On Sat, 2005-04-02 at 00:49 -0700, Lowell C. Savage wrote:
> I notice that a lot of these numbers are "socialist" or "collectivist"
> statistics. (Not all, but most.) For instance, on a libertarian list, it
> should be a "good thing" that the National Science Foundation has had its
> funds cut. WHO is a notoriously socialist organization that measures things
> by socialist standards ("fairness of healthcare"???!!!). Yes, I'll bet they
> claim Cuba has better health care in certain respects (one of the recent
> ones was infant mortality--until some blogger started looking into the
> details and discovered things like that US preemies that died were included
> and Cuban preemies weren't.) For some more, related info, see:
> http://www.techcentralstation.com/032105B.html.
Also, on an age-adjusted basis, Canada spends MORE on health care than
any other OECD country, period. Why "age adjusted"? Because the age of
the population matters for health care. The largest expenditures come in
the last year of life. In Canada, 12.5% of the population account for
nearly HALF of the spending.
Prior to it's nationalization of the health care industry, Canada ranked
second in doctors per-capita among OECD countries. Now it ranks 16th out
of 23.
http://www.techcentralstation.com/072004D.html
A very interesting read- yup, more Kling. Thanks for reminding me of
Kling's work. Now to share more. :D
And how about some more:
http://techcentralstation.com/092903A.html "Bleeding Heart
Libertarianism"
On the chart he has, ad a "K" to the left column. ;)
I found this one very interesting because years ago I twiddled the idea
of a negative income tax (taken from Friedman) in combination with
eliminating services from the government such as insurances and schools,
welfare, etc.. Maybe I should dust off the old hard copy and work on
some computer simulations. Hmm perhaps looking at it at a state level...
I had not considered basing it on consumption as Kling has done here,
and I must say it is quite appealing. My largest concern is the
paperwork involved in such a system. You would have to document your
purchases.
My other major concern is an incentive to spend spend spend w/o working.
Kling mentions no cap on NCT payouts. I would tentatively suggest a
maximum payout of maybe the poverty line (per individual/family/etc)?
On the other hand eliminating withholding, welfare, government run
medical/unemployment insurance, government run schools, half or more of
the budget, is quite appealing.
All the wranglings over special programs for the needy are gone.
Determination about deductions and brackets are gone. The "marriage
penalty" is gone. The current system which actually penalizes savings
now rewards savings. The political wrangling over taxes becomes:
1. The payout cap
2. The per-person "deduction" amount
3. The poverty line (which should be determined by economics anyway)
If I am not mistaken, this system (with cap) would create an incentive
to work/earn more. This is unlike a Negative Income tax which creates an
incentive to stay home. I'll definitely need to code up some simulations
to see if there is. That can be determined mathematically for a good
enough guess. Maybe we could even see the minimum wage go bye-bye. The
emotional argument for it goes bye-bye at least.
Off the cuff using figures local to where I am, a single person working
at a local McDonalds (which pays mid-upper $6/hour here for starting
high-schooler wage) full time living in a modest apartment with a modest
car and insurance, medical insurance at double local rates through
employers (who "cover" half of it for us), eating well, etc. would do
just fine, even able to stash away a couple or few grand per year w/o
pinching the pennies much if at all.
A couple w/o kids could also pull this off with that same single earner,
and even stash away several grand per year, or split the extra between
education/savings.
A couple w/1 kid:
Assume they are paying current private school rates, and the non-school
expenditures for the child add up another 1500/year. If I am not
mistaken, they would reach the maximum payout under the tentative cap I
posit above (2003 threshold). Since the tax is consumption based, there
is no disincentive for the spouse to work: that's just more money coming
in. However, it also looks like there would be no penalty to a
stay-at-home spouse as opposed to the current system.
A family of four:
One earner full time at 8/hour FT (not hard to find):
spending 30K/year would get around 16000 in NCT, for a total of about
32,640 per year, enough to stash away a coupe grand/year and still live
quite comfortably. If the spouse decided to pick up a part time job (say
while the kids were at school perhaps) they might increase spending some
amount (gas, maybe a second nice late-model or new car, extra food,
etc.), as well as adding income.
Above, with 1 PT spouse:
Add ~6800 in annual income. If the spouse bought a new car at
350/month with insurance of about 50/month that's a consumption increase
of about 4800/year; call it 5500 for related incidentals. The NCT they
get goes down about $2,200, but their net income went up $4,600.
Now, if such a system were to be pushed through, it could have some
dramatic impact on our future economy. Retirement planning becomes far
simpler. No "need" for Social Security or government managed retirement
accounts. Why? Well, the "poor" get their payments, but if they spend
them all then they get less next time, as it is consumption based. Thus
there is a built-in incentive to save or be thrifty; or at the least not
irresponsible and reckless.
But would it put a drag on consumption? Possible, but it doesn't look
like it would much, if any in the net terms. The decrease in business
overhead can not be denied. Eliminate the fedgov imposed red-tape of
payroll from HR. Big boost there.
Further decreasing the downward consumption pressure is the net increase
in disposable income. Initially, I'd bet many would start paying off
their high interest credit cards with their extra cash. Eventually, high
interest cards would become much much less common as people generally
have more cash laying about. Remember: the higher their payments, the
more taxes they pay (or the less they get). If I have a CC with a
monthly of 75 bucks, and I now see an monthly net increase of say
750/month, if I can use that to increase my cash flow by $75/month (pay
the card off faster) while reducing my tax burden. It's a win for me in
every way.
This would serve to keep the initial jump-start/boost going for a longer
period. An increasing rate of savings also should lower interest rates.
it would also create an upward pressure on wages as people can be w/o
employment longer.
The limiting factor would be inflation. With such an influx of readily
available cash, we might see a serious pressure on inflation. The fed,
however, could probably not do much to stop it. After all, with that
much money in private hands, the fed's upward pressure on short term
rates become even more meaningless.
The significant decrease in government jobs would provide a bounty of
people for the private uptake of these services. We'd likely see an
influx of investment and new business growth in the sectors currently
dominated by the gun enforced monopoly.
The other catch is that this assumes ALL government welfare and schools,
etc. goes away. That is state and federal. That would be a tricky
situation. I doubt the fed could mandate the states to make them go
away. Perhaps the change would be enough to force the change in the
states? Maybe state taxes should be considered consumption as well? That
would possibly create a pressure to the states by taxpayers and NCT
recipients.
Again locally, if the State of Idaho were to go along with such a
federal change we'd see a 50%+ drop in the state budget. Pulling out the
schools alone would get you a 50% drop. Eliminate the welfare and HHS
spending and there is another nice reduction. I wonder what'd happen if
the FedGov went with it and the State of Idaho moved to a matching
system -though obviously with different numbers. Perhaps keeping the
first part of the equation the same and simply reducing the deduction?
Since the Fed would be "providing for the general welfare" ;) ... the
state wouldn't need much at all comparatively speaking. Of the cuff I'd
figure at least a 2/3rds reduction, possibly 3/4rs depending.
In isolation, the state could likely pull off such a system on their
own.
And let us not underestimate what it would do to campaigns if the fedgov
was down 50%+ in it's budgeting. If most of these special interests go
away (most have to do with providing special benefits or exemptions).
While there would still be lobbying done for these corner cases, the
chances of them slipping through would be small if the NCT is done
properly or at least well enough.
It isn't perfect and there are a lot of considerations to go on (not the
least of which is the dollar figures, the cap, etc..). But from where I
sit, it certainly looks better than our current system.
Cheers,
Bill
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