Bill Mitchell — Cash transfers are not squandered on booze but do not replace the need for jobs

Some years ago I was asked to design a framework for the implementation of minimum wage system in South Africa as part of an ILO project my research group was involved. We were evaluating the first five years of the Expanded Public Works Programme in South Africa, which was a cut-down employment guarantee program (limited by supply-side constraints on public expenditure largely conditioned by the bullying of the South African government by the IMF). One of the issues I had to deal with was the belief among many economists that the existing cash transfer system introduced by the South African government after 1994 should be expanded into a full-blown Basic Income Guarantee and that any notion of employment guarantees should be rejected. Our work demonstrated quite clearly (in my view) the flawed logic in this argument. The cash transfer system was productive as it stood but was no reasonably extensible into a widespread income guarantee without significant negative consequences. The creation of an employment guarantee scheme to absorb the social transfers and leave them as supplemental to cope with varying family structures was a much better option. That conclusion holds for less developed nations and advanced nations alike....

Bill Mitchell – billy blog
Cash transfers are not squandered on booze but do not replace the need for jobs
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Marshall Steinbaum — Piketty versus Hassett: a primer on after-tax income and inequality

In short, income-redistribution policies failed to counteract growing income stratification over the past four decades. What’s more, these policies did less to equalize post-tax income now than it did in percentage terms in 1979, directly contradicting Hassett’s contention. Indeed, all the studies that have been done confirm the magnitude of income inequality as it has evolved whether you’re looking at pre- or post-tax-and-transfer income. Hassett should go back to defending inequality as economically efficient—at least that argument isn’t refutable with a swift look at the data.

WCEG — The Equitablog
Piketty versus Hassett: a primer on after-tax income and inequality
Marshall Steinbaum

Atif Mian and Amir Sufi — Why the Income Distribution Matters for Macroeconomics

Obvious to everyone but conventional economists. (See Manfred's comment on March 27, 2014 at 11:01)

House of Debt
Why the Income Distribution Matters for Macroeconomics
Atif Mian and Amir Sufi

Steve Roth comments:

STEVE ROTH ON MARCH 27, 2014 AT 12:10 PMI

Thanks for these great links to the empirical literature. Got my reading cut out for me.

On the theory: the arithmetic of this is inexorable — roughed out in a simple model here:

http://www.asymptosis.com/does-upward-redistribution-cause-secular-stagnation.html

As the post says, this is only one economic effect being illustrated. But the potential power of this effect seems massive — especially over decades — and it seems to be almost universally ignored and even pooh-poohed by economists, even liberal economists.

http://www.asymptosis.com/a-liberal-is-someone-who-doesnt-know-how-to-take-his-own-side-in-an-argument.html

http://www.asymptosis.com/underconsumption-income-wealth-and-capital-gains.html

"INFRASTRUCTURE" Spending As A Transfer Payment? Depends on Whether It's Social or Physical Infrastructure

(Commentary by Roger Erickson)

What are Transfer Payments, and why are they off-budget? Well, just because.

Yes, our country is pretty arbitrary about what is, and what isn't, exactly which kind of fiat. That kind of stuff matters to accountants, banksters and lobbyists ... as long as they're paid for their time and ... anything OTHER than their utility to nation. :)

It will be interesting to see how these two "ships" - infrastructure funding & Deficit Terrorism - manage to pass in the night. :)

Meanwhile, look at this example, to get an idea of the diversity of options that we could - and might yet - be exploring.

Waterways Council Lobbies for Multi-Billion Dollar U.S. Ship-Channel Project

" .. commercial waterway legislation may be enacted for the first time since 2007. The House plans to vote as soon as today on a multibillion-dollar bill that would authorize 23 port, dredging, levee and environmental restoration projects"

Looks like similar bills passed both House & Senate, with differences being negotiated in a Congressional Conference.

Could it be???

Are we accidentally, barely, saving ourselves from ourselves? Just in time?

Maybe the Tea Party, fiat-Deficit-Terrorist members will, rather like FDR, end up essentially voting to make "INFRASTRUCTURE" spending a Transfer Payment, and therefore officially "off budget"?

Just like most of our Social Infrastructure & similar public investment spending?* :)

Wouldn't that be hilarious, and unexpected? Less surreal things have happened in our wacky, national history.

Meanwhile, note that [all?] Corporate Welfare IS officially, on-budget. Maybe things aren't as bad as we thought.

It should be a hoot watching our Congress critters attempt to unravel all this reality. :)

You can almost see their mental wheels ... j..u...s....t... starting to
turn. Who knows, maybe they actually will.

Or, they might scare themselves, freeze up, and simply stop the country in it's tracks ... again.  Keep your fingers crossed and your fiat dry.

* Gosh, maybe we could even fund local police and white collar crime regulation as an Off Budget Transfer Payment!    Wotta concept! :)

Robert Oak — Over 15% of America was on Food Stamps in April 2013

Lately there have been claims from some in the press and Congress that SNAP, the food stamp program is ripe with fraud and abuse. This is simply false. The economic realities of the new America are the reason food stamp usage has risen so dramatically. Next time you go to the grocery, watch for the food stamp cards. You will be surprised just how many are using them and fraud has nothing to do with it. Most people are broke and the wages statistics back that fact up.

The Economic Populist
Over 15% of America was on Food Stamps in April 2013
Robert Oak

Rep. Alan Grayson — Walmart "the largest recipient of public aid in the country"

Representative-elect Alan Grayson (D-FL) said Monday that he will put mega-retailer Walmart squarely in his sights during the next Congress for the company’s liberal use of public assistance programs to supplement their workers’ wages.

Speaking to Current TV host Cenk Uygur on Monday’s episode of “The Young Turks,” Grayson called Walmart “the largest recipient of public aid in the country,” saying their low wages force workers to take food stamps, housing assistance and Medicaid just to get by....

“In state after state after state, Walmart employees represent the largest group of Medicaid recipients, the largest group of food stamp recipients....

The Raw Story

Grayson: Walmart is ‘the largest recipient of public aid in the country’

Stephen C. Webster

The living wage movement is picking up steam. Prof. Galbraith must be pleased that he played a part in getting it up and running.