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[andrea]

he isn't proposing to abolish welfare, he is proposing substituting it with a basic income, which would allow everyone to eat and have a roof on their heads, without overly restricting what they can spend money on ( which is what he called handholdng, I believe)

[smeeprocket]

ahh.

I agree with that, though I would like to see foodstamps remain to assure that poor planning or desperation doesn't lead to meals being skipped.

WIC checks can just be absorbed by foodstamps, imo. The limitations on it are not well thought out.

[Reelya]

"Poor planning" usually means you were born in a slum, or your job no longer exists and there are like 10 applicants for every job. Considering that the median wealth in the USA is only $44,000, half the country basically have no assets (average US personal debt is $50,000). Is America rife with idiots who can't plan their life, as opposed to Europe where everyone is a great planner? "Normal" developed countries have median wealths ranging from $100K - $200K, America really is rife with poor people. They can't all just have been personal failings due to "poor planning".

The "poor planning" is a national issue, not a personal issue.

[smeeprocket]

"Poor planning" usually means you were born in a slum, or your job no longer exists and there are like 10 applicants for every job. Considering that the median wealth in the USA is only $44,000, less than half the country basically have no assets (average debt is 50,000). Is America rife with idiots who can't plan their life, as opposed to Europe. "Normal" developed countries have median wealths ranging from $100K - $200K, America really is rife with poor people. They can't all just have been personal failings due to "poor planning".

The "poor planning" is a national issue, not a personal issue.

That's why I added desperation, because that is a possibility. It's also always possible (as a person with a very small budget I have experienced it,) to overstep when you don't really have much room to move. I don't generally think America is rife with poor planners or that that is the cause of poverty. That would be an amazing coincidence if so many people just sucked at planning, since the income they are generating, if any, doesn't really allow for any planning at all.

[MetalSlimeHunt]

I believe the best explanation for the planning issue is that this kind of planning does make perfect sense in the context of perpetually surviving in poverty, but that this kind of planning does nothing for actually escaping poverty, and in fact may work against it. The assertion that good planning for subsistence will lead to becoming more wealthy is common but unsubstantiated.

[smeeprocket]

I believe the best explanation for the planning issue is that this kind of planning does make perfect sense in the context of perpetually surviving in poverty, but that this kind of planning does nothing for actually escaping poverty, and in fact may work against it. The assertion that good planning for subsistence will lead to becoming more wealthy is common but unsubstantiated.

And to be clear I don't agree with the concept, anyway. I have yet to become rich, despite my finances being strictly managed. You have to have money to make money.

[Descan]

Pretty much every advice I've ever heard about making money involves something along the lines of "You have to take risks!"

Risk-taking and planning don't really go well hand-in-hand, and when you're living pay-cheque to pay-cheque, a fallen risk means starvation or worse.

[palsch]

One common sentiment I've seen is that financial planning often only makes sense if you have a net positive income anyway.

Crude hypothetical;

You are stuck working minimum wage jobs on zero hour contracts for whatever reason. Your rent and food costs eat the majority of your monthly income. You have to drive for work but can't afford the up front costs for a good car and public transport is not reliable, so you are paying over the odds for fuel, repairs and frequent replacement vehicles (more old clunkers because that's all you can ever scrape together the money for). The remaining money sometimes covers your bills and other costs, but sometimes not. You have had to resort to emergency or payday loans to cover shortfalls on several occasions and this has left you with considerable debts. Most months now you are deferring/skipping payments, occasionally taking on more debt or missing a bill payment to keep the situation from escalating further.

Now you come into some money. A bonus, a gift, some windfall. It's enough to pay your monthly bills with a fair amount left over. What is your best option?

Well, the money itself isn't enough to clear your debts and won't change your monthly position as far as payments go. At most it will cover them for a few months before you are back in the exact same position as you were before, without even giving yourself much in the way of breathing room.

Alternatively you could buy things that give a direct improvement to your quality of living. A new TV, games console, whatever. OK, so you are back on the monthly grind immediately, but at least now you are on the grind with something to distract you from it.

I've heard a number of stories where people who have tried to save money from a position of poverty simply see it evaporate before they can use it. Money doesn't multiply for poor people the way it does for those with assets and the ability to invest. Trying to hold onto it is trying to hold onto vapour. Not spending it means it will just go away without doing anything positive for you. Better to convert it into things with obvious benefit.

[smeeprocket]

And that is exactly why money given to the poor through welfare and such benefits the economy whereas things like tax breaks for the rich do not.

Any money the poor get goes right back into the economy, but the rich will sit on it or put it somewhere that they can dodge taxes.

And I have experienced the "get stuff to distract you rather than pay bills" thing. I also used to rotate bills because I couldn't pay them all at once. So I'd stagger them.

[Graknorke]

Alternatively you could buy things that give a direct improvement to your quality of living. A new TV, games console, whatever. OK, so you are back on the monthly grind immediately, but at least now you are on the grind with something to distract you from it.

Would it not make sense to 'take risks' with the money you just came into? If nothing you can at least avoid feeling like you're wasting it or whatever.

[Leafsnail]

Here's my guide to making money: first, and this is important, have a lot of money to start off with

[Loud Whispers]

And that is exactly why money given to the poor through welfare and such benefits the economy whereas things like tax breaks for the rich do not.
Any money the poor get goes right back into the economy, but the rich will sit on it or put it somewhere that they can dodge taxes.

The young and affluent tend to be the biggest spenders in shiny baubles; age is a better indicator for who is more willing to part with money than income. I'm gobsmacked at how many millions of Americans make 6 figures! Murrica's still wealthy as fuck. Metrosexual men also look set to splash out plenty of dosh, possibly even surpassing female spending. As for the ultra-rich plutocrats, I'm not sure if they'd just sit on their money; on the principle that if they aren't making more money than inflation their net worth is decreasing so they'll usually pay some financial adviser to tell them how to invest their money so it makes more money and very much stimulates the economy. Heck, the ultra-rich have created their own industry of people who cater to the ultra-rich and tell them how to spend their money. That's assuming the super-rich aren't Wall street titans or Company chairmen and Execs who don't already possess business acumen of their own to invest aggressively and invest well. All that money being invested in American companies would be gorgeous for the American economy.
Unless of course the money is invested somewhere else in the world in some other country, like an American plutocrat investing in London or Tokyo, but Murrica' still taxes its citizens abroad and America's status as world superpower is built on the dollar, not on its military superiority.

I would posit that the argument of a progressive tax does not hinge terribly well on how to get the economy growing as that's dependent on consumer attitudes, international political stability and how idiotic the world's bankers are being as of the moment. A progressive tax system is best argued in favour in terms of whether having a rich country where many within it are not rich is worth it. And I suppose that principle isn't up to argument, it's merely a matter of opinion and values. Do you stand on Mitt Romney's chiseled jawline or are you a filthy gommy?

[Reelya]

"Biggest spender" isn't the same as what we're talking about - which people should the government give/return money to, which maximizes growth in the economy? Rich yuppies may be big spenders, but throwing government money at yuppies isn't the optimal way to grow the economy (they already have more than they can spend).

If you give the same $$$ to different groups, which ones will spend the largest proportion of what you gave them the quickest, thus boosting the GDP (rather than sticking it in a bank account)? The answer is people who don't have any money. That's why tax breaks for affluent people don't grow the economy very much, but food stamps for desperate people do. And food stamps, by definition are a "spend it or lose it" deal, thus ensuring 100% of the value actually goes into the retail economy. Even if someone trades foodstamps for drugs, the next guy has to cash them in for retail goods before they expire, guaranteeing they have the desired stimulus effect and pay back most of the tax costs too.

Raising taxes on billionaires has a small negative GDP effect compared to the positive effects of handing out food stamps. $1 taken from a billionaire reduces GDP by about 30 cents, and that same $1 given as a food stamp raises GDP by about $1.80. On balance therefore, taking money from billionaires to feed the masses grows the entire economy by $1.50 for each dollar taxed. This is clearly justified by a pragmatic "maximize total wealth" policy, before even reasoning that it's the "right thing to do" morally. People getting fed is just a side-effect of rationally maximizing growth.

[Angle]

I will also note, economic growth is driven more by consumption than by investment. If there's no market to sell stuff to, then it doesn't matter how much investment capital you have, you'll get no use out of it.

[BurnedToast]

Edit: I need to stop making rants that are barely on-topic