What Should We Do?

Ukraine, Argentina, Venezuela, and others are in the news because of leadership problems. President Obama warns Putin about invading Ukraine, but yet his words seem hollow. Oh woe is me what do we do. Iraq and Afghanistan seem to go on and on and on. They never end. The world is crazy, but at times seems so far away.

On the home front we continue to battle the many social ills that plague our country. Poverty persists, economic growth is slow, yet any are still out of work. Oh woe is me, what will be we do? The Brits may have some answers for us, but we are America. We are self-sufficient! We can do it all! Just maybe though they may have some lessons for us that would help with how we deal with our social ills.

In a memo to President Obama our British cousins provide some ideas on how we could make people less unequal. They tell us that even though we think we are a country of positive social mobility we aren’t. “A child born in the poorest fifth of society only has a 9% chance of making it to the top fifth.” Below is what I think an exchange between our cousins and President Obama would sound like.

President Obama:

“OK Cousin Brit you say that inequality is driven by technology and globalization. Well duh, cousin. I get that. Oh and by the way, I also know that the reason U.S companies are going to technology is that it is less expensive than hiring a human being. It is called income substitution. When wages get to expensive then companies will look for other ways of getting the work done.”

Our British Cousin:

“You know President Obama that Employment is essential to mobility. All of us know that, but do you know that your health care plan, according to the Congressional Budget Office (CBO), that by 2024, 2.5 fewer people will work because of disincentives embedded in Obamacare?

President Obama:

“Ouch cousin that hurts!”

Our British Cousin:

“The British solution is to incentivize work. Actually, we have done some very interesting activities to ensure our people work. Your own CBO stated that if you increase minimum wage to $10.10, 500,000 jobs would be lost. The increase will help 900,000 people climb out of poverty, but the jobs lost will impact many teenagers who usually work during the summer. And remember teenage joblessness can crimp mobility later in life.”

President Obama:

“Ok, cousin, what advice do you have for us?”

Our British Cousin:

“First, continue the Earned Income Tax Credit. It costs $63 billion per year, but it is one of America’s most potent anti-poverty tools. The EITC is related to the level of income and number of children within a family. It really is a wage subsidy for low-income people. It helps those who aren’t making enough money to climb out of poverty.  Even your own Mark Rubio wants to change it from an end of the year refund to being a part of the worker’s paycheck.

President Obama:

“Good point cousin, maybe that should be something we enhance.” How about another recommendation cousin?

Our British Cousin:

“Second, roll all safety-net programs into a single state-administered grant, similar to Britain’s universal credit. Similar and cheaper to run, which seems pretty simple to implement.”

President Obama:

“Thanks cousin. Anything else?”

Our British Cousin:

“Did you know that the United States is not very good at providing practical, vocational training?

President Obama:

“Why thanks for telling me that, I did not know that.”

Our British Cousin:

“In 2011 America spent a paltry .1% of GDP on active labor measures designed to put the unemployed back to work; the OECD average was .6%.” Even .6% seems paltry.”

President Obama:

“Cousin, I think you are on to something. I Know that nothing is worse than not being employed, and I know how debilitating it is to be paid to do nothing. And cousin thanks for feeling safe enough to tell me the truth. I know I am not doing a very good job. I know I have not been able to get the two sides of the aisle to work together, and I know I have been violating rules by doing what I think is right regardless of what my critics say. But these are simple things that I think I can do. Here is what I think you want me to do:

  1. Incentivize work. Make it beneficial for low-income people to work, rather than pay them to stay home.
  2. Don’t raise the minimum wage, but counter that with an EITC.
  3. Provide more opportunities for the hard to hire. I am a little unclear on why 3.7 million people have not been able to find a job for a long period of time, but I am willing to try.
  4. Make disability harder to get, and available only to those who deserve it.
  5. Provide more practical, vocational training.
  6. Focus on the children with high quality pre-school education.

Thanks cousin, I know what I have to do now.”

If only it were that simple.

And that is my thought for the day!

 

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