Re:Iowa's handout to Apple illustrates the folly of corporat...
by AnthonyMouse on Thursday August 31, 2017 @02:35PM
(#15142656)
> We both agree it's a wealth transfer and intended, so why do you object to the term bail out?
Because a bail out is normally a cliff and cliffs are moral hazards.
Suppose Level 10 is great, Level 5 is mediocre and Level 1 is a disaster. Now suppose that there is a federal policy that says if anybody gets down to Level 1, we shower them with money until they get up to Level 5. What incentive does this create for a state currently at Level 3?
Compare this to something like a $12,000/year federal UBI with a 30% flat tax rate. In that case an unemployed person gets $12,000 and someone with a $20,000/year job gets $26,000 ($12,000 + 0.7*$20,000), which is obviously better than just $12,000. Moreover, the UBI is unconditional regardless of which state you live in, so if your state is terrible, the level of assistance isn't conditional on you continuing to live somewhere unsustainable.
> This is a wealth transfer to failing states to prevent complete collapse or an a massive exodus of the population.
But that's what's supposed to happen. WV has negative population growth. There is nothing wrong with that. It doesn't need to be stopped. It's completely natural for unsustainable places to be abandoned.
Places aren't people. There is no need to save them through external intervention.
Because a bail out is normally a cliff and cliffs are moral hazards.
Suppose Level 10 is great, Level 5 is mediocre and Level 1 is a disaster. Now suppose that there is a federal policy that says if anybody gets down to Level 1, we shower them with money until they get up to Level 5. What incentive does this create for a state currently at Level 3?
Compare this to something like a $12,000/year federal UBI with a 30% flat tax rate. In that case an unemployed person gets $12,000 and someone with a $20,000/year job gets $26,000 ($12,000 + 0.7*$20,000), which is obviously better than just $12,000. Moreover, the UBI is unconditional regardless of which state you live in, so if your state is terrible, the level of assistance isn't conditional on you continuing to live somewhere unsustainable.
> This is a wealth transfer to failing states to prevent complete collapse or an a massive exodus of the population.
But that's what's supposed to happen. WV has negative population growth. There is nothing wrong with that. It doesn't need to be stopped. It's completely natural for unsustainable places to be abandoned.
Places aren't people. There is no need to save them through external intervention.