
Basic Income is Practical Today, Necessary Soon - mchusma
http://hawkins.ventures/post/94846357762/basic-income-is-practical-today-necessary-soon
======
com2kid
Assuming social security is replaced by basic income seems to be a fallacy.

SS payments are not the same for everyone. Knowing the distribution of pay
rates for SS is very important.

Reducing SS payments, perhaps by a dramatic amount, is not going to go over
well.

Likewise, giving straight cash versus Medicare/Medicade does not work. You are
basically telling people "I'm sorry, but you can either die of a treatable
condition, or starve".

(Unfortunately the latter is more palatable in the current American political
climate...)

1k per month for the elderly who have multiple medical conditions, is not
acceptable.

IMHO the author is viewing this through the lens of someone who is young and
healthy.

It is also odd that the author highlights some jobs (plumbing, cleaning) that
are likely to be the last that will be automated. A Roomba is a far cry from a
proper janitorial service. While eventually we will get autonomous bots that
can do such tasks, we are _really_ far away from that goal.

And finally, statements like

> It is not clear to me why it should be significantly different, as a 12 year
> old needs basically the same as an 18 year old.

Make me wonder what sort of reality the author lives in. (And only further
confirms that the author is likely young, and has obviously never had
children!)

The price of child care alone is huge. Medical expenses are higher for
children. School expenses exist. Children are not cheap.

~~~
phkahler
If the basic income replaces social security but is available to all adults, a
large number of working people are going to quit and retire prematurely. SS
isn't supposed to be a total retirement plan, but it is for many and this
would increase the number - probably to the point where it all falls apart.
What is the incentive to work under this scheme?

~~~
dragonwriter
> SS isn't supposed to be a total retirement plan, but it is for many

There are many people who are _unable_ to work due to age and infirmity and
have no other savings and who are forced to rely on SS as a total retirement
program, but there are very few if any who do so through choice, even if they
have earnings high enough to have SS benefits at the high end of what is
possible.

> What is the incentive to work under this scheme?

Even assuming that BI provided a standard of living equivalent to minimum wage
(which the levels that have generally been proposed _don 't_, even if one
assumes no inflationary effect from BI itself, which is naive), people who
have the capacity to expend effort to acheive greater than minimum wage
incomes frequently do so under the current regime.

The same incentive exists to do _some_ work in a BI scheme that exists to work
to get more than minimum-wage in a non-BI scheme. That incentive is called
"money".

Furthermore, because BI would be available to all _unconditionally_ (unlike
existing means-tested programs), it would mitigate disincentives to work that
exist with existing systems that it would replace.

~~~
phkahler
>> Even assuming that BI provided a standard of living equivalent to minimum
wage (which the levels that have generally been proposed don't, even if one
assumes no inflationary effect from BI itself, which is naive)

But TFA said it would replace social security payments. Is that more than
minimum wage? at $10 per hour and about 160 hr per month that's $1600 per
month. I believe social security pays better than that for many people.

------
eastbayjake
The Cato Institute had a post about this last week: [http://www.cato-
unbound.org/2014/08/04/matt-zwolinski/pragma...](http://www.cato-
unbound.org/2014/08/04/matt-zwolinski/pragmatic-libertarian-case-basic-income-
guarantee)

Their argument for BI is that it sharply reduces rent-seeking behavior by
lobbyists and special interests, which could reduce quite a bit of pork and
wasteful spending. It also gives political cover to remove lots of expensive
middle class entitlements, like the mortgage interest tax deduction.

It would definitely take a massive compromise bill -- probably a
constitutional amendment -- to make sure that entitlement programs are
dismantled at the same time BI is instituted.

~~~
zo1
"expensive middle class entitlements"

It was an incentive created by legislators, so they could increase home-
ownership in their populace. Wow, way to turn a government-legislated
incentivization of middle-class individuals for home-ownership, into an
"entitlement".

~~~
cortesoft
Umm it fits the definition of entitlement exactly:
[http://en.wikipedia.org/wiki/Entitlement](http://en.wikipedia.org/wiki/Entitlement)

It is a benefit (tax credit) given to a specific group (homeowners). Whether
the goal is worthy or the means effective is another question, of course, but
it is CLEARLY an entitlement.

~~~
zo1
Interesting, didn't know that! Still, feels like a lot of the usage of that
word that I come across is pejorative, as per the linked article.

~~~
kasey_junk
What makes you think we shouldn't be applying negative connotations to the
mortgage credit? There is lots of evidence that it has been particularly
harmful and it is a very regressive entitlement (if that's important to you).

~~~
zo1
Well, negative connotation in the sense that those people receiving the
benefit feel entitled to it. I'd disagree with such an implication as I don't
think the tax-credit was requested by those people, but rather given as a
benefit or tax-incentive.

I don't think I've made any comment regarding the harm/benefit of this tax-
credit. Can't say I have a big opinion on it, or have researched it. Why do
you say it's harmful and regressive?

~~~
kasey_junk
I think you'd find the mortgage tax credit is as dangerous to tinker with as
social security politically. That is, no politician would dare try to get rid
of it due to the uproar from their "entitled" constituency.

I say that it is regressive because the bigger your mortgage the bigger your
tax credit (given some small print about AMT etc), which means that people who
qualify for larger loans (read richer people) get a better tax rate.

As far as it being harmful there are some disputed studies about US home
ownership rates being much higher than the "natural" economic rate, which
subsidizes all manner of non-essential middle men (real estate agents,
lawyers, title companies etc) and increases the impact of mortgage rates on
the larger economy.

My personal problem with it is that I've seen estimates that it costs the
government close to half a trillion dollars. This is a very similar number to
Medicaid. Medicaid is constantly being attacked yet the mortgage credit isn't,
when basic health care seems like a better fit for governmental spending to me
than real estate industry subsidies.

~~~
waps
Well, given that they presented this advantage as an incentive to buy a home,
there better be an uproar. Many people based their decision to spend a huge
amount of money on the presence of this benefit.

And of course, what the government won't do is give them a second stab at that
decision after they cancelled their end of the deal. Especially since making
this decision will cause a massive drop in home prices as well, so there's
very good reasons for most people to want out.

The second reason is that removing this entitlement will, for a huge number of
people, effectively be a tax increase of 20, maybe even 30%. Since most people
also have a discretionary spending budget of about 15% of their income, this
will effectively mean they go bankrupt (selling the house won't work as it'll
drop -a lot- in value as a result of the repeal of this credit).

There is no way the banking sector can absorb a 5% drop in house prices, and
this policy sounds like it'll drop them by maybe even 50%.

So no, you can't repeal this without an uproar. There are very valid reasons
for these people to feel entitled.

~~~
eastbayjake
I think your assumption about the tax increase is way off. The deduction is
for the _interest_ paid on a mortgage. Let's assume you buy a $400,000 home
with 20% down and a 30-year loan with a 4.5% interest rate. Because it's a
deduction -- not a tax credit -- your savings in the first year is only about
$6600, and that savings decreases every year after that as interest becomes a
decreasing portion of each payment.

I don't think people are going to avoid homeownership in droves because of
$6600 per year -- especially people who are in the financial position to own a
home. It would, however, remove some of the perverse incentives that make
people buy homes who might otherwise be happy to rent one.

------
aaron-lebo
Basic income is not practical today, at least not in the political sense. The
political climate is in no way configured to do so, and won't be for years.

The Democrats are never going to be okay with removing federal programs (even
if basic income could cover several of them), and the Republicans won't touch
something that would be seen by many as socialism.

I think proponents of BI are ignoring just how radical it is. Basic income is
a massive change. It would more or less completely change our society (or
require our society to completely change in order to even happen). Democrats
and Republicans hardly work together on small issues today, what would cause
them to work on something which threatens both parties in various ways?

~~~
eastbayjake
You don't think millions of constituents would support the "Free $1000 Check
Every Month" bill? Democrats get to claim a victory on income inequality,
Republicans get a victory for cutting spending and government waste. It's the
bureaucrats who administer these massive programs that would be the losers.

~~~
bryanlarsen
I doubt that "free $1000 check every month" would receive any more support
than "free healthcare". And it will be even more complicated than the so-
called ObamaCare by the time it gets to the ballot box.

------
gerbal
Basic income might make it reasonable to eliminate TANF, some portion of SNAP,
and some unemployment, but it doesn't eliminate the core need for Medicare and
Medicaid.

In the basic income scenario outlined, the poor and the elderly will still
need subsidized health insurance (assuming the current employer-provided
health insurance model) or health coverage of some sort.

Social Security is also something of a dicey proposition. While it would be
possible to use basic income to reduce social security benefits, it's role as
a social insurance scheme to provide for the elderly couldn't be substituted
in its entirety by simple basic income. Social security disability and death
benefits would also need some more thought.

~~~
awt
What about allowing people to store wealth in a non-depreciating, attainable,
liquid asset (something besides USD or mutual funds or a home made out of
plywood), and limiting liability for health providers?

~~~
kasey_junk
"non-depreciating, attainable, liquid asset (something besides USD"

What does that even mean?

~~~
zo1
Are you actually confused about the terms, or just trying to be facetious?

~~~
kasey_junk
No, I'm curious what financial instrument meets all those requirements.

------
lutusp
It's true that computers and automation are rapidly eliminating most low-level
jobs, but it doesn't follow that a non-merit-tested basic income is the best
way to deal with this new reality.

Even with an automated workforce, I think there should still be social
incentives, and incentives require merit-based income differentials and some
concept of "earned income".

We've already witnessed the first large-scale social experiment designed to
replace the dog-eat-dog nature of conventional human society, and everyone
knows how that turned out. But doing nothing while most jobs are absorbed by
teams of obedient robots, and expecting society to rearrange itself optimally
with no new ideas, is naive.

This is an open problem, and the solution is not obvious.

~~~
wutbrodo
> Even with an automated workforce, I think there should still be social
> incentives, and incentives require merit-based income differentials and some
> concept of "earned income".

A properly-implemented basic income barely touches this, on the margins. The
majority of social incentives don't lie on the line between starving and
subsisting. I don't see how putting a floor at subsistence level (not even
enough to buy a TV, e.g.) would somehow remove (or even appreciably affect)
the social incentives around getting more money. People want iPods and TVs and
Xboxes and decent cars and bigger houses (both to use and to show off), and
there's no reason a basic income would change that.

------
11thEarlOfMar
Basic Income cannot replace Social Security and Medicare. It can only provide
a floor for it. Same for Welfare.

The intent of basic income is to enable a family of minimum wage earners to
have a much less stressful financial existence: 2 minimum wage jobs
($9.00/hour in California) + 2 adult basic incomes at $12,000 each = $61,440.
By no means a king's ransom, but certainly gives a family of four a fighting
chance to live in a less unsafe place, feed the kids a little better and maybe
take a modest vacation once in a while.

Lower financial stress across the entire country will free people up to focus
more on raising their kids. Many, many social problems subside when families
do better.

~~~
dragonwriter
> Basic Income cannot replace Social Security and Medicare. It can only
> provide a floor for it. Same for Welfare.

It _can_ replace those things. Whether it is _desirable_ is a matter for
debate (but I don't see you make the argument that its not, just asserting
it.)

> The intent of basic income is to enable a family of minimum wage earners to
> have a much less stressful financial existence

I disagree: the intended beneficiaries of Basic Income are not just "minimum
wage earners", further, your calculation of minimum wage + basic income is
misleading since many BI advocates advocate eliminating the minimum wage with
the adoption of BI. (More libertarian and less liberal BI supporters tend to
do so; more liberal and less libertarian supporters tend not to.)

I would say that the intent of BI as a replacement for means-tested welfare is
to (1) increase short-run efficiency but eliminating costs and perverse
incentives associated with means-testing, (2) provide a system which is easier
to scale up as automation reduces the relative demand for labor as compared to
capital, and (3) reduce financial stress _generally_ , and increase labor
market fluidity.

------
golemotron
There are two things that are hardly ever addressed when Basic Income comes
up: 1) What problem is it trying to solve, and 2) what will the social effects
be?

For (1) the thing we hear is that BI will be a way to deal with the increasing
automation of labor and progressive unemployment that it will bring. That's a
decent motivation but we shouldn't delude ourselves into thinking that it will
solve poverty. Whenever people have choices, some will make bad choices. A
cheque for 1K a month can be used wisely or squandered immediately. The net
effect is that the power-law distribution of wealth will not go away.

For (2), it's easy to imagine our future being something like Star Trek where
people don't have to work but elect to. Again, some will and some won't. When
people have a lot of fee time, they can opt for self-enrichment and charitable
work, or they can sit on the couch all day (every day) and play video games,
or they can cause trouble - delinquency/crime. The path people take is really
more influenced by culture than economics. Basic Income will take the issue of
what people do with their time and make it a pressing issue for society.

I'm liberal, but I do buy the conservative argument that work engenders
responsibility. When work is unnecessary, hopefully there's some other social
force that helps us stay healthy as a society. I think that Europe would
handle a transition to BI better than the US would.

------
Havoc
I don't know about practical, but purely from a theoretical point of view I'm
getting a "this is happening" vibe. People can whine and theorize about it as
much as they like but I don't see a path that leads to anything other than
basic income happening...at least in 1st world countries.

~~~
lutusp
The problem with "basic income" is that by definition it's not merit-tested --
it is a guaranteed base income regardless of the recipient's activities and
efforts. You need to understand that this is politically a very controversial
idea, and not just with conservatives.

~~~
streptomycin
Why is that aspect very controversial? It's not like Warren Buffett would
suddenly not be paying tons of taxes. $1k/month is dwarfed by the taxes he
pays.

~~~
dragonwriter
> Why is that aspect very controversial?

Because people are often afraid enough of the "wrong people" getting things
they don't deserve that they are willing to accept the right people _not_
getting things they do deserve to prevent it. ("deserve" here being relative
to the value system of the person whose opinion is at issue, to be clear.)

------
absherwin
This math works because the average person over 65 receives approximately
$24,000 in federal benefits which would be cut in half. There are other groups
who lose but this one is by far the biggest.

------
baddox
My main concern with most articles about basic income, and in fact most
articles about the intersection of economics and politics, is that public
choice theory is almost never satisfactorily addressed.

Looking at raw numbers is very important, and this article seems to do a good
job and make a compelling case. But there is very little mention on the
_internal_ economics of government, and whether such a system is _actually_
feasible in some specific government, given the incentives that apply to
political behavior.

------
patja
Most rational people would agree we would all benefit from a wholesale
scrapping of the current US tax code and restructuring of entitlement
programs. If you thought getting the ACA through the political process was
hard, just think for a moment on the fight all of the existing beneficiaries
and rent-seekers (tax attorneys, H&R Block, etc.) will put up. It is fun to
play what-if with the numbers but given our current oligarchy it is pure
fantasy.

------
lmarinho
I think the best way to make people subservient to their government is to keep
their subsistence dependent on it. There has to be a better solution for this.

Automation might make many goods and services readily available without
requiring extensive labor, but that also means more people will have access to
cheaper goods. Who knows what demands might come up in this new society that
people with low skills might be able to cover.

~~~
scotty79
We depend on government for such a huge range of services by now that
distributing basic income wouldn't be unique leverage the government has over
us.

The last thing any government want's is unrest. An you can bet that going late
on monthly basic income could cause serious unrest.

------
chris_va
While I realize HN loves basic income, it honestly is not a good idea. I would
love to hear people's arguments for it.

Make no mistake, no one wants unemployment, poverty, starvation, poor health,
etc. Like any government program, basic income will alleviate some of these
issues. And in that sense, it sounds great. However, like any government
program, it will create other problems.

People seem to treat basic income like a panacea, as if somehow just giving
people money (as a tax to the rest of society) will somehow solve all of their
problems.

People are not good at spending money. Why don't we give people money instead
of food stamps? Is it because it was politically untenable? No, it was done
because giving people food stamps (actually, now debit cards redeemable at
grocery stores) is significantly more effective than just giving cash at
solving hunger issues.

Basic income, granted, looks great on paper. However, it only provides those
benefits if people are rational and relatively interchangeable, which they are
not.

I didn't even get to the negative incentives it creates, which is a whole
other can of worms. For example, subsidizing income on the lowest level
generally leads directly to price inflation, which is highly regressive. It's
not clear if that, by itself, will cause more problems that this helps.

~~~
dragonwriter
> While I realize HN loves basic income, it honestly is not a good idea. I
> would love to hear people's arguments for it.

You could click the link -- the article here _is_ a set of arguments for it.
And there are usually more posted in every thread on the subject.

> Make no mistake, no one wants unemployment, poverty, starvation, poor
> health, etc.

Actually, plenty of people benefit fromt he existence of these things and the
insecurity they cause in others, so I think the "no one wants" claim is false.

> People seem to treat basic income like a panacea

Never seen this. I've seen people directly address how basic income addresses
particular problems experienced by government programs that exist to address
some of the same problems now. I haven't seen it treated like a panacea.

> Why don't we give people money instead of food stamps? Is it because it was
> politically untenable? No, it was done because giving people food stamps
> (actually, now debit cards redeemable at grocery stores) is significantly
> more effective than just giving cash at solving hunger issues.

Evidence?

> I didn't even get to the negative incentives it creates, which is a whole
> other can of worms.

Basic income eliminates negative incentives inherent in the means-tested
programs it replaces.

> For example, subsidizing income on the lowest level generally leads directly
> to price inflation, which is highly regressive.

Basic income is an across the board increase to income, not a targetted
increase at the lowest levels. Further, the regressive impact of price
inflation is only an accurate description if you assume it occurs
_independent_ of income changes; to be regressive _with_ income changes, the
percentage increase in prices would have to be greater than the percentage
increase in income at the lowest levels.

------
winslow
I must be the only one who thinks basic income is insane.

Let me explain. On paper this sounds great, everyone gets income to cover
living costs (housing, food, basic utilities) in an economy where the
workforce demand is dwindling. However, I personally don't trust my government
(US) to implement this properly without any special niches carved out for
someone. The corruption is rampant and by the time it gets through our
government they will absolutely put loopholes in it or help special interests
groups with something.

My second problem with this is those who mismanage their money. There will
absolutely be people who abuse the system and use this money to not cover
their required expenses and use it for a variety of things they don't need. At
the end of the month if they don't have any money left how will they cover
their necessary expenses?

Everyone keeps looking at basic income as this perfect solution and I just
don't buy it. In a perfect world where the government aren't so corrupted and
incompetent along with people who knew how to properly manage their money I
feel this could work. However, I just don't see this working and it will be
another money sink from our government.

Maybe someone can convince me otherwise.

~~~
aeturnum
I think your objections are reasonable, but miss the point of what basic
income is trying to accomplish. Basic income is a more libertarian answer to
the problem that all people share some basic needs. The success of failure of
the system should considered overall.

I am sure that, if it were implemented, there would be many exceptions and
special cases. I don't agree that all those exceptions or special cases would
be bad or to serve "special interests." EX: severely disabled people may
retain the services they used to receive through discontinued social
assistance programs as it would be unrealistic to support their increased
needs out of the same pool everyone uses (as we've already decided their
increased needs should be supported).

I also expect there would be people who mis-managed the money, just as there
are those who mis-manage the support they receive through the current US
social net.

However, considering how hellishly complex the current systems are, my gut
feeling is that both the problems you outlined above would be reduced. The
straightforward nature of such a program would make it vastly easier for
people to access the services they get for their money.

The question you should really ask is if BI seems like a better answer than
the current system.

P.s. I'm not sure how I feel about BI, but I think your objections aren't the
biggest worry.

~~~
SnowProblem
I'm baffled why any libertarians support basic income. It's basic wealth
redistribution. It's forcing those who work to financially support those who
don't work at threat of jail time.

~~~
TheHydroImpulse
I'm assuming your comment is rhetorical, right?

~~~
SnowProblem
Why would you assume that? I did add the word "any" in case you thought I was
saying libertarians in general support BI.

~~~
TheHydroImpulse
The additional word makes it a lot clearer. We're on the same page.

------
logn
What about just this: for every dollar that is created, 50 cents of it goes to
a basic income fund. Right now, banks and government contractors receive a
disproportionately high amount of the newly printed money.

Also, we need to reform corporate taxation. That would reduce wealth disparity
and ensure stability of the social safety net.

------
shams93
If you look at the militarization of local police to me it seems to be clear
that the ruling class are moving to eventually gun down 3/4 of the human
population. Share the wealth? Hell no! Who needs consumers when you can gun
them down and continue to make a fortune off of artificial financial
instruments.

