A final line of argument is that these public assistance programs have become de facto subsidies for low-wage employers. For a program to be a subsidy for an employer, it needs to lower wages. Is this plausible for the public assistance programs considered? I think it is for the EITC [Earned Income Tax Credit], but not for other programs. Depending on where one is on the EITC schedule, that policy can increase work incentives. And there is a lot of empirical evidence showing EITC encourages labor force participation. An unintended consequence of that labor supply response, however, is that employers capture some of the tax subsidies. This can happen in a simple supply and demand framework, where an increased labor supply to the market drive wages down. This can also happen in a bargaining context where the size of the bilateral surplus expands from lower taxes, and employers capture some of this increased surplus. Work by UC Berkeley’s Jesse Rothstein suggests that for every $1 of transfer to workers using the EITC, post-tax income rises only by $0.73 because of employer capture.
But what about other programs like food stamps or housing assistance? These means tested public assistance programs are not tied to work, and we should not expect them to lower wages. Let’s take food stamps, which are available to eligible families whether or not a family member works or not. Indeed, when people are not working, they are more likely to be eligible for food stamps since their family incomes will be lower. Therefore, SNAP [Supplemental Nutrition Assistance Program] is likely to raise, and not lower a worker’s reservation wages — the fallback position if she loses her job. This will tend to contract labor supply (or improve a worker’s bargaining position), putting an upward pressure on the wage. Whether or not wages are increased is an empirical matter: there is evidence that the initial roll-out of the food stamps program across counties in the 1970s lowered work hours, consistent with an increase in the reservation wage. The key point is that it is difficult to imagine how food stamps would lower wages. And if they don’t lower wages, they can’t be thought of as subsidies to low wage employers. The same logic applies to other means tested programs like energy or housing assistance. Moreover, these conclusions hold in a wide array of models of the labor market, including ones that emphasize bargaining or efficiency wage concerns.
Arindrajit Dube, “Public Assistance, Private Subsidies and Low Wage Jobs”, Arindrajit Dube, 2015-04-19.
February 10, 2020
QotD: Welfare programs as a form of subsidy to employers
February 9, 2020
QotD: Toronto and Vancouver
What the residents of these two cities have in common is an irrational smugness, an utterly unfounded belief that they are living in the best city in the world. We grasp desperately at warm comments from visitors, keen to be noticed by outsiders. The best of all is when we get acknowledged by international studies that rank the cities of the world. These surveys invariably come up with widely divergent results, and sometimes Toronto does well and other times it’s Vancouver.
Nicholas Pashley, Notes on a Beermat: Drinking and Why It’s Necessary, 2001.
February 8, 2020
QotD: Canadian peacekeeping, myth and reality
So we’re no longer a great military nation. But nor are we a great peacekeeping nation: we do less than notorious sabre-rattlers like Britain and America. Compared to the Scandinavians and the other niceniks we’re a poor aid donor, and our immobile rapid-reaction force is of no practical use in humanitarian crises. M. Chrétien’s legacy-building Africa initiative of 2002 is known only to Canadians. Everywhere else, it’s credited as Tony Blair’s Africa initiative. We have less influence internationally than we did in the 1940s — before we had a flag, an anthem, or our own citizenship. Even if the Trudeaupian vision of Canada were sufficient for a national identity, it suffers from the basic defect of being a bald-faced lie.
Mark Steyn, “Nothing to see here”, Western Standard, 2005-08-08.
February 7, 2020
QotD: The negative economic and human value of foreign aid
During the past four decades, Western governments have lavished on Africa nearly a half-trillion dollars in aid. But to no good effect. Everyone agrees that Africans remain desperately poor.
Academic studies confirm aid’s ineffectiveness. In his celebrated 2001 book, The Elusive Quest for Growth, former World Bank economist William Easterly carefully reviews aid’s history and concludes that it is one of abject failure.
Indeed, many studies find that aid harms economies. For example, University of Regina economist Tomi Ovaska, writing in the Cato Journal, finds that “a 1 percent increase in aid as a percent of GDP (gross domestic product) decreased annual real GDP per capita growth by 3.65 percent.”
The reasons for this dismal record should be plain to anyone with a rudimentary understanding of economics. Failure of economies to develop is not because of lack of resources. Instead, it’s because of overbearing and corrupt governments, as well as to the dysfunctional social and cultural institutions that keep such governments in power and that are themselves fostered by such governments.
As long as a country is cursed by a malignant government and dysfunctional institutions, no amount of foreign aid will help it.
Don Boudreaux, “Faulty Band-Aid”, Pittsburgh Tribune-Review, 2005-06-18.
February 6, 2020
QotD: Saint Paul
Nicholas Pashley, Notes on a Beermat: Drinking and Why It’s Necessary, 2001.
February 5, 2020
QotD: The decline of Jazz
Most jazz musicians would agree. As the cliché goes, it’s one thing to do a show for your paying customers, playing what they expect and have paid to hear, but after the squares go home, you can stop blowing shit and make another kind of music altogether. Yet many musicians would also agree that, more often than not, it’s a lot more satisfying to play that personal kind of music than it is to sit and listen to it. Jazz musicians involved with each other in intimate creativity may well be negotiating their way to improvisational sublimity, but they’ve often left the audience out of the musical deal. This is a central but rarely acknowledged tension in Burns’ documentary treatment.
Charles Paul Freund, “Epic Jazz”, Reason, 2001-01-03.
February 4, 2020
QotD: Brutalist “sincerity”
Unrefined concrete was an honest expression of [brutalist architects’] intentions, while plain forms and exposed structures were similarly sincere.
This is like saying that the Gulag was an honest expression of Stalin’s intentions. Sincerity of intentions is not a virtue irrespective of what those intentions are, and as a matter of fact those of the inspirer and founder of brutalism were clearly evil, as the slightest acquaintance with his writings will convince anyone of minimal decency. And what exactly is “sincerity of form and exposed structures”? Is it meant to imply that anything other than brutalism is insincere?
The same article continues:
Beyond their architectural function, Brutalist buildings serve other uses. Skateboarders, graffiti artists and parkour practitioners, for example, have all used Brutalism’s concrete surfaces in innovative ways.
Dear God! I have nothing against playgrounds — they are socially commendable, especially for children — but to regard the urban fabric as properly an extended playground is surely to infantilize the population. As for graffiti artists, to regard the extension of their “canvas” to large public buildings is an abject surrender to vandalism. No one, I presume, would say of a wall, “And in addition it would make an excellent place for a firing squad.”
Theodore Dalrymple, “The Brutalist Strain”, Taki’s Magazine, 2019-11-02.
February 3, 2020
QotD: The “fine-tuned universe”
For a few of these constants, if they were just one or two percent higher or lower, matter would have never condensed after the big bang. There would have been no stars, no planets, no life. As Stephen Hawking put it, “the remarkable fact is that the values of these numbers seem to have been very finely adjusted to make possible the development of life.”
Some have suggested that this fine-tuning might be evidence for the existence of God. This would be a deist conception of God, of the sort that Thomas Jefferson, James Madison, and most of the Founding Fathers believed in: a God who set up the universe like a giant clock, with exactly the right springs and gears, and then set it in motion.
Jonathan Haidt, “The Age of Outrage: What the current political climate is doing to our country and our universities”, City Journal, 2017-12-17.
February 2, 2020
QotD: The role of government, as seen by fans of government
Don Boudreaux, “Bonus Quotation of the Day…”, Café Hayek, 2017-11-25.
February 1, 2020
QotD: Justifying tyranny
Deirdre McCloskey, Bourgeois Equality, 2016.
January 31, 2020
QotD: The heyday of blogging
Steve H., “Cracking on Crackers”, Hog On Ice, 2005-01-21.
January 30, 2020
QotD: Nutrition and aging from the middle ages to the 20th century
Look Portugal is fertile enough that a careful planner can feed a family on less than an acre of land (particularly the area I come from, apparently one of the oldest inhabited in Europe and whose name in Indo European translated as wet and fertile valley.) I’m sure the food available to us in the 20th century when you could buy improved seeds, etc. was way better than the one available to people in the middle ages.
But … yeah, no. We didn’t eat like people do now. Not even close. For one, meat was fairly scarce. We mostly ate fish (thanks to the coasts!) and vegetables. Oh, and we were relatively lucky. A lot of people got almost no protein. The most common lunch among the people was the “isca” that is a bit of fried flour which might or might not have a couple of shreds of codfish in it. The very poor ate a lot of vegetable soup.
And again this was in the 20th century. In winter vegetables more or less vanished and the only fruit available were the wrinkled, flour-like apples.
Christmas treats were dried fruit, not cookies. It tells you all you need to know. (Yes, it was healthy too except for the scarce protein for most people, but no one said the way we eat is particularly healthy.)
I’m not complaining, but I know that we ate massively better than my parents did in the mid 20th century. And they ate better than their parents. So, kindly, do not tell me some serf on a medieval estate got his choice of however many flavors of ice-cream.
Sure the very rich ate well, if sometimes oddly. But the average person, not so much.
And as for living as long? Yeah, no.
I still remember vividly — as do many our age — when 60 was old, 70 VERY old.
Yes, I’m concerned for my parents in their late eighties. And that’s, as my dad puts it “after 80, that’s old”. But it would surprise no one is they lived another 10 years. Because a lot of people do now. And now one makes a big deal of people who turn 100. (Even though 114 seems to be, a little inexplicably, our hard drop-off limit.)
And besides we KNOW. Shakespeare at 58 — two years older than I’m now — was “very old.”
So kindly take your “people lived about as long,” fold it all in corners and put it where the sun don’t shine, even if people in the arctic in winter will be a little puzzled by it.
Sarah Hoyt, “What if I Told You?”, According to Hoyt, 2019-11-05.
January 29, 2020
QotD: The Golden Gate Bridge
Tim Cavanaugh, “Why Kill Yourself…”, Reason Hit and Run, 2005-01-20.
January 28, 2020
QotD: Drinking and driving
According to BTLPTP, “Drinking drivers are responsible for one-quarter of all people killed on Ontario roads.” In other words, only 75 percent of Ontario traffic fatalities are the work of sober people. Either we have more drunks in Ontario or our sober drivers are better drivers than Britain’s. [Where “one in seven of all deaths on the road involve drivers who are over the legal limit.”]
Now, despite the damning evidence in these brochures that sober people are causing carnage on our roads, the people who know what’s good for us are busy trying to lower the legal blood alcohol limit. Early in 2001 the Quebec government announced that it was lowering the limit from eighty milligrams to fifty, throwing in a complete drinking ban for professional drivers — cabbies, bus drivers, and the like. This last measure was a reaction to — well, nothing at all. Were drunk ambulance drivers creating havoc on the roads of Quebec? No. But it gave the government of Quebec the appearance of having taken a strong stand on something. Predictably, the Ontario government immediately made noises about following suit.
Nicholas Pashley, Notes on a Beermat: Drinking and Why It’s Necessary, 2001.
January 27, 2020
QotD: The radicalization of the Republican Party
And this all happened along with the rise of Fox News. Many political scientists have noted that Fox News and the right-wing media ecosystem had an effect on the Republican Party that is unlike anything that happened on the left. It rewards more extreme statements, more grandstanding, more outrage. Many people will point out that the media leans left overall, and that the Democrats did some polarizing things, too. Fair enough. But it is clear that Gingrich set out to create a more partisan, zero-sum Congress, and he succeeded. This more combative culture then filtered up to the Senate, and out to the rest of the Republican Party.
Jonathan Haidt, “The Age of Outrage: What the current political climate is doing to our country and our universities”, City Journal, 2017-12-17.
