welfare

Best Tool to Fight Crime is Welfare

- Adam Clare

The best way to fight crime is to take away motivation to commit crime. It’s been proven time and time again that severe punishments don’t deter crime, so how can we creat conditions which ensure people don’t want to break the law. The solution is welfare.

Economists have proven that when people lose a social security system they turn to the easiest (most efficient) way to make up their losses: crime. Therefore we should fund welfare programs instead of thinking that funding the police will deter crime.

They found that terminating the cash welfare benefits of these young adults increased the number of criminal charges by 20% over the next two decades. The increase was concentrated in what the authors call “income-generating crimes,” like theft, burglary, fraud/forgery, and prostitution. As a result of the increase in criminal charges, the annual likelihood of incarceration increased by 60%. The effect of this income removal on criminal justice involvement persisted more than two decades later.

The researchers found that the impact of the change was heterogeneous. While some people removed from the income support program at age 18 responded by working more in the formal labor market, a much larger fraction responded by engaging in crime to replace the lost income. In response to losing benefits, youth were twice as likely to be charged with an illicit income-generating offense than they were to maintain steady employment.

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California Launches Improved Reverse Income Tax Scheme

- Adam Clare
work and smile

California’s welfare system (EITC) includes subsidies sent annually for people living without income and that’s about to change. Under new rules the money given to people who earn less than minimum wage will be sent monthly. This is really good since it provides a stable, reliable, and regular sum every month; in theory this will reduce stress for the recipients.

The plan is more like reverse income tax than it is universal basic income. Regardless, it’s good to see one the world’s largest economies delivering financial care in a more efficient manner.

“The typical pattern with the EITC is that you get deeper and deeper into debt over the course of a year,” Ruben says, “and then you use the big payment at tax time to try to pay everything off and break even.” Giving people the option to receive the credit on a monthly basis will help people plan their budgets on a more immediate basis. Benefits like food stamps are delivered monthly, so families receiving both will have a more accurate sense of their financial landscape. And in months when a household finds itself on more stable financial footing, they might be able to put some of the tax credit money aside in savings. “What we’re seeing is the idea of the importance of a steady drumbeat of financial security throughout the year,” Ruben says.

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Newsom’s budget proposal aims to tackle these challenges. It will raise the household income threshold to over $30,000 (or what someone would take home working full-time at the projected $15 per hour minimum wage) to include more families. And the expanded funding will grant parents with children under six an additional $500 per year. That may not seem like a lot, Ruben says, but in focus groups run by the ESP over the past year, one woman said anyone who looks at that money and responds in that way “has never had to choose between paying rent and buying food.”



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Ontario to Test Basic Income

- Adam Clare 2 Comments

Basic income is the idea that people will have enough money to live (food and shelter) regardless of their employment status. Manitoba tried this decades ago and it worked, but was cancelled for political reasons. A basic income is needed now more than ever since robots are going to take all the jobs. Plus, inequality is growing at an alarming rate and we need policies that help stymie this growing disparity in wealth.

Let’s hope this trial run in Ontario is another success!

The general concept is that the government would ensure that all citizens have enough income to cover basic needs. One option for such a program is for the government to set a basic amount, such as $18,000 a year, and people whose income is less could receive payments to bring them up to that level.
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“We will be testing the potential of a basic income to determine if it will provide more consistent support to clients, streamline the delivery of income support, and achieve savings in other areas, such as health and housing supports,” Ms. Jaczek said.

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