I don't see how it's difficult to see the "right" thing to do - it almost never is, really.
"The right thing" (TM) is to treat the poor like you would any other social entity. You (as a businessman) can profit off of them, but not by taking advantage of their desperate situation. You make a fair offer, you get a fair return, and everyone lives happily ever after.
Now if you choose to give them a more-than-fair offer (interest rates that just cover inflation, pretty much no profit involved) out of the goodness of your heart - kudos to you.
Keep in mind the most important thing: the current sub-prime woes were all caused by banks taking advantage of people who couldn't afford to pay them back; "balancing-off" the high risk of investment with even higher interest rates - and look where that's put the global economy. There's a lesson in there - you can't make a quick buck, and ripping people off can never help society as a whole in the long run.
Ya, I agree. To me the right thing to do looks like this: Efficiency at some (possibly significant) cost to workers, and then use some of the fruits of that efficiency to subsidize the migration of those people to new jobs, or just subsidize their lives.
I suppose the way I see it efficiency is an absolute goal - the debate should be about what we do with the product of that efficiency.
Blindly investing money into “the poor” is a foolish endeavor that yields little strength to a country. Herd immunity and preventative health is a quantifiable thing and so I support universal healthcare. But we have to stop this disasterous assumption that the only reason people are poor is their circumstances.
The best way to help poor people is to lower the minimum wage so they can get jobs.
Subsidizing the poor increases consumption which is bad not only for the first order effect (throwing away money)... but also for the little thought of second order effect: it incentivizes people to build businesses that cater to consumption that was in the first place unsustainable. Smart people that could have been doing something else instead facilitate the creation of businesses that are only funded by inflation and cheap credit.
This is the story of the US economy in the past 30 years. The two largest disasters in recent history: the student loan bubble and the housing bubble, were both founded upon the notion that we should “give money away” without any real measurement of whether or not there would be a return on capital.
Our government should invest the majority of capital in basic research, healthcare, education and infrastructure... not the creation of a consumption driven bloated welfare state.
Luck playing a part doesn't take away from the whole. You still need to work and create opportunities.
Ripping people off is already a crime. Exploiting the poor is a complex equation of personal choices and societal policies. Bribing politicians is an issue with govt politics (something I've stated several times). Poor corporate practices require regulation. Taxes do not solve any of these issues.
The bailouts were completely paid back with interest. It was one of the few examples of good govt spending and one of the best investments ever made. And it wasn't about saving a particular business but rather ensuring we don't go into a greater depression. Is that what you would've preferred?
I think that one of the biggest things that policymakers should keep in mind is that frequently, there is no good solution. There are only less bad solutions.
Take payday loans as an example. The entire industry is extremely exploitative and preys on uneducated poor people who are desperate due to bad circumstances and / or poor financial planning. Well-meaning activists have campaigned to "reform" the business and make it less scummy.
The result? Legitimate payday loan companies go out of business, as it's no longer economical to invest money in loaning to poor people, and the mob fills the void. Instead of getting a loan from Usury Inc, whose backers have pulled out and invested in something else, you're getting a loan from Cousin Vinnie. Now, the poor get exploited even more nastily by organized crime, which has absolutely no compunctions about getting its money back by any means possible, including threatening families, breaking kneecaps, killing people to get the rest of the debtors in line, etc.
The only answer is an optimization - you curb the worst of the abuses, and then accept the fact that the exploitation is a side effect of underlying causes and impossible to remove without making things worse. It's as good as we're going to get.
Same exact thing with the drug trade. Drugs destroy lives. It's a fact - heroin and other opiates are a scourge on poor communities, and it's not just due to the fact that they're illegal. After all, people overdose on prescription medication all the time, too[1]. But a lot of the enforcement that has been done makes things even worse - we still have addicts, and then we get all of the violence that comes from the enormous markup that's inherent in the black market. There is no good solution that makes everything better, but it's very easy to make things worse.
More nastily, it breeds what I like to call "contempt of the law" - if everyone in a community is breaking the law somehow, (smoking weed, buying black-market cigarettes, buying prescription painkillers, etc) then even worse crimes don't get prosecuted because everyone is preoccupied with the fact that the police are going after the people they perceive to be average Joes. As soon as people perceive the police as an occupying force that arbitrarily goes after average citizens for gits and shiggles, the people will stop seeing the police as guardians against the truly evil and dangerous people among them.
I think that the biggest issue that blocks action on this is that people are confusing legalization with approval. You can make something legal and still think it's horrible. It's legal to cheat on your spouse, even though most people consider it immoral, but the cost on society that would come from making adultery illegal (and enforcing it) would be far greater than keeping the government out of it. Similarly, you can make prostitution legal and still consider it horrible. You can make casino gambling illegal and still consider it exploitative of people who suck at math. And you can make drugs legal and still consider it exploitative of human weakness. The only criteria that we should be using is "Would government intervention actually make the situation better? If not, keep the government out of it." And at this point, I'm pretty doubtful that dispatching thousands of officers to go after heroin dealers will keep people from using heroin. I'm pretty confident that doing so will increase the money that's in heroin, increase violence, and breed contempt of the law.
<asshole> Oh. Also, if we make drugs legal, I'm investing like a motherfucker in Soma, Inc. Drugs sell themselves, and I'm sure that corporations will make a bundle if they can sell them to The Public. My retirement fund will thank the wonderful residents of Appalachia for their generous contributions. Whichever company is the first to make an oxycodone version of Joe Camel is the one I'm investing in.</asshole>
I agree giving poor people money (possibly just everyone money right away rather than sorting out who is poor first) is the right thing to do now, but I think about it slightly differently:
I don't think "economic stimulus" is the right goal. The public health officials are doing their absolute best to bring the economy to a near-halt, at least any part of it involving non-essential physical interaction. I don't want to second-guess or undermine them.
I think the right goal is to make sure people have money to survive, including paying for food, medicine, and housing, paying off their debts, and building their savings, so they can make it through until we're ready to restart the economy. I wouldn't consider the measure to have failed if it's not all spent right away or if the stock market doesn't rise.
While I can appreciate the optimism, I think it's important that we get this right (which might or might not be my idea).
Think about all the payday loan places. They're everywhere. Think about all the credit card debt (among other excess debts). Note that a lot of people with credit card debt make much more than any basic income would be. Think about how much the poor (who do not have luxury of wasting money) spend on cars, cigarettes, and TVs. With all these things in your head, do you still think that people will manage the money well if you just hand them money? Will they handle money that they didn't work for better than they handle the money they did work for?
Sure, some of it will go to good purposes. Why not make most of it go towards good purposes?
And to be clear, I'm not just trying to blame the poor - good money management is psychologically hard.
Instead of simply telling poor people to stop making bad decisions, we should work to solve the underlying problems which are causing them to make those decisions.
Beyond that, minimizing the amount of money that is forcibly taken from people is inherently good.
You'll have to elaborate on this a little better, because it seems misinformed. For example, it would suggest that saving Warren Buffet a billion dollars while taking fifty grand from a hundred poor families is preferred. And that's horseshit.
I agree about having a duty to each other, I guess I'd describe giving money to the poor as an investment to benefit all of us (and clearly the amount paid into the social safety net can be bigger for the rich, who can spare it). But that is a more nebulous payback than loaning money to the rich, who can and will pay it back directly?
I think that's a slight misreading, if we as a society, through our government, offer blanket loan forgiveness then the benefit and cost of that action can be appropriately distributed. The comment is asking for people to take the burden onto themselves and pay out to solve the crisis unilaterally which is an unproductive action at best.
Maybe Bill Gates and Bezos could execute a one time rent forgiveness program from their personal values - that might even work out pretty well in the short term, but it'd be placing too high of a burden on those two in particular.
When said actions (paying for something with legal tender) were both (a) legal and (b) harmless, I would say the way to fix any current inequities are to ensure everyone ("with liberty and justice for all") would also fail to suffer consequences beyond missing one's daughter's athletic meet.
You can overdo fairness and cause troubles to the poor. Very concretely: Giving someone a loan, despite their credit score being marginal, will severely mess up their credit score forever, if they can't repay you.
If you are poor, then don't create more debt! It should be hard to rack up such a debt, not easy and accessible. No amount of credit is going to increase your social status, because you have to pay it back with your own current/near-future money.
If we want social justice for the poor through access to more money, then capitalism is not a good way to go. The state should become a credit provider.
I said it was well intentioned not that it was right.
Since you asked, I believe in compensating ability via markets while providing basic income to all parties. Instead of trying to apply some kind of centralized reverse meritocracy to social support systems, or worse, via tax rebates and business development programs.
I vehemently disagree. Handing out cash to the poor isn’t fixing the problem. It will make matters worse (inflation).
It’s almost unbelievable that investing in education and apprenticeship is considered a negative thing but giving straight up cash from Billionaires is popular.
Homelessness and poverty needs to be tackled by getting these people jobs.
It is unarguable that the super-wealthy should use their wealth to the benefit of society. I disagree with the author's belief that direct aid is the best method to accomplish this. There is a massive amount of data indicating that direct aid in poor nations builds dependency while not fixing the underlying causes of the poverty. I don't think the dynamics of direct aid are going to be markedly different in the united states. In my opinion, the best way to help people is to fix the underlying system that is holding them back. From this perspective, political mobilization efforts and working to sway public opinion in favor of better policy is absolutely the smart way to spend your money.
"The right thing" (TM) is to treat the poor like you would any other social entity. You (as a businessman) can profit off of them, but not by taking advantage of their desperate situation. You make a fair offer, you get a fair return, and everyone lives happily ever after.
Now if you choose to give them a more-than-fair offer (interest rates that just cover inflation, pretty much no profit involved) out of the goodness of your heart - kudos to you.
Keep in mind the most important thing: the current sub-prime woes were all caused by banks taking advantage of people who couldn't afford to pay them back; "balancing-off" the high risk of investment with even higher interest rates - and look where that's put the global economy. There's a lesson in there - you can't make a quick buck, and ripping people off can never help society as a whole in the long run.
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