live off £37,000-a-year benefits !

[muon]

Why do you keep having kids if you cannot afford to feed them? If there was a cap on benefits would this family have kept having kids knowing they would not get any more money?

That is the cycle you need to break, which means bringing in any new system in a staggered manner rather than replacing what we have straight off. Very few people are going to keep having kids if there is no one there to pick up the bills.

Yes. Have you looked at nations with no welfare systems? We don't see children being born reduced. The 3rd world hasn't solved its problem through some survival of the fittest idea.

This won't break any cycle. People will have children like they always have done, but live in extreme poverty. Homeless on the streets if you aren't giving housing.

I do not wish to live in a country with abject poverty around me when it doesn't have to exist. Same goes for most people I'm guessing.

 

[Dolph]

A 'rainy day' != bereavement or physical disability. Do you expect everyone to take out life insurance?

Why not? It is better that way than being forced to pay into the state run ponzi scheme as we currently have to...

 

[muon]

Why not? It is better that way than being forced to pay into the state run ponzi scheme as we currently have to...

And if I don't you will watch me on the streets begging for money?

The very reason social insurance exists is because of the failure of markets to offer it in a pooled equilibrium.

 

[RDM]

Yes. Have you looked at nations with no welfare systems? We don't see children being born reduced.

Are there any industrialised western nations with no welfare system? Do you honestly think this family would have continued to have children when they can't afford to keep them?

The 3rd world hasn't solved its problem through some survival of the fittest idea.

Apples to oragnes comparision. A 3rd world country doesn't have any form of welfare, little in the way of healthcare, poor education and is mostly subsitance farming so lots of kids are needed to firstly survive childhood and secondly as labour to bring in food/money.

This won't break any cycle.

So we just shrug our shoulders and keep paying for people to be irresponsible?

 

[86JR]

http://www.dailymail.co.uk/news/art...-year-benefits-fresh-blow-welfare-system.html

What a disgraceful this country are! It all Gordon Brown for all these tax credit are paying out too much £22,828 for these family and more baby on the way to get more benefits.

I do hope that the tax credits will be scrapped under conservatives government to teach them a lesson !

But then thats only £192 per head per month, not really much is it ?

 

[Mucky_Pup]

The parents are scum and parasites, a stain on the underpants of society.

 

[muon]

Are there any industrialised western nations with no welfare system? Do you honestly think this family would have continued to have children when they can't afford to keep them?

You see. You keep focussing on this very rare example. Are you really advocating serious reforms with wide ranging negative effects so that this family doesn't exist? How much money do you feel is wasted here? How many of these families exist?

Apples to oragnes comparision. A 3rd world country doesn't have any form of welfare, little in the way of healthcare, poor education and is mostly subsitance farming so lots of kids are needed to firstly survive childhood and secondly as labour to bring in food/money.

Again, this is such naive analysis using guesswork. Malthusian analysis (actually doing empirical analysis) tells the real reasons why birth rates vary with income. At very low incomes we have the normal Darwinian effect where you only have children you can feed and so birth rates are low. Then above subsistence we get this growth of family sizes because you can now feed more children and as a form of retirement saving (i.e. investing in human capital). At higher incomes we see a change because the opportunity cost of children becomes larger (especially as women start working) and birth rates decline.

So why will poor people have higher birth rates? Because the opportunity cost isn't as high as wealthier people. It will be lower for people living on the brink of starvation, but that isn't everyone.

It isn't an apples and oranges comparison. We are breaking this down into basic determinants of money and providing for a family.

Secondly, I can guarantee NIT proponents do not want public healthcare or welfare beyond NIT itself. Libertarians do not even want public education because of its negative effects (in perfect markets it would be better for no government involvement, but unlike what Libertarians believe, we don't have that). Also it makes no sense to use welfare as a point of argument since the effect I am comparing is declining incomes per child as family sizes increase. This exists with NIT.

So we just shrug our shoulders and keep paying for people to be irresponsible?

We say that these people will exist. In order to prevent homelessness, starvation and terrible standards of living we come up with a system which solves these as best as possible. There are costs and benefits to anything. There is no magical system.

Do you think that basically removing the government from any serious redistribution (NIT is very much a hands off approach), inequality will be at levels people in this country will tolerate?

 

[Dolph]

So these people earning this flat rate die. Not gonna find any supporters of this beyond die hard libertarians.

Appeal to emotion, not to mention a slippery slope.

There is absolutely nothing to suggest that these people will die, they just won't have the lifestyle they perhaps desire.

Note that the more kids you have, the higher the fixed cost. Here the eitc schedule is steeper to counteract this effect.

Result? We have a lot of people bunched at zero hours worked because the wage they command is rubbish. Ideally this graph should be like the one below showing hours worked, and the gradient determining the wage rate.

*Correction to incomplete sentence in picture : People at the zero discontinuity due to the low effective rate of taxation increase supply as long as it compensates for fixed cost and disutlity of work. More people move from here to the points shown by the green arrows. Similarly in order to optimise preferences people above the schedule fall into the schedule reducing hours worked. (This is all explained by simple optimisation theory). We have this participation benefit, but this hours worked problem for people just above the schedule. This trade off has been shown to be positively in favour of eitc.


Not exactly sure what date this refers to, but this is the principle of additional children. (Note different axes to above).

The argument above appears to be assuming that we should negate the costs of having children... I'm not sure I agree with that. While I accept there is a cost to working, it would be reduced under NIT compared to the current setup, unless you think we should 'compensate' people for their choice to have kids.

 

[Dolph]

Housing benefit is a problem because it destroys this carefully constructed schedule in the UK. It certainly needs a reform, but as I said in my previous posts, this is difficult.

NIT would result in increased poverty as people are stuck in unemployment. This isn't even a debatable result. This will happen.

Well, that's convincing, it will happen because you say it will. Yep, colour me convinced. What definition of poverty do you plan to use (hint, any definition that uses a comparison with average earnings is a complete pile of crap)? Being at the lower end of the income scale should not imply poverty, not having enough money to cover basic needs implies poverty, and that can be addressed via the tax system.

Remember, the current system doesn't exactly achieve what it sets out to do, and comes with significant issues in both fairness and trapping people within it.

However, it obviously has the positive labour supply benefits of a flat tax schedule (although this isn't necessarily equitable).

It is more equitable than taking different percentages from people...

I'm more than happy to acknowledge that reforms will take time, and probably have to be introduced gradually to wean people off the state dependancy model, but we cannot keep rewarding bad choices, encouraging irresponsible behaviour and continuing to pile obligations onto an increasingly small working population.

 

[Dolph]

And if I don't you will watch me on the streets begging for money?

If you fail to take responsibility for yourself where possible, why should I be forced to bail you out?

In reality, I would help you out, indeed I do now, not wanting the government to inefficiently provide support doesn't mean I think support shouldn't be provided at all. However, that support still has to be earned and justified, not an obligation or entitlement.

The very reason social insurance exists is because of the failure of markets to offer it in a pooled equilibrium.

No, the reason social insurance exists is because people felt that others should take responsibility for their failure to invest in their future, not because the market failed to provide the products.

 

[muon]

Appeal to emotion, not to mention a slippery slope.

There is absolutely nothing to suggest that these people will die, they just won't have the lifestyle they perhaps desire.

I can gurantee homelessness. Starvation might not be widespread, but people in this country do not tolerate people living homeless and just being able to survive. What is the basic level of income you desire? Is it per adult person or per family? When are children allowed to claim?

The argument above appears to be assuming that we should negate the costs of having children... I'm not sure I agree with that. While I accept there is a cost to working, it would be reduced under NIT compared to the current setup, unless you think we should 'compensate' people for their choice to have kids.

This fixed cost encompasses many things. Cost of search, cost of going back and forth to work (something you don't get compensated for), opportunity cost of having children.

This isn't about whether you feel it is somehow the duty of the government to "compensate" people for having children.

Its about improving the labour supply dynamics.

because people felt that others should take responsibility for their failure to invest in their future, not because the market failed to provide the products.

Nearly all your arguments are based on ideas of social justice (probably wrong phrase, I meant equality before government and not the Rawlsian idea) and absolute ideas of responsibility. Nice things which aren't quantifiable.

Economics provides the motivations of people in what they do and how much they do of it. Unless you can come up with proper analytical reasons, you won't convince me of anything. And since you will probably require a much more complete analysis to convince you otherwise, this is pointless.

You evidently don't even know what a pooled equilibrium even is. Because I would like you to show how a market provides that. Because without that we have problems of incomplete markets. That is the fundamental reason why social insurance exists.

 

[Destination]

Looking after 15 kids IS a full-time job.

Ridiculous comment.
If overly busy at work... do less hours.
Neither of them thought to have their tubes crushed?
If the state wasn't funding them, they wouldn;t have had 15 children, not breed for a new one. Quite honestly I am wondering if there are mental health issues here, who the ^&*% has 15 children when you have no ability to raise them?

Child benefit should stop at a level, lets say.... 4. After that you want to continue breeding, pay for it yourself.

 

[Dolph]

I can gurantee homelessness. Starvation might not be widespread, but people in this country do not tolerate people living homeless and just being able to survive. What is the basic level of income you desire? Is it per adult person or per family? When are children allowed to claim?

Are you saying that there would be no market or social adaptation to the issues?

Are people entitled to a house?

Would the housing market stay exactly the same if housing benefit changed?

As for what level of basic income, tricky one, because it depends what you expect from people. I would suggest that £5-6k per adult is perfectly reasonable, provided it is spent properly. Sure, it won't get you a house with sky TV and all the mod cons, but you don't have an entitlement for that.

This fixed cost encompasses many things. Cost of search, cost of going back and forth to work (something you don't get compensated for), opportunity cost of having children.

This isn't about whether you feel it is somehow the duty of the government to "compensate" people for having children.

Its about improving the labour supply dynamics.

The problems you are highlighting are also present in the current system in addition to the extra ones that NIT address (such as the clear benefit trap). Are you saying NIT should be rejected because it isn't a perfect solution?

 

[SC04]

I think the comment was referring to the fact that the average Mail reader simply sees a headline, gets outraged and complains about it. More often than not, no interest is shown in reading the article or gaining further insight into a given topic.

Whereas Sun, Mirror readers?

 

[K1LLSW1TCH]

Did you write that in another language and translate it online?

HAHA!!

That was hilarious, he must have used Google Translate.

 

[muon]

The problems you are highlighting are also present in the current system in addition to the extra ones that NIT address (such as the clear benefit trap). Are you saying NIT should be rejected because it isn't a perfect solution?

The NIT creates a worse benefit trap, when compared to just an EITC schedule. The benefit of NIT is its flat tax schedule and therefore has none of the blue arrow effects in the above diagram. However, it has been shown empirically that these aren't that large in reality for a smooth effective tax regime. While the green arrow effects are large.

Meyer and Rosenbaum (2001) is probably the best paper to look at for this.

Saez (2002) explains why fixed costs and associated extensive responses are important. This is essential in theoretically explaining why NIT is worse for labour supply (ignoring any other factors if you wish).

I don't know if you have seen it, I had posted quite a difficult lecture up online which explains nearly everything I'm saying.

 

[Dolph]

The NIT creates a worse benefit trap, when compared to just an EITC schedule. The benefit of NIT is its flat tax schedule and therefore has none of the blue arrow effects in the above diagram. However, it has been shown empirically that these aren't that large in reality for a smooth effective tax regime. While the green arrow effects are large.

Meyer and Rosenbaum (2001) is probably the best paper to look at for this.

Saez (2002) explains why fixed costs and associated extensive responses are important. This is essential in theoretically explaining why NIT is worse for labour supply (ignoring any other factors if you wish).

I don't know if you have seen it, I had posted quite a difficult lecture up online which explains nearly everything I'm saying.

Does NIT create a worse benefit trap than our current total setup?

I'd be quite happy to abandon NIT in favour of a pure EITC setup, but that would surely leave those unemployed etc far worse off because they would get nothing. You then have to administer a seperate minimum income program (unless I'm looking at the details of the earned income tax credit incorrectly).

 

[bigredshark]

Whereas Sun, Mirror readers?

Oh they're all terrible for it, just the Sun and Mirror seem to cater to an audience with more interest in whatever some celebrity has done now...the mail like to make it's outrageous statements about things bearing some semblance to news.

Basically it's a non story, for the thousands of people who claim benefits justifiably and as they were meant to be claimed, there will be a few people who exploit the system. Then the mail like to find them and pretend because one family is claiming an inconsequential amount of money (in real terms) it means the country is falling apart. Plays to the views of their readers. There will always to be people who exploit the system, there comes a point where preventing them from doing so becomes more expensive than just accepting it...

 

[muon]

Does NIT create a worse benefit trap than our current total setup?

I'd be quite happy to abandon NIT in favour of a pure EITC setup, but that would surely leave those unemployed etc far worse off because they would get nothing. You then have to administer a seperate minimum income program (unless I'm looking at the details of the earned income tax credit incorrectly).

The graphs above contain the unemployed income. If you supply zero hours labour then you get what's given by the second graph. There's a minimum level built in to the system.

EITC (WTC) also doesn't imply housing benefits. When I first found out about the way it was implemented in the UK, I was amazed. It completely destroys what WTC attempts to achieve. Also, it doesn't mean that a WTC system cannot be overly generous.

I suppose the problem with giving a fixed housing benefit which tapers off much more nicely (or just removing it and adding to existing WTC or CTC) is that you end up with ghettos of poor housing (like council estates on a larger scale I suppose). Is that a valid reason? I'm not too convinced.

 

[Dolph]

The graphs above contain the unemployed income. If you supply zero hours labour then you get what's given by the second graph. There's a minimum level built in to the system.

So how does that differ from NIT, apart from not giving everyone the same level of minimum benefit?

EITC (WTC) also doesn't imply housing benefits. When I first found out about the way it was implemented in the UK, I was amazed. It completely destroys what WTC attempts to achieve. Also, it doesn't mean that a WTC system cannot be overly generous.

The UK benefits system is retarded, that's one of the things that needs to be addressed.

Edit: I've also realised the worked example is gone from the NIT wiki page, I'll see if I can dig out an alternative.