Knowing which way to jump helps.
Barry
Physical vs. Financial Economics
Getting people off of welfare by creating jobs for them is a popular idea. If people had good jobs others would not have to pay to support them. If we wish to think clearly about the need to make entitlement cuts it is important to separate the economy of money from the economy of stuff. The paper economy and the physical economy both need cuts, but they are very different in kind.
Cuts in physical consumption are needed to avoid excessive demands on natural resources and to avoid pollution problems. Physical cuts are not optional if we wish to preserve the natural systems we all depend on.
Living beyond one's means usually refers to going into paper debt. In physical economics we can never consume something we don't have. Some advocates of cuts are thinking about money, about ending excess borrowing and cutting taxes. Other advocates of cuts are thinking about cutting the consumption of physical goods.
It seems that cutting entitlements would cut the physical consumption of people on welfare. That is true if their lost welfare income is not replaced by wages. Whether a dollar comes from welfare or wages that dollar will allow the same amount of physical consumption, so if welfare cuts are going to cut physical consumption that lost welfare income must not be replaced by wages.
From a physical point of view a person's consumption could be less if he didn't have to do so many things. Having a job will increase a person's consumption above his basic personal needs. Commuting to work and many other kinds of consumption related to having a job can only be justified if the job is really needed for the physical economy.
The physical consumption needed by the economy can be cut by increased efficiency in the use of resources and by adopting streamlined and direct methods of operation. Machines don't need to commute, they have less need for workplace amenities. Robot workers can cut the physical consumption needed for a business using human labor. A robot economy that uses direct delivery, bypassing the need for many retail outlets, will cut physical consumption and jobs.
If we focus on who is paying for what, the waste of idle labor, and excess government debt we may conclude that cutting entitlements is a good idea. Yet, it is perfectly clear that a person would need to consume less physical stuff by staying home on welfare than by going to work.
Our physical needs for food and shelter and our need to operate within natural limits can not be changed. Our more flexible paper economy must be changed to serve the physical economy bound by the laws of nature. Increased entitlements can avoid the need to create jobs when they aren't needed. Without the need to stimulate physical consumption to make jobs we could stop trying to consume more physical stuff than the planet can continue to supply.
You choose. Do you want to end all welfare and face hungry unemployed mobs, end all welfare and make lots of jobs to consume as much as possible...and toast the planet, or start thinking of entitlements as dividends for ex-workers paid from the wages of robots.
Barry Brooks http://home.earthlink.net/~durable/