Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP Path: utzoo!decvax!decwrl!ucbvax!ametek.UUCP!walton From: walton@ametek.UUCP.UUCP Newsgroups: mod.politics Subject: Welfare, crime, business, unions, and freedom (long) Message-ID: <12226922314.40.MCGREW@RED.RUTGERS.EDU> Date: Wed, 30-Jul-86 20:10:15 EDT Article-I.D.: RED.12226922314.40.MCGREW Posted: Wed Jul 30 20:10:15 1986 Date-Received: Thu, 31-Jul-86 17:42:58 EDT Sender: daemon@ucbvax.BERKELEY.EDU Reply-To: ametek!walton@csvax.caltech.edu Organization: The ARPA Internet Lines: 133 Approved: poli-sci@red.rutgers.edu Return-Path: Date: Thu, 24 Jul 86 10:04:13 pdt From: Steve Walton Subject: Welfare, crime, business, unions, and freedom (long) Well, it seems I touched a nerve. :-) Let me discuss a few points with minimal quoting from your letter, which I greatly enjoyed. You are correct that one is often "better off" under welfare today, because the current benefit structure is such that you lose more than $1 of benefits for every $1 you earn at a job. However, the numbers show that the majority of means-tested benefit programs (which should be distinguished from non-means-tested entitlement programs such as veterans' benefits and Social Security) go to people who cannot work, mainly unskilled mothers with small children whose fathers have split. We all know people who are stealing from the government, including people who "watch TV all day and count the welfare checks." This is anecdotal evidence of abusers of a system, and proves nothing about the general utility, or lack thereof, of that system. The current welfare system is, indeed, an active disincentive to finding useful employment, and must be either fixed or scrapped. Whether it can be fixed awaits the outcome of such experiments as California's new "workfare" program. It really is possible to be a victim of circumstance. I admire your success since your release from prison; it doesn't change the fact that there are people who have applied for more than 100 jobs, re- ceiving one interview and no job, and have given up looking. (Actual name of this person can be found on the front page of the July 21 LA Times, which I don't have handy at the moment.) I am also not aware of anyone who "HAS TO commit crimes to survive" in this country. You suggest that crimes would decrease if crime was less lucrative and exciting. How do you suggest we do that? We already spend a larger percentage of our national wealth on law enforcement, and have a larger percentage of our population in prision, than any other democracy. And they are not in there for the victimless "crimes," which I agree should not be illegal, but for crimes against other persons and others' property. Business and employees: The relationship between an *individual* employer and employee is not symmetrical. Employers have, in the past, not only fired employees but tagged them as "troublemakers," thus preventing them from getting jobs anywhere else. They also paid workers a barely adequate living wage, which meant they couldn't afford to strike, or put money aside and quit, in order to protest low wages, or unsafe working conditions. When, despite these odds, workers started to band together in unions, the coercive powers of business and government (the two being nearly identical in those days) were used to prevent this. In the book I recommended in my last posting, William Manchester's "The Glory and the Dream," he offers another explanation for the Great Depression. Manchester, reflecting a middle-of-the-road consensus of economists, concludes that it was due to low wages. Industry showed spectacular productivity gains from 1900 to 1929, but wages remaind relatively constant. The result was that those who were manufacturing the cars and refrigerators couldn't afford to buy them. They bought them anyway, on credit terms which they couldn't meet. The problem was compounded by low farm product prices, the result of overproduction, which meant that farmers couldn't afford industrial products either. When it turned out that most people couldn't afford the payments on their debts, the banks and then the economy collapsed. Note that NONE of this was the result of government action or inaction. In fact, the top income tax rate was dropped from 65% to 25% in 1925, which today's economic thinking says should have generated an enormous boom. (If all of this sounds familiar, perhaps it should.) Before 1929, there was a regular crash every 20 to 30 years; they called it the "business cycle." There hasn't been another one since the New Deal. While correlation is not cause and effect, I think a fair case can be made that this one is. When unions demanded a fair share of their company's profits, and won them after years of battles, it created the middle class in this country. We avoided the socialism of Europe because of, not in spite of, our labor unions. (I must credit a George Will commentary on ABC of about a year ago for these thoughts.) At the time, they were simply asking for a share in the productivity gains which they had helped bring about. Now, of course, they ask for wage increases even when their productivity goes down. Senator Bill Bradley of NJ recently suggested that fixed wages be scrapped in favor of giving workers some minimal wage plus a share in the company's profits, an idea which I think has much merit. TODAY'S labor unions are, to quote Prof. Lance Davis of Caltech, monopolistic corporations whose product is labor. This does not change their mainly positive contributions to American life. You are absolutely correct about the current state of the auto and steel industries, and the negative effects of import quotas on the economy. And I certainly share your lack of sympathy with people who were sporting "Drive 85--freeze a Yankee" bumper stickers a few years ago. Most government transfer payments, such as Social Security, go to the middle class, but such "entitlement" programs must be carefully distinguished from "means-tested" programs such as food stamps and AFDC. I don't know what the total amount being spent on means-tested programs at all levels of government are, but I'm quite sure its a tiny fraction of the $350 billion which the Social Security system hands out every year, to say nothing of government pensions which often exceed what employees at the same level as the retiree's receive. So, your comment about the amount which taxes would drop if social spending were eliminated is true even if welfare is excluded. But I am not sure that voluntary contributions would in fact adequately provide for "the 1% who are permanently truly needy and the 2% who are temporarily truly needy." However, it is in fact possible to be a victim of circumstance. Your 2% of the population who are temporarily truly needy is 5 million people, or roughly 1.5 million families. Coincidentally (?), about 1 million Americans are classed by the Labor Department as "discouraged workers," meaning that they have tried hard and been unable to find a job. Loss of a job is not merely "traumatic" to a family with only one wage earner. What are they to eat while another job is found, or retraining obtained? Your analogy to divorce is interesting, since another large component of government aid recipients is wives whose husbands recently left them, and who have no job skills and are given custody of the children. Consider widows in similar circumstances. We, as a society, have made the value judgement that such people should not have to sell their homes and cars (which are usually old VW's not new BMW's) and live in abject poverty until such time as employment can be found again. Rather, we have decided that tax revenues (which are largely voluntary--it is laughably easy to cheat the IRS) should be used to prevent such poverty. You disagree with this value judgement; I agree with it, and I don't think that either of us can change the other's mind. If you don't have time to watch TV (I don't own one either), I'm surprised you have time to read, or write, diatribes like this one. Steve -------