Simplified welfare state

[RandBlade]

I would propose a few changes:

1: Somebody earning Minimum Wage full time should not be taxed on their income, the amounts they are earning should be what is considered the minimum reasonable so why should they be losing money through tax? Nor should there be any payroll etc taxes on the employer at (or below, eg Part Time) this statutory Minimum level.
2: Welfare payments should be capped below the amount earned through full time Minimum Wage work - the unemployed should not earn more than the full time employed.
3: The loss of welfare should be phased such that for a part-time or even full-time Minimum Wage worker, the more they earn the more they keep. Work should always pay, this may mean still having welfare payments to the full time low-paid, but if so tax should not start yet (point 1).
4: Welfare payments (and thus Minimum Wage and the start of taxation) should be sufficient so we don't have anyone in real poverty.

I would consider these 4 premises to be "fair" and reasonable.

[Hazir]

You should work on your definitions. You can't say that Minimum Wage is the minimum on which you can expect a person to live on AND that a person should get less than that minimum if he doesn't work (why bother with welfare if it doesn't allow a person the minimum necessary). Also, what is the use for a minimum wage at all in a welfare system? Welfare should be based on the needs of a person relative to that person's situation. A single able adult needs less money to live at a mimimal level than a single mother and her child on a minimal level (by the way, I am one of those people who think society should NOT let children live on that minimal level as this harms society in the long run).

You're also giving a rather rough deal to everybody who's not on the lowest rungs of the economy. Let's say a working couple with a child of which both mother and father have a job. If either of the two loose their job they should not have any rights to benefits that might enable them to bridge the time between jobs?

[RandBlade]

You should work on your definitions. You can't say that Minimum Wage is the minimum on which you can expect a person to live on AND that a person should get less than that minimum if he doesn't work (why bother with welfare if it doesn't allow a person the minimum necessary).

1: I said what is considered reasonable, that is not necessarily the least a person needs to live on. You might think someone who works full time should reasonably get more than the minimum needs to survive.
2: Even if it is, sorry, I meant to say that welfare payments should be capped "at or below" minimum wage.
3: I said in point 3 that the loss of welfare should be phased, so someone on minimum wage may still get some - less than if unemployed, but will take home more than the unemployed person does.

You're also giving a rather rough deal to everybody who's not on the lowest rungs of the economy. Let's say a working couple with a child of which both mother and father have a job. If either of the two loose their job they should not have any rights to benefits that might enable them to bridge the time between jobs?

There's insurance for that.

However I don't like the fact our welfare state looks at households exclusively rather than individual adults, meaning that parents who live apart each with joint custody can get twice as much parents who live together. If one loses their job and is looking for a new one, then they should be able to get unemployment benefits.

[Illusions]

4: Welfare payments (and thus Minimum Wage and the start of taxation) should be sufficient so we don't have anyone in real poverty.

So what happens in places like the United States? This is an honest question, not a critique, as the way our minimum wage is handled, mainly on the Federal and State level, would need to be re-worked as the cost of living even in a single state can be drastically different. For instance, imagine the cost of living in areas like Manhattan or the Hamptons, to some of the poorest parts of Queens and the Bronx, and that is just the lower third/quarter of New York state.

Also, while you consider this reasonable (raising minimum wage), consider people like Lewkowski who are going to flip out because their XBox 360 game costs several dollars more because Target is paying its employees slightly more, and would fight against it for personal reasons. What are your plans for countering this?

[RandBlade]

Why does anyone have to live in the Hamptons? Or Manhattan?

There is quite a good train capability to move people between Queens and Manhattan, people often do. Why is anyone too good for that?

[Ominous Gamer]

I assume that your minimum wage would than account for the increased cost of living associated with transportation costs then?

[RandBlade]

No as jobs in Manhattan are generally more than minimum wage was my understanding, plus there are jobs in Queens and the Bronx.

[Ominous Gamer]

so your original excuse of public transportation has no place in your stance. gotcha

not that your new excuse is any more realistic, but its nice to simplify.

[RandBlade]

so your original excuse of public transportation has no place in your stance. gotcha

not that your new excuse is any more realistic, but its nice to simplify.

Still waiting to hear why anybody needs to live in the Hamiltons?

[Nessus]

Didn't take long for this to get hostile

What you are essentially saying, Rand, and correct me if I'm wrong, is that society should engineer residential areas comprised mostly of "the poor", or those on the dole. I suspect that this would have many negative side-effects. What is the positive this engineering would bring? Your thesis in the OP seems to focus on an idea of "fairness", that is that work (a concept left undefined) should always be more desirable than living on the tax payers' money. Are there concrete benefits that accompany this ideological position?

[Ominous Gamer]

is that society should engineer residential areas comprised mostly of "the poor", or those on the dole.

This is what I was trying to figure out. I couldn't tell if this was Rand's "got mine, fuck you" or NIMBY. You don't have to restrict the examples to the Hamiltons. I only live about 10 miles from my work, but its not exactly free for me to get there. If I still held a minimum wage job under his concept, I would be forced into cutting out necessities, or forced to move my family into an area that would do nothing but create a repeating ghetto cycle with my children and their families.

[RandBlade]

I never said everyone should be on minimum wage

I said that those working should get more than those that don't.

[Ominous Gamer]

No one proposed that was the case

[Nessus]

I never said everyone should be on minimum wage

I said that those working should get more than those that don't.

Do you feel my question was inappropriate or rude?

[Aimless]

On the bright side the slightly more expensive neighbourhoods would become much nicer and much more desirable to people of means, creating lots of value for their residents

Apart from that I'm struggling to think of great social benefits of segregation. It's possible that the problems wouldn't be too great either--but, looking at how disparities in housing costs have influenced eg. Sthlm, I am skeptical.

I would propose a few changes:

1: Somebody earning Minimum Wage full time should not be taxed on their income, the amounts they are earning should be what is considered the minimum reasonable so why should they be losing money through tax?

Barring Hazir's objections, I think can tentatively agree with this. At least with the general notion that low-income earners should have a lighter tax-burden. At the same time, there's the worrying possibility that you'll end up with a situation like eg. that in the US, see all the outraged posts here about how half of the US pays nothing in federal taxes and just mooches off of Bill Gates

It would nevertheless be a little good to enable minimum wage earners to put away more money. Make sure to set up the rest of taxes so that people who work for more than minimum wage don't end up having less than minimum wage after taxes.

Nor should there be any payroll etc taxes on the employer at (or below, eg Part Time) this statutory Minimum level.

On the one hand, this would open up more minimum-wage jobs and more part-time jobs. On the other hand it'd give employers even stronger incentives to creatively use/abuse part-time job schemes. That's been a great problem in Sweden eg. in the healthcare sector (esp. elder-care), to the point where we may end up being spanked by the EU for being assholes.

2: Welfare payments should be capped below the amount earned through full time Minimum Wage work - the unemployed should not earn more than the full time employed.

Wait, how many people on welfare actually earn more than people who have full time jobs?

Also, how far below do you think the cap should be? At 80%? 50%?

3: The loss of welfare should be phased such that for a part-time or even full-time Minimum Wage worker, the more they earn the more they keep. Work should always pay, this may mean still having welfare payments to the full time low-paid, but if so tax should not start yet (point 1).

I might agree to phasing out welfare, but I don't know if it's a good idea to keep giving financial support to someone who's working a full time minimum wage job, esp. since you've implied that minimum wage doesn't necessarily mean lowest possible living wage. On the face of it, it looks like giving welfare to someone who doesn't need it at that moment, which goes against the general principles of need and solidarity that are so important to having a functioning welfare state. Moreover, it gives people an incentive to go on and off of welfare. Finally, I have no doubt employers will find a way to game the scheme. Admit it RB, you have a con prepared

4: Welfare payments (and thus Minimum Wage and the start of taxation) should be sufficient so we don't have anyone in real poverty.

I think I can agree with this.




I get the impression you're trying to frame the welfare issue in such a way as to say that people on welfare don't have incentives to get off of welfare. I have to admit that my personal experience really does not support that notion, except in the case of very few woefully misguided and unfortunate youths (much younger than myself). Being on welfare is, for most of the welfare recipients I've known and met, very undesirable. You don't get much money, you have little freedom and control, you lose much of your status and dignity, the effort-reward imbalance is ridiculous... :-/

[Aimless]

I never said everyone should be on minimum wage

I said that those working should get more than those that don't.

Just so we're clear, you're proposing this be accomplished through capping welfare rather than by raising the minimum wage, yes?

[Hazir]

1: I said what is considered reasonable, that is not necessarily the least a person needs to live on. You might think someone who works full time should reasonably get more than the minimum needs to survive.

So you have a social minimum for welfare, and then a minimum wage that is set at a higher level?
2: Even if it is, sorry, I meant to say that welfare payments should be capped "at or below" minimum wage.
3: I said in point 3 that the loss of welfare should be phased, so someone on minimum wage may still get some - less than if unemployed, but will take home more than the unemployed person does.

So you have a social minimum for welfare, and then a minimum wage that is set at a higher level? To make sure that a person partially on welfare and partially working still gets better from it is fairly easy. You simply cap the work income you cut from welfare with the al least the same percentage (or lower if you want them to benefit more) that the social minimum is of the minimum wage.

There's insurance for that.

You have an actual example of insurance for unemployment? Or even actuary information that such an insurance could work? I could think of partial insurance for home owners, or government 'insurance', but neither of the two are real insurance against unemployment in the way insurance works.

However I don't like the fact our welfare state looks at households exclusively rather than individual adults, meaning that parents who live apart each with joint custody can get twice as much parents who live together. If one loses their job and is looking for a new one, then they should be able to get unemployment benefits.

An unemployment benefit is not welfare really, it's a government backed insurance scheme and as such it logically is not means-tested. However, it would be crazy to treat every individual as if he/she is alone for welfare. You would get the kind of nonsense where the wife of a billionaire could qualify for welfare just because you have principled objections against taking the assets of her husband into account when you establish if she needs help.

[ImAnOgre]

Also, while you consider this reasonable (raising minimum wage), consider people like Lewkowski who are going to flip out because their XBox 360 game costs several dollars more because Target is paying its employees slightly more, and would fight against it for personal reasons. What are your plans for countering this?

You do understand that raising the minimum wage raises the cost of everything right? It causes inflation and only dilutes what the dollar is worth....

Oh, and all the unions who's hourly rates are based off the minimum wage get raises too.

It's not even simple economics, it's simple common sense.

[CitizenCain]

If you really want to simply the welfare state, just go back in time 1,000 years or so. The king gets ~10% of your hide, the Vatican gets another 10%, the poor are cared for by the local church, and every once in a while, the peasants get to kill them some sand niggers and maybe burn a heretic alive, should there be no infidels nearby. Plus, women are property, so there's that to enjoy, along with the lowered tax rates and reduced bureaucracy.

Or did you have your heart set on inventing some way that the welfare state is anything but human history's bloodiest experiment in moral bankruptcy?

You do understand that raising the minimum wage raises the cost of everything right? It causes inflation and only dilutes what the dollar is worth....

And more importantly, raising the minimum wage hurts those that the minimum wage is supposed to help, by decreasing the demand for labor. (So who ends up without even a minimum wage job... the unskilled, bottom rung of society... that the minimum wage is designed for in the first place, yippie.)

[RandBlade]

Funny how I create a thread stating things that could get me lambasted from the right but some just want to attack me for eating babies of the poor. Thanks Minx, Hazir etc for some creative discussion.

On the bright side the slightly more expensive neighbourhoods would become much nicer and much more desirable to people of means, creating lots of value for their residents

Apart from that I'm struggling to think of great social benefits of segregation. It's possible that the problems wouldn't be too great either--but, looking at how disparities in housing costs have influenced eg. Sthlm, I am skeptical.

I think segregation is a bad thing. However places like the Hamptons etc have reputations already.

At the same time, there's the worrying possibility that you'll end up with a situation like eg. that in the US, see all the outraged posts here about how half of the US pays nothing in federal taxes and just mooches off of Bill Gates

If that's true, be honest about it. It's stupid to pay tax on one hand, just to get a handout with the other.

It would nevertheless be a little good to enable minimum wage earners to put away more money. Make sure to set up the rest of taxes so that people who work for more than minimum wage don't end up having less than minimum wage after taxes.

Wait, how many people on welfare actually earn more than people who have full time jobs?

Also, how far below do you think the cap should be? At 80%? 50%?

As an employer (paying a bit more than the minimum on entry level jobs) for nearly 7 years now I can tell you I've met plenty of people that'd rather be on benefits that work. Many have been honest about it: after working full time, putting in the effort and stress for that time, but paying taxes on most of it losing benefits etc then they work out they're not much better off and they decide it's not worth it.

The effective income tax for someone on low income can be about 90%. I find that repugnant. Its wrong and it traps people to being poorer than they could be, and on our taxes. We and they both lose.

I think the effective income tax for low earners should never be lower than the actual income tax for normal let alone higher earners.

I might agree to phasing out welfare, but I don't know if it's a good idea to keep giving financial support to someone who's working a full time minimum wage job, esp. since you've implied that minimum wage doesn't necessarily mean lowest possible living wage. On the face of it, it looks like giving welfare to someone who doesn't need it at that moment, which goes against the general principles of need and solidarity that are so important to having a functioning welfare state. Moreover, it gives people an incentive to go on and off of welfare. Finally, I have no doubt employers will find a way to game the scheme. Admit it RB, you have a con prepared

No con.

I honestly think the system currenty is broken - here at least. As an employer my only benefit is recruitment etc would be simpler without perverse incentives.

I get the impression you're trying to frame the welfare issue in such a way as to say that people on welfare don't have incentives to get off of welfare. I have to admit that my personal experience really does not support that notion, except in the case of very few woefully misguided and unfortunate youths (much younger than myself). Being on welfare is, for most of the welfare recipients I've known and met, very undesirable. You don't get much money, you have little freedom and control, you lose much of your status and dignity, the effort-reward imbalance is ridiculous... :-/

That is exactly what I think for a culture here in the North West of England it is definitely acceptable. As for effort, an appointment at the Jobcentre once a week/fortnight is no effort compared to a job.

You have an actual example of insurance for unemployment? Or even actuary information that such an insurance could work? I could think of partial insurance for home owners, or government 'insurance', but neither of the two are real insurance against unemployment in the way insurance works.

When I got my mortgage I was offered unemployment and sickness insurance by the bank.

An unemployment benefit is not welfare really, it's a government backed insurance scheme and as such it logically is not means-tested. However, it would be crazy to treat every individual as if he/she is alone for welfare. You would get the kind of nonsense where the wife of a billionaire could qualify for welfare just because you have principled objections against taking the assets of her husband into account when you establish if she needs help.

So what? The billionaire would be paying a fortune in tax (bankrolling the system as Minx pointed out) so what difference does it make if his wife gets it? Besides, it'd not just be nothing compared to their billions so why bother?

[GGT]

Funny how I create a thread stating things that could get me lambasted from the right but some just want to attack me for eating babies of the poor. Thanks Minx, Hazir etc for some creative discussion. I think segregation is a bad thing. However places like the Hamptons etc have reputations already.
If that's true, be honest about it. It's stupid to pay tax on one hand, just to get a handout with the other.

Semantics matters, though. "The Welfare State" can mean anything from Universal Health Care (which your idol Thatcher believed in, for the 'welfare of the nation') to Food Stamps for low income-earners, to corporate subsidies in the form of tax breaks. In the US, people are famous for mixing 'welfare' with 'entitlements', and applying incongruous definitions.

As an employer (paying a bit more than the minimum on entry level jobs) for nearly 7 years now I can tell you I've met plenty of people that'd rather be on benefits that work. Many have been honest about it: after working full time, putting in the effort and stress for that time, but paying taxes on most of it losing benefits etc then they work out they're not much better off and they decide it's not worth it.

The effective income tax for someone on low income can be about 90%. I find that repugnant. Its wrong and it traps people to being poorer than they could be, and on our taxes. We and they both lose.

I think the effective income tax for low earners should never be lower than the actual income tax for normal let alone higher earners.
No con.

I honestly think the system currenty is broken - here at least. As an employer my only benefit is recruitment etc would be simpler without perverse incentives.
That is exactly what I think for a culture here in the North West of England it is definitely acceptable. As for effort, an appointment at the Jobcentre once a week/fortnight is no effort compared to a job.
When I got my mortgage I was offered unemployment and sickness insurance by the bank.

So what? The billionaire would be paying a fortune in tax (bankrolling the system as Minx pointed out) so what difference does it make if his wife gets it? Besides, it'd not just be nothing compared to their billions so why bother?

Correct me if I'm wrong...but it seems what you're seeking is a simplified national economy that makes work (labor) workable and incentivized (??), as a way to weed out fraud or abuse (??) That's where the minimum wage and COL comes into play. I can't speak for what the UK is motivating, but at least everyone there has access to minimum health care, and won't be forced into personal bankruptcy by ONE major accident or illness.

In the US, minimum wage / part-time / contract workers don't have employer health insurance subsidies, earn too much to qualify for Medicaid, find private comprehensive health insurance prohibitive, AND can't afford to pay OOP for a damn ambulance ride to the hospital. Simplify that.

[Illusions]

Why does anyone have to live in the Hamptons?

the Hamptons has a high cost of living because the real estate and rent is expensive there, because people with money find the property alluring. So no one needs to live in the Hamptons, but the cost of living is high because rich people want to live there.

Or Manhattan?

We'll get to that in a bit...

There is quite a good train capability to move people between Queens and Manhattan, people often do. Why is anyone too good for that?

There are already 2.23 million people living in Queens. Of the other boroughs that make up New York City, Manhattan has 1.58 million people, The Bronx has 1.38 million, Brooklyn has 2.5 million, and Staten Island has 468,000. All of this is approximate, so there are a few more thousand thrown in there. The nearest county outside New York City is Nassau County with 1.33 million people.

So your solution is as follows:

1) Take the 1.58 million people living in Manhattan and move them out into the surrounding area, which is already cramped for space with millions of people living there. This influx of people into the surrounding area will have little to no effect on the cost of real estate, property rental, or cost of living at all.

2) Pray to some form of deity to magic a better LIRR, MTA, and PATH into existence as there are going to be a portion of 1.58 million new riders. Or magically wave your hands yourself and fix it.

I am of course joking, but it really seems like you haven't fully thought through the ramifications of this.

No as jobs in Manhattan are generally more than minimum wage was my understanding, plus there are jobs in Queens and the Bronx.

No, a new guy working the same job as me in Manhattan would be started at the same pay rate, as would some guy starting in Oregon, Alabama, or Virginia. In fact the guy working in Manhattan would have to pay New York City taxes, on top of State and Federal taxes. Yes, a lot of jobs in Manhattan pay vastly more than minimum wage, but there are still plenty of minimum wage jobs in Manhattan in retail stores, corner shops, etc.

Still waiting to hear why anybody needs to live in the Hamiltons?

Because people need to live somewhere and people with lots of money are going to like living somewhere, and where a lot of them want to live is going to influence the cost of living in that area. If all of a sudden, several hundred people with multi-million dollar incomes, decided some trailer park in Alabama was the place to build a nice home, then that area would suddenly see a tremendous increase in cost of living. So really, moving a few thousand rich people out of Manhattan, or the Hamptons, is going to have the same effect, because they're just going to choose a new place to live...where there will be people who don't make as much money...living there already.

You do understand that raising the minimum wage raises the cost of everything right? It causes inflation and only dilutes what the dollar is worth....

I'm aware it will. I'm not entirely sure how much this could be offset by simply cutting back costs elsewhere, for instance lowering the amount paid to those in the company making multiple times more than minimum wage, or more to the point those people working who will make in a week what I earn in a year (or multiple times what I earn in a year).

Oh, and all the unions who's hourly rates are based off the minimum wage get raises too.

Unions could always go back to what they were meant to be, as I'm not entirely thrilled at their current existence either.

It's not even simple economics, it's simple common sense.

Some things should perhaps be more expensive though. It seems like a failure at a societal level if we're going to have jobs that 1) Need to be done, or a vast majority of population want done, and then 2) Not pay these people enough to live by themselves on.

[Hazir]

I knew you were going to bring up the 'insurance' your bank offered you in connection to your mortgage. That is why I mentioned that THAT is not really an insurance unemployment. It is an insurance against you defaulting on your mortgage payments. Sort of an extension of the CDS (for all I know you are paying the risk-premium your bank used to shoulder).

It is not an actual insurance against unemployment which would cover your loss of income for a specified period. A long, long time ago I was taught that the risk of unemployment was considered to be un-insurable, which was the rationale for the state to step into that market. That is why I had that specific question, excluding the bankproduct securing the bank's income or the state sponsored system.

Mind you, this is not necessarily an attack on you. I could imagine a way of thinking that people should care for themselves above a certain minimum (to be set) so that the state has no obligations to offer any type of income support above that level. I just want to point out to you that simplification can have unexpected effects. Unexpected effects of simplifications are typically unwanted.

[Aimless]

I'm trying to figure out how rich people or successful companies in eg. the UK would react to seeing large groups of people getting out of paying taxes.

[earthJoker]

You have an actual example of insurance for unemployment? Or even actuary information that such an insurance could work? I could think of partial insurance for home owners, or government 'insurance', but neither of the two are real insurance against unemployment in the way insurance works.

What is the problem with a governmental insurance? Other than maybe it isn't free market etc. boohoo.

[Hazir]

What is the problem with a governmental insurance? Other than maybe it isn't free market etc. boohoo.

I did not say there is anything wrong with it, I am stating that the free market does not offer the alternative Randblade thinks it offers. So that his 'simple welfare' either will be very simple and very meagre for everybody who doesn't save (a lot) for rainy days, or he'll have to spruce it up with some extra's for people who have worked and loose their jobs.

I am not saying which is the right choice, I am saying you have to make a choice and be aware of the consequences of that choice.

In principle I agree with him when he says it's stupid for government to take part of your income to re-distribute it to yourself. Unless you like bloated administrations that is of course. For me it is reason to be against the deductability of interest paid on home-loans in Holland. They should scrap that 'home-owners subsidy' and let tax-payers keep more of their before taxes income themselves. That way people can decide more freely how to dispense of their income and you have less chance of government intervention distorting the market. I'm not necessarily in favour of a flat tax, but I don't like any regulation away from it that isn't done for an extremely good reason.

[Hazir]

I'm trying to figure out how rich people or successful companies in eg. the UK would react to seeing large groups of people getting out of paying taxes.

Rich people and/or successful companies would have no problems with that. It would be somewhat different for failing companies; they could problably not count on government gripping them under the arms ever. Pure capitalists would think of that as a good thing.

[earthJoker]

OK, then I have to rephrase and redirect the question. @Rand, would a unemployment insurance run by the state be possible in your model?

Just to add why I am asking. IMO such a governmental unemployment insurance is not part of the welfare state, as it's purpose its is to minimize risks and not to support the weak.

[Aimless]

Rich people and/or successful companies would have no problems with that. It would be somewhat different for failing companies; they could problably not count on government gripping them under the arms ever. Pure capitalists would think of that as a good thing.

Hmmmm I may be missing something but that is not the impression I've gotten of eg. the attitude in the US, with a sustained and angry campaign against the principle of having the overtaxed wealthy buoy up the untaxed lower/middle class. No doubt lazy welfare suckers.

[RandBlade]

I'm not sure I understand what's getting asked. I never said the employed should be ineligible for benefits, I said benefits should be capped and phase.