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I was thinking about our country after looking at a photo of a scene in Ferguson, Missouri, which was the site of a police shooting and subsequent protests for several weeks (and also some rioting and looting), It seems that Ferguson is pretty peaceful again.

The photograph was of a family walking with bags from the Family Dollar store, a store specializing in inexpensive merchandise.

Image: wpxi.com

I really liked this photo. To me, it looks like the family bought themselves some inexpensive goods, maybe including a few treats. These are regular, unpretentious folks. I like that we have diversity in this country--the rich, the middle class, the lower middle class, the working poor, the non-working poor. We have them all, and I'm not at all ashamed of that.

In that train of thought, I decided to find images of "poor people in Sweden." It's a very disappointing search. There are pictures of Swedish aid projects in climates where palm trees thrive. Are there any pictures of poor Swedes? No.

Not even Bloomberg Businessweek could find a picture. Here is their take on the gulf between rich and poor in Sweden:

Image: businessweek.com

The "poor" house on the left is a historic example of a house from over a century ago. I did find a few articles: about riots that involved the poor and immigrants, begging, and Roma shacks being demolished. Among native Swedes, poverty is gone, I guess.

I doubt that Sweden is a good exemplar that the US could follow, however. It's a much smaller country, and not the melting pot we are. We are who we are, a very mixed bunch. I'm ok with that.

Too many workers

We've come to a major turning point in history. Our economies, throughout most of the world, can no longer absorb our population increases and provide an increasing number of jobs. While there have been periods of high unemployment before in history, they've been reversed. I don't foresee that happening at all in the future. We are permanently in a situation where we have many more workers than we need, and there's no way for the extra workers to join the regular economy at the full-fledged rate.

Looking just as the US, we have the lowest worker participation rate in 36 years.

Labor Force Participation Rate 1948 - 2013

Image: businessinsider.com

We have high unemployment among our young people, and that's a worldwide problem. It's certainly possible for jobless people to be productive (cleaning, doing small repairs, gardening, teaching, etc.), but not at the going rate. So this extra labor force can work in the gray economy, work at home or in family businesses, or can volunteer, but they must be supported by others--those who are working at market rate jobs.

Why don't paying jobs exist for these people? Because our economies have become much more automated. It's been a goal in innovation to automate actions instead of having workers perform them. I go to an ATM machine instead of the human bank teller earning a wage. An ATM costs $2k (according to the ads on Google). That's a lot less than a teller's yearly salary. Ordering is automated online, saving the cost of a order entry clerk. Crops are planted and harvested with the help of huge machines, shrinking the number of farmers to 2% of the US population.

Too many workers? Yes, and too many people.

With all this equipment, we just don't need as many workers. So what should we do? There's a logical answer, but most people don't want to admit it: we need fewer workers, thus we need fewer humans. We should be shrinking our birth rates. Our birth rate should be lower than the replacement rate--yes, lower. Not zero growth, but negative growth, meaning contraction of the human population. If we don't do this, we will continue to have too many workers for the rest of foreseeable future, barring global cataclysm.

What are the downsides of fewer children and lower human population? Many people don't like the policy. Their cultures emphasize having children to carry on their legacy and take care of elders. It's hard to counter the cultural norms, but that doesn't mean that the cultural norms are logical or well-adapted to our current situation.

We'll have fewer people paying into Social Security, but we have to face that anyway. The huge baby boom generation is an anomaly that shouldn't become the norm just due to worries about how pensions are going to be paid. Besides, if there aren't enough jobs, those unemployed people aren't contributing anyway.

Suppose we underestimate the number of workers we need, and we create labor shortages due to a labor pool that's too small? That's not a big problem. We can either import workers or we can increase our birth rate to correct the problem. As we've seen, we can increase our population very quickly when we want to.

I'd like every country to decrease their birth rates, and they are. Two decades ago, few countries were reproducing below replacement rate. At that time it was considered a dire situation, but it no longer looks that way. Now many more countries are running below replacement rate. That's a good thing ... especially if we want to avoid more of this.

The lucky one has a metal roof (Bangladesh).

Image: paveldospodinov.com

They pray for a rectangular shack instead of a lean-to (Bangladesh).

Image: theguardian.com

Apartment blocks don't solve the problems (Cairo).

Image: ahlu-sunnah.com

Update 12/26/14. An article from The American Conservative pointing out that no one (despite political parties' claims) seems to know what to do about these economic problems.

Short: Hooray for fewer teen moms

When I was growing up middle-class, white, and college-bound, I knew to  be terrified of unintended pregnancy. There was no faster way to derail my plans for life, not to mention get either kicked out of the house or permanently locked in the attic.

Somewhere in the last few decades, teenagers lost their fear of pregnancy. This was definitely not a good thing. These days kids aren't usually 1) forced into marriage, or 2) locked away or sent away for the duration, or 3) blackened forever by the shame they bring on themselves and their families. However, life plans are definitely derailed, at least for a while. Shouldn't this be enough to make them very careful? Apparently not.

The good news is that teen pregnancy has dropped dramatically since 2009. This article discusses some of the possible reasons, but nothing is definitive. Maybe it's the use of IUDs (previously not recommended until after the birth of a child). Maybe it's the reality shows like Teen Mom which show the heap of troubles involved with trying to manage a baby, high school, parents, and a barely-committed baby-daddy. Maybe it's the recession, which has been so hard on families that teens actually figure out that they shouldn't make it worse.

Whatever made teens think harder about being careful, I'm grateful for it, and I hope the teens are too.

Image: msnbc.com

Paul Ryan is confusing me

I'm very confused. Paul Ryan has just released an overhaul plan for federal programs that help the poor. Why has he done this? This is the same guy who was the only Republican (almost) to put together a budget, and that budget slashed poverty abatement programs. And now he's for giving the poor a lot more help than his budget envisioned? I'm trying to make sense of this.

• Perhaps Ryan wants to have a better poverty plan than "cut, cut, cut" prior to announcing his intention to run for president. That would make sense. Let's call this Option 1.
• Maybe Ryan always cared about the poor, but he got so wrapped up in being the budget guru that he forgot about it. Let's call this Option 2.
• Maybe Ryan is seeing others in the GOP, such as Mike Lee, taking a lead in poverty issues, and he doesn't want to lose his status as the top idea man. Let's call this Option 3.
• Maybe Ryan is just a juggernaut when it comes to policy. He sees a vacuum, and he's driven to do something about it. Let's call this Option 4.

Does this have anything to do with the midterm elections? Maybe, but I don't see how. A major overhaul of federal poverty programs isn't on the agenda of either party. That is part of what confused me--this doesn't seem to be connected to the upcoming elections.

I hate this sense of not knowing the strategy behind this proposal. Maybe it will become clearer. What's more likely is that the plan will fizzle, sort of like the Ryan budget did.

Oh, I just realized one additional option, which we'll call Option 5. Paul Ryan is incoherent in his thinking and ideas.

Good, Now I'm not confused anymore. I can always fall back on this option. Phew, that's a relief.

Image: huffingtonpost.com

Extras. A post containing an interesting graph showing how benefits phase out as income rises. A post about how we have only 3% chronically poor. Is Ryan's plan a big program for a small number? Some good points there, but I have lingering questions about all the non-chronically poor, such as the poor children, poor elders, and poor disabled that are also mentioned in passing. That sounds like it adds up to loads more than 3%.

The New Year of Inequality

Welcome to another election year. Even though it's only a mid-term election, it's going to be nasty because all elections are nasty now.

The Dems have a major vulnerability in the various troubles of Obamacare, but that's not enough for an entire campaign season. It's too bad for the conservatives who thought they could run non-stop bashing Dems on Obamacare and Benghazi. Those really aren't enough for a campaign when the economy is weak and people need jobs. Somehow, when you or someone in your family needs a job, that trumps political talking points. Maybe because people do have a sense of the real priorities.

The Dems see this, or perhaps they desperately want to talk about something other than Obamacare. They decided that they're going to talk about inequality--the fact that some people are making millions in this economy while you or someone close to you struggle to find a job. The argument has a lot of potential, but also some risks, like "what can you (the Dems) do about it?"

Lies, Damned Lies, and Exaggeration

Before looking at what the Dems actually say on the issue, it's fun to look at how the GOP characterizes what the Dems really want:

• Dems are just stoking envy, that most terrible of sins. 
• This is class warfare, I tell you!
• This is a prelude to confiscating wealth.
• Well, maybe they won't seize wealth, but they'll end personal savings.
• They'll nationalize healthcare, banks, the auto industry, and... No, wait, they already did. 

It never ceases to amaze me how conservatives shoot themselves in the foot with such exaggerations, and then do it again in the next election cycle too.

What do "they" really want?

So what are the Dems actually saying they'll do about inequality? To start, they want to extend unemployment benefits beyond the standard 20-some weeks. They want to maintain social programs like food stamps at the higher levels enacted as part of the stimulus. They want to enact higher minimum wages, both locally and nationally. They want to maintain healthcare for all, so you can still see a doctor even if you can't find a job. Maybe they still want universal pre-K, or perhaps that was just last year's failed social agenda item. I doubt they'll revive the half-trillion-dollar jobs program, which was 2011's failed agenda item.

The Dems aren't saying how they'll fund the programs that aren't already funded--that's a return to type for the Dems. One exception is the new progressive mayor of New York City, Bill de Blasio. He wants to fund pre-K through a minuscule tax on the wealthy of NYC. The wealthy in NYC already pay higher federal taxes, higher state income taxes, and even city income tax. Why worry about taxing them even more? After all, INEQUALITY!!!!!!  (Rhymes with BENGHAZI!!!!!!)

Sorry for all the snark. Briefly, I support an increased minimum wage, healthcare for all rather than a return to the pre-Obamacare mess, but not a national pre-K program or maintaining the bonuses to social programs given out in the stimulus. I think one year of unemployment insurance is the maximum people should receive, not year after year.

From the Party of the 1%

Somehow, a few in the GOP realized that they might have some vulnerability on the inequality issue. It is hard to dismiss it purely as envy when what people want are jobs, not to throw the rich out of their mansions and behead them. Some in the GOP thought that Romney lost the presidential race over his 47% remark--I disagree, but it doesn't help when the billionaire Koch brothers are on one side of the GOP's internal war and the Chamber of Commerce and establishment/CEOs are on the other side. The GOP could stand to appear more compassionate, both for the 2014 election and the next general election (thanks, Atlantic Wire, for pointing this out).

So this was the week that the GOP trotted out their ideas for anti-poverty initiatives. They include no minimum wage increase, a reworked Earned Income Tax Credit (questionable whether it would be better), repeal of Obamacare (because it's part of every GOP domestic proposal), turning anti-poverty programs into block grants, and more school vouchers.

What We Need More Than Anti-Poverty Plans

Neither the Dem nor the Republican proposals sound very effective to me. A wage increase puts a bit more money in workers' pockets, unless it costs you your job, but that doesn't happen often. As for block-granting anti-poverty programs like food stamps, housing subsidies, etc., I don't care strongly. None of these programs seem to help people get out of poverty, they only help them endure it.

What's really needed are a lot of jobs with decent pay, but that is what our economy has been exporting for four decades. The Dems don't have a plan to change it, neither do the Republicans, and neither do I. When wages are so much lower in other countries, no one is going to have a good plan.

I wish we could be Germany or Sweden, having a mixed economy of high-margin, high-quality goods and good-paying jobs. But I don't think we can do that. That niche may not be large enough to accommodate a nation of 300 million. So I wonder whether we're actually on our way to being a middle-income country like Brazil.

Maybe we were always bound in that direction. When factory owners encouraged lots of immigration, they weren't trying to turn them all into middle-class consumers. No, they wanted cheap labor. So we accidentally became a rich country, but we've always had a large pool of cheap labor. If there weren't enough cheap American-born workers, we managed to bring cheap workers in, legally or illegally. So being part of a pool of cheap, excess labor is more our birthright than being a rich country. Ironically, they don't teach you that in school or say it on the campaign trail.

If we really want to be a rich country, we may have to change in fundamental ways, including ending our tradition as a nation of immigrants seeking the American dream. I don't think any of our candidates will get close to that particular discussion. It's probably political suicide to say the American dream is over.

Image: frumforum.com

A redundant member of society (Takers)

I'm afraid that's what I am--a redundant member of society. If society is separated into 'makers' and 'takers,' I'm someone who ministers to the 'takers.' My career in healthcare has given me the opportunity to work with all sorts of 'takers' including: long-term nursing home residents, short-term Medicare rehab patients, residents (inmates) of locked psych units, seriously handicapped children, children from foster homes and wards of the state. It's been the rare occasion when I take care of someone who has a job.

So if we manage to rid our society of takers, I won't have a job. That's probably true for a fair number of people. Perhaps our takers provide employment for many people who are otherwise redundant. If we tried to shrink our society to only the productive people, we'd have a much smaller society, say 40% of the current size. When you get rid of the takers, you can probably get rid of 80% of the doctors, maybe 35% of the farmers, 40% of the teachers, 80% of the police, and 95% of the lawyers (ha, just exaggerating... maybe).

It's not that I advocate increasing the number of takers so that there are more social service jobs. I understand the budget implications of that, which is blowing an even larger hole in our state and federal budgets.

No, the reason I write this is to reflect on how many excess people we have in society. There are so many extra people and so much extra labor in this country and in the world. Industrial and computer automation has made many millions more redundant. If we are going to despise the 'takers' and respect only the 'makers,' we're going to hate much of humanity, and we should be working to reduce our numbers by a significant amount. 

I guess once all my 'taker' clients are gone, I'll be scheduled as redundant too unless I'm lucky enough to get a healthcare position ministering to the generally healthy. There will be so much competition for those positions I probably won't succeed. Oh well. 

It's not all that bleak. Maybe one of the makers will let me live on his crumbs and table scraps. I can always hope.

Image: usmanvakil-beggars.blogspot.com

Sanctions hurt the poor here

Not in Iran, Iraq, Syria, or Libya...

In Texas. The Texas legislature wanted to put sanctions on Planned Parenthood, so they eliminated funding and took the double hit from the loss of federal grants for family planning too. Clinical sites are closing and fees are being instituted or raised.

Some poor women may shift some of their small but existent disposable cash to pay for contraception. But for others, having to travel further and raise the extra $60  for the 3- or 6-month supply of pills will prove impossible, and nature will take its course. By this time next year, Texas may or may not see the results of this policy in birth rates, maternity hospital fees, child health program sign-ups, and adoptions.

We don't know the outcome yet. But it didn't have to come to this. In the fight over Planned Parenthood, someone could have blinked. Texas could have backed down, or Planned Parenthood could have separated into two organization: one that handles abortions and another that handles everything else.

If PP had done that, it would have been a capitulation to anti-choice forces and an abandonment of part of its mission. Still, I hope they considered it. If both types of services remain available through separate, that's not a huge sacrifice to make. Instead, both Texas and PP decided to sacrifice free or subsidized care for poor women.

Well, it's probably wrong to say Texas or PP sacrificed. The government of Texas (elected officials and public employees) and PP (the governing board and employees), and the strident pro-lifers behind the "kill PP" movement, are most likely still covered for the contraceptives they need and want. The real sacrifice is borne by those poor women who are pushed back into the bygone days of no contraceptives with all those stresses and uncertainties. We, the decision makers, are safe.

How far is the clinic?

Sources: NYT, Reuters, local Amarillo station

Update 3/16/12. Texas is suing the federal government over the loss of federal funding for its programs. Texas paper, Baltimore paper.

Update 4/15/12. More details on Planned Parenthood closings in Texas.

Whipping Boy: The Working Poor

 

This talking point makes me really, really angry. But first, let's correct an error--lots of lower income people pay no income tax, but they do pay: social security tax, medicare tax, sales taxes, property taxes, state income taxes, excise taxes, gasoline taxes, thruway tolls, etc. They haven't been given a get-out-of-taxes-free Monopoly card.

The big complaint stems from two aspects:

1. Some people have such low incomes that their deductions (same as your deductions, not different ones) totally wipe out their income tax liability.
2. Some people have such low incomes from working that they benefit from tax credits that reimburse even more than they paid in from income tax payroll deductions. These credits include the Earned Income Tax Credit, Making Work Pay Credit, and Child Tax Credit. In many cases, these credits pay back even more than the person paid in social security tax and Medicare tax.

I don't think critics dislike the standard deduction and exemption amounts, because they are based on estimated costs of subsistence living in this country. So let's focus on the credits.

• Making Work Pay Credit is small, about $400, and is part of the stimulus to get more money in the pockets of most lower and middle class working people. I like it, but it wasn't meant to be long-term, but I'm not going to defend its continuation.

• The Child Tax Credit is a family-friendly support to low and middle income families that support children under age 13. Kids are expensive, and low income families struggle to support them. These tax credits make it a bit easier to stretch your $380 weekly paycheck to help pay your bills and still have some money left to buy your kids new shoes from a store instead of searching vainly for decent shoes that are the right size and not hideous looking from the Salvation Army thrift store. The Child Tax Credit maxes out at $1000 per child, up to $2000. Families making under, say, $25,000 yearly really need this extra help, but the credit has been extended to families making up to $110,000 a year to sweeten it for the middle class. If the credit should go, take it away from the top first, and maybe keep for the under $50,000 a year people. 

• The largest target for the critics is the Earned Income Tax Credit. Here is potted history per Wikipedia: it started under President Ford. The amount paid out increased under Presidents Reagan, Bush 1, and Clinton. Reagan in particular expanded this credit (actually a subsidy) to make low-wage work pay more than welfare. Not because welfare was so generous, but because many low wage jobs pay so little, but require a family to take on more expenses such as transportation, slightly better clothing, child care, etc. The Earned Income Tax Credit maxes out about $5700, but that is only for families with under $50,000 income. 

Critics who are offended by these subsidies are hard-hearted, and perhaps hypocritical. They bash people on welfare, then bash them again when they work. I guess they have no idea how hard it is to be a low-wage worker. These subsidies, particularly the EITC, may be what keeps people in the workforce, contributing their labor to the economy, instead of on welfare or on the street. I personally know workers who put their refunds aside to pay for auto repairs, just to ensure that they can continue to get to work.

Skin in the Game

The outcry arises because these worker don't have "skin in the game" because they don't pay income tax. The argument is that they don't care about income tax rates because they don't pay. There is some logic in this argument, but it isn't strong. Anyone can be accused of caring only about their own tax rate, and not about any other tax rates. Many times this is true. Lots of people want their own rates low, and everyone else's higher. This isn't a vice you can pin only on low-wage workers, because it applies equally to middle class, upper middle class, well-to-do, and the rich.

I suspect that this is a dog-whistle that goes along with the conservative talking point that the Democrats are trying to increase the number of people dependent on the government. However, low-wage workers aren't getting a free ride. They work AND they pay payroll taxes, which are a huge contributor to the federal budget (40% in 2010).

Make Them Pay

If you want to make life harder for the working poor, by all means, protest the EITC. But maybe it should be the last program you try to eliminate since it gives recipients the most control over how they allocate the money. If you want to reduce government spending, you may want to target direct welfare, medical payments, food stamps, rental subsidies, public schooling, social programs, training,  and higher education first.

If you're angry that some people pay less tax than you do, get over it. EITC recipients will never contribute as much to federal revenue as middle-class workers who pay both payroll and income taxes. They just don't earn nearly as much, so they don't have the money to contribute. But what should they do, just disappear? Work 80 hours a week just so that they can pay more? I think only a selfish lout would demand that.

[Original post accidentally deleted, then reconstituted from salvaged bits. What a pain. An instance where one wrong move creates a ton of new work.] 

Update 10/11/11. Read my thoughts on a fairer tax code.