
If we can afford our current welfare system, we can afford basic income - MaxGhenis
https://medium.com/@MaxGhenis/if-we-can-afford-our-current-welfare-system-we-can-afford-basic-income-9ae9b5f186af#.d17uajll9
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overdrivetg
Good overview. I think one thing that gets left out is how do you handle
systemic sustainability: ie "if everyone quit their jobs and went on BI, there
would be no one working to pay taxes to pay for the BI expenses".

This could just be solved by having a total BI payout pegged at a fixed % of
overall tax revenues. As more people earn less and pay less taxes, BI payouts
also decrease as they are split among more people so the burden on the
remaining taxpayers doesn't overwhelm them.

Then we could adjust that % every year (or not) based on actual conditions,
how generous / prosperous / stingy we as a society are feeling, plus it gives
a mechanism by which automation productivity gains can get rolled back into a
BI program to (warning: utopian thinking ahead) eventually fund fewer workers
overall, plus workers who work fewer hours, but we still have
economic/automation gains rolled (via ongoing taxation) back into the BI
support.

This basically shores up the "moral hazard" counterargument to BI proposals
(which is the first thing that comes up for me after the "how do you pay for
it" thing Max solved).

~~~
MaxGhenis
Pegging BI to tax revenue or GDP seems like a good idea to me, though I'd
prefer to start with something revenue-neutral like I lay out. As it
eliminates welfare cliffs, it seems self-evident that it would not reduce
employment. Many other studies on cash transfers have found that they don't
reduce work incentives, except for specific populations like new mothers and
teenagers, but more evidence with slowly-rolled-out programs would help
address this.

Speaking of utopia, what I'd really prefer is for BI to be funded as 100% of
land value tax and pollution/carbon taxes. But that could be for another
article. Even if nobody's working and everything's automated, we'll still need
natural resources to house people and build things, so this would be
sustainable.

~~~
overdrivetg
Yes, totally agreed (/probably poorly described) - start revenue neutral as
you have, then the following year just use the % of GDP from this year as the
initial "set point". Then you get both: revenue-neutral cold start plus a %
pegged to GDP moving forward.

Good idea wrt land-value and pollution/sustainability taxes too, makes total
sense.

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MaxGhenis
My goal with this piece is to deconstruct basic income into parallelizable,
redistribution-neutral pieces: 1) Replacing non-cash benefits with cash 2)
Smoothing the payout curve to avoid welfare traps 3) Replacing means-tested
negative income tax with universal basic income

I hope this makes the idea more palatable to conservatives, as opposed to
proposing a particular level of basic income (e.g. $15k/year) and then
figuring out how to finance the extra cost. If we want society to redistribute
more, that's fine, but IMO should be addressed separately from basic income,
which can be beneficially enacted within the current redistribution
parameters. The framework also clarifies how small steps can lead to BI
someday, for example expanding the EITC instead of food stamps.

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refurb
How do you deal with the edge cases? Do you eliminate disability programs as
well? A lot of Americans are on disability and have _much_ higher income
requirements than someone who isn't disabled.

Also, what do you do about the difference in cost of living across cities? Do
you take the housing allowance, give them a basic income and tell them to move
if it's not enough?

And what do you do with the small number of people with addiction issues who
just blow through the basic income and are left homeless? I highly doubt we're
going to tell them "tough, you get to live on the street".

~~~
MaxGhenis
Part of the reason I got into BI is because my brother is quadriplegic (spinal
cord injury), so I saw firsthand how extreme the welfare cliffs are for the
disabled: if he earns over ~$20k/year, he loses so many benefits (which he
needs, such as attendant care), that it doesn't make sense unless he's earning
~$100k/year. So I believe disability programs would benefit the most from some
of the proposals in the article.

That said, they certainly wouldn't have the same BI as everyone else, just as
children wouldn't and the elderly probably wouldn't as well, since they have
existing programs targeted to them. The idea is just to replace non-cash
benefits within each group (those four are probably sufficient), and smooth
out the payout curve and find the equivalent BI for that NIT.

CoL adjustments would result from this as well: the primary way this is
currently done is via housing as you mention. Any housing assistance benefit
can be valued like other programs, so that could then be disbursed as cash. In
practice, this means layered basic incomes at the federal/state/local level,
and if done gradually they could be designed to minimize evictions.

Those with addiction issues who would spend all their money tend to have
mental illness, which hinders their ability to get benefits in the current
system. I suggest retaining social workers for such circumstances:

> Some of these programs will likely be more effective than their cash value —
> especially those serving the physically disabled and mentally ill — and
> should remain intact.

~~~
refurb
The problem I see with that approach is you are solving some problems (the
welfare cliff), but in order to accommodate the edge cases, you're creating a
complex program to replace a complex program.

One of the huge benefits of BI is that it's simple, you just give everyone the
same amount of money. The more your start layering on exceptions, the more
bureaucracy you'll create and you're back to square one.

~~~
MaxGhenis
Separating (1) children (2) people with disabilities (3) retirees and (4)
other adults, is I would say an upper bound on complexity.

The PwD piece falls more under healthcare (which I think should probably just
be universal), so if their health-related benefits can be separated out, they
would just get the standard basic income.

Retirees only need special consideration for political reasons, since social
security may exceed basic income, but it could also be separated out into a
supplemental amount to make basic income more universal. Ultimately they could
converge to avoid special treatment.

And whether children get the same amount as adults is an open question among
BI advocates; I don't have a preference either way and believe it should be
studied empirically.

~~~
vacri
'PwD' is inherently complex. I have mild clinical depression - it's a
disability, but I don't need any welfare for it. That's one end of the
spectrum. The other end is the GP's quadriplegic brother.

There should simply not be a 'PwD' element to BI - that should be a separate
item altogether, otherwise it's just the thin end of the wedge. Leave it in
healthcare-based welfare where it belongs, where both complexity is expected
and health issues are better understood.

~~~
MaxGhenis
Agreed, though I'd hope that some lessons from basic income could be used in
the disability benefit sphere too. The welfare cliffs are devastating and
produce severe underemployment among PwD.

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sharemywin
Sometimes the devil is in the details and if you this part

"To be revenue-neutral, some people will be worse off with a smooth curve
(e.g. those earning $29k getting maximum benefits), and others will be better
off (e.g. those who lose $6k of benefits after earning just over $29k). But
every dollar earned will lead to improved livelihood."

can be finessed in a palatable way. Try to avoid too many you took money from
grandma to give to the pot smoking college kid. You sold me on it. The only
problem I see how do you convince the voter on disability complaining about
the gorvn'ment and all it GD entitlements... and your also talking about the
country that's about to elect the guy that wants to ban Muslims from the
country.

~~~
MaxGhenis
The quote you selected concerns welfare cliffs, where smoothing out the payout
curve may slightly reduce benefits of those near a cliff and increase benefits
for those just past a cliff. This split should be independent of the
"grandma/pot-smoking-college-kid" split. In general the proposal I lay out can
be designed to split out benefits for retirees such that they get a different
NIT/BI than others, so grandmas can sleep well.

I am curious what Trump might think of basic income. I tried to write this
piece to appeal to conservatives who want to shrink the antipoverty
bureaucracy, and I believe there's a lot to like about BI from both sides of
the aisle.

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MaricopaArizona
Has anybody studied the outcomes on American Indian reservations from having
basic income guaranteed for generations? I'm not an expert or well-read in
this field, but I think anybody advocating basic income would be interested to
visit a reservation and observe the lifestyles, dreams, goals, and successes
found there.

~~~
barney54
This is a damning critique of having a basic income. Some of the saddest
places I've been to are Indian reservations in the U.S. They were sadder than
the poorest parts of Ecuador.

~~~
tim333
The effects of welfare on Australian aborigines are pretty sad too. A good
proportion of the young sit around drinking all day. The aboriginal elders
hate it but ironically it seems to continue because it could be considered
racist to treat the aboriginals differently from laid off office workers in
Sydney for welfare purposes.

~~~
vacri
It's not welfare that makes life suck for Aborigines. A lot of the problem is
from being considered outsiders by the wider society they live in. Take away
the welfare from the drunken troublemakers and they're not going to magically
turn into middle-class professionals. The whole situation is incredibly
difficult and complex, and to lay it at the feet of "welfare did this to them"
is doing a disservice.

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tim333
One of the troubles with this kind of reasoning is it kind of assumes peoples
behaviour will remain much the same so someone on a $50k salary will keep at
it but maybe with some basic income added and some tax removed and similarly
for someone on welfare.

And maybe that will be roughly true initially but people change their
behaviour and maybe the guy who would have done the $50k job if you give him
say $300/week no strings attached will say hey, why slave away when I can go
to Bali and surf and smoke joints.

We had something like that when I was a kid - the somewhat socialist UK
government brought in generous untested welfare and some people used it to hit
the beach in Spain and then the remaining workers paying the bills objected.

~~~
MaxGhenis
Do you have sources for the Spain-beach-hitting? Several studies have found
that cash transfers do not reduce work incentives, except in specific
populations like new mothers and teenagers. Much more significant
disincentives are those generated by current programs with welfare cliffs.

~~~
tim333
Not really on the sources. I remember it from news stories in the 60s/70s. It
may have been hyped up by the tabloids rather than having been significant in
reality.

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ac29
I'm not sure that combining BI with a flat tax, especially as high as 50%
would work out. People with minimum wage or low-paid jobs would have a
disincentive to work -- working full time would net them nearly nothing versus
staying home, unemployed.

Napkin math: 2000 hours (approx full time hours per year) * $7.25/hr (US min
wage) * 50% = $7250. Cost of transportation, child care, and other things that
wouldn't be required if unemployed could easily eat most of that, netting a
wage of just a dollar or two per hour.

~~~
MaxGhenis
As stated in the article, 50% was chosen only because it's the rate where
calculations are simplest, it's not the proposal (it'd generate way more than
the current government tax receipts). Income tax rates under a revenue-neutral
negative income tax could remain pretty similar for those about the threshold;
it's really just replacing non-cash welfare-cliffed benefits with a smoothed
cash transfer.

~~~
ac29
I reread your article, and maybe I was being too harsh. You gave an example of
a 50% flat tax (which you admitted is too high), but I think what would be
more interesting is to see what a progressive tax would look like to remain
revenue neutral while providing a reasonable level of BI.

I dont think basic income is tenable in the US without raising taxes on high
income earners, perhaps significantly.

~~~
MaxGhenis
Yes I'd like to do that. Net tax burden (taxes - BI) still shouldn't change
under the revenue-neutral approach, since they'd be equal between NIT and BI.

