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Author Topic: Welfare pays more than working across most of US
Seneca
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In a significant study just released, it was found that across the majority of US states, combined welfare benefits pay more than the federal minimum wage. In 13 states it pays more than 15$ an hour (which is what labor and protest groups across the US are agitating to make the new minimum wage).

Is it any wonder why the workforce is shrinking? People may not even be lazy, but they can do simple arithmetic and realize that working costs more than accepting handouts from the government.

But is this really surprising? The government has been trying to get as many people hooked on public assistance as possible for years. There are rewards programs for federal employees who wear down what is referred to as "mountain pride" and get people to sign up for benefits who had been resistant to accepting handouts prior to that. EBT fraud and waste has largely been ignored by matter of procedure and order, and the welfare state has expanded to its largest size in history, even beyond that of the FDR years.

http://object.cato.org/sites/cato.org/files/pubs/pdf/theworkversus.pdf

And what about the "workfare" reform of the 90s? Well the study found that less than 1/5 of people receiving welfare benefits were actually working an un-subsidized job and that the program has been altered to include "looking for work" and job training programs as sufficient to be considered actual employment to receive benefits.

Of course this is unsustainable. The government is going deeper and deeper into debt and poverty is increasing. Who will pay the taxes to support this behemoth welfare state? It's too bad that the government is creating widespread poverty instead of incentivising people to become productive members of society.

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Wayward Son
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quote:
In a significant study just released, it was found that across the majority of US states, combined welfare benefits pay more than the federal minimum wage. In 13 states it pays more than 15$ an hour (which is what labor and protest groups across the US are agitating to make the new minimum wage).

Is it any wonder why the workforce is shrinking? People may not even be lazy, but they can do simple arithmetic and realize that working costs more than accepting handouts from the government.

There is another, more significant arthimatic you are neglecting to mention. Welfare (TANF) benefits are calculated to be the amount of money needed by a family for the necessities for living. It does not include luxuries; nor is it so low that the family is slowly (or quickly) starving. It is supposed to be just enough to keep them afloat until they can get a job.

So if welfare benefits are higher than the minimum wage, i.e. than the vast majority of jobs that welfare recepients can get, that means that the choice is between taking a government handout or slowly starving. [Eek!]

That is the calculus that matters most. And while paying out welfare may not be sustainable, how sustainable is a society that has a significant portion of the population slowly starving?

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Seneca
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Starving huh?

http://www.mysuncoast.com/news/manatee_newsroom/arrest-warrants-issued-after-undercover-operation-for-ebt-card-fraud/article_afeb2c08-b28a-11e2-9d41-001a4bcf6878.html

http://www.sbsun.com/general-news/20120911/fewer-ebt-card-requests-more-welfare-fraud-detected-in-county

Welfare recipients use ebt cards to ship food overseas

EBT cards used at Liquor stores, strip clubs

http://www.nypost.com/p/news/local/poor_some_ugar_on_me_0Hq1d3iPnvj2RwpsEDS7MN


A closer examination of welfare fraud and what it is really costing us, even if the deniers are to be believed:
http://www.roanen.com/1/post/2012/04/how-much-is-welfare-fraud-costing-us.html

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Pete at Home
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I know a guy in Vegas who was literally starving to death, as he gave his e.b.t card to a drug dealer for meth and weed.
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Seriati
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quote:
Originally posted by Wayward Son:
There is another, more significant arthimatic you are neglecting to mention. Welfare (TANF) benefits are calculated to be the amount of money needed by a family for the necessities for living. It does not include luxuries; nor is it so low that the family is slowly (or quickly) starving. It is supposed to be just enough to keep them afloat until they can get a job.

What's intended and what's happening are not the same thing. I don't agree with your assesment that its as bare bones and you imply. There's also the issue that its often "supplemented" by cash work, or other jobs, and has perverse incentives built in - like encouraging people not to marry or live together.
quote:
So if welfare benefits are higher than the minimum wage, i.e. than the vast majority of jobs that welfare recepients can get, that means that the choice is between taking a government handout or slowly starving. [Eek!]
Is there something that prevents someone from having 2 minimum wage jobs? Or that requires that a person stay at minimum wage? Do you know anyone that worked for years at minimum wage without ever getting a promotion or an opportunity to get a better wage or job?
quote:
That is the calculus that matters most. And while paying out welfare may not be sustainable, how sustainable is a society that has a significant portion of the population slowly starving?
Are you implying that our only choice is between excessive benefit payments and a starving society? Could we not provide meals at public kitchens, for example? Could we not require public aid recipients to work for the public good for 40 hours? I think the system of "lazy" dependency is what's offensive to most, not the idea of helping people out or of giving them a fresh start.
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Seneca
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Good points. Very few people stay at minimum wage for any length of time. Working in America is all about starting at the bottom and working your way up. Two thirds of minimum wage workers earn a raise in their first year: http://www.heritage.org/research/reports/2006/07/minimum-wage-workers-incomes-rise-when-the-minimum-wage-does-not

But what we have now is a horrible arithmetic that stops people from ever beginning work so they can then go on to get raises later, because its more immediately profitable to stay on welfare then to start a career. This is creating a huge problem. Along with Obamacare, we are seeing the vast majority of Americans no longer being full time employees.

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Wayward Son
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First off, welfare fraud has nothing to do with welfare benefit levels. Preventing fraud on any program, be it government or private, is a difficult problem, and one that probably will never be solved. That's why there are crooks in this world. [Smile]

quote:
I don't agree with your assesment that its as bare bones and you imply.
If you have facts to back up your assessment, I would applaud lowering benefits to that level. Welfare should be enough for someone to survive on, but not more, so they have a strong incentive to find work that will be more rewarding.

quote:
There's also the issue that its often "supplemented" by cash work, or other jobs, and has perverse incentives built in - like encouraging people not to marry or live together.
Certainly there will be minor fraud lik "cash" work and other jobs. But they are hardly an incentive to stay on welfare. You don' build up savings or have a large amount of extra money at the end of the year with those. Otherwise, you'd get off welfare and move to the middle class. [Smile]

And I agree with you about certain disincentives, like the prohibition against marriage. But those were imposed by people who were trying to minimize the number on welfare. A classic case of "unintended consequences."

quote:
Is there something that prevents someone from having 2 minimum wage jobs? Or that requires that a person stay at minimum wage? Do you know anyone that worked for years at minimum wage without ever getting a promotion or an opportunity to get a better wage or job?
Remember, this is TANF (previously known as Family Assistance). Typically it is given to single mothers of dependent children. Do you really expect mothers to work two minimum-wage jobs and be responsible for their children at the same time? Or do you think they should get child care, another "benefit" that increases their virtual wage to over $15/hr?

And while promotions are a long-term benefit, the short-term reality is there is not enough money until those promotions occur. You first have to prevent starving now before you can consider getting more money later. [Wink]

quote:
Are you implying that our only choice is between excessive benefit payments and a starving society? Could we not provide meals at public kitchens, for example? Could we not require public aid recipients to work for the public good for 40 hours?
No, those are not our only choices. But they may end up costing more. Soup kitchens don't address housing for children. Public work projects tend to cost more than simply providing aid (IIRC). Part of the problem is that people try to keep the expense of these programs to a minimum. Ideas that make people not be so "dependent" often end up increasing the cost, which is then shot-down by fiscal conservatives.

However, I am open (and eager) to hear any ideas that would preserve helping people while preventing dependency.

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MattP
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Well right now the job market is still crap so "just get a second job" or "work harder" aren't necessarily viable options for many people.

Also working two 30+ hours jobs at once is crushingly exhausting. I've been doing a consulting job recently in addition to my regular job and I can barely sustain it only because my wife is picking up the slack for me at home. Still, I'm only getting 4-5 hours of sleep per night and am going to burn out if I don't wrap it up soon. I can't imagine a single parent trying to manage it indefinitely.

As far as the study goes, what they've found is that a person who qualifies for the most possible welfare programs, if they applied for and received all of them, would receive benefits that are on-paper worth more than minimum wage. That doesn't mean they get that much cash and it doesn't mean that they can get all the things they would have bought if they had that much cash. It also doesn't mean that there is a large number of people actually getting that level of benefits.

It also doesn't take into consideration the reasons they qualify for that maximum level of benefits. A single mother of four kids may receive more than minimum wage but may find it extremely difficult to find a job with a schedule that still allows her to take care of those kids. Nevermind the increased cost of of their care since she won't be home and will need to pay for child care.

The biggest flaw in our wellfare system, IMO, is that many of the program are all or nothing. You are basically punished for making incremental steps toward independence. This is a good reason to support a "minimum income" standard were benefits are prorated to the point where your income matches the benefits rather than cutting benefits when income passes $0 or some arbitrary amount that is still substantially less than the benefits.

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Pete at Home
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OBVIOUS FIX: require id for TANF purchases. That's a low cost no brainer.
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Seneca
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Actually Matt what they found was that 60-70% of people qualify for all 7 of the major welfare programs, and nearly that same amount who qualify get it, so a person getting most/all of it is actually the rule, not the exception.

Edited for typos and clarity.

[ August 22, 2013, 05:02 PM: Message edited by: Seneca ]

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MattP
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Qualifying is the rule or getting it is the rule?
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TomDavidson
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quote:
Between 1998 and 2003-a time when the federal minimum wage did not rise-the median minimum wage worker earned a 10 percent raise within a year of starting work. During this period, over two-thirds of workers starting out at the minimum wage earned more than the minimum a year later.
I just want to remind people what the numbers are, here, based on Seneca's link.

The median minimum wage worker, with his ten-percent raise, earned an extra nickel per hour -- $2.00 per week, $104 per year -- after a year. That's the median.

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Clark
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Tom,

You missed a zero. Those numbers should be $20/week, $1040 per year.

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yossarian22c
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The point is that $8 an hour is still well below a living wage (unless you are living in your parents basement). Most minimum wage jobs don't lead to jobs that put people in the middle class. Some will but most jobs are minimum wage because they are low skill jobs and people working them acquire few marketable skills that would jump them up the pay scale to $10-$15 per hour within a year or 2.
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Pyrtolin
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Suggesting that there's an eaither/or situation with public assistance and a minimumwage position is misleading right out of the gate- a significant number of the people benefitting from those programs have at least a minimum wage job, and the assistance is what actually enables them to afford to work at such low pay in the first place. The whole "make people dependent on assistance" argument is absurdly ignorant of history, never mind common sense. (For example, the Food Stamp program grew pretty directly out of concerns expressed by the military during WWI that the majority of the recruits that they processed were severely stunted due to malnutrition. The alternative to food stamps is not a return to some mythical self-sufficiency for the vast majority of the population, but rather to widespread, debilitating deficiency.)

When you get down to it, the issue isn't even remotely that the government is directly discouraging people from working by providing what actually is rather less than a livable level of assistance to people, but rather because the private sector simply does not need the labor enough to outbid such assistance, even with the government helping to subsidize its labor costs by padding low wages with assistance to help people make ends meet. If the overall market actually needed their labor, it would be outbidding the support programs to get it.

quote:
It is supposed to be just enough to keep them afloat until they can get a job.
The total baseline benefit should really be enough that they have some amount to invest in improving their condition in some way after basic expenses are met, or, at worst to afford to function at a lower-middle class baseline, even if they don't choose to invest it in things that will help improve their future ability to earn higher levels of income. Without that extra margin, they can't help create pressure for additional production, hiring, and wages beyond the current levels (and the current policy of keeping such benefits just a bit below what actually baseline needs are just to "keep them afloat" actually represents a net drag on growth because every corner they translates not only to less need to hire people to meet the need that was pushed aside now, but generally into higher net costs to the person who delayed that need in the long run as they then pick up the compounded costs of letting the problem at the root of the need fester without being addressed. (That includes, as an example, interest paid on loans or credit use to try to bridge financial gaps while on support, also increased severity of medical problems due to deferred treatment, increased damage from deferred repair costs for homes, vehicles, etc...)
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edgmatt
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quote:
The total baseline benefit should really be enough that they have some amount to invest in improving their condition in some way after basic expenses are met
I disagree. Improving their condition has to come from the individual, not an outside source, or it won't be sustainable. I don't need money to go look for a job, or to work harder, or to do the thousands of other things it takes to "improve my condition".

I think this state of mentality, (give you enough to not only get on your feet, but to support you and your family, and a little extra so that you can improve your condition) although noble, leads to an unhealthy level of dependence for the individual, and a poorer economic state for the rest of the country.

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Seriati
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quote:
Originally posted by Wayward Son:
First off, welfare fraud has nothing to do with welfare benefit levels. Preventing fraud on any program, be it government or private, is a difficult problem, and one that probably will never be solved. That's why there are crooks in this world. [Smile]

This assertion is contra-logical. Fraud is always connected to both benefit level and ease of implementation. Are you really asserting that if benefits were enough to make one rich, fraud would not increase? I also would note that disability fraud massively increased when it became harder to stay on Welfare.
quote:
quote:
I don't agree with your assesment that its as bare bones and you imply.
If you have facts to back up your assessment, I would applaud lowering benefits to that level. Welfare should be enough for someone to survive on, but not more, so they have a strong incentive to find work that will be more rewarding.
What kind of facts would you be looking for? If you want to encourage work, including encouraging people to take jobs that pay low wages wouldn't logic dictate that benefits be set below the wage level?

You could also experiment with staggering benefits more than we do, like by providing housing assistance to low wage earners as well as no wage earners, and then severally capping non-housing benefits to below low wage amounts.
quote:
Certainly there will be minor fraud lik "cash" work and other jobs. But they are hardly an incentive to stay on welfare. You don' build up savings or have a large amount of extra money at the end of the year with those. Otherwise, you'd get off welfare and move to the middle class. [Smile]
Sure I would. So why do so many choose not to do so?
quote:
quote:
Is there something that prevents someone from having 2 minimum wage jobs? Or that requires that a person stay at minimum wage? Do you know anyone that worked for years at minimum wage without ever getting a promotion or an opportunity to get a better wage or job?
Remember, this is TANF (previously known as Family Assistance). Typically it is given to single mothers of dependent children. Do you really expect mothers to work two minimum-wage jobs and be responsible for their children at the same time? Or do you think they should get child care, another "benefit" that increases their virtual wage to over $15/hr?
What's interesting to me about this question is that you're justifying a bad policy by using the consequences of the bad policy. Why are there so many single mothers of dependent children? They aren't largely widows. This is pretty much a low point in history for married family life, and the statistics on marriage show an overwhelming benefit to married families. The single mother on assistance is a virtual creation of the welfare state.

I agree with you that forcing a single mother to work 2 jobs isn't going to work well, unless we craft the policy carefully. Why not require that single mothers on assistance contribute 20 hours per week to serving in a day care. That simultaneously solves the problem of them not having day care and gets rid of some of no work assistance problem. I still think we ought to implement policies that encourage marriage.
quote:
quote:
Are you implying that our only choice is between excessive benefit payments and a starving society? Could we not provide meals at public kitchens, for example? Could we not require public aid recipients to work for the public good for 40 hours?
No, those are not our only choices. But they may end up costing more. Soup kitchens don't address housing for children. Public work projects tend to cost more than simply providing aid (IIRC). Part of the problem is that people try to keep the expense of these programs to a minimum. Ideas that make people not be so "dependent" often end up increasing the cost, which is then shot-down by fiscal conservatives.
I think that's too simplistic an analysis of why conservatives shoot these programs down. I think they feel they are never run efficiently, that they get corrupted away from the goal of tough love short term help towards permanent entrenched entitlements and that they get corrupted into liberal voter block generating devices. Honestly, when entitlement voters are overwhelming Democratic voters, why would they rationally think otherwise? You should start with the premise that, as good people, conservatives are persuadable, but you're going to have to show how the plan makes sense, not just how it "helps people" (which they're going to interpret as a propaganda style lie to benefit their political opponents).
quote:
However, I am open (and eager) to hear any ideas that would preserve helping people while preventing dependency.
Expect results from the people receiving help. Require public service if individuals can't find private employment.
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LetterRip
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Seriati,

quote:
What's interesting to me about this question is that you're justifying a bad policy by using the consequences of the bad policy. Why are there so many single mothers of dependent children? They aren't largely widows. This is pretty much a low point in history for married family life, and the statistics on marriage show an overwhelming benefit to married families.
Individuals who stay married generally love each other enough to want to stay married and/or have other qualities that contribute to a stable marriage. Thus you have an extremely strong confounding variable for 'married' vs 'divorced/single'. I suspect that far more likely than marriage itself being of benefit - it is the character and other qualities of individuals that tend to stay married that are of benefit.

quote:
I agree with you that forcing a single mother to work 2 jobs isn't going to work well, unless we craft the policy carefully. Why not require that single mothers on assistance contribute 20 hours per week to serving in a day care. That simultaneously solves the problem of them not having day care and gets rid of some of no work assistance problem. I still think we ought to implement policies that encourage marriage.
I favor something like this in principle - implementation details is a pain though. Also it isn't clear how we handle the issue of many parents really wouldn't be qualified to watch children (the barrier for having and raising your own children is essentially the physical ability to reproduce, and so there are lots of people who are attrocious at child care).

quote:
I think that's too simplistic an analysis of why conservatives shoot these programs down.
There are lots of reasons - some don't want competition from religious services - ie some Christian conservatives want forced dependency on the church as a tool for evangelism; thus the government taking care of these needs reduces dependency on the church.

quote:
Honestly, when entitlement voters are overwhelming Democratic voters, why would they rationally think otherwise?
The reason that minoritys tend to vote Democratic is that the message from your typical Republican politician is that if you aren't upper middle class - the reason is that you were too lazy and dumb to achieve it and all personal circumstances as regards wealth and position are purely through ones own meritorious actions or lack thereof; that any public assistance to the impoverished is theft from the wealthy; etc. Very rarely is political messages and goals about welfare reform based on actualities - instead they tend to be driven by the above narrative that poverty is strictly a moral failing of the impoverished and that therefore the poor are morally bankrupt.

quote:
Expect results from the people receiving help.
We have about 20% of the population that are unemployed. The reason is that the US simply doesn't have jobs for them. Almost every person in the US is willing to work. And the vast majority of that 20% will have adequate job skills to 'hold down' a job; and the remainder could likely be trivially trained to do so (the barrista training for Starbucks is extremely well designed for doing just that).

quote:
Require public service if individuals can't find private employment.
I'm fine with that but I'm not clear how we can convince the Republican party that we should do so.
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Pyrtolin
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quote:
Originally posted by edgmatt:
quote:
The total baseline benefit should really be enough that they have some amount to invest in improving their condition in some way after basic expenses are met
I disagree. Improving their condition has to come from the individual, not an outside source, or it won't be sustainable. I don't need money to go look for a job, or to work harder, or to do the thousands of other things it takes to "improve my condition".
You get gas to travel, day care for your kids, food to eat, professional qualifications, etc... for free? The tools, material, and experience in how to make things or otherwise provide marketable services for free and quickly enough that you don't need to eat or have a roof over your head during the time it takes to build the necessary experience and deal with the inevitable setbacks?

The expenses required to live don't magically disappear if you're unemployed, and covering those expenses while looking for a job costs money, never mind the additional costs inherent to the process of actually looking of available work, developing the skills necessary to perform that work, and applying for the positions.

Just looking for a job costs money, nevermind being able to be afford to get to it, maintain the level of health toe perform it, and to devote the required amount of time to do it- money that has to be spent long before doing the work generates a penny of income.

quote:
I think this state of mentality, (give you enough to not only get on your feet, but to support you and your family, and a little extra so that you can improve your condition) although noble, leads to an unhealthy level of dependence for the individual, and a poorer economic state for the rest of the country.
There's no logic to that statement- giving a person less than they need to be independent creates dependence, giving them as much as is needed to sustain independence promotes independence.

By your use of "unhealthy level of dependence" all of modern civilization represents an unhealthy level of dependence, because our current level of technology, living standards, and economic function are all the exact same kind of dependency on modern society to provide all the aspects of a modern life.

Sure a societal system of support to provide independence at the individual level represents a dependence on the society providing the support, but that's no different in any real sense than anyone else that benefits from the additional individual independence from being forced to devote their energies to pure survival by being a member of that society.

We live in a society that requires specialization, because it's through the coordination of multiple different specialists that we manage to create orders of magnitude more than each of us could ever hoe to do independently. It's that specialization that creates the dependence that you're framing as unhealthy, not the social structures that we need to establish to compensate for the downsides of such specialization, such as the degree of education needed to become a productive participant and the costs of granting credit to those who are already employed in producing food, shelter, and other survival needs for that society, particularly when the resources needed to produce those goods, such as arable land, is not commonly available in a given area for any given individual to simply abandon society and instead attempt to be completely self-sufficient.

Dependence on society precedes public support; public support is, in fact, a tool that we've created to help mitigate that dependence and provide individuals with a baseline level of independence so that they can freely choose their own economic behavior instead of being forced to let those that they would otherwise be in debt to for their survival control them.

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noel c.
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Pyrtolin,

I agree with (almost) everything that you said.

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RedVW on a Laptop
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Correct me if I'm wrong but, during the welfare reform under Clinton and Gingrich one of the original stands of the GOP was that there should be a service requirement for people on welfare. The Democrats termed this requirement as being the equivelent of imposing a form of slavery. The GOP countered that having a small weekly service requirement could help with delivery of public services that couldn't be directly funded by local and state governments. The Democrats then countered that that would be indentured servitude. Further they argued that welfare is an entitlement in and of itself requirering only a person's need as the justification for having benefit.

The press coverage at the time portrayed the GOP as slave holders. In the end the only change was for people to be actively engaged in either education or work training programs on a minimal hourly basis. These rules persisted until sometime in the last year when the requirements were made laughable. Ie getting a massage qualified as job seeking activity as did creative writing and drawing.

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Seneca
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I don't buy the line of reasoning that if you have a job, are paying for housing, food and other commodities, then if you lose your job and all your money that because those things you were paying for still exist you are entitled to them and should get them. When your working part of that economic transaction ceased, those resources should go to someone else. It is fundamentally unfair for someone to take something that they did not work for that someone else had to provide. This form of redistribution of wealth through taxation IS a form of slavery.
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RedVW on a Laptop
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Seneca I concur.

Let us say that I decide that I had a job that provided me with 32 k a year. I have a mortgage and common utilities for light, heat, and water. I have a five year old domestic car. My employer provides healthcare. I have a stay at home wife who looks after my two year old child.

My employer subsidizes my cellphone and Internet. I have managed to purchase all major household appliances. I have a radio, LCD TV, a Playstation 2, I can afford a case of beer a week. In short I'm living a lower middle class lifestyle ineligible for most if not all Federal entitlements OR if I am entitled to them I have chosen not to take them because I am of a self sufficient bent.

One day I wake up and realize that with a little less income, not only would I be eligible for most programs, but also that I wouldn't likely see much change in my lifestyle if I did go on aid. I'm missing out on my kids childhood.

So I start slacking off at work. I miss assignments. I miss quotas. In fact I manage my efforts in such a way that my overall performance is low. Not low enough to be outright evidence of being intentional but objectively low enough for an employer to actively replace me.

I get replaced. Because its not a voluntary seperation and because it is due to an inability to perform the required funtions of my job, I am now eligible for unemployment. I wisely advise my case worker that I feel I could do my previous job if only I had more education and skill training. So now I find myself eligible for federal and state education funding and stipends.

I then decide I want to seek a lower mortgage payment. So being currently unemployed and a student, I almost automatically am entitled to the current federal program that wipes tons of the balance, forebares payment amounts and directly lowers my monthly payment. Ill enjoy that benefit unless I decide that mainstreamed section 8 housing would be even better since I could find myself suddenly placed in a Freddy or Fannie property in a great neighborhood where my housing costs would be pennies on the dollar compared to my neighbors who have traditional mortgages.

Since I no longer have healthcare, my child goes onto the state administered but federally paid for child health and wellness plan. Next thing I know my wife and child are eligible for WIC. Mysel and my wife now qualify for free care as well since we are both unemployed thanks to Obama care.

Between my unemployment wages, student stipend, and essentially free housing I suddenly find that my cost of living has gone through the floor. I next find out that in addition to WIC I'm also eligible as a family for food stamps.

Then I realize I'm also eligible for a free cell phone for both my wife and myself thanks to Obama at zero cost to myself. Then I use that same phone to contact my utility providers to apply for the federal subsidize rate for poor people. I still get the same light, water, and heat but now all I pay for is the actual resource cost.

In fact I'm still living the same lifestyle I had before- but I'm not having to work for it myself. Tax time comes and thanks to my low income I'm eligible for EIC even though I'm just a student. I wind up paying no income tax and get a bonus check simply because I filed. My wife decides this is a great scam and chooses to become a subsidized student.

I'm actually doing better as an unemployed person than I ever did as an employed person. And there is no social stigma anymore being on welfare. I know this because the federal government advertises in the mass media to inform people that there is no shame and that I'm entitled to these benefits because its not my fault or responsibility for why my life is the way it is.

Then one day as I'm lounging on campus discussing the required global warming seminar, I hear some idiot Young Republican speaker explaining why welfare is bad. You realize that what he states is true in your own personal case. You indeed owe your existence to the income transfers from others.

You go to the polls in November and vote straight Democrat.

That isn't far from what we have now.

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Seneca
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Red, you couldn't have given a better example. I think we're seeing similar situations to that all across America right now, and it's horrifying. People by nature are greedy animals, if their foreseeable short-term needs are being met, how can we possibly convince them that in the long run this is unsustainable and ruinous and that in the end it will be bad for them? I only see this ending when the government collapses from having strangled its tax base for ever-increasing funds to pay for this growing welfare state.

[ August 24, 2013, 04:28 PM: Message edited by: Seneca ]

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RedVW on a Laptop
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History shows that when a government becomes the accepted agency of charity, and the government charity becomes entitlement- the government and its society it represents collapses.

Pick nearly any communist country. They fell or adopted a more open market. The exceptions of corse being Cuba and North Korea. Both of which continue on only due to cash inflows from Russia and China respectively.

Collapse of Empire can be directly traced to social entitlements delivered by government agency. Ancient examples Egypt and Rome. Later examples Byzantium and the Ottomans. Later examples Imperial China and Imperial Russia. Modern examples Soviet Union East Germany.

Collapse of socialist systems are the current examples. In states where the government and not social norms, religious norms, or philosophical norms became the provider of what is known as charity, we now see devaluation of GDP, massive unemployment. Collapse of economic systems. And riots in the streets. Ie Southern Europe fiasco we have now. Or look at the socialists in South America or the African socialist governments that aren't already in armed conflict or under military dictatorship.

It is inherently unhealthy over a long term for a people to derive their livelihood from the government. If you have made the government also the grantor of charity and the government derives political power from the granting of charity there are only a handful of outcomes.

1. Economic collapse due to first hyper inflation followed by hyper deflation.

2. An outside agent provides stable liquidity through cash infusions

3. Productivity declines leading to a cycle requiring less and less workers but more and more government charity

4. Collapse of society where the young get nothing they normally should have in abundance while the aged get nothing they expected or promised whereby economic activity ceases and political agitation becomes violent

5. Outside invasion and conquest

6. Civil War or Revolutionary War whereby the original state is either fundamentally changed or results in a dismemberment

The reality is there has yet to ba a society that can afford to keep a large percentage of its political citizens on a government administered entitlement or charity.

We already have a significant number of people who pay no federal tax on either investment or income. We currently have one of the lowest work force engagement levels in history. We have one of the highest and longest sustained unemployment level in our history. We have a frightening percentage of our population on food stamps. We have a frightening number of people in section 8 housing. We have a frightening level of people on SSI. We have a frightening level of government employees. Etc

Reality is we are currently lucky that we haven't initiated a perfect storm yet.

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LetterRip
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Red,

quote:
History shows that when a government becomes the accepted agency of charity, and the government charity becomes entitlement- the government and its society it represents collapses.
I'd say that is a misreading of history.

quote:
Pick nearly any communist country. They fell or adopted a more open market. The exceptions of corse being Cuba and North Korea. Both of which continue on only due to cash inflows from Russia and China respectively.
The fall of communist countries had quite a bit different causes of collapse - primarily due to corruption, poor design of central management (and ****ty management practices in general), and perverse incentives. I don't see a hand in this for 'government charity'. Also communisty coutries were generally 'welfare to work', not charity.

quote:
Collapse of Empire can be directly traced to social entitlements delivered by government agency. Ancient examples Egypt and Rome. Later examples Byzantium and the Ottomans. Later examples Imperial China and Imperial Russia. Modern examples Soviet Union East Germany.
I invite you to make the case for your claim. Sounds pretty questionable.

Also 'charity' and 'public benefits' and 'entitlements' aren't the same thing.

Education, sanitation, and basic healthcare seem fairly obvious benefits to the state for improving quality of human capital.

The US problem is that we have far more human capital than we can productively use - we could do 'make work' or we could use it for infrastructure revitalization - however any such government contracts would tend to be taken by existing contractors and their existing employees, so wouldn't put much of a dent in unemployment.

quote:
We already have a significant number of people who pay no federal tax on either investment or income. We currently have one of the lowest work force engagement levels in history. We have one of the highest and longest sustained unemployment level in our history. We have a frightening percentage of our population on food stamps. We have a frightening number of people in section 8 housing. We have a frightening level of people on SSI. We have a frightening level of government employees. Etc
This is purely due to

1) lack of demand for labor (outsourcing, H!B Visas, exporting of manufacturing jobs, automation)
2) what employers are willing to pay for labor (the working poor, who end up having to stay on food stamps and other public benefits, etc.)

It isn't the public provided benefits and services that are the problem or risk, it is the lack of employment opportunities.

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RedVW on a Laptop
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LR

No offense but my examples are pretty common ones that most historians have pointed out the bread and circus effect. Namely government dependency leading to ever expanding entitlements to the point that one of the above happen.

Look to the imperial entitlements the Chinese Emperors saddled themselves with. Look at the effects of the city entertainments food and shelter grants on Byzantium. Look at what happened when the Czar free bread and soup system broke down.

I'm not trying to cut you short but the reality is as I stated.

The lack of demand for labor is due to the negative reaction by the private sector to ever increasing government handouts and wealth transfers.

What you say it is due to is actually just symptoms.

Not to go all Atlas Shugged on you, but if you were a manufacturer or industrialist would you start an enterprise here in this country? Where youLl suffer the highest corporate tax rate in the first world? Where capital management and creation is penalized as both investment and resource? Where the average worker is either under skilled and over paid or under knowledges and demanding higher pay? Where local and state tax policy determines your net yearly result? Where you find yourself often competing with government for market share and access?

Where the government dictates 25.% of the economy directly?

You sure you want to invest in a place like this?

Ill go to Ireland or Hong Kong or Vietnsm.

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LetterRip
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RedVW,

I don't give much credit to the views of 'most historians' - historians as a whole seem pretty poor at analyzing cause and effect.

You seem to have swapped the direction of causality - massive hunger leads to handouts; handouts are a short term fix because the underlying cause of the widespread hunger (crop failures) isn't addressed. The nation runs out of ability to continue abating the starvation and civil war happens.

quote:
The lack of demand for labor is due to the negative reaction by the private sector to ever increasing government handouts and wealth transfers.
Wow, that is one of the most bizarre assertions I've heard of. All wealth transfers and handouts end tomorrow - how would that stimulate demand? Bill Gates hasn't held off on purchases because he is afraid he won't have enough to afford something. Nor has investment been 'held back' due to taxation.

I forgot a major point to my list of 'lack of demand for labor' - many goods are now IP goods with nearly infinite economy of scale - movies, television, games, software in general, many internet services.

quote:
Not to go all Atlas Shugged on you, but if you were a manufacturer or industrialist would you start an enterprise here in this country?
According to Bloomberg we rank #2 overall for best country to start a new business.

quote:
United States
Overall Rank: 2

Economic Integration: 4

Business Startup Cost: 8

Labor/Material Cost: 3

Transport Cost: 7

Less Tangible Costs: 27

Local Consumer Base: 38

Vietnam doesn't even make the list, Ireland doesn't make the top 20, Hong Kong is #1, but the differences are slight from the US.

http://images.businessweek.com/images/images/lede/12/sr/best_countries_for_business.pdf

I suspect that Bloombergs is a bit more knowledgable on the topic than you [Smile]

For the US the biggest risk is competing with a corporation with political influence.

quote:
Where you suffer the highest corporate tax rate in the first world?
Actually we have one of the lowest effective rates; lower than that of Hong Kong for US multinationals.

quote:
The Government Accountability Office (GAO) has analyzed financial data reported by large United States multinational corporations to the Internal Revenue Service (IRS), and concluded that they paid an average effective rate of only about 13 percent of the pretax worldwide income that they reported in 2010.

[...]

When foreign and state and local income taxes are included, the ETR for profitable filers increased to around 17.4 percent, while the inclusion of unprofitable firms, which pay little if any tax, raised the ETRs to 22.7 percent, because the losses of unprofitable corporations greatly reduce the denominator of the measures. Even then, however, all of the ETRs were well below the top 35 percent statutory tax rate.

http://www.tax-news.com/news/US_Effective_Corporate_Tax_Rates_Seen_Much_Lower____61325.html

So 13-17.4% for US versus 18% for Hong Kong (Headline number is always 15%, but that excludes the local corporate taxes which area bout 3%; the US number includes local taxes).

quote:
Where capital management and creation is penalized as both investment and resource?
We have one of the most generous treatments of capital in the world.

quote:
Where the average worker is either under skilled and over paid or under knowledges and demanding higher pay?
That isn't really the case, labor is cheap, skilled, and plentiful and highly productive. See Bloombergs report, we rank at almost the top.

quote:
Where local and state tax policy determines your net yearly result?
???

quote:
Where you find yourself often competing with government for market share and access?
What do you think the private sector would be 'competing with government for marketshare and access' - our government provides fewer services than almost any industrialized country in the world, and even those provided by the government tend to be outsourced to private contractors.

quote:
Ill go to Ireland or Hong Kong or Vietnsm.
Hong Kong is kinda reasonable (the other two choices are a bit dumb) but you end up without any real advantage compared to the US. If you aren't planning to compete with one of our major multinationals, then the US is almost certainly the better choice.
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LetterRip
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Understated Hong Kongs tax rate,

quote:
Hong Kong has a flat corporate tax rate of 16.5% on assessable profits.
http://www.guidemehongkong.com/taxation/corporate-tax/hong-kong-profits-corporate-tax-guide

Also they have taxes on IP at 5% of the value licensed.

The US it is possible to have negative tax rates, so overall the US tax system is much cheaper in the US over the long run for a multinational than Hong Kong would be.

[ August 24, 2013, 09:36 PM: Message edited by: LetterRip ]

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RedVW on a Laptop
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Lr
I'm sorry I just don't have the time. It's a forest for tree moment here. I'm seeing the forest burning and you are pointing out the shrubbery around the most exceptional trees.

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LetterRip
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Also should be noted that comparing Hong Kong - a city of 7 million, to the US is a bit silly. Given we are only slightly behind Hong Kong for the entire US, I bet for a number of cities we kick Hong Kongs butt.
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RedVW on a Laptop
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LR
Ill go where taxes are minimal, access to markets is high, transportation cost and access low, and where the labor force is both skilled and creative. Eg that's why you pick Ireland over the usa

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LetterRip
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See the comments above, the US wins on all of those - supperior labor; cheaper transport; ready access to market; and cheap taxes.

There are two corporate tax rates in Ireland - one for 'trading' income (12.5%) and one for 'non-trading' income (25%).

So unless you can restructure your corporate income to be recognized as a stock trade, you'll pay more in corporate taxes in Ireland than in the US.

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LetterRip
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Here is another source for Labor Productivity

http://www.jpc-net.jp/eng/research/2012_02.html

US ranks 3rd, Ireland 4th. And for manufacturing productivity we are #1.

[ August 25, 2013, 03:39 PM: Message edited by: LetterRip ]

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KidTokyo
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Seems like ever since the Reagan era of fake-libertarianism, we've been caught in the false dichotomy exemplified here.

Whenever we discuss "government handouts" and "welfare" and so forth, it's important to remember that what this boils down to is someone working more than they should, getting less benefit than they should, for the profit of someone else who works less and gets more.

Why then do these discussions always focus on the bottom of the economic ladder, as though that were the only place this phenomenon occurs?

State governments and judicial systems actively support and enforce complex corporate contracts, at considerable expense, thus greatly increasing the market value of their stock. Shouldn't we recognize this as a handout? As with the bailouts? Or military industrial purchases of from the private sector?

In the past three decades, the government has given countless gifts to the credit and banking industries, writing policies that have made these entities vastly more wealthy and powerful. Many acknowledge this, but don't properly consider the effect on wages.

Due to easy, government-back credit, the most expensive commodities (housing, education, and now to some extent healthcare) have inflated bubble-wise far ahead of wages well up through the upper-middle class.

If people at the bottom are suffering, the primary reason is the complete lack of control they have over their work environments and their wages. I don't like the idea of welfare, but as a reason to decry "big government" it seems comparatively frivolous. Even under the most generous welfare regime, the government is not returning what it takes proportionally. Our current economic system is designed for the specific purpose of extracting wealth (as opposed to simply "money") from the working and middle classes and feeding it to the rich and powerful, and that is essentially what it does and has been doing.

For most of the middle class and working class in this country, credit is the primary form of welfare. Actual welfare is there for those so badly-off that they cannot obtain credit.

A higher federal minimum wage and/or stronger unions would solve most of this problem, that we have neither is the result of suppression of popular interests and needs by both major political parties.

[ August 25, 2013, 08:57 PM: Message edited by: KidTokyo ]

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Seriati
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quote:
Originally posted by LetterRip:
quote:
When foreign and state and local income taxes are included, the ETR for profitable filers increased to around 17.4 percent, while the inclusion of unprofitable firms, which pay little if any tax, raised the ETRs to 22.7 percent, because the losses of unprofitable corporations greatly reduce the denominator of the measures. Even then, however, all of the ETRs were well below the top 35 percent statutory tax rate.
http://www.tax-news.com/news/US_Effective_Corporate_Tax_Rates_Seen_Much_Lower____61325.html

So 13-17.4% for US versus 18% for Hong Kong (Headline number is always 15%, but that excludes the local corporate taxes which area bout 3%; the US number includes local taxes).

Why would you compare an ETF rate to a base rate? The direct comparison is 35% to 18%. Do you think that HK corps aren't able to use local tax rules to change their tax payments?

Instead of looking at the GAO report on the US ETF why not look at ETF comparisons globally? Several indicate the US has the highest ETF rate as well as the highest statutory rate.

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Seriati
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quote:
Originally posted by Pyrtolin:
You get gas to travel, day care for your kids, food to eat, professional qualifications, etc... for free? The tools, material, and experience in how to make things or otherwise provide marketable services for free and quickly enough that you don't need to eat or have a roof over your head during the time it takes to build the necessary experience and deal with the inevitable setbacks?

You get 12 years of free education, and if you truly are impoverished you get grants at most institutions of higher learning for an additional 4 years of education. Very few college grads are not employable, heck very few high school grads are not empoyable.

What are you looking for here? A way to alter the life implications of those who managed to get well into adulthood without a single marketable skill? If a healthy person exists for whom there are no work options (as in no work they can do) you may have a point. Otherwise training isn't the real issue we need to address. The issue is why people aren't working now.
quote:
Originally posted by LetterRip:

Individuals who stay married generally love each other enough to want to stay married and/or have other qualities that contribute to a stable marriage. Thus you have an extremely strong confounding variable for 'married' vs 'divorced/single'. I suspect that far more likely than marriage itself being of benefit - it is the character and other qualities of individuals that tend to stay married that are of benefit.

Is it your assertion that we're largely talking about divorced mom's being on public assistance? Take a look again, its largely never been married moms, which we all acknowledge need more help. However, that basic empathy has led us down a bad path to incentivize the situation that should have us looking at what we can change.
quote:
There are lots of reasons - some don't want competition from religious services - ie some Christian conservatives want forced dependency on the church as a tool for evangelism; thus the government taking care of these needs reduces dependency on the church.
Red herrring. I'm sure such people exist, but this is not a valid argument nor one I would believe a material amount of people accept.
quote:
quote:
Honestly, when entitlement voters are overwhelming Democratic voters, why would they rationally think otherwise?
The reason that minoritys tend to vote Democratic is that the message from your typical Republican politician is that if you aren't upper middle class - the reason is that you were too lazy and dumb to achieve it and all personal circumstances as regards wealth and position are purely through ones own meritorious actions or lack thereof; that any public assistance to the impoverished is theft from the wealthy; etc. Very rarely is political messages and goals about welfare reform based on actualities - instead they tend to be driven by the above narrative that poverty is strictly a moral failing of the impoverished and that therefore the poor are morally bankrupt.
What's funny about this is that it is so false. I get why you think it though, the media screens out messages they don't really buy into, so they report every bizarre extreme statement by Republicans but let the vast majority of positive and uplifting ones die on the vine.

Virtually every politician on the right has a position or message that should appeal to poor voters, but you're correct they're going to emphasize self-reliance.

So yes the "message" they hear, largely from Democrats, is one of the right "taking away their entitlements", "hating poor people" and generally only wanting the changes they advocate for cynical big business or racist reasons. Gone is any rational discussion about whether these changes will actually benefit people by getting them into better situations where they actually get paid. And Democrats are as much to blame for this as anyone as its not in their interest to damage their own guaranteed voter base.

quote:
We have about 20% of the population that are unemployed. The reason is that the US simply doesn't have jobs for them. Almost every person in the US is willing to work. And the vast majority of that 20% will have adequate job skills to 'hold down' a job; and the remainder could likely be trivially trained to do so (the barrista training for Starbucks is extremely well designed for doing just that).
Two things, first I agree there aren't enough jobs. Second, I disagree that virtually everyone is willing to work - take a look at the swollen disability roles (most common increases are conditions that doctors can't directly verify or refute) - that show that there are a good number interested in not working.
quote:
quote:
Require public service if individuals can't find private employment.
I'm fine with that but I'm not clear how we can convince the Republican party that we should do so.
It wasn't the Republican party that stopped this from becoming the law before.
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G3
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quote:
Originally posted by LetterRip:
Also should be noted that comparing Hong Kong - a city of 7 million, to the US is a bit silly. Given we are only slightly behind Hong Kong for the entire US, I bet for a number of cities we kick Hong Kongs butt.

No, we don't. In the 2013 index of economic freedom, the top 5 are Hong Kong (19th year in a row at #1), Singapore, Autralia, New Zealand, Switzerland. The United States has slipped to #10 - essentially equivalent to Ireland now.

As to the point of Redskull, why would anyone work when you can retain a similar, or perhaps even higher, standard of living on government subsidies? People will, as always, do what they are incented to do and in many states they are now incented to get on and stay on government support. With ObamaCare, that incentive is accelerating for both the employed and employer. It's a ever increasing downward spiral under the current regime.

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MattP
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quote:
Two things, first I agree there aren't enough jobs. Second, I disagree that virtually everyone is willing to work - take a look at the swollen disability roles (most common increases are conditions that doctors can't directly verify or refute) - that show that there are a good number interested in not working.
In a crappy job market I don't see disability fraud being an indicator of anything more than an inability to find another source of income. That's the most reasonable explanation for a concurrence of an increase in disability rolls with an increase in unemployment.
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TomDavidson
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quote:
As to the point of Redskull, why would anyone work when you can retain a similar, or perhaps even higher, standard of living on government subsidies?
Wouldn't this be true of any level of subsidy? That if you can not starve by working for just above a starvation wage or by accepting a government handout that keeps you from starving, you are being incentivized not to work?

(Note that I don't grant the premise, BTW. I suspect that most people do in fact want to work. But the argument being presented here is an argument against charity in general, nothing less.)

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