Welfare Programs Increase Poverty

If it wasn't for capitalism we wouldn't need welfare.

The reason workers don't make enough to live in is cause private owners of the means of production take most of what your labour earns in 'profit'.

If the company was workers owned the profit that now goes to the private owner would go to the worker increasing wages.

Also the capitalists system requires a labour pool. If all workers were employed, and jobs were in abundance, then workers would have power over the owners and could dictate pay scales, and working conditions, under the threat of leaving for another job. The owner would have to continually increase wages and working conditions to maintain their exploitation of labour.

If the system maintains an unemployed class then they can use it to coerce people to work for less than their worth and fear the poverty of unemployment.

Welfare is just a way of helping workers not to be exploited as bad. Yes it is abused, but not as much as the private owner system abuses the workers with their exploitation of workers.

The problem is the private ownership of production, the system that keeps you in wage slavery, as the profits made from what you produce go to private entities, and you get paid just enough to survive on. Yet enough wealth is produced to make us all fat and happy.

reply to post by ANOK


Yes, without capitalism (free trade and private property rights) manna would rain from heaven and roast quail would fly fully cooked into the mouths of the masses.

Rainbows and sunshine would cover the skies and there would be a home for every plebe.

Just like 1940s Soviet Russia.



[edit on 25-8-2010 by mnemeth1]

Originally posted by mnemeth1
reply to post by ANOK

 

Yes, without capitalism (free trade and private property rights) manna would rain from heaven and roast quail would fly fully cooked into the mouths of the masses.

Rainbows and sunshine would cover the skies and there would be a home for every plebe.

Just like 1940s Soviet Russia.

How many more times do I have to explain capitalism is NOT free markets and private property rights?

Capitalism is the 'private ownership of the means of production'. Not free markets, not your 'private property', unless it is used to exploit labour which should not be allowed. Why should any one have the right to exploit?

It is NOT capitalism unless the means of production are privately owned, which is a cause of worker exploitation. Capitalism can not work without exploiting labour. Everyone can not be a capitalist, who would provide the labour?

Why do you fail to see the benefit of a worker owned economy? Wouldn't you like to own your own workplace, or do you already? Do you already exploit labour? I doubt it. You are a worker like the rest of us no?

You are focusing on one part of what capitalism allows, NOT what it actually is.

Russia is NOT a good example as I've already explained to you many times, did you forget already? Remember Spain? You keep ignoring that example because it contradicts your assumptions about Socialism and Anarchism and what they really are.

Plebe huh? You're nothing but an elitist snob mate. How about actually addressing the points I raised instead of continually sticking your fingers in your ears and saying but..but...but...

[edit on 8/25/2010 by ANOK]

reply to post by ANOK


The only exploiting going on is by the State, which views me as a source of slave labor.

en.wikipedia.org...

reply to post by mnemeth1

if you think you are being exploited now, try looking into the 20's and 30's, when the gov't had a much more laissez-faire approach to things....
no minimum wage and all that....
when people had to have five or six little ones along with the wife working beside them just to come up with a wage they could survive on!!!

I just love all these people who are trying to protect our "free market"...which doesn't exist really.....
companies are getting bailouts, tax breaks, and subsidies all over the place. they want higher profits, so they lay off the workers...who then go on unemployment, and gov't aide programs (another gov't manipulation in the "Free market"), so they can still buy the overpriced goods that the companies sell at such high prices.....because they can get that much, because the gov't is giving enough money out to enough people so that they can afford to buy them!!!

there is nothing "Free" about this market, hasn't been in a long time....
but you usually don't hear people griping about all those things that the gov't is doing to help the business sector...oh no!! That's job creation!!! they don't mind the welfare, as long as the people are trying and out doing something.....ie working for peanuts!! oh no...that's just being charitable!!


cars not sellling, oh we can fix that....we will call it cash for cluckers!!
not enough people willing to play in the insurance scam...oh, no problem, we'll just write a law that makes everyone play!!!

not enough people interested in your stock market....oh, don't worry, we can come up with such things as IRA's and make them tax deductible..maybe even convince a few business to match the funds that their employees put in.

and who knows...maybe we can convince the people to let us throw their social security money into the markets also!!!

the third world nations are needing some help to grow into industrialized nations, oh, no problem, we will send out armies, lend you the money, and we'll even con businesses here to import your goods, even when they are in areas where those goods are produced in abundance!!!

ya.....that's all really free!!!

reply to post by dawnstar


People were poor in the 20s and 30s because the industrial capacity of the country was low.

As we got better production technology, the country was able to afford sending kids to school instead of putting them to work on the farm or in a factory.

If you went to some poor country today and said - "hey mr. farmer, you can't put your kids to work on your farm. You need to put them in school." The farmer would laugh at you, because if he didn't have them working on the farm, the kids would starve to death. No parent wants to make their kid work rather than learn. This is not a choice. They do it because they will starve if they don't.

Listening to liberals talk about "social justice" and its history in America always makes me laugh. Its like they read history out of a fairytale novel or something.


[edit on 26-8-2010 by mnemeth1]

Bad welfare system increases poverty. Good welfare system, diminishes it. And it can be done. Good welfare system must not motivate people not to work, or not to work too much (it must not have any sharp cutoffs which cause people to "optimalize" their income, as OP showed). Negative income tax (NIT) based welfare system would not have any of these problems. Our new government in Slovakia has a very good program for welfare system reform in our country - NIT + basic income (BI):

Your income which you get every month from the state in computed as (BI) - (10% of your own earned incomes). This system never demotivates people from working because you always have more money if you work than if you dont (there are no sharp cutoffs), and also we can actually eliminate minimal wage - if you dont work you get full BI and you if your employer gives you too low wage it is better for you to not work for him and only take full BI - but the decision for minimal cost of your work and minimal living conditions (BI is not very high, it literally is BASIC income) is on you, not some government clerk. Also it does not have the one negative of simple BI - thanx to 10% decreasing rate you dont have to waste tax money for supporting people which dont need it. Simple, beautiful, yet motivating and efficient system. I hope it gets passed.

[edit on 26-8-2010 by Maslo]

reply to post by Maslo


Do you have a minimum wage law?

As you mention, in order for welfare to have any effect on poverty, minimum wage laws must be eliminated.

HOWEVER - here's the rub.

If I can collect just enough to get by without having to work, no matter what you do with minimum wage laws, you will create a class of people that simply chose not to work.

This is the disutility of labor in action again.



[edit on 26-8-2010 by mnemeth1]

Originally posted by mnemeth1
reply to post by Maslo

 

Do you have a minimum wage law?

Yes, currently. But with the new system they plan to abolish it because it wont be needed.

reply to post by Maslo


Yeah i just edited my comment. I understand what you're saying.

This will not eliminate poverty or wipe out the welfare class. It is certainly better and more logical than having a minimum wage AND having welfare, but it is not a complete solution.



[edit on 26-8-2010 by mnemeth1]

reply to post by mnemeth1

HOWEVER - here's the rub.
If I can collect just enough to get by without having to work, no matter what you do with minimum wage laws, you will create a class of people that simply chose not to work. This is the disutility of labor in action again.

Well, if the system works like current programs - if you start to work then all or major part of your state income is cut off, then the incentive to not work is very high. If it only gets diminished by 10% of your income, then it is almost nonexistent compared to income increase you get from working. Yes, some peole may be so lazy and comfortable with poverty that they would only live from welfare and never work even if BI is low and the income increase from working was very persuading - but people like these would not work in any system and you cant just let them die of hunger because you dont have any means of discriminating them from people who really try but are just unlucky - but as I said, BI is very low and motivation to work is high, so number of these people would be very small I suppose, certainly compared to our current system. And what you cant solve is not a problem

Lets take your example of a more rational welfare system.

If we say a person gets 1,000 a month in welfare if they make below 10,000 a year.

No matter how you slice it, there will be disincentive points that act to keep people from earning above 833 a month.

Lets say I earn 2.00 an hour working 40 hours a week, so my monthly take home is:

80 * 4 weeks + 1000 = 1320

If I get a raise that pays 6.00 per hour, I now make 960 per month - so no more welfare - my monthly take home is now 960 per month instead of 1320 per month.

Is it better for me to reduce my work hours at 6.00 per hour so I stay below the 833 cut off point? yes. Thus I will not work more, I will work less.

If you add a whole bunch of graduated steps in there - what you effectively create is a tiered system of pay grades that employers must chose from.

This automatically means some people will be left unemployed because employers are not allowed to pay exactly what the person is worth.

We also have to consider the tax implications on the employers. Since the employers are taxed to provide the welfare in the first place, they will have less capital available to hire someone to begin with - this automatically creates unemployment as well.


[edit on 26-8-2010 by mnemeth1]

reply to post by mnemeth1

This will not eliminate poverty or wipe out the welfare class. It is certainly better and more logical than having a minimum wage AND having welfare, but it is not a complete solution.

I dont think completely eliminating povetry is possible in any system, and completely eliminating welfare class is not possible in any welfare system, there will always be some people which will live off anything even if welfare is so small as to make it almost uneffective. But as long as econ. benefits of welfare system (economic value of "saved" people which wanted to work but had problems in finding jobs and without welfare would have slipped into poverty, but with it have found new jobs) is greater than the value lost on paying chronic mis-users, it has a meaning, and is better for society than no welfare at all, even in economic terms, humanism aside.

What would you consider complete solution?

reply to post by mnemeth1

Is it better for me to reduce my work hours at 6.00 per hour so I stay below the 833 cut off point? yes.

This question and answer sums it all up. You believe in exploiting a system in a dishonorable way (Welfare Fraud!) and your thread is implying everybody is as dishonorable as you.

reply to post by Maslo


"What would you consider complete solution?"

I think the answer is obvious.

No welfare.

No minimum wage.

Along with this though, we must have a sound system of money and no taxes. If the government is actively taking from the private sector and redistributing that wealth to itself and its cronies, this will devalue the earnings of the lower class.

We can't allow the government to devalue the currency and expect people to be able to earn a living at the lowest wage rates.

Otherwise what must be done to compensate for the loss of wealth by the low wage earners is we must take from only those who get the new money and largess of government.

That is to say, a proper system of "taxation" to pay for the welfare (even though this is still bad) would be for government to "print" the money necessary to pay for the welfare and to heavily tax government employees and contractors.

The largest burden of taxation must come directly from new money and the public sector.

Its still bad, but if you are going to do it, that's how it should be done.

reply to post by mnemeth1

If we say a person gets 1,000 a month in welfare if they make below 10,000 a year. No matter how you slice it, there will be disincentive points that act to keep people from earning above 833 a month. Lets say I earn 2.00 an hour working 40 hours a week, so my monthly take home is: 80 * 4 weeks + 1000 = 1320

No, I dont think you got it. The system is continuous. There are no sharp cutoffs and the only values inserted externally into the system are the value of BI (185 euro in our country) (, rate of decrease (10% in proposed reform) and external incomes of the person:

The formula for welfare value is:

BI - 1/10 * (own income)

The formula for all money received from employer and welfare therefore is:

own income + [BI - 1/10 * (own income) ]

If you are unemployed you would get 185 e a month. If you find a part time job and start making, lets say 100e a month, your total income would be:

100 + [ 185 - 10 ] = 275e a month. (Welfare: 175e, Wage: 100e)

No decrease in total, even in absolutely minimal wages.

If I get a raise that pays 6.00 per hour, I now make 960 per month - so no more welfare - my monthly take home is now 960 per month instead of 1320 per month.

If you get a raise to 300 a month, your welfare diminishes, but your whole income raises even more.

300 + [ 185 - 30 ] = 455e (Welfare: 155e, Wage: 300e )

Basically, you always have 90% of the incentive to work than without any welfare.

The point where you cease to get any welfare completely is therefore 1850e. (actually, in the real system proposed by our government there are two levels of welfare diminishing, 10% and 30%, so it would be sooner, but the principle is the same, and you never make less in total if you work more - thats the core principle of the reform).

reply to post by Maslo


Yes, I know what you are saying, and that is absolutely the most optimal way to distribute welfare.

I fully agree, it can't be argued against in the method of the OP.

HOWEVER - It is still net bad for the poor, for the reasons I pointed out previously.

The taxation required to make the system work removes capital from the private sector. It follows that:

1. Since the private sector now has less capital, they will not be able to hire as many workers. The market efficiently allocates resources to those in the best position to create jobs. When you take money away from a business and hand it to a welfare case, you are impeding job creation.

This means there will be less jobs for the poor because of this.

2. While you have removed the work disincentive because of the sliding scale of allocation, you have not removed the disincentive against work altogether. That is to say, I can still chose to live the lifestyle of a complete dirtbag and not work at all. - or I could chose to simply work part time and not try too hard.

For many, this is a personal lifestyle choice that can only be rectified by eliminating welfare altogether.

The system of welfare you have proposed is probably as good as it gets in terms of how welfare should be allocated, but it is not the best overall economic solution.

I think the optimal solution is no welfare, no minimum wage, and to rely on private charity to pick up the hardcases.


[edit on 26-8-2010 by mnemeth1]

reply to post by mnemeth1

No welfare. No minimum wage.

What would stop the employers to exploit their emploiees then? Especially in our current situation (overpopulation, millions of cheap people in third world and asian countries waiting to get your job). If you have extensive and growing supply of workers and low and diminishing demand for them (automatization, computers), their price also diminishes - thats basic economy.
And it will continue, because our technology progresses inevitably, and sometime in the future it will even reach a point when EVERYTHING will be done by robots and AI. System without welfare will start to break down when we approach this point, because almost everyone will be unemployed. System with welfare would gradually compensate for reducing needs for human work by increasing welfare and decreasing daily working time.

Along with this though, we must have a sound system of money and no taxes. If the government is actively taking from the private sector and redistributing that wealth to itself and its cronies, this will devalue the earnings of the lower class.

How does taxes devalue the earning of the lower class? It "devalues" the earnings of all classes equally, therefore in the end noone is better off.

We can't allow the government to devalue the currency and expect people to be able to earn a living at the lowest wage rates. Otherwise what must be done to compensate for the loss of wealth by the low wage earners is we must take from only those who get the new money and largess of government.

I agree. Solution? Do not print any new money or gold-backed stable currency.

That is to say, a proper system of "taxation" to pay for the welfare (even though this is still bad) would be for government to "print" the money necessary to pay for the welfare and to heavily tax government employees and contractors. The largest burden of taxation must come directly from new money and the public sector.

No, no printing money as taxes (silent taxation of peoples savings) is acceptable. Stable constant money supply and direct taxation is always better, because you always see exactly how much is government taking from you. Taxation in stable currency doesnt devalue it, because the whole money supply is always constant.

reply to post by Maslo


Employers can not exploit their employees in a voluntary system of employment.

This is impossible.

My employer can not exploit me - he can't do it - no matter how hard he tries he will always fail.

He will fail because if he attempts to pay me below market wage, I will leave for a new place of employment.

If he attempts to work me in conditions that are not commiserate with the market, I will leave for a new place of employment.

If he attempts to beat me, rob me, defraud me, or otherwise cause harm to me, I will sue him.

It is absolutely impossible for me to be exploited since my employment is entirely voluntary.

In fact HE MUST pay me market wages and provide conditions that are expected in the market if he wishes to retain my employment.


----------

As for robots taking over the planet. - this too is impossible.

If robots could do everything, we would all be rich and never have to work. I pray for the day this happens. We would have total abundance without having to work for it. Everything would be totally free, since it would require no cost to produce something.

I could sell paintings on the side and earn enough to buy a Mercedes Benz.



[edit on 26-8-2010 by mnemeth1]

reply to post by Maslo

Employers can not exploit their employees in a voluntary system of employment.

Yes, of course, employer only does what is the most economic decision, thats not exploitation. I will try to reformulate my point: What would stop the increasing numbers of excess unemployed people from falling to poverty? Your system does not have any systematic means of helping them, so no job - no income. What if the society gets so automated, that the needs of every human would be satisfied with, lets say 3 million people working part-time, worldwide. How would the other 15(?) billions all get ANY income, even the small amount needed to buy very cheap products from so heavily automated industry? Their income would be exactly zero (0).

As for robots taking over the planet. - this too is impossible. If robots could do everything, we would all be rich and never have to work. I pray for the day this happens. We would have total abundance without having to work for it. Everything would be totally free, since it would require no cost to produce something. I could sell paintings on the side and earn enough to buy a Mercedes Benz.

Its not so impossible as you may think.

Technological singularity

www.abovetopsecret.com...

In the past, every work has to be done by humans. The first class of humans which were substituted by technology were manual workers. The second class were people working with their brain on non-creative tasks like operating machines, robots and doing computations. Now the only class which remains are people working on something creative, which cannot be done by present computers or robots, like scientists, doctors.. because it requires non-linear intelligence and creative adaptive thinking. It requires BRAIN. And given the current speed of increasing of computing power, we would be able to simulate complete human brain in 2030. In 2050, there may be simulated 5x sped up virtual human brains with no limit in size because of no skull already on the market (imagine Einstein 3.0 with math coprocessor ) If they get cheap enough that it would be more economic for the employer to buy one of them than hire even the most educated and skilled human expert in the field, then thats it. Almost all people unemployed.