Friday assorted links


"There's no doubt that poorly designed social programs can deter work. Aid to Families With Dependent Children, the pre–welfare reform welfare program, was found to decrease hours worked by 10 to 50 percent among recipients"

How many will completely ignore this part?

I'm all for well-designed cash transfers, if the government can do it.

That likely has something to do with the fact that AFDC benefits were taken away at a rate of 100 percent, so every dollar earned on the job was a dollar not received from AFDC.

Translation: That has to do with high marginal tax rates

Probably not for these low-income people. What share of workers don't pay any income tax?

Taking back welfare at 100% = 100% marginal tax.

Yeah, it is a stupid policy design, though not actually a tax.

Probably should count social security as an income tax in which case 100% of workers pay an income tax.

What about Medicare?

Does anyone who is taken seriously make the argument that cash transfers to poor people in poor countries makes them lazy?


It would not alter basic dispositions in the short or medium term, but it does alter the work-leisure calculus within a given set of dispositions.

Has anybody ever looked to see if there are differences between the poor in poor countries vs rich ones? One might expect that in countries where a large fraction of the population is poor, being poor doesn't necessarily correlate with lower than average levels of impulse control, conscientiousness, etc. If this is the case, cash transfers might have noticeably different effects in the developing vs the developed world.

Exactly what I was thinking. Theoretically it would make perfect sense if absolutely poor people's work ethic weren't affected much by cash transfers, but relatively poor much more so.

Oh I forgot. Anyone who writes this sentence is a moron: "Attacking welfare recipients as lazy is easy rhetoric, but when you actually test the proposition scientifically, it doesn't hold up."

Not lazy but it might affect how people plan their work and expenditures, and thus their behavior.

It's like the example from Montesquieu in which temperate clines are associated with delayed gratification and sacrifice to spread resources throughout the year while the ubiquity of food in the tropics never required the behavior of sacrifice.

So if a cash transfer - or welfare - removes the need to delay gratification, it affects underlying behavior, for acquiring food and other things as well from obtaining education to monogamous family groups etc.

The AFDC ended up with the bad design because conservatives opposed to welfare forced that high penalty into the program. Friedman negative income tax was opposed by conservatives opposed to welfare. The same people argue welfare causes poverty by discouraging work. The conservatives who fight to make government not work are the ones who say government never works. But the are also the first to demand government fix problems that are so complicated or beyond human control.

FDR opposed cash handout and food handouts because the we're degrading and harmed the human spirit and character, but by his time as governor and president, he understood that the "free market" would not provide jobs for everyone seeking a job. Thus, he made it a priority to provide jobs instead of welfare because in every society there is always much work that should be done for the long term benefit of society. Building capital assets is always possible because you can't have too much capital. Unless you are a rent seeker or monopolists.

So, why don't we replace welfare with jobs? That would eliminate all rent seeking and monopoly profits,, so conservatives force unemployment and poverty to gain the benefit of scarcity and rent seeking and monopoly profits. Oil prices rose from 2001 on because Cheney was planning the monopoly profits from government created scarcity. Since 2009, that scarcity has been reduced by Obama policy of lots of jobs building lots of competing energy capital. Conservatives have attacked the building of energy capital as too costly because of all the jobs created and wages paid, and the zero profits that result. Conservative would rather have welfare paying people to not work so monopoly profits can exist.


"Oil prices rose from 2001 on because Cheney was planning the monopoly profits from government created scarcity. Since 2009, that scarcity has been reduced by Obama policy of lots of jobs building lots of competing energy capital."

That must be some kind of record for the maximum amount of disinformation in so few words.

I don't know which is the better parody site, Clickhole or Vox.

Haha. You hate Vox. That'll never get old!

What exactly was wrong with this Vox article? Just for shits and giggles!

No.7 i`m betting the "study" was funded by the Government and they were told what result to produce.


Re-analysis of 7 RCTs found that "Exactly zero of the seven programs saw a statistically significant change in either employment levels or hours worked per week".

Without having looked at the link let me make some sort of guess as to what might be going on. People have to income qualify for welfare programs. What this likely implies is that recipients lose their jobs or have reduced hours before they receive the benefits. What probably happens is that because of poor design those people are unlikely to get a new job or increase their hours because they will lose benefits.

No. The benefits were not conditional on "staying poor." See comment above. Nor were they based on having demonstrated low income or having lost an income source.

"A first challenge in these types of programs is finding the poor (“targeting”). Unlike developed countries, where program eligibility can be verified from tax returns or employment records, developing country labor markets often lack formal records on income and employment and thus alternative targeting methods must be used (see Alatas, et al, 2012, for a description)."

"For all of the programs in our study, regions were first geographically targeted based on some form of aggregate poverty data. After that, in 5 out of the 7 programs eligibility was determined by a demographic criterion (e.g. a woman in the household was pregnant or there were children below an age cutoff) and/or an asset-based means test (e.g. not owning land over a certain size)."

So then what explains their failure to increase hours worked and employment?

If that's the case then the study is an applicable to American welfare.

Not applicable. American welfare requires that recipients stay poor.

@Cliff, the same thing that explains their failure to decrease their hours worked. There may be no cause and effect in either direction. (But do note the two studies cited in the article that suggest perhaps such payments do increase work.)

@Thomas it is applicable in that welfare must be reformed in line with these successful programs.

You could just look at the paper.

"Once a household becomes eligible for any of the programs that we study, the amount of benefit that one receives is the same regardless of actual income level and lasts at least a period between 2 and 9 years, depending on the program."

"On net, however, the programs were fairly generous ranging from 4 percent of household consumption (Honduras’ PRAF II) to about 20 percent (Mexico’s Progresa)."

7. It's like economics 101. When one receives more money and benefits from the government than from working at a paying job, one will not work for pay.

But that is not what happens, so we're safe.

Two recent RCTs have suggested that giving cash to poor people in the developing world could actually, in some cases, encourage work.

Even if the results were true you would really be obligated to provide the microfoundations which makes sense of why supply and demand stops working in this area. A cynic might point out that supply and demand seems to stop in all areas in which the left is interested in regulating.

Restate your point more clearly.

Or maybe they keep working, just not the way the people who worship the Market and refuse to accept the evidence for market failures want to believe they worked.

In what way do these completely expected results in any way violate the "laws" of supply and demand? Would you quit your job or start working less hours if someone started giving you $5,000/yr? So then if you are a subsistence farmer desperate to survive it would make even less sense to stop working.

The $5,000 alters the marginal value of leisure, so some people will slack off. That's not what's at issue in the contention that the grant will 'encourage work'.

Went don't people work for free? They prefer leisure. So, why do people work? They need things.

This isn't exactly difficult. The specifics matter of course. But in principle this is right. The implication from the left is that this is in principle wrong. So demonstrate why we should expect lowering the price of leisure shouldn't result in now leisure consumption in principle?

You don't have to abandon all common sense in slavery to some economic model. When you are already earning as much money as you can and it is not enough, a windfall will not cause you to decrease your work. You already have more leisure than you want.

You're right Cliff, but is that what will be written about this study? Is that what the title implies?

Oh, I agree the headline and generalized conclusion are horrible


A cynic might point that conservatives cling to kindergarten-level graphs to justify their economic views, even if there is evidence those views are wrong in some cases. Micro-economics is interesting and valuable, but it's not Euclidean geometry.

conservatives cling to kindergarten-level graphs

Conservatives remember that kindergarteners are illiterates and do not read graphs or have a grasp of arithmetic.

A study of conservative fiscal proposals suggests that they are like kindergarteners in lacking a grasp of arithmetic.

But kindergarteners generally learn by watching the world around them, a method seemingly disdained by many conservatives. So yes, there are differences.

If you can't cite empirical evidence for bullshit, it's simply bullshit.

What does an RCT mean to you?

Regimental Combat Team.

>one will not work for pay

Which of course says nothing about whether somebody will be a productive member of society or not. I'm willing to bet that most people would be much more productive and entrepreneurial if their basic needs were guaranteed by cash transfers and social safety nets.

I don't think that you get around in the social circles of the bottom 20% by income distribution. I know a lot of people who would be completely satisfied if all of their needs are taken care of and they could just play video games and eat junk food and smoke weed all day long. Among the people who want that, the successful ones have disability.

How do you know these people? Did you ask them about this? (Your 16 year old son, does not count.)

That definitely describes my roommate. He was in the military and has good tech skills and earns more than the median income, especially for his age. But his dream life is gaming and weed.

Well, you know, nothing is too good for our troops, but they demand so little. Unlimited video games and dormitories for all the vets!

Not weed though. That is a bridge too far.

I went to high school with them and keep in touch directly and through mutual friends.

The military can use synthetic cannabinoids without detection and many of them do. I knew many while I was in the military.

This is probably true for a tiny share of the population. If you actually asked people I highly doubt many would say that all they need is weed, games and Doritos. But if that is all they want, guaranteed basic income is the answer, and a relatively cheap one.

Yes, it is the answer to a big hit to our GDP as they cease all productive activity

Basic income should be a universal right in a country this rich.


I know a guy on disability, but he re-roofs his own rental property and does the electrical himself, too, poorly.

I guess we should be happy the extra money doesn't dent his work ethic...

Give me an unconditional basic income that's high enough and I'll stop working tomorrow.

I took a year off from work and found that I was miserable.

You just need to find something to do. Wouldn't be much of a problem if your friends didn't work either.

1. I'm not a serious scholar (not serious about much, anymore). I scanned the linked outline, really weakly designed flow charts. I won't be reading the newest agenda-driven diatribe on the Great Depression, mainly b/c I'm not a scholar and the author's exaggerations of the roles gold may or may not have played both in the depression and the decade-long weak recovery.

And, "gold hoarders", "barbaric relic" are simply liberal swear word disengenuously used to advance the statist, central-planning/control fiat money narrative, which has worked so perfectly since 1913. .

The author's an economist of a libertarian bent, as was Milton Friedman, as is Sir Alan Walters. Goldbuggery is a sect.

Guilty as charged. I belong to the Sect of Diversification.

I believe gold coinage did not cause the Great Depression and I do not see evidence that the gold standard inhibited the New Deal. I believe that, after WWII, the US was able to grow GDP and repay WWII debt, while burdened with the gold standard. Is that wrong?

Art, I love you, man.

I believe gold coinage did not cause the Great Depression and I do not see evidence that the gold standard inhibited the New Deal. -

T. Shaw, the country experienced a rapid increase in the demand for real balances in the early 1930s. The monetary base declined slightly and you had a decline in the money multiplier and a hideous decline in M1 as demand deposits disappeared in bank failures. The result was rapid deflation and hideous real interest rates and a large mass of sour loans which had to be discharged in bankruptcy. Yes, gold fetters were implicated in the Great Depression, and when the currency was devalued in 1933 the country experienced rapid economic growth (at 9% per year from 1933 to the end of 1936). It's at this point the vulgar Austrians retreat some squares on the board and start to claim that production statistics are nonsense.

And, no, none of the problematic or misplaced features of the New Deal were generated by a devalued currency. Not one. The National Industrial Recovery Act was just bad legislation, nothing more, nothing less, and it was annulled by the courts. Social Security may have been an innovation in the United States, but such had been in place in Germany for five decades before it was enacted in the United States, and co-existed satisfactorily with the classical gold standard. The Wagner Act may have been wise or silly. What it was was a legal architecture for a regime in industrial relations. That's not dependent on monetary policy any more than its dependent on the price of wool.

I'm not sure what your problem with the Fed is. Business cycles were more modulated after 1933 than before 1933. The very worst contraction ran from the fall of 1945 to the spring of 1947 and it was concentrated entirely in the military sector and then some. Private consumption actually increased. The year-over-year contraction in 1937-38 was about 1./8th the size of the 1929-33 contraction. The most severe contraction since 1947 was in 2008 and 2009 and incorporated a contraction of 5% in the rate at which goods and services were generated. That would have been ordinary prior to 1929.

1. I don't believe Sumner is one of the historical revisionists who blame FDR for the financial collapse and Great Depression or blame Obama for the financial collapse and Great Recession, but those flow charts, well, we will see next month when the book is published. Something that fascinates me is that the public didn't forgive the Republicans for the economic calamity of the Great Depression for an entire generation even though it took forever to return to prosperity, whereas the public forgave the Republicans for the economic calamity of the Great Recession in less than two years even though it took a much shorter period of time to return to prosperity. I suspect that the difference has less to do with economics than the influence of media today. If that's the case it doesn't really matter if Sumner's book sheds light on the causes and consequences of the Great Depression.

What did the Republicans have to do with either one of those things?

Not much re 2008-09. There was a failure to update financial regulation to take account of certain innovation and there was a collapse of underwriting standards at Freddie Mac among other loci. The failure to act was bipartisan and the principal defender of Freddie Mac's accounting was Barney Frank.

As for 1929-33, what needed to happen (per Sir Alan Walters) was for the U.S. to follow Britain off the gold standard in September 1931. Not sure there was a ready way to do that without inducing a banking panic given the institutional forms of the time. Roosevelt did manage to engineer a devaluation in 1933, though.

Scores of factors contributed to the 2007/2008 debacle.

Fwank and Chris Dodd: so, the stars aligned that the two would write legislation to prevent the next existential financial crisis. Lot's a luck with that.

An early cause (among hundreds of actions) of the crisis was the Fed's actions to prop up Long Term Credit Management in the early 1990's. Unrelated, it set precedent for investors' losses being covered by Fed action - in 2008 the Fed cut deals for Merrill Lynch and Bear Stearns so that no one lost. Why didn't they do it for Lehman and AIG? Hank Paulsen was a Goldman Sachs man . . .

Clinton admin allowed increased (to 40 times) leverage . . .

it set precedent for investors’ losses being covered by Fed action -

Not 'investors'; the commercial banks who had lent money to LTCM.

in 2008 the Fed cut deals for Merrill Lynch and Bear Stearns so that no one lost.

That might come as a surprise to Bear, Stearns shareholders. JP Morgan took the bait because the price for the company was cheap. Might also come as a surprise to Bank of America that no one lost from their merger with Merrill Lynch. There's a reason they tried to back out of the deal.

1. I don’t believe Sumner is one of the historical revisionists who blame FDR for the financial collapse and Great Depression or blame Obama for the financial collapse and Great Recession

There are no 'historical revisionists' who blame Roosevelt because people who would offer that thesis do not know a basic chronology of events, much less a history of events. The only component of the banking implosion that could possibly be laid at Roosevelt's door would be that running from November 1932 to March 1933, when there was anxiety that Roosevelt would devalue the currency. Nearly all the decline in production recorded between the summer of 1929 and the spring of 1933 had occurred by November 1932. That particular banking panic took out a huge mass of small unit banks but coincident decline in production observed was quite modest.

At the government cheese office, we don't make people lazy. We make lazy people happier.

But not without periodic drug tests!

Tyler's odd defense of China's 1 child policy

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That sounds great!!

The header of that website "Moon of Alabama. Where barflies get together." That is where one goes to get the straight dope on foreign policy, apparently.

You've been trolling hard for Putin on pretty much every issue. Was wondering when it would begin to include the ISIS stuff.

What if we were trying not to start yet another war with a head of state (even if an illegitimate one) in the Middle East? Just cause we don't bomb the hell of someone's army, doesn't mean we don't want the leader gone. But, yes, obviously with what has developed in Syria, we now want Assad gone less than we did before--less of a priority. And, yes, we may well end up actually collaborating with him to eradicate ISIS. It's a very simple hierarchy. Not sure why that is hard to understand. It does not mean that Assad is not brutal and deserves to be removed from power.

Russia just wants to preserve its only client state in the Middle East. Why is it surprising they don't mind bombing nearly indiscriminately to accomplish this? They are already an international pariah--which you bizarrely support.

As if Iraq in 2014 was the start of anything. Obama was ending that shit.

I accept that Assad may be the best of numerous terrible options right now. Does not mean he is not brutal and deserves to be removed from power. Sometimes there are not good choices.

Russia is the antithesis of democracy. How many countries have implemented voluntary sanctions against Russia? There is your answer. Because some poor/developing countries and those that don't care about democracy don't publicly despise Russia does not mean it is not an international pariah.

I'm done arguing with you, as the facts speak for themselves.

Run along, little Putin troll.

Russia is the antithesis of democracy.

Actually, Russia in the state it's in right now would have been considered the most benign Eastern European state there was in 1979. There is residual political pluralism and no question that the government has the assent of the general public. Its more of a somewhat abusive political-machine state, not an autocracy. V. Putin is not Tsar Alexander or Gen. Pinochet. He's Tom Pendergast.

Except for the mysterious murders of investigative journalists and political opponents, the imprisonment of democracy activists, government control over most of the media, severe restrictions of public assembly, trumped up charges and sham trials of political opponents, and corruption of several times magnitude of anything Pendergast ever did, it's just like Missouri of the 1930s!

Putin's Russia is an improvement of the Soviet Bloc of 1979, but that is hardly the correct comparison. Poland, Czechoslovakia, the Baltics and others who were all in the same condition in 1979 as the Soviet Union are now far better. That would be the correct comparison to make.

Popularity does not have anything to do with whether someone is a dictator or not. Hitler was undoubtedly popular in Germany as were many other dictators. And of course, Putin had probably reached the unpopularity point in 2014 as the anti-corruption protests took hold just before Putin cracked down and invaded Ukraine. So it is uncertain if he can maintain that popularity.

You may be right about the comparison to 79. But fundamentally, it is an autocracy, a kleptocratic one.

The interesting thing is that it is the only country among former eastern bloc that has made such a huge retreat from democracy and rule of law.

No. White Russia actually is an autocracy (and democratic institutions there imploded before they did in Russia and imploded more thoroughly). Azerbaijan had only the briefest constitutional interlude, and Kyrgyzstan is alone among the Central Asian states for having had any sort of constitutional period.

Jan, what do you think of the people of Russia, who I'm pretty sure provide some democratic legitimacy to the current regime. I mean, isn't democracy the bee's knee's?

You can talk about electoral shenanigans, but it's hard to deny that Putin is popular domestically.

No, that is true. I think many of the people are brainwashed by state propaganda, but mostly they think Putin provides stability and has overseen increasing living standards, so they accept it. They also see Putin trying to stand up for their honor, which helps his popularity. The national Russian psyche is wounded, and Putin helps rekindle a little bit of their former pride, though in their hearts most Russians know they live in an unfree and declining state. They want something to feel good about. Of course, this situation will not last, mostly because the Russian standard of living has started to decline and will likely continue that trend. It is the single most important factor.

For a slightly hyperbolic preview of the future, read Day of the Oprichnik.

Of course, this situation will not last, mostly because the Russian standard of living has started to decline and will likely continue that trend.

That's called a recession. They come, they go. Russia's was induced by a shock to the terms of trade. Depends on the degree to which the decline in oil prices is tapped out.

Yes, I do want to bet. If Putin stays in power and there is no unexpected skyrocketing of oil prices, the standard of living will definitely be lower in Russia by 2025. Immigration from poorer countries may go up, but I expect the high volume of political emigration to continue apace.

Russia media is dominated by state enterprises controlled by the Kremlin. Nothing compared to the situation in the US.

Yes, I actually know a number of Russians and used to live in that part of the world. Maybe it's a biased slice of the population, but they almost universally say their country is not free or in a good position to improve.

I don't do revolution. That's up to them. They'll get there soon enough.

Yes, I do want to bet. If Putin stays in power and there is no unexpected skyrocketing of oil prices, the standard of living will definitely be lower in Russia by 2025.

I think if you're expecting an 11 year long unrelenting economic depression, you'll lose the bet. If you're positing a war between now and then, perhaps not. Also, Russia has had a partial fertility recovery the last 15 years. If you apply naive past-is-prologue assumptions, they could recover fully in the next decade.

What makes you think that the economy will turn around soon?

After a long decline alcohol poisoning rates are back up again this year in Russia. Fertility rates will probably also reverse. Even if not, the demographic outlook is still terrible. Maybe they can continue to annex more land to increase growth?

What makes you think that the economy will turn around soon?

Because business cycles in modern economies typically have a periodicity of about 6 years and recessions typically last a year or so. Russia's had 3 quarters of contraction. That's nothing abnormal.

And, no Russia's demographic problem is not 'decades in the making'. They did not fall below replacement rates until 1989 and hit bottom in 1999.

Nah, there are structural problems that I've outlined--dependence on oil, weak institutions, lack of rule of law-which will bring Russia to its knees. It will certainly prevent real growth. Cycles don't maneuver around these issues. Just look at why nobody is investing in Russia. Let their money (or lack of it) do the talking.

@Jan, the fact is that he is popular. Your fascinating excursion into the whys and wherefores is irrelevant.

How do we treat leaders who enjoy popular support at home? As pariahs?

Some lefties are so gung ho on the muscle against Putin. Where were y'all when Russia really was a dictatorship fomenting shit around the globe?

"Where were y’all when Russia really was a dictatorship fomenting shit around the globe?"
I do not know if I am a lefty (I guess I am because I fo not see the wisdom of pampering Saudi Arabia and antagonizing Iran), but I was in elementary school when Russia stopped being a Communist dictatorship (still is a dictatorship by the same standards the USA love to apply to left populists like Chavéz) . I was born the same week Andropov died.

Where were we? Russia is pretty much same as it ever was. I had some hope after USSR fell, but that was fleeting. Your suggestion that I was pro USSR or something is curious.

Of course state control of the media does matter, because the Kremlin implicitly or explicitly tells them what to say.

There could be no Fox News in Russia because it would be shut down. Period.

That story is completely illogical. If you want to stop supposedly illegal oil sales, you bomb relatively easily-replaceable trucks but don't touch the difficult-to-repair and expensive infrastructure of the refineries themselves? Balderdash. Aside from that, what about the environmental effects of exploding oil tankers, huh?

It's crude oil so refineries will not affect that

7. But that doesn't tell the whole story. See, first you have to start with a quantitative analysis of...ah, geez, that's gonna be a lot of typing. Forget about it.

Just have another kid, why don't ya!

#7 that evidence seems to support a BIG with a steep phaseout like 50%. I think every adult USA citizen could get $200/week and every dollar they earn drops the big 50 cents until it is 0 would be good. Eliminate the min wage of course.

$20k for a couple living in the Mid-West seems a bit generous. And 50% seems a bit steep. But I agree in principal.

$200/week would be quite generous around where I live too. Maybe $150/week would do.
I think that the 50% marginal tax is not too steep maybe even 60% would be OK. The Democrats contend that you do not get reduction in work below 70%.

50% may be okay but what about state income tax, FICA/medicare on top of that

Maybe they should surrender.

#2. I can think of no better way to discredit Islam and shame all Muslims than to refer to ISIS as the "Islamic State".

I think they know. And they don't seem shamed to me.

#7. This probably works just fine in very poor countries where people are living near subsistence or far below their comfort set points.

However, in the US, even quite poor people can afford relative luxuries like television sets and automobiles. Some people also have relatively low comfort set points, and a bit of extra cash might make it easier to trade off work for a little extra leisure time.
For example:

If all you want to do is pursue an inexpensive hobby and occasionally order pizza, one can live happily on very little.

Uh oh, looks like the great ketchup stagnation is back on:

Regarding Pigeons, we live in a strange world that so many pixels can be wasted on something so absurd.

If only it were the exception.

If this continues to occur you will want to replace your Minions Paradise cheat device to work

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