Americans should stay on welfare unless they can jump to the upper-middle class

The U.S. is a great place to live if you’re rich. There is no wealth tax and income tax rates, though much higher than in the most efficient countries (e.g., Singapore, Estonia), are still lower than in many European nations. Prices are low and there is no VAT so you can consume like crazy.

The U.S. is also a great place to live if you’re poor. You’re entitled to a lifetime of free housing, free health care, free food, and free smartphone. If you start at age 18 and navigate the policies and waiting lists you might find yourself in an apartment with a market rate of $60,000 to $100,000 per year in the heart of one of America’s most desirable cities, e.g., San Francisco, New York City, or Cambridge, Massachusetts.

What if you’re on welfare and want to give up some of your 168 hours per week of leisure time to work? According to a post by Greg Mankiw, an economics professor at Harvard, you’ll face a 76 percent marginal income tax rate unless you can vault beyond the middle quintile of income. You will have a slightly higher spending power as a middle-earner compared to if you were a bottom-quintile earner, but for most people it wouldn’t be worth the loss of freedom and aggravation that are entailed in having a full-time W-2 job.

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6 Comments

  1. Tony Doe

    July 9, 2018 @ 1:15 pm

    1

    PhilG: You somehow forgot our uniquely rewarding sex work!

  2. paddy

    July 9, 2018 @ 2:51 pm

    2

    Don’t forget, you can still work under the table if you choose! It’s unfair and problematic to audit those on welfare, or even do spot-checks…

  3. Brian

    July 9, 2018 @ 2:54 pm

    3

    Wait, what? The US already has UBI?!? But it’s opt-in?

  4. Mclionhead

    July 9, 2018 @ 4:29 pm

    4

    The smart guys jumped on the unlimited unemployment benefits in 2010 & rode them out until they were phased out in 2013. Rent was actually low enough to get away with it. Idiots took jobs with greatly reduced salaries in 2010 & watched their income disappear in the following inflation.

  5. philg

    July 9, 2018 @ 7:12 pm

    5

    Brian: The U.S. had a UBI program back in the 1970s. See https://blogs.harvard.edu/philg/2016/11/30/long-term-effects-of-short-term-free-cash-guaranteed-minimum-income-experiments/ for a link to a paper on the long-term outcome. (It turned out that one thing Americans like to do with extra cash is sue their spouses!)

  6. Mark

    July 10, 2018 @ 2:55 pm

    6

    There are many cities that have waiting lists stretching for years with people seeking subsidized housing, Phil. Years.

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