Thread by @Noahpinion

1/In today's @bopinion post, I talk about how America is shifting toward the idea of unconditional cash benefits and away from the idea of "workfare".

bloomberg.com/opinion/articl…

2/Biden's relief bill has no less than FIVE major cash benefit programs ($1400 checks, Pandemic UI, rental assistance, health care assistance, and the child tax credit).

This is no coincidence.

noahpinion.substack.com/p/bidens-first…

3/When I was a kid, everyone was worried about welfare dependency and poor people being paid not to work. Workfare thus became the most popular approach.

4/But we're reevaluating that approach.

One reason is that welfare reform doesn't seem to have boosted employment that much in the long term. Employment seems much more limited by job opportunities than by people's willingness to work.

5/Recent research suggests that the work incentives of programs like the EITC aren't a very important part of how those programs reduce poverty.

The cash handouts are effective; the workfare part, maybe not so much.

nber.org/papers/w26405

6/In fact, cash handout programs seem to be effective at raising incomes in general, without discouraging labor supply very much.

nber.org/papers/w24337

7/And when the cash is truly unconditional, as with the payouts of the Alaska Permanent Fund, the effect on employment seems to be pretty much nil!

home.uchicago.edu/~j1s/Jones_Ala…

8/In fact, in a recent experiment in Stockton where some people from low-income neighborhoods were randomly chosen to receive $500 a month, the people who got the cash ended up working MORE!!

theatlantic.com/ideas/archive/…

9/A whole new theory of poverty is working.

Basically, poor people get nickled and dimed to death by a million small risks and a million small hassles that stop them from bettering themselves.

Cash makes daily life easier, and allows poor people to focus on their future.

10/This is why studies show that welfare programs actually encourage entrepreneurship! You can't start a business if you don't feel at least a little bit secure.

bloomberg.com/opinion/articl…

11/In other words, A HANDOUT IS A HAND UP!!

That's why the idea of shifting U.S. welfare away from workfare and toward unconditional (or even universal) cash benefits.

amazon.com/Give-People-Mo…

12/And Biden's administration is being advised by economists who strongly believe in the power of cash benefits.

cnbc.com/2020/09/24/bid…

13/Even on some parts of the right, cash benefits are now seen as preferable to various complex welfare programs and government interventions in the workings of the economy.

14/And on the left, social democrats don't focus exclusively on cash benefits, but the idea is gaining credence.

noahpinion.substack.com/p/interview-ja…

15/If America as a whole realizes that a handout is usually a hand up, it could revolutionize our welfare state and our approach toward poverty. In fact, we may already be well on the way.

(end)

bloomberg.com/opinion/articl…