Free Money in the Age of Trump

Donald Trump is on the way to the White House, and Republicans will hold both houses of Congress. Seems like grim times for those who want free money from the government — unless you are a military contractor. Right?

Maybe not!

For all his bluster and political incorrectness, The Donald is far to the left of recent Republican offerings. His platform resembles that of a Democrat prior to the rise of the McGovernites. His nativism is labor unionism with a veneer of nationalism. To build a wall is to enforce a national picket line. Ditto for his talk on tariffs.

(Sidenote: I did not vote for Mr. Trump. He said way too many unacceptable things, and his campaign had an authoritarian vibe that I find chilling. Just trying to look at the bright side here.)

Trump’s plan for this country’s working-age poor is to raise the market minimum wage, so you don’t need the free money — maybe.

But there are logistical problems. Expelling millions of illegal workers will require police state tactics. “Your papers please” must become the rule of the land. The militia types would go nuts if a Democrat tried such a plan. The government could appease the militia types by using profiling — asking for papers for those who look foreign. This, of course, would violate the rights of millions of legal citizens.

Free money for all provides a human rights compatible solution. If you make the tax code flat at the bottom and provide a dividend check to all adult citizens, you make it difficult for visitors to tap into the U.S. welfare state without resorting to ugly police state tactics. Foreigners who are net taxpayers can stay. No need for quotas.

Instead of bureaucratic quotas to determine who can work here, we get:

  • Those who have skills we really need here, and thus get paid enough to justify paying the higher tax rate.
  • Those who are willing to do jobs that citizens truly don’t want to do, and thus get paid enough that after tax income is still worth coming here.
  • True refugees who would rather be poor here than persecuted there.
  • Those who have family here that are willing to provide enough support that no dividend is needed.

So, if you want to avoid a human rights nightmare, or simply want free money, pass along the idea to your nearest Trump supporters.



Before You Consider a For-Profit College

For profit college is conceivably a good idea. The non-profit colleges have expensive emphasis on fancy architecture, student life, political correctness, research, and maintaining traditions that go back to the Middle Ages. Strip away the cruft and focus on teaching motivated students who want to learn career skills, and you should be able to provide a practical education at a lower cost and still make a tidy profit.

But MBA types are driven to maximize profits, and sometimes this leads to taking moral shortcuts. Read carefully this article before considering a for-profit school.

Then, if a for-profit school still looks promising, be sure to do some research:

  • Have you verified with potential employers that they do indeed hire from the college you are considering?
  • Have you investigated their graduation rate? Are they recruiting students who aren’t up to the task?
  • Are you truly prepared for the degree program you are considering?
  • Do you have adequate study time? A career and/or kids can do bad things to your GPA.

If you need to takes some remedial coursework first, seriously consider your local community college or the many free online courses available. (And for some of you, your local community college is a better value, period.)

Shop carefully.

Your Questions Here

Any questions about what you read on the main site? Was I confusing? Incomplete?

Is there an article I should have written but haven’t?

Ask your questions in the comments area below. I will keep an eye on this post and do what I can to make this site more useful based on your feedback.


The Welfare Cliff

The American Enterprise has a great short article with graphic showing the huge penalties a working single mother can experience as her income increases. According to the article/graphic, this single mother is better off making $29000 in gross income than $57,000(!) See entire article here.

Note this article is for a woman making use of all available government programs, including housing and childcare.

According to the article, the total value of all the programs for this hypothetical single mom is $45,000! This is more expensive than the Free Money for All proposal. Sorry, we cannot give out that much to everyone and stay solvent. For some people there would need to be benefit cuts — for those people to most effectively work the system. There is not way all the needy are getting the level of benefits shown on the graph. You want to know why there are so many hoops to jump through, look at the numbers.

Happy Fourth of July!

For all the U.S. readers, I hope you are having a happy Independence Day. As you gather in crowds to celebrate, please be kind to any politicians trying to get their message out. Political solicitation is the price we pay for democracy. If you don’t like politicians catering to the big money donors, then you have to let them take advantage of cheap outreach — such as bugging citizens in the middle of eating hot dogs, listening to bands, etc.

Of course, you should take bug any politician who is bugging you. If you want free money, election season is the perfect time to ask. Because of the sacrifice of past patriots, you live in a democratic republic. Make use of it. Contact your representatives.

Saving Money

A penny saved is a penny available for something else. It’s almost free money. And unlike writing grant proposals or convincing Congress to give all citizens free money, saving money is something you can do now. And for those of you who will need to live off the universal stipend without getting a job, mastery of the art of scrimping is key. For those of us trying to affect public policy, studying the art of scrimping helps us determine how much money the government needs to dole out to prevent poverty.

Once upon a time, I was pretty good at living off a low income; I was a graduate student for six years. While I am way out of practice in the art of living cheap (and do not want to get back in practice!), I do remember the key disciplines.

  1. Share a home. Whether it be house or apartment, two or more can live cheaper under one housing unit. The kitchen is the most expensive room in the house; it pays to share. If you share with people of similar tastes, then luxuries like cable television can also be shared. Warning: this strategy can backfire if you share a home with a parasite or a barbarian. Vet your potential housemates carefully! Also, he who is on record for the rent should not be on the record for the utilities. Make sure whoever doesn’t pay their share of the bills gets to deal with creditors.
  2. Cook. When you eat out, you are paying for expensive First World labor. This is not a bad thing if your finances are overflowing, but a serious error if you are scrimping.
  3. Entertain at home. The markup on booze and other party items at bars and restaurants is astronomical.
  4. Drive a well-used car. For the interest alone on a new car, you can pay for quite a few extra repairs and come out ahead. You can also forgo collision insurance. It doesn’t take many years for the money saved on insurance to add up to another old car.
  5. Buy used other stuff. Furniture and appliances can be had at incredible discounts used. When I was an undergrad I made many a trip to the Salvation Army thrift store as I was one of the few people at my university to drive a pickup truck. (There was a time I wondered if it was taking from the poor for middle class people to buy from thrift stores. I stopped wondering after trying to donate some of my used furniture; I had to pay the charity to take some of it.) Used textbooks can be incredibly cheap after a new edition comes out. While problematic for taking a class since the problems and page numbers can change, these can be excellent for self-study. I have quite a few 90+% off textbooks on my bookshelves to this day.
  6. Make use of public facilities. Parks, libraries, and even more are free for you to work out your body and brain. (This goes triple if you are a student.)

This list is not complete. I may throw in some more posts on the subject if there is interest. If you want to really live cheap, check out the Early Retirement Extreme blog, and its associated network of blogs. Continue to live like a grad student after graduating and you can retire young. Or you can use the same techniques to live the good life without going to college at all. (Early Retirement Extreme is dormant today, but most of the posts are timeless. Read the archives.)

How About some Supply Side Love for the Poor

Megan McCardle gets it right when she writes When It Comes to Taxes on the Poor, the Supply Siders Are Right.  (Hat tip Mike Dixon.) Read the article and take special note of the graph. As income goes up, benefits go down so fast that it pays to take a lower paying job! Fixing this greater-than-100%-marginal-tax-rate is far more important than preserving the Bush tax cuts for the rich. It might even save the government some money.

Now if only we could get the talk radio buffoons to read McCardle…


The Laffer Curve and Farm Labor

The New York Times has discovered the Laffer Curve! Has the esteemed liberal newspaper of record been bought by Rupert Murdoch? Has hell frozen over as a result of global warming?

Not quite. Though the Times has implicitly recognized the logic of the Laffer Curve, it took more than the plight of hedge fund managers and dot com billionaires to merit their notice. The disincentive of a mere 15% tax was not news fit to print. When a Colorado farmer was unable to find local laborers willing to pick onions, despite high unemployment rates, however, the New York Times took notice.

Unemployment and labor shortage at the same time. Something seriously stupid is going on. This prompted an in depth debate. Tom Lutz gave a pretty good answer:

First let’s do some easier math: the Colorado farmer is offering 10 bucks an hour. Say you’re a 50-year-old agricultural manager earning in the 75th percentile, or making $90,000 a year, and you are one of the 6,000 such managers to lose their jobs this year (as predicted for that job category by the Bureau of Labor Statistics for the next decade). You are eligible for a maximum of $13,000 in unemployment benefits. Even though it is not much, it would pay a year’s major medical coverage for your family as you try to get back on your feet. You might not want to screw up those payments in order to earn $400 a week for a seven-week harvesting season. Unless of course, you got paid under the table. Does making such a calculation mean you have a bad work ethic? Obviously not.

Unemployment insurance is not free money. You have to stay unemployed to collect. If you are unemployed anyway, this is a sunk cost. But as the Times noted, there are jobs out there: they just don’t pay enough to risk losing government benefits. The effective marginal “tax” rate is way higher than 15% or even 35%. It can be greater than 100% for those down on their luck.

Make the government benefits unconditional, however, and seasonal work becomes worth doing. Environmentalists take note: if you want your local foods and free range meats, you need cheap farm labor. Demand a high wage and/or job security for farm workers and the masses will opt for factory-farmed badness or food grown in poorer countries — food grown on what used to be rain forest.

Free money for all gives us affordable farm labor with a better life for those who pick our tomatoes. Harvest work is brutal work, suitable for short bursts only. Using migrants to follow the harvest is inhumane. Far better to hire locals who don’t have steady jobs. But to make that happen, we need to replace our sticky safety net with a safety trampoline.

Playing Fair

Miller-McCune Magazine has a very interesting article “The Fairness Doctrine” reviewing Peter Corning’s book The Fair Society. Activists of all political stripes would do well to read this article and perhaps the reviewed book as well. (It is now on my reading list.) Corning makes the case that many of our notions of fairness are hard wired, part of our instincts which make us social animals, and that neither the egalitarian socialists nor the followers of Ayn Rand have it right. We have a mix of egalitarian and meritocratic instincts in our “biosocial contract.” This contract has three important provisions:

  • Goods and services must be distributed to each of us according to our basic needs. (In this, there must be equality.)
  • Surpluses beyond the provisioning of our basic needs must be distributed according to merit. (There must also be equity.)
  • In return, each of us is obligated to contribute proportionately to the collective survival enterprise in accordance with our ability. (There must be reciprocity.)

If Corning is correct, both the Left and Right represent subsets of this hard wired social contract. If so, it seems to me that a political movement which consciously put forth all three provisions might crush the competition. This might make for an interesting experiment…

This is especially so given that my free money plus freedom proposal fits in nicely with the above, as long as the amount of free money is reasonable, and the free market rules are truly fair. That is, if the free money is sufficient to meet basic needs, then my proposal meets the first criterion. As long as the free money is insufficient to indulge in luxury, it meets the second. As for the third, free markets with simple rules and a simple tax system does the job. Not only that, even the needy—the net dole recipients— have some incentive to do what they can for society.

Therefore, if Corning is correct, my proposal should be an easy sell. Yet experience tells me otherwise. Maybe Corning’s ideas are bunk. Maybe there are subtleties which are found in the book and not the review. Maybe ideology has blinded people to their core instincts save when violations of the biosocial contract are truly blatant, such as the recent bailouts of rich financial institutions.

I can see a couple of other possibilities, which all who wish to bring about this proposal should consider:

  • Perhaps the biosocial contract is hard-wired, but holistic thinking is not. The instincts cut in for the three provisions separately. This would explain the success of the ideological camps which are based on subsets of the biosocial contract.
  • Perhaps people see free money as violating either the first or second provision, since people’s needs do indeed vary. The same amount of free money for all is an imperfect approximation.

If the former is dominant, then our task is simply a matter of education. If the latter, then we might provide part of the universal stipend in the form of vouchers for health insurance, since variations in health are a major factor in variations in need. Some experimentation is in order.

Finally, libertarians especially should take into account this idea of a biosocial contract. Do some studies, some focus groups. Methinks you will find that Ayn Rand’s moral philosophy is strongly at odds with our hard wired human nature. Maybe we need to become more like the peaceful production men Rand extols, but is and ought are not the same thing. To promote Rand’s vision of liberty requires remaking human nature, much as the fictional Vulcans of Star Trek remade their nature in order to avoid war. Start your monastaries now if that is your goal. But if you plan to win political battles, some concessions to hard-wired human nature (not to mention our predominant religion) is in order. Freedom may require free money.