Save the Humans

Welfare Poverty Glorified

I think we should draw a clear distinction between people who defraud the taxpayer of money that they are legally not entitled to, and people who just take advantage of the system. While we would love all our welfare-heads to be deserving, the massive cost of ensuring this when our welfare expenditure runs to $50m a day and around a million people, is just not possible. A better solution might be term limits, lifetime limits and making benefit information public to make more use of peer pressure.

But there should also be a distinction, in terms of public approval, between those who spend every cent and end up 20 years later with nothing, and those who save and build assets even while on welfare.

Take this bloke for example:

Inquiries have confirmed the 64-year-old who lives with his girlfriend Sandra Hilleard in the Christchurch suburb of Linwood is entitled to a benefit of around $200 a week because he suffers from deep-vein thrombosis, caused by the formation of blood clots in major veins.

The 64-year-old has been able to build up his own property portfolio while on an invalid's benefit "for more years" than he can remember.

Sunday News spoke to Cox after being told he had built up the property portfolio, worth nearly $500,000, while being on various benefits for 30 years.

To me there is nothing wrong with that. Welfare should not apply only to those with no assets, since it will then encourage people to have no assets. Don't fund what you don't want more of. In fact, someone who uses what little money welfare provides to actually increase his assets is a friend of capitalism (and extraordinarily thrifty!).

Mr Cox may or may not have been able to work while on welfare. Surely there is some job that he could have done. For someone to be on welfare for more than 6 months in a row, they should have to pass a fairly high test to continue.

But assuming that he has been declared eligible, his property should not be an issue. The more people we have with assets, the better for society.

David Henderson v. Tim Smith: Avoiding Bar Tabs

David Henderson is a Christchurch property developer, the one who gave us the story behind the movie 'We're here to help'. He has also given us the Chancery Arcade (which was great in its heyday) and now SOL Square, a recently-created and (for the moment) popular collection of bars and retail.

In exchange, the Council has given him some $17m to buy him out of trouble with his various property investments. Ratepayers are less than impressed.

Other money is owed. Apparently, in part exchange for a $1m debt owed, Smith Crane and Construction's head Tim Smith arranged a Christmas do at one of Henderson's bars (Yellow Cross) in SOL Square. After a while, the police were called and Smith's crowd was evicted.

I happened to be downstairs in the Yellow Cross as this happened. First 10 police went up, then another 10. Another 10 or so remained outside. After a while, patrons started leaving. Bouncers made a big deal of getting us out of the way, and forming a line (3 long) to try to protect us from the dangerous people upstairs.

We were briefly locked in as a few blokes had a go at each other outside. I'm not sure if they were from upstairs or not. As we left, we saw someone arguing with the police about his ruined Christmas party.

I wonder what all the fuss was about. Henderson says:

Henderson said his management had not called the police, who had taken action after a routine visit to the Yellow Cross.

This doesn't explain why the police emptied the bar. Was the tab getting a bit high?

After being evicted Smith, his partner and a few friends went to
another Sol Square venue, the Fish & Chip Shop, and ordered a round
of drinks.

He tried to pay for the drinks with one of 10 Sol Square vouchers
(of $400 each), which he had arranged as another offset to the debt.

He said a well-built man, whom he assumed was the manager or a security staff member, asked him to move away from the bar.

I know times are tough, but surely $17m should be enough to cover a few drinks, Mr Henderson? This is not the way to get your creditors on side.

Get Fat and Spread Out

Canadian airlines are apparently now required to give fat people two seats to spread out on, although they only need to pay for one.

This is hilarious. I can imagine thin people wearing body padding to get an extra seat. I wonder whether you can just quote your weight or width when you book, or whether you need to front up at the check-in desk and sit on the scales first.

Of course, fat people will also need plenty of food, to maintain their privileges. Airlines which refuse to provide at least five standard size meals to fat people might be accused of trying to slim down their charges to try to sneak another person on board. This will have to be banned also.

But obviously the law doesn't go far enough. What about this poor Mexican chap? He's the one who got married recently.

(If you have a strong stomach, the video is here.)

It is clear that two seats isn't going to cut it. Mr Uribe is going to need at least 4, probably 8. He will also need a hole cut in the top of the plane so that he can be hoisted in. Canadian airlines had better avoid Mexico in case the Tequila courts have a crack at them too.

(pic from Barstool Sports)

The Price of Cheese

Speaking of Colby (as in budget), I have been meaning to comment on another site's discussion of the price of cheese.

The claim was that a 1kg of Anchor tasty cheese is AU$10.38 ($9 on special) in Australia but NZ$16.15 here, perhaps 50% higher. However the comparison was between Woolworth's (the most expensive supermarket) and an item on special in Australia.

A quick look at Countdown found it at about $13.80 ($12.36 on special) on 21/4. At current exchange this is AU$11.31, which is only a dollar more. Part of that is explained by GST of about 30 cents more. The other 70 cents can surely just be put down to the vagaries of the market.

How much child poverty would you like?

Susan St John, a well known left wing economist, is in the news today raising alarm over child poverty.

But child poverty is largely by choice. If my title sounds like a silly question, then ask yourself this: how much welfare dependency would you like?

In New Zealand these questions are closely related. While there are cases and situations where people can arrange to be paid quite a bit of money on the dole, sickness benefit, etc., this is not the common case. Most people on welfare are poor.

Even when the cost to the taxpayer of keeping a particular family on the breadline is high, the benefit to the family may be much lower. For example, a family may obtain an accommodation benefit which means that most or all of their rent is paid, even if the rent is quite high. However, given this money in cash the family would often choose to live in a cheaper house and spend the money elsewhere (on milk for the children, or the pokies, for example). So much of the money paid is 'wasted', or at least not spent optimally as far as the beneficiary is concerned.

So the fundamental problem with welfare is that it is a shadow existence, like a 'welfare drip', where you pretend to look for work (or that you are too sick to work) and the state pretends to pay you enough money to have a real life. Both sides are deluding themselves and the other.

If we were to truly pay enough money to live properly, rather than in poverty, then welfare benefits would need to be a lot higher. However this is difficult because the incentive to work is already low enough in New Zealand. We actually need to reduce welfare roles rather than increase them. Increasing the payments would definitely increase the number of people willing to sign up. As proof, look how roles dropped when benefits were cut in 1991.

Over the years I have met and known many 'welfare heads'. One single mother I knew had not worked from when her child was born (the child now being 20). Another got into a funk and did not have the confidence to get out there and find something. Another found the jobs on offer (mostly shop work at the time) not appropriate to her desires and aspirations. Still another found that her weak constitution was unsuitable for work but she could get by as an artist on the dole. Many people will make these decisions regardless of the effect on their children. Also, for people with very young children and no family support, working even part time is a huge headache.

There is perhaps a solution to the problem of wanting to pay higher welfare but not being able to. That is term limits and lifetime limits. For example (as in the USA) we could allow people to receive a benefit for up to 6 months at a time, followed by a 1 year stand-down, and up to 5 years in their whole life. This policy is credited with a sharp reduction of welfare roles in the USA, and also with a marked reduction in child poverty.

Welfare and poverty are linked. Despite what you might read, virtually everyone on welfare is poor, and when they have children, the children are poor also. Some might ask why they had children if they were on welfare. Well, many women marry a git, have a few kids, split up and end up on welfare that way. But yes it is true that some element of personal responsibility needs to be present.

The measure used for poverty is (I think) this, from the report's executive summary. Sorry you need to pay $25 to read the full report. No that is not a joke.

Designate an official poverty line at 60 percent of the median household disposable income after housing costs, and set net income for those on benefits at this measure to prevent poverty.

Here are the group's ideas with my comments:

Pledge to end child poverty by 2020

Silly. By definition this cannot be achieved. You can't have 100% of the people above 60% of the median income.

Raise benefits and family support to 60 per cent of the net median household income, adjusted for family size.

According to this story, the figure is $67,973, which means the welfare benefit would be set at just over $40,000. This means of course that 60% of households would be better off on welfare, at least in the short term (i.e. there is no chance of promotion on welfare).

The family size provision encourages more children and more neglect, which I think is the opposite of what is intended.

Resurrect universal family benefit of $20 a week for all children under 5.

Can't hurt. It is low enough that it would only encourage very stupid people to have another child.

Extend $60 a week income-tested in-work tax credit to all families with children.

Does this mean you don't have to work to get the in-work tax credit? That's going in the wrong direction, as it needs to be better to work.

Cut the bottom tax rate to 10 per cent and/or extend the bottom tax bracket to $20,000.

Great idea. People earning at this level should not pay tax. Roger Douglas's negative income tax would have been even more generous.

Extend free primary health care for children under 18 to after-hours clinics.

This is a tough one, but best dealt with by the welfare system I think. Otherwise the clinics (which are expensive to run) will fill up with people who have no incentive to wait until Monday.

Extend 20 hours free childcare to parent-led centres such as playcentres and kohanga reo.

It should have been this way from the first. However, a subsidy is surely better than 'free' hours.

Abolish tax subsidies for KiwiSaver.

This is silly. The government should encourage people to save for their retirement so they aren't on welfare in their old age. Our tax breaks are pretty stingy and should be increased.

Fundamentally the problem with the report is that it assumes a steady state. The fact is that people respond to incentives, and in 5 years we will have a different steady state as people have adjusted. That is the problem with welfare, and why it is (and needs to be) so mean.

The calculation that people make (whether to go on welfare or to work) is complex. It is made much more complex by all the rules, allowances, tax credits, etc. on offer. Even a good accountant might take a day to get to the bottom of it, given a statement of the family's situation on one hand, and a job offer on the other. This is a shame. It needs to be a lot simpler, so even non-accountants can work it out in 10 minutes.

With the right system and the right incentives, child poverty will decrease. So will child abuse and many other diseases of the welfare underclass. Designing the right system isn't easy, but on balance I think this report points in the wrong direction.

Save the Food for us Humans

I find the environmentalist websites absolutely fascinating. On one level I believe that apart from their smelly odour and frightful appearance, many environmentalists are intelligent people. I'm not sure why I believe that, it is just a feeling.

But then we get posts like this, worrying about food riots and food 'security' (which I think means: can you buy it?). Not a mention anywhere of an apology for the biofuels debacle. Still I suppose that is the fault of other environmentalists. It is like blaming the Anglicans for something the Baptists did to your son.

I noticed this bit on the Greens website:

Because there are good biofuels and there are bad biofuels, the Greens have negotiated for a requirement that biofuel cannot be counted towards the sales obligation unless it is produced sustainably and that is given effect to in clause 34G(2)(e), which provides for an Order in Council to set a sustainability standard. That would ensure that the biofuels are not significantly impacting on food production or the environment, and biodiversity.

Now, according to this site, we can feed up to 8 vegans with an acre of land (you might ask why bother, but please understand that in the third world this sort of diet is not uncommon and not by choice).

And according to this site you get very roughly 1000 litres of diesel equivalent per acre of land. So by my maths you have two choices with an acre of land

• Run a car on biofuel, filling up about every two weeks
• Feed 8 people

For me, I think pumping the black stuff out of the ground (at least while we can) and leaving the green stuff for humans is a much smarter idea. What kind of biofuel is it that doesn't significantly impact on food prices? Something grown on Mars, perhaps?

 

Can I Get a 25% Pay Rise?

Now $11.25 per hour is not a princely sum but many many people earn around that in NZ at the moment. The current hate triangle between Spotless, the DHBs and  some dodgy Union throws out some strange facts:

• The pay is to increase to $14.25 per hour, backdated almost a year. That is a massive pay rise - is this typical of the health sector? Is this why so much money is pouring into it with so little in the way of results?
• 800 workers were on strike
• The DHBs provided $1.6m specifically to increase wages, presumably for a year (I could be wrong about this)
• 800 workers x 2000 hours in a year x $3 per hour each = $4.8m

How can Spotless pay an extra $3 an hour based on getting $1 an hour more from the DHB? In fact I would expect Spotless to keep some of the increase to pay for Kiwisaver, etc.

The Standard (becoming almost like a party drug to me now) says:

And now, after all that, Spotless won’t even pay its workers what they’re owed. This has gone on for far too long - if Spotless won’t deliver on its commitment to its workers and to the public then it’s time our DHBs gave them the sack.

In the meantime, you can contact Spotless’ HR manager Peter Jennings at [will omit the poor bugger's email address if that's ok] and tell him to pay up or get out of our health system.

Reading the union website you get a taste of the kind of world these people live in:

"In fact, the NZ taxpayer is being short-changed twice by this Australian corporate.  First, when they pay a large profit margin to Spotless, thereby making their service delivery more expensive than directly employed services, then the NZ taxpayer gets short-changed again when Spotless refuses to pay its staff wage rates they have been funded for by the Government/taxpayer." said Shane Vugler, SFWU Industrial Coordinator.

It's that public good, private bad idea. if it were true we would have one of the goodest countries in the world, what with our recent 30% increase in public sector 'workers'.

Still it's good to hear mention of the taxpayer in all of this. I wonder if Mr Vulger has ever met one?

GM Food is the future, even in Europe

The Economist suggests that Europe may yet adopt GM food on the basis that the cost of obtaining non GM food for its cattle is becoming prohibitive.

Good.

While I agree that there needs to be a benefit before consumers will accept a change, it seems that the benefit already here is yield. Rich countries can hold their noses in the air and demand the genuine article, but for poor countries, increased yield helps to feed the starving.

Rich countries may not be much interested in GM food until other benefits appear, such as nicer taste, flavour, healthier, or perhaps a cooking oil that produces no trans-fat when heated.

I predict that New Zealand's proposed GM-free stance will start to look a bit silly within a few years, particularly as companies like Fonterra are all about trying to move up the value chain to more sophisticated products.

GM food will either feed the starving or kill us all? I suppose we will find out soon who is right. In the meantime, the topic attracts lots of analysis.