This is how our system works. The government subsidizes corporate low wage work, and everyone pats themselves on the back for being so enormously virtuous, truly the most wonderful people ever to have graced the earth. The circuitous redistribution is a feature and not a bug of the system. It prevents competition, which makes shareholders happy. It also provides a minimum standard of care for workers, who would otherwise need to be replaced at higher rates.
Should the companies shoulder more of the burden? It would be fairer and more just, but words about justice are cheap and power is expensive.
>The government subsidizes corporate low wage work
But importantly only the lowest of the low wages
There is a huge swath of workers that can't get benefits like food stamps or medicaid because they don't qualify via the means testing formula and they can't really afford to live where they live, afford medical insurance etc.
Its those folks that have it the worst, IMO. Cost of living keeps you from building any wealth, even in the form of cash savings, but the government has arbitrarily decided you make too much or some other form of disqualification[0].
To add insult to injury, means testing[2] often costs more than the cost of fraud in social benefit programs! Not to mention, the biggest fraudsters with Medicaid are providers not recipients.
EDIT: To those whom have questions on the fact that means test cost more than the fraud of social benefit programs, Last Week Tonight did a break down on Medicaid[3] (linked to below) that explains all this better than I can.
[0]: often by declaring some aspect of the filing paperwork invalid or the beneficiary unresponsive, more often than not due to errors by the agency rather than the individual(s)[1]
This is exactly what Mitt Romney was referring to during the 2012 election when he said he wasn't worried about the very rich, and he wasn't worried about the very poor. The truth is if you are making $20k/yr in income you're likely in a better position day-to-day than someone making $40k/yr, especially if you're raising a family and especially if you live in a city with functioning social services. He was excoriated in the press for saying he didn't care about poor people, which isn't exactly what he said and isn't at all what he meant.
Let's be honest, no matter who the Republicans run, the candidate will be demonized. Only years later, when the person is not a threat to Democrat dominance will people judge them more positively on their actual value like is happening here (and has happened to McCain, and to Bush...).
If you don't get points for running a good candidate, there's no incentive to run a good candidate, only one who can win.
That's part of the point. People spewed vitriol at both Bush and Trump with similar levels of hate. It didn't matter that they were of different quality.
If you're already 100% sure the other side is going to passionately hate your candidate, no matter who you pick, then you can't win by choosing a reasonable or moderate candidate. Therefore, you pick whoever has the strongest appeal amongst your side.
Heh dont get me wrong. I think Obama is a philosopher king but by giving such emotional speeches and rhetorics he set the stage for very strong reactions. Reactions that bloomed into the awful culture wars of today. At the time I saw Obama as a good politician but the wrong time for it. Mitt Romney was a good candidate that would likely have normalised the tensions post 9/11. Alas it did not happen so.
Because people don't care who it is. If it's a Republican candidate, he will be portrayed as devil incarnate.
Mitt Romney was a smart guy who actually had plenty of on-ground experience. But no, deliberately interpreting everything he said in the worst light (anyone remember "Binders full of women"?) was more important.
> To add insult to injury, means testing[2] often costs more than the cost of fraud in social benefit programs!
This is not informative. The correct comparison would be of the marginal cost of eligibility testing (both in terms of false positives and false negatives) vs the marginal cost of fraud. In other words, whether the current cost of means/asset testing is more than the current total fraud is irrelevant to the economic case for reducing or increasing funding for eligibility screening.
> The correct comparison would be of the marginal cost of eligibility testing (both in terms of false positives and false negatives) vs the marginal cost of fraud.
There is a much better way to do this, because the way we do it is entirely asinine.
On the one hand we say that people who make more money should pay higher marginal tax rates, and set marginal rates on lower income people to low or zero rates. On the other hand we demand means testing at lower income rates, which is equivalent to a tax on marginal income.
We should just let these things cancel out, using a flat tax that funds unconditional cash benefits (i.e. UBI) and delete an epic amount of unnecessarily complexity.
A flat tax disproportionately favors the rich and hurts the poor; a progressive tax is much, much more fair. A poor person making $2k a month can make more use of $200 to improve their lot vs what the person making $2M can do with $200k to improve theirs
>On the one hand we say that people who make more money should pay higher marginal tax rates, and set marginal rates on lower income people to low or zero rates. On the other hand we demand means testing at lower income rates, which is equivalent to a tax on marginal income.
Isn't this already the case? It's true that you need to means testing to get access to additional benefits, but the tax rate itself is already progressive even if you don't any means testing.
Means testing does the opposite of progressive marginal tax rates. It cancels them out by increasing the marginal tax rate on people who make less money, by the amount of the benefit phase out. There is no point in incurring the complexity of doing both at the same time just to have them delete each other.
Another way of saying this is that a flat marginal tax rate combined with a fixed-amount universal tax credit (UBI) is a progressive tax system. But it's a much simpler progressive tax system which is harder to game and doesn't result in unintended nonsense like phase out cliffs or higher marginal rates on lower income people than higher income people.
I love the idea of a UBI, but there is a real risk of the UBI being impacted like the minimum wage. When initially passed it's set to a barely reasonable level, and then not adjusted for decades.
Not saying it can't be solved, tie it to inflation or CPI, but I doubt that could pass.
This has nothing to do with a UBI. What happens if the government doesn't raise the benefits amount for a food stamp program? In both cases you can either index the amount to inflation or you have the same concern, so it doesn't matter which one you use and isn't a reason not to use a UBI.
If anything it's a reason to use it, because raising the amount that everybody universally gets would be easier to pass when there are more beneficiaries. Nobody cares about the minimum wage because hardly anybody actually makes minimum wage, whereas around half (and plausibly a slight majority) of the population would be a net beneficiary with a UBI.
I would argue progressive taxes are less complex than your proposed flat tax because you can load all the expenses on the high brackets who won't miss a meal if you set the value too high instead of trying to pick a single value that works for everyone.
To begin with, that isn't what "complex" means. Having to track every income source to every citizen in order to impose differential marginal rates is always going to be more complex than not doing that. We nominally do it so people who make more money pay higher effective tax rates -- but a flat tax with a UBI does the same thing. If everybody paid a 30% marginal rate and everybody got a $12,000 UBI then the effective tax rate on someone with $30,000 in income would be -10%, at $60,000 it would be 10% and at $200,000 it would be 24%. That's a progressive tax system.
Meanwhile you don't really want low marginal rates when you're providing benefits, because then the benefits phase out too slowly. Suppose you were providing $12,000 in benefits and the phase out rate was only 10%. Then someone making $100,000/year would still be a net recipient of benefits, which would bankrupt the government. In practice the phase out rates we currently impose on the poor are higher than the marginal rates in the highest formal tax brackets, which is probably bad, but making them uniformly the same is certainly not going to result in something less progressive than we have now.
>Having to track every income source to every citizen in order to impose differential marginal rates is always going to be more complex than not doing that.
It's the same exact load as tracking everyone's income source to impose a flat tax. Taxing income is the same "tracking load" whether the tax system is progressive, flat, or regressive.
>That's a progressive tax system.
No it's a flat system with a $12k UBI. The effective tax rate of a millionaire and a billionaire is the same in your system because it's flat.
>but making them uniformly the same is certainly not going to result in something less progressive than we have now.
A million of income would pay 29.64%, a billion of income 29.99%. That's literally less progressive than those incomes would pay today.
> It's the same exact load as tracking everyone's income source to impose a flat tax. Taxing income is the same "tracking load" whether the tax system is progressive, flat, or regressive.
It is not. If you go and work for a corporation and they pay you a salary without a flat tax, they don't know what your tax rate will be. It depends on whether you do any work for someone else, or sell any property with a taxable gain, or have any tax deductions, all of which change your taxable income and therefore your tax rate, so now you have to keep track of all of them.
With a flat tax the rate is always the same, so your employer withholds the tax from your paycheck, the seller of some deductible product simply doesn't pay tax on it to begin with, and there is no individualized calculation to do because the rate for each thing is always the same and known ahead of time.
> No it's a flat system with a $12k UBI. The effective tax rate of a millionaire and a billionaire is the same in your system because it's flat.
The effective tax rate of a millionaire and a billionaire are as much the same in the existing system. Someone who makes $5 million currently pays ~36% compared to someone who makes $5 billion who pays ~37% (because the highest bracket is 37%).
> A million of income would pay 29.64%, a billion of income 29.99%. That's literally less progressive than those incomes would pay today.
That has nothing to do with the mechanism, it's just because the example rate was 30% instead of 37%. You can make it arbitrarily more or less progressive by changing the flat rate and the amount of the UBI.
But also notice that you wouldn't need tax rates to be as high, because in a simpler system less of the money would be wasted on administrative overhead or arbitrary constraints on what the poor can do with the money which causes it not to go as far for them. And they would spend less time doing benefits paperwork which they could instead spend doing work that earns money, or use the time for DIY instead of paying someone else to do things they didn't have time to do. Allowing everyone -- including them -- to pay lower tax rates from the increase in efficiency.
> means testing[2] often costs more than the cost of fraud in social benefit programs!
This is like saying that since robbery is rare, the cost of permitting robbery is lower than funding the police force, thus we should defund the police.
>To add insult to injury, means testing[2] often costs more than the cost of fraud in social benefit programs!
The point of means testing isn't to fight fraud, it's to better divert a limited pool of resources to the neediest people. If you have a pool of money to distribute, only giving it to the poorest 25% (ie. means testing) means the recipients can get 4x the money compared to giving it to everyone. Sure, there are ways this can be done badly through onerous requirements or whatever, but the cost of means testing vs the fraud rate is a completely irrelevant metric.
The problem is that means testing programs often have a cliff where you go from qualifying to not qualifying instead of being a gradual ramp-off. In other words, earning $1 more can remove $100 in support from the government instead of something more reasonable like only removing 10c at the beginning and up to $0.9 if you’re already on your way out.
The common criticism of means testing is that more money is spent on the bureaucracy implementing the testing than if you just took the money you otherwise spent on bureaucracy and gave it directly without means testing.
There's only so much money to go around, if I chose to spend more money on preventing fraud than the fraud would cost, I'm prioritizing righteousness over helping people.
If you have funding for 500 people, and fraud would cost you funding for 10 people. If you spend the cost of funding 40 people on fraud prevention, you're harming the 30 people you can no longer fund to keep those 10 from undeserved funding.
>To add insult to injury, means testing[2] often costs more than the cost of fraud in social benefit programs! Not to mention, the biggest fraudsters with Medicaid are providers not recipients.
Intuitively, I'd expect fraud to go up (at least to some degree) as means testing goes down like a differential equation. The depressing part of this is that it doesn't matter what is actually true, or what either of us are convinced is true, as the system will do its own thing.
"Eliminate means testing" doesn't mean that you stop verifying if someone qualifies for the program, it means that you stop imposing conditions on qualifying for the program, i.e. turn it into a tax credit that everybody gets unconditionally, and adjust rates to compensate.
In principle you can do this without affecting the budget at all -- if there is a benefit that phases out at, say, 20% up to $30,000 in income, this is equivalent to paying the benefit unconditionally and increasing the marginal tax rate by 20% in the same income range. All it does is eliminate the application paperwork.
In practice the problem is that there are multiple overlapping programs like this, so the poor aren't paying a 20% marginal rate (on top of any formal taxes), it's more like 60-80% and in some cases it even exceeds 100%. This is a poverty trap. But to get out of it while balancing the budget you'd have to use a lower total phase out rate, requiring higher marginal rates on people who make more money. These people -- as much upper middle-class doctors and computer programmers as Jeff Bezos -- then object to this, and so here we are.
Of course, another way to do it would be to cut some other government spending and use the money for this.
This is by design, and not an anti-socialist viewpoint, but another way to treat poor people with disrespect and to encourage class warfare between the working semi-poor and very poor. Keep people trapped by a myriad of low arbitrary thresholds rather than tapering off. In America, you're sometimes "better off" making no or almost no money.
Also, the benefits are paltry. If you're completely homeless, have no resources, and out-of-work in, say California, per month you will get MediCal*, $240 for food**, $149 in cash "aid", and that's it. There is an inconsistent patchwork of programs to give slightly more benefits that require a certain range of income threshold and specific demographic strings. Most all of these programs treat recipients like criminals and require regular paperwork and significant time, time during work and transportation that the working-poor can least afford.
The elderly and disabled qualify for Medicare***, which isn't quite "Cuba-level" health insurance but administered by a for-profit health insurance company under the vague supervision and standards of Medicare who pays for it. Medicare+MedicAid special needs plan (SNP) and Social Security**** is what a disabled or elderly homeless person would typically have.
* Same as the federal program known as MedicAid. It is much worse than Obamacare (health insurance for the working poor), and moderately worse than Medicare (for the disabled and the elderly) and almost no regular doctors take it. Providers who do take it usually are far away and usually serve a specific demographic. While it covers emergency care almost completely and some medications, it's not very good. There is significant healthcare bias in America based on health insurance and age.
** "Food stamps" that used to be actual stamps. In the US, the federal program is either SNAP or WIC (pregnant women, infants, and children).
*** Medicare is a federal health insurance system comprising many types of plans run by private corporations with a Byzantine patchwork of limitations and benefits.
**** Social Security is monthly cash for disabled (SSIDI) and retired people. SSIDI waives work requirements. Non-disabled elderly receive an amount based on how many years they worked and how much income they received, up to a relatively low limit. There is a debate about cutting off income- and/or asset-rich people from receiving Social Security when they don't need it.
> Should the companies shoulder more of the burden?
Note: this only works for large corporations. Small corporations don't get this benefit.
To make it more fair and increase competition and reduce corporate corruption, the system should increase support for everyone on a fair basis, not just these particular wage slaves.
Who bears the blame for this though? If social programs are cut then voters freak. If the price of goods increase then voters freak. If taxes increase then voters freak.
We collectively bear the blame for allowing a system where government subsidizes shareholders and the wealthiest owners of these companies by not paying a living wage.
In this case, these are Amazon government subsidies by way of the disadvantaged. "Why are consumers receiving low prices and shareholder profits more important than workers receiving a wage they can survive on?" seems to be a question no one wants to answer.
As Galloway showed, we don't love our children, or even fellow humans in this context. We love line goes up more. At least we're making progress with the fertility rate going off the cliff, less humans to suffer under this regime in the future.
>In this case, these are Amazon government subsidies by way of the disadvantaged. "Why are consumers receiving low prices and shareholder profits more important than workers receiving a wage they can survive on?" seems to be a question no one wants to answer.
If this is a "subsidy" to Amazon, what do you think would happen if they were pulled? Would amazon be forced to raise wages, or would the wages stay the same (because labor supply and demand is still the same) and the people starve instead?
This is a a false dilemma. Force corporations to raise wages, continue to provide social safety nets (so basic needs are met), and if there is a gap, raise taxes in a progressive fashion. There is enough wealth to not configure the system in this manner; to continue to do so is a choice. It's just a big spreadsheet, you're arguing over a cell or two, I'm arguing over the function result and working backwards from there.
Otherwise, we admit we're just fine with the current setup and that is who we are. We prefer the human suffering for magic numbers in a database.
Ok. So you admit that it's not a subsidy to businesses then and you're just using that word as an inflammatory talking point?
> It's just a big spreadsheet, you're arguing over a cell or two, I'm arguing over the function result and working backwards from there.
The problem is that if you're making wrong observations about these individual cells, you're going to write bad functions trying to wrangle them into the result you want. An example of this is the San Francisco blamed "greedy businesses" on their housing crisis, so they passed a ballot initiative that would raise hundreds of millions in taxes on businesses that they could spend housing. The problem is that housing problem was caused by NIMBYism all along, and despite spending billions of dollars on homelessness since then, their housing crisis only gotten worse and businesses are refusing return to SF even more than other cities.
I think this goes to highlight why capital is winning over labor. Shareholders will do whatever it takes to make money without being blinded by ideology. Amazon investors realize that they would actually benefit from an America with higher labor costs because they are more automated their their competitors and are positioned to capture market share in such an environment. Meanwhile, most regular people are apathetic towards politics and those who care are too committed to their ideology to make good decisions.
No, I still assert government subsidies to people employed below a living wage are corporate subsidies. I am referring to citizens needing a social safety net who do not have an employer, children, or the elderly (social security, medicare, medicaid, wic, snap, section 8 housing, to name a few but not all encompassing).
They fight unions awfully hard for an org proclaiming to want better wages and working conditions for their workers. Amazon wants both the positive PR while maintaining unilateral control over workers.
My talking points aren't inflammatory, they are observations. If the observations are inflammatory, change the state being observed if you don't care for current state being inflammatory. "I don't like the truth" is not a rebuttal, and the truth is pretty terrible based on all available evidence.
> No, I still assert government subsidies to people employed below a living wage are corporate subsidies.
This is the first result with I look up the definition of a subsidy:
> A sum of money granted by the government or a public body to assist an industry or business so that the price of a commodity or service may remain low or competitive.
You never disagreed with the parent comment that if welfare got pulled, Amazon wages would stay just as low. In fact, states or countries with less welfare tend to have lower wages, so if it's the opposite of a subsidy for Amazon. Therefore, welfare isn't a corporate subsidy. QED.
The vast majority of the world can and does live with off of less than $17/hour and healthcare benefits, which is what Amazon pays for entry level roles these days. Even in the US, that's enough for a single person without children. If Amazon only hired only these people, would that relieve their burden of having to pay a "living wage" to people?
I wonder if social programs were pulled then people would push harder for changes, unions, benefits, etc. As it stands now the social programs keep people pacified.
It's notable that several countries with very strong unions have no minimum wage because there's no feeling of need. Norway, for example, has less regulation of the labour market in this respect than the US (but much more in other areas) in large part because the unions have been strong enough to push through higher salaries without it.
But changing that in the US would be an incredibly long slog.
If income taxes increase, then voters freak. We can increase the corporate tax, ban share buybacks, impose limits on the executive to non-executive pay, tax wealth etc, which will freak out the richest, but will benefit the society better.
Share buybacks were illegal stock manipulation for the majority of the USAs existence, until Reagan legalized them. They need to be made illegal again, they serve no purpose other than short term stock manipulation. If companies have excess cash, they should issue dividends (which was a huge part of the reason stocks were initially desirable). People would then buy stocks with good dividends (i.e. long term value, versus short term quick gain).
Those who refuse to question the legitimacy of our so-called democracy, even more so those who engage in deceitful (even if well-intended!!) rhetoric or other actions[1] to present any such discussions from taking place.
> It seems that we get exactly what we vote for.
Consider what voting (or "democracy") is actually(!) composed of. Do we have any good reason to expect other than what we get?
My impression is a lot of the people affected either don’t vote or are actively distracted so they’ll vote based on less relevant factors or pure theater.
Bezos and execs, who earn billions of dollars in compensation on the shoulders of the working class like leeches. Reduce their compensation packages and redistribute it as wages in their baseline workers.
Do the math instead of just seeing red at large numbers. Jassy earns about 29.2 M$. Lets round it to 30M$ for the sake of convenience and assume all 17 of the board members get paid the same. Amazon has about ~1.5M employees. Which means that if the entirety of their earnings were redistributed they would get a whopping ~$340 per person. An insult for a yearly bonus and certainly not enough to get people off of food stamps.
The biggest challenge is to prevent companies from just far more aggressively outsourcing. E.g. you get your CEO on contract from YourBrandCEOs'r'us, where he is paid 1x the salary of the lowest paid employee.
Then the company hires a stooge CEO that happens to have "coach", and if they don't listen to their "coach" the board fires them. Or the CEO gets handed a board seat or side consulting gig from a key investor. Etc.
You can certainly try to address this, and I'm not saying it isn't worth trying. But I do think you'd be playing whack-a-mole with creative management consultancies and accountants trying to find workarounds for a very long time, and you'd need to be prepared for that.
It also doesn't really address the problem so much - while CEO pay is often entirely out of proportion, the money flow to investors is often a far bigger issue, and would also be a workaround: Ensure the CEO has enough shares, and gets to sell enough shares, and they have a vested interest in doing the work even with lower pay. E.g. there are plenty of CEO's on low pay because their ownership is sufficient.
because small companies can't get away with paying poverty wages. amazon jobs are ubiquitous and well-known enough that people treat it as a fallback. if you can't find a better job, you go work in the amazon warehouse or as a wal-mart cashier, because they're always hiring.
companies that don't operate on the same scale aren't constantly hiring, so they can't get the same benefit of being the fallback option for people and have to offer wages that are high enough to actually attract employees.
> amazon jobs are ubiquitous and well-known enough that people treat it as a fallback. if you can't find a better job, you go work in the amazon warehouse or as a wal-mart cashier, because they're always hiring.
I agree that larger companies are better capitalized and therefore can better withstand economic shocks than smaller companies, but how does that mean that foodstamps "prevents competition"? Foodstamps aren't tied to a specific employer, so it doesn't favor large companies over smaller one, because employees can continue to get benefits even after switching jobs.
Of course small businesses can always pay poverty wages or constantly hire. Amazon actually actively advocates for more than doubling the minimum wage because it would be beneficial for them.
Is this really? If foodstamps were to suddenly disappear, would Amazon increase their wages? I doubt it. In fact, there would be _more_ desperate people scrambling for some paying jobs, which would depress wages further. Right?
Poverty wages comes with the cost of constantly hiring, and hiring is a relatively expensive thing to do, mostly in terms of time, unless you're big enough to make it a fixed cost (eg an internal team and a job marketing budget).
I'll avoid the low hanging fruit but: if the government needs to supply aid to working citizens, they aren't getting much or any tax on a non-trivial portion of the population. I don't see how the government benefits from this transaction, and why they wouldn't at least (on the state level) increase minimum wage to offset this.
Three different 'governments' in this scenario. The local government still benefits from having people employed even if state government/Federal government doesn't.
Supposing that fulfillment industry in general went without these labor subsidies - the industry would pass the costs on in some proportion p and 1-p to dividends and customer prices, resulting in lower investment and smaller sales volumes.
Sounds alright, but then you have noticeably less unskilled and semi-skilled labor demand (possibly as much as 1-4%) in an environment where:
* the long struggle of delegitimising explicit political violence is waning,
* nobody outside of the Club of Rome wants to so much as touch the application of the framing of subsidies and overbuild to the topic of population
* and the math for how UBI interacts with the primary sector is intractable.
> * and the math for how UBI interacts with the primary sector is intractable.
There have been lots of empirical studies of UBI and the evidence from them is pretty clear that… they don't actually affect employment much either way.
Which I don't think is an answer that advocates or opponents like, as seemingly everyone thinks it would cause people to retire and write a book or something.
> Should the companies shoulder more of the burden? It would be fairer and more just, but words about justice are cheap and power is expensive.
But how is this related to the subject?
There is an article lamenting that a third of Amazon warehouse workers are on food stamps. Now suppose that Amazon paid more taxes and correspondingly provided more funding for the food stamp program. The next week a third of Amazon warehouse workers would still be on food stamps and media outlets would still be publishing the same clickbait headline.
This implies that government expenditures are based on actual revenues, and that $x in additional revenue is divided proportionally to all government services. Neither of these is true.
It does not. The amount Amazon pays in taxes is independent of the proportion of their warehouse workers eligible for food stamps. This is entirely consistent with amount they pay in taxes also being independent of the amount of their taxes that go to fund the food stamp program in particular.
No, people should shoulder the burden and when a business model is untenable, there should be a correction which is instantiated by a lack of labor. It's neither the company nor the governments responsibility to dictate what the market will bear, only follow the optimization curve that the charter is architected to. A lot of the problems we see in the modern market are a product of well-intentioned interventions, namely things like welfare that allow for low-wage workers to sustain a long term position at a job that underpays them which is ultimately zero-sum to those individuals which it is supposed to support.
Where interventions need applied to companies, namely conglomerates, they are not and virtually nobody seems to want to discuss this, but it's the bull in the China shop because these monoliths have a unidirectional charter toward profit and infinite coffers by which to affect policy change and ensure that margins can remain relatively extreme without regard to consequences which either the individual or the society in which they operate suffer.
Should the companies shoulder more of the burden? It would be fairer and more just, but words about justice are cheap and power is expensive.