Agreed that the example is silly, but the general trend is basic economics. A tax and a subsidy have the same effect on behavior in the short term, but one of them makes the industry less profitable (and thus it shrinks) whereas the other makes the industry more profitable (and thus it grows). I really don’t want to make the industry of “endangering public health” more profitable.
Well, first of all, if there are two industries and their size is a zero-sum game (all population is divided between classes A and B and everyone must belong to either A or B) then the effect of a tax and a subsidy is exactly the same. What grows one part, shrinks the other part and vice versa.
Second, this is a general-purpose argument against helping anyone in trouble. And, certainly, sometimes it is a valid argument (e.g. see the flood insurance for shore properties in the US). But sometimes its validity is more doubtful: for example, following this logic the SSI system for disability benefits should be dismantled immediately.
What grows one part, shrinks the other part and vice versa.
Yes? If we, say, use subsidies to reward coal plants for reducing their emissions, then coal plants will have lower costs relative to nuclear, and we’ll see more coal plants and less nuclear plants than we would have otherwise, and this goes against our stated goal of reducing emissions. If we taxed emissions, then we would get the same short-term behavior but in the long run there would be less coal plants and more nuclear plants, which would aid our stated goal of reducing emissions.
Second, this is a general-purpose argument against helping anyone in trouble.
Agreed. I think this is a concern that should be taken into account whenever considering whether or not to help someone in trouble, but think that it will only be decisive in marginal cases (or cases where trouble is easy to cause or fake).
But sometimes its validity is more doubtful: for example, following this logic the SSI system for disability benefits should be dismantled immediately.
It seems obvious to me that a significant amount of ‘disability’ today actually is fraudulent, and the SSI system exists as it does because we haven’t accepted on the social level that a growing percentage of the population is not able to contribute productive work in the modern economy. Given that SSI fulfils an actual social need that is different from its stated social need (as well as filling that need), dismantling it without fixing the problem it’s been co-opted to fix seems like a mistake. If we had a guaranteed income (or negative income tax or however you want to call that solution), then it’s not obvious to me that we would need SSI.
the SSI system exists as it does because we haven’t accepted on the social level that a growing percentage of the population is not able to contribute productive work in the modern economy.
I don’t understand. It seems to me that we HAVE accepted that on the social level and so are paying that growing percentage of the population so that it doesn’t starve (or turn to crime, etc.).
Basic Income solves a somewhat different problem—that of people not willing to work.
It seems to me that we HAVE accepted that on the social level and so are paying that growing percentage of the population so that it doesn’t starve (or turn to crime, etc.).
I think we’re disagreeing about the use of ‘accepted’ rather than the facts: I mean that the media consensus is not that we have ‘surplus population’ who should be paid to not starve or cause too much trouble, but that we have a growing number of people with disabilities, and that the labeling as ‘disabled’ is a significant portion of why the voting public is willing to spend taxpayer money on them. I understand you to use ‘accepted’ to mean that SSI is still funded and protected by public opinion against significant cuts.
I think there is some definition fuzziness here. We started with “percentage of the population … not able to contribute productive work”, this mutated into “surplus population” which is not the same as “people with disabilities”?
A resonable (economic) definition of “disabled” is “not able to contribute productive work”...
Do you have in mind what Tyler Cowen calls ZMP (zero marginal productivity) workers?
A resonable (economic) definition of “disabled” is “not able to contribute productive work”...
Agreed, but my impression is that SSI is targeted at medical disabilities- “I used to be a manual laborer but I now have persistent back pain” instead of “I used to be a manual laborer but now I’m structurally unemployed.” The system as is encourages the medicalization of economic issues- and in particular of exaggerating the medical impact of issues rather than ameliorating them.
SSI is targeted at medical disabilities- “I used to be a manual laborer but I now have persistent back pain” instead of “I used to be a manual laborer but now I’m structurally unemployed.”
Right, because the former means unable to work, while the latter usually means “can’t find a job that I like enough”.
The system as is encourages the medicalization of economic issues- and in particular of exaggerating the medical impact of issues rather than ameliorating them.
I agree. I have no particular wish to defend SSI or the way it’s run—my point was basically that “we should not subsidize failure” cannot be taken as an overriding principle. It is one of many considerations: sometimes it governs and sometimes it steps back.
I agree. I have no particular wish to defend SSI or the way it’s run—my point was basically that “we should not subsidize failure” cannot be taken as an overriding principle. It is one of many considerations: sometimes it governs and sometimes it steps back.
It still (mostly) follows the principle that we should not subsidize deliberately choosing to fail, as medical disabilities are generally assumed not to be voluntarily self-inflicted.
Agreed that the example is silly, but the general trend is basic economics. A tax and a subsidy have the same effect on behavior in the short term, but one of them makes the industry less profitable (and thus it shrinks) whereas the other makes the industry more profitable (and thus it grows). I really don’t want to make the industry of “endangering public health” more profitable.
Well, first of all, if there are two industries and their size is a zero-sum game (all population is divided between classes A and B and everyone must belong to either A or B) then the effect of a tax and a subsidy is exactly the same. What grows one part, shrinks the other part and vice versa.
Second, this is a general-purpose argument against helping anyone in trouble. And, certainly, sometimes it is a valid argument (e.g. see the flood insurance for shore properties in the US). But sometimes its validity is more doubtful: for example, following this logic the SSI system for disability benefits should be dismantled immediately.
Yes? If we, say, use subsidies to reward coal plants for reducing their emissions, then coal plants will have lower costs relative to nuclear, and we’ll see more coal plants and less nuclear plants than we would have otherwise, and this goes against our stated goal of reducing emissions. If we taxed emissions, then we would get the same short-term behavior but in the long run there would be less coal plants and more nuclear plants, which would aid our stated goal of reducing emissions.
Agreed. I think this is a concern that should be taken into account whenever considering whether or not to help someone in trouble, but think that it will only be decisive in marginal cases (or cases where trouble is easy to cause or fake).
It seems obvious to me that a significant amount of ‘disability’ today actually is fraudulent, and the SSI system exists as it does because we haven’t accepted on the social level that a growing percentage of the population is not able to contribute productive work in the modern economy. Given that SSI fulfils an actual social need that is different from its stated social need (as well as filling that need), dismantling it without fixing the problem it’s been co-opted to fix seems like a mistake. If we had a guaranteed income (or negative income tax or however you want to call that solution), then it’s not obvious to me that we would need SSI.
I don’t understand. It seems to me that we HAVE accepted that on the social level and so are paying that growing percentage of the population so that it doesn’t starve (or turn to crime, etc.).
Basic Income solves a somewhat different problem—that of people not willing to work.
I think we’re disagreeing about the use of ‘accepted’ rather than the facts: I mean that the media consensus is not that we have ‘surplus population’ who should be paid to not starve or cause too much trouble, but that we have a growing number of people with disabilities, and that the labeling as ‘disabled’ is a significant portion of why the voting public is willing to spend taxpayer money on them. I understand you to use ‘accepted’ to mean that SSI is still funded and protected by public opinion against significant cuts.
I think there is some definition fuzziness here. We started with “percentage of the population … not able to contribute productive work”, this mutated into “surplus population” which is not the same as “people with disabilities”?
A resonable (economic) definition of “disabled” is “not able to contribute productive work”...
Do you have in mind what Tyler Cowen calls ZMP (zero marginal productivity) workers?
Agreed, but my impression is that SSI is targeted at medical disabilities- “I used to be a manual laborer but I now have persistent back pain” instead of “I used to be a manual laborer but now I’m structurally unemployed.” The system as is encourages the medicalization of economic issues- and in particular of exaggerating the medical impact of issues rather than ameliorating them.
Right, because the former means unable to work, while the latter usually means “can’t find a job that I like enough”.
I agree. I have no particular wish to defend SSI or the way it’s run—my point was basically that “we should not subsidize failure” cannot be taken as an overriding principle. It is one of many considerations: sometimes it governs and sometimes it steps back.
It still (mostly) follows the principle that we should not subsidize deliberately choosing to fail, as medical disabilities are generally assumed not to be voluntarily self-inflicted.