*The High Cost of Good Intentions*

by on October 14, 2017 at 1:08 am in Books, Economics, History, Law, Political Science | Permalink

The subtitle is A History of U.S. Federal Entitlement Programs, and the author of this new and excellent book is John F. Cogan of Stanford University and the Hoover Institution.  It is the single best history of what it covers, and thus one of the best books to read on the history of U.S. government or for that matter American economic history more generally.

How did the American entitlement state get built?  In multiple, discrete pieces:

The House and Senate overwhelmingly approved a modified version of President Truman’s Social Security proposals in June 1950.  The Social Security Amendments provided a mammoth across-the-board increase in monthly benefits.  The law’s sliding scale of benefits…averaged 77 percent per recipient…The 1950 Act also rewrote Social Security’s eligibility rules to enable hundreds of thousands of workers with little history of contributing payroll taxes to begin collecting benefits.


…from 1969 to 1975, inflation-adjusted federal entitlements pending grew annually at a remarkable 10 percent, registering an 86 percent increase in six years…Total annual inflation-adjusted entitlement expenditures grew 20 percent faster under President Nixon than they had under President Johnson.


The eligibility liberalizations from 1997 to 2008 produced sharp increases in the food stamp and Medicaid rolls.  From 1998 to 2008, the food stamp rolls increased to 28 million people from 20 million and the Medicaid rolls increased to 59 million from 40 million people.  The liberalizations enacted during the Great Recession have lasted well beyond the recession’s end in 2010.  In 2016, the number of food stamp recipients ballooned to 44 million, and the number of Medicaid recipients rose to 73 million in 2016.

Here is a good sentence:

In 2015, 41 percent of the nation’s nonelderly-headed households received entitlement benefits.

This book is well-written and has useful and important information on virtually every page.

1 prior_test3 October 14, 2017 at 1:53 am

Well, it is nice to see know America’s defense spending is not an entitlement program, because comparing its growth under Truman to today would be fascinating.

More bucks for the bang, basically, because if there is any thing that weapon makers feel they are entitled to, it is taxpayer money.

2 GoneWithTheWind October 14, 2017 at 11:00 am

It is past time to end, completely and totally end, the federal entitlement/welfare/free stuff. The tipping point was probably the uncontrolled immigration both legal and illegal. We can no longer afford it. It has bankrupted us.

3 mulp October 14, 2017 at 5:22 pm

Right, in places like Afghanistan and Somalia and so many other places without entitlements, there is no poverty, just endless wealth held by everyone thanks to the free market which delivers abundance for free.

The question is why aren’t you rushing to the great nations without a any entitlements that are so superior to the US and Europe and Japan,….?

4 Mike A. October 14, 2017 at 5:46 pm

We’re still doing the “Somalia is a libertarian paradise” meme in 2017? Jesus Christ.

And the place without wild entitlement spending that the megarich are making back-up plans to escape to when the shit hits the fan is New Zealand. Sorry.

5 RobH October 15, 2017 at 2:40 pm

The total absence of market systems and law and order… actually probably more similar to a highly arbitrary and interventionist left wing ideal than a libertarian paradise.

6 GoneWithTheWind October 14, 2017 at 8:29 pm

The good things about American and some other Western countries are the result of freedoms, good court systems, a capitalist system and a good constitution. Certainly NOT because of entitlements/welfare/free stuff. In fact those things tend to work against personal success and achieving self sufficiency.

I’m not going anywhere except on vacation.

7 Al October 14, 2017 at 3:34 am

Sounds like we will be paying for the Obama administration for some time to come. The gift that keeps on giving.

8 Jan October 14, 2017 at 7:31 am

You are confused as to the causes and effects of spending. The Obama administration coincided with a financial collapse launched under the Bush administration. The increased spending we saw was due to the Republican-approved stimulus (tiny amount) and the automatic stabilizers that kicked in, which were already in law long before Obama. The ACA was deficit neutral.

Now R’s are pushing tax reform that will increase the deficit $1.5 trillion. Luckily, I don’t think saner and soon retiring Republicans will let them do something that crazy.

9 Noah Yetter October 14, 2017 at 10:27 am

The ACA was *projected* to be deficit-neutral, under absurd assumptions, and has since turned out NOT to be deficit-neutral, as we all knew it would.

10 Engineer October 14, 2017 at 11:29 am

The long term cost of many of these programs were profoundly underestimated. In the early days, lack of experience with large scale entitlement programs probably contributed; people simply couldn’t/didn’t conceive of the later expansions.

More recently (e.g. ACA), the underestimates are intentional, and routinely made in bad faith. The contours of the programs (who’s entitled, who’s not) are also routinely expanded after initial passage, contravening the political agreements made (again in bad faith) to pass the initial legislation.

11 Engineer October 14, 2017 at 11:47 am

Some of this reminds me of the impending crisis of public pensions.

The people making the decisions were/are by and large not very numerate, cost benefits analysis was/is made on short term benefits vs. long term costs, and the perception that tax receipts, especially those to be raised in the future, are unlimited. Sounds like the Chicago school district, or maybe the US Congress.

Public pensions are already starting to displace other spending at the local and state level, and this is likely to get much worse.

12 Boonton October 14, 2017 at 3:08 pm

Bull. One of the first things the GOP did was pass a rule saying repealing the ACA was exempt from rules that all bills be deficit neutral over 10 years. If the ACA was adding to the deficit such a rule change would not be needed. In fact they could tout ACA repeal as helping the deficit.

13 dearieme October 14, 2017 at 11:21 am

“a financial collapse launched under the Bush administration”: what a daft way to express yourself.

14 Al October 14, 2017 at 11:29 am

Read, liberal, read : “The liberalizations enacted during the Great Recession have lasted well beyond the recession’s end in 2010. In 2016, the number of food stamp recipients ballooned to 44 million, and the number of Medicaid recipients rose to 73 million in 2016.”

Read, liberal, read.

15 Boonton October 14, 2017 at 6:16 pm


First, what jumps out at me is food stamps have cycled up and down over time….which makes sense if the economy goes into recession people go on them, they get jobs they come off.

Second, food stamps declined well below trend in the late 90’s with something like barely 6% on them. But then during the early 2000’s they rose under Bush II…which is odd because they were rising *before* the crash and Great Recession started in 2008.

Third, there’s a reason it’s called a Great Recession. Food stamp peaks were around 10% of population and the Great Recession peak was around 15%.

16 Al October 14, 2017 at 11:07 pm

2016. The recession has been over for a long time and yet the quantity of food stamps recipients is far higher than previous periods.

Thanks Obama!

17 Boonton October 15, 2017 at 11:23 am

Peak was 2013 and has been declining since then.

18 mulp October 14, 2017 at 5:26 pm

Public education has been an entitlement for all in most of the US for at least a century, so Obama is responsible for giving your grandfather a public education in reading, writing, math, and civics? Obama is so powerful he can travel through time and change the past before his conception?

19 Boonton October 14, 2017 at 6:17 pm

Actually the oldest entitlement of all was put in the US Constitution, the US Postal Service. For the price of a stamp you are entitled to send a letter or postcard anywhere in the US regardless of how obscure, rural or difficult to reach the place is.

20 Kevin ONeill October 14, 2017 at 4:23 am

Since the poor are just a conduit for funds, they rarely get to save any of it, this amounts to a massive subsidy to hospitals, doctors, dentists, landlords, child-care providers, and grocery stores – probably in that order.

21 The Other Jim October 14, 2017 at 9:56 am

State governments (in the form of lotto tickets).

22 peri October 14, 2017 at 12:07 pm


23 Boonton October 14, 2017 at 6:23 pm

I think there’s some difference in that order.

A poor person walks into a grocery store with $100 in food stamps. He has some freedom to decide what to buy and at what price, shopping more intelligently means he can get more for his dollar. $100 is not a lot to feed yourself for a whole month but depending on your decisions it can help a little or a lot. Regardless if he sees a gallon of milk is going for $25 rather than $3 or $4, he knows it’s a rip off.

On the slip side his child suddenly has a strange seizure. After going to the ER, getting a diagnosis and treatment he is told he ‘consumed’ $100,000 in medical care. What does this mean? Absolutely nothing. He waited hours in a waiting room no nicer than what an oil change place gives their customers. A doctor spent 15 minutes examining his child, a machine was turned on to do some test, next thing you know we tell him this costs a huge amount of money. The doctors and nurses are well paid but only enough to live an upper middle class life, the equipment is there but does using it briefly for his child really represent tens of thousands of dollars?

24 Sure October 14, 2017 at 10:40 pm

This is my life. The average visit to see me is around $2,500. That is all comers: from kids with splinters to combo MCV secondary to GSW. Things in my world are expensive, not because of the equipment, but because of the safety cost. Take an EKG. I could use the same leads on multiple patients, sterilizing in between, and just tape them down. Instead, in order to reduce fomite transmission I use disposable tabs. Now run of the mill tabs are about $2 for a set of 10 (standard EKG), but we use better leads that are multiplicatively more expensive.

Why? Because a lot of people who have VTach do so while driving, pass out, and have a MVC that results in bleeding. Getting leads that stick with active oozing is more expensive, but that also saves patient lives. But that is one little thing, how expensive can it be? Well does the patient have a latex allergy? It is really bad form to give a patient in VTach anaphylaxis to go with it. So we pay more for latex free to be sure that we do not kill a few marginal patients. But that is just two things … except of course I may need them to be silver free. Or to have minimal residue (e.g. I suspect the patient has a thoracic aortic aneurysm and will need emergent open surgery so having sticky goop on his chest just might kill him). All of this makes my EKG more expensive than the typical family med doc or even cardiologist, they get to have patients who are not crashing typically, I do not.

Worse, I need a staff who can keep plenty of different tabs straight and preferably know which ones to grab so I do not have to spend time dictating to them as I focus on figuring out if the patient needs clot busters, heparin, blood fractions, intubation, and dozens of other life-saving measures. This isn’t a doctor’s office, the guy running the EKG has to be far more proficient to work for me because he has to know a lot more, be able to do a lot more, and to do all of it when a ton more is happening around him. His time costs more even when I have him do something less taxing. Same for me, sure a bunch of what I do another doctor can do for cheaper, but the reason for all those years of residency is so that I build up the skill set so if the kid comes in with “seizure” I can keep him alive when it turns out to be cardiomyopathy (i.e. one of the most frequent causes of sudden death in kids and one of things often wrongly thought to be seizures). You are not paying me to read an EKG or an EEG to say your kid has epilepsy, you are paying me in case your kid has a sudden obstruction of his aortic valve and I have very little time to try to save his life.

And that is the whole point of ER. We are meant to be expensive because when you come to see us it is always supposed to be something that could be life or death. You pay for the capacity to keep you alive if the worst happens. If you want common crap to be treated more cheaply, we have something for you. It is called urgent care. Their staffing levels at all skill levels are lower and they can handle most things that are not life and death. That is why the average visit to see them is around $100.

When you go to the ER you do not pay for the skills, machines, etc. that you actually use that visit. You pay for the stuff you might need; the care that cannot be rendered to another patient while I deal with your issue.

And let’s be real. The hospital advertises my bloody weight-times on billboards. They expect results for money invested in my department. If something is expensive it is because I cannot change it because it risks killing patients or because I am obligated (usually legally) to use it. If I come up with a cheaper way confirm seizure disorders in the ddx I can basically mint money.

Is there wasted money? Sure. There are plenty of crap expenditures that are totally useless to me – like most EMR functions. But the law says I have to use them. Or some jury has decided that even though I will prescribe the same exact antibiotic regime, I still need to do a useless CBC or worse BAL if I do not want to be liable for failure to meet standard of care.

We choose to break down the overhead among all patients who walk through the door. Charging the easy patients less does not change the cost of that overhead. We either bill more overhead to the truly sick patients or we go broke (and our margin is already a net negative that is being chocked up as marketing costs for the entire hospital system).

If there were a cheaper viable option, some one would do it. If there were a simple legal solution, one state would try it.

There are no cheap solutions.

25 Boonton October 15, 2017 at 11:35 am

So an analogy I see here is a bar. Let’s say you have just a lot of cheap beer drinkers, all you need to do is keep plenty of beer. Or let’s say you get a lot of high end drinkers, you keep top shelf stuff but that’s ok because it gets used frequently and the high end drinkers pay enough so the guy who just drinks regular beer pays a normal price. But the worse case would be you *must* keep top shelf stuff but hardly anyone uses it. Now the beer drinkers must pay for your high end inventory because people ordering fancy cocktails are few and far between. Same applies here for skill, it’s one thing to hire a beer jockey for bartender or a ‘mixologist’ but the worse is probably having to hire someone who can mix the most exotic drinks but 99% of the time he has to pour beer.

f there were a cheaper viable option, some one would do it. If there were a simple legal solution, one state would try it.

Well there is. You can have a lot of cheesey low end beer bars and a few very high end bars. High end drinkers will hit the high end bars where the inventory and skill set will be optimally utilized. Or you can have a huge bar so that both the low and high end drinkers are in such large quantities you again spread the costs out efficiently.

In other words one optimal option might be a universal coverage scheme so more people go to the regular doctor’s office for minor things freeing up the ER for ‘high end’ stuff. But another option is to beef up the ER adding on something like a community clinic that can handle people coming in for more routine things. In other words, ‘serve beer’.

26 Sure October 15, 2017 at 3:44 pm

The problem is when you come through my doors, nobody knows if you are a going to down a few beers or if you are going to guzzle top shelf. Figuring that out, itself, is expensive.

Take your scenario, kid goes down with a seizure, dad brings kid to hospital, and now we have decisions to make.

Do we send the kid to skilled triage? This is a medical professional who has substantially above interview and preliminary diagnosis skills if done right. They are not cheap. Talking to them likely incurs north of $100 of costs between hourly pay, hospital overhead, and liability. Now skilled as their are, triage will be wrong sometimes. How many dead kids are you willing to tolerate? If they miss obstructive cardiomyopathy there is a very real chance that the kid will die in clinic where I could keep them alive. If you want fewer dead kids that means we need better specificity and sensitivity than interviewing.

Now this means tests and use of skilled personal. When I put the EKG leads on, 90% of the time I know exactly what I am going to see. But we burn the money to be sure as it saves lives. An EKG will burn a good chunk of change, but we will catch a few people with long QT or something else that we would otherwise miss. Maybe I do an echo, well sonographers do not work cheap so more money gone. How sure am I that he does not have a brain bleed? Well that means either a CT and a few hundred bucks gone or babysitting the kid for a few hours to make sure his condition does not deteriorate which is again expensive. By the time we are sure that the kid doesn’t need expensive stuff, we are pretty close to his total cost. I may as well complete the treatment rather than shuffling a huge amount of paper onto another doc.

By the time we figure out that this is just a beer run, we have already dumped a load of cash.

Now as far as ER size, good grief, what is this 1985? We have been consolidating ERs for well over three decades. The problem is that when you do that you increase drive times. This is terrible for a lot of stuff. Getting to see me faster during a serious medical emergency is a huge survival advantage. This is why we dump $15,000 to send a chopper instead of sending an ambulance that can legally ignore traffic rules with a lead footed driver. Say you consolidate 4:1. You at least double the average drive time. That means more patients die.

Worse it may not even save any money. Say this is an elderly area without a major drug problem. With enough stroke burden, twenty minutes more driving means that a sizeable fraction of stroke patients will have to wait before I push tPA or worse will fall out of the tPA window. This is really expensive. Busting the clot before severe brain damage means that the healthcare system does not have to pay for weeks in the wards in recovery; it does not have to pay for months of PT and OT to reteach little skills like walking. Saving a few million in ER costs can be totally eaten up by having to pay for more tertiary and long term care.

Consolidation is old news and happens in the majority of healthcare mergers. It still has yet to do jack to bring down ER costs. Remember a sizeable minority of ERs are run by for profit corporations. If there was a way to reduce costs, they would do it and take all the savings as pure profit. It simply cannot be done by anything simple.

27 A Truth Seeker October 14, 2017 at 5:31 am

So that’s what America has become: a country where more than a one-seventh of the population depends on the generosity of State to eat… “Brother, can you are a dime?”, indeed.

28 jk October 14, 2017 at 5:51 am

Substitute any of this with the any neocon social engineering project and get the same outcome.

The US somehow manages to constantly through resources in the end-stateless, goal-less, sinkholes such as Afghanistan for decades, STILL subsidize the defense of rich EU and Asian countries, fight the latest “Al qaeda offshoot” everywhere on the African continent but the US can’t afford universal healthcare like US welfare baby Israel or about every other developed country, or restore power or drinking water in a US territory.

But hey, it feels good and the intentions are good!

29 Jeff R October 14, 2017 at 10:31 am

Meh, not all sinkhole are foreign. Plenty of domestic ones we throw money at also.

30 Sure October 14, 2017 at 10:48 pm

The US government already dumps more per capita into healthcare that Israel does. If we were as poor as Israel, in as good of health as Israel, or the like it might already be more than enough to fund universal healthcare.

Heck, the VA, alone, is larger than Israel. It spends more per capita than Israel. It is a single-payer system by design and full on Beveridge at that.

The VA still costs more than Israel.

Universal care in the US will undoubtedly either by hideously expensive or we will have patients die. If it was easy to deliver cheaper healthcare places like Vermont or small-country-scaled health insurers like Kaiser would have already done it.

In 10 years Afghanistan and Iraq combined cost around $6 trillion. This is an order of magnitude less than the likely cost of healthcare given the best numbers we saw bandied around in Vermont.

31 rayward October 14, 2017 at 8:15 am

That the expansion of government benefits coincided with the contraction of American manufacturing and middle and lower class wages and opportunities didn’t occur to Mr. Cogan? He likely believes the former caused the latter.

32 Keith October 14, 2017 at 8:45 am

So, poorly designed old-age social insurance programs distort people’s incentives and cause them to have too few kids and to invest too little in human capital. This eventually calls forth more demand for other entitlement programs to deal with the ruined next generations. In addition, this calls forth a greater demand for immigration, to grab people who still have cultures that produce useful children.

33 Jan October 14, 2017 at 8:53 am

Who’s up for massively increasing the child tax credit and mandating paid maternity leave? Also, these immigrants nobody wants to deal with through new policy have lots of kids. Ready?

34 Potato October 14, 2017 at 9:03 am

Seen and unseen. Paid maternity leave is going to make it even harder for women to move up the ladder. Why hire a woman into a critical position if they might be gone for six months?

The way the Nordic countries dealt with this was to slowly transition public and pseudo public jobs to women. That’s A method, but not one I think we should encourage.

The federal government should be agnostic to family formation.

35 Jan October 14, 2017 at 7:03 pm

Wrong all around. Not even worth rebutting. The data tell the story.

36 Harun October 14, 2017 at 2:54 pm

Even better would be state funded maternity leave. Why should business have to pay for state interests?

37 The Anti-Gnostic October 17, 2017 at 9:25 am

Magic immigrants, who never get old or sick, and who cheerfully pay lots of taxes and buy your mutual fund shares for more than you paid for them!

Seriously, I have a nice, Canadian friend who told me, “They will pay my pension!” He didn’t ask them.

The net for child tax credits and paying somebody not to work for you has to come from somewhere, and the immigrants will claim them too. Everybody can’t live off everybody else.

38 mcdgreene@gmail.com October 14, 2017 at 9:44 am

Don’t know about that. I’m old enough to read the obits in the hometown paper.

On Wednesday, one concerned a 66-year-old guy with eight grandchildren and 13 great-grandchildren.

Yesterday, it was a 77-year-old with 37 grandchildren, 82 great-grandchildren and 12 great-great-grandchildren.

39 Thor October 14, 2017 at 10:26 am

Your hometown, hmmm? Is Kampala your hometown?

40 anon October 14, 2017 at 10:37 am

Not unusual among more “conservative” religious families right here in the USA. I know several Catholic couples in their 70s in Ohio who have more than 35 great grandchildren.

Yes, anecdote is not evidence.

41 KM32 October 15, 2017 at 9:23 am

I grew up In Utah. My grandmother died a couple of years ago with 28 grandchildren. My uncle and aunt have 32 grandchildren and counting. My brother is an attorney in California and has seven children through two marriages. His second wife (a former mechanical engineer) comes from a family of nine, and is still fairly young, so I expect them to have at least three more.

42 JosieB October 14, 2017 at 10:46 pm

Actually, it’s Nashville. I don’t believe it is “conservative religious families,” and I grew up in one, if you count Catholicism. We are, at most, replacing ourselves. Didn’t believe such could happen, which is why I mentioned it.

43 Boonton October 14, 2017 at 3:11 pm

So, poorly designed old-age social insurance programs distort people’s incentives and cause them to have too few kids and to invest too little in human capital.

The US has a higher birth rate than most other developed countries and the second part of this statement sounds sensible unless you actually think about it. The US is not investing in human capital enough? We’ve gone from educating people *maybe* through High School to more than 4 years of college plus. How much more investment in ‘human capital’ do we need? And there’s a direct conflict in the idea that we are having too few kids and investing in too little human capital. Investing more in human capital is in direct conflict with having more kids. Simply doesn’t work.

44 Potato October 14, 2017 at 8:58 am

Is there any evidence that social security causes a lower TFR?

The obvious answer seems to be that when women get to decide for themselves, they choose to have fewer children. You know, basic freedom of choice over your own life.

Ruined generation? Less crime, fewer teenage pregnancies….not seeing it.

The entire developed world is aging. There IS a crisis with savings rate and dependency ratio mismatch. Our best hope is to push supply side reforms to increase the growth rate to mitigate the effects. More likely outcome is that we do the opposite and slowly strangle economic growth.

45 chuck martel October 14, 2017 at 11:13 am

There’s a crisis everywhere one turns. Could there be a daily crisis priority list published somewhere? Put the “existential” crisis higher on the list than the savings rate and dependency mismatch, which is itself higher than the NFL/national anthem crisis. Or is it? Maybe the NFL thing is an existential crisis.

46 Boonton October 14, 2017 at 3:31 pm

If there’s a crises with the savings rate why are long term interest rates not shooting thru the roof?

Let’s say there’s a national shortage of yams. The lucky farmer who planted lots of yams and had a huge crop would usually make a windfall profit. Yet in this ‘savings crises’ there seems a strange lack of market signals indicating the need for more savings.

47 Potato October 15, 2017 at 8:10 am


That’s not how the supply and demand for loanable funds works. That’s not how any of this works.

There’s a dependency ratio: the inverse ratio of people who actively contribute to production and the retired/disabled population that does not.

If the ratio has a long term trend of going up, then you need a high enough savings rate to push increased consumption into the future.

That in and of itself says nothing about the interest rate, which is determined by the supply and demand of loanable funds/time value of money. That’s a global rate which says nothing interesting about how much we should be saving in the west to support a large dependency ratio as the population ages.

This shit shouldn’t be controversial, especially on an economics blog. It’s not partisan. It has nothing to do with political parties or cultural baggage. It’s as true in Europe as it is in the US. It’s true no matter what letter is next to the current president.

We can debate the solutions. But the problem is there.

48 Boonton October 15, 2017 at 11:52 am

Savings doesn’t ‘push’ consumption into the future. The economy today can produce a certain amount of goods and services to consume. The economy 25 years ago can produce some other amount. If I ‘save’ $100 that doesn’t automatically increase what the economy of 25 yrs from now can produce. This confuses how the financial system and the real economy interacts. Money is like the chips in the poker game, having more chips entitles you to more of the pot, but the pot is what is real.

So let’s say the dependency ratio is gradually increasing. What does that mean? Well normally you have fewer people producing goods and services with more people consuming then. Supply demand. To produce things business needs workers and capital. To a degree they can substitute, if workers are expensive they can swap in machines or vice versa.

If business opts to increase capital, their demand for loans goes up, interest rates rise and the reward for savers goes up.
If business tries to increase workers, wages go up which puts downward pressure on that ‘dependency ratio’.
Or inflation picks up as business cannot supply all the consumers with so few workers and people refusing to save. In that case the dependency ratio rises but the average consumption falls as people with a fixed income have to consume less if prices go up.

Or perhaps our desire to consume stuff is going down. If that happened you would see lower interest rates because business wouldn’t be demanding a lot of capital, lackluster wage increases because business can meet demand easily and low or negative inflation….which oddly looks like our world.

Think of this as the difference between lots of people retiring and demanding cruises around the world versus lots of people retiring and spending 18 hours a day on Facebook sharing nonsense memes churned out by Russian bots subcontracted out to some guys in Croatia and Nigeria. In the first world interest rates, wages, prices are going up as industry struggles to build and staff thousands of new cruise liners….in the second…well…..

49 Tom Jackson October 14, 2017 at 10:08 am

The “high cost” that I’ll note here is that the Kindle costs $27.49. Doesn’t Stanford University Press want anyone to read this?

50 anon October 14, 2017 at 10:39 am


Ebook prices seem to be rising, but it is especially noticeable by academic presses.

51 clamence October 14, 2017 at 10:39 pm

Note Tyler gets his greedy little mitts in there too with his amazon referral code; you scratch my back, I’ll jerk you off

52 Massimo Heitor October 14, 2017 at 11:03 am

“the noble purpose of assisting people who are destitute”

That is the charitable (no pun intended) interpretation. Another interpretation is that people want to seize power and claim moral superiority and shout out any other interpretation.

53 Paraguayan October 14, 2017 at 11:32 am

One wonders why Americans do not use their vaunted computer expertise to weed out the free riders, and qualify the needy.

Instead it seems “more” or “less” is the highest math attempted.

54 Massimo Heitor October 14, 2017 at 1:04 pm

Weeding out free riders and directing efforts on genuinely needy is what you do with your own charity dollars. When it’s your political opponents’ dollars you focus on maximizing your take and humiliating them.

55 Paraguayan October 14, 2017 at 4:42 pm

I weep for America, where no one aspires to public virtue.

56 rayward October 14, 2017 at 11:37 am

China has nothing comparable to social security; hence, the savings rate is about 50% (compared to our 5%). Of course, it’s possible for China to have such a high savings rate because America has such a low savings rate and consumes all those China-made goods. If China were to adopt something comparable to social security, I would expect China’s savings rate to fall and our exports to China to rise. On the other hand, if America were to drop social security I would expect our savings rate to rise and our consumption to fall. Who would consume the goods produced as the result of a higher savings rate in America? China, if it adopted something comparable to social security. More likely America would have to adopt the China model with a much larger public sector. What if America dropped social security and replaced it with big incentives to have lots of children (an actual policy proposal from some Republicans). How would America deal with a much larger population of children and all of the public spending that goes with it (more schools, public benefits for poor children, etc.). Viewing social security (and other public benefits) as simply a cost (“the high cost of good intentions”) is so myopic as to be useless. No, dangerous.

57 Engineer October 14, 2017 at 12:03 pm

Its not clear that importing other people’s children (an actual policy proposal from most Democrats), and paying the costs of all of the public spending that goes with it (more schools, public benefits for poor adults and children, more balkanized culture, etc.) is a better idea.

Most of the European countries are trying that approach now, with varying degrees of enthusiasm. I suspect what they are going to get is a cultural Darwin Award. Check back in a generation.

58 James Liu October 14, 2017 at 2:26 pm

Probably according to your logic, I am other people’s children, brought here in 1989 aged 7. My parents paid far more in taxes than my public education, and between us we paid my college, masters’ and law degree. You come and say that to my face. 312-554-5548 and we can arrange a meeting.

59 Viking October 14, 2017 at 4:51 pm

Pretty feisty, eh!

I immigrated in the early nineties as a young adult, and am also a net tax contributor.

Engineer’s thesis is that immigrants as a whole cost more in social spending than they contribute, and our anecdotal counter examples don’t disprove that. Most people that claims immigration is a net benefit to USA will use statistics for legal immigrants, and make the assumption that the statistics don’t change when the groups of legal and illegal immigrants are merged.

And while most Chinese immigrants are net contributors, their parents are not, and this is not a new phenomenon:


60 Boonton October 14, 2017 at 6:31 pm

If immigration is a net drain then why do states that seem very blue with highly urban populations (CA and NY) or even TX and Fl for that matter seem to be net positive tax and GDP contributors? These areas seem to have huge amounts of both legal and illegal immigration. While the midwest and rust belt does have immigrants, they don’t seem to have any great economic advantage from being ‘weighed down’ less from a large illegal or even legal population?

While illegals do not make as much income as the average American, they consume almost no services. They can pay into but cannot draw from Social Security, non-emergency Medicaid (and most health care costs are NOT emergencies but chronic conditions), even their crime rate is lower (unlike a legal person even the most minor of offense can get you deported).

61 Engineer October 14, 2017 at 6:09 pm

I’m glad that you have been successful. Few do as well.

Viking’s comments are directly on point (thanks, Viking). I would add a few more.

As with many things, numbers matter. One immigrant family, no matter their circumstance, tends to evoke “lets help” sympathy. But policy does not (or at least should not) be developed on that basis.

According to Pew, in 2013 there were over 41 million foreign born persons in the US, about 13.1%. I think as a matter of national policy, its reasonable to limit legal immigration to what we can comfortably assimilate. If we take 3% foreign born as that limit, a 325 million population, and a 60 year post-immigration lifetime, that allows about 162,500 immigrants (of all categories) per year. That’s a lot of people – every year; but it shouldn’t exclude too many of the available MDs and future Nobel laureates that we want.

Whatever the number, legal immigration should be selective, based on skills and ability and willingness to assimilate (we want – again as a matter of policy, the net contributors).

Illegal immigration should be zero. And it doesn’t get to be zero by just declaring all the illegal immigration to be legal.

62 James Liu October 14, 2017 at 6:44 pm

I’m still waiting for that phone call. Or text.

What year did your family get here, Engineer? Would they have been allowed in if a 3% limit was in place? Where does that 3% number come from? At some point, your family were “other people’s children” too.

And even if recent immigrants who sponsor their parents to come to the US should honor their financial commitments (the law could be changed to that effect, I wouldn’t object too much), it doesn’t change my point. When you say “other people’s children,” the upshot is that the children of immigrants (or children who immigrate here with their parents) aren’t real Americans. I disagree. Come meet me face to face and perhaps I can demonstrate that for you.

63 Boonton October 14, 2017 at 3:28 pm

In 1950 our savings rate looks like it was about 10%, today it is about 5% (https://tradingeconomics.com/united-states/personal-savings). Going back further I can spot what looks to be a bit above 5% back around 1929/30 (right before the Great Depression hit hard).

Clearly WWII massively distorted savings because government restricted consumption by rationing and preventing industry from making non-war goods (you couldn’t buy a new car all during WWII for example) plus massive campaigns to induce people to buy war bonds. Even then, though, savings topped out at 15%.

You can envy China all you want but this tells me a ‘normal’ savings rate should probably be 5-10% and 50% represents something abnormal. It’s reasonable to consider adding social security taxes to our savings rate of 5% and you end up with what is essentially a normal country, like it or not.

What if America dropped social security and replaced it with big incentives to have lots of children (an actual policy proposal from some Republicans). How would America deal with a much larger population of children and all of the public spending that goes with it (more schools, public benefits for poor children, etc.).

Well at the moment there are about 3.2M school teachers in the US. Suppose we increased children by 50%. We’d need another 1.6M school teachers. The current US labor force is about 160M people so you’re talking about moving around about 1% of jobs. That’s assuming we simply increase teachers in proportion to children as opposed to letting class sizes grow larger (which they typically did decades ago). Of course after two decades or so a massive surge of kids becomes a surge of young adults who start earning money and increase their earnings (and tax paying) rapidly after that. So if we did have a surge of children I don’t really see an issue financing that either in terms of debt today or in terms of the physical man/womanpower needed to handle them.

64 rayward October 14, 2017 at 4:06 pm

Demographers predict that China’s population will continue to grow the first half of this century then fall by roughly 400 million in the second half (that’s the mid-range prediction). That’s right, 400 million, roughly the entire population of America. You think that might have economic and political consequences. Ideologues have such myopic views they are worthless. No, dangerous.

65 Boonton October 14, 2017 at 6:07 pm

In 2015, 41 percent of the nation’s nonelderly-headed households received entitlement benefits.

Is this unreasonable? 41% includes some households totally dependent on entitlement benefits but for many you are talking about a single member in a working family on disability or Medicaid or collecting $100 a month in food stamps.

66 James Oliver October 14, 2017 at 7:13 pm

Social Security is that it is a rob Peter to pay Peter program. It gives more money to the higher earners but, if you ask people why Social security exists they will tell you that it exists so that no one will be destitute in retirement. People treat FICA like a tax so there are dead weight losses.

The average monthly Social Security benefit for a retired worker was about $1,200/month and there is no minimum Social Security benefit so it does not even cover some of the neediest people at all.

If we want to keep people from becoming destitute in retirement but want to be more efficient and not discourage work and saving, what can be done with Social Security to save money? Means testing the benefit in retirement is out because that would discourage saving. What you could do is select an amount below the average benefit and give that to everyone. So how about we give everyone on the program $800/month that would reduce spending on the program by about 32 percent.

67 T J Elliott October 14, 2017 at 7:33 pm

Isn’t entitlement a distorted now biased term?

Hard to have a productive dialogue when we start with a term that conjures up images of giveaways. The programs cited were created by duly elected officials in one way or another and now some of them are being dismantled in the same manner. This conversation rattles around and while the book looks interesting the snippets suggest a prejudice that make it more a salvo than a solution.

68 byomtov October 14, 2017 at 9:49 pm

In 2015, 41 percent of the nation’s nonelderly-headed households received entitlement benefits.

A good sentence?


So suppose Grandpa or Grandma lives with their children and grandchildren, and gets SS and Medicare. That fits the definition, right?

The point being that without some definition as to what counts as an entitlement, and what counts as a “nonelderly-headed household” the sentence is useless.

No wonder Mercatus puts out so much nonsensical “research,” when its director abandons all his critical faculties when he finds something that suits his ideological preferences.

69 The Anti-Gnostic October 17, 2017 at 12:00 pm

“High Cost…” is the polite way to put it.

Comments on this entry are closed.

Previous post:

Next post: