Does poverty cause conservatism?

A University of Tennessee study, reported at phys.org among other places, finds that, when incomes are more concentrated, people are more likely to say they oppose governmental redistribution of income.  This decidedly includes low-income people.  Why would low-income people oppose redistribution of income?

It might be because they’re too busy with survival to pay much attention to the question.  Or, having been screwed by the powers-that-be, they assume any redistribution will be away from them, toward those already in control.  Might even be that they are “free-market” types who expect to make a better living in the absence of government interference. I really have no idea.

I’ve only seen the news report, the actual paper seems to be behind a paywall, so there’s a lot of detail left unspecified. Such as whether “redistribution” is defined to include the current pattern of redistribution from those who work to  those who manipulate, what specific surveys were analyzed, and how the matter of sequence (Does public support for redistribution cause redistributive programs to be expanded?) was handled.

Fiscal responsibility and reform

The “President’s National Committee on Fiscal Responsibility and Reform” has issued its “draft report,” actually just a series of powerpoint-like slides in pdf format, with a few complete sentences here and there.   Yves Smith [correction: These comments were guest-posted on Naked Capitalism but originate at The Daily Bail] has already posted comments, of which I fully endorse the last sentence, but I would like to expand a bit here on my own site.

Now, it would be too much to expect the President’s Commission to suggest anything that would seriously change the way the powers-that-be conduct their business.  Continue reading Fiscal responsibility and reform

Dangerous checks, no balances

I always knew that those checks sent by the credit card companies were dangerous.  You pay a cash advance fee, and interest; it’s extremely unlikely that you couldn’t get better rates elsewhere if you urgently need cash.  Now I have received from Discover Card some unilateral revisions to the Cardmember “Agreement:”

We will charge you a Returned Discover Card Check Fee each time we decline to honor a Discover Card cash advance check, balance transfer check, promotional purchase check, or other promotional check.  The amount of this fee is $25, except [if we have already done this to you within the past six months] it will be $35.

So, any time they want, if I try to use one of those checks, they can pick up an easy $25 or more.  Probably put something nasty on my credit report, too.

Are tariffs even more regressive than I thought?

Tariffs– fees charged by the U S Government for the import of goods– are designed to protect politically-powerful interests who would otherwise be unable to compete as profitably with foreign producers.  So they are regressive in the sense that politically-powerful interests are likely to be relatively wealthy.

But according to this article, tariffs are also regressive in the sense that their direct impact on the poor exceeds that on the wealthy. “Luxury goods have very low tariffs, while cheap clothes, underwear, shoes and household products have much higher rates.”  Several examples are cited; I have no idea whether they’re typical.  Both the Cato Institute and the Democratic Leadership Council are quoted in support, an official of the former calling tariffs “our most regressive tax that the federal government imposes.”

100% mortgages still available…

… at Prairie Park in Beecher, courtesy Uncle Sam. And, with the $8,000 credit Uncle also provides, you’ll take out some cash right away!

I guess the target market is folks who can’t save a few thousand dollars for a down payment. Or maybe the purpose is to keep some construction workers employed, builders solvent, and housing finance gangsters profitable. It’s a Department of Agriculture program, thus the houses are remote enough that any big increase in gasoline prices will be a problem.  (This DOA site indicates that 50,000 homes will be 100% financed, funded by the American Recovery and Reinvestment Act.)

I thought that, at least for a little while, the authorities would pretend to have learned the lesson, that poor people have better uses for their energy and money than becoming highly-leveraged “homeowners.” Silly me.

Unnatural Causes

This broadcast documentary looks at the relationship between income (and other status considerations) and health, including life expectancy. Statistically, your income is strongly associated with how long you’ll live.   And recent statistics indicate that Americans’ life expectancy is lower than that of 29 other countries.

One of my favorite points regarding health care is made:

NICHOLAS CHRISTAKIS: But the vast majority of improvements in health in our society over the last century have had very little to do with medical innovation. What really counts is other kinds of things we can do, and those other kinds of things tend to be non-medical things. Like, thinking about the distribution of wealth in our society, or providing public health infrastructure, or better education for people, better housing – all of those things which aren’t medical phenomena. It’s all those that are really material for public health.

Social Security reportedly provides a higher monthly payment, relative to the amount put in, for lower income workers.  But because low income people have shorter lifespans, this doesn’t mean that it redistributes income downward.

And any post about income inequality, including this one, should include a disclaimer such as the following:

Any system of taxes and subsidies intended to equalize incomes will do so inefficiently if at all, and is likely to be perverted. An effective solution to the problems of poverty requires the elimination of privilege and the preservation of opportunity for people to earn a good living.

Originally broadcast last year, this seems to be a four hour program, and I’ve only read part of the transcript for the first hour. Thanks to Bob Matter for pointing it out.

700-bank solution isn't better than nothing

Bob Matter’s thoughtful comments need a response, and I can’t figure out how to properly format one without doing a new post, so here it is.

1. Not enough to time to implement a plan of such scope.

There’s enough time to price and purchase opaque derivative securities but not to open 700 straightforward banks?  There are so many out-of-work bank staff– and more to come.  I agree that this is a considerable task, but there are lots of people who know how to do it, and would have started their own banks already if they could raise the capital.

2. Too much added expense. 700 more buildings to rent, heat, light, and maintain, 700 sets of phone lines to pay for, computers, personnel, etc. etc.

We have a banking infrastructure in place now. There is plenty of vacant commercial space pretty much throughout the country. Of course there will be a cost, but each bank is a billion-dollar institution before they even take a deposit; they could spend 1/10th of 1% for physical facilities and startup staff.

3. Even this plan would ultimately lead to failure. The core problem of allowing private ownership of real property needs to be addressed. Until that time we will just keep repeating the boom-bust cycle. Interested parties can read the solution to today’s financial “crisis” in _Progress and Poverty_ by Henry George.

Henry George explains the root cause of economic meltdowns, and they will not be avoided until something like his proposal is put into effect. If he were here today, what would he propose as a way out of this depression?
I claim only that my proposal is far better than what the authorities propose.  I don’t claim that it is better than doing nothing, which would result in considerable inconvenience but probably a quicker recovery than what we’ll get.

What’s really encouraging now is how much opposition is appearing to the whole idea of any bailout.  I wish that meant it was unlikely to happen.

The 700-bank solution

Georgists know why the economic meltdown was unavoidable.  It could be postponed and, to some extent, redirected, but it was inevitable as long as big profits could be anticipated from speculation in privilege including landownership.

And furthermore, we know what needs to be done to avoid the next meltdown.

But what do Georgists say should be done to facilitate the recovery from the present economic distress?  I will offer my suggestion, a pragmatic approach to what’s already underway. Continue reading The 700-bank solution

RSF's Poverty Film emerges; will it be useful?

“The End of Poverty?,” a film funded largely by the Robert Schalkenbach Foundation, seems to have been shown at an auxiliary part of the Cannes film event, implying that it is complete. What little publicity I have found (more here) implies that it simply makes the point that poverty exists, it is large and serious worldwide, and is somehow the fault of more affluent countries. This may be news to many folks, but I wonder how many of the ignorant will see the film. One article quotes the director Philippe Diaz: “They are poor because we are rich.” Certainly seems to be an oversimplification, not literally true, but then what do I know about reaching the politically influential masses?

Originally some of us had hoped the film would teach a bit of Georgist economics. If that’s not possible in a mass market product, we hoped at least it would draw some links between control of resources and lack of access thereto. Perhaps it does, tho that doesn’t come out in what I’ve read thus far.  We shall see.

Racism and land value taxation

Prosper Australia exec Gavin Putland has written an insightful analysis (“Still on the Mountaintop”) of how a policy of taxing productive activity almost guarantees, under American conditions, that blacks will suffer economic discrimination and be overrepresented among the poor and unemployed. The link is thru NAIRU, which requires a substantial level of unemployment in order to prevent ruinous inflation.

“full employment” means enough unemployment to cause enough wage restraint to give stable inflation. So we’re living in a system of enforced failure. A percentage of people have to be unemployed, and therefore, at the boundaries of unemployment, another percentage of people have to be underemployed or intermittently employed or precariously employed. In other words, the economy is being run in such a way that a certain percentage of people have to be losers.

He explains what seem logical reasons why Africian Americans, rather than other minorities or the entire labour force, bear this burden. The solution is to tax “land-like assets” instead of “house-like assets” and the work that goes to produce them, resulting in increased employment opportunities with less inflation, among other benefits. The piece includes detailed explanation of why even landowners will be better off under this reform.

Even experienced Georgists will benefit from reading Putland’s accessible explanation.