Econ 28 Articles on Income Redistribution and Welfare

The UN, what it says about poverty in the US

40 million Americans live in squalor and deprivation, in a country where tax cuts will fuel a global race to the bottom. Criminal justice system is a sys for keeping people in poverty. Demonizing of taxation = legislature refuses to levy taxes. Census bureau counts as poor all people in families with incomes lower than the established income thresholds for respective family size and compo.

Other researchers on the corporate income tax

A 2012 Treasury Dept Study found that less than a fifth of the corporate tax actually falls on workers, a CRS report concurs.

Universal basic income

A fixed income that every adult, rich or poor, working or idle, automatically receives from government. Payments are usually the same size, and arrive without request.

Skeptics of UBI; effect as a ceiling

A society with a basic income has no pressure to pay employees a good wage.

Speenhamland System

A system developed in England in 1795 of supplementing the income of all poor people so that everyone would have what was deemed the minimum income necessary for survival. It was a failure because there were no work incentives

Social welfare fn

Aggregates individuals' well-being into a summary measure. Each person in society recieves a certain amt of happiness, or utility, from a given allocation of soc's resources.

Leftists: Why they support UBI

Although politically dissimilar people may support a UBI, the reasons for their support differ, and so do the ways they set the numbers. A rising group of thinkers on the left tout a generous version of UBI both as a safety net and way to free people from corporations.

Refundable Tax Credits

As part of its effort to reform welfare by making work pay, the Clinton admin persuaded Congress to expand EITC btw 1993 and 1996. By 2013, EITC provided a refundable tax credit of 3250 a year for workers with 2 or more children and earnings btw 10k and 23k.

Effect of antipoverty transfers on work effort

Devastated it! Expanding availability of antipoverty transfer has devastated the work effort of poor and lower-middle income families! The numbers also understate the decline in work among low-income Americans!

Nixon's Family Assistance Plan

Every poor family of four in America with zero income would receive 1600 dollars a year plus food stamps' supplement would fade out as earnings increased. Plan died in the Senate. By the end of his Administration, the idea of moral hazard had become a guiding doctrine of the right. Work requirement stuck around in EITC and welfare reforms.

Chris Hughes

Former Facebook executive. He dreamed of a bigger life, and applied to top high schools; later wound up at Harvard. No technical knowledge, early PR for FB. Claims that we need a modest basic income, or 500 dollars a month for every adult in a household making less than 50k. It is a boost to the current system, and money can be found by closing tax exemptions!

Results of research

Found that, 36 days after phillie tax on SSBs was levied on beverage distributors, stores subject to the tax in the Philadelphia airport raised their prices of SSBs by 93% of the tax. Stores on the untaxed side of the airport may hve raised their prices in response.

Effect of UBI on happiness

Happier!

Rutger Bregman

He claims that accounts of Speenhamland's disastrousness were based on a single report by the comission empowered to replace it! Report = largel fabricated, as the era's pop grwoth = edcess of responsibility! Wages in Speemhaml = low, but lw as before the thing.

Andy Stern

He thinks UBI is the right response to technological unemployment.

Supporters of UBI: effect of the raised floor

If workers are no longer compelled to take any job to put food on the table, work must be worth their while! This will be true for highly undesirable jobs, but for jobs whose appeal goes beyond paycheck, pressures are less clear.

Post-Tax Policies

Involve redistribution of income and wealth via tax code and social safety net, the EITC, food stamps, housing vouchers, health insurance. The US relies very little on these post-tax tools!

Super Rich, why they like the idea of UBI

It fits with a certain idea of meritocracy. If everybody gets a strong boost off the blocks, the winners of the economic race can believe that they got there by their industry or acument. The very rich appreciate UBI b/c it dovetails with a narrative that casts their wealth as a reward.

What the bureau measures as income

It measures poverty using money income, which includes earned income and some transfer payments like SS and UI. But it exludes food stamps, Medicaid, Medicare for low-income, CHIPS, EITC, and 87 other menas-tested federal payments to individuals. I fwe countd those missing annual transfer payments, poverty rate = less than 3%!

The biggest challenge for means-tested aid

It must determine who is the most deserving, a vestige of the old Elizabethan system. Moralizing edge! Current programs favor working poor over jobless; racism plays into how policies are shaped and such. How do you certify the employee status? With UBI, everyone gets a basic chance.

Why census Bureau's data isn't great

It raises the poverty line every year by the same percentage as the increase in the consumer price index for all urban consumers. CPI-U does not try to measure changes in what people need, or why they think they need it. Also doesn't measure changes in what Americans mean when they talk about poverty. Just measures changes in poerty.

Business Centrists; why they like it

It's a way to manage industry side effects, like low labor costs and displacement of workers by apps and AI, without impeding growth.

Why the measured poverty rate has remained unchanged

It's because the census bureau doesn't count most of the transfer payments created since the declaration of the war on poverty.

Effect of War on Poverty on dependency

It's been to make the poor more self sufficient and bring them into the mainstream of the economy. In that effor the war has failed, increasing dependencing.

High inequality; what it says about our taxing and spending choices than our paychecks

Looking at income distrib after taking into account tax and transfer payments, we suddenly become the second-most-unequal developed economy in the world. High ineq says a lot about the taxing and spending choices.

Medicaid; its related bills

Medicaid pays some relatively small medical bills that poor families w/o medicaid pay out of their own pockets.

Pre-Tax policies

Minimum wage, overtime and fringe-benefit requirements help increase workers' paychecks, with employers generally footing the bill.

Necessity of political philosophy, why

Most policies are good for some people and bad for others. For example, an increase incomes for some low wage workers but will cause some biz to make smaller profits.

Giving everyone a flat check: effect on opportunities

Naturally rebalances opps for choice. A thousand bucks to a mulimillionaire = nothing, but it's significant for a middle-income person, and for a poor person it ocould open up the world.

How finland ran its experiment

Paid 2000 unemployment benefit recipients 635 dollars a month and required them to go through bureaucracy involved in applying for trad benefits reg of tthey got a job or not

The actual deal regarding poverty rates

Poverty is still bad, but it's not as bad! Food stamps, rent subsidies, and refundable tax credits all have had a role in declining poverty!

The practical problem with maximizing the social welfare funciton

Practical: we economists often have only a basic understanding of how most policies work. Economy is complex, and economic science is still a primitive body of knowledge. Unintended consequences are the norm, so what seems like a utility maximizing policy can backfire.

Why you don't use trends in poverty as a measure of the war on poverty's success: reasons

Prevalence of poverty depends not just on success or failure of policies aimmed at reducing it, but also on other independent economic and demographic forces like the decline in unskilled men's real wages and rising number of single-parent families. Second reason is that the official poverty rate is probably misleading. Any assessment of the war's political legacy requires a detailed discussion how misleading the official poverty rate really is, why its flaws have been allowed to persist for decades, and how their persistence undermined poli support for efforts to reduce poverty.

Cohabiting Couples; what it means for poverty

Say you've got 2 twenty-five-year-olds who are romantically involved, live together and each earn 12k. If they were unmarried, the Census Bureau would have classified them as unrelated individuals with povery thresholds of 12k each. However, if they were married, the bureau would have taken a more upbeat view, classifying them as a family of two with a poverty threshold of 15.6k

Elizabethan Poor Law

Social system at the time divided indigent adults into those who could work, those who could not, and the idle poor that didn't want to.

The First Do No Harm Principle

Suggests that when people have voluntarily agreed upon an economic arrangement to their mutual benefit, that arrangement must be respected. The main exception is when there are adverse effects on third parties.

Finnish UBI, what it tells us

Tells us that money for nothing makes people happier but doesn't inspire them to find work any more than traditional unemployment benefits. Perhaps the most important parameters for policymakers concern the ubconditional income's effect on employment and on govt soc spending. On both these counts, finnish epxperiemnto produce a breakthrough for UBI props b/c o/ its flwawed design.

Price Changes; the Consumer Price Index

The CPI is used to adjust the poverty thresholds for inflation. They push up the threshold for a married ocuple with 2 children from 3.1 k to 23k btw 1964 and 2013. All other thresholds rose by same multiplier.

Effect of corporate income tax on $$

The incidence of corporate taxation falls mainly on workers, meaning they have much to gain if such rates are cut. If the corp tax were cut to 20 percent, the median US housheold would earn btw 3k and 7k more

Research design

The philadelphia int'l airport straddles city border, with some terminals in phillie subject to tax and others not. They used diff-in-diff reg with SE's clustered @ store level. because of concerns that stores in the untaxed side of airport would raise prices once their tax competitors had done so, additional analyses focused on change in prices in taxed stores.

Sugar Sweetened Beverages Tax in Philadelphia

The tax was levied on beverage distributors. It is unclear how much of the tax is passed through to consumers in the form of higher retail prices vs. being paid by distributors or manufacturers.

Broad Consensus among economists; the CPI-U

There is a fairly broad consensus among economists taht the CPI-U has overstated the cost of maintaining a constant standard of living over the past 50 years, although they disagree about the size of the bias. Most widely used alternative to the CPI-U is the chain-price index for Personal Consumption Expenditure.

Further problems with the utilitarian approach: comparing one person's happiness to anothers

There's a problem with doing this, especially when people have different preferences. Peter may work long hours at a dreary job to earn a high income because he gets a lot of utility from the money; he may be forgoing a higher income for a job that requires fewer hours or offers more satisfaction because he doesn't care as much about money

Flaws in the official poverty rate: how the poor are really living today

These flaws in the official poverty rate helps reconcile trends in poverty with trends in the more direct mesures of material well-being. Nonetheless, most of the poor are still beset by constant financial anxiety, partially bc the poverty line was set so low in '64.

Economists who give policy advice; what they're doing

They are often speaking not just as economic scientists, but also as political philosophers.

Relative Poverty; effect on financial anxiety

They are relatively poor to everyone else. Liberals and conservatives tend to resist the idea that poverty has fallen dramatically, although for different reasons.

Why we need more post-tax policies

They complement the minimum wage and do things the minimum wage can't like grow more generous for larger families; they don't raise cost of employees, meaning the business lobby won't fight the policies.

Transfer Payments: effect on poverty in America

They have essentially eliminated poverty in the US; they now constitute 84.2% of the disposable income of the poorest quintile of US households and 57.8% of the disposable income of lower-middle-income households. Payments also make up 27.5% of US total disposable income.

Europeans; on their tax codes

They think it's highly progressive, but that progressivity holds true only for direct taxes on personal and corporate income. Indirect taxes like the VAT on consumption and SS taxes, are a different matter. VAT affects disprop lower earners, who spend a higher proportion of their incomes. The real money is in the VAT and social taxes.

Speemhamland's crisis

They were trying to solve a social crisis brought on by the rising price of grain. Challenge was an increase in poverty, even among the employed.

Effect of Corporate Tax Cuts on Workers' Wages

Trump's top economist argued in a report that corp tax cuts would increase a typical household's income by between 3,000 and 7,000 dollars a year. he wants to reduce corp rate to 20 percent, from 35 percent.

Results of Finnish experiment

UBI hasn't increased people's propensity to find work. People in treatment worked 49.64 days, control did 49.25 days. No sign diff. UBI recipients got 16 k in euros form govt.], icncluding the UBI; control got 11 k.

Trolley problems

Where you can decide to hurt one group of people or another group of people. For example, you are ona bridge and see a runaway trolley care below, hurtling toward 3 kids on a track. Fat man. Push him off bridge and into pay of trolley, killing him but saving the children; what do you do?

Why using tax reform to create a significant change in either household consumption or saving isn't gonna do it

You need to tackle indirect taxation. Some argue that reducing German's top rate of VAT to 18% from 19% would deliver tax relief of 11 billion a year, mainly for households at the lower half of the income ladder. Unfortunately, VAT and social taxes are too important to modern welfare state.

Structural Inequality

inequality that is built into social institutions