One reason people pursue startups is to achieve so-called "FU money". A strong safety net gives everyone at least a minimal version of "FU money". So at the same time it makes risk-taking easier, it might remove a major incentive for risk-taking.
In any case, it wouldn't work. How long would people tolerate a significant percentage of people just plain mooching off the state? I don't think that would work anywhere, Europe or US. Even in European countries that provide that kind of assistance, you're supposed to be at least looking for a job, or in training, or be seriously disabled enough that it's clear you wont' work productively.
Welfare programs used to require people to work (picking up trash, etc.) to get benefits. When William F. Buckley ran for mayor of New York, he got a huge amount of flack for suggesting this as a law (nobody realized it was already on the books).
Most Western countries are able to pay large numbers of people to mooch off the state by calling them lobbyists, "diversity coordinators," graduate students, defense contractors, etc. Many people in these categories are probably doing some form of useful work, but some jobs with that title clearly exist to give an articulate member of a politically sensitive group enough money to stay happy.
Also, Aaron specifically uses the term "basic minimum income", and describes a scenario where "you could live off the government-provided income as you got things started."
This sounds like the welfare office becomes your infinitely patient investor. "Well, yes, I've been receiving assistance for 20 years straight, and I'm not disabled. But you see, I've been working on my startup all this time, and I think we're just about to turn the corner!"
"Supposed to" means they do have people in place whose job is to prevent fraud. It's surely not possible to prevent it entirely, but if you're just sitting around working on a startup, I think they'd probably catch on.
So, if the Swedish model is to believed, society would have to cope with, an approximately 7-10% jump in unemployed working-age people living on the state. If you don't think that's applicable, please explain why.
Given Aaron's example, such behavior isn't "fraud" anyone needs to "catch". Using the minimum income to help you work on a startup, no matter how silly or hopeless, is notabug, it's a feature.
I think that Aaron's idea is 1) unworkable, 2) politically unfeasible in the US, and 3) doesn't even reflect what countries like Sweden have in any case.
