4 years ago: The workers in the vineyard

Feb. 24, 2009, on this blog: The workers in the vineyard

These are warped, stunted, soulless creatures who lie awake at night worrying that somehow, somewhere, some poor person might be catching a break that they didn’t 100-percent deserve. Some poor family might be getting extra food stamps. Some poor mother might be using WIC to get the good cheese.

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  • AnonymousSam

    Communes, perhaps, where people are encouraged to work together and their efforts channel into a business through which they can make a little extra. Community farms where a certain amount of produce is sold on the market, contracts to have community chefs who are employed by restaurants, etc… that’s all I can think of.

    Getting to a point where I’m in desperate need of something like that myself. My living situation is degenerating quickly. There’s a non-trivial chance that I’ll be homeless before the end of the year. Hard not to want to shake everyone and scream “Try something! Anything!

  • Gotchaye

    To make sure we’re clear, I’m talking about giving $20k to everyone no strings attached, not saying that every job has to pay at least $20k.  So this is all in addition to whatever else.

    People with special needs should get more, and that’s a good reason to have programs other than a guaranteed income, such as some provision for universal health care, and something has to be done about the cost of education, but $20k per person /is/ enough to live on, if not very comfortably, for people who don’t have some unusual sort of expense (which is hopefully addressed by universal health care).  I do think that the guardians of minors should get guaranteed income on their behalf, and perhaps people should be able to get something like a special $10k allowance if they have particular disabilities or medical conditions that make working harder.  But I’m hopeful that in general this would take pressure off of people currently working 50+ hours a week for relatively low wages and create more demand for part-time positions while also allowing many people to really choose to work part-time, lowering unemployment as well as median hours worked.

  • Sgt. Pepper’s Bleeding Heart

    $15.96 per hour for an adult with annual and sick leave entitlements.

  • Sgt. Pepper’s Bleeding Heart

    Why not?

    I earn $127,000. You guys are suggesting that the government gives me $50,000 as a cash handout then dramatically increases taxes to get back that plus more to distribute to other people. That’s ridiculously inefficient! How about the government gives me no money as a cash handout and the efficiency that results from not hading out then taking back gigantic sums of money to rich people like me can instead me spent directly on people who actually need it.

    I think you guys probably don’t understand the fiscal environment that my country is in, which informs my opinion on these matters. I’m not talking about funding for things like education, healthcare and infrastructure. I support public funding of high quality, universally available healthcare and education. What I don’t support is the public purse giving cash for “general cost of living” to people who don’t really need it, because there are much better ways to spend it than on middle class people with a lack of perspective. The Australian middle class is doing very well but we’ve conned ourselves into beliving that we struggle to make ends meet, and politicians of all stripes pander to this misbelief. The end result is that the financial concerns of the largest and most politically powerful group are met at the expense of the greater needs of people living in actual poverty.

    For example, in Australia we have one of the most generous family payment systems in the world. No-strings-attached cash is given to people with children–not just poor and working class, but middle class and, until recently, very wealthy people. We also have very large subsidies for child rearing-related expenses that are either not means tested at all, or have a very generous income cap (e.g. $150,000 p.a.) Similarly, we have some quite generous payments and subsidies to people aged over 65–not just the poor or nearly-poor, but people who are quite comfortable thanks very much. These commitments combined with our demographic trajectory have created a structural budget deficit that means expenditure on people who really badly need it but aren’t politically appealing (like, say, poor people under 65 without children who really do struggle with the basic cost of living). It’s inefficient, ineffective and unjust.

    Short version: I earn plenty of money and should not be receiving government subsidies to my cost of living beyond universal access to healthcare, education, public transport etc. Giving me money then taking it back is hugely inefficient and unnecessary, when the option exists of just not giving me money in the first place.

  • AnonymousSam

    Not bad considering the AUD is only ≈two cents less than the USD. $15.96 AUD would be $16.31 USD, or about 225% the US minimum wage.

    Clearly business must suck in your country, what with all the greedy workers and their thieving unions. It’s a wonder you pay for that national health care! :p

  • Sgt. Pepper’s Bleeding Heart

    I believe once you take purchasing power into account it works out as something like $US14.

  • EllieMurasaki

    Which is still better pay than me.

  •  http://en.wikipedia.org/wiki/Negative_income_tax

  • AnonymousSam

    ^ What Ellie said. This is the country which tolerates a “job creator” who was paying me the equivalent of about $2.08 an hour for a job that was anything but trivial — and they were hot and eager to take that job away from anyone who didn’t like the terms of working there (12 hour days, no benefits, no accomodations), as they proved by firing my manager when his health went into the toilet and he asked for the network access to perform his duties from home.

  • EllieMurasaki

    Point of clarity: I make 180% of minimum wage. And I have benefits, which a lot of people at my pay rate in the private sector don’t.

  • AnonymousSam

    Yeah, it’s sad when people can be making well above minimum wage and be struggling… and then corporations are more than happy to hand people significantly less than minimum wage.

    (Icing on the cake? Shortly before he was fired, my manager told me that the company wanted to try an experiment where they would create a new pay grade for people who were particularly productive. I don’t know if they ever actually did, but apparently it would have made as much as twice the normal pay. I do know that apparently they were planning to accomplish this by firing employees and having those who entered the pay grade do the job of two people.)

  • Gotchaye

    But postage just doesn’t cost that much.  What’s so inefficient about taxing you $100k and mailing you a check for $50k instead of taxing you $50k?  And it actually does save on the administrative burden; there /has/ to be a system for determining and auditing a variable tax regardless, so why complicate things by requiring the determination of a variable benefit instead of just rolling something else into the determination of the tax?

    I’d still appreciate your thoughts on my post a ways back about marginal tax rates.  Again, that’s what matters here – we care much more about the function that maps income before taxes and benefits to income after taxes and benefits than we do about whether or not some benefits are cancelled out by taxes.  It’s these effective marginal rates that matter for incentives and all of that stuff that economists go on about.  The total tax burden is irrelevant as long as benefits and taxes are cancelling out rather than being redistributed.

    The “advantage” of means-tested vs universal benefits is simply that phasing them out by some finite income puts higher marginal taxes on the middle and upper middle class and lower marginal taxes on the rich.  I don’t have an in-principle objection to providing some benefit via a refundable tax credit such that you only actually receive cash if you’re paying less than the benefit in tax, while if you’re paying lots of tax you merely subtract some amount from what you owe.  The problem is when you phase out that tax credit by a finite income.

  • Sgt. Pepper’s Bleeding Heart

    Mail me a cheque? When did it become 1985?

  • Gotchaye

    Right.  Having an automated system send your bank some electrons is even cheaper.

  • Launcifer

    About the time the Delorean hit eighty-eight miles per hour?

    In all seriousness – and this is a general question aimed at everyone – how would other areas of public spending be affected by such a scheme as people are theorising here? I’ve been following this all day with some interest (although most of it’s kind of going over my head, if I’m honest), but that one’s still kind of bugging me. Would things get ring-fenced or would tax rates vary depending upon projected spending on things like the transport system and whatnot?

    ‘Course, if this is something that’s been mentioned already and it really did sail right past my ear, then please let me know ;).

  • Gotchaye

    As long as we’re supposing the sort of political environment where a guaranteed income at a significant fraction of the median wage income is possible, there aren’t any tradeoffs of that sort you seem to be talking about – governments don’t require taxes in order to spend.  They should spend on things they want more of or which have expected returns greater than expected inflation, and they should tax things they want less of, plus they should levy the least harmful set of taxes consistent with controlling inflation and debt and whatnot.  But the debt constraint is pretty loose as long as significant economic growth over long periods of time is reasonably certain.

    Government spending can instead be financed by borrowing, and there’s surprisingly little evidence that borrowing lots and lots of money in a country’s own currency is a real problem.  Governments with their own currency also have the option of printing, although this is generally thought to be more inflationary than borrowing except perhaps in situations like the one the US is in now.  Countries without their own currency, like EU members, have more to worry about, but only to the extent that there’s a fear that the ECB and other members would allow them to default (so Germany and France are pretty safe).

    There would be tradeoffs between a guaranteed income and certain other government spending, but only because the goal of a guaranteed income is very similar to the goal of lots of other programs.  If it is not possible for someone to make less than some income, spending meant to help people making less than that income is obsolete.

  • Since I was the one who brought this whole thing up I think it would be unfair for me not to explain in greater detail what I was talking about.  I did make a post about it on my blog, but I don’t think that really addresses what people in the thread are interested in.

    I was not talking about just sending people money and counting on them to know what to do with it (Republicans and libertarians, this is the part where you start hating me with a passion.)  I’m on food stamps, it’s a good system.  Here is your food money, even if you’re the most irresponsible person in the world we know that you have food money because this is money that can only be used for food.  What I am talking about involves giving food stamps to everyone.

    There are multiple reasons for this.  One is that the way aid is distributed puts all the onus on the person who is struggling.  To get aid you need to:
    1) Know that there is aid.
    2) Know that you qualify.
    3) Do all the work of applying.
    4) Appeal if the aid people fuck up and deny you aid when you should have gotten it.
    5) So forth.

    Sometimes getting aid works very well.  Sometimes it’s something that you have to fight for.  And what should be immediately obvious from the above is that not everyone who needs aid gets it.

    If you give foodstamps to everyone then you know that everyone who needs foodstamps is getting them, something that is not true now.  You don’t force people who are already struggling to have another stressful job in their life (actually getting the aid), something that is not true now.  You make it so that there is no need for a large bureaucracy devoted to determining who really “deserves” food stamps and who doesn’t. At most you need something to make sure everyone gets a card, everyone gets only one card, and should the card be lost or stolen it gets replaced.  Something much smaller and less costly than what exists now.  Also something much less likely to mistakenly fail to give foodstamps to those who currently qualify.  Are you (in this case) American?  Then you get a card.  Very simple.

    It also eliminates thresholds.  Now I’ve never met anyone who intentionally earned less money in order to qualify for aid.  What I have met is people who worked just a little too much to qualify for aid and thus got completely screwed over.  What I mentioned earlier about someone making two dollars too much to qualify for aid and so ending up much poorer than if he’d earned two dollars less in that pay period is completely true.  Two dollars.  The rich in the US are not punished for working harder, the more they earn the more they take home.  Period.  The poor are punished for working harder because the aid cuts out.  (Though in that case it wasn’t food stamps, but still.)

    It also eliminates the argument from envy, “How come they get shiny thing and I don’t,” because you do get shiny thing.  And you can use the foodstamps to pay for the first part of your food costs and then use your own money to pay the rest.  Or not, if you’ve already got enough to have it covered I don’t really care what you do.  (And I’d probably put some cap on what you can have in your account, for example if you’ve got 6 months worth of food stamp money… what are the odds anyone is going to need six months worth in one month?  So I wouldn’t start refilling the account till it dropped below that.)

    So not money for food for everyone, foodstamps for everyone.  Similarly giving people a lump sum and counting on them to know they should use X amount of it to buy health insurance seems to make a hell of a lot less sense then just providing health insurance to everyone.  (Otherwise known as single payer.)  And if people don’t particularly like that if they have the money they can buy some commercial health insurance with their own money but regardless they get government health insurance as a result of being in the country.

    Similar things with everything.  I don’t want the government paying people some lump sum and saying, “Do with it as you please,” because that doesn’t work.

    Consider fire departments.  We do not collect enough taxes so that everyone can afford to pay a private fire department and then pay everyone that money so they can get the fire department of their choice.  First off, what if they decide to use the money on something else?  Then when their house burns down there will be nobody to put it out and even if the fire doesn’t spread to other buildings a burning building can do serious damage to the buildings around it.  (A building near my home recently burned, the fire department was there to contain the fire*, but they couldn’t contain the heat.  The siding on the buildings on either side of it melted and thus needed to be replaced.)  Second, we’ve tried private fire departments.  They don’t work.  More houses burn down, more fires are allowed to spread from house to house, sometimes they end up getting in each other’s way so the fire department someone paid for can’t actually get to them to save the house.

    Fire departments, being a necessity are something that we (usually) provide to everyone rather than giving each person cash with which to pay for their own fire safety.

    What I propose is to give everyone, regardless of their means, food aid, housing aid, clothing aid, medical insurance, and so forth.  Everyone gets enough aid to live on.

    It makes sure that everyone who needs aid gets it whether they have the spoons to fight for it or not.  (Some of the hoops that I’m being made to jump through seem like telling someone in a wheelchair, “Oh, getting help is easy, you just have to walk up those stairs and ask for it.  No, of course there isn’t an elevator.  Why do you ask?”)  Whether they know the aid exists or not.

    It makes sure that there are no threshold points where working harder screws you over.  It eliminates the principle force behind the constant unending argument from envy, “How come poor people get help?  I work hard and I don’t get help.”

    And for those who don’t need aid it just means that they can use up their aid as the first part of paying for whatever the aid is for.  Yes, they spend more on food than the food aid covers, but they can use up all the foodstamps first before they pay with their own money.

    That’s my proposal, and yes, it would cost a lot of money.  I favor a much more progressive tax code which I believe would do a lot to deal with that.  I favor funding the IRS enough that they can actually hunt down those who are tax cheats no matter how crafty said people may be.**  I favor taxing capital gains at the same damn rate as money actually, you know, earned via work.  (Or, at the higher levels, at a higher rate.  If someone makes 2 billion dollars by actually doing 2 billion dollars worth of work -has that ever happened?- I have no problem with them paying less in taxes than someone who made 2 billion dollars in capital gains.  Which has happened.)

    I note the savings that can be had by no longer having to determine who qualifies for aid.  I note the savings that single payer can bring.  I note that regardless of how much it costs this is a moral issue.  In a country this rich no one should go hungry.  In a country this rich no one should be homeless except by choice (some people do choose to be homeless and I have nothing against them) in a country this rich no one should have to walk through snow in shoes full of holes or be stuck in threadbare clothing because they can’t afford to pay for new clothes.  In a country this rich no one should be without access to medical care.  So on, so forth.

    The only way to make sure that everyone who needs aid gets it is to give it to everyone or turn the government into Big Brother so that they know all of the personal details of all of the citizens that they might give aid to.  That’s also the only way to make sure that there are no thresholds where earning more means keeping less.  That’s also, I believe, the best response to the argument from envy that lasts longer than the one person you happen to be talking to.

    Also, I note, that if done right it would actually eliminate the need for a minimum wage. Businesses would, at least, like that part.  Right now if you’re on minimum wage you probably make well under a dollar an hour after necessities are paid for, if the necessities were taken care of automatically then a dollar an hour would be a step up.  A rather big one in some cases.

    (Though I wouldn’t advocate phasing out the minimum wage until one was damn sure that the aid provided was enough to take care of necessities for everyone.)

    It may be apparent that I’m talking about taxing other people.  I am not a tax payer.  I would like to be a tax payer but I need medical help before I can get a job.  I tried to get medical help through the government but they fucked up (oh, good God did they fuck up) and when the opportunity to appeal their decision came up, even though an appeal probably would have succeeded I didn’t have it in me to go through the motions.  (Short version of what I would have liked to be able to say: Of course you had insufficient information, asshole, you didn’t contact either of the doctors I told you to contact.)

    Right now I’m getting medical help through University (I could have graduated with two majors without getting into any student debt, now I’m getting into student debt just so I can get access to a psychologist and a psychiatrist.  The medication I’m basically getting someone who can’t really afford it and would like to retire to pay for, for which I am very grateful (especially since she took it on herself to do it without me asking her to).)  And hopefully, given time, I’ll be able to work.

    If I had been given medical help through the government a decade ago I’d likely be a taxpayer by now.  Thus making them money rather than costing them money.

    But something else needs to be said.  In the USA, when discussing income tax, after all the loopholes and credits and deductions are stripped away, not to mention tax havens and whatnot, and not talking about capital gains because it’s on a different system, everybody pays the same.

    That’s why the top marginal tax rate is the top marginal tax rate.  The only reason that rich people appear to pay higher rates than the poor and middle class (again, leaving out capital gains, deductions, credits, loopholes, and cheating) is that the tax is by percent.

    This year every single single person (the double “single” is not a mistake) in the USA, from the richest to the poorest, will (before credits and deductions and not counting capital gains and all that stuff I said before) have to pay 39.6% on every dollar they earned over $400,000.  It’s just that for those of us who didn’t earn any money in that range, 39.6% of zero happens to be zero.

    Everybody pays the same is the model we use for income tax.  It’s a model that all sorts of exemptions and exceptions gets thrown on top of, but at its base everybody pays the same.

    The result of this is that (ignoring all that stuff I said to ignore before) it is never the case that making more money leaves you with less money at the end of the day.  That’s how everybody pays the same works.  Same treatment for everyone means no thresholds with perverse incentives.

    * They were also able to put out the fire before the building burned down, but apparently not enough to make it more cost effective to repair the building than to knock it down and build a new one.  Or maybe they did save the building but the owner thought if they had to spend all that money repairing anyway, they might as well start from scratch and get a house more to their liking.  I don’t know; I didn’t ask.  Until the house was knocked down my assumption had been that it was going to be repaired, not replaced.

    **I’m not kidding about the ten to one figure.  Right now the IRS is so underfunded that every extra dollar we give them allows them to give us an extra ten dollars in revenue.  Ideally it should be at a point where more money doesn’t get us any more revenue because they’ve already got enough money to catch all the tax evaders.  In practice people would probably demand that it stop being given additional funding when it was no longer profitable to add additional funding.  When every one dollar spent brings back one dollar there’s no problem because it’s essentially costing nothing to spend that dollar.  When every additional dollar spent brings back only $.99 then one is actually spending money that they won’t get back, and given how hated the IRS is I don’t think people would stand for actually spending money on the IRS.  (Whereas the argument, “We’re not spending money; we’re making money.  Which will cut into the debt and possibly one day lower your taxes,” has some chance of working.  Especially if one points out that we’re making money by catching criminals an bringing them to justice, law and order Republicans and all that.  The politicians may be corrupt, but I’m less convinced about the rank and file.)

  • What I propose is to give everyone, regardless of their means, food aid,
    housing aid, clothing aid, medical insurance, and so forth.  Everyone
    gets enough aid to live on.

    You may talk of this and studiously avoid calling it “handing money over to people”, but the fact remains that since this effectively equates to funding peoples’ basic needs, it fits with the theory of fungibility of money.

    The universal basic income is not in fundamentals different from your concept with the exception that instead of receiving cards debitable for food, clothing, etc, people just get a monthly stipend.

    Considering that the average single person on welfare gets around $7,000 a year, with attendant bureaucracy meaning that for BC’s case, ~300,000 recipients get funded through a $5 billion budget, and this equates to the fact that $10,000 per recipient, on average, is wasted in overhead in the welfare system…

    Well, it strongly suggests that were welfare, Unemployment Insurance, and Canada Pension all folded into a basic income scheme run on the federal level, total federal spending nationwide would about double, which is feasible if one recalls that the feature of such a system is to raise tax rates on higher income earners to compensate for the universality of the benefit.

  • You may talk of this and studiously avoid calling it “handing money over to people”, but the fact remains that since this effectively equates to funding people’s basic needs, it fits with the theory of fungibility of money.

    The reason that I distinguish it from simply handing money over to people is that handing money over to people doesn’t really work.  Instituting single payer works better than giving everyone funds and expecting them to buy health insurance with it.

    Now under single payer the money that they would otherwise have used to buy health insurance would now be freed up for them to use for whatever (provided that they would have otherwise used that money to buy health insurance) which means that from one way of looking at it’s no different from giving them that much money, but on the other side you have the fact that by instituting single payer you made sure that they got health insurance where by just handing them the money to buy insurance for themselves you didn’t make sure, which means maybe the spend the money on something else and then, when they get sick, they’ve got nothing.

    In Canada you already have single payer so maybe that example doesn’t mean much to you.  But I think what I’m talking about is different than a stipend in that the focus is on making sure that everyone’s basic needs get met rather than making sure everyone has the money to meet those needs if they manage it correctly.

    I don’t think someone’s ability, or lack thereof, to manage money well should determine whether or not they go hungry, for example.  And while someone managing money badly on food stamps might leave them going hungry to some degree (maybe they blow it all on cookies*), it’s simply not possible for it to leave them as hungry as they could be if that money hadn’t been set aside for food and only food.

    For those who would use the money well, yes, it’s indistinguishable from a stipend.  But for someone who would spend too large of a portion on getting really nice housing and not have enough left for their food and medical expenses then I think there’s a big difference there.

    And that’s the idea behind having different categories of aid.  Everyone needs food so there is food aid, everyone (or thereabouts) needs shelter so there’s housing aid, everyone needs medical insurance so there’s singe payer, everyone needs education so there’s a public education system, everyone needs fires put out so there’s a fire department, everyone needs protection from those who would break the law so there’s a police department, everyone (again, or thereabouts; in my climate: everyone) needs clothes so there’s clothing aid, and so forth.

    And I think that that compartmentalizing is better than giving people a stipend and saying, “We’ve worked out that this amount of money should be enough for you to buy food, rent/lease/buy shelter, buy medical insurance, pay for your children’s education, hire someone to put out your house should it be lit on fire, pay for someone to protect you from any criminal elements, buy clothes, and so forth.  Spend it wisely.”

    *Though that would probably get them sufficient calories so bad example.

  • Gotchaye

     I can agree that there are lots of things that it makes sense to have a dedicated system for, like health care and education, but I’m not really seeing it with food and (especially) clothing.  As long as the cash payments are made frequently, like a paycheck would  be, it’s going to be pretty hard not to have enough for food unless you’re determined to use that money for other things, and in that case selling your food allowance for cash is likely also on the table.

    It’s also just really, really hard to say “/this/ is how much you should be spending on each of food, on clothing, on shelter, etc”.  At least when it’s all lumped together a lot of the variation across individuals cancels out. What if someone wants to move in with a friend for a bit in a fairly informal arrangement while putting extra money towards some other things?  You need some bureaucracy to oversee this and arrange to reimburse the friend with some of the first person’s housing aid.  What if someone is happy wearing old t-shirts and only one pair of pants but really likes sushi?

    Plus, with housing aid in particular, universal aid probably helps nobody.  If everyone gets a coupon good for $500/mo in rent, then every landlord is going to charge $500/mo more.  The landlord knows that renters were previously willing to pay $X out of pocket in rent, after all.  The regular rent negotiation is just going to occur on top of the subsidy to landlords.  That’s a bit too strong of a statement – the aid will help to the extent that rental housing is a competitive market and landlords keep rents down in order to attract renters.  But it’s really not very competitive in most of the country.

  • Housing subsidies are an area where I’m well aware of the problem that they present, and it’s not just universal ones that present it.  The problem is here already.

    Locally I’ve been told that landlords never ask for less in rent then what they know those with rent subsidizes can afford.  So what if people without the subsidies can’t afford that much?  Unless everyone with subsidized rent has a place to stay they know that someone who can afford it is out there.  Thus that’s as low as they’re willing to go.

    I do not have a good solution to this, short of the government opening up its own competing housing and charging less in an effort to use competition to drive costs down I don’t really know what could be done, and even then as soon as the government housing filled up the private landlords could jump back to their original prices.

    Hopefully someone somewhere has a good solution, but here and now I do not.

    But that is, I might add, another reason why it’s good to keep housing separate from things like food.  If every landlord everywhere knows that everyone gets a subsidy of X, why would they say, “Well, I’ll charge X minus the cost of sufficient food”?  Much less, “Well, I’ll charge X minus the cost of everything other than housing that people need”?

    By keeping it separate you make it so the landlord saying, “I know you have X to pay,” can’t eat into the food budget or the clothing budget or the anything-but-housing budget.

    In answer to your other points, you seem to be assuming that the only thing people would be receiving are the necessities covered by the government.  That makes no sense.  Very few people are content to just survive.  And that’s what jobs are for.  To make money so that you can buy things that you want.

    At least that’s what jobs should be for, in my opinion.  Right now, for a lot of people, jobs are so that you can survive, and that’s not right.  Survival should be a basic right, not something that you have to work six jobs for.  Or even one job for.

    Everyone should be able to know that no matter what their job situation they will be able to survive.

    And that is all that I’m talking about government aid taking care of.  Survival.  Nothing more.  Survival with a not-crap standard of living, yes.  Survival with a margin of error enough that it’s not “barely survival”, but survival none the less.

    If you’re asking why can’t people have all of these nice things that don’t factor into survival, they can.  They just need to pay for them themselves.  Like they would in the absence of government aid.

    I don’t propose a society in which no one but the very rich does any work and everyone else lives happy lives of jobless comfort by leeching benefits off the very rich.  I propose a society where everyone has fundamental needs like getting enough food, getting adequate shelter, getting adequate clothing, getting adequate education, getting adequate medical care, and so forth provided for no matter what.  Whether they’re the richest person in the country or the poorest.

    But most people want more than that.  Maybe instead of a decent apartment they want a house with a white picket fence.  Maybe they want a bluray collection to rival Hollywood’s own, maybe they want a dog, maybe they want a psychic reading, or maybe (and this is something forgotten by a lot of anti social welfare advocates) they just want to feel useful: like they’re contributing something.  And for that the answer would be to get a job.

  • And, also, this is a point worth making: aside from housing your examples boil down to, “What if we give people the ability to buy X amount of something and they buy less than X?”

    Then… so what?  They got more aid than needed and were decent enough people not to try to sell the excess on the black market.  (Yes, there is a black market for government aid.  At least in the USA.)  Sounds like the system is working.

  • Gotchaye

     The problem is that it’s unfair and inefficient. 

    It’s unfair because people whose preferences line up with what the government uses to set the amount of each aid category get more use out of their aid than everyone else.  When we’ve gone beyond “barely survivable” aid, we’re making judgments about which additional comforts are valuable.  If the point is to provide everyone with some amount of preference satisfaction beyond mere survival, then you can’t guarantee that with category-specific aid unless it’s much, much more generous than is necessary to give almost everyone the desired amount of preference satisfaction.

    It’s inefficient because that aid is going to get spent regardless of whether or not the person would much rather have the same value in cash to spend on other things.  When you remove any incentive for people who don’t have the state-endorsed set of preferences to consume less of the things they don’t actually care about very much, they won’t consume less of those things. 

    If two people don’t mind living as roommates in a relatively small apartment and would much prefer to put the saved rent money towards a really nice TV and sound system and going out to restaurants more often, what you’re proposing hurts them and hurts everyone else.  It hurts them because you’re not allowing them to make that tradeoff – you’re privileging people who place a lot of value on a certain sort of housing arrangement and who don’t have particularly expensive tastes in recreation or food.  It hurts everyone else because, without the option to better satisfy other preferences by making sacrifices in housing, they won’t make those sacrifices in housing.  They’ll each just get their own place, which is only a little better as far as they’re concerned, but which costs society substantially more.  They’re taking up resources which would be much better used in other ways.  It’s just wasteful.  They want to make that tradeoff, and we should want to let them make that tradeoff.

    The whole problem is that if “we give people the ability to buy X amount of something” /and/ we make sure that they gain nothing by buying less than X of something, then they have no reason to “buy less than X”.  It’s horribly inefficient.  For a reasonably generous amount of total aid, almost everyone ends up much better off if that’s in the form of cash rather than split up into different categories of goods which different people value differently.  This isn’t a problem for “barely survivable” aid – this problem goes away if nearly everyone would spend more than the aid allowance in each category even if handed cash – but you’re talking about something substantially higher than that.

    This would still be worth it if there were some huge problem solved by breaking aid into various categories, but it’s still not really clear to me what that is.  With health care and education, sure, people are going to be really tempted not to budget for those things.  But with weekly aid payments are people really not going to budget for food?  For clothing and housing?  These aren’t things like health care where you can “save” on them for a long time with no apparent ill effects; it’s easy to tell when you would benefit by going out and buying some clothes.