The GREAT SOCIALIST CALIFORNIA WELFARE STATE IS DYING

[Neubarth]

You are assuming under-provisioning. There is no evidence nor reason necessarily to think this.

I've constructed an argument based on an understanding of the impact of the franchise (going further than a static public choice approach such as the median voter model). Its possible to demonstrate the severity of any underprovision by comparing across countries. For example, we have the evidence into welfare state effects that- by ensuring a more generous safety net- enables more risk adverse behaviour that then encourages social mobility

You are assuming in your argument that social mobility and a more equal distribution is the optimum outcome for a society. I don't disagree that countries with a more extensive welfare system can bring about more social mobility, such as in Canada or Sweden. However, it can also be demonstrated that increased welfare spending slows economic growth. In the United States, economic growth is generally considered a better outcome than government spending to increase social mobility and general economic welfare.

Toro, the taxation to support the Welfare state is what destroys companies and drives them from the taxing state. Most legislatures do not understand the principle. Taxation destroys the bottom line.. Taxation may be great for the politicians and their careers, but it destroys the economy.

 

[Toro]

I'm happy for you to refer to empirical evidence in support of that premise. Given the distinctions in welfare spending, it should be a straight forward exercise to find study after study in support

Sure, no problem. Here is an older one.

http://www.irp.wisc.edu/publications/focus/pdfs/foc123g.pdf

The author concluded that government spending on redistribution of income for consumption, i.e. welfare, lead to a drag on economic growth. That is what I am arguing. However, government spending on education increased economic growth, of which I would wholeheartedly agree.

 

[The Rabbi]

What the State of California needs is help from the Federal government. And then they need an immediate increase in Taxes accross the board.More Taxes , and then they must sell State bonds to the world.They must act now.Time is running out.

No, those are the last things they need. They need to get their own fucking house in order, castrate the unions, and lower taxes to get companies to stay or move back. They need to dismantle the nanny state they have created and take some fucking responsibility for their spending.

 

[Neubarth]

What the State of California needs is help from the Federal government. And then they need an immediate increase in Taxes accross the board.More Taxes , and then they must sell State bonds to the world.They must act now.Time is running out.

No, those are the last things they need. They need to get their own fucking house in order, castrate the unions, and lower taxes to get companies to stay or move back. They need to dismantle the nanny state they have created and take some fucking responsibility for their spending.

I agree with all that you have posted.

 

[The Rabbi]

What the State of California needs is help from the Federal government. And then they need an immediate increase in Taxes accross the board.More Taxes , and then they must sell State bonds to the world.They must act now.Time is running out.

No, those are the last things they need. They need to get their own fucking house in order, castrate the unions, and lower taxes to get companies to stay or move back. They need to dismantle the nanny state they have created and take some fucking responsibility for their spending.

I agree with all that you have posted.

I knew we'd agree on something.

Out of control spending has been the death of CA, is the death of MI, and will be the death of the USA. People are used to no limits. They don't like hearing the word no. They are used to hearing "we can't afford NOT to do this."
Well, bullhocky.

 

[Limey]

Sure, no problem. Here is an older one.

http://www.irp.wisc.edu/publications/focus/pdfs/foc123g.pdf

The author concluded that government spending on redistribution of income for consumption, i.e. welfare, lead to a drag on economic growth. That is what I am arguing. However, government spending on education increased economic growth, of which I would wholeheartedly agree.

That isn't a particularly useful source. For social expenditures, try something like Shaikh (2003, Who Pays for the "Welfare" in the Welfare State? A Multicountry Study, Social Research, Vol. 70, pp. 531-550). This notes:

In the United States from 1952 to 1997, the average net social wage ratio in the United States is a mere -0.33 percent. Thus during the entire postwar period, United States labor paid for its own social benefits. Indeed, in the boom years of the postwar period, from 1950 to 1972, the United States net social wage was negative, which meant that wage and salary earners paid out more in taxes than they received. Rather than dragging down the rest of the economy in this interval, United States workers actually subsidized it. It is only after the unemployment rate rises when the boom runs out in the early 1970s that the net social wage ratio turns positive. But this is because increased numbers of the unemployed and the poor led to increased benefit payments, while at the same time their decreased incomes reduced the taxes they pay.

We'd therefore expect to find insignificant results. For something more specific into social protection effects try something like Mares (2007, The economic consequences of the welfare state, International Social Security Review, Vol 60, pp 65-81). Here's the abstract:

What are the economic and employment consequences of larger social insurance programmes? Are larger welfare states diverting resources from economic activity and distorting the investment decisions of firms? I examine theoretical and empirical research on the economic consequences of the welfare state. This review shows that the predictions of a negative relationship between higher levels of social protection and growth have not been borne out in the data. Both insurance programmes and other policies that increase investment in human capital or the overall productivity of workers generate important economic externalities that outweigh the potentially distortionary effects of higher taxes. Empirical studies also fail to uncover a consistent negative relationship between larger welfare states and the level of employment. The employment consequences of the welfare state are mediated by existing institutions and policies—such as the level of centralization of the wage bargaining system—which affect the redistribution of the costs of higher taxes among workers and firms. As a result, the employment consequences of larger welfare states are non-linear

 

[52ndStreet]

America can not afford to let the California welfare state die.

 

[The Rabbi]

America can not afford to let the California welfare state die.

No, America cannot afford not to let it die. And all others like it.
If we bail out CA, then MI will be next. Then NY. And then all responsibility is out the window.

 

[Limey]

America can not afford to let the California welfare state die.

It certainly would be irrational to allow a welfare state to collapse, given it is an integral aspect of reducing instability in capitalism

 

[Charles Stucker]

America can not afford to let the California welfare state die.

It certainly would be irrational to allow a welfare state to collapse, given it is an integral aspect of reducing instability in capitalism

What?
Welfare is a tool for purchasing votes. The only stability it provides is to politicians seeking reelection.

 

[Limey]

What?
Welfare is a tool for purchasing votes. The only stability it provides is to politicians seeking reelection.

The median voter model is incapable of explaining redistribution levels (i.e. if it operated, we'd have much more generous redistribution systems).

Welfare is about maintaining the physical efficiency of the workforce, a rather important goal given the unemployment and underemployment that goes hand in hand with capitalism

 

[Charles Stucker]

Welfare is about maintaining the physical efficiency of the workforce, a rather important goal given the unemployment and underemployment that goes hand in hand with capitalism

Wow, you certainly have a way of expressing idiotic ideas in flowery language.
The US has lost a lot of jobs because the taxes to support "welfare" (of different sorts) have helped drive the cost of doing business too high to be competitive.
Get rid of the welfare and the taxes that support it and the jobs will return.
Then, among capable adults, only lazy bums will need welfare.

 

[Limey]

Wow, you certainly have a way of expressing idiotic ideas in flowery language.

I don't see the correct application of labour economics as flowery. But one never knows, it might come across as quite poetic to someone innocent of basic economics

The US has lost a lot of jobs because the taxes to support "welfare" (of different sorts) have helped drive the cost of doing business too high to be competitive.

You don't seem to understand your welfare system at all. Compared to all other western nations, it is quite tiny. Accountancy criteria has out-trumped economics

Get rid of the welfare and the taxes that support it and the jobs will return.
Then, among capable adults, only lazy bums will need welfare.

Both orthodox and heterodox economists agree that capitalism will naturally deliver involuntary unemployment. You're starting from the premise that market clearing occurs (i.e. we're left with voluntary unemployed) that is clear nonsense. Even if there was a parallel universe where you're correct, the elimination of welfare would interfere with job search. Essentially you'll be replacing unemployment with more severe underemployment, as the frictional unemployed are forced into unsuited employments. The severity of job mismatches would increase, ensuring lost productivity and the failure to exhaust mutually beneficial exchange