American vs. Chinese poor

China is boosting their determination of poverty to an annual income of $229.30. In the United States, the poverty level is $10,890.

So a poor person in the U.S. makes nearly 50 times as much money as a poor person in China. Additionally, American poor get all sorts of free services (subsidized public transportation, welfare, libraries, food stamps, etc.) from the government that the Chinese poor do not receive.

In fact, China’s per capita GDP is just $4,382. An American living in poverty has higher income than the average person in China.

The war on charity continues

I’ve previously written about the explicit war on charity. However, the larger war on charity is done through bad policies, not an outright dislike of charity. For example:

City puts a stop to homeless outreach
Couple must have proper permit to continue feeding dozens each day
By BRADLEY OLSON
HOUSTON CHRONICLE
Jan. 13, 2011, 11:14PM

Bobby and Amanda Herring spent more than a year providing food to homeless people in downtown Houston every day. They fed them, left behind no trash and doled out warm meals peacefully without a single crime being committed, Bobby Herring said.

That ended two weeks ago when the city shut down their “Feed a Friend” effort for lack of a permit. And city officials say the couple most likely will not be able to obtain one.

“We don’t really know what they want, we just think that they don’t want us down there feeding people,” said Bobby Herring, a Christian rapper who goes by the stage name Tre9.

Anyone serving food for public consumption, whether for the homeless or for sale, must have a permit, said Kathy Barton, a spokeswoman for the Health and Human Services Department. To get that permit, the food must be prepared in a certified kitchen with a certified food manager.

The regulations are all the more essential in the case of the homeless, Barton said, because “poor people are the most vulnerable to foodborne illness and also are the least likely to have access to health care.”

Bobby Herring said those rules would preclude them from continuing to feed the 60 to 120 people they assisted nightly for more than a year. The food had been donated from area businesses and prepared in various kitchens by volunteers or by his wife.

I understand the city’s concern that the food the clean and free of foodborne illness. But the most important line above is: “And city officials say the couple most likely will not be able to obtain one.” The story continues:

City officials in the past had considered passing a “public feeding” ordinance that would make it easier for people like the Herrings to comply with rules designed to protect people’s health and well being. The ordinance could involve easier and cheaper permitting processes, she said, although there had not been discussion of the matter for some time.

Obviously, city officials have done nothing to “make it easier” for charitable people to help the poor. Houston has laws to protect the health of the poor, but can’t find the time to pass a law enabling the generous citizens to feed those less fortunate. God willing, this story will push Houston into action.

Government says it’s OK to break social security agreement, but not pension agreements.

Barack Obama’s debt commission proposed several changes to Social Security to help reduce the deficit. The New York Times reports:

The plan would reduce cost-of-living increases for all federal programs, including Social Security. It would reduce projected Social Security benefits to most retirees in later decades, though low-income people would get higher benefits. The retirement age for full benefits would be slowly raised to 69 from 67 by 2075, with a “hardship exemption” for people who physically cannot work past 62. And higher levels of income would be subject to payroll taxes.

I have no idea how much these measures will contribute to reducing the deficit or paying off the debt. My complaint is more ideological.

When employees contribute to social security, they are doing so with the understanding that they will receive certain benefits starting at a certain date. Currently, an American expects to pay a certain amount each year into the system, retire at age 67. and receive cost of living adjustments (COLA) each year. The proposals by the debt commission would violate this agreement, forcing people to pay more each year if they earn over a certain amount, retire at a later date than originally agreed to, and receive less in benefits than promised as the COLA is reduced. In effect, the government is unilaterally canceling its contract with each American and replacing it with a less attractive one.

In reality, I am not opposed to these changes, especially the retirement age which will not fully take effect for 65 years, thus having little effect on anybody working today. The reduction in COLA would have a much greater effect on everybody starting in the near future while the removal of the cap on social security taxes would have an even larger effect, but only the wealthy. But while these are necessary changes, contrast this with the government’s stance on pension funds.

In a Q&A titled The pension time bomb, The Week asks:

Can benefits be scaled back?

Only for future employees. New Jersey Gov. Chris Christie recently signed legislation reducing pension benefits for new state employees. In California this month, voters in nine municipalities approved ballot measures to limit benefits for future public employees. And governments are starting to take a harder line in collective bargaining with public unions. “I’ve seen a sea change in the local collective bargaining process,” said Dwight Stenbakken, deputy executive director of the League of California Cities. Some analysts recommend following the lead of Georgia, which requires that prior to being enacted, any changes to retiree benefits be studied for long-term impacts. According to the Pew Center on the States, the policy has helped Georgia avoid “costly and irreversible” mistakes.

These pension liabilities have already been promised to employees and retirees. The government has a contractual obligation to pay the pensions as promised.

So why are the pension obligations sacrosanct while money can be taken from Social Security beneficiaries? Social security is just as much a contractual obligation as public union pensions. If social security benefits are to be reduced for those who have already paid in, public union pension benefits should be as well.

* Though I have not yet read this (too busy writing my next book), Robert Graham discusses this topic in much more detail in his Job Killers: The American Dream in Reverse. How Labor Unions are Destroying American Jobs and the Economy. If you’ve read it, leave a comment here or send me an email, tweet, or facebook message letting me know what you think of it.

Record number in government anti-poverty programs. Fewer people to support them.

In The Path to Tyranny, I wrote:

Why work if the government will provide free food, subsidized housing, free health care, and a welfare check?

It turns out that fewer people are working and more are relying on government assistance. The USA Today reports Record number in government anti-poverty programs. Here are some of the numbers:

• “More than 50 million Americans are on Medicaid.”
• “The new health care law adds about 16 million people, beginning in 2014.”
• “More than 40 million people get food stamps.”
• “Close to 10 million receive unemployment insurance.”
• “More than 4.4 million people are on welfare.”
• “The federal price tag for Medicaid has jumped 36% in two years, to $273 billion. Jobless benefits have soared from $43 billion to $160 billion. The food stamps program has risen 80%, to $70 billion. Welfare is up 24%, to $22 billion. Taken together, they cost more than Medicare.”

All told, these government welfare programs cost $525 billion. Currently, there are 139 million employed people in the United States. Thus, each worker is taxed about $3,800 to support the unemployed. The average employee earns about $40,000 per year. So he gives up 9.5% of his wages to be received by the employed. The unemployment rate is 9.5%, an exact match for this income redistribution scheme.

Of course, the average employed person lives much better than the average unemployed person. But this is not always true at the margin. A  below average wage earner may find he or she is better off not working and choose to receive government welfare instead. This is especially true if he or she has children and would have to pay for childcare while working. The added childcare expense along with taxes and transportation expense may make it financial wiser to stay unemployed and receive government assistance.

Not only are these programs costing hard-working Americans a large portion of their earnings, it is encouraging many to stay at home when they could work and would like to work.