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Does giving out hand outs incentivize laziness?

Source: TheDigitalWay

 

There is research on welfare and cash transfers. I go over those two topics a bit in this thread, also in regard to ‘laziness’.

Long story short, studies (including experiments) show that well-implemented welfare policies can be beneficial for individuals and society, and that both conditional and unconditional cash transfers can ameliorate several outcomes (i.e. education, health, income, etc.), including promoting entrepreneurship.

Revue_of_Zero

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I would nuance it further than that, and suggest thinking in the following manner: a program or a policy may have no effect, have varying degrees of effectiveness, and/or have varying degrees of negative (or collateral) effects according to different objectives and criteria.

For example, welfare policy can participate in the stigmatization and social exclusion of certain groups of people. Quoting Dodson and Deprez:

Ever-more punitive eligibility rules and program sanctions, including rules like mandatory drug-testing for welfare recipients (though research shows they are less likely than other populations to use drugs) reflected the ideology that poor people—particularly women of color—were not the casualty, but the cause of poverty.

For a concrete example, they comment on the concept of Work First:

Since welfare reform was enacted in 1996, the goal of getting mothers into jobs—any jobs, at any pay—has dominated domestic policy. Best characterized by the Work First policy, this bipartisan consensus idealized employment for poor parents without regard to earnings […]

Reflecting an ideology that permeated welfare regulation, low-wage working mothers who receive work supports are treated as needing close monitoring and ready sanctions.

Quoting LaDonna Pavetti, writing for the Center on Budget and Policy Priorities:

The facts don’t support claims by the American Enterprise Institute’s Robert Doar that TANF (Temporary Assistance for Needy Families) is a success so we should continue and even strengthen its “work-first” approach — which requires recipients to participate in activities that mimic work (like unpaid jobs) and thereby limits their access to education and training […]

In today’s increasingly skill-focused economy, work-first approaches that limit TANF recipients’ opportunities to increase their skills through education and training hurt their chances of finding jobs and lifting themselves out of poverty.


There is an extensive overview by Vox correspondent Matthews about the pitfalls of the Clinton administration’s welfare reform. I would however stress the issues are not in terms of welfare recipients being lazy or being made lazy (i.e. unwilling to work). Quoting Shaefer and Edin‘s book on the topic:

Everything we’ve learned about the $2-a-day poor suggests that it is typically the opportunity to work that is lacking, not the will, and that ensuring work opportunity would do no end of good.

The problem with TANF was that it created cashless poor. Quoting Matthews:

Using data from the Survey on Income and Program Participation (SIPP), they found that the share of households with less than $2 per day, per person, shot up from 1996 to 2011, from 1.7 percent of households with children to 4.3 percent. That’s a 153 percent increase.

The growth is much smaller if you throw food stamps, tax credits, and housing subsidies into the mix, but it’s still an increase of more than 45 percent: from 1.1 percent of households to 1.6 percent. That just underscores Edin and Shaefer’s main point, which is that more and more families are being forced to get by without a reliable source of cash income.

And cash matters. You can’t pay the rent with food stamps. You can’t buy clothing for your children, or refill a subway card, or pay the car bill, or refill your gas tank either. You can’t eat housing subsidies (and very few of the poor get them, in any case).

Revue_of_Zero

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Which people?

QE encouraged rich people to hoard rather than invest, which is a kind of laziness from people who are supposed to earn their keep by creating new economic opportunity: QE-fueled share buybacks may lose luster.

But you probably mean poor people. This claim is only ever made in relation to poor people. Weird, huh?

Research on UBI tends to show no negative effects on employment, and sometimes positive effects. Which makes sense as the marginal tax rate on earnings is much lower with a UBI than means-tested benefits. Not that there’s any kind of consensus on employment effects and nor is there consensus about what UBI is (it is not a single policy or even a set of policies with the same aims).

UBI is typically compared to means-tested benefits so doesn’t necessarily address your question directly (although its history does predate modern social security systems). Would a country with no social safety net have more people willing to work, or just more people desperate enough to be an easy mark for exploitation given no other way to survive?

It’s not just about the amount of work that gets done, it’s about the quality of that work. If people are cheaper than machines, there will be no investment in machines, causing a productivity crisis (which rich people will naturally talk about as if it was a measure of how lazy poor people are rather than a measure of how little they are spending).

Social security underpins wages by setting a floor below which employers cannot sink. Increasing conditionality of those benefits makes them less effective in this role. The UK government did commission (but did not act on) some research on this from their so-called ‘nudge unit’: Poverty and decision-making which is summarised in a much shorter news article.

D-Juice

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Lots of rich farmers get ag subsidies. Wallstreet bailouts and then those firms being allowed to give their execs big bonuses despite the fact that their company should’ve been bankrupt. Lots of special little tax breaks/advantages (mortgage interest deduction is a common one [yachts can be classified as second homes to get the mortgage interest deduction on them]). Electric vehicle credit for people to buying Teslas. And etc.

I’m not well versed on the matter, so those are just a couple fairly common/simple examples; however, it’s actually a really complex topic since the overwhelming majority of the rich/ultra-rich’s “handouts” are oblique and abstruse. It’d be interesting if you asked r/tax what they thought were the most questionable tax breaks that overwhelmingly benefit the rich/ultra-rich.

mn_sunny

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Mortgage interest rate deductions are one. Also farm subsidies. A lot of well off people buy large plots of land and grow the minimum possible amount of crops to be considered a farm to get a generous tax break.

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The Sociological Mail

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2 comments

  1. colonialist 20 June, 2019 at 17:26 Reply

    The well-worn saying about fish or fishing rods holds good. The fish inspires a good post-prandial doze and the expectation of more falling into one’s lap. This is overwhelmingly the experience in SA.

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