Basic incomes have always been an interesting idea, appealing to a lot of smart people from radically different economic-political camps. There are some potential massive wins on long term unemployment that come from eliminating incentive issues, some answers to the "living wages" and other positive rights problems. Less bureaucratic micromanaging of people's lives. There's a reason it hold attention on HN, it's a real interesting idea. But…..
Basic income is the type of idea that is very, very hard to implement within our current (possibly any) political systems. There is very little room for compromise, half measures and gradualism. It does not lend well to caveats exemptions, and design by committee.
One of the big selling points is that basic income is funded largely by replacing different welfare state institutions: unemployment benefits, child benefits, housing subsidies, state housing, pensions… This allows (A) A big enough basic income (B) big savings on welfare institutions running costs, (C) the simplicity needed for a clean re-write of incentives.
Where do the "efficiency savings" come from? Largely they come by cutting salaries associated with managing a welfare system. Can a government reduce public sector employment to that extent?
The danger for any country implementing this is that once they get into the political procee, they will chop and compromise and water down the idea until it is just another item on the big list of ingredient in the social welfare soup €212.13 per month that you qualify for while keeping everything else that exists.
Reforming the tax system and the welfare system as radically as required in a short time is a tall order. Maybe the Finnish can pull it off. They have a good track record. More broadly, I expect that this would have a high failure rate.
The best chance (IMO) is for very a small country to try it first.
> Where do the "efficiency savings" come from? Largely they come by cutting salaries associated with managing a welfare system
I think this is a misunderstanding. Those programs generally have low bureucratic overheads percentage-wise to begin with.
Some of the main benefits are 1) reducing welfare traps (accepting work doesn't cut your beneifits) and 2) encouraging independent behaviour by decreasing the stressful and dehumanizing busywork of continually reproving in various forms your entitlement to the benefits (and resulting economic uncertainty, mistakes derailing your finances)
Don't underestimate how inefficient benefits systems can be - an IFS paper in the UK from 2005 suggests that for every £1 a benefit recipient receives, £5.30 is required - that is, of every £10 that goes into the benefits system via national insurance or what not, £1.88 actually reaches someone who needs it.
The principal cost is staffing for the vast number of people needed to means-test, scrutinise, shuffle paper and rubber stamp things - were you to dispose of much of this apparatus by going for a straightforward "everybody gets £x/month", your efficiency would rocket.
That is, of course, if the actual main cost isn't money being siphoned off into politicos pockets.
6M or so people receive some kind of welfare benefit for a total of 77.8B dollars. Total expenditure on welfare in Australia: $154B (latest budget figures).
That's nowhere near a 5x overhead, but it is pretty damn inefficient.
You are linking to a 2009 study and comparing with this year's projected 154B budget. Aside from actual welfare spending changes there are all kinds of reasons why those might not be comparable.
You're right about the dates, but when I had a more convoluted set of figures for 2014 (which required doing quite a bit of arithmetic to get the raw inputs, and would have required linking several pages and so forth) the results were pretty much the same.
The fact is the Australian government spends in the ballpark of $2 for ever $1 of benefit handed out; whether it's $1.80 or $2.20 doesn't really matter -- it puts some actual figures behind the concept of simply giving out a basic income (versus trying to figure out who gets the benefit, means testing it, and so forth).
Australia's unemployment rate hasn't changed much over the period 2009-2014 (it was shielded from the great recession by commodity prices).
Another problem I just noticed - it seems your spending figures include more than just benefits paid in cash. Eg http://www.aihw.gov.au/expenditure-faq/ says
"In 2010-11, Australian Government and state and territory government welfare spending was estimated at $119.4 billion - $90 billion (75%) was in cash payments (including unemployment benefits) and $29.4 billion (25%) was for welfare services."
So to make your case you'd need to dig up figures about how much the administrative overhead related to the cash benefits is.
>> Those programs generally have low bureucratic overheads
What makes you say that? I have tried to look into this before and failed. But, from the way these things are structured I assume they have high overhead. The anti abuse/fraud work alone…
What makes you say that? I have tried to look into this before and failed. But, from the way these things are structured I assume they have high overhead. The anti abuse/fraud work alone…
I don't remember the source but I do recall findings that the costs of investigations into welfare fraud in Germany significantly outweigh the (potential) costs of the fraud itself.
Of course the inefficiency is difficult to prove because it's impossible to correctly measure the amount of fraud that would exist if there were no investigations (the existence of the investigations might discourage fraud in the first place).
Still, it seems pretty intuitive that welfare fraud isn't actually as big a problem as people tend to think. Welfare fraud is one of these problems that are easy to exploit for public outrage. It's relatable ("they steal my (tax) money"), the people doing it are already stigmatised (if you're on welfare you either did something wrong or are simply not trying hard enough), the falsely accused are unlikely to retaliate, it's easily actionable (just add more inspections or simply reduce the benefits) and it's difficult to measure and nearly impossible to solve.
Sure, it may be a non-issue but it so wonderfully exploitable if you're a politician (or a "newspaper" that needs some inciteful headlines).
There is no concept of benefit fraud in a BI system. Everyone by default qualifies for the same level of BI. Your government paycheck starts at the max value and can only go down from there, which happens when you are paying back that money in the form of tax. The only type of fraud detection needed would be the tax fraud system that already exists.
I'm not saying everything about BI would work (although I hope it does), but the fact that you could cut benefit overhead is self evident I think.
Well, that is already tax fraud correct? Someone already has to check for that. The savings come from all the additional checks you would no longer need to do to see if people are really disabled, what their marital situation is, where they live, etc.
In most of European countries, people has an ID card and SS number, and there is a centralized database controlled by the state. A single person cannot have 2 different IDs. At least, it is not something trivial to do.
I'm don't really know much about the US case, but that article reads as a somewhat disingenuous response to a very disingenuous statement by and electioneering politician. They define "Benefits & Services" as opposed to "administrative costs" and report the first makes u 90% or more.
I assume that "Benefits & Services" includes various services that might be termed "administrative costs" in everyday talk.
But point taken, maybe this is not such a huge savings.
I believe he's referring to fraud in the current system: inspectors working full-time to catch people claiming welfare while working odd jobs, processes to verify that people are entitled to various benefits that they're claiming, etc.
Cutting the jobs is very doable, the UK shed hundreds of thousands of public sector employees over the past 5 years.
The concerns I have are:
a) a ratchet effect along the lines of state pensions where the basic income keeps being put up in populist moves but is never reduced
b) that specific entitlements (with their administrative burden) either continue to exist or again get created by politicians in "something must be done" mode. Specifically things like disability benefits, state pensions, child benefits are all likely to still stick around
Finally many of the lessons we've seen in the where welfare reform has been attempted over the past 5 years is that it is the detail which gets you. Young healthy people are not the majority recipients, it is questions over how to support the partially disabled, children of separated parents with joint custody etc. Giving a new entitlement is easy as it is something that wasn't there before. Taking it away is incredibly hard politically.
I don't see how child benefits and state pensions need to exist if you have lifelong BI.
Sure, you could convert state pensions in the public sector into a voluntary retirement fund but the basic idea behind pensions is that the government gives you money in old age so you can afford not to continue to work -- this is entirely solved by BI.
Likewise, child benefits are intended to be spent to accommodate the child, exactly like the child's BI.
Of course good luck convincing prospective pensioners that their pensions are not going to be.
Disclaimer: I have only a vague idea of what the welfare and pension systems are like in the US.
State pensions provide a much higher level of income than a universal basic income could possibly provide.
Basically, government workers agreed to work for a lower current salary for many years, with the coincident agreement that they'd get X% of that (via some complex formula) for life after Y years of service. That X% provides a modest but certainly comfortable lifestyle.
There's no way you can set basic income levels high enough to provide everyone with that same level of lifestyle before they've lifted a finger of productive work. Basic income must be more basic and spartan than that in order to work mathematically/economically/practically.
(My parents both retired as school teachers with 25-ish years of service and a full pension. I'm not privy to the details, but it's enough for them to live reasonably well, but that didn't fall out of the sky; it came from them raising kids and living 25 years on school teachers' modest salaries.)
I concur that child benefits need not exist (unless/except to the extent that children receive basic income of their own).
Its not actually inconceivable. The world is changing. We have to suppose a new sort of industrial infrastructure. One that doesn't need (so many) people to run it. The level of lifestyle (or standard of living) can certainly stay high, even increase, without so many people working. Its already happening!
Rising unemployment is partly due to a rise in automation and industrial efficiency. The ultimate limit is, (almost) nobody needs to work, yet goods are still available and continue to increase.
Even if you could provide that same level of basic income, there's an inherent unfairness between someone who worked in the private sector and saved $1MM for their defined contribution (401K-type) retirement and people who worked for less salary all that time and now rely on their defined benefit (pension) plan. Let's say both are living off $50K per year (4% plus a slight drawdown for the 401K person and $50K in straight pension for the other).
If you use basic income to replace the pension money, but don't confiscate the 401K savings, you've massively disadvantaged the pension holders. If BI is $25K/yr, now one person is living on $75K per year (or $65K/yr and passing along a $1MM inheritance) and the other is living on $50K and will die without a nest egg to pass along.
Trust me, those pensioners are one pretty well-organized voting bloc... ;)
Yupp, pensioners (especially in the US) are a big problem to plans like this.
Ideally (state) pensions would become obsolete and retirement funds would become an entirely personal issue (as they've largely become in Germany btw -- the tax-funded pensions will at best barely keep you above the poverty line even if you've worked every day since from 18 to 65).
So as far as pensions go you will have to go with an unfair transitional period. You could freeze the pensions and pay them out in proportion to the (now discontinued) contirbutions (which at least in Germany is how it works already) on top of the BI. But for pensioners you pretty much end up allowing them to "double dip" or drawing some arbitrary cut-off line for who will receive BI or only grant BI in proportion to the pensions.
But as you may have noticed I'm not well-versed when it comes to US pension systems. I'm assuming it's similar to ours but considering even healthcare was purely defined by the employment contracts until fairly recently I wouldn't be surprised if it's drastically different.
The difference is that a basic income is supposed to persuade non retirement age people to continue to work, hence "basic". A state pension is supposed to be enough to enable every retired citizen to be able to live without working with a sufficient sense of dignity even without any other form of pension. It is almost always higher than the equivalent unemployment benefit.
Now it could be combined (as Finland currently does) with a mandatory pension scheme system in order to provide retired people with an additional income source, but then you're getting beyond a basic income only. See - it's hard!
There might be a more utopian concept of paying everyone enough that they don't need to work at all, but that isn't what is meant by this Finish scheme and what is meant by "basic income" normally.
my dignity is OK only if I can spend at least 6 months travelling around the world, and remaining 6 spoiling myself. good luck satisfying that! (joking on my side, but this whole discussion is pointless, since everybody wants something else from system (and all want as much as they can, and slightly more) and it would produce massive resentment from those that would lose even a single cent
For most of the people, dignity is being able to sleep under a roof, being able to eat at least once a day, being able to be seen by a doctor when they are ill and being able to give an education to their children.
We should be deeply ashamed by the fact that there is people in our rich developed countries who do not have access to that simple things.
Yeah, good luck living a worry-free live on pensions these days.
In Germany outside the public sector pensions put you so far below the poverty line welfare has to jump in and bridge the gap. For anyone entering the workforce today that is.
> I don't see how child benefits and state pensions need to exist if you have lifelong BI.
State pensions need to exist as long as you expect state workers to work for (pension excluded) below-market compensation for the jobs they do. BI has no effect on this one way or the other.
> Sure, you could convert state pensions in the public sector into a voluntary retirement fund but the basic idea behind pensions is that the government gives you money in old age so you can afford not to continue to work
No, the idea behind pensions is that, as part of the exchange for work now, you accept a deal which provides payment later (including specified contribution of the funds from your nominal current income, as well as the rest being contributed by your employer.)
I think an important economic impact people forget for Basic Income is how it will liberate people to pursue vocations, invention and education. How I expect this to show in practise is an explosion of culture and learning and new tech (hardware and software) - ripe for secondary commerce.
You're thinking of how it will shuffle money around, you aren't considering how it will shuffle opportunity around.
I think you may have a skewed view of what the average person does with their free time (probably because you and your peer group are not typical). Here's a breakdown of what the average unemployed person does with their day (lots of television, almost no education): http://www.bls.gov/news.release/atus.t08C.htm. There's also a big chunk of unspecified leisure/sports, but those activities don't seem to be the type you're hoping for either: http://www.bls.gov/TUS/CHARTS/LEISURE.HTM.
You may very well be right that the relatively small group of people who like to do creative things in their free time would make a big impact, though.
- Low access to anything not in walking distance, or which costs money to get in
- Easy access to distracting pop culture and particularly TV
It's basically unsurprising that a person here and now who's unemployed DOESN'T behave like a person in a society that distributes Basic Income without stigma.
If you want to look at a group which might make a better comparison, look at retirees, or lottery winners.
Fair point, but compare full-time workers to people aged 75+ (who are mostly retired): the latter have 4.5 hours more leisure time per weekday, and 60% of that is spent watching TV. The category most likely to contain creative hobbies ("Other leisure and sports activities, including travel") gets an extra 4 minutes per day. Education time rounds to zero. They do read more, though: about an hour more per day.
Dropping back to ages 65-74 is mostly similar, except they only read half as much.
This is skewed towards people who are unemployed in the current system. It's a bit far-fetched to conclude that this is also what the average person would do. It's more plausible (to me) to assume those people are doing this regardless of the system, and those who would quit paid work because of basic income might do something different.
Also, many types of work are just not possible outside of a company context because you need infrastructure and, well, company. Some people may be willing to do a bit of today's work for free, just for socializing, if they have basic income and if it's socially acceptable to work without pay. Or maybe not. But it's hard to know, from just looking at this data.
You do realize you need money to do what the OP said, an unemployed person with no BI income is not the same person with BI income.
If I have a basic income, I would love to go out and do something productive, take classes to benefit myself to get a better job. I have a few family members who doesn't have a job for a few years and they cannot take any free classes, they all cost money, especially the intensive technical courses.
I would love to go to the arts and stuff but the moment I step out as an unemployed person with no income, it will only incur expenses I can't afford. Rent, Bus fares, food, clothing and so on are vital expenses that I need to save for, I can't do that with no income. I've met people who can barely make any profit after paying their expenses.
This. I've seen people effectively emulate this lifestyle by living on student loans (that they then didn't actually use to pay tuition). Except in the end they'd have accrued a considerable amount of debt, of course.
The benefits of BI can be summarized in that it eliminates the foundation of the hierarchy of needs from everyday considerations. Even minimum wage can't aspire to solve this (simply because at some point minimum wage becomes so high the jobs become unprofitable if they can be avoided -- also because minimum wage does nothing for those who don't collect a wage).
This is just a glass-half-full way of admitting that a lot of people will quit their jobs and stop working. Unfortunately, we're not mining asteroids yet, so we need enough people to continue working regular jobs that there couldn't be a significant gain in short-term-unproductive pursuits.
According to a study (don't have a link unfortunately), 56% of Danes say they would continue working their current jobs if then won millions on the lottery. In a society like that, basic income may very well work.
Would love to see how that statistic breaks by class of occupation though.
Whilst there are plenty of people who wonder how they'd fill their day if they didn't have computers to program or interesting research to complete, there are an awful lot of people who work long, tedious and unsocial hours simply to make ends meet. Any feasible value of BI is going to be set at much closer to the current incomes of the latter group of people than the former. Even if the first group is vastly larger than the second group, they're still going to have to pay significantly more for the drudgery to be done.
Unfortunately, there are still a few problems. One, we don't know how many would actually continue working. Two, 44% quitting is still far too many. Even 10% of currently working people would cause huge problems.
On the other hand, any feasible BI program couldn't pay anything close to the annuity possible by winning a lottery, so a lot of Danes should still be 'stuck' trying to make their desired income level.
I agree we may be able to count on the Scandinavian mindset to make social programs work that couldn't in a place like the United States, but even in Denmark, I don't think this particular program can deliver the desired benefits without giving out enough money to cause problems.
1. The study does not say that 44% would stop working - they just wouldn't continue working in their current company/occupation, with a portion of them probably moving on to more fulfilling work (as opposed to living a life of pure leisure).
2. The stats refer to winning a lottery, which solves one's all financial problems and desires. Basic income does neither for a majority of people.
> The danger for any country implementing this is that once they get into the political procee, they will chop and compromise and water down the idea until it is just another item on the big list of ingredient in the social welfare soup €212.13 per month that you qualify for while keeping everything else that exists.
Exactly this. You can already see in the article this process is happening in Finland. At first it talks about basic income, then about how the income should be below a living wage (which at least waters down many of the benefits). It then ends with a suggestion that maybe it won't actually be a basic income, but a stipend for poor people.
Stipends for the poor are hardly a revolutionary new idea being tested for the first time, and calling it a "basic income" is just wrong.
I also am not sure that testing such a thing in only a part of an existing economic area is a valid indicator of how it would function over the whole. If only some people get the benefits it may create some perverse economic incentives.
It should really be unconditional basic income (as it's called sometimes). The main risk I see is that conditions creep in, e.g. if it gets tested only on people who are currently on welfare. I think a low UBI can still have a small effect, and there is no need to go from zero to 1000€ per month in a single day. The amount can be adjusted by the usual political processes, and if it gets adjusted towards zero, well - then maybe the people who vote didn't actually want to grant this small amount of freedom to each other.
The problem with a basic income is that for it to be close to enough to live off, it'd be very very expensive — way too expensive. Giving everyone in the US enough to be above the poverty line, say $12,000 (which is hardly enough to live off in many areas), would cost $3.8 trillion, which is what the entire US federal budget is now.
So, people with disabilities and people who are unemployed would be left worse off, with an amount they can barely live off. Not exactly the situation we want after enacting our utopian basic income program.
The only way around that would be to give people with disabilities and the unemployed more money. But then that means you can't eliminate the welfare institutions needed to identify them and cut them checks.
You can correspondingly increase taxes on people earning substantially more than the basic income. Unconditionally increasing everybody's final (post-tax) yearly income by $12k isn't an outcome anybody expects (or should expect).
One way of modelling basic income is as a negative income tax.
However one of the advantages of making it "unconditional" (but not necessarily actually beneficial to high income people) is that it buys political acceptance from the middle classes especially.
That doesn't mean the cost goes away. You'll still have to increase marginal rates by at least 20% across the board, or if you have lower marginal rates for the poor, then even higher for the rich. ($12K is about 20% of the per-capita income in the US).
A 20% increase in marginal rates is definitely going to affect the incentive to work. Middle class wage earners will be paying 50% to 60% of their income.
If you want to save on the cost by scrapping existing benefits, the $12,000 a year would probably not fully replace the social security pension, disability benefits, or EITC/food stamp/TANF benefits people get, or at best be approximately the same. So you haven't changed things much for people at the bottom, in exchange for a massive tax hike.
> So you haven't changed things much for people at the bottom, in exchange for a massive tax hike.
A massive tax hike combined with a simplification in government should result in larger revenues. If things don't change for people at the bottom, who did they change for - all that extra money has to go somewhere, holding all other government spending constant. Presumably the lower middle classes ended up the recipients of this massive tax hike, in your perspective. But this is just a function of the progressive tax curve; it and the fixed payment can both be adjusted to achieve a particular redistribution.
The more interesting thing, to me, about an unconditional fixed income, is that it changes the nature of work at the margin. Benefits don't turn into poverty traps if they're unconditional. Incremental part-time work doesn't come hand in hand with the risk of losing your benefits. I think employment overall, and productivity, would increase.
Either you need to make a massive, basically unaffordable tax hike on middle-class and upper-middle class people, or make a decent size tax hike on everybody.
Pensioners/disabled/people receiving unemployment benefits would be worse off.
The big winners would be people who are not working and not receiving benefits today, and presumably the people who live in the same household as them.
1. It's not going to be an amount barely above the poverty line. If it's implemented "correctly" it needs to be enough to do away with all the other welfare programs. Think way, way higher than $12K per person per year.
2. With less revenue coming in, guess who's going to be hit with higher taxes? All those suckers working to make a marginally higher income.
3. If the BI is sufficiently high (think in the $45K range), there will be a lot of people leaving their jobs to live a life of leisure and avoid having their income taxed at a >50% rate. I know I would.
This utopian idea is like every other: sounds great on the surface, may even work reasonably well at a small level, but doesn't scale. Human nature is what it is.
BI alone is by definition the poorest you can be. That's never going to be nice. It's almost certainly never going to be $45k. So long as money motivates people, people should still be motivated to have more than the poorest.
OTOH, BI does not disincentivize recipients from working, like current schemes do.
The specifics vary by place but almost everywhere unemployment benefits recede rapidly when you are.. employed. If you are disabled but manage to work part time, that can be used to invalidate your disability claim.
The whole point is to get more people working, and make it worth their while. If BI results in fewer people working, it has failed.
The benefit will be universal, but then you have to pay for it with increased taxes. So the increased marginal rate will disincentivize people from working.
$45k is way too high. A basic income is per person, not per household. Median personal income in the US is only about $24k (https://en.wikipedia.org/wiki/Personal_income_in_the_United_...). About 20% of adults with income currently make less than $12.5k. And if children also receive a basic income payment (which seems to be the case in the parent post's calculation), then no one will be starving at $12k/person.
Right, but like I said, if this is to be implemented correctly your BI has to be high enough to replace existing welfare programs. One of the benefits is that you eliminate the overhead of maintaining said programs and just cut everyone a check.
You need to look at this in the "end game" scenario, which is, we need BI because there will be so much automation that hardly anyone needs to work anymore. You're not going to sell this to the poor by telling them that they're now unemployable and their BI is going to be less than their previous income + food stamps + housing subsidy + etc. So right off the bat, yeah, the BI floor needs to be the cash value of a person with full welfare benefits. And that's a lot more than $12K.
You're also discounting the inevitability that politicians will promise bumps to the BI for votes, people protesting that they can't afford to live in Manhattan on their BI, etc. It will quickly reach a point that even skilled workers will say "F this" and join the ranks of the unemployed.
If per person, it would need to top out at some level.
Assuming your household consists of 5 kids, your spouse and you. 7 people x $12K/person = $84K. That would be 2x the average family income in the US today!
Generally, I think a strong version of BI is a payment of similar value to an unemployment/disability pension.
I don't think this is impossible, but it's pushing the limits of what's possible.
To take one example, "social welfare" in Ireland is widely quoted as costing 20bn, about €370 per person. Maybe close to 500 per adult. If you could scoop 75% of that amount into a BI fund, you would be about half way to funding a BI scheme.
The other half would come from increased income tax, a low band increase. Realistically, there will be a break even point that probably should sit around median income. IE, for a median income person, their increased tax equals their BI income, more or less. So, a lot of that tax come from people who are still net beneficiaries. Most people are close to break even.
There is an extra tax burden but it's not an impossible one.
So, if I'm following your math right, you're proposing a basic income of €1000 per person annually?
That would indeed be basic and probably too low to achieve what proponents want, which is to allow the elimination of other welfare programs for the truly disabled, etc.
That doesn't make sense. You're not going to give everyone that 12000. Just those that make less than that per year, right?
If that's the case, then the amount is a whole lot less than $3.8 trillion. The calculation is then 12000 * (Amount_of_people_that_get_less_than_12k).
Latest poverty numbers (2013) that I could find indicate only 45million are living in poverty. Assuming that poverty maps to less than 12k (and assuming they get all of it, and not simply the difference), then the calculation is:
12000 * 45,000,000 = $540 billion.
Which is a lot less than what you mentioned, and would probably be even less. That is definitely do-able, if the political and social will is there.
In the first article, he says we'd need to increase taxes 35% if we don't cut any programs. If we cut them, he says we'd "only" have to increase taxes 18%. Neither seems particularly affordable to me — remember, this is on top of our existing rates.
If we cut existing beenfits, it still seems to me many disabled/unemployed people would be worse off with BI, or about the same, as the current system. So we're left with massively higher taxes, and people who can't work will be left poorer.
The second article mentions all the secondary social benefits, and all the costs we'll avoid associated with people living in poverty. I buy that, but a 18%-35% tax rate itself is also going to have a massive deadweight losses as well which he's not accounting for. Current marginal rates are 30-40%, so we'll now have 48%-75% marginal rates (or assuming a 35% increase, 65% to 75%). Think that won't make society poorer and decrease the incentive to work?
I want a stronger social safety net. But BI seems to me like a extremely costly way to do it. There are many things we can do that would have higher bang for the buck.
Looks like each year of age under 18 makes up about 1.33% of that, for a total of 77M residents under the age of 18.
Suppose you don't give a cent to anyone under 18 (which is not consistent with the UBI arguments I've seen, but whatever). 244.5M residents, times $12k, gives $2.9T.
Sure, that's "residents", not "citizens". Otoh, non-resident citizens might be entitled as well. Either way, how can you argue with "over 300M times over $10k gives over 3 trillion"?
Edit1: screwed up reading the graph, fixed above numbers.
Edit2: oh, just saw your comment suggesting "18 to 65" Fine, integrating by eyeball the graph from my link, I see 47 years at more than 1.2% of the pop per year, gives roughly 60% of the population in your age bracket. Now it's 200M recipients, or $2.4T.
Bi has two main savings, direct welfare and indirect welfare from a flat tax rate. The vast majority of workers make over to 9,225$ per year which is taxed at 10%. If they had a 39.6% tax that's 2730.6 new taxes to offset a BI of 12000$ for a net cost of -9269.4.
Next $9,226-$37,450 is at 15%, bump that to 39.6% and someone making 37,450 costs -9269.4 + 6943.104 = -2,326.30$.
Now if you continue this you find a medean income gets a bigger tax break than 12,000$ per year from the graduated tax rates. Also, with BI you don't need a standard deduction...
Net impact BI's are not simply whatever the BI is * the population.
Whether you call the way of paying a "claw-back", "flat-tax", or just straight up higher marginal rates, you need to pay for it somehow. In the end someone is getting less of each additional dollar they earn. All these need to add up to BI * the population.
BI makes a lot of implicit subsides explicit. If someone gets a tax break that adds up to 1k/month and you replace that with a check for 1k/month and do away with their tax break it's no net change in there cash flow. All that you’re doing is acknowledging a tax break is equivalent to a cash handout.
If we decide that 12,000$ is enough to live on then it calls into question why people get a larger payout from SS on top of a large tax break from low incomes.
Add it all up and a 12k BI costs less than SS + all other tax breaks and subsides. But, people rarely think of tax breaks as a subsidy so there is a lot of cognitive dissonance on this topic.
PS: Another way of looking at it is to consider the Canadian government spends less per person on healthcare than the US government while covering their entire population. Presumably the US government could do the exact same thing which makes it a worthwhile thing to consider.
I am agreeing with you that there's really no difference between a tax break and a subsidy.
However, I don't understand your next point. If you're saying a $12K BI wouldn't cost anything extra after getting rid of social security and all tax breaks in our tax system, well then maybe. But then you've made SS pensioners much poorer. And increased taxes on all the rest of the population. Also keep in mind the standard deduction is sort of like a BI for people who earn above a small threshold so if you get rid of it the net benefit of implementing a BI for low income people is even less than $12K.
BI sounds attractive in theory, but the math around it seems hand wavey. When you try to add up the numbers, there's no way around increasing taxes massively, or leaving large groups like the retired/disabled/unemployed worse off.
It might be impossible to make significant change without making some group worse off. My point is the net cost of BI is simply the added benifits to very low income people as long as your also removing other subsidies. And we are already handing out a lot of subsidies.
Which subsides to remove becomes an open question. EX: With BI do we still pay post doc's a small amount for living expences?
PS: If nothing else BI is an interesting comparison point for the current system. EX: You get more from SS as a married couple than an unmarried couple.
> Now if you continue this you find a medean income gets a bigger tax break than 12,000$ per year from the graduated tax rates.
You're going to struggle to sell BI on the basis that the person with a median income should make higher net tax contributions to subsidise those that won't work as well as those the present system determines "can't" work at the moment...
You're assuming the goal is to increase the post-tax income of all citizens by $12k, and all current benefits schemes are kept running.
In the UK, there's a tax free allowance of ~10k then an income tax rate of 20%. If we gave everyone in the country £2k/year and dropped the threshold to 0, nobody earning more than £10k would get any extra money. This is just an example that seemed nice because the figures were pretty clean.
Even this toy example would still require a 3% rise in taxes on all workers, decreasing the incentive to work. Also, in this case you literally wouldn't help any poor wage earners at all, since a minimum wage job in the UK is already making more than £10k. (and maybe hurting them, if you increase taxes across the board — if not, then high earners will be seeing a rate increase of closer to 4% -- so top rate will go from 45% to 49%).
If you start getting to more life-changing money, like £6k a year, you're starting to talk about >10% increase in taxes on the whole working age population. The top rate will go from 45% to over 55%. And again, it won't add a penny to anyone who's earning more £10k.
On top of that, some people would presumably drop out of the work force, and the higher tax rates would reduce the incentive to work, so your tax base will be even smaller. That'll push up the tax rates a few more percentage points at least.
My math:
Going along with the example, around 65% of the UK is working-age, and about 62% of working age people work. So 15 million people in the UK don't work at all, let's assume they don't earn anything. Assuming you restrict the BI benefit to just to working age population (no pensioners or children), there are suddenly 15 million people who didn't get anything before who now get BI, costing £30 billion pounds. The UK collects/spends about a £1 trillion, so that would be a 3% rise in spending.
My point was simply that the cost of any form of unconditional income is not "population * amount given out", as with that maths the cost of £2k/year to everyone of working age would be over 80 rather than 30 billion. I'm not arguing that even small forms of unconditional income would be free, but the system is not as expensive as made out.
> 3% rise in taxes on all workers
A 3% rise in tax revenue, how that affects people will depend on how it's applied (changes to tax on businesses, for example).
We must consider at least
* Knockon effects of changing the tax thresholds / amounts
* Benefits that are being paid out that no longer need to be
* Changes in employment when people have a more reliable safety net
For example, with the £6k case, we can now remove JSA, ESA, Incapacity Benefit and Income Support I think at the least. That's about £20B we can knock off, while increasing the amount those people receive and removing the problems that come with things like benefits sanctions. The UK spends about £85B on welfare other than the state pension, and any of that spending that gets people's income up to £6k is completely covered already.
I would like to see more involved analysis for specific figures to know what the true cost might be.
> (no pensioners or children)
Children, yes, but any pensioners claiming more than this sum in state pension don't cost more.
> Also, in this case you literally wouldn't help any poor wage earners at all, since a minimum wage job in the UK is already making more than £10k.
Full time workers, true, but several forms of benefits now are restricted to those working fewer than 16 hours. A 20yo could be earning less than £4300 (£5.13 * 16 * 52).
Not a great source, but precise figures here aren't too important:
It can be unconditional and not apply to children and people collecting pensions. It would not create a huge mess by limiting it to people over 18 and under 65.
Wouldn't the simpler solution be to simply reduce the pensions by the amount of UBI?
For example, a pensioner gettin $40k/year would get $25k under a $15k UBI. You would have to get them to agree to the renegotiation, so I suppose it's not a realistic solution.
Yes it would, although getting people to give up something is hard. Personally I would structure a UBI as a large negative income tax to try and avoid these problems.
Why should people with pensions not get UBI? They saved their money into a pension vs into a bank account.
Unless you are talking about replacing Social Security, but even there the math isn't as straightforward.
As for 18 and under, I think it's a bit tough. A 6 person household with 4 kids needs much more than a 2 person household. If we don't supply UBI to the children / wards of the children then we risk needing to recreate social assistance programs. Although it does run the risk of having kids for money, which admittedly probably already happens.
I was making the point that a UBI can have age exclusions and still be simple. I would be reluctant to provide a full UBI to children since they don't have the freedom to spend the money themselves.
I agree those are all huge hurdles and it's incredibly risky, too, as it could be catastrophic if doesn't work, and you would have to cut all of those jobs, and then you also have to revert all the social programs back back. It could turn into a decade of pain for that society.
However, I think this pilot will at least tell us if a basic income works from the point of view of whether it can be sustainable on itself and whether 90% of the working people will quit working or not. Right now we have no clue whether something like that would happen or not, and it's probably the riskiest thing about a basic income - having 9 out of 10 people sit around and do nothing while the other 1 out of 10 have to support them.
If the outcome for that is a positive one and most people continue to get jobs, then we can start making a well thought-out plan on how to do the transition with the minimum damage possible to the society (until the transition is complete and then there's a net positive from the basic income for everyone).
I love the idea -- you could even come up with a 30-40 year plan to reduce working hours to 20 hrs/week while gradually increasing a basic income. Perhaps we could end up in that Star Trek future we've all been hoping for.
Implementation, however, looks tricky. I'm not at all sure it will roll out the way people think it's going to roll out. There's a lot of hand-waving about the effects, but it's mostly smoke and no fire. We really need some real-world data from various experiments to make better choices. There's also a vast difference between the slogan "basic income" and the actual details of how it would all work.
But as you point out, aside from all of that, there's a very real political problem: we've created a large political caste that likes identifying some great misjustice and passing various social programs to fix them. These cost money. For existing programs, lots of folks have intricate ideas about how to tweak things so that they work even better. These take simple systems and make them opaque. In short, we might be able to create enough wealth over the next few decades such that we could see an incredible change in the living styles of most people -- but dang if I can see the political system actually letting that come to pass. Oddly enough, it's not because of direct opposition. It's the "embrace and extend" folks that could cause far more damage than anybody else.
> The best chance (IMO) is for very a small country to try it first.
How about a city?
"The city of Utrecht announced that it would give no-strings-attached money to some of its residents, other Dutch cities are getting on board for social experiments with “basic income,” a regular and unconditional stipend to cover living costs."
I worry that these trials being conducted in certain regions and cities that are part of a larger economic area will end up being used to argue against BI due to the strange incentives that are created. One way I could see this going is that a large chunk of people who are on welfare today will move to the city to get a better deal. At the end of the trial, the numbers will show that productivity for the city as a whole declined. But that may not be representative of what would have happened if the whole country/EU/whatever had done it.
(This is just one example of how this could be spun in the media. I'm sure there will be many perverse incentives created that will cause inefficiency that can be pointed to as a case that BI "does not work").
One of the big selling points is that basic income is
funded largely by replacing different welfare state
institutions
...which presumably means some people are going to receive less total income under basic income than they did before. And, of those people receiving less total income, some will be the very model of the worthy types people had in mind when they created those benefits.
People in wheelchairs who can no longer afford the specially adapted vehicle they need to get to the shops. Hard-working parents losing their homes (in the city where all homes are expensive) because they can't afford the rent, even though they've only been out of work for a few weeks.
Setting the basic income high enough to cover specially adapted vehicles and family homes in expensive cities would of course be an expensive affair.
I can't remember where I read it (probably reddit, check out /r/basicincome), but I believe many proponents of basic income suggest that it will replace institutions that provide income to people such as social security, but not benefits such as medical benefits as you described above, or benefits provided to soldiers, et al.
This is so true. Milton Friedman's negative income tax proposal was implemented in the 70s as the watered down earned income tax credit. Welfare reform didn't occur in any meaningful way until the late nineties.
Living in Scandinavia (Norway), once thing that's become clear to me is that the welfare system really requires you to work to capture most of the benefits. You won't get normal disability pay, unemployment payments, and maternity/paternity leave if you haven't been working and paying into the system.
If you're income and asset poor, you'll get some minimal benefits, even housing. But these benefits are heavily means tested and much less generous than the regular system.
Scandinavian countries have some of the highest workforce participation rates in the world, so I think they've structured the incentives right. They need to, to make they generous systems possible. It would be interesting to see Finland take a different path.
Ate the savings the diff between the salaries bureaucrats had and the basic income they'd receive now that their positions are eliminated, given that some may not find full time employment after the cuts?
My impression was that the savings were from reduced externalities and increased spending power by those on basic income.
Why would you want it to replace other institutions?
Why not simply add it to the mix?
Politically, the way to make it happen would be to campaign for a small one to be introduced. This would get the infrastructure in place. Then ramp it up gradually over time.
The article alludes to the fact that you remove marginal disincentives to work by doing something like this. Many existing systems have some form of means test, which in practice results in very high effective tax rates.
Once we decide we want to support people on low incomes, there's a question of how the best way to do that is. The Nordics especially have built up enormous bureaucracies that in themselves cost a lot to administer various handouts and benefits. It might make more sense just to cut a cheque to everyone.
Means testing actually increases the disincentive to work. Working usually results in greater income which can diminish the benefits. This amounts to an effective higher marginal tax rate, when benefits are removed as you earn more.
It's hard to imagine a system that disincentivizes working more than means tested welfare. A few examples from SNAP can be found here [1], CBO study showing up to 80% marginal tax rates on the poor here [2].
This is precisely the insight driving basic income: by removing means testing, we can avoid perverse disincentives to work: higher income always results in higher pay.
In Germany we have a welfare system that requires you to take on pretty much any job if you become unemployed. If you only qualify for low-income jobs this can mean you end up taking on a job that pays you below welfare and welfare actually has to bridge the gap and pay you the difference.
This not only means you're working for the same money you would have if you didn't work, it also means there's pretty much no way for you to improve your income unless you can change jobs to a significantly better paid one. Even a raise or bonus wouldn't change your bottom line as the welfare is adjusted 1-to-1 for every cent you make.
This is IMO the greates disincentive of our welfare system. There's no advantage to finding an actual job when you're on welfare and don't qualify for jobs that pay significantly more than welfare. It's unsurprising that some game the system by intentionally failing job interviews and doing ludicrous amounts of trainings instead of finding and getting a (low-paying) job.
I don't know whether a blank check is the right solution here, but a frequently mentioned alternative for the skeptical is basically a negative income tax: for every two cents you make on top of basic income, you pay one cent (or whatever fraction -- the actual percentage is irrelevant to the idea as long as it's below 100%). This avoids the financial "dead zone" created by the 1-to-1 adjustments of the current welfare system.
>In Germany we have a welfare system that requires you to take on pretty much any job if you become unemployed. If you only qualify for low-income jobs this can mean you end up taking on a job that pays you below welfare and welfare actually has to bridge the gap and pay you the difference.
For as much as people say that the US "far to the right" social programs compared Europe, something like this would be a political nonstarter in the US.
To be fair, you merely have to prove that you keep applying for jobs and go to interviews arranged by the agency if you couldn't find anything. Also, these reforms are relatively new (historically speaking) and were justified with economical arguments (because the economy is always a good justification if you can't think of anything).
But I have heard about postgraduates having to take on so-called "1 euro jobs" (i.e. busy work like collecting trash in parks) in order to maintain unemployment benefits while working on their theses.
Yeah, these exist. They're called "1 Euro jobs" and the government likes to pretend they're a good thing (probably because they keep people busy so they can't complain about not actually having a real job).
The funny thing about most of these social reforms is that they were introduced by the more social of the two major parties -- although at this point they're social in name only.
They also legalised temp agencies creating an entire market of quasi-but-not-really employed people who don't show up in unemployment stats even if they're sitting around not getting paid.
What could be great about basic income is that you can safely fire a lot of bureaucrats without harming them. Some of them might even welcome the change from being paid to do meaningless job to being paid for literally nothing.
The problem with combining smaller towns in Finland has been, that the now redundant workforce in each town has been given a long period of dismissal protection. Five years has been quite common. And in Kuopio some people gained even 15 years of dismissal protection!
We Finns may occasionally have great ideas, but then we manage to execute the great plan in a bad way. How can the combined towns save a single dime, if they don't do the work with smaller workforce. So far those new bigger cities have been just losing money, because everything from health care to education has to be renewed.
One way basic income could potentially backfire is that rent could, and will go higher and swallow all the free money distributed to average people.
In effect robbing the ones that rely on just basic income of opportunities to get a roof over their head and transferring most of the distributed wealth to property owners.
I think introduction of basic income must be accompanied by laws that highly penalize owning unoccupied apartments to prevent that scenario.
Just pay for basic income by levying progressive property taxes. Right now, most societies have very regressive property taxes. The wealthy (who own vast amounts of property) pay very, very little tax on all of it while small homeowners pay very large property taxes.
You could even pin the basic income to a % of revenues. If landlords started raising the rent to try and capture the basic income, their property values would skyrocket and then they'd pay a higher tax rate which would bring in more revenue to support basic income. This would effectively create a feedback loop until the landlord class would no longer be able to afford to raise the rent.
I would contradict you by saying that in my opinion, the performance (execution) of plans is in fact reasonably good, and I think is a lot better than in many other countries.
But: even if municipalities are allowed to dismiss workforce, they won't. It appears that no public servant wants to have his/role and power diminished.
In fact, it seems that the larger a municipality is absolutely, the higher proportion of its workforce will be in public administration.
The highest cost of public administration and municipal services per head is in Utsjoki (a remote and poor area in the North with extremely disadvantageous geography), and Helsinki (the largest municipality with lots of well-to-do people and very high income). The lowest cost of public administration and most efficient organisation of services is in municipalities whose size is somewhere in between; record lows are in small communities where each and every inhabitant is committed to what they see is a common good.
Another factor for people not wanting to have their municipality merged into a larger one is the track record of previous mergers, where local services of the old, smaller municipalities where wiped out simply out of pure spite (I'm looking at you, Hämeenlinna, and how you managed Lammi and others.).
You would harm the bureaucrats by firing them, though. Most people would take a pay cut going down to a basic level of income. You can see this for yourself by examining public pay tables (common salaries for individual contributors are $30-$50,000 in the US.) This is much more than any feasible BI number.
I suppose this depends on country. In Poland bulk of low level gov bureaucrats earns barely above minimum wage. Mostly young (or old) women are hired for that positions.
People tend to want to work, really. But to your point, many people can't find work that pays the money they need to survive, so they become depressed. Also, people often lose their jobs.
Disclaimer: I'm stupid broke, live in a van and take a highly-effective antidepressant, so I might have a little authority on this subject. ;)
Depression is terrible (anti-social, self-destructive, painful, etc.) but useful when it's grounded in an existential crisis... it makes people reflect on themselves and think about what else they can do or change.
They're not worries, they're concerns. Also, that resource doesn't list a single successful, large-scale deployment. Finland is considering it. (The US will never, ever have such a fanciful thing because the plutocracy prevents it, even with Bernie 2016.)
And another concern: if people don't earn money themselves, the tendency is to waste, in all regards. This tends to reinforce learned helplessness, even farther away from the brutal reality of life/business/nature.
"And another concern: if people don't earn money themselves, the tendency is to waste, in all regards."
I have not observed the same.
My impression is that the trend is we, people, like to waste when we don't have to pay, but if the money come from our accounts, we start to get careful, independently how the money arrived to our account. People would not like to waste their money even it's from a basic income.
The motive for wasting is that the money-giver might want to see your bank account balance before giving. Not having savings is generally a requirement for receiving welfare after unemployment benefits have run out. It's something basic income would do away with.
That's the thing. Meaningless busywork is making people stressed and depressed.
Basic Income on the other hand would free people to pursue whatever purpose they themselves desire. You can make up your own meaningful job, cause you're already getting paid.
That's a sweeping generalization which presumes far too much. It depends on the person. Some people enjoy monotonous factory work because it removes the burden of thinking. Other people need a manager because they don't want to, or can't, plan the next logical thing. Others need constant variety or don't like being told what to do.
The other issue is that getting paid for a "meaningful job" which doesn't turn a profit is not going to scale. Millions of people suddenly wouldn't work in fast food, farm fields, industrial tanneries or meat processing plants because they're really shitty/dangerous/disgusting jobs. (But I'm sure some scary/crazy people enjoy them.)
And, when people have infinite choices and opportunities, the Paradox of Choice comes in to play and people become even more dissatisfied. See also: Zillions of wealthy housewives in perpetual existential boredom (depression) filling psychology & psychiatry offices.
Also, there are lots of people whom already do things they love. My stepsister is a special ed TA and loves it, but makes peanuts. Would this help her family, absolutely.
With wide-scale deployment, a common issue will be too many people doing all sorts of terrible# crafty work without making something people would actually want to buy like bric-à-brac kitsch shops that wealthy spouses subsidize while having zero foot traffic.
# Terrible because it's far too common for people to make the novice mistake of asking opinion of friends and family whom will say only nice things, and those people to base their perception on those lies.
> "That's a sweeping generalization which presumes far too much. It depends on the person. Some people enjoy monotonous factory work because it removes the burden of thinking. Other people need a manager because they don't want to, or can't, plan the next logical thing. Others need constant variety or don't like being told what to do."
If you like monotonous factory work, then you are free to choose to do it. There's no problem here. Again, you get to choose what you do yourself.
> "The other issue is that getting paid for a "meaningful job" which doesn't turn a profit is not going to scale. Millions of people suddenly wouldn't work in fast food, farm fields, industrial tanneries or meat processing plants because they're really shitty/dangerous/disgusting jobs. (But I'm sure some scary/crazy people enjoy them.)"
If a job isn't turn a profit and can't pay a decent wage, it means that that job is being out-competed by something else. And risky jobs should pay for the risk involved. If the pay is high enough, then someone will choose it over basic income.
> "And, when people have infinite choices and opportunities, the Paradox of Choice comes in to play and people become even more dissatisfied. See also: Zillions of wealthy housewives in perpetual existential boredom (depression) filling psychology & psychiatry offices."
You don't have infinite choices. You are only good at a few things. Only able to do meaningful work in a few ways. With Basic Income the culture would change. People would start learning about meaningful work. Wealthy housewives would learn to do meaningful work. The culture right now is not helping wealthy housewives, because it says that they should already be happy without meaningful work.
It depends on quality of the human contact. Often people feel most lonely when they are in company of people who don't behave friendly towards them. That often happens at bs job.
I see that it could help people start their own businesses since at the worst case you'll end up back on the minimum income. So that takes one element of stress out of it and you can focus on the business more.
I can see some arguments against this that would say the owner would be less hungry for success, and while that's true not every business that starts needs to be the next big thing.
In practise, this is more or less the case already in the nordics. The social safety net is so wide that even if you fail spectacularly at life, you won't hit rock bottom.
Except if you do badly at business, you have to lose everything before they help you. If you have anything that can be turned into money, or your spouse does, you have to use that first.
Another facet of the Nordic system, and not great for entrepreneurs.
Of course, one problem with the current bureaucratic system in the Nordic countries, is that some people slip through. If for example you start a personal company, and later fail, you won't get unemployment benefits (unless your company was a corporation and you hired yourself, of course). At least, that is the case in Norway.
That's the case in many European countries with sophisticated welfare systems. In Austria, we can pay extra (I think ~1.5% of income) as self-employed to get unemployment benefits but I don't know how popular that option is in practice.
Personally (as a highly employable, fairly senior software developer, so I'm unlikely to be out of a job as long as I can work) what's worse than lack of unemployment benefit is dealing with times of sickness. I suffered from Lyme disease for about 2 1/2 years until it was diagnosed properly and treated, and in addition to the reduced income due to being unable to work at times, and the extra cost of healthcare (despite the insurance it's not exactly free) in Austria, they still expect you to pre-pay taxes and pension & health insurance contributions based on your earnings 1-2 years ago. In theory you can claim some money for a few weeks if you get sick, but (a) you have to completely shut down any business activity for that time and (b) you have to be declared unable to work by a doctor. (Unlikely, considering the doctors were all telling me there was nothing wrong with me and it was "stress"…)
A basic income would at least help deal with the reduced income due to sickness & extra costs due to healthcare. The pre-payment aspect is probably peculiar to Austria and apparently frequently bankrupts profitable small businesses.
In Germany (which has socialized healthcare) I've heard of plenty of entrepreneurs and freelancers who aren't on health insurance because they can't afford it. What's worse: if they eventually do sign up they are legally required to pay fees for the entire time they didn't have health insurance. Good luck paying the backlog if you've been off healthcare for a few years.
If you're self-employed, a lot of the welfare system doesn't really apply to you either. Heck, if you are self-employed (or running your own company) and get pregnant, you don't even get the benefits an employee would (you get child benefits because those are for the child not you but that's pretty much it).
You get those benefits if your employer pays you for them. The problem is that you, as the employer, have chosen not to pay you, as the employee, those benefits. That money has to come from somewhere and if the employer doesn't pay it, the employee doesn't get it.
Unless I'm misinformed, you're actually wrong. As far as I was told, you can pay into the social welfare system but as you don't qualify for certain benefits the only thing you can do is get a refund of the most recent payments (not all of them, mind you).
So you're of course free to pay into the system, but as you're neither required to pay nor eligible for the benefits, it's mostly a waste of money.
In the case of parental leave, the employer only pays as much as 50%. The rest is paid by the tax payer (or the government agency, rather). Plus, of course, the employer has no say in whether they pay this or not. They're required by law -- thanks to the arm's length principle ("Fremdvergleich") it wouldn't matter whether you as associate ("Gesellschafter") pay for yourself as the employee; at least if you're incorporated, not merely a civil law partnership ("GbR") or DBA ("Kaufmann").
Of course the situation is entirely different when it comes to healthcare: if you're an employee of your own company (i.e. you incorporated, otherwise you are the company) it's considerably more difficult to opt out of healthcare entirely. The healthcare-free entrepreneurs I was talking about are regular DBAs or freelancers and the only reason they don't have healthcare coverage is that they can't afford it (which of course technically means they should actually be insolvent as a business but it's difficult to draw the line between trying to survive as a business over a rough patch and desperately holding on to a sinking ship).
Oh, and another fun excerpt of German law: senior staff (which includes general managers, i.e. you if you incorporate and employ yourself) is exempt from a fair share of labour laws. On the plus side this means you don't have to obey vacation rules for yourself, but I'm sure you can also think of some of the negative implications.
I find your question a bit unclear, but I'll try to answer.
Even in a best-case scenario where the politicians who are creating the laws/rules are well-intentioned and really are trying their best, I guess it's impossible to think of every single real world scenario. Thus, there will always be people who will fall through a complicated safety net.
As for why entrepreneurs aren't always covered in Norway? I'm just speculating here, but anyway: Since WW2, Norwegian politics has been dominated by The Labor Party (Arbeiderpartiet). They usually look out for ordinary workers, which tend to have it pretty good in Norway. Others groups, such as entrepreneurs, drug (ab)users, farmers etc. aren't always treated so well.
Does running the welfare system actually cost a lot? Last time somebody claimed that about US social security another person responded with data showing that it's less than 1% overhead.
> The final totals are $59 billion, 3 percent of the total federal budget, for regular welfare and $92 billion, 5 percent of the total federal budget, for corporations.
> The Nordics especially have built up enormous bureaucracies that in themselves cost a lot to administer various handouts and benefits. It might make more sense just to cut a cheque to everyone.
Not only that you could argue that it is also more efficient to have the spending decisions done by the individual and not the state.
This is great. One of the main reasons I think political progress is so slow is because its near impossible to experiment with any new ideas. Few countries can just scratch something and say ok that didn't work lets try something else - because 10s of millions of people are already working in or dependent on said system. There are however a handful of countries in the world that can actually do this, because of the wealth and relatively small populations they have. Finland is one of those, so this is exiting.
The same problem exists in city planning. I'm sure civil engineers could design much more environmentally friendly and efficient cities, free of cars and with optimal transit, waste, and housing systems. But you always have an existing city where millions already live and work, and you have to have 20/30 year plans to get anything changed.
Its like trying to build a new piece of software but having to mold it out of a 20 year old monolithic legacy app where everything is interconnected and you have to maintain full backwards compatibility.
I don't "know" if any of this is a good idea, but I'm glad to see it at the top of HN & elsewhere, where people can start to consider different ways of dealing with a changing world economy. We need to allow ourselves to consider new ways of thinking about work, welfare and income
Things like this have been posted quite often lately (some cities in the Netherlands are also starting small-scale experiments, and a rather high basic income was proposed in Switzerland a few months ago; I think all of those were posted here). I'm all in favour of a basic income (or at least of testing whether it works), but I wouldn't actually dare post here about it in fear of creating an overload...
I don't know either, but I find it interesting. I guess it really needs to be tested in the real world, in order to see whether or not it will actually work.
The problem in those countries is taxes and social contributions. You need to make 10 in order to bring home 5, that kills work, completely. Now the basic income, so basically we want the State to manage even more of the economy. If past experience would prove this effective, then OK, but it just proves the opposite!
Let me do some back of the envelope calculations for you. In Europe we pay around 40% of income tax. On top we pay at least another 8% for pension, which we will never see, and another 8-10% for health insurance, which is not great at all. On top of that, companies have another 30-40% of cost, _on top_ of the bruto salary of an employee in taxes and similar to pay to the state. Bottom line: more than half of your cost to the company goes to the government.
It's just incredibly bad. If you have a 10% unemployment the most effective way to help people is to bring that down to, say, a 3%. That will help most definitely. But for that to happen you need to bring down the cost of labor, which is just too high.
And don't let me start with pension. Europe is basically starving an entire generation, you don't see it now, you will see in 30 years when the young of today will start to go into retirement age. There will be no money to pay a real pension to everybody. You know how much you need to have a very comfortable pension? At a 6% rate, about 500 euro a month for 40 years. That's it, that's all you need. Right now we are paying close to this amount for a public pension, will we see that money? Absolutely not.
Bottom line: they have to fix the economy. That's the only long term solution and the only way to bring people out of unemployment and poverty.
> If past experience would prove this effective, then OK, but it just proves the opposite!
Can you cite some examples? I'm interested, because I seem to read a lot about how experiments with basic income actually tend to work out very well. (It certainly does in Alaska, although that isn't much money[0], as well as other examples[1] cited in this thread.)
> Europe we pay around 40% of income tax. On top we pay at least another 8% for pension, which we will never see, and another 8-10% for health insurance, which is not great at all. On top of that, companies have another 30-40% of cost, _on top_ of the bruto salary of an employee in taxes and similar to pay to the state.
I don't know how much you earn, or where you work in Europe, but I have never paid this much. Income tax and social security (including NHS contributions, so all my health insurance) in the UK was never more than 30% of my salary. It's about the same for me in Germany right now, if anything a little lower.
Maybe you're in a really wealthy income bracket, though, in which case -- congratulations?
UK is not Europe, in fact you pay less taxes and you actually do get a pension since it's tied to a low taxation fund that belongs to you.
Germany is about 45% once you go over the 45-50k bruto, which is not much if you ask me (rent tends to be 35-40% of your income). Also, note in Germany the company has another 30-40% cost on top of your bruto (they pay the other half of your pension and health insurance, for instance). Don't look just at what you get, but at your overall cost for the company.
Past experience? After World War II public spending has been trending up everywhere (also in US, but more in Europe). What did we get in Europe? Slow growth, huge public debt, 3+ times the unemployment they have in USA, should I continue? The thing is: government is just really, really, bad in any kind of productive spending. Government should take care of the ones in need* and should make clear rules for everybody, that's it, everything else is waste (and we have seen it).
*And let's be clear here: this doesn't mean public housing in the city center. This means giving enough to keep your dignity, which means you need to accept to leave far from the city. Just that people "in need" should be actual people in need, not some privileged class (like in Denmark students get money to study, those are NOT people in need)
If you are in the UK, 50k a year (above average but honestly, if even remotely close to London, not that much) will bring you a tax bill of around 38% (19k) if you consider employee NHS contributions ( data from http://www.listentotaxman.com/50000? ). So you are already at 38% and you have council tax (probably another 2k or more a year) plus VAT (21% or something?) on stuff you buy. I don't remember other taxes I paid while in the UK but these were the big ones. It isn't hard to get to the end of the year and see that you(+ employer) paid around 50-60% in taxes.
I live in Portugal, and if I consider VAT+income tax+social security contributions (self employed so I pay both parts or approx. 33% in social security) and ignoring other extra taxes (property, road tax, etc) 62% or so of the money I earn goes to the government (this was for 2014, my accountant did the math). I could probably get this lower with some creative accounting I guess.
Yes. That was the point of the grandfather post. That on top of that you even have employers contributions. If you add all of that you will get a value that often reaches 50-60%. I've given the example of myself, since I'm self-employed I pay everything, my tax rate is around 60%.
Ah, if you can still edit it then you might want to change "employee" to "employer" then.
In which case your effective tax rate is ~35% rather than 38%, 36325 / 55780.
My council tax is under £1200/year (and that's for the house, so we should only count half of that for me and half for my wife) and VAT is 20% on some but not all items. Pension contributions bring the tax rate down too, so it gets a bit hard to compare.
It's not fantastic, it's just that the UK is a very unequal country with an expensive property market. 50k gives a comfortable middle-class lifestyle outside London.
If you weren't paying those taxes, how much would you have to pay simply for equivalent health/education/unemployment insurance/pensions cover?
Well, looking at my payslip, disregarding the fineprint (I have some taxes lower because my wife is a stay-at-home mom) ~40% from what my employer pays for me goes to the state.
This of course includes health insurance, social welfare insurance and income tax.
The thing with a tax for basic income (as opposed to other taxes) is that the money doesn't go to the government, it goes directly to the people. The government cannot decide how this money is spent, so it's not a "fat government" thing.
And what is this "past experience" you refer to? If you are referring to communism, this is in some sense the very opposite of an unconditional basic income - unconditional means the government cannot tell you what to do (nor can employers, as long as you don't want to own a car, have a nice home, etc.). Yes, "fix the economy". But how? Basic income is actually a proposal how to fix it, I think.
While of course basic income is not a replacement for healthcare, the health spending cost reduction under such scheme is an interesting topic. A country could probably save a lot on psychiatric hospitals. It's not rare that a person attempts suicide (or looks like they're going to attempt it) because they're poor and in debt, barely holding to a low-paying job; they get put on an observation (during which they'll probably lose their job), stuffed with medication and then thrown back to society at large. The hospitalization itself can cost more than the debt the patient has is worth.
I think such cases are making benefits of BI hard to estimate - because it could eliminate some percentage of costs across so many different aspects of public spending that it's getting hard to keep track of them all.
Basic income is not going to prevent people from taking on unsustainable debts.
Arguably it's less likely to do so than a conventional bureaucratic, means-tested system, since (i) such systems usually directly subsidise things people tend to get into debt for (housing, education/training, and medical care) and have a more flexible, living-costs-related approach to the size of the subsidies on offer and (ii) predatory lenders can chase the indebted far more aggressively when armed with the knowledge their target has a cash income of at least $xx per month and therefore could easily make the payments if they stopped paying for their house, food and health insurance...
You always pay for it. The US does have a lower tax rate, for example… but then you pay for health insurance, schooling, etc. etc. that in other places are handled through the higher tax rate.
except for the public pension that is a shameful tool invented to satisfy one generation of privileged people, I disagree with you.
The problem is not the % of income tax. tax is fine if the system works. take a simple example in many european countries education is free. in USA even in a community college, going beyond two year studies will cost you 10K$ per child, then if you do not have a good company insurance it will cost you an arm to insure your family. id rather pay tax to subvention education.
the only problem is that salaries are not going up since the early 00s, tuition costs are going up, consumer goods prices are going up, accomodation price are so crazyly high (especially in cities where there are lot of jobs) that you won't get a house before 30-40 years of debt. Hell people even thought their greatchildren will work two days a week and earn more than them but the sad truth is that the payroll of a qualified worked in today's world will buy you less than a blue collar in the old days. this is the great failure we experiencing right now, tax just did the right thing, they went up, like everything else but our salary.
This is the only thing to fix in the world right now. a company shouldn't make 400K$ profit per employee.
It would make it impossible unless you dramatically slash Social Security, Medicare/Medicaid, and the military.
Every time basic income comes up, the one thing persistently avoided is running the budget and taxation numbers needed to support it (and there are endless excuses raised for why that discussion is avoided).
$2.6 trillion (basic income) + $600 billion (military) + $1.2 trillion (SS) + $1 trillion (M/M) = $5.4 trillion, and that's before you get into all the other costs of government. Throw on another $400 billion in other mandatory spending costs, and another couple hundred billion in other discretionary spending items.
$6 trillion is the minimum out of that, just for the Federal Government.
Now throw in $3 trillion for local and state.
$9 trillion in total government costs out of an $18 trillion economy. Pretty obvious what would happen to that system. And it's why nobody ever wants to discuss actual numbers.
> And it's why nobody ever wants to discuss actual numbers.
I do. I want to talk about actual numbers because I think it'll be interesting to work out what might or might not be affordable. But I get rather frustrated that people either provide no numbers or do what you've just done and multiply the basic income amount by the total number of people and go no further.
You're making the assumption that everyone gets $12.5k more post-tax. That's not what many people would propose. There's also a reduction in the number of benefits and other programs that need to be funded (in the UK, anything above £4000 would eliminate the need for job-seekers allowance and several other benefits). SS is $1.2T, but some portion of that would be covered by BI.
The money also doesn't evaporate, one of the arguments in favour of large scale wealth redistribution like this is the people you distribute it to are the ones who are most likely to spend it.
It's an extremely complex issue, and both those saying "everything would be wonderful" and "X * Y = $$$ is too much" are doing it a disservice.
You remove the marginal disincentive to work at the low income end. This is good.
However you add a large incentive to give up work at the higher end.
As an example, I own a house in london. I'm by no means rich but I have a fairly decent income and significant savings. Enough that if I downsized my house and lived frugally I could support myself for 10-15 years.
That's not enough to retire on. If I was to receive £4-5 free income a year though, it would make enough different that my saving would last 20 years or more and I'd be able to give up work now.
There might be a relative small number of people in my situation, but together we probably pay a great deal of tax that would be lost.
There might be a relative small number of people in my situation, but together we probably pay a great deal of tax that would be lost.
You've made a basic error in your assumptions - you're assuming that when you quit your job ceases to exist. It doesn't. Someone else would do it instead, being paid what you're paid, and paying the tax that you pay. So long as the number of people leaving the workforce to live on their basic income + savings is smaller than the number of currently unemployed people then the tax receipts wouldn't change. In fact, with the consequent savings on employment benefit, the amount of tax to spend on services would go up.
so it'll increase the efficiency of the workforce, instead of people just doing ANY job to survive they can take a short break while they look for what they really want to do in life.
You could pursue a hobby creating computer games, and when your game is ready you can they make profit and start paying back to society.
The work/welfare system stifles innovation, people with skills end up doing work they hate, those who wanted that job have to get a job they don't want and the unemployable take advantage of the system to watch TV all day.
You're assuming that the pool of unemployed workers would have the same skills and abilities as the early retirees, many of whom would be in the most productive phases of their careers. There may not be anyone who can fill the job and justify the same pay. If unemployment rates decrease the availability of skills drops off.
I'm not suggesting that unemployed people do the jobs of the people who leave the workforce - just that someone does it, and someone moves job to do their job, and so on, until eventually an unemployed person gets a job. There might be people who are really hard to replace, but they're so unusual that they're not really worth considering when you're talking about national policy.
No one could reasonably suggest that a nation should base their welfare policy ideas on whether or not a few thousand people will be hard to replace if they retire.
No one could reasonably suggest that only a few thousand people would opt to retire early if every adult had an automatic right to a sum in the region of the present basic state pension.[1]
There's nothing particularly unusual about the OP's circumstances, and they made a good point in that a BI would be particularly attractive to asset-rich people who had paid off their mortgages even whilst poor BI recipients struggled to pay rent without their housing benefit
[1]a touch under £6k per year in the UK, which is certainly in the ballpark of BI proposals, as well as probably not enough to replace other subsidies in may parts of the country.
No one could reasonably suggest that only a few thousand people would opt to retire early if every adult had an automatic right to a sum in the region of the present basic state pension.
Suggesting that people will decide not to work if you give them £6k a year is a ridiculous strawman.
The basic income (and the pension for that matter) aren't high enough to buy any significant assets. There's an assumption with a pension that you've already bought a home, you're not going to invest in a new car, that you're unlikely to want the latest expensive gadgets (I'm not arguing that the assumption is right, just that it's there). With a basic income being the equivalent the only people who'd use it to 'opt out' of the workforce are those who already have the assets they want and have decided they won't ever want new or better ones (a vanishingly small number who could probably opt out of the workforce now if they wanted to) and people who have decided they don't want those assets in the first place (a much larger number, but still very small in the grand scheme of things).
Every single person who has £6k x years-they're-likely-to-live could opt out of the workforce right now by your reckoning. It just doesn't happen. There's no reason to believe it would suddenly become popular if a basic income were enacted.
> Suggesting that people will decide not to work if you give them £6k a year is a ridiculous straw man.
Around 1.2 million people over the pensionable age live on only the state pension (and that has other qualification requirements). That's a little more than the number of people over 60 actually in work.
Sure, 40 year olds typically have a little more energy than 70 year olds and quite probably a few years of mortgage payments left, but I still think you can safely add more than a few thousand early [semi]retirees if you open it up to everyone and remove all qualification requirements.
Would you like to live frugally for those 20 years though? One could assume that you'd get bored of doing absolutely nothing after a while, so you'd end up working anyway, even if just to raise your living standards. People generally hate boredom. You may even be more willing to start your own venture since you're not risking extreme poverty if it doesn't pan out.
Definitely. I'm not arguing with that. But there's a difference between going frugal because you have to, and because you want to. BI is about getting rid of the first while maintaining the second.
I'm assuming you meant "£4k-5k" there - and if you own property in London, you're almost certainly getting more than that in asset price appreciation. You could probably live the rest of your life on equity withdrawal schemes.
Although there seems to be enough support by MPs for basic income so that it realistically could be trialled, I wouldn't be holding my breath. The government has too many other things on its plate.
Finland is suffering from a period of slow growth and rising unemployment. The three immediate reasons are the economic troubles of euro area, the decline of Nokia, and the trade sanctions against Russia, one of Finland's largest trading partners. Add to that the quick rise of wages until 2008, the aging population, an expensive social welfare system, and the inability to devalue the local currency, and the troubles seem very hard indeed.
The government's main goal is to adapt the Finnish economy to the new reality, by spurring growth and improving state fiscals. It has many options on its plate, basic income being one of them.
Currently, however, the government's focus seems to be in short-term. The current hot topic is the so-called "social contract", which is essentially government trying to make a deal with labor unions to increase the length of work week from 37,5 hours to 40 (or a similar reduction in wages). This plan, perhaps not so surprisingly, seems to be failing. After it is buried (probably within the next few days), the government may try "fiscal devaluation", i.e. moving tax burden from companies to citizens. And then some painful public finance cuts. And after that, who knows what?
Regarding long-term efforts, other pending reforms have more support than basic income, but still not enough agreement to be hammered out quickly. The two most important ones are health care reform and the change of municipality responsibilities. Both of these have been in talks for years without signs of being resolved.
All this is made more difficult by the fact that the rising populist party 'The Finns' is in government for the first time, still learning how it wants to play the game.
In summary, it isn't clear when the government will move from short-term considerations to longer-term restructuring, and if the basic income will still be on the plate then.
Finn here. Some figures to put the floated numbers of 500-1000 euros/month in perspective:
Average salary, before tax: 3150 EUR
Average salary, after tax: ~2000 EUR
Market rent for one bedroom apartment in central-ish Helsinki: 1000 EUR
In other words, 500 EUR/month is a tolerable budget for a skin-flint student living in subsidized/free accommodation, but it's going to be pretty tough going for an adult, and completely prohibitive for eg. raising a family. 1000 EUR would be more realistic, but obviously also twice as expensive to implement.
But if it's an unconditional guaranteed income, i.e. each member of the family is making it, then it shouldn't be a problem. For example, a single mother with two kids would get her 500 EUR/month plus 500 EUR/month for each kid, bringing in a total of 1500/month for the family. While this certainly isn't massive, with a part-time job and being frugal, it should enable her to pay the bills.
Also, you don't have to live in the most expensive part of the most expensive city... Good livable apartments can be had for 300e-400e/month, even in the larger cities.
As long as this cuts off all other social security payments, like for housing and child care etc. So if you are poor then you have to live cheaply.
It's ridiculous that the only people who can afford to live in downtown Helsinki are the very rich and the unemployed... "They have to live near where the work is!", what a joke...
I wonder how this interacts with savings, credit and location. Knowing that you are guaranteed an income would mean that people could spend all their income. It would also mean that it would be a lot less risky to offer certain level of credit. Lastly, it would allow people to go and live where life is cheaper.
Isn't basic income really pretty dependent on closing borders? So you have a basic income ... here come the stampedes of African and East European low skilled immigrants looking to get a basic income without having to do anything.
Essentially, also how do you move people from basic income to being ambitious to pursue more than basic income. People become complacent when they become comfortable with their circumstances. I don't think that is appreciated enough in this discussion. People really need to be kept slightly "on their toes".
If you look at the USA, that is precisely what happens here, for better or worse and even to an extreme and unhealthy manner. We have extreme poverty relative to other societies we want to consider ourselves to be peers of, but at the same time we have these unachievable dream motivations in the form of grotesquely wealthy people in the form of CEOs, athletes, movie stars, musicians, etc. that 99.99999% of people will never ever get even close to reaching.
Rather than a guaranteed income, I think a better system would be a guaranteed jobs. This would work better than basic income as there are 2 type of unemployed (let's leave out the disabled for this discussion). Those that want to work, but can't find work. And those that simply don't wish to work or conform to a work environment. Given this why not have a 2 tier unemployment offering.
The first is a guaranteed job. Ideally covering areas that don't compete with non-essential open market business. So things like looking after parks and helping out in nursing homes. General community benefit programs. This way if someone is out of work the government guarantees minimum wage at X hours a week to keep people in work and not go into that unemployment rut where after extended time they find it hard to re-enter the workforce.. The remain a productive member of society for their own self-worth while working gives the opportunity to upskill or show they are productive people while looking for better paying work. And given they are already working there is not the problem that taking a job earns them little more than being unemployed anyway.
For those that are capable but refuse to work they are offered a bare minimum living environment for pure humanity sake. Something like a bed in a dorm and 3 hot meals environment but they lack personal luxuries until they are willing to be productive and this keeps costs are kept at a minimum. It also solves the view of people who feel like unemployed are all bludgers as it separates those that are victim of circumstance vs unwilling to work.
This way we don't punish people who are willing to be productive but the economy does not have capacity to offer employment, and minimise the cost and incentive for people to abuse the system.
I'm sure it's not that simple in reality but having a one size fits all seems limiting. Something down this route would better allow for people in differing circumstances.
I'm not sure the point of this comment. Is it just for anecdotes sake? If not it sounds like you have a problem with the type of work being offered in this particular example. Not the concept. One (arguably) bad example doesn't make an entire concept void.
If you tie benefits to work for moral reasons, but have no real work for them to do, then you'll just end up with pointless labor. Consider many people on welfare are not very employable anyways, their labor is not valuable or in demand. That is why they need welfare in the first place!
The British Victorians solved this problem with treadmills. But eventually this archaic thinking was replaced with more enlightened solutions to poverty.
Not sure why you're being downvoted without explanations, a good job (key word, good) can bring a lot to a person's self worth and sense of purpose. You have an interesting idea here - for someone that can't find work, it could be the opportunity to do something that would build their abilities and might help get their lives in order. A guaranteed income is a pleasant idea, but gives people neither skills, nor discipline, and lessens modern incentives (nicer stuff, more options) to build either.
I wondered this too. If a small country implements basic income, they really will have to put strict limits on immigration. If the whole world was doing it, it wouldn't matter as much.
Unconditional basic income is certainly not going to hurt, as it'll make one parent staying home to take care of the kids a lot more feasible financially.
With 10% unemployment, and the last eight years consisting of a non-stop stagnation / recession (Finland has had zero net GDP growth since 2007) - how would removing workers from the labor pool not crash the economy even further?
Finland is very likely to see its GDP stay at 2007 levels for at least a 15 to 20 year period of time. There's nothing indicating growth or recovery is inbound (things have only been getting worse the last three years). I don't see how it can all be paid for with a broken economy.
Unless the premise is to drop concern for total economic output, and strictly focus on redistribution to raise the median. That seems like a huge leap of faith, unless you can get tax revenues to climb with greater economic growth.
In response to the deleted comment because I had already typed it out when the parent was deleted:
> proof that unemployment benefits incentivizes staying at home
I have yet to see conclusive evidence for this "people are lazy" argument. Humans aren't rational actors in a vacuum (except psychopaths). There is social pressure to contribute to society and "carrying your own weight" -- just ask anyone who's ever spent a non-trivial amount of time unemployed.
BI can be more than a replacement for current welfare but it aligns very nicely as a replacement for the current systems of unemployment benefits. Of course there are people with special needs and of course BI can't replace all of the welfare system but it significantly reduces a lot of complexity.
In my opinion, the potential effects of a BI are far greater than just redistributing wealth (which the tax-sponsored welfare system already does). It raises the barrier from zero to a liveable wage. IMO this entirely eliminates the need for minimum wages and drastically changes the dynamics of the job market. It significantly reduces the inequality in the labour/capital struggle -- it eliminates the major social factor of "will I lose all of my possessions and ruin my family's lives" from fundamental job decisions.
Instead of having to worry about your (and your family's) continued financial and social existence when you lose your job (or your company tanks or whatever) you have a built-in financial safety net making sure that even if you do fall, you won't hit rock bottom.
Basically it's "rich parents for everyone".
> everyone thinks "I'll get more" or "they'll get more"
But that's not what it's about. In all likelihood, if implemented correctly, most people will get pretty much what they have now or maybe less. But as with existing unemployment and welfare systems, BI guarantees that you won't be out on the street if your employment situation changes. Unlike most existing unemployment or welfare systems, BI also creates a smooth transition for when you do find a new job (or start a new company).
It's a zero sum game. It has to be. Everybody can't be better off financially merely because of a universal basic income. It's the market dynamics that change, not the amount of money in the system.
You're basically arguing against welfare, not against the BI. BI is no more about closing the gap between the rich and the poor than welfare is. It's like socialised healthcare (a recent import from communist East Bloc countries like the UK): it's not about helping you when you're already fine, it's about preventing your life from being ruined when you're not fine anymore.
> it's not popular to disprove BI here
You're merely disapproving, not disproving. That's why you get the downvotes.
Typical Hacker News comment section on something innovative and something that takes the next step in global economy; "I don't know.", "hmm, looks like a bad idea.", "yeah, it doesn't affect me so I guess it's pretty bad."
This always reminds me of that quote "A democracy cannot exist as a permanent form of government. It can only exist until the majority discovers it can vote itself largess out of the public treasury."[1]
1. presumably someone did actually write or say this at some point, seems to be unclear as to who that person was.
<<[It] is a variant expression of a sentiment which is often attributed to Tocqueville or Alexander Fraser Tytler, but the earliest known occurrence is as an unsourced attribution to Tytler in "This is the Hard Core of Freedom" by Elmer T. Peterson in The Daily Oklahoman (9 December 1951)>>
Yep, I've done the Googling a few times and as I looked further in to the attribution change it became progressively unclear. Not sure how much we should trust an "unsourced attribution".
The people who downvote could elaborate on how this magnificient plan should work. And why it should be implemented? Because communism on paper also seems like a valid idea and then millions die
Plans in general fail as soon as they hit cold reality. There will be problems with implementation, inglorious watered-down compromises, corruption, unforeseen consequences, etc. The funny thing is though that political radicals will not view their original plan as flawed, only the 'deviations' from that plan.
For example, some communists would argue that the reason communism failed was because it deviated from the "paper" version. See 'actually existing communism' and the Nomenklatura (New Class) for more information.
How much more genocides are needed before some crazy idealists realize that communism is a utterly dangerous idea that has little to do with reality? We had/have the Soviets, NK, China, Cambodia and few others with the toll in tens of millions (or more than a hundred) and some entitled middle-upper class pricks still want to "save the world" with this flawed to the core idea?
The next concern of implementation: extremely common for people whom aren't good with money tend to not budget or buy what they need, and end up in crises of failure-to-plan ahead (economists call them "high MPC"). Some people will need guidance as to what to buy. Others won't.
A related concern is when people whom aren't good with money suddenly receive a pile of it: the sad Anna Nicole Smith syndrome: excesses in all things apart from improving or acquiring basic necessities. It's common in human nature to really screw up, and it literally kills some people. There has to be some programs/assistance which can offer/help locate specific recommendations and get people out of a bind at least once.
Hopefully, it can be implemented in a way which reduces risks of negatives and offers useful, advantageous advice without treating people as children or dipping into their privacy without permission.
> The core question of basic income is: if people work, do they lose it entirely?
That's not a question in basic income. If you would lose it when you start working, that's just basically your standard welfare system. Basic income is by definition given to everyone without discrimination.
To compensate, you adjust tax levels. In my country you don't pay tax the first few thousand dollars. You can remove that. Then you can increase the tax rate a bit, especially in the higher brackets. Then you end up with most people getting the same net income after taxes and basic income. And you get a smooth and bureaucracy-less progression from unemployment to full employment.
I agree with your comment on people not being good with money or budgets. You would still need some social support system for people with issues or mental disability. Perhaps the government could be granted the power to take some of the income and putting it directly towards housing.
Increasing taxes "a bit" in the higher bracket does not have proportional effects. Beyond a certain level the higher brackets simply opt out of paying taxes - and this level is not much higher than the price of a competent accountant.
> The core question of basic income is: if people work, do they lose it entirely?
Usually basic income is intended to be irrespective of any other income source. This article about Finland states the same.
It's the key difference from other kind of welfare.
The other being that you don't have to prove and thus nobody has to check anything.
By removing the marginal disincentives it gives the ability to accept any job opportunity, no matter how temporary, non continuous or whatever; you can only gain
by doing something.
It's not clear how this would affect the whole society. Especially since now everybody has X bucks more, will the prices go up for everybody, thus excluding the poorer and thus making the system counterproductive ?
> Especially since now everybody has X bucks more, will the prices go up for everybody, thus excluding the poorer and thus making the system counterproductive ?
This is the big question for me. I have yet to read about a trial being run long enough to determine this.
> The core question of basic income is: if people work, do they lose it entirely?
No. That is the point: it is for everyone.
In the Netherlands, a few cities intend to start experimenting with a variant: only jobless people get a basic income, but they will keep it when they find work.
> The next concern of bringing into reality: extremely common for people whom aren't good with money [...]
On this, data is available. Giving money directly to poor people turns out, on average, to be the best way to help them. Most of them will spend the money wisely, the ones who fail at it are pretty few.
The core question of basic income is: if people work, do they lose it entirely?
No, that's the whole point of it, and the difference to regular systems with unemployment benefits: it's extremely simple to administer, because everybody gets the same amount. Also, even if you pursue a very low-paying job, you will always earn more than people who don't work at all.
I suggest we use basic income to even pay wall street ceos - and here is why.
Give everyone a salary that allows them to afford food and rent. Including rich wall street bankers. This will help unsigmatize the "welfare queen" factor.
Second - since we have this habit of treating humans as lab rats and need to dangle "incentives" to drive them to be productive. Create a sliding scale on top that goes from 0 to S_max.
Everyone from the Walton family members to Jeff bozz gets paid S_max + food + rent and every homeless person gets paid 0 + food + rent.
If the overall GDP of the country improves S_max goes up. If there is food shortages or housing shortages then S_max does down.
There's a different matter though; Wall Street bankers implies they live in NY, where the cost of living is enormous; the basic income as described in this and similar articles wouldn't be nearly enough to cover even half of the cheapest cost of living.
And you need to live in expensive places because why exactly? Because the jobs are there. And why do you need to be where the jobs are? Because you need a job. And why do you need a job? Because you need to pay for your livelihood. And why do you still worry about that when you have BI?
Sure, some people still might want to do the kind of jobs you can only find in places with astronomical costs of living, but even BI can't prevent you from making unsound decisions like taking a job in an expensive place for a wage that barely pays your cost of living.
What BI can do, however, is eliminate the necessity of taking on that job or moving to that expensive place. And maybe if you can't find a job in the places you can afford to live, you just start your own company and create jobs for other people who can't afford to move to those places.
BI changes dynamics. I'm not saying people will stop moving to NY to work low income jobs but at least they have less incentives to do silly things like that.
>"the basic income as described in this and similar articles wouldn't be nearly enough to cover even half of the cheapest cost of living."
Actually, the system commonly discussed in Finland would work so that the basic money for living comes on top of housing costs. And this is what kills the system. We already have a system where the income of each person is topped up to a certain level of "livable level", on top of housing costs; this means that quite a number of people have not much incentive to optimize their housing cost as it is anyway paid by the government, and that in turn means that housing is quite expensive (comparison to NY is not entirely wrong). Property investors are happy, of course, because taxpayers foot the bill.
Overall, the problem is that what is called "atypical job" is nowadays typical, and the system cannot adapt. The only way seems to do it via an insolvency of the government.
Evening taking the location out of it though if you want to live in a large house basic income won't cover it. I think as long as it provides a basic level of living for everyone (small house - enough room for you and your family, basic healthy food costs, utilities) it's good enough. Then if you want a higher standard of living (eating out, mansion, car, vacations) you have to get a job. That way we keep people who want to work working but those who want to pursue pursuits without large financial upsides can.
Basic income is the type of idea that is very, very hard to implement within our current (possibly any) political systems. There is very little room for compromise, half measures and gradualism. It does not lend well to caveats exemptions, and design by committee.
One of the big selling points is that basic income is funded largely by replacing different welfare state institutions: unemployment benefits, child benefits, housing subsidies, state housing, pensions… This allows (A) A big enough basic income (B) big savings on welfare institutions running costs, (C) the simplicity needed for a clean re-write of incentives.
Where do the "efficiency savings" come from? Largely they come by cutting salaries associated with managing a welfare system. Can a government reduce public sector employment to that extent?
The danger for any country implementing this is that once they get into the political procee, they will chop and compromise and water down the idea until it is just another item on the big list of ingredient in the social welfare soup €212.13 per month that you qualify for while keeping everything else that exists.
Reforming the tax system and the welfare system as radically as required in a short time is a tall order. Maybe the Finnish can pull it off. They have a good track record. More broadly, I expect that this would have a high failure rate.
The best chance (IMO) is for very a small country to try it first.