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Means-tested social assistance is now a vestigial remnant of an economy strictly dependent upon labor as its primary input for growth. As the share of economic

• purplelobster 14y ago
  That is becoming increasingly clear. When I drive through small to medium sized towns I can't help myself thinking "what do all of these people DO for a living?". They have to import everything they need and many of these places don't produce anything of value. Add into the mix that if they do have any fast food or services, more likely than not they're global franchises sucking even more money out of the town. How is this sustainable? It seems to me that the more globalized, specialized and efficient the world becomes, a few hubs will produce pretty much everything. If in the past every town within a 100 mile radius had it's own carpenters making furniture, today there's one big Ikea in the middle of them all taking all that business away.
  • ams6110 14y ago
    There is a lot more to a local economy than factories and fast food. Small towns likely have an agricultural component, and most all will have trades (plumbers, electricians, HVAC, carpenters), mechanics, general handymen, other services, doctors, optometrists, lawyers, other professionals. It may not be New York or San Francisco but there's enough work to do to get by.
    • tgrass 14y ago
      Pay off your $60K house by the time your 30 (perhaps from commuting to some distant town) - and entertain yourself with television and playing cards, and you don't need much annual income.
      • icebraining 14y ago
        TV and cards don't need much income, but the health care certainly does.
    • bilbo0s 14y ago
      It's more complicated than that. Just to give you an example, everything you mentioned is a service that would, ideally, be consumed locally. Consider where the money to pay the plumber comes from. Will hundreds of people from other towns call on that plumber? Or on their own plumbers? What I'm trying to say is that at some point, someone, not necessarily the plumber, but someone has to bring money into the town.
      • bcoates 14y ago
        It's quite common for people to reach child-raising or retirement age and move to such places, or even leave their families there and continue to work in the big city. These cities also tend to have a lot of cottage-industry scale businesses: the average small American town is probably the worldwide capital of some incredibly obscure product or service. A town needs hard-currency inflow to pay for their imports but not a terribly large amount of it.
  • davidroberts 14y ago
    More like each country had its own furniture making factories, but your point still stands. The ideal would be a society in which quality locally produced goods would be valued over trashy throwaway goods like those sold at Ikea, but this requires a complete rethinking of what's valuable in life by individuals and the society as a whole. Past experience has shown that attempts to manipulate this bureaucratically through tariffs, fixed pricing, closed guilds or the like just cause market distortions that bring about new problems without solving the old ones. In the meantime, though it's far from ideal, at least there is a way that hardworking people with no market for their labor can avoid starvation, although at a personal loss of dignity and a societal loss of that person's potential contribution.
    • bollockitis 14y ago
      But you're missing an important point. "Quality locally produced goods" are very expensive. I can get a "trashy" piece of furniture from IKEA for just a few hundred bucks. That same piece of furniture, produced by a local artisan, would cost me thousands. Most people don't buy cheap furniture because they choose to, they do it because I have to. As the population grows, more people buy more stuff. Local woodworkers and cabinet makers cannot possibly fulfill demand using locally sourced materials and hand tools. If everyone is to get chairs and tables and cabinets, production must be automated. Once automated, production can scale, which usually reduces both quality and cost. Instead of local wood, wood is imported and turned into particle board because its dimensions make automation easier. But now a nightstand can be turned out in less than an hour, where a traditional artisan might spend a week or more, driving up labor costs. In other words, it isn't that people need to "rethink" what's valuable. They have already done the thinking, and they value more affordable, lower quality goods over limited, expensive ones. And I don't blame them.
    • jordan0day 14y ago
      But what happens when Ikea sells goods of the same, or superior quality, than those "quality locally produced goods"? In fact, for many of the goods we buy, a lot of the "quality" we perceive from "locally-produced" is a figment of our imagination, or at least biased by taste. Sure, the coffee table you paid $30 for at Wal-Mart is almost certainly inferior in every way but one (price!) to something you'd find yourself paying $400 (or $4000) for at [locally-produced furniture company]. But you could probably spend $200 and get something made in China or Vietnam that is just as good as anything you could buy locally-produced.
  • protomyth 14y ago
    "Weird, I look at cities and wonder what the heck you all produce since you've closed your factories (they smell) and don't farm, ranch, mine, fish, or log." Economics is subtle and much more complicated than what you describe. We are not heading to Mega City 1.
    • purplelobster 14y ago
      You're right, I mean there has to be something there or the people couldn't survive (unless they're all on disability). I would say though that 90% of these places don't have much except maybe farming. Maybe that's enough to sustain these places, but given how automated farming has become I'd doubt it. And farming is also concentrated the same way Ikea is. Modern farming tend to be much bigger scale (thus fewer players).
      • protomyth 14y ago
        You probably should do some research on what farming actually means in this day and age. Farms are not self sustaining, they buy seed, equipment, fuel, and supplies. Those people buy other things. A farm is a huge input to an economy and money changes multiple hands.
        • vacri 14y ago
          My mother has lived in a couple of different up-in-the-mountains hamlets and I've met the people in nearby houses. Like you say, there's farming support work. There are also people like scriptwriters, professional wine tasters, hoteliers/B&Bers, architects, software engineers, government consultants ('what kind of consulting?' => 'consulting'...) and officials, retirees, successful artists, landlords living off rent from elsewhere, so on and so forth. There are heaps of people with 'portable' jobs that can bring money into a town, and plenty of those like the small town or hamlet life. You can't tell that a town doesn't have a well-off scriptwriter living in a back street simply by driving through it.
    • mogrim 14y ago
      > We are not heading to Mega City 1. Gutted, I need a Chopper style surf board!
  • dhughes 14y ago
    I've thought the same thing, I live in a small town and when I travel out to the country and see small houses actually shacks (their pickup truck is bigger) my mind spins. Agriculture sounds innocent enough but living in such an environment I know it's not that simple. It's seasonal which is at the moment a huge problem the Canadian government has with seasonal workers in isolated areas. People get government assistance aka employment insurance or "EI" in Canadian-ese but the government has closed down the offices people go to apply and made it web based, baffling non-techy 60 year-olds. Now "EI cops" are making unannounced visits to these rural areas to make sure they people on EI are looking for work...but where?! Anyway it's an age-old situation, the people make our food live in the middle of nowhere get pennies per ton and when they need money the government and city dwellers sneer at them.
    • eli_gottlieb 14y ago
      Admittedly, at the same time Big Farming are just the same kind of bastards as any other large manufacturing or resource-extraction capitalist titans, and are often receiving very nice breaks from the government.
      • maxerickson 14y ago
        Take a look at the ownership breakdowns here: http://www.census.gov/compendia/statab/cats/agriculture/farms_and_farmland.html http://www.census.gov/compendia/statab/cats/agriculture/farm... 826, "Farms by Size and Type of Organization" is probably the more interesting report. There is some room at the top for your cartoon owners there, but the typical farm, by acreage and number, is a medium sized place (still hundreds of acres) that is closely held by a family.
      • dhughes 14y ago
        The USA calls subsidies a different name but they're still subsidies especially sugar and corn crops. It's do as I say not as I do even if the rules are broken, but it's no shock coming from the US. NAFTA supposedly has wording about subsidies but the US often denies it I am just going by what I hear since living in an agricultural region you hear this stuff since birth even if you're not a farmer or fisherman.
  • Florin_Andrei 14y ago
    Reminds me of the movie "Cars" by Pixar.
  • crusso 14y ago
    You see communities surviving, perhaps thriving in their own way and you don't understand how. Instead of thinking, "I must not know something", you think "these places don't produce anything of value". Your comment said very little about economics and a great deal about you.
  • gregpilling 14y ago
    I think with an increase in telecommuting jobs (except Yahoo!) there may be growth in these small towns in the future. Small towns are nice to raise children in, have lower costs of living - which can be offset by high pay, high skill work telecommuted into the office from small town home. And then the extra cash will turn into custom furniture because all the neighbors have IKEA and they want to be different.
• kevinskii 14y ago
  As others have noted on HN, what you're describing is called the "Lump of Labor" Fallacy: http://en.wikipedia.org/wiki/Lump_of_labour_fallacy http://en.wikipedia.org/wiki/Lump_of_labour_fallacy
  • michaelochurch 14y ago
    "Lump of labor" is fallacious, but there's a demand curve at any given time, and demand for most of the stuff that being have been doing for decades is softening and will continue to do so. The long-term, progressive solution is to train people up. Give them the resources and autonomy to learn the skills they need to rise to a higher level of work. If this is done, then we break out of the zero-sum labor regime, people graduate to more creative, high-yield work, and we can all be happy. But... someone has to pay for these people to survive while they learn, which takes far away from our original-sin (work, or don't eat) economy and closer to the basic income concept.
    • mkr-hn 14y ago
      This is one of the big criticisms of unpaid internships. It favors people who already have the ability to work for something other than subsistence. There may be more room for paid internships than companies are willing to admit, and encouraging them to pay might be a useful stopgap until we come up with something better.
      • michaelochurch 14y ago
        Unpaid internships exist for exploratory purposes (try people out, discard most) in industries that, while "cool", are effectively marginal (and headed toward obsolescence). The unpaid internship phenomenon is not there to skirt minimum wage laws, but to avoid an uncanny valley. The actual economic worth of a publishing intern is nonzero (and probably above the minimum) but unsavory. No middle-class college-educated person will work for $9.50 an hour-- it's a pride thing-- so the wage is reduced to a flat zero and the job type is redefined as a "learning experience". To be fair, it's not totally dishonest bullshit. If the pay is zero, the power dynamic is different. So it is a different kind of experience (I'm just not sure how much of one it really is). I actually think that a basic income is good insofar as it removes the need for the minimum wage. Minimum wage is essentially a clumsy minimum-income program where the bill is paid by low-end employers, who respond by cutting low-end jobs, creating unemployment. In theory, without a minimum wage, we'd have zero unemployment (except for the beneficial, intrinsic kind). Add that to basic income, and the (theoretical) result still holds: full employment. Most capable people would work, for economic reasons, but the option not to work would give employees more leverage and be better, on the whole, for society. As much or more work would be getting done, since it's unambiguously bad for people to be economically disenfranchised (1930s proved that fucker true).
• dia80 14y ago
  I often discuss this with friends. It often comes down to: Big technology disruptions have happened before. The market adjusted and something new came along for people to do. I like to argue: There were about one million working horses in the UK in 1900 but only 20k by 1914. No one found new jobs for those horses... [1] [1] http://en.wikipedia.org/wiki/History_of_the_horse_in_Britain http://en.wikipedia.org/wiki/History_of_the_horse_in_Britain
  • SoftwareMaven 14y ago
    Except when a horse became a cost instead of providing income, it would likely have been slaughtered. I don't think that's the path we want to take with people.
    • mbetter 14y ago
      Based on the glee that a significant proportion of Americans seem to derive from cutting social safety nets, that appears to be exactly the path we seem to be heading down.
      • pc86 14y ago
        Yeah those stupid Americans sure do hate poor people, don't they? /s
        • niels_olson 14y ago
          Perhaps you haven't been to the South? Even the poor people hate the poor people. And they have the most poor people. Figure that.
          • mncolinlee 14y ago
            This is too true. Here in Minnesota, we had a state representative equate food stamp recipients to animals in two separate speeches. In her rural district, almost twenty percent are on welfare programs and most residents are under the poverty line and qualify for food stamps. They still vote for her in spite of statewide coverage of her statements. The attitude that everyone else is lazy and abusing the system seems most common in poor rural regions that depend the most on benefits. It usually has racial, anti-urban overtones that imply "we're only suffering because of THOSE people who don't look like us." It's a form of scapegoating.
• Domenic_S 14y ago
  > The only long term solution is a basic income system We already have basic income (guaranteed income/'living wage'/whatever buzzword you want to use) in the US, it's called... welfare and disability.
  • tjic 14y ago
    This is the point made by blogger The Last Psychiatrist.
  • michaelochurch 14y ago
    That's closer to a minimum income program, in any case. The difference is that a basic income means that X amount is paid to everyone. There's no "welfare valley" (or plateau). Every $1 earned on the market is $1 (less taxes) earned.
  • deleted 14y ago
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  • jchrisa 14y ago
    There are BIG problems with welfare that are solved by giving it to Bill Gates also. For starters, right now the income you get when you transition off of welfare is taxed at greater than 100% - why work when you can get paid more to do nothing and get paid more?
    • yebyen 14y ago
      Is that really true? Explain Are you saying that welfare income is not taxed, but when you earn the minimum amount required in order to be denied welfare, it's less than the welfare check / also taxed? I am not sure that's the same as 'taxed greater than 100%' -- that would mean that you've earned $10, so pay $13 in taxes. The math might work if you had actually been earning welfare; if you mean something else than what I'm saying, please explain.
      • scarmig 14y ago
        Well, we're talking about effective marginal rates, not the listed amounts. The next dollar would be taxed at 20% or whatever the listed rate is. However, if you also lose a dollar of welfare, the tax rate is actually 120%, at least in terms of how incentives influence someone's marginal decisions.
• obviouslygreen 14y ago
  While this is interesting, it breaks down -- suggested logical fallacy notwithstanding -- at "the only long term solution is [x]." Applying enough reasoning to see and understand our larger problems is a necessary first step, but to find one potential solution and stop there, as though further consideration could not possibly find alternatives, is extremely baffling.
• yummyfajitas 14y ago
  Of course, it's a moot point at this point in history. Lots of productive professionals are probably willing to pay $8-10/hour to have their homes cleaned, meals cooked, and errands run. I certainly am. The robots don't do that stuff yet. Yet there are millions of people who claim they can't find work. Something doesn't add up.
  • bilbo0s 14y ago
    The union of the set of people you would be willing to have in your home and the set of people comprising the millions who claim they can't find work is, I suspect, small relative to the size of the US. ie - The people we are talking about... you probably wouldn't hire.
    • eli_gottlieb 14y ago
      Hmmm.... extremely true. Even when we're not talking about the criminal underclass, I wouldn't hire an unemployed frat-boy type to take care of my apartment (too much nerdery about the place) or cook my meals (what's he going to know about kashrut or how to make curry?).
  • bluehat 14y ago
    While cleaning your home for a few hours a day is not hard physical labor, cleaning houses all day would probably not be a great job for somebody with back pain. It is certainly more physically strenuous than your average job at McDonalds, which they already have available to them.
    • prodigal_erik 14y ago
      Many of them may not. I remember news covering a McDonalds "national hiring day" where they hired 62,000 out of a million applicants. http://www.bloomberg.com/news/2011-04-28/mcdonald-s-hires-62-000-during-national-event-24-more-than-planned.html http://www.bloomberg.com/news/2011-04-28/mcdonald-s-hires-62...
  • brigade 14y ago
• DennisP 14y ago
  Let's assume you're right that we should have a basic income system, where every citizen receives a fixed amount. The money for that can partly come from cutting existing welfare systems, but we'll likely also need new revenue for it. Coincidentally, the "fee-and-dividend" plan proposed by James Hansen calls for taxing carbon emissions by the ton, and distributing all the money to citizens, equal amount per capita. That sounds a lot like basic income. Maybe we can kill two birds with one stone here.
• joelmichael 14y ago
  The basic income might sound like a far-left idea to some, but it is supported by some ardent capitalists including Milton Friedman. He specifically supported its implementation in the form of a "negative income tax" which would replace the current welfare system. The reason for his support was that it was a more efficient redistributive system, as it avoided the perverse incentives of means-based welfare.
  • RandallBrown 14y ago
    I like the idea of a negative income tax. I'm imagining it as a system where if you make below a certain amount of money, you aren't taxed, you're actually given money. If you make above that amount, you're taxed. As long as it's implemented in a way that there is still an incentive to make more money, I think it could be a decent solution to our problems.
    • scotty79 14y ago
      There's always incentive to earn money as as long as there are things to buy that your neighbor won't be able to buy with basic income an you, with your earned money will be able. Earners are driven by envy and competition.
      • nitrogen 14y ago
        Right now there's a disincentive to make more money because you lose some types of benefits when you get a job, even if that job pays less than the benefits.
    • mjn 14y ago
      The EITC is somewhat like that, though it's mainly targeted at families (the amounts for households without children are extremely low, with a max benefit in 2013 of $487/yr).
    • TomatoTomato 14y ago
      The best example of this is the FairTax. The prebate is currently based on making sure those at the poverty line pay 0% federal taxes. But, if you change this to be 2x the poverty line or something, you effectively achieve a floor "basic income" https://fairtaxer.files.wordpress.com/2011/11/prebate-chart-married3.jpg https://fairtaxer.files.wordpress.com/2011/11/prebate-chart-...
• lukifer 14y ago
  I agree wholeheartedly, including on basic income, with one more detail: as long as people are being paid, why not pay them for "unprofitable" work? Firstly, pay people to go to school. Any subject, useful or not, for as long as they like. The education and mental fitness of the populace is a deep reservoir of Real Wealth. Secondly, pay (more) people to do community service work: visiting the elderly, cleaning up parks, tutoring kids, etc. And last, those people still work in the few remaining market jobs: have them work fewer hours! There will always be those who want 40+ hour weeks, but for everybody else, distribute up the same workload over a larger number of people with 20-32 hour work weeks. More people employed, who are less stressed, and a healthier society due to more time to self-improve and spend with family. Income is only one part of the sociological phenomenon called "jobs". People also want to feel useful.
  • iskander 14y ago
    > as long as people are being paid, why not pay them for "unprofitable" work? What you're describing is very similar to the "full employment" of Soviet bloc countries.
    • lukifer 14y ago
      So what? A thousands other details of politics, culture, and economic structure are vastly different. Soviets also had police and military and schools: should we automatically not do those things either?
  • john_b 14y ago
    Regarding your last point, it basically ignores everything about the "mythical man month" concept. Work and productivity are usually not evenly divisible into discrete chunks. When we had an economy dominated by factory work, where workers attached Widget A to Bracket B, you could divide things fairly evenly between workers. But today most jobs that aren't just physical labor benefit from having employees around more often. They stay up to date more easily, they can communicate what they learn more quickly, they can code for hours straight without the interruption of leaving at 2pm (not to mention all the interruptions due to meetings that would have to be compressed into shorter workdays to keep them up to date). There are also economic benefits of longer work days. A smaller fraction of a person's time is spent commuting (in aggreggate, cleaning up the roads and reducing carbon emissions due to fewer workers per company). And in the US, where we have decided to couple a person's insurance and benefits with his or her employer, the non-salary costs associated with an employee are a very significant component of the total cost of that employee, companies have a big disincentive to hire a large number of people, even when the work can be evenly divided into small chunks.
• jchrisa 14y ago
  What's Wrong with a Free Lunch is another great one, and short. http://www.amazon.com/gp/aw/d/0807047139/ http://www.amazon.com/gp/aw/d/0807047139/
• nathan_long 14y ago
  >> The only long term solution is a basic income system, which rewards consumption What do you mean by "rewards consumption"? Consumption is the reward for labor.
  • olefoo 14y ago
    No. Consumption is in fact a form of labor. One that in some manifestations is employed in support of natural hedonism; but often has little or no relation other than that hedonism is used to propagandize the consumption. In the United States this is particularly and sometimes painfully obvious, when people who do not wish participate in certain forms of consumption are sanctioned in various forms. This sanctioning can be overt "You'll need to wear a suit and tie if you're you want this job." or covert, "That guy rides a bike to work, wonder if he got a DUII?" Keeping up with the Joneses is the job you have when you aren't at work. One of the surprising things about social status in America is how often certain forms of consumption are effectively mandatory to signal ones class membership. Go looking for a CEO of a publicly traded company who chooses not to own a car for instance. Or a partner at a major law firm who does not have more than one residence. Those are only gross examples, one that is more familiar is the prevalence of electronic gadgets, especially those by Apple as symbols of membership in the digital worker class. The truth is that our choices in those matters are socially constructed, and that social construction happens in response to needs that are historically contingent rather than deterministic in nature. True a certain amount of consumption, of food, shelter and medical care is biologically determined; the rest is cultural.
    • eli_gottlieb 14y ago
      Oh, it gets worse than all that. Every so often you hear stories floating around about managers, in these sorts of signal-ridden workplaces, who threaten the jobs of employees who don't consume to the appropriate level. Why? It's really much more straightforward than only "class signalling": if the worker consumes too little, they'll get out of debt, and thus they'll be far less captive to one particular employer. Therefore, employees must be encouraged to be do things like purchasing new cars every so often, to keep the Golden Handcuffs tight.
    • 14y ago
• aethertap 14y ago
  This is an interesting concept, but I have two big objections to it (the same objections I actually have to other safety nets as they currently exist). First, I want to mention at the top that I'm not in favor of leaving people out in the cold. I love to help people, and I think anyone who wants help should get it. The problem I have is that money seems to be the default strategy for "help," when it often seems to be counterproductive. The two things I really don't like about the ultimate safety net are these: First, that type of mechanism actually seems to be oppressive (based solely on my own observations, which are limited, but I'll explain below). Second, having the safety net from on high actively discourages people in a community from helping each other directly. Instead, they turn to the authority, saying that the basic wage is good enough, so why should I bother? The observations I mentioned were over a period of about a year when I lived in a neighborhood that was almost entirely composed of people living on some form of assistance. They were not evil, bad, or leeches, and I'm not going to make that claim. However, as best I could determine, they had found a strategy that was "good enough" that they didn't feel the need to improve their standing in life. In other words, they had elected to live in near-poverty because it was effortless. I knew several of them to varying degrees, and they were intelligent, able people. The effect of the safety net on their lives was extremely negative (in my opinion), even though they would certainly say otherwise. They did not want to be in better circumstances, and given the opportunity to learn a skill that would immediately improve their lives (trade skills like welding, or gardening even), most would refuse. I don't think that is a natural state for people, and it was frustrating for me to see it (especially for the kids involved, who had subsistence living as their primary model). The other point, about passing off responsibility for helping neighbors, is something I've seen in two flavors. First, and by far the most common, is in the world of conflict resolution. It's typical for one neighbor to call the nuisance abatement or police on another rather than actually go knock on the door to solve a problem. This is because they can offload all of the discomfort of confrontation onto an authority figure. The unfortunate consequence is that it makes the neighbor hate them, and things get worse from there. The other flavor of this problem is when people who do work and pay taxes resent seeing people who don't work but could, who are living "on the dole." The feeling of resentment looking at someone who is, even to a tiny degree, living for free on the fruits of your labors gets in the way of actually wanting to help that person. It gets people thinking in terms of "Why should I help them? They already live for free on my back, and they're not trying to make any changes." So what would I propose? Like I said, I'm not a fan of the "survival of the fittest" approach, and while many people seem to advocate that I don't think they actually want to see others suffer either. My main objection is that I see money going to causes that I think are directly harmful to the people they're supposed to be helping. What I would like is a way to direct the resources I spend on social support to causes that I think are actually beneficial (free education, skills training, apprenticeships, etc., maybe even with stipends and whatnot). I realize that everybody likely has a different view of what "helpful" means, so what I'd like to see is decentralization of social support into various forms that cater to different people's concepts of what actually works. You can make paying into it compulsory or not, but to me the real problem is that I don't like to see my money going to what ultimately seems to be an oppressive form of "help."
• rohern 14y ago
  I appreciate the interesting reading. Thanks for the useful comment!
• guard-of-terra 14y ago
  How does the basic income works against immigration (including illegal)? Because it seems that once you declared basic income and nobody wants to work anymore, you'll get a huge influx of immigrants from the third world (who would be like slaves but even more oppressed) plus they will be trying to get citisenship as hard as they can. Won't be pretty.
  • scarmig 14y ago
    "Because it seems that once you declared basic income and nobody wants to work anymore" That's not in evidence: most programmers could work a month out of the year and have the amount of money provided by a basic income, but they choose to work much more than that. But I digress. Immigration is one of the more interesting challenges for a BI, but I think it's overstated. As alluded to above, there's still all the incentive in the world to work even while receiving a basic income: which is to say, more income. You would want to make sure that you don't have a huge immediate influx of immigrants, but that's pretty simple: limit the number of immigrants in to a manageable amount (whatever that is), and only give citizenship to an immigrant once they've lived here for X years. At that point they'd have been working aplenty, paying taxes, and building skills: on citizenship and receiving the income, they'd have the same skills and incentives to continue working.
  • lilsunnybee 14y ago
    if a basic income is $10000 a year, i doubt that many people are going to be falling over themselves to stop working and try to scrape by on just that.
• deleted 14y ago
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