I just recently found your SubStack and it is great! I had two thoughts from reading this piece.
(1) Comparing the US to Ireland is feasible but comparing it to the EU is perhaps a more correct way to assess American poverty. Whether we like it or not, the civic structure of America is very federal, with semi/quasi sovereign states. America is like a more united EU-a continent spanning superstate with very different regions and sub-interests. Ireland just does not compare. It is structured differently. Perhaps we should ask why Ireland has better poverty stats relative to the state of Hawaii or Mississippi.
(2) Also, when we look at many of the Top 1% they often make great wealth through investments. We need to find a way as a nation to leverage investing to benefit those in poverty. That is where huge fortunes are made.
Great post as always. One small correction: "But it’s a step toward the holy grain of universal, cash-based programs" --> "holy grail", or maybe you're trying to sell farmers on the idea ;)
In Israel such a plan was considered a disaster in 2000 since it encouraged muslims and orthodox Jews to have a huge number of children. But it is like the FDA's hesitancy with the Pfizer booster. Why learn from Israeli experience instead of doing your own mistakes.
I'm skeptical that a CTC-type benefit would (or did) cause a disastrously huge jump in births; the income elasticity of births is generally found to be low, especially in the long run (https://ifstudies.org/blog/pro-natal-policies-work-but-they-come-with-a-hefty-price-tag). I'd certainly hope that the US not "learn" any notions that upticks in births among The Islams And The Wrong Kind Of Jew are disasters.
There is indeed a reality distinct from racist anecdotes. That report documents that
• Israel didn't even raise child allowances in 2000;
• the nearest increase in child allowances to 2000 was the 2001 increase (the "Halpert law"), which was limited to families that already had 4+ children;
• the 2001 increase was temporary, and more than reversed by 2004;
• there weren't any notable spikes in fertility among ultra-Orthodox Jews or Arabs in general in 2001 or 2002 or 2003;
• ultra-Orthodox Jews and Arabs tended to have DECREASING total fertility rates during the 2000s, not INCREASING rates; and
• the average high-parity child allowance over the 1994–2007 period raised the probability of a married Arab/ultra-Orthodox women having a kid by 3%–7% (which would suggest an even smaller effect of the temporary 2001 increase).
It is interesting to consider that our New Deal legacy is based on work (or the unavailability of it, or inability to do it). I hadn't thought of it that way before. I guess that's not surprising, since the triggering event was the Depression, where the problem seemed to be lack of jobs for all who wanted them.
It makes sense, though, that this is true -- the focus on work -- when you consider the gaping holes in our social programs. Paid time off for new parents? Nah, get back to work! You dropped that kid way back on Tuesday; you can be back to work by Thursday. Health care for all? Nooo, you can look for a better job if you want health care. Generous vacation time? No, you don't need that. You're lucky to have a JOB. Etc.
I support cash benefits to people, in place of all other (complicated, administration-heavy) social programs. If we replace all the other programs, though, I'd like to see a lot more than $10,000 a year go to...everyone, not just people with kids. If I didn't have to earn a living, I'd be spending my time very differently -- my work would still be (I like to think) productive and beneficial to society, but it would not be my current paid gig.
I wonder (rather idly, not having much knowledge in this area) whether centering this current plan on a child-credit is not just because there's sympathy for families but also a weak attempt to get people to have more kids. One hears that people aren't having enough kids to support all the aging people. I know little-to-nothing about that.
On the other hand, kids are so expensive -- if you're living in utter poverty, $8,000-10,000 a year would no doubt make a lot of difference in your life. But I can't really imagine someone deciding to have more kids on that basis. Kids are a lot of work and expense.
I really worried that the home care plan that was in BBB was going to turn into a classic Cost Disease Socialism initiative. :-/
My very first econ professor was somebody you might describe as a Supply Side Liberal, who felt that Democratic retreat from thinking about how their policies played out in Aggregate Supply, partially in reaction against Reaganite over-simplification of supply-side econ to "all tax cuts, all the time", was a huge mistake. Back in the early '00s, that was a very lonely position. It seems like Center Left econ world, at least, has pretty uniformly come around to that position.
There's a hypothesis that cash transfers create dependency traps only in generations that grow up with them. The first generation to get welfare uses it to better their situation, but their children grow up to be lazy bums. (What percentage of the children of "self-made" extremely rich people grow up to be "idle rich"?)
All of these projected benefits of giving cash to people veer pretty close to a claim that cash transfers can pay for themselves. If cash has such a miraculous ability to pull people out of poverty, why not consider programs that give impoverished people generous loans instead? By generous I mean fairly easy to default (significantly easier than student loans), and no obligation to start repayment until the recipient is no longer impoverished. You'd get the same benefits as the cash transfers and greatly diminish the need to raise anyone's taxes.
I think it's time to cop to reality and cut it, though. Manchin fucked it so hard, it's not coming back until we have a solid D Senate majority, and THAT's not happening if we don't recover this clusterfuck and pass SOMETHING.
Look, the topline dollar amounts that have been negotiated are enough that the Overton window has been shifted. Failing a miraculous filibuster repeal, the next 5-10 major public policy debates are GOING to be discussed in the trillions of dollars just like this one. At this point, taking a partial victory will do FAR less damage than a total loss will.
But what I have read is that Manchin is against the expanded CTC while he does support universal pre-K (a bureaucratic nightmare). Drop the pre-K and expand the CTC.
The link about child poverty refers to *relative* poverty. You could make that clearer. The US is much richer than Ireland, so the median income is higher, so American children need to be much richer to be not counted as "living in poverty".
Now both measures of GDP per capita are somewhat poor proxies for the wealth of a country, but they’re not entirely wrong either. In some meaningful ways, Ireland is richer than the US.
Warning: Ireland's success as a tax haven has seriously inflated its GDP for years. GNI per capita (average income of residents) is better, and there Ireland and the US are much closer. Google gives me $69,190 for Irish PPP GNI per capita and $66,060 for US PPP GNI per capita in 2019.
Them, if Ireland has a higher GNI per capita than USA, and probably the median income is closer to the average than in USA, this means that, if anything, the *relative* poverty underestimate the USA child poverty compared to Ireland.
I don't think you are on the right path with this. But I do suspect that the definition of poverty used is another way of highlighting a given country's Gini coefficient.
Noah,
I just recently found your SubStack and it is great! I had two thoughts from reading this piece.
(1) Comparing the US to Ireland is feasible but comparing it to the EU is perhaps a more correct way to assess American poverty. Whether we like it or not, the civic structure of America is very federal, with semi/quasi sovereign states. America is like a more united EU-a continent spanning superstate with very different regions and sub-interests. Ireland just does not compare. It is structured differently. Perhaps we should ask why Ireland has better poverty stats relative to the state of Hawaii or Mississippi.
(2) Also, when we look at many of the Top 1% they often make great wealth through investments. We need to find a way as a nation to leverage investing to benefit those in poverty. That is where huge fortunes are made.
Great post as always. One small correction: "But it’s a step toward the holy grain of universal, cash-based programs" --> "holy grail", or maybe you're trying to sell farmers on the idea ;)
In Israel such a plan was considered a disaster in 2000 since it encouraged muslims and orthodox Jews to have a huge number of children. But it is like the FDA's hesitancy with the Pfizer booster. Why learn from Israeli experience instead of doing your own mistakes.
I'm skeptical that a CTC-type benefit would (or did) cause a disastrously huge jump in births; the income elasticity of births is generally found to be low, especially in the long run (https://ifstudies.org/blog/pro-natal-policies-work-but-they-come-with-a-hefty-price-tag). I'd certainly hope that the US not "learn" any notions that upticks in births among The Islams And The Wrong Kind Of Jew are disasters.
Nearly every country in the world wishes you could fix this issue by throwing money at it
The author: here are some studies that carefully assess causality
You: Well I'll prefer my blandly racist anecdotes, not verified as mere facts (let alone verified for causality) over that. I am very smart.
https://tinyurl.com/vazdanak
There is also a reality, not only "racist" name calling
There is indeed a reality distinct from racist anecdotes. That report documents that
• Israel didn't even raise child allowances in 2000;
• the nearest increase in child allowances to 2000 was the 2001 increase (the "Halpert law"), which was limited to families that already had 4+ children;
• the 2001 increase was temporary, and more than reversed by 2004;
• there weren't any notable spikes in fertility among ultra-Orthodox Jews or Arabs in general in 2001 or 2002 or 2003;
• ultra-Orthodox Jews and Arabs tended to have DECREASING total fertility rates during the 2000s, not INCREASING rates; and
• the average high-parity child allowance over the 1994–2007 period raised the probability of a married Arab/ultra-Orthodox women having a kid by 3%–7% (which would suggest an even smaller effect of the temporary 2001 increase).
Dude. That was brutal. Loved it.
Awesome destruction. That Splain got you a new subscriber.
The result of that plan is clear to this day. A huge crime wave in southern Israel where there are so many young unemployed Bedouin Arabs.
It is interesting to consider that our New Deal legacy is based on work (or the unavailability of it, or inability to do it). I hadn't thought of it that way before. I guess that's not surprising, since the triggering event was the Depression, where the problem seemed to be lack of jobs for all who wanted them.
It makes sense, though, that this is true -- the focus on work -- when you consider the gaping holes in our social programs. Paid time off for new parents? Nah, get back to work! You dropped that kid way back on Tuesday; you can be back to work by Thursday. Health care for all? Nooo, you can look for a better job if you want health care. Generous vacation time? No, you don't need that. You're lucky to have a JOB. Etc.
I support cash benefits to people, in place of all other (complicated, administration-heavy) social programs. If we replace all the other programs, though, I'd like to see a lot more than $10,000 a year go to...everyone, not just people with kids. If I didn't have to earn a living, I'd be spending my time very differently -- my work would still be (I like to think) productive and beneficial to society, but it would not be my current paid gig.
I wonder (rather idly, not having much knowledge in this area) whether centering this current plan on a child-credit is not just because there's sympathy for families but also a weak attempt to get people to have more kids. One hears that people aren't having enough kids to support all the aging people. I know little-to-nothing about that.
On the other hand, kids are so expensive -- if you're living in utter poverty, $8,000-10,000 a year would no doubt make a lot of difference in your life. But I can't really imagine someone deciding to have more kids on that basis. Kids are a lot of work and expense.
So are they getting rid of the "care work" subsidies in this new version? (If so, thank God)
I really worried that the home care plan that was in BBB was going to turn into a classic Cost Disease Socialism initiative. :-/
My very first econ professor was somebody you might describe as a Supply Side Liberal, who felt that Democratic retreat from thinking about how their policies played out in Aggregate Supply, partially in reaction against Reaganite over-simplification of supply-side econ to "all tax cuts, all the time", was a huge mistake. Back in the early '00s, that was a very lonely position. It seems like Center Left econ world, at least, has pretty uniformly come around to that position.
There's a hypothesis that cash transfers create dependency traps only in generations that grow up with them. The first generation to get welfare uses it to better their situation, but their children grow up to be lazy bums. (What percentage of the children of "self-made" extremely rich people grow up to be "idle rich"?)
All of these projected benefits of giving cash to people veer pretty close to a claim that cash transfers can pay for themselves. If cash has such a miraculous ability to pull people out of poverty, why not consider programs that give impoverished people generous loans instead? By generous I mean fairly easy to default (significantly easier than student loans), and no obligation to start repayment until the recipient is no longer impoverished. You'd get the same benefits as the cash transfers and greatly diminish the need to raise anyone's taxes.
.
I think it's time to cop to reality and cut it, though. Manchin fucked it so hard, it's not coming back until we have a solid D Senate majority, and THAT's not happening if we don't recover this clusterfuck and pass SOMETHING.
Look, the topline dollar amounts that have been negotiated are enough that the Overton window has been shifted. Failing a miraculous filibuster repeal, the next 5-10 major public policy debates are GOING to be discussed in the trillions of dollars just like this one. At this point, taking a partial victory will do FAR less damage than a total loss will.
But what I have read is that Manchin is against the expanded CTC while he does support universal pre-K (a bureaucratic nightmare). Drop the pre-K and expand the CTC.
The link about child poverty refers to *relative* poverty. You could make that clearer. The US is much richer than Ireland, so the median income is higher, so American children need to be much richer to be not counted as "living in poverty".
Well, tbh we're not really much richer than Ireland, if at all.
In nominal GDP per capita rankings, Ireland is behind only Switzerland, Luxemburg, and a few tiny countries. It’s ahead of the US by $20,000. https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)_per_capita if you look by PPP, it’s behind only Luxemburg and Singapore. https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_per_capita
Now both measures of GDP per capita are somewhat poor proxies for the wealth of a country, but they’re not entirely wrong either. In some meaningful ways, Ireland is richer than the US.
Warning: Ireland's success as a tax haven has seriously inflated its GDP for years. GNI per capita (average income of residents) is better, and there Ireland and the US are much closer. Google gives me $69,190 for Irish PPP GNI per capita and $66,060 for US PPP GNI per capita in 2019.
Them, if Ireland has a higher GNI per capita than USA, and probably the median income is closer to the average than in USA, this means that, if anything, the *relative* poverty underestimate the USA child poverty compared to Ireland.
I don't think you are on the right path with this. But I do suspect that the definition of poverty used is another way of highlighting a given country's Gini coefficient.