It's not a silly idea at all but I like to think of myself as progressive and I think it is a very bad idea in reality vs on paper.
Just look at how college costs magically rise to the availability of loans and grants. What do you think is going to happen to food and rent prices once those supply chains figure out there is much more profit to be made?
The Walton family alone has more wealth then the lower 42% rest of the USA. What do you think is going to happen when they know all their customers have a certain base income - you think prices are going to stay where they are?
Presumably a lot of the potential profit would be taxed to fund this basic income guarantee. In any case, it seems like your argument boils down to "Better not let poor people buy food, in case the price of food rises," which I think fails without significant deeper examination.
Nope, I say make sure poor people have that basic income.
You don't have to give it to everyone.
I live in a low income neighborhood - you can clearly see the difference in generational poverty and how help is needed.
You also can fix the problem by making sure that corporations like Walmart do not rely on their employees getting foodstamps as part of their income as a business model. It is a very unlevel playing field when entire cities are funding the "low prices".
> Nope, I say make sure poor people have that basic income.
> You don't have to give it to everyone.
Then it's not a basic income. Giving it to everyone, period, is the defining characteristic of a basic income, and what makes it different than welfare.
Proponents believe it to be a superior model because it eliminates a lot of beaurocracy, bad incentives and paternalistic structures that communicate to poor people that they're inferior and might as well not even try to improve themselves.
Giving it to everyone, period, is not mathematically tenable. A thousand dollars per month to every adult US citizen would represent over 2 trillion dollars in additional spending per year. At the very least you have to change the tax structure to claw it back from people as they earn more money.
It would be a massive net increase in spending and it's not even remotely tenable without changing the tax structure specifically to claw the basic income itself back from most of the recipients.
Yes, but once you give everybody $X,000 dollars per month you'll spur inflation and in a couple years $X,000 will no longer be enough to live on. So then you've got to adjust your basic income to $(X+Y),000 per month to make sure everybody has enough, but that will spur more inflation and you'll be right back where you started. Meanwhile, that money has to come from somewhere and it will come out in the form of taxes. Remember, that only about one in three people in the US is employed. So now every working American has to be taxed enough to pay for three basic incomes plus their own incomes on top of that. The rich will complain about the added taxes, but it's the middle-class that really suffers, since they will NOT escape the added tax burden and their extra taxes combined with rising inflation mean they now make just barely enough to get by, effectively placing them in the lower-class. Now you've got a gigantic lower-class, a tiny middle class, and an upper class that only gets richer because they can accelerate the rate at which they siphon off income from the lower classes through price increases.
> once you give everybody $X,000 dollars per month you'll spur inflation
> Meanwhile, that money has to come from somewhere and it will come out in the form of taxes.
These two statements are contradictory. If it comes from taxes, it's not "printed" money and thus does not directly lead to inflation - unless it's through increased spending, in which case it means increased consumption and thus a growing economy.
Prices for basic necessities such as food and housing would rise, causing an increase in inflation. Meanwhile, spending for luxuries would see a contraction as additional tax burdens shrink discretionary spending.
The net effect is to shrink the middle class, as I explained.
> Prices for basic necessities such as food and housing would rise, causing an increase in inflation.
Only if previously a significant portion of people could not afford basic necessities at all and/or it's impossible to produce more of those basic necessities. Both of these seem rather dubious.
> The net effect is to shrink the middle class, as I explained.
You didn't explain anything, you made a bunch of predictions.
You increase taxes to provide the basic income, so on net you're not providing it to everyone. On gross you provide it to everyone so that there's no sharp drop off at any point.
It's already worse than that. There are many products which have a smaller size of that's more expensive than the larger size because the smaller one is WIC-approved. There's targeted price-gouging for people who are forced by the government to buy specific products. There are also ridiculous loopholes. People buy soda and milk with returnable bottles, walk outside, pour it out, return the bottles for cash, and buy a beer. This happens consistently at grocery stores.
> People buy soda and milk with returnable bottles, walk outside, pour it out, return the bottles for cash, and buy a beer. This happens consistently at grocery stores.
No it doesn't, poor people aren't stupid; there's far simpler ways to convert food stamps to cash and poor people know them all and they certainly don't waste them like this. It's much simpler to buy groceries for someone else and take their cash for a dollar for dollar exchange.
I grew up poor, everyone I knew was on government assistance and they certainly did not and would not waste possible cash by dumping it out to get a few cents off a bottle.
> People buy soda and milk with returnable bottles, walk outside, pour it out, return the bottles for cash, and buy a beer. This happens consistently at grocery stores.
This is a perfect example of how all people do not in fact act in a responsible manner as many people would have us believe when discussing topics such as this. Some people simply are unwilling or unable to even semi-wisely manage the life of a human being, which shouldn't be that shameful really considering how complex of a job it is nowadays.
In many cases, some people really do know what is better for certain others.
Okay, but you're talking as if this is the default behavior while it may very well not be. I'd like to see some numbers to back-up these claims as general behavior rather than "a friend of mine, saw a guy who's uncle was once in a grocery where a guy..."
Actually, I'm not talking as if it is the default behavior, and your comment to me is an excellent example of why these things are so difficult to solve in society. Not all people are rational actors whose behaviors are in their or societies best interest. This is a fact, and it is important to the solving of this problem in a practical manner.
But your interpretation of a reported instance of this behavior is that the person pointing it out is asserting that this is common/normal/default (which is incorrect), so (implicitly) this opinion (and any related) can therefore be ignored and removed from the discussion. However, that it is the default behavior isn't in fact being asserted, and it is you who is most incorrect in this small subset of the overall conversation.
In my opinion, that seemingly most participants on both sides of the issue are inclined to pick and choose their facts and have little interest in the genuine objective reality of the situation is one of the main reasons that we will never solve problem of this kind in a reasonably efficient manner.
I could show you POS records, but I'm not sure what that would prove. This us not what everyone does, but it was meant as an example of the kind of problems that arise from trying to control consumer behavior that go away if you just give cash. A more extreme example would be the economy of the former U.S.S.R., but I thought exchanging a two dollar milk bottle deposit for beer money was more relevant.
Really? You sound like a snopes advertisement. I believe the most generous glass bottle return is 10c, can return 5c, and that would be down at a recycling center. A six pack of crap beer is $5, meaning you would need to buy 50 bottles or 100 cans, pour them all out, take them to a recycling center and back (bus fair) and then buy some beer. I doubt this happens consistently at grocery stores.
In MI, there are 10c deposits for cans and also larger deposits. There are $2.00 milk bottle deposits. Dumping is definitely not the best way to make money from food stamps, but I see it happen every week.
Who cares? The government pays for WIC, so the only people being defrauded in this circumstance are the government. There's no "price gouging" involved here; WIC recipients get a voucher that pays full price for the items on the voucher, no matter what they are or how much that is.
Don't take it up with me, take it up with ck2. That's what his statistic (yummyfajitas and the Walton's have more wealth than the bottom 42%) is measuring.
Actually, while I do see what you are saying, I don't think it's that ridiculous. If they have a house with lots of equity they aren't included in this. If you have a negative net worth you aren't doing that great. If you happen to lose your job (like lots of people have over the last few years) now you are in an even worse situation than the guy with a dollar. Now you have no money, and lots of debt.
Having debt ("able to borrow the cost of a house") does not mean you have a negative net worth. It just means you have debt. Having 30k in credit card debt on the other hand...
Yes, it is, because the person with $1 and no access to credit was just made up for the purpose of convoluting a point about wealth inequality in America.
>and so does almost anyone with a positive net worth.
A recently graduated MD with $120K in debt is still massively more wealthy than a hobo on the streets who is technically in the green. In this knowledge economy a well respected degree is a valuable asset to hold.
Somehow this idea always comes from libertarian quarters, too(please, no 'no true scotsmen responses' replies about how nobody but a single mute hermit living on a mountaintop in South Dakota is a _real_ libertarian).
This seems like an incredibly market distorting policy. Social welfare programs provide hard floors on quality of life: you don't have food? food stamps. you don't have medical care? medicaid. Some people live longer than they financially planned? universal old-age poverty insurance (social security).
This has all the feel of letting the more financially/business-sophisticated citizens go hunting on one of those hunting ranches with borderline tame 'game'.
Not true. We're not talking about some kind of inflation that hits every dollar equally. The first 10000 dollars can't be made useless without affecting all the other money.
A basic income means everybody eats and has shelter. What part of the economy does that affect? Less and less. It may be time to just make that a civil right, and move on.
College is different than food. Everyone cares about going to most prestigious school they can afford (that will accept them), which creates a bidding war. This is actualy very similar to housing markets in desirable neighourhoods - everyone wants to live there while there's room for maybe one person in ten, so the market forces set the price at a level beyond the means of the bottom 90%.
Food, on the other hand, is a globally traded commodity. There's no reason for the food prices in the US to go up if basic income was to be introduced there.
For college in particular, where it is quite specifically the fact that you are (better skilled and/or better connected and/or more able to pay) than everyone else that commands a premium this is very much the case - we can't just build more prestigious schools.
For housing, for most people, the bulk of what makes a neighborhood desirable is location relative to their work and social group and activities, cleanliness, and safety. Prestige is less of a component outside the very high end, where we don't care to subsidize anyway. The market (and the rest of society) can absolutely provide more "desirable neighborhoods" for the desires of the people who will be turning a net positive from BI.
Did you noticed how farmers are subsidized? This is actually form of basic income in artificially lowered food prices.
I think there will be some adjustments in real estate necessary for the rent not to skyrocket after introducing basic income. I'd go for tax rate on housing directly proportional to how much housing you own, reaching 100% tax when you won 50 or so times the amount of housing necessary for one family.
Availability of loans and grants for college that can't be used for other purposes is a very different situation, because there are fewer options competing for that money.
Is it silly to assume that competition in a free market will produce startups trying to upset this situation in markets that do not have a high barrier to entry?
Rather than these posts discussing universal basic income in abstract, I would like to see someone go through a back of the envelope scenario for a real country that might try it. Switzerland or some other European country.
Presumably there would need to be major changes to income tax brackets (especially for the lower income tiers) & dismantling of various existing welfare programs in order to fund a basic income. I think Friedman included public services like schools, public transport, health services, etc in his definition of welfare. I doubt Europeans would go this far.
Then we can discuss the more speculative parts like who will be more or less incentivized to work.
Here's[1] a detailet scenario for basic income in Finland.
Key points: cost neutral, basic income would be 440€/month (although the study is a bit dated, and would be higher these day due to inflation) and the tax rate would be 36% (low in Finland).
Socialism was a good idea, maybe an unrealistic one in many respects.
Whereas Communism via "Vanguard-party" was always a bad idea. Pretty much all of communist countries never got past the Vanguard transitional stage and ended up with a brutal dictatorship.
I think socialism has worked pretty well in the UK, all things considered. We've never gone the whole hog, but we have had a welfare state and a number of industries nationalised at various times. I rather like having a mixed economy where some elements of capitalism are balanced by socialism.
I'm not sure how this meme started, Communism is a `terrible` idea. The goals of Communism are good but the actual plan might be the worst model of government ever tried.
I'm a conservative. One would probably assume I'd be against a universal basic income. In theory I am, but I actually think I find the basic income much more palatable than the current welfare state.
At least with the basic income, there is never an incentive to not work. It makes it possible to not work, but it doesn't incentivize it. The current welfare systems make it such that if you start working you lose the welfare. If you don't have the skills to make significantly above the welfare level, you are actively incentivized to not work.
For those suggesting we'd have massive inflation making this completely worthless, I think you underestimate the level of money we currently give away. While there would be some inflation, we already give huge amounts of money in the form of welfare, food stamps, social security, etc. A basic income would replace all of those things.
Yes, exactly. The only problem is, in practice, it's so hard to get rid of those things, that we may end up with basic income AND various forms of welfare and that would not be good
"This sounds like some communist plot. How can anyone take seriously the idea of paying people to sit around on their backsides?"
That's something a person that didn't experience communism would say.
Communists would never allow a person to just stay idle doing nothing if you don't have a job you would be sent to forced labor camps where people are needed.
Ask any Romania born before 1989 if you don't believe me.
The UK benefits system has been built up over many years, over a range of different government departments, and covers many different needs and philosophies.
This means it's a horrific mess. For years it was not possible to know how much housing benefit you would get before you moved into a property. While I think there are flaws with the free market I can see that crippling it doesn't help at all.
It's really hard to work out if you're getting the correct benefits, or if you're getting too many. (We have a tax credit system. The credits lag real world payment information, and many people get caught with having to repay tax credits.)
There are other flaws. Someone getting voluntary work (improving their chances of getting full time paid employment) is penalised. Someone with MH illness who gets voluntary work as a step back into society gets penalised.
So, the different government departments have been streamlined a bit. The different benefits are being changed, and signals are being sent about acceptable use of the system.
I got a letter, to my name and address, with all my relevant information. It had a phone number. I called the number. They asked me security information, and confirmed my name and address. They sent me a form. I had to fill out the form and return it. That form is an assessment for an interview. I'll attend an interview, which is given by a doctor. That doctor doesn't do any diagnosis, they have a rigid check list which they assess the patient against. ("Can you walk 10 metres unaided?" "Can you stand for ten minutes without pain?"). The form is scored and sent to a decision maker. That is then returned to a bureaucrat, who awards one benefit, or another, or none.
The checklist is flawed - turn up with a dirty t-shirt because you're a lazy slob? You score points. Turn up with an ironed shirt and tie because your crippling OCD and anxiety won't allow you to leave the house otherwise? You lose points.
All of this bureaucracy is very expensive. The system is open to abuse from multiple parties - criminal gangs using dead people's names to claim benefits; people over claiming, or claiming while working, or claiming for something they're not eligible for.
Sweeping away all of this and replacing it with a relatively simple "Does this person exist? Are the eligible for the universal income?" would save so much money, and time, and stress. It would free people to do voluntary work, or small informal projects.
Then we just need a bonfire of the tax / duties system, and get something sane there.
> Sweeping away all of this and replacing it with a relatively simple "Does this person exist? Are the eligible for the universal income?" would save so much money, and time, and stress. It would free people to do voluntary work, or small informal projects.
Exactly. Some people just can't wrap their heads around what people want. Decent wages and free time.
To give people a certain minimum amount of wealth, we can just acknowledge that the best way to do social welfare is by utilizing efficient taxes and spreading that wealth equally amongst all, not because everybody needs it, but because it's ethical.
I'm in favour of the idea that it would still factor into your tax bracket. So making a UMI of $15,000 itself is meaningless at tax time, but working a part-time job and escalating that into the $40,000's should place you in that income.
This could mean that it ignores the wealthiest of us on a per year basis if we make more than $100,000 of so.
With the savings from those individuals and the elimination of our bureaucratic social system now, I truly think it should be attempted.
The real problem is the government firing those workers and saving that money. They would not like that.
Progressives seem to have lost all understanding of the concept of money. It is a means of trade. The spending power of the basic income will ultimately reflect the value its recipients produced in order to obtain it - zero in this case.
> The spending power of the basic income will ultimately reflect the value its recipients produced in order to obtain it - zero in this case.
What do you think the purchasing power of welfare money is? Furthermore, can you really separate the purchasing power of the money utilized in the minimum income and the income from working?
I am not separating anything. I am saying that inflation will rise, because that's what happens when a country isn't producing anything more, but the country increases the amount of its currency in circulation. It's like a stock split - absent a rise in the actual value of the company, doubling the number of shares makes each share half as valuable.
In this case, over time inflation will adjust to the point that the spending power of the basic income will approach zero. It won't actually hit zero, because markets are not 100% efficient. But it will be close.
They will have to print this money, because there is nowhere else to get it. What happens when you print money but there is no additional demand for it? You guessed it...the value drops. Markets are surprisingly efficient at pricing things like this in.
Are you seriously trying to make the argument that their economy will absorb this with no effect on the value of their currency?
Why that? Nobody's talking about abolishing taxes. Note also that the basic income would replace many other forms of social subsidies that already exist and have harmful side effects.
That depends entirely on how high it is, doesn't it?
Ultimately, it's not about money but about productivity. If the economy is productive enough to give everyone a minimal standard of living as well as comforts and luxuries for those who earn them, it doesn't really matter how said minimal standard of living is "funded".
And there is little doubt that the economies of developed countries are that productive for a reasonable minimal standard.
You can free up ~4500 per adult in the US "just" by redirecting the "mandatory" portion of the Social Security Administration and the Department of Agriculture (which I believe is largely food subsidies, but I could be wrong about that). Drop Medica.. and tell people to spend some of their BI on insurance if they need it and you can just about double it, with no tax increases at all.
Apparently the total income in the US is $13,401,868,693,000 (according to http://bber.unm.edu/econ/us-tpi.htm), which is about $43k per person.
So funding a $20k/person basic income would correspond to about 50% tax? Actually I think this is an overestimate, since the declared incomes do not cover social security and corporate taxes.
Taxes? I'm not proposing anything by the way, just explaining that mincome isn't a proposal to print a bunch of new money. I think the idea is that it replaces current welfare programs.
That's absurd, of course people will work. Why does anyone work right now when there are already welfare programs?
By your logic there would be no sense in companies paying bonuses--if you already have a guaranteed salary why would you do anything more than the minimum?
This is not welfare. This is giving money to every single person, and you cannot do that without negatively impacting the value of the currency. Reality sucks, but we still have to live in it.
How is it not welfare in your estimations? It's nearly the dictionary definition of welfare.
Why would it negatively impact the value of the currency and how is that any different than the current state of welfare (where only some people receive it)?
Because welfare, being given to only a small percentage of the population, can be funded out of taxes from the much larger pool of people not receiving welfare. But if everyone were suddenly on welfare, the system would quickly run out of money. We would then have to print more money.
Your argument seems to rest on the false assumption that (like welfare) anyyone who receives the basic income is not paying taxes.
In fact, a lot of people would pay considerably more taxes than the basic income they're getting. Yes, that's not perfectly efficient, but still more efficient than the bad-incentive-riddled beaurocracies that exist to ensure that welfare goes only to the "deserving poor".
You seem to be under the impression that this is not being done already. That impression would be wrong. The treasury creates trillions of new dollars every year.
People won't accept full-time low-wage shitty-manager jobs, because they won't accept their lives being poisoned by shitty managers, and they will have the choice.
But most shitty managers are shitty because they have power over their low-education personal (which can be easily replaced, and job market is not good these day). Those workers will take part-time ok-manager jobs, mostly because they want to contribute to society, also because they might get bored.
Also, in most of Europe, University cost is quite low (like, less than 1k€ / year, instead a life-long debt like 'some' country can pull out), so universal income could bring interesting trends in education.
Not everyone would go back to school, maybe almost no one at first, but I would expect views to change rather quickly on that subject.
We're already giving money to people with no job, this would effectively take money off people who administer welfare systems and give it to low paid workers who would then get benefits and wages.
Not at all. It gives money to everyone regardless of income. Welfare makes up a small percentage of GDP (unless you include all entitlement programs which this wouldn't). A basic income would be a huge percentage of GDP. IIRC in Switzerland's case this is about 25% of GDP. That's a massive increase in government spending.
You missed my (admittedly subtle) point. Yes, on the face of it, it gives a basic income to everyone. But you haven't magically made more wealth so your average tax payer has to pay somehow. Either through higher taxes, a devalued currency, or fewer schools/hospitals. The people who do stand to benefit are those who would have been earning just enough to stop receiving welfare before. They now get to keep the benefits and the transition up the income scale is smoother. Meanwhile, those people who had a job administering welfare are out of work.
> he spending power of the basic income will ultimately reflect the value its recipients produced in order to obtain it - zero in this case.
I'm always interested in these sorts of arguments and how certain some people are about how it will all end up. Could I ask how you have managed to be so certain about this?
Personally, I don't think economics is enough of a settled science to guarantee very much. The real world tests people have done so far have been intriguing, but I think a basic income requires a lot more empirical testing to know for sure.
Yes, that is a pedantic statement :). The number will never actually hit zero, largely because the brief statement I wrote here is a drastic oversimplication of how currencies are valued. But it doesn't change the underlying statement - the basic income will be pretty useless after a relatively short amount of time.
Not really, if the total amount of money does not change, then the worth of the basic income would not converge to zero. Am I missing something obvious?
In a country with it's own currency, wouldn't this just raise prices until finally the effect would be being back to step 1 but with huge inflation.
I.e. I'm selling bread for $3. Now I get $1500 free money every month and I know you do too. I'm selling bread for $6 because I know everyone has extra money lying around and since I have extra money I don't really care if people buy less from me.
There's this side concept called competition. If you sell your bread for $6 because you think the market can afford it, but the vendor next door continues to sell for $3 you go broke.
I didn't always see eye to eye with Milton Friedman, but I think we can give him credit that he'd thought through the obvious problems with this approach before he proposed it.
Except that your costs go up as well. There will be an added tax burden, for one. Since only one in three Americans works, you'll have to pay for a lot of taxes. Then you've got to buy the flour. Your next door neighbor didn't just walk in one day and raise his prices to $6.00. The costs of the flour rose. The eggs. The yeast. The labor that creates the bread increased in cost as well, since nobody wants to work for minimum wage when there's all this free income now and the increased cost of labor shuts out newcomers, thereby reducing competition. Eventually, you have to raise prices not out of greed but because if you don't you'll be losing money and then you'll need to rely on your basic income and so will all the people you used to employ.
If prices == amount people are willing to pay, then your analysis would be spot on, but it's basic economics that this isn't the case. The elasticity of bread demand is high (because of the wide variety of substitutable goods, including other bread brands). So you would not expect to see the price change much.
You are missing the point here, in your example when new money is created (to be able to hand it to everyone) you simply devalue currency and create inflation.
Universal income is not being generated out of thin air by the government, it is being generated by tax. Therefore you will not find hyper inflation of the form you suggest.
Well, the point I was getting to is how to approach such an effect through a thought experiment. I agree that my scenario is very different, but it's about the short and long term effects. You're right, my example would probably devalue the currency and create inflation, but what would happen as a result. Would prices go up within days, weeks year. What about wages and tax. How long would the rate of increase last.
Emigrate? I guess that could be the problem with universal income as well. You get £20k p.a. for doing nothing, so maybe you'll be doing nothing on a beach in Asia?
If you're successful at it you will then pay much higher taxes which will in turn fund higher basic income... More likely to happen is that your competitor will not also raise prices to $6 and you will soon yourself be relying on the basic income to live.
But there is no overpopulation in Europe in terms of land availability or food supply (Europe's population density is 72 person/sqkm, the last famine was during WWII and not even then widespread). Sure, population density is very high in urban centers but there is still plenty of space in the country side. It just needs more incentives to be settled. So 'importing new people' really isn't a problem.
I cannot find any information on 'Replacement breeding in the emigrant nation' so I really cannot say anything about the validity of this statement. Could you provide a source?
EDIT: Fixed sqm to sqkm. Elaborated second paragraph.
Overpopulation is in the eye of the beholder. 72 is enough, we don't NEED more people! Side effect of overpopulation capitalism: need more people on the same space ? You need apartment, which requires capital, which means America and there 1%/90% ratio ... Do not want!
Are you suggesting that Europe is not capitalist already? I think it is and despite this we have still managed to maintain greater equality (as measured by Gini coefficients after taxes and transfers) than the United States by having more state intervention. Why would immigration change that?
I'm not saying that immigration is just going to turn out to be a positive effect without any action. Measures have to be taken to account for it, but I think investing large amounts of money in trying to prevent it is the wrong approach, because it a) does not work b) is inhumane, and c) does not solve the actual problem (people being forced to migrate).
You said that both things ('importing new people and replacement breeding') contribute to overpopulation. Importing new people can only contribute to overpopulation if you consider it locally. If you consider it globally moving X people from A to B cannot possibly directly affect the total amount of people in A and B. I considered overpopulation only in Europe and not globally because neither did you.
You're not understanding. Overpopulation involves the worldwide figure. The point of the statement is that immigration increases overpopulation by moving people to a new place, and then replacing them in the original place.
I think that eventually universal income will be a good idea. The question is not whether it's a good idea, but whether it's the right time for it.
This is a bit of a tangent, but since this is tech oriented community I think it's relevant. It's highly likely that one day strong AI will be able to run the entire world economy, and humans will not longer have to work, nor will they be needed. At that point humans will need basic income to survive. In this scenario, the whole concept of "the economy" will have been stretched and squeezed into something entirely unrecognizable, so the problem of basic income being a drag on the economy will be irrelevant.
We are getting closer and closer to this point every year. Just look at employment figures. Computers are replacing humans in the workforce, and they will continue to do so at a rapid pace.
Basic income will be useful and needed, it's just a matter of time.
Can we stop putting these "universal income" posts on the front page until someone has something genuinely new to say about the idea or there's some news about an actual implementation?
I had a genuinely new idea this morning. Paying people for idleness increases idleness, which isn't necessarily good for the recipient. Why not pay them instead for doing things that make their life individually or collectively better?
* Pay them for taking and passing college classes.
* Pay them for losing weight and getting their BMI to an acceptable level that reduces collective health care costs.
* Pay them for giving up smoking, drugs, or drinking or not starting.
* Pay them to drive more safely.
* Pay them for art appreciation.
* Pay them to adopt children and make their lives better.
This is an alternative to the model where everyone works for a living. It produces non-work social good that is to the benefit of the recipient and the society they live in.
But then the money has strings attached and you need to check whether people really comply (= cost). Basic income wants to avoid that by simplifying the welfare system assuming that most people do not want to simply be idle.
Simplifying the welfare system is a good idea, but my idea is more like gamifying the system and giving people rewards for doing good things. Simplicity is not the only virtue, what about tangible, measurable outcomes that have improved people's lives?
Some things are not immediately measurable? Who is going to decide what is worthy? I may take care of my community by planting pretty flowers all day (like in Minecraft), would that fit your criteria?
You try to gamify and I think people would game it instead.
Instead, basic income makes you free to figure out what is a worthy endeavour.
Wouldn't this impose some sort of control mechanism, akin to the "employment search" one which is already mentioned as inefficient and bureaucratic in the article?
For instance, isn't "pay them to drive more safely" similar to "make them pay fines when they drive unsafely, i.e. speeding"?
Actually, it's more like giving them an insurance discount when they carry around one of those black boxes that measures their driving. But it's not very different from what you said, really. Is it inefficient and bureaucratic? It's not that difficult to ask someone to step on a scale and measure their weight and height, or determine whether they have completed a college course. I think the benefits are worth the effort.
Now we have someone thinking. Economics 101: people respond to incentives. If you incentivize them to do nothing they will do nothing. If you incentivize positive behavior you'll get positive behavior.
Of course this is an over simplification because it's easy to overlook the real incentives and impact of such actions. Still, incentivizing positive actions is far better than incentivizing idleness.
4. Not fit to adopt kids (not everybody is fit and we should never make this an incentive to get money. We had many horror stories of froster parents gaming the system to earn more money while neglecting kids). The best way to do this is to limit to 2-3 kids and pay based on the grades, not just because they have a kid.
5. Already took college classes or even graduated but there's not enough jobs in the field. This is one of the biggest problems we have in USA, a lot of high-class graduates but many of them just end up doing jobs that are not related to their majors because there's not enough jobs or the wages aren't enough.
By your logic, this person would be earning far less than the person who is fat, an alcoholic, adopted several kids, and just taking some boring classes that usually might not lead them to anything.
In fact, the main reason I'd support basic income is that it'd lead to people doing more for society than LogicialBorg's idea.
Why?
1. Mothers don't have to work two jobs to support their kids, they can actually spend more time home with their kids. Which would actually benefits our future, led by kids in stable homes. (over-simplication but this is one of the potential benefits).
2. Folks who can't do art projects, read or anything that'd improve their artistic side because they don't have the time or money to do so, would actually be able to do this with the basic income. They're not so stressed about making ends meet.
3. There are many folks where staying idle just upset them more, so they'd go out and do something useful and not have to worry about money to do it. They might be more motivated to do some menial jobs like taking care of elders, cleaning up the streets near them, and so on.
The reality is that the smarter we make our robotics, the less jobs there'll be for anybody, even those who did everything right to get a job, they just won't be able to find a job.
Interesting thought! But then we are back to the huge bureaucratic system that needs to reinforce all those rules. Also, several of those ideas sounds very exploitable.
They're just a brainstorm. The simplest and most effective would probably be measuring BMI for rewards. It could put some brakes on the obesity epidemic. Being paid to do nothing isn't exploitable, because there are no rules, but that doesn't necessary make it better, because there is no connection between effort and reward.
But that's exactly the point of universal income. You don't pay them for idleness, you pay them regardless. You just don't pay them enough for their desires, just their needs.
All those things you want cost money to verify and adds massive administration costs. Another point of universal income is it's cheap to administrate.
If you want to "pay" people for taking college, just subsidize it.
I don't think cost of administration is a big deal. The outcome of the system in people's lives is more important. Otherwise you'll end up creating a system where people sit around in idleness and drink themselves to death on booze. Paying for their needs is a good idea, but what about using the payment to motivate them to make their own life better in other ways?
I think the costs of administration would exceed the payments. We're fine with bureaucratic jobs now because we need employment numbers, but those jobs aren't producing anything real. Look at the VA, it employs half as many people as the Army, just to manage benefits. What your proposing would, like the VA, require filings, delays, rejections, appeals and a whole lot of heartache. Simplifying things is the key selling point. You reduce pointless jobs that produce nothing and get rid of red tape in the process.
I just don't think adding bureaucracy is the solution. If I want someone to go to school I don't manage it on the individual, you'll spend half your money on administration. I spend it by subsidizing tuition.
Some people will drink themselves to death, but they already do that in our current system. How does that matter? The only difference I see is they'll have a lot more free time. Maybe they'll waste it, maybe they'll improve themselves.
isn't it possible at least in theory to decrease this administrative costs using technology, But maybe it costs said much because there's no real push to do so and large resistance from the public sector ?
You're describing effectively a Committee for the Promotion of Virtue and Prevention of Vice. A much softer version than most regressive states offer, but nevertheless a similar thing. I think you'll run into a lot of the standard problems relating to good intentions and unanticipated results.
One point of confusion for me, that I hope someone with a sounder economics background than myself can address, is:
Would the national unconditional basic income render the national minimum wage effectively 0 (or much lower than it currently is)?
For example, corporations could be taxed more heavily if they could offer their lowest paid positions a wage of £2 per hour. This extra taxation would then help fund a national basic wage (equivalent to say £5) which would leave a low-skilled worker earning £7 (roughly what they were before). I had assumed that any such 'basic income' scheme would be so prohibitively expensive as to require such drastic means, just to find the money, however I haven't seen any such changes mentioned in many of the articles discussing the relative merits of the Swiss proposal.
As an aside - for those saying: "What if people don't spend the money responsibly?" - Isn't that, somewhat idealistically, a large part of the point of the scheme?
The scheme would encourage responsibility, rather than treating people like children? Yes things like addiction (to Gambling, Drugs etc...) throws a spanner in the works of this - but charities and support groups exist to tackle this kind of issue already - they could continue to do so, with one critical difference. Charities could do a lot more with less if their workers were earning a basic income from elsewhere, and could afford to give their time for less ££.
I support this idea in theory although I would need to see calculations of possible levels of universal income and tax rate in a given economy to fully support it.
The interesting thing is that with a generous universal income and a fairly high rate of tax (e.g. 45%) you would naturally get a really quite progressive tax and benefit system without the complexity of many thresholds that currently exist. It actually makes the idea of a 'flat tax' actually work and not be ridiculously unfair.
It would also enable people not to be employed and to work on projects that they are passionate about whether start-ups, internships, forming pop bands, writing, caring for children or parents but enable people to choose to earn additional money. Unpleasant jobs should command increasing premiums as more people have the choice not to do them open to them but interesting flexible jobs may not need as high wages as current minimum wages (which I could imagine being abolished for recipients of universal income).
Of course some would sit around all day doing nothing but I suspect that not many would do this long term and it may be better that they can declare it as an active choice rather than be bullied into interviews and appearances at job centres.
There would be complicating factors such whether/when immigrants were entitled to the universal income and if not a minimum wage may be required to protect them from exploitation.
1. Premise: "Basic income of X units of money is sent to everyone in population".
2. Basic income comes from where? Either from taxes, or from printed money. Either way, purchasing power is being taken from some people in proportion to their savings/income.
3. There's always a difference in income and amount of savings. If everyone was making the same amount of money, doing "basic income" wouldn't change much (except feed some bureaucrats in the process).
4. Therefore, some people will be taxed less than "basic income" they receive. And some people will be taxed more that the income they receive.
5. Therefore, some people do not really receive any extra income. They are getting deprived of a portion of their purchasing power instead.
6. Therefore promoting it as "everyone gets it, no strings attached" is a total lie.
If they said "we want to take from some people and give to others" it would be honest and true. But it doesn't sound as fair as "everyone gets", isn't it?
Note: I'm not debating taxation itself. Even if you think it's okay to tax and redistribute wealth, the description of this law is a total lie.
EDIT: I guess downvoting folks are too busy redistributing people's wealth to point out a logical flaw in my comment.
Everyone of consequence understands it has to be paid for, and thus it's not a net income win for everyone. So you're refuting an obtuse interpretation of "everyone gets it" that only the very naive might believe.
The point of "everyone gets it" is to simplify administration, soften the stigma, and eliminate the sort of marginal-disincentive cliffs that patchwork 'progressive' benefits often create.
"soften the stigma" is the problem here. It's false, dishonest advertisement which means to produce a psychological effect when the practical effect is different. That's why it is called fraud: you say one thing, but sell another, and you know it in advance.
A basic income may or may not be a good policy, but people like Milton Friedman and Charles Murray weren't trying to perpetrate a dishonest fraud (or convince people it's a "free lunch") when they outlined its potential benefits over alternate existing patchwork systems of redistribution.
"Everyone gets it" means to avoid the complexity, corruption, and gaming that comes with an eligibility-testing bureaucracy. "Softens the stigma" means the marginal incentives, especially for the working poor and near poor, aren't muddied by taboos around other welfare programs. (And "softens the stigma" is a honest way to describe that part of the rationale, as well... because some listeners will consider the stigma a good thing, while others see it as a barrier to the policy's intended effects. Universal eligibility does, in actual fact, alter the stigma associated with receiving government income – and people can still argue about whether that's a good thing or not, without allegations of bad-faith fraud.)
One side effect I can think of is that this might spur innovation and entrepreneurialism, because the consequrnces of risk-taking are softened.
It increases the opportunity cost of getting a job, vs being an entrepreneur. Perhaps we will see a generation of new entrepreneurs that otherwise would never have taken that leap; Which in turn might be great for the overall economy
An alternative that I prefer is a welfare system such as in Australia. Australian welfare is very similar to basic income, the main differences being that you have to look for work (but enforcement is not strict) and the way welfare decreases as your income increases, makes your effective marginal tax rate about 50%.
I'm not sure what the optimal tax schedule (pre-tax vs post-tax and welfare) should look like, but my intuition is that a high effective marginal tax rate for people on welfare is not bad, as the disincentive to work that it produces affects fewer people, than if we had a flat tax (e.g. VAT) plus basic income.
The disincentive to work produced by a higher effective marginal tax rate is also offset by the fact that welfare isn't a lot of money, and the longer you are on welfare the stricter enforcement becomes.
I also don't see the moral reason for a true basic income, except perhaps for men, who should be compensated for the possibility of being conscripted.
> the main differences being that you have to look for work
This is a bad idea in the long term. The whole reason basic income is being seriously looked at is because we know automation is eliminating the need for labor and that trend will continue until work simply isn't available for a large percentage of the population. People need to get over the idea that work will be necessary to live or the idea that work is how one contributes to society.
We don't know what the full impact of technology would be, so a basic income is premature at best.
When you say "People need to get over the idea that work will be necessary to live" you are just insulting people's intelligence. Of course I am aware that if you got paid for doing nothing, then work would no longer be necessary for (an individual) to live.
Also, the theory of technological unemployment is that technology will render labor less productive. Basic income might be a kinder and more efficient way to deliver money to people without jobs, but it won't magically make them more productive.
I think the biggest benefit of a universal income is to remove the perception that unemployment is a bad thing. Now to reduce unemployment there's a fair amount of menial labor and policies encouraging it. If countries didn't have to worry about their employment levels I suspect they'd be a lot more willing to embrace new approaches.
The thing I genuinely don't understand regarding the basic income for all argument is that surely it just moves the goal posts rather than solves the problem at hand?
In the current system, you can go stay at home and get income support, which should provide you with the basics i.e. a home, food, electricity etc.
If you would like more than this, you can go and get a job and hopefully earn more (have a better lifestyle) than staying at home not working.
[Note the 'should' and 'hopefully' - This system may not always work, but when it doesn't it's generally a fault with wages paid not being sufficient rather than the benefits system being broken]
This therefore means there is an incentive to go work. There is also control, to make sure the money the unemployed person is getting is mostly spent on the basics (such as housing, rather than say drugs).
The problem with suddenly giving everyone a minimum amount of money, is that due to everyone now 'at least' having that amount of money at hand, this becomes the new 'bottom' of the market. If I get a job, I earn money on top of this basic amount, which means I can afford nice things and the person unemployed still can't afford anything.
To clarify, this works similar to pricing of items in different markets. A beer in the UK is ~£3.50 (£5 in London), a beer in Vietnam is about 14 pence. Both costs are fairly relative to what they would have to pay their work force to produce the item (plus cover costs and make a profit) and what the local market can afford to pay.
If let's hypothetically say, you gave everyone in Vietnam this basic wage, the cost of beer would not remain at 14 pence. The first reason is because the work force would find their existing pay negligible compared to the basic pay (so wages would have to rise to be incentive to work on top of basic pay) which would in turn cause cost of manufacturing to rise, but also the market would realise with this extra money available - the price could be set higher and would rise accordingly.
Now back in the UK if this was to occur, you would have slight price rises due to these factors which would in affect move the poverty line up higher, which would mean the people at the bottom are still poor relatively.
What's worse is that assuming the people who are unemployed are given the choice on how that money is spent, they may in fact not spend the money sensibly (i.e. on their housing) and end up homeless instead.
The final problem with this model is that the cost of living and economic output is not evenly distributed throughout a country. £1750 a month in northern England may give you a fantastic lifestyle, where as in London you'd barely cover your rent. (What happens to the unemployed in London in a fixed give everyone a basic income situation? They have to leave London and move where they can afford, which then makes it potentially harder to find a job and splits the country into two halves, the elite / the poor).
I understand the confusion, but its mostly there thanks to misconception about how things works now,
> If you would like more than this, you can go and get a job and hopefully earn more (have a better lifestyle) than staying at home not working.
Staying home and not working today is not actually an option in most places in the world. The reason is why this new model is called unconditional basic income. The current system called income support is conditional.
And market forces love the fact that its conditional, since it allows exploitation. If income support is for example conditional on the unemployed not having received a job offering, then the market can exploit this fact and offer people jobs for below income support (or what ever is minimum). Unemployed people can not say no, or they loose the government income support, and thus become forced to accept a slave job or loose all income.
unconditional basic income would eliminate this issue from the board, and increase wages for unattractive jobs.
Inflation should also not be effected by much. The total amount of money in society is still the same finite amount as before. There is no "extra money available", only a different form of distribution. There is a larger group with money to spend on products, which drives prices both up (more demand), but also down (more incentives for large scale production). It also makes money change hands more often, and is often attributed as the reason why a income support system do not actually drive prices or wages down.
Nobody today wants to accept an income below what you need to survive because..you need to survive. Liberals don't want to see other people accepting an income below what is needed for them to survive in a way that we can accept, so pass rules about a minimum wage.
With this proposal, there is wage that it too low. As long as you make enough to afford something nice that you want that you couldn't otherwise afford, there is no reason not to take the job. Therefore at the low end, employers can pay LESS than they do now.
What it does instead is remove perverse incentives that make poor people receive less money for working than not working. The classic example being a single mom who, while working, and paying child care, makes less than on welfare. (Incentives that we've responded to by passing rules forcing poor people to take the otherwise irrational work option.)
Liberals don't want to see other people accepting an income below what is needed for them to survive in a way that we can accept, so pass rules about a minimum wage.
This is silly. If that were the motivation, then minimum wage would be a few dollars/day.
Here is a list of countries by GDP per capita, after adjusting for purchasing power. Lots of countries (e.g. Venezuela, Georgia, India) have a GDP/capita below the US minimum wage. The world GDP/capita is below the US minimum wage. Yet somehow people in those countries still survive.
I don't think you read what I wrote carefully enough. Here it is again.
Liberals don't want to see other people accepting an income below what is needed for them to survive in a way that we can accept, so pass rules about a minimum wage.
The key points being that liberals don't want to see it (they don't see other countries), and it is the liberals defining what seems acceptable.
As for your "after adjusting for purchasing power" comment, you know enough economics to know that such adjustments depend on the bundles of goods being purchased, and the poor purchase different bundles than middle class people would. (The same problem means that the quoted inflation figures do not accurately predict the experience of specific socioeconomic groups.) Thus the figures should be taken with a grain of salt.
But that said, yes, people survive on that. But do liberals like seeing them do that? I submit that liberals don't, and this is the motivation for the minimum wage. (See the sibling reply to yours for verification.)
As for watching TV versus working, I'm sure that would happen. I know some of those people. I also know people who would happily work for less than minimum wage just to get out of the house.
I definitely misunderstood what you said. Thanks for the clarification. I suspect your theory about what people like to see has more than a grain of truth to it.
>The classic example being a single mom who, while working, and paying child care, makes less than on welfare.
It can be worse that this.
At least in some states, every dollar you earn is deducted (at least in part) from your welfare checks. This was at least the case a while ago; I couldn't vouch for its truth today after welfare has been "reformed" several times. It was definitely true at one time, though.
When this was true, at the very least, it was a severe disincentive to working, since until you were able to make more than your welfare check, you would be at best be making pennies on the dollar by taking a job.
But how you cheat on universal income is to declare having more children than you actually have. Or just actually having them, treating them badly.
Or at least, every now and then, there's an article in various European news articles that someone pulled that crap. (Most Euro countries will give a monthly stipend of ~100 euro per child you have, no questions asked (in Belgium you have to work to get it, I believe, but no other qualifications. A bank director gets it, and so does the cleaning lady))
>But how you cheat on universal income is to declare having more children than you actually have. Or just actually having them, treating them badly.
Welfare also scales payments based on the number of kids you have. This is a common (and almost certainly apocryphal) accusation against people currently on welfare; if it's ever true, it's an exception and not the rule. (which is why it would be news)
What is true is that the vast majority of people want to feel useful -- and (at least when the women in question are even moderately educated) they don't want to have extra children just to have a higher stipend.
Not that original intent should in any way be binding, but it's an interesting cultural shift that "single mom who, while working, and paying child care, makes less than on welfare" is now a reason why welfare is bad, when "mothers shouldn't be working" was part of what motivated welfare in the first place.
This reminds me of the old paradox that a man who marries his maid is reducing GDP, because when she was the maid she would cook and clean and he would pay her enough to support her as a business transaction, but as husband and wife, she still cooks and cleans and he still supports her but it's not a business transaction anymore.
Likewise, a mother who goes to work and spends her whole paycheck on child care increases GDP, but if she just stays home and cares for the child herself, it doesn't count because it's not a business transaction.
The problem with making it unconditional is that it will completely break the ceteris paribus calculations as to what is good enough, making a lot of collateral damage on its way while being largely ineffective.
Showering money to everybody is very likely to make more harm than good to real people's economies. A transition to Friedman's proposal on a "moderate" negative income tax (it's not what the name suggests) makes a lot more sense than this. Although I'd just give conditional help as it's done in many European countries with a reasonable degree of success.
The Swiss suggestion aside, it's not really meant to be a free middle-class experience.
In the minds of most people it's more of a "you will not go hungry or get cold in the winter" level of support, and I would make the argument that the majority of folks would continue to work to supplement their income beyond the bare necessities.
It depends on your base axioms here. Most people don't like living with the bare minimum, and will try to work their way out of it. Most people aren't stuck at the bottom of the income range by choice.
Think of the entrepreneurial venues now open to people who no longer have to juggle two shitty jobs just to get by. I think we'd come along way towards reducing human misery without really harming the economy - with the exception of making jobs that are shitty for no good reason obsolete.
My take is that capitalism is corrupted because people are unable to meet basic needs. We pretend that capitalism is a system where everyone is able to make informed decisions. We pretend that in capitalism, a 10% chance of making $1M a year in income has the same value as a 100% chance of making $100k a year. This is just not the case.
People have two different types of risk they can take. Income risk, and personal risk. Personal risk is your shelter, your food, your health, your family. Income risk is your expected income beyond what is needed to meet those basic needs.
If your personal risk is covered for some reason, then you are able to objectively evaluate income risk. But if your personal risk is not covered, you have to be more conservative. The downside is not that you might not make as much, it's that you might lose your home, health, or starve. You can't be logical about that.
If we have a system where personal risk is largely covered, then the free market will actually pay people what they are worth because people will feel free to actually take risks and (for instance) start companies and pursue their passions.
This is some stuff I wrote on it a while back, it's better written than what I put here.
> In the minds of most people it's more of a "you will not go hungry or get cold in the winter" level of support, and I would make the argument that the majority of folks would continue to work to supplement their income beyond the bare necessities.
And that's the essential fallacy: You cannot control the prices of goods and services in the market.
Once you provide a basic income to everybody, that will create a scenario wherein the majority of people benefit from the income inversely proportionally to their level of other income. This is the intended effect: The poor benefit the most and the upper-class are largely unaffected. So it's a good idea, right? Not exactly: What are the poor going to spend their income on? Primarily food, housing -- the "not going hungry or cold" things. So they've got more money to go out and buy food and they will. And the lower-middle-class who make a bit more than that will now have enough money to buy more food and better housing and they will. And the middle-middle class have a little extra money to spend as they wish and they will. And so on. But the majority of that money will be spent. With more free cash to go around, prices will rise to capture the additional profits. When prices go up we have inflation and now the poor are back to not being able to afford food and shelter and the lower-middle-class are back to living hand-to-mouth and so forth. The market compensates for the additional influx of cash by providing opportunities to soak it up, so it doesn't wind up helping anyone in the long run.
Well we'll just peg it to the rate of inflation and the problem will be solved, right? Again -- it's not that simple.
See, only one in three Americans is working. If we determine that each American needs about $500 per month to "not go hungry or cold" then that means the average American will have to pay $1,500 in additional taxes. We'll burden the upper class with the majority of those taxes, of course, but this isn't good for the middle class either. The upper-middle-class winds up being saddled with enough additional tax burden that they join the middle-middle class. And the middle-middle class who were previously getting along fine on a household income of $50,000 just joined the lower-middle class because even with the added income they have to pay more for the basics: food and shelter because of the additional inflation.
So now we're saddled with a shrinking middle class, (sound familiar?) nobody being able to afford any more than they were before and the rich continue to remain largely unaffected by all of this. In the end it accomplishes the exact opposite of what you set out to do.
... and this is why, selfishly, I would like to see the system implemented somewhere, albeit not necessarily where I live. People keep throwing peremptory statements here and there (on both sides of the argument), even though we really have no way to know what's going to happen. So let the Swiss implement it, and let the whole world see how it's gonna play out. If it works (which I sincerely hope, from the bottom of my heart), then that can give ideas to the rest of us. If it fails, we can draw the adequate conclusions too.
It's always refreshing to find someone who wants a good debate to be settled by experiment. Hopefully that would be enough. Portugal famously had great success with decriminalization of nearly all illicit drugs, but unfortunately I don't think too many countries have changed their own laws as a result. There's almost always too much politics involved, and it's usually easy to find a reason that is at least superficially convincing as to why what works elsewhere will not work at home.
That article contains a lot more information than most articles about stipends. Note that the US Earned Income Credit is a negative income tax, yet it doesn't seem to even make a blip on anyone's radar as communism.
> If you would like more than this, you can go and get a job and hopefully earn more (have a better lifestyle) than staying at home not working.
Except this isn't the case, since benefits are usually cut when you starting working. This means that you start work in an insecure job with no necessary increase in quality of life.
With a guaranteed income, if you were to get a job, you'd have a guaranteed increase in your quality of life, since the benefits are always there, so there is actually more incentive to work.
That's correct Mike, it's not always the case (benefits being cut and working a job can provide you with a worse quality of life) - but I think that is more of a problem regarding the wages people are being paid in jobs, rather than the benefits system.
For a long time inflation, house prices and general costs have beat basic wage increases - leaving many working for less money relatively than they would've got years ago. Meanwhile, the big corporations report yet ever greater profits and the CEO's take ever higher multiples of basic salary in bonuses each year.
The system is broken, but the equality of pay and living standards is not to blame with the government, it's to blame with greedy corporations, share holders insisting they need to do anything for profit and wages being pinned down to the minimum they can be that the work force will stand for (to maximise profits).
If corporation pay was fairer (like it used to be) where perhaps a CEO only makes 10 times the basic workers salary, rather than 100 or 1000 times the basic workers salary, then the wealth from the corporation output would be shared more evenly and the problem would be solved (for people in work).
Not to mention corporations which don't pay tax causing governments to lose out on a lot of tax revenue which would in turn pay to support the poor!
> The system is broken, but the equality of pay and living standards is not to blame with the government, it's to blame with greedy corporations, share holders insisting they need to do anything for profit and wages being pinned down to the minimum they can be that the work force will stand for (to maximise profits).
Let me ask you something... If you start a new business, and let's say you take out a huge loan to pay your startup expenses, and you have a huge pool of qualified workers fighting to work for you for 10 dollars per hour, are you going to pay them any more? Knowing full well that that's a shitty wage, but that if you pay them any more you might go out of business and have a huge debt burden... Or do you pay them 20 dollars per hour out of generosity, and risk going bankrupt, with repercussions that could follow you for years?
It's easy to blame corporations, but remember, there's more players in the job market, including many struggling small businesses... Furthermore, large corporations have gone out of business, and when they fail entire towns and cities can become destitute (look at Detroit).
Corporations pay market value for wages, to increase wages you need to either increase the number of jobs, or decrease the number of workers.
Capitalism is powered by money and greed. At it's heart, the point is to maximise profit and efficiency. This drives innovation and growth across the world... this is no bad thing.
However, as a side of effect of this, it also means businesses want to become more efficient, reduce costs and maximise profitability - your share holders are expecting good returns and that's just the way the world works!
Let's say the CEO takes $9.6 million and the average worker gets $40,000...
This income divide is causing the problem, as the prices will move up in line with the wealth the CEO has just got (along with the workers obviously), but to the average worker, they're not really being paid much more (or any more at all) to counter act the inflation.
If you go back to that graph in 1980 where the CEO only made 35 times the amount of the average worker and redistributed more of the profit to the employees, let's say average employee now gets $55,000 and the CEO gets $2,000,000 then the prices remain more affordable relative to the money in the market and the wealth has been distributed more evenly.
Note this is with the assumption the corporation still made the same profit whichever way it was divided.
The top 1% of wealth is greater than the other 80% of wealth combined in the USA and it's this greed that is causing the divide, rise in prices and rise in poverty line compared to the 'average salary'.
The growth in the divide is caused by changes in CEO compensation that reward CEOs of public companies with large stock option rewards. In theory this is a reform-- only CEOs with rising stocks should get paid. Also just looking at the top public companies isn't really representative of the economy as a whole. The median CEO really makes around $360,000, which is a respectable 9-1 ratio.
Further, being paid $9.6mil/year as a CEO is exceptionally rare. $10.2mil of total compensation would have placed you in the top 100 out of the 100Ks (millions?) of CEOs world wide in 2012. $20mil would have placed you in the top 20.
> Corporations pay market value for wages, to increase wages you need to either increase the number of jobs, or decrease the number of workers.
To a large degree the market value for wages is such only because of a government subsidy to the employers. Take Wal-Mart for example, they go as far as helping their employees enroll in all sorts of government poverty programs because even though they are full-time workers they still qualify for SNAP (food stamps), Medicaid and other similar programs.
Wal-Mart, McDonalds and other similar large low-wage paying corporations should not be able to use government welfare in what effectively part of their compensation to employees.
The government isn't subsidizing Wal-Mart; Wal-Mart is subsidizing the government by reducing these people's dependence on government benefits from 100% to something less.
Wal-Mart, McDonalds and other similar large low-wage paying corporations should not be able to use government welfare in what effectively part of their compensation to employees.
Think about what would happen if they weren't able to do this. Prices would go up and who would this hurt the most? Their customers. Who are their customers, generally? Poor people.
"Let me ask you something... If you start a new business, and let's say you take out a huge loan to pay your startup expenses, and you have a huge pool of qualified workers fighting to work for you for 10 dollars per hour, are you going to pay them any more? Knowing full well that that's a shitty wage, but that if you pay them any more you might go out of business and have a huge debt burden... Or do you pay them 20 dollars per hour out of generosity, and risk going bankrupt, with repercussions that could follow you for years?"
This calculus does not apply at all to the companies currently turning record profits. That's not to say that there's necessarily no important reason those companies should be choosing to keep their profits high as opposed to paying out higher salaries, but this manifestly isn't it.
Actually, wages are increasing enormously, and faster than costs, for the vast majority of workers of those corporations. It's just that most of them are not American or European.
In any case, that assessment, valid or not, doesn't provide a solution.
I often hear this argument, but it sounds wrong to me.
Benefits are cut when you start working, and resumed when you stop again.
Did you consider the fact that salaries WILL be lowered to compensate for BI ?
If BI is 1000, that 1200 paying job will become a 200 paying job... I just can't see where's the incentive to work. Who wants a 200 paying job when you get paid 1000 for just breathing ?
On the other hand, there are many jobs people are willing to do for free/minimum wage because they somehow like them. But they can't because without money they can't live or they have to maintain a very low living standard.
If BI is 1000, that 1200 paying job will become a 200 paying job... I just can't see where's the incentive to work. Who wants a 200 paying job when you get paid 1000 for just breathing ?
You've got it backwards. The incentive is not to work, the incentive is for employers to offer market value for their wages. When people have the power to choose not to work, the market will have to adapt. If nobody wants a 200 paying job, the pay will have to go up.
The current system we have forces people to work unfair wages just to support themselves. Basic income will make it a competitive, voluntary labour market.
Definitely. I do think that with a guaranteed income, minimum wage laws as well as welfare in most other forms should simply be eliminated. Pay a market rate for the work, if you don't pay enough, you don't deserve an employee. But you can also charge less for easy work and get away with it because to the employees it's basically just spending money to use for luxury items.
How much should a garbage man get paid? Arguably (to me) more than many other professions. The free market for labor is badly broken, and I think that a guaranteed income will help (although not perfectly). Besides, I for one think that giving people the freedom to raise their kids for a while, or do art, or start a company, is more valuable to society than having them work a very likely unnecessary job just because we incentivize working over value generation.
"The incentive is not to work": I meant to contest that assertion made by previous commenter. Actually I really don't think there's any valid incentive.
"the incentive is for employers to offer market value for their wages"
You might put pressure on employers, for sure -> more unemployment. Maybe wages will go north. Then inflation.. then BI will have to increase too.
It's the first time I read that BI might cause wages to increase. Most advocates say "it will not change anything for you" if you already have a job :-)
Lastly, keep in mind that workers ARE the ones who will support the cost of BI.
Not employers, not the government... Only workers.
So you'd better not increase unemployment :-) or the cost of work will raise a lot
Or unemployment would raise sharply, taxes would raise sharply (to pay BI), then companies would relocate to a foreign country.
Or wages would raise, prices would raise (inflation), then BI would not anymore afford a minimal standard of living.
Or both: unemployment would raise, wages would raise, prices would raise, taxes would raise.. companies would go bankrupt or relocate, and most people on BI would be poor.
I agree, for this to work, everyone would have to receive that amount of money. Or at least say, everyone receiving under $100,000 a year in salary. Otherwise, you might feel cheated if you replace your $12,000 free money for a $20,000 job. You'd still have to receive the free money, so you'd then earn $32,000 a year.
$100k limit is completely unnecessary in a universal income. The whole point is that the basic income is fully "paid" through taxes at some point. If the universal income is $12k and someone is paying $14k in taxes total, the "true tax" to fund the state (apart from basic income) is $2k.
The equitability of a basic income is not its main selling point, as I see it; in other words it is not necessary that it be equitable according to some specific conception in order for a basic income to provide value to society as a whole. The selling points are, as I see them:
- There are now more people spending money because they have disposable income. This is good for businesses.
- There is added incentive to work, because one does not lose income by starting a job.
- The people being made redundant by automation are given a cushion that will help as they figure out how to become economically relevant again. This is good for everyone, because there are fewer families forced out onto the streets, etc.
- There is, potentially, less of a bureaucracy to manage the distribution of existing welfare programs, assuming existing programs can be consolidated into the new basic income scheme. This is an attractive point for conservatives and libertarians.
There's no need for equitability here, although that's also something that is desirable within bounds. But I think few millionaires and billionaires will find a significant decrease in their standard of living if they have to pay more into the pot than they receive. Also keep in mind that the billionaires are billionaires because society provides a framework for them to accumulate and retain the capital that they have; for this reason they have an implicit debt and obligation to society.
Equitability is not absolutely necessary, but it is a great selling point.
With a scheme like this, one would replace a system full of loopholes (for the rich) and handouts (for the poor) with a simple flat system.
Everybody gets $x/yr, and everybody pays y% in taxes on all income after that (not just earned income). No deductions, no credits, no loopholes, no welfare state (other than the UBI).
For some people this "mincome" would be theirs to spend, but for others it'd just be a minor reduction in income taxes.
What's somewhat clever about this is how it essentially balances out. The billionaire won't even notice the extra amount in their bank account, but there aren't many billionaires. Meanwhile the three jobs four kids single mom will be greatly impacted by this, which is the whole point.
The billionaire won't notice it because it won't exist; the billionaire will be taxed way above mincome, because otherwise how are you going to pay for it?
That's exactly the purpose of basic income. If a billionaire businessman replaces all of his workers with robots, all of his income goes directly to him. The laid off employees are now competing for the few jobs that are available which have not yet been automated, and not all of them will be able to find another job because other businesses are automating away humans too. We need a way to redistribute wealth from the billionaires who make their money off the efficiency of automation to the people who would have previously worked for them.
The only way for it to be fair is for everyone to receive it. Naturally, there will be an inflection point where at some income level a person starts paying out more than they receive.
I once calculated, based on what amounts to a back-of-the-napkin calculation based on a flat tax, that the inflection point would be somewhere in the $60-70k range for Canada. The US would be a bit higher due to the greater income inequality.
Happens in the UK. Every £2k over £100k and you lose £1k of your tax-free allowance. This means that you keep 38p of every £1 earned between £100k and £118k, before the tax rate relaxes back to a more sensible 40% after £118k (and then up to 50% at £150k).
Wouldn't be that much different than progress tax brackets, though. In that case, lowering the tax rate for you by 10 percent would basically mean receiving $10,000 more a year in "free money".
hiring managers would use it to convince people to take sub-100k wages. This pretty much happens already in progressive taxation countries(e.g. belgium) where you can actually make less money by having a higher salary because your tax-rate increases.
I have yet to see an example about net pay decreasing with marginal tax rate increase. When you earn 120k, only those 20k over 100k will be taxed with the higher rate, not the amount below 100k, so every increase in gross salary leads to increase to net salary.
If you include welfare state benefits (which have wage-income-based phaseouts) in income, it's not hard to produce such examples. http://mises.org/daily/3822 has a simple case which has >100% effective marginal rates between about 20k and 50k for a family with one adult and 2 kids.
_That_ is the sort of thing that could go away with a guaranteed basic income. At that point, you'd just have taxes, which do in fact behave as you describe.
The US AMT can have that punitive effect, because AMT is an alternative calculation, not a marginal calculation. Yeah, not marginal, but it is a common tax system.
And there are some programs that don't have marginal phaseouts. Each one is trifilingly small, but they may add up.
Even programs with marginal phaseouts can end up adding up to the phaseout being > 100% of the income (e.g. 10 programs, each of which marginally phases out 11 cents on the dollar).
>This pretty much happens already in progressive taxation countries(e.g. belgium) where you can actually make less money by having a higher salary because your tax-rate increases.
All sane countries with progressive taxation always apply the higher tax bracket only to the part of the salary that is in the bracket.
E.g. if the tax is 10% < $50k and 25% >= $50k, a $60k salary would have to pay 10% * $50k + 25% * $10k in taxes, and all wage increases increase net pay.
> This pretty much happens already in progressive taxation countries(e.g. belgium) where you can actually make less money by having a higher salary because your tax-rate increases.
You don't understand how progressive taxes actually work. This simply doesn't happen. You can't make less money by making more money.
yea, I might have gotten it wrong about progressive taxation. The context I picked it up on was in choosing a higher salary vs. some benefits. The benefit did lead to more spending power compared to the salary increase and HR would push for this as salary increases would lead to more costs for the company.
That's why taxes must be proportional too.
The state spends X euro, the productive economy pays Y euro of salaries+dividends, therefore everybody pays incomeX/Y of taxes. X/Y is the income tax rate.
Or if you prefer to tax sales, with Z being the total amount of sales, priceX/Z. X/Z is the VAT rate.
> This therefore means there is an incentive to go work.
Yes and no. It's not an incentive to get a 10hr/week part-time job, for example, because you'd lose your benefits and so get paid less overall. Even making the transition can be difficult - most jobs won't pay you until the end of the month, but your benefits will be cut off at the start. How long does it take to save up a month's expenditures while on benefits?
> There is also control, to make sure the money the unemployed person is getting is mostly spent on the basics (such as housing, rather than say drugs).
> What's worse is that assuming the people who are unemployed are given the choice on how that money is spent, they may in fact not spend the money sensibly (i.e. on their housing) and end up homeless instead.
Sure. But the evidence is that just giving people money works better on average than requiring them to jump through hoops.
> The problem with suddenly giving everyone a minimum amount of money, is that due to everyone now 'at least' having that amount of money at hand, this becomes the new 'bottom' of the market. If I get a job, I earn money on top of this basic amount, which means I can afford nice things and the person unemployed still can't afford anything.
You can't have it both ways. Either employed people get more money than unemployed, which provides an incentive to go work, or they don't, which doesn't.
It's not like people with more money are going to start consuming twice as much food. The unemployed should be able to afford basic necessities; the employed will find it easier to buy luxuries, which is as it should be.
1. I address this somewhere else. I agree this is broken, but this is not a problem with the benefit system - it's something to do with wages not rising accordingly with everything else.
2. Perhaps, although if they do something stupid with that money, they still need supporting - so you either let people go homeless / starve or help them (which creates a new layer of welfare)
3. I'm not saying twice the food would be consumed, I'm saying prices would rise accordingly which would mean consuming the same amount of food costs more than it does now. The goal posts will just be moved and the poverty line will be above the basic minimum everyone gets paid.
> 2. Perhaps, although if they do something stupid with that money, they still need supporting - so you either let people go homeless / starve or help them (which creates a new layer of welfare)
Maybe. Even giving people food isn't reliable - some people will sell it for drugs. Sure, we'd probably still need some kind of emergency welfare system for those circumstances, but drastically reducing the size and complexity of the welfare system is a win, even if we don't eliminate it entirely.
> The goal posts will just be moved and the poverty line will be above the basic minimum everyone gets paid.
The point isn't to make the unemployed any better off than they are now. The point is to make the working poor better off, incentivize work more than it is presently, and reduce the overheads of the welfare system.
OK, I had missed that piece of context. Also, even though I think I am generally more familiar with British than with American English usage, I did not know this meaning of the word benefit.
Ah, I just took the opportunity to naïvely hate on the U.S. a little. I think their lack of social security is appalling. How can such a well faring nation have such a low income tax, and so many poor people.
I guess I just don't understand their definition of liberty.
There's plenty of welfare in the US, and stable and reasonably intelligent individuals (though with dubious ethics) are already capable of exploiting it to never have to work. In some parts of the country homeless people make tens of thousands per year tax-free from panhandling and choose to live the way they do. (For more typical earnings you really have to look on a city-by-city basis. The US spans a continent.) I think the main problem with homelessness though is that there's just not much support or sympathy for the mentally ill -- who make up the majority of homeless people. If you're mentally ill, a lot of places won't even let you in a homeless shelter. Your cost-to-live-stably also goes up a lot due to the prices of medication. Furthermore, low IQ is often found in individuals with the types of mental disorders that can easily lead to homelessness, so you get the double whammy that even if they manage to get stable, they're still limited in what sorts of economic activity they can do since higher wages usually require a higher IQ. Minimum wage is not enough to cover the cost of living and the cost of medication. Some states have better support for the mentally ill than others, but it's a messy problem all around.
There is quite a bit of welfare benefits in the U.S. the complete lack of social security in the U.S. is a strawman. Now, it's probably true that the benefits are not as generous as elsewhere, but they are fairly extensive, and depending on the state you live in, are quite generous
an Illinois family of one mother and two children receiving Temporary Assistance for Needy Families, or TANF; Medicaid, food stamps, Women, Infants and Children, or WIC; public housing; utility assistance; and free commodities (e.g., milk and cheese) would have a benefits package worth $19,442 per year. - See more at: http://illinoispolicy.org/the-work-vs-welfare-trade-off-in-i...
Now, I am not sure whether this is a high enough level of benefits or too high - but I don't think it's laughably low
I think poor is a relative term and I dont think America has as many as lets say Central or South America. I dont see people living in shacks sifting through landfills to make ends meet.
A few people do not want to work, and have no intention of ever working.
Do these people currently get incapacity benefit, income support, employment and support allowance, etc, coupled with housing benefit and council tax benefit?
Some of those benefits require people to go to an office and demonstrate willingness to work. So, these people who have no intention of getting a job sap the time and energy of advisors who could be helping people who do want to work.
> What's worse is that assuming the people who are unemployed are given the choice on how that money is spent, they may in fact not spend the money sensibly (i.e. on their housing) and end up homeless instead.
Currently, people can become "intentionally homeless". Didn't pay your rent and got evicted? Tough, you don't get social housing. If you're lucky (or you have unlucky children) you may get some emergency accommodation.
It's very tough to get council / housing association housing in the UK. Some places have a waiting list of 26 years. (twenty six years, so you know this isn't a typo.) And that's of the people who are eligible to go on the list - including everyone who thinks they're eligible makes the wait even worse.
I like the idea of a basic income but it suffers from the flaw at the heart of democracy: "A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury" -- Alexander Tytler. So say we have a minimum income guarantee that will cover a basic standard of living, and if you want luxuries, you have to work. Every election, that minimum will be ratcheted up, until it's completely unaffordable. This structural flaw needs to be fixed in some way before we can proceed.
> "In the current system, you can go stay at home and get income support, which should provide you with the basics i.e. a home, food, electricity etc."
That is assuming you know which benefits you are entitled for and how to claim them. Most of those benefits you can't apply retroactively. And you can't have someone else claim them on your behalf (for obvious reasons). There is a lot of useless and intrusive bureaucracy saved when you just pay everyone £X.
In the UK there is already a large subsidization of low paid people by higher rate tax payers. Its just that all the money is used to pay for services. The goal posts wouldn't be moved, you are just letting poor people decide for themselves how some of that redistributed income is spent.
If you give everyone a basic income, prices on certain goods will rise, but not nearly as much as to cancel the effect of the basic income. A basic income is just wealth redistribution from the rich to the poor. Relatively speaking the poor get a little richer and the rich get a little poorer.
If you give every person in Vietnam $1, then the poor people have a relatively higher percentage of all the money to spend than they had before. Hence the percentage of all goods and services going to the poor will also be a higher percentage of the total goods and services. This becomes even more apparent if you exaggerate the amount. What if you give all people on earth $1 trillion dollars? Now everyone is basically equally rich. Even though prices will rise massively, the total supply of goods and services going to the people who were previously poor increases a lot. (of course in practice such a massive basic income may completely destabilize a society)
What is different is that it frees you from the worry that you need to eat and have an abode. And the hope is that this comfort will make you engage in work you really want to do, rather then turn you into a couch potato.
In my region, there are a lot of able-bodied man in their forties and fifties who, thanks to the state policy, are already retired. The sad fact is that, due to a ton of free time that's suddenly appeared in their lives, a lot of them have become drunks.
I fear that for every person doing something meaningful with the freedom given to them via basic income, there'll be 10 or 20 who become couch poatoes or worse, self-destruct (booze, drugs, gambling) out of boredom.
I fear that for every person doing something meaningful with the freedom given to them via basic income, there'll be 10 or 20 who become couch poatoes or worse, self-destruct (booze, drugs, gambling) out of boredom.
Do you realize what you're saying here? That people should be forced into wage slavery to keep them from becoming lazy or alcoholic or drug addicts. That's an incredibly regressive position to take.
Basic income should be given to all. This gives everyone more freedom. If people have mental health problems including substance abuse, they should be given treatment.
Throughout the history of human civilizations we have stood on the shoulders of giants. We have built ourselves up from nothing and all of that progress has been measured by our ability to reduce our dependence on a subsistence lifestyle, freeing people to innovate and create great works of cultural or artistic importance. Now we are finally nearing the end of this long road. We are finally approaching complete freedom from labour as a survival necessity. And now people are complaining that this is a bad thing?
What if goods are produced by automation and where we cannot automate we have people that want to work. What kind of task would you give to all the other people?
Edit: I am alluding to the fact that we are way past full employment.
I don't think we have past full employment. We are not even close to it, at all. I'll give you several entirely random but real examples. The street here needs new paving. There is no public transport in our town and no taxi after 6PM (need drivers and support staff). I need someone to fix my roof, and it's hard to find good one. There is a need of better trains, better cars, better software, better technologies, more original movies, better restaurants... And someone to check my teeth more frequently (zero good dentists in town). I have tons of work in my backyard as well. There are loads and loads of work to do, and it's all work which can't be automated. Work is not something that will ever finish unless of course we want to stop progress.
And yet we have tens of thousands of people bloating up government at all levels with what are essentially "make-work" jobs. Likewise for universities and colleges which are bloated with administrators and other non-essential staff. Our economy is absolutely filled with redundancy for the simple reason that people need to work in order to pay the bills.
If it were 1:10-20 then these people would have already voted in basic income platforms into government.
I also suspect that a lot of these guys have been trained for manual work that is, regardless of basic income, being moved overseas and automated. The work is going/gone.
Edit: Also, I would highly respect any manual labourer who would stay in their job even though they were sure of their income. I think that is a useful currency too.
They turn into drunks not beacuse they have too much free time and money. It's because they were raise in a culture that said that a man is only worth as much as his job. Now they feel worthless and self-destruct. They also are too old to use modern entertainment. With internet, electronics and wide variety of recreational consumer goods hardly anyone should have become drunk to not be bored.
The idea is nice, but if it causes widespread increases in costs / consumer goods / rent due to the reasons I mentioned, then the only places you may be able to just stay at home and work may not be the place you want to be.
For example, I live in London and enjoy this city. I would love to be able to stay at home and work on my side projects in hope of making extra money, but given the outcome I believe from this, everyone who was to only accept the basic income amount would no longer be able to afford to live in London and would have to relocate to less desirable places in the country.
Yes, you would now be free to work on your projects from your own home, but you would now not live where you want, with the people you are friends with, in an area which would be full of people who also are only taking the basic wage and probably a pretty horrible place.
The on paper calculations of the affect of this is like a snapshot of some code, before you press run. In the first state it is in, it would be fine, but the economic effects from this over the long term both in social and financial terms would be profound.
That is incorrect, London is not like that today.
London is an extremely multi cultural city, with both rich and poor living side by side in the same boroughs. A lot of people argue that most of London's unique culture in places like Brixton came from the poor and that's what made London in a lot of ways great.
If you say, everyone in London will need a job, then you are then moving the poor / unemployed on mass out of the city. On paper this may look great, but for social-economic reasons this is a disaster.
You would end up with a 'walled garden' of elite living in London and the poor / unemployed living outside. The city would lose it's unique cultures, become even more gentrified / elite than it currently is and social unrest could start to occur.
London is turning into a ghetto for the rich just like most major cities as it is today. Which is really sad, I agree, but I don't see how this concept would change that in one way or another.
Hmm, London still needs the services of those poor that you speak of. If people are willing to pay the exorbitant prices for having a home there, I don't see why they can't be prepared to pay more to get the basic services running.
The further London moves away from the UK, the more are cities like Brighton, Cambridge etc. looking more attractive. More attractive to people willing to live in a more mixed area too.
Come to brighton! We have a nice little tech hub style arrangement going on, it just lacks a fancy silicon-related name because it isn't built on billions in government funding.
BTW,
>You would end up with a 'walled garden' of elite living in London and the poor / unemployed living outside. The city would lose it's unique cultures, become even more gentrified / elite than it currently is and social unrest could start to occur.
This is already happening/has already happened, unfortunately.
>For example, I live in London and enjoy this city. I would love to be able to stay at home and work on my side projects in hope of making extra money, but given the outcome I believe from this, everyone who was to only accept the basic income amount would no longer be able to afford to live in London and would have to relocate to less desirable places in the country.
Some models call for a universal income which takes location inconsideration. The income would be higher in London, for example. That's a pretty controversial model, though.
That's obviously nonsensical. All the basic income would be sucked up by rising rents, raising cost of living, go to step 1. Basic income should be set up to pressure people to live where it is cheaper.
In any monopoly/duoploy/oligopoly/cartel-ish environment in which prices are determined by limited supply and therefore buyers ability to pay (seller gets the economic profit) makes buyer side cash infusion useless.
If we assume people prefer to live in a major city, and incomes are adjusted so that your income matches your cost of living, there is no downside to living there. That puts upward pressure on an area that is probably already maxed out for living space, which causes people to pay a little bit more in order to secure a place to live. Then, your income rises to offset your new costs of living there, providing the money necessary to allow someone to pay just a little bit more than you, thus beginning the cycle.
Outside of the city you would find a low demand and high supply of housing under such a scenario, and thus there would be no fuel to ignite a race to out-pay each other to find a place to rent. In fact, there you could probably convince the owner to accept a little bit less for rent as few people are interested in the place at all. If your offer is not accepted, it might sit vacant.
Note that income can be adjusted even if it doesn't exactly match the cost of living. For example, if living in the capital is 25% more expensive basic income could be 15% more in the capital. That might allow a lot of people to live in the capital with basic income. I don't know how that affects your scenario.
Sure. There are some places where some kind of basic income are experimented (Alaska (very low), Norway IIRC). A big scale experiment in a more "normal" country like Switzerland would be welcome.
In any case, the problem is that we're on the verge of having roboticized (and computerized) everything. Already, most of the jobs are useless jobs. And for the remaining productive jobs, they could also me automatized a lot more than they are if the organizations performing them hadn't wrong incentives that make them perform them in silly and inefficient ways.
Well put. Perhaps if the energy sector wasn't so corrupt that £71/week might actually go a little further. I'm living in a house with an old immersion boiler and it costs around £20 every 4-5 days (that's only on for 2-3 hours a day + cooking).
As a huge believer in unconditional income, let me address your whole comment:
> The thing I genuinely don't understand regarding the basic income for all argument is that surely it just moves the goal posts rather than solves the problem at hand?
I agree, but I see it as a good first step towards getting rid of the plague that is (savage) capitalism.
> In the current system, you can go stay at home and get income support, which should provide you with the basics i.e. a home, food, electricity etc. If you would like more than this, you can go and get a job and hopefully earn more (have a better lifestyle) than staying at home not working.
The problem is that a lot of minimum wage employees are treated with minimum respect since they really are forced to be there. This way of thinking makes everyone miserable by not considering the quality of life of those concerned. And I'm just talking about "not being verbally abused" here basically, not even "have a nice kitchen". And there aren't enough public employees to ensure people don't get treated like shit.
> This therefore means there is an incentive to go work. There is also control, to make sure the money the unemployed person is getting is mostly spent on the basics (such as housing, rather than say drugs).
See, I disagree that the state should have such moral authority. But more to the point, this provides an incentive to the state to disregard basic needs (thereby reducing "needed" money) and pretend everyone has the same basic needs (thereby giving more people an arbitrary minimum). Also, people are still currently buying drugs/alcohol with their state money, because at the end of the day addiction will often win over food, and that's not a problem you solve by giving people less money (who will only starve more and/or commit more crimes).
> The problem with suddenly giving everyone a minimum amount of money, is that due to everyone now 'at least' having that amount of money at hand, this becomes the new 'bottom' of the market. If I get a job, I earn money on top of this basic amount, which means I can afford nice things and the person unemployed still can't afford anything.
That's on purpose. That's why it's not a communist scheme. But don't forget that food and house prices are/can be mostly controlled by the state, so it can make sure that everyone gets the real basics (as it already tries to do).
> If let's hypothetically say, you gave everyone in Vietnam this basic wage, the cost of beer would not remain at 14 pence. The first reason is because the work force would find their existing pay negligible compared to the basic pay (so wages would have to rise to be incentive to work on top of basic pay) which would in turn cause cost of manufacturing to rise, but also the market would realise with this extra money available - the price could be set higher and would rise accordingly.
That's also on purpose. One of the points is that everyone gets to be treated in a non-shitty manner, which means everything is going to cost more to produce, which means the middle class and above will be poorer on average, all things considered. I count that as a good thing (reducing income gap). However we're not talking about Vietnam (or China or Taiwan), because the powers that be would not allow the world factories to fuck up their way of life. This program only makes sense in first world countries, if we're aiming for things staying the same.
> Now back in the UK if this was to occur, you would have slight price rises due to these factors which would in affect move the poverty line up higher, which would mean the people at the bottom are still poor relatively.
Right. But more people would be able to not work under terrible conditions.
> What's worse is that assuming the people who are unemployed are given the choice on how that money is spent, they may in fact not spend the money sensibly (i.e. on their housing) and end up homeless instead.
That doesn't really make sense, since people need an address now to receive welfare, and I see no reason for this to change. If you're homeless you have a whole new set of problems, which would not be addressed by the measure afaik.
> The final problem with this model is that the cost of living and economic output is not evenly distributed throughout a country. £1750 a month in northern England may give you a fantastic lifestyle, where as in London you'd barely cover your rent. (What happens to the unemployed in London in a fixed give everyone a basic income situation? They have to leave London and move where they can afford, which then makes it potentially harder to find a job and splits the country into two halves, the elite / the poor).
This is a problem and needs to be addressed. I don't really think people on welfare can currently afford to live in London anyway (correct me if I'm wrong), so it doesn't really change anything.
All in all, remember that no one wants to have a shit life and be homeless. So if you give people money, they're likely to use that money to get a better/steady life rather than fucking up their life. There will be people who "mooch" on the system, but there already are. This is about working conditions and the right to be treated fairly (and to left-wingers like me, the right not to work).
The idea is this: in the current system of welfare benefits, they are phased out with income. At those income levels, this phaseout acts as an implicitly high marginal income tax, which creates a disincentive to work. If you give everyone basic income with no phaseouts, you accomplish the same goal of welfare transfers without those ill disincentive effects.
This is so self-evident, that I consider every talk of 'minimum income' to be populist bullshit.
It's also evil, as a large part of this income would go to funding alcohol and drug makers. If anyone needs further evidence, consider the costs of healthcare in the US vs Europe
This sounds as the industrialist's problem. Maybe it's a good idea to give the wage and let small groups of people produce crafted beer. i'm sure the price will not be the problem.
Universal income is a fantastic idea. Imagine being able to work on your own coding project for 2 years with a guarantee of basic ramen and safe shelter.
I don't think it'd work well in Western society yet. It would be feasible in, say, a dense and autocratic city-state like Singapore.
IMHO it will come. As a world, we are starting to automate and displace work faster than our brains can learn new skills en masse. IE one person can create a skill and codify it (years), faster than 300K people can go to training and expand the industry organically (lifetime). This applies to both manufacturing and service jobs.
Structural lifetime unemployment is going to be the cause of future civil instability, and governments will use UI as a way to calm and control social order.
Does anyone know how the swiss proposal treats travel/residency?
I've long thought that a guaranteed income is an idea worth trying. But it did occur to me recently that such an amount would let you live like a king in many developing countries. Is there anything in the proposal to stop people from simply moving abroad?
More generally, how should a well designed universal income proposal treat travel/living abroad? If you cut off payments for those that are no longer residents, you suddenly provide a huge disincentive for travel. If you keep them, you encourage mass emigration.
As far as I understood it: the proposal doesn't specify this. This (among other questions) has to be solved by the parliament in case the proposal is accepted.
This is the best timing for this. When the cost of things are driven down anymore, universal income makes more sense than ever.
After all, there's no truth in "having" to work. I think there should be the freedom to choose if you'd like to work or not.
I've always pondered why people think you "need" to work. You "need" a job.
I like working, and have a job, but I know many people are fine getting by, and it stresses them out for having to work everyday, which I think is perfectly fine.
Maybe the issue is, in the 'western' world its no longer actually necessary or even useful to have people work. That's not where the wealth comes from any more.
So incentive becomes less interesting. Demand, supply, innovation still count. But getting people to pound the streets and dig ditches en-masse is not important any more.
So a basic income makes employment not the goal. Its useful innovation and adaptation to changing conditions that matters.
In order for a basic income program to save costs on bureaucracy and replace existing programs, those existing programs must be closed by legislation or executive order, and the people employed by them must lose their jobs, and the number of employees in the new basic income agency must be fewer. Many of these employees will not find replacement work due to age or their industry (government bureaucracy) shrinking so will go from middle class to poor on basic income.
This will have a large economic effect unless it is done slowly, but if it is done slowly, both programs will have to exist at once without paying too much to the same person. This will require the basic income agency to have the same kind of bureaucracy as the other agencies or else have no oversight. In the first phase of the transition, at least, it would cost much more.
The agency would need to maintain some bureaucracy to guard against fraud since obtaining benefits would never require a visit to an office or proof of some activity. It would be easy for someone to claim extra people without oversight.
I haven't studied economics long enough to be an expert in the field, but doesn't a universal income drive inflation up?
It's basically the same as a minimum hourly wage that keeps going up to follow the inflation, it's always a catch up game and organization fighting for minimum hourly wage always say it's insufficient.
Not necessarily. Inflation is caused by several things, but mostly an increase in the money supply.
If a universal income is paid for with tax money, then the money supply stays the same and it shouldn't have much effect on inflation. If it's paid for by printing money, then yes, it will contribute to high inflation.
(very basic explanation, there are other factors that may cause inflation, but money supply is the big one)
None of the universal income proposals have any math to back them up. Simple napkin estimates show it's nowhere near affordable. "But people are rich!" is not an explanation. "We can draw on labor" is not an explanation. I want an explanation that actually demonstrates the affordability of such a thing. Not hand-waving about how we just aren't trying hard enough.
Can the people proposing a basic income please demonstrate how much they want to give and how much that costs? Then point out how they would fit it into the existing budget?
Also, please explain why prices would not react to a basic income? If $40,000 represents the price of doing nothing, other prices will change to respond to real not nominal costs. It doesn't seem like people proposing the basic income understand how prices are formed.
Everyone seems so deeply concerned with the specific economic calculus of the poor and low income that this will affect.
But nowhere in this thread is there a bare mention of how the economic system has been perverted by incentives that only the truly wealthy and elite have access too (ie. LIBOR, etc.) when there is no BI and capital has complete control over the laborer.
A true BI system would not be inflationary and would do a great deal to increasing the general welfare of the populace. We shouldn't demand that people be slaves to the engines of production. A BI at moderate level would alleviate poverty and also in some ways be very good for capital as well. It would increase the velocity of money and increase consumption in the economy (remember that poorer people spend more of their money as a %age than the truly wealthy)
I'm pretty ambivalent about basic income, although I think it's probably worth a try. Not a version that replaces earned income though, there are too many obvious perverse incentives for such a system, it must be supplementary. On the one hand I can see a lot of positive effects from it. On the other hand one of the biggest downsides is that now you have a very strong divide in terms of citizenship, which could potentially drastically change the dynamics of immigration. Personally I'm very much pro immigration and I think the fact that people from all circumstances have the opportunity to earn substantial benefits from their work by moving to the US (or the developed world in general) is one of the most positive aspects of this country and part of its life blood and character.
Someone has to try it somewhere. I for one won't make predictions, and instead think I'll wait to see if a country adopts this and see what happens to its industry, quality of life, and so on before being on 'one side or the other'. Most of the predictions in this thread are based on basic assumptions of economics that come from political backgrounds/beliefs, and I don't think that's an appropriate way to argue something this complex.
A lot of you are programmers, at least some of you can run simulations. Stop arguing with words, and instead concentrate on developing models. In other words, start contributing to the science or stop arguing from ignorance.
I find it sad, but not surprising, that one of the key disagreements with a BI system is the assumption that poor people are lazy and will spend it on drugs.
There are people like that but they make up such a small portion of the population considered, "poor," that it's insulting everyone in a very large demographic. I'd wager that the effects of these people who do use their BI for drugs and recreation will be statistically insignificant.
Whereas a BI would provide a lot of mobility and improve the bargaining power of the lower classes if I understand BI. It seems to me that would have far-reaching benefits for the economy at large -- even for high-income earners.
"assumption that poor people are lazy".
Not only poor people are lazy, all people are lazy. People can overcome the laziness only when there are incentives for them to do so: food, housing, sex, fame, vanity. When you take out the basic incentives by providing them for free, laziness will prevail for most people.
I still cannot comprehend how anyone with a basic knowledge of economics can perceive this as a good idea. All universal income can achieve is increasing the cost of living to the point where it is as if there is no universal income.
In other words, the universal income idea simply increases the cost of living by the same factor of the increased income. Perhaps it takes a year or two, so the poor benefit during that time, but in the end all it does is destroy the currency and suppress economic growth.
"There is no such thing as a free lunch"
Point being, there's always some trade off. All universal income does is push the cost of lunch onto the wealthy even more.
> Point being, there's always some trade off. All universal income does is push the cost of lunch onto the wealthy even more
Yes, that is the point of welfare. Universal income is a type of welfare. It is a form of welfare which is preferable to other forms because of its simplicity of implementation.
People like to bring these things up to as thought experiments about how they'd fly in other countries, but one thing to keep in mind is that Switzerland is a really, really different place. Particularly compared to the US, it has fairly stable demographics, and obtaining citizenship is absurdly difficult.
While the Reuter's article doesn't mention that as a prerequisite for income benefits, one can reasonably infer that they're not gonna start handing out money to anyone who wanders in.
Contrast that with the US, where you get healthcare and free public education just for making it across the border from Mexico.
> "[...] and obtaining citizenship is absurdly difficult."
Can you elaborate? I'd like to have some arguments from an "outsider" if I encounter a discussion about this again :)
The current majority (more or less) of people in Switzerland seem to believe that obtaining citizenship is way to easy and want to limit basicly everything..
I don't think this is a good idea. It could do a lot of harm to future generations. If we pay for this through debt, we're slapping a bill on our children.
I also don't like this idea because it increases personal dependence on the state. If the goal is to make people independent and self-confident, how does this help (on the whole, excluding edge cases)? And as the top commenter said, I think this will move the goal posts and surely cause inflation. I also think this will enable some peoples' destructive habits (how does the song go? "It's the first of the month... Get up, wake up!").
Basic income has potential but I think people are waiting for the governments to provide, while there is possibly another way.
Imagine creating bitcoin version that does not favor early adopters, but allows everyone participating to get the same amount of coins every week. Of course it's easier said than done, and it would need to be detailed a little more, but I think it's possible.
The problem with this is how do you prevent people from creating multiple identities and gain more than their fair share? Bitcoin solves this problem by tying money generation with something that can't be faked, computational power.
I would imagine something based on bitcoin with an added web of trust.. One person starts it all. Another person joins and their identity is certified by the first person. You then have to run mining software but it's not required that your rig is fpga or asic based :).. few hours a week on a cpu would be sufficient. If you run the software, some coins are mined and added to your wallet. You signup another person, they do the same... could grow pretty fast.
Of course there is more questions than answers, your question of how to prevent people from creating multiple identities... Maybe few people will need to sign the cert.. and they can only signed it if their cert was signed by x number of people..
But even if this did not work out, I'm sure it would be a good experiment that could show us how basic income could/would work in a reality.
It is easy to see that the redistribution of wealth throughout all of society is a noble goal. This becomes clear as we approach a point in our evolution where we start to automate the collection and processing of resources.
We're all part of this giant machine of modernity. If everyone can feel the benefits of it, and I mean everyone on the whole planet, then we can start to really feel good about what we're building and how we're gonna compromise all of our own individual pursuits and dreams with all of those people around us.
The truth of the matter is that we've all been in this big global machine the whole time. Cultural interchange on a global scale is nothing new, only the speed at which it happens is changing. Pretending that the resources gathered through the skills of just one man somehow doesn't affect the rest of humanity is very short sighted, especially in our modern world.
The ability to extract and accumulate resources is amplified loudly by the existing machinery. Facebook is just an aberrate growth on the top of a very large system that is fueled by the blood, sweat and tears of billions of people living now and extending back in time to the dawn of recorded history.
This has been known to the modern world for some time. We've built systems that we call social democracy, liberalism, communism and fascism with a lot of these tenants in mind. And we argue about the merits of each, and the merits of other systems, and we pontificate about the expected outcomes of imaginary systems or invent new versions of incomplete readings of the past, and we get lost in an endless maze of rhetoric.
There is danger merely in the act of having faith in manmade systems like politics, economics and technotronics. There isn't a point to nor a way to quantify and classify everything under the sun. We can't ever know how these things will work out.
We need to make sure that our faith is actually in the people around us. We need to have faith that the vast majority of people have a good heart and able hands, and they also have just as big of an itch to create, discover, and explore the world. We need to carry that understanding with us everyday and in all walks of our lives and stop pretending like "playing the game" is in any way nobel or worthy of anything other than meaningless excess.
And yeah, Silicon Valley and the cracker jack crew of Hacker News users, I'm talking right to you.
You would likely have to increase taxes. Taxes are extracted from us involuntarily through coercion. I don't think re-arranging this model in any format will change that.
Our best option is to spend less, shrink the state and get rid of income tax, especially on those say, living under this proposed living wage.
This would not be Communism. We shouldn't be arguing Comminism vs Capitalism because both are extremes that have never been fully realized. This is more about compassion vs group association - a typically American Democrat/Republican debate.
My question regarding this is how do you prevent gaming the system causing overpopulation? What will stop currently poor individuals from having 10 kids to collect their income? Is it just not awarded until you reach age of majority?
One thing is for sure (IMO), this would never work in America. The not-obvious reason is the middleman problem. In America (again, IMO), the primary financial problems we have has to do with capitalist opportunists finding clever ways to become transition siphons for money flowing in any given direction. The: It's-only-2500$-a-month thing would rapidly become 10000$, 100000$, etc a month as politicians add pork fat, Local municipalities siphon from it, public welfare divisions sprout up to "support" the distribution, and finally the capitalist system itself engineers ways to absorb that new free money floating around the system.
No. This would never work. This kind of universal support system depends on a core of altruism. I don't think anyone will try to make the argument that America's core is altruistic.
The reason universal income works for the Swiss is because they are the Swiss. There are many countries and cultures and people for which it wouldnotwork, at the very least not until some unknown time period required for adjustment, and even then only if conditions were right.
This is why (fiscally-liberal-supported) universal healthcare (and subsequently why Obamacare has flunked so far, because they wanted to promise universal healthcare and had to settle for a crappy healthcare marketplace that only a layer and more red tape to add to the overhead and cost of providing healthcase) and (fiscally-conservative-supported) fair tax initiatives would not work in the U.S.; because much of the economy, social norms, etc. are based upon it NOT being set up that way.
Status-quo is the best fiscal option.
And to everyone complaining that universal income would add to inflation, I'd like to add that I hope you are also not a fan of quantitative easing that we've done that will royally screw the U.S. in the future. We are now in "heavy experimental mode where we don't know what will happen", according to Ivy league experts on economic matters.
I'm always shocked how otherwise very rational and logical people tend to be "communists". It is one of the things that lets me down when reading comments on HN. So sophisticated as far as hard science goes, so naive and just - plain dumb - in terms of humanities.
Ever heard of inflation? If you give basic income to everyone what happens to the prices of everything? So the ROI on this is extremely limited and the price inflation will kill any benefit.
But still for some people rising prices with real unemployment at 15% is a good thing!
I'm always shocked how otherwise very rational and logical people tend think every socialist idea is communist and don't seem to know what communist actually means.
> Ever heard of inflation?
Yes, have you?
> If you give basic income to everyone what happens to the prices of everything?
I don't think you know how inflation works. Basic income doesn't increase the money supply, it's income redistribution, not money printing. Wealth is taken from those with excessive amounts and given to the rest.
2008 - 2012 money supply doubled. This means 100% inflation in long term - guaranteed. Who would care about their suggestions. Look at their actions and track record.
no, money printing is not inflation, money printing may cause inflation, income redistribution on the other hand is what is proposed and actually it is already happening(welfare programs, etc.), this basic income thing just wants to make it more efficient, it can even save us money!
Money printing is inflation because it will always end up in prices of goods and services. It's just a question of "when" and not "if".
Secondly, if you take money from the rich who would invest it to someone who will just spend it -- how this economically makes any sense is beyond me. We spent too much - that's how we got into the crisis. Now it is time to save & invest. Not to destroy savings and investments.
And thirdly, there are no poor in Switzerland, period. There might be some lazy young people who don't like to work and if their numbers are high enough and their parents are sympathetic to them, you are dealing with big group that you want to please before elections. So trying to make it economically sound (when it isn't!) is just pure propaganda for naive do-gooders.
It devalues money of the rich and of the poor. However, the poor suffer more in inflationary environment. If you spend 80% of your paycheck on housing and food, 30% inflation means you can't even provide to yourself. When you are rich end spent 8% income on housing and food, 30% increase will mean, now you spent just 10.5% of your income on housing and food. You need also to understand that rich benefit greatly from inflation because inflation will show up also in stock market prices (rich own stock), real estate prices (rich own real estate for rent), etc. Inflation is always poor getting poorer and rich getting richer.
Instead of making costs higher by distributing money and thus making it less effective, distribute no money, lower costs and allow people to live more comfortably.
Actually, we don't put them on the front page, they get upvoted until they land here. That means there is some interest for to this post and may lead to great discussions.
Just look at how college costs magically rise to the availability of loans and grants. What do you think is going to happen to food and rent prices once those supply chains figure out there is much more profit to be made?
The Walton family alone has more wealth then the lower 42% rest of the USA. What do you think is going to happen when they know all their customers have a certain base income - you think prices are going to stay where they are?
So you will just make the wealthy more wealthy.