

Basic income - parenthesis
http://en.wikipedia.org/wiki/Basic_income

======
abalashov
Perhaps I am not understanding the concept correctly, but this seems just like
a linear additive - a distortion - to existing incomes, nothing more, for most
people.

The only people for whom it would make a material difference would be folks
that are otherwise completely indigent, homeless, etc., and that does hold a
lot of appeal.

But it's not going to give every other category of society the freedom to say,
not work jobs they hate. The lack of economic survival alternatives isn't the
only thing that's keeping people at jobs that pay higher than subsistence
wages.

So, it sounds like the following things would happen, among others -- good or
bad. Am I completely off track here?

\- For people who are indigent, homeless and/or completely unemployed, this
would be a big help. However, it would also disincentivise taking any very
low-wage job that pays comparably, as long as people who have 'moved up' by
virtue of receiving basic income are content with that level of lifestyle.

\- That would strip a great, great many service industries in this country -
i.e. most fast food, a lot of retail - of their present sources of cheap
unskilled labour, requiring them to pay a premium above Basic Income and thus
drive up costs for them and everyone that consumes their products and
services. It would also greatly injure the competitive position of those firms
relative to foreign competitors that do not have a Basic Income requirement.
Although the requirement to pay higher wages when operating in the US for
those foreign competitors would mitigate that _somewhat_, it would still be a
very, very significant competitive distortion that could affect their ability
to expand into other markets vs. foreign competitors, etc.

\- Other aspects of having to "compete" with Basic Income would create similar
distortions elsewhere. It's effectively the same as raising minimum wage
significantly; it would encourage more aggressive export of jobs out of the
country, where Basic Income does not create a high compensation bar.

\- For anyone making substantively above a Basic Income-level salary, it would
just add $BASIC_INCOME to their salary, contributing to significant inflation
and making just about everything less affordable to people who _only_ receive
Basic Income.

\- There would be constant disagreement as to just what constitutes Basic
Income and how much is really needed to subsist. There's not a lot of
consensus as to just what exactly "subsistence" entails. Poor people in
America (somewhat understandably) have a standard of "subsistence" that poor
people in Third World countries could only aspire to.

~~~
chmike
These are all pertinent observations. The rational of basic income, as applied
in France, is to provide some money (not much) to people who have no revenue.
It was called the RMI, "Minimum Insertion Revenue". So it was given to
indigent people but only without any revenue.

But there was a backside to this system because it produced a threshold below
which it wasn't worth to work. This threshold was above the RMI because
working needs to cover the cost of the trip to the job, clothing and such.

This is why the system has changed this year into the RSA "Active Solidarity
Revenue". People without revenue still get the equivalent of the RMI. But now,
when they get a job, they don't lose the RMI. The revenue is now balanced with
the income, also providing an incentive to get a job even if it is only a few
hours a week.

The huge cost of such basic income model is balanced by the benefit of reduced
criminality, because these people don't need to steal, swindle or whatever to
survive anymore. This makes France a pleasant place to live even if the taxes
are high.

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ccc3
I just learned something new. Milton Friedman supported a form of basic
income.

<http://www.nytimes.com/2006/11/23/business/23scene.html>

~~~
grandalf
exactly... people like to make Friedman into some sort of ideologue, but he
was quite reasonable and most importantly _highly creative_ in his insights
about economic policy.

I recommend reading Capitalism and Freedom for a taste of his creativity.

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mynameishere
The advantage of this is that it might subsume other redistributory policies.
A _lot_ of money is simply transfered from one person to another in this
country, and to have a single method of doing so would make every adjustment
to the amount a large national debate, rather than a rider on a bill no one
reads.

~~~
patio11
It would also make the benefit impossible to kill or reduce no matter how much
it strangled the nation. See: Social Security.

The difference is that instead of the AARP threatening nuclear warfare over
any reform it would be everyone. (Incidentally, if you think the AARP is going
to give up Social Security just because they're getting Basic Income in
return, you're dreaming.)

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timdellinger
This would have lots of un-intended consequences, especially when you think
about how much money can be saved with group living (10 to 100 people per
house, economy of scale with respect to room and board).

Separatist cults would now be profitable instead of being money sinks.
Debtor's prison is now a possibility again (you can house the person more
cheaply than their annual stipend).

If the government gets to confiscate the stipend of incarcerated felons to
offset prison expenses, there's now economic incentive to increase prison
population.

~~~
anigbrowl
Er, have you looked at the US or California prison populations lately? They're
remarkably high as things are, and there are already all sorts of ways to
confiscate the property of convicts, which has proved a bonanza for some law
enforcement agencies.

As for the other economic incentive, you would need to compare the potential
saving with the cost to the state of keeping someone in jail, which can run
anywhere from about $15k (Texas) to $35k (Maine). Weather and geography are
significant factors in this variation. The basic income we're talking about is
probably only sufficient for basic survival; somehow I doubt it's going to be
more than the cost of imprisoning someone.

Of all the possible unforeseen ramifications of how something like this might
work out, putting people in jail to save money is not high on my list of
things to worry about...though now I think about it, the cost per inmate per
year might be a reasonable metric for determining this basic income, since it
reflects the approximate cost of living in the most literal sense.

~~~
eru
Inmates cost more. They have to be guarded.

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MaysonL
All startups would be instantly ramen profitable.

~~~
dangoldin
According to the article Alaska comes close due to the subsidy. Maybe Alaska
is the next Silicon Valley?

~~~
kingnothing
According to <http://www.ireport.com/docs/DOC-149993>, every Alaskan in 2007
received just shy of $3,300. I wouldn't call that enough to live on, but it's
not a bad start if you're looking to have just enough to scrape by.

~~~
pbhjpbhj
If that's every person, then a family of 4 would get $13000. Allowing for
differences in cost of living I'd say that's about 75% of what I'm living on
in the UK (and we run a car). If you own housing then I'd say that's more than
enough to live on. If you're happy to supplement that income by growing some
of your own food (allotments in the UK are very low cost) then I'd say you can
live quite comfortably.

~~~
kingnothing
I don't know for certain, but I'd imagine it's everyone over the age of 18.

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dpratt
I fail to see how this would not immediately cause the cost of living and
prices for most things to just rise to the level of what they were before plus
the new stipend?

This is basic supply and demand - If I give everybody in the country $5000 to
go buy a computer, over time, computers will start to cost around $5000. If I
give everybody $400/month to spend on food, over time, the cost of groceries
will rise up to something more than $400.

~~~
aaronsw
Because the basic income money isn't given to purchase any particular good.
People can spend it on what they like. If the person gets to choose between
spending their $5000 on a laptop or plane tickets, supply-and-demand says
laptops will stay at their marginal cost.

~~~
swolchok
On the other hand, it's supposed to be an amount of money that is enough to
subsist on. If there's a relatively predictable perception of "subsist" in
terms of proportional allocation to categories of goods in a basket, prices
for goods in this basket might start to track their respective allocations.

On another note, who says the rational thing to do with a windfall is to go
blow it on something just because you can?

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spking
How about everybody just gets to keep whatever they earn from their time and
labor? My God, we've become a nation (no, a world) of greedy busybodies who
think we deserve a piece of everyone else's stuff.

~~~
tome
What do you mean "we've become"? Can you point to a time in human history
where everyone thought they did not deserve a piece of someone else's stuff?

~~~
pbhjpbhj
The early Christian Church, as reported in Acts - the believers shared all
things in common. There was a brief breakdown when the apostles had to
intervene as those distributing food to the widows and orphans were tending to
favour their own people.

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dangoldin
Interesting post - I found this quote pretty telling: "After six months the
project has been found to significantly reduce child malnutrition and increase
school attendance. It was also found to increase the community's income
significantly above the actual amount from the grants as it allowed citizens
to partake in more productive economic activities"

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I_got_fifty
I think we already have that here in Denmark. If I understand the concept
correctly, that is.

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chmike
Basic income is given to people who earn less then that. You'll buy food and
shelter with it (no laptops !?), but it is tough to survive with it.

It might be more efficient if it was backed up with some kind of coaching to
help people learn how to manage their income and life because this is like
giving fish instead of learning to fish (though that's the purpose of school).
But sometime you really need fish and have no time to learn, or some people
are just too dumb to learn anything.

It has a huge cost, but it has to be balanced by the benefit of criminality
and insecurity reduction. Without it these people would have to steal, swindle
or deal drugs and this is very likely to have a much higher cost.

~~~
pbhjpbhj
The wikipedia article says that basic income is give to all regardless of
wealth. That's one of the points - it removes the huge costs involved in
administrating a system that has to establish and analyse the wealth of all
members of the community.

------
danteembermage
Mormon settlers practiced a basic wealth version of this briefly during
several periods during the 19th century.

From <http://en.wikipedia.org/wiki/United_Order>

"Members who voluntarily chose to enter the United Order community would deed
(consecrate) all their property to the United Order, which would in turn deed
back an "inheritance" (or "stewardship") which allowed members to control the
property; private property was not eradicated but was rather a fundamental
principle of this system. At the end of each year, any excess that the family
produced from their stewardship was voluntarily given back to the Order."

------
teilo
In other words: Basic Socialism.

~~~
pln
Hayek and friedman are certainly among the more outspoken proponents of
socialism

~~~
teilo
I may be an Austrian, but I don't agree with _everything_ that any Austrian
ever wrote. And I am definitely not a Friedman fan, although he is preferable
to many alternatives.

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dejv
Many european countries have something like basic income implemented. It
mostly realy basic income, but you can survive on that some time.

~~~
eru
Speaking for Germany: Basically yes. But it's split on numerous agencies and
bureaucracies. Also it's not unconditional. And among the worst things: The
effective marginal tax rate can be quite high for people with low income. I.e.
you don't pay much taxes per se, but for each earned Euro above a certain
threshold you have to forfeit one Euro of e.g. BAföG. Not a good incentive to
work gradually more.

~~~
pbhjpbhj
In the UK, we just got increased child benefit (new baby) and so our reduced
council tax (local taxation based on [an imaginary] property value) has been
increased. Net loss to us. Sadly we're not allowed to refuse the added child
benefit.

Mind you the system is so complex that they couldn't tell us in advance what
child benefit we'd get - presumably they just wait and see what number the
computer spits out. This number appears to have a random perturbation.

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PostOnce
How many people who work today would be content with simply subsisting on
their stipend? Who would then pay taxes? Would the burden be too great for the
workers that remained? Almost certainly, I think.

~~~
pbhjpbhj
The stipend, IMO, needs to be at a level that requires you to grow your own
food, mend your own clothes, etc., in order to not go hungry and naked. That
is it should require you to be productive even if you're not employed.

If you can afford to smoke or buy brand new clothes, buy cable telly or go out
for food then you're getting too much stipend.

Then the question becomes how many people on minimum wage jobs would give up
what they have and live in charity shop clothing, tending an allotment, not
smoking or drinking (unless they grow/bottle their own) and preparing their
own food at home in shared accommodation.

I don't think you'll see too many of the current generation choosing that sort
of lifestyle.

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tybris
Just balance the budget first.

~~~
eru
These measures are orthogonal.

