
Four Reasons a Guaranteed Income Won't Work - jseliger
http://www.bloomberg.com/news/2013-12-04/four-reasons-a-guaranteed-income-won-t-work.html
======
wwweston
>"At any given point, a minimum-wage job may be very unattractive compared
with spending more time with your family. But over the long run, it’s very
hard to get a “good” job if you have been living on a basic income rather than
working; employers do not like the signal sent by resume gaps."

If a guaranteed income does in fact provide enough of the labor force with an
incentive to drop out as an alternative, then it seems likely that employers
would have to stop thinking of resume gaps as an indicator.

Which, really, would be win-win, because my guess is that resume gaps are
possibly less helpful in evaluating a candidate than most of the rest of the
usual cargo cult surrounding hiring.

~~~
mgkimsal
" then it seems likely that employers would have to stop thinking of resume
gaps as an indicator."

Exactly what I was thinking. I don't understand why it's so hard for people to
consider that when social changes are introduced, some of the current ways we
value things will change, and current judgements can't necessarily be used as
a gauge for future behavior.

Employers looking at 'gaps' and _never ever_ inquiring from anyone remotely
interesting why those gaps occurred are just throwing potentially great
workers to the competition. "I took 18 months off to care for my dying
parents, who passed away last month" is a totally different type of person
from "meh - there's just too much quality day time television beckoning me to
sit on the couch to bother looking for work".

~~~
johnpmayer
> I don't understand why it's so hard for people to consider that when social
> changes are introduced, some of the current ways we value things will
> change, and current judgements can't necessarily be used as a gauge for
> future behavior.

 _Ceteris paribus_ is quite prevalent in economic discussion.

------
3pt14159
The whole point is that some people won't be working because they are being
made obsolete with the advent of computerized robotics. I don't want the
uninformed and skilless clamouring to be in the work force, I want them out of
the way.

As for the cost, that is simple. Don't just look at federal numbers. Basic
Income should be at National, State/Province, and City level to iron out
regional differences. Don't forget that there are a lot of other costs that go
away with a Basic Income, like minimum wage and socialized housing.

~~~
MaysonL
During World War II, one of the U.S.'s great technical marvels was the Norden
bombsight. Production, by GM, needed to be ramped up: but labor in Detroit was
exceedingly tight. The only sufficiently large group available, who were
hired, trained, and succeeded in production, were "superannuated Negro
prostitutes." The reason the Germans didn't produce their own bombsight in
equal numbers is that they believed that such a device could only be produced
by highly trained, laboriously apprenticed technicians.

IMO, the idea that there are worthless people, in any significant number, is a
pernicious and evil meme.

~~~
brownbat
Side note, the Norden bombsight was pretty useless in actual combat. The
German solutions weren't much better.

But precision bombing was the fundamental engineering challenge of WWII. And
the US did solve it, twice. Sort of.

BF Skinner's pigeon guided missiles were the first way, they were crazy
effective. They were just too weird for everyone.

Giant irradiating bombs that don't need any precision struck everyone as a
much more sensible approach, so we went with that instead.

I think the last 70 years or so would have been better if we'd gone the pigeon
route.

------
cies
"Less incentive to work"

Yes! And more incentive to start a company!

That's why big-corps/govts that employ a lot of low-wagers don't like this
idea;

and small-self-owned, small-hi-tech-govt, and potential biz starters without
access to funding tend to like it.

The level of the guaranteed income can be "low", thereby leaving "some"
incentive to work.

I like the fairness, low-overhead and the sigma-reduction of this method of
wealth re-distribution very much. This method is not directly/economically
benefiting the 1% -- sure, I agree on that. But it helps _a lot_ of people to
live more comfortable and puts pressure on good labour conditions from the
bottom up.

Go Switzerland; please lead the way on this one -- it hope and predict it to
be a great experiment!

Edit: typo.

------
patmcc
To the cost argument: to say "it would be hard to manage efficiently" makes it
looks like most first-world countries don't already have a massively
successful income tax collection program of some kind. They do. Tax rates
could be set so anyone at the minimum income wouldn't pay; anyone at that
level to "middle class" (or whatever) would pay back part of it in taxes; and
anyone above a certain level would pay back more than the minimum income.
Would some people be taking home less overall? Yeah, sure. Same as any other
welfare service.

As for the idea that people won't work anymore and society would crumble -
people like xboxes and new iphones and clothes and nice cars and even feeling
productive. I tend to believe they'll keep working. Some will stop, sure.
They're the same people who don't work now or are criminals.

~~~
marknutter
The problem is when people start to say that money for xboxes, clothes, and
new iphones should be covered by a basic income.

~~~
oakwhiz
You're saying that people should not be allowed to purchase clothing with
money from social assistance programs. I'm fairly certain that clothing is a
basic human necessity, especially during the winter.

The problem is when people start to say that they ought to have control over
other people's lives.

------
chipsy
I'm coming around to believe that the most promising, direct method of
implementing equitable wealth redistribution is through cryptocurrency.
Probably not just yet, but within the upcoming generations of protocols; the
change in philosophy away from a competitive/speculative, gold-like asset is
in part foreshadowed by the growing popularity of proof-of-stake. In
Nextcoin[0], for example, mining no longer exists.

There are a lot of ways to model a currency so that rebalancing of wealth from
richer accounts to poorer ones is a smooth, gradual, automatic process. And
the software to do it, and the marketing campaign to popularize it, can be put
together much more quickly and cheaply than ramming it through the existing
political system.

All of which isn't to say that the political process is dead; but there is
potential for a revision of government's duties, where software can do the job
instead of a bureaucracy.

[0]
[http://nextcoin.org/index.php/topic,104.0.html](http://nextcoin.org/index.php/topic,104.0.html)

------
hannibalhorn
The $600bn spent on "income security" excludes social security, no? That's a
huge chunk of change, and a basic income could in effect replace the need for
it. That said, any sort of transition would be difficult to implement (and
political kryptonite.)

~~~
scarmig
It definitely does exclude Social Security, which as a program amounts to
~$750 billion a year. And Medicare and Medicaid, which amount to another $600
or $700 billion.

Combine them and the $600 billion on income security, and you get about $2
trillion, which is enough to fund a huge chunk of it.

I don't understand the how McArdle thinks that $12,000 per year is too austere
for most people to live comfortably on and simultaneously decries how it will
make many people drop out of the workforce. She should address what (many)
advocates of it want.

Political concerns are, of course, another question.

~~~
philwelch
Basic income can't be a drop-in replacement for federal health care programs,
because to get equivalent care you'd either need considerably more basic
income or some other mechanism for providing health care. The most generous
assumption from an accounting perspective is probably that the US adopts,
wholesale, the Canadian medical system with equivalent per-capita costs borne
by the federal government.

~~~
scarmig
Why?

People know best how to spend their money. The government shouldn't
effectively force people to consume healthcare.

Especially when there's evidence out there that programs like Medicaid provide
no net healthcare benefit to recipients. Health outcomes might even improve,
if the money that would be going to Medicaid instead goes to people spending
more time on self improvement and health.

ETA: That said, feasibility is always the question. Given that, I'd be happy
as a duck to make the basic income only $8,000 a year or whatever. Then again,
I'm one of the austere basic income advocates--I'm on the fence about the
Swiss proposal because I think it's far, far too generous, even considering
the higher COL there.

~~~
philwelch
Don't be foolish. If letting people die in the streets when they got cancer
was a viable option, letting people die in the streets of starvation would be
too and you'd have no rationale for a basic income.

Private health insurance is much more expensive per-capita than Medicare and
Medicaid and you would have to increase people's basic income to be able to
afford it. Except that wouldn't work for people with preexisting conditions--
they would be left to die in the streets. You'd have to regulate health
insurance companies to accept everyone, but then no one would buy health
insurance until they were already sick, at which point everyone has to buy
health insurance, at which point you might as well implement the Canadian
system because that's already less costly, per capita, to the federal
government alone, than Medicare and Medicaid are.

------
jfarmer
These arguments are specious.

Most Libertarian proponents of a guaranteed income don't favor it because it
will "save money," but because it's the least economically distortive way of
redistributing wealth. The arguments goes, "Well, as long we're going to be
handing out money, we should do it in a way that minimizes the number of
strange incentives." There are also ways of implementing a guaranteed income
that don't involve mailing a bunch of checks to people every month, e.g., a
negative income tax.

Overall the article appears to be arguing against a particular and very naïve
implementation of a guaranteed income.

~~~
philwelch
So how does a negative income tax get implemented, you mail people a "refund"
after they file their taxes for 0 income for the previous year? What do they
do until then?

~~~
ds9
Well here is one way it could be implemented, and this would also solve the
issue of cost.

Imagine it's offset against earnings. That is, if you earn more or less than
the benefit amount, you get paid the difference - in one case by the employer,
in the other case by the government.

You can see how this solves the cost problem: the society overall is _already_
paying the total cost is of whatever people are currently paid; this just puts
a floor on the range.

Clearly this would get rid of much of the extreme inequality: it would amount
to a kind of minimum wage; the net effect would be to give workers a larger
share, and more bargaining power, and leave less for the upper-middle and the
1% - at no more cost than the current system.

------
Houshalter
Cost can be dealt with by making it a negative income tax. That way not
everyone is getting the full amount. People that are already making money only
get a little from the system, whereas truly poor people get more. The new tax
would be set just enough that it pays for itself. It probably wouldn't start
at an amount that replaces current systems like welfare, but even $3,000 would
help considerably towards evening out wealth inequality.

"People not working" is a good thing IMO, because many jobs have/are being
automated and we can actually support people not having to work. The market
rate for labor is pretty low. Things like the minimum wage prop it up even
further from what the market rate would be. A lot of people not working would
not actually cost the economy that much.

And as I said, the minimum income would probably start at a low amount, so
people would still have a large incentive to work for the time being.

~~~
philwelch
Negative income taxes are an elegant solution, but they entail literally
paying people to commit tax evasion, not just in the "if I evade my taxes I
won't have to pay as many" sense but also in the "if I evade my taxes the
government will give me money" sense.

------
jupiterjaz
"Cutting everyone a check for $1,000 a month, which most people in that room
would consider too little to live on, would cost almost $3 trillion."

...What? I work a low skill service sector job and I only make $850 per month
after all the taxes and deductions are taken out and I do fine as far as
shelter and food are concerned. $1000 a month is plenty if it's after taxes
and deductions.

~~~
growupkids
I think the authors point was that the people in that room consider $1000 a
month to not be a livable wage. Therefore, the inference is that those people
would want to see more than $1000 a month, which would be even more costly.
Perhaps the author just picked $1000 for ease of mathematical illustration.

------
drawkbox
I like to compare it to free to play. It could possible work if the high end
becomes the whales that F2P games require to allow most people to play for
free > 95-98% and then the riches made by the highest advancing 2-5% players
provide the revenues to provide for the whole system. If there was some base
level free to play number, it would be an evolutionary step as big as moving
into modernized farming and what created markets, maths and the thinking
man/woman due to extra time not having to survive all the time. Somehow the
system would have to allow for the tasks noone wants to do though maybe by
rewards. It could skew actual needed services ahead of more greedy ones.

All of the biggest games and internet product companies are free to play,
maybe society is next or it will have to be when labor is limited, new things
will have to be created and more freedom is needed to solve these problems.

------
benjohnson
It's sad that many who claim to support 'welfare' don't like this idea because
it reduces their ability to manipulate people.

~~~
yetanotherphd
Another way of phrasing the same thing, is that modern welfare systems (e.g.
Australia's) put reasonable conditions on receiving welfare, that make it
possible to target welfare to only the people who really cannot find a job,
making the disincentive to work associated with welfare much smaller than it
would have been otherwise.

I actually think it's sadder that you think characterizing people's attitudes
using negative terminology is a substitute for a real argument.

EDIT: I've never complained about ratings before, but is this really a bad
argument, or do basic income proponents just think that everyone who disagrees
with them is an evil ignorant person? It seems to me that certain causes
attract zealots.

~~~
scarmig
Don't feel bad--I got net two downvotes above for pointing out the numbers
showing that federal spending on healthcare and Social Security together gets
us substantially closer to being able to fund it (I'm pretty sure they're not
wrong numbers--if so, whoever's down voting, just point it out and I'll
happily hash it out).

Zealots exist anywhere. Here, have an upvote.

~~~
yetanotherphd
yeah I shouldn't be so touchy. It's probably just controversial issues in
general that make people downvote based on the perceived motives of the poster
rather than the argument.

------
adamnemecek
For anyone unfamiliar with the author, she has close ties with the Koch
brothers so remember that while reading the article.

EDIT: You can read more about her at [http://shameproject.com/profile/megan-
mcardle/](http://shameproject.com/profile/megan-mcardle/).

~~~
yetanotherphd
I don't quite get why you think this is useful info. Koch brothers are just
people promoting a political agenda, like George Soros or any political party.

Everyone has a political viewpoint, and it's hard to see anything wrong with
writing articles consistent with that viewpoint.

~~~
adamnemecek
> I don't quite get why you think this is useful info.

Because I'm repulsed by everything they stand for. The world would be a better
place if they were dead.

> Koch brothers are just people promoting a political agenda, like George
> Soros or any political party.

Well I guess I should get rid of that shrine devoted to George Soros that I
have then. Or what's your point?

> Everyone has a political viewpoint, and it's hard to see anything wrong with
> writing articles consistent with that viewpoint.

[http://en.wikipedia.org/wiki/Propaganda](http://en.wikipedia.org/wiki/Propaganda)

~~~
yetanotherphd
You haven't addressed the issue of relevancy. Let me put it another way: How
much do we need to know about the journalist's views beyond the views that are
expressed in the article?

As far as I can tell, the article already reflects the author's ideology. So
by reading the article you are not going to be mislead. The page you linked
cited some instances of people promoting policies that would help the Koch
brother's commercial interests. In that case the link is relevant.

But if someone writes something right wing and you post "LOOK OUT EVERYONE
THIS GUY IS A RIGHT WINGER", that does not add useful information.

------
svachalek
In regards to the first point, I'm not sure what kind of crazy implementation
they had in mind with their discussion panel. Pretty much everyone who makes
money is paying some kind of taxes, and there's usually some baseline
deduction built in there. That's what you convert into UBI for the taxpayer.

It's like the flat tax in that the net result shouldn't necessarily be more or
less expensive than the current system, just a heck of a lot simpler.

------
andrewfong
One way of addressing the latter three points (reciprocity, politics, work) in
part is to only give a guaranteed income to people who are actually working,
regardless of how much they're earning. People would still have to work and
contribute to society, but they would receive an income greater than the fair
market value for that work. In the U.S., this would basically take the form of
boosting the existing Earned Income Tax Credit.

~~~
gremlinsinc
No, having any requirement at all puts more bureacracy into it, the point is
to get rid of bureacracy -because that requires money for paperwork filing,
and management, that could be spend on instituting the policy. The better
method would be to have tax breaks for employed individuals. Perhaps each
person would be required to pay back $500 in taxes per year if they're not
employed, or something similar... Though, I feel we should move away from
income tax as well and just have a national sales tax which would fluctuate
based on what outstanding debt is and how much is brought in per year.

It IS possible to get spending in check, and fix everything, but we need to
get rid of a LOT of bloat, there are WAY too many uneeded jobs in
congress(especially in congress/and the senate lol). Personally, if I had a
gbi, I would NOT work--in the basic sense, I WOULD innovate and do freelance
work to earn extra money to put towards a startup idea... That is what I love
about GBI -- the fact that entrepreneurs don't need to work but can actually
work full-time on their business ideas!

~~~
andrewfong
Tax breaks for employed individuals is exactly what the EITC is. Assuming you
stick with an income-based tax system, employment verification is effectively
built in and requires little to no additional bureaucracy.

A national sales tax comes with its own set of bureaucracy. It's also
regressive and shifts the tax burden disproportionately onto the poor (unless
you made the sales tax wealth or income dependent, which would introduce the
same bureaucracy you were trying to get rid of earlier).

I'm not sure a GBI would necessarily be good for entrepreneurship. I see your
point, but having a runway disciplines young companies and forces them to get
to market in a timely manner.

------
yetanotherphd
The "cost" and "work" arguments really need to be combined together (this is
also why economists prefer models to verbal arguments - it forces some amount
of internal consistency and avoids endless arguments about definitions).

The primary difference between conventional welfare and basic income, is that
you can have extremely _high_ effective marginal tax rates for people on
welfare. E.g. in Australia your effective marginal tax rate while on welfare
is around 50%. For each dollar you earn, you get $0.50 less welfare (and pay a
small amount of tax too).

Usually high marginal tax rates are associate with a disincentive to work.
However since when you are on welfare, the government makes you report your
job-seeking activity, you are forced to try to look for work even though
without this monitoring there would be little financial incentive to work. So
having strings attached to welfare allows a higher effective marginal tax rate
for people on welfare, and is therefore "cheaper" in some sense.

------
gruseom
Most of these objections (e.g. the reciprocity thing) seem absurdly made-up;
you could just as easily make up something opposite. But a couple of points
are substantive if not substantiated. For example:

 _But if you means-test it to control the cost, or try to tax most of the
benefits back for people who aren’t low-income, you rapidly lose the
efficiency gains and start creating some pretty powerful disincentives to
work._

Why? I can see how "means-test" might imply bureaucracy and thus inefficiency,
but what's wrong with using tax policy for this? It seems like an obvious way
to ensure that people who don't need the money don't get it, and no more
inefficient as everyone has to fill out their taxes anyway.

Come to think of it, isn't that so obvious that the debate ought to start
there, rather than end there? Otherwise the objections start to seem rather
straw-man.

~~~
didgeoridoo
That's not it. The issue is that "means testing" a basic income results in an
effectively negative marginal tax rate for those below the means-testing line.
The argument is that this is a strong disincentive to attempt to climb out of
dependency.

~~~
gruseom
Oh, I see now. That at least makes some sense. But surely you could construct
some formula to mitigate that effect, if not eliminate it?

I fear that many arguments about incentive and disincentive are just morality
tales anyway, based on beliefs about human nature. It's easy to imagine
opposite stories. Maybe there will be a social incentive to work. Maybe there
won't be enough jobs for everyone anyway. Maybe the disincentive to work will
make wages go high enough that they become an incentive to work again. Maybe
the disincentive to do menial jobs will free up incentive to do creative
things, a net win for society.

It's easy to make these things up, and everyone mostly does it based on
whether they already like or dislike an idea. (I rather like this one. Megan
Mcardle presumably doesn't.) But do we have a good way to decide between them?

------
pfranz
Working backwards:

4) 'over the long run, it’s very hard to get a “good” job if you have been
living on a basic income rather than working; employers do not like the signal
sent by resume gaps' Economics would change significantly. If you wanted a
"good" job and lacked the education and training you have the opportunity to
pursue it on your own. I have a feeling there would be a huge increase in non-
for-profit work (both in the traditional sense and in previously unseen
markets), apprenticeships, and likely more internships (working for free at
for-profit companies). I can't find any citation, but I remember recently
reading about women joining the workforce significantly reduced the amount of
volunteers for charities.

3) Politics would be very hard--but politics follow the people's will. If
there's enough support, it'll happen (even if the transition is messy). I
haven't seen strong, widespread support (or even wide knowledge of Guaranteed
Income) just yet.

2) Admittedly, I'm not quite following the point. Society and government are
the rules we all decide to make up and follow. The argument sounds very
similar to politics, except 2) is convincing the people and 3) is convincing
the politicians and people implementing it.

1) Cost is exactly why we're looking more seriously at this now (although, we
may not be there yet). Ideally, it would be cost neutral or a net win to
transition off of the quagmire of various welfare systems--similar to the
argument for a flat tax rate. As a whole (speaking for the US) we're more
prosperous and can afford to take on more of a social burden (or transition
our social burden from various welfares to a simpler system). We're also
moving toward a society where we don't need to have every person working to
survive. I don't know if the statistics back up the narrative of city's
factories getting closed and a majority of the population transitions to
welfare and disability--while on the other side of the coin entertainment and
the service industry are the largest growing markets.

~~~
philwelch
> Ideally, it would be cost neutral or a net win to transition off of the
> quagmire of various welfare systems

Ideals aren't convincing. Numbers are.

~~~
pfranz
I completely agree. There are two aspects here; what do we want out of a
society and what we can do with the resources we have (the numbers). We're
clearly moving towards the resources, which is why I hedged so much on the
topic of cost (and put it last instead of first). I'm just interested in
moving the conversation in that direction. I like the idea, but I'm not
entirely sold on it--it would be /very/ disruptive.

------
scotty79
> I would not be opposed to a system of guaranteed jobs that paid $10,000 a
> year, or whatever we think this basic income should be.

It already exists. It's called civil service/public sector and the problem
with it is that there's not enough money and not enough made up jobs to hire
everyone.

