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By R Mutt (Tue Jan 08, 2008 at 09:31:46 PM EST) MLP (all tags)


A quick glance at the Tax Benefit Model Tables suggests that moving someone from unemployment to full-time minimum wage work saves the taxpayer around £200 per person per week, even including the taxes they pay. This means that even if we could get every one of the 172,000 who have been unemployed (pdf) for over two years into full-time work, we'd save just £1.8bn. That's less than 3 pence for every £10 of government spending.
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Nota bene | 19 comments (19 topical, 0 hidden) | Trackback
Cause or effect? by Breaker (4.00 / 2) #1 Tue Jan 08, 2008 at 10:40:02 PM EST
According to the European Union’s internal polling, just two in five Germans and French would like to be their own boss, compared to three in five Americans.

Is this perhaps because European bosses are not as unpleasant to their employees as their USian counterparts?

The tax women less article really did seem like "here's a great solution to me not having to clean the bathroom again, evar".


But as a rational agent by R Mutt (4.00 / 1) #2 Tue Jan 08, 2008 at 11:33:04 PM EST
Surely if women paid less income tax, you should encourage your wife to go out and work full time, while you work part time or stay at home as a househusband, in either case cleaning the bathroom more?

[ Parent ]
I'm easy by Breaker (2.00 / 0) #3 Wed Jan 09, 2008 at 12:01:15 AM EST
But the article did seem a little patronising.


[ Parent ]
But I did like the phrase by R Mutt (4.00 / 2) #4 Wed Jan 09, 2008 at 12:06:54 AM EST
By the Ramsey principle of optimal taxation, familiar to any first year graduate student of public finance
How could anyone not be familiar with that...

[ Parent ]
You know it's not that simple by Cloaked User (2.00 / 0) #19 Thu Jan 10, 2008 at 03:35:32 AM EST
For example, although my ex and I have split up, I currently earn roughly 2.5 times her salary. Even if she had remained in employment, it's likely I'd be earning at least 50% more.

The savings on income tax won't address the situation where one partner earns significantly more than the other simply because of the jobs they do - e.g. I'm a programmer, she's a legal secretary.


--
This is not a psychotic episode. It is a cleansing moment of clarity.

[ Parent ]
Livinging in the past. by priestess (2.00 / 0) #5 Wed Jan 09, 2008 at 12:47:22 AM EST
I think it's quite telling that the dramas set in the future always have a kind of physics where hi-tech devices fail whenever you need to put people in danger. Those star-trek comms fail at the slightest hint of danger. Heh.

Pre.............
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Chat to the virtual me...

Women paying less income tax by nebbish (4.00 / 1) #6 Wed Jan 09, 2008 at 01:03:07 AM EST
Would take the onus off private individuals, companies etc to take responsibility for the gender inequality gap. It could also breed resentment, as presumably men's taxes would have to go up to compensate. Not a great idea, unless I'm missing something (it's a very dryly written article!).

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It's political correctness gone mad!

It's not just about inequality by R Mutt (4.00 / 1) #7 Wed Jan 09, 2008 at 01:19:33 AM EST
The Ramsey principle seems to be that it's more efficient to tax inelastic things than elastic.

So, if you tax chocolate and Turkish Delight, people will buy a lot less of it, so it doesn't raise as much tax money as you'd hope.

If you tax bread, rice and potatoes, people are going to keep buying them, so the tax money comes in.

So the logic is that women's income tax gives them more of an incentive to stay at home or work part-time than men, so it discourages them from working (and you get less tax money).

Whereas if you tax men more, pride/status/tradition will mean that they keep working anyway.

[ Parent ]
Ah I get it now by nebbish (2.00 / 0) #9 Wed Jan 09, 2008 at 01:28:44 AM EST
...But I still stand by it being a daft idea. Mathematically it is sound, but I can't imagine the social ramifications, people would be really pissed off.

Annoys me with a lot of economists that they see teh economy as a closed system and don't take into account social impact, human psychology etc.

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It's political correctness gone mad!

[ Parent ]
tax article by Merekat (4.00 / 1) #8 Wed Jan 09, 2008 at 01:23:07 AM EST
What is this family bargaining situation of which they speak? The family dynamics they describe are in no way permanently determined. I say this as someone who spent 5 years being the higher earner in a household that splits domestic tasks roughly equally.

Furthermore the article jumps from statement to statement, assuming causality. Particularly offensive in attitude is "Note that gender-based taxation would really go to the root of the problem by inducing a more equitable allocation of household duties between husband and wife." Note the gaping lack of a firmly based argument showing how this will occur? More likely in my opinion is in households where this division is already unfair, it will remain so and the woman further pressurised to work outside the home as well as in it.

Lazily speculated bullshit I say.

actually indeed by R343L (2.00 / 0) #10 Wed Jan 09, 2008 at 04:51:08 AM EST
I can't remember where I read it, but in the US, the typical result of a woman going into the workplace (and the expectation over the last thirty years that she should) is that she works full time and when she gets married she still does most of the typical household work. The result is that women in modern America work more than if they were just stay-at-home. Note: this is not all women, just that it was common in some survey. :)

Rachael

"There will be time, there will be time / To prepare a face to meet the faces that you meet." -- Eliot

[ Parent ]
IAWTP by lm (4.00 / 1) #11 Wed Jan 09, 2008 at 04:52:46 AM EST
As is often the case, we see an economist reducing all decisions people make to questions of money. But the division of household labor isn't really a question of money.

Further, the article doesn't seem to address single parent households. (Although admittedly, I didn't read it very closely or all the way through.) Reducing the tax rate on women will unfairly disadvantage single fathers.


There is no more degenerate kind of state than that in which the richest are supposed to be the best.
Cicero, The Republic
[ Parent ]
The Unemployed by Herring (2.00 / 0) #12 Wed Jan 09, 2008 at 06:33:58 AM EST
You would get the impression from vaiour tabloids that the taxpayer is being bled dry by hordes of unemployed people, having 20 kids and living the high-life. I accept that there are some people taking the piss, but in the scheme of things, it's got to be a fairly small fraction of our tax. (I'd be interested to know whether more government money goes to Capita et al than to the long-term unemployed.)

It reminds me slightly of the prison debate - the tabloids are firmly on the side of punishment rather than rehabilitation.

Anyhow, IANAE, but I would've thought that if we ever did have full employment, then that would result in huge wage-inflation. So in a way, high unemployment is what "the capitalists" want - even if they slag off the unemployed.

I'm sure I had a point somewhere, but I seem to have lost it.

christ, we're all old now - StackyMcRacky

I think "the capitalists" by R Mutt (2.00 / 0) #13 Wed Jan 09, 2008 at 06:59:14 AM EST
Have always been pretty blatant about preferring high unemployment. Apart from making it easier to hire, the Phillips curve shows there's a degree of trade-off between inflation and unemployment: they've preferred to have high unemployment and low inflation to keep their capital intact.

Hardline right-wing economists tend to insist that unemployment could be eliminated completely by lowering wages and welfare.

Most "normal" people seem to think that a large proportion of taxation goes towards supporting working-age unemployed adults, and that you could cut taxes significantly by forcing them into work.

[ Parent ]
Re. what most normal people think by Herring (2.00 / 0) #14 Wed Jan 09, 2008 at 07:14:05 AM EST
I wonder where they get that impression?

Saying that, various psychology experiments which I can't be arsed to look up would suggest that there's something in "human nature" that really objects to freeloaders.

As to "lowering wages" to eliminate unemployment: I thought (maybe incorrectly) that labour was a commodity subject to market forces like any other. If there is zero unemployment, there is a shortage of labour so the price must increase. Mustn't it?

Sure, welfare distorts this, but taking the example to the extreme, if you eliminate welfare altogether and let the unemployed starve to death, then you're back in a situation of full employment again. The employers need the government (or someone) to keep the unemployed alive and healthy so that there is an excess of labour.

christ, we're all old now - StackyMcRacky

[ Parent ]
Endogenous variables by R Mutt (2.00 / 0) #15 Wed Jan 09, 2008 at 07:31:56 AM EST
As to "lowering wages" to eliminate unemployment: I thought (maybe incorrectly) that labour was a commodity subject to market forces like any other. If there is zero unemployment, there is a shortage of labour so the price must increase. Mustn't it?
The price of labour is an endogenous variable, so it changes against the quantity supplied.

In the simplest model, the equilibrium is at the point where there is exactly zero unemployment, and the wages are at the minimum level to sustain that.

Ultra-right-wing economists tend to believe the simplest model is pretty accurate.

Some other economists believe that other factors will keep the equilibrium somewhere different (which means some unemployment). Others believe there will never be equilibrium due to lagging effects, so instead you'll get a cycle of unemployment followed by labour shortage.

[ Parent ]
objection to freeloaders by MillMan (2.00 / 0) #17 Wed Jan 09, 2008 at 11:52:39 AM EST
There is a reason the "invisible hand" and similar concepts have been beat into our heads.

When I'm imprisoned as an enemy combatant, will you blog about it?

[ Parent ]
I thought the thing about Capita was by ambrosen (2.00 / 0) #16 Wed Jan 09, 2008 at 09:39:11 AM EST
that it was a form of unemployment without the stigma.

Definitely an element of makework in it, anyway.

[ Parent ]
They are in the US. by wumpus (2.00 / 0) #18 Wed Jan 09, 2008 at 03:02:51 PM EST
Those with trust funds who do not work are taxed at a far lower rate than working stiffs. There are other easy ways for them to rake it in, too.

Unless you mean the poor sod who loses his job: he's screwed. Not so bad if you can find work in a few months (i.e. you company really screwed up in good times), but usually screwed.

Of course, you should probably ignore me. The econ I learned in school said that the Clinton employment/inflation ratio that happened a few years after I took the class couldn't possibly happen.

Wumpus

[ Parent ]
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