Poor American Spending Logic

When people get on the subject of welfare and basic income, I hear a lot of complaints about how poor people tend to be bad with money.  There are a handful of complaints that are so common they are practically cliche.  One is the complaint that poor people use food stamps to buy lobster or other expensive foods.  Another is that poor people use food stamps to buy a lot of soda and junk food.  People like to complain about how poor people do not put money into savings or investments.  I also frequently hear complaints about poor people not working full-time jobs.  Of course, there is also the complaint about poor people having seemingly expensive possessions.  These complaints seem to come from conservatives more often than liberals, but I hear them pretty regularly from liberals too and sometimes even from progressives.  The fact, however, is that poor people generally are not bad with money.  In fact, in my experience poor people are better with money on average than middle class and wealthy people!

The food stamp complaints are both pretty easy to explain.  Food stamps are a program intended to supplement the food budget of a family, so they can afford more healthy food.  For some, more healthy may mean the difference between not enough and enough, but often it just means topping off the food budget to allow the purchase of fresh vegetables and other healthier foods.  Unfortunately, most poor people do not need more food.  What they need is money to pay for insurance, a new set of clothing, some money to help cover rent, some money to pay for utilities, some money to pay for car repairs, some money to cover home repairs, and some money to pay for repair or replacement of essential appliances.  When a family gets food stamps, that family typically starts spending less "real money" on food, to reduce other financial burdens that food stamps do not cover.  The quality and quantity of food purchased may remain the same.  Further, most poor people do not have terrible diets to begin with.  Studies have found that poor people tend to have very similar food purchasing habits to middle class people, whether they are on food stamps or not.  On top of that, food is the single easiest kind of welfare to get.  There are soup kitchens, food banks, food drives, and religious food charities in most places in the U.S., where poor people can get enough food to stay healthy, and these sources tend to provide far healthier food than most people choose to purchase.  Thus, even studies on what people buy with food stamps tend to underestimate the health value of the food they are actually eating, because those studies do not account for the fresh produce and other much healthier foods poor families are getting from various charities.  Very few families get exactly the right amount of food stamp money.  Many get significantly less than they need, relying heavily on food banks and religious charities for fruits and vegetables and other healthier foods, while using the food stamps to purchase everything else from the store.  Others get more than they need, especially after accounting for other sources of free food.  These families face a few options.  They can spend all of the food stamps on the cheaper products they would normally buy, getting more than they can eat and either collecting more and more food until there is no room left for anymore and they have to start throwing away some of it, they can just not spend all of it and collect more and more unused food stamp money that the state will eventually seize once they no longer qualify for food stamps, or they can buy more expensive foods, so they maintain the same amount of food purchased while still spending all of their benefits.  There is no financial benefit to saving the money or buying and later throwing out surplus, thus the wisest decision they can make is to buy more expensive food.  Likewise, if those who are not getting enough are buying more calorie rich foods, typically considered junk food, to ensure they are getting enough to eat, that is also the wisest choice they could make.  Yes, junk food does not have all of the necessary vitamins and minerals, but humans can survive much longer with vitamin deficiencies but eating enough calories than they can getting enough vitamins but not enough calories.  The fact is, whether they are buying lobster and filet mignon or soda and potato chips with food stamps, poor people are actually making the best financial decisions given the resources available to them and the limitations imposed on those resources.

The reason poor people do not save or invest has nothing to do with capacity.  It is easy to look at the budget of a poor person and find places where he or she could save money.  Further, poor people are not choosing not to save due to stupidity, poor financial skills, or lack of financial knowledge.  Poor people do not save money because it is illegal.  The fact is, to qualify for welfare, you may not have cash or assets worth more than some threshold.  A family that saves money will easily amass enough to exceed that threshold.  If that money is in investments or a bank account, Department of Health and Welfare investigators will discover it and deny welfare.  This denial of welfare will force poor people to draw from investments and savings to pay the bills until they are practically gone.  At this point, they can qualify for welfare, giving them enough income to save again, until they exceed the thresholds.  This leaves them with only two options.  They can live on a more frugal budget, forgoing wants and less important needs while they are on welfare, so they can save money, and then live on that same frugal budget once they no longer qualify until their savings and investments are gone, in an infinite cycle, or they can just not save, living on a higher budget with welfare indefinitely.  In the first case, they live on a smaller budget and never amass significant savings, and in the second case they live on a larger budget and never amass significant savings.  Again, the wiser financial decision here is exactly what they are doing: Not saving and not investing.  Of course, they could just take the money out in cash and stuff it in a mattress, but it would be against the law not to report that money, and if it was ever discovered, they would never qualify for welfare again, and they might be required to pay back all welfare benefits they have ever received.  In other words, the only option poor people have for saving or investing is illegal.  Again, poor people are making the wisest financial choice available to them, and any poor handling of money is being done by fairly wealthy elected representatives, not by the poor people themselves.

Poor people choosing not to work full-time jobs is actually a fairly well understood phenomenon, and anyone complaining about this as an instance of poor people handling money poorly is either stupid, ignorant, or deliberately spreading lies to encourage discrimination and prejudice against the poor.  Most U.S. welfare programs have hard cutoffs where benefits are reduced or withdrawn entirely once a certain income level is reached.  A person working 20 hours a week near a threshold will be in a hard position, where increasing hours or pay will cross a threshold, reducing welfare benefits by far more than the earned income increase.  In this situation, the best financial decision is to refuse additional hours, promotions, and raises.  This is the poster child for the "welfare trap", though is it hardly the only place where people get trapped in the U.S. welfare system.  For some reason, despite how well known this is, U.S. lawmakers have such poor financial skills that they are incapable of implementing any of the numerous viable solutions to the problem.

Poor people in the U.S. often have fairly valuable possessions, or at least, they have possessions that others view as valuable.  The most cliche complaint I have heard about this is women shopping at Walmart, who pay for their groceries with food stamps while talking on an iPhone. This reveals some profound prejudice against poor people.  For example, this betrays an assumption that everyone on food stamps has always been on food stamps.  A great many Americans are on food stamps at any given time, but a significant portion of those are people who have recently lost jobs and are either looking for a new job or becoming more educated to qualify for higher paying jobs.  Perhaps that woman bought the iPhone six months ago, when she or her husband had a high paying, full-time job, but then that job was lost a few weeks ago, leaving her with an iPhone but having to rely on welfare for food.  Even if she was on food stamps when the phone was purchased though, the ability to afford an iPhone while on an income low enough to qualify for food stamps is impressive!  How does a poor person afford an expensive smart phone on such a small budget?  By careful spending and saving!  That woman at Walmart, checking out with food stamps while talking on her iPhone is very clear evidence that poor people are good at managing money!  If she was bad with money, how would she have been able to afford a phone worth half a month to a month of rent?  The last thing we should be doing is punishing poor people for good money management, and if they can afford expensive electronic devices, they are clearly managing their money well.  What else can they be expected to do with the surplus money they have as a result of wise financial decisions, when they are not allowed to save it?

The evidence is clear: Poor people are better with money than the lawmakers writing and passing the bills that give those poor people welfare.  The financial decisions middle and upper class people decry as evidence of poor money management are actually the best financial decisions poor people can make, within the context of the artificial welfare economy they have been stuck in.

When considering the financial skills of the American poor, it is critical to understand that they are not operating under the same economic conditions that free Americans are.  They are not allowed to save significant amounts of money.  Their spending choices are heavily restricted.  They are punished when they earn too much.  When we judge them based on the economic conditions of the wealthy, who are free to spend and save as they like, poor American spending logic may seem to make no sense and even be incredibly unwise.  When judged on the economic conditions they actually live in, however, most poor Americans are using very wise spending logic.  The average middle class American lives paycheck-to-paycheck on several times the budget the average poor American does.  If poor Americans are able to afford luxuries like iPhones and lobster, that strongly suggests that poor Americans have far far better money management skills than any other income class!

Is Welfare a Moral Obligation?

The left claims welfare is a moral obligation.  The right says it is not.  Ignoring the mountains of scripture from nearly every conservative religion explicitly stating that welfare is indeed a moral obligation, and addressing this from a purely secular point of view*, is welfare a moral obligation?



(*Technically speaking, from the purely secular point of view, morality is purely man made, and thus is completely artificial.  But let's pretend morality is a legitimate thing, even from a purely secular point of view.)

The biggest argument in favor of morally mandated welfare is that if a community is producing enough for everyone, then everyone should have enough.  This is a poor argument, because it is merely a claim without backing evidence.  Another major argument is that poverty causes suffering and suffering is wrong, thus to avoid this wrong, poverty must be eliminated if possible.  This is also a poor argument, because it is based on an argument, suffering is wrong, that is a claim without evidence.  The problem here is that all of these arguments are based on assumptions that have not been universally established.  It is truly right that because a community produces enough for everyone, everyone deserves a share?  What even is this "deserving", and what are the people of the community doing to have this property?**  And what about suffering?  Is suffering truly wrong?  The common consensus seems to be that pain is bad, but without pain we would not know when something was harmful to us.  The fact is, none of these arguments are truly secular.  They are all religious in nature.  They have no foundation in logic, only in the personal beliefs of individuals.  There is some wisdom in thinking this way, but if logic is not applied at some point, this is a purely religious way of thinking, even if it does not necessarily involve a higher power or a formal religion.

(**This highlights the problem with a purely secular point of view on morality.  Who gets to decide who deserves what?  Who gets to decide what is fair and what is not?  Is it a king?  Is it a religious leader?  Is it the wealthy elite?  Is it the majority?  Keep in mind that this is the same majority that tolerated or even endorsed slavery for so long in the U.S..    If the majority gets to decide morality, than slavery was legitimately not wrong until the majority decided otherwise.)

From the purely secular point of view, there is one thing that matters.  That thing is survival.  Every species on Earth has evolved with the exclusive motive of survival.  Humans, in this quest for continued survival, evolved sentience.  This gives us the power to reason logically, and it gives us the power to think in complex ways that can supersede instinct.  This is true as individuals, and as individuals we thus have the capacity to override this evolutionary motive of survival.  As a species though, survival is still our greatest instinct.  There may be individuals who don't want to survive.  There may be individuals that would prefer the human race not be in a position of dominance over nature.  As a collective though, we are no different from bacteria, plants, or other animals.  We have a motivation to survive, and because of our superior intellect, we have a much greater capacity for survival.  How is this relevant?  It is relevant, because in the evolutionary quest for continued survival, we evolved an instinct for cooperation.  We evolved this instinct because cooperation improved the ability of the species to survive.  Further, studies over the last few decades have found similar cooperative instinct in many primates, especially in the more intelligent species. From a purely secular point of view, all that matters in this argument is whether or not welfare improves the ability of the species to survive.

Now we have a starting point.  The question of whether or not welfare is a moral obligation from a purely secular point of view can be rephrased: Does welfare improve the ability of the human race to survive?  Natural evolution takes place as a function of survival of the fittest.  Essentially, nature kills off those who poorly suited to survival, reducing bad genetics and concentrating good genes.  This results in species slowly becoming more capable of survival over time.  Does welfare help to eliminate bad genes?  Obviously not.  Welfare is pretty indiscriminate it its effect of improving individual survival.  Welfare also does not hinder reproduction in those with inferior genes.  Given this, it is probably important to ask if welfare maybe increases the survival of bad genes, on average.  To answer this question, we must ask another one: Do poor people who need welfare have worse genes on average than everyone else?  If so, then welfare may actually be harming our ability to survive as a species.  Thankfully, the evidence does not support the idea that poor people have worse genes on average.  Physically, poor people are often more fit than middle class and rich people, because poor people are more likely to do a lot of physical labor.  This is not a genetic trait though, so it does not matter.  Poor people do tend to be less healthy than middle class and rich people, but this can be tracked down to poor eating habits that are the result of very limited income and lack of time for preparing healthier meals.  This is also not a genetic trait.  Poor people tend to measure as less intelligent and less well educated, but again, these can be traced back to poor health and lower quality public education for the poor.  In fact, the only genetic differences the poor could reasonably have, given the evidence, is actually better genetics, because poor people with serious genetic diseases are more likely to die before reproducing due to lack of quality medical care.  Yes, our poor may actually be genetically superior, which should honestly not be surprising, given that genetic disease has consistently been more common among nobility and royalty for most of human history (probably more due to inbreeding than quality of medical care, though medical care almost certainly played a role).  It is clear that even in the worst case, welfare does not increase the survival of bad genes on average.

Let's consider what would happen if welfare was eliminated.  Obviously, a lot of people would die from starvation, exposure, and medical problems.  Food is the easiest necessity to get, so discontinuing food stamps would not cause everyone relying on them to starve, but food banks, religious charities, soup kitchens, and others would easily be overwhelmed by the increase in need, and a lot of people would starve to death.  The current state of subsidized housing is pathetic.  That means that kicking everyone out that could not pay full price would not affect the majority of the poor.  Still, a lot of newly homeless people would freeze to death in the winter.  We already have problems with medical welfare, because it leaves such a large gap between who is able to afford their own medical and who qualifies for medical welfare.  Getting rid of medical welfare entirely would significantly impact the bottom of the lower class.  Many people would die due to lack of care.  Many would survive with permanent disabilities.  Many would survive but spend a significant amount of time sick.  In addition, many older retired people would die fairly quickly without their medical care and expensive medications.  So, how would all of this affect our ability to survive as a species?  Well, the lower class covers a significant portion of the labor required for producing things necessary for our survival.  If they are dead or otherwise incapacitated due to starvation or illness, we are going to have a serious problem.  The death toll would likely be so large from a change like this that we would not have the time or manpower to clean up all of the bodies, which means decaying sick corpses everywhere spreading disease.  Even the parts of the lower class that were able to get by without welfare will be getting sick from this.  The middle and upper classes will have a difficult time surviving without the food, clothing, and other necessities provided largely by lower class workers.  Retail stores won't be able to keep up with demand on either side, because on the supply side there will be shortages, and on the service side most of their employees will be dead or sick.  I could go on, but I think it is pretty clear that without welfare, our immediate ability to survive would be dramatically reduced.

We also need to ask what other things poor people provide.  It turns out they don't just provide low end labor.  More and more people in the tech industry are coming from poor areas.  This is true of other industries as well, though not, perhaps, as much.  The tech industry has always struggled to find sufficient skilled labor, so losing this source would certainly harm it.  Evidently, the lower class is actually a source of very intelligent people for the middle and upper classes.  In short, poor people provide a lot of value that improves our collective ability to survive.

In addition to that, poor people provide a lot more than just labor to the economy.  For the economy to function, there must be people to buy stuff.  This is part of the reason general population decline is harmful to the economy, even without considering the effect retired old people who need care have on the economy.  If we suddenly lost most of our poor, our economy would almost certainly crash very badly, and then everyone would be poor.  Our economic health depends on our poor.

The answer is, the left is right, even from a purely secular point of view, because the survival of our poor is critical to the survival of everyone else.  If we don't support our poor, our ability to survive as a species will be reduced considerably.  Most other social species seem to recognize this.  The only time most species that are similar to humans will hoard resources for the "upper class" is when they are so scarce that the only choice is to distribute the resources and have everyone slowly starve to death, or give all of the resources to a few in the hope that they can survive through the scarcity and repopulate.  Humans seem to be the only social species that will allow its lower classes to live in poverty even when there is plenty.  In short, yes, we have a moral obligation to make sure everyone is provided for.  The conservative religious argument has been clear for over 2,000 years.  Even the purely secular argument is well backed though.

Privatized Socialism

I was discussing our treatment of prisoners in the U.S. with some friends when I got what I think is an ingenious idea.

Part of the Left wants the government to socialize a bunch of things, most notably medicine.  Socialized medicine has some very great benefits.  It is based on the idea that healthcare is a universal need that is often too expensive for a significant portion of the population to afford.  In the U.S., medical debt is not uncommon, but more importantly, many of the lower class don't seek medical care when they need it, because it is too expensive.  A majority of medical care is not related to dangerous or self destructive behavior.  It is the result of disease, genetic disorders, living conditions, working conditions, or accidents that are not easily avoidable.  In short, most harm requiring medical care is not the fault of the person needing it.  Withholding that care for financial reasons is completely unreasonable, especially in such a wealthy society.  At the same time though, who is going to pay for it?  How do we keep things fair by providing necessary medical care without the apparent unfairness of taking wealth from others to pay for it?

This is not the only case where fairness demands both that something expensive be provided to those who cannot afford it and that rights of ownership are respected.  I have said before that death by starvation is not an acceptable punishment for laziness.  We also have mentally ill prisoners who are not entirely responsible for their actions but cannot be allowed their freedom without treatment, so they will no longer be a threat to society.  We have a political movement for abolishing the death penalty, but we also have prisoners who are too dangerous to let out but who's upkeep burden should not be thrust on the public against its will.  These are all very expensive problems.  Some we already charge to the people, even though a significant number see it as completely unfair.  Some we ignore, allowing some people to suffer for the fairness of others.

So, the other day I told a friend that the problem with abolishing the death penalty, aside from the rare prisoner that can still cause significant harm even in prison (for example mob bosses, who can orchestrate murders from their cells), is the cost.  Charging the public for the upkeep of prisoners who are too dangerous to ever release causes economic harm, violating the purpose of the justice system (which is to protect the people).  I suggested, instead of spending millions of dollars lobbying the government to abolish the death penalty, these groups should pay for the upkeep of these prisoners, thereby justifying keeping them alive.  This would retain the death penalty as a means of dealing with people who are literally too dangerous to keep alive, and it would alleviate the economic burden of keeping less dangerous people alive, who cannot be released, by allowing those who can and are willing to afford it to foot the bill.

This idea can, and in my option should, be extended to many other things, it if can be done successfully.  It would require one essential thing: The government would need to be willing to work with non-profits.

If enough people were willing to donate, a non-profit could be created that would provide a basic income to everyone in the U.S.  The best, and probably the only reasonable, distribution system for the money would be the IRS.  So, the IRS would have to work with the NPO, where the NPO provides the money and the IRS distributes it.  This could be done fairly efficiently through the IRS.  Even better though, no one would have to worry above government overreach.  The non-profit and the donors could decide controversial things, such as whether or not the funding should be distributed only to U.S. citizens or to all U.S. residents.  The actual amount distributed would be decided based on available funding.  The only government overhead would be the marginal extra work for the IRS, working the additional funds into its existing distribution.

Perhaps the best part about all of this is that it completely transcends politics.  Congress does not get to vote on whether or not to have a basic income, if it is being provided by a non-profit.  A Republican controlled Congress cannot cut the basic income to balance the budget, and a Democrat controlled Congress cannot increase government spending to raise the basic income.  The government would not have to foot the bill at all, and the only control it would have over it would be the cooperation of the IRS.  If a similar non-profit was created for a single payer medical system, it would get even better though: Medicaid would become entirely obsolete.  The government could easily cut the program (or cut it down to merely a distribution system for the funds raised by the NPO), balance the budget better, and maybe even start reducing its debt, and we would still get a decent medical system!  Add to this the prisoner related things, and our criminal justice system would cost far less.  In the long run, we could expect to see significant tax reductions, at the same time as expanding social programs and improving the fairness and living conditions of our country.

Crowdfunding is supposedly some big new thing invented in the 21st century, but in reality, it has existed for all of recorded human history.  Taxation is the involuntary crowd funding of government.  Charities facilitate the voluntary crowd funding of welfare.  I believe we can bring these things together.  Obviously the core of government and of our justice system needs to be funded, whether people are willing to donate voluntarily or not, but many, perhaps even a majority, of government programs can be crowd funded, and if they can, they should be.

The costs of crowd funding peripheral  government programs include potentially reduced efficiency and less government control over those programs.  The potential benefits include greater overall funding, especially for more popular programs, better distribution channels for charities (the IRS can distribute funds far better than any charity), more direct ability to influence programs for the general public (which means improved democratic process), the ability for people to choose whether or not to support a given program, and a much leaner government, all at the same time as providing the same or better services.

Yes, one potential problem is that some programs just won't get funded.  Not only is that already a problem (do you see a basic income), it is also not a problem with crowdfunding.  The U.S. is supposed to be a democratic nation.  What is more democratic than voting with your wallet?  There are exceptions, but in general it is accurate to say that if the people will not voluntarily fund a program, then the people don't want that program, and in a truly democratic nation, that justifies allowing the program to collapse and disappear.  There are a few programs that need funding regardless, like the military, the FDA, and the FCC.  Critical defensive and regulatory agencies should at least get minimal funding to continue sufficient operation.  Programs for social welfare, highly controversial agencies, scientific research (NASA, perhaps), and broadly socialized services (e.g. a single payer medical system), however, can and should be crowdfunded.

By crowdfunding these things, they become depoliticized.  Crowdfunding basic income and a single payer medical system eliminates the ability of Democratic candidates to essentially buy the votes of the poor by promising these things.  It also eliminates the ability of Republican candidates to buy the votes of the rich by promising to cut taxes by eliminating these programs.  The government can (and again, should) still be involved, as it is uniquely positioned to aid in distribution.  Adding a basic income to tax returns is something trivial for the IRS, because it already has a distribution system in place.  The Medicaid program already has a massive support network throughout the U.S., allowing it to provide coverage nearly everywhere.  Replacing Medicaid's underlying funding and qualification system with a universal single payer system funded by one or more NPOs would be a little more difficult than the basic income, but it would still be significantly easier than one or multiple NPOs trying to cut new deals with a wide enough network of health care providers to actually function as a single payer system.  For death row prisoners, having their support be crowdfunded to indefinitely delay execution, the criminal justice system is an essential element, but again, allowing one or more NPOs to provide that funding would be trivial.  The same applies for prisoners who need treatment for mental illness.  In all cases, the government is an essential element, but it can run leaner and avoid the distraction of controversial issues if the funding and management of these programs are outsourced to NPOs that are funded through voluntary donations.

We do not need the government to initiate this either.  We can do it ourselves.  The movement for abolishing the death penalty has enough money and influence that it could immediately start lobbying state governments to allow them to pay prisoner upkeep to delay execution, and most state governments would be far more amenable to this offer than the demand that the death penalty be abolished entirely.  There are also lobbying groups for medical reform and welfare that could easily shift their focus from trying to convince the government to provide more services to trying to provide those services themselves through a donation model.  Environmentalist groups could work with the EPA to offer better return on carbon credits.  They could work with state governments to offer credits for logging companies to avoid important habitats and replant wherever they go.  In fact, U.S. environmentalist groups could even work with other governments to provide incentives for companies to act more responsibly.  (For example, instead of spending tons of money on boats, helicopters, and other equipment to terrorize Japanese whaling boats, they could work with the Japanese government to offer incentives to whalers to reduce their quotas.)  Of course, I think we need to get things in our own country under control first, but this could eventually expand to the entire world, with international NPOs that help shape policy and behavior by offering to help instead of arguing and fighting.  The government does not have to buy into this before we can start trying to drive change.  All we need is reasonable government cooperation, and we can do the rest ourselves, and we can start now!

I believe crowdfunded peripheral programs is the next evolution of government.  It can reduce government overreach, reduce necessary size of government, reduce government corruption, increase overall freedom and liberty, and produce a better society that better fits the desires and expectations of the people.  I don't know if we are ready enough for it to ensure that it will always be sufficiently funded, but I think now is the time to start moving in that direction.

Single Payer System

I want to discuss why a single payer system for health care is better than insurance.  I am not going to go into ethics or what people deserve.  Instead, I am going to focus on value and efficiency.

First, it is important to fully understand what insurance is.  On an individual level, insurance is a bet.  The house bets that an event will not happen.  The gambler bets that it will.  For the customer, flood insurance is a bet that there will be a flood that causes more damage than the cost of the insurance.  For the insurance company, it is a bet that such a flood will not happen.  On a group level, insurance is a form of welfare.  It is essentially a means for distributing costs (you have probably heard of distribution of wealth; well, insurance is a way to balance distribution of debt).  When the insurance company looses a bet, the money used to pay for the losses comes from the money all of the other customers are putting into the pot.  As gambling, insurance is no different from any other kind of gambling.  The house always wins, and they want you to spend as much as possible, which is why they offer so many different options.  As welfare, insurance is actually pretty awful.  Imagine a welfare system where those administrating it constantly skim the poor box.  This is more than just compensation for work.  Insurance companies have CEOs, other extremely highly paid management, as well as shareholders who walk away with the house winnings.  No well designed welfare system goes to such extreme efforts to avoid helping anyone, just to walk away with the unused funds.

In short, insurance makes extremely poor and inefficient welfare.  It makes excellent gambling, at least for the house, but unless gambling is the whole point, insurance is actually pretty awful.  Economically, there is one useful thing that insurance provides: jobs.  Of course, paying people to spend 40 hours a week digging random holes would provide jobs as well, and those jobs might actually produce real value (good exercise for the employees, if nothing else).  Work for the sake of jobs is just plain stupid.  If work does not generate actual value, then it is not worth doing.

The better solution is real welfare.  Real welfare is not gambling.  Done well everyone wins.  Real welfare minimizes work, to maximize the help it can provide.  Real welfare does not have executives that are paid more in a month than most people make in a lifetime, and it does not have investors who ultimately get paid from the work of others.

It is very clear that our current health care situation in the US is unacceptable (despite Obamacare).  Aside from reducing costs (which not even the government seems interested in), the only way to fix this situation is to spread the cost of health care out.  Insurance is a very poor way of doing this, because insurance is more about gambling than welfare.  Long term, the costs of insurance on the economy are far worse than the long term costs of welfare, despite the loss of jobs associated with eliminating health insurance companies.  Economically, a single payer system is superior in almost every way to what amounts to mandated gambling.

Mom Salary

It turns out that moms do about $118,000 worth of work per year, according to Salary.com.  In light of this fact and the suggestions of certain less than intellectual U.S. public officials, I would like to share my thoughts on this. 

First let's look at the math.  One of the worst financial decisions anyone could make for single moms is to offer them free child care so they can work jobs that pay less than $10 an hour.  At full time, a $10 an hour job pays $20,800 a year, which is less than 20% of the value of staying at home to raise children.  It would be better to give them the $20,800 a year, no strings attached, because at least that way, we don't loose $97,200 a year in value.

Note that this accounts only for the actual monetary value of the work, not the social value.  The social value cannot even be calculated.  Civilization itself largely depends on it.


Now, here is a list of my immediate thoughts on this:

When we suggest that a mother work outside the home, we should start by comparing the income she could earn with the value of the work she does at home.  If the income from working is not significantly higher (recall that the $118,000 a year does not include social value), we should shut up and mind our own business.

There are not many jobs worth over $100,000 at entry level.  Motherhood is the easiest to get into.

While it is a volunteer position, unless we can justify the loss of volunteer labor at that value, we should be doing everything we can to make sure mothers have the necessary resources to do their job well.  In other words, it is a better financial choice to give a single mother $100,000 a year in welfare than it is to pay for daycare while she works a $10 an hour job.  The fact, however, is that $35,000 a year would be sufficient.  Are we really so stingy that we are not willing to pay 1/3 of the going rate for an essential service?  Even non-profits can afford to pay their lawyers and accountants around $40,000 a year.

As far as the government and society are concerned, raising children is an investment.  The average child does more to help society in the long run than to help her parents.  The majority of the payoff from the investment goes to the employers of the child, the government, and society in general, so why does the mother have to foot the entire bill of $100,000 per year worth of work?  In fact, why do the parents have to foot the entire monetary cost of child rearing, when they are not even in the top three who benefit from the investment?  We should not just be giving tax write offs and paltry credits for children.  Parents with children should be getting significant stipends, and society should be grateful that they are not demanding even more!

What I just said above is even more applicable when a majority of the children are being raised by a minority of the people.  When pretty much everyone raises 2 or 3 children, the costs get spread out fairly well (excluding the part owed by the government and businesses).  When Mormons have a birth rate of 3.4 and everyone else is hovering around 1.9, everyone but Mormons are freeloaders who are not doing their share.  Without Mormons, Catholics, and Protestants, we would probably be almost as bad off as Japan or South Korea.  You are welcome, all of you Americans who are choosing to have one child or less.  It would be nice if you at least acknowledged the massive value of our public service!  And it would be even better if you would occasionally help us out (without any petty complaining) when we needed it ("need" in this case should include things like occasional vacations, because raising children does not come with paid or even unpaid vacation time; you have to actually buy vacation time when you have children).


Now, I should probably note that a working mom evidently still does about $70,000 worth of work at home, in addition to paid work.  For single moms working $10 an hour jobs, the total value still comes out at only just over $90,000 a year (assuming full-time), except, of course, that the social value is significantly lower, because the kids get significantly less time with mom.  Also, the statistics seem to indicate that working moms ultimately do more hours of work total per week, for that lower total value.  This does not change the fact that a majority of U.S. society is freeloading though.  Likewise, even a working mom is doing $70,000 more worth of work that is benefiting everyone else more than herself, and that does not magically reduce the monetary cost of having kids (in fact, daycare actually increases that cost).

Missouri SNAP Restrictions

One Missouri state Representative, Rick Brattin, recently drafted a bill that would restrict what food stamp recipients in the state could buy with their SNAP benefits.  Besides the fact that imposing new limitations is against Federal law, there are many problems with this.

The specific restrictions the bill would illegally impose include prohibiting the purchase of "cookies, chips, energy drinks, soft drinks, seafood, or steak."  Brattin complains that he has seen people buying products like lobster and fillet mignon with their food stamps, and evidently he takes offense at this.  In fact, he takes so much offense at this that he is willing to challenge Federal law by passing an illegal state law to prevent this.

The real problems with this bill are not related to Federal law at all, however.  There are health implications as well as a question of discrimination.  Besides that, expensive foods that are sometimes regarded as extravagant can easily be part of a very frugal diet.

"Seafood" is a huge category of foods, and nutritionists currently recommend eating at least two servings of fatty fish per week.  Many recommend twice that, but since fatty fish are typically the more expensive types (salmon, for example), and many Americans cannot afford to eat it more often than that, they say twice a week is enough for a reasonably healthy diet.  This bill would defeat the purpose of the SNAP program.  The acronym stands for "Supplemental Nutrition Assistance Program."  If seafood is prohibited, it might as well be renamed SCAP (Supplemental Calorie Assistance Program), because a significant part of the "nutrition" part is being thrown out over whether poor people should be allowed to eat traditional rich person food.

This brings up the next problem.  This is very blatant discrimination against the poor.  This Representative seems to believe that poor people should not be allowed to eat traditional rich person food.  He is acting like some kind of elitist foodie who cannot stand to see the rabble eating his precious steak and lobster.  Now, I understand why energy drinks would be prohibited, as they are more like medication than food.  Likewise, soft drinks are barely food (let's ban water too).  Chips actually provide a decent amount of calories (at a very low cost per calorie), and with the recent discovery that diets high in plant oils are very beneficial, chips can be part of a very healthy diet (in moderation).  Prohibiting cookies is absurd, as they typically contain a lot of healthy components, despite their higher than average sugar content.  The steak restriction is even more absurd.  Yes, people on SNAP probably should not be eating fillet mignon every night for dinner.  If they are, then it is the state's fault for giving them far more SNAP money than they need.  Real SNAP recipients do not eat steak and lobster dinners on SNAP regularly (because they cannot afford it).  If Brattin did not actually see how those buying these products on SNAP used them, then he has no business judging them.

Let me share my personal experience with this matter.  My family is on food stamps, and while we have never bought fillet mignon on food stamps, we have bought cheaper steaks and we buy about two lobsters each year.  For our New Years dinner, we have also been known to buy a few crab legs.  When we do this, we carefully budget our food stamp money so we can afford it.  Would Brattin deny us this opportunity to learn good financial skills?  (Actually, we are not poor due to poor financial skills.  For the most part, we manage our money quite well, but apply this to the many people on food stamps who do benefit from the experience.)  The steak is almost never cooked as whole steaks.  Once in a while, I make an oriental beef and broccoli dish, which calls for one pound of thinly sliced steak.  At $5.99 a pound (and we rarely buy it without a dollar or two discount), with $1 worth of broccoli and maybe $1 worth of rice, all seven of us eat a fairly nice (and healthy) meal at a cost of $8 or less.  That comes out to about $1.15 per person.  Most Americans spend two to three times that on a meal.  Obviously, we could use chicken instead to get it under $1 per person, but would Brattin really be so petty as to deny us quality in our meal for a few cents, even though we already spend far less than the average?  Evidently he would.

Now, the lobster is usually for special occasions, like anniversaries.  Even we consider it a bit extravagant, which is why it is a once a year thing.  Like I mentioned, we carefully budget for this.  It seems rather absurd that the state would interfere in our food buying choices, when we are already being so careful not to abuse the system.  Now, I recognize that others may choose to abuse the system, but punishing us for it is just plain wrong.  Further though, lobster is actually not that expensive.  On sale, where we live (Idaho, so not close enough to the ocean to make it seriously cheap), it is $4.00 for a medium sized lobster tail (we don't buy whole; the price is higher while the meat to shell ratio is lower).  Not on sale it costs more like $5.99 a tail, though in the winter it sometimes gets up to $7.99.  We don't buy it when it is not on sale.  Now, we could probably eat lobster once a week without extravagant spending.  Consider this: I can make a lobster sauce with one $4 lobster tail that is enough for the whole family (did I mention, we have 5 kids, so that is 7 people).  Over rice (about $1 worth; I would actually use pasta, which might come out to $1.50 or $2.00 total), the entire meal could be $5, with maybe another $1.50 for some kind of canned or frozen vegetables.  At $6.50 for the whole meal that is 93¢ per person (the flour, milk, and spices used in the sauce are almost negligible in cost).  That is a meal with lobster that costs less than $1 per person.  With pasta instead of rice, it would come out closer to $1.08 per person.  We could eat that every day and not spend all of our SNAP money!

The point here is that even the most expensive foods can be part of a very fugal and healthy meal.  Unless Brattin can prove that this is not how those people are using their purchases, then he is totally out of line condemning them for extravagant use of SNAP benefits.  Even expensive fillet mignon or crab legs can be integrated into a meal that costs far less than what the typical American spends.  In fact, even caviar could be used this way, though I have a hard time believing anyone would actually do this with caviar (I am not going to judge though).  Anyhow, judging people based on what foods they are buying is stupid.  Instead judge them on how they use the food that they buy, and if you don't know how they are using it, withhold your judgment!

What this really comes down to is freedom.  The U.S. is becoming less and less free as time goes by, with the government frequently thinking that it can make our decisions better than we can.  If we are not allowed to decide for ourselves, how can the government ever expect us to get better at decision making?  The first time some family buys enough steak and lobster on SNAP for every dinner for a week, they will quickly discover that their SNAP benefits won't feed them enough if they spend that way (unless they are doing what I suggested above).  Maybe they will start shopping sales.  They will probably budget more carefully the next month.  Most importantly though, they will learn from their own experience.  Maybe they will keep eating a lot of steak and lobster, but they will shop sales and add coupons to that, and if they are willing to do that much extra work to eat steak and lobster frequently, they deserve it just as much as the CEO who does an equal amount of work running his company (seriously, sale shopping and couponing is a lot of work).  Some people like bacon gravy for breakfast regularly (a meal that I have heard is often considered a poor man's meal in the south, but which I consider to be gourmet food).  It is reasonable to say that the guy who likes bacon gravy is more deserving of eating what he likes than the guy who likes steak and eggs, just because the prices are different?  This is an elitist attitude.  I don't think Brattin is actually bothered that SNAP recipients are spending some of their benefits on food that is expensive.  I think he is bothered that poor people are eating his elitist gourmet food!

(Thankfully, Brattin is the only one actually interested in the bill.  He has no co-sponsors, and the state legislature is not actually even considering the bill.)

http://www.huffingtonpost.com/2015/04/08/missouri-food-stamps_n_7026704.html

Small Businesses in the 3rd World

Recently, American investors have started funding startups in 3rd world countries.  It turns out that in Africa, the Middle East, and Southern Asia, there are a lot of artistic skills, without much local demand for the products.  Well, Americans have both the funds and the desire to purchase these products.  Some U.S. investors and charities have started providing funding for people in these 3rd world countries to start their own businesses based around these local arts.  Among other things, the funding is used to obtain training, pay for raw materials, and start shipping the goods to the U.S. where they can be sold.  Programs like this are helping to lift people in these countries out of poverty, and they are providing middle and upper class Americans with goods that are often of superior quality to factory produced products.  The problem is that this does not do anything for our large numbers of people in poverty here in the U.S.

Helping starving people in 3rd world countries is a noble goal.  Helping them in ways that reduce their dependence on us is even better.  It cannot last though.  We are not in any position to be giving people outside the U.S. significant amounts of our time and effort.  Poverty is increasing in the U.S., and we have plenty of our own starving people that need our help.  Our welfare system takes away some of the burden, but it adds others, partly because it is poorly designed.  What we really need is not U.S. investors providing funds for startups in Africa.  What we need is U.S. investors providing funding for U.S. poor.  Most of these businesses that we are funding in 3rd world countries could exist in the U.S. as well.

Americans can make shoes and rugs and many of the other things that we currently import.  Training is not that expensive, and it does not have to involve expensive trade schools.  Things like knitting and weaving can be learned on the internet.  Those with any level of artistic talent can learn how to make high quality costumes out of fairly cheap materials, and the current cosplay trend would help fetch some pretty good profits on this.  Things like blacksmithing and metal casting are also easy to learn on the internet, and in most areas of the U.S. there are groups that would be willing to help with training for cheap or even free.  This just brushes the surface.  There is a market in fixing old toys.  Learning to make simple web sites for individuals and small businesses is pretty easy.  Many people with unusual talents have managed to make a decent income just recording and publishing YouTube videos of their performances.  All of these things are artistic in nature, which means that they are not subject to the same sort of competition that normal jobs and products are.  There are only two things most poor Americans are missing: time and training (and sometimes equipment and materials).

American investors and charities should be looking at the American poor, instead of, or in addition to, those living in 3rd world countries.  They should offer funding, including enough for living expenses and training, for Americans who have or want skills in things that would provide the opportunity to start a small business based on artistic skills.  Besides helping those in the U.S., this could also be quite profitable for investors.  Demand for artistic products in the U.S. is fairly high, especially among the upper class.  Art knives made by reasonably skilled blacksmiths can demand $10,000 a piece or more, for products that take about one month to produce.  Hand crafted shoes can bring in a few hundred to a thousand dollars each for a week of work or less.  An old doll that takes a few hours to clean, repair, and repaint can bring in $20 or $30 with a half decent job (more for an experienced artist).  Hand knit or woven clothing and rugs can bring in a reasonable income as well.  Many people have managed to make a decent supplemental income with YouTube videos, and good ones can bring in ad revenue for months or years after they are published, without any additional work.  Even for those with less skill, these kinds of work can be done from home and supplement a poor income enough to make a significant difference.

What about those who are starving in 3rd world countries and do not even have food stamps to help them out?  The more we help our own poor, the more resources we will have to help others.  Every poor American we help out of poverty in a sustainable way is another potential donor, investor, or customer for poor people in other countries.  Instead of looking at investing in Americans as a drain from funds that could be invested elsewhere, consider it an opportunity for a more sustainable investment model for everyone in need.  Any investment that pays off will provide additional funding that can be used anywhere.  In addition, investors might encourage Americans they help to invest in or donate money to organizations that help people in other countries.  One rich person investing in some businesses in Africa will help a few people, until something happens that prevents that investor from continuing to invest (death or massive medical bills, for example).  Several thousand middle class Americans donating money to charities that help people start businesses in Africa will ultimately provide far better funding and be far more resilient.

The best strategy here is probably a mentorship strategy.  Investors should start investing in hobby-style artistic professions for poor Americans.  They should provide paid or volunteer mentors for every person they fund.  Those mentors should help beneficiaries manage their finances, find training, and setup their operations.  The mentors can also report back to the investors, to allow them to bail as soon as possible when a beneficiary is not using the funds wisely.  Another responsibility of a mentor should be to encourage beneficiaries to help out others once they are able to, and this theme should be repeated during regular meetings of the beneficiaries with the investors.  With mentors, chances of success will be much higher, and imminent failure will be much easier to detect much earlier.

The long term effect of this will be to teach Americans that cannot find jobs to create their own.  It will improve the U.S. economy, and it may even reduce the burden of the poor on the U.S. welfare system.  More importantly though, it will provide Americans with the means to provide aid for others far better than we are currently capable of.  A few rich investors helping the 3rd world poor start businesses to get them out of poverty cannot compete with what a robust U.S. economy composed of a large number of American middle class donors can do for them.  A common religious theme applies here: You must help yourself before you can truly help others.  To maximize the good we can do, we must first remove the mote from our own collective eye.

Religion is Government

Throughout history, religion has played a major role in how people act.  In many cases, religion is better at controlling how people act than law is.  Historically, many nations that recognized this co-opted religion as an additional method of control, creating or adopting state religions that encouraged people to act how the government wanted them to.  Religion has always been more personal than government though.  Even within one religion, members understand doctrines differently from one another.  Because religion is about personal belief, it should not be forced on someone, and as the American Revolution approached, this started to become far more obvious.  This fact was ultimately one of the driving factors in that revolution.  If you ignore the aspect of personal belief though, you may notice that religion has a lot in common with government.

First, to be completely blunt, religions are governments.  They are not secular governments, but they do govern their members.  The most important difference between religion and secular government is free will, and this is why government and religions have no business being legally connected.  When a state religion is created, it becomes an arm of the government, and the free will that makes religions what they are is lost.  This even applies to nations that adopt atheism as the state religion, banning any other religions.  As micro governments, religions actually play some very useful roles.

Religions have some power over the behavior of their members.  Now, some people perceive this as a bad thing, but it is not actually.  The reason is that participation is entirely voluntary.  Where religion is free from the influence of secular government, it encourages people to be civilized of their own free will.  Religions to do wield legal power to punish their members in any universally meaningful way.  They might excommunicate members who do not follow the tenants of the religion, but in most cases, members who are expelled from a religion have shown either through their words or actions that they do not actually believe the doctrine of that religion (there are occasional exceptions), and thus, no serious harm is done to them.  Religions are more or less social institutions that impose social rules and punish deviation through entirely social means.  People are free to choose their social rules by choosing which religion they are a member of.  This is unique, because people have little power over their secular government beyond relocating to the realm of a different government.  Even in a democratic government, those who do not agree with the majority have little control over how they are governed.  When religion is free, each person can choose his or her own social rules, and if there is not a religion that fits, it is always possible to create a new one.  Overall, religions help keep civilization civilized, and more effectively than government can.

Religions act as an additional check and balance to secular government.  Religions help unify people.  Groups of people who choose to have similar beliefs is far more united than the people of a nation that is forced to follow only one religion.  Religions can unite against unjust government actions.  Religions can help encourage political dialog that can drive positive change.  Religions give the people more power and ability to unite against the government when necessary (religions even played an integral role in starting the American Revolution).  When governments choose to work with religions, the voice of the people can be better heard by the government, without the need for the people to unite against the government.  Viewed as independent governing entities who represent their followers, religions can work with secular governments to enhance communication between the government and the people it represents.

Religions also tend to be better at social welfare than governments.  Because religions cannot impose mandatory taxes, they are limited to the voluntary donations of their members, which is why some forms of welfare must be handled by secular governments, however, religions can often get into places that secular governments cannot.  This does not just include countries in need of foreign aid that doubt the motives of secular governments.  It also includes homeless people, who do not have permanent addresses or even identification.  Secular governments just cannot afford the man power required to effectively distribute all needed welfare, even in their own regions.  Religions often have plenty of members willing to spend some time on charity work, who can distribute welfare with less concern for accountability.  Because the funds are donated voluntarily, religions do not have to worry so much about abuse of the system.  Also, because religions typically have more limited funds, abuse of religious social welfare is rarely very profitable.  In addition, because religions are autonomous and have less accountability, they can be more flexible.  In the effort to enforce fairness and accountability, government often inadvertently leave gaps in their social welfare programs.  Religions can fill those gaps, though perhaps no so well as the government could by analyzing the system and making adjustments.  Without religions helping with social welfare, much of the world would be doing far less well than they are.

The most unique thing about religions is that participation is voluntary.  This is very useful.  First, it encourages each person to choose a religion.  Most people in the U.S. are members of some religion or other.  Of those that have no official membership, many still identify with some religion, even if it is just a generic version of some category of religions (for instance, non-denominational Christian).  Those who do not identify with any religion often still have some personal religious ideology that guides they actions.  This means that most Americans subscribe to some religious ideology that encourages them to get along with others.  Further, because religion is voluntary, people feel compelled to keep the tenets of their religions, because they made a personal choice to do so.  There is a great deal of work that government does not need to do, because religions do it for them.  Integrity is only legally enforced when legal contracts are involved, however, most people are honest most of the time, even when it may not benefit them.  Most people don't steal, even when they know they will not get caught.  Most people overlook minor harm that was unintentional.  There are no laws enforcing most of this good behavior, and in the cases where there are, they are not reliable.  People choose to be civilized anyway, and in a large part, religions are responsible.  Religions encourage civilization and making wise choices, and because participation is voluntary, members are more likely to follow the commandments and recommendations, because they chose them of their own free will.

Secular governments have a monopoly on violence, and perhaps that is for the best.  In the past, religions that have been permitted to use violence have abused that authority a majority of the time.  Even limiting religions to using violence only on their own members is probably a bad idea.  Likewise, religions have something of a monopoly on personal belief.  Again, this is probably for the best.  Allowing secular governments to control the beliefs of people has almost always ended in disaster in the past, and forcing a large group of people to have the same beliefs has never turned out well.  Government and religion complement each other in very important ways, when they are autonomous from each other.  When they are combined, however, a major conflict of interests almost always arises, and one or the other is assimilated and becomes an engine of tyranny.

Pulling Your Own Weight

The idea of pulling your own weight is based on the idea that each person incurs costs for upkeep, including food, water, clothing, and shelter.  In the U.S., we might add things like internet and electricity to this, but really it comes down to the fact that every person has an upkeep cost, and someone has to pay it.  The idea of pulling your own weight is a very old idea, but also a conditional one.  Each person in a society that is capable of doing so is expected to pull their own weight.  Of course, there have been some deviations from this, but it is largely the most common way of running an economy.

There are some occasional historical exceptions to this, but there are also some chronic exceptions.  Historical exceptions almost always involve slavery.  Greek philosophy and math were built by people who did not pull their own weight.  In fact, if they had not had slaves to pull their weight for them, we would probably not have modern technology and science as we know them.  Slavery has been common off and on throughout history.  In the U.S. and most of Western civilization, slavery (overt slavery, anyhow) has been abandoned and replaced with an economic philosophy very common to cultures that reject slavery.  This philosophy is the idea that every person must pull their own weight.  Chronic exceptions to this are very common and will never go away.  Babies, young children, elderly people, and disabled people are not expected to pull their own weight, because they cannot.  Stay-at-home mothers are treated as not pulling their own weight in many parts of modern society, however this is a filthy lie.  They may not be producing goods, but stay-at-home mothers are doing work that is far more important than most of the work done outside the home.  Now, the slavery exception is becoming an unusual one that is likely to overturn how we view economy, probably within the next half century.

In older economies, the pull-your-own-weight ideology was a fairly sound one.  While it is possible for a small number of people to provide for a large number, the work involved has been excessive.  One slave working 16 hours a day might be able to provide the needs of ten or twenty other people, but that slave cannot have any freedom because there is just no time for it.  Modern technology has changed this though.  Besides finding more efficient ways of producing, it has also provided ways of replacing human labor with mechanical slaves.  Mechanical slavery is completely ethical.  The machines can work 24 hours a day, and they never need time off or personal time.  The only down time is time spent on repairs and maybe upgrades.  Experts estimate that this ethical form of slavery will replace about 50% of the human workforce by 2050.  This presents a very serious ideological problem.

Here is the problem: The U.S. economy is based on this pull-your-own-weight ideology.  We are in the process of rapidly replacing human workers with mechanical slaves.  These two things are completely incompatible.  If we replace half of the human labor force with slaves and then still expect the humans to pull their own weight, we are expecting the impossible.  Actually, we are perhaps doing something worse.  We are missing something important. What is the actual weight of a human?

The "weight" of a human is the amount of labor required to meet that human's needs.  Slavery with human slaves does not change the weight of a human; it just displaces the labor.  Some human still has to pull the weight.  Slavery with machines slaves, however, does change the weight of humans.  Replacing human labor with machine labor directly reduces the human labor required to meet the needs of humans.  This is what we are missing: As we automate more processes, we are reducing the weight of humans.  The problem is that we are not accounting for this.  We have high unemployment largely because we have reduced the weight of humans, and those humans that are still doing the same amount of work are now pulling more than their own weight.  The result is that there is not enough work left for everyone else, because their weight is already being pulled.  Unfortunately, because we have not noticed this problem, we are not distributing the results of the work appropriately.  The consequence is that some people are pulling more than their own weight, and they are getting the proceeds of that.  The people that are not able to pull their own weight are stuck without enough to survive, because their portion is being given to the people that are pulling their weight for them.

This is complicated, and it is not obvious that this is what is happening.  Further, there is a very important reason that this is happening: We have reached a point where it is actually substantially less efficient for each person to pull their own weight.  When each person's weight costs 2 to 4 hours of work per day (and, when that burden is centralized to one or two people per family), it is fairly efficient for businesses.  Each employee spends enough time working to easily keep up with overhead.  Now, however, each person's weight comes out to around 1 or 2 hour per day, or even less.  When centralized, this comes out between 10 to 20 hours a week.  Having every employee work half time doubles the overhead, because the number of employees are doubled (reducing hours does not reduce overhead).  In addition to that, higher end jobs often have warm up and cool down time that results in unproductive hours on each end of a shift.  This means, in an 8 hour shift, if an hour at each end is unproductive, 75% of the work time is productive.  In 4 hour shifts, productivity is reduced to only 50%.  In lower end jobs this effect is dramatically lower, but in high end jobs (especially in problem solving work like engineering and science), this is a major obstacle to reducing hours (note that in these jobs, longer time between shifts tends to increase the unproductive warm up time, so 8 hours three days a week is not an efficient solution either).  This is an efficiency problem that is never going to go away.  It is just not efficient at current human "weight" for each person to pull his or her own weight.

Is there a solution to this?  Yes, but it is not a very popular one.  It is incredibly unpopular among conservatives, and it is at least mildly unpopular among liberals.  The solution is abandoning the pull-your-own-weight ideology.  We are quickly becoming a slave state, just like Greece was, except that we are doing it ethically.  If we do not abandon this pull-your-own-weight ideology, we are going to either let the majority of Americans starve as their jobs are replaced by machines, or we are going to have millions of Americans working workweeks so short that they are costing more overhead than the value they are generating.  Neither of these is a good long term economic plan.  One short term solution might be long vacation time, where each employee works "normal" hours, but only for 1/4 of the year, and the rest of the year is vacation time, however, that only partially mitigates overhead costs.  The most efficient solution is for some people to work 20 to 40 hour weeks at least 50% to 75% of the year, while everyone else lives off of the proceeds of that work.  Some kind of motivation would be necessary for those who work, and this would probably be complicated and difficult to do without resulting in an overprivileged working class and an underprivileged non-working class (ironic, given that historically the opposite happens).  Ultimately though, it is going to eventually become necessary, or we are going to have an epic economic crash when so many consumers starve to death that consumption drops below an economically sustainable level.

Things are changing rapidly.  Technology continues to advance faster than we can keep up with.  In the past, the impact of this has been primarily limited to the tech industry itself.  In the near future, however, this is going to have a massive economic impact.  If we are not prepared, we are going to suffer.  In some degree, the consequences are not predictable, but there is one thing that is predictable: If a large portion of human labor is replaced with machine labor, we cannot have a sustainable economy that is based in the pull-your-own-weight ideology. 

The Little Red Hen

There was once a little red hen.  She owned a wheat field.  When duck came asking for a job working on the farm, the little red hen told him that she did not need any help, because she had an automatic system for planting, watering, harvesting, and separating the wheat.  The little red hen also owned a flour mill, but when pig asked if there was anything he could do to help, the little red hen told him that she had an automatic delivery system from the farm to the mill, and the processes for milling the wheat and bagging the flour were automated as well.  The little red hen had a bread factory, but when cow asked if there was something she could do to help, the little red hen told cow that the factory was so well automated that she did not even need someone for quality control.  The little red hen had a bakery as well.  When horse asked if he could help sell the bread, the little red hen showed him rows of completely automated bread vending machines, and she told him she already had it covered.

When it came time to harvest the wheat, the automatic harvester harvested all the wheat, it dumped it into a thresher, which separated the grain from the chaff.  The wheat was then pour into buckets on a conveyor belt, which carried the wheat to the mill next door.  Machines at the mill dumped the buckets into the milling machine, and the flour cascaded down a funnel into bags.  Another conveyor carried the flour next door to the bread factory, where they were dumped into huge mixers along with water and other ingredients, then divided into loaves, cooked, bagged, and sent to the bakery on yet another conveyor.  A complex mechanical system hidden behind the vending machines filled each one with bagged loaves of bread.  The little red hen then waited for customers to buy her bread.

After a few hours with no business, the little red hen looked out the front window.  Standing outside, across the street, stood duck, pig, cow, and horse, looking longingly at the bakery.  The little red hen walked outside and called across the street, asking why they were looking but not buying any bread.  One by one, each of them explained that they had been unable to find any jobs, so they had no money.  They just could not afford the bread.  The little red hen stuck up her beak and went back inside.  She did not need friends who were poor, when she had so much.  If they did not have any money, then they would not have any bread.

Duck, pig, cow, and horse lived on the streets until they starved to death.  Only the little red hen was left in the town, but she was content.  She had plenty of bread.  Her lack of friends did not bother her.  She was rich, so she did not need any friends.  Her money and her property could be her friends.  At least, this is what she told herself when she started feeling lonely.


(In case someone thinks that this story is about the evils of automation, read my opinion on that subject: Dehumanizing.  Automation is not evil.  People who succumb to greed are what is evil.)

Discrimination Against the Poor - Part 1

I want to share a little bit of back story before I start the actual article.  We just had our 5th child.  It was a natural birth at a local hospital.  Our first birth was a water birth in a birthing center, and we went home three hours after the birth.  Our other three were all natural in-hospital births, where the hospital required us to stay for 24 hours for observation after the birth, and my wife was sick of this.  We made a birth plan specifying that we wanted to leave 12 hours after the birth, and while we forgot it at home, we made our plans very clear to the hospital staff.  Our nurse, our midwife, and the pediatrician all accepted our decision, though some of them did not agree with it.  The nurse, however, informed the billing person for the hospital, who came in and informed my wife that if we left against medical advice (the hospital's 24 hour policy required the pediatrician to write the discharge for the baby as "against medical advice" if we left before 24 hours), Medicaid would not pay for the services provided for the baby, and we would have to pay out of pocket.  The midwife had told us something different, so I went home and did some research, while my wife tried to contact Medicaid by phone.  Eventually, she reached Medicaid who told her that they had no such policy and could only find a reference stating that if we brought the baby back before the 24 hours were up, we might be charged for services for the new visit that did not qualify as medically necessary.  Before that, however, my research at home revealed a rats nests around the billing lady's claim.  First, her claim was completely and absolutely false.  Second, most hospitals tell their patients this lie (though, hospital staff rarely knows the truth to begin with) and not just those insured through Medicaid.  I found three research papers from three different studies about this problem.  None of them found any insurers in the US with such a policy.  Anyhow, we left about 13 hours after the birth, and we informed the nurse that the claims were false and asked her to forward that on to the billing lady (the baby had no issues within those last 11 hours, though, the hospital staff had already determined she was perfectly healthy and the probability of problems was extremely low).


It should be obvious that poor people in the US face regular discrimination.  It is awfully hard to get hired for a job, even a really poor job, without nice clothing to wear to the interview (in fact, at least one US charity loans suits to poor job applicants to wear to interviews).  Many Medicaid, Food Stamp, and WIC office employees treat clients as inferiors.  Often, schools in poorer areas of towns and cities get sub-par teachers, while the other schools get the more skilled ones.  Middle and upper class people often look down on poor people and treat them as inferiors, and sometimes poor people even treat each other more poorly than those with more wealth.  Many Americans assume poor people are lazy.  This problem is so prevalent that comments from the few people that really are freeloading on government welfare often reflect badly on anyone who is receiving government welfare for any reason.  There is one place where this discrimination against the poor is especially repugnant, not to mention of questionable legality.

Most hospital employees in the US will tell patients that if they leave before their treatment is complete (known as leaving "against medical advice" or AMA), their insurance will not pay for it.  Because most patients leaving AMA are Medicaid patients, and because more wealthy patients can afford the costs better, this affects poor people far more than anyone else.  At least three studies have been done on this subject in the last three years, and none of these studies have found any insurance provider in the US with such a policy (some insurers actually laughed at the researchers for even asking).  Medicaid also has no such policy.  Now, in most cases, the hospital employees are not deliberately lying (though, hospitals do stand to benefit from patients staying "for observation" longer than is strictly necessary).  This is a common misconception among hospital employees, and it is presumably perpetuated as interns are taught this lie by regular employees.  This problem is not just bad for patients, it is also bad for insurers and potentially very bad for hospitals.

Because this problem affects primarily the poor, it is a clear case of discrimination against the poor.  As such, it is rather appalling.  It is also dangerous and perhaps even illegal.  This may be one reason that medical costs in the US are so high.  The biggest reasons people leave a hospital AMA are poor treatment or lack of additional time after treatment is complete.  Often, Medicaid patients have long waits to see a doctor, when their conditions are not critical.  Eventually, they get fed up with waiting, and they sometimes leave against medical advice.  The second, and more nefarious problem is when a patient has completed treatment, but the hospital either wants to observe the patient for an extra day or more, or the patient has to wait a long time for the doctor to do a final review and sign discharge papers.  In both cases, the hospital may charge more money to Medicaid, another insurer, or the patient, for the longer stay.  In the second case, however, it is possible that the long waits are actually deliberate abuse of the system, designed to allow the hospital to charge more for the visit by keeping the patient there longer.  Either way, forcing patients to wait so long that they consider leaving without getting full treatment is dangerous to the health of the patient.  Telling the patient that insurance will not pay if they leave early, however, may be more dangerous to the hospital than the patient.

Most hospitals require patients to sign a release before leaving AMA, to reduce liability for any problems that might have been prevented had the patient received full treatment.  Patients leaving AMA is considered a big problem in the US right now, especially among Medicaid patients (males patients are also more likely to do this).  Concerned hospital workers may be tempted to lie to patients to convince them to stay and complete treatment.  This carries two very dangerous consequences.  If found out, these lies will cause patients to distrust doctors, and this is already a big enough problem in the US; we really do not need to add to it.  Lying to patients may cause them to look for alternatives to normal medical treatment that might be dangerous or at least allow serious conditions to go untreated.  This is not in the best interest of the patients, and as such, it qualifies as a violation of the oath taken by nearly all medical practitioners in the US to avoid harming patients.  The second consequence is worse, at least for the hospital.  Medical patients have legally protected rights in the US, and one of those rights is to refuse treatment.  Any medical patient in the US may choose to leave a hospital at any time, without legal penalty, and if the hospital attempts to hold them against their will, the hospital is breaking the law.  This is a very serious offense.  Lying to a patient to manipulate them into forgoing this right, when they would otherwise have chosen to exercise it is a violation of this right.  Telling a patient that there will be severe financial penalties (for people on Medicaid, nearly any hospital bill is severe) is essentially forcing the patient to make a choice under duress.  Decisions made under duress are not legally binding.  If the patient has informed a hospital employee of an intent to leave AMA, and the hospital uses this lie to convince the patient to stay, the patient's original decision is still in force (because the overriding decision was made under duress), and by keeping the patient, the hospital is both holding the patient against his or her will (this is illegal by itself) as well as violating the rights of the patient.

There are several better ways to treat this kind of situation.  First, financial employees in hospitals should determine policy for specific insurance providers before any employee is allowed to suggest to a patient that penalties might exist.  Since most insurance companies have no such penalties, there is no point discussing them without asking the companies first.  Second, instead of trying to scare patients to stay by lying to them, it should be far more effective to inform them of the actual medical consequences of leaving AMA.  Even Medicaid patients are not stupid.  If they still want to leave, fully informed of the potential consequences, then it is their legal right to do so.  At that point, they have chosen to own the consequences, and nobody has any right to force them to stay.

This problem is dangerous to both patients and hospitals.  Employees need to be educated properly so that they do not inadvertently do or say things that could get the hospital in trouble.  Violations of patient rights can incur heavy fines, and multiple instances can get hospitals shut down.  Given how prevalent this problem is in the US, there have probably been enough of this kind of patient rights violations at most US hospitals to get them shut down.  Further, this kind of discrimination against the poor needs to stop.  Most poor people may not have the research skills to ever discover the lie they have been fed, but this does not absolve hospital employees of their responsibility to treat patients well and honestly.  If nothing else, more care should be taken to treat the poor fairly and legally, because they have a disadvantage.


Following are the studies on this problem:

The University of Chicago Medicine
http://www.uchospitals.edu/news/2012/20120203-billing.html

PubMed.gov, Journal of General Internal Medicine
http://www.ncbi.nlm.nih.gov/pubmed/22331399

Annals of Emergency Medicine, An International Journal
http://www.annemergmed.com/article/S0196-0644%2809%2901798-3/fulltext

Donating Ourselves to Death?

We might be donating ourselves to death.  Wealth goes two ways.  The first, and most often noted, is how much money a person has.  The second, and most frequently ignored or overlooked, is how much stuff costs.  A salary of $350,000 a month sounds like a lot, but when a one bedroom apartment costs $59,000 a month, suddenly that salary seems a bit low.

According to one website, ¥350,000 is about the average monthly salary in Japan, and according to another ¥59,000 a month is about the average rent for a one bedroom apartment outside of a city center.  Right, it is yen, not dollars, but given the same values in dollars, those wages would not be that impressive given those costs.

Where ignoring costs and focusing on dollar amount becomes problematic is when average pay raise is less than average inflation.  When pay increases less than inflation, it is the same as pay decreasing by the difference.  This has been happening in the US, especially among the middle and lower classes, since at least 1960.  That, however, is not the subject of this article.

Modern companies are expected by many consumers to back popular causes.  Companies that donate to educational, environmental, or human rights causes are are revered by many consumers, and companies that do not are viewed as evil money grubbers.  The consequence is that companies feel obligated to back some popular cause, because otherwise they will loose business and eventually fail.  From a cost point of view this is problematic.

It is possible to reduce the income of the poor without ever touching their money or reducing their wages or welfare benefits.  All that is necessary is to raise prices without raising the wages and benefits of the poor.  An extremely effective way for the general public to do this is to make companies feel obligated to spend money on something that will not bring any profit.  Consumers who refuse to do business with companies that do not support some popular cause force businesses to spend more money on unprofitable things.  This, in turn, forces those companies to raise their prices.  Increased prices make the poor even poorer.

While supporting moral causes is a good thing, expecting businesses to do so is a misplacement of resources.  When a business donates to a cause, it is indirectly forcing all of its customers to donate to that cause.  If some of those customers cannot afford to donate, then this practice is unethical.  This kind of shopping habit perverts competition to force businesses to do things that are oppressive to the lower classes.  The correct application of market forces uses competition to keep prices low, and this application of competition supports a healthy economy.  Competition that values things other than price or product quality almost always results in increases in price and reductions in quality.  Admittedly, competition that encourages businesses to act ethically (from a business standpoint, not a popular cause standpoint) can be very good and can help keep workplaces safe and encourage ethical treatment of employees (though it still increases prices and/or reduces quality but justifiably).  Competition that encourages or forces businesses to start acting outside of their sphere of influence, however, is harmful to the economy, because it drains funds from the rich and poor equally and without their consent.

We might be donating ourselves to death.  The graduated income tax system is designed to put the majority of the tax burden on those with the majority of the money.  At first this may seem unfair, but a government that protects the ownership of property benefits the wealthy far more than the poor, because the wealthy have more to protect.  In addition, the poor cannot afford much if any of the burden, and what good is a government that favors protecting property ownership over the lives and well being of its citizens?  When businesses donate, they impose a sort of flat tax on all of their customers.  Of course, the rich pay more than the poor, because they spend more, but the poor cannot afford to pay any of this involuntary tax.  By donating to popular causes, businesses are harming the economy and robbing the poor.  When people refuse to shop at the cheaper stores because those stores do not donate to a popular cause, they are paying the more expensive store off for oppressing the poor.

It is not fair to blame the businesses for this problem, because they are not, for the most part, responsible.  They are responding to market forces.  If they did not do this, they would ultimately fail.  The blame goes to the people who blindly choose to avoid stores that do not donate without considering the consequences.  The blame goes to the people who are too lazy to donate directly and instead patronize businesses that donate so they can feel good about themselves anyway.  If a cause is worth supporting, it is worth donating directly, instead of spreading the burden to those who cannot afford it by expecting businesses to do the work of donating.

Philanthropy does not belong in for-profit business.  Those who want to donate to a cause should do it themselves instead of expecting someone else to do it for them.  It is hard enough for the poor without forcing them to donate to every popular cause.  This problem is one of the many reasons the US economy is struggling and taking so long to recover.

Cheap Military

I was appalled (though not horribly surprised) when I read this article.  It turns out that starting wages for military service are lower than average fast food wages.  Just to get wages above the Federally defined poverty level, it takes around 3 years of service (with at least one deployment).  In a previous article, I discussed some research showing that the Federal poverty level is around $10,000 a year short of the real poverty level (which is somewhere between $30,000 and $40,000 a year, depending on location).  It takes 6 to 7 years of military service to get out of poverty for real.  Most people who join the military never make it that far, in part because it is almost impossible to survive on what the military pays.  Several years of military service can qualify a person for a law enforcement or security job that pays two to four times what the military pays for a much higher risk position.

The above mentioned article is about military families who must get some kind of food aid just to survive.  In some areas over a quarter of food bank patrons are military.  Part of the problem is that the military expects spouses to work as well, because many families in the US do have to have both adults work to make enough to get by.  For military families that just does not work.  For families with children, if the military parent gets deployed, the other parent is left caring for the children, and the extremely low military pay is just not enough to cover childcare in many areas.  In addition, because the military frequently and unexpectedly transfers people, and it is currently difficult to find jobs, even in the ideal situation, the non-military parent often spends more time looking for a job than working.  Worse, frequent job changes make it even more difficult to find a job.  It is totally unrealistic to assume that spouses of military people will be able to work a job to make up the difference.

There are multiple things wrong with this situation.  The first is that it is unethical to pay so little for such a high risk job.  Even military service entirely in the US, without any combat, is fairly high risk.  More soldiers die in mechanical accidents, on base, in the US, than in combat situations.  Soldiers regularly die or are seriously injured in weapons accidents and other training accidents as well.  Military service, especially for the lower ranks, is just plain dangerous.  Paying low wages is straight up wrong for this kind of risk.  The second is that soldiers need to be able to focus on their job.  A soldier that is worrying about how he is going to provide the next meal for his family is not a soldier that can focus well on military service.  Military service is stressful enough by itself.  Adding more stress will result in potentially critical mistakes.  Aside from practical issues, these people are being paid to defend our country.  Is national defense really less valuable to us than providing low quality, unhealthy fast food?  If we are paying soldiers less than fast food workers, we should expect more mistakes from them than from fast food restaurants.  Do we really want our military to make mistakes?  Mistakes in fast food are annoying.  Mistakes in the military are fatal.

This situation is getting worse.  This year, the Department of Defense issued a military raise of 1 percent.  According to the article the DoD has said that it plans to continue asking Congress for only 1 percent annual raises.  Annual inflation is bigger than that.  This means that each year military workers are taking pay cuts, not getting raises.  Over the last decade, inflation rates have ranged from 1.5% to 3.8% (with the exception of a -0.4% in 2009).  At this rate of inflation, members of the military will be loosing 0.5% to 2.8% of value of their pay each year, even with the 1% annual "raise."  While McDonald's employees get real raises that keep ahead of inflation (just barely), members of the military are getting veiled pay cuts.  That is just plain wrong.

(Just for the record, with a minimum wage of $7.50 an hour, working full time all year, the yearly earnings come out to $15,600, about half of the real poverty level.  With Obama's planned minimum wage of $15.00 an hour,  this comes out to $31,200, which is above the real poverty level for the lower cost areas in the US.  A military salary of $18,000 a year will be just under 2/3s of Obama's planned minimum wage.  Note that this assumes no vacation time, because military work comes with no guaranteed vacation and typically entails far more than 8 hours of work a day.)

Now, I am not pro war, and I do not think that we need to throw more money at the military, but if we cannot afford to pay our soldiers enough to survive, something is very wrong.  It is bad enough that we tolerate businesses paying wages that are too low to survive on, but our government should know better.  No government job should pay less than the poverty level, otherwise the government is directly responsible for some amount of poverty.  Our soldiers are not only working for our government and our nation, but they are the first line of security for our nation.  By underpaying them, we are buying second rate security for our most important security.  We are putting our lives and our freedom in their hands, but then we are paying them so little that there is no way we can expect them to do a very good job?  That just does not make sense.

My solution to this is a smaller, more elite military.  Instead of a large standing army, we should have a small standing army of extremely well trained soldiers.  To balance this for emergencies, we can increase the reserves.  Reserves work far less and typically work normal day jobs.  They report for training for only a few weeks a year, unless there is something major that requires more soldiers than the regular military currently has.  This makes them cheaper, and while they are usually less well trained than active duty military, they are still far better trained than drafted civilians would be.  A military with fewer, better trained soldiers would also not need as large of numbers.  The real kicker though is that we could even reduce the number of military by only 50% and start paying new recruits $36,000 a year, which is above both the Federal and the real poverty level.  If we left the top end of the pay scale alone (those with 20 years typically make around $65,000 a year), we would actually save money by doing this.  This might also reduce the rate of accidental casualties as well (given the better training).

At this point, it looks like our military is bloated, and it is becoming very clear that we cannot afford it.  If things continue the way they are going, military jobs will be the worst paid (legally) jobs in the US.  The quality of our military will continue to suffer, and eventually we may have the largest, lowest quality military in the world.  By focusing on expertise instead of numbers, we could improve our military and cut costs at the same time.  It is a travesty that we are willing to pay less for national security than we are for fast food, and something needs to be done about it.