Rep. Paul Ryan’s Poverty Plan: Wrong Target, Wrong Solution

July 24th, 2014 at 12:12 pm

Over at PostEverything.

BTW, a friend who visits here regularly was mildly complaining about jumping around from site to site to read my posts.  I sympathize, but we’re just talking a mouse click.  And while OTE’ers bring very high quality eyeballs to this site, changing the world requires eyeball quantity as well as quality.

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9 comments in reply to "Rep. Paul Ryan’s Poverty Plan: Wrong Target, Wrong Solution"

  1. smith says:

    Re: Bernstein and Ryan and Obama want
    “EITC expansion for childless adults”
    Minimum wage takes care of underpaid full time workers. Workers with children may not be able to work full time absent affordable child care. But the issue of not enough full time jobs can not be solved with EITC expansion. In fact, it makes it worse.

    We know what’s going on. Employers are exploiting workers by artificially creating part time jobs to cut costs and create two or more workers competing for the same hours, thereby also suppressing wages. On a macro level, the lower wage costs increase profits more than lower demand from underemployment. EITC burdens the middle class to pay the cost for the businesses engaged in this bad behavior. As such, you are robbing Peter to pay Paul. Meanwhile, there is no penalty for creating the “army of surplus labor” but now the government is actively in collusion supporting this regime. Changing tax law and labor law to encourage full time work, and deficit spending on economic stimulus to tighten the labor market is what I want government to promote. Not more corporate welfare that I pay for while locking people into substandard working conditions.

  2. Larry Signor says:

    Smitty, you could be on to something here—“…there is no penalty for creating the “army of surplus labor” …”. Let us suppose, in our model, that there was a disincentive to business for creating unemployment, would this lead us to higher employment levels? Would the institutional reaction be a shortening of the “full time” work week and higher levels of employment? Would short term unemployment, i.e. more vacation/personal time, be a positive result? What would be the effect of removing some of the current government responsibility for UI and assigning it to business? American poverty is a distributional problem, not a moral or quantitative problem. Perhaps to more efficiently distribute wealth we must redistribute work.

    • smith says:

      Businesses are currently directly taxed for creating unemployment, because when they lay off workers, the employer share of unemployment tax goes up. But in most cases, the savings of lower payroll vastly exceeds any increased assessment. This is true even when employees are replaced by lower paid often younger full time or part time employees.

      There are many ways to encourage employment and discourage unemployment.

      Preventing consolidation which sacrifices macro growth and competition for economies of scale and higher profits should be a no brainer. But TimeWarner Cable Comcast proves it’s not. This is simple anti-trust of a highly regulated industry, a near public utility, with a tendency towards natural monopoly, at the leading edge of economic growth and free speech. (internet market place and public square).

      Much higher marginal tax rates are needed to prevent the incentive to hurt the marco economy for personal gain. As long as corporations, corporate management, and businesses gain more from higher profits in a smaller economy, pro growth and equitable distribution policies will be blocked. The market based solution is higher marginal tax rates so only a shared growing economy brings any type of reward, albeit not strictly monetary.

      Germany and France have much stronger government regulation of labor policy (excepting minimum wage up until recently in Germany). France is also too hindered by lack of at-will employment, but many other policies bring more balance to the labor side.

  3. Oakchair says:

    You did mention it but I wish you and others would go onto more details about how welfare reform is a huge failure, and that was before the recession caused a large increase in poverty.
    For example in 2006 before reform 12 million Americans were getting help, compared to just 5 million in 2001 this equals a 58% decline, and benefits per person decreased by 9.7%. Despite this total welfare spending only declined from 28bn to 24bn a 14.3% decline. So benefits declined around 70% but spending only declined by around 15% and that is solely because welfare reform increased administrative and bureaucratic spending.
    Further more welfare reform has made it so only 27% of families in poverty get assistance compared to 82% before.

  4. Fred Brack says:

    Some friend, Jared. Just thing of the bitching that would ensue if your friend had to go down to the street and purchase a newspaper to read your stuff. Fact is, thanks to you we’re getting an education in economics wonkery free of charge.

    My hope is that Hillary will hire you as chief of her campaign economics team then appoint you her principal economics adviser when she’s elected.