Tag: poor

How to Keep the Young and Poor from Succeeding

Let’s face it. I’m not that young anymore. I’m also not poor anymore, and I live a comfortable middle-class American life. Most older, better-off middle-classers like me got where we are through the dynamic market process. The trouble is, now that we’re doing pretty well, that same dynamic process is a threat. I don’t want some young whippersnapper or poor immigrant to outwork me. What if they succeed faster than I do? What if they create more value than I can, and so outcompete me for a job?

Take heart, well-heeled middle-agers. I have a plan. My scheme for keeping younger and poorer people from succeeding—and possibly making us have to work harder to stay on top—is two-pronged: We’ve got to affect both supply and demand.

We need to restrict the supply of economic opportunities. We need to make those opportunities more costly and thus out of the reach of many young and poor. We also need to suppress the demand for jobs and entrepreneurial ventures. We need to make it more beneficial to stay out of the market than to participate in it.

Let’s get to some specifics.

Restrict the supply of opportunities

The biggest advantages young and poor people have over us are very low opportunity costs and a low-cost lifestyle. This means they don’t have to give up much to work a job, and they don’t need to earn much to cover their expenses. Because of these major advantages, they can work for very low wages, and thus become attractive for employers to hire and train. At low wages, they’ll always find work, and worse yet, they’ll be constantly learning and improving—adding to their stock of human capital.

The obvious solution is to make it illegal to work for low wages. Working for free is absolutely out of the question. If young and poor people could simply offer to work for little or no pay, they’d soon be gaining valuable skills and competing with us for jobs! Let’s cut that first rung off the ladder, lest they climb over us some day.

Young and inexperienced workers don’t have a lot of expertise. They make mistakes. Of course, if they’re allowed to participate in the trial-and-error process of the market, the incentives will soon drive them to develop expertise and be reliable suppliers of goods and services. That would be a travesty for us. We need to keep them unskilled and unreliable. The solution is to create a labyrinthine web of licenses and regulations that make it illegal for anyone but experts to sell goods or offer services. Since we’ve already banned working for low wages or apprenticing for free, it will be almost impossible for these novices to learn from a seasoned expert until they gain the necessary skill. We can make it even harder by adding lots of fees and costly training sessions to obtain licenses.

There needn’t be just one law making low wages illegal or just one licensing and regulatory regime. We need a wide variety of complex and ever-changing barriers. High taxes on productivity and profit, union dues and demands, work restrictions, rigid job categories, seniority bias, massive credential requirements, health and safety rules to cripple upstarts, consumer protection laws to hamper smaller producers, no access to capital or ability to stay in line with the law without costly lawyers and accountants, etc., etc., ad nauseam.

My recommendations are myriad, but they all boil down to a simple principle: Do anything we can to make economic opportunities more costly and rare. This reserves most of said opportunities for us.

Now for the second prong.

Reward non-participation

We don’t want to seem callous and cold toward those less comfortably situated. Indeed, we harbor no ill will toward the young and poor. We just don’t want them to compete with or catch us.

Since we care—and especially because we want people to believe that we care—we can’t be all “stick.” We need some “carrot,” too. It’s not enough to restrict the supply of opportunities, because some people will break the rules or work around them. We also need to suppress demand by offering some sweet incentives for young workers to stay unproductive and uncompetitive. We need to make non-participation in the market more attractive than participation.

First, I recommend a strict policy of forced education for the first few decades of life. We’ve already discussed making it illegal for the young to work or the poor to work for low wages. But we also need to make it mandatory that they do something else, and something that won’t make them more likely to compete with us now or later. We should create giant institutions where we send them all day to follow rules and do what they’re told without question. We don’t want them becoming innovative, or pursuing passions and interests that they might become experts in and thus supplant us in the market. They must only learn what the bureaucrats who run the system tell them to. (Oh, and the people who run the system should only be those who don’t really know much about competing in the market, because we wouldn’t want them passing on such knowledge.)

We can’t just make school mandatory. Many would still play hooky if it cost too much. We also need to hide the cost by paying for the whole thing through taxes and borrowing. We need to subsidize it so much that alternatives can’t compete. We need to weave a narrative about its glory so that no one wants to opt out.

But 18 years isn’t enough. We need to keep these young, hungry individuals out of our way as long as possible. I say we artificially lower the cost of otherwise very expensive degree programs and advanced studies. We can guarantee low-interest loans, throw a lot of grants and subsidies around, and always, always parrot powerful propaganda about the inestimable value of classroom learning. Let’s make the most attractive option—socially and economically—the one that keeps them from the commercial world as long as possible.

The longer we can make the education process, the better for us. Defer, defer, defer the time at which young people start entering the productive sector. The more loans they take on in the process, the better. Maybe they’ll even get married, get a nice house (we can incentivize the buying of expensive consumer goods via debt as well!), and have kids. All of these things are good because they take away one of the major advantages the young have in the workforce—their low cost of living and hence ability to bid for lower starting wages. We want them saddled with so much debt that they have to earn high wages to get by, and thus have to compete with workers who are a lot more experienced for those higher wage jobs. We need them coming out of college looking for salaries that don’t comport with their skill levels. This increases the odds that older workers like us will win.

We’ll need to address those too old or too poor for school as well. We need basic income guarantees, food stamps, and all manner of welfare to cover the costs of low-income life such that no part-time entry-level job could pay quite as much. Again, we need to make not working worth more than working.

The best part

Here’s the best part: By the time these young and poor find themselves unable to compete, with costly lifestyles and loans to maintain and little skill or experience, they’ll be older. They’ll join our ranks. They’ll lobby for even harsher restrictions on those even less experienced and less well-off than they are. They’ll demand to get the low-skill jobs they’re qualified for, but demand the pay be raised to high-skill wages. They’ll make the list of degrees and credentials they’ve accumulated the new barrier to entry to artificially raise their market value. They’ll help us perpetuate the very policies that caused their plight!

As with the first prong, these are but a few examples. Ideally a massive and shifting bundle of incentives to not enter the market as a producer can be put together: education mandates and subsidies, tax incentives to spend rather than save and to purchase education rather than other goods or business tools, housing and healthcare as long as you don’t work, and rewards for any activity that makes one less likely to try to compete with us in the market.

These policies will subtly turn the attention of nearly everyone away from value creation, innovation, and serving customers—all of which might threaten our dormancy. It will turn everyone’s attention and energy to fighting over the details of these policies and programs, to who gets which slice of the artificially limited pie and at whose expense. Some of us can really take advantage by running for political office and dividing up the warring interests we’ve created by promising them more restrictions and subsidies.

Above all, with both prongs of this strategy, we need a narrative that calls these policies noble, compassionate, and wise. We need them to be perceived as humanitarian aid to the young and poor, not as ways to keep them from succeeding. We need to make these programs universal values in themselves—regardless of the outcomes they produce. Who could oppose better wages? Who could oppose more education? Who could oppose more loans for homes or college? Who could oppose work rules and consumer safety regulations? Middle-aged, middle-class people certainly won’t, if we know what’s good for us.

We cannot abide an America in which plucky newcomers outperform us at every turn. Join me in securing our future.

Originally published in The Freeman.

No Home Should Sell for Less Than $100,000

I am appalled by the fact that some people live in homes that cost less than $100,000.  It is truly tragic, and something my conscience can hardly bear.  That is why I support laws that require all homes sold to sell for no less than $100,000.

That is the same argument made by those who support minimum wages, “Sweatshop” bans, and other workplace and compensation regulations.

Every exchange has two sides.  Both parties give something to get something.  When acquiring a home, you give money to get whatever value the home will provide you.  When acquiring a job, you give your productive capacity for money.  If a home costs more money than you have, you simply can’t buy it.  If a wage costs more productive capacity than you have, you simply cannot “buy” it, or exchange your labor for that wage.

Demanding that all homes be sold for at least $100,000 does not magically put money in the pockets of those who have less than that with which to purchase a home.  Demanding work be compensated at a certain price (whether by wage floors, forced offering of benefits, work hour restrictions, etc.) does not magically enhance the productive capacity of the worker.  In both cases, the least well off have simply been priced out of the market.

You may feel sad in your quarter million dollar home when you realize many people have $60,000 houses, but only a fool would respond by demanding homes be sold at a higher price to ease the plight of the less well off.  When you feel bad about people only earning a few dollars an hour, it would be just as foolish to demand that the jobs they wish to purchase only be sold for a higher price than they can afford.

Private Charity Isn’t Enough

Originally posted here.

“The idea that churches can tackle national poverty, take care of those who are ill, and rebuild communities after natural disasters requires a spoonful of bad moral theology and a cup of dishonesty.” – Robert Parham

In this blog post, EthicsDaily.com editor and Executive Director of Baptist Center for Ethics Robert Parham claimed that churches and charities could never do enough to alleviate poverty. I agree.

Poverty will never be “tackled” because it is a relative term; a moving target. If you could describe the plight of America’s poor today to a poor person in another country, or an American 100 years ago, they would conclude that poverty had been eliminated. The standard of living among the poorest Americans today is incredible by world and historical standards. Yet we still wage the war on poverty, even in America. This is not a bad thing – helping the down and out can be wonderful. But when we aim at targets like the “end” of poverty, there is no end to what we can justify in order to reach this impossible goal. “The poor will always be with you.” The question is how best to reach them, spiritually and materially.

The second reason I agree with Parham’s claim is that, to the extent that poverty can be reduced, private charity alone is simply too small to do it. The incredible gains in social and material welfare of the poor in America have not primarily resulted from charity, churches or governments. They have resulted from (mostly) free-market economies.

If we look at poverty in a vacuum as Parham does and ask how private charity compares to government efforts, we could conclude that private efforts are too small. But if we look at government and private efforts combined compared to the power of the market, they would be dwarfed so as to make them hardly important in the big scheme. Charity is a targeted and short-term salve for the wounded; its value is far more in its spiritual nourishment and encouragement than any material progress it brings. A vibrant free-market is the only institution powerful enough to bring about the kind of dramatic increases in standard of living that most of us wish to see.

Public Choice

Jumping from the premise that private charity is not enough to the conclusion that government must do something places a blind, sometimes idolatrous faith in government that counters logic and experience. The incentive structure in government departments is to perpetuate and grow regardless of their effectiveness or the need for their services. There is no check on whether or not they are effective. In fact, the less effective a bureau of poverty relief is, the more they are rewarded with bigger budgets. If poverty is on the rise, and they will always claim it is so as to increase their importance, the last thing to do is cut the department of poverty relief!

Government programs are also subject to “capture” by interest groups and politicians. Scratch the surface of any government program and you will find that it is not the “general welfare” being promoted, but the welfare of a very small and politically connected group at the expense of the general welfare.

To examine private efforts and claim they cannot tackle a problem is only half the analysis needed. We must also examine government efforts and ask if they can tackle the same problem before we charge them to do it. The field of Public Choice Economics does just this, and you would be hard-pressed to find a case where the market is not providing something and getting government involved makes it better. If Christians have a duty to help the poor, they also have a duty to use their brains to discover ways that actually work. Intentions and actions are not enough, we need to understand how to be effective. This requires some knowledge of economic and political systems.

Wrong about Rights

The most damning and least supported claim in Parham’s article was that it is wrong for a Christian to value other people’s property rights:

“[L]ibertarian morality values property rights over human rights. For a Christian, that’s bad moral theology.”

I beg to differ. What Parham leaves unexplained is how human rights are to exist absent property rights. Private property is not some sacred dogma for its own sake; it is important because there is no other method of peacefully settling competing demands for limited resources. Such resources include food, water, shelter and other necessities of life. Common definitions or human rights include the right to be free from hunger. How can you have this right if you have no right to the very food you need to survive?

If Parham means by human rights the right to food, shelter, health care and other positive rights, this poses an incurable conundrum. Positive rights are a logical and practical impossibility. They cannot coexist with negative rights, or even with other positive rights.

A positive right is a right to something. A negative right is a right from something. A positive right obligates another person to take action. A negative right prohibits another person from taking action. A right to life, liberty or property is a negative right. You are free to live and act and justly acquire property, and no one can prohibit that so long as you are not violating their rights. A right to health care is a positive right. If you have the right to receive health care, someone else has an obligation to give it to you. If I am a doctor and you say you need my services, I am obligated to assist you in a world of positive rights. But what if at the same time I am hungry and need to eat rather than assist you in order to maintain good health? Our positive rights to health care cannot both be fulfilled, and in order for one of us to fulfill them we’d have to violate the other’s negative right to liberty and property.

Indeed, it is not possible to have any moral theology whatsoever without an acceptance of private property. One cannot give generously what one does not own, and one cannot help another by stealing from him.

Means and Ends

To sum up the argument, the author couldn’t imagine church and charity doing a task to his satisfaction, so his response was to ask men with guns to take money from people who presumably wouldn’t part with it voluntarily, and give it to causes he valued. Everything government does is backed by threat of force. Indeed, that is the only thing that distinguishes government from all other institutions. Let’s remove the intermediary agents (IRS, law enforcement) and revisit the argument with the author as the principal actor:

Churches and charities can’t or won’t do as much to help the poor as Parham wants, so he threatens, “donate or else.”

That’s clearly a barbaric and inhumane way to a more civilized and humane world. Yet voting for people, who will appoint people, who will hire people, who will send threatening to extort money to give to some bureaucrats to spend on social causes is no different in moral terms.

Appealing to Christian ethics is an odd tactic to justify a redistributive state.  Jesus made it pretty clear that the methods of the kingdom of God are service, sacrifice, grace and love. The means of all earthy kingdoms are brute force and the threat of it.

When the rich man refused to sell all his possessions and give the proceeds to the poor, Jesus did not send the disciples after him to extract a percentage on threat of imprisonment. He let him walk away. Christians are supposed to do the same.

Luxury and Voluntary Redistribution

Watching Mr. Selfridge with my wife last night I was reminded of an under-appreciated feature of free-markets.  The wealthy subsidize beauty for the less well-off by patronizing luxury retailers.

Selfridge’s, a pioneer in the development of department stores, is a purveyor of fine goods.  The upper crust are its clientele.  Yet one of the things that made the store famous is available to the general public for free: it’s beautiful and dramatic window displays.  The sale of expensive goods to wealthier individuals is the goal, but thanks to the dollars from those customers and the desire to get more of their business, the store goes to great lengths to display their wares in an appealing and provocative way.  The result is a positive externality for every passerby on the streets of London.

Other luxury items have the same effect.  If you can overcome the urge to envy, you notice that high-end cars and buildings make the world around us more beautiful and enchanting.  Market detractors often fret about negative externalities in a free world, but how often do they account for the immense richness experienced by all, thanks to the wealth of some?

Our sense of life is made up of many things, including the aesthetic environment in which we dwell.  The seemingly extravagant expenditures of the wealthy can create surroundings overflowing with creativity and elegant design.  If you’ve never enjoyed the art of a neighborhood full of houses you couldn’t afford and landscaping you’d never dream of, I recommend taking a drive through one.  Put prejudice aside and let the sensory magnificence seep in.  Humans are amazing creatures who can shape our environs in amazing ways – I’ll be damned if I’m going to let those with nice stuff be the only ones to take pleasure in it!

You Can’t Have Free Markets without Free People

I’ve run a trading game at seminars and in classrooms where, by the end, all the students agree that free trade creates wealth and restrictions reduce it.  I give out trinkets, ask students to rank how much they value them, then allow them to trade for a few rounds, each with a larger segment of the room.  At the end of each round we tally up the value they place on the goods they have after trading.  As the movement of goods opens up, each person’s wealth in trinkets goes up.  Without producing a single new good, the total value of the goods in the room (measured subjectively by the owners) increases dramatically between the initial dispensation and the few rounds of trading.  Trade creates wealth.

This provides a nice segue into a short talk about the benefits of trade, comparative advantage, specialization, and why trade restrictions make us worse off.  I see several eureka moments as students understand from this simple exercise that freedom to move goods allows resources to go to their highest valued use.  Then I throw in a twist just before Q&A;

“Just as restricting the free movement of goods unnecessarily reduces wealth, so does restricting the free movement of labor; otherwise known as immigration restrictions.”

Hands shoot up.  Despite nearly an hour spent demonstrating and discussing free trade in goods, this single line at the end attracts 100% of the Q&A attention.  Inevitably, well over half the class has a reason why the laws of economics they just learned cannot possibly apply to human resources the way they do to goods and services.  Within the first few questions, every one of these objections withers.  What’s left are objections that have nothing to do with immigration per se, but are problems with the welfare state or the warfare state, and immigration is sought as a scapegoat.

The economic case for the free movement of people is incredibly clear and not hard to make.  Yet those opposed to freedom of movement tend still to cloak their arguments in economic rhetoric.  Even though it’s unsure footing, it is perhaps more comfortable than talking about the moral implications of barring people from interaction and exchange across arbitrary borders.  When you get down to it, it’s one of the most inhumane policies around.  Anyone who talks about helping the world’s poor should start by advocating open borders.

Here’s a great article to get started.

What if ‘The Least of These’ are Criminals?

Nearly every religious and ethical system places a high value on helping those who need it most – those who can do little to help themselves, and who have fewest opportunities, and fewest advocates.  But who are “the least of these”?

People who feel a calling to help the down-and-out often work in cancer research, the Red Cross, international humanitarian organizations, or soup kitchens.  These are all noble efforts.  But in a way, these are the easy targets, and the ones who get the most attention from charity workers.  There are other individuals who actually have significantly less access to assistance, and who are more consistently abused and taken advantage of.

Who are “the least of these”?  Illegal immigrants.  Drug dealers.  Prostitutes.  Felons.  Those accused of crimes who are assigned a public defender.  It is these members of society who are most consistently abused, and who have nowhere to turn and no one who thinks them worthy of assistance. They are in the most difficult position of all, precisely because they are not all wonderful, innocent people.  Some of them might be scoundrels, though innocent of whatever particular charges they face.  Some of them may be decent people.  No one knows, and they rarely get a chance at a fair hearing.  All the incentives are against them.  Law enforcement and prosecutors pad their stats and claim they’re making the world safer by abusing and locking them up.  Public defenders have no incentive to prove them innocent.  The general public assumes that because they seem less than trustworthy in some things, or because they’ve broken the law, they’re probably guilty of whatever they’re accused of and deserving of whatever punishment.  Who would stick their neck out for them?

Working with cancer patients or the innocent poor of the third world is not only fulfilling for many people, but it also makes them look good in the eyes of the public.  But helping accused criminals, drug dealers, prostitutes or illegal immigrants might destroy your reputation.  It’s relatively easy to help people who are seen as good people on hard times.  But what about risking your reputation to help the seedier members of society who are on the wrong side of the law?

What if you told me your one passion in life was to help those least able to help themselves: What if I told you the way to do the most good for those that most need it was to help illegal immigrants avoid harassment by state officials, or to fund legal defense for those accused of crimes who are given a public defender?  Would you do it?

I don’t think anyone is obligated to take a career helping others.  Nor do I think charity efforts are the only or best way to help others.  Indeed, producing, creating and exchanging in the free market, and cultivating the ideas of freedom to do so are more powerful in the long run than all these efforts.  But for those who feel the most fulfillment helping the least of these in the short term, it may be worthwhile to consider deeply who the least are.  Yes, it is a subjective evaluation – a rich and famous person without a friend may be desperately needy.  I am not claiming we can know in any objective sense who are the least.  But we might try expanding our paradigm.

Consider those labelled scoundrels.  Consider those called criminals.  Jesus risked his reputation by hanging out with the unclean riff-raff of society.  Not just the noble poor, but the prostitutes.  He didn’t care that the law condemned them to death.  He dealt with them on their merits as human beings, not their status in the man-made legal system.

Most assistance efforts have a non-criminal record as a precondition to receiving help.  Maybe that blocks the very people who need the most help from getting it.  The laws of man do not determine who is and is not worthy of help.  Don’t let them distract you from offering it.