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(Boston Globe)   Traditional economics and the expectation that people act rationally may not apply to the poor, which explains why they continually do dumbass stuff that keeps them poor   (boston.com) divider line 209
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3789 clicks; posted to Business » on 02 Apr 2008 at 4:08 PM (7 years ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2008-04-02 12:22:29 PM  
I thought it was evil rich people sabotaging their opportunities, forcing them to enter into predatory contracts, and enslaving them in underpaying jobs...
 
2008-04-02 12:23:25 PM  
Any theory based on humans acting rationally is doomed to failure.
 
2008-04-02 12:31:28 PM  
I paid fro my big screen television with food stamps. And you thought I didn't understand economics.
 
2008-04-02 12:31:41 PM  
Reducing the number of economic hardships that the poor have to deal with actually make them more, not less, likely to work, just as repairing most of the dents on a car makes the owner more likely to fix the last couple on his own. Simply giving the poor money with no strings attached, rather than using it, as federal and state governments do now, to try to encourage specific behaviors - food stamps to make sure money doesn't get spent on drugs or non-necessities, education grants to encourage schooling, time limits on benefits to encourage recipients to look for work - would be just as effective, and with far less bureaucracy

FAILboat
 
2008-04-02 12:39:10 PM  
KaponoFor3: FAILboat

why? wouldn't that be more honest--here's a check, use it the way you think best, and don't complain if you spend it all on crack or lottery tickets?t

i think it's pretty clear after 40 years that the government is not succeeding in changing social behavior through restrictions on aid. behavior and attitudes are too strong to change this way
 
2008-04-02 12:43:35 PM  
albo: why? wouldn't that be more honest--here's a check, use it the way you think best, and don't complain if you spend it all on crack or lottery tickets?t

More honest? Sure. A good/better use of taxpayer dollars? Absolutely not.

albo: i think it's pretty clear after 40 years that the government is not succeeding in changing social behavior through restrictions on aid. behavior and attitudes are too strong to change this way

I don't think the approach is to remove restrictions then, but more likely to remove the government involvement. It sure seems to be the one common denominator.
 
2008-04-02 12:46:08 PM  
I know plenty of people who complain about being skint all the time yet continually buy crap they don't need with money they haven't got. Your third new cellphone this year? Really?
 
2008-04-02 12:48:05 PM  
Most folk'll never lost a toe But then again some folk'll Like Cletus the slack-jawed yokel ...

img530.imageshack.us
 
2008-04-02 12:48:42 PM  
KaponoFor3: Reducing the number of economic hardships that the poor have to deal with actually make them more, not less, likely to work, just as repairing most of the dents on a car makes the owner more likely to fix the last couple on his own. Simply giving the poor money with no strings attached, rather than using it, as federal and state governments do now, to try to encourage specific behaviors - food stamps to make sure money doesn't get spent on drugs or non-necessities, education grants to encourage schooling, time limits on benefits to encourage recipients to look for work - would be just as effective, and with far less bureaucracy

FAILboat


CORRECT! This idealist nonsense is just that. Nonsense.

If you fix all the dents except for "just a few" most folks will say, "screw it I'm not fixing the rest of the dents".

If you give people money for NOTHING they will NOT WORK.

Welfare should only be for those with mental and physical disabilities which ABSOLUTELY prevent them from working.
 
2008-04-02 12:48:53 PM  
KaponoFor3: More honest? Sure. A good/better use of taxpayer dollars? Absolutely not.

If I have a choice of giving money to Halliburton (or other major government war contractor) or a crackhead, the crackhead's gonna be wealthy.
 
2008-04-02 12:52:32 PM  
If you fix all the dents except for "just a few" most folks will say, "screw it I'm not fixing the rest of the dents".

Or complain that George Bush doesn't care about the last few dents.
 
2008-04-02 12:52:39 PM  
fuzzwell: If you fix all the dents except for "just a few" most folks will say, "screw it I'm not fixing the rest of the dents".

If you give people money for NOTHING they will NOT WORK.


And you know this HOW? You've done empirical studies?

Not to say that TFA is necessarily right either, but people are putting effort into studying these things. Are you one of them, or only having a "gut feeling" or whatever, which is precisely what the article is criticising?
 
2008-04-02 12:53:35 PM  
fuzzwell: If you give people money for NOTHING they will NOT WORK.

i think, though, if you pair it with chicks FOR FREE, they might just.
 
2008-04-02 12:53:36 PM  
benlonghair: If I have a choice of giving money to Halliburton (or other major government war contractor) or a crackhead, the crackhead's gonna be wealthy.

With all due respect...

i166.photobucket.com

At least Halliburton employs thousands of US citizens and gives the the paychecks they need to feed their family. The crackhead? Not so much.
 
2008-04-02 12:54:56 PM  
I'm still trying to comprehend the Dr.Phil'ish bee-sting analogy.


/blonde
 
2008-04-02 12:55:07 PM  
KaponoFor3: FAILboat

This... is what we tried to do during the "Great Society" and the "war on poverty." It did not work.

Economics assumes people act rationally, but the problem is the definition of what is rational. Is it rational to delay present consumption to gain a higher payoff in the future? Usually, yes: going to college, saving to buy a house, starting a business... all of these are examples. But if your perception is that there is no higher payoff waiting (or if you think the promise of a higher payoff is a lie or a trick) then you have no incentive to delay consumption. It may be based on bad information, but it is still basically a "rational" belief. Or to take another example, look how many young blacks today think that the most viable career paths for them are either professional sports or rap music, instead of CEO or doctor or lawyer. They don't know anyone like them who have become CEOs or doctors or lawyers, but they know that LeBron James and 50 Cent and the like started where they were and became successful, so why not follow a path they know works, however unlikely it is. This is a perfectly rational belief, it's just based on a lack of information, or bad information. (A computer programmer would say "garbage in, garbage out.")

Poverty is as much a psychological and spiritual condition as it is an economic and social one. If you think you are always going to be poor, it generally turns into a self-fulfilling prophecy.
 
2008-04-02 12:56:24 PM  
benlonghair: If I have a choice of giving money to Halliburton (or other major government war contractor) or a crackhead, the crackhead's gonna be wealthy

halliburton employs lots of people. if you're going to give taxpayer money to someone, let's at least give it to people who work and pay taxes and contribute something to the country's non-crack economy
 
2008-04-02 12:56:59 PM  
oops, didn't read KaponoFor3.
 
2008-04-02 12:58:48 PM  
kingMountain: fuzzwell: If you give people money for NOTHING they will NOT WORK.

i think, though, if you pair it with chicks FOR FREE, they might just.


That's the way you do it!
 
2008-04-02 12:59:32 PM  
Is this the thread where "libertarians" trumpet the American Way of LifeTM as being super duper awesome because even our poor are so well off or the one where they say anyone receiving government assistance is a lazy leech? Looks like the latter.
 
2008-04-02 01:01:23 PM  
itazurakko: fuzzwell: If you fix all the dents except for "just a few" most folks will say, "screw it I'm not fixing the rest of the dents".

If you give people money for NOTHING they will NOT WORK.

And you know this HOW? You've done empirical studies?

Not to say that TFA is necessarily right either, but people are putting effort into studying these things. Are you one of them, or only having a "gut feeling" or whatever, which is precisely what the article is criticising?


You're right I'm sure. Since I'm not a liberal psycho-analyst and this 'may not' have been conclusively figured out yet, we should give people money to not work. That sounds like a great idea. Get real, get a life, and send me all of your money so that I can stop working please.

Also, I learned all of this from playing guitar on the MTV.
 
2008-04-02 01:04:20 PM  
My Econ 101 prof was a big advocate of this, called it a reverse tax I think. its combined with a flat tax.

basically, if you made less than say, 3000 dollars, the gov't just gave you money.
Ex:
you make 0 dollars. The government gives you 1500
You make 500 dollars. The goverment gives you 1250
You make 1000 dollars. The government gives you 1000.
You make 1500 dollars. The government gives you 750.
You make 2000 dollars. the government gives you 500.
You make 2500 dollars. the government gives you 250.
You make 3000 dollars. the government taxes you at 5%.
You make 3000 + X dollars. The government taxes you at 5%
 
2008-04-02 01:05:41 PM  
Katie98_KT: My Econ 101 prof was a big advocate of this, called it a reverse tax I think. its combined with a flat tax.

He should have just called it straight up redistribution of wealth -- steal from the "rich" and give to the "poor"
 
2008-04-02 01:07:27 PM  
Katie98_KT: My Econ 101 prof was a big advocate of this, called it a reverse tax I think.

we have something kind of like that. the earned income tax credit. best anti-poverty program for the working poor
 
2008-04-02 01:08:36 PM  
KaponoFor3: Katie98_KT: My Econ 101 prof was a big advocate of this, called it a reverse tax I think. its combined with a flat tax.

He should have just called it straight up redistribution of wealth -- steal from the "rich" and give to the "poor"


yea, I'm not a big fan of it. but, if you look at the numbers, basically the government is guaranteeing a basic poverty line (in my example, $1500). And then, even if you work, just a LITTLE bit, you earn more than this poverty line.
 
2008-04-02 01:10:46 PM  
Most people here, oddly enough, aren't paying attention to the argument. Poverty is a trap. Part of that trap is formed by perceptions. Changing the circumstances that form the trap can be helpful. This argues against pretty much all existing efforts against poverty except the Earned Income Tax Credit and Food Stamps.

There was a program around where I live that worked on a similar basis to what this economist is suggesting. It would seek out specific problem cases among the poor and try to get them what help they might need at least temporarily so they could get a step up. One of its great successes was transforming an abnoxious troublemaking drunk who lived in his car into a productive citizen with an apartment and a good job who spends his extra time working for charities. All it took was helping him out with the basics. It was expensive in terms of government employee time, but the amount of money it was costing to arrest this guy all the time and take care of him in emergency rooms was astronomical. Now he works hard, doesn't cause trouble, gets along with the police, and has health insurance. The program that enabled this transformation was cancelled because it cost too much, but it is interesting that it succeeded where no others did.

So what do you want to spend money on? Services for people who have fallen on hard times, or endless arrests and emergency room visits for people who have fallen on hard times. Thought so. There's your FAILboat right there, and you are sailing troubled seas on it. Some reason and human feeling might help, but both are in very short supply--as economists would say, a condition of scarcity.
 
2008-04-02 01:11:37 PM  
fuzzwell: You're right I'm sure. Since I'm not a liberal psycho-analyst and this 'may not' have been conclusively figured out yet, we should give people money to not work. That sounds like a great idea. Get real, get a life, and send me all of your money so that I can stop working please.

I'm not claiming either way. I'm merely claiming you have no basis.

The entire point of TFA is that it's possible the supposed "common wisdom" is wrong. So coming in saying, "no, no, I just have a gut feel that the current way is working" is kinda silly.
 
2008-04-02 01:12:32 PM  
albo: Katie98_KT: My Econ 101 prof was a big advocate of this, called it a reverse tax I think.

we have something kind of like that. the earned income tax credit. best anti-poverty program for the working poor


If you are working, and you are still poor, and the government gives you a tax break to help you not be in poverty.... fine.

However, if you are not working and the government gives you money anyhow, this is unacceptable unless you are disabled mentally or physically.
 
2008-04-02 01:12:46 PM  
benlonghair: If I have a choice of giving money to Halliburton (or other major government war contractor) or a crackhead, the crackhead's gonna be wealthy.

Give me a choice, and they'll both be poor, unless they actually want to get off their asses and put in an honest day's work.

I'm not going to give welfare to shiatbird A just because he's not as bad as shiatbird B.
 
2008-04-02 01:14:35 PM  
fuzzwell: However, if you are not working and the government gives you money anyhow, this is unacceptable unless you are disabled mentally or physically.

It's accepted US law, however. Ideological purity aside.
 
2008-04-02 01:15:12 PM  
fuzzwell: albo: Katie98_KT: My Econ 101 prof was a big advocate of this, called it a reverse tax I think.

we have something kind of like that. the earned income tax credit. best anti-poverty program for the working poor

If you are working, and you are still poor, and the government gives you a tax break to help you not be in poverty.... fine.

However, if you are not working and the government gives you money anyhow, this is unacceptable unless you are disabled mentally or physically.


well, the idea would be to set the minimum line so low that NOBODY wants to be there. But yea, it has issues anytime you take it from the philosophical economics line of thought
 
2008-04-02 01:18:44 PM  
MasterThief: KaponoFor3: FAILboat

This... is what we tried to do during the "Great Society" and the "war on poverty." It did not work.

Economics assumes people act rationally, but the problem is the definition of what is rational. Is it rational to delay present consumption to gain a higher payoff in the future? Usually, yes: going to college, saving to buy a house, starting a business... all of these are examples. But if your perception is that there is no higher payoff waiting (or if you think the promise of a higher payoff is a lie or a trick) then you have no incentive to delay consumption. It may be based on bad information, but it is still basically a "rational" belief. Or to take another example, look how many young blacks today think that the most viable career paths for them are either professional sports or rap music, instead of CEO or doctor or lawyer. They don't know anyone like them who have become CEOs or doctors or lawyers, but they know that LeBron James and 50 Cent and the like started where they were and became successful, so why not follow a path they know works, however unlikely it is. This is a perfectly rational belief, it's just based on a lack of information, or bad information. (A computer programmer would say "garbage in, garbage out.")

Poverty is as much a psychological and spiritual condition as it is an economic and social one. If you think you are always going to be poor, it generally turns into a self-fulfilling prophecy.


Hmmm. So exactly how many "young blacks today" think the way you're describing? Or was that a generalized statement that's based on a loose stereotype?

You seem to imply that the lack of information is what's keeping people who are traditionally poor from embracing more likely career paths to strive for.

Assuming that what you say is correct, and that poor people (or black people, since that's who you're talking about) tend to think that the only way out of poverty is to be a rapper or pro athlete, and that if they had better information, they would instead look at being a doctor, a lawyer, or a CEO as a way out.

What makes you think that any of those professions is a rational choice for poor black people? Each one of the positions you mentioned requires the better part of a decade of schooling, at extremely high cost (with the exception of the CEO, which doesn't require formal education, but would be immensely more likely to happen with an MBA and considerable capital).

Sure, there are scholarships available, but not in anywhere near the numbers necessary to make it any more of a realistic goal than being a rapper or athlete. And good luck navigating that bureaucratic process if you don't have someone familiar with to help you.

It seems to me that a much more helpful alternative would be to focus on making available jobs that pay in the $30,000-$40,000 range for people in these situations to aspire to. At least in the area where I live, a job such as this would certainly go a ways to lifting someone out of poverty, wouldn't require an advanced degreee (and in some cases, could be had with vocational training). And of course, these are a lot more likely to come by than the high-end six-figure type occupations.

When the sentiment from people around you is "just become a lawyer, and you'll be rich and not poor anymore!", it can certainly contribute to the belief that there is no payoff awaiting you for your efforts, since that's a patently unrealistic proposition. At which point the rational choice that you mentioned previously comes into play.
 
2008-04-02 01:20:56 PM  
itazurakko: fuzzwell: You're right I'm sure. Since I'm not a liberal psycho-analyst and this 'may not' have been conclusively figured out yet, we should give people money to not work. That sounds like a great idea. Get real, get a life, and send me all of your money so that I can stop working please.

I'm not claiming either way. I'm merely claiming you have no basis.

The entire point of TFA is that it's possible the supposed "common wisdom" is wrong. So coming in saying, "no, no, I just have a gut feel that the current way is working" is kinda silly.


Here's a basis for you...

I'm an employer. I sign paychecks. Why do you think people work for me? Because they like me? I assure you that is not the case.

When some folks figure out that they can get money from the government system well enough to earn about 50% of what they can make as a part time employee for me, sometimes they QUIT and take the government checks if at all possible.

Experience is the basis for my opinions, and I don't need to have a "report" from anyone to tell me how to think.
 
2008-04-02 01:22:27 PM  
Cagey B: Sure, there are scholarships available, but not in anywhere near the numbers necessary to make it any more of a realistic goal than being a rapper or athlete. And good luck navigating that bureaucratic process if you don't have someone familiar with to help you.

Apply to community college.

Walk into financial aid office.

They walk you through filling out the forms.

You get loans/grants for tuition.

Get good grades.

Apply to 4-year university after 2 years at CC.

Profit.

Anyone that has at least a GED can do it.
 
2008-04-02 01:23:22 PM  
mediaho: Is this the thread where "libertarians" trumpet the American Way of LifeTM as being super duper awesome because even our poor are so well off or the one where they say anyone receiving government assistance is a lazy leech? Looks like the latter.

No, this is where geolibertarians point out that we should move taxes from trade, labor, and capital, to land value, economic rent, and societal cost.

/heh
 
2008-04-02 01:27:05 PM  
I guess this is the one area where I'm pretty right-wing, and I believe that if you can't find a job, the government shouldn't give you money; if you can't find a job, the government should give you a job. There's always litter to pick, fences to paint, gardens to tend etc. Maybe three days a week at minimum wage and education and assistance to find a proper job on the other days of the week (if wanted)? If you're able to work, money for nothing shouldn't be an option (chicks for free sounds good though).
 
2008-04-02 01:30:11 PM  
SchlingFo: Cagey B: Sure, there are scholarships available, but not in anywhere near the numbers necessary to make it any more of a realistic goal than being a rapper or athlete. And good luck navigating that bureaucratic process if you don't have someone familiar with to help you.

Apply to community college.

Walk into financial aid office.

They walk you through filling out the forms.

You get loans/grants for tuition.

Get good grades.

Apply to 4-year university after 2 years at CC.

Profit.

Anyone that has at least a GED can do it.


This is why supporting community colleges is a good idea. Though it's difficult to get 100% coverage for your subsequent two years at a 4-year, and chances are you'll be on the hook for a substantial amount to pay for your degree at a halfway decent four-year. Even then, with that bachelor's, you're still not in line to get the high-end jobs that were referred to earlier.

But you do bring up a good point. I don't know what the state of outreach efforts to get people to do this is, but I suspect we could probably be getting the word out better.
 
2008-04-02 01:32:38 PM  
I've had the pleasure of knowing a few welfare recipiants. Some of them were flat out embarrassed to be on it. As it should be. They used it temporarily & did everything they could to get off the tit ASAP.

That being said, there were just as many that felt getting a job was to suppliment their welfare. They'd work until the state told them they were making enough to disqualify them from specific benefits, then they'd quit & biatch that they couldn't get ahead.

The latter should be thrown off the boat w/o a life vest.
 
2008-04-02 01:34:26 PM  
Sorry about the earlier troll. I shouldn't do that. Bad benlonghair, bad!

Anyhow, one of the problems is the stigma attached to not having 'stuff'. MUST HAVE 42" HDTV (even though I only earn 21k per year).

The difference between my grandparents generation (parents generation for many here) and the current generation is going without back then was almost a badge of honor. Now it makes you almost an outcast. No boat? WTF is wrong with you!?
 
2008-04-02 01:35:03 PM  
Cagey B: It seems to me that a much more helpful alternative would be to focus on making available jobs that pay in the $30,000-$40,000 range for people in these situations to aspire to.

This used to be a big role of public sector jobs and things like the post office. Civil service. If you ask a lot of slightly older people about the good, stable, not rich or flashy but steady dependable gigs their parents had back during the Good Society days, very many of them were civil servants of some sort. Stable gigs, decent pay.

A lot of that stuff has been eliminated or outsourced these days, though. I can see the arguments for doing it, but maybe there's something to be said for keeping a little bit of extra padding in the budget that helps people out by having good jobs available, thought of as a form of aid that's not quite really "aid."

fuzzwell: I'm an employer. I sign paychecks. Why do you think people work for me? Because they like me? I assure you that is not the case.

When some folks figure out that they can get money from the government system well enough to earn about 50% of what they can make as a part time employee for me, sometimes they QUIT and take the government checks if at all possible.


I.e., just another guy with his own individual unresearched opinion based on his own life experiences. That's cool, we've all got one.
 
2008-04-02 01:41:54 PM  
benlonghair: Anyhow, one of the problems is the stigma attached to not having 'stuff'. MUST HAVE 42" HDTV (even though I only earn 21k per year).

Eliminating as much advertising from your life as humanly possible goes a long way with helping with that particular problem, at least IME. I was led that way by my parents, so it's second nature, but yeah. TV is a big one (I watch shows, but on DVD), ad blockers on line, etc. Downside: You can get nerdy.

That, and if you can just get yourself to fall enough behind the curve so that catching the Joneses isn't really a possibility, the pressure to constantly upgrade is gone. You can join the "oh yeah? My car is still running from 1982!!" crowd instead.
 
2008-04-02 01:45:49 PM  
itazurakko:

I.e., just another guy with his own individual unresearched opinion based on his own life experiences. That's cool, we've all got one.

I don't need the weatherman to tell me it's raining when I can go outside and feel it for myself.
 
2008-04-02 01:48:32 PM  
fuzzwell: I don't need the weatherman to tell me it's raining when I can go outside and feel it for myself.

Yes, it's raining in your area.
 
2008-04-02 01:56:39 PM  
BravadoGT: I thought it was evil rich people sabotaging their opportunities, forcing them to enter into predatory contracts, and enslaving them in underpaying jobs...

I know you're trolling, but that is indeed part of it.
 
2008-04-02 02:04:47 PM  
SchlingFo: Give me a choice, and they'll both (Halliburton and the crackhead) be poor, unless they actually want to get off their asses and put in an honest day's work.

Give me a choice, and they'd both be wiped out of existance.

Predatory farktards!
 
2008-04-02 02:05:05 PM  
Well the orals were fascinating. Now you can defend your dissertation in this little practicum we whipped up between naps.

(Committee whacks hive of bees with yardstick, flees room, and locks door.)
 
2008-04-02 02:08:08 PM  
itazurakko: You can join the "oh yeah? My car is still running from 1982!!" crowd instead.

Haha. I used to drive a '97 Geo Tracker. People laughed at me until I told them I had payed $1700 for it, put a grand total (not including gas and oil) of $450 into it and got almost 50k miles out of it. Ya, cheapest car I've ever driven. Ugly as hell, but a great vehicle.
 
2008-04-02 02:10:28 PM  
fuzzwell: itazurakko:

I.e., just another guy with his own individual unresearched opinion based on his own life experiences. That's cool, we've all got one.

I don't need the weatherman to tell me it's raining when I can go outside and feel it for myself.


Link (new window)

Headline is: Many Leaving Welfare for Jobs
 
2008-04-02 02:10:39 PM  
Boritom: SchlingFo: Give me a choice, and they'll both (Halliburton and the crackhead) be poor, unless they actually want to get off their asses and put in an honest day's work.

Give me a choice, and they'd both be wiped out of existance.

Predatory farktards!


Maybe we could staff Halliburton with crackheads, and kill two birds with one stone in hilarious fashion.
 
2008-04-02 02:20:14 PM  
benlonghair: People laughed at me until I told them I had payed $1700 for it, put a grand total (not including gas and oil) of $450 into it and got almost 50k miles out of it

i conned my old man out of his buick for $1,500, sold my old toyota to cover $900 of that, put about $2,000 into it in repairs and tires and such, then got hit by some lady and got $2,500 check for teh damage, didn't get the damage fixed, then sold the car at 40,000 miles later for $250.

So, not counting gas and insurance, it cost me negative $6 a month to run it for 3 years or so
 
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