Saturday, May 03, 2008

A Modest Proposal to Solve Poverty: The Miserly Welfare State

In the spirit of Scott Adams, who uses his blog to offer simple solutions to the world's most intractable problems, I'd like to offer my thoughts on solving the problems of poverty and the welfare state.

On the one hand, it seems wrong for so many to live in squalor during a time of such plenty.

On the other hand, the generous European welfare state has largely failed; given the choice between hard work and no work with the same standard of living, many choose the path of least resistance.

The logical conclusion is to provide a universal safety net, but make sure that the services it provides are spartan and undesirable, so that no one is tempted to live a parasitic existence.

Here's how it might work. Let's assume that the most important thing to do is to provide food and shelter. Since McDonalds, and Taco Bell have already managed to push the price of meals down to $1 or less, we'll focus on the shelter part of the equation.

1) Set up a government program, Project Shelter, that will provide free shelter to any citizen (the issue of what to do with immigrants shall be left for another post).

2) Every citizen has the opportunity to sign up for a Project Shelter account either online or at a government office.

3) Any hotel or place of lodging can opt into being a Project Shelter provider. In addition to providing shelter, they must also provide some means of using the Internet, such as an open computer cluster.

4) Anyone with a Project Shelter account can go to any Project Shelter provider and get one free night of accomodation per day. To do so, they log into the provider's page on the Project Shelter web site (probably from the provider's computer cluster).

5) The government reimburses providers $10 for each night of shelter that they provide through this program. This is done monthly via ACH.

Let's examine why this would work.

A) Almost no new infrastructure. Rather than building government housing or using some elaborate system of subsidies, there is a single program with a reasonable cost.

B) By limiting the payment to $10 per night, it almost certainly guarantees that the accommodations will be spartan and uncomfortable. There's little incentive for folks to try to join the program unless they are truly destitute (though I can imagine this being used by road-tripping college students...who don't mind sleeping with the homeless). The same holds true for the requirement of daily logins.

C) Using a centralized Web site should limit opportunities for fraud, and make it relatively easy to investigate disputes and punish wrongdoers.

D) By simply offering reimbursement and specifying nothing else, we open up the floodgates of entrepreneurship.* Since few existing hotels will want to participate, innovative entrepreneurs will probably build Japanese-style "capsule" hotels, start marketing to homeless people, and compete to offer the best amenities they can to attract business, while still making a profit on $10/guest/day.

* Honesty compels me to point out one could imagine (as I did) that extralegal entrepreneurs might also take up the cause by purchasing accounts from the homeless in exchange for cash up front, or simply extorting them by violence. But I think that a random inspection regime for providers, and the value that a homeless person would place on nightly shelter would limit such abuses.

Even if you're unemployed and broke, this program would give you a clean, safe place to live and improve your chances of finding work. Moreover, just about anyone should be able to find some way to scrape together $2-3/day for food. And if a few hard-working entrepreneurs or aspiring artists were to use the program to quit their day jobs and take a chance on achieving their dream, I'd still consider it money well spent.

What do you think?


Alex said...

I admit the concept is very elegant - instead of having regulations or rules you let the 'cheap housing market' forces take the quality as high as possible. But I can't help but wonder if it would work that well, in practice.

I also think it is unrealistic to say you can eat at taco bell for 1 dollar/meal and that 2-3 dollars is enough food for a day because of that. I'm not saying the housing program needs to address the food problem, but I think it's worth being honest about it.

Lastly, the flat 10 dollar rate should probably adjust to property values in the area as well as other factors.

Still, it's an interesting idea. Fleshed out it might be crazy enough to work.

paul said...

never work in a million years. for one, you're relying on government to make laws to make it work, and they are the most ineffecient people on the face of the earth. #2 the incentive of making a profit on $10 a day (again, who in the WORLD can do that?) with the hassle of gov't intervention is no incentive at all. #3 starting with the $10 for lodging, the 'trickle down effect' for other business would be enormous - water and electricity would have to be subsidized as well (or else the shelter would lose money on $10 a day) at a cost of how much exactly? #5 once water and electricity were subsidized for the homeless, how long before the 'working' people paying for all the services would complain that if the gov't can 'give' the homeless water and electric so that $10 a day shelters can make money, why can't they at least lower the cost for them as well... #4, alex is right, $3 a day to eat is nothing - and I'd venture to say that contrary to your belief that everyone should be able to get $3 a day is off by 90% or better. There's already a strong element in society that discourages people from giving to the homeless because 'they eat for free at the shelter' - BS. Imagine the pressure working people would come under knowing 'real' shelter is paid for as well. People will stop giving altogether. And it's not easy to make $3 a day - seriously. all the respect in the world to people who are thinking about these things... there are no simple solutions.

eipi10 said...


I don't know if you have ever panhandled, but a few of my friends have somewhat extensively (in highschool), and it is quite a bit more lucrative (at least in a moderately large city) than $3/day.

As far as how much $3/day can buy. If you look at the least expensive one can go, rice + multi-vitamin runs about $1 (say $2 based on the recent price hikes). I'm skeptical that one can live on fast food for less than $8/day with reasonable (>1200) caloric intake.


There are to be WAY more restrictions present. Basic hostel regulations are there for a reason - no one wants to measure for arsenic or asbestos when they look for a place to sleep.

At a minimum, the place should be free of pests, disease and poisons, should have clean bathroom facilities (sink, toilet, shower) and a single socket with 2 amps/person. If you are genuinely looking to help homeless people, you'd include a mail service as well (this is often the real problem for homeless people, not the lack of a place to sleep) although that could be a separate program.

My guess is that $10/night is too low (right now) for such a program in any major city. $15/night might be doable, and that would be for bare-bones, coffin style accommodations (cheaper than open bays, as it prevents issues with theft/violence). At $15/night these accommodations would be far from pleasant - no personal storage, long lines for the bathroom, uncomfortable mattresses, etc. would probably drive most people away as soon as possible.

Question: there is already a relatively large number of people who couch-surf. Wouldn't this help to create a sizable class of young adult migrants?

Chris said...


In terms of food, I believe that you can eat for less than $2-3/day if you have the chance to cook. Perhaps the housing providers will be required to make kitchen and refrigerator facilities available.

You're probably right about needing to adjust the $10/night figure for cost of living. But I figured that the IRS didn't bother adjusting tax brackets for different regions, so I kept things simple.

Chris said...


I definitely hear you in terms of your doubt that the government could make such a program work.

So why not try out the program in the private sector?

There are 2 million families in the US who are on welfare. Let's say that we want to serve 10% of those as a trial, or 200,000 families. Let's further say that each family needs 2 rooms per night. That's 400,000 rooms per night, or $4 million/day. That's less than $1.5 billion per year.

Surely the Gates Foundation can afford that. And if the experiment works, then bring in government grants to fund it, but keep the administration in private hands.

Chris said...


It might be that $10 is too low, and $15 is what's needed. You'd have to experiment with the program and see.

I do think that young folks might take advantage of the program...I think I referred to it in my original post. But I think that's acceptable collateral damage.

Alex said...

Yes, 2-3 dollars can feed you if you have:

1) the ability to buy and store bulk food

2) cooking facilities and time to do so

Those two points are far from given though. I don't think the kitchen and fridge facilities you mentioned are really practical solutions, though. Now, if drinkable water (both cold and boiling) was provided, that does help a lot with some cheaper instant foods.

Chris said...


Your point about drinkable water is a good one. That should be a requirement as well.

pseudopseudointellectual said...

Interesting proposal Chris. But:

"...Anyone with a Project Shelter account can go to any Project Shelter provider and get one free night of accomodation per day..."

In other words you can stay in a Project Shelter house forever?

Shouldn't one of the aims of the project be to rehabilitate homeless people. There needs to be a disincentive to staying forever.

Chris said...


The disincentive to staying forever in a Project Shelter hotel is that no one is going to provide much luxury for $10/night. I don't think HBO is going to be included. There might not even be carpets.

Paul said...

given all the ideas, it's still a hard sell. IF the private sector could do it that might be one thing, but I stand by my comments on gov't.

One such entity that could possibly do it is the mormons -- my sister was born and raised mormon and I know first hand how they store up food for the future - -and how they essentially help their own in numerous ways (that's not an endorsement of that religion, only an observation as to the way they operate internally within their community).

Still I'm not seeing the $3 a day/feeding yourself thing. Maybe panhandling for $3 isn't a big deal - even still, I'd hate to think that's all one had to live on...

Counseling would be needed as stated, but that's to help those... well, let me say it like this -- NOT EVERY homeless person has a drug or alcohol problem - that's a given - but it could be said that a lot of the homeless use the money they panhandle for drugs and alcohol. So how do you stop them from spending their money on those things? Gov't intervention? Some kind of disincentive maybe?

Ultimately homelessness is a rabbit hole where one problem solved opens 5 more problems. I would honestly swear on a stack of bibles that I was closer to being homeless last year than anyone you know or have met (that includes your readers) -- in fact, at the time we first met a year or so ago I was on the verge daily and thanks to the good Lord and the good graces of a friend and then my grandmother, I had a home and shelter. I'm a hard-working guy, no drugs, no alcohol... my 'california marraige' ended abruptly... and that left no home to go home to... and I was on my way there then.

BTW, last tuesday my former company was to fly me back from LA, instead, they stranded me in LA - at LAX... so I slept in the airport (what sleep I could get) until the next morning when once again I had family come and 'rescue' me - - they played a recording all night "giving to individuals who ask isn't an obligation" ... Nashville, where I am now has a slogan and signs "Please Help, Don't Give" ... it has an outstretched hand painted on it like a homeless person... businesses place these signs around town to discourage giving to the homeless... thank the LORD I'm not homeless... and those heartless peices of crap that hang that sign should be thankful they aren't as well...

better people than I have to solve this problem if it's in fact, solvable... but I would like to be a part of helping.

Thomas A. Shakely said...


It seems that despite general disagreement over per day food and housing cost, the general sentiment is that it's potentially doable, but crazy.

Which, for me, makes this plan all the more worth doing. Innovation of this type could not only help cut through partisan red tape in our local, state and national governments, but it could have a measurable impact on our society by pulling many out of extreme poverty and giving them at least a shot at getting their lives back.

It's no secret that government polices, following the law of unintended consequences, often harm more than they help. When citizens step up and offer real, working alternatives, though, it's not nearly as hard to convince your elected leaders to subsidize or otherwise support a good program, especially if it will earn them some good media attention before an election.

You may have heard of it already, but there's a group that was founded about two years ago called American Solutions for Winning the Future that exists to harness workable citizen solutions to improve government and the nation.

If you're interested and have a few moments, check it out:

All in all, this post is a solid start in a new way of thinking about welfare and poverty.

All the best,