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Monday, July 18, 2011

It's A Whole New World

This is something I never thought I'd live to see:
“We have to balance the public accounts without delay” and reduce the deficit to 3 percent of gross domestic product by 2013, Francois Hollande, the leading contender to become the Socialist candidate for president, said in an interview with yesterday’s Le Monde newspaper. “Debt is the enemy of the left and of France.”
There's an election on in France, and all the candidates agree on tightening up the fiscal stance. This is quite a shift from last year and even earlier this year. The odd thing here is that the primary Socialist candidates to replace Sarkozy are committed to undoing some of his changes, so they do not explain how they will carry on the government belt-tightening. Continued pressure on European sovereign bonds might explain this.

Australia got itself into the consumer debt bind a couple of years ago, and its economy is now paying the price. But the fundamentals aren't that bad, so the normal central bank move would be to drop rates. I think they are going to have to do it.

I worked most the weekend, and I am currently deeply disturbed by H.8 and the remarkably coordinated moves in money flows. They indicate nothing good:
Other Deposits:












Consumer Revolving:



Shoot me now.









I was coping with all this until I made the mistake of looking at weekly rail. Carloads YTD YoY are down to +2.5%. That may not sound bad, but it is a huge relative decline over the last month. If you are in a depressed mood I wouldn't read the weekly update. Over the last month: 3.3% > -0.2% > 0.3% > -3.2%. It looks like whatever springback we were due for from the previous auto supply shortages is over. Truck inventory has been building up, so I think domestic light vehicle production is going to tail down a bit. Also, at the beginning of the four weeks past period intermodal YTD YoY was up 8.2%. Now it is up 7.5% - having decisively entered the declining trend.

I have read the GS latest, and I view it as overoptimistic to a lunatic degree. Everything I see points to fundamentals that are worsening rapidly in the third quarter.

There is a mystery here, and it is how we get such a tightly coordinated and synchronized movement. So far all my scratching around has only served to convince me that the movement is real. Until I truly understand the reason for what is an unusual degree of correlation, I do not want to go forward. There are considerable knock-on effects for banking. Retail commercial mortgages are ugly, losses on residential mortgages are rising, FHA may be in deep trouble, and needless to say, credit card debt is going to degenerate.

Therefore, I am going to stop blogging and do a detailed vector analysis. That usually serves to clarify things.

Foo is no longer blathering, but has now decided that we should deport people who cannot support themselves without aid of government programs, including SS. If one adopts a pure utilitarianism, this is a valid way to deal with our fiscal problems. I do not, but at least Foo is now advocating something that would save money. Admittedly, this is basically a Nazi solution, but the widespread starvation and fighting over food prevalent in Germany at the end of WWI and after spawned the Nazi era (people were crazy with fear that it would happen again), so in one way Foo is merely going directly to the logical endpoint.

Setting aside the constitutional changes that would need to be made, the obvious constraint of not having a place to deport them to remains. After considerable thought, I have decided that we should conquer New Zealand and deport them there. NZ will be very cheap to conquer and relatively cheap to hold, and it is far enough away that people will have trouble returning. Nor will the screams of the dying bother us.

It is remarkable that we are discussing problems that were prevalent in the 1700s and 1800s in England. The Poor Laws of England dated back to the Elizabethan era formally (brief historical summary), but had been modified in 1723 to start parish workhouses (never popular locally due to competition with local business owners), then modified in the 1790s by reformers to add supplemental relief in many parishes (for workers with inadequate incomes). There was a system by parish of providing either work or subsidies (subsidized rent, sometimes bread, occasionally money) for the disabled, the unemployed and the employed not making enough to live on.

In 1832 a Commission of Enquiry was appointed to change the system, because the system was supported by a compulsory "poor tax" and the rates were felt to be burdensome. The whole 1834 report was rather long, and I had quite a search before I found it. If you bother to read it, you'll see that our current system of EITC is not original.

As a result of the 1832 commission (the result was predetermined), out-doors relief was banned and a system of workhouses was implemented in the 1834 Poor Law. The result was to make being poor essentially a crime punished by imprisonment. Spouses were separated so they couldn't reproduce and children over seven were separated from their parents. Both children and adults were forced to hard labor. It did not last that long as a system due to public repulsion. The poor often simply turned to begging or crime due to their deathly fear of accepting that type of assistance.

The prison ship system and the last large wave of Australian deportations coincided with the economic changes which began in the early 1800s and made the old parish system unworkable. After the 1740s the population of Great Britain rapidly increased and a labor surplus had developed. This development coincided with the Enclosure Acts, which displaced a certain amount of the rural population, but did make it possible to feed a larger population.

The more things change, the more they remain the same!

PS: The economic benefits of creating a labor surplus coinciding with the economic cost of preventing societal breakdown are best understood by looking at the development of the English Poor Laws. In many, many ways you can see the push and pull of landowner and later manufacturing interests against the interest of workers. With Reagan's amnesty in the 1980s, the US embarked on a course very similar to that of England after 1750.

Marxist doctrine really derived from English history; stupid as Marxism is, it did address the societal push and pull of labor and poor regulation that began after the plague years of the 1300s. Those who need to employ labor always are interested in maximizing its supply and minimizing its costs; however the property depredations that ensue due to sheer deprivation force public subsidies of labor, and the result is then a public rebellion against the cost of subsidizing people who can't support themselves.


Comments:
MOM - There is a strong humanitarian argument for disallowing additional wlfare support and payments for additional newborn children to people already on welfare - because it encourages welfare mothers to have children not because they love children, but because they love money. People on welfare are in no position to support additional children, and should so refrain from adding to the size of their family. This is reasonable and the only responsible course for someone on welfare.

Welfare should also be reformed so that all utility bills should be deducted from the amounts posted to the welfare recipient's debit card, so that you don't have the situation of children living in houses with the electricity turned off in the middle of winter.

Thirdly, the food stamp debit card should be set up to interrogate the recipient's recent purchases, and disallow disproportionate food purchases. ( such as the purchase of 2 cases of chicken, and 2 gallons of barbecue sauce at a time. ) An individual should be permitted no more purchases in a week, than is required for adequate human nutrition for a week, and luxury class items, such as steak, lobster, many prepared foods, should be disallowed for food stamp recipients.

Then entire Medicaid system must be re-thought, as we spend vastly more for Medicaid recipients than any other major cohort of Americans, including the elderly, who tend to be less healthy than other cohorts.

The entire welfare system was designed by liberal democrats to produce a degrading dependence on governemt by the recipients, so that the welfare recipient would be sure to go to the polls for the democrat at election time. That is a disgraceful way to treat people less fortunate than themselves.
 
Anon - The 1750-1850 period is so long ago that much is different.

In general, we have birth control now. It is a question of whether the support is aimed at the parent or the child. Denying support may produce ill children who then require massive societal intervention, but it is very true that a dysfunctional person may produce ill or dysfunctional children regardless of any level of support.

So it is not clear that your humanitarian argument can be rebutted entirely by any honest person as long as the children are followed and taken away if neglected or endangered. It is true that some persons who would have been good parents will have their children taken away for no other reason but an inability to support them.

I don't think the Great Society programs were set up with anything but the best intentions, but once set up, inevitably politicians were going to pervert the system by angling for electoral advantage. It is not surprising that a society so deeply marked by the abject poverty of the GD would assume that poverty was the problem. For many, it is. For many more, it is their own behavior that produces the poverty.

It's true that Marxism is bunk, but that is because it ignores human nature. All attempts to form human beings are bunk if they ignore human nature.

With that in mind, I have to tell you that trying to control food purchases with food stamp debit cards are doomed to fail if some margin for purely discretionary purchases isn't left. What will happen is that persons will buy the allowed items and resell them to others for less than the nominal amount in order to buy whatever goods desired but disallowed.
 
"Foo is no longer blathering, but has now decided that we should deport people who cannot support themselves without aid of government programs, including SS."

You have *REPEATEDLY* and *GROSSLY* misrepresented what I have said. That is not a valid way to engage in debate. (It is also not a good way to maintain credibility -- if you can't/won't faithfully represent what the comments in your own blog are clearly saying, then why should people trust that you can do so with all of the other data and articles you are looking at?)

Here's what I actually said:

"Because of these problems, it might turn out to be necessary to modify my suggestion such that if someone commits a crime, is found guilty, goes to "debtfare" jail, and their resources run out [...], then it's time to kick them out of the country.

Note that this modification only applies to people who commit crimes. I did *NOT* say that non-criminals who are just in need of basic food/shelter/clothing would get kicked out.

Furthermore, I outlined a specific moral hazard in the preceding paragraph and no solution is required if that problem never materializes. There is also the possibility that a better solution than deportation is found. Thus the use of the word "might". (BTW, I might be open to accepting them back after they have finished serving their term "abroad".)

Maybe you think it is every criminal's right to keep stealing resources from law-abiding citizens via government programs. I would disagree.


"this is basically a Nazi solution"

Way to godwin the debate. And way to equate not subsidizing criminals with ethnic cleansing.

If you owned/ran some housing and someone was committing crimes against your other tenants, would you feel it was your duty to reward them for their acts with free housing and food? Or would you instead try to kick them out?


"Setting aside the constitutional changes that would need to be made"

You don't need constitutional changes to punish criminals -- we already do that -- it's called a "sentence" and is handed out after a guilty verdict. The constitution already allows for capital punishment. The exact details of whom and how deportation works would be constrained by the constitution. (Of course, these days nothing the feds do seems to be constrained by the constitution... not that I am an advocate of that situation.)

And deportation is just one possible solution to a potential moral hazard. The measuring stick I would use to decide if this solution is the best, or if any solution is even required at all, would be: What results in all of our natural rights being defended with the best possible combination of strong/broad protections and small costs.

Feel free to propose other solutions which would do better (with "better" defined as per the above measuring stick).


[snipped: A whole bunch of other garbage that has nothing to do with the current debate as no one suggested we do any of it.]
 
Kicking people out of the country? Man, I missed that one I guess.

Everybody has to calm down and take a deep draught of their favorite narcotic substance for a sec.

None of us are going to fix this right this second. It's all good.

I seriously appreciate this blog, MOM is doing a service that not many do.

That's my two pesos. And if I see more arguing, I'ma gonna reach through the internet and throttle yer bandwidth ;)
 
MOM,

After reading your post here I had to comment. WOW! I knew nothing of this history! Yes, no doubt, the lessons from that time in England are invaluable to us today! Thank you! I also want you to know that it's not just this post that I appreciate. I read you everyday but rarely, if ever, comment. I find your analysis of economic data to be among the best. Look, OK, it is the best! I also appreciate your knowledge and perspective regarding the big picture - yes, your wisdom. Keep it up! Or where else will I go to get to the bottom of what's going on out there?
 
rying to control food purchases with food stamp debit cards are doomed to fail

Plus the fact that the control happens at the point of sale. There's no need to make a cashier the enforcer because the computer system won't allow the sale to be rung up. You'd basically have to have a food-stamp only grocery - which might not be a bad idea in some urban areas with so-called "food deserts" but it would be a logistical problem in rural areas.
 
foo said, "if someone commits a crime, is found guilty, goes to "debtfare" jail,...."

Brings back memories of my tadpole years. 'Twas the GD, and my mother was raising three boys with hearty appetites on what she could eke out from her "beauty shop" in the back room of the hovel/house we lived in. We never went hungry, but often pushed away from a table of simple food (Potatoes and salt pork, etc.) not being full. Many is the time she told us we were going to end up in "debtors prison" if we wasted money, food, fuel, or such. I did not know what debtor's prison was, but I knew I didn't want to go there. Thus began a habit of being thrifty. (My wife calls it miserly, and maybe she's right.) Anyhow, that threat worked with me, but my older brother never got the message and ended his life with nothing but the charity of family and government. I have tried to figure out a way that society could put the fear of debtor's prison in all who leave our schools, but alas no breakthrough ideas have appeared. Maybe my lawyer is right. He says that some people get the "money gene," and the rest struggle to ever get their financial acts together.

'Tis a pity we have no real answers for that. I do believe in charity and familly as last resorts. The closer the charity is to the receiver, the more likely it is not to be abused or defrauded. I would rather see all welfare dispensed by churches and local NGOs than by Big Brother. Such local organizations make good use of volunteers and thus the money or donated goods go much further.
 
MOM - With all due respect, your comments on welfare demonstrate that you may profit from going out a bit, and look at practice vs. theory re welfare. Beyond that, remember any subsidy tends to affect behavior.

For example, you say: " Denying support may produce ill children who then require massive societal intervention, " but you seem agnostic about whether any such dysfunctional welfare parents you cite actually exist. You also implicitly argue that people on public assistance have an unlimited claim on the taxpayer's wallet, as you display no qualms about individuals living in perpetuity on the taxes of people who take pains to live responsibly and not become a burden on others.

Regarding your claim: " It is true that some persons who would have been good parents will have their children taken away for no other reason but an inability to support them. " You are essentially saying offering incentives to increase single parenthood is desirable, because single parenthood has no effect on the children. It is simply a fact that households with two competent parents are far more effective in raising children, than single parent households. As far as the state taking children away from parents, in practice this virtually never happens, if the person is not in trouble with the law. Although personal experience represents a small sample size, I have personal knowledge of neglected children whose parents have never been in any way bothered by the state for their neglect, and this seems to be the norm.

Later: " I don't think the Great Society programs were set up with anything but the best intentions, "

This is your assumption, but they were signed into law by a man who was at the beginning, middle, and end of his political career, a man of breathaking dishonesty and corruption. And many of the prime movers in the Congress were of the same ilk. I think that's your hope, but it is not very plausible, nor historical, looking at the long history of representative government.

Regarding your comment on food stamps: " With that in mind, I have to tell you that trying to control food purchases with food stamp debit cards are doomed to fail if some margin for purely discretionary purchases isn't left. "

If the recipients are poverty stricken, they need to eat, and have no other means of eating, therefore they would, in theory, have to go hungry to commit this particular crime.

Are you arguing that food stamp allowances are much too generous, and that far too many people receive food stamps who don't need them, except to pad their incomes?
Food stamps are meant to prevent malnutrition, not provide a middle class lifestyle on the public dime through illegal re-selling of goods purchased under the program.
 
MOM, are you familiar with Henry George? If we’re discussing appropriate responses to poverty, we would wisely establish its causes.
 
"a man of breathaking dishonesty and corruption"

I think I'm seeing some kind of odd pattern:

FDR lies about the USS Greer to get us into WWII (though that attempt failed and he had to wait for Pearl Harbor). FDR creates SS.

LBJ lies about the Gulf of Tonkin to get us into war with Vietnam (and succeeds). LBJ creates Medicare/Medicaid.

GWB lies about WMDs to get us into war with Iraq (and succeeds). GWB creates Medicare part D.

BHO lies about "humanitarian help" to get us into war in Libya (and kind of succeeds). BHO creates Obamacare.

The phrase "bread and circus" comes to mind:

the Roman practice of providing free wheat to Roman citizens as well as costly circus games and other forms of entertainment as a means of gaining political power through populism
 
Foo, I am sorry if I misunderstood you, but this is not speculative.

People are stealing now because they are hungry. Private charity is not equal to the task.

There aren't jobs for all those who desperately need them, and the type of thing I used to see in the rural areas I now see in the more upscale areas. What was a rural depression has now transited into the suburbs.

I do the supermarkets because they tell me what's going on. What's going on is that an increasing number of people can't feed themselves.
 
Anon 5:30 - I take your point about food stamps, but any program, whether it is government-administered or a food bank run out of a church, will be be misused by some.

That's just the way things are.
 
"this is not speculative.
People are stealing now because they are hungry. Private charity is not equal to the task."

But the deporting criminals idea was presented as a possible addition to "a ward-of-the-state system" which would make food and shelter available to anyone and everyone (specifically for the *purpose* of avoiding crime). So if you look at the entire system I was suggesting, people would not be stealing because they were hungry, because they would not be hungry. You can't just take the deporting criminals modification to the "a ward-of-the-state system" proposal out of that context and then criticize the modification because it doesn't work when jammed into some entirely different context it was never meant for.
 
I think we have come up with a Godwin^2 law. Here is my attempt to define it: anyone who dismisses a Nazi comparison by referencing godwin's law automatically loses the debate, and the Nazi comparison stands.
 
Indeed, the history of the Industrial Revolution era in Britain, and the century or so that preceded it, is very interesting and deserves study.

I'm currently re-reading Thompson's The Making of the English Working Class, which deals with this period.
 
Okay, personal experience again. At one point in the history of food stamps, you couldn't buy non-food items. If you have no income, have you ever tried to get soap (personal and laundry), toilet paper, rubbing alcohol, etc? During that period, I got a cash Christmas present and those are the things I spent it on.

Let me say it again, commodities are the way to go. We still give out commodities to the Native Americans (or did up to a few years ago when I actually saw some in a house.) They contained basic grains, canned meat and butter, powdered milk and cheese. They also used to give out cook books, designed to help you figure out what to do with the stuff. I've never received it, but I did have people trade the things they didn't use for things they needed. That's going to occur under any situation you want to devise.

And just for the record, although I'm sure there are some commenters here that will figure they got what they deserved, single moms on food stamps have to plan very carefully for the holidays. They come at the end of the month, when you are prone to run out of food stamps. And no, not everyone gets some sort of Christmas or Thanksgiving baskets. The smart women who wound up on welfare got off it as quickly as they could. (One I knew pulled green chain at a lumber mill. She was barely five feet tall but tough. Had her first kid at fifteen.) The not so smart ones considered welfare their "paycheck".
 
And I don't know how it plays into this, but I'll mention it. At one point, you didn't get change back from food stamps spent on food. You got script good only at that particular store. Great for the merchant but meant you had even less to spend on food. The current system is designed to benefit merchants and food processors, far more than the folks getting the food stamps. WIC at least seems to do a better job of getting nutritious food to those who need it most.
 
Regarding foo's debtfare system, there is a reason that we don't allow people to sell themselves into slavery. Some people would do it, and it's utterly degrading to society.

You can call it whatever you like, but you're proposing to make people slaves to the state. Sure, theoretically they can get out, but you can be damn sure that the powers-that-be (probably the debt wardens themselves) would make sure it's nigh impossible.

Jesusmarynjoseph, foo, don't you think about how people would pervert the rules you dream up? You're guilty of the same utopianism as the Progressives, and the Puritans before them. Spare me your "logic", because it's apparently a Philosophy 102 version of logic that doesn't allow for human nature.

That is all.
 
"Regarding foo's debtfare system, there is a reason that we don't allow people to sell themselves into slavery. Some people would do it, and it's utterly degrading to society."

So allowing someone to accept some debt so they can eat, debt that they can at least pretend they might be able to pay back some day (with full accounting), is somehow more degrading than taking government handouts? You accuse me of not understanding human nature, but I know that honest upright people feel better about taking a loan than having to resort to charity. To many, accepting handouts involves shame. And the shame doesn't get smaller when they know that the "charity" is actually stolen loot the government has taken by force from others.

The situation we have *NOW* is that we are pretty much *ALL* slaves. I never agreed to any debt -- it has been imposed on me against my will, apparently as punishment for the crime of being born.


"you're proposing to make people slaves to the state."

That's backwards, I am trying to *FREE* *US* from being slaves to the state. I am losing 3/4 of my job income to the state *RIGHT* *NOW*. In about 6 years it will be at 100+%. (At that point my savings will still be going up in nominal dollars, but will be dropping in real value. "Gambling" is my only hope to avoid that.) And that is assuming we don't see inflation go even higher, which is not a safe bet.

The slavery we have now is insidious because most people can't even see it, so they not only don't know where to begin to fight, they don't realize there's anything to fight. The potential "slavery" you are concerned about would be right out in the open with an actual accounting of exactly how much debt a person has accumulated. That is much easier to monitor and fight (i.e., do our due diligence as citizens) if it goes wrong than what we have now where slavery is imposed on us from many different angles and many of those in "stealth" form.


"Sure, theoretically they can get out, but you can be damn sure that the powers-that-be (probably the debt wardens themselves) would make sure it's nigh impossible. [...] Spare me your "logic", because it's apparently a Philosophy 102 version of logic that doesn't allow for human nature."

So your logic is that the government might corrupt an originally non-corrupt system, and therefore we should never introduce the non-corrupt system in the first place? By such reasoning we can do nothing, ever, as anything we do will be corrupted.

It is practically guaranteed that a government will go corrupt if its citizens do not remain vigilant. Vigilance is what I am exercising here, and is what we have had far too little of in the past century. I am seeing several massive systems of theft (with very large amounts of money moving through them, which is just that much more attractive to corruption) and I am trying to eliminate or at least minimize them.

If you want to help, then help educate our citizenry. Teach them about liberty, and about government's true role to protect that liberty at the smallest cost (which is itself measured in liberty lost). Government corruption *ALWAYS* involves diminishing people's liberties in one form or another, so the liberty-minded are inherently against corruption. Help create the vigilance needed to fight corruption.

Or just keep pissing and moaning about how everything will get corrupted and do nothing to help. Your choice.
 
How is a system where someone gets a loan to cover basic needs supposed to be *more* corrupt[able] than one where they have promised "entitlements" taken from others and a system whereby they can increase the amount of theft simply by voting for it themselves rather than relying on the votes (aka good will) of all of those who are providing said "entitlements"?

How is a system where someone between jobs is racking up debt and therefore incentivized to get a job sooner rather than later supposed to be *more* corrupt[able] than one where they can sit back and collect "free money" for 99 weeks before bothering to look for a job?


And how are these people "slaves"? If they go in debt, the only thing that I have suggested happens to them is that they can't vote again until their debt is paid off. Maybe there would need to be some other provisos, but so far that is the only one I have identified as necessary. (I would imagine it would impact their credit score -- but that would be a private sector decision. If their loans were cosigned and the cosigner does not pay, then they may be subject to the same penalties.)

And what of me? What about the slavery I am in, for debt that I never asked be created in the first place? What happens to me if I refuse to pay up when the interest comes due every April 15th? I don't just lose my ability to vote and get a dinged credit score -- I get thrown in jail (and probably get my life ruined).

So who's really subject to slavery here?


What if one of these you allege to be "slaves" comes into some money and wants to use it to pay off their debt in part or in full so they don't have to be on the hook for the future interest? They can do so.

What if I have some money and wish to pay off "my debt" so I am not responsible for the future interest? I am *NOT* allowed. I am required to keep paying perpetually-increasing amounts of interest even as I protest the creation of new debt.

So who's really subject to slavery here?
 
Free money, Foo? Unemployed people pay taxes! They pay 10% on their "benefits". The reason for these programs isn't so much to benefit people as it is to make sure that state, local governments and businesses get a cut of whatever program is created. We can't just give people food any more. We have to give them food so that grocers and food processors get a cut.

Teaching people to show vigilance? You can't even get people to pay attention to what the local politicians do, let alone on the national level. We discovered that our county was strong-armed by the state to "donating" tidelands to them. The state threatened to drag them into the lawsuit we are dealing with. Those tidelands were donated to the county and are attached to the county park. Do you think anyone besides us knows about this or gives a damn? We are dealing with governments that already have too much power to stop, outside of armed rebellion.
 
foo, your assumption that I am doing nothing is incorrect.

Vigilance and education, as you correctly say, is the only thing that will protect us from government-gone-wild. Replacing one set of "reforms" with another will solve nothing--the fault is not in our government programs, but in ourselves.

There are some programs which need to be gotten rid of, or scaled back, but simply replacing one with another just changes the form of corruption, unless society is ready to guard against that corruption.
 
foo, the reason that what you are proposing is slavery, not debt, is quite simple.

A normal loan is given to someone who has, at least nominally, been screened for an ability to pay. It doesn't always work out, and that's why we have bankruptcy (and why non-dischargeable college loans are such a rotten idea). But generally, we issue loans to people who we expect to be able to pay the loan back.

What you are proposing is to search out precisely the people who are most unlikely to ever pay a loan back, and tell them they can have money now to pay their bills if they accept loss of citizenship and a debt for the money. Oh, and by the way, the payback required to regain full citizenship will be ever-growing (and presumably non-dischargeable if I understand your proposal correctly). Such work as they do will belong to the government forever after, with no hope of enjoying the fruits of their labor. How is that not slavery?

This is the logical outcome of your proposal, allowing for real human behavior. At the very least, it's no better than what we have now. There is no answer in complex "reformed" programs.
 
Foo - you now - if I understand you - appear to be advocating for a serf society with this debtfare thing. If I misunderstand you, please explain.

The basic social contract is that parents take care of kids and kids take care of parents, and regardless of what you want to say about boomers, they did take care of their parents. They weren't good at math, but they were good at heart. It is not the boomers that did not pay for their retirements, but the previous generation that didn't. However the previous generation started out with the GD and WWII on their backs, so overall they did great and we owe them more than they owe us.

Your basic reasoning here is economically FUBAR, because if debt is absolute, then we are all born incurring debts and thus are born as slaves. Nor would anyone ever borrow to buy a car or a house or invest in a business or an education. Mature people know that success or failure is sometimes a matter of chance and sometimes a matter of external circumstance. The graduate who can't find a job in 2009 might have had six offers in 2004. That's life.

So what you are really advocating for is a society of peasants, serfs and a few feudal lords. It would be a very poor society with astonishingly little freedom. On the bright side, we might enjoy invading Mexico to set up a new Free State. There's always a bright side.

People already accept debt obligations for old age assistance. But that already exists. For example, if an older person becomes unable to live alone, usually he or she will be placed in a nursing home. Whatever assets the person has will be taken, which includes all but a very small portion of SS or pension checks, houses, etc.

Nor does the debtfare idea change the financing problem. If a person can't pay debt, then of course they will accept debt in exchange for food. But the debt has no value, and I can assure you that 82 year old slaves are a liability, not an asset. This raises the awful specter of a new era of subprime SS SOBS (Social Obligation Backed Securities), which will have no other effect than to utterly dwarf the last round of bad loans!

Social Security is not at all a comfortable existence for most people. Society has structured things so that there is a high incentive to save and economize, while making it quite difficult for many people to do so. Positive incentives exist. Negative incentives also exist.

You say you are willing to go with whatever is the cheapest way to preserve freedom.

My response is that by far the cheapest way is to address joblessness by providing jobs. If people are willing to go out and clean toilets or weed parks for low wages, they are obviously not abusing the system. I would far rather do it than steal, and you see people with advanced degrees now applying to fast food restaurants. In some cases, those degrees are technical or scientific! The problem is not that they are applying for jobs in fast food restaurants, but that there aren't enough of them to go around.

However there are also the disabled, including most of the elderly, who can't get out there and work. The cheapest way to support those people are through continuing disability (you have to work for it), Social Security (you have to work for it), and some of the other basic programs.

Standard welfare is limited to five years unless you are disabled. There is gross abuse of the SSI system. to be sure, but without the missing jobs, there is little that can be done to fix it.

Our problems - just about all our problems - are due to Mark's job graph. I suggest you study it a little more.
 
And how are these people "slaves"? If they go in debt, the only thing that I have suggested happens to them is that they can't vote again until their debt is paid off.

Foo - if they can't vote, and if the government automatically gives them money in exchange for a promise to repay, then nothing about your personal problem changes, does it?

You'll still be paying for their maintenance, won't you? And now the people will have even less incentive to go out and get a job, because then their living standard will be worse. They'll know they are slaves and have no chance to get out. The bottom line is that if a person lost a job at a pizza joint, or for that matter most service occupations, that person would never be able to recover from debt incurred from a car accident, or whatever.

Our whole system is dependent upon bankruptcy, which takes people and returns them to a status which enables them to return to productivity again.

What you are advocating with this - as long as the government advances the money - is a system in which once a person truly fell he or she would never have an incentive to become self-supporting again. This would inevitably greatly inflate the numbers of those receiving the "loans".

And if the government does not advance the money, then all the older and less productive people would still be left out in the cold, and the more productive people would be poor-farmed once again, and reduced to permanent serfdom in the process.
 
"your assumption that I am doing nothing is incorrect."

Well, I hope you're not engaged in miseducating people about the difference between liberty and slavery, because you seem to have problems identifying what is and is not slavery (see below).


"replacing one with another just changes the form of corruption, unless society is ready to guard against that corruption."

And who gets to decide when "society is ready"? If people could see the morality of what I suggest in great enough numbers to get it enacted, that would be a fairly good sign that they are ready. (At present, the "quality" of citizens we have now likely means my proposal has zero chance. But that in itself doesn't make my proposal a bad end goal -- it just means we may have to make do with much less optimal solutions until the people are ready to travel the moral path.)


"tell them they can have money now to pay their bills"

No, I am more with Teri's line of thinking -- provide the basics as needed (food, clothing, shelter, facilities for hygiene), but do not provide money. These items/services would be simple but adequate, selected to offer good bang for the buck, and could be bought (by the entity providing such services) in bulk to save costs. (I might also like to see the providing of service separated from the state; the state provides the legal framework and debt-funds to make it work, but the actual running would likely be much better handled by non-profits such as the charities making the biggest contributions rather than by the state.)


"if they accept loss of citizenship and a debt for the money."

Not loss of citizenship. Almost all rights would remain intact. They would just not have the ability to vote (which would otherwise let them vote to raise their own allowance). If they want more stuff they will have to rely on the good will of others. (This is to avoid ever again getting into the case we have now where "entitlements" are viciously protected because so many people want "their piece of the pie".)


"Such work as they do will belong to the government forever after, with no hope of enjoying the fruits of their labor."

Absolutely not. Not in the slightest. Show me where I proposed *ANY* such thing.

The only control in my proposed system is what they are allowed to get for their loans, and suspension the right to vote (to protect that limited control).

There is no control in my proposed system to force people to pay back their loans (other than their right to vote being withheld until they do). So the government can't force you to pay back these loans no matter how much money you make (though if you are making enough money to be subject to income taxes you would still be taxed just the same as everyone else, and collection of those *is* currently backed by force).

In theory you could have a system of forced collection that only kicks-in if/when they make wages well above subsistence levels and even then only mildly (e.g., 2% of income). But I have not suggested such a thing, and my suspicion is that doing so would actually be counter-productive because it would give many the sense that they are "paying their way" just because they are making some inconsequential minimum payment.

If implemented, one side-effect I would not be surprised to see would be a significant increase in the number of people who vote, especially among the "lower" class. Because for many people voting may become a symbol that says: "I'm making it on my own. I'm pulling my own weight. I am a productive member of society."
 
Foo - so now the "loan" is no loan? They just don't get to vote?

They never have to pay the money back?

The welfare rolls would expand by about 40 million in just a few years!

A loan that never has to be paid back is not a loan. You are just proposing taking away their votes, first, and then, I quote:

Maybe we send them to Mexico (kind of a tit-for-tat), or drop them off on the African coast. There are all kinds of options. (They would be warned that returning to the USA would be a death sentence, so you don't have to worry about lots of them scrambling back over the border -- or if they do they will keep their noses *very* clean because their next encounter with the cops could turn out to be their last.)

That's what you are really after.

Except your fundamental lack of ethics is blinding you to the obvious. The voting class would be dominated by the batty professors who brought us this downturn, who believe in an economy powered by windmills, and who make up the WS/DC axis so exemplified by GS.

Fortunately, your proposal will never fly.

You are making several fundamental errors - you attribute individual moral failures to a situation that has arisen by mismanagement at the top, and you advocate a system that would treble the control over the system of the same elite that produced this collapse.

Also, I think your interesting ideas about national sovereignty would wind up greatly expanding our national security expenditures, which, frankly, would not be a help.
 
"appear to be advocating for a serf society with this debtfare thing"

No, serfdom is a form of slavery. My proposal does not involve slavery. (At least it does not involve slavery for those taking out the loans.)


[A lot of stuff clipped because it seems to be based on the mistaken idea that I am proposing slavery.]

Please keep in mind that debtfare is not intended to be an overnight change -- we don't just throw out SS today and replace it with debtfare tomorrow. Instead, if you recall (go here and search for "To flesh out the idea a bit more") I suggested that we phase SS out over a very long period of time and in a manner that allows for most people to eventually end up relying on their own savings rather than SS. Debtfare would be an add-on to that change -- it would be for those people who, despite the improved opportunities to work and save, simply didn't manage to do so. And its primary purpose is to prevent such people from feeling compelled to commit crime in order to meet their basic needs.


"Nor does the debtfare idea change the financing problem. If a person can't pay debt, then of course they will accept debt in exchange for food. But the debt has no value, and I can assure you that 82 year old slaves are a liability, not an asset."

I understand that old/retired people are unlikely to be able to pay back their debt themselves. That is why I included "bonuses" (better tasting food, a more comfortable place to sleep) if they can get someone to cosign their debt (or just outright donate money to pay for the service).

I also understand that some of these people will be unable to get anyone to cosign for them, and their debt will still be outstanding when they die. That debt will simply be written off (i.e., the tax payers will not get those funds back).

Note that I also see debtfare as a potential replacement for unemployment "insurance". Unlike with retirees, the lack of employment in this case is usually temporary and therefore they would at some point likely have the means to repay.


"You say you are willing to go with whatever is the cheapest way to preserve freedom."

Not quite -- the best combination of strong/broad protections and small costs. 100% freedom is unfortunately not achievable as you always end up trading some amount of liberty in order to protect the rest. So it's always a balance between what liberty you get and what liberty you have to give up.


"My response is that by far the cheapest way is to address joblessness by providing jobs."

This is not an either/or situation. We can take steps to improve the job situation *AND* make fixes elsewhere.


"if they can't vote, and if the government automatically gives them money in exchange for a promise to repay, then nothing about your personal problem changes, does it?"

Debtfare only provides the necessities, and it provides them directly in minimalist form. That at least puts a cap on how much one person can drain us for.

Debtfare acknowledges that people who take these loans owe us (even if they end up never repaying). It says these are not "entitlements". That gets rid ...
 
...the sense of being owed and replaces it with a sense of debt to society for helping them out.

"You'll still be paying for their maintenance, won't you?"

You won't accept a solution where I am not stuck paying for their maintenance, but you criticize a solution where I am stuck paying for their maintenance. There's no pleasing you.


"And now the people will have even less incentive to go out and get a job, because then their living standard will be worse."

Wrong. There is no disincentive for working. There is nothing forcing them to pay back these loans at all much less on any given time period -- they just don't get to vote until they do.


"They'll know they are slaves and have no chance to get out."

Slavery is when I can force you to give me the fruits of your labor. The person taking the loan is *NOT* subject to any such thing due to such a loan.


"is a system in which once a person truly fell he or she would never have an incentive to become self-supporting again."

If the don't have a cosigner, then they are going to have bad tasting food and an uncomfortable cot if they don't fund themselves.

If they do have a cosigner, then the cosigner is on the hook for the money. (The cosigner entered into this not only voluntarily, but without the "duress" of anyone going hungry. So in theory the consequences of nonpayment could be harsher on the cosigner if that's what you want.)
 
"The welfare rolls would expand by about 40 million in just a few years!"

I never said that it could not be subject to means-testing and any other controls that are required to limit what is provided. And as per my original proposal, the food/shelter they would get would be livable, but not desirable.


"That's what you are really after."

You are once again talking about something which would only apply to convicted criminals. Furthermore, as per the goal of balancing liberties with their costs, it would tend to be applicable for criminals with long sentences rather than criminals with short sentences. This is because the person with the long sentence has less post-sentence liberty to lose while imposing a more significant reduction in liberties on others due to the expense of their long stay, while the situation is reversed for the convict with a shorter sentence.


"Except your fundamental lack of ethics is blinding you to the obvious."

Bull. You never bothered to answer this question I previously posed on this issue:

If you owned/ran some housing and someone was committing crimes against your other tenants, would you feel it was your duty to reward them for their acts with free housing and food? Or would you instead try to kick them out?


"The voting class would be dominated by the batty professors who brought us this downturn"

No, the voting class would be dominated by people who actually pay their own way through life instead of being dominated by would-be leeches. (And as I suggested earlier, I suspect voter turn-out of the "lower" class would actually increase in response to debtfare, as voting would be seen as a symbol of their being a productive member of society.)


"You are making several fundamental errors - you attribute individual moral failures to a situation that has arisen by mismanagement at the top, and you advocate a system that would treble the control over the system of the same elite that produced this collapse."

Huh? I am attributing the growth of entitlements to the aggregate moral failure of many individuals. Your "mismanagement at the top" claim is nonsense -- people voted for this crap the whole way -- they voted to keep entitlements big and make them larger -- and they voted for politicians to go spend, spend, spend even though it was their SS pretend "savings" that was being spent.


"Also, I think your interesting ideas about national sovereignty would wind up greatly expanding our national security expenditures, which, frankly, would not be a help."

What are you talking about? I would shut down every foreign base and pull out of every war ASAP. I would also likely down-size our military as it is way more than needed to provide a solid defense of the USA.

If you're talking about running prisoners across a border, you don't need a sizable military for that. Just tell BATF to stop running guns into Mexico and start taking criminals there instead. :-)
 
Anyways, as much fun as it is to think of the poetic justice of sending criminals to Mexico, Africa would be the far better choice. We really want to cooperate with Mexico (and we really need to get rid of the stupid drug laws -- Mexico is taking a hammering over that), and there are places in Africa where there is basically no real government or rule of law so criminals dropped off there could try to turn it into something half-ways decent like what happened with Australia.

And really, this whole deportation of criminals idea is so hypothetical I don't know why you keep hanging on it. It wouldn't even be considered for enactment unless people on debtfare decided to start a criminal uprising as a means to get more stuff. And even then it's very unlikely to be needed because even though their food and shelter might not change much when switching from 100% debtfare to prison (due to being arrested for committing a crime), they *would* lose a lot of their rights as convicted criminals (e.g., no longer free to go where they want as they are now locked up). So deportation of criminals is basically "the nuclear option" which would only need to be invoked if a criminal uprising occurs *AND* throwing as many of those committing crimes into jail as is possible proves inadequate to quell the uprising, *AND* even the threat of invoking "the nuclear option" wasn't enough. What would your alternative be in that case -- just start shooting them? (Actually shooting them probably already is current SOP for an uncontrolled criminal uprising. So really deportation isn't really "the nuclear option", shooting them is. And don't even think about misrepresenting this as "foo now says we should shoot poor people".)
 
OK, I'll give it one more shot. I actually find this fascinating--I've met plenty of Progressives with the totalitarian disease, but never before a libertarian. It's instructive for our coming libertarian future. I didn't expect to see anything like this until 30 years from now, at a minimum.

foo, you say that debtfare recipients would not be eligible even to receive gifts. That money would be confiscated as repayment to the state. You haven't stated what other property the state may confiscate, but I assume it's not limited to Christmas gifts. They cannot vote, they are liable to be deported as punishment for any crimes they commit. Therefore, recipients have severely limited property rights, are subject to reporting and searches far in excess of anything a citizen now sees, have no participation in the political system, and may be bodily ejected from the country (and presumably prevented from returning, else why expel them) at the drop of a hat. They are NOT citizens, in any meaningful sense.

You haven't explained how you differentiate between gifts and wages. This requirement would probably limit the economic activities in which debtfare recipients could engage--tips (as non-wage income) go to the state, after all. This just scratches the surface of the problems with your idea.

I'd urge you to think seriously about how unscrupulous people would game the system you're talking about. How they'd use your debtfare recipients. It's a dark path you're on.
 
"Progressives with the totalitarian disease, but never before a libertarian"

What totalitarian disease?

My preference would be to have no non-voluntary wealth transfers at all. But MOM pushed on the idea that if you don't feed people they will go on a mad rampage of crime, so you have to do something to protect everyone else from that crime, with the suggestion that simply feeding them before the crime is cheaper than jailing them afterwards. I don't really buy that (the mad rampage part), but rather than arguing that point I decided to play along and see what kind of solution could be applied.


"foo, you say that debtfare recipients would not be eligible even to receive gifts. That money would be confiscated as repayment to the state."

Wrong. (I managed to track down where you picked up this idea though -- see below.)

If you want to give a gift to someone on debtfare, that's fine. (Though keep in mind that under current US tax law there is a gift tax if you give "too much".) If you want to pay off some/all of their accumulated debt for them, that's fine. If you and a bunch of others want to throw a party and raise money which will be used to prepay some of their debtfare services, you could do that too. The lack of voting really is the only limitation a debtfare recipient is subject to (and if their debtfare services are prepaid by charity or friends or by whatever means, then they don't even have that limitation -- it's only when they actually owe money that they can't vote).


"they are liable to be deported as punishment for any crimes they commit."

Not really. If you read one of my previous posts in this thread (search for "Furthermore, as per the goal of balancing liberties") you will see that I have reminded everyone that the real goal is to achieve maximum liberties, and deportation would probably only be justified on that basis for convicts with long sentences (which should generally translate into serious crimes). Plus I explained that we probably wouldn't need deportation at all (search for "And really, this whole deportation of criminals idea is so hypothetical"). And as of this post I've even softened my position on criminals a bit further (see #4 below).


"Therefore, recipients have severely limited property rights"

No, their property rights are no different at all than anyone not on debtfare.


"are subject to reporting and searches far in excess of anything a citizen now sees"

Since this comment of yours appears to be based on misunderstanding, let me take this opportunity to lay out what I think the requirements would actually be. There are I guess three main cases (and a fourth orthogonal case for criminals):

1. debtfare with no cosigner: In this case debtfare provides food that has been taste-sabotaged and uncomfortable sleeping conditions. I really don't think there will be a problem with lots of people rushing to this version unless they are truly in need of it. So my preference would be that there is no requirement for this version of debtfare other than showing your photo ID so they know who to bill.

2. debtfare with a cosigner: In this case someone (perhaps multiple people, perhaps a charity) with good credit has volunteered to cosign the recipient's debt (perhaps only up to some cap). Since this is purely voluntary and there is no duress of anyone starving (since option #1 above is always available), for the cosigner this could be a normal debt obligation with all of the legal ramifications of such. (FYI, that last bit is a new change to my proposal.) This would make it unlikely that cosigners would default, so again I think there is no requirement for the recipient other than showing ID. The cosigner(s) would be subject to standard best-practices with respect to approval of loans.
 
3. non-debt debtfare: In this case some person/group/charity (or maybe the recipient themselves) has prepaid for their debtfare services. If payment is made in cash for a specific service, then there should be no other requirement. If prepayment is applied to a specific person's account, then the recipient's requirement is once again to show photo ID so they know which account to charge.

In both cases #2 and #3 recipients get food that tastes normal and more comfortable sleeping conditions.

MOM was concerned that we'd instantly have 40 million people signing up for debtfare just to get free stuff, and I suggested that could be handled with means-testing (as some current programs already do)... but after laying out the cases above I think I want to completely retract that suggestion and return to my earlier position. For the above 3 scenarios, I am not convinced there will be any significant problem in foregoing any state-mandated means-testing. (Now if charities and others are donating funds, they may have their own prerequisites -- but those would be a private matter and have nothing to do with the state or the debtfare laws.)

4. "debtfare" jail: This is not actually another debtfare scenario, but rather jail modified to apply debtfare principles to criminals (who currently get free food/shelter). I think the above 3 cases can be applied in the jail setting as well. Originally I was taking a harder stance on criminals and if they couldn't pay their way via work or funds I was ready to go after their possessions basically the same as a bankruptcy would. But this is another case where seeing the 3 cases laid out above makes me think that is an unnecessary step -- people in jail will be plenty motivated to get themselves into a #2 or #3 type of case so they can get the good food/cot.


"have no participation in the political system"

Well, their free speech and other non-voting means of participation are not restricted in any way. How do you know I'm not on debtfare right now? :-)


"They are NOT citizens, in any meaningful sense."

Once you remove your confusion about what I said (hopefully this post will do that), then you should see that debtfare recipients have *EVERY* right a citizen does, except voting. (And if not voting means you're not a citizen, well, then most people in this country are not citizens. Yes I know not voting and being prevented from voting are two different things. But it does point to voting not really being treated by most citizens as the most sacred part of being a citizen.)


"You haven't explained how you differentiate between gifts and wages. [...]"

Debtfare recipients can make a billion dollars a day and be gifted every skyscraper in Chicago -- it doesn't matter. Repayment of loans is voluntary and no-one's income/gifts are tracked by, or of any interest to, the debtfare system.

And again with the "gifts"? Let's see...

...OK, I've managed to track down the sentence that must have tripped you up:

There are no gifts for wards -- anything they receive is tracked and they owe it.

All that is saying is that if the debtfare system provides you food/shelter/clothes, that is not a gift. Either it's been prepaid (you paid for it, or someone voluntarily paid for it on your behalf), or it is an outstanding debt that you now owe.

You really took that to mean that if you are on debtfare and I give you a car you now owe the state (or would it be me?) for the value of the car? What kind of sense would that make? That's crazy! :-)
 
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