently on disability for marginal reasons without the nuclear option of forcing them to complete against $80 a month wages overseas? It's no good for people to sit around and do nothing all day, either for the individual or society. Idle hands are the Devil's tools.
I can't believe I'm saying this, but maybe a government program? Since the government is paying for them anyway? Something like the old WPA in the US? I don't have much confidence that will work though. Realistically, government programs rarely accomplish their stated goals, and they rarely go away if they do.
Well, there's merit to the idea of a gov't program even if you're kinda sorta against it. As it is now, people are defaulting to a de facto living wage from a program designed for something else because their options are few to none. Something like WPA would allow us to address the problem of our country's infrastructure and put money in people's pockets in exchange for honest work, if nothing else.
It's completely unlikely anyway. We're barely hanging on to some of the existing meager social benefits in this political climate, let alone creating new benefits.
I think that many people in this situation would rather do honest work for their $13000 a year. So the government wouldn't lose anything by setting up a new WPA. And it might gain some new park trails or murals or some children being looked after while their parents worked. It would probably be worth it if the pay was $15000 a year, and there would be some incentive to get off disability. But the pay couldn't be more than minimum wage or else it would funnel people out of regular jobs.
I think with an increase in telecommuting jobs (except Yahoo!) there may be growth in these small towns in the future. Small towns are nice to raise children in, have lower costs of living - which can be offset by high pay, high skill work telecommuted into the office from small town home.
And then the extra cash will turn into custom furniture because all the neighbors have IKEA and they want to be different.
> There were about one million working horses in the UK in 1900 but only 20k by 1914. No one found new jobs for those horses...
That's because most of them were killed on the battlefields of WWI. Here's the source of that part of the Wikipedia article:
The war used horses in great numbers for non-cavalry
purposes. It is estimated that some six million horses
served and substantial numbers of these were killed. By
1914, the British had only 20,000 horses and the United
States was called upon to supply the allied forces with
remounts. In the four years of the war, the United States
exported nearly a million horses to Europe. This seriously
depleted the number of horses in America. When the
American Expeditionary Force entered the war, it took with
it an additional 182,000 horses. Of these, 60,000 were
killed and only a scant 200 were returned to the United
States.
Most of them were killed on the battlefields in the first half-year of the war? Surely this 'slaughter of 980k horses' in a mere 5 months would more prominently noted in our history books?
Indeed, WWI didn't start til August 1914... seems unlikely most of the 980K were killed in the war, more likely attrition/glue factory as they were replaced by cars/tractors.
I just read Storm of Steel -- which is, by the way, The Best First-hand Account of World War One -- and it does seem like you can't go two pages without running into a dead horse.
And from a numbers standpoint, if 6 million died in a 4-year war, it doesn't seem far-fetched that 980k would be killed in 6 months, especially since for an appreciable chunk of the war the Germans hunkered down behind the Siegfried line to conserve forces for a 2-front war.
The first few months of WWI weren't that intense and the full-scale horror was yet to become apparent. At this point it was 'just another war' rather than 'the war to end all wars'. Enough so that at Christmastime the opposing soldiers were giving each other gifts and in one case played a game of football. The battles of losing 20,000+ men in a single day were yet to come.
Actually, the war was every bit as intense in 1914 as it was in 1915-1918. 400,000 casualties at the Battle of the Frontiers. 250,000 casualties at the Battle of Tannenberg. Half a million casualties at the First Battle of the Marne -- which included losing 20,000+ men in a single day.
Remember -- the war in 1914 was a war of movement. Which meant that men were charging across open fields to attack the enemy. The Germans wore leather helmets, the other armies wore cloth caps, and the French wore red trousers. Yet the armies had modern rifles and artillery. This was a deadly combination.
Battles in 1915-1918 racked up higher total casualties, largely because they lasted longer. The Battle of the Somme lasted four months -- because they kept fighting over the same piece of land. Whereas in early 1914, the armies were still fighting a war of movement, so they'd fight in ten different towns, and the casualties would be spread out over ten different battles.
The Christmas Truce was not a question of numbers -- for a lot of men had already been killed or wounded -- but attitudes. The soldiers still felt that their opponents were fighting honorably. Poison gas, the British starvation blockade of Germany, unrestricted submarine warfare -- that would all come later.
if UK horse population went from 1m in 1900 to 20K in 1914, with half the decline being attributable to WWI in 1914, that would mean 490K out of 510K British horses alive at start of war died in those 5 months.
While this is interesting, I don't think starting a war to send older people to is a justifiable solution. Sending the horses to slaughter or to war are different means to the same end.
The issue I have with this is that technology disruptions came in the form of moving manual labor from farms to factories.
The service wave of disruptions moved manual labor to communications labor.
This wave of disruption is moving both of these to intellectual labor. Do I think that we have vast resources of unexploited intellectual labor? Yes. The issue is that the more people I meet the more I begin to believe the key to intellectual success is intellectual culture. Unfortunately, I don't think we have a very intellectual culture and culture changes slowly -- far slower than technology.
Not only is the culture of anti-intellectualism to blame, but so is the prevailing culture of intellectualism. It is hardly feasible for the majority of the workforce to get a PhD or even a Masters, which is still the cultural baseline for work in many intellectual fields. With the rising costs of education, even a BS is out of the question for many people, and it is not even an appropriate choice for many who would otherwise be inclined to intellectual work. Until we have widespread acceptance and a proven track record for more non-traditional forms of education, the rest of the cultural change you describe will be stagnant at best.
Lots of programming jobs hire based on experience and knowledge, not formal education. It is possible to gain experience without having a "job", but at an opportunity cost of time and lost wages from a low income job. Most knowledge is available for free on the internet and libraries, with additional in-person resources available in urban areas via informal networks and meetups.
This route still works out to considerably cheaper than a traditional college education, takes less time than college, and has the potential for immediate employment once qualifications and prerequisites have been met. Last time I checked, every company wants to hire a "rock star" if they could only find one...
> Lots of programming jobs hire based on experience and knowledge, not formal education.
I hear a lot of people say this here, but that's not true for most jobs in the industry. For big companies good luck even getting past the HR without a degree.
> I hear a lot of people say this here, but that's not true for most jobs in the industry. For big companies good luck even getting past the HR without a degree.
Most of the people I know who do hiring, including some in Fortune 100 companies, very frequently identify through networking, not HR. Yeah, if the company hasn't heard of you until you hit the HR front door filtering process, your going to have trouble without a degree, but if you are coming in that way, you are already behind the curve.
Not everyone has the specific skills needed to do the job, either: to be maximally employable, those are both things that you would do well to develop (I'm much better at the skill side than the connections side myself, but that doesn't stop me from recognizing the fact that connections matter a lot.)
I think you misunderstood. What you're describing is a culture of education. What I'm describing is a culture of intellectualism. Knowing things for the sheer joy of knowing things. To quote from HN, gratifying one's intellectual curiosity.
The people who know the most and, moreover, learn the best, tend to be those who love to know and learn. It is that which is so rare in our society. The Tweet, the press release, the short pithy blog post; these are consumption disguised as learning. I come to HN to learn -- unfortunately even here I suspect that maybe a tenth of the articles teach me something.
Or if the costs of education in the US were brought down and/or subsidies by the government as they are in other countries (or even paid outright like some European countries)
The cost of getting an education in the US is minimal or nothing. The cost of getting a degree from many schools is very high. However, there are still small universities where you can graduate debt free even with a minimum wage job.
Except when a horse became a cost instead of providing income, it would likely have been slaughtered. I don't think that's the path we want to take with people.
Birth rates tend to stabilize in first world countries anyway. The only reason that isn't happening in the US is immigration--legal and otherwise. In Japan, the population is decreasing. In Europe, it's near zero growth in many countries.
Some people do have a lot of kids. However, the overall total fertility rate in the US was estimated in 2011 at 1.89 kids/woman, below replacement level. So without immigration, population would indeed be shrinking.
It sounds like you're talking about 'immigration raising the population', which is slightly orthogonal to the grandparent post statement that birth rates tend to stabilize, but are higher than otherwise because of immigration. I assume what he was actually referring to was the tendency of first generation immigrants to have a higher birth rate than non-immigrants in America.
Based on the glee that a significant proportion of Americans seem to derive from cutting social safety nets, that appears to be exactly the path we seem to be heading down.
> Why do low-income individuals often oppose redistribution? We hypothesize that an aversion to being in "last place" undercuts support for redistribution, with low-income individuals punishing those slightly below themselves to keep someone "beneath" them. In laboratory experiments, we find support for "last-place aversion" in the contexts of risk aversion and redistributive preferences. Participants choose gambles with the potential to move them out of last place that they reject when randomly placed in other parts of the distribution. Similarly, in money- transfer games, those randomly placed in second-to-last place are the least likely to costlessly give money to the player one rank below. Last-place aversion predicts that those earning just above the minimum wage will be most likely to oppose minimum-wage increases as they would no longer have a lower-wage group beneath them, a prediction we confirm using survey data.
Wow. That's exactly it. Having spent most of my adult life below the Mason-Dixon line, that is exactly it. That and the comments noting that people receiving a benefit fail to recognize that program as an entitlement program.
This is too true. Here in Minnesota, we had a state representative equate food stamp recipients to animals in two separate speeches. In her rural district, almost twenty percent are on welfare programs and most residents are under the poverty line and qualify for food stamps. They still vote for her in spite of statewide coverage of her statements.
The attitude that everyone else is lazy and abusing the system seems most common in poor rural regions that depend the most on benefits. It usually has racial, anti-urban overtones that imply "we're only suffering because of THOSE people who don't look like us." It's a form of scapegoating.
That's an interesting point and I notice similar behaviour in the UK. People will talk up a politician who promises to "end the benefits culture" despite being on benefits themselves.
The reasoning is usually along the lines of "oh he's just talking about those other people on benefits who don't deserve them. Not good hard-nonworking folks like us"
That's a bit of an incomplete description you give, though.
Poorer regions that more benefits do tend to vote for people to cut those benefits. But as Andrew Gelman has demonstrated, it's not really the people getting the benefits who want to cut them: it's the professional and ruling class in the area who do.
Nearly everywhere the lower classes do want more benefits, but the big difference between regions is what the powerful people want.
Perhaps those who are receiving entitlement (and advocating for its abolition), may be using reasoning that you don't recognize. For example, could some of these recipients be very guilty about their use, and, are voting to end them because they don't see any other way out for themselves? Accepting a free handout is a very hard thing in our culture, especially for those that know the gift they receive was forcibly taken from others.
Take a glance at the comments - apart from the usual anti-lawyer screeds, the other main theme is that it'll be way too expensive and they're not worth it. There are some impressively nasty opinions, and a regrettably large number of people who think that way.
There is some strange mental block that makes it difficult for people to understand that technological progress does not and will not result in mass unemployment.
Here's a clearer example with humans instead of horses:
200 years ago, Shoemaking was one of the world's largest industries. Today, it represents a very small fraction of the world economy and almost all shoemakers have been replaced by machines.
What happened?
As shoemaking machines became commonplace, shoemakers were suddenly unable to compete. Some of them found other jobs, some of them became destitute. Most were probably able to keep shoemaking until they retired, as the shoemaking machines took a while to roll out.
However, the Shoemakers' children and other children in that generation were perfectly aware that shoemaking was no longer a viable industry. No one born after the popularization of shoemaking machines studied to become a shoemaker.
What is the result?
First, we now have less expensive, higher-quality shoes. This is not always an effect of mechanization, but it usually is. Second, we don't have mass unemployment.
Why do we not have mass unemployment? Because when you replace workers with less expensive machines, one of two things happen; either the factory owner makes more money, or shoes start to cost less. If the factory owner makes more money, they spend it on a yacht or something. If the shoes cost less, the consumers have more money to spend on food or books or whatever.
So, there are now very few people employed in the shoemaking industry, but all the shoemakers' children can now go into the expanding yacht-making or food-cooking or book-printing industries.
Recap: Mechanization does not cause long-term unemployment. At worst, it causes unemployment for a single generation of workers. Ultimately, decreasing costs in one industry contribute to the growth of other industries (either via increased profits for the wealthy or decreased costs for the non-wealthy), so there is not a significant net change in employment.
It's not a mental block, it's because it is plausible. Just because it hasn't happened yet, doesn't mean it won't happen. In the extreme scenario, if technology advances to the point where it does nearly everything better than humans for practical necessities, it is unknown how much that will affect employment and society as we know it. In my mind, it's not a matter of if it will happen, but how far away we are from that reality. We could be 100 years away or 1000 years away and that's where the more interesting argument lies.
In the extreme scenario you mention, we have effectively infinite labor. Provided we also have effectively infinite energy and resources (which is entirely feasible or only a matter of time if technology is that advanced), the value of all three of those things (labor+energy+materials) drops to zero.
That means we won't have to worry about employment. It will be an outdated concept.
But in the mean time, we also have nothing worry about, for the reasons I mentioned.
Problem is, the price of the nonlabor factors will never actually drop to zero. Energy and materials are basically things you pull out of the ground, and there's always going to be rent-seeking on natural resources.
Perhaps not mass unemployment, but certainly a shift to less valued employment (i.e. service jobs). There's a reason we're seeing a larger income gap now, and it's due to a shift to capital creating value in the economy rather than labor. Lower income folks are getting even poorer by shifting into low skill jobs and people who control capital are getting wealthier.
You know, there was that 'labor movement' and typical working hours decreased in 200 years from 16 hours a day, 7 days a week to 8 hours a day, 5 days a week + vacations. It is a good reason for the lack of mass unemployment, isn't it?
That's actually part one of the side effects of mechanization that I mentioned; not only does employment stay roughly the same, but we get better goods for less work. "The labor movement" had little to do with it; the amount of labor required for sustenance simply dropped to a remarkably small number of hours per day, thanks to technological advancement. The fact that we now have roughly 40 hour workweeks is simply how our culture responded to an exponential increase in productivity.
So I'm not really sure what you're getting at. Are you complaining that we get to work so little and have so much?
Previous technology based labor disruptions have been countered largely by economic expansions. At least until recently economic expansion required labor. If a new technology put people out of work, there was another growing area to get work in.
But we have kind of hit a tipping point though. Both in technology getting more efficient at automating even difficult work. As well as economic growth at least domestically is no longer as strong as it has been in the past.
Every time these disruptions happen people said we had hit a tipping point and it was going to be different this time. Not sure how this time is different.
The stock market is not economic growth. A far simpler explanation is that investors simply expect things like the labor market to recover, which is exactly why the markets react dramatically when the monthly jobs numbers are released.
Though the market adjusted, it does not always adjust in an optimal manner. With the increase in automation we've seen a shift into service jobs. These jobs are low income, low skill and often do not provide a living wage. They also don't actually increase wealth or create any real, long lasting value. This creates an income gap, which is what we're dealing with now.
The primary means of generating wealth has shifted to controlling capital from adding value, and that's not a good thing either. Those horses died off, we can't count on people to do the same.
Horses are able to provide more than muscle power! They can tread over ground unsuited to the most primitive vehicles. They can fit in narrow spaces, they don't require petroleum, and they have enough intelligence to avoid certain kinds of absentminded user error. They are animals and they have personalities that machines will never have.
Surely someone could find new uses for old horses, after all they are organic and adaptable in a way that machines aren't.
And somebody did find new jobs for those horses! 2% of them, at least. The balance got slaughtered.
You can wave your hands and argue that the jobs are out there or will appear given sufficient creativity, but the market simply doesn't care about the faith you have placed in it. Your optimism doesn't control the unemployment level. We have to prepare for the eventuality that the jobs don't materialize, and we have to do it in a way that doesn't heap perverse incentives onto the unemployed while choking off the very consumption that fuels the economy in the first place.
"And somebody did find new jobs for those horses! 2% of them, at least. The balance got slaughtered."
I do not think this was as much of a slaughterhouse as that makes it look. Today, horses typically live for 20-30 years or so. In 1900, I would think working horses would be lucky to reach 20 years; as they became older and less productive, they would be sold of and slaughtered.
With an average 'working career' of 10-15 years or a horse, just stopping buying replacement horses would be enough for most of that decline in the number of working horses.
No. Just look at the horsemeat scandal. Large numbers of horses were being slaughtered in Romania and Ireland for economic reasons and are being eaten. They cost a lot to feed.
One more data point - whaling industry was once fifth largest industry in the US and employed 1% of all workforce (auto industry, for comparison, employs about 0.5% of workforce, 1% would be around 1.5 mln jobs). Could you imagine fifth largest industry now almost completely disappearing? They probably couldn't either.
You are correct. The something new, at this point, is going on disability and waiting it out until they get Social Security payments. Most 50-year-olds with a high school education will not be becoming coders. If we are lucky, their kids are already working office jobs or have enough education/knowledge to do so.
As a country and society we will of course find new things to do, hopefully even replacing our manufacturing loss with even better technologies and methods. However, we will always have a huge discontinuity produced by globalization and automation that abandoned a significant portion of the population without the skills or the hope to catch on to the new fields.
So you're saying that rapid raise of number of people that can't do anything valuable enough for any employer will never happen? Or that it's not just yet because it wasn't just yet the last time?
The basic income might sound like a far-left idea to some, but it is supported by some ardent capitalists including Milton Friedman. He specifically supported its implementation in the form of a "negative income tax" which would replace the current welfare system. The reason for his support was that it was a more efficient redistributive system, as it avoided the perverse incentives of means-based welfare.
Another right-ish supporter was F.A. Hayek, who had some positive arguments in favor of it as well (whereas Friedman supported it mostly just because he thought it was better than welfare systems).
Hayek's main argument was that a society based on autonomous individuals, rather than collectivist groups, is more likely if everyone is guaranteed at least a minimum safety net, because otherwise people are forced to cling to birth-related groups (ethnic groups, clans, clannish religious groups, etc.) for their safety net. A short snippet: http://www.kmjn.org/snippets/hayek79_minimumincome.html
Elsewhere he discusses it in relation to choice as well: above a subsistence floor, he opposes much government intervention because he thinks markets made up of individuals making free choices can make decisions better. But below that floor, when people are desperate, you have things that are closer to "I'm going to make you an offer you can't refuse" than an economy driven by free choices. It's unclear from my memory if his worry there is primarily an ethical one, or relating to proper functioning of markets, though it could be both.
I've also long supported the negative income tax, because it avoids the perverse incentives of the existing system.
BTW, it's not being means-based that causes the existing system to have perverse incentives; the NIT is also means-based by definition. The difference is mathematical: whether the subsidy is a step function of income, or a linear function. Step-function subsidies always create perverse incentives. Unfortunately, they are ubiquitous. I dream of the day when our legislators have sufficient mathematical ability and understanding to select appropriate linear functions instead.
Anyway, I came across a paper explaining why the NIT is a non-starter, politically, in the US. The basic problem seems to be that there are too many people -- especially young single men -- who currently receive no subsidy yet would be entitled to one under the NIT. This group would make the program too expensive.
I've never understood why taxes, benefits etc. all seem to work with step-based functions instead of continuous ones – anyone care to explain that to me? The only theoretical benefit I could see is that it makes/made administration easier, but with everything being automated that surely can't be true nowadays.
I like the idea of a negative income tax. I'm imagining it as a system where if you make below a certain amount of money, you aren't taxed, you're actually given money. If you make above that amount, you're taxed.
As long as it's implemented in a way that there is still an incentive to make more money, I think it could be a decent solution to our problems.
I like the idea too, except for fraud. When everyone making less than X automatically gets money from the government, the temptation to work off the books and double-dip grows. (Though I don't know if it's really any more of a problem than faking disability.)
There's always incentive to earn money as as long as there are things to buy that your neighbor won't be able to buy with basic income an you, with your earned money will be able.
Right now there's a disincentive to make more money because you lose some types of benefits when you get a job, even if that job pays less than the benefits.
The EITC is somewhat like that, though it's mainly targeted at families (the amounts for households without children are extremely low, with a max benefit in 2013 of $487/yr).
The best example of this is the FairTax. The prebate is currently based on making sure those at the poverty line pay 0% federal taxes. But, if you change this to be 2x the poverty line or something, you effectively achieve a floor "basic income"
As this article shows, we're leaving behind more and more people; some people will remain Zero Marginal Product workers for the rest of their lives, and as we increase automation, their ranks will only swell. If this doesn't tell people that a guaranteed basic income is necessary, I don't know what will.
We still have 3 people for each open job in the country. That number may never get to parity again; the faster we can get those who cannot do anything out of the labor force, and onto a society-provided income, the better. There'll be less competition for the remaining jobs, and these people will not have to live lives of constant degradation.
If this is the road to guaranteed income, so be it. We need to get there one way or another.
I agree wholeheartedly, including on basic income, with one more detail: as long as people are being paid, why not pay them for "unprofitable" work?
Firstly, pay people to go to school. Any subject, useful or not, for as long as they like. The education and mental fitness of the populace is a deep reservoir of Real Wealth.
Secondly, pay (more) people to do community service work: visiting the elderly, cleaning up parks, tutoring kids, etc.
And last, those people still work in the few remaining market jobs: have them work fewer hours! There will always be those who want 40+ hour weeks, but for everybody else, distribute up the same workload over a larger number of people with 20-32 hour work weeks. More people employed, who are less stressed, and a healthier society due to more time to self-improve and spend with family.
Income is only one part of the sociological phenomenon called "jobs". People also want to feel useful.
Regarding your last point, it basically ignores everything about the "mythical man month" concept. Work and productivity are usually not evenly divisible into discrete chunks. When we had an economy dominated by factory work, where workers attached Widget A to Bracket B, you could divide things fairly evenly between workers.
But today most jobs that aren't just physical labor benefit from having employees around more often. They stay up to date more easily, they can communicate what they learn more quickly, they can code for hours straight without the interruption of leaving at 2pm (not to mention all the interruptions due to meetings that would have to be compressed into shorter workdays to keep them up to date).
There are also economic benefits of longer work days. A smaller fraction of a person's time is spent commuting (in aggreggate, cleaning up the roads and reducing carbon emissions due to fewer workers per company). And in the US, where we have decided to couple a person's insurance and benefits with his or her employer, the non-salary costs associated with an employee are a very significant component of the total cost of that employee, companies have a big disincentive to hire a large number of people, even when the work can be evenly divided into small chunks.
> Regarding your last point, it basically ignores everything about the "mythical man month" concept.
This is true. I would propose that we are, or will become, wealthy enough to absorb any inefficiency.
> There are also economic benefits of longer work days.
I agree with this as well. In fact, I think we'd be much better off with norms of 3x8, 3x10, 4x8, etc. A work week of 5 half-days would be deeply sub-optimal. (Maybe these are just my own biases.) :)
I've also wondered why there aren't more people participating in those sorts of community service activities spontaneously - clearly it is difficult being unemployed, but surely doing something of value is more rewarding than watching television?
Mostly because the unemployment system compels you to prove you're looking for work, and volunteering throws up a red flag saying, "I'm not looking for work, I'm dilly-dallying around volunteering for arts groups and children's scouting, ahahaha!"
So what? A thousands other details of politics, culture, and economic structure are vastly different. Soviets also had police and military and schools: should we automatically not do those things either?
We do pay people to go to school already, there are a multitude of retraining programs available for older workers. But as in this article I think the people in question are the reason for these programs not working, the one factory worker in this article didn't like school so he stopped going and went on disability. With that kind of attitude it's going to be hard to help people.
why not create jobs for these things? not for going to school though. why does someone need incentive to learn and train for a better job? something like that seems like it could be abused too.
"Lump of labor" is fallacious, but there's a demand curve at any given time, and demand for most of the stuff that being have been doing for decades is softening and will continue to do so.
The long-term, progressive solution is to train people up. Give them the resources and autonomy to learn the skills they need to rise to a higher level of work. If this is done, then we break out of the zero-sum labor regime, people graduate to more creative, high-yield work, and we can all be happy.
But... someone has to pay for these people to survive while they learn, which takes far away from our original-sin (work, or don't eat) economy and closer to the basic income concept.
"The long-term, progressive solution is to train people up."
This is just false. As computers begin to become capable of more and more jobs, the demand for human labor will decline. Automation is qualitatively different from mechanization. Education is a thin gilding on an impressive but non-optimal brain architecture. To say education will cure the ills of automation is a bit like saying fitness training could have saved workhorses from obsolescence. Workers of the world, you're fucked.
This reminds me frightfully of the Friendly AI Problem. Call it the "Friendly Economics Problem", if you will.
People often expect that Singularity-causing AI will have a set of pre-programmed guidelines about what to do (human happiness is good, killing all humans is bad, etc). It seems far more likely that we'll just use it to make money. If that happens, the Friendly AI Problem is exactly the Friendly Economics Problem.
So inevitably, the only thing humans will have to contribute to the economy will be consumption. Can AI be a consumer?
This is a critical step, politically. What we do now to the "useless" members of society will eventually be done to all of humanity.
Clever. I only figured this one out recently myself.
Here's the core issue: "economics" or "the economy" or basically any ideological, rule-based mode of controlling human conduct is all really just a massively-parallel distributed computation/program running on meatware substrate-nodes. The Unfriendly AI is already here, it's called capitalism, it already rules the world, and it runs on us.
The computer is unfriendly, and we are the computer. This is why it has become a political act to remind people that they actually do value things other than capital accumulation.
This has long been my argument for the long-term desirability of socialism.
But in my thinking, it's a bit more complicated than you make it out to be. Consumption doesn't really contribute to the economy in the relavent way; labor does. The only reason consumption matters now is that it returns the value of the labor's output to the capitalists. Then they can use the money to buy yachts and private planes and so on. Basically, consumption is a way of turning labor into general-purpose money. That's a fine model until you don't need the labor because you have all these fancy machines that can make everything (and design everything and clean everything and so on). So you lay everyone off. And then there's no reason you want the consumers because no one has given them any money to give back to you. You just make the private airplanes and swap them with the guy who makes yachts and call it day. And you're richer than ever before because you're massively more productive.
Now a few different things can happen: one is that everyone else just starts new businesses that employ the labor so that they can benefit from it, as sort of a second-tier economy, which exists until its elite accrue enough capital to build their own automation and the cycle repeats. That doesn't seem too likely. What seems much more likely is that everyone gets really mad that the current system doesn't provide for them anymore and demand a cut of all these robots' output. Maybe that happens voluntarily on the part of the capitalists (I think this is more likely, on reflection, than it sounds) or maybe it involves some government-sponsored coercion or a populist revolution. I don't really know.
Also, anecdotally, it seem that people are being trained-up for jobs that don't exist. . .at least not in their own geographic area. A lot of people who require training up don't want and/or don't think they are able to uproot themselves and move to where the jobs are (supposedly). I read a welfare-to-work success story where the person had gone to school, church, clinic and shopping all within a 1-mile radius of her home. She had literaly never been outside that radius. Her first job was at McDonald's. She required a lot of coaxing and coaching for that job because she had to ride a bus and go outside her comfort zone. Her family was quite impressed that she was able to do so. I was stunned. And she was able to return to her comfort zone each day. Imagine if she had to actually move her family to a new location. And she lived just a few miles outside of Washington, DC, in northern Virginia.
There is definitely an issue of matching skills to jobs and geography. That said, many companies that used to consider training and employee development no longer do so. So, even in locations where there is a workforce that might be trained for a job situation, companies aren't training...
This is one of the big criticisms of unpaid internships. It favors people who already have the ability to work for something other than subsistence. There may be more room for paid internships than companies are willing to admit, and encouraging them to pay might be a useful stopgap until we come up with something better.
Unpaid internships exist for exploratory purposes (try people out, discard most) in industries that, while "cool", are effectively marginal (and headed toward obsolescence).
The unpaid internship phenomenon is not there to skirt minimum wage laws, but to avoid an uncanny valley. The actual economic worth of a publishing intern is nonzero (and probably above the minimum) but unsavory. No middle-class college-educated person will work for $9.50 an hour-- it's a pride thing-- so the wage is reduced to a flat zero and the job type is redefined as a "learning experience". To be fair, it's not totally dishonest bullshit. If the pay is zero, the power dynamic is different. So it is a different kind of experience (I'm just not sure how much of one it really is).
I actually think that a basic income is good insofar as it removes the need for the minimum wage. Minimum wage is essentially a clumsy minimum-income program where the bill is paid by low-end employers, who respond by cutting low-end jobs, creating unemployment. In theory, without a minimum wage, we'd have zero unemployment (except for the beneficial, intrinsic kind). Add that to basic income, and the (theoretical) result still holds: full employment. Most capable people would work, for economic reasons, but the option not to work would give employees more leverage and be better, on the whole, for society. As much or more work would be getting done, since it's unambiguously bad for people to be economically disenfranchised (1930s proved that fucker true).
>No middle-class college-educated person will work for $9.50 an hour-- it's a pride thing-- so the wage is reduced to a flat zero and the job type is redefined as a "learning experience".
Wow -- that's pretty far removed from reality, at least as I've seen it. I know plenty of people with undergraduate degrees who work for that or less, because they can't find jobs related to their field. They would definitely work paid internships that were minimum wage, if it was part of the career path.
In fact, that's about on par with what I get from teaching classes as an adjunct!
I think I was going along with the meme that unpaid internships are abusive, but only because it seems plausible. There are more memes and heated rhetoric than productive discussion, unfortunately.
It's probably one of those things that happens, but is more isolated than it seems.
Agreed, but it's also essential that we as a society not incentivize idleness. If you refuse to take advantage of the opportunities presented to you, fine. We'll still make sure you have adequate food and shelter and medical care, and continued opportunity for improving your lot. However, you are not entitled to a discretionary income which is large enough to spend on a smart phone and a big screen television.
These days a smartphone and big screen television cost less than $200 each. Those are no longer extravagant expenses. If someone works only 10 hours a week they should be able to afford small luxuries. The problem I see is that your benefits get cut when you start working. Our society incentivizes idleness and punishes people who would otherwise be willing to be partially productive.
A smartphone or TV do cost $200, but that's not what makes poor people poor. Poor people are kept in poverty from sudden costs they are unable to cope with which accrue interest. Got to fix your car to get to work? Pay $800 and don't eat for a month, or pay $1200 because you need a loan and have shitty interest. Gotta see a doctor? Can't, because the consultation alone will cost $300, so you tough it out until it become unmaintaible and you get a hospital bill for $5000. Got a leaky pipe? Don't have the time to fix it because you work 12 hours a day because you have no alternative, so now your house get a humidity problem and you can't realistically do anything about it.
A phone is peanuts in comparison to the things that really matter.
A smartphone is at least $50 per month for 2 years, or $1200. Cable or satellite TV is also at least $50 per month. The initial teaser costs of these items are nowhere near the true costs. (Except for the rare user of a big screen TV who only uses it to watch free TV.)
you can buy a nice smartphone outright for $50 or less, and get a data and talk plan for $40 / month. 2 years? a contract isn't necessary. if you can't afford the phone that month you can do without, though you might lose your number.
" If someone works only 10 hours a week they should be able to afford small luxuries."
How? At what price? 10 hours per week even at $10/hour is still $100/week, minus some taxes - you're at... say, $80/week = max $400/month. How on earth can someone earning $400/month afford 'small luxuries' like a $200 tv? And the 'big screen tv' that was mentioned - I've never seen any (new) under $450 (yet). Not sure where you're living, but for someone earning minimum wage working 10 hours per week these are simply unattainable. Or, let me rephrase that - should be unattainable, because there's nothing left for subsistence.
why? i strongly believe that there are enough people who want to be productive, and that the means of production offer enough leverage, that there is more than enough spillover for people who want to be idle to be idle without harming anyone. if it is possible for those people to lead a pleasant life (including participating in the basic consumer economy) without improving their lot, why not support that?
As of the 2010 census [1] there were approx. 100 million households in the US. Let's say that 1% of them decided to be idle, and that we decided to give them each $40,000 a year to do so. This would be just enough for them to live pleasant lower-middle class lives.
This would cost $40B a year, which comes out to roughly $400/year for each remaining household that chooses to carry the burden. To a lot of families, that's a lot of money. Is it moral to forcibly take it from them and give it to someone who is willfully idle? Also, would the idleness rate really be 1% as in this example? I think it would be much, much higher.
the families to whom $400 was a lot of money would not, in any sane progressively-taxed system, be expected to pay that $400. the people to whom $400 was pocket change would.
consider this: there is a factory. it employs 100 workers, generates some amount of value which is split between worker salaries and profits for the owner. now someone invents a robot which can replace 90 of those workers, and cost the less to run and maintain than those workers' salaries. should the factory owner make the switch? of course he should, it's insane to make humans work when a machine can do their jobs. but now what about the people who were working there? they could be forced to retrain and find new jobs (not always possible). they could be kicked out to fend for themselves (what happens now). or the government could tax the means of production highly enough that it could pay them in welfare what they were making in salaries. the factory owner would be no worse off, the workers would be better off, and the government would have corrected for the fact that wealth tends to pool in the hands of the people who already have it, because they are the only ones who can afford to acquire the means of passively generating income.
in terms of morality it seems better than making person A "forcibly"[0] labour for person B simply because person B happened to start out with a lot more money.
[0] no one is putting a gun to his head, but if it's either work or starve you cannot call it uncoerced.
I understand the point you're making, but I see issues with some of the details: i) in order for the factory to remain competitive domestically and internationally, it will need to reduce prices and increase production, otherwise someone else will use these robots to put them out of business (thus profits increase, but not by the amount saved by salaries), ii) if the government taxed this factory more, they would no longer be competitive internationally; further, this innovation would be disincentivized, iii) even if the government reclaimed all of the additional profits in taxes and gave them to the workers, there wouldn't be enough to go around (see first point), iv) perhaps this would accomplish the goal of narrowing the wealth divide, but it only does so by destroying wealth (factory owner ends up with less, workers end up with less).
I really don't believe this strategy will accomplish any of these objectives in the way you intend. I don't mean to pick on your example or opinion; apologies if I come off as harsh.
not at all - i'm certainly not capable of developing a new economic policy in the hacker news comment boxes :) i was merely pointing out via an example why the up-front ability of some people to own the means of production inevitably means that wealth will pool in their hands, and that something needs to be done at a government level to redistribute that wealth.
the bugbear of international competition simply means that everyone involved gets caught up in a race to the bottom; the fact is that this would simply be a progressive tax on leveraged ways of making money. there's always an incentive to make more at a lower cost and effort, whether some of that more is taxed or not. i would go as far as to say that it's a basic human drive. the sticking point is, once you have a setup so productive that you do not need other people to contribute to it, what happens to the displaced people?
the current model seems geared towards "deserving" the means to acquire necessities and luxuries, by contributing something to the system, whether the system needs them to or not. however that leads to very strong inequities where the rich get richer and the poor lead lives of ever-increasing desperation, including the need to perform menial jobs at a "loss" (i.e. getting less for them than the human cost of doing them).
i also do not believe my scheme would destroy wealth, for the following reason: $100 would let a poor person eat better, a middle-class person buy a better cellphone, and a rich person tip his blackjack dealer. my contention is that the $100 is therefore worth strictly more in the hands of the poor person, and that "destroying wealth" is an illusion caused by the fallacy that $100 is $100 regardless.
Using your analogy, let's say someone worked in the factory for a year before they were replaced by the robot. Are they entitled to completely stop working and earn that same salary for the next few decades? A year?
Something about your comment really struck me. In most sci-fi utopias, increasing automation was assumed to lead to cheaper marginal prices that gave everyone more leisure time. In reality the benefits from increasing automation (and globalization) have instead been naturally captured by those with the means (capital) to achieve them. Sounds a lot like we're either back on the road that Marx described where the few have all the capital or we're able to escape that fate by lowering the capital needed to gain those efficiencies (cloud computing, 3d printing)...
my analogy was not about people deserving the output of the factory due to having worked there. it was just an attempt to reduce the problem to a single system to illustrate how earning potential tends to leak out, and why that would actually be a good thing if only "earning" and "being provided for" were decoupled. the very fact that you can use the word "entitled" illustrates the basic problem in the current system, where it is physically possible for a small fraction of the population to produce enough for everyone to consume, but where that is being blocked by the notion that there is something immoral about getting stuff you haven't "earned".
>the families to whom $400 was a lot of money would not, in any sane progressively-taxed system, be expected to pay that $400. the people to whom $400 was pocket change would.
You mean the smart phone they would use use for direction and communication while going out looking for prospective clients, and so they don't need a fixed Internet connection like cable?
And the big screen could easily double as a second monitor for doing work on a laptop.
You seem to have suggested that there are legitimate reasons for someone to buy a smart phone or large television using government benefits. If this is not what you meant, then kindly clarify.
The point of a basic income is to ensure everyone has the means to improve their standing, and keep from sliding into abject poverty. Any use of the funds that furthers that goal is legitimate. Social pressure can be exerted to limit frivolous uses, but it's easy for that to go too far and become counterproductive.
The worst that happens is someone has more than they need. And then what happens?
One of two things:
1: It sits in the bank, where it's lent out for investment
2: It's spent, possibly on something optional but still legitimately useful and non-frivolous, in which case it flows back out into the economy
I don't see a bad outcome. The vast majority of people want to have the self-esteem boost of fulfilling employment, and will seek it out once they're not stuck in the welfare trap. There's even a solid chance this will bring civilization to a point where no one needs a minimum income.
We're talking about basic income for the purpose of ending poverty, not giving people a billion dollars every year for some undefined purpose. Your hypothetical is nonsense.
People who win the lottery often end up worse off than when they started. Giving everyone a multiple of the highest lottery winning every year would be destructive.
No your point specifically is nonsense, because its a false comparison. Having a basic billion dollars would be massive wealth redistribution, as opposed to minor, and would have many additional negative consequences due to the severity of it.
mkr-hn's describing (as I read it) redistribution of wealth.
The problem with your suggestion is that it would necessarily create runaway inflation, because there's no way to square that payout with government tax income.
You can have redistribution of wealth without runaway inflation, there are a number of existence proofs of this.
or, well, the smartphone they would use for email, maps, games and web-browsing, and the big screen they would use to watch tv and movies on! do you really think we live in a society impoverished enough that providing basic luxuries to the poor would be an overall hardship?
I didn't want to cede so much ground to someone so obviously anti-poor at the outset. Better to limit it to the point and reduce the risk of a derail. Something like "so you think poor people should use government money on toys" would have appeared almost instantly and prevented the few good comments that came out of the discussion.
If I believed that poverty were primarily caused by a lack of opportunity and a concentration of economic power, then no, I wouldn't have any problem with providing basic luxuries to those who couldn't otherwise enjoy them.
I agree with you on not incentivizing idleness. That's why basic income is superior to minimum income. The difference is that a basic income is one that everyone (rich or poor) gets. There's no "welfare valley" (or plateau) where earning money on the market makes you worse off. Every $1 you make on the market is $1 (less taxes, which would go up under BI) earned.
I think some degree of discretionary income is useful, if only from a complexity-reducing standpoint (better to give the person funds than to regulate "how much phone" is necessary to get jobs and what is a luxury).
At any rate, I don't worry about the parasites we might have at the bottom of society if we're more compassionate. The costs they induce are a rounding error. We lose a lot more to the parasites we already have at the top of society.
No argument about the parasites at the top of society, but the ones at the bottom do incur far more than just a rounding error.
I've always thought the basic income idea is interesting, but I'm not sure how it could be made to work. If everyone receives a basic income, then those who earn more must pay back enough in taxes to cover their own basic income and then some. How this is really different than what we have today? People who receive government benefits get them mostly in the form of discretionary income. The argument goes back to "who" and "how much."
Well, one big difference is that it doesn't create those perverse incentives that prevent people from moving off of the dole roles. It also removes a whole lot of administrative costs, and it kills the issue of gaming the system. You get what you get, and there's simply no way to get more from the government.
I've been curious for awhile: in the USA, if you took Social Security, Medicare, Medicaid, food stamps, student loans, welfare and rolled them all up into one fund that was evenly divided to each person, how much would you have given out? Turns out the number is about $6-7k per capita. That's... not enough, but a pretty decent start. The economics suggest it would increase overall productivity, which would bring in a bit more tax revenue by itself. But taxes would have to be raised significantly--but not an obscene amount--to make it work.
The difference is that with basic income if you start working just a little bit - your basic income would stay with you and your total income would increase.
In current situation, if you start working - you are losing your welfare/disability benefits.
People at the Social Security Administration, which runs the federal disability programs, say we cannot afford this. The reserves in the disability insurance program are on track to run out in 2016, Steve Goss, the chief actuary at Social Security, told me.
Goss is confident that Congress will act to keep disability payments flowing, probably by taking money from the Social Security retirement fund. Of course, the retirement fund itself is on track to run out of money by 2035.
Goss and his colleagues have worked out a temporary fix under which the retirement and disability funds will both run out of money by 2033. He says he hopes the country will have come up with a better plan by then.
Does it sound like a rounding error to you? It doesn't to me.
Let's assume you're right that we should have a basic income system, where every citizen receives a fixed amount. The money for that can partly come from cutting existing welfare systems, but we'll likely also need new revenue for it.
Coincidentally, the "fee-and-dividend" plan proposed by James Hansen calls for taxing carbon emissions by the ton, and distributing all the money to citizens, equal amount per capita.
That sounds a lot like basic income. Maybe we can kill two birds with one stone here.
The union of the set of people you would be willing to have in your home and the set of people comprising the millions who claim they can't find work is, I suspect, small relative to the size of the US.
ie - The people we are talking about... you probably wouldn't hire.
Hmmm.... extremely true. Even when we're not talking about the criminal underclass, I wouldn't hire an unemployed frat-boy type to take care of my apartment (too much nerdery about the place) or cook my meals (what's he going to know about kashrut or how to make curry?).
One problem is finding people responsible / hardworking enough that you can rely on them doing your errands and chores without constant supervision. Someone that competent isn't likely to be working for $8-10/hour.
Obviously there are some subsets that mostly work at this price level (cleaning, landscaping, etc.) but there's a reason personal assistants are expensive.
Sure. Or people who need to be managed closely to be productive.
Which, I remind you, is a significant portion--probably the majority--of humanity. To make a world that I'd want to live in, you're going to have to find a place for them besides the glue factory.
I don't believe this is the majority of humanity. This was not a major problem when I lived in India - most people (with far less opportunity than typical Americans) were quite willing and able to work as domestic help.
Perhaps lower class Indians are simply superior to lower class Americans? Or perhaps the incentives are merely different?
It's not like Indians aren't picky about who they let into their houses, though. Cross-cultural labor market comparisons are always tricky, but unemployment in India is currently higher than unemployment in the USA (source: https://www.cia.gov/library/publications/the-world-factbook/... ).
Ignoring frictions, you expect that even the worst of those employed as live-in maids, cooks, or servants are probably comparable to the best of the 10% of Indians currently unemployed. And the burgeoning Indian middle class has collectively decided that those currently unemployed Indians are too expensive to employ as help (or anything else). So they don't get employed.
As labor becomes more and more capital reliant, management costs are going to increase. At some point those management costs will exceed the costs of substituting labor with capital. That labor will then be replaced with capital. And just as companies have to be effectively bribed to employ the mentally retarded today, there's a class growing ever larger whose cost of employment exceeds the amount of value they generate.
The thing about India is that they are not underutilizing labor. You don't walk around and think "if only they had a human doing XXX, life would be so much easier". Whenever you find a job that could easily be done by an unskilled human, it is being done. Most middle class people have a maid, a cook, and a driver if they have a car.
In contrast, there are plenty of jobs in the US that could be profitably done by a human at $9.25/hour - domestic services are just one example. This begs the question - why don't unemployed Americans fill these jobs like Indians do?
Because Americans, by-and-large, are comfortable (or at least accustomed to) doing these things for themselves. Most of us wouldn't want a driver or maid or a cook. Some of this reluctance comes from our cultural self image (egalitarian, self-sufficient). Some of it comes from the structural and legal complexities of employment.
Finding somebody you would trust to have in your home is difficult. The paperwork involved for payroll and taxes can be complex and time consuming. Above all, domestic service just doesn't add enough value to make it worthwhile. I can drive my own car, cook my own meals and clean my own house, all without it seeming like an undue burden.
The situation is probably different for a family with two career-oriented parents and school-aged children. But it's unlikely that displaced factory workers have the skills and temperament necessary to take up work as an au pere.
Perhaps most importantly, it seems like a huge step backwards to re-establish a menial serving class.
> Perhaps lower class Indians are simply superior to lower class Americans?
Hmm, maybe that is the case?
Dodging the issue of different cultures entirely, I could see such a situation arising if we assume that in the recent past India has been less of a meritocracy than America. Competent workers, therefore having less social mobility than their counterparts in the relatively more meritocratic country, would tend to stay in the lower class more frequently, seeding the lower class population with more competent workers. Meanwhile competent workers in the meritocracy would move upwards, draining the lower class of competent workers.
I have no idea if it is fair to say that India has been more or less of a meritocracy in the past than America.
Who exactly is unwilling to work as domestic help? Most poor people i know would be more than willing to do that. I've done that sort of work. Transportation costs are high and a lot of time is spent on the bus as you travel from job to job for just a few hours of work, but its doable.
Its the same problem as with lots of other jobs though. Clients want to hire people with experience, not just anyone. Cleaning services get most of the work, since they can often pay to replace belongings that might get broken or ruined.
You're not just discovering a new area of possible employment. The people who can afford to pay to have their houses cleaned, their errands run, their yardwork done, have long done so. If you aren't currently employing anyone and are bringing in a nice income, you're the exception.
Your post ignores a very important variable - price.
Who exactly is unwilling to work as domestic help?
Pretty much anyone, at $10-12/hour.
People who can afford to pay $35-40/hour have their houses cleaned by a maid, but there is nothing special about this price point. If we have a lot of un-utilized labor who are willing to clean houses for less than $35/hour, prices should fall.
Since prices have not fallen, we must conclude that our unemployed are unwilling to clean houses except for high wages.
(Or possibly demand for domestic services is completely inelastic, but that's unlikely. I'd certainly have my house cleaned more often if it were cheaper, and I know many people who can't afford it at $35/hour but could at $10/hour.)
I've worked for less than $10 an hour doing housecleaning when i was first starting out. I topped out at $15 an hour. That's higher than minimum wage and you're going to get plenty of interest as long as you're advertising. Most poor people aren't as choosy as you seem to think they are.
While cleaning your home for a few hours a day is not hard physical labor, cleaning houses all day would probably not be a great job for somebody with back pain. It is certainly more physically strenuous than your average job at McDonalds, which they already have available to them.
While this is interesting, it breaks down -- suggested logical fallacy notwithstanding -- at "the only long term solution is [x]." Applying enough reasoning to see and understand our larger problems is a necessary first step, but to find one potential solution and stop there, as though further consideration could not possibly find alternatives, is extremely baffling.
The U.S. has a fairly weak welfare system, especially if you don't have kids. The EITC for people without kids maxes out at $487/yr. And many other assistance programs, such as Section 8 housing, are full in most of the country and not accepting new entrants (in SF even the waitlist is closed). In places where you can manage to get on the waitlist, it may take 2, 3, 4 years to qualify. Hardly equivalent to a minimum income, whose point is to function as an immediate/constant floor.
There are BIG problems with welfare that are solved by giving it to Bill Gates also. For starters, right now the income you get when you transition off of welfare is taxed at greater than 100% - why work when you can get paid more to do nothing and get paid more?
Are you saying that welfare income is not taxed, but when you earn the minimum amount required in order to be denied welfare, it's less than the welfare check / also taxed?
I am not sure that's the same as 'taxed greater than 100%' -- that would mean that you've earned $10, so pay $13 in taxes. The math might work if you had actually been earning welfare; if you mean something else than what I'm saying, please explain.
Well, we're talking about effective marginal rates, not the listed amounts. The next dollar would be taxed at 20% or whatever the listed rate is. However, if you also lose a dollar of welfare, the tax rate is actually 120%, at least in terms of how incentives influence someone's marginal decisions.
It is a little bit worse than this in many cases actually, you pay tax on your earnings AND you have to cover the costs of getting to and from work and things like childcare while you are at work.
That being said, my experience is that among the poor there are very few that are not interested in working but I know of at least one person who did pull out of the workforce after finding that they were further behind with a job. Make of it what you will, I think it is a condemnation of low-skill labor rates, not of the welfare state.
It's not that hard to figure out - you just set a tax-free threshold of at least the amount of the minimum income. Minmimum income is $10k? Then the first $10k of any private income is tax-free.
To entice people to work, you'd probably do it so that it takes a bit more than a dollar of private income to remove one dollar of minimum income, so that you're always better off if you work, and if you properly set up your tax rates, there will never be a point where you are a cent worse off for earning an extra dollar.
This idea that the 'first $x is non-taxable' doesn't generally influence the withholding policies - you can change deductions, etc, but rarely - especially at low-paying jobs - does anyone ever give you actual useful direction on how to manage withholding values. But... telling someone that the first $10k is non-taxable, and they might get a refund 9 months from now - doesn't really help all that much in the day to day world of living expenses.
You still might face very high effective marginal tax rates, though, even if below 100%: instead of an hour of work costing you money, an hour of work might effectively be worth $2.00. Still a huge disincentive.
That's really hard to avoid when you do have conditional benefits that phase out with higher income. To "properly set up your tax rates" amounts to not having conditional benefits, which is a basic income under another name.
The problem is that a lot of welfare programs are means tested. So if your income goes up by a dollar, each of your 4 welfare benefits might be reduced by $0.30. So it sticks people in these plateaus where there is a substantial required jump in income needed to actually increase disposable cash.
I worked for a short time at a gas station, while having unemployment. The job paid minimum wage, and had no benefits or perks.
The first thing: when reporting wages, you had to report the untaxed amount to unemployment, even though I never saw that. I only received 87% of what I was paid.
Second: I now have wonderful costs, like driving to work, wear and tear, and other costs associated to working. This lowers my effective 87% even lower.
Third, I was on foodstamps. The moment I touched a job, which reduced my benefit by amount before taxes, I also had deducted from my foodstamp balance. I'm now down, by 2:1.
So, I did what many do in my situation: dump the job and go to school. I have less of a problem with myself with taking public assistance if I better myself.
The even bigger problem is parents. As long as you have no job, you don't need any help taking care of your kids. As soon as you have a job you find that a huge chunk of your income goes towards taking care of your kids.
Its worse than that. If you go over a certain threshold you might no longer qualify for certain types of assistance that are worth a lot more than that threshold, healthcare especially.
That's closer to a minimum income program, in any case. The difference is that a basic income means that X amount is paid to everyone. There's no "welfare valley" (or plateau). Every $1 earned on the market is $1 (less taxes) earned.
How does the basic income works against immigration (including illegal)?
Because it seems that once you declared basic income and nobody wants to work anymore, you'll get a huge influx of immigrants from the third world (who would be like slaves but even more oppressed) plus they will be trying to get citisenship as hard as they can.
"Because it seems that once you declared basic income and nobody wants to work anymore"
That's not in evidence: most programmers could work a month out of the year and have the amount of money provided by a basic income, but they choose to work much more than that. But I digress.
Immigration is one of the more interesting challenges for a BI, but I think it's overstated. As alluded to above, there's still all the incentive in the world to work even while receiving a basic income: which is to say, more income. You would want to make sure that you don't have a huge immediate influx of immigrants, but that's pretty simple: limit the number of immigrants in to a manageable amount (whatever that is), and only give citizenship to an immigrant once they've lived here for X years. At that point they'd have been working aplenty, paying taxes, and building skills: on citizenship and receiving the income, they'd have the same skills and incentives to continue working.
if a basic income is $10000 a year, i doubt that many people are going to be falling over themselves to stop working and try to scrape by on just that.
No. Consumption is in fact a form of labor. One that in some manifestations is employed in support of natural hedonism; but often has little or no relation other than that hedonism is used to propagandize the consumption.
In the United States this is particularly and sometimes painfully obvious, when people who do not wish participate in certain forms of consumption are sanctioned in various forms. This sanctioning can be overt "You'll need to wear a suit and tie if you're you want this job." or covert, "That guy rides a bike to work, wonder if he got a DUII?" Keeping up with the Joneses is the job you have when you aren't at work.
One of the surprising things about social status in America is how often certain forms of consumption are effectively mandatory to signal ones class membership. Go looking for a CEO of a publicly traded company who chooses not to own a car for instance. Or a partner at a major law firm who does not have more than one residence. Those are only gross examples, one that is more familiar is the prevalence of electronic gadgets, especially those by Apple as symbols of membership in the digital worker class.
The truth is that our choices in those matters are socially constructed, and that social construction happens in response to needs that are historically contingent rather than deterministic in nature. True a certain amount of consumption, of food, shelter and medical care is biologically determined; the rest is cultural.
Oh, it gets worse than all that. Every so often you hear stories floating around about managers, in these sorts of signal-ridden workplaces, who threaten the jobs of employees who don't consume to the appropriate level. Why? It's really much more straightforward than only "class signalling": if the worker consumes too little, they'll get out of debt, and thus they'll be far less captive to one particular employer. Therefore, employees must be encouraged to be do things like purchasing new cars every so often, to keep the Golden Handcuffs tight.
This is so true. I don't presently have a goal to rise at my current job, so I don't dress the part. If I did want to advance, I'd have to spend around $2,000 on more formal attire, and probably $1,000 on gifts and other kinds of spending. I might even have to get a degree of some kind in the field. I'd also have to go to bars and social events on a regular basis, after working hours.
This is an interesting concept, but I have two big objections to it (the same objections I actually have to other safety nets as they currently exist). First, I want to mention at the top that I'm not in favor of leaving people out in the cold. I love to help people, and I think anyone who wants help should get it. The problem I have is that money seems to be the default strategy for "help," when it often seems to be counterproductive.
The two things I really don't like about the ultimate safety net are these: First, that type of mechanism actually seems to be oppressive (based solely on my own observations, which are limited, but I'll explain below). Second, having the safety net from on high actively discourages people in a community from helping each other directly. Instead, they turn to the authority, saying that the basic wage is good enough, so why should I bother?
The observations I mentioned were over a period of about a year when I lived in a neighborhood that was almost entirely composed of people living on some form of assistance. They were not evil, bad, or leeches, and I'm not going to make that claim. However, as best I could determine, they had found a strategy that was "good enough" that they didn't feel the need to improve their standing in life. In other words, they had elected to live in near-poverty because it was effortless. I knew several of them to varying degrees, and they were intelligent, able people. The effect of the safety net on their lives was extremely negative (in my opinion), even though they would certainly say otherwise. They did not want to be in better circumstances, and given the opportunity to learn a skill that would immediately improve their lives (trade skills like welding, or gardening even), most would refuse. I don't think that is a natural state for people, and it was frustrating for me to see it (especially for the kids involved, who had subsistence living as their primary model).
The other point, about passing off responsibility for helping neighbors, is something I've seen in two flavors. First, and by far the most common, is in the world of conflict resolution. It's typical for one neighbor to call the nuisance abatement or police on another rather than actually go knock on the door to solve a problem. This is because they can offload all of the discomfort of confrontation onto an authority figure. The unfortunate consequence is that it makes the neighbor hate them, and things get worse from there. The other flavor of this problem is when people who do work and pay taxes resent seeing people who don't work but could, who are living "on the dole." The feeling of resentment looking at someone who is, even to a tiny degree, living for free on the fruits of your labors gets in the way of actually wanting to help that person. It gets people thinking in terms of "Why should I help them? They already live for free on my back, and they're not trying to make any changes."
So what would I propose? Like I said, I'm not a fan of the "survival of the fittest" approach, and while many people seem to advocate that I don't think they actually want to see others suffer either. My main objection is that I see money going to causes that I think are directly harmful to the people they're supposed to be helping. What I would like is a way to direct the resources I spend on social support to causes that I think are actually beneficial (free education, skills training, apprenticeships, etc., maybe even with stipends and whatnot). I realize that everybody likely has a different view of what "helpful" means, so what I'd like to see is decentralization of social support into various forms that cater to different people's concepts of what actually works. You can make paying into it compulsory or not, but to me the real problem is that I don't like to see my money going to what ultimately seems to be an oppressive form of "help."
> It's typical for one neighbor to call the nuisance abatement or police on another rather than actually go knock on the door to solve a problem. This is because they can offload all of the discomfort of confrontation onto an authority figure. The unfortunate consequence is that it makes the neighbor hate them, and things get worse from there.
See also: Donglegate. This reflex is thoroughly ingrained at all levels of society.
Part of the rise in the number of people on disability is simply driven by the fact that the workforce is getting older, and older people tend to have more health problems.
This is probably one of the key points the article could be making, but it's kinda glossed over. As the baby boom generation (the one born ~1946 –> ~1959) nears retirement, it makes a lot of sense. That generation - my parents' generation - really did a large portion of the work involved with building out the physical infrastructure that allows our economy to operate as it does today: buildings, roads, power lines, mining, machinery, warehouses, etc. Physical work tends to create more injuries and disabilities than sedentary work, and people who do that kind of work simply cannot do it for as long as people who do sedentary work. How can we forget there was an entire generation of people who turned the 1940's USA into the one of the 1970s?
I know I've mentioned this on here before but it's relevant: my dad hung sheetrock for living. He stopped going to school after 6th grade. There was no way he could have made to age 64 -- people thought he was crazy to be doing it until age 53 -- which is when he died, almost 10 years ago. From a combination of issues related to what his work did to his body.
But the sheer idiocy of the system which has rewarded and continues to reward neat-suit Realtors and loan officers and salesmen (those "educated" ones who tend to work the sedentary jobs) -- instead of the workers meant that he was left with no options for healthcare, retirement, or even being able to leave his children a dime.
It's not like none of them have a work ethic. . . many of them have worked long and hard already; they're just "prematurely" tired and worn out. Not to mention the system keeps trying to move the dangling carrot of retirement further and further away from their grasp by attempting to increase retirement age.
[edit -- apologies for the awry double pasted text in the original post]
> (The baby boomers generation) really did a large portion of the work involved with building out the physical infrastructure that allows our economy to operate as it does today: buildings, roads, power lines, mining, machinery, warehouses, etc
> How can we forget there was an entire generation of people who turned the 1940's USA into the one of the 1970s?
The baby boomers were just entering the work force in the 1970s. You are conflating two generations.
Everywhere in the US that I am well familiar with (Portland Oregon, Minneapolis, Southwest VA, San Jose CA, greater Los Angeles) built most of their infrastructure between 1945 and 1970(schools, roads, highways, bridges).
Anecdotally speaking, the infrastructure that came after 1970 consists of strip malls, suburban housing and airports. some highways were built in LA and San Jose. The 85 is the only one i can think of off the top of my head though. Lots of road projects to widen, adjust and fix earlier mistakes though.
What did the baby boomers accomplish besides fighting in Vietnam and presiding over the general decline of the US in the 1970s-1990s? They still have their final act of bankrupting the stae left, true, but I'd argue they've done more than their share already.
What a bizarre claim. By every measurable standard, the U.S. was a far, far better, richer place in 2000 than in 1970, and occupied a more significant and more secure position in the world.
I sometimes worry that the demographic of places like HN is shifting young enough that statements like yours can actually seem authoritative. Even someone merely old enough to have been paying attention from 1990 to 2000 would realize that "general decline" is an absurd description.
Technology has undoubtedly improved, but most other elements of society have gotten worse. I'm 34, and first hand there was a decline (other than technology) from 1990 to today, and from statistics (inequality coefficients, relative competitiveness, political system, etc) those trends accelerated rapidly in the 1970s and 1980s.
Let's put aside the longest peacetime economic expansion in U.S. history for a second. What about living in the U.S. in 2000 was worse than in 1990? Health care was better. Houses were bigger. Cars were both more luxurious and safer. Incomes were higher. Unemployment was absurdly low. The Federal budget was, through bipartisan efforts and a terrific economy, balanced for the first time in decades. The Cold War was over. Europe was uniting and Asia was exploding. More kids (and more significantly, more women) were going to college. Cities like New York that had been nearly given up to crime and decay had become vibrant and thriving again.
And frankly, 1990 had a lot going for it over 1980, too.
There are lots of overlapping trends, some positive and some negative.
The War on (some) Drugs (aka war on blacks/mexicans/chinese) really stepped up in the 1960-1990 period, so crime stats and general urban hell was at a peak during that period, and improved 1990-2010. It's unclear how much blame for that is on baby boomers. The continuation of the War on Drugs is undeniably a boomer thing, though. That alone is more than enough reason to be angry.
"White Flight" to the suburbs was mostly the parents of Boomers, so they were only indirectly involved, although they did also continue it through the 70s/80s/90s. Gen X and Gen Y are the dominant forces behind re-urbanization.
There are lots of awesome new technologies (I mean, even a 2013 car vs. a 2006 car is an improvement), but that's technological progress and relatively global, vs. US-specific. Yes, points for not actually causing global thermonuclear war or a collapse of the global economy. Microcomputers, cellphones, the Internet, medical advances, etc., all amazing.
The (re) emergence of China from ~1990, the end of the Cold War, and the rescue of India from socialism in the 1990s+ were undeniably great, but had little or nothing to do with US domestic policy. Reagan probably did accelerate things by up to a decade, but the 1990s were a case of mismanagement of the "peace dividend" and a bunch of emerging threats.
(1990 itself and 2000 are probably unfair years to pick, due to the bubble of 2000 -- 1991 vs. 2000 is a lot different from 1989 vs. 2001. I don't remember the exact details of the early-1990s recession or the early 1980s and which time periods were bad, but I do remember 1998-2001 and 2001-2003)
Women and racial/ethnic minorities did probably do better in the US fairly steadily year on year for the past 100 years. That's one big point.
On college -- look at the costs of MIT or UC-Berkeley in 1980, 1990, 2000, 2010, especially vs. a feasible income for an 18-22 year old.
The big thing is the rise of inequality -- essentially everyone in hn is one of the winners or is credibly likely to become one, but for the bottom...50%? of the US, the odds of having a better life are lower now than they were in the past.
What does that prove? You really think a 60th percentile-level household in 1970 was better off than a 40th percentile-level household today? I'd spot you a whole quintile.
And even without accounting for the difficulty in comparing like-to-like over 40 years of CPI indexing, or the change in the demographics of U.S. households, that median line still looks pretty good when you realize you're looking at a linear scale.
That's because, largely, they benefited from the work done prior to their gaining power (nation-wide new infrastructure, etc) and failed to reinvest in the same. Instead, we've seen an epidemic of deferred maintenance and a lack of capital projects. Of course everything is falling apart now!
This is not unlike managers who come in, strip R&D budgets, point to big profits and split before the inevitable crash. All they did was milk the cash-cow. It really is a well established phenomenon.
Right. "Management" people who adhere to that philosophy are glorified by the media, press, etc because they lack vision beyond quarterly results. The worship of short-sighted idiots like Jack Welch, Mark Hurd, Carly Fiorina and MBA-style methodology is destroying American competitiveness. Even Harvard Business School, of all places, says so: http://www.forbes.com/sites/stevedenning/2013/03/10/the-surp...
Ending the Cold War and the threat of Mutually Assured Destruction? Expanding and increasing civil rights for minorities and women? There are plenty of positive things that the boomers have done, but Gen Y seems to have it in for them without ever bothering to open a history book.
I'm an Xer, so I get ignored in this mudflinging, but once I listed these things along with some others in an argument with a Y, talking about who had it harder growing up. Her response? Yeah, but we had peanut-butter bans in schools. It's hard not to succumb to the stereotype that Ys are self-centred when you never hear one giving boomers props for the good things they did.
(also X, myself (1979, so kind of borderline, but enh)
Ending MAD was actually done by GI or Silent generation people (essentially, the last push in the 1980s), and the general implosion of the Soviet model. It's fair to give some credit for everyone who survived and didn't cause a war during MAD, but that's largely top political leaders (who remained older longer than the general population or most politicians, even) and top military leaders (who were probably 45-55 in the 1970s and 1980s, so kind of borderline as baby boomers). But a lot of the soldiers, engineers, etc. from 1970-1990 were undeniably baby boomers so they get credit for that.
There were plenty of good things done by the baby boomers (I'd say some environmental regulations, like clean air/clean water/ozone, have been incredibly good, and were largely a result of lobbying and organization by baby boomers in the 1970s). They didn't do as many good things per capita as would be expected, and they have done far more bad per capita than previous or subsequent generations.
They were a pretty potent political/economic bloc even before that (from 1968 on), but yes, they now have the government officially too. The worst generation to walk the earth, IMO.
Actually, not a lot of major US airports were built after 1970. Denver International Airport is the only big one I can think of. NIMBY makes it really hard to build airports except in the absolute middle of nowhere, where there's no need.
>Anecdotally speaking, the infrastructure that came after 1970 consists of strip malls, suburban housing and airports. some highways were built in LA and San Jose.
That's not an anecdote at all, you're just apologizing for arguing from your experience and then doing it anyway.
Nitpick maybe, but I'm tired of this "anecdotes don't matter" when clearly they're important enough that we keep relying on them.
Forgive me if I tread on a difficult subject, but your father passed away at an age somewhere between average and old for every generation before his. 40+ years of physical labour has and will always take its toll and there would have been nothing premature or unusual had he been an Elizabethen shipwright.
Were this still the norm, then the focus would still be on working life health checkups and realising we cannot lift into our 70s. I think perhaps we are missing something there.
I suspect it might be worth linking retirement payouts to total calories burnt over a working life. Sitting at a desk might not be such a good career move :-)
Please again - I saw your point about your father as noteworthy and I wanted to recognise that - no offense or other comment meant
Previous life expectancy levels were based on poor public health levels and tended to be solved by improvements in public health. It is entirely reasonable to claim someone dying at fifty today is dying prematurely due being overworked.
"Life expectancy increases with age as the individual
survives the higher mortality rates associated with
childhood. For instance, the table above listed life
expectancy at birth in Medieval Britain at 30. A male
member of the English aristocracy at the same period
could expect to live, having survived until the age of
21
1200-1300 C.E.: 43 years (to age 64)
1300-1400 C.E.: 34 years (to age 55)
(due to the impact of the Black Death)
1400-1500 C.E.: 48 years (to age 69)
1500-1550 C.E.: 50 years (to age 71)."
Guess farm life doesn't count as taking a heavy toll. Anecdotal to be sure, but I never recalled any farmers dieing young except to accidents. The other early deaths were from undetected abnormalities that just get you one day.
Its more than the type of work you do, that simply adds risk - some you see and some you don't. If anything it can be all the idle time shift workers have off work that kills them faster. Inactivity doesn't help the body age. I am quite sure a good number of people I work with will not live to a ripe old age and all they do is sit at a desk... and then go home and sit on a sofa or desk again
I have to chime in here. Physical labor itself is not necessarily wearing. When I was growing up, our next door neighbor in his 80s was constantly gardening and doing projects around his house. He was in incredible shape for his age. He used to shovel coal for steamships as a young man. He died in his 90s.
Physical labor can become debilitating when there is injury that is not allowed to heal completely or when there are excessive hours compounded by stress. Aside from that, it's probably very good for you.
"As the baby boom generation (the one born ~1946 –> ~1959) ... people who turned the 1940's USA into the one of the 1970s"
I think your math is a little off. The one born in 1946 would have been 24 years old by 1970... And the one born in 1959 would have been 11 years old. Those kids definitely did NOT build all of the infrastructure.. that was their parents.
But the sheer idiocy of the system which has rewarded and continues to reward neat-suit Realtors and loan officers and salesmen (those "educated" ones who tend to work the sedentary jobs) -- instead of the workers meant that he was left with no options for healthcare, retirement, or even being able to leave his children a dime.
I can understand the frustration you have and you make some thoughtful points, but I wonder how could you change "the system" to be any different? It's not as if these are government jobs. The prices are pretty much set by market forces so what can you do if the market doesn't deem the price high enough?
The Earned Income Tax Credit (EITC) is one example of how to do this. It effectively increases the earnings of low wage workers without distorting market prices.
The EITC does not _directly_ address the retirement/disability problem, though.
In New York, the total value of benefits received by a disabled single mother with 2 kids is in excess of $55k. (One of the reasons why states like South Carolina encourage poor folk to migrate north) The old welfare system was replaced with "Temporary Assistance", but you still get disability, SSI, food stamps, basic cell phone, housing assistance and healthcare. Some counties will buy furniture and provide other goodies as well.
That's pretty close to what a drywall guy makes, except a drywall guy who isn't in a union has to save for retirement, operate a car, pay for healthcare, and pay market rents.
When a guy like your dad suffers a workplace injury or is worn out, he has to live with uncertainty for months or years while his case gets appealed, because the law judges are backed up handling the cases of people whose disability is being ignorant and lazy.
I appreciate your post and your pain. However, one thing that I will point out is that one data point is not something one can draw conclusions from. A friend of mine's father (Ph.D. and desk job) died in his early 50s too.
Looking at data, it seems that the sedentary-jobbed have a life expectancy of 79.3 while the manual workers have a life expectancy of 75 years. So, there is a difference of 4.3 years (males, UK 2002-2005). It should also be noted that life expectancy for the manual group has gone up about 7 years since 1972-1976 (the sedentary saw a similar 7 year increase).
Governments aren't looking to increase the retirement age to dangle some carrot in front of people they consider too stupid to know better. If life expectancy is going up by 7 years, that means that a pension needs to provide income for more years. That means higher taxes, raising the retirement age, or putting more onus on the individual to save for retirement. There's a genuine question: where would the money come from to give someone a retirement at 50? To provide the average 50 year old male a $50,000 salary for the rest of their life costs over $1M - and that isn't $50,000 adjusted for inflation. What does that come out to per year? Assuming the kind of conservative planning that the government does, over $20,000 pear year. Essentially, we would need a tax of 40% for people to be able to retire at 50 and replace their income for life. Now, maybe 75% income replacement is ok and a 33% tax would do it. But then you have to think about providing inflation adjustments and healthcare for that period and it's just not good. Health costs are rising substantially faster than inflation. Should we lock people into the standard of care at the year of their retirement with newer, more expensive treatments unavailable to them?
There's just a big money issue when it comes to retirement age that's hard to ignore. Ideally, none of us would ever have to work. Unfortunately, that isn't our reality. Not to become too weird, but it's really tragic when you think about it. We're these biological beings trying to strive against what would happen to us if we stopped working to survive. And we've created some awesomeness to make our existence a lot better (medicine, for instance), but it's a thin veil over the harshness of what happens to us in the absence of working to survive. To come back down to earth, it's really crappy that we can't have the same retirement age that we used to have. However, I'm not sure how to go about talking about retirement ages without talking about the money we need to support it. Maybe it's time we raised social security taxes realizing that we don't care as much about iPhones as we do about our retirement. Ultimately, it isn't about governments trying to hurt people, but governments not having the money to offer it.
It should also be noted that a lot of these jobs pay better than similarly skilled jobs that are more sedentary. Construction salaries average $44,630. Office and administrative work averages $34,120. Sales $37,520. Personal Care $24,620. Part of the higher salary might be because of the nature of the work you speak of. The additional money per year could go toward providing an earlier retirement via individual means. I know that most people won't save and that's why I like social security. Maybe we should have a lower retirement age for certain professions along with higher social security and medicare taxes on jobs in those professions.
--
I can't imagine how hard it is to lose a parent so young. I'm sorry.
> Where would the money come from to give someone a retirement at 50?
Well, it looks completely different if we take out the money from this situation.
Consider this: we have big unemployment, a lot of part-time workers, a lot of people not working because of disabilities, there are also millions of college and university students who are obviously not working full time. But the economy keeps going, it has no shortage of workforce, number of workplaces is limited and less than total number of people.
Then you propose to increase retirement age.
The number of workers will increase, but the number of workplaces is the same. Wages are decreasing, tax revenue is decreasing and we again have no money to pay welfare, pensions etc.
So we don't need more workforce.
Redundant workers rely on disability pensions, unemployment payments, food stamps etc. All these welfare programs have obvious deficiencies, but we need to feed the people anyway. If these people were working it would be much better. But there is simple way to increase number of working people without extra resources.
We just need to limit working hours. And it is possible, because it was possible to introduce 40 hour work week. Now cut it to 35, and you get 12% increase of number of working people and unemployment completely disappears.
That train of thought is known as the lump of labour fallacy.
What you propose would reduce output; if it was optimal for firms to hire the unemployed, in place of those already employed, then they would do so - unless they are prevented from doing so by labour legislation, which doesn't seem to be the case the U.S.
That the unemployed are not hired might make sense when there are costs to hiring and training a new worker, which don't exist for a worker already in place. On an aggregate level, this policy would increase the cost of labour, and consequently reduce its demand, so less overall would be employed (though the rate of employment would probably stay about constant because you reduced the denominator by reducing the labour force).
"In theory, theory and practice are identical. In practice, they're not."
A fair portion of the Western world's underemployment and unemployment problem derives directly from the overemployment of those who have the jobs. As people keep putting it, "Whatever happened to the 40-hour workweek?"
For example, among those sedentary professionals who can keep working for decades upon decades, most in the United States are classified as Fair Labor Standards Act exempt, and are therefore often made to work overtime. Health insurance is a fixed cost that needs to be driven down both through socializing medicine and, preferably, through requiring per-hour National Insurance taxes, but only the latter action would actually change the fact that firms find it cheaper to hire two professionals working 60 hours/week each than to hire three professionals for normal 40-hour workweeks.
And, here's the trick, neither of those two professionals actually receives overtime pay. The company is literally getting a 1/3 boost to their productivity-per-employee solely by using a legal loophole to not pay for all hours worked. This is not the lump-of-labor fallacy, it's straightforward exploitation.
To paraphrase many Hacker News-targeted blogposts, "Fuck companies, pay workers."
That's a great point, but it's only a definition. Being a definition in an economics text (in this case, just a website) doesn't make it automatically correct. It needs to be proven by research.
> What you propose would reduce output; if it was optimal for firms to hire the unemployed, in place of those already employed, then they would do so - unless they are prevented from doing so by labour legislation, which doesn't seem to be the case the U.S.
Payroll taxes definitely do work in that way (not as an outright barrier, but by acting as a market distortion which encourages investing in expanding production through expanding capital rather than doing so by expanding employment rolls when, before considering payroll tax costs, it would be equally or more efficient to expand production by expanding employment.)
Doesn't the Obama care insurance penalty basically do this? Companies are forced to either spend $10000 per employee like they do do now to give them coverage or pay a $2000 fine to the government. The beauty of this is that part time workers are exempt from the fine so most companies will just hire 25% more people and make everyone only work 30 hours.
Unemployment is basically solved in 2014. Under employment on the other hand...
Exactly. They tried that in France at a moment where everybody was euphoric: the two germanies had recently been re-unified and GDPs of nearly everybody were growing like crazy.
Instead of France trying to reimburse its own public state debt they decided to move to 35 hours / week.
We can see the results now: Germany's economy is one of the best in the eurozone, they managed to stay at "only" 80% of public debt and are enjoying a modest GDP growth. Meanwhile France reached 100% public debt and is dangerously close to a disaster (youth unemployment is rising, the private sector isn't motivated anymore, austerity will need to kick in or France won't be able to re-finance itself on the markets).
The loss of competitivity of France is directly attributed to moving to 35 hours / week and is going to be the main reason why France is going to lose its status as the world's fifth biggest power. By 2017 Brazil's going to be in front of France. Heck, if Holland and the socialist gets re-elected there's a far from zero probability that France won't be part of the G8 anymore by 2022!
That is very concerning but, sadly, there's nothing else to hope from socialists who are spreading hatred of the entrepreneurial spirit and hatred of those who succeeded, in the name of the nanny state spraying loyal socialist voters with money inflating their sense of entitlement.
And yet, having a 35 hour work week for 30 years is a huge achievement in itself. That's a billion hours not worked.
International economics is too complex to pin France's woes on one single factor, especially when they have a lower debt to GDP than the US which is famous for it's long working hours.
There is a lot wrong in the French economy. There is a lot uniquely wrong with every economy. I'd argue that as the huge populations of BRIC countries use modern productivity tools like automation to increase per capita GDP, it would be bizarre for France to hope to stay in the G8. And that's a win for everyone.
You're thinking of "money" as a resource that can be depleted like a forest or an iron mine. But that's not true, the amount of money is constant -- it just changes hands a lot. First graph shows that everyone could retire comfortably at age 50:
GNP (red line) tripled since 1970. That means, on average, every worker got three times more efficient. So why on earth do we have to talk about a lack of money when society's wealth has increased so fast?
> GNP (red line) tripled since 1970 [...] So why on earth do we have to talk about a lack of money when society's wealth has increased so fast? [... Link to income gap ... ]
It's less of a problem of income distribution than one of wealth distribution. The key issue is that people with lower incomes accumulate assets that cost them money (house, car, TV...) while those with higher income collect stocks, bonds, rentable real estate property, all of which generate more wealth.
Right. Governments print money all the time, but the total value of all the money remains constant, thanks to inflation. It's just a measure of how much power someone has in a society compared to everyone else.
> It's less of a problem of income distribution than one of wealth distribution. The key issue is that people with lower incomes accumulate assets that cost them money (house, car, TV...) while those with higher income collect stocks, bonds, rentable real estate property, all of which generate more wealth.
That's not given by God. Stocks didn't use to be money making machines and there is nothing that says they have to be. Stocks have been doing amazingly well since about 1980's because during the same time period wages have gotten a smaller and smaller share of the gnp. The ugly truth of the stock market is that for every winner there is also a loser.
>> Right. Governments print money all the time, but the total value of all the money remains constant, thanks to inflation. It's just a measure of how much power someone has in a society compared to everyone else.
Inflation, by it's definition, is caused because more money is chasing the same goods & services...which drives the prices up. That's why loose monetary policy (i.e. the Fed printing money) often comes with lots of "concerns about inflation".
Also...if money was indeed constant as you suggest, and it's just a power tool, then why have we seen 2 phenemona in the last 100 years.
1. The greatest number of people are moving out of absolute poverty, than at any other time in recorded history (hundreds of millions if not 1 Billion+ by now) - meaning, more people (as a % of the global population) are earning enough income to move themselves out of an abject poverty state, at a faster rate than at any other time in recent recorded history.
2. The greatest income gaps between the top 1% of the top 1% and the rest.
If the money supply were constant, both of those would be mutually exclusive. But they are not.
Anybody can create wealth, likewise anyone can destroy wealth. Money is just the physical/tradable manifestation of wealth. It's just a proxy. That's all. No conspiracy to see here.
I think you misunderstood his argument. Assuming I understand correctly he was saying that if you have $100 in your society and 100 goods available for purchase, evenly each good is $1, if you have $200 and 100 goods each good is $2. Despite doubling your money it is still worth the same. Obviously it is more complex than that but I think that's the basic idea he was getting at. You can only increase the wealth of a country if you increase the amount of goods rather than the amount of money as money will more or less scale to goods. From what I understood he was referring to goods as wealth.
> The ugly truth of the stock market is that for every winner there is also a loser.
That's hardly the case. The only loser is someone who sell a stock for a loss (and even then considering dividends and the tax advantages it doesn't necessarily mean a net loss).
If our economy has $100 we both receive a paycheck for half the remaining money and you buy a stock that gives you $1/year and I do not, assuming we spend the same you will automatically become richer each year until we are both paid a pittance while you sit on most of the money. I think that was the general idea.
Assuming that is true inflation will still decrease the real value of the goods I purchase providing you with a greater share of the economy year after year. The general idea is that goods will increase at a higher rate than $1/year providing me with more wealth regardless of how rich you become. Unfortunately while a good idea in theory it hasn't really seemed to work in the US. The gap between the rich and the poor increased dramatically and minimum wage workers having trouble surviving.
So wealthy people do not bother with housing, transportation or entertainment, and instead put all their money into investments? I think it's more likely wealthy people had income sources that allowed them to invest, while still enjoying some level of comfort.
I think it is reasonably clear from the GP that relative levels of investment was the gist; of course rich people live somewhere, moves about and try to keep themselves happy.
Then I don't see why it's important to state that those with lower incomes paying for housing, transportation or entertainment is the reason for their inability to become wealthy. Merely stating a difference in income causes the disparity is enough. Housing, transportation, communications, food and even entertainment are necessities.
That's because they have more money. You have to pay for the necessities, and then you can save. If you're making near minimum wage, you won't be able to save much.
Also, those investments, like stocks and rental properties, transfer wealth from the poor to the rich, generally.
Sure, no one is disputing the fact that rich people have more money than poor people. For many reasons the rich get richer at the expense of the poor, the OP was noting one of the reasons.
Another is that the tax code incentivizes making your income through investments, something unattainable for people who aren't rich.
I would suggest it is not so much related to level of income, but rather knowledge of money management. The choice of buying more assets than liabilities is a basic, reliable (although frequently dull) way of acquiring wealth.
I am reminded of frequent stories of individuals with large incomes still being relatively poor - Doctors, Lawyers, etc. purchasing ever larger houses, ever more luxurious automobiles, etc. (all liabilities).
Or, as one individual who like to get peoples' attention puts it: "It's not how much money you make, but how much you keep."
> Ideally, none of us would ever have to work. Unfortunately, that isn't our reality.
Yet! Seriously, lets just focus on building robots to do things like build roads and buildings, tend farms, drive vehicles, etc. etc. We could almost definitely pass human efficiency in the next 50 years, and nobody would ever have to do manual work again (although if that's something somebody likes doing they should totally have the option if that's what they want).
Also, I'm not convinced a job in construction is "similarly skilled" to office and admin work. But that's kind of beside the point, it's possible to earn a good living from either manual or sedentary work. Sure, the extremely high earners are exclusively sedentary workers (if they work in the traditional sense at all), but that speaks to the wider problem of wealth distribution, where the fabled top 1% have 20% of the countries total wealth.
But I wonder - if they spent it, would it still have the same value?
Imagine one year, everyone spent all their income on stuff - earned and unearned. How much would an ipad cost?
There is a limited capacity to raise ipad production - building new factories takes time. So the cost of an ipad would increase.
Right now, all that wealth is locked up in various markets, increasing the value of property and various past what is rational. If it suddenly came out to play, surely we'd see things people need to live increase more than the poorest can afford.
Is wealth that is never going to be spent really wealth?
This argument is reduced to absurdity because it suggests that everyone will get things cheapest if one Scrooge McDuck accumulates all the wealth and simply sits on it.
That's exactly the argument that was had in the Western world starting with the '70s inflation "crisis", and this was indeed the conclusion people came to: radical inequality is an acceptable price to pay for low inflation. And now we're suffering the consequences of having an overly deflationary labor market.
>However, one thing that I will point out is that one data point is not something one can draw conclusions from.
Well, you missed the point entirely. He argued from a historical standpoint--in particular the involvement of the whole demographic in making the transformation of 1950s America to 1970s America--that you touch on with only one (largely irrelevant) statistical 'anecdote.'
As a blind individual in America I’m an example of someone on the disability bubble. What allowed me to avoid going on disability was college. By being blind I got some additional financial help to get through college. Even though I could have probably gotten full disability it made a lot more sense for me to get a degree and a programming job. I never considered going the disability rout since I easily make three times what I would have on disability and expect that gap to grow wider as I become more experience. If college hadn’t been an option for me I could easily see myself going on disability. I can’t think of a lot of jobs I could do that wouldn’t have required a college degree since most physical labor is not an option for me. Even with the help I got from the government with college I’ll still wind up being a plus on the governments balance sheet since I don’t receive any disability payments now that I work full time and pay taxes. Unfortunately from reading the story most people don’t have the opportunities I did, and even if they do some refuse to take advantage of them. While I think we should expand opportunities for education and job training there’s no way to force people to take advantage of them.
This seems like what journalism should be. This is shocking to me. An entire generation of people have slipped through the cracks, and I had no idea this sort of disability-gaming was occurring. Is this common knowledge?
Anecdotally, I am closely acquainted with several people who receive disability assistance from the government. They are all genuinely unable to perform moderate physical labor at present.
However, without exception, their disability was brought about by poor personal decisions and could be remedied fairly easily. The financial assistance gives them a strong incentive not to try.
> all genuinely unable to perform moderate physical labor
I know of several people who spend all day sitting at home blogging or chatting on email because they're physically disabled. Yet I've employed multiple people as customer support techs who's job description is "sit at home and chat on email".
Our government is unwilling to tell people that they're free to either work or not work, but if they choose not to work, they won't get paid.
It's a collective action problem: no politician wants to be the first one to be "mean" and tell perfectly competent people that they can't live off of the stolen labor of others.
...so we continue to have "disability" for people who are entirely capable of working, albeit not at wages that they'd prefer to earn.
Right, the old "take it or leave it" proposition. But is it actually better for our society to have all of these people living on the street? Becoming homeless? Going to our emergency rooms for medical care? Or, better yet, forcing them to become dependents on the next generation for food, shelter, and (expensive) medical care?
Realistically, those are the alternatives. A large subset of people have insufficient education or qualifications for a desk job. And note that "being old" is itself likely to disqualify you from a lot of jobs.
Remember, this amounts to $13,000/yr, which hardly qualifies as a sinecure, and health insurance. Do you think they're likely to be able to get a job which includes health insurance? Because otherwise "get a job" is a non-starter.
I'm betting when faced with the prospect of living on the street, or worse, starving to death, these people would figure out a way to cope with their current afflictions.
This is ridiculous considering that a large number of homeless people have a disability, physical or mental. To say that this people are just faking it or overreacting because they don't want to work is really messed up, you are essentially saying you really don't believe those people actually live with a disability.
I know I'm repeating here, but have you met the people living on the street? They aren't starving, thanks to charity, but they aren't that employable. A lot of them lack limbs, or have serious mental health problems that are probably exacerbated by living on the street, and would probably be exacerbated by working in a rough job.
I've tried thinking of jobs they could do, but I have had a hard time coming up with anything except recycling - something like sorting through residential trash picking out the recyclables. As it turns out, that industry is employing a lot of homeless people. And, you have to consider that recycling is subsidized by fees on bottles and cans.
I've also worked at a place were we hired a guy with some mental disability to clean up the cafe. He did OK, but not a really good job. If they offered $2 more an hour, they could have hired someone who'd clean AND fix things, easily saving more than the $4000 extra a year he'd cost.
I'm not really sure what kind of jobs you have in mind--- an employer can basically turn you away for any plausibly-non-discriminatory reason. And the kinds of jobs we're talking about here simply don't provide health insurance. Period.
Even if you think "high blood pressure" isn't a disability, the set we're talking about is older and more likely to require expensive medical care.
Are you willing to hire functionally illiterate people to do tech support? Of course not. It's not just a question of willingness to work; the overlap between people who can do intellectual work for low pay and little supervision is much, much smaller than people who can work physical jobs in a highly supervised environment.
At some point capitalism has to reap what it sowed. Deskilling peasant labor into manual-worker labor was an essential component of capitalist industrialization, but it creates a population that gets totally screwed over by capitalist post-industrialization.
This is true, but given that unemployment in the US is still sitting at 7% (or whatever -- pick your favorite metric), we as a society have a strong incentive for them not to try. It's much better for all of us that they be comfortable and (importantly!) consuming in the marketplace than that they be destitute and looking for work.
And even so, the disincentive thing really isn't a macro-scale problem. During the boom years in the late 90's, for example, we came very (some might say perilously, heh) close to full employment. If this policy, which is broadly unchnaged from what it was 15 years ago, was really a drag on the labor economy, it would have been visible then. It really wasn't.
> It's much better for all of us that they be comfortable and (importantly!) consuming in the marketplace than that they be destitute and looking for work.
This seems like a false dilemma: Either they're on disability and consuming, or they're not on disability and destitute, with no middle ground. Grandparent's anecdote is about disability that "could be remedied fairly easily," with the implication that the "remedy" in this case might be "rent is due next week."
Right, but the point of the second paragraph is that (in the aggregate) it's really not a dilemma at all. In conditions of very high employment (with the rising wages and physical mobility that entails) these people tend to go off disability (or not go on it at all) and enter the workforce for the simple reason that there is money available.
My point isn't that it's a perfect system, just that it scales the way you want it to and we should be wary of changing it just to stick it to some lazy good for nothings. Right now, like it or not, disability backfills a lot of what a "welfare" or "guaranteed income" program would be doing, and mucking with it risks severe poverty for its users and economic damage to the rest of us.
> we should be wary of changing it just to stick it to some lazy good for nothings.
I agree with you there, at least insofar as any change I can think of to stick it to them would also probably hurt the people the system was designed to help. I'd rather fund a few deadbeats than a genuinely disabled person go hungry, if given no other choice.
I guess I just fail to see how reducing the number of people on disability could, taken in isolation, result in economic damage to the rest of us.
If you add 4.8% people on well-fare, 2% convicts, some percentage of people that sustain themselves via petty crimes, and large number of government employees that don't do anything actually useful and also employees that are employed by private sector and their employer would like to fire them because they cost more then they are worth, but can't fire them due to various mass agreement, union restrictions and general PR ..... you end up with pretty high number number.
I grew up on the other side of the tracks and it was common knowledge even to me over a decade ago. Quite a few of my friend who barely graduated school knew where they were headed in their future.
If you're a guy you practically don't qualify for any aid, period. So with no future prospectes you get a job doing intense manual labor; roofing and warehouse were particularly popular. Do that for a year then "develop"[1] a back problem. File for workman's comp. Now your unemployed so you get UI as well. The UI money eventually runs out so you file for disability, bring your workman's comp dossier as evidence.
I first started hearing about this in 2001 from some colleagues working in factory. They were actually looking forward to being injured. A lot of them were real schemers, too. So one of them told me that Clinton fucked them by changing the welfare laws. He put in a hard limit of 5 years and made it difficult to qualify. They took no joy in the factory but took the work serious because they needed at least 6 months to qualify for UI and workman's comp can be denied if you don't do follow procedures (ex. breaking your back by following off scaffolding and not wearing a harness or being clipped in).
I have friends who are coming back from both wars and they are really fucked up, physically and emotionally. I can't imagine if there numbers fall under SS disabilities or VA disabilities.
Depends on your experience. We so a good bit of it after Katrina. The middle-class homeowners were completely at a loss when it came to applying to FEMA. The folks who live have lived of these federal programs for years were showing the engineers and lawyers how to fill out the papers. "No... don't check that box. That tells them you think you can afford food. Don't wanna do that."
I had no idea this sort of disability-gaming was occurring
a) I did think that people generally knew that disability claims go up during periods of economic dislocation.
b) I wouldn't call it 'gaming'. Toy example: Economy starts at equilibrium A where getting a job takes difficulty A. The economy slows down so now getting a job takes difficulty A + 10. It's obvious to state that the people who were at the margin, that could get a job at difficulty A but can't get a job a difficultly A + 10, will now be more likely to consider other options (including disability).
I'm sure there will be a bunch of comments to the effect that these people are malingerers but to me it's not black and white like that. IMO, it's unremarkable that a changed equilibrium is going to result in more disability claims.
Policywise, I think Minsky had some good ideas. The short form was limit transfer payments (i.e. payments where the recipient does nothing) and replace that with the government as employer of last resort.
You have 2 candidates for a job. They are entirely similar, except one of them discloses a history of MH problems which they claim are well managed by medication and monthly meetings with a psychiatrist.
Which do you employ?
There have been posts on HN from people saying they'd feel anxious about employing women of child-bearing age, or people who have had MH problems.
Very contrived scenario. No two candidates are perfectly similar.
Further, it is not legal to ask about medical status in an interview, other than job requirements (can you lift 40 pounds, can you stand on your feet for 4 hours).
It's not really gaming, because people don't necessarily want to be on it. They tend to be genuinely unable to find work. I have a friend who works as a disability adjudicator (i.e. he determines who qualifies or not), and he says that it's just barely enough to live on -- only the desperate sign up.
The one type of systematic gaming he does see is parents pushing their kids onto disability; in that case it's just extra money.
This is shocking to me. An entire generation of people have slipped through the cracks, and I had no idea this sort of disability-gaming was occurring. Is this common knowledge?
continuing disability reviews (CDR). So, previously a CDR was essentially a de novo evaluation of the case. In other words, you start from scratch and try to reach a new decision or not. Congress said: Well, now, CDR, to terminate someone based on a disability review you must prove that they have recovered from whatever state they were in at the time they were given benefits. So, if they were given benefits by mistake, that's not sufficient. They have to have recovered from whatever that state was to lose benefits. It really raised the bar for the SSA to administer any awards it had made.
The whole podcast is worth listening to, and Autor's work worth following, if you're interested in the issue.
Autor has also found that much of the growth comes from people in their 50s or older who don't have a high school degree—in other words, older people with few employment opportunities. In such circumstances, SSDI often looks like a better alternative than basically being forced out of the labor market.
It's not "disability gaming" for the most part. These people have legitimate, serious health problems and, in this economy, no employer wants to accommodate them.
There are a lot of people who are capable of delivering economic value, but not on a typical employer's terms. The sad truth is that the demand for most labor is crashing.
The truth is that disability is a spectrum from 0 (no economic function) to 1 (full health). In 1950, there was high demand for labor and people at 0.7 could get full-time jobs with access to middle-class labor. Now, the 0.8's are unwanted and the 0.9's are trapped in secondary labor, unless they're extremely intelligent and can swing as free agents.
"Scott tried school for a while, but hated it. So he took the advice of the rogue staffer who told him to suck all the benefits he could out of the system. He had a heart attack after the mill closed and figured, "since I've had a bypass, maybe I can get on disability, and then I won't have worry about this stuff anymore." It worked; Scott is now on disability."
It is "gaming", in the same sense that every decision you make to optimize toward a desirable outcome is "gaming".
40 years he had a choice; go work at the mill for $25/hr, and come home tired and dirty, or stay home and be unemployed, and face the scorn of his peers.
Now he has a choice, either go to "retraining" that is run by for-profit corporations hungry to suck up government funds, and whose "graduates" are still unemployable, or go on disability. Given the world he lives in, he made the best choice.
Now his choice involved some meaure of dishonesty. But while I'd love to live in a world that rewarded honesty and integrity, that's not the world we live in. We live in a world that has no place for a unskilled but hard-working individual, so those people have to take welfare to survive, welfare that they would likely refuse if there were better options.
I don't know Scott's situation. Maybe there's a job for him that doesn't involve cardiac risk. Maybe there isn't. How the fuck am I going to know? Yes, some people abuse social welfare programs. In Williamsburg, there are goddamn middle-class hipsters who take food stamps and use their parents' money to buy drugs. It happens, but this idea that there's an epidemic of moochers or that most people on programs are degenerately gaming the system is off the mark.
What if there's no job period which is what the article seems to suggest (at least not without going back to school -- which he "hates")?
The disability program is supposed to be if you are medically unable to work, not if you can't find a job. Look at the charts in the article, there isn't an epidemic of disability in this country, disability is being used as a substitute for traditional welfare programs which have been eliminated.
It isn't that I have no sympathy for people caught in the cracks, but we shouldn't have government programs that are de facto open only to those willing to lie and cheat.
It isn't that I have no sympathy for people caught in the cracks, but we shouldn't have government programs that are de facto open only to those willing to lie and cheat.
I agree with you 100%. We shouldn't have a minimum wage, food stamps, disability funds, or even 90% of the termination laws. In their lieu, we should have basic income, universal healthcare, free higher education for people with the ability, and affordable housing for everyone. Then, companies can hire and fire whoever they want, and the much simpler (if more radical) system is harder to game. But... the latter is not the world we live in, and we're not likely to see it in the contemporary US.
How is that different from what the Soviet Union tried? How do you keep from falling in the same traps that doomed it? I fail to see how, once the state has that much economic control, it will be held in check from taking more.
That said, there is a real problem here with unemployable people and it's only going to get worse. It's no wonder no politicians want to talk about it. It can't be summed up in a ten-second blurb.
The Soviet Union has a "command economy". Industries and labor produced what the central agencies told them to, with very little feedback to adjust and no incentive at all to run R&D, QA, etc.
But what he's proposing isn't a command economy, it's a default economy. The government isn't telling Factory A to make widgets and it's not telling Person B to work as a basketweaver. Instead everyone gets some minimum amount of capital to use every month.
In fact it sounds more market-driven than what we have now with welfare and disability where, again, centrally-managed plans are laid out and imposed on employers and employees saying what requirements you have, what you can and can't use the money on, etc. And don't you dare get a job and start accidentally making too much money!
It might even be beneficial to employers looking for talented employees: If people are safe to shift around looking for jobs they should move away from poor managers and bad companies to good managers at good companies (and if you're a good manager you'd suddenly have a lot more talent to find the gems out of). This is one of the same resaons governments take such an interest in education, is to ensure a competitive workforce in relation to other nations in the global economy.
I'm sure there's more to work out with the proposal but I like the spirit of the idea.
The Soviet Union didn't fail because of the funding of social safety nets, it failed because it had a command economy where too few people made resource decisions and they made them poorly. It matters little wether that command concentration comes from government or private sources. If the distribution of wealth becomes too skewed, the same economic failure could happen in capitalist economies. It's possible we've already seen the early symptoms of that kind of failure in the economy now.
Indeed--the TARP bank bailouts (where the government decided in a top-down manner which banks deserved to "live") were much closer to standard Soviet Union practice than a guaranteed income would be.
I'm divided on the TARP bailouts. On one hand they bailout went parties professed to be the most cognizant of their actions, and who should have had the knowledge and resources to to avoid their problems. In those terms, the banks did not deserve bailouts. On the other hand, as a short term measure I feel like it was reasonable to prevent larger scale chaos.
Overall, the need for TARP was driven by the weak long term oversight allowing concentrated influence in overlarge companies. That's often viewed as a failure of government to remain independent from influence, but at the root of the problem I think it was a shift in economic philosophy across business schools and the business community. The long term fix in my view is putting new focus on defining what criteria lead to healthy, competitive markets. Businesses themselves should recognize that poor competitiveness, and short term focus in markets can lead to poor long term performance in the economy for everybody. Different mechanisms to discourage oversized companies should be introduced into legislation, but now I'm rambling....
Actually, the Soviet Union didn't even fail for its lack of markets. It failed because entry and exit to economic activity was restricted, so no new ideas ever really got tried.
Remember, command economies work so well when the leadership knows what they're doing that they make up the structure of every successful business in "market capitalist" countries.
I agree with your first ideas, but not the last. There are successful companies that have allowed significant independence to the lower levels of management and employees to a point where I wouldn't class all companies command economies in any strongly centralized sense.
Also, the failure to generate new economic activity (or supressing new activity) is a prevalent theme in failed companies. Furthermore, when you look at new innovative products coming out of large companies, you'll often spot a phase goes something like: "A small group of employees broke off and put together <widget> after hours or out of sight of the upper management, etc". The new activity or market areas often come in spite of the controls in big companies.
That's not really much like the Soviet Union at all. It's much more akin to the kind of comprehensive social safety nets that European Social Democrats favor.
Scandinavian countries have put many of these ideas into place and they are hardly doomed. On the contrary they seem to be fairing pretty well.
I agree with you, as long as "free higher education" is delivered efficiently using the Internet, and affordable housing isn't in downtown San Francisco, but rather where it is inexpensive to provide.
A basic income guarantee is a far more important idea than free higher education or affordable housing. The argument for universal healthcare is that we're going to take care of the sick whether they purchased insurance or not. What argument do you have that the market is not a good mechanism for allocating funds to housing? Or education? I guess an argument can be made for subsidizing education on the grounds that an educated populace is good for society, but making it free doesn't sound like a good idea to me.
Wow, surprised that there's no comments here yet about the visual design of this page. I really enjoyed the long, scrollable page, with readable typography and just the right amount of flair with the headings. It's also a well implemented responsive design.
This type of long, scrollable design seems to be growing in popularity these days -- e.g. the NYTimes Tunnel Creek article [1] or AirBnB's annual report [2], and I think it's a good trend. Even though this NPR page has less special effects than those other two examples, it's still a fantastic reading experience, and I'll take it over a standard paginated article any day.
I came to say the same thing. Also, nobody mentioned the "scrolling window" effect on the images behind the headings. One problem is that it doesn't show up with paging (Page keys or scroll wheel), only with smaller scrolling increments.
As as counter-example, I continue to be baffled by expired pages here on HN. The parent comment is "below the fold" so I clicked on more comments, read a dozen comments, clicked on the AirBnB link, and by then--about 5 minutes, the Reply button (after typing in my comment, not the reply link below the parent) was expired. I had to back up to the first page of comments, click on more comments again, and then I was able to submit my reply.
Agreed. This is a fantastic presentation of long-format text. The balance between readability, design, and imagery is very well done. I would love to see more journalistic publishers take a leaf from this book.
The rise in "back pain and other musculoskeletal" disability claims since the 1960s seems to track well with the rise in obesity during that same time. And I noticed that a fair number of the pictured subjects were obese.
We geeks are working at increasing the rest of the world's productivity. And we're doing great! This means that less people are needed to produce the same wealth, and that more and more people have nothing left to contribute, because we improve productivity faster than teachers improve education.
It's not a bad thing: I'd rather have everyone being useful, but I'd rather pay someone for doing nothing than for doing an unnecessary job; at least in the latter case, we've got a honest view of the situation, we haven't broken the compass. A society where half the people are economically worthless and they don't even know it is doubly broken.
Jobs serve two purposes in our modern Western world: they produce wealth, and they're our way to redistribute that produced wealth. The latter is a convention, not a necessity. Exchanging wealth for work proportionally is an effective motivator for those able to produce actual wealth, but for the increasing masses who simply can't, it's a cruel joke, a game they're forced to play and doomed to lose humiliatingly.
So sure, they shouldn't get the same revenue as a heart surgeon; but if there's a robot which can flip burgers better than them, and thus make them economically worthless, I'd rather give them their minimum salary and let the robot do the flipping. My life is interesting enough that I don't need others to suffer in pointless jobs in order to endure mine.
I think you touch on one of the greatest problems of the 21st century - coming to terms with the reality that maximizing for wealth creation rather than redistribution means very few people are doing things anyone can predictably assume is beneficiary - such as research, arts, etc. Almost every job lost in the last 50 years due to globalization and automation have been jobs very few people would want to do with their lives, and people always dodge that over some preconceived notion everyone should be putting in 9 - 5 hours.
Though, I think the more acceptable solution is to just drastically cut the hours of the uneducated grunt work that still isn't automated (while spending the time to automate it, because we are at the threshold of eliminating traditional labor and that is a good thing) and just divvy up the available work to the many, maybe even as little as an hour a day, or an 8 hour shift a week.
The problem is changing the entrenched century old agriculture / housing / trade industries to accept a lack of scarcity and dramatic price drops across the board. You want the income from that tiny work week to be the disposable income after providing food, warmth, shelter, and transportation, since it seems silly to even think of anyone living today unable to enjoy their life, when we have so much plenty.
I worked for about 4 months at a factory. My job was thus:
.5 sec: Put bracket in tapping machine.
.5 sec: Press Tap button.
4 sec: wait to Tap bracket.
.25 sec: Air blows tapped part into crate
--Goto Beginning until 120 parts are in crate
Change Crate
--Then Goto beginning.
Do this for 8-12 hours. Yes. a 5.25 second loop.
Other things in this job was if a part was in the crate that wasnt tapped properly (I found out Im also in charge of QC as well..)I would have to manually check the last day's work all by hand.
I was hired temp labor, at 8$ an hour. The machine that would replace me would cost $.5 million. That was one of the worst mind numbing jobs I had ever done. I figured once I started to contemplate suicide, I should probably get out of there.
There's another issue: it seems likely that a minority of people will be in charge of most of the productive work. It's great to cut grunt work into a couple of hours a week if we can, but we probably want to keep talented robot designers occupied full-time. How to provide effective incentives for that, without creating social instabilities? I'm afraid that financial incentives only works to some extent...
The solution is probably to replace useless jobs with useful but unprofitable ones, but to keep people busy with almost-mandatory, socially useful activities. Without growing a management system comparable with the soviet one, in terms of ineffectiveness and corruptibility.
Or pay them to do something useful, but not profitable in the market. For example, childcare. Or taking care of old people. These are totally useful jobs, but babies and retirees don't have money.
The adults supporting them no longer have triple the income to afford to pay for the lives of their children and their parents.
Exactly, and that's what taxes are supposed to be for: finance useful activities which aren't handled adequately by the free market. But before moving some workforce to those jobs, we first need to acknowledge this workforce as available, i.e. unemployed rather than employed at something pointless.
Part of what fueled the industrial revolution was the number of farming hands which went unemployed due to agricultural mechanization: they became industrial workers.
What' s interesting is that this move to disability is just another manifestation of the unanswered question, "what do we do with all of these people for whom the economy no longer has use?"
Between globalization, automation/technology, and "increased productivity" (aka working people like slaves), we just don't need as many U.S. workers. Yet the wealth is still flowing, corporations are realizing record profits, and more billionaires are being minted.
We here on HN tend to feel immune, due to our skillsets. And, while it is true that the shift currently most affects those with high school educations and/or in other sectors (manufacturing), our time is coming. With continued outsourcing, gains in automation (software writing software), and other shifts, we will all experience this. While the software and technology we here produce are helping to facilitate the shift for others, some day the focus will be on us as too costly or ineffecient.
So we will have wildly profitable corporations, an extremely wealthy investor/executive class, and an economy that produces all that the world needs while employing only a tiny fraction of the world's population.
Either these entitlement programs will continue to bloat to unprecedented levels or we will require a fundamental restructuring of society.
We have very similar problems in the UK. The number of people claiming Incapacity Benefit grew from 0.75m to 2.75m in less than thirty years. Two-thirds are claiming for reasons of mental health or back pain. In the most impoverished parts of the country, nearly 20% of the population is officially "too sick to work".
The issue is currently the most contentious of many welfare benefit reforms, I suspect in large part because discussing the issues raised in this article are almost totally taboo. Everyone knows perfectly well why disability rates are 10x higher in the poorest parts of the country, but there's a political taboo that prevents anyone from saying "Incapacity Benefit was used for decades by governments of both parties as an accounting trick to keep down the official unemployment figures".
I don't think it's a taboo to discuss it, it's not being discussed because it shows very clearly what a big problem we have (just like America) with waning job numbers and really awful support for the poorest. We're not in as deep is as America is (from my basic understanding of our benefits vs. American welfare) but if the government were to talk about the problems with Incapacity Benefit they would also have to address the problem of another 2 million unemployed people with no recent job history and no jobs for them even if they could work.
Things are just about ticking over now, imagine the shit storm that would occur if every unemployed person was told they're now competing with another 2 million people, keeping this a "secret" is as much in the governments interest as it is every person that votes. No good would come of this issue being out in the open now, it needs to come out when there are jobs available or proper support for the unemployed, neither of which is true at the moment. I could be missing an important factor (due to aforementioned shallow understanding of benefits) so please correct me if I'm wrong and there is an advantage or proper way this can be addressed.
I cant help think that business would rather keep the, er, difficult to employ out of the employment market.
Do employers really want to employ people with various disabilities and ailments? Do they really want the added grief, work, red tape, costs, etc?
Then we have the long term unemployed, the , er, useless manky scum who cant wash, dress or string a sentence together. Drunk, illiterate and on drugs? Do employers really want these people over and above nice educated suited "normal" people? Who wants Frank Gallagher on reception, as a sales rep, or stinking out out nice Google offices?
If the answer is yes, then hit the streets and employ a few. Go down where the "scum" are and offer them jobs and hope. Cheap, easy to find and plentiful.
If the answer is no, then lets stop begrudging the meagre social security they get. Lets happily pay our taxes to keep such people alive, comfortable and out of "our" way, so that we can get on with our businesses and work, and improve our lives.
In the city where I live, I walk to work. On the way, I see an uncountable number of cars with handicap placards. They are especially dense near large office buildings. My wife once drove to my work to have lunch, but ended up going home without us having lunch--there were no free parking spaces she could find after 30 minutes circling. This has got to hurt business.
I'm not saying there are a lot of disabled people in my city, but it shows the mentality. People want something for nothing and a lot more people that I would have thought don't mind pretending to be disabled.
My favorite is watching people pull up next to Lake Merritt to park, but before they get out they put up the placard, then proceed to walk 3+ miles around the lake.
My wife works in social services, and people are constantly trying to game the system by claiming disabilities.
On the flip side, our social safety net in the US is horrible and unemployment is very high. I don't really blame people to trying to use any means they can to live.
The bottom line is that if we had a real safety net that caught people slipping into poverty, there would be many fewer people claiming disabilities.
While not related to the topic of this article, the UI around the pictures for the article is impressive. It's modern and clever, but not in a distracting way like a lot of attempts to do things that are clever. And it's still perfectly readable on my phone. Normally I don't like "clever" designs, but this one is pretty neat.
Did you read the whole thing? The system pulls the rug out from under people the moment they start making progress. The scaling that exists is too abrupt.
The federal government disability program pulls the rug out from under people the moment they start making progress? I read the whole thing but missed that part of the reporting. Maybe I read it wrong. Where is it?
"Jahleel's mom wants him to do well in school. That is absolutely clear. But her livelihood depends on Jahleel struggling in school. This tension only increases as kids get older. One mother told me her teenage son wanted to work, but she didn't want him to get a job because if he did, the family would lose its disability check."
Being poor is not fun. Period. Can you imagine living on $20K, $30K, $40K, a year? Depending on where you are in the US that might just cover your living costs. There is a large segment of the population that will not get degrees, not work in jobs that are considered "careers".
In any demographic class there are people that abuse the system, but I wouldn't consider the poor in that category. These people are as or more hard working than the middle class.
Also, the government giving disability and welfare doesn't mean they are bringing in $100K a year in benefits. The government provides enough to live on.
They article states it's $13k/year in cash. Not sure what the value of the medical benefits, but $13k/year would be pretty miserable on a family. I know someone who subsists basically on minimum wage and made just about $12k last year, he's still pretty young and healthy and is looking for a job that's better (has a degree), but he's spent a significant amount of time having to live with family/friends to get by. He's always on the lookout for $.99 taco night, but I think really at some point he'd like to get past that phase of life.
For a family or working person, sure. For an individual who no longer has to work or live in a city, $13K/yr is a windfall. One could live like a king, experiencing great nature with all the time freed up, and have money left over.
For medical, it's a safe bet that many of those on disability go to the emergency room and never pay a dime.
>Can you imagine living on $20K, $30K, $40K, a year?
Yes, because I have done it every year for the past decade. Having lived in several large metropolitan areas, I don't consider myself poor or even struggling.
I'm a grad student, so I make about $30,000 a year.
I didn't feel poor until I had a bicycle accident and saw the hospital bill. If the insurance hadn't covered it, it would have taken me years to climb out of that hole of debt.
> Can you imagine living on $20K, $30K, $40K, a year?
Where do you live that $30-40K a year is poor? The median personal income in the US is under $33,000 a year for employed workers, and still under $40k if you exclude part-time and seasonal workers (which is think is abusing the statistic).[0]
My father raised me and took care of my mother on barely $30k a year all throughout high school. It's not impossible to live on that or less, nor is it especially hard if people would stop acting like they deserve a new car, a big house and the latest toys.
The millionaire that compares themselves to the multi-millionaire feels poor. Someone making $90K could feel poor beside the person bringing home $200K a year.
Feeling poor is a mindset. Having a limited income is a reality. I use those numbers as ranges. You are right that you can live on a low income if you manage wants (and being in a low-cost area will definitely help).
The problem with low income is that there is hardly any breathing room. Medical, car or other types of unexpected expenses can make it difficult.
People that make a good income can afford to be more stupid with their money. Being stupid with money when the income is low is just asking for real trouble.
I would much rather get $20K a year for life and have all day every day to do what I want, than have to work to earn $100K a year. I could live on $20K/yr easy. My main cost would be transportation to hiking trails. But I could live near the trailheads since I wouldn't have to live in a city.
To most people on disability or any sort of welfare $100,000 per year is literally rich, even some employed people feel that way. I don't know any 6 figure earners getting bailouts. When discussing poor and rich it's worth either defining what you believe each is, or including an extra class (eg: "super rich"), because for the lay person (depending on audience of course) when you say "rich" they think of people like us, people making average engineer salaries.
I'd venture that most employed people would feel that an income of $100,000/year is rich. While the definition of rich isn't exactly set in stone, $100,000 is nearly twice the national median household income. If you're making $100,000 a year, you're almost certainly rich.
Edit: And while those of us earning "average engineer salaries" might not be getting bailouts, I'd reckon we're at least more likely to feel the effects of them than a poor, or even "average" person. The financial services sector got bailouts -- they also buy a lot of software. Maybe we keep our jobs because of those bailouts.
Anyone who doesn't think $100k/yr is rich has never been poor… or even middle income. Sure, $100k/yr will only get you a small studio in Manhattan, but you're still rich. You live a life that someone who's making $30k can only imagine, you just decided to live in a relatively small place square footage wise. The closest most middle income people will ever get to the experience of being able to just walk down to the Guggenheim, or go out drinking fancy cocktails is watching someone else do it on TV. If they are lucky, they'll maybe get to experience that once in their life.
It's perplexing to me that people who are rich don't think they are just because they live in a small apartment. How you can be obtuse with respect to how he majority of people live? I see it all the time in New York and San Francisco. Single people making $100k pretending like they are somehow "middle class" because they live in a small apartment.
I think the person making $xx and living in a farmhouse on 10 acres in Idaho is richer than the person making $xxx and living in a 400 sq ft studio in Midtown.
I didn't always think that. Possibly my perspective has changed because I'm starting a family, and spending time with relatives and friends at home is vastly more important to me than going out on the town. You spend that time at your house, and if your house is a tiny apartment it sucks. Then you realize that you can't afford a house in the city on your $100k salary and it feels bad.
Some middle-income joe in Nebraska might make 1/2 of my income, but I bet he can afford a sweet house with lots of bedrooms for all his kids - something I can't afford. Who's the rich one?
I don't earn huge amounts, but I live in a really nice little cottage in a small rural village surrounded by amazing countryside, I eat well, own a car and a good computer, I have all the amenities of modern life, disposable leisure income, and don't really want for anything.
How do I do this? I live in rural Yorkshire, near Barnsley, in a very cheap area. I would say that in real terms, I'm 'richer' than someone earning twice as much as me, but living in a similar village 30 miles outside London. There are jobs in the capital with salaries far higher than mine, that I could likely have a shot at getting if I applied, but I don't apply because I don't want to live in crowded, expensive London.
I much prefer it this way, even if my bank account doesn't have as big a number next to it as someone else's. I'm happy!
$100k is rich, provided you're purchasing something with little dependence on land prices. $100k is middle-class if you're purchasing something with a land-price component.
(The fact that the FIRE sector, also known as the owners of land and large pools of money, can extract huge rents from the rest of the economy is probably America's chief economic problem today.)
> Jahleel's mom wants him to do well in school. That is absolutely clear. But her livelihood depends on Jahleel struggling in school. This tension only increases as kids get older. One mother told me her teenage son wanted to work, but she didn't want him to get a job because if he did, the family would lose its disability check.
But people hate the idea of giving people money when they "don't need it." So for each dollar someone makes that pushes them above bare sustenance, a dollar is taken away. In some perverse income ranges, more than a dollar is taken away.
The only way around it really is to either give people nothing, or to provide a basic income. Most people hate the idea of both of those: if you give people nothing, you in a very real sense end up starving people. You can pick and choose who gets aid, but that immediately adds a bunch of administrative overhead and encourages gaming the system. A basic income, though, gives Bill Gates free money from the taxpayers, and is very, very expensive.
All told, I prefer the BI, but that has a load of difficulties.
I'm going to reply to this thread against my better judgement because I'm afraid of getting trolled. I am on SSI, I have Autism as well as severe longterm depression and PTSD. I get about $700 a month to live off from. In my area you can't find housing under $450. Then I have to pay someone to pay my bills for me at $39 a month because social security somehow deems I can't spend my own money. My point is after necessary things (electric, transportation, gas, water) I struggle for toilet paper at times.
I have tried jobs before, got fired in a manufacturing job getting overwhelmed by the process - got fired in another job because i could not understand "shop talk". I don't like living off the system and one of the main reasons I'm really pursuing entrepreneurship is I see it as the only way I can get off the system.
My sympathies. I know someone with a some similar mental health issue on SSI. It's tough out there. (And they have relied heavily on basically working at home online to have a little extra money. It's tough right now due to the recession and basically nothing comes in, but the process of doing that work is positive.)
I can also understand being overwhelmed. I don't have autism, but have done the programmer thing, and have trouble interacting with people so might be on the spectrum a little bit. I swear, if it weren't for our mechanized society with machines to repair and computers to fix and program, I'd be a poor dirt farmer.
I wish you the best of luck.
If you'd like to brainstorm possible jobs or business maybe we can talk on this thread.
This EconTalk is also interesting: http://www.econtalk.org/archives/2012/12/mulligan_on_red.htm... – the thing that really made me think is the observation that the marginal benefit of work is often negative for people on different assistance programs, and that comes up in the first interview too. To try to get ahead, to try to get off disability, will put you behind where you'd have otherwise been. I think it also offers something of a solution, to look at the entirety of the support systems and make sure that there's always a benefit to being more beneficial to society. I suspect that would largely mean increasing benefits for the not-quite-poor, or the almost-disabled, etc. But if a well managed slope of benefits is achieved, the incentives may lead to less total dependence.
It's also something that, in theory, could be supported by Republicans and Democrats, as analysis is based on ideas that are appealing to both sides.
I agree about this - the fact is, there's a gradient of disability, and a gradient of employability, and a gradient on the ability of people to participate in the market.
Having benefits pulled out doesn't work, particularly health insurance.
If disability is masking unemployment, we should expect anomalies in other labor statistics, like labor force participation rate, or per capita employment.
Labor force participation has been declining the last few years, but at least some of that is aging population and massive recession. And despite the decline, the rate remains well within historical bounds. I'm glancing at Bureau of Labor Statistics charts, not seeing a massive hidden class of people that are somehow staying off all the books.
On the other hand, there's an MIT economist that totally disagrees with me, claims that disability DOES explain trends in other labor statistics, like participation rate: http://economics.mit.edu/faculty/dautor/papers/disability
Full disclosure: I am most definitely not nor have ever been "an MIT economist."
His paper from 2006 depicts some interesting trends.
(Wait, 2006? This guy has been forecasting disability armageddon for seven fucking years, when the real threat back then was the imminent housing bubble!? Now I'm skeptical again...)
I like it. The snowfall article is fancier, but they share an aesthetic, and I hope we see more of it.
Thinking about it, I'd be willing to pay for a regular stream of articles that are presented so nicely. (Well, assuming the content itself is also good). This is significant... I've never been willing to pay for news in my life.
I just heard the show on TAL, and while it was interesting, some aspects grated, particularly the one about learning disabilities. That part of the show is going to end up as a proxy for all kinds of mental disabilities, making it sound like these things not only don't exist, but when they exist, they don't matter.
I know some people on disability who have mental issues. Some had developmental problems, and some had strokes, and some have mental illness, and there are other situations in between. They aren't employable, at least not easily and full time. The reason is that as the economy has shifted to a service economy, the service jobs, which used to be considered "kick back" or basically low stress, have become high stress. When the profits of the business depend on the service workers, the stress falls on the service workers.
That stress is either around increasing production of mentally produced product (I'm sure programmers here know this), or of producing a positive psychological experience for someone else. For example, the people working in retail have to be nice. They can't be grouchy and talk shit to each other like people used to when they worked in factories.
Maybe Joffe-Walt hasn't really thought about this, but within the class of sit-down jobs, the ones she has are not the common kind. There's variety in the work, and a huge need to "think outside the box". Even the stressors have some variety to them.
Most service jobs are about forcing your mind into the box, and handling the same stressors over and over. These are easy on the muscles, but rough on the mind, and the mind, as we sometimes forget, is a manifestation of the brain, an organ in the body, subject to being overworked and injured.
I lived in Aberdeen when they shut down the mill. I remember everyone saying how this was the end of the town. It's weird that the article didn't show a picture of downtown. It's just a bunch of run down buildings with boards over the windows.
The Wal-Mart there is doing great though, one of the most profitable in all of Washington state, according to friends that work there.
The part about kids and SSI abuse is also cited as being the reason for the uptick in ADHD diagnoses (and not violent video games or high fructose corn syrup or gay marriage):
"The company has an office in eastern Washington state that's basically a call center, full of headsetted women in cubicles who make calls all day long to potentially disabled Americans, trying to help them discover and document their disabilities"
Why am I not surprised that getting people on disability has become an industry. I very much believe that governments should look after people who need help but there seems to be a significant lack of accountability when it comes to disability.
Does anyone know the details American of politics of disability? Welfare, social security and health care are constantly in the political news but I do not recall seeing much about disability. As someone who regular consumer of political text I find this surprising. Especially given the size of the program.
Unemployment benefits run out after a year (or whatever they changed it to), but disability benefits never run out. If you look at the chart the big increase from 1961 to 2011 is "back pain and other musculoskeletal problems", which, as every prospective medical marijuana patient knows, is impossible for a doctor to disprove.
Of course disability claims are going up - the economy is bad and people are using disability as an unemployment benefit. The unfortunate result of all of this is going to be lots of extra paperwork (and potential rejections) for people who really are too disabled to work.
> People don't seem to be faking this pain, but it gets confusing. I have back pain. My editor has a herniated disc, and he works harder than anyone I know. There must be millions of people with asthma and diabetes who go to work every day. Who gets to decide whether, say, back pain makes someone disabled?
I dunno, maybe the difference is that you don't have a job where you have to STAND ALL DAY?
If you're in a wheel chair you can still do a desk job. Does that mean you're not disabled?
We're kidding ourselves if we believe that we can continue to find meaningful work for the uneducated. Given that education for the poor is appalling and getting worse, it seems that we are kidding ourselves.
At some point we need to accept that an economy based around leisure is already here. The irony is that adapting people to that mindset is going to take education...
The bigger irony is that only the (rapidly becoming extinct) upper classes really know how to entertain themselves.
The fact that more and more people do not have the skills to make it in America today is the most heart breaking. And with the costs of college education, the problem will only become worse with the offsprings of those affected today becoming the most likely to be affected in future.
I think education is what should be provided free or subsidized.
Not related to the topic..
The site is really well designed and kudos to NPR for a splendid coverage and presentation as usual.
With a guaranteed income defined not in dollars but in goods, the government could automate (much of) the welfare of these people. "You get 10 loaves of bread, 3 cheese, and 1 elective per month." for example.
Then people wouldnt complain about the big screen tvs, etc. that they think the poor spend the welfare money on.
We had that. "Government cheese" was not always a metaphor. Neither were "food stamps".
As it turns out: it's better to just give people cash and let them make their own determinations and let the free market and substitution do its thing, than maintain a huge parallel infrastructure just to avoid hurt feelings over the idea that someone somewhere may buy a non-necessity with welfare dollars.
It costs the taxpayer less, people get better results, they have a better opportunity to learn and improve, etc. Some will abuse it, but some sold their government cheese and food stamps to buy non-essentials as well.
People complaining about the big screen TVs are flat-out disingenuous. They're either outright ignorant of history and/or of the specifics at hand [1], or they're lying to effect a policy change they couldn't justify with the truth.
[1] Studies have been done. The "welfare queen" and "strapping young bucks buying steak dinners" do not actually exist. Exceptions do, but they've never amounted to significant quantities of waste. And we already do search for, and ferret these people out.
The only problem with the "free market" thing is that the current market isn't really all that free, and a totally free market is full of externalities and wrong incentives (incentives for A and B to collude to the detriment of C) .
As a convinced capitalist, I find myself agreeing with you (although you leave out things like toothpaste, shoes, etc).
In economic terms giving anything but money is less efficient, but in practice it would save massive amounts of money, prevent starving people in the streets and give them an incentive to work themselfs up.
I think you've re-invented the Roman welfare system. Probably less vulnerable to abuse than currency-based welfare, but in the end it had sustainability problems.
It seems that a large part of this is a problem with implementing and/or acting upon rudimentary analytics. If a particular doctor or judge is referring plenty of patients into the disability rolls, that doctor/judge should be singled out for special investigation.
What large number of sit-down jobs do you expect to be available to dubiously-educated people that can't also be outsourced to poorer/cheaper countries? It's a problem if you believe the less educated should still have nice rich-country middle-class lives.
Ok, I haven't read this. The title alone brings an immediate reaction.
I live in the U.S. I've observed, first hand and individually, more instances than I can count of deliberately unsafe work conditions.
Contractors having e.g. employees deal with lead paint without protection. Small businesses as well as large corporations having employees work regularly with unsafe chemicals.
Landlords renovating "under the radar", spreading toxic contaminants throughout their properties.
People take advantage of other people's ignorance. They "don't want to be hassled" and "hate the government" and want to "save money".
I'm one person. And I can hardly go through a day in life without running across this. In part, perhaps, because I am at least semi-informed, and because I pay attention to my surroundings.
It's no mystery to me that our population ends up with so many "unfit to work", disabled people.
In addition to the above, add the stress of job insecurity, health care insecurity, bully bosses.
A lot of people who have to live amidst this (and you, exhalted programmers and "high technology" wonks, are generally not -- in such roles -- among these; that is speaking generally, while I do recognize the individual experiences vary widely), eventually resign themselves that "this is the way the world works".
The smart ones try to save and earn a retirement before their body gives out. And/or to move into some sort of management position where knowledge and experience keep them valuable and employed.
In the U.S., at least, these circumstances continue to exist because we let them and because many people continue to take advantage of them. The next time you're looking for lower bids on your renovation project, keep this in mind.
There are the formal rules -- OSHA and all that. Then, there is an entire culture of "on the side" and "under the table" and loyalty and betrayal, that changes and morphs somewhat but that remains, on a day to day basis, apparently largely untouched by all this.
I'm sure it's worse, often far worse, in much of the rest of the world. But... the U.S. has more -- far more -- than a "few bad actors" that contribute to the problem, domestically. Lots of people make lots of money, in amounts both small and large, from taking advantage of this.
And... this is anecdote. One guy, just looking around as he goes through day-to-day living.
Another reason I am disgusted by the health care situation in this country (where the results of these problems ultimately end up). Another area where costs and benefits are not at all aligned and balanced, on an individual basis.
Would it be somewhat fair in this situation of disability as described to say that disability is a bit like welfare with an excuse? "I'm not too lazy to work or study, my back hurts."
A simple fix would be to give each disabled person a "wage bonus" subsidy. For each hour they work, their employer gets x$. If they were more disabled, the number gets bigger.
wondering why nobody has brought up the fact under Obama, unemployment assistance has been extended multiple times and it would seem obvious once your unemployment runs out, you would simply apply for disability.
I wouldn't propose this if I didn't already know several people who have done this in order to continue supporting their family. Also, my best friend is on disability and wholeheartedly deserves it, so I'm kind of torn about how I see people use and abuse this program.
fascinating piece, i'll have a deeper look later. i came here to say it's gorgeous and presented beautifully and functionally. the designers should be proud.
"Charity degrades those who receive it and hardens those who dispense it.”
Self reliance, while not always possible, is always better as it empowers the individual and the state. I have never met a disabled person who enjoyed being helped.
The only long term solution is a basic income system, which rewards consumption and allows the market to continuously reward innovation and efficiency. Without a redistribution mechanism to fuel consumption, the market collapses entirely as wealth is further concentrated.
Further reading:
1. http://www.naturalfinance.net/2013/02/nearly-all-of-us-suppo...
2. http://amzn.com/B005WTR4ZI
3. http://amzn.com/B002S0NITU