search for pragmatic policies

posted by andrebb on July 25, 2024 - 10:56am

I have bee teaching economics for almost 3 decades and increasingly over the years I have found myself saying to my students that if only the two political parties could got together they might formulate reasonable policies. Two areas where this is particularly the case is trade and poverty. I do not see either of these listed as discussion areas.

On trade:
Republicans generally support free markets so one would expect them to support free trade. But too few modern-republicans are economically literate or too connected to special commercial interests to be for free trade. Worse, Republicans cannot bring themselves to support policies that provide support to those who suffer as a result of trade (or any other economic progress). Democrats are all for providing support to those who lose their jobs due to imports, but are much more interested in stopping the trade or progress in the first place. What both parties call "fair trade" is of course protectionism and most voters do not understand why. What is needed is free trade and generous assistance to those who suffer the costs.

On poverty:
Democrats are congratulating themselves on their big accomplishment of an increase in the minimum wage. Republicans may be happy about it as well if they really do not care about the poor. The problem is that the minimum wage does not help the poor as a class. Some get a raise at the cost of others losing their jobs. The crime is that everyone is able to claim they voted for a policy to help the poor and then proceed to do nothing of real consequence for the poor. I do wish we could have a conversation about how to address the problem of poverty without Marxist and Voodoo blinders.

For example, back in the election of 1972 both presidential candidates proposed the same policy - Negative Income Tax. For Nixon the policy was developed by Milton Friedman, while James Tobin worked on the same policy for McGovern. There were even experiments cunducted to test the effects of such a policy. Unfortunately, the results of the experiments did not satisfy the policy objective of the winner of the 1972 election - the program would not save the government any money, at least not within the first four years. The idea was largely forgotten though a truncated version of it still survives as the Earned Income Tax Credit. Too bad because if anyone would bother to read the results of the research done on these experiments they would find that the program would not only be very effective in reducing poverty but would save the government money over the longer term. The data is collecting dust in the libraries and no one has had a new idea about fighting poverty in a long time. How about revisiting an old one that has never been tried.

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Okay,

You now have a magic wand to implement any economic reform measure you think will achieve more beneficial results than the present system. Wave your magic wand over your head a couple of few times and make your motion.

ex animo
davidfarrar

There is no cure for poverty, but there are things we can do to make it better. Being poor isn't like what it was. Being poor means you don't have a big house. You may rent instead of own. You have plenty of food (unless you're drug addicted maybe), but can't afford to eat out. You have basic cable instead of the movie channels and your internet is slower. Your computer may be pretty mediocre compared to a new one and your car is probably cheap to buy, but requires a lot of gas and maintenance. Your kids have health care at the emergency center, but you may not be able to pay the bill. That is poverty in America, not the much talked about hungry kids with no medical care.

So, the question should be, what government policies can help? Well, obviously jobs help most people. So that means growing the economy. One of the biggest and best vehicles for helping the poor is.......the yard sale. Yes, the yard sale. Where you can buy, for 5 or 10¢ on the dollar, really great stuff. Heck, I've purchased $1500 sofas and chairs at yard sales for a few $hundred. The wealthier the middle class is, the more good, solid stuff gets passed on at ridiculously low prices to the poor.

That sounds silly, so let's talk about something more serious. I think there are two things the poor (and everyone else) needs in this country:

1. Life simplification - simpler taxes, simpler bill payment systems, simpler programs, simpler insurance, simpler everything. Life has gotten too complex. The government can't help out too much except to drop the complexity of the damned tax system.

and 2.

2. Lowering the cost of living.

Lowering the cost of living is the big thing. Not giving people more money, but figuring out how to make their lives less expensive. Health care, obviously. Gas taxes certainly affect the poor more than the rich. Interest. I think it should be illegal to loan people money for anything less than a house or a car. IOW, you shouldn't be able to borrow less than, say, $20,000. No rent to own, no pay day loans, no credit cards, etc. Maybe that's a bit protectionist, but companies *want* people to be late on their loans, even as they complain about it. They want these people to have bad credit and pay higher interest rates. Take away predatory lending or what I would call "advantageous lending", would help people a lot. Teaching classes in advertising and money during high school would take away a lot of the impact of skilled marketing. For example, when the old trick "buy today or you'll never get this deal". Well, heck, that is an *obvious* warning sign to many people, but if you're really hoping to have nice things, this often works. Getting more people into their own home is helpful. Maybe more important than a college education for some. Hunting down criminals and putting them in jail, permanently if necessary. After all, the poor suffer more from crime than the rich.

So, rather than talk about "programs", I think we should talk about reduction or elimination of problems that affect the poor. Let's hear some ideas about that for a change.

A Democrat seeks complex solution to simple problems
A Republican seeks simple solutions to complex problems
A reasonable person seeks simple solutions for solvable problems

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