A Plan to Replace the Welfare State

[Roxanne Appleby]

Colly, your thinking on these subjects is just too bound by the perverse and skewed incentives built into the status quo. You have got to expand your thinking outside that box. For example, almost half of US health care spending is allocated by the government, and most of the rest by third party payer systems that give individuals no incentive to economize. No wonder the system is all screwed up!

Regarding the stock market and retirement accounts, the worst compound average growth rate, using constant dollars, for any 45-year period in the history of the stock market was 4.3% from 1887-1932. Call it 4 percent. At that rate a young woman who puts $2,000 each year in an S&P 500 index fund will have $253,000 after 45 years, with which she could purchase an annuity worth about $20,500 a year.

What if all 500 stocks in the S&P get "Arthur Andereson" disease? Christ, what if an asteroid hits the planet! There are no guarantees this side of the grave, babe.

Almost no guarantees, that is. It is guaranteed that it will be impossible to honor the promises made by social security and medicare without massive tax increases on working Americans. Tax increases so large that they will wreck the economy, so that is not even a real option. The choice is not between reform and the status quo. The choice is between reform and something worse than the status quo.

On the Murray plan, you simply must look beyond the first order effects. This exchange has showed me two things:

1. There is no understanding today of how civil society works, and no appreciation of its power. Everyone here finds it almost impossible to see beyond the first-order effects.

2. There is incredible cynicism about the willingness and capacity of humans to help. I fear that nearly a century of welfare statism has had a devastating effect on our appreciation of the the potential for humans to practice virtue. (And I mean Mark 1 humans, not some "new socialist man" version.) It has had an effect on our psyches comparable to what 75 years of communism did to the Russians.

I say again, maintaining the Medicaid and Social Security status quo is not an option! The trends are unsustainable, and as Herb Stein famously said, "Unsustainable trends tend to come to end."

 

[Colleen Thomas]

Colly, your thinking on these subjects is just too bound by the perverse and skewed incentives built into the status quo. You have got to expand your thinking outside that box. For example, almost half of US health care spending is allocated by the government, and most of the rest by third party payer systems that give individuals no incentive to economize. No wonder the system is all screwed up!

Regarding the stock market and retirement accounts, the worst compound average growth rate, using constant dollars, for any 45-year period in the history of the stock market was 4.3% from 1887-1932. Call it 4 percent. At that rate a young woman who puts $2,000 each year in an S&P 500 index fund will have $253,000 after 45 years, with which she could purchase an annuity worth about $20,500 a year.

What if all 500 stocks in the S&P get "Arthur Andereson" disease? Christ, what if an asteroid hits the planet! There are no guarantees this side of the grave, babe.

Almost no guarantees, that is. It is guaranteed that it will be impossible to honor the promises made by social security and medicare without massive tax increases on working Americans. Tax increases so large that they will wreck the economy, so that is not even a real option. The choice is not between reform and the status quo. The choice is between reform and something worse than the status quo.

On the Murray plan, you simply must look beyond the first order effects. This exchange has showed me two things:

1. There is no understanding today of how civil society works, and no appreciation of its power. Everyone here finds it almost impossible to see beyond the first-order effects.

2. There is incredible cynicism about the willingness and capacity of humans to help. I fear that nearly a century of welfare statism has had a devastating effect on our appreciation of the the potential for humans to practice virtue. (And I mean Mark 1 humans, not some "new socialist man" version.) It has had an effect on our psyches comparable to what 75 years of communism did to the Russians.

I say again, maintaining the Medicaid and Social Security status quo is not an option! The trends are unsustainable, and as Herb Stein famously said, "Unsustainable trends tend to come to end."

You're looking at a 45 year outlook. If you implement this, than yes, those who happen to have 45 years left in the work force would ge tthe possible benefit of the overall trend. I have several previous 401K benefits rolled over into an s&P 500 index fund. I'm not a nervous market watcher. I know, within limits, that downturns and gains have minimal impact on me. I'm still a good 25 years from being able to draw that money. Are you saying the investment oprion would only be avialable to those who still have 45 years left in the work force? That wasn't the impression I got.

I'm not postulating the rediculous, metoers and the S&P 500 aside. I'm postualing a plausible worst case scneario. That is two or three stocks, currently rated as blue chips, who are cooking their books. You can't say it can't happen, there have been enough of them over the last ten years to prove it not only can happen, but does happen. If that worst case scenario comes into being, what contingency plan is in place to protect people who don't have the 5 to ten years left before they begin drawing there benefits? What plan is there for those who are already drawing who have their Social security halved or worse by such an event? Is there one? Has it even been considered? Or is the faith of the people who propose this in the market such that what I see ias a pluaible wrost case is simply beyond their ability to imagine, much less plan for?

The question has merit. Blue chips have failed. Recently even. Be it wrold com or Ennron. AA or Fannie mae. People lost millions. But even those who lost their shirts, can still fall back on their social security. What happens when the failure wipes out their social security? Or halves it? Do these people just get to die? If our society is not callous enough to just let them die, then the question is begged, who and by what mechanism will keep them from it? If the answer is government shouldering the bruden, which appears to be the only logical response, then why would we want to gie them the opportunity to loose their invested social security nest egg in the first place? Who benefits? Stock brokers, a fe brokerage houses, and a few already obsecenely wealthy bussinessmen. That's about it.

You're demand I refuse to consider first order effects has me kind of confused. By that rational Katrina was a wonderful thing. look at all the second order effects! You can't find a contractor anywhere south ot Corinth mississippi, they are all on the coast working! The ninth ward has been cleaned up! New Orleans can now be rebuilt with a better plan! The corps of engineers has been given the money to properly redo many of the dykes and flood control measures they have asking for for years! The pump houses now have water shielded generators! Ah the wonderous second order good effects that have been wrought! A few hundere dpeople died, a city was nearly destroyed, but hey, those are just first order effects. No sweat?

If the first order effects kill the patient, the second order good has little value. Telling me I should ignore the first order effects, is like an amicus argument. You're imposing a condition on rational debate of the plan that is simply not acceptable to me on a rational or logical level. I am not willing to see the good or thousands or hundereds of thousands rationalized away with a blase, it'll be fine. If I were, I'd be a liberal. Their pie in the sky utopian plans are so much better. A perfect world results.

You can, to a certain degree, discuss the long term good of a plan irrespective of it's short term harm. I see this a lot in professional sprots, where the long term good of the team is sometimes served by letting someone go because his salary deamnds would be crippling down the road. In this case though, the long term good does not trump the possible short term destruction of people's lives. If the best you rplan can do, is tell me I should ignore that destruction and focus on the long term good, then I'm not buying. In the first place, any long term good is purely hypothetical. No one can accurately forsee future results, future market trends future benefits from an economic strategy. You project and hope. So in the balance, your asking me to ignore potential short term ills, for the dubious payyoff a brighter future. to me, that's a healthy dose of sticking your head in the sand and wishful thinking.

A rational plan would address the short term fall out first. It would have safety mechnisms built in to make sure the short term crunch didn't destroy people. A rational plan would also have a contingency for the very plausible supposition that unforeseeable conditions might render the plan a bad idea. I see no such consideration here. This then, is the Japanese plan for the battle of midway, or the Russian plan for Tannenberg. It looks great on paper and it works great on table top manuvers. But it's totally reliant on the enemy doing exactly as you predict and all variables playing out in your favor. Basically, it's a script more than a plan. And if someone dosen't follow the script, you have no fall back position, because the plan dosen't allow for anyone not following the script. That's not responsible consideration in my book.

You may rail against the perception people are basically selfish all day. railing against it or lamenting that it is the perception does nothing to change the fact it's a perception based on observation. Demanding I accept a plan, whre people act in a way that is counter to my experience and observation isn't very likely to get me on board. How many jobs have gone overseas? Pretty good indication bussiness men aren't in it to do good, but to make profits. How many times have unions struck and fucked up thousands of innocents? Pretty good indication labor isn't in it for the good of anyone but their members. How many athletes who sign multi million dollar contracts give heavily to charity? A few, but by no means enough to convince me they aren't in it for themselves. How many people turn down a promotion because the guy in the next cube really desrves it more? Not too many. The postulation that people will do good and act responsibly is an idealistic one, no less idealistic than liberal plans to legislate a utopian society or communist plans to institure a completely fair and egletarian society. You're trying to cast human nature as something it is not. Or your simply ignoring the preponderance of evidence on what human nature is.

I'm going to go back to my statements in the political ideology thread. I want rational, reasonable and logical governance. I subject any plan to change the staus quo to very exacting strictures. The first time I am told to ignore a problem I can postulate, or to have faith things will work out, or to ignore the evidence of my own experience, we have left rationality behind. and I am going to be against the plan. I am not greenspan or Locke or even particularly perceptive and incisive. That said, if the plan fails to meet my criteria for well thought out and considered, I have to believe it would fail even more miserably under the scrutiny of someone who was particularly incisive or knowledgeable.

I don't mean to sound like I am hacking on you, but I have to say, your insistance I ignore the first order effects and that I accept people will act a certain way, and that I don't postulate possbile problems makes it sound a whole lot to me like this plan is religion. I have to exibit a large amount of faith that the short term first order effects won't be as bad as I think. I have to have faith in the nature of mankind being altruistic and good, despite the evidence of my eyes. I have to have faith that nothing tragic will occur that could turn this into a shambles and leave thousands if not hundreds of thusands of people adrift with nothing. Frankly, I have more faith in drawing two cards to an inside straight. I played a lot of poker when I was younger. And, believe it or not, I have drawn two cards to an inside straight on a couple three occasions. Strangely, I never had much money on the table when I have done so.

As to your final statement, I have a question. Why is medicare and Social security unsustainable? Is it because they are nherently insupportable plans or is it because they have been egrigiously mismanaged and abused by politicans with short term outlooks and no concience?

 

[impressive]

.....

 

[Pure]

Mr Murray

Murray as quoted by Roxanne,
Aristotle was right. Virtue is a habit. Virtue does not flourish in the next generation because we tell our children to be honest, compassionate and generous in the abstract. It flourishes because our children practice honesty, compassion and generosity in the same way that they practice a musical instrument or a sport. That happens best when children grow up in a society in which human needs are not consigned to bureaucracies downtown but are part of life around us, met by people around us.

The Plan returns the stuff of life to all of us in many ways, but chiefly through its effects on the core institutions of family and community. One key to thinking about how the Plan does so is the universality of the grant. What matters is not just that a lone individual has $10,000 a year, but that everyone has $10,000 a year and everyone knows that everyone else has that resource.

Strategies that are not open to an individual are open to a couple; strategies that are not open to a couple are open to an extended family or, for that matter, to half a dozen friends who pool resources; strategies not open to a small group are open to a neighborhood. The aggregate shift in resources from government to people under the Plan is massive, and possibilities for dealing with human needs through family and community are multiplied exponentially.

Overally it's a pretty weird scheme. It depends on taxation, which according to Rand and some libertarians is basically theft. That is left in place, perhaps as 'flat rate.' Then it has the government not doing anything--building roads, paying for the building of tanks and ships, delivering the mail, but giving the money back-- to encourage responsibility. This weird twist avoids the Libertarian "Stop all taxes," and replaces it with "OK, take the fucking taxes, but give it all back so we can allocate the money properly."

Murray believes most people, aside from himself [and Bill], are irresponsible. What is his evidence? They shifted responsibility to a 'bureaucracy' that is 'downtown.'

So instead of having the newspapers nudge the bureaucrats to repair the roads ("pothole of the day"), the neighbors virtuously get together and fix it themselves, or, in less exemplary fashion, chip in to have funds to pay a company repair the neighborhood road.

It's entirely unclear why, at present, my leaving road building to 'downtown' and 'bureaucracy' is bad, except of course that Murray likes to use loaded terms instead of offering evidence. If the road money goes "downtown," I'm deprived of the 'stuff of life' or have left that 'stuff' to someone else (I'm not sure which). And I'm so corrupt I *want* that to happen. BAD ME!.

The plan allegedly frees up money for healthcare. Private companies could offer low cost insurance, and it would be so large a scale that there would be enough funds. Now, how is that company distributing the money? Somewhat like Kaiser Permanente? They need to make their profit by trimming costs: What I get back then, if I've put out X dollars, is X minus the cost of the Kaiser Permanente bureaucracy and minus the profits to its shareholders. Oh, and doing it this way allegedly shows responsibility, whereas paying into the National Health Plan is fuelling 'bureaucracy' and irresponsibility, and losing the 'stuff of life.'

Mr. Murray is strangely silent on the issues of businesses and corporations. A bit like Ms. Rand. Presumably he thinks they continue to work for the public good, unregulated as in 1900 (sarcasm). So when all of us take our funds and need an operating system, Old Bill is there to sell us the new Windows. My money for the OS goes to Microsoft, which is NOT bureaucracy, but clean efficient profit driven human productivity, embodied in a lean mean virtuous organization. (Bill, embodying virtue, does not steal our money like his pal Mr. Lay at Enron.)

The one really clever thing is the talk of a new human goodness that is to emerge, but is not there now, having been poisoned with the New Deal. Let's get this straight. Everyone--when not personally working the soup kitchen-- goes to their local church or the salvation army and contributes generously, so that these orgs can help the needy.

Of course the church organization is not 'bureaucracy,' and only serves the people, not itself (sarcasm.) None of what the churches or SA do, of course is 'welfare,' in the bad sense, and no one is corrupted in receiving it, as Colly and Impressive corrupted by stipends in the present system.

Wait, here's the Murray/Roxanne answer on that: The churches wouldn't NEED to help very many people, since human nature has been changed (or allegedly purified, brought forth from corruption by Mr. Murray). Everyone (virtually) is now responsible; everyone is now an Ayn Randoid who is rational and productive and (here Murray substitutes Kelley's neo-Randish view) benevolent.

Capitalist anarchism is a bizarre contradiction, if alleged to promote freedom; capitalist anarchism leaving the state to collect taxes and distribute 'free money' is just plain nonsense. Murray doesn't ask why people continue to pay while (hypothetically) believing that the government 'bureaucracy' is unable to allocate it for any meaningful purpose.

If one asks about Murray's intent in writing the proposal.... I suspect Murray's goal to tout one of those GWB Social Security reforms, where all the money goes into the stock market, so that everyone is taught 'responsibility' by managing their health acct. The other current plan is of course reversion of 'welfare' to 'faith based' groups--the Catholic Church and the Southern Baptist convention not being 'bureaucracies' and not taking the 'stuff of life' from me.

 

[Roxanne Appleby]

Hey Colly –

First off, I apologize for the fact that I've been spelling your name as if you were a breed of sheep dog from the Celtic fringe. Although they are most handsome dogs.

On the Murray plan, stipulate a slow and gradual phase-in that leaves no one in the lurch, probably taking several decades. That is how I viewed this from the start, and assumed everyone else would too. We know what assuming makes of me.

Ditto on the Social Security private accounts - phased in over decades. Those in their 40s might get a hermaphrodite plan. For those in their 50s private accounts would be voluntary, or not available at all – they remain in the current system. Also stipulate prohibiting individual stocks in the plans, just broad based mutual funds. So no worries about an individual overinvesting in a loser. On all these issues there is nothing that says we can't adopt reforms that take decades to phase-in, with reasonable safeguards against folly.

You have misread something else I said, which means I was not sufficiently clear. That is "first order effects." You read this to mean the negative impact on those currently in need who are forced to go cold turkey from the current system to the Plan. Per above, there is no cold turkey.

Here's Murray's example of a first and second order effect:

"Or contemplate the effects of a known income stream on the young man who impregnates his girlfriend. The first-order effect is that he cannot evade child support--the judge knows where his bank account is. The second-order effect is to create expectations that formerly didn't exist." (That he will marry the girl.)

In other words, there is a real incentive to get married - they can pool their 10k stipends. More marriage is a secondary effect. Here's a cascading tertiary effect: A reduction in illegitimate births, and a reduction of all the dysfunctions that arise from that (especially at the lower end of the social-economic scale). Result: Fewer social problems in the future.

If you use your imagination it is not hard to picture thousands of cascading secondary and tertiary effects. Here's another: A number of people here asked what happens when the individual pisses away his monthly stipend on beer. Think of charity in the old days, when the price of aid would be to require the person to do something - sewing for a woman, cutting firewood for a man, etc. In that context think of this statement:

"A person who asks for help because he has frittered away his monthly check will find people and organizations who will help (America has a history of producing such people and organizations in abundance), but that help can come with expectations and demands that are hard to make of a person who has no income stream."

In the current system this person is just warehoused by bureaucrats who have no leverage to make any personal reform demands because the person has no assets or income - he has nothing to lose - and we don't need his strong back or her nimble hands. As a society we are unwilling to let such people just starve, so we treat them like cattle rather than human beings - here is your feed, here is your basic health care, go out and graze and don't make any trouble.

Under the Plan there is leverage: "Yes, we'll feed you for the rest of this month, but there is a condition. In two weeks $583 will be wired into your account ($10k - $3k annual health insurance bill / 12). Obviously you can't handle that money - in return for food now, sign this paper agreeing to enter our organization's rehab program, and turning over your stipend for three months until you graduate from the program. We will dole out your stipend money to you as needed, and return any balance at the end."

The organization is not a government agency, but private, and it must compete for contributions with other organizations. If its program is ineffective it will fail in that marketplace, and be replaced by some other private organization. Compare this to an ineffective government program - "the closest thing to immortal."

Stipulate safeguards preventing fly-by-nights from getting access to people's stipends, or "charity mills" that spend all their income on fundraising. Stipulate a functioning health insurance market to handle those lifetime $3,000 per year policies. Stipulate a lengthy phase in so no one relying on the current system is left in the lurch, even if that takes 35 years. Those are all details, and we are plenty smart enough to resolve them at the outset.

What I had hoped to generate here was a conversation about the big picture, the idea of handing responsibility back to individuals and communities. I don't like the direction our society has gone in the past 30 years in many respects. Who does? Who can deny that the decline in personal responsibility is responsible for most of the social dysfunctions that are eating us up?

As our Indian wisewoman might say, "when you find yourself on a dead horse, get off." In terms of creating a healthy society and culture we are riding a dead horse. Murray's holding a frisky young colt full of promise and energy - why not take a look?

Edited to add: We don't have to assume and expect continued social decline. We're accustomed to doing so under the current system, because it offers no plausible mechanism to reverse the decline. Ideas like this are a reminder that it is in our power as a people to not just solve big problems, but to change the course of our nation, and our civilization, even.

 

[SEVERUSMAX]

I didn't say that. I said that they need to pay the employees who make their companies a success a fair wage. It only makes sense. These are the people who are giving their time, life, energy, minds to making your company work. Yet bosses underpay them so that the company can make even MORE money and they, the bosses, can pocket even MORE profit. How much profit do they need to pocket? Why isn't a milion a year enough? Why cut out health care and under cut wages that people LIVE on, scrape by on...merely so the company can make an even larger profit next year and said owner can raise his own salary?

I mean let's be reasonable here. We're not talking about the boss with two employees and is it fair for that boss to pocket more than the employees. We're talking about guys who make OBSCENE amounts of money. I really don't think anyone needs to be obscenely wealthy. Can they be? Sure. Is it evil to be? I dunno. What's evil? It certainly starts to be evil if they're being obscenely wealthy at the expense of those who helped make them obscenely wealthy. Don't you think?

But let's take it one step further...do the children of the man who created the company deserve to pocket the profits? I mean kids like Paris Hilton...who did nothing to create the company and do nothing to maintain it.

Conversely, shouldn't people have the right to pass on their property to whomever they wish? I understand the frustration, since I was not born with a "silver spoon" in my mouth, either. I like to joke that I am "impoverished nobility". Not far from reality, in fact. My family was not exactly dirt poor all of the time, but there were times when we were close to it.

In any case, I think that the solution is for the shareholders to take some goddamned responsibility and start cutting the paychecks of overpayed CEOs who often embezzle even more than they collect in legal pay. Of course, they pay higher taxes, too, but that can be remedied as well.

Also, reducing the overhead for small business will increase the number of entrepeneurs as well as CEOs (who are basically private sector bureaucrats) and corporate raiders (who often DO have some value, in terms of shaking things up). The capital-gains tax is not a tax on big business. It is a tax on small business and entrepeneurs.

The problem that I have with the estate tax is that it often drives the family farms into penury, thus making it easier for huge agribusinessess to take over. Damn, that sounds a lot like the late Roman Republic! So, slash the estate tax, eliminate ethanol subsidies, and keep a small inheritance tax on unused or unfarmed real estate.

And there is a bonus in this for women. Many of the struggling smaller businesses are women-owned. There are fewer "glass ceilings" in small business, so more women will have some wealth. They will also be more likely to pay their fellow women the same salary as men. The same will be true of gays, minorities, etc. who are often left behind. With the power of their own capital and prosperity behind them, that should be less of a problem, and they should be more empowered.

 

[Colleen Thomas]

Hey Colly –

First off, I apologize for the fact that I've been spelling your name as if you were a breed of sheep dog from the Celtic fringe. Although they are most handsome dogs.

On the Murray plan, stipulate a slow and gradual phase-in that leaves no one in the lurch, probably taking several decades. That is how I viewed this from the start, and assumed everyone else would too. We know what assuming makes of me.

Ditto on the Social Security private accounts - phased in over decades. Those in their 40s might get a hermaphrodite plan. For those in their 50s private accounts would be voluntary, or not available at all – they remain in the current system. Also stipulate prohibiting individual stocks in the plans, just broad based mutual funds. So no worries about an individual overinvesting in a loser. On all these issues there is nothing that says we can't adopt reforms that take decades to phase-in, with reasonable safeguards against folly.

You have misread something else I said, which means I was not sufficiently clear. That is "first order effects." You read this to mean the negative impact on those currently in need who are forced to go cold turkey from the current system to the Plan. Per above, there is no cold turkey.

Here's Murray's example of a first and second order effect:

"Or contemplate the effects of a known income stream on the young man who impregnates his girlfriend. The first-order effect is that he cannot evade child support--the judge knows where his bank account is. The second-order effect is to create expectations that formerly didn't exist." (That he will marry the girl.)

In other words, there is a real incentive to get married - they can pool their 10k stipends. More marriage is a secondary effect. Here's a cascading tertiary effect: A reduction in illegitimate births, and a reduction of all the dysfunctions that arise from that (especially at the lower end of the social-economic scale). Result: Fewer social problems in the future.

If you use your imagination it is not hard to picture thousands of cascading secondary and tertiary effects. Here's another: A number of people here asked what happens when the individual pisses away his monthly stipend on beer. Think of charity in the old days, when the price of aid would be to require the person to do something - sewing for a woman, cutting firewood for a man, etc. In that context think of this statement:

"A person who asks for help because he has frittered away his monthly check will find people and organizations who will help (America has a history of producing such people and organizations in abundance), but that help can come with expectations and demands that are hard to make of a person who has no income stream."

In the current system this person is just warehoused by bureaucrats who have no leverage to make any personal reform demands because the person has no assets or income - he has nothing to lose - and we don't need his strong back or her nimble hands. As a society we are unwilling to let such people just starve, so we treat them like cattle rather than human beings - here is your feed, here is your basic health care, go out and graze and don't make any trouble.

Under the Plan there is leverage: "Yes, we'll feed you for the rest of this month, but there is a condition. In two weeks $583 will be wired into your account ($10k - $3k annual health insurance bill / 12). Obviously you can't handle that money - in return for food now, sign this paper agreeing to enter our organization's rehab program, and turning over your stipend for three months until you graduate from the program. We will dole out your stipend money to you as needed, and return any balance at the end."

The organization is not a government agency, but private, and it must compete for contributions with other organizations. If its program is ineffective it will fail in that marketplace, and be replaced by some other private organization. Compare this to an ineffective government program - "the closest thing to immortal."

Stipulate safeguards preventing fly-by-nights from getting access to people's stipends, or "charity mills" that spend all their income on fundraising. Stipulate a functioning health insurance market to handle those lifetime $3,000 per year policies. Stipulate a lengthy phase in so no one relying on the current system is left in the lurch, even if that takes 35 years. Those are all details, and we are plenty smart enough to resolve them at the outset.

What I had hoped to generate here was a conversation about the big picture, the idea of handing responsibility back to individuals and communities. I don't like the direction our society has gone in the past 30 years in many respects. Who does? Who can deny that the decline in personal responsibility is responsible for most of the social dysfunctions that are eating us up?

As our Indian wisewoman might say, "when you find yourself on a dead horse, get off." In terms of creating a healthy society and culture we are riding a dead horse. Murray's holding a frisky young colt full of promise and energy - why not take a look?

Edited to add: We don't have to assume and expect continued social decline. We're accustomed to doing so under the current system, because it offers no plausible mechanism to reverse the decline. Ideas like this are a reminder that it is in our power as a people to not just solve big problems, but to change the course of our nation, and our civilization, even.

LOL,

No offense taken on the Collie, I answer to most anything

Slow phase in or immediate, you seem to n ot be grasping what I am saying. You cannot live on ten K a year in New York. You can't. To those whom the ten K would just be extra cash, it's not a problem. to those who depend on thier benefits to survive, it's lights out.

Similarly, you cannot phase in Health insurance through a private provider, becuase they will drop the preexisting risks before they ever write a policy, will drop anyone they can who falls outside the statistical norm over a year or two, and will definetly drop everyone by age 35 if you are allowing them premiums of only 3K a year. They can't do otherwise and expect to survive. Unlike universal life plans, you can't "store" enough premiums in a health plan to cover one serious medical problem, let alone the multitude that come with age. No insurer, in their right mind, will issue a policy at 21 for a 3K per year premium and honor that policy and premium until death. You just cannot do it. At a ten K per year premium, you couldn't do it. Not with long term care costing what it does now, not with a single extended hospital visit likely to wipe out tens if not hundreds of thousands. I had a kidney stone that was too big to pass naturally not too long ago. 3 nights in the hospital, treatment, er visit etc. 500$ co-pay. the bill? 13,000 plus. In short, I just wiped out four years of my 3K premium, assuming I had gone four years without so much as a doctors visit. It's unrealistic. that dosen't even count the continued expense of having to see a urologist twice yearly from now on or of the cost of having to get GI tract X-rays once yearly from now on.

Not toolong ago, NYC built some huge skyscraper projects. It was derieded as trying to warehouse people and it failed miserably. Mr. murray, is, imho, doing the same thing. He's trying to sell his plan based on his interpretation of the average person. I don't buy it. If money were incentive to marry and pool resources, whay are there so many single mom familys out there? Because the incentive he sees and the proper response, are based on a socialization that isn't present across the population. I worked in a warehouse. I saw a group of young men, all decent to indifferent workers. Over three quarters had one, if not more children. Over half had children by different mothers. 2 out of the entire crew owned bank accounts, the rest spent part of each weeks pay to get their checks cashed at a check cashing place. We got paid on friday, by tuesday latest, they were trying to borrow money for lunch. Never mind that they got paid comperably to me. It all went into their cars, or into their guts in liquid form. In a few maybe into their arms and noses as well. Give these guys 10K? New radio, new sub woofer, massive hangover. tuesday next, boke and bumming 50 cents for a pack of M&Ms. That's reality. I'm not making these guys up. I'm not postulating the rediculous. The assumption that one of these guys would marry a girl he got pregnant because it's the responsible thing to do is ludicris.

Subjecting them to the tender mercies of an "organization" that sprung up to help gives me the willies. I assume you're talking abou things like the title loan places I see all over the poor part of town.

You want to see cascading secondary and teriary effects. Let give you a few I see. Old people dying like flies because they are afraid to use their policy and get dropped so they wait until it's serious, which is often too late. Young men from the inner cities frittering away their 10K, fritering away their possible credit to these helpful orgainzations and resoprting to crime simply to live. Disabled people such as myself, left with the option of heating fuel tonight or gruel, because you can't have both, pay rent and still be inside your ten-K budget. Folks who are comfortable, blowing their ten K on goodies, then going back to living their regular life till the next installment. Single mothers, blowing their 10K and that for their two or three kids, then not being able to feed them.

Murray's scenario assumes a responsible populace. Mine assumes an irresponsibble populace. I'm willing to bet mine is the more realistic. I'm also willing to bet Mr. Murray's plan has no contingency in it for recovery if my perception is dead on and his is a pipe dream. rampant poverty, rampant crime, the most vulnerable segments of society at hugely increased risk. Those are heavy cnsequences of his appraisal of the populace being wrong.

Is he wrong? I say he is. The evidence of my eyes and experience say he is. But maybe not. Maybe everyone is an eaton grad just waiting for the opportunity to show how responsible they can be. If we're betting 15 bucks on it, I'd be willing to let him try and prove it. Since we are betting people's lives, I'm not.

 

[Pure]

From the annals of looneydom

Canada's new 'conservative' Prime Minister must have been reading Mr. Murray. Instead of getting the Fed into setting up or structuring a daycare system--and totally corrupting working women, as in Sweden, Finland, etc.-- he proposes to just 'give' every family $1000 per child to spend as they wish on daycare!
---

Incidentally, just who is it that flips the burgers at McDonalds and sales clerks at Walmart if they've got 10K tax free coming in?

 

[Pure]

Hi Colly,

Colly said,

We got paid on friday, by tuesday latest, they were trying to borrow money for lunch. Never mind that they got paid comperably to me. It all went into their cars, or into their guts in liquid form. In a few maybe into their arms and noses as well. Give these guys 10K? New radio, new sub woofer, massive hangover. tuesday next, boke and bumming 50 cents for a pack of M&Ms. That's reality. I'm not making these guys up. I'm not postulating the rediculous. The assumption that one of these guys would marry a girl he got pregnant because it's the responsible thing to do is ludicris.

IIRC, Mr. Murray reckons that certain people--those earning top money-- are just born smart and virtuous, as shown by their prosperity, and other are born shiftless and stupid.

To answer your question. You ignore Phase 2, and Phase 3, of Murray's plan.

OK, you've given all these folk 10K, just like in the economics 101 problems.

The unproductive ones stuff it up their noses, etc. as you say.

Phase 2: The voters realize 1/2 their taxes are going to these folks.

Phase 3: They cut them back, and say--with Murray's applause-- "let them shift for themselves, or go to the soup line at the church."

At this point Mr. M is happy, the wealthy have their just desserts and the poor have theirs.

 

[3113]

In any case, I think that the solution is for the shareholders to take some goddamned responsibility and start cutting the paychecks of overpayed CEOs who often embezzle even more than they collect in legal pay. Of course, they pay higher taxes, too, but that can be remedied as well.

Also, reducing the overhead for small business will increase the number of entrepeneurs as well as CEOs (who are basically private sector bureaucrats) and corporate raiders (who often DO have some value, in terms of shaking things up). The capital-gains tax is not a tax on big business. It is a tax on small business and entrepeneurs.

The problem that I have with the estate tax is that it often drives the family farms into penury, thus making it easier for huge agribusinessess to take over. Damn, that sounds a lot like the late Roman Republic! So, slash the estate tax, eliminate ethanol subsidies, and keep a small inheritance tax on unused or unfarmed real estate.

Shakes Sev's hand. A reasonable and rational and workable solution. I agree. Especially about stockholders taking charge of the CEO situation, where CEO's often run companies into the ground (or go for short-term gain, to hell with the future) for their own profit, screwing shareholders.

As to estate taxes...you're absolutely right about the farm situation. The problem is that the inheritor has to pay what the farm is worth...but may not have the money. So the property is worth 2million dollars, they have to pay the Government 1mil...but they've only got $100K in the bank--which, if it's a farm, they need to run the place.

This forces them to sell the property or have one heck of a yearly payment of taxes to the Government. Not good. Especially if they're not making much of a profit on the farm. Inheritance tax certainly needs to be reworked, especially in such cases--though I believe a lot of this can be gotten around by incorporating, etc.

 

[SEVERUSMAX]

Shakes Sev's hand. A reasonable and rational and workable solution. I agree. Especially about stockholders taking charge of the CEO situation, where CEO's often run companies into the ground (or go for short-term gain, to hell with the future) for their own profit, screwing shareholders.

As to estate taxes...you're absolutely right about the farm situation. The problem is that the inheritor has to pay what the farm is worth...but may not have the money. So the property is worth 2million dollars, they have to pay the Government 1mil...but they've only got $100K in the bank--which, if it's a farm, they need to run the place.

This forces them to sell the property or have one heck of a yearly payment of taxes to the Government. Not good. Especially if they're not making much of a profit on the farm. Inheritance tax certainly needs to be reworked, especially in such cases--though I believe a lot of this can be gotten around by incorporating, etc.

Corporations need charters from the states, right? So, the states can decide that this kind of "corporation" is a fraud and refuse to grant it a charter. Plain and simple. In fact, a law requiring a minimum number of partners to run it would be cool.

 

[Colleen Thomas]

Colly said,

We got paid on friday, by tuesday latest, they were trying to borrow money for lunch. Never mind that they got paid comperably to me. It all went into their cars, or into their guts in liquid form. In a few maybe into their arms and noses as well. Give these guys 10K? New radio, new sub woofer, massive hangover. tuesday next, boke and bumming 50 cents for a pack of M&Ms. That's reality. I'm not making these guys up. I'm not postulating the rediculous. The assumption that one of these guys would marry a girl he got pregnant because it's the responsible thing to do is ludicris.

IIRC, Mr. Murray reckons that certain people--those earning top money-- are just born smart and virtuous, as shown by their prosperity, and other are born shiftless and stupid.

To answer your question. You ignore Phase 2, and Phase 3, of Murray's plan.

OK, you've given all these folk 10K, just like in the economics 101 problems.

The unproductive ones stuff it up their noses, etc. as you say.

Phase 2: The voters realize 1/2 their taxes are going to these folks.

Phase 3: They cut them back, and say--with Murray's applause-- "let them shift for themselves, or go to the soup line at the church."

At this point Mr. M is happy, the wealthy have their just desserts and the poor have theirs.

I'm a conservative J. And I'm no fan of welfare as it exists now.

I'm also fairly intellectually honest with myself and fairly reasonable. People are not born with a responsible code of ethics, anymore than they are vbborn with a solid grasp of cost and effect economics. If you haven't grown up in an enviornment where fiscal responsibility is taught, you rarely develop it on your own. Once you hit a certain age, you just aren't very likely to pick it up.

Handing a fellow 10K free gratis and expecting him to conform to a preset notion of fiscal responisbility isn't even sane, much less reasonable. Whilte there are some segment sof society, where his theory might hold true, I'm not convinced that those segments represent the majority.

It's also true that as fiscally careful as I am, I couldn't make it on ten k a year in an area this far upstate, much less in the city proper. A studio appartment in the Bronx is over 1400$ a month rent. A basement appartment in throgsneck is well over 800$ a month. Neither of those prices include utilites. Up here a nice appartemnt is over 1200 a month. A shitty one in a shitty neighborhood is still well over 900 a month. And prices are going up by leaps and bounds even this far upstate. If that ten K is ontop of what you are maing, it's all good. If that ten K is a replacement for what you are drawing, it's a death sentence.

I'm not prepared to say Murray has long term ulterior motives. I am willing to say ten K a year isn't enough in a metro area. And I'm more than willing to say his ideas on insurance are incorrect. Health insurance does not work in the same way life does. to intimate they are comperable in their mo is rank fantasy.

 

[gauchecritic]

None of which takes into account the fact that in the UK alone credit (or money owed) has passed the one trillion mark. How high is it in the US?

People in the west are spending money they don't have and that doesn't actually exist. When you can't sell your $300,000 home for $1000 what good is 10k a year going to do?

$253,000 after 45 years? Just how much is a quarter of a million dollars going to be worth in 45 years?

Here's an interesting site.

and it tells me that given those figures from 1961 to today for a quarter of a million dollars worth of goods or services you would have to spend $1,681,306.44.

so you could get a sixth of what you were saving for. (That's if the US remains dominant as a foreign reserve currency (fell by some 80% since the postwar years) and doesn't slide completely out of the market rather than become one of three or four.)

 

[amicus]

R. Richard]Colly:
Back in the early 80s the federal government made a horrible mistake. They allowed certain state government agencies to opt out of Social Security. A few such agencies in Texas did just that.

The Texas retirees now have to make do with several times what SS pays. Oh yes, they have to also take a $50,000 life insurance policy instead of the SS burial benefit of $255. Then one last, crushing burden, they own their own retirement funds and have to decide what to do with them.

Poor Texans!

Google it up!

[/I]

~~~~~~~~~~~~~~~~~~~~~~~~


Although tongue in cheek, well said R.Richard!

amicus...

 

[Roxanne Appleby]

Response to Colly:

The Murray plan creates an entire new paradigm, and you keep viewing it through the lens of the current welfare state paradigm. It requires some imagination to do otherwise. Your story page demonstrates that you have imagination in ample measure. Please use it here!

You explain why a $3,000 per year insurance policy can't work, but you are viewing it through the current paradigm. Forget the current model. Start with a clean slate. Is $3,000 per adult sufficient to provide health care for life for every American? I have not read the book or done the arithmetic, but I suspect it approximates what we now spend. With a little imagination it's easy to devise a system that leaves no one uncovered, doesn't kick people out for using benefits, contains reasonable incentives to economize, and provides more freedom and choice than the current system. You write the rules, Colly - you have debated this issue, you know what's needed. I hereby turn over to you 15 percent of the US GDP to make it work.

"It's impossible to live in NYC for $10k." Hell, it's impossible to live anywhere for that! The idea is not create a nation of hippies living on $10k in teepees. It is to supercharge the institutions of civil society by handing over the resources and the responsibility. One way to think of this is to consider the way charity was done in America in 1900. We were a much poorer nation then, yet no one was allowed to starve. But people weren't allowed to abandon personal responsibility, either. Take that model, add $2 trillion (the amount handed back under the plan), and you can expect some pretty good social outcomes.

The examples you cite of individuals lacking personal responsibility are a direct product of the current system. So why are you defending it?

"Subjecting them to the tender mercies of an 'organization' that sprung up to help gives me the willies." There wouldn't be an organization - there would be thousands of them. If you don’t like one go to another.

"Murray's scenario assumes a responsible populace. Mine assumes an irresponsible populace." Correction: Yours creates an irresponsible populace. It provides incentives to be irresponsible. Murray's turns those incentives around.

Are you saying we're doomed, Colly? That no matter what we do it's hopeless, because the social decline will just continue until the whole thing collapses, and we should just accept it? Are you saying it's absurd to imagine that most of the populace can live responsibly, and practice virtue?

Fuck that.

Most people do live responsibly and practice virtue. If the number of those who don't is increasing, that's because we have created a corrupt system. You are making a case for just accepting that system and its consequences, and doing nothing to change it.

Fuck that.

It's in our power to change, to blow up that corrupt system and replace it with a better one. If we don't do it, and watch our freedom, comfort and security go down in flames as a result, that will happen because we are too timid and inert to change the system, not because of any fatal flaw in the human animal.

Lord knows we're not angels, and there will always be those among us determined to wreck their lives no matter what we do. They are not the majority, though. Here's a description of the majority penned by Tom Wolfe a few years back:

"The truth is that there is a common bond among all cultures, among all peoples in this world ... at least among those who have reached the level of the wheel, the shoe, and the toothbrush. And that common bond is that much-maligned class known as the bourgeoisie - the middle class . . . They are all over the world, in every continent, every nation, every society, every culture, everywhere you find the wheel, the shoe, and the toothbrush; and wherever they are, all of them believe in the same things. And what are those things? Peace, order, education, hard work, initiative, enterprise, creativity, cooperation, looking out for one another, looking out for the future of children, patriotism, fair play, and honesty. How much more do you want from the human beast? How much more can you possibly expect?"

I want to put the future into the hands of these people, not the politicians you properly excoriate, or the underclass you properly scorn.

Join me, don't fight me. If you need to, make a social version of "Pascal's wager." He argued that it's is a better "bet" to believe in God, because the expected value to be gained from doing so is greater than that from non-belief. (This made sense in the pre-Darwinian world he lived in.) We'll call it "Colly's wager." The expected value to be gained from believing in man is greater than that from non-belief, because non-belief guarantees continued decline into social collapse. I think you will agree that this is the likely result of an unreformed welfare state.

 

[Colleen Thomas]

Colly:
Back in the early 80s the federal government made a horrible mistake. They allowed certain state government agencies to opt out of Social Security. A few such agencies in Texas did just that.

The Texas retirees now have to make do with several times what SS pays. Oh yes, they have to also take a $50,000 life insurance policy instead of the SS burial benefit of $255. Then one last, crushing burden, they own their own retirement funds and have to decide what to do with them.

Poor Texans!

Google it up!

I missed this RR, my apologies.

I never once intimated I didn't think there were alternatives. Nor did I ever say I was against looking at alaternate ways of dealing with it.

Bully for Texas. However, before we go too far off the deepend, we are talking abou t atystae agency here, are we not? By defintion then, the people involved have jobs. An while it's not a certainty, we can also assume most have an education and at least a fairly responsible upbringing. We can assume this because I know in Mississippi, you need some college now to get a job as a ditch digger.

So you have changed the parameters of social security for a select group, with a more or less heterogenous background. And the results look very encourageing.

I know from your previous posts, you have had dealings with the seedier side of the tracks. In you're opinion then, would giving ten K to the denizens of those areas produce finanical responsibility in them? Or would it be party time at the old watering hole, one hell of a hangover and empty pockets come monday?

 

[Roxanne Appleby]

$253,000 after 45 years? Just how much is a quarter of a million dollars going to be worth in 45 years?

Hey, Gauche - The rate of return on which that analysis was calculated used constant dollars. So the actual amount would be the future equivalent of what $253,000 buys today. Odds are you will do much better - that's a worst case scenario.

Or, the earth could get hit by an asteroid tomorrow.

 

[Colleen Thomas]

I think it important that i point out here, I'm not a bleeding heart liberal. I don't spend any time wringing my hands over the sad condition of the masses. I don't blame bussiness for all the worlds ills. And I don't pretend that any amount of governemnt intervention is going to make things fair.

At the same time, the less advantaged are a significant portion of the population. You short sheet them at your own peril. More importantly to me, you short sheet them at my peril too. If Mr. Murray's plan were put into efect in this town, for example, I'd have to go get a brick of .38 shells. Because we have a significant population who live on welfare. And as soon as they blow the 10K and some functionary tells them, too bad, you were irresponsible, you'll have to fend for yourself for the next 11 months and three weeks, this place will become the south bronx. The only option most of these guys will see is crime. There are not many jobs to begin with, the few that would be open to these fellows pay so little you couldn't get by. They are basically, highschool kid summer jobs or McJobs. And we only have one McDonalds. When faced with starvation or breaking into the little redhead's appartment and liberateing her VCR, I got a feeling most are gonna choose the latter.

That's a microcosm of what could happen, if Mr. Murray's observations on human nature prove to be as questionable as his grasp of insurance. Rampant crime, because that's the only option a lot of people have left.

I don't belive I want to live in that particular societal model.

In basic then, when presente with a plan to change things radically, i want to see as much attention given to the possible Adverse effects as I do the the hypothetical good results. If I don't see that, and I don't here, then I get the feeling the plan isn't based on rational thought processes. It's based on idealistic wishful thinking.

That's especially true when the plan calls for 3K per year paid to private insurers to cover the medical neds of the populace. Because that takes wishful thinking to a whole nother level.

 

[zeb1094]

Hey, Gauche - The rate of return on which that analysis was calculated used constant dollars. So the actual amount would be the future equivalent of what $253,000 buys today. Odds are you will do much better - that's a worst case scenario.

Or, the earth could get hit by an asteroid tomorrow.

The future equivalent of $253,000 in 45 years assuming an annual inflation rate (conservative) of 2.5% annually buts the the correct answer at $778,000 will be needed to by what $253,000 could. A far cry from even.

 

[R. Richard]

I know from your previous posts, you have had dealings with the seedier side of the tracks. In you're opinion then, would giving ten K to the denizens of those areas produce finanical responsibility in them? Or would it be party time at the old watering hole, one hell of a hangover and empty pockets come monday?

Colly:
In most cases it would not take until Monday for the empty pockets to come. Most of the really low class people I have had contact with don't think past the next couple of hours, forget tomorrow. Giving such people $10K would require more time and effort than throwing the money out on the sidewalk, with about the same result.

The "Texas plans" have been in place for more than 20 years. They are now having people retire. The people are very happy with the plans, as they have enough money to retire with dignity. One of the strongest opponents of the plans was an administrator with one of the state government agencies and he now admits that his opposition was stupid. He is now one of the biggest supporters of the plans.

The problem is twofold. The Social Security plan is run by Congress and will ALWAYS wind up being looted. The second problem is that the current Social Security plan is a Ponzi scheme. It is actuarially unsound and MUST be replaced. The sooner that the replacement is done, the better!

 

[zeb1094]

And as this plan too would be controlled by the government do you think they would want to drian the treasury coffers on the first day of every year? Wouldn't they want to dole it out over time, say twelve months? As most likely the money wouldn't be there to begin with!

 

[Roxanne Appleby]

To Colly's last:

Well look, he wrote a whole book describing this, and we've been discussing the plan based on a 1,000 word op-ed. That's why I've been begging you to stipulate this and stipulate that, because most of the objections you cite are details for which there are plausible answers.

Murray writes: "Many questions must be asked of a system that substitutes a direct cash grant for the current welfare state. Work disincentives, the comparative risks of market-based solutions versus government guarantees, transition costs, tradeoffs in health coverage, implications for the tax system, and effects on people too young to qualify for the grant all require attention in deciding whether the Plan is feasible and desirable. I think all of the questions have answers, but they are not one-liners; I lay them out in my book."

I ask you do a little thought experiment. Imagine the world 60 years from now under this plan, compared to what it would look like under 60 years of continued welfare state decline. Is it a better world, or a worse one? If better, then apply your mental energy to thinking of ways to get from the current state to the desired future one. We'll give you however much time and resources as you think are needed. Is it possible? Of course it is. Is it easy? Probably not. Is it worth it? Certainly, if the alternative is continued social decline and eventual collapse.

 

[zeb1094]

Well look, he wrote a whole book describing this, and we've been discussing the plan based on a 1,000 word op-ed. That's why I've been begging you to stipulate this and stipulate that, because most of the objections you cite are details for which there are plausible answers.

Murray writes: "Many questions must be asked of a system that substitutes a direct cash grant for the current welfare state. Work disincentives, the comparative risks of market-based solutions versus government guarantees, transition costs, tradeoffs in health coverage, implications for the tax system, and effects on people too young to qualify for the grant all require attention in deciding whether the Plan is feasible and desirable. I think all of the questions have answers, but they are not one-liners; I lay them out in my book."

I ask you do a little thought experiment. Imagine the world 60 years from now under this plan, compared to what it would look like under 60 years of continued welfare state decline. Is it a better world, or a worse one? If better, then apply your mental energy to thinking of ways to get from the current state to the desired future one. We'll give you however much time and resources as you think are needed. Is it possible? Of course it is. Is it easy? Probably not. Is it worth it? Certainly, if the alternative is continued social decline and eventual collapse.

Mack Reynolds wrote a book about America becoming a welfare state(the title of which I forget), the picture he painted was not a pretty one. There were two classes of citizens, those on the dole and those that worked for a living. Those on the dole were always looking for an increase of their annual subsistance dividend. Those not on the dole where complaining about those that were.

 

[R. Richard]

And as this plan too would be controlled by the government do you think they would want to drian the treasury coffers on the first day of every year? Wouldn't they want to dole it out over time, say twelve months? As most likely the money wouldn't be there to begin with!

If the government [read Congress] has a plan where they hand out money, they will NEVER drain the current year payouts, or the payouts until THEIR re-election time. It is the payouts in 20 years that are gone, gone, GONE!

 

[zeb1094]

If the government [read Congress] has a plan where they hand out money, they will NEVER drain the current year payouts, or the payouts until THEIR re-election time. It is the payouts in 20 years that are gone, gone, GONE!

So true!