It's not widely known but the United States was the first developed country to promote a basic income, in the form of the Alaska Permanent Fund. Each year, every US citizen resident in Alaska receives a dividend payment from this fund. The amount varies based on market returns but it has hovered around $120/month ($1400/yr) over the last decade. Children are eligible, so a family of 4, for example, would receive $480/month.
Economists who want to study the effect of a basic income can travel to Alaska and see the impact for themselves.
It always struck me as ironic because Alaska is one of the most conservative states, and conservatives are not usually in favor of handouts. In this case, however, the inflows to the fund come not from personal income taxes but from taxes and lease-revenue on the state's natural resources, notably oil and gas. Because of this, people view it as a birthright, similar to an inheritance, rather than a handout, like welfare.
In 1976 Alaska's citizens just banded together and determined that (1) all of these natural resources are shared, and the benefits from them should be shared also; and (2) none of us trust the Government to spend this money for us, better than we could spend it ourselves. Today, it is the most popular Government program in the state with near absolute bi-partisan support.
So there seems to be precedent that this can work, if you have a massive sovereign wealth fund that is fed by revenues from shared resources. There are other countries, like Saudi Arabia or Norway, who will probably be the first to try this on a nation-wide scale before Switzerland.
> Economists who want to study the effect of a basic income can travel to Alaska and see the impact for themselves.
The problem with the states as laboratories of democracy is that, from a scientific perspective, they're pretty crappy experiments in terms of having any control groups. While an economist can travel to Alaska, it's hard to tell whether any given quality in the current state is due to the experiment or not. For instance, the price of food is quite high in Alaska; is this due to some basic commodity inflation, or is it because there are no road and rail links to most major population centers? Probably the latter, and you can look at Alaska both before and after the Permanent Fund was implemented, but even then, it's not a perfect control.
I think the idea of states as labs is generally a good thing, but people often misunderstand it. States as labs shouldn't be seen as pilot programs for the whole country, they should be seen as pilots for other states. The US is huge, and a state like Alaska has a very different economy than Rhode Island. However, somewhere like Montana may be able to use some of what worked in Alaska. The advantage of state power is that allows things that are unique to the state to have more influence on policy.
> The advantage of state power is that allows things that are unique to the state to have more influence on policy.
That is also the disadvantage of state power. At least, if you are a person whose life is being controlled by the coercive power of the state government in ways that might be harmful to you.
If you are powerful in the state, of course, it is very good for you to have fewer checks on your own power. It also helps things like arranging elections, like by excluding demographics less likely to vote for you.
As an ongoing exercise it's useful to study over time the number of times the notion of state's rights is invoked in defense of a good idea, a bad idea, or a genuinely disgusting idea. I'm not trying to impose any beliefs on you: feel free to use your own definitions for these things.
My position is that state's rights is invoked so often in defense of bad or disgusting policy in the United States - and frankly, used so infrequently to test genuinely interesting policy in a meaningful way - that it's not a hugely important thing. I feel this is an empirical observation that won't necessarily hold true in all times or places.
When people try to state these things about how government should work purely out of principle, it usually seems pretty unconvincing. We can judge methods of government based on their outcomes to a large extent.
This is a very good point, since Montana is the "Saudi Arabia of Coal."[1] It could work in North Dakota, too, where they're sitting atop the Bakken Oil Formation.[2] And as a Montanan, I would __love__ to see a Montana Permanent Fund.
I think perhaps an even better place to try this would be where I currently live: West Virginia. The oil/coal/natural gas industries account for a significant percentage of the state's economy, yet the people who benefit the most from it are mega-corporations from outside the state. On top of that, most of the people in West Virginia are dirt poor, so a basic income would probably have a huge impact.
"Alaska is one of the most conservative states" + "none of us trust the Government to spend this money for us, better than we could spend it ourselves" = not ironic at all.
It is usually admitted that there are huge overlaps between conservative and libertarian philosophies. Thus if one equates conservatives with libertarians, one can (falsely?) conclude that there is an incoherence with the idea of libertarians receiving handouts (see Atlas Shrugged, and Ayn Rand's 'propaganda' for more details)
I don't get a check for the usage of the natural resources of Illinois. If I did, it would be a handout, because I didn't put them there, and I don't own the land. One would assume that conservatives would be against people getting money just for living somewhere, without having to work for it.
The money is given to the government, and the government didn't put it there either. However, the job of the government is to serve you. So I disagree that it would be a handout.
The money exists and is given to the government, the difference is just whether the government should decide to give it to those who need it most, or whether it should be distributed equally.
The money is given to the government because the government levies taxes. The government could also choose to reduce the levies so that there's no surplus to distribute, and avoid choosing how to distribute the surplus.
There is a natural rights argument for Georgism, a political philosophy which would suggest that land (as a natural resource) being originally unowned, everyone has the right to an equal share of it.
if we multiply the population of alaska for that sum, we get 731,449 * $120 = $87,773,880/mo
then we get Alaska oil production of 2mi barrel per day (it is much lower now than a decade ago). Assuming a very conservative $100/barrel = 200,000,000/day = 2,400,000,000/mo
That's 3% if you tax on top of gross profit (no idea how oil is taxed. it is probably much less than my income tax if i know how the world works...)
And I am not counting fish, gas, lumber, minerals, etc.
That sound like the citizens are doing a much worse job than the gov in setting the rent for the oil companies.
The biggest impact that many people see is that over time, a minimum income gives people a disincentive to work. So if Switzerland starts giving every citizen $2800 a month, will tons of people stop working because they realize they can live off of 33k/year? In Alaska, it is probably rather difficult to live off of $1400/year but some people do it by living off the land and hard work at home. If the Alaska fund did not exist, would some of those people go back to work? That is the question economists would look for.
But would it help anyone if those people go back to work? I'm pretty sure that in the future we need to refrain from the notion that everybody can find work. With increasing automation there just won't be enough jobs to fill.
Why speak on the future tense? This is occuring now (and has been occuring for more than 30 years now), with actual unemployment levels consistently above 10% and in some coutries even much more.
I'm unfamiliar with Alaska's situation, but some cities in Manitoba, Canada tried what they called "mincome" for a while as an experiment by the federal government.
The only people they found that were less represented in the work force were teenagers and new mothers (in my opinion, people that could do without being in the workforce for a while...). Hospital visits decreased (with socialized healthcare, this is a good thing financially). Crime went down. Kids did better at school... Really, the effect was a pretty clear net positive.
(It's important to note, however, that as you earned your own income the money was subtracted from your 'mincome' at half that rate. There was never a point where "working more" or "earning more" would equate to making the same or less money. Something missing in many current social programs.)
The program ended because of a shift from a more socialist party to a more conservative one, not because of any intrinsic issue.
> In Alaska, it is probably rather difficult to live off of $1400/year but some people do it by living off the land and hard work at home. If the Alaska fund did not exist, would some of those people go back to work?
They are working, as you note -- just working in a manner that they clearly prefer to wage labor.
There was a (Swiss) commenter on a previous HN article (last week, I believe) about the basic income idea and he/she said that $6000 is a median income there.
Sorry but you're talking out of your ass. People who are living off the land in Alaska are doing it because that's what they do, when they get their PFD check they spend it on extra things. Regardlesss, nobody's sole source of income is the PFD except for some of the homeless in Anchorage—but they'd be homeless with or without the PFD check.
>> "all of these natural resources are shared, and the benefits from them should be shared also"
Is it not unfair that they are only shared with people who live in Alaska? Shouldn't they be shared with all Americans? If I was an an American I would be in favour of one of two things:
1. The money from the resources is shared with all Americans either via a handout or government spending on something that benefits all Americans.
2. Use the money to subsidise current unemployment benefits (or some other nationally available benefit) in Alaska.
Norway's tax revenues from oil (which is taxed at a special, extra high rate) goes into a sovereign wealth fund. Proceeds are reinvested, but the government may choose to use from the fund to fund the budget. So far the general consensus has been to stick to spending no more than 4% of the value of the fund every year.
Currently the fund apparently holds about 1% of the total share capital of all listed companies worldwide (though it is by no means evenly distributed) - about 2% of the share capital of European listed companies - and a few months ago it was worth $670 billion, or more than $130,000 per Norwegian citizen.
>So there seems to be precedent that this can work, if you have a massive sovereign wealth fund that is fed by revenues from shared resources.
Sure, if you have a virtually limitless supply of free money, you can give away free money. Alaskans like the fund so much because a) that money goes into their pockets rather than the pockets of politicians or the wealthy and well-connected, and b) it's not welfare. Unless you have a large resource/population ratio, basic income generally isn't feasible.
It's not welfare as welfare is commonly understood: a subsidy for the poor that everyone else pays for. To Alaskans, it's just free money, so the negative connotations that typically come with the welfare label don't apply.
Economists who want to study the effect of a basic income can travel to Alaska and see the impact for themselves.
The thing is that Alaska is not taxing Alaskan to share the wealth. Alaska is giving everyone a s share of what it gets from what they have underground. Arab countries have generous welfare systems but I doubt they'd have them if the richer ones were taxed to provide for everyone.
I still have no understanding on how this sort of thing would be paid for. Presumably, it's via some form of income, consumption, and corporation taxes. However, the marginal income tax rate would have to be huge (as you need to recover the entire amount paid to the earner in "basic income" before you get a cent to spend on someone else), the consumption taxes would negate the value of the basic income, and punitive corporation taxes would just ensure no-one actually sets up a company there.
Until we have Star Trek style technology for these free ham sandwiches, I don't see how Star Trek style economics will actually work.
Affordability of a basic income proposal is a function of the social/government services it replaces, any tax increases, and the less tangible positive effects on spending and tax receipts associated with wealth redistribution towards the poor, and any social savings as a result of less crime, or fewer incarcerable offenses.
Specific, though informal, measurements were made by Pascal J. for Canada.[123] A 2004 taxable basic income benefit of $7800 per adult could be afforded without any tax increases by replacing welfare, unemployment, and core Old age services. (Canada has supplemental poverty old age programs and pension system). The number excludes any intangible benefits of tax revenue increases due to higher spending and lower personal savings, and any expenditure savings on criminal enforcement.
But unless the welfare bill has an astronomical amount of waste (which I don't deny may be the case), surely this redistributes welfare from those who need it to those who don't? At the moment, for example, I receive no welfare payments. Thus my "share" of welfare is actually going to people who require it. In the basic income universe, suddenly I get a share of this money, which must come from those who currently get it, thus reducing their share. Moreover, this is ignoring all the inflationary pressures that a basic income would induce.
No you don't. The basic income is set off against your income tax liability, in fact, it's also been referred to as "negative income tax".
One of the nice aspects of the negative income tax is that it reduces the marginal tax rate at the bottom, which can often approach or even exceed 100% (you lose close to or even more benefits compared to the income from a low-paying job). Instead it's all just one smooth scale.
Another aspect of this is that it is one way of distributing the "automation dividend" that technology has given to society more equitably: "if robots and algorithms replace us in the labour market, they should also substitute us as taxpayers."
> Another aspect of this is that it is one way of distributing the "automation dividend" that technology has given to society more equitably: "if robots and algorithms replace us in the labour market, they should also substitute us as taxpayers."
As an IT professional who spends his days writing code to automate people away, I'm completely okay with this.
Just to be clear, basic income is not the same as negative income tax. Guaranteed income is the same as negative income tax; it has the benefit that it should cost less overall since it only goes to people who need it but it has the cost of trying to catch all the people cheating on it.
There's no reason a basic income would be inflationary. Sure, if it's funded by debt or printing money. But you can't simultaneously worry about it being costly to fund and it being inflationary.
Beyond that: yes, you could in theory make things cheaper by only giving the basic income to people who need it. But that's a fool's errand: although that course would reduce average tax rates as a first order effect, it would drastically raise marginal tax rates, which are much more relevant for predicting behavior. On top of that you instantly add a whole lot of administrative costs and interest group jockeying about determining who deserves it and who doesn't.
You get a huge amount of value out of an unconditional grant, and it distorts the market far less than any other structure of welfare scheme.
This isn't really true. Inflation is defined as the cost of purchasing necessities (for a specific set of necessities designed by the BLS - basically housing, food, medicine, etc).
If a BI shifted spending from investment/savings to consumption, demand for necessities would increase, driving up the cost. I.e., inflation.
Also, there is another structure which distorts the market even less than Basic Income. It's called the Basic Job. You get a Basic Income, but you need to show up and do work to receive it. It solves all the same problems as Basic Income, but with far lower disincentive for work, and at far lower cost.
> It solves all the same problems as Basic Income, but with far lower disincentive for work, and at far lower cost.
There is a basic assumption people make that a basic income would result in masses of people lazing about doing nothing just because they can. Canada experimented with a minimum income in the 1970s in a Manitoba town, and here's what happened: http://disinfo.com/2013/02/the-forgotten-history-of-a-canadi...
"Only two segments of Dauphin’s labor force worked less as a result of Mincome—new mothers and teenagers. Mothers with newborns stopped working because they wanted to stay at home longer with their babies. And teenagers worked less because they weren’t under as much pressure to support their families."
I hear about Dauphin occasionally, but it would be great to see actual data rather than breathless reporters fawning over it. Unfortunately that's all wikipedia links to. I really want to see good data on this, since it seems useful. Do you have any?
Also, wikipedia's secondary sources don't agree with each other. Some do list small disincentive effects, and suggest they would have been larger if mincome wasn't a short term thing (i.e., "don't quit your job, mincome is going away").
The fact that the quote is pulled from a site named "disinformation" aside, I find it hard to believe that anyone worth reading would make claims as to why those two groups' workforce participation (?) rates declined in such certain terms.
Basic job is dumbest idea ever. It was implemented in eastern block european countries and failed horribly. It was good against poverty but it barred all of the population from any individual effort and formed the connotation thay you go to work to get money and you don't need to do any actual work there. Imagine ou have a job that you know is unnecessary, you don't do much there but they pay fairy well so you keep your head down, take the money home and wait till the company or you division drops dead. Sort of like huge fraction of corporate and goverment nowadays but extened to whole population. Increadibly soul devasating.
Eastern block countries had nothing but a basic job, i.e. no private sector. I'm not advocating this.
I also don't don't propose that the basic job should pay well at all - the pay should be well below market so you always have an incentive to get a real job.
> Eastern block countries had nothing but a basic job, i.e. no private sector.
From what I remember from my childhood there was some very limited private sector. Trust me, much damage on the psyche was done not by not allowing people to start companies but by bringing all to places where they couldn't do much and giving them money for just sitting there (and usually drinking copiously).
1) Good point, but it's not clear to me demand for necessities would actually increase. Bear with me: virtually no one in the United States actually starves, and only a very small number lack a roof over their head or other "necessities." I might even be tempted to defined a necessity as something a person will consume regardless of income. What people do do instead is externalize the cost of their purchase, through shifting it onto their social networks, relying on public funds either implicitly (nonprofits, churches) or explicitly, or by debt. Debt acts funny, though, because it either shifts costs to their future selves (reducing future consumption of non-necessities) or to creditors (who'll eat some of the cost and pass the rest on to borrowers in general). We can theorize all day about what the actual effects would be--it seems a bit opaque to me, and I'd like a small sized country to play with a reasonably sized basic income to give us some real data.
2) I'm not too familiar with the Basic Job idea, and it's not very google-able. But I expect my general response would be two-pronged: firstly, I reject the idea that there's a huge disincentive to work with Basic Income. No one is materially satisfied at the basic income level, which my gut says should be $10k-$12k. Most working age Americans make more than that, and most are happy to take on more work when it means more money. (At some point most people do value time over money, but that's well above the minimum income level.)
But more fundamentally I reject the idea that a government has the capability to designate what're jobs that involve real, economically valuable work and what're not.
Should a person who dispenses psychoactive consumables be considered a worker? Yes, but try getting that through Congress. Should an NSA snoop? No, but same deal. What about an artist? An entrepreneur exploring a new market? An unpaid intern building up social and knowledge capital? A family caretaker?
Even if I trusted bureaucrats in DC not to be subject to special interests and regulatory capture, it's a matter of capability. They just don't have the knowledge to make these judgments, and investing enough money into providing that knowledge would be a huge waste if not impossible. On-the-ground individuals have far more knowledge about their particular circumstances and the needs of their communities than anyone else. Building the ability for dispersed economic activity to leverage dispersed knowledge has to be a cornerstone of policymaking, because those knowledge costs are increasingly the costs that define our modern economy.
Bear with me: virtually no one in the United States actually starves, and only a very small number lack a roof over their head or other "necessities."
Your definition of necessities is, I believe, narrower than the BLS. Consumer goods is probably a better term in retrospect. When you redistribute wealth from savers to spenders (as a BI is purported to do), you are increasing demand for consumer goods.
No one is materially satisfied at the basic income level, which my gut says should be $10k-$12k...No one is materially satisfied at the basic income level...(At some point most people do value time over money, but that's well above the minimum income level.)
This is simply incorrect. Most Americans below the poverty line already choose time over money.
I don't propose that basic jobs necessarily involve real, economically valuable work. I expect basic jobs to cost the government money.
The point is that it's cheaper than a BI, for two reasons. First, only a small subset of the population will even take the basic job - perhaps 10-50 million people. The rest will find jobs in the market economy paying more than $7.25/hour. Second, you gain some economic output from them - a low skill worker might be worth only $3/hour, and you pay him $7.25, so the loss is $4.25/hour rather than $7.25/hour. This would actually save the government money in some cases if the basic job worker replaces a unionized government worker making $20/hour.
Incidentally, the Basic Job program has been tried. FDR did it. We got a national park system out of it, among other benefits.
Present-day welfare systems have tremendous amounts of overhead to run. In a basic income system, most of that overhead goes away - you don't need an Office of Unemployment Benefits, or a Food for Underprivileged Children program - because everybody gets a check.
Do the savings completely offset the cost? I have no idea. But, it seems reasonable that they could offset a substantial portion. Of course, getting a government to willingly reduce it's size is a whole other problem.
Eliminating administrative overhead would be a saving, but it's unrealistic to expect those savings to fund a substantial part of a basic income by themselves.
Social Security and Medicare comprise a large majority of social spending in the USA. SS-OASI has overhead costs of 0.5%, and Medicare has around 1%. That's owing to them being unconditional, outside of age. Even their less efficient brethren aren't that bad: SS-DI is around 2%.
Medicaid is much higher (~6% I think) because it is so targeted and is really administered by 50 different agencies on top of the feds. But after that you get to programs that might be super inefficient but just aren't big enough to generate the huge kinds of savings we might want.
> Social Security and Medicare comprise a large majority of social spending in the USA. SS-OASI has overhead costs of 0.5%, and Medicare has around 1%. That's owing to them being unconditional, outside of age.
Social Security is not unconditional; both whether you are eligible at all and the benefits for which you are eligible are based on your history of qualifying contributions, not merely your age.
The Social Security Administration considers interest on its special treasury bonds as pure free money (negative overhead). That's plainly ridiculous, as it's just tax money that came from the general fund.
> Medicaid is much higher (~6% I think) because it is so targeted and is really administered by 50 different agencies on top of the feds.
And because, while Medicare is usually a primary payer, Medicaid is the payer of last resort, so Medicaid has a lot more expense in verifying that there isn't another payer with an obligation to pay (including Medicare -- there is a substantial population eligible for both programs) that should pay before Medicaid, or reimburse Medicaid.
Since money is of diminishing returns, you'll notice your share to the extent that it's useful to you. That's better than coming up with some arbitrary threshold.
Whether or not it would cause inflation is unclear, because wages may decrease correspondingly.
Welfare politics are driven by resentment, and offense that "My tax dollars are paying for lazy welfare queens to drive Cadillacs!" Because of this, there's a tremendous amount of overhead built into fraud prevention and making sure no one who isn't utterly desperate gets it.
With GMI, there's no justification for class resentment - you get the same benefit as everyone else.
Guaranteed Minimum Income is the idea that if your own income is insufficient, the state will step in and provide one for you. The conditionality in that definition, however, means that it would be a means-tested programme with all the attendant implications for marginal tax rates, poverty traps, class resentment, etc.
A Universal/Unconditional Basic Income is different -- it's provided to everyone with no means testing whatsoever. I think that's what you meant, based on how you're using it. But just be aware that GMI/UBI are actually quite different things.
You also get rid of the administrative overhead required to ensure the people who need it gets it while the people who doesn't don't. That's a non-trivial expense.
> But unless the welfare bill has an astronomical amount of waste (which I don't deny may be the case), surely this redistributes welfare from those who need it to those who don't?
For replacing poverty-targetted programs, this effect is limited if its used in a system which already has an appropriate progressive income tax system, further, it makes "needing it" less durable, as it doesn't prevent gains in personal earning potential from being negated by cutbacks in benefits that create a disincentives (because the costs to realize the gains + the cutbacks do to receiving the gains mean that gaining income-before-benefits actually reduces effective income-after-benefits.)
It's also possible the money comes from eliminating the welfare administration system. All the paper and offices and maintenance must
cost a ton of money. (I don't count salaries because if you fired all those government workers their salaries would get replaced with
the basic income.
I wonder how much money is wasted in the US in government bureaucracy between making sure people who claim social security benefits are due social security, that medicaid claimants are not medicare claimants, that food stamps physically go out to those in need, and that the foods stamps themselves are just spent on food, etc. Probably much more than checking how many people over 18 live in each address.
Also, the whole economy benefits by simply giving out money that people can choose to spend as they wish, instead of in limited categories (like food stamps).
Finally, people who work (legally) already pay taxes and are managed by the IRS, so taking this basic income back from them in taxes wouldn't be that much overhead.
The SSA's budget is like $12 billion to oversee over $750 billion in social security payments (1.6%). Medicaid's administrative overhead is about $16.5 billion to oversee $288 billion in payments (5.7%). See page 69 of this PDF: http://www.hhs.gov/budget/fy2014/fy-2014-budget-in-brief.pdf.
Yes, but that comes from it being available to everyone (of a certain age), which is the same advantage a basic income has.
Unfortunately Medicare runs headlong into the other point the comment above was making: Medicare forces you to spend a very large income grant on a very particular category of consumer good. And that effectively forces huge spending on healthcare when society would be better off if they could spend it on other things.
Suppose the money was spent on better nutrition, exercise, good heating/insulation for seniors, instead of on curative medical care after something goes wrong?
Not that health economics is my area of expertise so feel free to contradict me, but I believe the US per-capita healthcare spending on Medicare, Medicaid et al is actually higher than comparable nations with universal healthcare. The rationing, measuring and paying is really very expensive to administer.
>the US per-capita healthcare spending on Medicare, Medicaid et al is actually higher than comparable nations with universal healthcare.
This is true.
>The rationing, measuring and paying is really very expensive to administer.
This is not.
We have written legislation that prevents us from negotiating for healthcare goods and services; we protect US doctors from foreign competition and allow the profession to artificially constrain the supply. We also prevent Americans from importing drugs, or buying into other countries' health care systems - also shielding the domestic market from competition. Also, patents and reformulations.
Administration is actually a very small overhead. Rent-seeking is the problem.
Yeah, one of these is not like the others. Medicare at least acts a bit like a single-payer, and drives other efficiencies in health care. Too bad there isn't a medicare-for-all option in Obamacare.
The medicare-for-all is the end game of what's happening now. All the key architects of ACA have voiced their support for single-payer as the ultimate goal.
I've been confused for years as to why that wasn't the proposed solution. We already have medicare and medicaid in place, and they are working (how well... up for debate).
"We have 17 million uninsured americans in this country!" (or whatever the number was. Well... just expand medicaid eligibility (or even allow people to pay for medicaid coverage on their own, regardless of pre-existing conditions). Problem solved (or solved a lot more broadly than this force-everyone-to-buy-private-insurance-and-make-the-insurance-companies-change-their-underwriting-practices).
> I've been confused for years as to why that wasn't the proposed solution.
It wasn't because a political concern was to get something that could pass without beign scuttled by pushback from the industry and resistance Congressional Republicans and even from conservative Democrats that met and scuttled Clinton's reform efforts (why Clinton didn't seek a simple single-payer solution is another question), and so pretty much all the proposals from the major Democratic candidates in 2008 were variations on the mandatory/subsidized insurance purchase idea that had been being pushed by the insurance industry since, IIRC, the early 00's, and had been frequently floated in Republican circles -- including being a signature accomplish for Mitt Romney in Massachussettes.)
> Medicare at least acts a bit like a single-payer
Well, several decades ago it did, before the shift to encourage purchase of private managed care plans with government subsidies through what (after several name changes) is now called "Medicare Advantage".
Medicare now is more like the ACA model plus a public option than it is like single-payer.
Enforcement costs can easily outstrip the revenue collected.
One example might be public transit where the cost of printing tickets, tokens and passes, plus paying fare collectors and maintaining the equipment to prevent people from jumping gates is way more expensive than just letting people on for free.
The existing taxes, in most countries, nowadays, are a very significant part of the GNP. Check:
http://en.wikipedia.org/wiki/List_of_countries_by_tax_revenu...
and this covers only the taxes from the central state, there are also local taxes, and social security. In France, that makes it over 67% from only 44% of national taxes.
The point of such a citizen basic income, is that it would eliminate the need for plethoric armies of "civil servants", at all levels. Instead of paying them to bother and harass the public, we pay they to do nothing, and the money that was wasted on their useless activity (beside their salaries converted into citizen basic income), is used to pay this citizen basic income to the other citizen.
http://www.technologyreview.com/view/519241/report-suggests-...
In other words, YOU are already paying for it!
As for the free ham sandwiches, what is required for that to work is:
- material resources: the universe is big. Even the Earth is big! (but we need energy to dig deep down).
- energetic resources: the sun is big too! And there's uranium, thorium, and perhaps soon hydrogen fusion.
- to put this energy to work moving mater into a ham sandwich, what else is needed is information, the command and control systems, which any programmer will be delighted to implement, if you give him the chance to do it.
Robots and 3D printers are already doing a lot of work, we just need to automatize more. Why aren't google cars already driving on the roads everywhere?
Why are we still making buildings with man power, when the can be made in automatic factories or by big 3D printers?
Also once you stop forcing people to do useless jobs just because it's considered good these days to "protect jobs" and just give them money (preferably enough to survive/look around for a bit but not too much to kill all the incentive to work) maybe they will start doing something actually useful like trying to meet all the increased demand for basic services/items created by shifting more wealth to the poor.
i agree. I imagine it works like this - a brick layer might have "hidden" knowledge about the building process that could mean improvement to efficiency. And yet, he would not be able to put it into practice, because the investigation/research will take resources that he does not have, and his employer is not going to pay for this because they don't believe in him (ala, he is a "labourer").
If there was a basic income, he could become someone who could advise how to build better, and thus make use of a higher order knowledge process where as labouring is done by automated means. The end result is a house gets build faster, and cheaper.
About free ham sandwiches, in USA actually the underlying industry is already heavy subsidized, thus - paid by pretty much everyone. The sandwich to be free (as available for free, not necessarily produced on negligible cost) is not dependent on technology here.
Actually, one of the major effects of basic income is that it would decrease marginal income tax rates (although it would undoubtedly raise taxes overall). This is counter-intuitive, so let me explain.
Marginal tax rates are the taxes that you pay on additional income. Eg., if I make (rounding numbers recklessly) £9k per year, I am taxed nothing. However every pound I make over £9k is taxed at 15% -- that's my marginal tax rate at the £10k income level -- then there is another step at £20k-something, etc.
For the poor, however, effective marginal tax rate include not only escalations in progressive tax rates, but the withdrawal of social support. Eg., let's say I am unemployed and receiving £700/month worth of benefits. Then I get a job which pays me £800/month. The first £750 is tax free, and I'll have to pay £8 of income tax on the remaining £50, so my total take-home pay is £792. Fair enough, so far...
Except now that I'm earning an income, all my benefits are withdrawn. This means that although I'm now doing £800 per month worth of work that I wasn't doing previously, at the end of the day I'm only receiving (£792 - £700 = ) £92 pounds of additional income. Hence my effective marginal tax rate on the extra income is a whopping 88.5%.
I'd have to think very hard about whether I wanted to keep that job, or stay on benefits. In fact, this is a fairly generous example: many benefits programmes are structured in such a way that they impose an effective marginal tax rate of more than 100% upon people who increase their incomes -- in other words, you can end up with less money by getting a job than by staying on benefits.
This is the mechanism which turns benefits programmes into poverty traps -- by de-incentivising people to work via astronomical marginal tax rates. Unfortunately, people have a very difficult time understanding this mechanism, and their intuitive reaction is often to "fix" benefits programs by increasing conditionalities and means-testing. The problem is that the more conditionalities and means-testing you impose, the more you increase the marginal tax rates for people trying to get out of poverty -- so such programmes are inevitably counter-productive.
A Unconditional Basic Income, however, is never withdrawn. This means that it imposes no penalties for increasing your earnings -- meaning that it actually minimises the effective marginal tax rates.
In fact a very fair basic income could be funded via a flat tax: tax every income at 50%, and then redistribute the earnings as a flat Universal Basic Income. Mean income earners, in this scenario, would pay exactly as much taxes as they receive back from the UBI -- so their tax rate would be zero. Non-income earners would earn 50% of the mean (which is roughly the level that Switzerland is proposing). Billionaires would see their income reduced by nearly 50%. However the marginal tax rate would be identical at every level of income. No matter what your standing in the economy, you would always receive the same UBI, and you would always pay the same rate of tax. It would seem almost fair.
I would be happy to give up half my income if I knew it was being used to support students trying to learn engineering or new technology, or help a small family through a rough time, or pay for some fresh grad to get a broken bone set--especially if I knew that that safety net existed for me as well.
It's time to start embracing the fact that as a civilization we've come beyond the point where we're scrabbling like mad to shake loose the resources for existence, and instead we can now start actually trying to make people, everyone, safer and happier and more actualized.
What if it were used to support students trying to learn intersectional gender theory, or help a small family replace their year-old phones, or pay for some fresh grad to sit on their couch and play videogames?
I'm not trying to be provocative, it's just that you're thinking about this in the wrong way. You can't associate it with any uses that you may think beneficial or worthwhile. You need to accept that it's no-strings-attached money, otherwise you're just going to be disappointed.
If they want to learn intersectional gender theory, more power to them--after a time, I imagine they'll tire and move onto other, more useful pursuits. Ditto videogames and phone replacement...you can only be a consumer whore for so long before you start to feel that there's something else out there.
I don't mind that it's no-strings-attached money, because I might myself want to blow my allotment on a fleeting pleasure someday.
We need to give up this "keeping up with the Joneses nonsense".
I've met plenty of people who have been happily sitting around, smoking weed and playing video games all the time, and showing no sign of stopping as they barrel into their 40s.
Ok, so let's go with your assessment, that life-long slackers are indeed quite few. What happens when being a life-long slacker becomes acceptable in the culture (or as it might start out, in some subculture)? If slacking makes its way into culture, and becomes more accessible, isn't that potentially quite a big threat to the prosperity of future generations?
Legal and funded does not mean acceptable in the culture. It's legal to go about naked in many places, but it's not often done, because it's not acceptable in the culture.
Welfare already exists and while the lazy scrounger stereotype definitely exists, I feel it's worth that overhead to take care of vulnerable people and those in hard times.
Why would it be a threat? We've multiplied individual worker productivity by fantastical amounts. I think it's vastly more likely that we will have more people who want to work than meaningful jobs in which to employ them.
And why shouldn't they be able to do so? With a guaranteed income they would still be actively participating in the economy and whatever work niche they had inhabited before would be freed up for more motivated individuals to perform.
Win win.
Most assuredly some will, that's to be expected. If given a similar option I'd mothball my career over the course of six months and spend $n years engaging in unprofitable creative pursuits and maybe travel.
But they wouldn't actually be participating, they'd just be a middle man that takes a small cut to support their own life without providing anything useful in return (aka a parasite)...
The good part is that it looks like most people wouldn't just do nothing all day long, they would contribute in one way or another...
Until we have an easy/efficient way of identifying such folk though (those who are truly capable vs those who are disabled/incapable) the most efficient solution is probably something like a minimum basic income.
Is there a lot of demand at the registrar's office for intersectional gender theory courses? I haven't heard of strong demand in that subject, but I normally avoid administration buildings.
So why don't you give up half of your income to a family or group of students who are struggling?
Do you feel more confident that a government entity would do a better job at picking a family or students? Or would you only want to do it if everyone at your income bracket was also doing it?
The genius of the minimum guaranteed income, and the reason that it could possibly appeal to both liberals and libertarians is because in this case it does precisely the opposite of what you're afraid of: the government doesn't pick anything.
They give it to everybody. If you think that the government does a poor job of allocating the absolutely colossal amounts of money currently spent by social programs, or you recognize that trying to "do a good job" and prevent fraud, and all the other social engineering requires a vast, wasteful bureaucracy, then this is an interesting option.
This is a program that eliminates extreme poverty, but requires almost no infrastructure. You'd only need to verify that recipients are citizens and that they file their taxes. Since you can abolish Social Security, a stripped down social security bureaucracy, which already prevents people who haven't paid into social security from receiving benefits, could take over that task.
It could allow one of the largest and most sweeping reductions in the size of government in our lifetimes.
And if you believe in freedom, but also want to live in a country where people don't have to beg for food, then this is your best bet. You trust people to make their own decisions about what benefits them and their family. You don't discourage work or enterprise.
I think it's a political long shot of epic proportions, but also a great idea.
Agreed, and it could effectively counter the increasing concentration of wealth that increasing automation in a pure capitalistic society would inevitably bring.
The fact is, our .gov is doing a pretty shitty job as far as social contracts go, and the incentives for playing nice only exist once you've bought into the thing wholesale and are doing quite well for yourself.
Given the way we treat felons, the poor, and the ill I'm rather surprised things aren't boiling over sooner.
The linked article mentions cuts in other social welfare programs as one of the risks of a guaranteed basic income. Many who promote guaranteed basic income do not think it should replace our existing programs.
> Many who promote guaranteed basic income do not think it should replace our existing programs.
I have never seen anyone advocate for UBI who expressed any position other than support for using it to replace, at a minimum, means-tested poverty support programs, and generally they want it to replace many other targeted social benefit programs that currently provide services, direct subsidies for selected purchases of goods and services, or indirect subsidies through tax credits and deductions for purchases.
The usual argument for UBI is that it eliminates the most of the administrative overhead and duplication of function in the multiple programs it would replace, as well as replacing the perverse incentives that occur with means-testing.
Can you cite any BI proponents who explicitly say that it shouldn't replace existing benefits programmes? Speaking for myself -- and every other BI activist I've ever read or heard of -- I certainly think that it should replace the vast majority of existing benefits, as well as minimum wage.
If there is no safety net, I can't really give away my money, because I'm worried about what will happen in the future if for some reason I'm unable to work. Or if my brother is unable to work, or if my parents have severe problems. If I pay taxes in a social market economy, on the other hand, I can be confident that I'm also covered, and so are they, like everyone else is. Therefore there is no need to hoard piles of money for yourself and family (modest savings are still prudent).
And in any case, I don't think a handful of people donating to charity is a serious systemic solution to inequality and poverty. For one thing, it fails to give a guarantee of a safety net, which is what's needed to give people a believable backstop. For another thing, there's a bit of an adverse selection problem: people who get rich retroactively decide they have no need for the existence of a safety net, and don't want to pay for one, because poorer people are lazy/stupid/etc.
I did move from California to Denmark, which is in a way putting my money towards what I'd like to see more of (due to visas/citizenship/etc. this is not equally easy for everyone). I now pay more taxes, and in return I am part of a more social-democratic system.
>I did move from California to Denmark, which is in a way putting my money towards what I'd like to see more of (due to visas/citizenship/etc. this is not equally easy for everyone). I now pay more taxes, and in return I am part of a more social-democratic system.
And, IIRC, Denmark rates much, much higher on social mobility than the US.
Presumably, he is interested in a solution to the class of problems, not to an individual instance of the problem. Giving up half your income in taxes in his method is a proposed solution to the class of problems. Giving up half your income when no one else is is a proposed solution to a single instance of the problem.
And with universal basic income, recall that there is no 'picking' performed.
To me the first-order effect is much less valuable than the second-order effect of living in a society where everyone knows a safety net exists (e.g. reduced crime).
If your going to talk about a socialist country you may have a point. But unfortunately I think your going to find you dont have as much evidence as you thought you did, should you do some research.
The most productive level of intellectual growth in the history of mankind has consistently come out of groups of people who have been 'freed' from the burden of worrying about their 'next meal' so to speak. From renaissance era patronage through to the modern trends you see with the flow of capital in California.
Socialized != Socialist.
A centrally planed socialist economy has no place for entrepreneurship at all, ergo it will be suppressed and not flourish. A socialized economy is one where all citizens are invested into the social fabric of society, for instance I have a level of free health care here in Australia, but I choose to work and pay for a higher level of medical care and I am free to do so. This is a socialized system, a socialist one would deny my right to chose a higher standard via some logical argument about the higher standard I want to pay for being excess capacity that should be redistributed to all.
I hope this brief illustration helps clarify some things to anyone else that might be having trouble seeing a clear difference between socialist and socialized.
> Or would you only want to do it if everyone at your income bracket was also doing it?
I think this is general answer to this question (at lest it's mine). It's similar to prisoner dillema: I am happy to agree to rules forcing cooperation but in absence of those I won't cooperate that happily (reasons I think are easy to imagine and I've just seen that one poster did great job explaining those).
It's not "I want to give away half my money", it's, "I want to live in a society where all people give away half of their money, and of course I am willing to be subject to that rule myself."
The purpose of government, if it can be said to have a purpose at all, is to cover those items where we're better off doing them but they wouldn't happen on their own due to various game theory considerations or just plain transaction costs.
> I would be happy to give up half my income if I knew it was being used to support students trying to learn engineering or new technology, or help a small family through a rough time, or pay for some fresh grad to get a broken bone set--especially if I knew that that safety net existed for me as well.
You can do this right now, without having to set up any controversial and potentially corruptible political programs, and have a greater certainty that the funds you supply are actually going to the purposes you support.
I don't understand the mindset that these goals should only be pursued through coercive politics.
In addition to those effects, there is more spending, which indirectly boosts the economy.
At first glance one might think, the recipient now has more to spend, but that amount is taken from others, so it's a break-even. But in fact, the "others" are higher income people, and would spend the money differently.
The poor people relying on the assured income boost total demand for things like food and clothes, while the richer taxpayer would have more likely spent it on either luxuries or investments. A transfer of spending from luxuries to basic items corrects a social balance, and increase of aggregate demand has better outcomes than feeding the supply side.
Now... Why do you say that spending boosts the economy?
Yeah, I know I'm questioning something quite basic. Do you (not just you, ds9, but anybody) have any justification for that that isn't a direct quote of Keynes? Because investing boosts the economy (by increasing productivity - Keynes never modeled that, go figure), and spending reduces the potential for investiments, so the picture is at least more complex than that.
> Why do you say that spending boosts the economy?
Because the economy is the whole set of exchanges of goods and services, and spending is economic activity.
> investing boosts the economy (by increasing productivity - Keynes never modeled that, go figure),
Actually Keynes directly considered not only that investment produced future gains in output, but how those gains changed with additional investement in the same area. [1]
> and spending reduces the potential for investiments
How? If spending by A to acquire a good from B decreases A's funds available for potential investment, it does so only by increasing B's funds available for potential investment by the same amount.
[1] See, particularly Book IV (commencing with Chapter 11) of The General Theory of Employment, Interest and Money (1936).
Because, demonstrably, it does. A lot of folks hate the very idea of social spending, but one thing that my dad noticed over time is that when he talked to a fast food restaurant owner in Orange, SC (fairly poor area) they said that their business would not survive without the social assistance provided to the area.
It’s fair to question whether Orange, SC should be kept alive as a going concern, but this franchise owner was able to employ ~20 people because of the social assistance funds provided to the community. His employees would be able to spend their paycheques, too.
Investments in infrastructure provide much the same value (as in the TVA, which did more for pulling Tennessee out of its deep poverty than anything else). Investments without spending associated with those investments are dead money. While savings should be encouraged so as to reduce individuals’ emergency needs for money, they don't keep an economy going as much as spending does.
(And yes, that pains me to say as someone who doesn’t like our consumer culture even as I participate in it because it’s what we have. I don't have a rightful solution to that dichotomy.)
The terms here are muddled, but what the hell, I'll go ahead and try and answer. For what it's worth, the parent comment isn't particularly well defined either.
First, if we define "the economy" as GDP [1] (a generally poor approximation, but still better defined than a vague "the economy" entity), spending tautologically boosts "the economy". It either falls under the "private consumption" or "gross investment" part of the equation.
Now, I'll try and respond to your analysis point by point.
> Because investing boosts the economy
Again, we're on solid ground here if we're considering "the economy" to mean "GDP"
> and spending reduces the potential for investiments
Woah, hold on there. This assertion doesn't make sense from several perspectives. First, the economy isn't some zero-sum game where players must choose between spending and "investiments". Spending by one party can be converted into productive investments by another. e.g. if people start buying a ton of G.I. Joe action figures, the maker of G.I. Joe Figurines can convert that capital inflow into a factory.
In addition, many forms of consumer spending are investments from their perspective. A new washing machine frees productive time that can then be spent e.g. learning a trade. A new car might enable them to find new jobs or reduce their maintenance expenses on their current car.
> so the picture is at least more complex than that.
Right, but generally when parties are producing things other people want to spend money on, the economy is "working". The corollary is that when nobody is willing or able to spend money on new goods, the economy is probably not healthy.
A transfer from luxuries might correct a social imbalance, but a transfer from investments to basic goods and services might have a negative impact on the overall health of the economy.
Also, many 'luxuries' are things that eventually become things we need (Tesla Motors?).
Having said that, I Am Not An Economist, so it's possible I Know Nothing.
Increased demand for basic goods and services increases the expected yield of investments in areas related to producing and selling those goods, and therefore would be expected to increase investment in that area.
One concern I've always had with the idea that the rich "re-invest" in the economy is how much they actually invest in American businesses vs sit on the money or invest abroad. A minimum basic income will assuredly increase spending on basic necessities in American businesses.
Thanks for this very clear explanation. I think maybe you just blew my mind.
Also, a question occurs to me. Would this scheme still function at a rate other than 50%? If the billionaires would only allow the scheme with the rate set at 45%, it would change the "zero" point, but maybe not much else?
That's exactly correct. At 45%, the top earners would pay a bit less, the bottom earners would receive a bit less, and the break-even point would move to the 45th percentile rather than the 50th percentile. So more people would actually pay net taxes, but the average taxation would be lower.
I'm not convinced that a 50% tax would actually be enough to afford a basic income for the entire population. It would also have to cover all other government expenses, and many countries already end up with taxes that approach or exceed 50%.
Consider also that the proportion of people who actually earn an income in many countries is falling already due to ageing of the population. Plus once this guaranteed income is available, it's only going to encourage more to give up working. Personally, I have already given up, even though my available income is substantially lower than the $2800 in the Swiss proposal, and really only covers my basic living expenses. Nevertheless, I value my free time highly enough that I prefer it this way.
> many countries already end up with taxes that approach or exceed 50%.
I doubt they're that many. Can you give any examples? And in the cases they do, most will be for an exceedingly small number of people.
Even countries people like to consider high tax, like Norway, does not get to 50% other than in extreme outlier examples (if you're an extreme high earner with a shitty tax accountant, has no debts or other means of getting deductions, and spends vast amounts of your money purchasing highly taxed items like alcohol and luxury cars).
If you mean marginal tax rates, then it's a different matter.
But I'd be pretty much nobody has an overall tax bill that approaches the marginal tax rate on their gross income. Norway, for example, has a marginal income tax rate that's 40%, but that only kicks inn on income greater than ~$135,000. Someone who makes $200,000 (about 3 times the national average) still only ends up paying 33% income tax total before deductions. Let's say said person spends $50k/year on stuff that's VAT rated at the full 25% rate (which is frankly unrealistic, and that only adds about 6.25 percentage points to their tax rate, bringing our example person close to 40%.
But if said person pays substantial debt interest (say on a mortgage), they'll also have massive deductions - it'd be fairly unlikely for a person at that kind of income level to end up paying more than about 35% between income tax, VAT and other taxes.
The rates reach 45% in Australia, and I suspect much of Europe is something similar. France was proposing 75% recently. It's true that these are marginal rates.
But consider how much taxes would need to rise to pay for the basic income. Let's say 50% of people who are eligible for basic income actually work. Then you'd need to collect two times the basic income from each of those people, on average. Surely this would push marginal, and probably overall, tax rates over 50%. Tax rates this high are only going to encourage even more people to give up working. I suspect such an economy would simply collapse.
It's possible that invention of Star Trek replicators would change things. If people could have all material things they wanted with minimal effort, then I imagine that the remaining work could move to a volunteer model.
One purpose of a lump sum distribution such as the monthly "basic income" is to counteract the regressive nature of consumption tax.
For example, suppose we want to provide free mass transit. We then get terrible rush hour traffic and the system is overburdened. So we must charge for transit access. Even better would be charging more for rush hour than off-hours, more for long-distance, etc. But this is regressive! Relatively cheap for the wealthy for rare events, expensive for the poor who need it for everyday commuting. The solution is to provide a lump sum grant to all citizens equal to the amount a person would pay for everyday transit commuting. Thus the poor get "free" transit and the wealthy get a few bucks and the positive externalities of transit.
If you have congestion pricing, and the money is paid in cash, people who value the money more than the convenience will use the transit system earlier or later when it's less crowded, and pocket the difference.
But then what amount is the lump sum grant based on? Is it based on the rush hour price with congestion pricing included? Then you've made the transit at rush hour look cheaper than it actually is, so you'll still have crowding even when the effect you describe is factored in.
Or is the lump sum grant based on something like the average price per ticket over both rush and non-rush hours? Then you can solve the crowding problem (by averaging appropriately to adjust the apparent cost of rush-hour transit), but you haven't solved the equality problem, because poor people won't be subsidized enough to take the transit during rush hour.
This is becoming my biggest concern about these Basic Income plans, too.
Giving this amount of money to every person in Switzerland would total almost half of the country's GDP.
Even if you exclude children and get the total amount down around 30% of GDP, you're still right around the total amount of money that the Swiss government takes in in a year.
So to get this basic income with no new taxes, the Swiss government would have to abandon all its other obligations. Or, put another way, to fund this and still function at the same level, the Swiss government would have to double its tax income.
Remember that everyone above median income is going to end up paying what they receive right back to the government in taxes. Only half the adult population will actually see this money as a check and not just a tax break.
Regarding those free ham sandwiches... The US government currently pays farmers enormous sums to NOT grow food. (This is not a simple issue - global economics - I just think it's an interesting data point.)
I was wondering, if the government shutdown continues, will they stop receiving those payments, and then overproduce food before going out of business?
The department of Agriculture's share of the discretionary spending in the budget is on par with Homeland Security and the NSA. Paying Farmers has a year long latency so not likely to change anything.
Switzerland has its own currency and its own central bank. It doesn't use the Euro. So the money doesn't need to 'paid for'. The government can just create the money and hand it out.
Of course this might devalue the currency as a whole, but the central bank had to institute an exchange rate floor because Francs were becoming too expensive relative to the Euro. So they probably wouldn't even consider a minor devaluation a bad thing.
The cost wouldn't be that bad, the unemployment isn't that high, the taxes for upper incomes are high (as they should be), and the guaranteed income isn't really that high either. Unemployment is 3%, workforce is 4.9 million, the guaranteed wage was, afair, 2500CHF, that gives us 367 million francs, which is a bit over a promile of the state revenue (less than I expected, I'm suspicious of my calcylation). Which is, by the way, less than the surplus they have, and doesn't take into account already existing and complex social support schemes, of which at least some would be effectively obsoleted (social housing has an invaluable stabilizing effect, but food shouldn't really be a problem).
But, (from my point of view unfortunately), this proposal has no chance of passing. Like many articles about what Swiss do, this forgets about the (awesome) nature of Swiss direct democracy, which sometimes ends up in voting on completely off-the-wall ideas (which sometimes even pass, but this won't be the case).
I guess your numbers are wrong. Yes, unemployment is only 3% of 4.9m workforce, but Switzerland has 8.1m inhabitants. So a lot more than 150k (the number of unemployed) would receive more than now - housewives, slackers...
Effectively, 8.1m * 2500 * 12 = 240b CHF would have to be redistributed every year. With the CHF at $0.9 that's roughly $218b - the Swiss GNP is $636b.
Now I don't know how much of this is additional instead of replacing traditional unemployment benefits, disability welfare etc - but still it seems a lot.
We are already buying tens of billions of dollars in "free ham sandwiches" in the form of Social Security Disability fraud every year. That's a LOT of ham sandwiches - similar in cost to running a war on the far side of the planet. Extreme poverty as a result of a post-labor economy also means very high public and private costs for police, prisons, and security.
Wait a minute, are you complaining that too much money is spend on ham sandwiches? Your counterexample suggests that this money should be better spent on another war on the far side on the planet?
I'm saying that between existing welfare, existing SS fraud, and other transfer payment programs we are already spending enough that trading that for a mincome program might cost less than you think. On top of that, if the removal of disincentives to make incremental income above the mincome level are removed actually works, the net cost will be even smaller.
Actually, I suspect we've had the capital and productive technology to build the "free ham sandwich" kind of existence for a while, a couple of decades, maybe longer? It's that our economic technology is derived from a system based in historic scarcity, and is run in a society of people with human frailties. Ultimately, it's currently too inefficient to put the right resources into the right hands such that the entire world is fed.
I can't imagine an entirely different economic system that would be more efficient, but just as a thought experiment, suppose you were the supreme world dictator and other than the command logistics, you could somehow redistribute all the capital in the world anywhere and direct the work of everyone. Would you have the technology to feed, shelter, and clothe everyone in the world? How many busy hours would it really take?
if i were the supreme dictator of the world, i would replace currency as a form of exchange, and use Joules as a form of exchange, and then mandate that all energy production be distributed equally to every single living human. E.g., lets assume 30 petawatthours of energy per year(approx 108 000 peta joules), divided by 6 billion people, is approx 18000000000 joules per year, or approx 50 million joules per day for each person.
To pay for food, you "pay" the amount of joules it takes to fuel the robots that create your food. Ditto with any automatable production (clothing, houseing), and any land has a tax equivalent of the amount of solar energy extractable from the land.
You could attempt to save your joule allocation, but i suspect it will become too difficult. You cannot borrow joules the way you can borrow money (that is, the "bank" cannot be a fractional reserve system). But you would be encouraged to invest your joule allocation into useful endeavours, such as scientific research, which is always made available to all to use.
You can get richer by investing in improvements, and get richer by growing the size of the pie. There would be no way to get richer at the expense of making someone else's allocation lower.
Energy as currency is interesting, but still has problems where cheap energy such as oil and coal has side effects which do affect others.
And are you constantly "rebaselining" the division of energy production or to you let the accumulation ride? If you let it ride, you'll have the same slow redistribution of a wealth gap between those who are capable/lucky enough to get a little bit of a headstart and continue to leverage it to more and more wealth. (or do you think you need some hybrid between the two, some something else entirely?)
I see basic income being implemented by giving tax refunds divided over two week payments instead of as a single annual lump sum. Then we set an amount where you may get a larger refund than you actually paid in taxes.
It was interesting reading this after having finished reading Bertrand Russell's, "In Praise of Idleness." [1]
It always struck me as odd that the ghost of the Protestant Ethic is still haunting us to this day. There are plenty of reasons why we can and should work less and still enjoy the benefits of a decent, modern life. And in spite of our advances there is a pervasive belief that we should work more.
I think this will be a very good thing and I'm interested to see how it turns out for Switzerland.
It always struck me as odd that the ghost of the Protestant Ethic is still haunting us to this day
Why is that odd? A strong work ethic has historically led to if not happiness, at least success & progress on a national scale. It is only natural that it would then be selected for.
> There are plenty of reasons why we can and should work less and still enjoy the benefits of a decent, modern life.
Or work more, but do so because you love your work, not to cover for some basic need. If I could retire next week, I'd probably work a little less, but wouldn't stop.
>> There are plenty of reasons why we can and should work less and still enjoy the benefits of a decent, modern life.
>Or work more, but do so because you love your work, not to cover for some basic need. If I could retire next week, I'd probably work a little less, but wouldn't stop.
If you read the essay I linked to, Bertrand Russell makes this very point. It's not that we should work less and be completely unproductive, but rather that we should work less so that we may better utilize our time to pursue those interests and lines of research that satisfy our curiosity.
I used some downtime I had a while ago during a job search to pursue such avenues. I don't think I've ever had a more productive period. As I was unconstrained by profit motivations I was free to think ideas I would have otherwise dismissed due to a lack of time and energy.
If I could retire next week, i'd still work on projects (heck maybe even the kind of project i'm doing at work now) but i'd also spend more time with my table saw.
To understand how this works for a relatively normal country (like Canada): Imagine having an expense that is HUGE for your government. Like easily the biggest expense that they have. Larger than healthcare or the military.
Then cut the government around that. School lunch programs, cut. Welfare, cut. Old age benefits, cut. Even some parts of healthcare get cut, like having someone care for you for free when you are bed ridden (since presumably you would be able to spend a portion of your money on hiring a personal assistant). Imagine laying off 30 to 60% of people that work for the government in a "knowledge worker" role (ie, administrators, not trash disposers). Completely scrap science grants and arts subsidies. Increase taxes slightly. Etc.
But for all that sacrifice, we insulate our economy from political turmoil of the continued mechanization of the economy. One day most people won't be working. I'm not 100% convinced that BI is something we should be doing right NOW, but I'm pretty sure we'll have it in 50 years or less.
I'm a big supporter of the GBI (see my comment history), and I think developed countries are going to all need to adopt it at some point for a variety of reasons. Reading this and a few other related articles on the Swiss experiment, I couldn't find information about the following, which I consider pre-requisites for a GBI system to be effective:
- Union strikes for non-safety related issues have to be made illegal. You don't get to strike for higher wages when there's a GBI.
- Hire/fire policies need to be made completely at-will, with pretty much no exceptions.
- The minimum wage has to be eliminated (generally won't matter, since the GBI will bring the wage of "bad jobs" up, rather than down.)
- The rest of the welfare system will likely need to be largely dismantled. The person answering the questions in the article seemed to conflate "public schooling" with welfare, which should be decoupled; things like schooling, health care, etc. should not be touched (and should not be considered welfare - they are regular public goods.) If the Swiss have things like TANF, Social Security, SNAP, WIC, etc. - those will probably need to go.
- Opt out. Any person who doesn't want to take the money (because they already have plenty) should be able to refuse it.
I'm glad to see a country starting to experiment with this, though. It's the only way forward in a world where the need for human labor is going down every day.
- Strikes are mostly illegal in Switzerland and are very rare
- Apart from a standard 3 months notice it's easy to lay off people in Switzerland (unless they are pregnant or sick)
- There are no standard minimal wage but there have been discussion recently of introducing one
- We do have quite a few "program" in our welfare system a GBI would simplify a lot of things
- There have been no mention of a possibility to opt-out
Thanks chli. It sounds like Switzerland is in great shape for this, then. I'm really rooting for their success here; it's hard to overstate how important successful examples of these policies are going to be for the future of our societies.
> - Union strikes for non-safety related issues have to be made illegal. You don't get to strike for higher wages when there's a GBI.
>- Hire/fire policies need to be made completely at-will, with pretty much no exceptions.
So employers should have all power, and employees should have none? Why should employers have the right to fire at will, but employees should not have the right to stop working at will?
In exchange for a GBI, we must enslave anyone who decides to work? I really don't get it.
Yes, they can just quit their job and still survive. (Although it is not "without financial consequences.") That is the point. I don't see how that justifies making it illegal to leave your job whenever you want to.
I think GP was arguing that both employers and employees should be able end employment at will. Strikes are something completely different, they're essentially a way for employees to hold their companies hostage to get more money (have you noticed how few strikes are based around "give us more money or we quit"?)
How are strikes different in any way? Strikes are when people stop working as a way to negotiate. If you're going to prevent them, then you're going to force people to work when they don't want to.
Because those people aren't saying "pay us more or we quit", they're saying "pay us more or we'll stop you from functioning". In many cases where people strike, the employer could quickly replace them if they quit (maybe not if they all quit, but they're easily replaceable individually).
How are they stopping a business from functioning? If they are sabotaging it or trespassing, that's already illegal and doesn't need to be made more illegal. If they're merely protesting, boycotting, encouraging people to go elsewhere, etc., that should remain legal as a matter of freedom of speech.
Can you fire workers on strike, and replace them? If not, that's essentially a hostage situation. They can protest and boycott all they want on their own time (after hours), but if they're paid to work, then they should work.
EDIT: What I'm trying to say is this: if the business depends on the workers, and they go on strike, and you're not allowed to fire them and hire new ones, then they're effectively "stopping a business from functioning".
"At-will" work would imply that, yes, you can fire striking workers. I can see no more reason to prohibit this than to prohibit strikes in the first place.
I don't think you even need 'at-will'. Someone that is so blatantly not doing their job that they're not even showing up to work should be trivial to fire under almost any circumstances. ahomescu1's worry is pretty unrealistic.
In most European countries, employees carrying out a legal strike are basically impossible to fire legally until the strike has ended.
But at the same time, the conditions for when a strike is legal wary substantially, and strikes for wage reasons are generally restricted to periods during wage negotiations.
If no one will do a job that pays less than $2800 per month, then how will those jobs get done?
Historically, wealthy societies that guaranteed incomes for citizens had slaves. I'll bet if you go digging around in these proposals you'll find a class of people who aren't eligible (new immigrants or something), who are going to wind up doing all of the low paying jobs.
Your job income adds directly to those $2800; it does not replace the basic income. E.g., if your employer pays you $500 a month, your total monthly income will be $3300.
Note that life in Switzerland is expensive enough that $2800 is not a whole lot more than minimum wage level in the US.
And that's perfectly fine. It's not like the employee would starve. You'd still have to pay enough so that working for you is worthwhile (because people aren't forced to work or starve). Employees would have the genuine bargaining power of a free agent, because employment would no longer be an existential need.
Also, it would be much easier to become self-employed or become an employer yourself; not only is the risk of failure lower, but your payroll expenses would shrink enormously. If there were a basic income, I'd have started my own company long ago (or at least tried).
Note also that "keeping more to yourself" is modulo the higher and more progressive taxes you'd need to finance a basic income.
The big question is rather: would enough people still have an incentive to work? It depends, I think, on how close to the subsistence level such a basic income would be.
That's my other concern. $2800 a month isn't enough for me personally to be able to stay home and play video games all month, but it might be for a fair number of people. And they wouldn't be contributing much to the economy (other than to the makers of Cheetos snacks.)
Here in Québec, we have "social help" where the government gives you money if you cannot work, etc.
A lot of people I know abuse of this. Pay the rent with the social help, then get money "under the table". A lot of people abuse of it, but I still think it's worth it. I work hard, but I know that if all else fail, I won't be stuck in the street.
It's also not a perfect solution. There are still homeless people (who are often too ill to be able to ask for the social help, or don't have a permanent address to sent it to). You can't live very well in Montreal with it alone, but you can manage to get somewhere to live, especially if you have "sidejob". Otherwise, there are HLM (French for "housing at moderated rents") where the rent is actually based on your income. You can live for $350 - $900 / month in a three room apartment in those. Especially if you live around the island on Montreal and not on it.
People who use this service are frowned upon. They call them "BS" (Guess you would call them SH in english, for "Social help"). The stereotype is that they all abuse the system, take your hard earned money and live in a big appartment with the latest computer, drink all day (no work!) and do drugs. People fail to see that computers are not as expensive as they were before.
I actually grew up in that world. The abusers were a minority. A large, noisy minority, but a minority nonetheless.
So? We don't have enough jobs for everyone anyway. Instead of guilt-tripping people by telling them it's their fault for not having a job and then making them jump through hoops to get unemployment, let's just cut everyone a check and let them eat Cheetos.
And there will be an extra kick to the young, whose labor is less valuable.
A negative income tax or EITC tends to work better, since you have to do some kind of work to get them. And the best way of determining if someone has a job tomorrow is if they have a job today. Long-term unemployment sucks.
The employer has to pay enough to get people to bother to apply for the job. If it can convince people to come into work while paying $1300 instead of $2800, then why not let it? We don't have to worry about people being forced into a job they hate, because they've got their basic needs cared for. Employer gets cheaper marginal labor, employee gets minimum income plus more income plus lower effective marginal tax rates.
You put your finger right on why this was originally a Republican proposal. It would replace the minimum wage, and allow the wages for low end jobs to go as low as would attract anyone interested in earning something above the mincome level.
The idea of a basic level of income isn't that it goes away once I find a job that pays the same or more, it's that I'm always guaranteed that base pay. If I take a job that pays an additional 2800 per month, then I'm grossing 5600/mo.
I don't think there's any reason to believe that low paying jobs will just go away, and more reason to think that the people who want nothing more than those low paying jobs will take them.
You can work a job that pays $1200 a month, and the program will chip in the rest to top it up.
This is not so people will do crappy jobs that pay very little, but instead so they can pursue things that otherwise don't pay very well, like working at a charity or other non-profit with a very slim budget.
Actually, this system would pay you the money unconditionally, and any money you make goes on top of that. It's a system that encourages work. However, it's going to encourage people to do work that makes them happy, because it's no longer necessary to work just to survive.
I think this could pose a problem for truly awful jobs like at slaughterhouses, because nobody would be desperate.
>I think this could pose a problem for truly awful jobs like at slaughterhouses, because nobody would be desperate.
I think this would pose a great solution for awful jobs: in order to attract workers you'd have to dramatically improve your working conditions.
Take Amazon's practice of hiring temps to work in their warehouses - Amazon might have to pay to introduce air conditioning and heating to their stockrooms, give their employees actual breaks, raise wages, etc.
Alternatively they'd invest more heavily in automation to replace employees, driving technological innovation while not displacing human labor.
> I think this could pose a problem for truly awful jobs like at slaughterhouses, because nobody would be desperate.
It might drive up the price of meat until you could pay people enough to work in a slaughterhouse (or make it cost effective to automate them), but is that a bad thing?
Maybe I'm reading this wrong, but if it's anything like the Mincome Experiment (http://en.wikipedia.org/wiki/Mincome) then it means you get $2800 unconditionally, but a $1200 a month job comes out of it.
The way these programs are paid for is because most people would be making more than $2800 a month anyway, so their net cost to the government is zero.
Mincome != Basic Income. Under Basic Income, everyone gets a fixed amount unconditionally. Any extra income you get on top of that is yours to keep. So you get the $2800 from the government, then get a job for that $1200 (from the grandparent's example), so now you have $4000 in total.
Mincome worked differently from this, but the OP talks about Basic Income, which just gives a fixed amount to everyone.
Actually, now that I'm doing more reading, things can be a bit more confusing.
There are a few approaches to solve this problem - in some cases a negative income tax is applied, and in others the government actually issues a 'citizens dividend'.
Neither case necessarily mandates a 1:1 decrease in benefit as your other income sources go up. It all depends on how things are structured... someone with a significant monthly income could have a high enough tax as to effectively remove the base payment, where a particularly poor worker may not lose any.
And unfortunately I don't speak enough French to read the petition, and none of the sources in English I can find actually spell out the details.
The job doesn't have to pay 2800/month. It doesn't even have to be a 40-hour job. You could get 1000/mo and the government would make up the difference. What they want is a baseline where everyone gets something no matter what. And that isn't attached to a minimum wage.
> who are going to wind up doing all of the low paying jobs.
This proposal removes the concept of a low paying job.
You're describing a significantly different proposal there: with a basic income, the government doesn't make up the difference of pay up to some threshold, which amounts to a massive marginal tax rate on low income labor and a massive subsidy to employers of low income labor. That's a guaranteed minimum income.
With a basic income, the government gives you the same size check, regardless of if you work and how much. I believe what Switzerland is proposing is a basic income.
The Mincome experiment (http://en.wikipedia.org/wiki/Mincome) did research into this and found out that, surprise, people don't like sitting around doing nothing. On the whole they want to work.
Significantly?? That is pretty bullish. Are you saying the supply of labor will drop dramatically for undesirable jobs? Or there won't be a underclass willing to work for less pay?
One way a country could get to this would also be revenue-neutral taxes. A revenue-neutral carbon tax, for instance – a lot of taxes would be collected, on the theory of limiting output, or maybe you could use the theory that you were charging for access to the environmental load, which is a public resource held equally by all people. To make it revenue neutral then you have to return that tax money to people. You could cut taxes or put it some bullshit "lock box" but that's nonsense thinking. IMHO the only reasonable way to keep it truly revenue neutral is to directly funnel the money back to individuals. A basic income would be the result.
People freak out that a carbon tax would be regressive, and it would, but the return would be so progressive that it would more than undo that.
In general I think this kind of theory should be applied to more use taxes – places where ostensibly a tax supports something like roads, making a system self-supporting. But the use taxes only address a small part of the cost of roads, they don't consider the opportunity cost of using land for roads and they don't address the negative externalities. A use tax that included all of that, and returned some portion to people, would be a fairer tax. In that context something like congestion pricing would be fair in a way that it isn't currently.
Correct me if I'm wrong, but wasn't Star Trek style economics no economics? I seem to remember a distinguished bald captain talking about how society has moved past the need for money.
Economics is not money. Its about how to allocate the limited resources in the most efficient way. Money is just a tool used for example in capitalism.
> Economics is not money. Its about how to allocate the limited resources in the most efficient way.
At least some presentations of Star Trek (or, at least, Federation) "economics" were that it was not economics; not having money was a symptom of that, but the fundamental thing presented was that scarcity was solved because resources were not practically limited (which is why they didn't have money.)
(Of course, there was a whole lot presented at other times that seems to be at odds with that.)
When you have technologies like replication and warp drives and your federation is off colonising multiple planets in an area 8000 light years wide your civilisation is not worried about limited resources
interestingly enough in star trek they still have constraints on things like dilithium, and of course wars are waged over territories
"Social scientists have argued that American hatred for “welfare” is racially coded, and that historic support for stronger social programs in Europe has been tied in part to ethnic homogeneity and lower immigration."
Interestingly enough, this is not true for Switzerland. In some cantons, up to 60 percent of the inhabitants have a migration background. (i.e. they or their parents were born abroad) [1]
To be fair, if you speak about racism in America, it's not based on nationality, but on well, race... The data for Switzerland is not categorized by race in that document, and I can tell from the list of source countries, the vast majority of those immigrants would be considered "white" - it's pretty rare to see discrimination based on country of origin between white people these days.
I think therein lies the disparity I see a lot in talking about "diversity" between some Europeans and some Americans: here, we generally view diversity as a plurality of races, whereas it seems (to me) in Europe it is seen as a plurality of ethnic groups.
[EDIT: What deserves a down-vote here? Does racism not differ from ethno-centrism? Can we not have a reasonable discussion on the point of the person I am responding to? He points out that welfare has nothing do with racism in Switzerland, because they're so well integrated with other races, yet does not provide any evidence to that point. My statement was clear, not argumentative, and as far as I can tell completely non-combative. If you disagree with my statements, then please tell me why, so we can have a discussion.]
This is not true for most of Western Europe, the notion of an ethnically homogenous population it's an outdated idea of Europe that Americans still hold on to.
In fact, for major parts of Europe it was never true in the first place, the continent has seen centuries of migration of various ethnic groups and cultures before many of today's nation states were even formed.
Pointing to European countries "homogeneity" is just a cheap and borderline racist (they're all white people right, so how can they be ethnically and culturally different?) excuse used by Americans that don't want to examine their own motives.
"In some cantons, up to 60 percent of the inhabitants have a migration background."
To have a migration background does not necessarily to have a different ethnicity.
Also, in Switzerland's case, it would be worth mentioning that the (cultural but also the ethnic) diversity was always a little higher than a lot of other European places and somehow they learned to handle it pretty well.
(Just for the sake of argument, and of course, in the odd event the U.S. went for a plan like this, you'd assume a long transition period so as not to screw people's ability to plan.)
The first trillion is "easy", insofar as it's revenue/spending that you could eventually redirect:
~$600B in existing Social Security taxes/spending.
~$400B in non-healthcare-related welfare spending, like food stamps and unemployment benefits.
You could maybe squeeze out another couple hundred billion from reducing aid to states and other programs made redundant by the new payments.
But the next nearly two trillion is really hard. Eliminating the entire defense budget wouldn't get you even a trillion. Doing the equivalent of lifting the Social Security tax cap and adding a marginal 12% to high-earner income would only net you another $125B.
If you were serious, you'd need to either double income taxes, most of which would come from the middle class, or impose a VAT or sales tax around 20% that would raise the equivalent (which would hit the middle class and the poor). Taxing the rich alone won't do, unless you really believe that ~70% marginal rates would actually raise twice the revenue of ~35% marginal rates.
And all of this assumes you can do this without tanking the economy and thus tax revenue.
Anyway, I'm actually hoping Switzerland goes through with it, since it will be interesting to see what happens. I'm all for unconditional cash payments as the main form of welfare, though I think something like the EITC on steroids would work better to ensure people who can work productively do.
The USA is significantly cheaper than Switzerland, though, so you don't need nearly the same amount here as Switzerland.
I have a hard time figuring out what the ideal grant amount is, but I'd want $15k as an absolute maximum, and more likely something like $10k-$12k. And like you mention, getting to there from here is pretty trivial if you think redirecting SS and Medicare funding is an option.
> I have a hard time figuring out what the ideal grant amount is, but I'd want $15k as an absolute maximum, and more likely something like $10k-$12k.
That seems unrealistically low. Around here, 10k isn't even enough to pay rent on a studio in a low-income area populated largely by migrant day laborers. What is the point of a minimum income if it isn't even enough to keep a minimum roof over your head?
Who says everyone has the right to a private apartment in a high cost-of-living area?
There's no shame in having roommates, and there's no shame in living in Nebraska. My goals are (a) to make sure no one lacks the necessities of life and (b) to make us a richer society. Making it so that everyone can afford a studio in the Bay Area would be very low on my list of priorities, if it were even possible.
I'm not talking about the San Francisco Bay Area. I'm talking about a place so thickly populated by low-income Mexican migrant workers that there are actually more hispanic markets than normal American supermarkets. To characterize people who stand on street corners and wait to be picked up for construction projects as rich folk seems pretty odd to me.
I think 12k or 13k a year is realistic in America for a single person, although it would not be easy surviving on this amount (especially if one has a family). Not in NYC or San Fran, but again that's incentive to work if one wants to live in the most expensive areas.
I did a rough calculation for the USA, and you get somewhere between $6k-$10k merely from ending the welfare programs it's replacing. And that ignores all the additional economic activity that'd come from the efficiencies realized by implementing a basic income.
At least for the USA, I would never support $30k/year (can't speak knowledgeably about Switzerland).
You shutdown all the targeted benefit programs that try and give money to people based on certain criteria. Things like unemployment benefit, state pensions, food vouchers, tax breaks for people on low incomes, tax breaks on goods and services that are deemed "essential" like childrens clothes.
What you end up with is a much simpler system. Everyone gets enough to survive, if you decide to earn extra you pay standard rate tax on it all.
It seems like a system like this would be designed to replace Social Security, Medicare, Disability, Food stamps, WIC and other benefits paid to those who are poor, disabled or not working (which would be well over a trillion dollars -- see http://www.usaspending.gov/explore). I'd imagine you'd also remove the standard deductible and other deductions and exemptions for taxes and possibly move to a flat tax bracket that wouldn't discourage people from earning more money or working in general. The question is, how much more money would that bring in, if any?
Also, if you just give people money, will they really spend it on basic necessities or spend it unwisely? Seems like it would work better if the money were given as housing, food, and healthcare insurance vouchers that could only be used for those purposes.
It will be interesting to see if/how this works out Switzerland.
"Seems like it would work better if the money were given as housing, food, and healthcare insurance vouchers that could only be used for those purposes."
I was asking myself the same at first. The thing is, all those would limit choices, the effect of which would be an object of hate. In addition, in USSR people were directed (or at most offered a choice of a few options) to planned working places where they should live and work, which was in fact just the way they were given many of the other things. As expected, that only spawned an underground markets (for products, services, and even for perspectives) on which were traded choices that weren't freely available. I think therefore that it's better to let everything on the table for the benefit of all.
About the quantity of money, maybe it would be best if this "citizen allowance" to be not a fixed sum, but calculated from how much the state can afford to give. Say it is 50% of the entire budget split on the number of citizens. More money gathered in budget - more per allowance, and if the allowance is getting smaller - the more people are encouraged to get involved as taxpayers. It would be a fair circle and a strong argument for everyone to either shut up or get involved.
I'd love it if we had a functioning individual market for health care, so that such a system could replace Medicaid/Medicare, but the jury's still out on that. Fingers crossed that ACA exchanges actually work out without requiring massive subsidies.
vouchers aren't fungible and then you need to pay for the whole system of authenticating/converting them. I don't have a problem with people spending unwisely; they will starve to death and stop collecting payments, right?
But you know that the groups that are continually pushing for expanded minimum wages, and other benefits would never let this happen. They'd find some paternalistic way of controlling the money, providing housing etc. And we have the last fifty years of The Great Society to show how well that works in fighting poverty.
How much money are you spending to make sure current programs are not misused? By making it universal, you get away with much less administrative overhead than you previously could.
Conceptually I like it for that, and other reasons. But what programs do you toss out? Education? Health Care? Food stamps? Subsidized Housing? Each of these has vast constituencies.
The article notes that this policy would be huge for the libertarian right - no need to give people any free stuff other than the standard income, and just let markets provide every other public service.
GMI is a dividing line on the libertarian right. Most still hate it, because they're basically anarchists who hate any form of government spending. But there's a minority who really like it for its simplicity and fairness, and the positive impact on personal liberty.
They sound like the Mutualists, of whom I know one (he's in the same political party as me, hilariously.)
As far as I can tell, Mutualists = Market anarchists who believe local judges (who aren't officially given any power) and embarrassment will keep everyone behaving ethically - no need for formal laws or governments. It seems a very very deep misunderstanding of the role of weak-tie trust in economics to me.
Some Googling shows that Medicare spending per enrollee is around $10k per year, and average Social Security benefits are around $15k. So a guaranteed basic income, paid to each adult and that maintains current benefits for seniors, would cost around $5.8 trillion.
$3 trillion is 20% of GDP. Medicare/medicaid alone is $1.6 trillion. Housing, unemployment assistance, and food stamps is probably a few hundred billion more. At the state level you have subsidized housing, etc, for hundreds of billions more.
What do you do about local differences in cost of living? $1K/mo will get you pretty far in a lot of the US, but it won't even cover rent in SF.
So now you have to come up with a system to calculate the COL differential between regions. You also have to come up with an enforcement mechanism to prevent people from saying they live in SF when they really live in a small-town.
Sounds like you'd only reduce overhead by a little.
This problem solves itself. Poor people move to cities because of limited economic opportunity where they live. You can make more money, but the cost of living rises in proportion. If you make 28K no matter where you live, then it makes sense for a lot of people to optimize by staying in or moving to places with a low cost of living. Maybe a lot of them will watch TV all day, but at least they'll be fixing up an old house so they have a decent place to live, and contributing to their community.
You absolutely don't give people more money who live in more expensive areas. Actually, by allowing people who don't really want to live in the Bay Area to move someplace cheaper and simultaneously increase their standard of living, you'd actually end up reducing price pressure in overheated real estate markets like SF, and propping it up in super-cheap areas like Detroit.
Then you have the issue of paying for it! What would you have to pay in order to give someone a basic standard of living in SF? $24K might fly for a young single person, but what about the single mom with four kids? That would be more like $50K.
So you just pay every person in the US more than the average income?
Places like SF and NY are more expensive because there is more demand to live there and a limited supply of places to live. Presumably if you're on a basic income, you won't be able to afford to live in the "most desirable" areas in the entire country.
This would be akin to guaranteeing everyone a basic transportation and then having someone say "Well, actually, I wanted a BMW."
As some economists have pointed out recently, the future will look back on us as nucking futs that we subsidize the poor to live in downtown Manhattan.
> $1K/yr will get you pretty far in a lot of the US
I don't think $83.33/mo will get you pretty far anywhere in the US.
> So now you have to come up with a system to calculate the COL differential between regions. You also have to come up with an enforcement mechanism to prevent people from saying they live in SF when they really live in a small-town.
No, you don't have to do either of these things. You could do them, but the benefits of the first need to be weighed against costs that come with the need to do the second if you do the first.
It will be interesting to see what happens if Switzerland tries out this policy. Thus far there hasn't been much mention in this thread of an author who has written a whole book about how a basic guaranteed income policy might work in the United States. Charles Murray's book In Our Hands: A Plan to Replace the Welfare State,
goes into detail about how much a program of guaranteed income for everyone would cost in the United States, and suggests some probable effects that would have on everyone's everyday behavior. I read the book a year or two after it was published.
may inform the discussion here. The policy proposal of a basic income guarantee is interesting because
a) no country has ever tried it, really, so there isn't a real-world experience case to look at yet,
and
b) a remarkable variety of people from otherwise differing points of view have proposed it over the years.
I'm still trying to make up my mind how the trade-offs of a policy like a basic guaranteed income nationwide would compare to the trade-offs of "targeted" social welfare programs for elderly, disabled, and poor.
How has the minds of otherwise intelligent Americans been hijacked by the main stream media and their 'conserative/christian' social conditioning?
Money is simply an abstraction used to further the production and exchange of material resources. Yet Americans seem hostile to any form of Social Security - which simply means printing money and distributing to be used to share production and resources equitably, rather than channeling it into expensive military procurement and genocidal foreign adventures.
Do they know that the money is printed by private institutions who charge interest on the money they print, virtually out of thin air, or computer storage (whichever you prefer?), pauperizing future generations even more?
Not adding anything to this discussion but by the looks of it, the Icelandic government was trying to imitate this stunt but misunderstood the "Start Trek" in "Star Trek" economics.
Here's a picture of the Icelandic prime minister and the Icelandic minister of finance as Kirk and Spock (this is a real thing they did as part of an auction for cancer awareness):
I'm a bit late, but I think a GBI provides MORE incentive for these kinds of jobs
At the moment, there's no way you could afford to live just from cleaning for 1 or 2 hours a day like many places require. But with a GBI, many more people would be available for occasional work like this, and the costs could be lower (no minimum wage).
The idea is interesting, why not use it to replace the myriad of benefits programs that exist? I would bet that most large governments have so many aid programs they truly cannot be sure of whom is getting what let alone if the who is supposed to.
A basic income strategy can roll up most if not all of these programs into ONE government program. The reduction in programs, persons, and the places for them to work, would all be applied to the program increasing the savings.
I'm all for a "Star Trek economy", but I think that implies having very low costs on stuff, too, such as replicated food that barely costs anything more than the atoms needed to create it (energy to make it would be free/renewable).
But from what I hear prices in Switzerland are very high, and while I'm interested to see how this experiment will play out, I fear they will get even higher because of it, which could make the whole minimum wage raise pointless.
I am generally pretty opposed to things like this, but in this case, I'm fascinated by this. If this actually happens, we'll actually get to see what happens when you guarantee people enough money to not need to work. How many people will just take the money? We'll actually have a data point on whether the incentive to survive is more important to a productive labor force than the incentive to get more.
It's funny because I think what the author fears in this proposal would be ideal. Guaranteed income replaces the welfare system with all its inequities, inefficiencies and bad incentives. Next you just need to replace the income tax with a natural resource /land tax. Then you have an ideal geolibertarian government.
I don't reckon we here in the U.S. would ever cotton to such a pro-shiftless social policy. Smacks of intellectualism to me. Even of Communism, and you know down what slippery path that "ism" can lead: It was Joe Stalin's money what gave us the Cato Institute.
I'm not an economist, but in simplistic terms if everyone was guaranteed X amount of income, wouldn't the price of everything go up by X amount - inflation?
How about making things like, food, clothing, healthcare, education, housing - basic human rights - universal for all instead?
Sadly, I think this will just raise inflation a lot.
If this passes, I would not be surprised that 1 kg of rice in the supermarket suddenly starts costing $100. The reasoning being: "hey, all my customers now have much more money than before, I can charge more for the same wares".
What a superb opportunity! You can just set up a rice importing business and sell rice at $50 per kilo. You'll make a fortune undercutting all the supermarkets!
This would be an interesting substitute for both basic personal income tax deductions, welfare, EI and disability programs. Think of how much government complexity could be streamlined.
Reading this comments, one can see the huge political and social perspective between Americans (USA) and Europeans, which is very intriguing - especially reading the arguments.
if everyone has base income added to their income (or as a sole income), wouldn't that raise the prices all around since people will have more money to spend?
Everyone doesn't have basic income added to their income, unless the government is printing money to pay the basic income. Basic income redistributes funds from one or both of two other sources:
1. Existing social benefit programs benefits + administrative costs, and/or
2. Taxes, (in most proposals where additional tax revenue is seen as part of the funding stream, this is a progressive tax on total income).
That being said, the redistribution should result in more money chasing certain goods and services, which should increase the price for those. With realistic elasticity levels, the increase in price will be less, proportionally, than the increase in the quantity of money available for the goods/services, and the market clearing quantity of those goods/services produced and sold will increase.
It will also result in less money chasing other goods and services (public sector administration for the "replace conditional benefits program" part, and goods that are disportionately attractive to wealthier purchasers for the "funds from progressive income tax" part.)
Indeed, I can't tell how inflation doesn't happen either - some people said above it wouldn't happen unless the government prints money, but that seems to be a very limited view of how inflation happens.
Obviously, if some people have more money than they had before - they have more buying power, and with more competition amongst buyers to purchase limited products, the prices of those products must rise. Added to this, the concept being thrown about that almost no one would work a low-paying job in such a system, you could consider a lot of your less expensive products/services to simply disappear. Meaning you get a double-edged sword on inflation: cheap production diminishes, and increased competition for more expensive products.
I'm sure there are a thousand economists and theorists who would like to say that's completely wrong, but I'd like to see it play out, and see where this goes. (Not that I agree that it would solve the problems people refer to: what happens when a mother spends her money poorly? We'll still say we have to bail the kids out, because they didn't have a choice. Other social welfare programs may shrink, but they won't go away for so long as we assume a duty to others, and accept that others won't always behave dutifully.)
dont forget that Switzerland has a high cost of living and presumably its making the system "fairer" in that its not as discriminatory to childless single people.
Economists who want to study the effect of a basic income can travel to Alaska and see the impact for themselves.
It always struck me as ironic because Alaska is one of the most conservative states, and conservatives are not usually in favor of handouts. In this case, however, the inflows to the fund come not from personal income taxes but from taxes and lease-revenue on the state's natural resources, notably oil and gas. Because of this, people view it as a birthright, similar to an inheritance, rather than a handout, like welfare.
In 1976 Alaska's citizens just banded together and determined that (1) all of these natural resources are shared, and the benefits from them should be shared also; and (2) none of us trust the Government to spend this money for us, better than we could spend it ourselves. Today, it is the most popular Government program in the state with near absolute bi-partisan support.
So there seems to be precedent that this can work, if you have a massive sovereign wealth fund that is fed by revenues from shared resources. There are other countries, like Saudi Arabia or Norway, who will probably be the first to try this on a nation-wide scale before Switzerland.