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Ehis Odijie

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The Solution to Welfare Crisis

The problem

There have always been storms of argument regarding welfare. I think everyone would agree that there is a problem with the welfare system – an enduring problem from the inception of the current welfare paradigm. To turn to some of the nagging problems:

A. It is sometimes more profitable to stay at home and receive welfare payments than go out to work and receive less payment.

B. Some welfare programs encourage divorce.

C. There is a relationship between teenage pregnancy and welfare. At least in the UK a teenage mother gets rewarded for getting pregnant outside matrimony. This includes free home and constant pay from the government. Yes, you heard that right! This is an incentive for fatherlessness.

(If you need sources for any of the above claims - please inform me)

There is a problem here. . . . .

My solution

I stand on the principle of ‘welfare for everyone or welfare for no one’. In my opinion, this is the only way to solve the problem of incentives. A standard libertarian would prefer welfare for no one. I think that is not practical so I would go for welfare for everyone.

We could have a system of 10000 pounds negative tax income tax payable to everyone within a system . . and also a flat tax income tax of 25 per cent (the currency and figures are for analysis).

If you decide not to work you’d receive your 10000 pounds and do whatever you like with it. A salary of 20000 pounds will be taxed at 25 per cent – and so is a salary of 1000 pounds but everyone will receive the negative income of 10000 pounds.

Millionaires on 10 million income will have to contribute 25% to the system and get a negative income tax of 1000 pounds. The same rule for everyone . . . . This way the system will do away with the problem of incentive because it will be senseless for anyone to choose joblessness. More, we can then do away with all the welfare programs and bureaucracies.

If you have a different view please share.

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  • Jon Ho

    • +1
    Aug 21 2012: AHA!

    I know where you're coming from now!

    You're looking at welfare from an economic standpoint while I looked at it from a sociological standpoint. Well, the thing is, you should use the right tools for the right job. You do not for example use a hammer to hammer in screws right? You use a screwdriver.

    So, in this scenario, you shouldn't really use economics to solve a sociological problem. You should use a sociological solution, ie free education provided by for non-profit organization to tackle this issue.
  • Jon Ho

    • +1
    Aug 21 2012: First off, did you know that you just gave me a youtube link to a video of an economist in 1978, when the internet as we know it did not even exist?! Why are you holding on to such a pedantic and Luddite views when technology has shaped new ways for us to communicate, learn and teach?

    Second, did you even check out the sites I gave you?

    Did you even actually check out the TED talks given by Salman Khan? Did you go to his Khan Acedemy site? I know you did not because you keep on harping about attending school and free ride and taxpayers money. If you had actually checked out Khan Academy you will actually know what I'm talking about!

    Oh, and here is an excerpt from their About
    "A free world-class education for anyone anywhere. The Khan Academy is an organization on a mission. We're a not-for-profit with the goal of changing education for the better by providing a free world-class education for anyone anywhere."

    First you accuse me of being new, perhaps trying to leverage your seniority or something to cow me into submission. Then you ask for civility, claiming that there is nothing in my presentation to suggest that making education free will solve the problem I identified. Well, let me tell you this now, I do not suffer fools. If you insist on acting like such, well, don't say I didn't warn you.

    And finally, what in Zeus name did you say I said? I never said that a government official should have the right to tell citizens what to buy with their money. What they do with their money is their rights! Please don't put words in my mouth. And then you come up with 'The logic of this statement is that the state should have the power and right to determine the basic need of individuals (this is not even possible in a technical sense)? Sigh. How the hell can you twist something from 'I should get a say' to 'the state should have the power and right'? The state does not equal me! I am not the state!
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      Aug 21 2012: I just got home to see the video . . Salman Khan is amazing ! I am completely taken by the video. If you were operating from that premise when you said "free education" then i can agree.
  • Jon Ho

    • +1
    Aug 21 2012: I have a totally different view. I believe that this new generation, people should be able to learn, unlearn, and relearn their skill sets.

    First, make education free. From kindergarten all the way to masters level. This way, there is no excuse for the welfare recipient to not reinvent themselves, learn a new skill set, get a job with good salary.

    Second, replace welfare payments to goods rationing. Once a week, recipients receive the basic commodity needed to live. No, not live comfortably, but alive nonetheless. This means no tobacco, no beer, no alcohol, nothing that will cause them to enjoy living the way they are, mooching off the rest of the population.

    Once these malingerers have decided that they had enough of second class living, they will go back to school because it is free, learn some new skills, and apply it to get a well paid job.

    If you say what if the welfare recipient is struck with a malady that renders them somewhat akin to Stephen Hawking, I will say even HE has a well paying job, debilitated as he was! All you need to do is pick up a new skill, perhaps learn a new language, and then get a job like Will-writing or Foreign Document translator or whatever, you're only limited by your creativity.

    You may say this whole project will be very expensive, I say to you Bollocks, sir! The only reason public education is expensive right now is because educational center is a veritable day care center overgrown with bureaucracies seeking to enrich themselves instead of doing the one thing that they should be doing all along: transmitting knowledge!

    I swear to you, nay, I'm willing to bet my life on it, that if
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      Aug 21 2012: Are you serious Jon Ho? You are operating from a false premise. For a start there is no such thing as free education - what you must talk about is who pays and who benefit. Numerous researches have demonstrated that it is the middle class that benefit from so-called free education at the expense of the rich and the poor. The rich pays and do not attend - so is the poor. Free education is not even possible in a technical sense. To turn to another point, tax payers funded schools (what you titled 'free education') is more expensive to run when compared to private schools. Supposing you look into the amount of tax payers’ dollars coming into a government run school and divide it with the number of students to get what is been paid by one student (but paid for by tax payers), you will come to the conclusion that it is more expensive to attend government school - from an economics point of view. The private school is however better in terms of quality.

      Your second view imposes a dictatorship on the people. You are saying that someone, usually a government official, should have the right to tell citizens what to buy with their money - be it welfare or otherwise.
      You cannot be serious.
      • Jon Ho

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        Aug 21 2012: Seriously? Are you blind or just refuses to see? Or you just chose to not see what I wrote?

        >

        I say to you Bollocks, sir! The only reason public education is expensive right now is because educational center is a veritable day care center, overgrown with bureaucracies seeking to enrich themselves instead of doing the one thing that they should be doing all along: transmitting knowledge!

        The reason that you are here on TED, a FREE site to learn and understand things, and yet you dare to come up with lame excuses like expensive education? Shame on you sir!

        Let me show you, nay, enlighten you, with this http://www.ted.com/conversations/1189/is_salman_khan_s_idea_of_incor.html
        and this
        http://www.ted.com/talks/lang/en/salman_khan_let_s_use_video_to_reinvent_education.html

        You said that numerous research demonstrated that free school is a zero sum game; some groups loses while another groups gains. I say, bollocks! Show us these research sir, so that we can disseminate the flaws in their reasoning together.

        As to my second point, do you even understand what I wrote? Let it make it simpler, replace money with goods. Simple enough? First of all, the reason they are handing out money instead of goods is because the bureaucrats are lazy and are prone to abuse/misuse. Second, the money that are used to buy those goods comes not out of the recipient pocket; it comes out of other hardworking tax payers pocket, people LIKE ME.

        Dictatorship you say? HELL NO. What I'm saying is that since I AM paying for these lazy bums, I SHOULD GET A SAY in what they are getting. I SHOULD BE the one getting the biggest bang for my bucks! Which is basically the physiological portion in Maslow's hierachy of needs. Oh, they're welcomed to buy kegs of beer, BUT NOT WITH MY TAX MONEY.
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          Aug 21 2012: Free school is not a zero sum game but it is a free ride, on those who do not attend, because everyone contribute to it but we are not all presented with the opportunity to attend. . . . . www.youtube.com/watch?v=uwG-5xCTGyI

          I think you can afford a little more civility! You must be new - there is no abuse here .

          First you said “ make education free. From kindergarten all the way to master’s level”.

          I am helping you understand that there is no such thing as free education in the way you employ the term. What you termed "free education" is a code term for 'education paid for by the tax payers'. The question we should be asking is whether the taxpayers are getting their money's worth. . If we make "education free" those paying for the so-called free education -will they get their money's worth? This is the only question.

          You answered the question in the negative when you said "The only reason public education is expensive right now is because educational center is a veritable day care center, overgrown with bureaucracies seeking to enrich themselves instead of doing the one thing that they should be doing all along: transmitting knowledge!"

          There is nothing in your presentation to suggest that making education free to masters level will solve the problem you identified.

          The very definition of public or government is something that is owned by nobody and controlled by people with no personal interest. There is no way to structure government schools without the involvement of bureaucracies - we can only hope for 'good bureaucracies'. It is a case of spending somebody else’s money on somebody else.

          You wrote: "What I'm saying is that since I AM paying for these lazy bums, I SHOULD GET A SAY in what they are getting". The logic of this statement is that the state should have the power and right to determine the basic need of individuals (this is not even possible in a technical sense). . But where do you draw the line?
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    Sep 2 2012: Welfare should be available for everyone who needs it for a limited time.
    It should be a helping hand-up, not a free ride.
    If it becomes a free ride you are diminishing the positive spirit the person may still have to improve their situation.
    People who need additional help should move to another tier of Welfare, with proof of long term disability papers etc.

    Here's an Idea: Using local State Universities to help reduce Welfare Costs

    - The top state universities receive X dollars from the government each year, to meet their local Welfare Recipients and distribute the welfare Checks. The $ received by the government are based on how many Welfare recipients are in the community for the University to handle.

    -The Universities offer certain classes to Welfare recipients who want to learn a new trade, get a new job and improve their situation. Many of these may be home-based businesses in the long run. Some of this training may need to be at the welfare recipients home, by a teacher in training at the university -for school credits.

    - The Government gives the University a bonus $ for every Welfare person the University trains and becomes employed each year.
    - The Universities use the bonus $ to pay for materials needed for training the Welfare recipients.
    - Eventually the Universities create their own Community Adult School retraining

    The University is creating more jobs by training the people - The university can use teachers in training to receive their credits.
    The Welfare Recipients improve their lives.
    The Universities are controlling Welfare Fraud at their end
    The Community wins as it reduces non-productive and poorer economic areas.
    The Universities turn Welfare Recipients into tax payers.
    the people win - reduce government employee costs, government waste,
  • Aug 27 2012: Simple
    Educate everyone. Put everyone to work.
    As if there isn't enough that needs to be done to go around and share
    Where everyone works a little bit, which contributes a lot, and gets things done that benefit humans collectively.

    Rather than a competitive marketplace, people do for themselves (we do for us), and one another because we are all connected and every single thing done, meaning every job, is just as important as any other job.

    With gaps in the entire chain of endeavors that are involved in accomplishing certain goals through labor, there is inefficiency, failure, the creation of new problems and usually mounting problems. Each job involved is necessary, therefore the people are necessary and valuable and in equal share to one another.

    Yes, dismiss it with a single word.
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    Aug 21 2012: O.K. already told you what I thought about your ideas about the abolition of a minimum wage on another of your conversations. Hope it helped you understand where your Professor might have been coming from when she said it was a bad idea to abolish it in the U.K. You really need to read some Dickens and some Shakespeare. Suggest you also read about what happened to the so-called orphan children who were shipped as cheap migrant labour to Australia. The U.K, and Australian governments apologised for this modern slavery last year. People make mistakes, it takes two people to create a baby. Having a go at the women who decide to carry on with the pregnancy is inappropriate. You need to consider the structure of the society and in this question I can see you are asking 'who pays'. It's a reallly good question but I would suggest the true cost is in the reduced life opportunites and social mobility of the children, the future taxpayers. Not sure what you are studying but you need to put some extra lenses from other subjects into your analysis and hypothesising. As I said on the other thread demonising certain members of a society detracts from the true source of the problem which is a social construction or smokescreen. Please do not be taken in by the latest political rant that British workers are lazy. You saw on the other thread about what happens when there is a global recession and the labour force is underskilled and poorly resourced.
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      Aug 22 2012: You mean no one should question minimum wage and welfare because they are for the poor. I disagree - i think they create more poverty. . Minimum wages as well as the current welfare system are means not end on themselves. The question we should be asking is whether the vehicle is moving to the right direction.

      To answer this question i turn to your point on future cost, I agree that there is a social cost if the problem isn't tackled.. but what have you done? You have created a system where teenagers find it profitable to get pregnant and receive benefit in form of housing and weekly payments. (I am not blaming the teenagers - i am accusing the system and people who choose to appeal to emotion instead of looking at the facts.) So, in order to solve the problem of future cost you are creating a bigger problem of diverting the attention of teenagers from school and other productive activities into compensation they could possibly receive by having a child - it is almost like an achievement . .

      There is a basic economic principle that has never been contradicted to the best of my knowledge. . that is, 'if you are ready to pay more for anything - product or behavior - the supply will increase' - if the government is ready to pay couples to stay married you'd have less divorce - this is common sense. So - paying teenage mother only create more - i am not saying they should be left to suffer. All i am saying is that we should look into the system.

      To top that – it is all happening in a backdrop of an immoral society where sex and what have you are seen as just fine for teenagers. . .

      To then say i am demonising the poor (even though i am not rich myself) or the single mother for pointing this out is completely wrong and emotional.
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    Josh S

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    Aug 21 2012: Ehis,
    Your idea makes great sense, and too me atleast, sounds like a good idea. It would seem everyone walks away happy, and if this could be implemented for a sustainable amount of time, it would be.

    But thats the problem, a SUSTAINABLE amount of time. I dont think the economics of it work, money doesnt come from nowhere, it has a source and has a limit. Lets do the math real quick just for an example, obviously your numbers were just for the sake of an argument, but lets keep it going. Lets say we implemented this system in the US, giving 10,000 dollars to every person per year. By the way, this is NOT enough to live on in most areas. The cost would be 3 trillion dollars. Just on giving the flat amount to everyone. This doesnt include costs of general upkeep in the country, government salary, a military, it doesnt cover anything else. Taxes of 25% wont cover the expenses of the country. something like the top 10% of the US pays 90% of the taxes. They usually pay well over 25% in taxes and because they have to pay less, there will be even less money coming in from taxes.

    How can a country possibly stay economically in the black with this plan? i think thats the biggest problem with welfare. Its not that 'rich old white men' are greedy and dont want to help the poor with welfare, its that these 'rich old white men' realize a country cant survive if everyone is getting free money.

    I do like your principle though, welfare for everyone or for no one, but this economically means their cant be welfare for anybody.
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      Aug 21 2012: JS, my proposal is just like a negative income tax taking the form of tax deductions . SO it is never the case that the sum will be paid to everyone within a system - it comes in form of tax deduction for employees. agreed it is almost unworkable.

      To turn to your point that "something like the top 10% of the US pays 90% of the taxes", i have to disagree . .your statement is not even possible in a technical sense. By taxes do you mean direct contribution or any contribution . . Corporation taxes, sales taxes and most form of indirect taxes (inflation included) are mostly paid by the masses. I think you meant income taxes which is no different, in money terms, from corporation taxes or VAT.
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    Aug 21 2012: This TEDx talk had some great suggestions to speak to these issues:

    http://youtu.be/pIqHcq2L2qE
  • Aug 20 2012: Again, could van Hayek be right and the big problem is corporations. San Mateo County vs. Southern Pacific Railroad talk about the courtg legislatingh.
  • Aug 20 2012: Are we really talking about all forms of welfare. A state does many things including maybe building roads, schools, banking systems , etc. Would you want to start a business in Somalia? Could it be as I believe it to be that the real welfare recepients aren"t some unfortunates, but some businesses?
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      Aug 20 2012: I should have been more careful! ; i meant social welfare,benefit = direct payment to the poor or unemployed.
  • Aug 20 2012: To put it bluntly, there is no solution to the "Welfare Crisis", because the underlying assumption are faulty: i.e , there is nothing in the business world to convince the leaders of it that they need to "provide jobs". Jobs is not their business, and ever since the Industrial Revolution started, it has basically been devoted to driving down costs. Since labor is a major cost, you can expect it to be driven down if industrialism is effective at all. Robots should just about finish the job. All this is not to say that society as a whole cannot do what the Wealtlhy already do: that is, create jobs for their friends and relations, with no particular need that they be "efficient" or "creative". i.e Nepotism. So there is no particular reason why everyone should not enjoy the benefits of "Nepotism fofr All".
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    Aug 20 2012: The problem with welfare in America is that there is no incentive to get off of it. I have an idea though. GDP is determined by the country in which the final good was produced. Therefore, if we bring manufacturing back to the home country, GDP would be increased for that country (an incentive for the government). So government should take welfare money and contract business who are outsourcing their manufacturing jobs to regions where the pay is cheaper. The companies could continue to pay, let's say $2 an hour, and the welfare money could make up the additional $6 to meet minimum wage (or more). Than everyone on welfare can be given a job which does not require an education. They gain valuable work experience to help improve their chance of getting a future job, they continue to make the money needed to support their family, laziness is no longer created, and the standard of living in the entire nation would be improved.
    • Aug 20 2012: I do enjoy your fresh outlook on the issue, but it seems that your remedy would not completely solve the problem. It seems like a great motivator, but what about those who are unable to work because of medical conditions? What about those who choose not to work? Also, what about larger families? Minimum wage is relatively not much compared to the standard of living in America. This is why some people choose to receive welfare as opposed to work; welfare pays more than some jobs. That being said, it is still incredibly difficult to pay for a larger family through only a minimum wage job. I enjoy your idea though. It is a step in the right direction, but this debate is very complicated. It is very hard to "fix" poverty because there are so many factors in it. I believe that one of the biggest reasons the welfare system has not been changed resides in the fact that removing benefits can be very devastating. It is a lose-lose situation. If we continue the path we are on, we go further into debt, but if we start removing benefits, we hurt those who are most vulnerable.
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        Aug 20 2012: Thank you for bringing that up! I was referring those who are able to work and choose not to. Those unable to work and have large families need welfare, and they generally don't abuse it. But if someone is too lazy to get a job even though they are perfectly able, well that doesn't make much sense. However you made an excellent point that the incentive is to remain on welfare because it pays more than minimum wage jobs. Maybe there could be a system to apply for government aid while working (Think work-study for college financial aid) that helped out those people who need a little bit more than minimum wage. I realize this brings up the issue of equality, but don't you think it's at least a little bit more fair when then person collecting welfare now has to work just as much as the person who doesnt need welfare because they have secured a minimum wage job. Very complicated issue indeed