However, without exception, their disability was brought about by poor personal decisions and could be remedied fairly easily. The financial assistance gives them a strong incentive not to try.

I know of several people who spend all day sitting at home blogging or chatting on email because they're physically disabled. Yet I've employed multiple people as customer support techs who's job description is "sit at home and chat on email".

Our government is unwilling to tell people that they're free to either work or not work, but if they choose not to work, they won't get paid.

It's a collective action problem: no politician wants to be the first one to be "mean" and tell perfectly competent people that they can't live off of the stolen labor of others.

...so we continue to have "disability" for people who are entirely capable of working, albeit not at wages that they'd prefer to earn.

Realistically, those are the alternatives. A large subset of people have insufficient education or qualifications for a desk job. And note that "being old" is itself likely to disqualify you from a lot of jobs.

Remember, this amounts to $13,000/yr, which hardly qualifies as a sinecure, and health insurance. Do you think they're likely to be able to get a job which includes health insurance? Because otherwise "get a job" is a non-starter.

I've tried thinking of jobs they could do, but I have had a hard time coming up with anything except recycling - something like sorting through residential trash picking out the recyclables. As it turns out, that industry is employing a lot of homeless people. And, you have to consider that recycling is subsidized by fees on bottles and cans.

I've also worked at a place were we hired a guy with some mental disability to clean up the cafe. He did OK, but not a really good job. If they offered $2 more an hour, they could have hired someone who'd clean AND fix things, easily saving more than the $4000 extra a year he'd cost.

Even if you think "high blood pressure" isn't a disability, the set we're talking about is older and more likely to require expensive medical care.

You mean like whole government, all government employees and everyone that is paid by or subsists on tax money?

In many cases we'd be better off paying people who currently work for the government to do nothing instead of what they are doing right now.

And even so, the disincentive thing really isn't a macro-scale problem. During the boom years in the late 90's, for example, we came very (some might say perilously, heh) close to full employment. If this policy, which is broadly unchnaged from what it was 15 years ago, was really a drag on the labor economy, it would have been visible then. It really wasn't.

This seems like a false dilemma: Either they're on disability and consuming, or they're not on disability and destitute, with no middle ground. Grandparent's anecdote is about disability that "could be remedied fairly easily," with the implication that the "remedy" in this case might be "rent is due next week."

* Edit for clarity

My point isn't that it's a perfect system, just that it scales the way you want it to and we should be wary of changing it just to stick it to some lazy good for nothings. Right now, like it or not, disability backfills a lot of what a "welfare" or "guaranteed income" program would be doing, and mucking with it risks severe poverty for its users and economic damage to the rest of us.

I agree with you there, at least insofar as any change I can think of to stick it to them would also probably hurt the people the system was designed to help. I'd rather fund a few deadbeats than a genuinely disabled person go hungry, if given no other choice.

I guess I just fail to see how reducing the number of people on disability could, taken in isolation, result in economic damage to the rest of us.

If you add 4.8% people on well-fare, 2% convicts, some percentage of people that sustain themselves via petty crimes, and large number of government employees that don't do anything actually useful and also employees that are employed by private sector and their employer would like to fire them because they cost more then they are worth, but can't fire them due to various mass agreement, union restrictions and general PR ..... you end up with pretty high number number.

So it's their fault that they're disabled?

I grew up on the other side of the tracks and it was common knowledge even to me over a decade ago. Quite a few of my friend who barely graduated school knew where they were headed in their future.

If you're a guy you practically don't qualify for any aid, period. So with no future prospectes you get a job doing intense manual labor; roofing and warehouse were particularly popular. Do that for a year then "develop"[1] a back problem. File for workman's comp. Now your unemployed so you get UI as well. The UI money eventually runs out so you file for disability, bring your workman's comp dossier as evidence.

I first started hearing about this in 2001 from some colleagues working in factory. They were actually looking forward to being injured. A lot of them were real schemers, too. So one of them told me that Clinton fucked them by changing the welfare laws. He put in a hard limit of 5 years and made it difficult to qualify. They took no joy in the factory but took the work serious because they needed at least 6 months to qualify for UI and workman's comp can be denied if you don't do follow procedures (ex. breaking your back by following off scaffolding and not wearing a harness or being clipped in).

I have friends who are coming back from both wars and they are really fucked up, physically and emotionally. I can't imagine if there numbers fall under SS disabilities or VA disabilities.

Depends on your experience. We so a good bit of it after Katrina. The middle-class homeowners were completely at a loss when it came to applying to FEMA. The folks who live have lived of these federal programs for years were showing the engineers and lawyers how to fill out the papers. "No... don't check that box. That tells them you think you can afford food. Don't wanna do that."

a) I did think that people generally knew that disability claims go up during periods of economic dislocation.

b) I wouldn't call it 'gaming'. Toy example: Economy starts at equilibrium A where getting a job takes difficulty A. The economy slows down so now getting a job takes difficulty A + 10. It's obvious to state that the people who were at the margin, that could get a job at difficulty A but can't get a job a difficultly A + 10, will now be more likely to consider other options (including disability).

I'm sure there will be a bunch of comments to the effect that these people are malingerers but to me it's not black and white like that. IMO, it's unremarkable that a changed equilibrium is going to result in more disability claims.

Policywise, I think Minsky had some good ideas. The short form was limit transfer payments (i.e. payments where the recipient does nothing) and replace that with the government as employer of last resort.

You have 2 candidates for a job. They are entirely similar, except one of them discloses a history of MH problems which they claim are well managed by medication and monthly meetings with a psychiatrist.

Which do you employ?

There have been posts on HN from people saying they'd feel anxious about employing women of child-bearing age, or people who have had MH problems.

Further, it is not legal to ask about medical status in an interview, other than job requirements (can you lift 40 pounds, can you stand on your feet for 4 hours).

The scary thing is that many employers would prefer a worse candidate over someone with a known MH illness.

The one type of systematic gaming he does see is parents pushing their kids onto disability; in that case it's just extra money.

One reason SSDI has grown so much is because the rules changed in 1984; David Autor, who is quoted in the article, did an Econtalk interview about this: http://www.econtalk.org/archives/2012/04/autor_on_disabi.htm... :

continuing disability reviews (CDR). So, previously a CDR was essentially a de novo evaluation of the case. In other words, you start from scratch and try to reach a new decision or not. Congress said: Well, now, CDR, to terminate someone based on a disability review you must prove that they have recovered from whatever state they were in at the time they were given benefits. So, if they were given benefits by mistake, that's not sufficient. They have to have recovered from whatever that state was to lose benefits. It really raised the bar for the SSA to administer any awards it had made.

The whole podcast is worth listening to, and Autor's work worth following, if you're interested in the issue.

Autor has also found that much of the growth comes from people in their 50s or older who don't have a high school degree—in other words, older people with few employment opportunities. In such circumstances, SSDI often looks like a better alternative than basically being forced out of the labor market.

http://www.econtalk.org/archives/2012/04/autor_on_disabi.htm...

Remember this during your next NPR pledge drive :)

There are a lot of people who are capable of delivering economic value, but not on a typical employer's terms. The sad truth is that the demand for most labor is crashing.

The truth is that disability is a spectrum from 0 (no economic function) to 1 (full health). In 1950, there was high demand for labor and people at 0.7 could get full-time jobs with access to middle-class labor. Now, the 0.8's are unwanted and the 0.9's are trapped in secondary labor, unless they're extremely intelligent and can swing as free agents.

"Scott tried school for a while, but hated it. So he took the advice of the rogue staffer who told him to suck all the benefits he could out of the system. He had a heart attack after the mill closed and figured, "since I've had a bypass, maybe I can get on disability, and then I won't have worry about this stuff anymore." It worked; Scott is now on disability."

It is "gaming", in the same sense that every decision you make to optimize toward a desirable outcome is "gaming".

40 years he had a choice; go work at the mill for $25/hr, and come home tired and dirty, or stay home and be unemployed, and face the scorn of his peers.

Now he has a choice, either go to "retraining" that is run by for-profit corporations hungry to suck up government funds, and whose "graduates" are still unemployable, or go on disability. Given the world he lives in, he made the best choice.

Now his choice involved some meaure of dishonesty. But while I'd love to live in a world that rewarded honesty and integrity, that's not the world we live in. We live in a world that has no place for a unskilled but hard-working individual, so those people have to take welfare to survive, welfare that they would likely refuse if there were better options.

The disability program is supposed to be if you are medically unable to work, not if you can't find a job. Look at the charts in the article, there isn't an epidemic of disability in this country, disability is being used as a substitute for traditional welfare programs which have been eliminated.

It isn't that I have no sympathy for people caught in the cracks, but we shouldn't have government programs that are de facto open only to those willing to lie and cheat.

I agree with you 100%. We shouldn't have a minimum wage, food stamps, disability funds, or even 90% of the termination laws. In their lieu, we should have basic income, universal healthcare, free higher education for people with the ability, and affordable housing for everyone. Then, companies can hire and fire whoever they want, and the much simpler (if more radical) system is harder to game. But... the latter is not the world we live in, and we're not likely to see it in the contemporary US.

That said, there is a real problem here with unemployable people and it's only going to get worse. It's no wonder no politicians want to talk about it. It can't be summed up in a ten-second blurb.

But what he's proposing isn't a command economy, it's a default economy. The government isn't telling Factory A to make widgets and it's not telling Person B to work as a basketweaver. Instead everyone gets some minimum amount of capital to use every month.

In fact it sounds more market-driven than what we have now with welfare and disability where, again, centrally-managed plans are laid out and imposed on employers and employees saying what requirements you have, what you can and can't use the money on, etc. And don't you dare get a job and start accidentally making too much money!

It might even be beneficial to employers looking for talented employees: If people are safe to shift around looking for jobs they should move away from poor managers and bad companies to good managers at good companies (and if you're a good manager you'd suddenly have a lot more talent to find the gems out of). This is one of the same resaons governments take such an interest in education, is to ensure a competitive workforce in relation to other nations in the global economy.

I'm sure there's more to work out with the proposal but I like the spirit of the idea.

Overall, the need for TARP was driven by the weak long term oversight allowing concentrated influence in overlarge companies. That's often viewed as a failure of government to remain independent from influence, but at the root of the problem I think it was a shift in economic philosophy across business schools and the business community. The long term fix in my view is putting new focus on defining what criteria lead to healthy, competitive markets. Businesses themselves should recognize that poor competitiveness, and short term focus in markets can lead to poor long term performance in the economy for everybody. Different mechanisms to discourage oversized companies should be introduced into legislation, but now I'm rambling....

Remember, command economies work so well when the leadership knows what they're doing that they make up the structure of every successful business in "market capitalist" countries.

Also, the failure to generate new economic activity (or supressing new activity) is a prevalent theme in failed companies. Furthermore, when you look at new innovative products coming out of large companies, you'll often spot a phase goes something like: "A small group of employees broke off and put together <widget> after hours or out of sight of the upper management, etc". The new activity or market areas often come in spite of the controls in big companies.

Scandinavian countries have put many of these ideas into place and they are hardly doomed. On the contrary they seem to be fairing pretty well.