Article arguing the failure of the government programs to help the poor.
A New War on Poverty
The old one has totally failed — we need a new one that encourages work and opportunity.
By Michael Tanner
Examples of the failures of government, large and small, are pretty easy to come by. Solyndra, the Iraq War, the response to Hurricane Katrina, Obamacare: Take your pick. But in terms of both wasted money and human suffering, it's hard to find a more egregious government failure than the War on Poverty.
It was 50 years ago today that Lyndon Johnson announced, as the centerpiece of his first State of the Union address, an "unconditional war on poverty in America." No one could deny that poverty was a serious problem at the time. Roughly 19 percent of Americans were poor, although the numbers had been falling steadily since the end of World War II. Fully 23 percent of children lived in poverty. The poverty rate for African Americans ran to an obscene 42 percent.
American government responded to Johnson's call by throwing money at the problem — massive amounts of money. Since 1965, federal, state, and local governments have spent more than $16 trillion on a panoply of anti-poverty programs. Last year alone, the federal government spent nearly $1 trillion on 126 anti-poverty programs, ranging from Medicaid to the Undergraduate Scholarship Program for Individuals from Disadvantaged Backgrounds.
There are 33 federal housing programs run by four different cabinet departments, including, bizarrely, the Department of Energy. There are currently 21 different programs providing food or food-purchasing assistance. These programs are administered by three different federal departments and one independent agency. There are eight different health-care programs, administered by five separate agencies within the Department of Health and Human Services. And six cabinet departments and five independent agencies oversee 27 cash-allocation or general-assistance programs. Altogether, seven different cabinet agencies and six independent agencies administer at least one anti-poverty program.
And the result of all this spending? Fifteen percent of Americans still live in poverty. Among children, the poverty rate is nearly 22 percent, barely a point below where it was in when the War on Poverty began. The poverty rate has declined significantly for African Americans, but that has more to do with efforts to end overt discrimination than with anti-poverty programs. Besides, it still remains far too high, at roughly 34 percent.
To oversimplify the math: Federal, state, and local anti-poverty spending totals more than $20,000 for every poor person in America, more than $60,000 per poor family of three. Given that the poverty line for that family is just $18,530, we could theoretically just mail a check to every poor family, wipe out poverty in America, and still save money.
Clearly, we are doing something wrong.
In fact, not only do government programs fail to lift people out of poverty, in many cases they undermine those things that actually do. For example, both academic research and experience provide a pretty solid idea of the keys to getting out of and/or staying out of poverty: (1) Finish school; (2) don't get pregnant outside marriage; and (3) get a job, any job, and stick with it.
But government programs discourage those efforts.
In 1964, just 6.4 percent of children were born out of wedlock. Today, nearly 41 percent are. Among African Americans, more than 70 percent of children are born to single mothers. At the same time, children growing up in a single-parent family are almost five times more likely to be poor than children growing up in married-parent families. Yet, as Charles Murray demonstrated years ago in Losing Ground, the overwhelming body of research shows that the increased availability of welfare benefits is directly correlated with an increase in out-of-wedlock births.
Welfare also undermines the work ethic. The best route out of poverty remains a job. Fewer than 3 percent of full-time workers are poor, compared with nearly 25 percent of those without a job. Even an entry-level, minimum-wage job can be the first step on the road out of poverty. But in 35 states, someone receiving each of the seven most common welfare programs could receive benefits that exceed what they could earn from a minimum-wage job. In 13 states, welfare effectively pays more than $15 per hour. And, in the eight most generous states, someone on welfare could receive benefits in excess of wages from a $20-an-hour job. For many people, we have made welfare a smarter choice than work.
Of course, even if we didn't discourage the poor from working, high taxes and excess regulation are making it harder for them to find jobs anyway. In 1965, the unemployment rate was just 5.4 percent. Today, it remains at 7 percent, a number that may underestimate the true level of those unable to find full-time work because many discouraged people have dropped out of the labor force altogether. With the full impact of Obamacare about to hit American businesses, and Democrats seeking both new business taxes and an increase in the minimum wage, we can expect the prospect of a job to remain outside the grasp of millions of poor Americans.
And one merely has to look around in any big city to see how government schools, despite ever more money, have failed low-income children.
We all seek a society where every American can reach his or her full potential, where as few people as possible live in poverty, and where no one must go without the basic necessities of life. More important, we want a society in which every person can live a fulfilled and actualized life.
Throwing more and more money at more and more government programs doesn't work. It is time to try a different approach.
Instead of attempting to make poverty more comfortable, we should focus on creating wider prosperity. We should end those government policies, such as high taxes and regulatory excess, that inhibit growth and job creation. We should protect capital investment and give people the opportunity to start new businesses. We should reform our failed government-school system to encourage competition and choice. We should encourage the poor to work, save, and invest for their future.
That might be a winning strategy for the War on Poverty.
— Michael Tanner is a senior fellow at the Cato Institute and author of Leviathan on the Right: How Big-Government Conservatism Brought Down the Republican Revolution.
http://www.nationalreview.com/article/367825/new-war-poverty-michael-tanner#comments
I like this guy, William Tanner.
Obama's 2014 War on the Poor
By Michael D. Tanner
To put it in today's standard D.C. terms, Democrats sure must hate poor people.
That's silly, of course. But there's no doubt that Democrats are preparing to push policies that are likely to hurt struggling low- and middle-income Americans.
Both the Obama administration and the Democratic leadership in Congress have announced that their top priority when Congress returns later this month will be extending unemployment benefits and raising the minimum wage. Both policies are likely to leave more Americans jobless — especially low-income workers with few skills, the very people Democrats claim they want to help most.
Take the extension of unemployment insurance. Labor economists may disagree on the extent to which unemployment benefits increase or extend spells of unemployment, but the fact that they increase the duration of unemployment and/or unemployment levels is not especially controversial. As Martin Feldstein and Daniel Altman have pointed out, "the most obvious and most thoroughly researched effect of the existing UI systems on unemployment is the increase in the duration of the unemployment spells."
In fact, even Paul Krugman, in the days when he was an actual economist rather than a partisan polemicist, wrote in his economics textbook:
"Public policy designed to help workers who lose their jobs can lead to structural unemployment as an unintended side effect.... In other countries, particularly in Europe, benefits are more generous and last longer. The drawback to this generosity is that it reduces a worker's incentive to quickly find a new job. Generous unemployment benefits in some European countries are widely believed to be one of the main causes of "Eurosclerosis," the persistent high unemployment that affects a number of European countries."
President Obama's former Treasury secretary Larry Summers estimated in The Concise Encyclopedia of Economics that "the existence of unemployment insurance almost doubles the number of unemployment spells lasting more than three months."
It's not hard to understand why. Incentives matter. Workers are less likely to look for work or accept less than ideal jobs as long as they are protected from the full consequences of being unemployed. That is not to say that anyone is getting rich off unemployment or that unemployed people are lazy. It's just simple human nature that people are a little less motivated as long as there is a check coming in. Indeed, research shows that, in the weeks just before benefits run out, workers spend more hours looking for a job and are as much as three times more likely to find jobs.
Of course, one should be careful not to overstate the effect — the overall impact on unemployment is likely to be modest. Studies suggest that the 2009 extension of unemployment benefits to 99 weeks, for example, raised the unemployment rate by 0.5 to 1.5 percentage points.
Still, that's hardly good news. And those most likely to suffer from extending this policy are the long-term unemployed. The longer a worker stays unemployed, the more his skills deteriorate. By extending the period spent without a job, extending benefits makes it less likely that an unemployed worker will eventually find a job, and reduces the workers' wages when they do find work. And low-income workers, with limited skills and frequent spells of unemployment, may find this a particular problem.
The second part of this one-two punch against employment is an increase in the minimum wage. Again, the overwhelming consensus among economists is that an increase in the minimum wage reduces available employment. In fairness, that consensus is not unanimous: Some studies, notably one by Princeton's Alan Krueger and Berkeley's David Card, suggest that at least small increases in the minimum wage have little or no impact on employment. But other economists have criticized the methodology of that study, and a comprehensive review of more than 100 papers on the minimum wage, by David Neumark and William Wascher for the National Bureau of Economic Research, found that 85 percent of them showed negative employment effects.
Given the current level of the minimum wage, the result of a small increase probably would not be catastrophic. For example, a study by Michael Hicks of Ball State University looked at the impact of the July 2008 minimum-wage increase in the United States and concluded that a 10 percent increase in the minimum wage results in a roughly 0.19 percentage-point increase in unemployment, meaning the loss of about 160,000 jobs.
But it is also important to understand that an increase in the minimum wage would not be taking place in isolation. Many businesses are already having to absorb a de facto increase in the minimum wage because of Obamacare. In 2015, businesses with more than 50 employees will have to provide health insurance to their workers or pay a $2,000–3,000 penalty. For a midsize employer that doesn't offer insurance today, that amounts to roughly a $1 per hour increase in a minimum-wage employee's compensation. And even those employers that provide insurance today will find their per-employee costs increasing as Obamacare drives up their premiums and requires that they provide more comprehensive and expensive insurance than they do now.
Increasing the minimum wage on top of this would almost certainly have a significant impact on employment.
Of course, Keynesians argue that extending unemployment benefits and increasing the minimum wage have a simulative effect on the economy, creating jobs. But for anyone not in total thrall to Mark Zandi's "multiplier effect," the evidence for such a stimulus is scant. In fact, a strong body of research suggests that, at best, spending on unemployment benefits adds only a few cents to economic growth for every dollar in outlays. Almost any other use of that money would provide more bang for the buck. There is even less evidence that minimum-wage increases are stimulative. The combination of Obamacare and a minimum-wage hike, in reality, would slow already weak economic growth.
Besides these two central proposals, Democrats are always willing to throw a few dollars to the poor in the form of increased welfare payments (witness the current debate over food stamps), but those programs, too, can discourage work. As the Cato Institute has shown, in most states the combined value of the most common welfare programs exceeds the earning potential of an entry-level job, discouraging welfare recipients from seeking those jobs and taking their first step up the economic ladder.
Democrats, then, seem to favor making poverty just a bit more comfortable rather than making serious attempts to reduce it through economic growth. The route out of poverty, and to a fulfilling and self-sufficient life, is through the dignity of work. Just 2.6 percent of full-time workers live below the poverty level, and the overwhelming majority of the poor would prefer the opportunity to stand on their own to continued dependence on government.
This year mark's the 50th anniversary of Democrats' declaration of a War on Poverty. Ironically, it seems as if President Obama and congressional Democrats have decided to mark the occasion by declaring a war on the poor.
Michael Tanner is a senior fellow at the Cato Institute and the author of Leviathan on the Right: How Big-Government Conservatism Brought Down the Republican Revolution.
http://www.cato.org/publications/commentary/obamas-2014-war-poor
Somebody finally admits America has a welfare state?The sky must be falling.
The Singularity will give us a successful Welfare State. :)
Quote from: Siege on January 08, 2014, 08:44:33 AM
To put it in today’s standard D.C. terms, Democrats sure must hate poor people.
Yeah the Federal Government has been a one party dictatorship for 100 years. The Republicans have absolutely zero influence over any policies of any sort.
So the pre-eminent libertarian think tank of the US thinks that the welfare state is a failure? Who would have thought...
Quote from: Valmy on January 08, 2014, 10:35:28 AM
Yeah the Federal Government has been a one party dictatorship for 100 years. The Republicans have absolutely zero influence over any policies of any sort.
I think you missed the point (such as it is): that well intentioned progressive policies such as a minimum wage and unemployment insurance extensions cause harm to the people they're trying to help.
Quote from: Admiral Yi on January 08, 2014, 10:37:36 AM
Quote from: Valmy on January 08, 2014, 10:35:28 AM
Yeah the Federal Government has been a one party dictatorship for 100 years. The Republicans have absolutely zero influence over any policies of any sort.
I think you missed the point (such as it is): that well intentioned progressive policies such as a minimum wage and unemployment insurance extensions cause harm to the people they're trying to help.
I have heard those arguments many times. I just enjoyed the notion that the Democrats are entirely responsible for 80 years of government policy. How often have they controlled the government in that time?
Seriously? Raising the minimum wage and extending UI are bipartisan issues? :huh:
Quote from: Admiral Yi on January 08, 2014, 10:42:25 AM
Seriously? Raising the minimum wage and extending UI are bipartisan issues? :huh:
Republicans have expanded benefits and government assistance for all sorts of people over the decades. There is very little that happens consistently for decades on end that both parties have not basically agreed to.
Quote from: Zanza on January 08, 2014, 10:36:39 AM
So the pre-eminent libertarian think tank of the US thinks that the welfare state is a failure? Who would have thought...
Helping the poor isn't actually helping the poor, so we should stop helping the poor.
Quote from: celedhring on January 08, 2014, 10:53:09 AM
Quote from: Zanza on January 08, 2014, 10:36:39 AM
So the pre-eminent libertarian think tank of the US thinks that the welfare state is a failure? Who would have thought...
Helping the poor isn't actually helping the poor, so we should stop helping the poor.
And everybody agrees and the evidence is overwhelming. Therefore the only reason one would want to help the poor is because you hate the poor.
Quote from: celedhring on January 08, 2014, 10:53:09 AM
Quote from: Zanza on January 08, 2014, 10:36:39 AM
So the pre-eminent libertarian think tank of the US thinks that the welfare state is a failure? Who would have thought...
Helping the poor isn't actually helping the poor, so we should stop helping the poor.
Except neither article actually shows anywhere that it isn't helping the poor. It merely compares figures from the past and present. The conclusion that welfare spending doesn't help is invalid though as we do not have figures to compare how the development would have been without welfare spending. And if you define poverty in a relative way you'll always have a roughly similar amount of poor people due to the income distribution following some kind of curve that probably stays similar, so if you cut of at e.g. 60% of median income or whatever, you'll always have about 15% of the population counting as poor. An absolute measure of poverty is probably no more useful than a relative measure though as it is just as arbitrary.
QuoteInstead of attempting to make poverty more comfortable, we should focus on creating wider prosperity. We should end those government policies, such as high taxes and regulatory excess, that inhibit growth and job creation.
The second sentence does not follow from the first. Or rather, there is a giant whopper of an assumption built into the second sentence that oddly enough has nothing to do with the "War on Poverty", and pretty much scuppers the rest of an otherwise interesting observational piece on the failure of government intervention to prevent poverty.
Quote from: Zanza on January 08, 2014, 11:09:08 AM
Except neither article actually shows anywhere that it isn't helping the poor.
Sure they do. Raising the minimum wage causes unemployment and unemployment insurance disincentivizes job searching.
Wait, the US has a welfare state? :lmfao:
QuoteInstead of attempting to make poverty more comfortable, we should focus on creating wider prosperity.
No way. As a leftist I must utterly oppose such things. We in no way want people to be richer. :rolleyes:
QuoteWe should end those government policies, such as high taxes and regulatory excess, that inhibit growth and job creation.
This is about the US right? You barely have taxes there....
Quote from: Tyr on January 08, 2014, 11:14:26 AM
Wait, the US has a welfare state? :lmfao:
Sure we do. Just cobbled together from various inefficient programs run at the federal and state (and joint) levels. It covers all the major bases of a welfare state -- disability, old age, subsidized healthcare, food benefits, unemployment insurance, benefits for young families, etc.
Quote from: Capetan Mihali on January 08, 2014, 11:19:28 AM
Sure we do. Just cobbled together from various inefficient programs run at the federal and state (and joint) levels. It covers all the major bases of a welfare state -- disability, old age, subsidized healthcare, food benefits, unemployment insurance, benefits for young families, etc.
The difference between US heartless capitalism and European fluffy Socialism is a few dollars on benefit checks.
I would argue that the biggest difference between the two is America's at-will labor market.
Quote from: Tyr on January 08, 2014, 11:14:26 AM
This is about the US right? You barely have taxes there....
Oh yes we do. We will even tax you if you move abroad and work and live there. That military that keeps all you Euros safe is costly.
Quote from: Admiral Yi on January 08, 2014, 11:25:12 AM
I would argue that the biggest difference between the two is America's at-will labor market.
That is probably true.
Quote from: Valmy on January 08, 2014, 11:31:19 AM
We will even tax you if you move abroad and work and live there.
:yes:
We always want a piece of the pie.
We know from the Swedish experiment that Socialist policies primarily hurt poor people.
I'm sick of people whining that taxes and regs "inhibit growth and job creation."
Lowering taxes might improve profitability, but in a service economy, everyone needs to sell something, and everything needs to have someone to buy it. Lowering taxes does nothing to create customers to buy products that have hit maximum market saturation at current income levels.
You want more jobs? You reward development, not up the amount of money the board sticks in their pockets, since they're just going to take the upped profits for themselves. Let's ask our resident business owners, esp. Jake or Ed:
Your profit grows right along with GDP for the past year: 4%. Do you:
A) Hire new employees to keep up with increased demand for your product?
B) Give your employees a raise for being team players and keeping your company on track?
C) Pay yourself extra? After all, it's your investment, it should yield returns for you.
D) Deposit the overage and build up cash reserves? After all, the market's been anything but stable.
Quote from: Admiral Yi on January 08, 2014, 11:13:44 AM
Sure they do. Raising the minimum wage causes unemployment and unemployment insurance disincentivizes job searching.
Why is the minimum wage considered part of the welfare state? It's not a government handout, just a work regulation. Two of the best-known welfare states, Sweden and Germany, do not have a state-mandated minimum wage.
While it may be true that unemployment insurance is a disincentive for job searching, the conclusion that it creates poverty does not necessary follow. It could just as well be that without unemployment insurance you would just have more destitute people that cannot find employment at all. In recent years the rate of employment in the US has dropped drastically. Searching and finding a job is not the same...
I misunderstood your original post Zanza.
Quote from: Admiral Yi on January 08, 2014, 11:13:44 AM
... unemployment insurance disincentivizes job searching.
Doesn't seem that much of a disincentive in practice. Back in the good old days barely 3% of the local workforce was out of a job.
Quote from: Iormlund on January 08, 2014, 01:32:55 PM
Doesn't seem that much of a disincentive in practice. Back in the good old days barely 3% of the local workforce was out of a job.
What periods are you comparing to, and have you controlled for all relevant independent variables?
Bubble days. When pretty much everyone who wanted a job got one. As it turns out, few didn't want one, even if they were eligible for benefits (which were better back then as well).
Quote from: Admiral Yi on January 08, 2014, 11:13:44 AM
Quote from: Zanza on January 08, 2014, 11:09:08 AM
Except neither article actually shows anywhere that it isn't helping the poor.
Sure they do. Raising the minimum wage causes unemployment and unemployment insurance disincentivizes job searching.
Assuming that is true, that still doesn't even show that these programs hurt the poor.
Quote from: Iormlund on January 08, 2014, 01:53:47 PM
Bubble days. When pretty much everyone who wanted a job got one. As it turns out, few didn't want one, even if they were eligible for benefits (which were better back then as well).
I got that. What are you comparing the bubble days to, in order to come to the conclusion that UI does not disincentivize job searching?
Why would a comparison be needed? The author states that UI provides a disincentive to work so strong that policy should be significantly altered. I simply put forward an example, in real life, where full employment existed despite most of the workforce qualifying for 2 full years of benefits.
Quote from: Iormlund on January 08, 2014, 02:08:57 PM
Why would a comparison be needed? The author states that UI provides a disincentive to work so strong that policy should be significantly altered. I simply put forward an example, in real life, where full employment existed despite most of the workforce qualifying for 2 full years of benefits.
Yeah, unfortunately that doesn't work as a rebuttal. The thesis is not that UI will, under all conditions, keep people unemployed for X amount of time. Rather it's that UI will keep people unemployed longer,
everything else being equal.
Or in other words, my argument cannot apply because it is an untestable thesis. Alrighty then.
It can be tested very easily because it's one data point: unemployment in your town was 3% in the year X. Your data point doesn't work to refute the thesis because it doesn't account for the other factors that can influence unemployemnt.
Quote from: Admiral Yi on January 08, 2014, 02:20:46 PM
It can be tested very easily because it's one data point: unemployment in your town was 3% in the year X. Your data point doesn't work to refute the thesis because it doesn't account for the other factors that can influence unemployemnt.
Is there a way we could actually test something like this? It is hard to find testable and repeatable conditions for economics theories.
Quote from: Valmy on January 08, 2014, 02:32:49 PM
Is there a way we could actually test something like this? It is hard to find testable and repeatable conditions for economics theories.
Econometrics!
Quote from: Admiral Yi on January 08, 2014, 02:11:55 PMRather it's that UI will keep people unemployed longer, everything else being equal.
I wonder how the authors quoted in the article came to that conclusion. It's not like they could empirically test this. Especially not the ceterus paribus part of your argument, that is found nowhere in the articles by the way.
Quote from: Valmy on January 08, 2014, 02:32:49 PM
Is there a way we could actually test something like this? It is hard to find testable and repeatable conditions for economics theories.
They just looked at an alternative universe where unemployment insurance wasn't instituted, every other policy was exactly the same and compared how long spells of unemployment were. Simple really, you just need to master extra-dimensional observation first. :mellow:
Quote from: Admiral Yi on January 08, 2014, 02:20:46 PM
It can be tested very easily because it's one data point: unemployment in your town was 3% in the year X.
Except all other factors are rarely if ever going to be equal. So there's no way to actually test this unless, as Zanza said, you can access alternate universes.
Quote
Your data point doesn't work to refute the thesis because it doesn't account for the other factors that can influence unemployemnt.
It puts limits on things. It shows that this particular factor could account, at most, for a minute part of the workforce refusing to search for jobs. And that's if all other explanations for that jobless 3% are assumed to be insignificant, which is rather unlikely since it includes things such as an overwhelming prevalence of home ownership instead of renting, people in transition between jobs, the presence of long-term unemployed without access to benefits or the disparity of demanded and available skills.
And yet this problem is so big it seems to be hurting the poor.
Econometrics. :huh:
This is what springs to mind when I hear about an economist predicting the future:
(https://languish.org/forums/proxy.php?request=http%3A%2F%2F4.bp.blogspot.com%2F_2Cy2Fq5HUDw%2FSaLxpZruFDI%2FAAAAAAAAAC0%2FuIl2A8dMeB0%2Fs1600%2Faugur.jpg&hash=ab648780692250ecf44af831318496f861a85d44)
Quote from: Admiral Yi on January 08, 2014, 02:51:08 PM
Econometrics. :huh:
I found the paper the quote from Feinstein and Altman is from (http://www.nber.org/chapters/c0046.pdf). There is no econometric substantiation of the claim in that paper. I read the abstracts of the three papers they cite there to corroborate their thesis. These seem to indeed contain econometric analysis, but I cannot read them due to paywalls. However, none of the papers seems to analyze the pure existence of an unemployment insurance, merely the effect on when people search for a new job.
Why does searching for jobs faster help the poor?
Quote from: Zanza on January 08, 2014, 03:27:42 PM
However, none of the papers seems to analyze the pure existence of an unemployment insurance, merely the effect on when people search for a new job.
You lost me. That's what we've been discussing: the effect of unemployment insurance on job searches.
Quote from: Admiral Yi on January 08, 2014, 03:34:18 PM
Quote from: Zanza on January 08, 2014, 03:27:42 PM
However, none of the papers seems to analyze the pure existence of an unemployment insurance, merely the effect on when people search for a new job.
You lost me. That's what we've been discussing: the effect of unemployment insurance on job searches.
I thought we were discussing whether unemployment insurance helped the poor or not.
Have you considered reading the thread Jacob? :)
Quote from: Admiral Yi on January 08, 2014, 03:37:21 PM
Have you considered reading the thread Jacob? :)
I did.
Here's the exchange that I've been reading:
Quote from: Zanza on January 08, 2014, 11:09:08 AM
Except neither article actually shows anywhere that it isn't helping the poor.
Quote from: Admiral Yi on January 08, 2014, 11:13:44 AM
Sure they do. Raising the minimum wage causes unemployment and unemployment insurance disincentivizes job searching.
Quote from: Zanza on January 08, 2014, 12:16:08 PMWhile it may be true that unemployment insurance is a disincentive for job searching, the conclusion that it creates poverty does not necessary follow. It could just as well be that without unemployment insurance you would just have more destitute people that cannot find employment at all. In recent years the rate of employment in the US has dropped drastically. Searching and finding a job is not the same...
Zanza asked if there is any proof that UI harms the poor. You claimed it disincentives job searches. That claim, if true, does no show that the poor are being harmed; merely that job searches take longer.
The original question that Zanza asked, and which you responded to, asked about harming the poor. You may - or may not - be correct that job searches take longer, but you will not have answered the question that I - and I presume you - read earlier in the thread.
You ignored the part about the minimum wage increasing unemployment, but leaving that to one side, your point is taken.
However, we do have reams of articles in the other long thread about the perniciousness of long term unemployment. A dollar of unemploment insurance may be interchangeable with a dollar of income, but the UI comes with the negative of decreasing the recipient's employability.
Quote from: Admiral Yi on January 08, 2014, 03:54:30 PM
You ignored the part about the minimum wage increasing unemployment, but leaving that to one side, your point is taken.
However, we do have reams of articles in the other long thread about the perniciousness of long term unemployment. A dollar of unemploment insurance may be interchangeable with a dollar of income, but the UI comes with the negative of decreasing the recipient's employability.
Bull. You're conflating the unemployment insurance with the period of unemployment itself- I've only ever had one employer ask directly whether I received unemployment during a specific period, and that was in a personal conversation, not as part of an interview process.
Quote from: DontSayBanana on January 08, 2014, 04:05:01 PM
Bull. You're conflating the unemployment insurance with the period of unemployment itself- I've only ever had one employer ask directly whether I received unemployment during a specific period, and that was in a personal conversation, not as part of an interview process.
I'm not conflating anything I'm including 2nd order effects. UI prolongs spells of unemployment. Longer periods of unemployment reduce employability.
Quote from: Admiral Yi on January 08, 2014, 02:35:22 PM
Quote from: Valmy on January 08, 2014, 02:32:49 PM
Is there a way we could actually test something like this? It is hard to find testable and repeatable conditions for economics theories.
Econometrics!
Which is its own methogological battlefield.
Quote from: Admiral Yi on January 08, 2014, 04:07:13 PM
I'm not conflating anything I'm including 2nd order effects. UI prolongs spells of unemployment. Longer periods of unemployment reduce employability.
OK, so you're addressing a correlation without establishing a causation. You haven't proven UI is not necessarily the primary cause of longer periods of unemployment, since you can't prove it's a cause of the unemployment, you can't prove it's a cause of the stigma.
Quote from: The Minsky Moment on January 08, 2014, 04:11:17 PM
Which is its own methogological battlefield.
The only real methodological battle to be fought is over omitted variable bias.
Quote from: DontSayBanana on January 08, 2014, 04:13:02 PM
OK, so you're addressing a correlation without establishing a causation. You haven't proven UI is not necessarily the primary cause of longer periods of unemployment, since you can't prove it's a cause of the unemployment, you can't prove it's a cause of the stigma.
Whenever I hear this old bromide repeated it makes me think people believe their is a test for causation, like you dip litmus paper in and if it comes out blue you have causation.
Quote unquote proving causation is just the act of attaching a plausible mechanism to an observed correlation and ruling out other plausible mechanisms with correlate similarly with the outcome.
Quote from: Admiral Yi on January 08, 2014, 04:13:57 PM
Quote from: The Minsky Moment on January 08, 2014, 04:11:17 PM
Which is its own methogological battlefield.
The only real methodological battle to be fought is over omitted variable bias.
It's broader than that. Models can be specified in many different ways - including variable choice, sample period, dynamic assumptions. It is a notorious problem that different specifications can give rise to different significance results - aside from the obvious risk of cherry-picking, it raises the difficult question of how one objectively determines the "right" choice or how or whether to incorporate a proper senstivity analysis. On top of that is the old Lucas Critique - the claim that even if one can demonstate a robust historical empirical economic relationship, one cannot assume that the relationship will continue to hold if policy changes.
These aren't irrelevant concerns - there are plenty of studies out there concluding that there is little negative employment effect from raising the minimum wage; similarly it is not difficult to find studies finding only small impacts on UI on employment.
Actually we've been over the minimum wage issue pretty exhaustively Joan. The majority of studies show an elasticity of -.1 to -.3. The only real controversy there is if you spin that as "close to zero" or as "overwhelmingly showing a negative impact on employment."
Quote from: Admiral Yi on January 08, 2014, 05:01:29 PM
The only real controversy there is if you spin that as "close to zero" or as "overwhelmingly showing a negative impact on employment."
Both. The studies tend to show a negative effect that is very small. Some studies have shown no statistically significant negative effect.
Quote from: Admiral Yi on January 08, 2014, 03:34:18 PM
Quote from: Zanza on January 08, 2014, 03:27:42 PM
However, none of the papers seems to analyze the pure existence of an unemployment insurance, merely the effect on when people search for a new job.
You lost me. That's what we've been discussing: the effect of unemployment insurance on job searches.
Are we actually discussing this? I think we're discussing whether unemployment insurance helps or hurts the poor. You're the one who discusses the side effects of the policy without even acknowledging the fact that they need to be compared to the benefits.
Quote from: Admiral Yi on January 08, 2014, 04:19:52 PM
Whenever I hear this old bromide repeated it makes me think people believe their is a test for causation, like you dip litmus paper in and if it comes out blue you have causation.
Quote unquote proving causation is just the act of attaching a plausible mechanism to an observed correlation and ruling out other plausible mechanisms with correlate similarly with the outcome.
:huh: I thought it was about setting up an experiment to see if the correlation holds up when you manipulate the independent variable.
Quote from: Siege on January 08, 2014, 08:33:47 AM
Article arguing the failure of the government programs to help the poor.
Instead of attempting to make poverty more comfortable, we should focus on creating wider prosperity. We should end those government policies, such as high taxes and regulatory excess, that inhibit growth and job creation.[/b] We should protect capital investment and give people the opportunity to start new businesses. We should reform our failed government-school system to encourage competition and choice. We should encourage the poor to work, save, and invest for their future.
Let's imagine a country that did all these things. Taxes are low, little regulation, few barriers to business creation, favorable treatment of captial income, none of these Great Society welfare programs.
We could call that country that United States. That pretty much defines what US economic policy was in the 19th century Gilded Age and really continuing up until the New Deal era.
History suggests that such policies neither reliably eliminated poverty nor guaranteed high levels of employment.
Quote from: The Minsky Moment on January 08, 2014, 06:05:28 PM
History suggests that such policies neither reliably eliminated poverty nor guaranteed high levels of employment.
What does those things? Has anything ever worked well for that?
Quote from: DGuller on January 08, 2014, 05:55:35 PM
Quote from: Admiral Yi on January 08, 2014, 03:34:18 PM
Quote from: Zanza on January 08, 2014, 03:27:42 PM
However, none of the papers seems to analyze the pure existence of an unemployment insurance, merely the effect on when people search for a new job.
You lost me. That's what we've been discussing: the effect of unemployment insurance on job searches.
Are we actually discussing this? I think we're discussing whether unemployment insurance helps or hurts the poor. You're the one who discusses the side effects of the policy without even acknowledging the fact that they need to be compared to the benefits.
Ecometrics Goddamn it!
:face:
Ecometrics?
Somebody hijack this thread, please!
Anybody!
I had a monstrous shit.
We need more details. Photos too.
I'd say it was 18 inches long. I named it U-235.
Quote from: MadImmortalMan on January 08, 2014, 07:12:00 PM
Quote from: The Minsky Moment on January 08, 2014, 06:05:28 PM
History suggests that such policies neither reliably eliminated poverty nor guaranteed high levels of employment.
What does those things? Has anything ever worked well for that?
If there was everybody would be doing it.
Quote from: Valmy on January 09, 2014, 09:41:52 AM
Quote from: MadImmortalMan on January 08, 2014, 07:12:00 PM
Quote from: The Minsky Moment on January 08, 2014, 06:05:28 PM
History suggests that such policies neither reliably eliminated poverty nor guaranteed high levels of employment.
What does those things? Has anything ever worked well for that?
If there was everybody would be doing it.
Now let's not exaggerate.
Quote from: garbon on January 09, 2014, 09:44:47 AM
Now let's not exaggerate.
Ok everybody would be doing it where it was politically feasible to do so.
Quote from: Valmy on January 09, 2014, 09:45:36 AM
Quote from: garbon on January 09, 2014, 09:44:47 AM
Now let's not exaggerate.
Ok everybody would be doing it where it was politically feasible to do so.
I'm not sure everyone would consider it a priority...unless we are defining everyone very narrowly. :P
If the state hires all unemployed people you have no unemployment.
Quote from: garbon on January 09, 2014, 09:46:45 AM
I'm not sure everyone would consider it a priority...unless we are defining everyone very narrowly. :P
Not everybody would consider elimination of poverty and guaranteeing high levels of employment a high priority? Sounds like a winning political legacy to me.
Quote from: Admiral Yi on January 09, 2014, 09:47:44 AM
If the state hires all unemployed people you have no unemployment.
Again if that plan worked everybody would be doing it. But somehow it has always proven to be rather unsustainable.
Quote from: Ed Anger on January 09, 2014, 09:40:38 AM
I'd say it was 18 inches long. I named it U-235.
:w00t:
Maybe we live in a computer simulation in which the theory of the welfare state is being tested.
Quote from: Siege on January 09, 2014, 02:10:49 PM
Maybe we live in a computer simulation in which the theory of the welfare state is being tested.
:o Sounds like they changed some parameters this morning, Siege actually said something deep (and coherent!).
Quote from: DGuller on January 09, 2014, 02:38:10 PM
Quote from: Siege on January 09, 2014, 02:10:49 PM
Maybe we live in a computer simulation in which the theory of the welfare state is being tested.
:o Sounds like they changed some parameters this morning, Siege actually said something deep (and coherent!).
Is he: The One?
Quote from: DGuller on January 09, 2014, 02:38:10 PM
:o Sounds like they changed some parameters this morning, Siege actually said something deep (and coherent!).
Just wait. The Rev.2014.01.10 patch will probably break him again.
Quote from: Valmy on January 09, 2014, 09:48:06 AM
Quote from: garbon on January 09, 2014, 09:46:45 AM
I'm not sure everyone would consider it a priority...unless we are defining everyone very narrowly. :P
Not everybody would consider elimination of poverty and guaranteeing high levels of employment a high priority? Sounds like a winning political legacy to me.
Garbon is a Republican. :secret:
When I'm speaking about myself, I think I'd make that clear. I was thinking that everyone encompasses a lot of nations on Earth.
Quote from: garbon on January 10, 2014, 12:58:28 PM
When I'm speaking about myself, I think I'd make that clear. I was thinking that everyone encompasses a lot of nations on Earth.
It does indeed. But more telling is your view of what most people on the face of the earth would think. ;)
Quote from: crazy canuck on January 10, 2014, 01:03:23 PM
Quote from: garbon on January 10, 2014, 12:58:28 PM
When I'm speaking about myself, I think I'd make that clear. I was thinking that everyone encompasses a lot of nations on Earth.
It does indeed. But more telling is your view of what most people on the face of the earth would think. ;)
Telling of my negativity? Sure but then that's always been a given.
Quote from: garbon on January 10, 2014, 01:09:37 PMTelling of my negativity? Sure but then that's always been a given.
I choose to believe that there once was a young garbon full of hope and joy and good feelings, before life so cruelly beat those sentiments out of him.
Now, no. Negativity doesn't mean I don't have joy and good feelings. :P
Quote from: garbon on January 10, 2014, 01:17:51 PM
Now, no. Negativity doesn't mean I don't have joy and good feelings. :P
Could have fooled me.