The rigged economy

[zoogs]

http://www.vox.com/policy-and-politics/2016/7/15/12200990/bernie-sanders-economy-rigged

 

This is a good overview of the topic.

 

Sanders thinks Koch and his billionaire comrades did it, more or less. Koch thinks an active, hands-on approach to economic regulation an approach Sanders strongly favors has allowed interest groups to capture the regulatory process and rig markets in their favor. Sorry, Bernie fans: Charles Koch is a lot closer to the truth.

It's closer to the truth to say that the middle class, entirely of its own accord, reliably opposes the high middle-class tax rates and generous progressive transfers that we see in the sort of egalitarian country Bernie Sanders would like the United States to become.

 

Some of this opposition has to do with Americas fraught race relations: Many white voters, who are more likely to be wealthy, dislike welfare transfers to black Americans, who are more likely to be poor. Some of it has to do with the unusual prevalence in the United States of the belief that effort is more important to economic success than luck.

As someone who supports said egalitarian country that Bernie Sanders would also like to see, I think the point raised there is an important one. Part of a more egalitarian country is we in the middle class probably paying more in taxes. But there is enormous resistance to this idea. The Middle Class is politically worshipped, or perhaps better to say pandered to, because we are numerous and wield electoral power.

 

Anyway, the idea from the first quoted passage gets fleshed out in a lot more detail. So I'm curious about you guys, with your diverse political leanings and takes on the economy, and so forth. What are your thoughts?

[Danny Bateman]

Interesting that that was penned by the VP for policy at a Libertarian think-tank. So it's not surprising that their main takeaway is to call for massive deregulation.

 

It's a complex topic, for sure. Sanders and Trump have had success attacking a rigged system because they present sufficiently simple, digestible assertions and solutions. I think that this article is likely closer to the truth, but it's hard to condense what it said down into a form that would be useful on a campaign stump. Hence, Sanders blames the billionaires and Trump blames corrupt politicians.

 

The truth can be hard to sell, sometimes. But I'm not entirely convinced that utter deregulation would be either the solution to the problem, nor good for our society at large.

 

I do think American exceptionalism is at least in part culpable in preventing the type of society you and Sanders yearn for, Zoogs. A huge part of the American political culture is the vast majority of people vehemently, almost irrationally opposing any kind of tax increase. It's hard to sell the benefits when people tend to stop listening after "We're going to raise taxes... (to provide X)". But they're part and parcel to creating this type of progressive society.

[JJ Husker]

I think it's some of both and neither that rigged the system. It's not as simple as saying it's this or that or one thing over another. It's a conglomeration of everything. Its real difficult to fault something like licensing of doctors or other specialized trades. It would seem a necessity of a civilized society to help assure that professionals are indeed specialists in their field. And really what is preventing people from becoming one of those specialists? Nothing except their socioeconomic background or laziness. Surely it is a tougher hill to climb for many disadvantaged but still scores of them manage to overcome. I think a bigger culprit and one that wasn't mentioned in the article is the attitude that somebody owes them something and they shouldn't have to work hard to achieve their goals or dreams. Entitlement to the good life without earning it yourself. Sorry, but if you want to make it in this world, you better pull up your own pants and get to work. Life wasn't meant to be easy. If you're not willing to work hard for it, why should I work harder for you and me?

 

And that brings me to this absurd idea that we need to increase taxes on the middle class so that we can transfer more to the poor. That is pure bullsh#t. Yes, my eyes do glaze over as soon as a politician goes there. Why should I have to pay 35%, 40% or more so that others can claim the proceeds of my hard work? I'm not opposed to the rich paying their fair share, the middle class paying their fair share, and I'm not opposed to helping the less fortunate that are incapable of helping themselves but the middle class is being bled dry at an already excessive rate. It's just one of those utopian pipe dreams of the liberal progressive that everyone should be happy and on equal financial footing. As nice as that might be, it is never ever going to happen. It's never been that way anywhere in the history of the world and it never will be. People who think that is somehow achievable, especially without everyone pulling their own weight, are not realistic and are fooling themselves. Problem is they don't realize it because it sounds so nice and seems less harsh than admitting there have always been winners and losers in life and there always will be.

[zoogs]

I think the point about licensing is that any group that wields political influence will shape the rules to favor them -- often at the expense of the whole. Ex: http://www.govexec.com/state-local/2015/01/state-licensing-rules-lawsuits/104151/

 

Regarding the concept of 'fairness': isn't it possible we live in a world where both the middle class and the rich have secured for themselves government handouts? In an alternative world, sure, perhaps your tax rate goes up. But perhaps many of the other nightmares, burdens, and socioeconomic traps wash way. Say, the ability to launch a hairbraiding business.

 

Shouldn't there be an interest in lubricating inefficencies? There's a lot of latent potential in the American workforce that never gets realized because people are stuck. Consider poorer families where parents don't have time for kids, and kids don't have time for school. We are all poorer for that. We lose great artists, scholars, entrepreneurs, etc -- because people who might have become any of those things have neither the time nor the safety net to pursue them.

 

It seems that middle class has been largely convinced, at the point of a gun, to hold on to their survivable station so long as powerful interests can stay the dominant winners. It's a Stockholm alliance where we agree the lower rungs probably deserve to be stuck where they are.

[JJ Husker]

I don't think anyone "deserves" to be stuck in bad circumstances. I just think it is inevitable for some to be stuck. I wish that weren't the case but I believe it is. I might have a strange thought on why this is but let's assume that everyone is equally wealthy for a minute. There are a finite amount of resources, food, etc. And everyone is getting their exact fair share. I'll call this everyone being at 50%. As soon as one person moves up one notch to 51%, I believe that requires somebody to drop to 49%. Hopefully you can see where I'm going with this. In a way, it is mathematically impossible to achieve a perfect balance. And even if it was possible, there will always be some who either work harder or manipulate the system to get ahead of others which makes it inevitable that some will have less. Anyway that is my realist view on why it is impossible to achieve a utopian balance. Now can we at least make it better? Sure we can. But I don't believe the go to answer is to raise taxes on the middle class. That seems to be the easy well of resources that many constantly want to tap. I think we can do many things to get the rich paying their share. But I also think we need to change the mindset of many that feel they are owed something in this life and that it is up to others to provide it for them. I don't necessarily blame people for arriving at that place. The system conditions them to get there. Generational welfare, hopeless attitudes generated by living in poor inner city areas etc. Those are big contributors that keep people from achieving more than life has dealt them. It's a much deeper problem than simply robbing Peter to pay Paul will fix. There just aren't enough Peters to go around. (Yes I recognized that as soon as I typed it but the OOC thread needs fodder).

[zoogs]

I wish that weren't the case but I believe it is.

Right. It is the case.

 

But the government has the ability to make people unstuck. It costs money, sure. But that's money well spent, because now it's resolving inefficiencies and enabling people to be productive when they couldn't otherwise.

 

It's not a zero sum game. That assumes the size of the pie is constant. But I am would argue that there are possible worlds where X and Y are the numbers of Americans who happen to be stuck in situations where they aren't likely become productive; that, depending on policy X >> Y, and that Y in this example is greatly preferable on the whole.

 

Speaking of productivity, I think it's awfully unproductive to reduce our thinking to worrying about people who will 'take advantage'. Most people will take the resources that are made available to them and try to use it to better their situations as best they can. Peter is already being robbed for the sake of Paul, anyway. It's just that Paul is really some rent-seeking finance executive and Peter is everyone who isn't particularly helped by the sanctioning of their singularly self-enriching activities.

[JJ Husker]

My point isn't to worry about those who might take advantage of the system. There will always be those, poor and rich alike. I think we should identify them and try to stop it but that also is just another piece of the overall probelem. My point was to implement policies that discourage the entitlemental mentality and the attitude that things are hopeless. I'm not near as worried about the people that may take advantage as I am about the system that makes them feel that is their best choice. I believe in helping the truly less fortunate. In some case that may be transferring my wealth to help a blind or crippled person. In many cases though it may be a tough love approach of saying you're capable so get out there and get it done yourself. Give a man a fish, feed him for a day but teach a man to fish and feed him for life.

 

These discussions always tend to get spun like the bad ole conservative is greedy and doesn't want to help the poor. That just isn't the case, at least for me. I just happen to think our current ssystem is somewhat self perpetuating when it come to poverty and the best solution in many cases is to fix the root problems of hopelessness and entitlement rather than just feeding it more by transferring more money and escalating the problem.

 

I don't want to get too deep into personal finances but I can guarantee you that what I pay in taxes and contribute to charity is well in excess of my fair share. I am comfortable and could afford slightly more but I am pretty much at the point that enough is enough. That surely isn't the case for many but I believe it is the case for many in the middle class. There just as to be a better solution than more and more wealth transfer. It is not an efficient way to get where either one of us want things to be. And let's not kid ourselves into thinking we want anything different. We just disagree on how best to get there. It's a tough problem to solve either way and unfortunately I believe we can only make it degrees better but inevitably a chasm will always exist between haves and have nots. Maybe I am in error by projecting my personal situation as being that of the whole middle class but that is where I am and I'm not going to roll over and take anymore. I know there are benefits for everyone, me included, for the poor getting their lot in life raised but I believe the middle class is generally already getting hit too hard. There has to be a better more comprehensive solution. If there isn't, things won't ever improve.

[Landlord]

What might be some real life, practical ideas playing out in terms of the "teach a man to fish and feed him for life" mentality when it comes to the poor and disadvantaged?

 

 

As someone who is completely ignorant and oblivious of how most things in our government work, I have a guess of a belief that a well-educated public is probably the most valuable underpinning for setting people up to succeed. So, start with the education system?

[JJ Husker]

What might be some real life, practical ideas playing out in terms of the "teach a man to fish and feed him for life" mentality when it comes to the poor and disadvantaged?

There are literally thousands of ways that don't involve simply handing over money directly to the less fortunate in the form of some aid. Occupational training, education, policies that encourage manufacturing by our citizens rather than purchasing cheap goods from other countries, real healthcare reform......

 

I'm not opposed to helping those that can't help themselves even at the expense of some taking advantage. But our current system would seem to help perpetuate and worsen the problem rather than fixing it at the core. I think one of the biggest problems is enabling the mentality and attitude and condition that makes people feel hopeless and that in some cases a handout or government program is their best option. As an example, I don't want to get too anecdotal but around here I think there are jobs to be found for some fairly low skilled people yet I constantly see visibly healthy working aged people standing on a corner with a sign asking for help. Quit walking from corner to corner, put the sign away, and starting walking door to door looking for a job. Every once in awhile I will give some of these people a few bucks, if my perception is they really need help. But a few times, when I have had some temporary type labor work at my business or once when I had some physical yard work at my house, I stopped and told a few of these people that I had a day or two of work that I would pay them for. Crickets, all they wanted was the handout even though the sign said will work for food. The most work many of them want to do is stand there with that sign. That is the attitude I would like to see fixed. Giving more of a handout may help a few but it won't fix the root problem.

[JJ Husker]

I also want to comment on something the Vox author linked in OP said. That many white voters, who are more likely to be wealthy, dislike wealth transfers to blacks. I feel sorry for anybody who jumps to those conclusions. I can honestly say that the picture I get in my head for the typical undeserving welfare recipient is that of a white person. I'm sure there are many who do feel that way but why lately must everyone be categorized as some sort of racist. It seems to me that liberals go that route almost invariably. It's like they want to paint the other side in the worst terms possible, always. As a fiscal conservative socially moderate person (no longer republican btw) I am fed up with the stereotyping of white people who are against any liberal position. Is that constant driving of the wedge really helping things? I don't want taxes raised on the middle class so therefore I am a racist? That guy can go f himself.

 

And no I'm not claiming some sort if white persecution complex. I am just getting fed up with race being brought into every f'n issue. I really don't believe it is that prevalent of a problem in most issues and it sure isn't for me. Is it helpful to falsely associate a person's position on taxes to race? I don't think so.

[zoogs]

There are literally thousands of ways that don't involve simply handing over money directly to the less fortunate in the form of some aid.

I really think handing over money is the most efficient, least wasteful way to help.

 

Zero overhead in bothering to try and sort out who deserves and who doesn't deserve it. I think the entire preoccupation with whether people are going to be encouraged to get lazy is a trivial aside.

 

Occupational training, education, policies that encourage manufacturing by our citizens rather than purchasing cheap goods from other countries, real healthcare reform

Several of these things can probably be considered entitlement; government spending to provide a service. I like some of these ideas, too. But so for example, to provide education would require wealth redistribution, including from the middle class. And that's fine. Again I think the argument is greater efficiency overall.

 

I'm not sure where the anti-outsourcing stuff comes in.

 

That many white voters, who are more likely to be wealthy, dislike wealth transfers to blacks.

The link for this is broken, but I hardly think the writer was pulling speculation out of thin air. http://www.asu.edu/mpa/Bartels.pdf That racial perspectives color policy perceptions would be the least shocking thing in the world.

[zoogs]

Here's a good passage from an Atlantic article that dovetails nicely with some of this discussion: http://www.theatlantic.com/business/archive/2016/07/the-republican-hydra/491525/

There are straightforward ways to help displaced workers and families in poverty. But many of these ideas involve the politically toxic notion that a fabulously rich country should send more money to vulnerable workers and children in poverty.As a share of GDP, the United States spends one-eighth of what Germany devotes to retraining workers and and one-third of what France spends on early education. With relatively low redistribution spending, the U.S. has the highest after-tax inequality in the OECD.

And with regard to charity, I think the government can simply do a better job, with less overhead, and greater reach. Individuals can give some change to a few local people on the streets (won't this merely encourage them to spend their days doing this?) or cut checks to charities and watch 50, or 80% of that go to administration costs. Or the government can use the already extant machinery of taxation and distribute it anywhere around the country it might need to go.

[JJ Husker]

I had all kinds of ideas on how I wanted to respond to that but it just isn't worth the effort. I wouldn't know where to start with trying to convince someone who feels our government is the most efficient way to do anything. We are 180 degrees apart and headed opposite directions. I just don't have the energy for it. Sorry.

[cm husker]

What might be some real life, practical ideas playing out in terms of the "teach a man to fish and feed him for life" mentality when it comes to the poor and disadvantaged?

 

 

As someone who is completely ignorant and oblivious of how most things in our government work, I have a guess of a belief that a well-educated public is probably the most valuable underpinning for setting people up to succeed. So, start with the education system?

For me, it's not about "teaching a man to fish" as much as it's about other fishers to stop telling the man he can only keep fish of a certain size, which means he can't fish at all because his gear can't reel in the larger fish.

 

I would love to improve the education system, but I think a meaningful shift there is a bit of a pipe dream. The variables are too great and the results too hard to monitor.

 

I think we should really focus on "clean", non distorting forms of welfare (like the negative income or minimum income that's been discussed).

 

We should focus on reducing policies that allow the wealthy to shield wealth at the expense of the less wealthy.

 

Ps, that first paragraph is an inelegant argument for reducing or ending the minimum wage. We should be out sourcing to inner city USA, not India, for example. But our laws won't allow it.

[cm husker]

Here's a good passage from an Atlantic article that dovetails nicely with some of this discussion: http://www.theatlantic.com/business/archive/2016/07/the-republican-hydra/491525/

 

There are straightforward ways to help displaced workers and families in poverty. But many of these ideas involve the politically toxic notion that a fabulously rich country should send more money to vulnerable workers and children in poverty.As a share of GDP, the United States spends one-eighth of what Germany devotes to retraining workers and and one-third of what France spends on early education. With relatively low redistribution spending, the U.S. has the highest after-tax inequality in the OECD.

And with regard to charity, I think the government can simply do a better job, with less overhead, and greater reach. Individuals can give some change to a few local people on the streets (won't this merely encourage them to spend their days doing this?) or cut checks to charities and watch 50, or 80% of that go to administration costs. Or the government can use the already extant machinery of taxation and distribute it anywhere around the country it might need to go.

Zoogs, what is the basis of your assumption that government is less wasteful/more effective than private charities? I feel like it's even less accountable to charities because once a charity is put on a "watch list" by the private charity watch dogs (navigator or star or something like that), they feel real pain in the form of donation cuts.

 

On conversely, when the gov is discovered to be engaged in straight up boondoggles, leaving aside just largesse, there is hardly ever real consequences.