Free money for all — Not!

kw: book reviews, nonfiction, socialism, welfare

It was reported in passing in a National Geographic article that people in some Third World country were being paid an ordinary daily wage for working to clear the way for a road. The work was being funded privately, and the on-site managers decided to "do their bit" to improve the lot of the local people. They raised their daily pay by 35%. Four days later hardly anyone showed up to work. It took a lot of questioning to find out the reason: The workers had been very pleased and surprised to get about another third of a day's pay every day. At the end of three days, they had the money they used to earn in four days. Their daily needs had not changed, so they took the day off! The few who had showed up to work were mostly the local drunks who had used their extra cash to go an a roaring bender and needed the ready money.

This story came to mind the minute I saw the title of Basic Income: A Radical Proposal for a Free Society and a Sane Economy, by Philippe Van Parijs and Yannick Vanderborght. In a book of 247 pages plus an enormous number of notes (another 74 pages), they seek to convince a primarily American audience of the necessity for, efficacy of, and liberty to result from implementation of an unconditional national income, to be distributed by dividing around one quarter of a country's GDP amongst all the citizens and legal residents of this country. It would be paid for by eliminating nearly all social welfare programs, which it would replace.

Here's the nuts and bolts for Americans. U.S. GDP per capita in 2016 was about $52,200, so a quarter of that is $13,050 or a little under $1,100 monthly, to be paid to everyone from babies to billionaires. The total U.S. GDP was $18.7 Trillion that year. Non-"entitlement" social programs cost about $1 Trillion (both Federal and state spending); Social Security was slightly less, nearly $900 Billion; and Medicare spending is pushing $750 Billion. These total more than $2.6 Trillion, or 14% of GDP. On the face of it, if all three segments of the U.S. "social safety net" were replaced by a basic income program, the total cost would be $4.6 Trillion, and we'd need an increase in taxes sufficient to generate another 9% of the GDP.

The math gets a little trickier at this point, because the basic income would not be taxed. If that is all you received, you would pay no income taxes. But all earned income anyone received would need to be taxed at about 12% above whatever is needed to fund other programs such as the military, infrastructure projects, the running of government itself, and so forth. Some savings would be realized because of one huge fact: There would be no means test. That is, everyone would get a check for about $1,100 monthly, from the homeless woman sleeping under the bridge to Warren Buffet, tax free. Then, whoever earned "their own money" above that would pay taxes on it. Perhaps some progressive taxation method would be used, but to be clear, some kind of tax would be needed to gather the required $4.7 Trillion. But—here is the savings item—there would be no need to employ some large number of people to check if people are working, or are looking for work, and to run all the other intrusive mechanisms needed to run programs such as Unemployment Insurance or AFDC. I wonder how many officers they'll need to employ to make sure people don't keep getting checks after they die! The authors hardly mention the impact of fraud, nor how to make a person's basic income unstealable.

The authors do their best to tout the added freedom experienced by someone who has a guaranteed, if modest, stipend. Someone working a dead-end job could afford to find more congenial work, even if it pays less. Many other examples are described. But here is the question to ask yourself: Would you keep working if you could afford to "live the leisure life"? How many would prefer to spend their days fishing, surfing, hunting, beach combing, painting, sculpting, composing, and other pastimes that many wage earners dream of doing full time if they could? Would enough people desire to work, at jobs sufficiently well compensated, to support all the "preferentially unemployed"?

Were such a program initiated tomorrow, I suspect that people now in the early-to-middle years of a career, who are used to working and who have developed a kind of identification with their work, would tend to keep working because that is what they know how to do. What would their children do? The story in the first paragraph is my guess. It is not without reason that one passage in the Bible exhorts, "If anyone is unwilling to work, let him not eat." We are not as "good" as we'd like to think we are.

I don't remember the author, nor an exact quote, but I recall reading that once a large segment of the population figures out how to extract largesse from the public purse, the downfall of the republic is unavoidable. In the U.S.A., that point was probably reached during the Johnson administration with the "War on Poverty", and for 50 years the downhill slide has continued almost unabated. The authors of Basic Income have a European viewpoint, and are accustomed to a lot more Socialism than U.S. citizens in general. I think we ought to just sit back and wait for some country or group of nations actually implements a basic income program, then give it a generation and see in what form the collapse comes…but be sure, collapse is certain.

Minorities in Charge

kw: poverty, education, welfare

It was announced today that Texas has become the fourth state in which "minorities" are the majority of its population (See, for example, Yahoo! News). Four other states have at least 40% "minority" populations. Of course this is all based on the notion that "whites," meaning Euro-Americans of a range of shades, accents, and "western" ethnicities, and whose parents were born here, are the "majority."

Today's "majority" is composed of a gaggle of former "minorities." Let us take as a benchmark in time the Revolutionary War of the 1770s and 1780s. By that time "native Americans" (or whatever today's PC term may be) were probably a minority in the 13 Colonies, at least. The dominant group, the "majority" of the day, was composed of Protestant, English-speaking folk whose ancestors immigrated from England and Holland. The rather large numbers of German-speaking Anabaptists (whose descendants today include the Mennonites, Amish, Moravians, and Hutterites) were largely ignored.

Over time, immigrants from Scotland, Scandanavia, France, Italy, Ireland...all were "minorities" for a time, then assimilated into the population over a few generations (My ancestors of the third wave of Scottish immigration, in the late 1800s, were better received, finding Scottish-majority enclaves throughout the Midwest). Today few people think of the Jews as a minority group. They are usually counted as part of the "white majority." Many people I know tend to think of them almost as just another denomination.

Today, when the word "minority" is used, people tend to think black, hispanic, or asian. The first word that comes to mind, though, depends on where one is. In the suburbs north of Los Angeles, California, there has been a great increase in mainly Chinese immigration over about the past thirty years. Some of those suburbs are now nearly all-asian. A lot of prejudice arose.

About twenty years ago, during the period of most rapid influx, my wife and I went with my parents to the LA County Arboretum in Arcadia. The parking lot was quite full. As we drifted slowly, looking for an empty space, an older man jumped out of a parked car, ran up to my father, who was driving, and offered him his parking space. As he turned to go back to his car, he said, "I've been waiting an hour for someone to give this space to that wasn't a damn Asian!" After he backed out, he passed us, and caught sight of my Asian wife in the back seat. He turned quite red and sped away.

I have observed over the decades that some folks have a harder time than others being assimilated into "American" life. Italians were once hated "dagoes" (sorry...), but few traces of the old prejudice remain. For a generation or two, an Irishman who couldn't get a job as a policeman had to start a business, because there were no other jobs available to them. Today, who cares? Everybody puts on something green for St. Pat's day.

When I lived in South Dakota, the mayor of Rapid City was of the Lakota tribe, though at that time many Lakotas were nearly at war with the US Government over the Black Hills (remember Russell Means?). I observed there was quite a difference between the "reservation Indians" and those I was in school with and others who had left the reservation. The Lakota, Dakota, and Nakota people I knew had not forsaken their culture. Most spoke a Sioux language, participated in traditional ceremonies, and gave much extra effort to learn and retain their cultural identity. Their dedication is similar to Scottish-ancestry cousins of mine who continue to study and speak Erse (Scottish Gaelic), attend Highland Games (some compete), and maintain their cultural identity. All within the context of modern American life.

Few "reservation Indians" had any education beyond mandatory public school, and many did little with their lives, preferring to squeak by on the entitlements provided by the Bureau of Indian Affairs. I really came to admire those few who educated themselves further, but stayed on the reservation to provide leadership. Tribal leaders had a heartbreaking situation to oversee. I usually didn't care for their politics, but came to look on them as heroes.

And here is a side note, that adds to the point I wish to make. I have two good friends, and each farms a couple dozen square miles in west-central South Dakota, one near Rapid City, the other a hundred miles farther East. Compared to their neighbors, they are prosperous. They have never taken out any "govenment backed" loans. During bad years, they got jobs in town to keep body and soul together, and waited for a better year. During better years, they saved their excess, or bought more land, often from those who had such heavy loan payments to make they had to sell land.

Today we hear a term, "disadvantaged minorities." Wherever there is poverty in an inner city, there is usually a population there that is ethnically different from that in the surrounding, non-poor, parts of the city or the suburbs. Philadelphia is a mainly black city in a mainly white state. San Antonio is a mainly hispanic city in what was a white state. New York City has several "minority" enclaves, Harlem, Spanish Harlem, Little Italy, and Chinatown for example. To my observation, though, the style of poverty is different in each place.

In some such enclaves (some are called ghettos, though that word was once reserved for Jewish enclaves) we see multigenerational poverty as the rule, while in others, most young people tend to escape poverty. There are two differences that I see.

Firstly, some ethnic groups, no matter where you find them, emphasize education, and do so to a fanatical level. Most of their young people at least finish high school, and every family has the ambition that at least one child will go to college (First among these, through all ages, has been the Jews. I think this is mainly because the book of Deuteronomy requires 100% literacy, so every person can read the Torah. No other group has a commandment from God to be educated).

Other groups, no matter where they may be, give education little more than lip service. The parents may nag at their kids about getting educated, but their heart isn't in it. Just by the way, to my observation, it is not the blacks who I'm pointing a finger at here; there are a couple of other ethnicities that are far, far down the scale in this regard. But to what extent the shoe fits, just wear it...and take it as an exhortation to change.

Secondly, those ethnicities in the latter category above tend to rely much more on government support. They take whatever they can get, and if they find that the "gift" is reduced when they work, they choose not to work.

Let us take it as an axiom: the government is unable to fully support everybody. There have to be taxpayers (that is those who earn money that can be taxed), so that the government will have money to give out. The biggest part of the Federal budget is that grand, diverse collection of "programs" we group under the term "welfare." There are hundreds of components. In fact, more than half of the Social Security payout is a form of welfare to the 120-odd categories of people who obtain "benefits," but didn't put a penny into the program. I include farm subsidies, guaranteed agricultural loans, GNMA and FNMA mortgage loans.

Now, there will always be more need than there is supply. Always. People say, "Oh, in Sweden, medical and dental care is free. If you're poor, the government takes care of everything," and so on, blah, blah. Income taxes in Sweden take 60% of all earned income, and still there are poor people there. The Swedish welfare system takes care of a certain percentage of everything. Just enough to keep you from starving, in most cases.

I cannot here propose a way to end welfare, as any large or national effort. But to any individual getting any kind of welfare, I say, get work anyway. Earn your own money. Yes, you'll lose benefits, but you'll also lose the grinding destruction of your own self-worth. If you have to use a government program to get a better education, do so. Then let that be the last handout you take. Earn your way out of poverty. There is no other way.

What will become of Texas? Well, it'll be run in the future by hispanics. That's not bad. As long as they are well-educated hispanics with a sense of self-respect and self-worth.