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People vs. profits?
I saw a young man carrying a sign that read: “People before profits.” The guy had joined “Occupy Chicago” crowd, chanting passionately against the greed of the wealthiest 1 percent of his fellow Americans. It is unlikely that many of the protestors are foolish enough to claim that Gates and Buffett are guiltier of covetousness than plumber Joe or nurse Jane. But I wish that the Occupy Wall Street supporters were better educated on the functioning of our capitalist society.
If only they would take a few minutes to read a single page in an introductory economics textbook, they could understand that all the comforts of their lives come from many generations of entrepreneurs striving after profits and trying to avoid losses. Once they figure out that the gain of the producer in an unhindered market is a function of his ability to increase the enjoyment of the consumer, they could move their protests to Washington where our elected servants are busy writing rules that reward mediocrity and prevent the adjustment of supply to meet actual demand.
The tragic mistake that keeps the “Occupiers” barking up the wrong tree is that they do not see profits as a result of creation of new wealth but of its redistribution. When you observe some people getting super rich from their investments while others are losing their savings, homes, and jobs, it is tempting to jump to the conclusion that the former comes at the expense of the latter. While this is true for government activities such as warfare and taxation, in a system based on voluntary exchanges, the entrepreneur can only make a profit by making many human beings better off.
When a politician is using the powers delegated to him to go after a company that sells water, food, and gasoline at temporarily obscene profits in a hurricane stricken area, he receives the admiration of the uneducated public. Instead, he should be voted out of office for decreasing the number of companies who choose to take the risks of bringing the necessary supplies to the suffering. As Ludwig Von Mises could point out, the gain of the entrepreneur is not the outcome of the natural disaster, “but the aid he gives to those afflicted.”
back to top88 Comments to “People vs. profits?”
Remember the story of Ebenezer Scrooge and Bob Cratchit in A Christmas Carol? That’s what the guy is talking about when he says “people before profits”.
Cratchit was employed by Scrooge at a market wage. I say this because, given the poor treatment he received from Scrooge, if he could have gotten a higher-paying job elsewhere then he would have taken it.
In paying Cratchit this wage, Scrooge is being a good capitalist. By paying Cratchit only what he must, in order to obtain the labor he needs, Scrooge maximizes his business’s profit. This additional profit might be used to expand (thereby employing more Bob Cratchit’s at similarly low wages) or Scrooge might pay himself a hefty salary in order to support a lavish lifestyle.
In the end, however, Scrooge repents of his by the book Capitalism and decides to pay Cratchit an above-market “living wage”. He does this voluntarily, with the knowledge that if he has to raise his prices then he’ll be at a disadvantage vs. the competition, which will continue to employ other Bob Cratchits at the subsistence wage their meager skills command.
Alternately, he could simply pay himself less and “eat” the cost of paying Cratchit a living wage. I get the sense this is what Dickens meant to imply happened. Since Scrooge was no longer consumed by greed, he no longer sought to maximize his own profits without concern for certain moral implications. Namely, the effect “profit maximization” would have on Cratchit’s family. Presumably Scrooge took a hit (albeit possibly a small one) to his own standard of living in order to enhance the standard of living of his employee.
That’s “people before profits”.
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Both you and the article are correct, since you are both seeing the same three words from two different perspectives. Beware of short slogans! They just don’t say enough and are subject to interpretation.
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#2 – Good point!
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Of course Professor Tokarev’s perspective is factual and Buddy Glass prefers to live in the world of fiction. Profits come from pleasing people more than the next guy! That includes employees.
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Ken sides with pre-change-of-heart Scrooge. Got it.
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Scratch a libertarian and you’ll find a proto-monarchist.
The 1% has enabled the establishment of a permanent aristocracy in the USA. As fortunes consolidate, we could end up with one person, a plutonomist magnus, owning half the country, or as much wealth as 100’s of millions of Americans combined.
We might not call him, “Votre Majesté,” but he certainly will be able to say, “l’etat c’est moi.”
We’ve tried trickle-down for 30 years, yet people like Tokarev tell us that things won’t get better until they get even worse. What would that mean? Wingers place all their hopes in catastrophe. They’re furious with Obama because he saved our nation from the suffering which they were hoping was necessary to bring redemption.
If there is anything within you that loves royalty, you will infallibly hate what I’m trying to say.
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Who is it making the profits–robots? No, it’s people who make profits; therefore, it is a false dichotomy.
Tokarev is wrong to refer to “our capitalist society.” Just because there are a lot of vestiges of capitalism does not mean that our “mixed economy” is truly a capitalist one.
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For those members of the 99% with IRAs, people and profits are THE SAME THING.
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The tragic mistake that keeps the “Occupiers” barking up the wrong tree is that they do not see profits as a result of creation of new wealth but of its redistribution.
We see creation as the result of co-operation. Personal effort is one of many variables in the accumulation of wealth. The “invisible hand” doesn’t distribute impartially, but acts in accord with social expectations. Occupiers want to escalate our demands for how our economy works, and who it benefits. Capitalists play hardball and workers can, too.
Tokarev talks as though Occupiers want to nationalize industries, expropriate wealth, and seize property. What they want are adjustments. They want the government to collect a larger franchise fee than it does now, more like it used to, and use that money to invest in common purposes for the welfare of all, as permitted by the Constitution. The government is a great tool for accomplishing beneficial purposes.
Americans have believed in the federal system in the past. The benefits are clear and obvious. Unfortunately the minds many of those in the Tea Party have been poisoned against government for non-economic reasons. Mainly, they’re mad that the government won’t criminalize abortion. If Democrats could come up with a politician who would put pregnant women in jail and surgeons on death row, I’m sure the Tea Party would help finish the work of FDR.
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Scroop,
So you think it’s possible for unregulated, fallen-sinner capitalists, to dodge working in behalf of the best interests of recent college grads looking for jobs?
You’re going to upset them so much, tea could be spilled all over the leather in the limo, during the next outsourcing update, on the way to morning tennis.
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Tokarev chooses to bow before his beloved idol, “the entrepreneur”
they could understand that all the comforts of their lives come from many generations of entrepreneurs striving after profits and trying to avoid losses.
I nearly choked on that statement — velcro and teflon courtesy of NASA; jet engines and trans-continental travel courtesy of the German war machine; nuclear energy, interstate highway system, emergency medicine, helicopter transport, mass vacinations courtesy of the American war machine; blood transfusions courtsey of a Cdn socialist doctor in the Spanish civil war; pablum and insulin from two Cdn doctors working in government medical labs (both weren’t patented); modern nursing courtesy of the Crimean War; utilities such as electricity courtesy of the TVA, Ontario Hydro, etc.
Public universities, public institutions (CDC, NIH), the military are more responsible for the comforts of our daily lives than any entrepreneur. Private business only comes on board after the research is done and its time for mass production and mass consumption. This has its place but Tokarev is remiss in not noting the origins of many facets of modern life – the gov’t absorbing much of the real risk.
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” The government is a great tool for accomplishing beneficial purposes.”
I was reading without looking who wrote it.
You really can not believe that the Gov. does a good job with our money, do you?
The #1 reason I hate sending any money (mine or rich people’s) to the Gov. is that they do such a poor job of it. I do not get what I payed for.
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FIVE55 – I’m glad you’re morally outraged by mismanagement and destruction of value. That would be Wall Street 2006-08. Compared with that track record, I’d say that bureaucrats in the basement of the Treasury Dept. with PhD’s from MIT would have done a better job setting the price of risk. The pre-eminent libertarian money man of our age, Alan Greenspan, says he was wrong about the ability of the market to correct its own excesses.
MYTOOSENSE – good. I’m very sorry for recent college grads. My coffee shop was full of 20-somethings this afternoon. They weren’t highlighting textbooks or calling the office, much less enjoying themselves. A few were in somber conversations. There was something wrong with the picture. They looked more sophisticated than I was at their age, but I was carefree and making good money, and they looked worried.
HRW – Yes, and the entrepreneurs who create are few and far between. Thousands of others merely replicate. They grab what’s already there for the taking (French: prendre). Entrepreneurs are all well and good, but they ain’t enough.
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The problem here Scroop is that the excesses were not of the market, but of a government manipulated market. The excesses you refer to was the bundling and selling, and betting against of mortgages, in an economy where the US gov’t had been pushing for increased home ownership among people who couldn’t afford it.
HRW, I have friends who work for NASA, and they abhor how NASA can launch a satellite for 100 million, where a private company can do it for 50 million, yet NASA charges 25 million and absorbs the loss with our taxpayer money.
You also fail to show tech developed outside government interference, like most importantly the transistor. There’s also the telephone, telegraph, the light bulb, every thing else Edison made, Tesla’s inventions, etc. Most technological advancement happens without government aid. Entrepreneurship does do research, and a lot of it it does. I go to CMU, and a whole lot of research is done on private dole, by entrepreneurs working 16 hour days to get their tech working and on the market.
Then of course there is the wheel, farming, bullet proof designer clothing (which came about from the drug trade actually, Escobar wanted to look good but be secure at the same time, and the market responded) the automobile, and the pc. The ps3 alone is great for assembling a cheap supercomputer capable of hacking any system within 2 days. (as of two years ago, which is why the Chinese bought a few thousand of them for that purpose, granted you only need 120 but they probably were future-proofing their system) Most stuff gets developed outside of government, and the stuff that is, it is rapidly improved upon when it enters the market.
#5 Buddyglass
Talk about missing the point. The book is not about Scrooge no longer maximizing profit, is about what to do with the profit you make. If everyone gave up profit, then we would have a terribly inefficient economy that would hurt everyone. The question is what do you do with those profits. In the case of Bob Cratchitt, that means letting him share in more of the fruit borne by his labor. The thing to me that stands out on the book is Scrooge taking care of the poor and unhealthy, like Tiny Tim, instead of letting the government do it. I’d like to say that again: instead of letting the government do it. The problem with Scrooge was not that he was profit-centric, but that he was not using the profit he had made (not earned, made) for the betterment of his fellow man.
Then there is the issue that people paid well enough to cover their living expenses work harder than those who don’t make sufficient cash to live on. Check out profit-sharing if you need evidence of this. The book was also markedly anti-population control and comes across with a dislike toward those who claim the “surplus” population needed to be checked.
There is then the fact that if people directly cared for those in need, the government has less of an excuse to tax more, taxes come down, and since direct aid is more efficient than top down bureaucracy, Scrooge would end up with more money after taxes in his pocket. The fact is, in the long run, caring for your fellow man is profitable, because they become productive members of society rather than being a burden.
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HRW and Scroop sure have an inflated view of government research. Sure it has provided some results that, with much tweaking by business, has been useful, but much more innovation came directly from business.
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. . . the US gov’t had been pushing for increased home ownership among people who couldn’t afford it.
ROM116 That’s not the story Joe Nocera tells in All the Devils are Here. While it’s true that Fannie & Freddie helped to inflate the bubble to its grand popping dimmension, the GSE’s could not have done so if private lenders had not made the bad mortgages in the first place and if Wall Street had not fraudulently packaged and rated them. By the time the GSE’s really began purchasing and guaranteeing Alt-A mortgages in large quantities in 2005-07, they were quite late to the party. Rather than causing the bubble, they were its final suckers, and this happened in plain sight of regulators who could have stopped it.
GSEs supervised the 30-year mortgages they guaranteed, but they relied on ratings agencies for the tripple-A and alt-A securities that they bought. In every category, the GSEs’ mortgages defaulted at significantly lower rates than the national average. Nevertheless, their purchases helped inflate the bubble. Without GSE buying power, the bubble never would have got as big.
But without Wall Street, there never would have been all those bad mortgages for the GSEs to buy and guarantee.
Shutting the GSEs down in 2005 might not have nipped the blossom in the bud. Subprime lenders were then selling their mortgages directly to Wall Street in order to avoid GSE underwriting standards. Fannie Mae’s share of the secondary mortgage market had shrunk to 23%.
Wall Street can’t blame its misconduct on home buyers or on the GSE;s. The GSE’s performed better than the rest of the market.
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Tokarev seemed to be countering the “people not profits” meme by asserting that what’s good for profits (within the law) is in fact good for people. Businesses expand, hire more workers, create new things that benefit everyone, etc. All due to profits.
My point in mentioning a Christmas Carol is to point out two things. First, that the maximization of profits (i.e. the energy that drives the machine of capitalism) does not directly benefit everyone. Namely, Bob Cratchit, whose life was greatly improved when Scrooge decided not to maximize profits and to instead pay him an above-market wage.
The second point is that a system of unfettered capitalism, unregulated labor markets and absence of social services will always have the effect of creating Bob Cratchits, which is to say the “working poor”. The strength of free markets is to accurately price goods. In this case the good is Bob Cratchit’s labor; a good which, I’m sorry to say, isn’t worth very much.
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Trick profits like lottery winnings don’t grow the economy.
In my favorite story, the housing bubble was caused by the failure of entrepreneurs to create jobs. The money that went into housing assets came from the “trick” profits of globalization. Unlike normal earnings, these profits were far in excess of intended investment. Capitalists were awash in money that they made by offshoring jobs. Since these capitalists were in the business of cutting costs rather than creating new jobs in the world, they had no idea what to do with their glut of profits. They were “entrepreneurs,” but they were the bad servant in the Gospels who buried his talents in a hole in the ground. Instead of building a new economy on top of globalization, these amoral geniuses inflated an asset bubble. So instead of trickling down, profits bought catastrophe. The basic idea of profits in excess of intended investment comes from Alan Greenspan.
If we had only taxed this money . . .
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Rom: The problem here Scroop is that the excesses were not of the market, but of a government manipulated market. The excesses you refer to was the bundling and selling, and betting against of mortgages, in an economy where the US gov’t had been pushing for increased home ownership among people who couldn’t afford it.
This is just not true. This is the spin that the lending industry has put on it to try to avoid being seen as the crooks that they became.
Lenders were not forced to make bad loans, nor were they forced to then package those loans into securities they knew were worthless, nor were they forced to sell those securities to unsuspecting municipal pension funds and other institutional investors.
They did all that willingly and eagerly, because they made a bundle of money while the bottom fell out of the housing market and many people got foreclosed on.
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Can’t we agree that both extremes are wrong? “A Christmas Carol” did a wonderful job of highlighting the pure Capitalist extreme. The testimony of the USSR (and more recently the decline and fall? of European Social Democracy) illustrates the Socialist extreme.
Just as “people before profits” has spiritual underpinnings, so does, “if anyone is not willing to work, then he is not to eat, either.” (II Thessalonians 3:10 b NASV)
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“if anyone is not willing to work, then he is not to eat, either.”
For the record, I’m totally on board with this principle. The reasons I continue to support social programs (though, not necessarily the current incarnations of those programs) are these:
1. In a free market system (which I agree is highly preferable to the alternatives) the wages of the least skilled will necessarily sink to subsistence levels. I view that as unacceptable in a society as wealthy as the United States and something that can be corrected without undue damage to the market economy.
2. There are many who are willing to work for their income but who are not able. The disabled, the young, the old, and those whose time is almost entirely consumed by caring for their own children.
3. The current state of medical care results in potential health care expenses that far exceed what most families can afford. Consequently, insuring against the risk of such huge expenses is even more important than it was in the past. We basically have two choices: effectively insure everyone, or let some people remain uninsured and suffer the consequences of their inability to afford proper care. The second option is unacceptable to me in a society as wealthy as the United States. (That said, I do support making the tough choices about which medical expenses are worth subsidizing and which aren’t.)
4. Private charity, even if taxes were lower than their current levels, is not sufficient to provide an adequate standard of living for the “working poor”, to provide adequate care for those who are chronically unable to work or to cover the catastrophic medical expenses of those individuals who can’t afford insurance.
It’s worth noting that guys like Friedman and Hayek agree with me, at least on principle. Friedman advocated a negative income tax (i.e. handouts to the working poor) and Hayek acknowledged the benefit of the state insuring its citizens against unforseen catastrophic medical expenses.
Also worth nothing that one can view the current implementations of U.S. social programs as “really bad” while still supporting the necessity of such programs in the abstract.
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It IS true that the government pushed for people who could not afford homes to buy them and pushed lenders to offer products for that purpose. Anyone who believes otherwise is just plain ignorant of the past few years and is living in lala land.
I work in this industry. Stop lying.
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NJL,
yes, govt intervention and blind-eye is ultimately the cause for this.
Clinton’s watchdog gal Brooksley Born warned about derivatives and need for oversight which the Clinton administration ignored, Greenspan ignored and Congress ignored. — looks like some govt malfeasance here as the good times were here.
Govt malfeasance can also be laid to blame for the the housing bubble since govt law and intervention did much forcing. “In addition, lawmakers in both parties enacted policies directed at increasing home ownership rates, resulting in lower mortgage underwriting standards for Fannie and Freddie. Roberts notes that from 2000 on, Fannie and Freddie bought loans with low FICO scores, loans with very low down payments, and loans with little or no documentation.” Greenspan’s super low interest rates were another primary factor for causing the housing bubble.
All this, including the irresponsibility of the white house and Congress with Glass-Steagall, points to govt malfeasance setting up the ultimate failure and collapse of 2008.
Without the Federal Reserve, Freddie and Fannie this would never have happened.
All this points to moral hazard in and out of government. A culture that is now based on moral relativism (ie: culural Marxism) is ultimately the prime factor for this financial crisis.
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But back to Tokarev’s article.
….he receives the admiration of the uneducated public.
This points to a more foundational problem our malfeasant govt has created….a failed government school system creating an intentionally uneducated public, creating sheeple much as the OWS crowd, who will help usher in Obama’s Fundamental Transformation of America.
Congressional Record–January 10, 1963 — Current Communist Goals — Get control of the schools. Use them as transmission belts for socialism and current Communist propaganda. Soften the curriculum. Get control of teachers’ associations. Put the party line in textbooks
On April 26, 1983, in a White House ceremony, Ronald Reagan took possession of “A Nation at Risk.” The product of nearly two years’ work by a blue-ribbon commission, it found poor academic performance at nearly every level and warned that the education system was “being eroded by a rising tide of mediocrity.”
…it famously stated: “If an unfriendly foreign power had attempted to impose on America the mediocre educational performance that exists today, we might well have viewed it as an act of war. As it stands, we have allowed this to happen to ourselves.”
I suggest this was not mediocrity in itself…it was and still is deliberate Cultural Marxist destruction of America’s institutions and creation of new Communist men and women.
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NJLawyer and RWHawk: I’ve agreed that government deregulation paved the way for the abuses in the lending industry.
You seem to be arguing that the lending industry’s abuses are directly the fault of the government, which is absurd. Just because Congress unwisely opened the door doesn’t mean industry had to walk through it .
They smelled big profits and went for them with no regard to the long term consequences, and we’ll all be paying for it for decades.
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it seems to me that the article makes a lot of assumptions about what the Occupy people know and think about capitalism, that somehow if they “really, really” understood capitalism then they would not moan and complain, or they would immediately go to the politicians and get them to deregulate so that capitalism can really get going. i would venture to say that many occupy people are, in fact, extraordinarily well informed, and feel that capitalism within the context of a true democracy is different than capitalism in its “pure” form.
very simplistically put, we would say that the need for products is the driving force of any economy, that profit is a great motivator in the making of the product and that the better the product the more the profit and then the more the profit supposedly the better for the “people.” there are several places, however, where this “pure” form of capitalism breaks down:
1. profit becomes a greater motive than making a good product, and so short cuts and all sorts of other ways of cheating the consumer emerges,
2. profit is in large measure dependent on how much one pays workers, the less the worker gets paid the greater the profit, so there is a no brainer, and
3. there is an amnesia, on the part of the profit takers about who made it possible for them to make that profit, who made and consumed the product.
it is not about redistribution at all, it is about fairness in a democratic society that is “by and for” the people… those who want to keep it all claim that what people want is a “communistic” (i.e. evil) redistribution of wealth and those who want fairness claim that it is about remembering how the rich and successful were able to become rich and successful–i.e. let us not forget who educated most of them, who builds the roads and bridges, who keeps the cities safe, etc…
all occupy is asking for is fairness and they are trying in all sorts of ways to remind the money makers and the money lenders of who made it possible for them to be so very wealthy to begin with. with few exceptions, the multi-millionaires are seldom the ones doing the inventing and innovating. we are, after all, a democracy of the people not a democracy for the capitalists. there is not one of us who got to where we are on our own.
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#26 – I suggest you read Basic Economics, by Thomas Sowell.
Responses to your points:
1. Competition forces companies to produce ever-better and less expensive products. You can see this every time you go to a store.
2. Workers are one of the groups that a company must “please” in order to prosper (along with customers and stakeholders). A company that doesn’t pay commensurate with the productivity of the workers will produce shoddy products that fail in the marketplace.
3. Nothing really to respond to here. It is a completely unsubstantiated allegation.
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A company that doesn’t pay commensurate with the productivity of the workers will produce shoddy products that fail in the marketplace.
This is not technically correct. An employer who doesn’t pay market prices for its labor is likely to attract substandard workers and suffer the consequences. But the association isn’t with productivity per se. Changes in technology and education might render the least-skilled workers significantly more “productive”, but so long as such workers are plentiful (relative to the demand for their labor) wages will remain low.
And you haven’t really addressed his point, which is that in a market capitalist system, the incentive for employers is to pay their employees as little with the goal of maximizing profit. All you’ve said is that there’s a lower limit on the wage an employer can offer and still attract workers that are actually useful.
What you might have said is that this incentive of employers to offer only “market” wages is not a flaw in market capitalism but a feature. It’s a feature, though, that in my opinion deserves a “work around” in the form of government social services, wage subsidies and/or progressive taxation.
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Buddyglass – I am talking about “personal” productivity. If all you do is punch a button to start and stop a highly complex and productive piece of machinery, you aren’t producing much. If you can maintain, repair, or even design such machinery, you earn progressively more.
Also, I thought it went without saying that workers fall under the same laws of supply and demand as products. I have long been mystified by interviews with people in areas where the mill, or the mine, or the factory has closed who say, “THEY have got to get some jobs to us down here”. Their ancestors went where the jobs were. THEY need to do the same.
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I thought it went without saying that workers fall under the same laws of supply and demand as products.
What makes me sad is that, for many folks, this is where it stops. Workers simply deserve whatever standard of living their value of their labor affords them. Period. End of story. If you’re Bob Cratchit and the value of your labor is so low that you can’t afford proper medical care for your children then too bad: Tiny Tim dies. Any attempt to ameliorate situations like Bob’s in a systematic way must be opposed, since it would “interfere with the market”.
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Cue violins. Our society has multiple layers of safety nets. The poorest in America are very well off in comparison to much of the rest of the world, and most of world history. And most of them could fairly easily improve their job skills and (ESPECIALLY) their work habits.
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Our society has multiple layers of safety nets.
Which Tokarev and most WMB posters argue should not exist.
You talk about improving their job skills. Somebody is always going to be “least skilled”. Folks in that category will have their labor valued accordingly. Moreover, certain essential jobs are almost always going to be unskilled. “Fruit picker”, for instance.
Those who argue for the total absence of social programs, wage subsidies, a minimum wage and/or progressive taxation are essentially saying, “We want those who pick fruit {or whatever} to higher a standard of living that doesn’t rise above subsistence.”
I think most folks, not being heartless, are able to hold the positions they hold because they don’t think that would actually be the result of the policies they advocate.
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27 – TWH, in response to your two points in reply to IR:
1 – Goods that get cheaper in this day and age are ever poorer quality. Buying cheaper products that last less time or are of lower quality is harder on the pocketbook in the longrun, but it sure keeps sales going.
2 – What company works to please its employees? The mom and pop, one-of-a-kind, small business; or the big corporation? I have seen time and time again, that the larger and, by extension, more financially successful the company, the more likely it is to treat it’s employees like numbers and push them around like numbers too.
And that brings me to support IR’s third point with a little story:
There was a small, successful, rural service company that knew its clients personally and treated its workers well. One day, its owner recieved an offer from a muli-national service company that he could not resist. He sold his business, on the condition that the workers keep their seniority.
The big company proceeded to decentralize the service, placing the call and dispatch centre a few provinces away. The service employees were limited to how many parts they could carry with them, so had to order parts on a daily basis from a warehouse in a large city several hours away. Sometimes, in order, to keep things running for clients until parts arrived, one employee actually invented parts from common items like paper clips.
Still, things were not as streamlined as much as the big company wished, so they introduced a contest to see how many service calls each employee could get done in a day. I have mentioned it was a rural area, with sometimes three hours of travel in between calls, especially as the dispatchers had no idea of the local geography, being several provinces away.
Some servicemen tried to participate, but that one employee who invented parts, had always made a habit of giving the machines a thorough going over – cleaning and fixing any other problems – and he wasn’t about to change his quality of service. The clients were becoming frustrated with the company, but they really appreciated the extra effort this employee made to help them out.
Well, this employee recieved his pink slip. He was given a small serverance package, and his many years of seniority were stripped away, with only the five under the big company being put to a tiny pension, not enough to pay for one week of groceries. The employee was advised he had grounds to sue for wrongful dismissal, but he did not have the money for the legal fees.
Although the big company lost its contracts in that rural community, it is still a successful muli-national. The employee is still struggling to make ends meet. So yes, there is definitely an amnesia that profit makers have towards those who help them make that profit.
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31- our society does have safety nets, and unions, and public sector jobs…those emerged out of a democratic process that reportedly believes that “promoting the general Welfare” (familiar? its in the constitution) is what this country is about… the stronger the people, the stronger the country, no?
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Buddyglass #32 wrote, “Tokarev and most WMB posters argue [safety nets] should not exist.”
You may “feel” this is the case, but I reviewed the story and the comments and I don’t see any evidence that’s the case.
You also wrote, “certain essential jobs are almost always going to be unskilled. “Fruit picker”, for instance.”
Very true. While I have never picked fruit for money, I have done many even less skilled agricultural jobs. I have also worked at entry level in a canning factory, and several summers on the kill floor of a packing plant – a dirtier, nastier job than most people can even imagine. I was fortunate to be working my way through college, and for me these jobs provided MOTIVATION. But even for the “regulars”, the worst jobs were mostly transitional. They were also MOTIVATED – to develop the skills to get a better job in the packing plant, for instance.
You wrote, “Those who argue for the total absence of social programs , , , ”
As far as I can see, this is a straw man argument. I haven’t seen people in this forum arguing for this extreme. Maybe I’m wrong. Can you identify some Grinches among us?
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Phos #33 –
Point #1 – As I write this, I am watching an LCD television that is more than 5 years old. It has operated flawlessly during that time. This television produces an HD quality picture. My family’s first television was a 12 inch black-and-white with very poor picture and sound quality. There was an expectation that every 12 to 18 months, the TV would quit and a repairman would have to replace one or more tubes. The main picture tube rarely lasted more than 5 years, and replacement cost at least half the price of a new TV (which, inflation adjusted was many times the cost of today’s much better TV’s). Have I said enough on this subject?
Point #2 – The largest corporations vary greatly in the way they treat employees (just as the smallest family business). It’s a bell curve, just like so many other characteristics. Here are some of the best. http://money.cnn.com/magazines/fortune/bestcompanies/2011/full_list/
The story you relate is, indeed a sad one. Capitalism produces a better overall result than the alternatives, but that sure doesn’t mean that every case comes out positive. Please note that in my first comment under this story (#20) I didn’t argue for “pure capitalism”, but instead a balance between the two extremes. And Buddyglass’s response to that (#21) was very positive. We may not be as far apart as it appears.
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IR #34 – I don’t get your point. I was not arguing against the safety nets, merely pointing out their existence and the fact that the standard of living for the poorest segment of America is at least equal to the “middle class” in large chunks of the world.
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36: I get your point as regards technology, but for other, everyday things, it is the other way around. Small appliances like blenders, irons, toasters, kettles, even vacumn cleaners break much more often, usually because more parts are made of plastic or poor quality metal. Clothes are like that too, shirts, made from material so thin it looks like cheesecloth, are sold at the same prices shirts made from good quality cotton were sold at 5 years ago. These things are much more important for daily life than an HD TV, but much less care goes into the making of them.
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Phos – I do agree with you on the current state of non-electronic “basics”, so my TV example was “extreme”. You tripped my trigger on this one, so stand by for a rant!
I am a fairly old guy, and I remember the unbelievable inflation of the late 70’s and early 80’s. My wife and I bought a new Sears washer and dryer soon after we got married in 1975. They cost $400 each. 3 kids later, we needed another set in the mid-80’s. They cost $400 each. Knowing inflation had cut the value of the dollar in half, I was bowled over, and being an engineer, I did some research. I found that Sears (Whirlpool) had cheapened the product in almost every way.
Why did they do this? Because consumers had been spending $400 for washers and dryers for many years and that’s all they were willing to pay! The consumers actually “forced” the manufacturers to cheapen the product (since there were no electronics miracles to be had, as in TV’s). Maytag tried to raise prices with inflation and keep their vaunted quality. They were then forced by declining sales to compete on price, and eventually went bankrupt because their customers deserted them when their quality went down. As a matter of interest, I looked at the Sears ad in today’s newspaper. Their basic washer and dryer are now $600 each, even though the value of a dollar has decreased by half again over that time. So, the high-quality, American built $400 Sears basic washer of 1975 would now cost over $1700 if Sears had been able to increase washer prices at the rate of inflation.
Your cotton shirt example is another good one. http://www.tradingeconomics.com/commodity/cotton
Notice that the price of cotton increased fourfold from long-term averages in recent years, due to a worldwide shortage. Shirtmakers had to come up with alternatives, because most people weren’t going to pay far more for the same cotton shirt. Of course, this also had the positive effect of reducing demand for cotton, which brought the price back down. This is all basic economics. It does “work”, but it doesn’t always give us the result we would prefer.
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TWH – I can tell you why this household isn’t willing to pay any more for a shirt or a washing-machine than it did five years ago – it can’t. Income does not increase at the same speed as the cost of goods does.
A recent example is the rise in gas prices in the past few years. Some truck drivers and others who drive as part of their job, pay at the pump out of their own pocket. They then claim their mileage to the company, which, theoretically, should be equal in value to the pump prices.
However, the gas prices go up weekly, but the company only raises its mileage payments every few months. In addition, the mileage payments are always significantly less than the price at the pumps. This means that the driver is paying for company gas out of his own pocket, reducing his income.
Basic wages suffer the same delay and deficiency, especially in private sector, non-unionized jobs. The cost of electricity, water, heating, all rise faster than pay raises happen, lessening the power of low-wage earners to buy other goods. Really, much of the reason there is this outbreak of anger here in the West and in the Middle East, is the sudden increase in the cost of the most basic of human necessities, food, in a time of major recession and reduced income.
Living in the city last year, I learned to spend on $20 dollars a week in food; around February/March, I had to suddenly start spending $25 for the same amount of food. I couldn’t find a job, and with my resources being depleted quicker, I had to come back to my parents’ house. I wouldn’t protest in the streets, because my hope is in God, not government; but that is where some of these young occupiers are coming from.
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@29 Their ancestors went where the jobs were. THEY need to do the same.
The problem with that statement is that most of our jobs have gone overseas. I have always thought that one of the hallmarks of a third world country is that they simply cannot support their own population, and the people are forced to find other countries if they want to survive and prosper. I’m sick to my stomach that we have sold our country and our heritage for a bowl of pottage and cheap tvs.
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Phos,
Being unemployed is one of the most discouraging things a person can face, but you can survive it. One of my sons logged over 700 calls, contacts and applications before he finally landed an above minimum wage job. It’s only marginally above minimum, rather menial, and not at all in his field, but I could hear the thankfulness in his voice when he told me he was finally working again. He has a wife and children to support.
Things will probably stay tight for a while, perhaps quite a while, but God can make a way for you. Don’t lose heart.
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Phos – Thanks for the response. I am not as unsympathetic as I may appear, but I do react when it seems to me that “blame” is being unfairly assigned. If I could just leave you with one point it would be that this is not a black and white situation where if we would simply do these few things, everything would be fine.
I worked for a Fortune 100 company for 35 years. There were more “ups” than “downs”, but plenty of both. The key thing I observed over time is that companies work to survive and thrive – just like every family and individual. When that means paying the CEO a huge sum, I don’t like it. But yesterday Albert Pujols got an unbelievable contract with the California Angels. That team felt it was needed so that they can survive and thrive.
It is when we start thinking of corporations as “evil entities” only looking out for themselves that (I believe) we deviate from reality. The highest levels at Maytag held out for long term quality, trusting that their customers would reward them for it. We also have the memory of companies that thought customers would pay the necessary premium for “Made in America”. Or thought that rewarding their employees far more than their competition would motivate their employees to provided enough additional productivity. In the end, they all let down their customers, employees, and investors because they didn’t do what was necessary to survive and thrive.
PS – I never worked for Maytag or in that industry.
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Debra – Please see my response to Phos which I hope will explain why I think that we, the consumers, have driven the current labor outsourcing and lower quality of products with our buying decisions.
And again, I am sympathetic. My daughter is in a similar situation to your son. She has a Bachelor’s degree in Business from a Land Grant University, but her current employer required her to demonstrate proficiency in Excel as a condition of employment. Humiliating. But, she has a job, and is gaining experience that will allow her to “survive and thrive” in the future!
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CONAN,
You seem to be arguing that the lending industry’s abuses are directly the fault of the government, which is absurd.
What is so absurd? The banks initially balked at making the subprime loans, etc until they were assured that they wouldn’t be responsible for the results as Fannie and Freddie were told to buy up all the bad debt. Due to the moral hazard from govt these institutions were promised the taxpayer will pick up the tab.
Without the govt interference the banks would never have made so many bad loans without credit checks, no down payments and even providing cash loans on top of the no down payment loan.
On top of this, govt allowing the Feds to drop the interest rate so low was a known commodity for creation of bubbles that eventually POP!
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Can you identify some Grinches among us?
I could rattle off some names, but it would take some effort to hunt down actual quotes. Stick around this blog, read the comments and look at the candidates and policies people tend to support. The general memes are:
1. Poor people are generally moochers and are spoiled by the many social programs currently in place.
2. We are strapped for cash and something has to go; the least damaging thing would be to axe social programs for the poor, since they’re lazy and spoiled anyway. This would motivate them to actually work for a living.
3. Moreover, they don’t pay any taxes while the rich are hamstrung. This is unfair. Any modifications to how we collect revenue should have the effect of collecting more money from the poor and less from the rich.
The prototypical WMB commenter wants to get rid of Medicaid, Pell grants, food stamps, TANF (i.e. “welfare”), Section 8 housing, the EITC, etc. and replace them with…nothing. Oh, at the same time we should raise taxes on the lowest earners.
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PHOS,
Your observations of decline are correct. Seeking the source(s) for the problems would be the next logical step. The younger generation has learned to blame the free market, private ownership for the problem and give govt malfeasance a pass. If you look to God then it would be incumbent upon you to look for His truths.
Is there anything about the Federal Reserve and fractional reserve banking that violates His laws that contribute to what you see is wrong?
Is there anything about dropping the gold standard and relying totally on depreciating fiat money violating His laws and contributing to what you see is wrong?
Is the excessive growth of govt power,indebtedness and intrusion along with the continued violation of the rule-of-law (ie: the Constitution) a violation of His truths and constributing to what you see is wrong?
What about a nation that has abandoned God and thumbed it’s collective nose at Him with legalizing abortion, homosexual behavior, pushing feminism, pluralism, legal plunder and wealth redistribution, encouraging breakdown of the family and demonizing Him in govt institutions?
Focusing on only economic issues and ignoring ethics,sociology and law/politics will only lead to wrong answers. Unfortunately, that is the course this current adminstration, the OWS crowd and some of the commenters on this thread are going. They are adopting the wrong worldview.
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BG,
The prototypical WMB commenter wants to get rid of Medicaid, Pell grants, food stamps, TANF (i.e. “welfare”), Section 8 housing, the EITC, etc. and replace them with…nothing. Oh, at the same time we should raise taxes on the lowest earners.
You are partially correct but terribly wrong with your conclusion.
The Constitution does not allow for all the programs you listed. We didn’t have most until 1965 and later. How did this country prosper until the era of excessive govt? Did we have all these folks prior to excessive govt dying in the streets? When did real wages flatten out? Think there is a correlation?
If the original intent of the Constitution is violated by these programs then by all means, delete them and let the individual states and communities regain those programs which they had before this Progressive era of continued central govt growth. They won’t disappear, just get down to the proper level again.
A statist working from the Marxist worldview will always fall back onto an immense central government to be the nanny state and tend to all our needs regardless of indebtedness and eventual collapse of the monetary system. With that we get the PIIGS and eventual death of a nation. The Marxist worldview works from a utopian fantasy that does not approach reality at all and ends up with PIIGS, Argentina circa 2000, collapsed USSR, etc.
LBJs War on Poverty is a superb example of govt malfeasance at it’s best; we are worse off today than we were when the War was first declared as the poverty rate is essentially the same yet the wealth of the nation is trillions of dollars poorer and we suffer a hangover with a permanent welfare mentality.
The Chistian worldview takes the care for poor down to the street level with local church and families and local govt helping the community thrive and offering safety nets, etc. That had been a successful worldview until Progressives ushered in their worldview beginning in the early 1900s.
The heartless remedey is to rely on bureaucrats to spend our money on programs that prove ineffective versus the relationship approach of one helping another voluntarily. Currently, the socialism is approximately 2/3 of all govt expenditures.
This is an excellent link for a taste of reality:
http://www.youtube.com/watch?v=nTY3klgl_KY
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Dicken’s “A Christmas Carol” was a story of conversion–NOT to some political or ideological “ism” of any kind but to a genuine new morality that he did not previously have and that transcended the structures and ideologies of his culture. It took divine intervention too.
The result was NOT a transformation that empowered gov’t to control or redistribute Scrooge’s resources. The transformation occurred in Scrooge’s own heart and as a new man, he fully retained the control of his own resources and did his own redistribution.
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BUDDYGLASS wrote, “In paying Cratchit this wage, Scrooge is being a good capitalist.”
And by the same token, in choosing to give to others in need at the end of the story, Scrooge was being a good capitalist and NOT a bad one. There was no political or ideological change that took place. It was spiritual and moral.
Like fascists, communists and socialists, there are both good and bad capitalists. Scrooge was a bad person (capitalist or otherwise) from the outset. Being a capitalist did NOT prevent him from being bad. But by the end of the story, he was a good capitalist.
“A Christmas Carol” shows the transformation of a bad capitalist to a good capitalist.
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Scrooge NEVER repented of his “by the book capitalism.” He repented of his selfishness. It was Scrooge and NOT the government who decided to pay Cratchit an above-market “living wage”.
He did this knowing that this would help him keep a good and happier worker longer. He was being a good capitalist at the end of the story, knowing that capitalism operates best on a WIN-WIN basis.
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Fascism, socialism, capitalism, leftism, rightism, and even Obama’s version of neo-marxism are ALL powerless to enforce or even effectively promote the putting of people above profits. Regardless of all such “isms”, a people must be meaningfully rooted in a strong faith-based morality to promote the unselfish putting of people above profits.
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JM,
I would suggest that true, competitive capitalism does put people before profits. People, being the customers, do have to be placed first for a sustained period of profits and life of the company. If customers are not pleased they go to a competitor that will provide the value the customer is seeking for the win-win outcome. Any other ‘ism’ is enforced with brute force and there will be losers and disadvantages.
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The Constitution does not allow for all the programs you listed.
Debatable. But even if I grant that it doesn’t, I disagree that their unconstitutionality is the reason most people oppose those programs. They oppose them because they don’t believe they meet a legitimate need. People people don’t need them; if they’d only work harder they’d be fine.
We didn’t have most until 1965 and later. How did this country prosper until the era of excessive govt?
I never said the country couldn’t prosper without aid programs and/or a redistributive tax system. Doing without them just results in your lowest earners having a very low standard of living. It’s also worth noting that demographic changes in the population and changes to medical technology have changed the landscape from where we were 50 or 75 years ago.
…delete them and let the individual states and communities regain those programs which they had before this Progressive era of continued central govt growth.
Not sure these would work well on the state level. It’s the same problem was with insurance that gave rise to “mandatory coverage” laws. Well people would simply go without, then get insurance when they’re sick and need it. I would live and work where taxes are low and services non-existent, then when I need services I’d move to a state that offers them.
A statist working from the Marxist worldview will always fall back onto an immense central government to be the nanny state and tend to all our needs
Allow me to suggest that one can advocate for certain government assistance programs without being “a statist working from the Marxist worldview”. That is, unless you include Friedman and Hayek in that category.
The Marxist worldview works from a utopian fantasy that does not approach reality at all and ends up with PIIGS, Argentina circa 2000, collapsed USSR, etc.
Or Sweden 2011, which is arguably in better shape than U.S.A. 2011. Or Australia. Etc.
…yet the wealth of the nation is trillions of dollars poorer and we suffer a hangover with a permanent welfare mentality.
Yes. We’ve done a terrible job of managing our national finances. You’ll get no argument from me on that point. Other countries, however, with even more extensive safety nets have managed to make ends meet.
The Chistian worldview takes the care for poor down to the street level with local church and families and local govt helping the community thrive and offering safety nets, etc. That had been a successful worldview until Progressives ushered in their worldview beginning in the early 1900s.
I’d argue it wasn’t so successful. Sure, there are a number of success stories, but reliance on private charity did little to mitigate systemic poverty.
The heartless remedey is to rely on bureaucrats to spend our money on programs that prove ineffective versus the relationship approach of one helping another voluntarily.
What I’d call heartless is yanking these programs and expecting private charity to pick up the slack. You call them ineffective, but the janitor whose kid gets cancer treatment only because of Medicaid might tend to disagree.
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Buddyglass,
Sweden would be more appropriately compared to a small US state, like Massachusetts, not the entire country because of its size, its economy and its homogeneity. Australia probably closer to Texas. Not good comparisons to our central government.
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A much better comparison to the size and complexity of our country and economy would be USSR or China.
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#46 Buddyglass – I contended in #35 that your statement in #32, “Those who argue for the total absence of social programs ” appeared to be a strawman argument. You responded by doubling down with, “The prototypical WMB commenter wants to get rid of Medicaid, Pell grants, food stamps, TANF (i.e. “welfare”), Section 8 housing, the EITC, etc”
How can you state what they “want” to do, when you can’t even quote one example? But one example won’t suffice at this point, because you have now stated that this is the “typical” WMB commenter position. Please either support that statement, or retract it.
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RWHAWK, I think what you said is what I was trying to say. Good competitive capitalism does put people before profits. But that does not change the fact that there are still bad capitalists who do put decide to profits before people. But it is the person rather than the “ism” that is good or bad. There are also bad fascists, socialists and communists who put profits (including the profits they usurp unjustly from those who earn them) before people. But when comparing the “isms” on their own merits, capitalism is by far the most just and effective in raising the level of prosperity of the people.
Capitalism does operate on a WIN-WIN basis wherin all transactions done with mutual consent meet the needs of both parties. However, when bad people introduce fraud and greed, this can corrupt any “ism” including capitalism. But I think I agree with you that it is not really c apitalism that is evil but the person abusing it.
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How can you state what they “want” to do, when you can’t even quote one example?
Because I read this blog alot. Too often, probably. I can recall several situations where people have argued for shutting down aid programs, and virtually no situations where they’ve defended them.
If I could conduct a poll and force people to answer I would. Short of that, I’m forced to go back and try to pore through every discussion I’ve ever had on here.
Let me flip it around. Do you think there is widespread support for these programs among the conservative evangelical posters here? (That excludes folks like Scroop Moth, Conan the Librarian, Arcadia, HRW, JJF and Evan).
If I could poll Paster Roy, Joel Mark, NJLawyer, Fuzzyface, The Real AJ, Frank in Spokane, Thorn, Xion, Ken, Kyle A, Cheryl, Mrs. News2me, Make It Man, Fives55 and Buzzy, how much support for a program like “Food Stamps” or “Section 8 housing” do you think I’d find? Honestly?
But one example won’t suffice at this point, because you have now stated that this is the “typical” WMB commenter position. Please either support that statement, or retract it.
Okay. Consider it retracted and replaced with, “It is my strong suspicion that the typical position of conservative evangelical WMB posters is that such programs should be abandoned.”
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“Do you think there is widespread support for these programs among the conservative evangelical posters here?”
I can’t speak for WMB, but among my Christian and conservative friends (and speaking for myself), there is a sad recognition that as a society we have created a situation where the “safety nets” are needed. I argue that our emphasis must be to eliminate the NEED for these programs; not to perpetuate and grow them.
Thanks for the new wording to your statement. Here is what I think. Too often these discussions drive the posters to the extremes. “He said THIS so I need to say THAT to counteract”. Some are only here to express their disdain for Christianity, but I think most of us could have some very good discussions and actually learn things and change our positions over time as we learn.
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RWHawk: What is so absurd? The banks initially balked at making the subprime loans, etc until they were assured that they wouldn’t be responsible for the results as Fannie and Freddie were told to buy up all the bad debt. Due to the moral hazard from govt these institutions were promised the taxpayer will pick up the tab.
That’s less than half the story, though, because once they had that safety net in place (which I do agree was a dumb move) they took full advantage of it to fatten their profits with no regard to the cost to taxpayers, or to the fate of borrowers who were persuaded to borrow more than they could afford (or who suffered layoffs or other changes in circumstances.)
The government does indeed bear some of the blame, as its plan to expand home ownership was geared toward helping consumers go into debt more easily rather than actually making housing affordable. But as I said elsewhere, just because the government opened the door doesn’t mean the industry had to go through it.
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CONAN,
By law, the banks had to go through with much of it.
What you seem to be ignoring is the fact that the banks would not have done the immoral deeds if it weren’t for the govt first initiating all the bad lending activity by law. The primary culprit is govt malfeasance and the bankers took advantage of this.
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BG
They oppose them because they don’t believe they meet a legitimate need. People people don’t need them; if they’d only work harder they’d be fine.
How about if they are expected to be personally responsible do you suppose there would be fewer on the public dole? Socialism has always been the lazy way out. It is an immoral system as well as unconstitutional for the Feds to be involved with.
Not sure these would work well on the state level.
But it conforms to law. It’s definitely not working well at the national level when considering how the Feds have created this crisis and is fast approaching the failed ends of multiple Ponzi schemes they have forced on us. Do you consider going into bankruptcy and devaluing the currency successful? Do you know the size of the unfunded liabilities?
Allow me to suggest that one can advocate for certain government assistance programs without being “a statist working from the Marxist worldview”.
But it is the worldview that is at play here in America. It’s a worldview that creates a permanent underclass. You’d do yourself a real favor reading Theodore Dalrymple’s Life at the Bottom; the worldview that makes the underclass.
Or Sweden 2011, which is arguably in better shape than U.S.A. 2011. Or Australia. Etc.
But Sweden is sinking now due to the weight of welfare. It is following the same socialist herd into decline. Excessive socialism seems to always end up in bankruptcy. The USA used to be in the best shape of the whole world. Do you suppose it was free market capitalism with minimal intervention that brought us down and more socialism and govt intervention that will bring us back up?
Other countries, however, with even more extensive safety nets have managed to make ends meet.
Such as? And how did they do it because we definitely are not?
I’d argue it wasn’t so successful. Sure, there are a number of success stories, but reliance on private charity did little to mitigate systemic poverty.
Where was the systemic poverty and what was the cause?
What I’d call heartless is yanking these programs and expecting private charity to pick up the slack. You call them ineffective, but the janitor whose kid gets cancer treatment only because of Medicaid might tend to disagree.
Sounds like a strawman. Programs aren’t yanked, just relegated to the appropriate sovereign sphere within this nation which is not at the national level. So if the janitor got aid from the local level rather than from the national level he’d be just as thankful.
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RWHawk wrote, “The USA used to be in the best shape of the whole world. Do you suppose it was free market capitalism with minimal intervention that brought us down and more socialism and govt intervention that will bring us back up?”
That is an excellent insight!
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RWHawk: What you seem to be ignoring is the fact that the banks would not have done the immoral deeds if it weren’t for the govt first initiating all the bad lending activity by law.
Because it’s simply not true. The government never once forced any bank to make any loan.
The CRA forced banks to consider the creditworthiness of individuals in making loans rather than “redlining,” that is, excluding entire areas on the assumption that no one living there could possibly be creditworthy. But its text specifically states that any loans made should still meet the guidelines for lending.
Another point: The majority of the lenders involved in the subprime crisis (80 percent) are not subject to the CRA at all. It applies to banks, but most of the loans were made by mortgage service companies or affiliates of banks, not the banks themselves. And in fact, those subprime loans that were made by institutions who are under the CRA rules have been low on defaults and rarely involved in mortgage-backed securities.
As for the others, they made the loans by choice, as part of a derivatives scheme, in what is essentially fraudulent behavior. Whether they planned to blame the government all along or they just found the public’s confusion over the CRA to be a convenient tool for plausible deniability, that’s all it is.
So no, I reject the false assertion that the government forced the lenders to make the loans. Where the government is to blame is a law passed in 2000 that ensured that credit default swaps would remain unregulated and the Securities and Exchange Commission’s decision to allow brokerage firms to borrow more than 30 times their capital.
Actually, here’s a good summary for you: http://online.barrons.com/article/SB122246742997580395.html
You’ll find that the blame the government bears is largely in the relaxing or repealing of regulations and bad financial oversight decisions, giving Wall Street a wide-open field for abuses. Nowhere will you find any substantiation for your assertion that government forced the innocent lenders to do it.
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CONAN,
The Government-Created Subprime Mortgage Meltdown
by Thomas J. DiLorenzo
The thousands of mortgage defaults and foreclosures in the “subprime” housing market (i.e., mortgage holders with poor credit ratings) is the direct result of thirty years of government policy that has forced banks to make bad loans to un-creditworthy borrowers. The policy in question is the 1977 Community Reinvestment Act (CRA), which compels banks to make loans to low-income borrowers and in what the supporters of the Act call “communities of color” that they might not otherwise make based on purely economic criteria.
The original lobbyists for the CRA were the hardcore leftists who supported the Carter administration and were often rewarded for their support with government grants and programs like the CRA that they benefited from. These included various “neighborhood organizations,” as they like to call themselves, such as “ACORN” (Association of Community Organizations for Reform Now). These organizations claim that over $1 trillion in CRA loans have been made, although no one seems to know the magnitude with much certainty. A U.S. Senate Banking Committee staffer told me about ten years ago that at least $100 billion in such loans had been made in the first twenty years of the Act….
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But it was the Clinton administration, obsessed with multiculturalism, that dictated where mortgage lenders could lend, and originally helped create the market for the high-risk subprime loans now infecting like a retrovirus the balance sheets of many of Wall Street’s most revered institutions.
Tough new regulations forced lenders into high-risk areas where they had no choice but to lower lending standards to make the loans that sound business practices had previously guarded against making. It was either that or face stiff government penalties.
The untold story in this whole national crisis is that President Clinton put on steroids the Community Redevelopment Act, a well-intended Carter-era law designed to encourage minority homeownership. And in so doing, he helped create the market for the risky subprime loans that he and Democrats now decry as not only greedy but “predatory.”
Source(s):
http://ibdeditorial.com/IBDArticles.aspx…
http://www.investors.com/editorial/edito…
The only thing Bush has had to do with this is that in 2004 he (along with McCain who cosponsored the bill) and a few other congressmen tried to overhaul and regulate how Fannie Mae and Freddie Mac were run and their financing.
The Democrats Blocked the measure:
Top 3 receivers of Fannie Mae Funds.
Chris Dodd
Barack Obama
John Kerry
It’s not a coincidence
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In addition to the Federal push for lenders to make unsound loans (backed up by the Federal Government (taxpayers), there were also many Federal redlining lawsuits to “emphasize the point” with the lenders. At some point they collectively said, “If that’s what they want, we’ll give it to them”.
PS – I don’t give President Bush any credit for trying to change things. In fact, his frequent State of the Union pronouncements about the “progress” in home ownership percentages is a vivid memory. He bought into the “good politics” of the issue.
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rwhawk,
DiLorenzo?
Careful, or you’ll soon be questioning the received account of how Abe Lincoln freed the slaves and saved America.
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@TWH: there is a sad recognition that as a society we have created a situation where the “safety nets” are needed. I argue that our emphasis must be to eliminate the NEED for these programs; not to perpetuate and grow them.
Some questions: How do you eliminate the need for such programs? Do you disagree with my assertion elsewhere in this thread that the natural result of “hands off” market capitalism is that the least skilled workers earn (what I consider) an “unacceptable” wage? If you don’t disagree with that, then what’s the proper way to address it? Do you share the opinion of many here that private charity can completely take over the functions currently served by the wide gamut of assistance programs?
@Rwhawk: How about if they are expected to be personally responsible do you suppose there would be fewer on the public dole?
If you take away the dole then yes, obviously fewer people will be on the dole. Because there would be no dole. For what it’s worth I don’t support many of the current implementations of these programs for the precise reason you highlight: they set up a scenario where people aren’t responsible for allocating their own resources. They also incur what I view as an unnecessary level of bureaucracy. There’s a “program” that has to be “managed”. I’d much prefer a system that just puts money in peoples’ pockets and allows them to spend it as they see fit.
Two other observations about this question. First, it implies that many/most of those “on the dole” are in that position due to ongoing irresponsibility that they can correct. In many cases that simply isn’t true. For instance, many of those in Section 8 housing are on permanent disability. They’re mentally ill, physically handicapped, or they’re elderly and have SS as their only income. Some are single mothers. These aren’t people who can, by simply becoming more responsible, obviate their need for assistance.
Second observation: While we should take care not to create moral hazards by rewarding irresponsible behavior, I’d argue our policies should be built around the assumption that some people will act irresponsibly regardless of what we “expect” of them. I don’t know about you, but I’m not willing to condemn someone to death because of their irresponsibility or lack of foresight.
@Rwhawk: Socialism has always been the lazy way out. It is an immoral system as well as unconstitutional for the Feds to be involved with.
To clarify, I’m not arguing in favor of “Socialism” as a monolithic system. I’m arguing in favor of market capitalism in conjunction with policies designed to ameliorate the situation of those either unable to work or the value of whose labor is not sufficient to support a decent standard of living.
@Rwhawk: But it conforms to law. It’s definitely not working well at the national level
It’s a matter of debate whether current programs are unconstitutional, as you suggest. But I’ll cede that the matter is a murky one. Even allowing that current programs aren’t constitutional, that wasn’t really the point I was trying to make. If they won’t “work” at the state level then they should be made constitutional (via amendment if necessary) and implemented at the federal level. I’m less interested in discussing “what the law allows” and more interested in “what would work best”. The law can always be changed.
Do you consider going into bankruptcy and devaluing the currency successful? Do you know the size of the unfunded liabilities?
No to the first, yes to the second. Please don’t misunderstand me: I’m not arguing in favor of the status quo as it exists in the United States today. Recent management of the national debt has been an unmitigated failure. Though, we probably disagree on the reasons for that failure. Much of the recent per GDP debt growth has been fueled by tax cuts, increased defense spending unrelated to Iraq/Afghanistan, Iraq and Afghanistan, Medicare Part D and the recession.
To be sure, though, Medicare (especially) and SS will need to be restructured in order to remain viable in the long term.
@Rwhawk: But it is the worldview that is at play here in America. It’s a worldview that creates a permanent underclass.
Is there a permanent underclass in countries like the Netherlands and the Nordics? I ask simply because the research I’ve seen indicates those countries enjoy a greater degree of relative income mobility than the United States. That is to say if you’re born to parents in the lowest 20% of earners in the Netherlands you’re more likely to escape that income bracket when you become an adult than if you were born in the U.S.
Who has the permanent underclass?
Also, are you really going to call Friedman and Hayek “statist Marxists”?
@Rwhawk: But Sweden is sinking now due to the weight of welfare. It is following the same socialist herd into decline.
Defend this assertion. All the stats I’ve found indicate Sweden is doing just fine. Certainly in better fiscal shape than the U.S.
@Rwhawk: Do you suppose it was free market capitalism with minimal intervention that brought us down and more socialism and govt intervention that will bring us back up?
Free market capitalism. Preferably with smarter government intervention, supposing we want to elevate ourselves in the aggregate without throwing the least of us under the bus.
@Rwhawk: Such as? And how did they do it because we definitely are not?
How about: Norway, Sweden, Finland, Denmark, Switzerland, Canada, Australia, New Zealand. Each country has a AAA sovereign debt rating, just like the U.S., but each country also has a debt-to-GDP ratio smaller than that of the U.S.
As to how they manage to do it while we can’t…that’s the million dollar question. My feeling is that there is a certain cultural decay in the U.S. that result in Americans being more likely to mooch off the system than citizens of these other countries. But that’s just my theory.
@Rwhawk: Where was the systemic poverty and what was the cause?
The cause was free market capitalism in the absence of controls to ameliorate the plight of those whose labor wasn’t particularly valuable. Think ethnic ghettos in New York City or people living in shanties during the Depression.
@Rwhawk: Sounds like a strawman. Programs aren’t yanked, just relegated to the appropriate sovereign sphere within this nation which is not at the national level.
Two thoughts here. First is the concept of a “race to the bottom”. If we administer these programs at the state level, then certain states might get the bright idea that if they cut services they’ll motivate people actually need those services to move elsewhere, thereby making their state more economically vital. Of course, this is zero sum. Those people have to move somewhere. They will relocate to states that offer the services they need, which will crush those programs under the additional weight. That’s why I say they wouldn’t work well at the state level.
The second thought is this. One of your major objections to these programs seems to be the cost, given the U.S.’s debt situation. If, as you say here, my hypothetical janitor is going to take advantage of the same services just at the state level instead of the federal, how is that going to affect these services’ overall cost? Answer: it wouldn’t. You’re just shifting the spending from one level of government to another. Unless of course you expect some states not to maintain the services that currently exist, in which case you can’t assume that my hypothetical janitor will be able to get assistance for his son at the state level.
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@Sanders via Frank: I wonder who in God’s creation really NEEDS $231 million to $3 billion, or who really is WORTH $17 million in bonuses to any company anywhere anytime.
Joel Mark says (post #42) Sanders is “stoking class envy” and “isn’t respecting liberty”.
Or, at least, that’s what he said about Obama when Obama made essentially the same point.
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Buddyglass wrote, “How do you eliminate the need for such programs [like Food Stamps]?”
We simply need to revert to the natural progression. Family, then neighborhood, then community. This will naturally re-institute incentives to be a “good” member of the family, the neighborhood, and community, so the benefits will go FAR beyond entitlement program costs.
You asked, “Do you disagree with my assertion elsewhere in this thread that the natural result of “hands off” market capitalism is that the least skilled workers earn (what I consider) an “unacceptable” wage?”
I don’t support “hands off” market capitalism (but that certainly isn’t a system we have seen even in our grandparents’ lifetimes). The least skilled workers very appropriately earn the least. Their relative poverty needs to stand out as an incentive for young observers to make themselves more skilled. People earn what they earn. That’s what “earn” means. If I laughed my way through school and am not even interested in developing an acceptable set of work habits, I should expect to live in pretty abject poverty. I am not talking about the “worthy poor”, a concept that needs to be revived.
You asked, “Do you share the opinion of many here that private charity can completely take over the functions currently served by the wide gamut of assistance programs?”
Yes, I absolutely agree. But that doesn’t mean that everyone who currently receives “assistance” will continue to receive the same amount and kind. And many people will need to change their lifestyle in order to qualify for assistance. Again, we need to revive the concept of the “worthy poor”. The benefits to society (and to the individuals involved) will be beyond measure.
I suppose this sounds cruel and heartless to you. Unfortunately for your philosophy, it’s merely a recognition of human nature. If we don’t administer what used to be called “tough love”, the ranks of the unproductive will swell until our society collapses. So, we can “wish” human nature was different, but we have to deal with what “is”. The example I have used for decades is the American Indian. A fiercely self-sufficient society was reduced to misery, and still today the highest suicide rate, by allowing the government to take over responsibility for them. (I’m not saying that they had a choice – that’s a whole different discussion).
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RWHawk: Thomas DiLorenzo is not a credible source. He has taken money from the tobacco lobby to write books arguing that tobacco doesn’t cause cancer, and he refers to the Civil War as “the war to prevent southern independence.” (http://www.lewrockwell.com/dilorenzo/dilorenzo206.html)
This is a man who hates government programs of any sort and so is naturally going to portray anything the government does as bad and as to blame for a given problem. (This may be why you like him.)
An objective analysis shows that the Clinton administration encouraged lenders to make more loans to people living in poor neighborhoods and stepped up enforcement of oversight meant to prevent discrimination. It doesn’t show lenders being forced to make bad loans.
And you also continue to ignore the fact that 80% of the lenders involved in the crisis are not subject to CRA, and the loans made by those who are subject to CRA have not really been part of the problem.
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Conan – Thanks for the URL. This is the first I can remember hearing about the “Hartford Convention”, or Thomas DiLorenzo, and I’m happy to learn about these things.
No matter what modern revisionists want to make of it, it appears that there was serious discussion of Secession at that Convention. In fact, the Wikipedia article says that no secession article was “adopted”. It also says that a military officer was in the area to “watch” the participants, who included big names like Cabot.
As a far-removed cousin of Honest Abe, I have long been interested and concerned about his willingness to take the country to war over secession. Especially in hindsight, the cost in human life and destruction is very difficult to justify, especially since the end of slavery was an afterthought to gain crucial support (and stave off British southern intervention) late in the war. A decent case can be made that Lincoln was perhaps the worst, most intrusive war President in our history.
As to the accusation that DiLorenzo has “written books arguing tobacco doesn’t cause cancer”, my research on that subject turns up a contribution to one book that in no way denies the cancer link, despite its unfortunate title, “Cancer Scam”. The title refers to the authors’ belief that the American Cancer Society has acted wrongly in accepting government funds. Perhaps you have reference to other books??
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We simply need to revert to the natural progression. Family, then neighborhood, then community.
What policy makes that happen?
The least skilled workers very appropriately earn the least.
I agree. Though, do you think we should make any effort to place a lower limit on meager their standard of living can be? That is to say, if it were the norm that hard-working (but not valuable) individuals like Bob Cratchit were earning so little that their children were dying for lack of a good meal, would that be a problem?
If I laughed my way through school and am not even interested in developing an acceptable set of work habits, I should expect to live in pretty abject poverty.
What about your kids? Should they also suffer for your poor choices?
[re: private charity] Yes, I absolutely agree.
I just can’t see it. The scope of the need is too great, and people just aren’t that generous.
Unfortunately for your philosophy, it’s merely a recognition of human nature.
I’d say we could both accuse one another of ignoring human nature. Whereas you think I’m oblivious to the moral hazard created by assistance that doesn’t demand anything in return, I think you’re oblivious to mankind’s ability to ignore others’ suffering. I just can’t envision an outpouring of financial giving sizable enough to pay for what needs to be paid for.
If we don’t administer what used to be called “tough love”, the ranks of the unproductive will swell until our society collapses.
Again, this statement speaks to your belief that the majority of those who benefit from assistance programs are just lazy and could provide for themselves if they weren’t. What about the chronically disabled and/or mentally ill? The elderly poor? Single mothers? Hard workers who just don’t earn enough to afford things like private health insurance?
There are folks whose poverty does not stem from the moral hazard of government assistance programs. “Private charity will take care of them” is not a realistic solution.
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TWH,
I agree with you about Bush. The Bush’s, Clinton’s and Obama leave a lot left to be desired.
FIS and CONAN,
ad hominem attacks on Dilorenzo really haven’t demonstrated whether or not he is correct about the housing crisis.
A man who hates socialism can’t be all bad!
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CONAN,
I agree CRA was not a prime cause, it was part of the mix created by govt malfeasance. Govt intervention is the root cause for the crisis and the banking industry were secondary contributors. History will eventually have this heated topic worked out but at this time there are many fingers pointing in all directions. It is obvious that the govt created Fed Reserve, Fannie and Freddie and the govt push to put unworthy borrowers into home ownership are primary factors and this is what you seem to ignore:
Via the Washington Examiner:
Bloomberg said, “it was not the banks that created the mortgage crisis. It was, plain and simple, Congress, who forced everybody to go and give mortgages to people who were on the cusp. … They were the ones who pushed Fannie and Freddie to make a bunch of loans that were imprudent, if you will.”
The usual suspects on the left went crazy. The New York Times Paul Krugman called Bloomberg an “ignoramous,” citing liberal blogger Mike Konczal’s Fannie defense:
“The first thing to point out is that the both the subprime mortgage boom and the subsequent crash are very much concentrated in the private market … [Fannie and Freddie] were not behind them,” Konczal said.
Is Konczal right? Are Fannie and Freddie innocent of causing the mortgage crisis?
This we do know: Thanks to the widespread belief that the federal government would bail them out, Fannie and Freddie were able to borrow money at below-market interest rates.
This gave them a significant competitive advantage over private-sector firms which, by 1992, the two government-backed corporate entities had turned into an almost 70 percent share in the mortgage securitization market.
That same year, at the direction of the Congress, the Department of Housing and Urban Development began setting “affordable” mortgage goals for the agencies.
And if you’d like to attach actual names in Congress — the two men most responsible for the mortgage meltdown — that would be Democrats Barney Franks and Chrissy Dodds.
What do you make of the emboldened sentence above?
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FIS and CONAN,
ad hominem attacks on Dilorenzo really haven’t demonstrated whether or not he is correct about the housing crisis.
No, the historical record demonstrates he is wrong. The added biographical information offers some explanation as to why he says such wildly wrong things.
The Clinton administration relaxed the standards to make it easier for lenders to make subprime mortgages, as part of an effort to expand home ownership to people who had not previously been able to afford a home. This was a bad move that made it more likely that banks would make bad loans, but it did not force them to.
You force me into a position of having to defend the government’s involvement when I really don’t want to because the deregulation of the ’90s and early 2000s played a big role in allowing the problems to develop. But when you go well past what the facts support in your endless quest to exonerate businesses and blame government for everything, I have to take up the defense of government.
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Buddyglass – Wish I could figure out how to bold sentences. How do you do that? Anyway, I will use quotes for your statements that I am responding to.
“What policy makes that [bottom-up welfare] happen?”
I don’t know of a policy proposal to make this happen, or even move in that direction. I said “simply”, not “easily”! I’m not at all optimistic that I will live to see a reversal of our current course. But, I believe that our current approach is not stable and will eventually collapse, if not addressed (see “social entropy”). At that point, (amid very great suffering) the society will rebuild itself, beginning with families and moving upward.
“Do you think we should make any effort to place a lower limit on (how) meager their [least skilled workers] standard of living can be?”
I sure wouldn’t let anyone starve (including Bob Cratchit and family), but it’s extremely important that those who are not worthy poor should have an obviously undesirable standard of living so that they will be seen by young people as negative role models. And, it’s just as important that young people see the worthy poor being provided for.
“What about your [the unworthy poor's] kids? Should they also suffer for your poor choices?”
The kids certainly suffer under the current system, and I don’t see how to avoid that. This is a generational issue, and the best we can do is inspire the young people who are victims of these conditions to rise above them, rather than perpetuating their parents’ behavior. This happens all the time, but the examples don’t get the notoriety they deserve and these people don’t end up becoming role models.
“I just can’t see it [private charity meeting the need]. The scope of the need is too great, and people just aren’t that generous.”
Do remember that taxes would be MUCH lower, and people would be increasingly motivated to leave the “needers” and join the “givers”. Human nature can provide the incentive if it means responding to social pressure to take care of your family, your neighborhood, and your community. I would be remiss, though, if I didn’t say that I believe that human suffering over the centuries has been much greater in Non-Christian societies. The benefit of Christianity is a true charity coming from faith (in my opinion), but also a very strong peer pressure to be charitable, no matter what our inner feelings are.
“I think you’re oblivious to mankind’s ability to ignore others’ suffering. I just can’t envision an outpouring of financial giving sizable enough to pay for what needs to be paid for.”
I grew up in a rural community and have been associated with a number of small Baptist Churches. What happens “under the radar” can be pretty incredible. You are right that most people won’t voluntarily give so that some nameless, faceless person will get some unknown benefit. But if my neighbor Joe has lost his job and the family is struggling, they will be quietly and adequately taken care of. And if that “no good” Fred won’t hold a job and won’t take care of his family, he will find himself ostracized, which is a very uncomfortable feeling in a community where everyone knows everyone else.
“Again, this statement speaks to your belief that the majority of those who benefit from assistance programs are just lazy and could provide for themselves if they weren’t. What about the chronically disabled …”
Please don’t accuse me of thinking this. I haven’t said anything of the kind, and I don’t believe anything of the kind. Tough love is still love! I have said in every response that there is a category I call “worthy poor” that would certainly include the situations you mention. We have a difference of opinion about how effective a program like this could be. Please don’t make me out to be heartless.
“There are folks whose poverty does not stem from the moral hazard of government assistance programs. “Private charity will take care of them” is not a realistic solution.”
I think you would be surprised (no, shocked) at the way many people you think don’t care about the poor would respond IF they thought that they could be listened to in terms of policies to (over time) break the cycle of poverty. The nature of the current debate (not only on WMB) leads both sides to defend the extremes and makes my side look heartless and your side look like Pollyannas.
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twh (75): As a far-removed cousin of Honest Abe, I have long been interested and concerned about his willingness to take the country to war over secession.
Frank: A couple of things you might consider to be of interest:
1.
2. “The Great Centralizer: Abraham Lincoln and the War between the States” by Thomas J. DiLorenzo, The Independent Review, Fall 1998
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twh,
To format your posts (bold, italics, html links, etc.), see the HTML Cheat Sheet. (See under “Text Tags” and “Links.”)
It’s easy peasy! Just takes a wee bit o’ practice.
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BG,
Two other observations about this question. First, it implies that many/most of those “on the dole” are in that position due to ongoing irresponsibility that they can correct. In many cases that simply isn’t true. For instance, many of those in Section 8 housing are on permanent disability. They’re mentally ill, physically handicapped, or they’re elderly and have SS as their only income.
No argument here, but I would suggest these examples you listed are a small percentage compared to the govt welfare system. This is my take from the nature of clients in our tax office.
To clarify, I’m not arguing in favor of “Socialism” as a monolithic system. I’m arguing in favor of market capitalism in conjunction with policies designed to ameliorate the situation of those either unable to work or the value of whose labor is not sufficient to support a decent standard of living.
I would agree, with reservation, for those unable to work but not for those between jobs and for those earning low wages. This is for the free market to sort out, not socialism. I understand Chile has an excellent, free market program in this area that is much more effective than what we have. The govt has required the citizens to be in the programs, however.
… I’m less interested in discussing “what the law allows” and more interested in “what would work best”. The law can always be changed.
For the first part….this is why we’re in the mess we’re in. The laws have been circumvented for political gain. Working with the rule-of-law is paramount to maintaining a society. What works best is very subjective, however. Based on pragmatism which is based on moral relativism and the dialectic process. All part of the Marxist worldview.
I agree with the second part as long as the laws were properly enacted.
Though, we probably disagree on the reasons for that failure.
Govt intervention and govt growth are the causes. The govt has become a toxic parasite with unfunded liabilities that can’t be covered. Irresponsible politicos on both sides have failed their fiduciary responsibilities to us by overspending and relying on a fiat money system to carry the day. Social engineering via socialism, a fiat money system and irresponsible politicos is the combination that has destroyed much of this nation. But then we have to take a look at who put these jackals into office.
Who has the permanent underclass?
At least Britain and the USA; haven’t explored any others. PIIGS may be interesting to look at.
Also, are you really going to call Friedman and Hayek “statist Marxists”?
What causes you to ask?
Defend this assertion. All the stats I’ve found indicate Sweden is doing just fine. Certainly in better fiscal shape than the U.S.
It is better off than the US for some things and failing in others. Source: Socialism by Kevin Williamson, Chapter 7; Why Sweden Stinks. It explains how to truly interpret those stats.
Free market capitalism. Preferably with smarter government intervention, supposing we want to elevate ourselves in the aggregate without throwing the least of us under the bus.
Smarter govt intervention???? Really? Housing crisis, Ponzi schemes of social security, medicare, failed govt education system, failed War on Poverty with a permanent underclass, unnecessary wars, etc
As to how they manage to do it while we can’t…that’s the million dollar question. My feeling is that there is a certain cultural decay in the U.S. that result in Americans being more likely to mooch off the system than citizens of these other countries. But that’s just my theory.
You’re right about the cultural decay. Suggest you look into the influences of the Frankfurt School and Cultural Marxism that is endemic in our institutions. The necessary worldview to support Obama’s Fundamental Transformation of America. via cultural decay.
BTW. The mooching part is what Sweden is beginning to suffer as the younger generation is taking ‘advantage’ of the socialist generosity. Why work and pay high taxes when you can mooch as they see their neighbors mooch.
The cause was free market capitalism in the absence of controls to ameliorate the plight of those whose labor wasn’t particularly valuable. Think ethnic ghettos in New York City or people living in shanties during the Depression.
Don’t believe this was the cause. Prior to our socialism what I have learned is the ghettos were a transition for new emigrants. Some of my ancestors went this route. But I am not extensively read on this field. It was the free market that helped these folks work out of poverty rather than govt welfare that keeps people in poverty (think projects). The Depression was created and sustained by Fed Reserve policies and malfeasant govt intervention.
Sounds like a strawman. Programs aren’t yanked, just relegated to the appropriate sovereign sphere within this nation which is not at the national level.
Per your two thoughts. This will conform to law and allow each state to tailor their programs to fit their particular needs. What ifs can be endless and are only conjecture.
Local level programs have usually been much more cost effective than a centralized system. Fewer layers of bureaucrats for one. And those at the local level along with the local politicos are more responsive to the tax paying constituents. I believe we have dead weight govt bureaucrats at something like one out of every 5 workers now and one SS/Medicare recipient for every 3 workers.
You do take the statist position with a large central govt at the helm. This is a good part of the Marxist worldview. Not saying having a Marxist worldview is totally Marxism, but your solutions to the issues at hand are in that direction. Reflects much of what Cultural Marxism is all about. Private ownership with heavy govt intervention is not a free enterprise, capitalist system, more fascism. Taxes can never be high enough, govt solutions to issues that belong to other social spheres.
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CONAN,
What you don’t seem to understand is the crisis would never have come about without an interventionist, Progressive govt.
The banking industry did act immorally but only based on the system the govt first put into place and the coziness with govt regulators and what the govt encouraged them to do as long as the good times rolled.
Without the Fed Reserve, Fannie and Freddie this would never have happened; all three monsters created by govt to carry out the social engineering (CRA and other pushes in that direction) the politicos so desire.
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@TWH: I don’t know of a policy proposal to make this happen, or even move in that direction. I said “simply”, not “easily”!
Well, that’s why I asked. It seemed to me like you might as well have been saying, “If we all just stopped committing crimes we could spend a lot less on law enforcement and society would work a lot better.” While that’s true, it’s also irrelevant since people as a group are never going to do that. Likewise, people are never going to be universally responsible, so we should expect to have to deal with those situations (either publicly or privately).
@TWH: I sure wouldn’t let anyone starve (including Bob Cratchit and family), but it’s extremely important that those who are not worthy poor should have an obviously undesirable standard of living so that they will be seen by young people as negative role models.
Then we’re mostly in agreement here. My feeling is that there are “worthy poor” who will suffer, or whose children will suffer, in the absence of a level of assistance that it is not realistic to expect private charity to provide. I also feel like the lifestyle of those who receive govt. assistance is already pretty undesirable. I wouldn’t want to live like I’d have to live in order to quality for Medicaid and food stamps.
@TWH: The kids certainly suffer under the current system, and I don’t see how to avoid that.
They’d suffer a lot more in the absence of Medicaid / SCHIP, no?
@TWH: Do remember that taxes would be MUCH lower…
I’m not convinced they would be. Lower, yes, but how much? Consider that we currently run a huge deficit. The first $1T of spending cuts (or so) won’t lower taxes, they’ll just erase that deficit. As you continue to cut, recall that you’re cutting services people actually use and that provide income people actually depend on. If you cut my elderly parents’ Medicare and SS then I (and my siblings) are going to have to pay for those things out of our own income. So, while we’re not “paying taxes”, some of the money we save in lower taxes will go to providing that support directly.
That may be highly preferable to the current system, but it does mean that for many people “lower taxes” won’t automatically translate into “more disposable income from which to donate to charity”.
@TWH: I grew up in a rural community and have been associated with a number of small Baptist Churches. What happens “under the radar” can be pretty incredible.
I agree church-going Christians will often open up their pocketbooks to help members of their church, or possibly other believers with great need. They’re less likely to give large sums of money to people who aren’t part of their church (or any church) and have no interest in joining. In times of catastrophe, maybe, like relief for a natural disaster. But what about the disabled atheist down the street who needs chronic (and expensive) treatment for a medical condition, has no family, and is totally unable to work? Is a church going to pay his enormous (and neverending) medical bills, rent, and other basic necessities? I just don’t see it.
My vision, such as it is, is that through our tax structure (and possibly wage subsidies) and some sort of universal health insurance (not ObamaCare) we could “rig the system” such that there are very few “working poor”. The goal would be to enable the Bob Cratchits of this country to provide adequately for their families without having to rely on specific programs targeted toward the poor (e.g. Medicaid, food stamps, Section 8, etc.) Those who would still need assistance, then, are the ones who can’t work, either due to disability, age, or family situation.
@Rwhawk: No argument here, but I would suggest these examples you listed are a small percentage compared to the govt welfare system. This is my take from the nature of clients in our tax office.
My wife is an attorney who works exclusively with low-income tenants on housing law issues, almost all of whom are in subsidized housing. Based on what I know of her experience, most of them are either disabled in some form or fashion (often mentally), are elderly and have SS as their only income, or are single parents.
Yes, there are lots of people who receive assistance who don’t fall into those categories. The so-called “working poor”. Sadly, that they have jobs and work hard doesn’t necessarily mean they’re able to afford what I’d call basic necessities (hence Medicaid/SCHIP).
@Rwhawk: This is for the free market to sort out, not socialism.
The free market gives us Bob Cratchit. I think we can do better.
@Rwhawk: For the first part….this is why we’re in the mess we’re in. The laws have been circumvented for political gain.
Per your understanding of the laws. Suffice it to say there’s a spectrum of opinions when it comes to evaluating constitutionality.
@Rwhawk: …with unfunded liabilities that can’t be covered.
I agree that SS and Medicare were poorly designed.
@Rwhawk: Irresponsible politicos on both sides have failed their fiduciary responsibilities to us by overspending and relying on a fiat money system to carry the day.
Overspending is one way to look at it. Undertaxing is another.
@Rwhawk: [Also, are you really going to call Friedman and Hayek “statist Marxists”?] What causes you to ask?
I ask because both men supported programs you’re now calling “statist marxism”. Friedman advocated a negative income tax as a means of alleviating poverty. Hayek saw no problem with the state providing insurance against “genuinely insurable” health events. In your zeal for ideological purity you’ve made two of the giants of market capitalism into “statist marxists”.
@Rwhawk: It is better off than the US for some things and failing in others. Source: Socialism by Kevin Williamson, Chapter 7; Why Sweden Stinks. It explains how to truly interpret those stats.
Which stats does he cite? I don’t have access to the book. And when was it published? Sweden has changed somewhat during the last decade. When I look at metrics like poverty rate, violent crime rate, incarceration rate, debt-to-GDP ratio and long-term GDP growth, there’s a subset of countries (that all provide ample govt. assistance) that come out looking pretty dang good compared to the U.S.
@Rwhawk: Smarter govt intervention???? Really? Housing crisis, Ponzi schemes of social security, medicare, failed govt education system, failed War on Poverty with a permanent underclass, unnecessary wars, etc
Yes, really. To the extent the housing crisis was precipitated by “not smart” government intervention, doing things “smarter” (which might have meant “not doing some things”) would have mitigated it. Better regs on the banks might also have mitigated it. Social Security and Medicare need to be fundamentally restructured in a way that contains costs. If that ever happened, it would be an example of “smarter intervention”. When I say “smarter” that means: “knowing when to intervene and when not to, and, when you do, doing so in a way that minimizes bureaucracy, takes into account human nature and incorporates stringent cost controls”. Most existing govt. programs are poorly designed and unnecessarily complicated.
@Rwhawk: The mooching part is what Sweden is beginning to suffer as the younger generation is taking ‘advantage’ of the socialist generosity. Why work and pay high taxes when you can mooch as they see their neighbors mooch.
What evidence have you seen/read that this is happening?
@Rwhawk: This will conform to law and allow each state to tailor their programs to fit their particular needs. What ifs can be endless and are only conjecture.
You don’t think it would kick off a nationwide race to the bottom? Any state that wished to rid itself of economic deadweight (e.g. the chronically disabled, elderly poor, etc.) would simply cut all assistance to those groups. They would then relocate to other states that do offer assistance. In effect, the economies of those states that insisted on offering assistance would end up supporting a disproportionate percentage of the nation’s needy, since a large number of them would relocate to those states.
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Frank #81 – Thanks for the good info on A Lincoln (although the second link was dead). I suppose it was impossible to look at Lincoln critically for the first 50 years or so, but I don’t understand why he has avoided almost all criticism for so long.
Also thanks for the HTML Cheat Sheet. I will boldly try to use it!
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twh,
I can’t explain it … perhaps a glitch in the WM blog. The link is:
http://www.independent.org/pdf/tir/tir_03_2_dilorenzo.pdf
… and it’s still very available: It’s a 29-page article in PDF, with lots of references.
(For some reason, the link I made ended up as http://online.worldmag.com/2011/12/06/people-vs-profits/www.independent.org/pdf/tir/tir_03_2_dilorenzo.pdf. See the difference between the two?!)
Re. your statement, “… I don’t understand why he has avoided almost all criticism for so long,” I have one theory. But I think it will make more sense once you’ve read the DiLorenzo piece.
Let me know when you’ve done so, and then I’ll run it by you.
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@Buddyglass – It seemed to me like you might as well have been saying, “If we all just stopped committing crimes we could spend a lot less on law enforcement and society would work a lot better.”
I proposed an approach which has built-in feedback mechanisms which use human nature to provide control and stability. That is hardly wishful thinking.
I also feel like the lifestyle of those who receive govt. assistance is already pretty undesirable
To you and me, perhaps, but not nearly undesirable enough for those who perpetuate the cycle of poverty. No cell phone, no cigs, the list goes on. They would still have a standard of living FAR above much of the world.
They’d suffer a lot more in the absence of Medicaid / SCHIP, no?
Highly debatable.
I’m not convinced they [taxes] would be [much lower].
I agree we have created a mess that must be dealt with and will affect all of us. The question is what is the least painful (not painless) way to unwind ourselves from the mess.
what about the disabled atheist down the street who needs chronic (and expensive) treatment for a medical condition, has no family, and is totally unable to work?
I don’t believe many Christians would let this person who they know, suffer. But how rare is this situation? How many people actually have “no family”? Instead, many have alienated their whole family (and community) due to their attitudes and actions. Christians can, and will, do a great deal, AND there’s nothing stopping Atheists and other groups from forming “communities”!
My vision, such as it is, is that through our tax structure (and possibly wage subsidies) and some sort of universal health insurance (not ObamaCare) we could “rig the system” such that there are very few “working poor”.
It’s a nice vision. I would sign up in a minute if I thought it could possibly work. But I don’t think there is nearly enough wealth in the system to support this approach, AND I don’t think it would be stable, but would instead invent workers to become non-workers. That’s not just theory. There is the old Soviet Union fact-based joke, “They pretend to give us a job, and we pretend to work”. What is your basis for thinking this could work?
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