Minimum Wage Part VII: Powerball

Odds to win the Powerball: 

1 in 175,223,510 

(1.75 x 10⁸)

Odds to pick the ideal combination of public assistance programs among 126 federally funded programs: 

1 in 85,070,591,730,234,600,000,000,000,000,000,000,000 

(8.50 x 10³⁷)

Disclaimer:

Unlike the Powerball where one either wins or loses, there are many combinations of antipoverty programs that may produce results close to the ideal (normal distribution). While the Powerball analogy is imperfect, I hope it highlights the problem of choosing which combination to implement.

Michael Tanner cites 126 federal public assistance programs received $668 billion in 2011. Individual states spent an additional $284 billion dollars funding public assistance programs.

Updated spending from fiscal year 2014 estimates >$1400 billion were spent by the federal government on public assistance programs.

• Includes Social Security and Medicare
• Estimated $880 billion was spent on public assistance excluding Social Security and Medicare
• Source: Christopher Chantrill at usgovernmentspending.com

As detailed previously, I believe current poverty alleviation efforts, including minimum wage, are failing. See:

• Minimum Wage Parts I - VII
• Unemployment Assistance Parts I - VII
• Food Assistance Parts I - II
• Private Charities Parts I - V

To preface, I hold the following assumptions:

1. There is no perfect public assistance system
• All systems and approaches have benefits and drawbacks
2. One size does not fit all
• What works for one community may not work in another
3. Individuals have various definitions of success
4. Systems cannot replace individual integrity, character, or morality
5. One cannot have freedom without personal responsibility

With such an overwhelming number of choices before us, is there any way to increase the chances of selecting an ideal system? Going back to the Powerball, one can increase their chances of winning the jackpot by purchasing additional tickets.

The same mindset could be employed in choosing antipoverty programs. Rather than our current system of the federal government picking a single combination, what if local communities and states were free to choose their own combinations? This would allow for multiple "tickets" (or combinations) to be tried simutaneously thereby increasing the odds of finding a successful combination.

As prefaced, individuals have various definitions of success. I define success as citizens making well informed decisions through a fuller understanding of what they are sacrificing (schools, roads, law enforcement, etc.) to obtain additional public assistance provision.

To optimize the path to “success”, I support the handing of public assistance provision from the federal government to states, and ideally to local communities. Currently the federal government provides ~70% of public assistance funding and states provide ~30%. Seeing this reversed could serve as an initial benchmark. As I believe all systems have benefits and drawbacks, I see the following with making states and local communities the primary source of public assistance program funding:

Potential Benefits -

1. Local communities are unable to hide the true cost of public assistance programs through hidden inflationary taxes under the auspices of the Federal Reserve. 
• Communities and states are required to have a balanced budget or risk bankruptcy (Detroit). This enables elected officials and citizens to fully realize the true cost of public assistance funding (less funding to schools, roads, public services, etc.).
2. Multiple combinations/systems may be simultaneously implemented.
• As with purchasing additional Powerball tickets, by shifting the implementation primarily to states and local communities, we increase the number of systems being tried. The worst will be discarded and the best adopted by other communities.
3. Communities are free to tailor public assistance to their unique needs
• Moves away from the one size fits all approach
4. Local citizens have greater influence in the decision making process and their vote does not get lost in the ocean of millions of others.
5. Less political gridlock and red tape.
• Local officials have numerous political hurdles and barriers removed to pass reform.

Potential Drawbacks -

1. Some communities may have insufficient resources to adequately fund public assistance programs
• I believe this was a greater concern when relocation and transportation was more difficult. Please see Private Charities Part V for additional information.
• I also suggest this may result in a spreading of assistance as those in need would relocate to areas with greater assistance and decrease the rise of impoverished communities.
2. Increased costs
• Centralizing and standardizing processes typically leads to decreased costs (especially administrative costs).
• I would suggest the increased costs may lead to greater effectiveness for the reasons cited above.

Increased complexity

• Our current public assistance system is already extremely complex. Decentralizing and removing current standardization will likely increase the complexity of antipoverty systems, especially if one chooses to relocate to another location.
• As with increased costs, I would suggest overall effectiveness has been sacrificed to reduce complexity.

Increased risk for corruption

• Local communities may have fewer safeguards in place to prevent the abuse and misuse of public funds compared to a federal system.
• I would suggest while the frequency of corruption may be higher, the rewards would be much less. No longer would all the eggs be in one basket.
• In addition, local communities would be able to more quickly vote corrupted officials out of office compared to the sluggishness of the federal government.
• Again, systems cannot replace individual integrity, character, and morality.

This concludes my series on minimum wage. While I do not believe minimum wage accomplishes its intended goal, I applaud the cities of Seattle and Oakland for exercising their freedom to increase their precinct’s minimum wage without waiting for the federal government.

As the original founding fathers and colonies supported, I believe the potential benefits of a limited central government emphasizing individual freedom rather than forced support outweigh the potential drawbacks. I leave you with the position statement of the Republican Liberty Caucus whom I believe summarize this view well:

• WHEREAS libertarian Republicans believe in limited government, individual freedom and personal responsibility; 
• WHEREAS we believe that government has no money nor power not derived from the consent of the people; 
• WHEREAS we believe that people have the right to keep the fruits of their labor; and 
• WHEREAS we believe in upholding the U. S. Constitution as the supreme law of the land;

Be it resolved the Republican Liberty Caucus endorses the following [among its] principles 5.0 Welfare:

• 5.1 The US Department of Health and Human Services should be abolished, leaving decision making on welfare and related matters at the state, local or personal level. All Americans have the right to keep the fruits of their labor to support themselves, their families and whatever charities they so choose, without interference from the federal government.

Next Post Topic: Fantasy Football 2015 Recap