The Poorer The Bottom 20% Are, The More Money It Costs The Rest Of Us

DavidGrace
Feb 10, 2018 · 17 min read

By David Grace (www.DavidGraceAuthor.com)

Choosing To Hurt Yourself If That Will Let You Hurt Someone Else

One of the most catastrophically DUMB things people can do is to choose to injure themselves in order to hurt someone else.

A classic example of that is the jealous husband who decides to murder his wife and then kill himself.

“Boy, I really showed her!” he mutters just before he blows his own brains out.

DUMB! DUMB! DUMB!

Life offers us lots of examples of people who will damage themselves in order to hurt someone else — people who will happily cut off their nose to spite their face.

This column is about how people who politically exercise their desire to hurt others screw up our taxes, our government, our economy, and our country.

A Childish Personality Trait

Psychologists have run tests with young children where they tell Johnny that he can either

  • Have two small cookies and another child whom he doesn’t know, Billy, can have one small cookie, OR
  • Have one small cookie and Billy won’t get any cookies at all.

A certain percentage of children choose to have only one cookie instead of two in order to guarantee that Billy won’t get any cookies at all.

In fact, they’ve run this experiment where Johnny is told that he can have one cookie and Billy can have one OR neither of them will get a cookie, and some kids choose to have no cookie at all if that will keep the other kid from getting one.

There’s something seriously defective about a personality that makes this choice. But, luckily, these kids are only four years old. One hopes that as they mature they will grow out of this damaging personality trait and become mentally-healthy adults.

Unfortunately, some people do not mature as they age, and even as adults they would still rather hurt themselves if that self-inflicted pain will prevent someone else from getting something they think the other person doesn’t deserve.

Jack Benny had a famous routine:

A thief confronts Benny on a darkened street, sticks a gun in his face and says, “Your money or your life.”

Benny says nothing.

The gunman shouts, “Your money or your life!”

Benny angrily replies, “I’m thinking. I’m thinking.”

Now, let’s look at how this warped personality quirk affects us on a national scale. We’ll start with some history.

Bread & Circuses

Roman politicians passed laws in 140 B.C. to gain the votes of poor citizens by introducing a grain dole: giving out cheap food and entertainment. Advocating “bread and circuses” became an effective way for a politician to rise to power.

Here is an opinion that I draw from Rome’s dive into a Bread & Circuses society:

An impoverished population that is supported by Government handouts is a really bad thing for the whole country.

It doesn’t take a genius to understand that it’s really bad for a country to have 20% or 30% of its citizens too poor to be able to feed and house themselves.

  • It’s bad for the poor people.
  • It’s bad for the middle-class people.
  • It’s bad for the rich people.
  • It’s bad for everyone.

Does anyone think that it would be a good idea to turn America into a government-operated “bread and circuses” kind of country?

Here is my opinion:

Nobody with even half a working brain should think that it’s good for the United States to have 15%, 20%, 30% of its adult population unemployed or receiving such low pay that they have to be fed by a welfare system.

Do I have to explain to anyone the really bad things that happen to a country when 15%, 20%, 30% of the adult population can’t feed, house or get medical care for themselves and instead have to rely on government welfare?

If you agree that having a material percentage of the population dependent on government welfare checks is really bad for a country, you can skip ahead to the section entitled: “>>Today, 18% Of All Adult Americans Are On Food Stamps

For the rest of you, let’s take a look at some of the really bad things that happen to a country when a material percentage of its people can’t support themselves.

Some Of The Bad Things Having An Impoverished Population Does To A Country

Negative Government Effects

Poverty Reduces Tax Revenues

  • People living below the poverty line pay little or no income taxes.
  • They pay less in payroll taxes which means they get smaller Social Security checks and thus need more gov’t assistance in their old age.
  • They contribute less to the fund that pays their Medicare expenses.
  • They buy less which means they generate much less in sales tax revenue.
  • They can’t afford a home so they pay no property taxes.

Poverty Increases Welfare Costs

Food stamps, Medicaid, and Section 8 housing are only a few of the expenses that rise with an increase in the number of people living below the poverty line

Poverty Increases Taxes

In addition to paying far less in taxes, poor people consume more in government services thus increasing taxes on the rest of us to finance their welfare costs.

Poverty Increases Crime Costs

Poor people commit more petty crimes which increases the costs for police, courts, probation officers and jails. And don’t just say, “Lock them up.” It costs about $50,000 a year to jail someone, not counting the cost for the cops, lawyers, judges, courtrooms, and parole officers.

Poverty Increases Gov’t Medical Spending

People living below the poverty line don’t get treatment for diseases than can be easily controlled like high blood pressure, diabetes, etc. So, instead of taking a relatively cheap generic pill every day they end up having a heart attack, stroke, kidney failure or the like, all of which cost Medicaid billions of extra dollars.

Poverty Increases The Size Of Government — Increases Bureaucracy

People living below the poverty line consume vastly more government resources for food, medical care, and police and jails, all of which bloats the size of the government bureaucracy. The more people living below the poverty line the bigger and more expensive the government becomes.

Negative Economic Effects

Poverty Reduces Economic Growth

This is a consumer economy. Poorer people buy less stuff. The fewer people with money to spend the fewer customers businesses have for their products.

Poverty Depresses Prices & Profits

Poorer people are intensely price-sensitive shoppers. Whoever wants to sell to them has to offer the lowest prices which means lower profits and increased cheap, foreign-made goods being sold instead of more profitable, American-made goods. Today, Dollar Stores are booming. It’s no secret why.

Negative Social Effects

Poverty Increases Crime

When people have no money and are hanging out all day instead of working they’re going to get into trouble. The old adage that “Idle hands are the devils playthings” is true. People will look for a “side hustle” — car break-ins, package thefts, mail theft, shoplifting, drug sales, burglaries, car theft, drug dealing, etc. Look at the crime stats in counties with a high number of people living below the poverty line.

Poverty Increases Drug & Alcohol Abuse

What are a good number of people who have no job and no money going to do all day? Drink, take drugs, have sex, and get into trouble.

Poverty Shifts People From Middle-Class Values To Lower-Class Values

When you move people from the middle class to the lower class you change the way they deal with the world.

  • Middle-class people plan ahead because they believe they have a future. Lower-class people don’t plan ahead because they believe that they have no future.
  • Middle-class people avoid crime because they believe they are a part of a society and they want to obey the rules. Lower-class people feel that society has not only abandoned them but is actually hostile to them. They feel that the rules are only designed to help the rich people who’ve denied them any chance they might have of a decent life and that therefore they don’t have to follow those rules.
  • Middle-class people think that success comes from a step-by-step life of education and advancement. Lower-class people think that success comes from good luck and grabbing any chance at money that comes within reach because they can’t depend on ever getting that chance again.
  • Middle-class people believe in delaying gratification today in anticipation of better things tomorrow. Lower-class people believe in enjoying life today because tomorrow is likely to be crap.

The more you increase the number of impoverished people, the more people you have with lower-class values which they will pass on to their children.

Negative Political Effects

Poverty Increases Political Volatility/Instability/Demagoguery

Do you know what they call 30% of the population that’s dependent on a monthly government welfare check? A Voting Block.

Politicians will be falling over themselves to be the champions of the people on the federal dole. “I’m with you”; “I will protect your right to that federal check”; “$XXXXX thousand a year is too low. You deserve more. Vote for me and next year your federal welfare check will be even bigger.”

Each election, people receiving these checks will be asked to vote for the candidates who promise them the most.

And these are not careful, thoughtful, responsible, highly educated middle-class voters. No, these are the broke, poorly-educated people who have no jobs, no careers, no direction, no real lives. Remember Trump’s campaign line: “What have you got to lose?”

Who put Trump over the top? People who had lost their jobs or had crap jobs that didn’t pay them enough to live on or whose kids could only get crap jobs. People who were terrified that their kids had no future and that they themselves were only one plant closing away from being thrown out on the street.

Watch the National Geographics documentary series, Drugs, Inc. The number-one reason people are dealing drugs, smuggling drugs, and cooking drugs is because that’s the only industry where they can make some decent money.

They want a middle-class life, but there are no legal jobs that will pay them enough to have that life. But the drug business will. So, that’s what they do.

A Guaranteed Minimum Income System Is A Huge Threat To Citizens’ Liberty.

If you’re concerned about the growth of the government’s power to take away citizens’ freedom you should really, really worry about increasing the size of the impoverished underclass.

If a large number of Americans can’t support themselves then the government is going to end up instituting some huge welfare program to “fix the problem.”

It’s now trendy for some libertarians to tout a Guaranteed Minimum Income as a mechanism to deal with the anticipated mass unemployment of unskilled and low-skilled workers.

These libertarians have not thought the idea through, because what a GMI really means is that some large percentage of the population will be absolutely, totally dependent on the government’s goodwill.

Suppose the politicians tell the 30% of the population dependent on this GMI money that for the good of the country and national security and law and order the government has to crack down on this and limit that.

“If our plan is thwarted,” they will warn, “then the government might have to drastically reduce the payments next year unless this national-crisis problem is solved.”

In other words, you’d better get on board and not make too many problems if you want to keep getting those checks next year.

Suppose the GMI law says that those indited for certain federal crimes will no longer be eligible for GMI payments.

“So, Mr. Smith you posted this and that about the President. We think that constitutes a threat to the President or Congress or Our Government, a crime. Cut it out or we’ll charge you with the Saying Bad Stuff crime and we’ll stop your checks, and you can go live in a cardboard box for the next two years while you wait for your trial.”

Ask yourself this: Do you have any doubt that Donald Trump would demand that GMI payments be taken away from the “bad people” who “hate America”?

Enacting a massive welfare program where 20% or 30% of the population is dependent on the government’s goodwill is a huge threat to Americans’ individual freedom. Every libertarian worth the name should be fighting a GMI plan with everything they’ve got.

Poverty Increases Racism

When people are broke, when they have no future, when there are no jobs that will pay them, or their kids, enough to have a decent, middle-class life they will very quickly look for someone to blame.

Hitler knew this. He gave the Germans the Jews.

Trump knows this. He gave his voters the Hispanics and the Muslims.

Rich countries with a massive underclass of unemployed or partially employed, poorly educated, impoverished people are breeding grounds for politicians whose campaigns focus on the “bad people who are wrecking our country.”

Those “bad people” may be Hispanics, Blacks, Jews, Muslims — it doesn’t matter exactly who the demagogues will point the finger at. What matters is if that’s how elections are conducted we’re screwed.

>>Today, 18% Of All Adult Americans Are On Food Stamps

About 18% of adult Americans, about 43,000,000 adults, need food stamps in order to feed themselves and their families.

And you wonder why we have so much petty crime, gangs, drug and alcohol abuse?

You wonder why approximately 2.7% of all American adults are either in prison or on parole?

In light of these facts you would think that people would say:

“This impoverishment of almost one-fifth of the population is really hurting all of us.

“We need to increase the income of the workers in the bottom 20% of the economy so that we can get them off welfare, reduce the size of government, reduce taxes, reduce crime, reduce drug and alcohol abuse, spur the economy, increase tax revenues, and move people from lower-class cultural values to middle-class cultural values.”

But No.

Instead, there is a pervasive, raging hatred in this country for the idea that a full-time job should pay adults enough money that they no longer qualify for food stamps.

In multiple comments to one of my columns, a person argued that it was wrong and bad for employers to be required to pay a wage that was high enough to prevent their full-time, adult employees from qualifying for food stamps.

This person then went on to say that he thought that in the future perhaps the government might need to institute a welfare policy that gave everyone a monthly check so that they would have enough money to live on.

Let me get this straight: You would prefer creating a massive government tax, bureaucracy and welfare system which paid people tax money to do nothing instead of requiring that private employers pay their adult, full-time workers a wage that was high enough so that their employees wouldn’t qualify for welfare in the first place?

I just lost you.

If you asked people who hate the idea of a living-wage minimum wage:

“Is it good for the country to have a large (20%-30%) poverty-stricken underclass that cannot feed, house, clothe or medicate itself and that is living on government handouts?” I think almost all of them they would say “No.”

But then if you asked those same people if the minimum wage should be increased to the point that full-time, adult workers would no longer qualify for food stamps, they would also tell you “No.”

Wait.

  • You don’t want people to earn enough money from their work to be able to support themselves.
  • You don’t want to reduce the billions of dollars spent on welfare programs.
  • You don’t want to reduce the taxes we have to pay to fund those welfare programs.
  • You don’t want to make the size and complexity of the government bureaucracy smaller.
  • You don’t want workers to have the freedom to earn and spend their own money as they choose and instead you want the government to be in control of their money.
  • Instead, you want to vastly increase the size of the government welfare system through some kind of a Guaranteed Minimum Income scheme.
  • Instead, you want to increase taxes to fund this massive welfare program.

And you want to do all of this because of your unalterable hostility to requiring employers to pay their adult, full-time employees enough money so that their workers don’t qualify for welfare in the first place.

What’s up with that?

Why Do Some People So Hate The Idea Of Low-Skill Workers Earning A Living Wage?

There are two groups of people who prefer having a massive government welfare system instead of a minimum wage that is high enough that people don’t qualify for welfare.

  • The first group sees non-management employees as lazy, stupid, unskilled people who don’t deserve to get all that money. They look at these low-skill workers as almost thieves who are taking profits away from the really smart and hard-working (good) people who built and run the companies, (and their shareholders).

They think that these workers just plain don’t deserve to earn that much money, and that it’s wrong to pay them that much even if it means that the rest of the country has to live with all the bad things that having an impoverished 20% or more of the population bring with it.

They’re like Johnny who would rather have one cookie instead of two if that will keep Billy from having any cookies at all.

  • The second group that hates the idea of a minimum wage that’s high enough to keep employees from qualifying for food stamps believes that the most important thing is protecting non-human, artificial-entity public corporations from having to pay higher wages.

These people believe that protecting the power and profits of public corporations is more important than protecting the human citizens of this country from higher taxes, bigger government and the damage caused by having a large underclass of people who can only survive as participants in a massive government welfare system.

I view the first reason (At all costs we must keep those losers from getting more than they deserve) as exhibiting Johnny’s personality defect — the willingness to will hurt yourself if doing so will allow you to keep someone else from getting something you think they don’t deserve.

I view the second reason (The most important thing is to protect and increase the profits and power of public corporations) as the hallmark of someone who has become a turncoat to the cause of the human freedom and human prosperity and instead has switched his allegiance to doing whatever will advance the wealth and power of inhuman, artificial corporate entities.

One Last Point — Low-Paid Fast-Food Workers Are No Less Skilled Than High-Paid Auto Workers

Everybody talks about wanting Americans to have good-paying manufacturing jobs, but they never ask why those manufacturing jobs pay so much more than jobs at Walmart and McDonalds.

I can’t close this column without pointing out that the idea that the people who work at GM and Ford deserve their high wages while the people who work at McDonalds and Walmart don’t deserve good wages is ABSOLUTE NONSENSE.

It’s total BS.

Many of the people who oppose a living-wage minimum wage act as if the level of skill and intelligence of the people on the GM assembly line morally entitles them to $30/hour plus medical insurance, vacation pay, sick pay, and pension benefits while the fast-food worker has a much lower skill level and thus only deserves a minimum wage with no sick leave, vacation pay or medical insurance.

Total BS.

Manufacturing Jobs Don’t Pay More Because The Employees Are More Highly Skilled.

Do you know what the difference in talent/intelligence level is between the people who work the auto assembly line at a GM plant and the hamburger assembly line at a Burger King?

The answer is not very much. You could take a majority of the people working at Walmart or McDonalds, put them into an auto assembly plant, give them a week or two training, and they could do the GM job just fine.

The Difference Is That Manufacturing Jobs Are Structurally Subject To Unionization

The reason that auto manufacturing jobs pay so much more than Burger King jobs is that the auto manufacturer is either unionized or under threat of unionization.

Why are manufacturing jobs unionized and high-paying while fast food jobs are not unionized and low-paying?

Because manufacturing facilities employ thousands of workers in one physical location. It’s relatively straight-forward to recruit those workers to vote for a union if they feel that they are underpaid, and it’s relatively easy to shut down a facility that employs a thousand people and ships tens of thousands of pieces of equipment all over the country from that one facility.

Manufacturing production facilities and their labor pool are physically concentrated in a few locations and are therefore vulnerable to both unionization and a strike.

On the other hand, there are tens of thousands of McDonalds, Burger Kings and Carl’s Junior locations scattered all over the place, each one employing only a few dozen people. Shutting down five or ten or a hundred of them isn’t crucial to the chain’s operation. They are too decentralized to be easily unionized or easily hurt by a strike.

On top of that, a majority of the individual restaurants are not owned by McDonalds and Burger King. Bill Jones who owns the McDonalds on Main Street couldn’t pay a higher wage even if he wanted to because McDonalds will not allow him to raise his prices to cover a higher labor cost.

Increasing the fast-food wage rate from $10/hour to $15/hour would result in about a 15% increase in the price of a food item, from 99 cents to about $1.15.

You can negotiate with all the Burger Kings in your area as much as you like. Without the franchisee’s ability to raise his prices, which ability he don’t have, his only choice is to hold the line on pay or go out of business.

Before you try to falsely claim that increasing prices to cover the cost of a living wage will cause unemployment, see my columns: A Living-Wage Minimum Wage Will Not Materially Reduce Employment and “We Can’t Raise The Minimum Wage Because That Will Put Me Out Of Business” Is A Really Bad Argument

The people holding the “good paying” manufacturing jobs don’t “deserve” those higher wages any more than the people holding the “bad paying” fast food jobs “deserve” those food-stamp wages.

The principal reason for the wage disparity is that manufacturing jobs are highly subject to unionization and fast food jobs are not.

It’s all about bargaining power.

For a detailed examination of the factors that govern the prices of goods and services in a market economy, see my column Real-World Limitations On Bargaining Power, Not The Law Of Supply & Demand, Are The Primary Reasons For The Low Price For Unskilled Labor. Supply And Demand Are Only Two Of The Many Factors That Affect Bargaining Power.

Summary

Why are there millions of Americans who are totally committed to preventing fast-food workers and Walmart employees and other people at the bottom end of the service industry from being paid full-time wages that will keep them above the poverty line?

What is the source of their raging anger at paying full-time, adult workers enough money to prevent them from qualifying for food stamps and Medicaid?

It’s not about supply and demand or some notion of market economics. The salaries for the vaunted, good-paying manufacturing jobs’ have very little to do with supply and demand or market economics and everything to do with unionization or the threat of unionization.

The principal reason why these people oppose a living-wage minimum wage is the same reason that Johnny chooses to get only one cookie instead of two so long that choice will keep Billy from getting any cookies at all.

For them it’s the emotional/moral belief that:

  • Those people don’t deserve that much money.
  • Those people aren’t worth that much money.
  • Those people are too stupid and unskilled to be paid enough money to live on without needing food stamps and Medicaid.

But I think that the rest of us would like less welfare, less taxes, smaller government, less crime, a better economy, less individual dependence on government handouts, and more prosperity for every American including those in the bottom 20%.

The rest of us shouldn’t have to suffer the damage to our society from a large number of impoverished citizens because of the “I don’t want Billy to have a free cookie” mentality, or because some people have pledged their allegiance to increasing the wealth and power of non-human, public corporations in preference to increasing the freedom and prosperity of actual human beings.

I think that for the good of our economy, our society, and Americans who are human beings, not corporations, all adult, full time workers should to be paid enough to support themselves without government handouts.

— David Grace (www.DavidGraceAuthor.com)

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DavidGrace

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Graduate of Stanford University & U.C. Berkeley Law School. Author of 17 novels and over 200 Medium columns on Economics, Politics, Law, Humor & Satire.

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