I can't find the original tweet, but someone (half?) jokingly proposed a law that all benefits must be defined as continuously differentiable functions (thus making cliffs impossible).
"Yeah, I made $1M last year. Here's my SNAP check for six cents."
They should be. And for the great majority of citizens, they should be calculated automatically along with taxes without the need for filing/paperwork. But we must think of the Intuit shareholders and the harm that that would cause them.
If someone in the coming years ran on taking down regulatory capture and returning that as social safety net funding, public goods, and lower taxes, and had the chops to actually deliver, they'd do well.
Though best to start local government first, obviously.
We're reaching breaking points in so many places...
“They’d do well.” That is not the lesson I’ve taken from the past 15 years of politics in the US and abroad.
Political candidates actually interested in taking on the very difficult and nuanced task of governing are routinely drubbed by edge lord culture warriors or candidates that simply promise the world without any regard to annoying facts like existing laws, budget deficits, or basic tenets of economics.
I definitely agree there is probably less disfunction and greater chance for reform at the local level.
As someone who formerly worked in this space, the issue is administration is orthogonal to legislature.
Administration and implementation is inherently technocratic in nature, but legislation is is often driven by short-term electoral needs.
This isn't to say autocracy is the answer (it isn't), but the dysfunction arises when people assume that every single administrative decision needs to be made by "elected officials" and constantly second guess administrators.
When administration from local to federal becomes politicized (as is increasingly the norm across the democratic world), implementation slows down severely because the "ideal" solution might not be political tenable.
A good example of this is welfare expansion in the US - the assumption is lower income voters who voted for Trump voted irrationally, but in action, the majority of Trump voters tended to be in the 25th-75th percentile income bracket, which in most cases put them outside of the bracket for a number of social services. Those services which were available such as the ACA/Obamacare have been protected by legislators for that very reason because they know they would lose their seats as a result.
You're in Japan so you've probably seen similar decisions being made with regards to Japanese rice protectionism [0] - unpopular with urban voters, but urban voters don't swing elections at scale.
Japan is 93% urban. 25% of the population lives in Tokyo! It's not that they can't outvote the farmers, it's a more complicated mix of agrarian nationalism that supports farm subsidies in a lot of countries, plus outright bribery with literal sacks of rice.
> administration from local to federal becomes politicized
Administration is politics. It's a mistake to go full technocrat and proceed without the consent of the administered. The problem comes when techocrats get rings run round them by misleading populists.
Japan is a parliamentary system, and the amount of Single Member Seats in the House of Representatives needed to flip an election are primarily small towns or rural.
This is what happened in the 2009 election when the LDP lost the farmer vote.
There's actually plenty of examples out in the real world with competent administration to learn from. Especially if you generalise enough to look at how pockets of competence work even in an otherwise abysmal system, instead of demanding overall competence.
What you end up seeing is those cases of "competence" only worked in cases where administration and legislation was aligned. But even in those societies you'd still see problems which are distinct, but problems nonetheless.
GP might be saying that analyzing _differences_ in how perf targets are met in say, VN&CL (or SG&CH IE&HK TW&SI KR&DK) might be most productive. As you mention, in particular, how are their sad paths ("problems") different? Or the same?
Now there are subdepartments of study devoted to this very question (empirical study of the legislative-administrative divide) , but in the US I'm hard-pressed to list the corresponding think-tanks :) I suppose some MBA level depts in the US will have to suffice
I wish in the US more areas of policy would be decided at the state level, and I wish more state government would flip coins to decide on their policy. (Even better, if we can push it down to county level.)
The first part is about subsidiarity, which is a good idea anyway. But together this is just a tongue-in-cheek plea for doing more randomised, controlled experiments. (Alas, we can't blind them.)
> I wish in the US more areas of policy would be decided at the state level, and I wish more state government would flip coins to decide on their policy. (Even better, if we can push it down to county level.)
The overwhelming majority of policy is decided at the state and local level in the US so long as it's not foreign policy or monetary policy related.
Whatever is decided on the Hill has no bearing once administration and implementation comes to play - which is overwhelmingly done by state and local government.
This is why the US has become increasingly dysfunctional over the past few years - state and local elections which were previously staid affairs became polarized partisan affairs because turnout is low and the overwhelming majority of decision making roles are elected.
Flipping GP's tangent on its head (after all states in the US are akin to countries in the EU/EA:)
If you can't blind them find them
I suggest that, absolutely, state governance has _already_ generated lots of excellent data >> federal level :) probably much more accessible than corporate governance data )
Of course YC's Seibel might have something to say here, it's probably not a new perspective
I wish you were right. NYC can't even charge people for their using their roads (whether that's driving or parking) without the state and federal governments getting involved.
The problem isn’t that such candidates would never accomplish anything let alone get elected due to the insurmountable amount of resistance from so many incumbents with a vested interest in that not happening, ever.
One of the biggest problem of a two-party system is that the two parties are thoroughly captured by lobbyists.
In a PR system, fresh parties do arise over election cycles, and it takes some time for them to be thoroughly infested. These can then push for some reforms that threaten entrenched interests, and sometimes succeed.
Most people don’t even know what regulatory capture really means. There’s no “brand” to rally around and I don’t know how you’d go about building one.
And without the concept spread through the population, where would you find the grass roots support you’d need for resisting the avalanche of interest-group pushback?
“Draining the swamp” or “revolving door” were sorta in the neighborhood, but still ineffective and counterproductive.
DOGE was a Potemkin organization. They destroyed USAID, smashed up a bunch of other institutions, then went home. Very little of which complied with Federal funding law, either.
I like my cliff. I earn enough that I and my family are ineligible for most welfare schemes. I do not want even 6 cents worth of SNAP. I spent my entire childhood on that, and it disgusts me. Thus, were this policy ever seriously proposed, I would do what I can to dissuade my legislators from voting it into law.
Right, so people who would use their trauma to prevent themselves from thinking logically about the problem and helping those in the middle instead of some arbitrary line your mind made up?
Never underestimate how many good policies go nowhere because some median voter is irrationally mad at them due to something that happened decades ago.
Because you live in a world where other people exist, and how they go about existing can impact you negatively, both directly and indirectly. The fewer people living in and dealing with poverty, the better off the everyone else is.
>so people who would use their trauma to prevent themselves from thinking logically
You're using your trauma here. You keep yearning for the kindergarten lessons to be true, that we're all the same people and we should all share and all the other nonsense that was only taught to you so that the elemntary school teachers didn't have a city-burning-down-riot on their hands every day.
Even if you insist that I'm the one being illogical here, it's wired pretty deeply into my brain, and I'm not going to change. Not only am I not going to change, I'm raising children to be like me, and one of the early and fundamental lessons is that fertility rates are top priority. Be fruitful and multiply. There will always be more like me than more like you, and it's only going to get worse (for you and those like you).
There is idea behind that, but continuous is not enough.
The variable is all transfers, taxes and benefits T = [all taxes - all benefits] as function of income per person (including children). T starts negative (benefits are negative taxes).
Goal: monotonously increasing effective marginal T rate.
This. No need for continuity in the derivative - the marginal tax rate should be fine to jump around - but should start low (I'm fine with negative) and increase as you earn more. Like US federal tax brackets, but with benefits also considered.
Continuously differentiable is fine with jumps in that derivative.
I agree in principle. And I also suggest that we should probably only have one bureaucracy that does means testing that can then administer both taxes and benefits. No need to duplicate the effort.
However most benefits and taxes aren't just means tested against income, but a myriad of other conditions. So net transfers aren't just a function of income.
To calculate the amount of your childcare benefit take the negative of the your adjusted gross income (box 26a), divide it by 10,000, and add 2. Then take the arctan of that result and multiply by 5,000. Add 2500π and write the result in box 46. You may round the value of π to 2 digits. If you are filing as head of household, divide the amount in box 46 by the definite integral from 0 to your adjusted gross income (box 26a) divided by 10,000 of sin^2(x)/(x^2 + 1) dx, and write that amount in box 48. If you are unable to find the function of the anti-derivative, IRS rules allow you to approximate with a Riemann sum using the midpoint rule and a rectangle width of 0.1.
It's not sufficient to make cliffs impossible, you just never want the effective marginal tax rate go above a certain threshold.
It's insane that we cap marginal tax rates for the wealthy below 50% “because they need incentives to work harder” yet the working class family is facing an effective marginal rate near 100% because of reduced benefits.
The solution would simply be to stop making benefits decrease when salary goes up.
“But it's going to be insanely expensive” one may say, but it's an accounting illusion. All we need to do to break the illusion would be to stop counting gross public spendings and taxes and instead count the net public spendings/taxes for each individual (that is, over the whole population you take the difference between what they pay and what they receive and that gives you how much they contribute or how much they cost, instead of the current accounting system where we count people paying for their own benefits).
What's really expensive is the economic inefficiency of the current system.
> The solution would simply be to stop making benefits decrease when salary goes up.
That's an option, and I'd be interested in how the math works especially with predictions of how the economy would respond.
That said I don't think not decreasing benefits is an important requirement. But net income (benefits + earned income - taxes) should be strictly increasing with earned income, and probably at a rate of at least 50% but ideally higher than that up to some reasonable definition of middle class income. It should never be the case that if you earn more you can end up worse off.
> That's an option, and I'd be interested in how the math works
The math works because the derivative of a constant is zero, it's that simple.
> That said I don't think not decreasing benefits is an important requirement. But net income (benefits + earned income - taxes) should be strictly increasing with earned income, and probably at a rate of at least 50% but ideally higher than that up to some reasonable definition of middle class income.
Exactly, it doesn't need to be fixed, we could also have decreasing benefits, simply with a much lower rate of decrease (ideally the rate of decrease should be the marginal tax rate for this income). But in practice such a system would be much more complex than a flat benefit system for little gain (the more limited the decrease rate is, the closer to a flat rate your public spending would be).
Actually, optimal taxation models tend to show that a base transfer at zero income with an initially "high" marginal rate for clawing back the transfer at the lowest end (but still no higher than 100%, and falling very quickly as earnings increase!) works very well. (Marginal rates then rise progressively for higher incomes, and paradoxically become lower again at the very top end, trending towards zero at the extreme top-end of the scale. This is actually a consistent result in non-linear incomes taxation models; the very top earner should face zero marginal tax on the very last cent she earns!)
The intuition is that you only "feel" the high marginal rate if you earn very little, which impacts very few people; but the effect of making the break-even point more manageable with lower marginal rates for most earners is felt throughout the incomes scale. What really screws up things is higher-than-100% marginal rates, which are regrettably common in real-world systems amd completely useless.
I'd be curious to read more about that, because none of what you've written makes any sense to me right now. (Why would we want zero marginal tax on top earner who already get zero marginal utility for her money in the first place ?).
The zero marginal tax only strictly applies to the very last cent the extreme top-earner is expected to earn in the tax period. The idea is that at this theoretical extreme top-end tax bracket basically no one is paying infra-marginal taxes, hence the share of the incentive effect compared to the pure revenue effect is maximized. So you'll want to ensure that this extreme top-earner is only paying in lower, infra-marginal tax brackets, which have no incentive effect on her. This cannot be done literally because of randomness and uncertainty, but the broad effect of paradoxically lowering optimal marginal rates at the top end is nonetheless real.
It's only real if you assume top earners have monetary incentives to work more, which is a very bold assumption in a world where the top earners don't even earn money through their work in the first place.
And again, the utility of income for an individual is logarithmic with regard to their income, which means the marginal utility is the inverse function and that never stopped the top earners to want more.
Labor income is very important at the top end. The work a CEO performs in her superintendence of a large company generates what's economically labor income, even when paid as stock grants, options or the like. Basically all professional income (including that of devs) is labor income, not capital income.
(Besides, optimal taxation models also say that capital income should not be taxed at all, and you should concentrate "capital" taxes on sources of pure rent instead, with the rest of the burden falling on labor income and/or consumption! The intuition is that taxing invested capital is basically double taxation, since the apparent "returns" on capital are in fact wholly accounted for by time value and risk. There are important offsetting arguments, but these also become less relevant at the extreme top end of the scale.)
> Labor income is very important at the top end. The work a CEO performs in her superintendence of a large company generates what's economically labor income, even when paid as stock grants, options or the like. Basically all professional income (including that of devs) is labor income, not capital income.
If the CEO has a significant voting power in his company, then it's capital income even if the said income is “a salary”. Like it or not.
> Besides, optimal taxation models also say that capital income should not be taxed at all
It would be nice if people advocating for their political view could stop labeling their view as “optimal”, but hey, this is economics so here we are.
The optimality results are drawn from modeling assumptions that happen to be fairly general, not from any specific political views. For instance, much of the real-world political advocacy of UBI or cash transfers towards low-income folks is downstream from arguments about the predicted efficacy of this as a kind of redistribution; the arguments are not themselves politically motivated. The argument for taxing pure rents only, as opposed to productive capital, is structurally quite similar; as is the general argument for paying careful attention to incentive effects at the top end of the income distribution.
> The optimality results are drawn from modeling assumptions that happen to be fairly general, not from any specific political views
The idea that someone rich would “work less and thus produce less value to the society if their marginal tax rate was non-zero” isn't “fairly general” it's straight Randian and it's not how the world works. Same for the idea that individual income reflect the value they create to society.
The idea that you ought not to tax capital is also politically motivated.
Anything can be said to be “optimal” if you pick the hypothesis accordingly, and that's exactly what's being done here… It may work on paper for a world populated by a spherical John Galt in vacuum, but it tells you nothing about the real world.
> The idea that someone rich would “work less and thus produce less value to the society if their marginal tax rate was non-zero” isn't “fairly general” it's straight Randian and it's not how the world works.
People generally tend to work in exchange for money, and the more money they earn thereby, the more effort they'll want to put in their work. (This broad idea is sometimes known as "efficiency wages"; it often leads to paying workers more than they could directly compete for on the market!) Some independently rich folks may obviously choose not to work in any high-paid job at all, but given that they are, it makes sense to ask what motivates them.
> Same for the idea that individual income reflect the value they create to society.
That's obviously not true, since positive externalities, negative externalities and pure transfer rents all exist. Some people might well end up creating more value to society than their income accounts for, others less.
(I actually stated above that the zero-taxes-on-capital result is somewhat unrealistic on its own and there are arguments that do push the other way, so the current notion of what should be taxed may in fact be roughly adaptive. In practice, it's often more important not to push too far away from optimality with punitive levels of taxation than to precisely match the outcome of any given theoretical model.)
> People generally tend to work in exchange for money,
When they need it. Healthy retired people regularly do work for free in various charities and community work. Working people also don't usually seek to maximize their income, but balance it with plenty of factors.
> and the more money they earn thereby, the more effort they'll want to put in their work. (This broad idea is sometimes known as "efficiency wages"; it often leads to paying workers more than they could directly compete for on the market!)
This only works up to a point, you can't pay a taxi driver a million bucks in the hope of getting to destination 10 000 times faster. People do work better and harder when they feel they are fairly compensated vs when they feel they are being abused but that's it.
> Some independently rich folks may obviously choose not to work in any high-paid job at all, but given that they are, it makes sense to ask what motivates them.
And the answer is not the income proper, but everything that comes with such jobs and income, particularly “I'm making more money than Bob”. As long as Bob and him are being taxed similarly, then the actual amount makes little difference.
As I said above the marginal utility of money converges to zero the more money you have: a million dollar would change the life of the median US worker but wouldn't even be noticed by Tim Cook. (And even a billion doesn't change Jeff Bezos perception of worth an inch).
> In practice, it's often more important not to push too far away from optimality with punitive levels of taxation than to precisely match the outcome of any given theoretical mode
The concept of “punitive taxation” is in itself a political one, and again I can build a model in which the optimal income taxation is 100% above 1M and then say “we shouldn't push too far from the optimal” and that would be equally nonsense.
I agree with you, but for what it’s worth I live somewhere top marginal rates are about 50% and indeed 32 hour weeks are very common. I think this is a good thing though.
Yes, looking at the net transfers makes more sense.
However, net transfers aren't a function of income alone. They depend on lots of factors, because they are plenty of benefits that depend on more than income and plenty of taxes like that, too. Eg capital gains taxes and property taxes and sales taxes and tariffs don't depend on your income.
I would guess that was not a joke. The benefits could drop all the way to 0 at a reasonable point unless you impose the stronger condition that the function be analytic.
Suppose, e.g., that you can get $5k/yr in benefits if you make less than $10k/yr in other revenue and $0 otherwise. Unless you have a viable strategy for pushing past $15k/yr it's a strong financial disencentive against actually working, and even then your incremental ROI isn't very good past that cliff (if it takes an extra hundred hours to push to $15.1k/yr, then compared to your $10k/yr option you're only making $1/hr for the extra work).
This doesn't sound monotonic. This sounds like a mapping from pre-benefit income to post-benefit income which sends just under $10k/yr to just under $15k/yr, but sends just over $10k/yr to just over $10k/yr. So it sends a larger input to a smaller output.
I think I see the definitions we're disagreeing on. I'll lay out what I meant and then address your thing.
1. A couple levels up, the function somebody requested being continuously differentiable was the "benefits." You seem to be looking at the total post-benefit income instead.
2. It's not totally clear, but you _might_ also be using "monotonic" to refer to "monotonic increasing" or "strictly monotonic increasing" instead (the total income function in my example isn't even monotonic, so this is just me reading between the lines in the wording of your reply).
The cliff issue still exists though (and still exists in the differentiable version -- you want bounds on the derivative ideally to prevent the cliff issue, and for unrelated reasons you probably want other properties like the benefits not increasing as a function of pre-benefit income). Suppose you have a strictly monotonic increasing function mapping pre to post benefit income. That function can still, e.g., have a long region with a high slope, followed by a long region with a low slope, and some curvy thing connecting those. It's still continuously differentiable and strictly monotonic increasing, but the incremental value of work in the low-slope region is low (by definition). You might make a dollar in pre-benefit income and $0.10 in post-benefit income, so at minimum wage you're back to a <$1/hr situation unless you can make enough money to push substantially past the right side of that low-slope region (which we're assuming exists, else it basically says you have a 90% tax rate if you make too much money, and in-context "too much" would be near poverty levels, so even people wanting that sort of thing for the ultra rich wouldn't think that to be a good idea).
I'll go further and say what we probably want is for the derivative of net income as a function of earned income to be monotonic increasing but max out less than 1. So that there aren't ranges of income where you are receiving very little per dollar earned and then after some point start receiving more per dollar.
But solving benefit cliffs really just means having earned=>net income strictly increasing with the marginal rate reasonable, say at least 30 cents more net income per earned income. Under that constraint, you could have ranged where net income grows slower until you hit some higher dollar amount of earnings, but imo that should also not be desirable.
You jest, but as an unemployed student I was approved for $6/mo of SNAP.
Like... for what possible purpose would the calculation even go that low? Just deny the application instead of wasting everyone's time and resources. I have no idea how long they put $6 into the account. I never bothered to look.
That can still have work disincentives; anywhere the magnitude of slope of the benefits is close to (or steeper than) the slope of the income as it phases out, then working more can get you no gain (or lose you money).
If you continue with the idea of transfers, which is, in effect, the current government buying off parts of its constituents, then "democracy", whatever has remained of it in the West, will die for good. What happens if I receive money from the Government but in the same time I'm also actively opposed to said Government's actions? Will I be allowed to speak against the Government that is, as a matter of fact, paying me? Will I have second thoughts of doing it? Will the Government cut off aid to me if I'm too vocal against said Government's actions?
All this to say that all we're doing is turning most of our countries' citizens into de facto slaves, people with no political free-will and who are well-aware that if they were to speak out against the powers that be they risk destitution.
> What happens if I receive money from the Government but in the same time I'm also actively opposed to said Government's actions?
Nothing? That's how it's worked in literally all functioning democracies. The purpose of any government, democratic or not, is to benefit its constituents. If it doesn't do that, we have a moral obligation to destroy the tyrants. Those benefits range in their tangible value, from hard to quantify things, like establishing public expectations of behavior (laws), to easy to quantify (subsidies like wellfare, farming subsidies, etc).
I'm truly baffled by your take that seems to insist that helping the needy somehow makes you moreso a slave to the government than the whole monopoly on legitimate use of force thing.
You can have net transfers to the poor without turning most of your country's into net recipients.
I also don't understand why you assume that people who are net recipients would stop complaining or voicing their opinion? That's not at all what happens in practice.
You're turning the "poors" into slaves, into slaves to the Government that is keeping them (the "poors") on the Government's payroll. I'm not "mixing" anything, so if we can please leave that condescending tone behind that would be best.
> who are net recipients would stop complaining or voicing their opinion
Why? You're asking why the "poors" will have second thoughts about openly criticising the hand that, literally, feeds them?
> Why? You're asking why the "poors" will have second thoughts about openly criticising the hand that, literally, feeds them?
No, I'm not asking why the poor would stop complaining. I am pointing out that empirically we observe that people who receive government largess don't shut up! (And that's true for all kinds of government largess, eg also for subsidies for rich people or companies.)
No, the "why" question I am asking is: why do you think that recipients of government handouts would shut up, when in the real world they haven't done so?
> You're turning the "poors" into slaves, into slaves to the Government that is keeping them (the "poors") on the Government's payroll.
Would you say the same about eg car drivers, if the government provides roads free of charge to the user? Or about anyone who benefits from national defense? Or are in-kind benefits excluded from your calculus? In that case, would giving poor people food and clothing and shelter instead of money mean they are no longer 'slaves' by your definition?
(For comparison: real-world, actual slaves like in the American South were usually provided with in-kind benefits to keep them alive. Money rarely changed hands, partially because it leads to autonomy.)
I remember reading this book called 'The Losers' (https://www.goodreads.com/book/show/2114133.The_Losers) about a privileged man who has a car accident, becomes disabled and comes to rely on government support. The book looks at the lives of the working poor and actually poor, who rely on welfare cheques and other subsidies and highlights the social and psychological impacts of these systems of support. It was very disempowering and psychologically enslaving for the people living on these systems of support.
I know it's probably not intentional but I believe welfare in the US absolutely is rife with negative outcomes and negative incentives for people receiving support, it doesn't uplift and enable success, it keeps people trapped in poverty and a mindset of helplessness.
I come from Australia where the social welfare system has similarly degraded (Though not as bad as the US), and there are increasingly more dehumanizing aspects in engaging with the system just to receive a below-subsistence amount.
This article highlights one aspect of such disincentives, but I believe the problem is deeper and more systemic.
What "current results" are you referring to? No, people 50+ years ago weren't arguing that cliffs can lead to disincentives, they were arguing that the whole system is "socialism" and bad - something that has been repeatedly disproven.
There are few things more evil in our society than the breed of conservative that will talk about how their family needed social welfare growing up to survive, how it worked and they did survive, but how "ashamed" they feel so they thing we should tear everything down and remove the ladder now that they've climbed it.
> What "current results" are you referring to? No, people 50+ years ago weren't arguing that cliffs can lead to disincentives, they were arguing that the whole system is "socialism" and bad - something that has been repeatedly disproven.
In fact, we have disincentives like that because they were arguing that having a flat benefit for everyone would be socialism.
If you don't reduce benefit with income level, these disincentives vanishes and that's how all post-war systems worked in Europe (can't talk about the US) before the neoliberal crew started dismantling everything in the name of “reducing public spendings” for greater economic efficiency.
A flat benefit for everyone that doesn't reduce with income level would be universal basic income, which has many supporters in theory, but has never been implemented in practice so far, not even in the most socialist countries of the 20th century...
No it's not. Not all benefit is “income” and not all such income is universal. And it also has nothing to do with socialism (socialism is about forbidding the private property of the means of production! Please stop calling every kind of public intervention “socialism”, that's as ridiculous as calling all Republicans “fascists”).
For the non-income version see countries with free schools or free hospital, and for an example of an income benefit see the French Allocation familiales, which until 2015 were given to every family with 2 child or more no matter the parents income.
There were plenty of such systems, and some of them still exist (AFAIK the US social security is one of those, you don't lose access to the benefits even if you're rich)
Ok, those are valid examples (also, how about free roads for everyone? Everyone seems to take that for granted and wouldn't dream about calling it "socialist"), but in your original post you wrote about "a flat benefit for everyone" that doesn't reduce with income level, and the examples you gave are either non-income or not for everyone (e.g. not for families with less than two children, not for people who didn't pay social security taxes for at least 10 years etc.).
> Ok, those are valid examples (also, how about free roads for everyone? Everyone seems to take that for granted and wouldn't dream about calling it "socialist")
This exactly.
> but in your original post you wrote about "a flat benefit for everyone" that doesn't reduce with income level
Yeah, my writing was confusing. By “for everyone” I meant “no matter the income”, not that we should give children's allowance to single adults. Just that we stop index these things on income. By the way I also think we should give more in nature (“the medical operation is free”), and less in cash, but that's independent.
That's not true for the US, because minimum wage is so low you can be working full time and still be below the poverty line. The poverty line is not minimum wage, it's the amount it takes to afford to live.
We all know that person on the left that struggles with reasoning that involves economic or statistical intuition, but has extremely strong instincts of right and wrong, and is quick to outrage and moral certainty, and low in curiosity.
Their thinking is that poor people are poor, which is bad. So let's check if they're poor, and give them money so they're not poor anymore, which is good. That feels right. Let's do that.
Negative income tax? But that gives rich people money too! Giving rich people money is bad because they're rich already. QED.
I haved lived the majority of my life in working class communities (as an electrician). Despite sporadic eligibility, I've never applied for the benefits that many of my near poor neighbors receive (I am a simple homebody, with zero dependents).
>negative incentives for people receiving support, it doesn't uplift and enable success, it keeps people trapped in poverty and a mindset of helplessness.
For the majority of my recipient neighbors, I would disagree: [single] parent households simply are too expensive to operate without temporary community support.
Conversely, I have a few childless neighbors that simply ride out "disability" payments while working cash jobs part-time, typically along the lines of handyman and/or dealer. This bothers me.
Few of my neighbors are incentivized to work harder (at least on paper), out of fear of losing healthcare/housing/dining benefits.
Several of my wealthier clients had PPP loans "pre-emptively forgiven," and pay my neighbors cash for housework, so I know all sides are gaming this system...
----
But it just seems so obvious that single-payer healthcare and subsidized childcare would solve most of society's problems (much more simply than our current failures of welfare). These are the legitimate grievances of my working class neighborhood.
The decision to implement benefit cliffs is absolutely intentional, because income requirements that cause people to fall of medicaid or SNAP completely are sharp, and maybe 10 % of the population rely on those. Obamacare subsidies are phased out gradually, because half the country relies on Obamacare, and if there were issues around Obamacare, that would have repercussions at the ballot box.
It serves to have an underclass that politicians can dump on, it seems.
> because income requirements that cause people to fall of medicaid or SNAP completely are sharp
How often do pay increases perfectly keep someone in the gap? Presumably some of them will be large enough, through changes of jobs for example, that the family would completely jump that gap.
> because income requirements that cause people to fall of medicaid or SNAP completely are sharp
Why would it? This is perhaps intentional as well. Only allow the program to benefit half the country. I'm sure you can predict how that political split occurs and insulates politicians from the ballot box.
> It serves to have an underclass that politicians can dump on, it seems.
It helps keeps wages suppressed. Politicians want money. They don't care about "dumping" on you, they'll make any excuse they need to keep the money coming in.
Maybe it's just incompetence, bureaucratic morass etc but it really does feel like the system was designed to fail, and trap us into this false choice of a broken welfare system vs. no welfare at all.
UBI and/or UBS (universal basic services) would be so much better but there was a sustained propaganda campaign to tell people that free things are communism and therefore bad. Now Western countries are becoming ungovernable due to regulatory capture, tax evasion and industrial-scale manipulation of opinion by the elites, so fixing these problems within the current democratic system is an extremely uphill battle. At least Mamdani's election gives us some hope in the US, but there's only so much one city or even one country can do on its own without worldwide changes.
There is no propaganda campaign needed to tell people that free things are bad. Nobody likes a freeloader. Western nations are ungovernable because they have universal suffrage, not because of some conspiracy. The fact is that a sizeable majority of people just don't have the intelligence to wield the political power given to them. A quick look at our present government is all that you need to tell that we are ruled by the stupidity of the common man, not some shadowy billionaires.
>I know it's probably not intentional but I believe welfare in the US absolutely is rife with negative outcomes and negative incentives for people receiving support, it doesn't uplift and enable success, it keeps people trapped in poverty and a mindset of helplessness.
That's the best way to ensure their vote in the next election for the welfare party.
> Literally no one is immune to the character-destroying nature of entitlement programs.
I personally know people who appear 'immune'. I find the issue is trauma, not 'character-destroying' - the uncertainty; the demoralizing nature; the experience living continually on a precipice, and seeing your kids, other dependants, and loved ones living that way. People are in a continual state of survival - of fight or flight, not of growth and health. Over a long term, that will injure anyone.
You can see the privileged atmosphere of HN in the comments, mostly from people with no contact with US welfare programs. It's like reading software development analysis from people who have no contact with that. (I have seen people on HN who do have experience, but they don't seem to be commenting.)
A considerable part of this is the fact that in a society where utilizing these programs is stigmatized to the degree that the USA does, people who see themselves as honest tend to avoid utilizing them.
And even those who are less than honest, but have a sense of propriety, would understand that the correct, culturally approved time to engage in these activities is AFTER one acquires a significant amount of wealth, when entitlements are knighted to become "economic incentives".
> In practice, however, several of the programs that seem to offer the most generous benefits are severely underfunded, so relatively few families are actually able to obtain them. For example, according to congressional testimony from the Center on Budget and Policy Priorities, 68 percent of poor families with children received Aid to Families with Dependent Children in 1996. By 2015, after the welfare reforms of the Clinton era, benefits from TANF, which replaced AFDC, reached just 23 percent of poor families with children, according to the same source. Similarly, just 8 to 12 percent of eligible families receive child care benefits from the CCDF, and just 24 percent of those eligible receive Section 8 housing vouchers.
This doesn't surprise me at all. On top of lack of funding, you have:
1. Benefits don't come into effect fast enough to matter for emergencies. Even with expedited processing you can have to wait a week for food.
2. The bureaucratic requirements aren't obvious if you're new to the system. How many people know that "expedited" processing exists? How many people know that they qualify?
3. The bureaucratic requirements aren't exactly painless. It's been awhile, but I remember one was as simple as "show up at our office for <xyz> reason." That's easy if you have a car or money or friends or whatever, but a 10-mile hike each way in -20F weather is never fun, and I've gotten in trouble more than once when hyper-local weather patterns (e.g., too close to a body of water with a long straight stretch) made the situation much more dangerous than I was equipped for.
And so on. The system is (supposedly) easy to use if you know its ins and outs, but if you're struggling and never anticipated being in that situation then you're mostly just fucked.
> and just 24 percent of those eligible receive Section 8 housing vouchers
There are definitely problems with the distribution of these programs, but it’s also a mistake to think that everyone eligible for every program wants to collect every benefit. The housing vouchers are a good example of something that isn’t applicable to a lot of people who, for example, are living with relatives. I have some people in my extended family who fit this description right now. They have housing in a beneficial family situation, so any housing benefits they qualify for aren’t relevant to their current situation.
Not to minimize the problems, but the number of people who should be or want to be receiving every benefit isn’t 100% minus the number of people currently receiving it
I always felt simplifying all this, it would probably be possible to consolidate and offer proper health care, and a real welfare, along with a supplemental program for those inapt to work, with it all costing less than the mountain of piled complexity and paper work that we have today.
The system in its current insane state serves the purposes of multiple groups of people:
1. The bureaucrats administering the system because the more complex and insan the system is, the more bureaucrats you need.
2. The politicians who can promise $X of benefits to N people while knowing all along that due to the complexity of the system the actual cost of the program will be well under X*N due to failure to claim the benefits.
3. Companies that can now hire workers for less than their cost of living because they know they can just make it up out of government benefits.
And it hurts, of course, the poor people who depend on these programs. But that doesn't matter politically, because these people are mostly not smart enough to even figure out how they are being screwed. Whereas the people in 1-3 above are absolutely smart enough to figure out how they benefit from the current system and they vote and donate accordingly.
3. has always bothered me - if you run a McDonalds, you have to pay market price for the building, kitchen equipment, both when buying and maintaining it. If you don't pay enough to maintain the fridge, it won't unionize - it will break down.
The idea proposed by these 'free market types', that somehow people working there below sustenance salaries 'deserve it' - that the cost of labor needs to be essentially subsidized just doesn't make sense to me.
Practice what you preach - either pay the wages people need to get by, or close down.
Agreed, 3 is the one that consistently annoys me in arguments I see across the internet. The reason why our welfare programs exist and are in such a disasterous place is partially because they are literal corporate subsidies so they can buy workers at a premium. If you were to kick out the ladder and fully remove the minimum wage and remove our welfare systems it would outright collapse the economy because A) working would be a full net negative in income generation and B) corporations would crash and burn realizing that they can no longer hire workers at their subsidized price.
The sane way to approach a system like this is just UBI + socialized healthcare but I think we'll approach labor collapse before we see movement in this direction by out of touch bureaucrats.
I wouldn't go so far - I would just raise the minimum wage to a level where a person can actually make ends meet.
Sure some folks would be fired, and their jobs automated, but they could be redirected towards better paying opportunities.
If all else fails, then the money saved by such approaches could be used for welfare. It's just putting things from one pocket into the other for the government.
As things stand, these corporate subsidies are just for enshrining inefficiencies in the system.
I cannot express the extent to which that picture at the top of the article with a baby “working” at a laptop upsets me.
I can see the beginnings of a hand of an adult at the bottom, but there is something so on the nose about such an image that it prompted a visceral response.
On the website there is cropping and it might be displaying differently on different browsers. I was able to recognize it as an adult at the computer holding a baby on their lap. I do not see any intent to show a baby working.
It looks like in practice the most generous of these programs are not accessible to most working poor, so the charts here are more theoretical than practical. It also doesn't address income tax-free earnings (traditional 401k and IRA) - it seems like those generally don't count against your eligibility for programs and could shelter ~25k or more for the self-employed. Not that I imagine most people actually near poverty are maxing out their retirement accounts, even if it theoretically costs them nothing or even gains them value.
I usually get downvoted on any of my commentary on poverty or welfare, despite my lived and continued experience in it, but I'll punt again.
My family, from grandparents downwards (siblings, aunts, uncles, cousins, across 3 family lines) have all relied on government handouts for a majority of their lives, and had their character destroyed by the system. All rely on a meager amount of welfare to stay alive, not healthy, not productive. Just kicking along and in alcohol and drugs just to feel something. Most have died of some form of cancer from their vices.
I joke (with a semi serious tone) that my drug-induced psychosis was the best thing for me because it broke me out of the system (tied in with a move interstate) - I lost all my old friends, family was quasi-cautious of me, and I was in a new town and had to completely rebuild myself. I had a mental health nurse nurture me "back on my feet" within 6 months and it was the first time I was actually on my feet since birth.
Governments and society, in the large part, think "something is better than nothing" - but I think it's actually the opposite. Maintaining a status quo is what makes people "comfortable in misery" and not have any way out. Most can't even get a job, because the job (which might be temporary) knocks out the welfare (which is permanent, as long as they don't get a job).
I would love to see modelling or examples on my theory of the way out of this mess: reinvest the welfare system as mental health services, only give welfare to those who are in the mental health service. Incentivise for how many people transition out of the welfare system. keep it at the same dollar amount, just reallocate that money to the people who really need it.
Some cases are almost too tragic to mention and there's no positive outcome; others have "learned" behavior and can come out of it with some help (or sometimes just some positive messaging)
I also largely blame a lot of societal/government programming. I call it "poverty programming" -- the idea that people cannot do ANYTHING without help. You absolutely will not make it on your own, you NEED support you NEED this label, medication, service, benefit.
I strive to message the opposite: you can do it, release the chains. the world is not that scary. embrace the chaos, there is a lovely world out there ready to be explored.
I appreciate your willingness to keep trying to communicate your experiences. It's obviously a huge spectrum of possible lived experiences and incredibly hard to legislate in a way that does the best for everyone. Do you think having a trained case worker evaluate each person's circumstances and coming up with a pathway to success makes some sense?
I think it totally could for people in just the right position and timing, but I also feel like for many it would be advice and help that could end up unreceived.
How would that be implemented on an individual basis? Force drug-induced psychosis (obviously not)? Just kick people off of support? That will have obvious, very bad downsides. And then we'll have a bigger problem with homelessness (which will get the same response).
While I don't downplay your experience; do you know of research that talks about it? The idea that people need incentives is an old one - Bill Clinton's welfare reform talked about 'a hand up, not a hand out', etc. I also remember research, though I don't know how current, that most people in welfare programs are there temporarily - they are in and out, not there on a long-term basis.
What about people who aren't going to make it on their own? Do we just let them die? A similar problem is people addicted to drugs: There is no reliable solution; rehab only works for some, not always permanently, and forcing people into it is almost certain failure (besides being a serious violation of their freedom).
There is research and experience saying 'housing first' - providing housing, which provides stability and much better access to services - helps significantly, but that may be focused on people lacking shelter.
P.S. I hope you drop the whining about downvoting. It's against guidelines and is tactical victimhood.
I guess it really is too broad of a sector to think of any clear cut solutions. I'll tap out, but my main shtick is the poverty programming but. I think k that perpetuates.
I would agree with housing first. Definitely something that goes a long way. But it's also not clear cut (IE: too many recovering drug addicts in the same neighbourhood will bring each other down..)
While some people might only be on welfare temporarily, others are long term. And removing it drops the "floor" for everyone at once. Having seen death and evil that happens in poor.. families, societies, etc.. I don't mind the idea of letting certain elements die.
I'll keep the tactical victim hood, it's the only way I get positive responses that takes me on good faith. Otherwise I'm just a "corporate bootlicker who doesn't know anything" or "privileged male(?) with typical survivorship bias"-- I gotta get that out of the way first, this is my learned behaviour. I'm counter-programmed. Hate the game not the player.
having been out of work before and going on benefits the cliffs are hilariously badly calculated, not even sure how they are determined. for someone who knows their potentially salary far outweighs the reduced subsidies it can be a needed life boat. for people at the cutoff it incentivises you to stay under it.
The real issue isn’t just the cliffs themselves — it’s that our welfare system is a set of disconnected programs that interact like poorly designed APIs. For people with zero margin for error, even a small income change can trigger huge losses in healthcare, childcare, or housing.
We ended up with a system that’s expensive, complicated, and psychologically brutal — and still fails to do what it was designed to do.
I can't find the original tweet, but someone (half?) jokingly proposed a law that all benefits must be defined as continuously differentiable functions (thus making cliffs impossible).
"Yeah, I made $1M last year. Here's my SNAP check for six cents."
They should be. And for the great majority of citizens, they should be calculated automatically along with taxes without the need for filing/paperwork. But we must think of the Intuit shareholders and the harm that that would cause them.
If someone in the coming years ran on taking down regulatory capture and returning that as social safety net funding, public goods, and lower taxes, and had the chops to actually deliver, they'd do well.
Though best to start local government first, obviously.
We're reaching breaking points in so many places...
“They’d do well.” That is not the lesson I’ve taken from the past 15 years of politics in the US and abroad.
Political candidates actually interested in taking on the very difficult and nuanced task of governing are routinely drubbed by edge lord culture warriors or candidates that simply promise the world without any regard to annoying facts like existing laws, budget deficits, or basic tenets of economics.
I definitely agree there is probably less disfunction and greater chance for reform at the local level.
As someone who formerly worked in this space, the issue is administration is orthogonal to legislature.
Administration and implementation is inherently technocratic in nature, but legislation is is often driven by short-term electoral needs.
This isn't to say autocracy is the answer (it isn't), but the dysfunction arises when people assume that every single administrative decision needs to be made by "elected officials" and constantly second guess administrators.
When administration from local to federal becomes politicized (as is increasingly the norm across the democratic world), implementation slows down severely because the "ideal" solution might not be political tenable.
A good example of this is welfare expansion in the US - the assumption is lower income voters who voted for Trump voted irrationally, but in action, the majority of Trump voters tended to be in the 25th-75th percentile income bracket, which in most cases put them outside of the bracket for a number of social services. Those services which were available such as the ACA/Obamacare have been protected by legislators for that very reason because they know they would lose their seats as a result.
You're in Japan so you've probably seen similar decisions being made with regards to Japanese rice protectionism [0] - unpopular with urban voters, but urban voters don't swing elections at scale.
[0] - https://news.ycombinator.com/item?id=41367653
Japan is 93% urban. 25% of the population lives in Tokyo! It's not that they can't outvote the farmers, it's a more complicated mix of agrarian nationalism that supports farm subsidies in a lot of countries, plus outright bribery with literal sacks of rice.
> administration from local to federal becomes politicized
Administration is politics. It's a mistake to go full technocrat and proceed without the consent of the administered. The problem comes when techocrats get rings run round them by misleading populists.
> It's not that they can't outvote the farmers
Japan is a parliamentary system, and the amount of Single Member Seats in the House of Representatives needed to flip an election are primarily small towns or rural.
This is what happened in the 2009 election when the LDP lost the farmer vote.
There's actually plenty of examples out in the real world with competent administration to learn from. Especially if you generalise enough to look at how pockets of competence work even in an otherwise abysmal system, instead of demanding overall competence.
What you end up seeing is those cases of "competence" only worked in cases where administration and legislation was aligned. But even in those societies you'd still see problems which are distinct, but problems nonetheless.
GP might be saying that analyzing _differences_ in how perf targets are met in say, VN&CL (or SG&CH IE&HK TW&SI KR&DK) might be most productive. As you mention, in particular, how are their sad paths ("problems") different? Or the same?
Now there are subdepartments of study devoted to this very question (empirical study of the legislative-administrative divide) , but in the US I'm hard-pressed to list the corresponding think-tanks :) I suppose some MBA level depts in the US will have to suffice
Going on a tangent:
I wish in the US more areas of policy would be decided at the state level, and I wish more state government would flip coins to decide on their policy. (Even better, if we can push it down to county level.)
The first part is about subsidiarity, which is a good idea anyway. But together this is just a tongue-in-cheek plea for doing more randomised, controlled experiments. (Alas, we can't blind them.)
> I wish in the US more areas of policy would be decided at the state level, and I wish more state government would flip coins to decide on their policy. (Even better, if we can push it down to county level.)
The overwhelming majority of policy is decided at the state and local level in the US so long as it's not foreign policy or monetary policy related.
Whatever is decided on the Hill has no bearing once administration and implementation comes to play - which is overwhelmingly done by state and local government.
This is why the US has become increasingly dysfunctional over the past few years - state and local elections which were previously staid affairs became polarized partisan affairs because turnout is low and the overwhelming majority of decision making roles are elected.
Flipping GP's tangent on its head (after all states in the US are akin to countries in the EU/EA:)
If you can't blind them find them
I suggest that, absolutely, state governance has _already_ generated lots of excellent data >> federal level :) probably much more accessible than corporate governance data )
Of course YC's Seibel might have something to say here, it's probably not a new perspective
I wish you were right. NYC can't even charge people for their using their roads (whether that's driving or parking) without the state and federal governments getting involved.
NYC is an outlier because it was in receivership in the 1970s-80s and near bankruptcy [0]
[0] - https://rockinst.org/blog/behind-the-fiscal-curtain-forgotte...
The problem isn’t that such candidates would never accomplish anything let alone get elected due to the insurmountable amount of resistance from so many incumbents with a vested interest in that not happening, ever.
One of the biggest problem of a two-party system is that the two parties are thoroughly captured by lobbyists.
In a PR system, fresh parties do arise over election cycles, and it takes some time for them to be thoroughly infested. These can then push for some reforms that threaten entrenched interests, and sometimes succeed.
We couldn't get carried interest legislation to pass. It was that easy of a question and not a single Republican crossed the aisle to support it.
Simplifying the tax code and balancing the budget is what they talk about but they never walk the walk.
Most people don’t even know what regulatory capture really means. There’s no “brand” to rally around and I don’t know how you’d go about building one.
And without the concept spread through the population, where would you find the grass roots support you’d need for resisting the avalanche of interest-group pushback?
“Draining the swamp” or “revolving door” were sorta in the neighborhood, but still ineffective and counterproductive.
"The swamp" and "evil big corporations" are the left and right's respective brands for this.
DOGE tried, and despite it’s best efforts still couldn’t do more than make a dent
DOGE was a Potemkin organization. They destroyed USAID, smashed up a bunch of other institutions, then went home. Very little of which complied with Federal funding law, either.
[flagged]
They definitely should be. Some people might be in situations where asking your boss for a 10k pay cut gives them an extra $1k per year. Just dumb.
I like my cliff. I earn enough that I and my family are ineligible for most welfare schemes. I do not want even 6 cents worth of SNAP. I spent my entire childhood on that, and it disgusts me. Thus, were this policy ever seriously proposed, I would do what I can to dissuade my legislators from voting it into law.
There are others like me, too, I am not unique.
The cliff here means a disincentive to go for a slightly better paying job because you end up with less overall. I think the 6 cents was hyperbole.
Right, so people who would use their trauma to prevent themselves from thinking logically about the problem and helping those in the middle instead of some arbitrary line your mind made up?
Never underestimate how many good policies go nowhere because some median voter is irrationally mad at them due to something that happened decades ago.
Who would this policy be good for, and if it's not good for me, why should I care?
Because you live in a world where other people exist, and how they go about existing can impact you negatively, both directly and indirectly. The fewer people living in and dealing with poverty, the better off the everyone else is.
>so people who would use their trauma to prevent themselves from thinking logically
You're using your trauma here. You keep yearning for the kindergarten lessons to be true, that we're all the same people and we should all share and all the other nonsense that was only taught to you so that the elemntary school teachers didn't have a city-burning-down-riot on their hands every day.
Even if you insist that I'm the one being illogical here, it's wired pretty deeply into my brain, and I'm not going to change. Not only am I not going to change, I'm raising children to be like me, and one of the early and fundamental lessons is that fertility rates are top priority. Be fruitful and multiply. There will always be more like me than more like you, and it's only going to get worse (for you and those like you).
Well, that's a very interesting and aggressive take about me holding up a mirror to your own neurosis, I recommend therapy.
Would you like a golden sticker?
There is idea behind that, but continuous is not enough.
The variable is all transfers, taxes and benefits T = [all taxes - all benefits] as function of income per person (including children). T starts negative (benefits are negative taxes).
Goal: monotonously increasing effective marginal T rate.
This. No need for continuity in the derivative - the marginal tax rate should be fine to jump around - but should start low (I'm fine with negative) and increase as you earn more. Like US federal tax brackets, but with benefits also considered.
Continuously differentiable is fine with jumps in that derivative.
I agree in principle. And I also suggest that we should probably only have one bureaucracy that does means testing that can then administer both taxes and benefits. No need to duplicate the effort.
However most benefits and taxes aren't just means tested against income, but a myriad of other conditions. So net transfers aren't just a function of income.
To calculate the amount of your childcare benefit take the negative of the your adjusted gross income (box 26a), divide it by 10,000, and add 2. Then take the arctan of that result and multiply by 5,000. Add 2500π and write the result in box 46. You may round the value of π to 2 digits. If you are filing as head of household, divide the amount in box 46 by the definite integral from 0 to your adjusted gross income (box 26a) divided by 10,000 of sin^2(x)/(x^2 + 1) dx, and write that amount in box 48. If you are unable to find the function of the anti-derivative, IRS rules allow you to approximate with a Riemann sum using the midpoint rule and a rectangle width of 0.1.
Or, as it has always been, piecewise linear approximate it.
It's not sufficient to make cliffs impossible, you just never want the effective marginal tax rate go above a certain threshold.
It's insane that we cap marginal tax rates for the wealthy below 50% “because they need incentives to work harder” yet the working class family is facing an effective marginal rate near 100% because of reduced benefits.
The solution would simply be to stop making benefits decrease when salary goes up.
“But it's going to be insanely expensive” one may say, but it's an accounting illusion. All we need to do to break the illusion would be to stop counting gross public spendings and taxes and instead count the net public spendings/taxes for each individual (that is, over the whole population you take the difference between what they pay and what they receive and that gives you how much they contribute or how much they cost, instead of the current accounting system where we count people paying for their own benefits).
What's really expensive is the economic inefficiency of the current system.
> The solution would simply be to stop making benefits decrease when salary goes up.
That's an option, and I'd be interested in how the math works especially with predictions of how the economy would respond.
That said I don't think not decreasing benefits is an important requirement. But net income (benefits + earned income - taxes) should be strictly increasing with earned income, and probably at a rate of at least 50% but ideally higher than that up to some reasonable definition of middle class income. It should never be the case that if you earn more you can end up worse off.
> That's an option, and I'd be interested in how the math works
The math works because the derivative of a constant is zero, it's that simple.
> That said I don't think not decreasing benefits is an important requirement. But net income (benefits + earned income - taxes) should be strictly increasing with earned income, and probably at a rate of at least 50% but ideally higher than that up to some reasonable definition of middle class income.
Exactly, it doesn't need to be fixed, we could also have decreasing benefits, simply with a much lower rate of decrease (ideally the rate of decrease should be the marginal tax rate for this income). But in practice such a system would be much more complex than a flat benefit system for little gain (the more limited the decrease rate is, the closer to a flat rate your public spending would be).
Actually, optimal taxation models tend to show that a base transfer at zero income with an initially "high" marginal rate for clawing back the transfer at the lowest end (but still no higher than 100%, and falling very quickly as earnings increase!) works very well. (Marginal rates then rise progressively for higher incomes, and paradoxically become lower again at the very top end, trending towards zero at the extreme top-end of the scale. This is actually a consistent result in non-linear incomes taxation models; the very top earner should face zero marginal tax on the very last cent she earns!)
The intuition is that you only "feel" the high marginal rate if you earn very little, which impacts very few people; but the effect of making the break-even point more manageable with lower marginal rates for most earners is felt throughout the incomes scale. What really screws up things is higher-than-100% marginal rates, which are regrettably common in real-world systems amd completely useless.
I'd be curious to read more about that, because none of what you've written makes any sense to me right now. (Why would we want zero marginal tax on top earner who already get zero marginal utility for her money in the first place ?).
The zero marginal tax only strictly applies to the very last cent the extreme top-earner is expected to earn in the tax period. The idea is that at this theoretical extreme top-end tax bracket basically no one is paying infra-marginal taxes, hence the share of the incentive effect compared to the pure revenue effect is maximized. So you'll want to ensure that this extreme top-earner is only paying in lower, infra-marginal tax brackets, which have no incentive effect on her. This cannot be done literally because of randomness and uncertainty, but the broad effect of paradoxically lowering optimal marginal rates at the top end is nonetheless real.
It's only real if you assume top earners have monetary incentives to work more, which is a very bold assumption in a world where the top earners don't even earn money through their work in the first place.
And again, the utility of income for an individual is logarithmic with regard to their income, which means the marginal utility is the inverse function and that never stopped the top earners to want more.
Labor income is very important at the top end. The work a CEO performs in her superintendence of a large company generates what's economically labor income, even when paid as stock grants, options or the like. Basically all professional income (including that of devs) is labor income, not capital income.
(Besides, optimal taxation models also say that capital income should not be taxed at all, and you should concentrate "capital" taxes on sources of pure rent instead, with the rest of the burden falling on labor income and/or consumption! The intuition is that taxing invested capital is basically double taxation, since the apparent "returns" on capital are in fact wholly accounted for by time value and risk. There are important offsetting arguments, but these also become less relevant at the extreme top end of the scale.)
> Labor income is very important at the top end. The work a CEO performs in her superintendence of a large company generates what's economically labor income, even when paid as stock grants, options or the like. Basically all professional income (including that of devs) is labor income, not capital income.
If the CEO has a significant voting power in his company, then it's capital income even if the said income is “a salary”. Like it or not.
> Besides, optimal taxation models also say that capital income should not be taxed at all
It would be nice if people advocating for their political view could stop labeling their view as “optimal”, but hey, this is economics so here we are.
The optimality results are drawn from modeling assumptions that happen to be fairly general, not from any specific political views. For instance, much of the real-world political advocacy of UBI or cash transfers towards low-income folks is downstream from arguments about the predicted efficacy of this as a kind of redistribution; the arguments are not themselves politically motivated. The argument for taxing pure rents only, as opposed to productive capital, is structurally quite similar; as is the general argument for paying careful attention to incentive effects at the top end of the income distribution.
> The optimality results are drawn from modeling assumptions that happen to be fairly general, not from any specific political views
The idea that someone rich would “work less and thus produce less value to the society if their marginal tax rate was non-zero” isn't “fairly general” it's straight Randian and it's not how the world works. Same for the idea that individual income reflect the value they create to society.
The idea that you ought not to tax capital is also politically motivated.
Anything can be said to be “optimal” if you pick the hypothesis accordingly, and that's exactly what's being done here… It may work on paper for a world populated by a spherical John Galt in vacuum, but it tells you nothing about the real world.
> The idea that someone rich would “work less and thus produce less value to the society if their marginal tax rate was non-zero” isn't “fairly general” it's straight Randian and it's not how the world works.
People generally tend to work in exchange for money, and the more money they earn thereby, the more effort they'll want to put in their work. (This broad idea is sometimes known as "efficiency wages"; it often leads to paying workers more than they could directly compete for on the market!) Some independently rich folks may obviously choose not to work in any high-paid job at all, but given that they are, it makes sense to ask what motivates them.
> Same for the idea that individual income reflect the value they create to society.
That's obviously not true, since positive externalities, negative externalities and pure transfer rents all exist. Some people might well end up creating more value to society than their income accounts for, others less.
(I actually stated above that the zero-taxes-on-capital result is somewhat unrealistic on its own and there are arguments that do push the other way, so the current notion of what should be taxed may in fact be roughly adaptive. In practice, it's often more important not to push too far away from optimality with punitive levels of taxation than to precisely match the outcome of any given theoretical model.)
> People generally tend to work in exchange for money,
When they need it. Healthy retired people regularly do work for free in various charities and community work. Working people also don't usually seek to maximize their income, but balance it with plenty of factors.
> and the more money they earn thereby, the more effort they'll want to put in their work. (This broad idea is sometimes known as "efficiency wages"; it often leads to paying workers more than they could directly compete for on the market!)
This only works up to a point, you can't pay a taxi driver a million bucks in the hope of getting to destination 10 000 times faster. People do work better and harder when they feel they are fairly compensated vs when they feel they are being abused but that's it.
> Some independently rich folks may obviously choose not to work in any high-paid job at all, but given that they are, it makes sense to ask what motivates them.
And the answer is not the income proper, but everything that comes with such jobs and income, particularly “I'm making more money than Bob”. As long as Bob and him are being taxed similarly, then the actual amount makes little difference.
As I said above the marginal utility of money converges to zero the more money you have: a million dollar would change the life of the median US worker but wouldn't even be noticed by Tim Cook. (And even a billion doesn't change Jeff Bezos perception of worth an inch).
> In practice, it's often more important not to push too far away from optimality with punitive levels of taxation than to precisely match the outcome of any given theoretical mode
The concept of “punitive taxation” is in itself a political one, and again I can build a model in which the optimal income taxation is 100% above 1M and then say “we shouldn't push too far from the optimal” and that would be equally nonsense.
I agree with you, but for what it’s worth I live somewhere top marginal rates are about 50% and indeed 32 hour weeks are very common. I think this is a good thing though.
Yes, looking at the net transfers makes more sense.
However, net transfers aren't a function of income alone. They depend on lots of factors, because they are plenty of benefits that depend on more than income and plenty of taxes like that, too. Eg capital gains taxes and property taxes and sales taxes and tariffs don't depend on your income.
I would guess that was not a joke. The benefits could drop all the way to 0 at a reasonable point unless you impose the stronger condition that the function be analytic.
Why continuously differentiable and not just monotonic?
Monotonic is what we have, and it allows cliffs.
Suppose, e.g., that you can get $5k/yr in benefits if you make less than $10k/yr in other revenue and $0 otherwise. Unless you have a viable strategy for pushing past $15k/yr it's a strong financial disencentive against actually working, and even then your incremental ROI isn't very good past that cliff (if it takes an extra hundred hours to push to $15.1k/yr, then compared to your $10k/yr option you're only making $1/hr for the extra work).
This doesn't sound monotonic. This sounds like a mapping from pre-benefit income to post-benefit income which sends just under $10k/yr to just under $15k/yr, but sends just over $10k/yr to just over $10k/yr. So it sends a larger input to a smaller output.
I think I see the definitions we're disagreeing on. I'll lay out what I meant and then address your thing.
1. A couple levels up, the function somebody requested being continuously differentiable was the "benefits." You seem to be looking at the total post-benefit income instead.
2. It's not totally clear, but you _might_ also be using "monotonic" to refer to "monotonic increasing" or "strictly monotonic increasing" instead (the total income function in my example isn't even monotonic, so this is just me reading between the lines in the wording of your reply).
The cliff issue still exists though (and still exists in the differentiable version -- you want bounds on the derivative ideally to prevent the cliff issue, and for unrelated reasons you probably want other properties like the benefits not increasing as a function of pre-benefit income). Suppose you have a strictly monotonic increasing function mapping pre to post benefit income. That function can still, e.g., have a long region with a high slope, followed by a long region with a low slope, and some curvy thing connecting those. It's still continuously differentiable and strictly monotonic increasing, but the incremental value of work in the low-slope region is low (by definition). You might make a dollar in pre-benefit income and $0.10 in post-benefit income, so at minimum wage you're back to a <$1/hr situation unless you can make enough money to push substantially past the right side of that low-slope region (which we're assuming exists, else it basically says you have a 90% tax rate if you make too much money, and in-context "too much" would be near poverty levels, so even people wanting that sort of thing for the ultra rich wouldn't think that to be a good idea).
Yeah I agree, it sounds like a misunderstanding.
I'll go further and say what we probably want is for the derivative of net income as a function of earned income to be monotonic increasing but max out less than 1. So that there aren't ranges of income where you are receiving very little per dollar earned and then after some point start receiving more per dollar.
But solving benefit cliffs really just means having earned=>net income strictly increasing with the marginal rate reasonable, say at least 30 cents more net income per earned income. Under that constraint, you could have ranged where net income grows slower until you hit some higher dollar amount of earnings, but imo that should also not be desirable.
I mostly agree. However that's all a gross simplification, because there are plenty of taxes and benefits that aren't just a function of income.
Eg property taxes or capital gains taxes don't depend on your income at all.
You jest, but as an unemployed student I was approved for $6/mo of SNAP.
Like... for what possible purpose would the calculation even go that low? Just deny the application instead of wasting everyone's time and resources. I have no idea how long they put $6 into the account. I never bothered to look.
That can still have work disincentives; anywhere the magnitude of slope of the benefits is close to (or steeper than) the slope of the income as it phases out, then working more can get you no gain (or lose you money).
Continuously differentiable doesn't mean your SNAP check couldn't go to zero.
If you continue with the idea of transfers, which is, in effect, the current government buying off parts of its constituents, then "democracy", whatever has remained of it in the West, will die for good. What happens if I receive money from the Government but in the same time I'm also actively opposed to said Government's actions? Will I be allowed to speak against the Government that is, as a matter of fact, paying me? Will I have second thoughts of doing it? Will the Government cut off aid to me if I'm too vocal against said Government's actions?
All this to say that all we're doing is turning most of our countries' citizens into de facto slaves, people with no political free-will and who are well-aware that if they were to speak out against the powers that be they risk destitution.
> What happens if I receive money from the Government but in the same time I'm also actively opposed to said Government's actions?
Nothing? That's how it's worked in literally all functioning democracies. The purpose of any government, democratic or not, is to benefit its constituents. If it doesn't do that, we have a moral obligation to destroy the tyrants. Those benefits range in their tangible value, from hard to quantify things, like establishing public expectations of behavior (laws), to easy to quantify (subsidies like wellfare, farming subsidies, etc).
I'm truly baffled by your take that seems to insist that helping the needy somehow makes you moreso a slave to the government than the whole monopoly on legitimate use of force thing.
You are mixing up lots of different ideas.
You can have net transfers to the poor without turning most of your country's into net recipients.
I also don't understand why you assume that people who are net recipients would stop complaining or voicing their opinion? That's not at all what happens in practice.
You're turning the "poors" into slaves, into slaves to the Government that is keeping them (the "poors") on the Government's payroll. I'm not "mixing" anything, so if we can please leave that condescending tone behind that would be best.
> who are net recipients would stop complaining or voicing their opinion
Why? You're asking why the "poors" will have second thoughts about openly criticising the hand that, literally, feeds them?
> Why? You're asking why the "poors" will have second thoughts about openly criticising the hand that, literally, feeds them?
No, I'm not asking why the poor would stop complaining. I am pointing out that empirically we observe that people who receive government largess don't shut up! (And that's true for all kinds of government largess, eg also for subsidies for rich people or companies.)
No, the "why" question I am asking is: why do you think that recipients of government handouts would shut up, when in the real world they haven't done so?
> You're turning the "poors" into slaves, into slaves to the Government that is keeping them (the "poors") on the Government's payroll.
Would you say the same about eg car drivers, if the government provides roads free of charge to the user? Or about anyone who benefits from national defense? Or are in-kind benefits excluded from your calculus? In that case, would giving poor people food and clothing and shelter instead of money mean they are no longer 'slaves' by your definition?
(For comparison: real-world, actual slaves like in the American South were usually provided with in-kind benefits to keep them alive. Money rarely changed hands, partially because it leads to autonomy.)
I remember reading this book called 'The Losers' (https://www.goodreads.com/book/show/2114133.The_Losers) about a privileged man who has a car accident, becomes disabled and comes to rely on government support. The book looks at the lives of the working poor and actually poor, who rely on welfare cheques and other subsidies and highlights the social and psychological impacts of these systems of support. It was very disempowering and psychologically enslaving for the people living on these systems of support.
I know it's probably not intentional but I believe welfare in the US absolutely is rife with negative outcomes and negative incentives for people receiving support, it doesn't uplift and enable success, it keeps people trapped in poverty and a mindset of helplessness.
I come from Australia where the social welfare system has similarly degraded (Though not as bad as the US), and there are increasingly more dehumanizing aspects in engaging with the system just to receive a below-subsistence amount.
This article highlights one aspect of such disincentives, but I believe the problem is deeper and more systemic.
>probably not intentional
All the current results were foretold by people screeching warnings about them 50+yr ago.
> deeper and more systemic.
Nobody's budget ever got bigger or headcount grew or government contract got more lucrative because people got off welfare.
What "current results" are you referring to? No, people 50+ years ago weren't arguing that cliffs can lead to disincentives, they were arguing that the whole system is "socialism" and bad - something that has been repeatedly disproven.
There are few things more evil in our society than the breed of conservative that will talk about how their family needed social welfare growing up to survive, how it worked and they did survive, but how "ashamed" they feel so they thing we should tear everything down and remove the ladder now that they've climbed it.
> What "current results" are you referring to? No, people 50+ years ago weren't arguing that cliffs can lead to disincentives, they were arguing that the whole system is "socialism" and bad - something that has been repeatedly disproven.
In fact, we have disincentives like that because they were arguing that having a flat benefit for everyone would be socialism.
If you don't reduce benefit with income level, these disincentives vanishes and that's how all post-war systems worked in Europe (can't talk about the US) before the neoliberal crew started dismantling everything in the name of “reducing public spendings” for greater economic efficiency.
A flat benefit for everyone that doesn't reduce with income level would be universal basic income, which has many supporters in theory, but has never been implemented in practice so far, not even in the most socialist countries of the 20th century...
No it's not. Not all benefit is “income” and not all such income is universal. And it also has nothing to do with socialism (socialism is about forbidding the private property of the means of production! Please stop calling every kind of public intervention “socialism”, that's as ridiculous as calling all Republicans “fascists”).
For the non-income version see countries with free schools or free hospital, and for an example of an income benefit see the French Allocation familiales, which until 2015 were given to every family with 2 child or more no matter the parents income.
There were plenty of such systems, and some of them still exist (AFAIK the US social security is one of those, you don't lose access to the benefits even if you're rich)
Ok, those are valid examples (also, how about free roads for everyone? Everyone seems to take that for granted and wouldn't dream about calling it "socialist"), but in your original post you wrote about "a flat benefit for everyone" that doesn't reduce with income level, and the examples you gave are either non-income or not for everyone (e.g. not for families with less than two children, not for people who didn't pay social security taxes for at least 10 years etc.).
> Ok, those are valid examples (also, how about free roads for everyone? Everyone seems to take that for granted and wouldn't dream about calling it "socialist")
This exactly.
> but in your original post you wrote about "a flat benefit for everyone" that doesn't reduce with income level
Yeah, my writing was confusing. By “for everyone” I meant “no matter the income”, not that we should give children's allowance to single adults. Just that we stop index these things on income. By the way I also think we should give more in nature (“the medical operation is free”), and less in cash, but that's independent.
Every employee is off welfare. Employment is very lucrative.
That's not true for the US, because minimum wage is so low you can be working full time and still be below the poverty line. The poverty line is not minimum wage, it's the amount it takes to afford to live.
Nobody in the United States makes minimum wage.
that's true. lots of people make tipped minimum wage which is way lower
The tips make up for it.
We all know that person on the left that struggles with reasoning that involves economic or statistical intuition, but has extremely strong instincts of right and wrong, and is quick to outrage and moral certainty, and low in curiosity.
Their thinking is that poor people are poor, which is bad. So let's check if they're poor, and give them money so they're not poor anymore, which is good. That feels right. Let's do that.
Negative income tax? But that gives rich people money too! Giving rich people money is bad because they're rich already. QED.
I haved lived the majority of my life in working class communities (as an electrician). Despite sporadic eligibility, I've never applied for the benefits that many of my near poor neighbors receive (I am a simple homebody, with zero dependents).
>negative incentives for people receiving support, it doesn't uplift and enable success, it keeps people trapped in poverty and a mindset of helplessness.
For the majority of my recipient neighbors, I would disagree: [single] parent households simply are too expensive to operate without temporary community support.
Conversely, I have a few childless neighbors that simply ride out "disability" payments while working cash jobs part-time, typically along the lines of handyman and/or dealer. This bothers me.
Few of my neighbors are incentivized to work harder (at least on paper), out of fear of losing healthcare/housing/dining benefits.
Several of my wealthier clients had PPP loans "pre-emptively forgiven," and pay my neighbors cash for housework, so I know all sides are gaming this system...
----
But it just seems so obvious that single-payer healthcare and subsidized childcare would solve most of society's problems (much more simply than our current failures of welfare). These are the legitimate grievances of my working class neighborhood.
The decision to implement benefit cliffs is absolutely intentional, because income requirements that cause people to fall of medicaid or SNAP completely are sharp, and maybe 10 % of the population rely on those. Obamacare subsidies are phased out gradually, because half the country relies on Obamacare, and if there were issues around Obamacare, that would have repercussions at the ballot box.
It serves to have an underclass that politicians can dump on, it seems.
> because income requirements that cause people to fall of medicaid or SNAP completely are sharp
How often do pay increases perfectly keep someone in the gap? Presumably some of them will be large enough, through changes of jobs for example, that the family would completely jump that gap.
> because income requirements that cause people to fall of medicaid or SNAP completely are sharp
Why would it? This is perhaps intentional as well. Only allow the program to benefit half the country. I'm sure you can predict how that political split occurs and insulates politicians from the ballot box.
> It serves to have an underclass that politicians can dump on, it seems.
It helps keeps wages suppressed. Politicians want money. They don't care about "dumping" on you, they'll make any excuse they need to keep the money coming in.
Maybe it's just incompetence, bureaucratic morass etc but it really does feel like the system was designed to fail, and trap us into this false choice of a broken welfare system vs. no welfare at all.
UBI and/or UBS (universal basic services) would be so much better but there was a sustained propaganda campaign to tell people that free things are communism and therefore bad. Now Western countries are becoming ungovernable due to regulatory capture, tax evasion and industrial-scale manipulation of opinion by the elites, so fixing these problems within the current democratic system is an extremely uphill battle. At least Mamdani's election gives us some hope in the US, but there's only so much one city or even one country can do on its own without worldwide changes.
There is no propaganda campaign needed to tell people that free things are bad. Nobody likes a freeloader. Western nations are ungovernable because they have universal suffrage, not because of some conspiracy. The fact is that a sizeable majority of people just don't have the intelligence to wield the political power given to them. A quick look at our present government is all that you need to tell that we are ruled by the stupidity of the common man, not some shadowy billionaires.
>I know it's probably not intentional but I believe welfare in the US absolutely is rife with negative outcomes and negative incentives for people receiving support, it doesn't uplift and enable success, it keeps people trapped in poverty and a mindset of helplessness.
That's the best way to ensure their vote in the next election for the welfare party.
I used to think the welfare system had a few bad apples.
Later, while working for a charity, I realized the truth.
Literally no one is immune to the character-destroying nature of entitlement programs.
> Literally no one is immune to the character-destroying nature of entitlement programs.
I personally know people who appear 'immune'. I find the issue is trauma, not 'character-destroying' - the uncertainty; the demoralizing nature; the experience living continually on a precipice, and seeing your kids, other dependants, and loved ones living that way. People are in a continual state of survival - of fight or flight, not of growth and health. Over a long term, that will injure anyone.
You can see the privileged atmosphere of HN in the comments, mostly from people with no contact with US welfare programs. It's like reading software development analysis from people who have no contact with that. (I have seen people on HN who do have experience, but they don't seem to be commenting.)
Destroying the character of those administering the programs?
How does an executive such as yourself find empathy and compassion for people who did not simply lift themselves up by their bootstraps?
FWIW, charity and voluntary assistance differ from legal entitlements.
A considerable part of this is the fact that in a society where utilizing these programs is stigmatized to the degree that the USA does, people who see themselves as honest tend to avoid utilizing them.
And even those who are less than honest, but have a sense of propriety, would understand that the correct, culturally approved time to engage in these activities is AFTER one acquires a significant amount of wealth, when entitlements are knighted to become "economic incentives".
> entitlements are knighted to become "economic incentives"
I have no patience for corporate welfare and bailouts.
I'm sure you don't. But culturally, the things you are permitted to have influence over are the non-corporate welfare and bailouts.
The culture is that you get to speak against both, but only act against one.
Were you somehow exposed to a random sampling of welfare recipients through your work?
If no, how did you account for this sampling bias as you came to form your beliefs?
> In practice, however, several of the programs that seem to offer the most generous benefits are severely underfunded, so relatively few families are actually able to obtain them. For example, according to congressional testimony from the Center on Budget and Policy Priorities, 68 percent of poor families with children received Aid to Families with Dependent Children in 1996. By 2015, after the welfare reforms of the Clinton era, benefits from TANF, which replaced AFDC, reached just 23 percent of poor families with children, according to the same source. Similarly, just 8 to 12 percent of eligible families receive child care benefits from the CCDF, and just 24 percent of those eligible receive Section 8 housing vouchers.
This is complete insanity.
This doesn't surprise me at all. On top of lack of funding, you have:
1. Benefits don't come into effect fast enough to matter for emergencies. Even with expedited processing you can have to wait a week for food.
2. The bureaucratic requirements aren't obvious if you're new to the system. How many people know that "expedited" processing exists? How many people know that they qualify?
3. The bureaucratic requirements aren't exactly painless. It's been awhile, but I remember one was as simple as "show up at our office for <xyz> reason." That's easy if you have a car or money or friends or whatever, but a 10-mile hike each way in -20F weather is never fun, and I've gotten in trouble more than once when hyper-local weather patterns (e.g., too close to a body of water with a long straight stretch) made the situation much more dangerous than I was equipped for.
And so on. The system is (supposedly) easy to use if you know its ins and outs, but if you're struggling and never anticipated being in that situation then you're mostly just fucked.
> and just 24 percent of those eligible receive Section 8 housing vouchers
There are definitely problems with the distribution of these programs, but it’s also a mistake to think that everyone eligible for every program wants to collect every benefit. The housing vouchers are a good example of something that isn’t applicable to a lot of people who, for example, are living with relatives. I have some people in my extended family who fit this description right now. They have housing in a beneficial family situation, so any housing benefits they qualify for aren’t relevant to their current situation.
Not to minimize the problems, but the number of people who should be or want to be receiving every benefit isn’t 100% minus the number of people currently receiving it
I always felt simplifying all this, it would probably be possible to consolidate and offer proper health care, and a real welfare, along with a supplemental program for those inapt to work, with it all costing less than the mountain of piled complexity and paper work that we have today.
The system in its current insane state serves the purposes of multiple groups of people:
1. The bureaucrats administering the system because the more complex and insan the system is, the more bureaucrats you need.
2. The politicians who can promise $X of benefits to N people while knowing all along that due to the complexity of the system the actual cost of the program will be well under X*N due to failure to claim the benefits.
3. Companies that can now hire workers for less than their cost of living because they know they can just make it up out of government benefits.
And it hurts, of course, the poor people who depend on these programs. But that doesn't matter politically, because these people are mostly not smart enough to even figure out how they are being screwed. Whereas the people in 1-3 above are absolutely smart enough to figure out how they benefit from the current system and they vote and donate accordingly.
3. has always bothered me - if you run a McDonalds, you have to pay market price for the building, kitchen equipment, both when buying and maintaining it. If you don't pay enough to maintain the fridge, it won't unionize - it will break down.
The idea proposed by these 'free market types', that somehow people working there below sustenance salaries 'deserve it' - that the cost of labor needs to be essentially subsidized just doesn't make sense to me.
Practice what you preach - either pay the wages people need to get by, or close down.
Agreed, 3 is the one that consistently annoys me in arguments I see across the internet. The reason why our welfare programs exist and are in such a disasterous place is partially because they are literal corporate subsidies so they can buy workers at a premium. If you were to kick out the ladder and fully remove the minimum wage and remove our welfare systems it would outright collapse the economy because A) working would be a full net negative in income generation and B) corporations would crash and burn realizing that they can no longer hire workers at their subsidized price.
The sane way to approach a system like this is just UBI + socialized healthcare but I think we'll approach labor collapse before we see movement in this direction by out of touch bureaucrats.
I wouldn't go so far - I would just raise the minimum wage to a level where a person can actually make ends meet.
Sure some folks would be fired, and their jobs automated, but they could be redirected towards better paying opportunities.
If all else fails, then the money saved by such approaches could be used for welfare. It's just putting things from one pocket into the other for the government.
As things stand, these corporate subsidies are just for enshrining inefficiencies in the system.
So UBI + universal healthcare? Sign me up!
I cannot express the extent to which that picture at the top of the article with a baby “working” at a laptop upsets me.
I can see the beginnings of a hand of an adult at the bottom, but there is something so on the nose about such an image that it prompted a visceral response.
https://www.niskanencenter.org/wp-content/uploads/2021/01/wo...
On the website there is cropping and it might be displaying differently on different browsers. I was able to recognize it as an adult at the computer holding a baby on their lap. I do not see any intent to show a baby working.
I think it’s amusing. That was probably the expected response.
It looks like in practice the most generous of these programs are not accessible to most working poor, so the charts here are more theoretical than practical. It also doesn't address income tax-free earnings (traditional 401k and IRA) - it seems like those generally don't count against your eligibility for programs and could shelter ~25k or more for the self-employed. Not that I imagine most people actually near poverty are maxing out their retirement accounts, even if it theoretically costs them nothing or even gains them value.
I usually get downvoted on any of my commentary on poverty or welfare, despite my lived and continued experience in it, but I'll punt again.
My family, from grandparents downwards (siblings, aunts, uncles, cousins, across 3 family lines) have all relied on government handouts for a majority of their lives, and had their character destroyed by the system. All rely on a meager amount of welfare to stay alive, not healthy, not productive. Just kicking along and in alcohol and drugs just to feel something. Most have died of some form of cancer from their vices.
I joke (with a semi serious tone) that my drug-induced psychosis was the best thing for me because it broke me out of the system (tied in with a move interstate) - I lost all my old friends, family was quasi-cautious of me, and I was in a new town and had to completely rebuild myself. I had a mental health nurse nurture me "back on my feet" within 6 months and it was the first time I was actually on my feet since birth.
Governments and society, in the large part, think "something is better than nothing" - but I think it's actually the opposite. Maintaining a status quo is what makes people "comfortable in misery" and not have any way out. Most can't even get a job, because the job (which might be temporary) knocks out the welfare (which is permanent, as long as they don't get a job).
I would love to see modelling or examples on my theory of the way out of this mess: reinvest the welfare system as mental health services, only give welfare to those who are in the mental health service. Incentivise for how many people transition out of the welfare system. keep it at the same dollar amount, just reallocate that money to the people who really need it.
Some cases are almost too tragic to mention and there's no positive outcome; others have "learned" behavior and can come out of it with some help (or sometimes just some positive messaging)
I also largely blame a lot of societal/government programming. I call it "poverty programming" -- the idea that people cannot do ANYTHING without help. You absolutely will not make it on your own, you NEED support you NEED this label, medication, service, benefit.
I strive to message the opposite: you can do it, release the chains. the world is not that scary. embrace the chaos, there is a lovely world out there ready to be explored.
I appreciate your willingness to keep trying to communicate your experiences. It's obviously a huge spectrum of possible lived experiences and incredibly hard to legislate in a way that does the best for everyone. Do you think having a trained case worker evaluate each person's circumstances and coming up with a pathway to success makes some sense?
I think it totally could for people in just the right position and timing, but I also feel like for many it would be advice and help that could end up unreceived.
How would that be implemented on an individual basis? Force drug-induced psychosis (obviously not)? Just kick people off of support? That will have obvious, very bad downsides. And then we'll have a bigger problem with homelessness (which will get the same response).
While I don't downplay your experience; do you know of research that talks about it? The idea that people need incentives is an old one - Bill Clinton's welfare reform talked about 'a hand up, not a hand out', etc. I also remember research, though I don't know how current, that most people in welfare programs are there temporarily - they are in and out, not there on a long-term basis.
What about people who aren't going to make it on their own? Do we just let them die? A similar problem is people addicted to drugs: There is no reliable solution; rehab only works for some, not always permanently, and forcing people into it is almost certain failure (besides being a serious violation of their freedom).
There is research and experience saying 'housing first' - providing housing, which provides stability and much better access to services - helps significantly, but that may be focused on people lacking shelter.
P.S. I hope you drop the whining about downvoting. It's against guidelines and is tactical victimhood.
I guess it really is too broad of a sector to think of any clear cut solutions. I'll tap out, but my main shtick is the poverty programming but. I think k that perpetuates.
I would agree with housing first. Definitely something that goes a long way. But it's also not clear cut (IE: too many recovering drug addicts in the same neighbourhood will bring each other down..)
While some people might only be on welfare temporarily, others are long term. And removing it drops the "floor" for everyone at once. Having seen death and evil that happens in poor.. families, societies, etc.. I don't mind the idea of letting certain elements die.
I'll keep the tactical victim hood, it's the only way I get positive responses that takes me on good faith. Otherwise I'm just a "corporate bootlicker who doesn't know anything" or "privileged male(?) with typical survivorship bias"-- I gotta get that out of the way first, this is my learned behaviour. I'm counter-programmed. Hate the game not the player.
> I don't mind the idea of letting certain elements die.
> takes me on good faith
The first overwhelmingly rules out the second. It just makes you a psychopath (if true, which I doubt) or very much not in good faith.
Maybe some people would be ok with letting you or me die - would that be ok? Would it be clever and cool to post on HN?
You don't need to play the victim to identify yourself. One thing victims do, however, is have no compassion for others because - they're a victim!
Ego death is necessary. I think that is perhaps that is the essence.
(the rest of it is projection and labelling so I'll try not to respond)
having been out of work before and going on benefits the cliffs are hilariously badly calculated, not even sure how they are determined. for someone who knows their potentially salary far outweighs the reduced subsidies it can be a needed life boat. for people at the cutoff it incentivises you to stay under it.
The real issue isn’t just the cliffs themselves — it’s that our welfare system is a set of disconnected programs that interact like poorly designed APIs. For people with zero margin for error, even a small income change can trigger huge losses in healthcare, childcare, or housing.
We ended up with a system that’s expensive, complicated, and psychologically brutal — and still fails to do what it was designed to do.
Almost as if it was designed this way on purpose