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Mota Boy
05-20-2006, 12:07 PM
A couple days ago I was looking for Rahm Emanuel's book "The Plan" on Amazon when I stumbled across the book In Our Hands (http://www.amazon.com/gp/product/0844742236/sr=8-1/qid=1148150833/ref=pd_bbs_1/102-5692798-3273710?%5Fencoding=UTF8.) and became intrigued.

In it, libertarian Chalres Murray proposes a radical alternative to the current welfare state. One of the reviews summed it up very nicely:

"'The Plan' is simple. Everyone at the age of 21 receives $10,000 (tagged for inflation) per annum for life. No changes for marital status or any other demographic tag. Erring on the high side, this program will, at the most, cost about $1.73 trillion to start and, according to demographics, will descrease over time in equal-valued dollars. This replaces all entitlement spending at all levels of government which Murray states in 2002 totaled almost 1.4 trillion dollars. This includes business and agricultural subsidies and means tested programs for the poor ((editor's note: i.e. welfare, "corporate welfare", Medicare, Medicaid, Social Security, etc.)). According to Murray, 'The Plan' will effectively eliminate involuntary poverty.

"Seems radical but it isn't. It makes more sense than other policy innovation I've ever heard of. The liberal skeptic needs to consider how much we spend on social assistance and take a sobering look at how far the battle over poverty is from being won. This plan gives every American, regardless of circumstances, the financial base to escape poverty. Failure is in 'our hands'. Virtually every extreme circumstance one can imagine is countered by 'the plan'. For the average and below average american it is a base to build from and protect oneself.

"The conservative skeptic needs to see how much we spend and what it does and doesn't do. The funding of this program, erring on the high side, will be less expensive than the current system in a few short years...maybe sooner. By 2020, Murray estimates "The Plan" will cost over $500 Billion less annually than the current system. How's that for savings?

"Some practical details: Murray also proposes smart healthcare reforms that will bring down the cost of healthcare. He estimates an annual premium cost per person of $3000 per year. The other $7000 per year is for the person to use to provide one's saftey net. He also suggests $2000 per year go into conservative retirement savings. It's important to note that $7000 after health insurance is the more important stat to Murray. If healthcare cannot be done for less than $3000, he demands increasing the 10,000 to a suitable number. At an anemic 4% annual growth over one's working life(unheard in America history except for someone who started working during the crisis of 1887 and retired at the Great Depression, in which case the return would have been 4%!) it gives a total of about $245,000, which in the form of an annuity will give a yearly income of about $20-24000 and you STILL get the $10,000! Double for an elderly COUPLE of limited means and you get a retirement income of at least $60,000 GUARANTEED. What government program can do that?! Save more, retire sooner!

"Other important details: at 50,000 in income, you give back half the grant. Also keep in mind that all those FICA and Medicare withholding taxes are eliminated from payrolls...the most regressive wage taxes of them all. Plus, the lowered cost of employing people by eliminating these payroll taxes will lead to increasd payrolls.

"People earn more, save more, retire better and when they want and the government averts fiscal crisis. Involuntary poverty is easily averted for virtually everyone. Some may argue that that is impossible. Maybe it is. But it is much easier to avoid poverty this way then by relying on the current system. Some people will always doom themselves to life of voluntary squalor...just like they do now. With the Plan, a minimum wage part-time job is all you need."

Hell, that doesn't sound half bad. I'm cautiously optimistic that it could work. Thoughts?

HornyPope
05-20-2006, 02:05 PM
Stupid.

Someone still has to work at Mcdonalds at the end of the day.

It would have made more sense to say raise the lower salary to say 12 dollars an hour, force the commerces to eat up at least 8$ and the other 4 subsidised by the State.

Of course the higher echelons would never agree to this plan because it leaves nothing to them. But then again they wouldn't agree to the "plan" either.

Do you know there were also plans who proposed to give every citizen a million dollars? Yeah...


The liberal skeptic needs to consider how much we spend on social assistance and take a sobering look at how far the battle over poverty is from being won.

Wait, there's a battle in America waged on poverty?
Well if there's one battle less sucessful than the war on drugs... and i'm not talking about war on terrorism.

Mota Boy
05-20-2006, 03:05 PM
Someone still has to work at Mcdonalds at the end of the day.
So? This proposal isn't trying to raise the minimum wage. It's trying to replace a government welfare system that will bankrupt this country in a few decades.

HornyPope
05-20-2006, 03:20 PM
I've no idea why your welfare system is where it is. Ours is holding. I think.

Well he can't eliminate social services where the people have to check in- like the functions occupied by actual social workers. Someone has to still pay for their salaries.

Paint_It_Black
05-20-2006, 03:31 PM
How would you ensure that people spend the money wisely? Most people I know would most likely blow it all on music, movies, computers and such. And then when it's all gone and suddenly they have a health problem, do we just leave them to suffer and/or die? Or do we spend even more money on them?

I suppose the $10,000 could be simply some sort of voucher, redeemable only for things like food and medical services. A plus side of this is that it's not actually money, and wealthy people would possibly not use theirs because of the stigma that would be attached. Using them would be like admitting that you need them.

It's certainly an interesting plan, but it would take a lot to convince me that it would actually work.

Tizzalicious
05-20-2006, 03:59 PM
You can't give everyone 10,000 dollars. Even if you accounted for the inflation it would cause. The Danish union movement attempted this in the 60's, where wages were forced to rise and fall with inflation. What ended up happening is that inflation just skyrocketed and it was a dismal failure.

I'm just having a hard time imagining it. One of the clear dangers is the fiddling with the health care system. America is already well known for the harsh realities of it's health care system. But in any system, it would probably cost more than 10,000 to cure cancer. Or even to fight it. Or AIDS, or HIV (not cure but delay perhaps.)

Vlad, it's a class war! lol!

Mota Boy
05-20-2006, 04:14 PM
Richard & Per -


"Some practical details: Murray also proposes smart healthcare reforms that will bring down the cost of healthcare. He estimates an annual premium cost per person of $3000 per year. The other $7000 per year is for the person to use to provide one's saftey net. He also suggests $2000 per year go into conservative retirement savings. It's important to note that $7000 after health insurance is the more important stat to Murray. If healthcare cannot be done for less than $3000, he demands increasing the 10,000 to a suitable number. At an anemic 4% annual growth over one's working life(unheard in America history except for someone who started working during the crisis of 1887 and retired at the Great Depression, in which case the return would have been 4%!) it gives a total of about $245,000, which in the form of an annuity will give a yearly income of about $20-24000 and you STILL get the $10,000! Double for an elderly COUPLE of limited means and you get a retirement income of at least $60,000 GUARANTEED. What government program can do that?! Save more, retire sooner!
In other words, $3,000 are automatically converted into your health-insurance policy. In essence, you're "taxed" three thousand dollars a year, which is used to create a free health care system. That's how I understand it, anyway. I'm assuming it doesn't cover all procedures (for instance, if we allowed free access to liposuction, stomach-stapling, Lasic eye surgery and other cosmetic surgeries, there would be widespread abuses), but our currently healthcare system doesn't do that either.

And WCM - raising the minimum wage and tying it to inflation increases the amount of money employers have to pay to their employees, forcing businesses to raise prices and increasing the amount of money given to workers, creating a feedback loop. "The Plan", however, doesn't add money into the economy so much as redistributes money the government already gives out in the form of Social Security, Medicare, Medicaid, welfare, etc. (and in time, will reduce the amount of money the government adds to the economy). This shouldn't affect inflation.

Betty
05-20-2006, 04:49 PM
I see so many flaws in this.

-$10000 is not nearly enough to live off of if there are no social services provided, so those who don't/can't hold jobs are fucked.
-Especially for parents. It does not state whether money is provided for children, so a poor family with 3 or 4 kids is gonna be fucked.
-Are the rich still getting this $10000? Why? Wait no, I reread. They still get $5000. Why?

I can't even go through it all, but it really seems like a bad idea. Either that or it's very unclear. I really don't see how taking money out of social programs and giving it directly to everybody is a good idea to combat poverty. A welfare system where there is healthcare, education, perhaps food vouchers, whatever, plus some extra spending money and child benefits seems better than just giving out $10000. It is structured, more fool proof. If they claim this is going to save money overall, I'm missing how it is costing less yet still combatting poverty better. And where is all this money coming from again?

HornyPope
05-20-2006, 05:31 PM
And WCM - raising the minimum wage and tying it to inflation increases the amount of money employers have to pay to their employees, forcing businesses to raise prices and increasing the amount of money given to workers, creating a feedback loop

That's the ol' American gimmick. Heard it too many times. But it's only relevant if taken from a higher mid-class perspective. Which is always the fault with your country. You treat it like the middle class is all that matters.

Here's to break it down for a bit:
If the minimum wage would go down from the 6 dollars it is now to 8 dollars, a person earning a minimum wage to support his family would see an increase of 30% on his salary (adjusted with higher tax burden we're talking about 25% net increase)!

Meanwhile, the cost of labour that accounts within the retail price (or the service) would equally increase 30%. Correct?

However!
The percentage of which labour accounts within a retail price (or the service) is NOT 100% of the retail cost. For instance, a typical, franchised, fast food joint spends under 20% of her operative cost on his employes.

So, if say a given fast food joint has 20 000$ per month in expenses of which 4000$ is tied in salary, another 4000$ in franchise and licencing costs, another 4000$ for running the place plus bills plus insurance plus random, and the other 8000$ are for the products. If the salaries went up 30%, the salary of the employees rise from 4000$ to 5350$.
However, compared with the total costs of 20 000$ of running the joint, the 1350$ hike represents a hit of 6% to all total costs.

So if the hike was reflected on the price of your hamburger that retails for 2$, it would increase to a whole 2.12$. TWELVE CENTS!

However, for the employees and everyone making minimum wage, that hike represents hundreds dollars more in wages. Their purchasing power adjuted with the new retail hike, they would still see an increase of 20% in their ability to afford various products and services.

Granted, it's slightly more complicated because the labour hikes would be seen all over the join, like the cost of machinery and the cost of raw products etc... Perhaps few busineses would close, leading of course to a slight hike in unemployment.

In addition, it also complicates the imports and exports into which I won't get because I don't have the figures or a clear grasp of what they all mean.

But in the end, lower minimum wage means benifits for those earning that wage, and the only reason it iisn't implemented is because the middle class doesn't want to see its burgers (and various retail) a dozen cents more expensive. Even if it means higher standards for the poorest in your country. Well fuck you middle-America. Fuck you, motherfuckers.

HornyPope
05-20-2006, 05:34 PM
Michelle, those 10 grand are supposedly granted on top of what you already earn. Basicly they scratch the "welfare system" all together (minus the introduction of health care) and give it to you in real, hard, cold cash.

But of course, the drawbacks are astounding and only economic-libertarian morons can stand behind it.

Among the drawbacks is a) less incentive to get a job; b) the kids are fucked. You're looking at another generations of kids growing up in the ghetto because their parents are dead-brain morons who were abandoned (no wait, BOUGHT OFF) by the State.

Edit: and I see you edited the first point. So you understood then.

Tizzalicious
05-21-2006, 02:33 AM
The worrisome matter of cutting Federal welfare in the United States is that there isn't much of one anyways. Although I had a friend in Oregon who was very happy to finally get onto Food Stamps. I think he's a janitor now though.

America could easily have a European style welfare state (well not easily in as easily implement it, the government however could afford it.) That too, would just be a re-arrangement of the economy. You go to the Federal Budget, and you will see about half the budget goes to the military or military related agencies. And the rest is divided up between various things. I personally don't believe any president could make any significant cut to military spending, as the military is simply too big a lobby, and too powerful to alienate.

But in a world where you were able to shift money in the federal budget easily, and the environment allowed one to do so. You could make vast and extensive reforms to the US welfare system, so that it actually prevented things like massive homelessness (kinda embarrassing for a developped country). Effective programs to create jobs that aren't all service sector. Like improving infrastructure or something. Whatever, we could become modern.

Although that would also mean massive job loss in the military. And if you've ever read Dear Abby, you would know that's where we send our most incapable people.

It's early in the morning so I don't know how I got off topic.

Also Vlad, the minimum wage is different all over the US. In Oregon it's something like $7.75 while the federal limit is either 5 or 6 dollars. I don't remember. I believe however, that Fast Food franchising is much more costly than you say. I've heard different estimates, but it's supposed to take something like 4-6 years for a McDonald's to become profitable (maybe longer but let's go with 4-6 years). During this 4-6 year period of time, not only do you invest heavily (I think it takes about 1 million out of your own pocket to start a McDonald's) but then you probably got the loss of profit and fix the accountings from your own account.

Franchising is often the way small entrepeneurs go. And what McDonald's and other franchisers do. Is make it just profitable enough for their franchises to stay alive, but make sure that their "business partners" aren't cutting too much aside for themselves. Because whatever cut of the profit there is,the more you give to the franchise owner, the less you give to McDonald's Corporation.

Kind of a rotten deal. But Franchising is a rotten deal anyways.

HornyPope
05-21-2006, 02:42 AM
Uhhh... I never said anything about profits. Profits had nothing to do with the point. I'm well aware of the enormous initial start up funds and years of patience before you turn in a profit. I'm just saying how the labour you pay to your workers represents an insignificant chunk of investement. And while to your employees an increase of few dollars can literaly make a difference bewteen having a dinner or not, the consumer (the rest of America) will barely see the hike.

Mota Boy
05-21-2006, 03:04 AM
I see so many flaws in this.

-$10000 is not nearly enough to live off of if there are no social services provided, so those who don't/can't hold jobs are fucked.
Well, they currently get next to nothing, so I don't see it as being any better than the current system.

And Michelle, the rich get $5,000... minus $3,000 for medical expenses and maybe $2,000 for a retirement fund. Though maybe they still get $2,000. Anyway, the poor still get much more than they currently do. And those working at just the minimum wage get $10,000.

Betty
05-21-2006, 11:08 AM
Yes, I realize. I guess my point here is that, as a way to combat poverty, since that is not nearly enough money to live off of for those who don't/can't hold jobs, it wouldn't really combat poverty very effectively.

If they are using tax money for this, I would rather see it being distributed more according to need. A single mom or whatever getting a nice fat welfare cheque every month, and child benefits, and being able to rely on an already established public healthcare system, etc. would be much better off. And those who don't need the extra money won't get it. This seems much more logical a means. I'm not even going to say how much I agree with the welfare system as it stands, but if you're going to have one that works, I don't see "the plan" as being the best choice.

Sin Studly
05-21-2006, 11:48 AM
I agreed with Vlad up to the point where I got bored and stopped reading.