welfare economics

If you look for immigrants, you won’t find us sitting on the sofa in the local mansion, on the phone to our relatives as we work out how to claim yet another benefit. You’ll find us working early cleaning leisure centres and tube stations, working late in fish and chip shops, McDonalds and strip clubs, working in the afternoons in factories and schools, on farms and building sites. Most of it is service work, the kind of jobs you don’t notice people doing, with low pay and long hours, poor conditions and little career progression. Immigrants are invisible, working hard and late for low pay, stigmatised and hated. Lots of hard work, for very little reward: that’s most immigrants’ experience of their own lives and of the lives of others in their communities.

The facts back this up. Two million immigrants have come to the UK from the eight Eastern European countries which joined the EU in 2004. Of those, only 13,000 have claimed Jobseeker’s Allowance. Those who have been on benefits haven’t stayed on them for long: the average time on Jobseeker’s Allowance is a mere thirteen weeks. And the cost of benefits is nothing compared to the five billion pounds that these immigrants have added to the economy.

Immigrants don’t get much of reward themselves. They cycle home six miles from a late shift at minimum wage because they can’t afford the bus, risking their life because they can’t afford lights on their bike; scrimp and save to send money home or look after elderly relatives or young children; or live in a small flat above a fish and chip shop, managing a business and looking after four children. Something for nothing? More like a lot of back breaking work for next to nothing.

—  Immigrants Never Got Something for Nothing (via Huffington Post)

Something terrible has happened to the soul of the Republican Party. We’ve gone beyond bad economic doctrine. We’ve even gone beyond selfishness and special interests. At this point we’re talking about a state of mind that takes positive glee in inflicting further suffering on the already miserable. …

[L]isten to the rhetoric conservatives often use to justify eliminating safety-net programs. It goes something like this: ‘You’re personally free to help the poor. But the government has no right to take people’s money’ — frequently, at this point, they add the words “at the point of a gun” — “and force them to give it to the poor.”

It is, however, apparently perfectly O.K. to take people’s money at the point of a gun and force them to give it to agribusinesses and the wealthy. …

What about the theory, common on the right, that it’s the other way around — that we have so much unemployment thanks to government programs that, in effect, pay people not to work? (Soup kitchens caused the Great Depression!) The basic answer is, you have to be kidding. Do you really believe that Americans are living lives of leisure on $134 a month, the average SNAP benefit?

—  Paul Krugman, “Hunger Games, U.S.A.”
The Practical Choice: Not American Capitalism or "Welfare State Socialism" but an Economy That's Working for a Few or Many

For years Americans have assumed that our hard-charging capitalism  is better than the soft-hearted version found in Canada and Europe. American capitalism might be a bit crueler but it generates faster growth and higher living standards overall. Canada’s and Europe’s “welfare-state socialism” is doomed.  

It was a questionable assumption to begin with, relying to some extent on our collective amnesia about the first three decades after World War II, when tax rates on top incomes in the U.S. never fell below 70 percent, a larger portion of our economy was invested in education than before or since, over a third of our private-sector workers were unionized, we came up with Medicare for the elderly and Medicaid for the poor, and built the biggest infrastructure project in history, known as the interstate highway system.

But then came America’s big U-turn, when we deregulated, de-unionized, lowered taxes on the top, ended welfare, and stopped investing as much of the economy in education and infrastructure.

Meanwhile, Canada and Europe continued on as before. Soviet communism went bust, and many of us assumed European and Canadian “socialism” would as well.

That’s why recent data from the Luxembourg Income Study Database  is so shocking.

The fact is, we’re falling behind. While median per capita income in the United States has stagnated since 2000, it’s up significantly in Canada and Northern Europe. Their typical worker’s income is now higher than ours, and their disposable income – after taxes – higher still.

It’s difficult to make exact comparisons of income across national borders because real purchasing power is hard to measure. But even if we assume Canadians and the citizens of several European nations have simply drawn even with the American middle class, they’re doing better in many other ways.

Most of them get free health care and subsidized child care. And if they lose their jobs, they get far more generous unemployment benefits than we do. (In fact, right now 75 percent of jobless Americans lack any unemployment benefits.)

If you think we make up for it by working less and getting paid more on an hourly basis, think again. There, at least three weeks paid vacation as the norm, along with paid sick leave, and paid parental leave.

We’re working an average of 4.6 percent more hours more than the typical Canadian worker, 21 percent more than the typical French worker, and a whopping 28 percent more than your typical German worker, according to data compiled by New York Times columnist Nicholas Kristof.

But at least Americans are more satisfied, aren’t we? Not really. According to opinion surveys and interviews, Canadians and Northern Europeans are.

They also live longer, their rate of infant mortality is lower, and women in these countries are far less likely to die as result of complications in pregnancy or childbirth.

But at least we’re the land of more equal opportunity, right? Wrong. Their poor kids have a better chance of getting ahead. While 42 percent of American kids born into poor families remain poor through their adult lives, only 30 percent of Britain’s poor kids remain impoverished – and even smaller percentages in other rich countries.

Yes, the American economy continues to grow faster than the economies of Canada and Europe. But faster growth hasn’t translated into higher living standards for most Americans.

Almost all our economic gains have been going to the top – into corporate profits and the stock market (more than a third of whose value is owned by the richest 1 percent). And into executive pay (European CEOs take home far less than their American counterparts).

America’s rich also pay much lower taxes than do the rich in Canada and Europe.

But surely Europe can’t go on like this. You hear it all the time: They can no longer afford their welfare state.

That depends on what’s meant by “welfare state.” If high-quality education is included, we’d do well to emulate them. Americans between the ages of 16 and 24 rank near the bottom among rich countries in literacy and numeracy. That spells trouble for the U.S. economy in the future.

They’re also doing more workforce training, and doing it better, than we are. The result is more skilled workers.  

Universal health care is another part of their “welfare state” that saves them money because healthier workers are more productive.

So let’s put ideology aside. The practical choice isn’t between capitalism and “welfare-state socialism.” It’s between a system that’s working for a few at the top, or one that’s working for just about everyone. Which would you prefer?

Generous welfare benefit levels make people who are not in employment more likely to want to work rather than less, new research suggests. “Many scholars and commentators fear that generous social benefits threaten the sustainability of the welfare state due to work norm erosion, disincentives to work and dependency cultures,” the researchers say. “This article concludes that there are few signs that groups with traditionally weaker bonds to the labor market are less motivated to work if they live in generous and activating welfare states.”

(more at sciencedaily.com)


If you have 11 minutes, or even if you don’t, watch this video. Zizek’s incredible explanation of the issues with charity, social democracy, and liberalism combined with RSAnimate’s beautiful illustrations results in a masterpiece.

Americans are taught from moment one that we’re the Greatest Country in the History of Humanity™. We’re also taught that the reason we’re the Greatest Country in the History of Humanity™ is because anyone can make it here if they try. What being taught both of those things does is inexorably lead to the conclusion that those in poverty deserve their misery. Because they deserve their misery, it is therefore not just beyond our responsibility to provide a safety net for them, but providing them things like worker protections, paid sick leave, basic medical care, and above all fair pay is thus actively unethical. Give a man a fish and he’ll become an unending burden on the limited resources of the state. Teach a man to fish and you’ve placed the burden for his education on those who have no responsibility to help him — he should be able to figure out for himself how to fish, and if he can’t, well, that’s not our problem.
Here's How Much Raising The Minimum Wage Would Save The Federal Government

Here’s How Much Raising The Minimum Wage Would Save The Federal Government

A study released by the Economic Policy Institute in mid-October shows that increasing the minimum wage from it’s current level of $7.25 an hour to $10.10 an hour would save the federal government more than $7.6 billion dollars, per year.

It stands to reason that anyone who works full time should not have to live in poverty. And yet, a full time minimum wage worker who has only one child, falls…

View On WordPress

Collegiate “practice babies”: Changing ideas of parenting.

By Lisa Wade, PhD

Nils G. drew my attention to a fascinating now-abandoned America educational practice that nicely illustrates how ideas about ideal parenting shift over time.  Between 1919 and 1969, the Home Economics departments of about 50 colleges and universities served as foster homes for orphans. Writes Emily Anthes at Wonderland:

During this time, homemaking… was considered to be something that could be conquered by science. Running a home based on instinct was considered to be woefully old-fashioned; the idea that raising a child and maintaining a home could be optimized by following a set of scientific rules was gaining currency.

Accordingly, getting a degree in Home Economics included a labratory set up exactly like a home: “practice apartments.”  And what better to fill these homes with than “practice babies!”  Students would practice applying the latest science-endorsed parenting techniques on orphans.  An article published in the Journal of Home Economics in 1920, by Elizabeth Vermilye, explained the rotation of care:

Each girl, in rotation, carried the work of “baby manager” for one week… The “baby manager” assumed the entire responsibility for the care of the child during her period. She herself did the actual work of caring for him between the hours of 6.00 to 8.00 a.m. and from 4.30 to 6.00 p.m. During the day the child was in the care of three or four other students during the time they were not in class, the manager making the program for this care, giving instructions regarding food and other matters needing attention. The baby manager did the baby’s laundry work.

Far from being exploited, it was believed that these babies would get not just excellent, attentive care, but the best, most scientifically-valid care.  Vermilye claims that the examining physician was highly impressed with the children’s development during their stay with the students.  She quotes him saying, “The improvement in the condition of these children speaks highly for your cooperative motherhood.”

These pictures of orphan and practice baby Bobby Domecon (surnamed after his role in the Domestic Economics department) reveal his chubbification.

A skinny 6 pounds at 2 months old:

Perking up at age 10 months:

Nice and chubby 5 months later:

Because these children were believed to be benefiting from the latest science of parenting, they were highly adoptable; many couples were eager to get their hands on a child that had such a good start in life (source).

Eventually, however, ideas about mothering began to change.  In particular, scholars began to talk about Attachment Disorder and argue that a child’s development required that it strongly bond to one unique person.  In 1954, a short Time magazine article on the subject included experts suggesting that the program was harmful.  Starting with the Superintendent of the Illinois State Child Welfare Division, the author writes:

“It is not a normal family setting,” said he. “There are just too many persons involved in the handling of that child.”  Heaven only knows, added the superintendent, how many neuroses little David might develop. Other officials seemed to agree. “Imagine.” cried Mrs. Babette Penner, director of the Women’s Services Division of United Charities, “what anxieties there are in a child who is given a bottle in twelve or more pairs of arms.”

The scientific consensus eventually changed and, as a result, by 1969, then, “practice babies” were a thing of the past.

Lisa Wade is a professor of sociology at Occidental College and the co-author of Gender: Ideas, Interactions, Institutions. You can follow her on Twitter and Facebook.

Corporations have sizeable cash flows and access to credit markets, which gives them a cushion against adversity and added costs…[S]mall businesses often operate much closer to the margin and are acutely sensitive to policies that threaten to drive up costs.
—  William Galston at the Brookings Institution, explaining succinctly why—as I recently wrote—government interference in the marketplace benefits big business at the expense of smaller companies.

The perverse incentive of America’s welfare programs is that it perpetuates poverty and discourages work.  The real solution to get more people out of poverty, is a job.

A central fallacy of Keynesianism, as of all inflationary nostrums, is that they chronically confuse ‘income’ in terms of paper money with real income in goods and services. It is possible to increasing paper-money income to any amount by debasing the currency. But real income can only be increased by working harder or more efficiently, saving more, investing more, and producing more.