(noun, etymology Dutch from ‘boedel’: estate, possession, inheritance, stock.). 1. Crowd, pack, lot, as in ‘the whole boodle.’ 2. a. Counterfeit money b. Money acquired or spent illegally or improperly, particularly when used in bribery for political purposes. 3. Slang for money in general.

Planes, Trains, Automobiles, and Welfare States (Part I)

Posted on: Sep. 18, 2012  |  By: Ronnie Kahn  |  Category: General

When Mitt Romney said that nearly half of Americans “believe they are victims” and are dependent on the government, he is tapping into not just should government be large or small but the hot button issue of whether government’s role can help protect its citizens from some of the risks that can confront us.  It also alludes to behavior and motivation in that when government does provide such benefits, does it breed complacency and pit those who would take advantage of a system against those who don’t receive anything and whose income is not being “redistributed.”

In 2008, a terrible commuter train accident happened just a few miles from my Woodland Hills office in Chatsworth, California.  Just the other day, Caltrans announced that they have devised a system called positive train control which uses GPS tracking to monitor speed and train location.  It is the first such system in the nation and it can detect if a train is on the wrong track or has missed a signal.  The purpose of the system is designed to take the human error out of situations so that another Chatsworth type disaster will not happen again.  The system cost about two hundred million dollars.  It is always the job of society and government to determine and weigh out the rational dollar cost of preventing accidents against the loss of life and the emotional horror that is wrought on the victim’s families.

When it comes to safety, the airline industry has a strong record.  Each accident is examined thoroughly to determine if there is some way of preventing the accident in the future.   We assume that no expense is spared when it comes to airline safety.  We hear that planes are grounded when defects are found and we experience delays or cancellations for adverse weather conditions.   When airplanes become instruments in acts of terror, screening devices and searches are added at airports even though passengers are inconvenienced and these added protections can make a short flight last as long as if one had driven to their destination.  There is a psychological component to risk in that accidents of terror seem more horrific because they are perpetrated on innocent victims since the tragedy comes about in no way related to the choice of its victims.  In a car, on the other hand, we choose to go behind the wheel.  In addition, the psychological fear of the possibility of a plane falling out of the sky seems much more gruesome than the act of getting in a car accident.  Statistically, of course, you have a much greater chance of being injured or killed in an automobile yet, unless you are in the organized crime business, most of us think nothing about starting our cars.

Auto safety has become better as well although there are constant outcries that certain safety features will cost too much.  Many consumers consider safety lower on a list for reasons to buy the particular car they choose while they rank the look, status, and/or affordability as generally more important. There are also outcries that if the mileage standards on cars are increased then it will make the cost of the cars less affordable.  Again, a tradeoff must be made between the benefits of making us less oil dependent, the environmental impact, and how the cost will affect the economy as a whole.  Perhaps, at some point robots or track devices can factor out human error but the problem with car safety is that at this point, technology cannot minimize the human error that plagues all accidents.  Again, the intention of the positive train control technology was just that purpose, for taking more human error out of the equation.

We live in a welfare state.  Like it or not but the United States and many a Western country has grown more and more to abhor risk and when we feel we can minimize it, we will take the institutional leap to help alleviate the individual from suffering the loss.  If you become sick and don’t have insurance, that state will pick up the tab.  If you can’t afford to go to school, the state and/or college will pick up the tab.  If you cannot afford food, food stamps are available.  If you become unemployed, the state will pick up the tab.  If you become sick or disabled in the short term, the state will pick up the tab.  When you retire, the state will pick up the tab and even when you die, your dependents will be paid.  Think of a large societal risk and the words “safety net” comes to the fore.  Sometimes these protections can actually help an economy in the long run but, as the U.S. federal budget keeps skyrocketing, we also have to weigh out how much of this risk transference we can afford.

In political arguments about big and small government, this often becomes another wedge issue.  While most of us would take issue with someone who games a welfare system to get benefits, what about the other side where you work hard, especially those single parents without help, but still the amount of money that you’re earning is not enough.  With immigration too, some become incensed when benefits are given to those who are not citizens.  How can we treat illegals at emergency rooms or allow them to attend college or other schools?  Some argue that jobs are taken away from taxpaying citizens by illegals while others see it from the perspective that immigrants only take the grunt jobs that most others would not do anyhow.  One of the most contentious of issues is that someone would have children just to get welfare benefits and avoid having to get a job.  It is one of many emotional hot button issues for some that it amounts to cheating to take services and not pay taxes.  While many immigrants do pay taxes there are others that can’t or won’t.  Not only that, immigrants cannot get driver’s licenses and don’t pay for insurance which then costs everyone by the ill effects when an accident happens.  Some persons cry foul that when immigrants take benefits and services it equates to stealing from the rest of us honest taxpayers.   Of course, this logic does not seem to extend to the consequences on all the taxpayers who would fudge or outright cheat on their taxes.  I knew of a person with a cash business that drastically underreported income but would think nothing of focusing their hatred on how immigrants are ruining this country.

In Part II, we will discuss how the story of welfare and risk extends to money in the form of regulations, who and how we should pay for the benefits, and whether the risk of another financial crisis should be part of the risk discussion.

There are no comments yet, add one below.

Leave a Comment


Understanding Money Connections • Building Mutual Trust • Creating Economic Substance

© Boodle. All rights reserved.

The views and opinions expressed on this website and blog are those of the author, and may not actually come to pass. This information is subject to change at any time, based on market and other conditions and should not be construed as a recommendation of any specific security or investment plan. The representative and author does not guarantee the accuracy and completeness, nor assume liability for loss that may result from the reliance by any person upon such information or opinions. Past performance does not guarantee future results.