Friday, October 23, 2009

The fundamental problem

Let me finish my economical doomsday prophecies. There will be no more. Believe them or not, do something or not is your call. I made my own actions: all my RL money is either in gold (I mean real world metal gold in a safe) or on bank accounts (with lousy 7-8% interests) that has government guarantee if bank goes down.

In the previous posts I claimed that:
  • Technological advance will decrease the income of the uneducated, unskilled workers
  • This is already happening, in the last decades the richest 20% of the population increased their income share (their income / income of all people) by 0.5%/year, 60% in 2000.
  • The GDP/employed cannot be increased arbitrarily, it's defined by technology at the level of 2-3%/year
To prove that these effects will lead to large-scale GDP loss, I have to prove the following:
  • The uneducated, unskilled workers will be displaced instead of employed for low wages (income inequality is incompatible with employment)
  • This cannot be stopped by education (transforming them into skilled workers)
  • The displaced unskilled will not be employed in services area (where jobs cannot really be done by machines)
  • The employment rate will fall faster than GDP/employed will increase, resulting in net GDP/person loss

Let's start with the first and simplest one. Theoretically the already existing person has several advantages over a machine:
  • The machine must be bought. So it needs either loan (with interest) or cash (with opportunity cost of being invested elsewhere).
  • Binary barriers: you either have $100K for the machine or don't, a bank either gives you $100K or doesn't
  • Scalability: you can owertime/send to unpaid leave some of your current workforce to respond market but can't buy/sell 10% of your machine
  • Risk: you can fire all your workers and end your company but you can't sell the now useless machine overnight regain your money (or even worse, to repay the loan)
  • Workers can be reused for different purposes in emergency (for example digging snow to let your transports out in a nasty winter day), machines not
  • Being an employer makes you a (locally) respected member of the community. This often has $ value (for example the city will more likely be permissive to your factory being noisy if everyone has a friend/family who loses his job if it is shut down)
You can assign $ value to these advantages, add them to the costs of machines (maintenance, amortization), and get a nice $/year number. If you can employ people below this cost, doing that is the effective choice. If we assume this scenario, than the advancement of the machines simply means that this $/year number decreases over time, so the workers make less. Is it a problem?

In China, not. In the USA and EU it is, due to welfare. If you get $5K/year for nothing, you won't work for $10K. It's not laziness, simply maximizing utility. People want "fun" at the end, so if the "fun" gained by the salary (a car, a travel, a big TV, better meal) is lower than the "fun" lost by the job (you are away from friends since you are at work, you must go bed early, you can't drink, boss is mean, job is dirty), it's the right choice to refuse employment.

The only way to overcome this, is putting welfare/basic income below the survival rate: if you don't work, you can't eat or pay medical bills. However you can't do it in a country where these people have rights. They will vote for welfare and they will steal to survive, and you can't just hang them on the trees, you must put them into the expensive legal system (that is expensive exactly to avoid violation of the rights of people).


The second issue is harder. It's obvious that (besides a few mentally disabled) people can learn new skills. We are genetically the same mankind who dug the dirt a couple thousand years ago, and look at us, even the dumbest of us are driving cars, can read, install WoW to a computer and somehow get out of the starting zone (I'm always puzzled how they manage that). So there are no serious limits for the dumb people to go back to the school and learn new things.

However studying is a long process. Even a technical school takes 1-3 years and it assumes some pre-existing skills like fluent reading and user-level computer skills. However you must eat during learning. If you have no money now, you can't go to a school, pay education costs just to get a job 2 years from now. The only way out is someone else paying for your school, food, home until you get a job. For kids, these are the parents. For bright young people, it can be a profit oriented banker who makes his profit from student loan interest. But who would give student loan to a 30 years old illiterate homeless?!

The country could provide education, housing and food free for such people (in the hope of later tax revenues). However by doing so, it destroys the reason for getting the job. You get what you pay for! If you pay for being a student, you'll get lot of students and only a few graduates able to get a job (common thing in country found universities in Europe)

Can you pay for graduates? I mean could the country give student loans (that must be repaid from salary) to everyone? Of course it could. But what do you do with those who default? If there is no punishment, people will take the loans and don't bother learning. On the other hand how can you punish defaulted student loans in a country where people have rights? Do you think you could pass a bill in the US or the EU to imprison or rather put to chain gang forced labor those who defaulted their student loans?


To handle the "services area" issue, I start with a personal anecdote. I really don't like cleaning my home, so I went to a home cleaner company to order their service. Their hourly cleaning fee was more than 2x higher than my (pretty good) salary. I chatted with the boss a bit and she revealed the reasons behind these extremely high fees:
  • At first they have to find people who don't steal, don't stink, don't curse, don't drink and so on. Their workforce are practically middle class women for cleaning and middle class men for gardening. They can't employ random guys for minimal wages since they will work in the homes of the clients, near their kids and car keys.
  • Secondly, their employees must be transported from a town 100 km away, to make sure that their neighbors will not find out that they are "lowly servants". Yes, these middle class women tell their neighbors lies about their job, they take the bus, travel two cities away, work here 4-6 hours, transported back. That has costs, right?
The mass-services (like shop-vendor) can be done by machines, see self-servicing supermarkets or the cleaner-machine used in offices. The personal services (home cleaner, baby-sitter, waiter, escort girl/boy) need manners that needs to be learned first, and has a very negative social stigma that needs to be compensated.

These services are usually done by immigrants (less than citizen) or young people (less than grown person). Here we are talking about giving jobs to average people. If we comply to both requirements we reached to a luxury-service! An ordinary man doesn't afford the luxury of eating out in a real restaurant every meal. We can afford it now-and-then, usually on our vacation. There are some people who can afford it whole year. So there is demand for such services and some people will work there. But the situation where every employed person (who is not a personal servant himself) have 2-3 personal servants is completely impossible.

Servitude was in custom in the feudal age and the XIX century, so we just have too look up why this "ideal" world diminished? Simply because being a servant had no alternatives. If someone refused such jobs, he died on the street or was whipped by his lord. Do you think it could be re-introduced?


So we have an ever-growing group of welfare leech, who refuse to work for $5-10K/year, refuse to study and refuse to work as a servant. However we still have one hope: GDP/employed is constantly increasing. If we assume this trend continues, the GDP/employed of 2040 will be 220-240% of 2008. So even if 20% of the population will be employed (instead of 44%), the GDP/person will be 2.3*20/44 = 1.05 of 2008. That's "only" stagnation, not collapse.

However in the "top 20% will outplace everyone else by 2040" theory I used the assumption that the welfare gives 20% income share to the other 80%. Can it be? The answer is sadly: no! The welfare is low because the welfare leech is a minority of the society and gets welfare only because of the "goodness" of the employed. The average employed person doesn't want to see his fellow men starving on the streets.

However as the amount of permanently unemployed increases, their political power grows. If today I'd start the "welfare party" in the USA with the only program point "moar welfare" aka "nerf the world", I'd get 10-20%. In the EU, with lower employment rate, such parties (socialists) are common and get 30-40% and the other parties often have to make compromises with them, making the welfare a "holy cow" in the EU.

As the employment rate drops, the "welfare party" gets more and more voters, gets more and more power, giving out more and more welfare. The higher welfare makes more jobs unfillable. With $5K/year welfare, you can get workers for $15K. If the welfare gets to $10K/year, you can't. This speeds up unemployment, increasing the power of the "welfare party" even more. It's also important, that with the increased number of welfare leeches, the social stigma of being one diminishes. Today lot of people choose work over welfare because they don't want to be looked down. If the local majority would be welfare leech, the work could be socially stigmatized! The workers would be "no lifers" opposed to the "fun ppl" living on welfare, hanging out with friends all day! Haven't you seen such normative change somewhere?


Now comes the solution! I have to disappoint all my fellow sociopaths, no genocide involved. It's not humane action on my side, simply logic. Any "waste-disposal" method could be (therefore necessarily would be) abused by some person, group or movement to get rid of their enemies/competitors.

The solution is: if you choose to ask for any kind of welfare, country found education or health care (after the age of 18), you give up your right to
  • vote in any elections (president, congress/parliament, city mayor, judge, public vote)
  • your right to be a juror
  • to serve in any elected position
  • law enforcement, bureaucracy (on fields where you actually enforce something on people, you can still be CSI, secretary in some government office or janitor in the courthouse)
  • in the army in any positions which is not under constant supervision of a superior
  • as a boss (employer) of any people (if you can't handle your personal finance, how could you manage a company)
  • bear arms
You can still have a one-man business or obviously can have a job. You can only regain the political rights by repaying all welfare received in your life, with (Fed) interests. By this scheme no man's rights are limited unless he ask for it in return of the welfare.
This scheme would create a new class besides the full right citizens, people who have personal rights but no political rights. This way the welfare leech could not vote for more welfare, could be forced to learn or take "lowly jobs".

Wait a minute!
  • unable to vote
  • unable to bear arms
  • cannot be a boss
  • forced to study
  • works as a baby-sitter
It's not a new class at all? It's the class known as children! I merely suggest that anyone who has welfare-loan towards the country should be equal to children in rights and obligations. My guess is that 18+ "children" would work their ass to become adult.

PS: if someone would commit crime, the costs of the legal procedure, the compensation to the victims and prison costs would also be added to the welfare balance, rendering the convict a "child" until he repays the damages he caused.

55 comments:

Smeg said...

In Australia there is one sort of welfare that is not looked down upon:

Veterans Welfare.

Army also takes all manner of idiots and pays them min $30K. They also look after you as well. I get the feeling that army recruits will always be in demand.

akanet said...

I have to admit you made me laugh with the comparison to children at the end there.

Nathan said...

While I'm still thinking about a lot of your entry, I do have a comment about the "you give up your right to vote in any elections (president, congress/parliament, city mayor, judge, public vote), your right to be a juror, to serve in any elected position, law enforcement, bureaucracy, army, as a boss (employer) of any people or hold a gun." part.

While giving up rights to vote, act as a juror, or privately own a gun may make some sense, the rest do not. Why would you limit the earning potential of someone trying to repay a loan by making them ineligible for a "boss" promotion? Likewise, if someone takes out an education loan to learn forensic science and you prevent them from working in law enforcement, you're putting them in virtually the same spot as before. They now have an education, but no place to use it.

Military, police, politics, and supervisory positions are all valid ways to earn a living. While I can see the fear of letting someone into a political position where they could potentially change this law, I don't see the benefit in limiting the earning potential of people you want to pay you money.

Slightly related, I would think that the right to sin (buy alcohol, cigarettes, or gamble) would make sense on the list. There would be enforcement problems of course, but it makes more sense to me to prevent wasting income on slot machines instead of preventing earning higher incomes.

Just my initial 2cents while I mull it all over.

Hirvox said...

You can only regain the political rights by repaying all welfare received in your life, with (Fed) interests. By this scheme no man's rights are limited unless he ask for it in return of the welfare.
And how would one implement this modest proposal in a democracy where the welfare party has plenty of political power?

Kip said...

I would like to add that you take away the freedom of speech as well. If you don't contribute you don't have a right to complain.

Also, I would say that anyone on your welfare system be forced to take some measure of contraception. If the state has to care for you then it shouldn't have to deal with the added burden of your brood. If a person has a desire for children then there is no better incentive to pay off the debt while they are young and fertile. If there is no desire then the gene pool gets just a little bit stronger.

Al said...

Probably you are right about that but there is a problem "cutting" rights to people.

Im talking from the point of view of a middle age, middle class, european male getting over $20K/year.

I think people not in 20% top richest always have the fear of lose their job and don't get a new one (what leads to loans and/or welfare), even when it's false and they would find another job.

Because of this fear, the political change that should be done in countries for your solution (i think) its really far from reality to see.

Even more far... suppose we have this system implemented: people don't have political righst until they return the total amount of the welfare/loans they got.
The real shot its this: lot of people would never become people with political rights again, just for the interest and the low salaries you are talking about.

Maybe, maybe not... we can't know now, just time will tell us. Just wonder if i want to see it or not...

Anonymous said...

If edited to:

unable to vote
unable to serve in elected office
unable to bear arms

It'd be brilliant. Many of the other make it hard to earn a living.

unable to bear children is tempting...but involves some pretty primal human drives and will result in lots of expensive violence.

Okrane S. said...

Hehehe, nice solution at the end. I Agree human rights should not be something immutable.

OTOH, the predictions u make are a bit far fetched. It's a worse case scenario result of a worse case scenario cause... it wont happen... at least not that fast anyway.

One question, if I may: what drove you to these predictions?

I mean, what inspired all these thoughts?

You know, looking at only a part of the sample can lead to skewed conclusions...

Gevlon said...

@Smeg, Nathan: text changed a bit, to allow them to army private or police backoffice. However letting them issue orders to "adults" seems weird and wrong.

@Hirvox: we are (yet) majority.

@Kip: no, just like current children has freedom of speech. Telling an idea (even if it's wrong) does not hurt other people.

Anonymous said...

Holding money in the form of gold is rather silly.

Gold is dug up, guarded and does nothing to bring in a risedual income. In fact, gold prices still have not recovered since the 80's. (Gold prices historically raise 3-4 times then crash every couple decades or so)

If you want power, buy in reputable companies. Buy shares in boring, secure companies (e.g coca cola etc) and the company profits will eventually pay for your share.

Hmmmm said...

OK, I get your analogy of WoW and future world, perhaps the micro world of WoW is so small that is has accelerated the process and we are now at the point where the casuals rule the roost. As they appear to do, blizz(the government) caters to casuals. We know this.

So using your model and logic, apply a tax into WoW world. What effect would it have? where the raiders and money earners and farmers, not the illegal ones, the one who list all the mats we buy, where all these people were taxed on what they did, to provide the casuals with free gold to buy the stuff we are selling?

What would happen then? and with what you predict would happen then, can that be applied to the real world? Will the top %20 either give up or refuse to pay or ????

Dan said...

I like your points Gev regarding citizen's rights. However, I believe something of that nature may become improbable to implement. Socialism (aka Democrats) are just too powerful in this country and in the EU. Unless such legislation gets slipped in under the radar, I don't see anything like this happening.

Cingy said...

Did you know that you are pretty close to Karl Marx's views? I would like to add some insights from scientific literature, of course with references. Although the polarising between creative jobs and menial jobs has been described in literature by e.g. Richard Florida (ref. Rise of the creative class). Reality is not as polarised as you describe it yet. It has been shown that given a well managed balance between welfare and wages, people prefer to work.

Most importantly, several strategies have been prove to work to reduce the part of the workforce that relies on wellfare. All of these revolve around keeping businesses in an economic system competitve.

The first is the Anglo-saxon way, which revoles around cutting back on welfare and making the labor market flexible. This has been shown to work to increase employment.

The second is the Dutch way, in which labor organizations and employers agree on a wage & welfare levels, education and other things that would support medium term competiveness. This has been shown to work to increase employment

The third way is to go all out for innovation and guarantee competiveness that way. Countries taking this path (e.g. the Skandinavian ones) have shown high employment combined with new technology showing that you don't necessarily end up with high amounts of welfare leaches this way.

For more indepth treatment see e.g. Kleinknecht & Naastepad, "The Netherlands, failure of a neo-classical political agenda", European planning studies vol.13 no.8 2005.

Anonymous said...

I realize that this is besides the point, but what bank is giving you 6-7%? I would love to invest in a bank like this. Right now I'm getting about .05%.

thenoisyrogue said...

Nathan said:

"Slightly related, I would think that the right to sin (buy alcohol, cigarettes, or gamble) would make sense on the list. There would be enforcement problems of course, but it makes more sense to me to prevent wasting income on slot machines instead of preventing earning higher incomes."

This actually makes no sense at all. The reason that welfare was brought into being in the first place was to save money on these people commiting crimes and the cost in law enforcement, courts and jails. How much time, money and man-power do you think would be required here?

You absolutely need these people in the army as privates - they're the perfect tools to fight a war. mYou could also add that time spent in the armed forces goes back to paying welfare loans. The same could be said of menial labor such as cleaning homes etc.

Adam said...

Like someone wrote in a previous post, there isnt always that big a difference between people with jobs and people without. In todays society with high unemployment rates, getting a new job after you've been made unemployed is not that much about how skilled you are. Many times it has to do with "how you know" or what industry you worked in. This is mainly because of the heavy restructuring of many companies that move jobs around from high income countries to low income ones.

My point is that an unemployed person might be more qualified to do a job that someone else is doing right now. Does that person deserve to loose many of his fundemental rights as a citisen solely because his company decided wages are lower in Eastern Europe? Or should he, with a diploma in whatever field, take on a job in say McDonalds? How much are these rights you posted worth for a citizen today?

Knowledge in most fields have to be continously updated and kept fresh to be competetive. If this person take the job at McDonalds he will be less competitive for a new job within his profession.

Anonymous said...

A point to consider: if losing a job means leeching welfare and thus giving up political rights... employers'd have a really sharp stick to point at their employees to enforce unpayed overtime etc.

Greetings from Europe

Bobob said...

Wow, an idea of yours I don't find impossible or horrid.

My thoughts were that no one had any such rights unless they did something to get them in the first place (serving in the military, getting a legitimate college degree, etc.).

Anonymous said...

No bank offers 7-8%.

Heck, is such a bank existed, then people would borrow money at 5% and save at 7-8%!

Most banks do tricks such as "deposit 20k and we will give you 10%.........then in the small print... " on your first 50 bucks and 0.01 on the rest")

Carra said...

I don't care much about my rights to vote, be in a jury, be a "boss" or bear arms (the US != the world). Not having those rights wouldn't change much for me.

Now I do think that repaying the money you made from welfare is a good idea. It's what happens with most people anyway. They live on welfare until they get a job. Once they have a job they start paying for welfare themselves.

If you study at an army school (doctor, engineer,…) in Belgium you get your full education for free. You even get paid each month. The catch here is that you have to work for the state for 7 years once you finished school. If you stop your studies you have to completely repay them or work until your debts are repayed. I quite like this system since it forces people to do their best and the state (the people) always gets it money back.

Gevlon said...

@Anonymous: Indeed it's the "first 3 month for new money" fine print. I move the money every second month.

You know I can also read the fine print :-)

Rem said...

I made my own actions: all my RL money is [...] on bank accounts (with lousy 7-8% interests) that has government guarantee if bank goes down.

The underlying assumption that governments will hold can, in fact, still be attributed to the realm of optimism. The deep end our society could end up going off might (mind you, might) turn out deeper than we're willing to imagine.

Also, ever read Starship Troopers? If you haven't, you should (read, not watch - the movie is good, but mostly unrelated to the novel beyond some of the names used). Read it, then remember he wrote it 50 years ago, then look around. Some of your posts do remind of it.

Anonymous said...

Hi!

As I'm usually one of the "silent" readers, I just thought it might be of interest for your latest post regarding the following discussion:

"But who would give student loan to a 30 years old illiterate homeless?!"

Actually here in Sweden, EVERYONE is entitled to study - we get a base income about $500 and 1x to 2x that as loans should we wish for up to five years.

This is just enough to survive and even though some remain students for the full five years, you are pushed to finish school - hopefully with better chances to get a job (should one not pay the loan back, well you will not get a new loan for house, car - no landlord wants to rent you appartement et c).

I would like to thank for an (two - Tobold's) intereseting blog(-s) - using an advise or two (ie addons - Lil sparky mainly) from you helped me get even more money in wow than I would ever need for raiding and decided to give my girlfriend something she would never find time to grind money for - a chopper.

Just my five cents, again thanks for a living and intereseting blog!

Anonymous said...

You are all dumbs. you dont have to repaid the welfare because you prepaid it. i mean a part of your taxes goes to welfare funds and you can have money from them when you need it. if you have ever worked in your live, you have payed this welfare (maybe not all the amount, but a part of it)

btw, my two cents. isnt a M&S a person who spend a lot of hours in front of the PC playing wow? yes he is, think about the oportunity cost. you all cant be more M&S in RL, neither cant i. so, if i werent a wow player, i would think that you and me, as time wasters, should have no right to vote too. ofc, gevlon would say that he isnt, becouse blablablabla (im always right for the sake of the apes subroutines... and all that shit)

I think also that democracy stinks, and that not everybody should have right to vote. but for other reasons. would be much better any kind of oligarchy than democracy or dictatorship.

the only problem is that neiher you gevlon nor anybody, can say whats the limit in order to be a moron with no rights. your thoughts are so primitive in the best term that are boring, not only economically related, but also morality related. maybe in XVIII century they would have been some kind of interesting.

from your best friend, anonymus.

Steven said...

I've thought before, that upon finishing basic education a person should either have to prove they are going to college, or have a job offer... Otherwise they are forced into something like the military/national guard/peace corps/ civil service. You could still live on your own, you’d just have to report for work or training.

Once enrolled they must remain active for 1-3years (gaining education, and training during this time) after which they can transfer out once they prove they have been accepted to a college or have a job offer, otherwise they remain active.

People that default - fail to show up for training or work would lose their right of independence and would be put into something like a labor camp or the active military.


Pretty much, it would mean a person is either in school or working. If someone has a job and gets laid off or finishes college, they get 6mo-1yr to either find another job or go back to school or get pushed into service. Under the assumption that it isn’t hard to find a Job (if you aren’t picky about standards), everyone would have the ability to avoid being forced into service. Just get a job in food service or retail, or go to a community school while you look around for a better job.

If you are married there could be an exemption as long as one spouse is working full time or both part time. There would be some sort of child care service available for working couples or single parents. Single parents would have to work or go to school part time. To pay for the child support there could be an adjustment for retirement age. Each child after the 1st (or second) adds 5years to your retirement age. No kids retire at 65, 2kids 70… etc. Parents that adopt children could be exempt.

This isn't a goal I would necessarily like to see come to pass in any country. It is just a way that I thought of that a government could use to make sure they gain some value from every citizen. To either force people to work or to better themselves. No more just sitting at home waiting for the check to come in while complaining, or gloating…

Hirvox said...

@Hirvox: we are (yet) majority.
Yes, but the current superficial financial crisis could throw a spanner into the works, with the risk of getting fired in the air. Perhaps I'm not cynical enough, but I doubt that they would risk having to give up their political power for something that they do not see as being their fault. Currently, they can have their cake and eat it too. They can vote and they can rely on welfare being there. In a sense, your doomsday scenario is a tragedy of the commons in the making. Until it becomes painfully obvious that a catastrophe is coming, people won't act. And by the time the catastrophe looms in the horizon, the M&S may be too numerous and too entrenched to dislodge.

Anonymous said...

ok now I really have to know which banks are you in that offer such absurd rates (especially at this time). Note: historically investing in the stock market only gives 9% returns, and that's a rather high risk field, as opposed to the virtually secured bank account.

Maybe you mean you invested them in CD's? but even then 7-8% is a pretty high rate. (Most banks are loaning out for less than that amount.)

Wulfen of Dreadmaul said...

I agree with the notion that people who are receiving welfare should have some of their rights restricted. At the very least the right to vote should be curtailed.

However, I would complicate the system by having the welfare portion of a person's income tax be credited to them, and have any welfare they receive be debited from their 'welfare account'. A person should only have their rights restricted if they go below zero - they must have drawn more in welfare than they have contributed in order for their rights to be curtailed.

[Troll feeding]

A bank paying an interest rate of 7% is reasonable.

http://www.commbank.com.au/personal/rates-fees/term-deposit-rates.aspx

The link is to a blue-chip Australian bank's term deposit rates. Note the 60 month deposit is paying 6.75% per year on balances over AUD$10,000. I'm sure Gevlon would prove capable of finding better offers, considering finding that one took all of five minutes.

The reason most of you are getting 0.01% is because you are thinking of your transaction accounts, which do not provide reliable capital with which the bank can finance loans and therefore do not attract interest worth a damn.

[Troll fed]

crimsona said...

When you live in a country like Hungary (at least, I think that's where Gevlon lived)

http://www.forbes.com/feeds/afx/2009/10/19/afx7015919.html

7% central bank rate

skiftor said...

Servitude - "a condition in which one lacks liberty especially to determine one's course of action or way of life"

You really think bringing back a form of slavery is a good idea?

So what about the people, what if the people react to this by, striking, boycotting, protesting, and finally rioting. You do understand you can't take away that many rights without severe consequences. How are you going to handle the people in your grand solution?

Hugh Jass said...

there's a few flaws with your solution. First off, if someone has worked his whole life and paid taxes I think they should get some kind of credit towards welfare. The employed pay for the unemployed through welfare so it wouldn't be very fair to hit some hard times later in life and have to pay that amount back even though you've already paid taxes for 20 years.

Second, by having a welfare tab and adding to it with crimes you will make rehabilitation that much harder. If your tab gets too high you might just abandon hope at ever paying it back and life a life of crime instead.

My solution is to fill all manual labour government jobs with welfare recipients. If you receive welfare then you must show up for your government appointed job and sweep the streets, pick up trash, mow lawns, etc... For this you will get paid just enough to scrape by. If you want to improve your life you need to go find other work arrangments. You could combine this with a loss of civilian rights. If you are on welfare then I think gun ownership, voting and having children should be out of the question until you better your situation.

Gevlon said...

@Hugh: there are not enough manual labor positions, that's the point of all.

If someone gives up hope repaying he may remain on welfare eternally but that's no reason for crime. If he is a welfare-child, he still have his personal rights (like go where he wants to), while convicted criminals don't. I suggest to take away political rights, not personal ones.

What's my main Again? said...

If the issue is people not wanting to work for 10k when they can get welfare for 5k... but companies can't pay more then 10k in orde to still make a profit...

What about a governemnet subsidy to the these companies that cannot pay higher wages? The 5k from welfare can be given to the company so that they can higher an employee at 15k a year while still maintaining a profit margin. To prevent abuse of the system the companies that take the subsidies are capped out at say 3% profit and anything over that is sent back to the government to help pay for the subsidy.

This will make it easier for starter business to create jobs and decrease unemployment. The goal for the companies being to stop being subsidized so they can keep the higher profits while still maintaining a standard of living for the employees.

This would in theory also prevent inflation because the companies wouldn't have to charge more for their product in order to break even.

thehampster said...

Gevlon, unfortunately, removing a welfare recipient's right to vote will never happen. That's because welfare recipients vote disproportionately for one political party. Therefore, that party would have to give up power in order to make that change (i.e., the country will collapse before it happens).

And in regard to Smeg's post: how is the Army in Australia any different than any government job in that regard?

I'm pretty sure the Army isn't looked down upon b/c they work harder and do dirtier jobs than most of the government workers.

csdx said...

OK a few issues:
I still don't think there's a problem with potential collapse or merely stagnation. You've continued to make (as I see them) unfounded assertions about how unemployment will continue to increase. (Also you stop at 20%, why not take 20% of 20%, etc until you end up with one person in one job and all of us are welfare leeches).

Even if you force the person to make the 'choice' of staying on welfare, it's not really one. If your options are death (starve, die of an untreated disease) or not death (welfare), I'd argue there's pretty much no choice in the matter.

You really seem to also believe that people on welfare stay on it continually. Most forms of welfare, are temporary and meant to be. See things such as unemployment insurance (which companies (and employees indirectly) pay for), student loans, disaster relief, etc. These are all meant to help people through temporary situations and not permanent. So taking away someone's right to vote because they got hit by a hurricane seems to be an inappropriate solution.

Also taking rights away from the poor has pretty much been a standard in all ages previous. Before we gave women the right to vote, you had to be a landowning male to get things done.

Also (if we believe your declining employment hypothesis) your plan would accelerate the gap between the wealthy and poor. Currently that's the rate it's rising without people having the restrictions on income (no manager jobs (even at McDonalds), paying back all assistance, etc). So those in power would have even more incentive to threaten those under them to either work for less or get fired completely. And then it'd be that much harder to hire people back on (especially if a higher level boss fired a mid-level manager, he's ruined since he can't find a new job in his skill set due to your restrictions). So your system might cause the economic collapse you worry about by accelerating the unemployment rate.

Anonymous said...

Not having to deal with jury duty seems like a benefit. And not being able to vote ... another hassle avoided.

Gevlon said...

@Csdx: being unemployed =/= being welfare leech. He can live on unemployed INSURANCE (market product that he paid for while employed) or he as savings.

It's a common mistake to believe that "you between jobs" is similar to a drunken, uneducated welfare leech.

Anonymous said...

by the way, would it be also good if in case smth happens to keep your money in a stable course in cash, f.e. Euros?

Zeran said...

Wow, ok...
1) it won't happen. Perhaps You could review some historical works dealing with the situations of the poor (The Jungle comes to mind)…

2) your solution is not any better than genocide. Those in power will force their opposition to be state-children, confiscating their power and thus create their n ruling class. (The return of the blacklist)

3) assuming your proposal WOULD work, it's a horrifically labor intensive solution when they answer (which is being fought against by the right wing of all groups) is much simpler. To get welfare, you must get a job. If you cannot get a job, you must show up for X hours a day 5days a week at the welfare office (or some office set up for it). This be comes your job until a job becomes available. This causes 2 affects. 1 everyone has a job (either a job, or a job getting a job) 2 the stigma of being the one Guy who has been in the office forever, makes you the clear leech.

The right-wing (Republicans here) hate this idea because it gives everyone a job. Which causes the wages to go up (why would i clean trash cans when Wendy's pays just as well) since wages go up, the money amassed at the top gets pulled back down into the middle and lower classes. And finally, eventually everyone gets paid according to their abilities, and not how much someone in their ancestory amassed (old money lasts for a much shorter time)

TL:DR give people jobs to redistribute wealth, thus avoid major issues.

Anonymous said...

Gevlon,

As much as I enjoy your posts, I notice that no where is there reference to corporate welfare or banks that rob the taxpayer coffers aided and abetted by politicians.
I assure you that the wealthy "deserving" of all rights and privledges in your society, are not going to volunteer to serve in wartime.

You only seem to go after the bottom rungs of Western society...Brave New World anyone?

Bill said...

There another potential solution: advance technology fast enough to get to a (nearly) post-scarcity economy before society explodes.

Granted, this is risky, and may strike some as techno-utopianism; but it's not impossible.

With sufficiently advanced and sufficiently inexpensive robotics and computers, and sufficiently inexpensive energy we could supply food, clothing, and shelter (at, say a current lower-middle class level) to everyone for very little cost to the economy.

But can we get technology to that point before Gevlon's collapse of civilization happens? I dunno.

Anonymous said...

Join the Mobile Infantry and save the Galaxy! Service guarantees citizenship. Would you like to know more?

Anonymous said...

Your proposed "solution" to making sure there isn't a permanent welfare party by restricting welfare recipients from voting wouldn't work in reality (and is morally wrong since it basically sets up an indentured servant class).

Here in the US, the so-called "Red" states (such as Texas and Mississippi) that typically vote conservative and are opposed to welfare are actually the states that receive the most federal assistance. The "Blue" states (like California and New York) that typically vote for liberals are the states that pay far more in taxes to the federal government and yet receive less in federal assistance than they pay in. Restricting a certain class of voters in this manner wouldn't necessarily have the desired effect as voters don't always vote just on their pocketbook.

As for welfare creating a large mass of "welfare leeches," that was myth in the 1960s when the conservatives trotted it out, it was a myth when Reagan made a big issue out of it in the 1980s and it's still a myth today. At present in the U.S. federal government, food stamps, aid to children, etc. only accounts for about 2 percent of the total federal budget.

The real problem is that we seen a huge transfer of wealth from the middle class to the top 1% of the upper classes since the 1950s through corporate welfare. At present, corporations pay 9% of all taxes and individuals pay 56%. This is almost the exact reverse of the federal tax rolls in the 1950s. While the U.S. has one the higher corporate tax rates we actually have the lowest actual collection rate since there's so many corporate loopholes in the tax structure. This is the reason we have CEOs able to pay themselves $100 million and more a year in compensation. The only real "welfare leeches" are at the top of income ladder.

Nick S. said...

One of my favorite posts of yours, Gev. Bravo.

Yaggle said...

Yeah, that does sound like a good solution. I'd vote for you. Well, problem is, all those welfare have not lost their rights yet, so they would not vote for you, and you would lose the election badly. We have to figure out how to get you into power by using force, I'm afraid. This is going to be difficult but I stand behind you.

Anonymous said...

Humm your "predictions" are well documented, but you forgot one variable, Economics is a science, if GDPs start dropping bells will start to ring and steps will be taken by the appropriate entities to correct the bad trends.

Anonymous said...

"People want "fun" at the end..." People start with wanting food, shelter, companionship, peer recognition, fun is way down the line of wants.Psychologists say so anyway.

"The uneducated, unskilled workers will be displaced ..."
Well international news do show the opposite trend.

"This cannot be stopped by education"
Again this statement is false. Outsourcing, for the last 10 years, has shown that unskilled workers can be transformed into skilled workers, and that they can be employed in the services sector. Now the same happens with insourcing. Do you follow the news of your industry ?

"The only way to overcome this, is putting welfare/basic income below the survival rate"
Welfare is already below the survival rate, in many countries. People still claim it, when they are out of work.

"If you pay for being a student, you'll get lot of students .." Adults who are accustomed to supporting themselves tend to go find new jobs with their new skills. Which was the main motivation in establishing conversion courses. Graduates of degrees who were / are not in demand go and pick up new degrees. They don't sit at home. Do you follow your industry sector ? At all ?

"If there is no punishment, people will take the loans and don't bother learning ..." Again the last 15 years have shown that this statement is false. Would you happen to have any data supporting this claim of yours ?

"So we have an ever-growing group of welfare leech, who refuse to work for $5-10K/year, refuse to study and refuse to work as a servant..." Where have you got this ever growing population who decided to live on welfare ? Could you provide some data for this claim maybe ? Preferably data that shows a rising percentage of the population that refuses to work.

"If today I'd start the "welfare party" in the USA with the only program point "moar welfare" aka "nerf the world", I'd get 10-20%.." You would get what the current administration gets, while it tries to reform health. Diminishing popularity.

"In the EU, with lower employment rate, such parties (socialists) are common and get 30-40% and the other parties often have to make compromises with them, making the welfare a "holy cow" in the EU.." In the EU the socialists have lost ground during the last decade. As national and euro-parliamentary elections showed. As recorded in the news. In fact news, and history, show that when the going gets tough the socialists lose ground. Would this be familiar by any chance ? Has this happened before ?

"As the employment rate drops, the "welfare party" gets more and more voters, gets more and more power, giving out more and more welfare. The higher welfare makes more jobs unfillable.." Really ? So why do the current news and 20th century history, show the exact opposite trend ? Would you say that for instance UK in the 80s or europe in the 30s and euro-parliament right now was/is the rise on the socialists ? Exacty how many socialist goverments exist in europe right now ? And of those, how many do really pursue a socialist agenda ? Honestly have your watched any news since you started playing wow ?

Oh and your solution is a rehash of a 2500 years old practice ?

I would say that these posts show two things that may be of use.
1) read your national and international news. They document thoroughly the reasons why national debts and unemployment are rising, and its got nothing to do with technology. After all some of the most skilled and experienced people have been layed off in 2009 by profitable industries. And they weren't replaced by machines. (EDS IBM, HP,Dell, etc etc). Same thing happened 9 years ago.
2) If you are going to make a claim, you cant pick and choose your data. Either your theory fits them or it doesn't in which case its false.

Sydera said...

Once again, we have an overly simplistic model.

Let's talk about "welfare" and education.

Now, I am a professor, and I've been subjected to horrible budget meetings, so I know a bit about higher education in the U.S. Even in a private school, the tuition does not cover the cost of each student. Education (even in Europe) is a personnel-intensive profession. Even though professors are paid less than doctors, lawyers, businessmen, accountants, etc, they still must be paid a living wage (whatever that means for each town or city). If students want the "best" education, there must be lots of faculty--say, 1 faculty for every 15 students (and actually, that's a low number of faculty--you'd need some adjuncts to run a school on those numbers).

The balance of educational costs is made up from endowments, which come from donor gifts. That's right, the kids at Harvard with no financial aid are not paying their own way. As it is, tuitions in the private schools average around $50,000 a year in the best institutions. No one can really pay more than that, and about half the students at each school pay less based on financial aid packages. Now, financial aid is important, because if a school doesn't provide it, they miss out on their best students--and who wants a class full of rich dummies? The reciprocal relationships created between donors and students are mutually beneficial. Donors want the best institution possible, which will only come about if the school attracts a wide variety of quality new students. As for students, they want the best education they can afford, and donors bring down the price. That is not to say that college is "affordable"--it simply isn't (witness me still paying my loans in my 30s). However, without the "welfare" of state money and private donors (or a combination, which is usual for public universities), the whole system crashes.

The point is, no man or woman is independent. Even when we've apparently paid for things, we're still taking part in reciprocal social relations. You can't avoid them. You can't "pay your way." Human society is, and always has been, a cooperative enterprise.

Anonymous said...

Lovely. your are back to unskilled workers.

What about the unskilled, morons running the company. The ones that intentionally understaff so they can get a raise for doing nothing.

A good example at my company the head of our division sets a goal that is impossible to keep because of the economy and recent trends. If any one not at the executive level misses their projections this badly they are fired. Instead of being fired he gets praised and gets a bonus.

The morons are not just at the bottom.

btw I'm extremely worried about my company. We are running with a skeleton crew, we have ignored problems for 10 years. Its only a matter of time before our customers decide not to put up with it.

Anonymous said...

You really have no idea what you're talking about do you. Throw in the pot a little bit of pseudo- economics, add a pinch of both mashed sociology and crushed political theory, add a good dose of resentment and there you have it. A post.

Anonymous said...

You are missing who the real enemy of society is- it is not the poor, uneducated, and irresponsible members of society- they can still contribute greatly to a country with their labor, buying goods that keep others employed, and reproducing to increase the countries productivity and wealth of ideas. More people is only a burden when you are short on resources- US has plenty. And just because parents make poor decisions doesn't mean the kids will too. We need poor people to have more kids, because the wealthy elite of academia take steps to limit their reproduction because it is inconvenient, costly, and limits their ability to do whatever they want. The real enemy is the corrupt rich who use their power to sway the masses to gain more power and achieve whatever ends they see fit. They would love the ability to control the simple, sheeplike people in the world- driving them into deeper and deeper slavery, the whole time preaching hope and promising a bright future, while taxing them to the point of discouraging their ambition and taking away their freedoms. People who don't do a lot in the first place, don't tend to be involved in society and politics unless someone lures them with greed and tells them they will get lots of "freebies" if they support their cause. They will veil this in the shroud of "being fair" and "supporting the rights" of the downtrodden, but look at the results of the legislation they promote. Think long term. Look at the past and see how this will turn out. I say it is the responsibility of good citizens, whenever they see rising entities of power whether it be government, corporate, or religious, to check that growth and resist any efforts to pool power by actively working to reduce their power to a less corruptable level. Checks and balances- without them, our world is doomed.

Beebop said...

The real enemy is the corrupt rich who use their power to sway the masses to gain more power and achieve whatever ends they see fit.

^ This. THESE people are the problem. The poor are just a means to an end. These people are Ellsworth Toohey, James Taggart and Wesley Mouch. (Gevlon strikes me as someone who embraces the Ayn Rand objectivist philosophy. Perhaps he's even commented about it here before. Although I'm pretty much an American libertarian, I'm not (yet) extreme enough to very much with the Randians.)

My own personal view is that in order to vote, or hold public office you need to:

1. Pay taxes for a minimum of four uninterrupted years. Nobody should be dictating how to spend other people's money.

2. Active duty in the military. If you are willing to put your life on the line for your country, your country does owe you a debt (even if you don't qualify under #1.)

Mr. Irwin said...

Gevlon,

I am a student of economics, and I follow politics, and I have long thought that one of the best things that could happen would be for people on welfare to have reduced political rights. :)

People should not be allowed to vote themselves into ownership of their neighbor's property; that just exchanges guns for ballots.

bobturkey said...

I feel sorry for anyone who takes your real life investment advice. It was good 18 months ago, but is bad now.

Phoenix said...

A serious issue with this proposal is that, as soon as the party with political rights feels they "deserve" a bigger slice of the pie, they will automatically vote for some "improvement" measure.

It maybe slavery, genocide, etc. We have seen more than once when whole societies (not only a few individuals) decide against human rights just because they are not an affected by those decisions.

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