[ExI] Friedman and negative income tax

Dan dan_ust at yahoo.com
Mon May 4 14:48:23 UTC 2009

--- On Mon, 5/4/09, Stathis Papaioannou <stathisp at gmail.com> wrote:
> 2009/5/4 Damien Broderick <thespike at satx.rr.com>:
> > <...the supply of welfare clients is inversely
> proportion to another vitally
> > important factor: the cultural or value disincentive
> of going on welfare. If
> > this disincentive is strong, if, for example, an
> individual or group
> > strongly believes that it is evil to go on welfare,
> they will not do it,
> > period. If, on the other hand, they do not care about
> the stigma of welfare,
> > or, worse yet, they regard welfare payments as their
> right – a right to
> > exert a compulsory, looting claim upon production –
> then the number of
> > people on welfare will increase astronomically, as has
> happened in recent
> > years.
> This is an alien view of welfare for me. In the client
> group I deal
> with, the mentally ill, welfare payments are regarded
> unquestioningly
> as a right, but despite that, I don't know anyone who
> actually wants
> to *stay* on welfare if they are able to work. This is
> because they
> feel better about themselves and also make more money if
> they work. I
> can't say I've met many who could work but prefer not to
> because they
> can get welfare payments.

Doesn't that fall under a "value disincentive" explanation?  Yes, some might take the payments, but there's a strong disincentive for it under at least some conditions.  Once their condition changes, they no longer take it -- whether that includes merely the availability of jobs to feel good about or because the income is higher.  (Of course, on the latter, one might expect marginal effects -- as when someone might be disinclined to work merely to make a small improvement in income.  In this case, what's small depends on the person.  Were this, too, not the case with most people, I'd expect we'd see lots more people working ever longer hours to make ever more money.  In fact, even people not on the dole often make a certain level of income and then prefer leisure or non-work to more money.  I've found myself in this position often too.)




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