Monday, March 30, 2015

Two Very Different Alternatives to America's Bad Economic Status Quo

It seems that nearly everyone is unhappy with America's economic status quo.  

The Haves, especially around tax time, are sad at how little they seem to get for paying the lion's share of taxes, and the massive effort required to pay one's taxes--filing all but the simplest returns is extremely  complicated. 

The Have-Nots, an ever growing percentage of the population, are struggling ever more just to make ends meet. 

As I've written ad nauseam, the recovery is a government-and media-perpetrated myth. Yes, a few very rich people and companies are recovering but most people are not. 

I'm of two completely different minds on what to do. One is a lightly regulated small-government version of capitalism. The other is socialism plus a method of selecting leaders that would make socialism more likely to succeed.

My preferred flavor of capitalism
Government does most things badly: slowly, inefficiently, and "invests" in schemes that the private sector rejects as bad investments and usually turn out to be. What pop to mind are ethanol, Solyndra, and endless "promising" social programs that fail, not to mention $85 hammers and bridges to nowhere.
The government seems to forget that it's our money they're toying with and they have a responsibility to spend it wisely. And government, riddled with sinecures and the near-impossibility of getting fired from most government jobs, ensures we get terrible value for the enormous amount of taxes we pay: not just federal, state, and local income tax, but sales tax, alcohol tax, tire excise tax, property tax, tolls, user fees, plus usurious fines for traffic violations, for example, I paid $85 for a parking ticket. The penalty for driving in the car pool lane is $481 dollars. The punishment should fit the crime. Rather, tickets are merely one of many hidden taxes.
I'd slash the size of government while retaining a safety net for the poor. Hard work would not be enough to make people rise out of poverty. Most are poor heavily because of bad luck in who their parents were and where they grew up. It feels appropriate to have some redistribution from people who won in the genetic lottery to those who lost.

So I'd fund free group-housing and food for the poor---If dorm living and eating is good enough for Harvard students, it's good enough for those who aren't working.  I'd also provide basic health care but not the same level of care available to provided to people who pay for health care. 
I'd dramatically scale back most agencies, including defense. We can't reduce risk to zero and the fortune we spend on defense doesn't sufficiently increase our chances of remaining safe. I'd cut education spending--We fund absurdly large bureaucracies that create mountains of regulations, micromanage, and require huge sums for schools to comply with regulations that, net, ironically impede learning.  Truly. 
I'd similarly review all government spending with an eye toward cost-effectiveness.That would put a fortune back into working and middle-class people's pockets. I believe they would far more wisely spend the money than the government can.
My preferred flavor of socialism
Capitalism creates too many losers. While a small percentage get wealthy, millions, unable to compete even for moderate-level jobs, must struggle to maintain even a meager existence. 

Socialism, which heavily taxes middle and upper incomers to provide a broad, cradle to grave support system is worthy of consideration. And indeed, America is rapidly moving toward a more socialist economy with ObamaCare, paid Family Leave, etc., etc. 
A brand new way to select our elected officials leaders
The problem is that socialism expands government and is likely to result in even more poorly spent taxpayer money. 
The core problem in my view is in how we select our leaders. The people who run for office are the types willing to continually press the flesh and say what's needed to win. Politicians are not the pool from which the wisest stewards of our tax dollars would come. 
Even if campaigns were brief and 100% publicly funded, you still have the problem of an electorate too subject to the influence of commercials, sound bites, and slick politician speeches. 
Instead, I propose that our government officials be selected using passive criteria, like a stock index fund picks stocks. For example, our legislators might consist of the most newly retired of the nation's 10 largest nonprofits, a randomly selected CEO of the S&P Midcap 400, the Police Officer of America's Cop of the Year, the Teacher of the Year, the most award-winning scientist who finished her or his Ph.D. in the last decade, plus five random citizens. 
Those legislators would vote to select the heads of executive branches: the president, state governors, and mayors. 
While the impact of better leaders would help all economic systems, it would particularly benefit a socialist government, because it is so large.
Making it practical
You protest, "But the incumbent politicians would never allow it--the foxes are guarding the hen house." My approach would be to get the media to urge voters to vote against candidates that oppose a fairer system for selecting our government's leaders. 
Your thoughts? 
I feel insufficiently knowledgeable to recommend either of these economic reforms wholeheartedly. They merely represent my best thoughts and I welcome your thoughts on the subject. 


Anonymous said...

At first glance, I don't see why those 2 systems you mentioned have to be mutually exclusive. I think you could take the best from each. The election system is an awesome idea...I still think people with money make the rules though, so they would try to game the would probably end up being better than what we have now, but by how much I'm not sure...I could easily see the requirements for something like "Teacher of the Year" being lobbied out of this new election law and replaced with "has at least 10 years of teaching experience" and that being further watered down...and so on...The real problem is concentration of power in too few hands imo.

There should be a social safety net; medicine should be totally socialized...Obamacare does not even come close to socialized medicine...we still have a very bizarre and unique mix of public/private healthcare...a terrible combination should be either one or the other, but certainly not both. It's common knowledge that those who visit the doctor regularly are generally in better health than those who don't, so making healthcare a public good seems like the wise thing to do...even if it does atrociously expand the bureaucracy.

Poor schools should be given federal aid, and rich ones should get nothing...beyond that the feds shouldn't set any standards or get involved ie scrap the common core/NCLB/Race to the Top, etc. Decentralize government as much as possible...Taxes on "negatives" such as consumption, pollution, luxury goods, and so on are an attractive alternative to the income tax, which makes no sense at all, since people don't save enough for retirement, and without savings, investment declines and it's harder to start new businesses. Many other taxes and fees you mentioned are ridiculous, especially federal ones. The states should be left to work out their own issues with that.

Defense spending is very high, but the issue is not safety, it's about who controls the world's resources and strategic regions...oil, metals, food, water, etc. None of that has anything to do with safety at home. Control over resources of production is the current war that is being waged by US, Russia, China, mainly and others as well. AFRICOM was formed partly in response to the Somali pirate threat/Al Qaeda terrorism, yet its theater of operation is all of Africa, and they have a base all the way on the other side of the continent in the Gulf of Guinea.

Capitalism is better than socialism because it rewards hard work, but only if it's a decentralized form of capitalism. Otherwise it turns into fascism, which, as much as I hate to use the word, is kinda what we have now.

Anyway, it was fun writing this down...thanks for another thought-provoking blog post...

Marty Nemko said...

I love your comment. Very thoughtful. Adds immeasurably to the readers. Thank you.


Anonymous said...

Marty, you said you would cut spending for education. In the liberal Bay Area, everyone complains that "California ranks 49th in spending for education." I've wondered where this statistic comes from and if it's true. I think education receives the largest chunk of California tax revenue, and we have one of the highest state tax rates. Yet the complaints (that K-12 education is under-funded) persist.

Marty Nemko said...

That statistic is misleading on many counts. 1st, it speaks only of state spending. California gets a ton of federal money and foundation money. Also, even the state ranking is old. California has moved up from there. Most important, it implies spending is what matters. Fact is, the U.S. spends #1 in the world per capita yet achievement ranks near the bottom of developed nations. And in experiments in which districts spent 500% more per child, no enduring differences in learning, behavior, etc were found. Education is the politically correct prescription. Alas, it's an aspirin fighting a superbug.

Maria Lopez said...

I think group housing for the poor is a big loser. You putting together people with screaming babies, old, demented, people, and thugs all in the same place.

You are also making it easy for diseases to spread and making it hard for people to avoid the theft of their belongings. This could make it much harder for the people who can to get out of poverty and possibly make it harder for people to maintain outside jobs or legitamate businesses

Marty Nemko said...

Maria, I disagree with your foundational premise. I do not believe it is fair to force taxpayers to pay for housing beyond the level provided to Harvard students for people so they don't rob from one another. There must be SOME level of responsibility. Obama and Friends has gutted the work requirement for even able-bodied welfare recipients. At least we should require that they--if not legally demented--as a condition of free housing, food, health care, bus passes, etc be required not to steal from their housemates. If they choose to rob from each other, they should be lose rights to the taxpayer paying for all that, thereby incenting them to be honest and protecting the innocent residents.

Yes, people who chose to have babies when they couldn't afford to take care of it should be housed with other welfare recipients so they don't create auditory misery for people who chose not to be parents . Demented welfare recipients should be housed with other demented people so they don't wreak havoc on the other welfare recipients.

Maria Lopez said...

Of course, people don't always choose to create babies when they can't take care of them. They have chosen to do so when their circumstances were better. Also contraceptives are sometimes used improperly or simply fail.

Finally, getting rid of thugs, preventing the spread of things like TB, and keeping drugs out of a place where people are likely to be having problems with despair and boredom all seem like they would be fairly costly to do well.

Also, what if they don't want free food because it isn't very good and they can afford to get themselves better even if they can't afford their own housing. Harvard would allow at least some such people kitchen privileges.

People talk about welfare creating a culture of dependency but wouldn't your do worse. Also, many people want to have sex and will so in unpleasant ways (i.e. prison rape) if more wholesome expression of desire is difficult. People in college dorms generally ask their roommates to leave while they do this but I'm not sure that's a great solution for families.

Marty Nemko said...


Re "contraceptive failure," you're again putting all responsibility on the taxpayer, not the individual. If it fails, use more reliable birth control. If you're pregnant, for whatever reason, and you don't want it, put it up for adoption or have an abortion but to demand that the taxpayer pay for better-than-Harvard housing seems unjust.

Re thugs, etc. Group housing can have a measure of supervision. And if a person is such a thug that s/he's a danger, that person belongs in jail, not the much more pleasant Harvard-level housing I advocate.

And the food not being good enough? Come on. I'm not advocating gruel.

And sex? The residents, as in the Harvard dorms, have private rooms. And believe me, there's plenty of sex that goes on in private dorms.

Maria Lopez said...

My take on food is based on the observation that many soldiers and students prefer cooking their own. This is so even though soldiers' food is free.

Because of your advocacy of open wards for poor hospital patients, I sort of assumed that you would also advocate barracks type housing for poor people. Instead, you seem to be advocating something more like the shelters run by bronxworks. I'm okay with this for people who actually need shelter and can't easily work.

However, for many people, I'm not sure it would be in any way better or cheaper than section 8 housing vouchers because even though the square footage would be smaller it would require more direct government involvement to clean and maintain the housing and feed the people.

Finally, yes, contraceptives do fail. If you want them not to you need either IUDs or Norplant. While I use this kind of contraception, it does require someone to stick something in you for it to work and another medical intervention if you later want a baby. I can understand reluctance to get this done.

Also abortion is a can of worms. Basically there will be babies unless you forcibly remove them or require people to accept medical interventios.

Marty Nemko said...

You seem to insist on demanding nothing of the people who would be getting free housing, health care, food, etc, and everything from the taxpayer. And on that, Maria, I have nothing more to say on the topic.

Anonymous said...

Yeah I think the housing idea is a good one...but the execution of it, I'm kind of scratching my head on that one...

Should government simply build these dorms? Should they give vouchers to the poor like foodstamps? What should these dorms include? Computers? TV? Wifi? What kind of food are they going to have? I see a lot of ways that this project could quickly become divisive...prisons are out of everyone's sight and therefore mind as well, so if they have libraries, computers, rec rooms, etc. Nobody cries foul, but with non-convicts, that might be very different...

OTOH, if you simply give people housing vouchers, it might be really hard to to determine eligibility? How do you monitor if someone already has a place to live? If they do, then a voucher might quickly become an underground form of currency...lots of possible scams.

Should the private sector build and run these dorms or should a government agency handle it? Where should they be located, in the city or on the outskirts? They need to be close to public transport so "dormers" can get to and from gainful employment without spending a fortune.

Another problem I just thought of after reading Maria's post is that wherever this dorm is located property values are sure to decline...also security will be a significant concern, so you need guards and cameras...

I think this idea of housing for the poor is emotionally appealing, and it may in fact work well in real-life, but for it to do so, I think it has to have a very clear purpose, and eligibility has to be clearly defined. What problem is this actually supposed to solve? Homelessness? We have shelters already...would this be different...just spitballing here...

Marty Nemko said...

They'd go where current welfare hotels are, e.g., the Tenderloin area of San Francisco. Eligible people would, just as with food stamps, receive a monthly voucher good for residency. It would be built and run by the private sector and inspected, like restaurants are, for compliance with agreed-to standards.

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