On Forks In The Road

Credit: psmag.com

NPR is commonly considered to have a liberal bias, but having of late listened to many of its products I would now disagree. Of course, that might have something to do with a drift politically leftward, but I prefer to think it’s a matter of just paying more attention, albeit late in life. One recent article I mentioned in a comment on another blog did elicit a complaint. “Unfit For Work” remarks on the sudden growth in the rate of applications for disability status under the Social Security System. That increase is being accelerated by states which are employing subcontractors to the tune of over $2,000 per person to transition the poor from welfare roles funded by the states to the federal disability rolls wherein they receive a monthly stipend of about $1,000 or so and also virtually free medical care.  They get that only if their disability prevents them from working, and they don’t have to prove their disability. Thus far some 14 million people have that status and at the present rate of growth their numbers are projected to double in 15 years. Personally, given the obesity epidemic and the graying of the Boomers, I fully expect those rolls to grow even faster than that.

Does this imply that people have a slothful nature and are therefore being naturally drawn to such a program, thus depriving them the motivation to be self-supporting? That was the concern and that’s the same theme embraced by many conservatives and notoriously expressed in the Mitt Romney recording in which he disparaged “the 47%”. It was also a motivating force behind the Clinton-era welfare reform effort, now considered a success. Rather than see this as denigrating human nature and categories of poor people, however, I prefer to see it as instructive of how economic policies affect people. Haven’t we all read of or know people whose lives seemed to take turns for the worse or the better seemingly on small pivots of influence? Consider for instance one Barack Hussein Obama, a half-black kid raised in a polyglot landscape (no, not Kenya, Hawaii) by an abandoned mother and grandmother. What chance did he really have of making something of himself? Colin Powell is another. If not for the U.S. Army, what might he otherwise have become?  (Perhaps a discouraged community organizer.)

The problem I see with the disability thing is that it subsidizes dependency and that it’s growing rapidly. At least demographically, people act in predictable ways. On an NPR Planet Money pod-cast today however, I heard about a give-away program that incentivizes productivity and it’s one that may surprise you as it did me. It is the Earned-Income Tax Credit. It pays poor people a subsidy, being in effect that conservative anathema, a direct transfer of wealth from haves to have-nots.  But here’s the thing: The EITC requires a person to have earned income, and the more they earn, the larger the subsidy (up to a point of course). One person in the story, a single mother making $9,000 from part-time work got a “bonus” of $3,000. But the point is that she was incentivized to not only keep on working, but to try to earn more.  (Read the pod-cast to find out more about what happened – there is humor there as well.) The Earned Income Tax Credit is considered a success by economists and according to the article it sprang from a concept proposed by none other than conservative economist Milton Friedman.

Credit: selfpublishordie.com

Thus we see two government programs here. One incentivizes dependency and one self-sufficiency. Personally I believe in the butterfly effect. I believe that when people come to a fork in the road, they take it.  (Thanks, Yogi.)   And I believe it’s all too easy to take the wrong fork. That’s not being down on human nature, I submit, it’s being realistic. What do you think?