I can't find the original tweet, but someone (half?) jokingly proposed a law that all benefits must be defined as continuously differentiable functions (thus making cliffs impossible).<p>"Yeah, I made $1M last year. Here's my SNAP check for six cents."
They should be. And for the great majority of citizens, they should be calculated automatically along with taxes without the need for filing/paperwork. But we must think of the Intuit shareholders and the harm that that would cause them.
If someone in the coming years ran on taking down regulatory capture and returning that as social safety net funding, public goods, and lower taxes, and had the chops to actually deliver, they'd do well.<p>Though best to start local government first, obviously.<p>We're reaching breaking points in so many places...
“They’d do well.” That is not the lesson I’ve taken from the past 15 years of politics in the US and abroad.<p>Political candidates actually interested in taking on the very difficult and nuanced task of governing are routinely drubbed by edge lord culture warriors or candidates that simply promise the world without any regard to annoying facts like existing laws, budget deficits, or basic tenets of economics.<p>I definitely agree there is probably less disfunction and greater chance for reform at the local level.
As someone who formerly worked in this space, the issue is administration is orthogonal to legislature.<p>Administration and implementation is inherently technocratic in nature, but legislation is is often driven by short-term electoral needs.<p>This isn't to say autocracy is the answer (it isn't), but the dysfunction arises when people assume that every single administrative decision needs to be made by "elected officials" and constantly second guess administrators.<p>When administration from local to federal becomes politicized (as is increasingly the norm across the democratic world), implementation slows down severely because the "ideal" solution might not be political tenable.<p>A good example of this is welfare expansion in the US - the assumption is lower income voters who voted for Trump voted irrationally, but in action, the majority of Trump voters tended to be in the 25th-75th percentile income bracket, which in most cases put them outside of the bracket for a number of social services. Those services which were available such as the ACA/Obamacare have been protected by legislators for that very reason because they know they would lose their seats as a result.<p>You're in Japan so you've probably seen similar decisions being made with regards to Japanese rice protectionism [0] - unpopular with urban voters, but urban voters don't swing elections at scale.<p>[0] - <a href="https://news.ycombinator.com/item?id=41367653">https://news.ycombinator.com/item?id=41367653</a>
The problem isn’t that such candidates would never accomplish anything let alone get elected due to the insurmountable amount of resistance from so many incumbents with a vested interest in that not happening, ever.
One of the biggest problem of a two-party system is that the two parties are thoroughly captured by lobbyists.<p>In a PR system, fresh parties do arise over election cycles, and it takes some time for them to be thoroughly infested. These can then push for some reforms that threaten entrenched interests, and sometimes succeed.
We couldn't get carried interest legislation to pass. It was that easy of a question and not a single Republican crossed the aisle to support it.<p>Simplifying the tax code and balancing the budget is what they talk about but they never walk the walk.
DOGE tried, and despite it’s best efforts still couldn’t do more than make a dent
They definitely should be. Some people might be in situations where asking your boss for a 10k pay cut gives them an extra $1k per year. Just dumb.
I like my cliff. I earn enough that I and my family are ineligible for most welfare schemes. I do not want even 6 cents worth of SNAP. I spent my entire childhood on that, and it disgusts me. Thus, were this policy ever seriously proposed, I would do what I can to dissuade my legislators from voting it into law.<p>There are others like me, too, I am not unique.
The cliff here means a disincentive to go for a slightly better paying job because you end up with less overall. I think the 6 cents was hyperbole.
Right, so people who would use their trauma to prevent themselves from thinking logically about the problem and helping those in the middle instead of some arbitrary line your mind made up?
There is idea behind that, but continuous is not enough.<p>The variable is all transfers, taxes and benefits T = [all taxes - all benefits] as function of income per person (including children). T starts negative (benefits are negative taxes).<p>Goal: monotonously increasing effective marginal T rate.
I would guess that was not a joke. The benefits could drop all the way to 0 at a reasonable point unless you impose the stronger condition that the function be analytic.
Why continuously differentiable and not just monotonic?
Monotonic is what we have, and it allows cliffs.<p>Suppose, e.g., that you can get $5k/yr in benefits if you make less than $10k/yr in other revenue and $0 otherwise. Unless you have a viable strategy for pushing past $15k/yr it's a strong financial disencentive against actually working, and even then your incremental ROI isn't very good past that cliff (if it takes an extra hundred hours to push to $15.1k/yr, then compared to your $10k/yr option you're only making $1/hr for the extra work).
It's not sufficient to make cliffs impossible, you just never want the effective marginal tax rate go above a certain threshold.<p>It's insane that we cap marginal tax rates for the wealthy below 50% “because they need incentives to work harder” yet the working class family is facing an effective marginal rate near 100% because of reduced benefits.<p>The solution would simply be to <i>stop making benefits decrease when salary goes up</i>.<p>“But it's going to be insanely expensive” one may say, but it's an accounting illusion. All we need to do to break the illusion would be to stop counting gross public spendings and taxes and instead count the net public spendings/taxes for each individual (that is, over the whole population you take the difference between what they pay and what they receive and that gives you how much they contribute or how much they cost, instead of the current accounting system where we count people paying <i>for their own benefits</i>).<p>What's really expensive is the economic inefficiency of the current system.
> The solution would simply be to stop making benefits decrease when salary goes up.<p>That's an option, and I'd be interested in how the math works especially with predictions of how the economy would respond.<p>That said I don't think not decreasing benefits is an important requirement. But net income (benefits + earned income - taxes) should be strictly increasing with earned income, and probably at a rate of at least 50% but ideally higher than that up to some reasonable definition of middle class income. It should never be the case that if you earn more you can end up worse off.
I agree with you, but for what it’s worth I live somewhere top marginal rates are about 50% and indeed 32 hour weeks are very common. I think this is a good thing though.
That can still have work disincentives; anywhere the magnitude of slope of the benefits is close to (or steeper than) the slope of the income as it phases out, then working more can get you no gain (or lose you money).
To calculate the amount of your childcare benefit take the negative of the your adjusted gross income (box 26a), divide it by 10,000, and add 2. Then take the arctan of that result and multiply by 5,000. Add 2500π and write the result in box 46. You may round the value of π to 2 digits. If you are filing as head of household, divide the amount in box 46 by the definite integral from 0 to your adjusted gross income (box 26a) divided by 10,000 of sin^2(x)/(x^2 + 1) dx, and write that amount in box 48. If you are unable to find the function of the anti-derivative, IRS rules allow you to approximate with a Riemann sum using the midpoint rule and a rectangle width of 0.1.
I remember reading this book called 'The Losers' (<a href="https://www.goodreads.com/book/show/2114133.The_Losers" rel="nofollow">https://www.goodreads.com/book/show/2114133.The_Losers</a>) about a privileged man who has a car accident, becomes disabled and comes to rely on government support. The book looks at the lives of the working poor and actually poor, who rely on welfare cheques and other subsidies and highlights the social and psychological impacts of these systems of support. It was very disempowering and psychologically enslaving for the people living on these systems of support.<p>I know it's probably not intentional but I believe welfare in the US absolutely is rife with negative outcomes and negative incentives for people receiving support, it doesn't uplift and enable success, it keeps people trapped in poverty and a mindset of helplessness.<p>I come from Australia where the social welfare system has similarly degraded (Though not as bad as the US), and there are increasingly more dehumanizing aspects in engaging with the system just to receive a below-subsistence amount.<p>This article highlights one aspect of such disincentives, but I believe the problem is deeper and more systemic.
>probably not intentional<p>All the current results were foretold by people screeching warnings about them 50+yr ago.<p>> deeper and more systemic.<p>Nobody's budget ever got bigger or headcount grew or government contract got more lucrative because people got off welfare.
What "current results" are you referring to? No, people 50+ years ago weren't arguing that cliffs can lead to disincentives, they were arguing that the whole system is "socialism" and bad - something that has been repeatedly disproven.<p>There are few things more evil in our society than the breed of conservative that will talk about how their family needed social welfare growing up to survive, how it worked and they did survive, but how "ashamed" they feel so they thing we should tear everything down and remove the ladder now that they've climbed it.
> What "current results" are you referring to? No, people 50+ years ago weren't arguing that cliffs can lead to disincentives, they were arguing that the whole system is "socialism" and bad - something that has been repeatedly disproven.<p>In fact, we have disincentives like that because they were arguing that having a flat benefit for everyone would be socialism.<p>If you don't reduce benefit with income level, these disincentives vanishes and that's how all post-war systems worked in Europe (can't talk about the US) before the neoliberal crew started dismantling everything in the name of “reducing public spendings” for greater economic efficiency.
A flat benefit for everyone that doesn't reduce with income level would be universal basic income, which has many supporters in theory, but has never been implemented in practice so far, not even in the most socialist countries of the 20th century...
No it's not. Not all benefit is “income” and not all such income is universal. And it also has nothing to do with <i>socialism</i> (socialism is about forbidding <i>the private property of the means of production</i>! Please stop calling every kind of public intervention “socialism”, that's as ridiculous as calling all Republicans “fascists”).<p>For the non-income version see countries with free schools or free hospital, and for an example of an income benefit see the French <i>Allocation familiales</i>, which until 2015 were given to every family with 2 child or more no matter the parents income.<p>There were plenty of such systems, and some of them still exist (AFAIK the US social security is one of those, you don't lose access to the benefits even if you're rich)
Ok, those are valid examples (also, how about free roads for everyone? Everyone seems to take that for granted and wouldn't dream about calling it "socialist"), but in your original post you wrote about "a flat benefit for everyone" that doesn't reduce with income level, and the examples you gave are either non-income or not for everyone (e.g. not for families with less than two children, not for people who didn't pay social security taxes for at least 10 years etc.).
Every employee is off welfare. Employment is very lucrative.
We all know that person on the left that struggles with reasoning that involves economic or statistical intuition, but has extremely strong instincts of right and wrong, and is quick to outrage and moral certainty, and low in curiosity.<p>Their thinking is that poor people are poor, which is bad. So let's check if they're poor, and give them money so they're not poor anymore, which is good. That feels right. Let's do that.<p>Negative income tax? But that gives rich people money too! Giving rich people money is bad because they're rich already. QED.
>I know it's probably not intentional but I believe welfare in the US absolutely is rife with negative outcomes and negative incentives for people receiving support, it doesn't uplift and enable success, it keeps people trapped in poverty and a mindset of helplessness.<p>That's the best way to ensure their vote in the next election for the welfare party.
The decision to implement benefit cliffs is absolutely intentional, because income requirements that cause people to fall of medicaid or SNAP completely are sharp, and maybe 10 % of the population rely on those. Obamacare subsidies are phased out gradually, because half the country relies on Obamacare, and if there were issues around Obamacare, that would have repercussions at the ballot box.<p>It serves to have an underclass that politicians can dump on, it seems.
> because income requirements that cause people to fall of medicaid or SNAP completely are sharp<p>How often do pay increases perfectly keep someone in the gap? Presumably some of them will be large enough, through changes of jobs for example, that the family would completely jump that gap.<p>> because income requirements that cause people to fall of medicaid or SNAP completely are sharp<p>Why would it? This is perhaps intentional as well. Only allow the program to benefit half the country. I'm sure you can predict how that political split occurs and insulates politicians from the ballot box.<p>> It serves to have an underclass that politicians can dump on, it seems.<p>It helps keeps wages suppressed. Politicians want money. They don't care about "dumping" on you, they'll make any excuse they need to keep the money coming in.
Maybe it's just incompetence, bureaucratic morass etc but it really does feel like the system was designed to fail, and trap us into this false choice of a broken welfare system vs. no welfare at all.<p>UBI and/or UBS (universal basic services) would be so much better but there was a sustained propaganda campaign to tell people that free things are communism and therefore bad. Now Western countries are becoming ungovernable due to regulatory capture, tax evasion and industrial-scale manipulation of opinion by the elites, so fixing these problems within the current democratic system is an extremely uphill battle. At least Mamdani's election gives us some hope in the US, but there's only so much one city or even one country can do on its own without worldwide changes.
There is no propaganda campaign needed to tell people that free things are bad. Nobody likes a freeloader. Western nations are ungovernable because they have universal suffrage, not because of some conspiracy. The fact is that a sizeable majority of people just don't have the intelligence to wield the political power given to them. A quick look at our present government is all that you need to tell that we are ruled by the stupidity of the common man, not some shadowy billionaires.
I used to think the welfare system had a few bad apples.<p>Later, while working for a charity, I realized the truth.<p>Literally no one is immune to the character-destroying nature of entitlement programs.
> Literally no one is immune to the character-destroying nature of entitlement programs.<p>I personally know people who appear 'immune'. I find the issue is trauma, not 'character-destroying' - the uncertainty; the demoralizing nature; the experience living continually on a precipice, and seeing your kids, other dependants, and loved ones living that way. People are in a continual state of survival - of fight or flight, not of growth and health. Over a long term, that will injure anyone.<p>You can see the privileged atmosphere of HN in the comments, mostly from people with no contact with US welfare programs. It's like reading software development analysis from people who have no contact with that. (I have seen people on HN who do have experience, but they don't seem to be commenting.)
Destroying the character of those administering the programs?
A considerable part of this is the fact that in a society where utilizing these programs is stigmatized to the degree that the USA does, people who see themselves as honest tend to avoid utilizing them.<p>And even those who are less than honest, but have a sense of propriety, would understand that the correct, culturally approved time to engage in these activities is AFTER one acquires a significant amount of wealth, when entitlements are knighted to become "economic incentives".
How does an executive such as yourself find empathy and compassion for people who did not simply lift themselves up by their bootstraps?
Were you somehow exposed to a random sampling of welfare recipients through your work?<p>If no, how did you account for this sampling bias as you came to form your beliefs?
> In practice, however, several of the programs that seem to offer the most generous benefits are severely underfunded, so relatively few families are actually able to obtain them. For example, according to congressional testimony from the Center on Budget and Policy Priorities, 68 percent of poor families with children received Aid to Families with Dependent Children in 1996. By 2015, after the welfare reforms of the Clinton era, benefits from TANF, which replaced AFDC, reached just 23 percent of poor families with children, according to the same source. Similarly, just 8 to 12 percent of eligible families receive child care benefits from the CCDF, and just 24 percent of those eligible receive Section 8 housing vouchers.<p>This is complete insanity.
This doesn't surprise me at all. On top of lack of funding, you have:<p>1. Benefits don't come into effect fast enough to matter for emergencies. Even with expedited processing you can have to wait a week for food.<p>2. The bureaucratic requirements aren't obvious if you're new to the system. How many people know that "expedited" processing exists? How many people know that they qualify?<p>3. The bureaucratic requirements aren't exactly painless. It's been awhile, but I remember one was as simple as "show up at our office for <xyz> reason." That's easy if you have a car or money or friends or whatever, but a 10-mile hike each way in -20F weather is never fun, and I've gotten in trouble more than once when hyper-local weather patterns (e.g., too close to a body of water with a long straight stretch) made the situation much more dangerous than I was equipped for.<p>And so on. The system is (supposedly) easy to use if you know its ins and outs, but if you're struggling and never anticipated being in that situation then you're mostly just fucked.
> and just 24 percent of those eligible receive Section 8 housing vouchers<p>There are definitely problems with the distribution of these programs, but it’s also a mistake to think that everyone eligible for every program wants to collect every benefit. The housing vouchers are a good example of something that isn’t applicable to a lot of people who, for example, are living with relatives. I have some people in my extended family who fit this description right now. They have housing in a beneficial family situation, so any housing benefits they qualify for aren’t relevant to their current situation.<p>Not to minimize the problems, but the number of people who should be or want to be receiving every benefit isn’t 100% minus the number of people currently receiving it
I always felt simplifying all this, it would probably be possible to consolidate and offer proper health care, and a real welfare, along with a supplemental program for those inapt to work, with it all costing less than the mountain of piled complexity and paper work that we have today.
The system in its current insane state serves the purposes of multiple groups of people:<p>1. The bureaucrats administering the system because the more complex and insan the system is, the more bureaucrats you need.<p>2. The politicians who can promise $X of benefits to N people while knowing all along that due to the complexity of the system the actual cost of the program will be well under X*N due to failure to claim the benefits.<p>3. Companies that can now hire workers for less than their cost of living because they know they can just make it up out of government benefits.<p>And it hurts, of course, the poor people who depend on these programs. But that doesn't matter politically, because these people are mostly not smart enough to even figure out how they are being screwed. Whereas the people in 1-3 above are absolutely smart enough to figure out how they benefit from the current system and they vote and donate accordingly.
So UBI + universal healthcare? Sign me up!
having been out of work before and going on benefits the cliffs are hilariously badly calculated, not even sure how they are determined. for someone who knows their potentially salary far outweighs the reduced subsidies it can be a needed life boat. for people at the cutoff it incentivises you to stay under it.
I cannot express the extent to which that picture at the top of the article with a baby “working” at a laptop upsets me.<p>I can see the beginnings of a hand of an adult at the bottom, but there is something so on the nose about such an image that it prompted a visceral response.
<a href="https://www.niskanencenter.org/wp-content/uploads/2021/01/working_parent-960x400.png" rel="nofollow">https://www.niskanencenter.org/wp-content/uploads/2021/01/wo...</a><p>On the website there is cropping and it might be displaying differently on different browsers. I was able to recognize it as an adult at the computer holding a baby on their lap. I do not see any intent to show a baby working.
I think it’s amusing. That was probably the expected response.
The real issue isn’t just the cliffs themselves — it’s that our welfare system is a set of disconnected programs that interact like poorly designed APIs. For people with zero margin for error, even a small income change can trigger huge losses in healthcare, childcare, or housing.<p>We ended up with a system that’s expensive, complicated, and psychologically brutal — and still fails to do what it was designed to do.
I usually get downvoted on any of my commentary on poverty or welfare, despite my lived and continued experience in it, but I'll punt again.<p>My family, from grandparents downwards (siblings, aunts, uncles, cousins, across 3 family lines) have all relied on government handouts for a majority of their lives, and had their character destroyed by the system. All rely on a meager amount of welfare to stay alive, not healthy, not productive. Just kicking along and in alcohol and drugs just to feel something. Most have died of some form of cancer from their vices.<p>I joke (with a semi serious tone) that my drug-induced psychosis was the best thing for me because it broke me out of the system (tied in with a move interstate) - I lost all my old friends, family was quasi-cautious of me, and I was in a new town and had to completely rebuild myself. I had a mental health nurse nurture me "back on my feet" within 6 months and it was the first time I was actually on my feet since birth.<p>Governments and society, in the large part, think "something is better than nothing" - but I think it's actually the opposite. Maintaining a status quo is what makes people "comfortable in misery" and not have any way out. Most can't even get a job, because the job (which might be temporary) knocks out the welfare (which is permanent, as long as they don't get a job).<p>I would love to see modelling or examples on my theory of the way out of this mess: reinvest the welfare system as mental health services, only give welfare to those who are in the mental health service. Incentivise for how many people transition out of the welfare system. keep it at the same dollar amount, just reallocate that money to the people who really need it.<p>Some cases are almost too tragic to mention and there's no positive outcome; others have "learned" behavior and can come out of it with some help (or sometimes just some positive messaging)<p>I also largely blame a lot of societal/government programming. I call it "poverty programming" -- the idea that people cannot do ANYTHING without help. You absolutely will not make it on your own, you NEED support you NEED this label, medication, service, benefit.<p>I strive to message the opposite: you can do it, release the chains. the world is not that scary. embrace the chaos, there is a lovely world out there ready to be explored.
How would that be implemented on an individual basis? Force drug-induced psychosis (obviously not)? Just kick people off of support? That will have obvious, very bad downsides. And then we'll have a bigger problem with homelessness (which will get the same response).<p>While I don't downplay your experience; do you know of research that talks about it? The idea that people need incentives is an old one - Bill Clinton's welfare reform talked about 'a hand up, not a hand out', etc. I also remember research, though I don't know how current, that most people in welfare programs are there temporarily - they are in and out, not there on a long-term basis.<p>What about people who aren't going to make it on their own? Do we just let them die? A similar problem is people addicted to drugs: There is no reliable solution; rehab only works for some, not always permanently, and forcing people into it is almost certain failure (besides being a serious violation of their freedom).<p>There is research and experience saying 'housing first' - providing housing, which provides stability and much better access to services - helps significantly, but that may be focused on people lacking shelter.<p>P.S. I hope you drop the whining about downvoting. It's against guidelines and is tactical victimhood.
I guess it really is too broad of a sector to think of any clear cut solutions. I'll tap out, but my main shtick is the poverty programming but. I think k that perpetuates.<p>I would agree with housing first. Definitely something that goes a long way. But it's also not clear cut (IE: too many recovering drug addicts in the same neighbourhood will bring each other down..)<p>While some people might only be on welfare temporarily, others are long term. And removing it drops the "floor" for everyone at once. Having seen death and evil that happens in poor.. families, societies, etc.. I don't mind the idea of letting certain elements die.<p>I'll keep the tactical victim hood, it's the only way I get positive responses that takes me on good faith. Otherwise I'm just a "corporate bootlicker who doesn't know anything" or "privileged male(?) with typical survivorship bias"-- I gotta get that out of the way first, this is my learned behaviour. I'm counter-programmed. Hate the game not the player.