
Scrap the Welfare State and Give People Free Money - thejteam
http://reason.com/archives/2013/11/26/scrap-the-welfare-state-give-people-free
======
pinaceae
As a European we are bit further down that path than the US.

I assume most of the readers here are "wealthy", would not need basic
guaranteed income. So let me explain why this is a good idea from a rich man's
perspective.

You give poor people a basic sum of money so they don't climb over the fence
and kill you in your sleep.

That's it.

Behind all the nice language this is what it boils down to. It is paying off
poor people to stop pestering you. Chump change for security. Europe learned
it the hard way through numerous revolutions and war - keep the lower classes
happy and _everyone_ benefits. Social housing, healthcare, the lower rungs of
Maslow's pyramid.

The Romans called it panem et circenses. Not a new idea. Focus on the panem.
Hungry people do desperate things.

Want to see how society looks like that does not get that? Brazil. Mexico.
Have a nice house in Sao Paulo or Mexico City? Then enjoy your 3m high wall
with barbed wire around it.

Sharing a bit of wealth means personal security for you. You don't get robbed.
You don't get infected by shit because no one gets shots (yes, you want basic
healthcare for all). You have a nice large market to sell shit to, so job
security (the basic Henry Ford insight).

So there you have it, even if you hate poor people there is good reason to
give them some money.

~~~
ctdonath
_You give poor people a basic sum of money so they don 't climb over the fence
and kill you in your sleep._

Once you've established a "protection money" system, establishing their
"right" to your money & property, they are now incentivized to demand - and
take - more. Panem et circenses is the last stage of polite society; the cost
eventually becomes unbearable as fewer work and more expect comfort & leisure
for nothing.

You give poor people money because it's generosity, kindness and help -
_freely given as your choice_. The recipient receives knowing the charity is
out of goodness, and is coupled to an expectation that the recipient will make
a respectable effort to overcome poverty.

As an American, we ensure people don't climb over the fence and kill us in our
sleep because (A) the firepower many have within 3 steps of bed will give
potential attackers pause, and (B) the local police will apprehend surviving
thugs. We also strive to reduce legal barriers to productivity, promoting
liberty to earn an honest wage for honest work (rather than creating high cost
of entry with a flurry of stifling regulations). Between severe disincentives
to crime, coupled with easy access to rewarding opportunity, we don't have to
pay people to not kill us.

~~~
barrkel
Ideological response: Police are the thugs that rich people buy to defend
themselves from the poor.

Actually, basic income / negative income tax is a very good idea, much better
than welfare schemes of almost all kinds - it has almost no administration
overhead. Charity, like you advocate, has huge amounts of overhead. Milton
Friedman was an advocate, for example, and he was hardly a socialist.

And the idea that charity comes from goodness? That is utter bullshit. It's
95% social signalling. Altruism doesn't exist.

~~~
ctdonath
Police are assigned to serve all, protecting poor as well.

If welfare _is_ going to be provided to such a large scale as we do, then yes
I'd rather the BI approach just to keep things simple and efficient - and to
reveal the veiled problems a complex welfare system conceals.

And no, charity is not utter bullshit. What I do isn't signaling anything to
anyone, as I keep it as low-profile & anonymous as possible. Altruism exists,
and the nature of it means you don't know much about that of others precisely
because its nature is to be low-profile & anonymous.

~~~
evacuationdrill
Come to Houston, where most of the departments operating here earn lots of
income from neighborhoods. Your HOA pays the departments to guarantee periodic
patrols or even guarantee an officer present somewhere inside 24/7.

This is not the same as off-duty police being hired; they pay the department
toward officer salaries. Just because they're sworn to protect doesn't mean
they can't prefer to protect certain areas.

------
drcube
I've been saying this for years now. Give people the freedom to make their own
economic decisions without the fate of crushing poverty over their heads. Give
them the financial breathing room to learn a new skill, start a business, or
simply find a better job than the one they currently have.

Basically, the freedom to take risks. Rich people have been telling us for
decades that is what they bring to the table. Risk. That's how jobs,
innovation, progress and wealth are created. Let's see how it works when
everyone has that opportunity.

And if it decreases crime, disease, teen pregnancy, and the dropout rate,
that's just icing on the cake.

~~~
peterdundi
"Give people the freedom to make their own economic decisions"

Why should they be free to make their own decision about how they spend MY
money?

~~~
adekok
This seems to me a typical US response. Let me give you a perspective from the
rest of the world. I've lived for years in multiple countries on multiple
continents, so I'm not just talking out my backside.

In the rest of the world, the poor people vote for health care, welfare, and
unemployment insurance. This is because they want that safety for themselves
if something goes wrong. They recognize that these programs are largely
_insurance_. They pay into them in the expectation that most of the time
nothing goes wrong, and they're not getting their moneys worth.

But when something does go wrong, the insurance is there to help them. In that
situation, they get far more out of it than they put in.

Their decision to pay insurance is a rational one, based on cost/benefit
analysis. It's the same as your decision to buy life insurance, or fire
insurance on your house. (Car insurance is usually mandated, so I'll ignore
that...)

Sure, there are scammers. But the scammers of these programs are individuals.
Their impact is limited. The scams done by corporations, and people with the
right connections far outweigh the scams done by Joe Average on welfare.

In the US, the poor people vote for no health care, no welfare, and no
unemployment benefits. They also vote for lower taxes on the rich (corporate,
inheritance, etc.). They claim this attitude is because they don't want idiots
on welfare spending MY money.

You might be well intentioned, but the rest of the world thinks your approach
is crazy. Not "Gosh, that's crazy!". But "We, the jury, find the defendant not
guilty by reason of mental defect".

The disparity between rich and poor in the US has grown enormously in the past
20 years. And it's all because the average joe has bought a line of horse
twaddle about "independence" and "welfare mom living off of MY money".

The rich people who've sold you that crap are laughing all the way to the
bank. And Joe Average is left wondering why he's doing everything he's told...
and is still poorer than his parents.

~~~
yummyfajitas
These programs are not largely insurance. People don't pay into them
proportionally to their actuarial costs.

I.e., the guy who drifts between jobs, getting fired every few months doesn't
pay more for unemployment insurance than the guy who has been stably employed
for the past 10 years.

 _The disparity between rich and poor in the US has grown enormously in the
past 20 years. And it 's all because the average joe has bought a line _

Nope. The disparity in the US has moved more or less lockstep with the
disparity in the rest of the world (with one exception in 1986 when a change
in tax law caused income to be shifted from corporate to individual returns).
If policy caused it, it's a policy that basically every nation has adopted.

[http://www.scottwinship.com/1/post/2011/03/what-would-it-
mea...](http://www.scottwinship.com/1/post/2011/03/what-would-it-mean-for-
theories-of-us-income-inequality-growth-if-the-us-experience-has-been-similar-
to-that-everywhere-else.html)

~~~
judk
Actuarial cost is a function of a population, not an individual. It isn't
obvious that a finer-grained breakdown is superior to nationwide "open
enrollment"

~~~
yummyfajitas
The actuarial cost of any event is integral( cost x P(cost) dP ). There is no
population involved.

------
saosebastiao

        Some libertarians may not be fans of a guaranteed or basic income because such a system would, they argue, disincentivize work. Murray believes that his surtax scheme would incentivize work after someone began earning over $25,000. 
    

I'm fairly libertarian and also agree with the concept of a basic income or
negative income tax, but phrases like this are very dangerous. It would only
begin incentivizing work after you make 25k? And what about people like me
that took 28 years to get to that point? I would have never worked as hard as
I did to finish college if I didn't have the threat of perpetual poverty and
possibly homelessness hanging over my head. When I was 22, a $25k income with
no work attached would have been the party of a lifetime, and I would have
never tried going to college, let alone struggle (albeit mostly with ADHD, not
college itself) to finish.

There is a reason people get a little squeamish about proposals to just give
poor people money...we all know what it does to us. You can't just go
proposing something like this and throw out a magic number ($25k) and an
assertion of how people will react to the incentive. You have to be much more
careful and empirical than that.

~~~
kiba
_It would only begin incentivizing work after you make 25k? And what about
people like me that took 28 years to get to that point?_

Incentive to work is only one issue. Another is that people don't want to lose
their job because it would mean that they die. That mean technological
improvements are more likely to be opposed by workers. With basic income,
programmers and other job destroyers will be able to automate at will, and
everyone will benefit.

 _I would have never worked as hard as I did to finish college if I didn 't
have the threat of perpetual poverty and possibly homelessness hanging over my
head._

Then find a way to incentivize yourself to work. I never finished college, but
now I am pretty active as a self taught learner and actually care more about
learning than most college students. It has been a while since I didn't study
and learn something new everyday.

The threat of perpetual poverty is like the threat of dying in wars. Yes, it
propel you forward, but it was not a good incentive.

~~~
saosebastiao
I'm not saying people should have looming threats of poverty in order to work.
I'm saying that having too much too soon is a disincentive to self
improvement.

I've wanted to do what I currently do for a very long time, but there was no
entrance to it without college, which was something I struggled with
immensely. A $10k income with some pell grants would have meant food and
health care while working my way through college (which I achieved by being a
truck driver on weekends), but a $25k income would have meant "fuck it, I'm
just gonna do nothing".

Solutions like "Then find a way to incentivize yourself to work" might be good
advice, but not a good policy.

------
3pt14159
As robots and AI replace humans a Basic Income combined with geolibertarian
style'd property and resource taxes are the only sane way to have humans
compete with machines in the marketplace. Otherwise we're just born landless.
Slaves to the land and robot owners who came before us bequeathed with
immortality and inheritance of the former economy.

Private property was necessary for a time. It ensured long term investment,
but if we don't switch models soon social unrest will be the limiting factor
on scientific advancement and growth.

------
ataggart
Whatever the economic effect, I have a hard time imagining the political class
giving up the power that comes from being the middle men between dispersed
costs and concentrated benefits.

~~~
ams6110
I have two concerns: the first is basically the one you identified: welfare
and similar programs are less about helping people and more about keeping a
large voting block in a state of dependency. I'm not sure the alternative of
basic income changes that, it might actually increase it since more people
would be getting basic income than are currently getting welfare and other
forms of assistance.

Any program which encourages people to be dependent on government rather than
themselves is problematic in my view (obviously with exceptions for those with
disabilites that make this impossible).

My other concern is that it's simply inflationary. Giving every adult a
$34,000 basic income (the amount proposed here) would mean a married couple
would be bringing in $68,000 a year doing NOTHING AT ALL productive. There's
no getting around economics: money is an abstraction of productivity. To the
extent you introduce money into the economy that was not created by
productivity, you simply reduce its value. So what would happen is that the
basic income would become the new zero line. It represents the value of zero
productive work. Wages and prices would simply inflate so that a person having
only basic income would be as impoverished as someone having zero income is
today.

~~~
jrs99
$34,000 is foolish when you can do a pilot program for $12K per year, or even
$6 K per year to simply see what happens.

There's no other way around it. You need to give people money in a more
automatized world.

wages and prices may increase, but money will still be more evenly distributed
than it was before. As in the person that had nothing will now be able to get
something even if prices increase. That is what's important. We simply can't
leave these people behind because a robot will eventually do what they can do
24 hours per day without getting tired and more accurately than any human on
earth.

------
peterdundi
This is unpopular here, but I really believe that if you can't provide for
yourself financially there is something seriously wrong with you, and I don't
think treating you like a child is unreasonable. Beyond washing and feeding
yourself, getting an income is pretty much adulthood 101.

~~~
sp332
Then why does unemployment fluctuate so much? Do you think the population just
forgets how to make money occasionally?

~~~
peterdundi
When unemployment fluctuates the bar for earning money is fluctuating. If
you're the kind of person who is near that bar you need to take a good hard
look at yourself.

~~~
sp332
Something external changed, and suddenly there's a problem with me? I need to
look at myself, because someone else raised a bar?

I think your point is bullshit. It's not like people are capable of making
money when the mill shuts down. There is literally no money left in the town
then.

~~~
simplemath
His point IS bullshit - if there is one to be gleaned at all. Its a classic
cautionary tale in myopic argumentation - He's doing OK, so everyone else
should be too, and if they aren't they aren't trying hard enough. Externality-
free projection.

------
brockers
The author is a little confused about the history of Libertarian thought on
this issue. A minimum basic income (MBI) is NOT a social progressive concept
first thought up by western social democrats but was originally a fundamental
tenant of a flat tax system. Something Libertarian's have been arguing in
favor of for a long time.

The basic design is simple. You give every person a single dollar amount as a
MBI and then ALL income (besides the MBI) is taxed at a flat rate of X
percent. For example (and just using simple numbers for maths sake) pretend
that the MBI is $10,000 and the tax rate is 10%. Everyone making LESS than
$100,000 would actually receive a subsidy because their overall paid tax would
be less than the $10,000 they received from the MBI. Everyone over $100,000
would pay a progressively higher tax approaching 20%. The results are:

1) A tax rate that is perfectly progressive providing a MBI and fully scaled
real tax rate for everyone. 2) Increased income has no tax disincentives (your
tax rate doesn't change because you move into a higher income.) 3) Simplifies
that tax code dramatically (which would also increase revenue.) 4) Doesn't
artificially encourage capital gains manipulation by large income holders. 5)
Removes government manipulation of social policy by giving them ONLY two
number to play with... MBI and tax rate! 6) Finally, it provides a real
mechanism for everybody to feel the effects of tax rate changes. Making it
MORE responsive to economic factors like income inequality. For example, if
90% of people would get more money in their pocket by increasing the MBI to
$15,000 while also increasing the tax rate to 30%... the likelihood of that
change actually passing through Congress is dramatically higher that it
currently is because such a system is transparent to your own pocketbook.

ALL of these effects without negatively affecting market freedom. Again, we
see Libertarian thought is both MORE "fair" AND more compassionate.

~~~
dragonwriter
> A tax rate that is perfectly progressive

No, its flat. A flat tax is not progressive. The point of a progressive tax
system is that the marginal impact is greater at higher income levels.

> Increased income has no tax disincentives (your tax rate doesn't change
> because you move into a higher income.)

In a progressive income tax system where the top marginal rate is <100%, there
is always a positive incentive to higher income (well, so long as the marginal
utility of additional income is non-zero; there's considerable evidence that
for most people, there is some level where this assumption doesn't hold, but
that isn't a tax disincentive, and tax rates don't really have any effect on
it, since they are a multiplicative rather than additive effect on utility,
they never take a nonzero utility to zero.)

> Simplifies that tax code dramatically (which would also increase revenue.)

Only if the flat rate is set very high compared to the existing rates paid by
most of the population.

> 4) Doesn't artificially encourage capital gains manipulation by large income
> holders.

If this includes taxing capital gains _as_ income, then this is true, though
many flat tax proposals I've seen haven't taken that step. I'd agree that that
choice is desirable independently any other changes (and it really has nothing
to do with flat vs. progressive taxes or basic income.)

> 5) Removes government manipulation of social policy by giving them ONLY two
> number to play with... MBI and tax rate!

To do this, government has to alter the definition of taxable income (as well
as many other things.) This does not eliminate their ability to make similar
decisions in the future, so it doesn't remove any levers. (And, of course,
government intervenes in social policy through things other than direct
benefit programs and tax policy, so even fixing those wouldn't have the effect
described here.)

Generally, I find "autopilot" arguments of the form "once we get government to
decide X, government won't be able to decide other things incompatible with X
in the future" to be ludicrous.

> 6) Finally, it provides a real mechanism for everybody to feel the effects
> of tax rate changes.

I'm not sure this makes any sense. Everybody feels the effect of rate changes
now, but the utility effect of rate changes is different depending on
circumstances. In a flat tax system with MBI, the same thing is true.

> ALL of these effects without negatively affecting market freedom.

Define "market freedom".

~~~
brockers
> No, its flat. A flat tax is not progressive. The point of a progressive tax
> system is that the marginal impact is greater at higher income levels.

Marginal impact is greater. Using the numbers I listed above your marginal tax
rate at a income of $10k/year is NEGATIVE 100%, at an income of $100k/year it
would be 0%, at $500k/year it would be 8%, at $1m/year it would be 9%...
asymptotic increasing towards 10%.

> ...there is always a positive incentive to higher income

Sorry, you are correct. I should have said there is increased income doesn't
increase disincentives.

> Only if the flat rate is set very high compared to the existing rates paid
> by most of the population.

The point wasn't being made on total net revenue but on cost per dollar
collected due to compliance enforcement and bureaucratic overhead. Regardless
the flat tax rate CAN be set very high as long as there is a corresponding
offset in the MBI. Ultimately the ACTUAL rate people pay could be similar to
the amount they currently pay but normalized over the population as a whole.

> If this includes taxing capital gains as income

> To do this, government has to alter the definition of taxable income

Which is why I specifically mentioned ALL income.

> This does not eliminate their ability to make similar decisions in the
> future

This is very true, and probably the strongest argument you made in your post.
Hopefully such exemptions would "stand out" with such a simplified tax
structure but any government that exists will continually work to expand it's
power at the expense of the governed.

> Everybody feels the effect of rate changes now

Everybody does NOT feel the effects of a rate change as often lower tax rates
are unmodified while higher tax rates are adjusted.

> Define "market freedom".

Sorry, "market freedom" is both to general and arguable incorrectly used in
this case. I should have said it equalizes market manipulation by the
government.

~~~
dragonwriter
> Marginal impact is greater. Using the numbers I listed above your marginal
> tax rate at a income of $10k/year is NEGATIVE 100%

You seem to be trying to count the MBI _both_ as tax-basis income _and_ as
negative tax when computing marginal rates. This is obviously improper,
because you wouldn't consider _positive_ taxes as part of the tax-basis
income.

If you consider your MBI as negative tax and not income, then at $0 income
(excluding, for the moment, negative pre-MBI income, which may or may not be
possible, depending on how you define "income"), the _total_ tax rate is
negative infinity, but marginal tax rate is +10%, and at $100K the marginal
rate is +10%, and at 500K the marginal rate it is +10%, and at $1 Trillion the
marginal rate is +10%. Its perfectly flat.

If you consider it as tax-basis income but not negative tax, then there is no
income below 10K, and from 10K on the marginal rate is still a flat 10%.

You can't count the inverse of the amount paid in tax as part of the taxed
income to compute marginal rates.

------
philwelch
One question: has anyone else ever done the math on this?

Let's suppose we have a basic income of $1,000 per month per citizen. This is
barely enough to get by in someplace like eastern Washington and not enough to
get by in someplace like Seattle but it's a nice round number so let's go with
it.

The US population is about 300 million. But let's assume only adult citizens
receive basic income. If you want children you have to provide for them
yourself. How many adult US citizens are there? Well, Barack Obama won 51.1%
of the popular vote in 2012 with about 66 million votes with 58% turnout. By
my calculations that's a voting-eligible population of about 220 million.

220 million people receiving 12,000 a year is around 2.6 trillion dollars.
Total federal tax revenue is around 2.8 trillion dollars, and total
expenditures are around 3.5 trillion. You think you can make up the difference
by eliminating other entitlements? You can't. Look it up. Basic income +
defense + transportation already exceeds the current budget, with nothing left
over for courts, embassies, Medicare, the space program, or the Coast Guard.
And that's with a particularly low basic income that isn't really enough.

So you're left with having to raise taxes. Fine, you might say, just tax the
rich--except even if you subtract out a lot of entitlements to close the
budget gap, including social security, you still have to raise maybe an extra
trillion dollars in tax revenue just to keep a comparable deficit.

The only way to really make basic income work is if it's effectively means
tested. One way of doing this might be to say: if you get paid 72,000 a year,
your salary drops to 60,000 and the government taxes your employer for the
12,000 that you receive in basic income; either that or you just don't receive
basic income anymore, it's mathematically equivalent. But that is more of a
guaranteed minimum income than a basic income anymore, and it's politically
that much more difficult.

~~~
lingoberry
Forgive me if I'm wrong, but wouldn't basic income also increase the tax
revenues from goods and services, and by creating more jobs because of the
increased buying power of the poor? Especially since close to 100% of the
basic income money will continue to circulate in the economy. Give Bill Gates
a trillion dollars though and there's zero tax revenue on that.

~~~
twoodfin
_Give Bill Gates a trillion dollars though and there 's zero tax revenue on
that._

Obviously I'm not advocating giving $1T to Bill Gates, but this is a
fundamental misunderstanding that gets repeated over and over again. Rich
people do not keep their money under their mattresses. Much of it they keep in
a variety of financial instruments, most commonly stocks and bonds. Sale of
stock is how many companies finance their operations, which includes, among
other things, hiring people who pay taxes. Bonds are how corporations and
governments fund things like building factories, roads and schools.

Even if Bill just kept it in the bank, the bank now has more money to lend at
easier terms to businesses needing capital.

There is a serious economic study and debate about how much of a "multiplier"
effect you get from handing money to a poor person vs. to a rich person. It
wouldn't surprise me if it were higher for the poor person, but it's surely
not 0 for the rich person.

~~~
lingoberry
Good point.

------
Roboprog
How about the idea of actually _hiring_ people, rather than handing out money?
As in, the employer of last resort hires people to clean and fix roads and
parks, etc. Or perhaps in some cases, being paid to go to school or doing
basic research in fields deemed to be relevant at the time? (even if it means
you do research for a couple of years for low pay, then bail out)

There are enough things in the commons that need doing, I can't see just
giving the money away to the able bodied/minded.

What's wrong with using tax money to approach 100% employment, and if you want
a larger salary, get a private job? (as for the more grungy private jobs, if
they can't find people to do them for $MIN wage, maybe they should up the
automation or fold, in some cases)

Note that I am NOT advocating government ownership / communism, just basic
Keynesian spending directed at useful activity, with the goal to keep
unemployment near 0%. I suppose that in itself could be a nightmare for some
corporations, but screw 'em. Treat people w/ dignity, or they can/will work
elsewhere. (at least in the fantasy world in my head :-))

Recapping some other comments in this thread:

"Money for nothing" is very likely to cause inflation. So would full
employment, but perhaps actually having something of value produced by the
employed would offset that some?

Not many people would be satisfied sitting around doing nothing all day. Even
in high school, most people got a bit bored after the end of summer break.

~~~
venomsnake
Be careful. You are moving into Keynes heresy territory. The imperial
inquisition (aka the very serious people) may want to have a word with you.

~~~
Roboprog
Am I the only one who caught the part about the regressive tax on the middle
class ($25 - $50 K income range) to pay for the hand out???

Gotta love uncle Milty (Friedman) and his boys.

~~~
streptomycin
Probably. Friedman's negative income tax proposal was the opposite of
regressive.

~~~
Roboprog
Quote:

It is important to point out that under Murray’s proposal, which is outlined
fully in his book In Our Hands: A Plan To Replace The Welfare State, after
someone’s total annual income reached $25,000 a 20 percent surtax tax would be
imposed on “incremental earned income,” capped at $5,000 once someone earns
$50,000 a year.

OK, not uncle Milty, some other libertarian. Still, a tax that _stops_ at $50K
is hard to call something other than regressive.

------
hga
George McGovern lost to Richard Nixon in the 1972 presidential election in
part due to his "demogrant" proposal to give $1,000, $5,600 in 2013 dollars,
to every US citizen.

In my memory, the political ads against it were only exceeded in impact with
the ones about his proposed gutting of our military (had toy soldiers, ships,
etc. on maps with a hand sweeping away the percentage he proposed to cut; this
did not do well in a period when Cold War was very hot).

------
motters
Having been in the welfare system at various points in my life I can easily
imagine that the bureaucracy must be expensive to upkeep. There are numerous
complex rules, all of which need to be checked and double checked at regular
intervals.

A basic minimum income would at a stroke sweep a way a large army of box-
ticking officials and end the pernicious moralising and absurd punishments for
not adhering precisely to whimsical rules.

------
Kiro
Can someone tell me why basic income won't just lead to inflation? Everyone
gets more money which drives up the prices until the gain is negligible.

~~~
gnaritas
Everyone doesn't get more money, the money is just distributed differently.
The rich would be paying in much more than they get back in basic income. This
doesn't change the money supply, just the distribution.

~~~
Domenic_S
Right, but cost of basics would increase. If you sell bread, and you know that
everyone now has $xxK basic income, why would you not increase the price of
bread?

~~~
dragonwriter
> If you sell bread, and you know that everyone now has $xxK basic income, why
> would you not increase the price of bread?

If you are a monopoly, of course you would. That's called a monopoly rent --
and why, in a supply monopoly, the demand curve effectively sets prices.

If you aren't a monopoly, you won't because competitors (either existing or
new entrants) will undercut your prices until the prices are dropped to the
economic cost of production.

~~~
Domenic_S
That isn't how pricing works. Your competitors would _raise_ prices, not lower
them.

Either way there are only like 3 players in the "basics" market anyway so
we're closer to a monopoly as it is.

~~~
dragonwriter
> That isn't how pricing works.

Its how pricing works in a competitive market where even a loose approximation
of rationality applies.

> Your competitors would raise prices, not lower them.

"Lower" relative to yours (or compared to incumbents, in the case of new
entrants.)

> Either way there are only like 3 players in the "basics" market anyway so
> we're closer to a monopoly as it is.

To the extent that the absence of a competitive market in basics is a problem,
its a problem independently of basic income and needs to be addressed whether
or not a basic income is adopted.

------
3am
And when they spend their money stupidly and don't have enough money for
health care or food, we let them die on the street, right?

Or we let private charities cover the gap. But when they don't, we let them
die on the street?

And if we don't let them die on the street, we find ourselves back where we
started, in need of a social insurance safety net for basic necessities.

~~~
streptomycin
We have the same problem today. For instance, food stamps can be sold/wasted,
and not everyone who needs them signs up.

~~~
Domenic_S
Right, so why bother incurring more cost for the same outcome? It's like
refactoring your code for speed and ignoring the DDoS that's bringing your app
down in the first place.

~~~
streptomycin
Because basic income isn't just "keep everything exactly the same, but it's
more expensive". There's more to it than that. Nobody has ever argued for
basic income by saying it'll fix only the problem you stated (irresponsible
people dying on the street).

------
carbocation
How would minimum basic income free us from a welfare state?

What happens when your $50,000 in medical bills is greater than your $27,000
in annual income (or whatever it happens to be), and you elected not to
purchase insurance with your money? Serious question, not meant at a dig
against this proposal, because I am genuinely curious as to how it would be
handled.

~~~
rwl
Yes, I have a similar question. One of the major reasons to have social
programs that buy things like health insurance is that governments have a lot
more bargaining power than individuals (up to and including the legal
authority to set price caps). In the case of healthcare, governments can get
the same coverage and care much cheaper per capita than individuals could if
they purchased it on their own. Giving individuals a basic income does not
give them this bargaining power, so doesn't that mean that either (a) there
will still be a need for social welfare programs for things like healthcare,
even with the basic income; or (b) the basic income level must be much higher
per capita than what the government would spend on these programs? I think I
am probably missing something here, so I'd appreciate it if someone would
explain this.

~~~
dragonwriter
Consider the ACA model (even minus the subsidy aspect), which uses (1)
purchase mandates, (2) minimum standards, and (3) state exchanges through
which private insurance can be purchased.

This applies most of the the large-purchaser effect of a social program, but
isn't a traditional social benefit program (sure, the actual ACA, which has
subsidies for some purchasers, includes a traditional social benefit program
as a component, but there is no reason that the rest couldn't be maintained
with similar benefits without the subsidy in a BI system.)

~~~
rwl
> This applies most of the the large-purchaser effect of a social program...

Does it, though? That's what I'm wondering. Is there any evidence that the
model followed by the Affordable Care Act is not significantly more expensive
per capita than a single-payer, "Medicare for all" kind of system?

~~~
dragonwriter
Well, there's the large-purchaser effect when the purchased good is privately-
offered health insurance, and the large purchaser effect when the purchased
good is actually health care _services_. Aside from the effects of the non-
discrimination requirements which shift costs from the older and less healthy
to the young and healthy, the ACA model increases the number of people that
can benefit from large-purchaser group rates on insurance -- its almost
certainly less efficient than single-payer overall still (as, for that matter
is Medicare, which hasn't been single payer for decades, due to Risk HMO /
Part C / Medicare Advantage plans, which are actually make it very similar in
model to the ACA except with a public option.)

------
beat
It's nice to see Reason, the voice of mainstream American libertarianism,
getting behind this idea. I think it's possible to win over significant
elements of the left as well (although you'd probably have to fight labor and
others that benefit from the current political structure). I've thought for a
while that a libertarian/liberal alliance makes far more sense and could shake
the American political system far more effectively than the current structure
where the libertarians are unhappy puppets of the Republicans. This is the
issue that could make it work.

------
prostoalex
Do the "welfare state" programs include Medicare and Medicaid? Otherwise $3
trillion spend ($10,000 x 30,000,000 people) is pretty close to US budget
expenditures today, but that figure includes all healthcare, defense and bond
interest payments.

[http://www.heritage.org/research/reports/2013/08/federal-
spe...](http://www.heritage.org/research/reports/2013/08/federal-spending-by-
the-numbers-2013)

It's probably an affordable program at $1,000 a year, but at that level, is it
going to make a difference?

~~~
ctdonath
The article references $10,000/yr BGI for all over 21. Thats some
$2,400,000,000,000 which is 15% of USA GDP.

~~~
prostoalex
From that same link the federal budget revenues for 2012 were at
$2,501,000,000,000. Unless there's a plan to drastically increase those
revenues, cutting a billion of overhead costs here and a few billion there
won't help.

------
ALee
Three interesting pieces of data that help this discussion:

1) To combat extreme poverty, a lot of great studies show that giving direct
cash is better than giving non-profit services.
[http://www.economist.com/news/international/21588385-giving-...](http://www.economist.com/news/international/21588385-giving-
money-directly-poor-people-works-surprisingly-well-it-cannot-deal)

2) Instead of expanding the welfare state, it's probably better that we expand
the Earned Income Tax Credit (EITC) which has HUGE support on both sides of
the aisle. It was first created by Milton Friedman and is one of the only
things that is a policy that we predicted would be successful and became
hugely successful. The issue is that each party in the United States has found
that public opinion polling finds that "SNAP" or other parts of the federal
government are hugely popular compared to the wonky sounding EITC.

3) Some studies also show that despite poverty, human beings will also forgo
basic necessities (as determined by the state) and buy things like
smartphones, text messaging plans, etc.

All in all, really, what we should be doing is likely cash infusions to the
extremely poor, expanding EITC (which somewhat supports the article), and
keeping the important parts of the state alive, e.g. healthy food, early
childhood pre-school, etc.

------
Aloha
We're doing this now one way or another, I mean in terms of dollars spent.

The problem is, its 14+ different programs doing it - if we make ONE program,
we've just cut how many administrators and bureaucrats out of the loop saving
however many dollars in overhead - plus all sorts of different infrastructure
systems to administer and pay it all.

It's logical common sense this program would work more cheaply (and possibly
better) just thru overhead savings. Means tested welfare is wasteful.

------
Retric
I think a basic income is a decent idea but 583$ a month aka 10k - 3k for
heath insurance seems rather low to replace things like disability checks
especially if your removing all benefits for children. It's also not goig to
satisfy people on social security who are getting checks for as much as 3,000$
a month.

~~~
megaman821
I think this would have to be combined with universal healthcare. If basic
income is enough to live on barring any medical issues, then universal
healthcare would take care of the medical issues part.

As for social security, it would have to be slowly phased out. The people on
it now and the still working have been paying into the system, and should at
least get there money back plus interest.

~~~
jrs99
universal health care is coming no matter what. The best governments will
figure out a way to provide that, and if we want to stay competitive, that's
what we'll have to do.

------
maaku
"Give people enough that they could do anything. But not so much that they can
do nothing."

------
nova
Although I am not entirely convinced (what to do with immigrants, in
particular) I believe this could be a good idea.

We should judge this from a pragmatic, not ideological, viewpoint. It may not
be the ideal libertarian society, but it could easily be better than the
current one, where we are _already_ paying an insanely high amount of taxes
which are in great part wasted.

But I don't see its application without some huge political change, as
politicians would be most unwilling to give up the power they now yield. Let
me share a well known Spanish saying:

[http://en.wiktionary.org/wiki/quien_parte_y_reparte_se_lleva...](http://en.wiktionary.org/wiki/quien_parte_y_reparte_se_lleva_la_mejor_parte)

------
wallawe
Until the point where we decide that <$1000 a month is inhumane. "Who could
live off of that?" says the next politician in line. "If I'm elected, you get
$2,000 a month." Why not provide everyone with $5k a month. I think that is a
reasonable amount to lift anyone out of poverty. That seems fair, right?

The problem is, in essence, all you are doing is disincentivizing one person
to work by paying them with another person who has chosen to work. Money is
the ultimate incentive. Not to mentioned the effects on the overall economy.
What do you think happens when everyone has more money to spend? Prices go up,
and your 5k/month becomes worth what 2k was a few years ago.

~~~
rprospero
Not everyone will have more money to spend. The proposal isn't based on
printing more money, but shifting it around through taxes. In fact, it can
lead to deflation.

Assume that Alice has a million dollars and Bob has nothing. Eve sells
pumpkins. She's currently charging $1000 per pumpkin, which cost her $100 to
grow. She makes $900 profit.

Now, we add the minimum income proposal. Alice is taxed $900 and this $900 is
given to Bob. Even would then lower her price to $900. Bob is better offer,
since he now has a pumpkin. Eve is better off, as she made $1600 in profit, as
opposed to her old 900. Alice is out $800 dollars compared to the old system,
but that's less than the $900 she was taxed.

Of course, this was just an example and there's no guarantee that it would go
down this way. On the other hand, there's no evidence that it must head down
the inflation road, either.

------
protomyth
I guess I'm cool with it but I really wish it was scaled with income (like
every $2 earned decrease payment by $1) and paid daily M-F.

I do worry about politicians buying votes by promising more money each
election. There are some fairly hard solutions, but they go against our
current political tradition. I've heard a means testing for voting saying that
if you take more money than you pay, you are ineligible to vote or sit on a
jury.

[edit] I assume that all the other programs would be removed including student
loans, unemployment, minimum wage, welfare, etc.

------
phamilton
As someone who lived on $800/month (rent was $235 for my share), I'm wondering
what would have happened if all of us had 3x that amount to live on each
month. I imagine rent would have gone up substantially as would other expenses
if it was understood that we could afford double or triple that amount.

My guess is that the people barely making ends meet on a minimum wage job
would barely make ends meet on a basic income + minimum wage job, regardless
of actual amounts. Is anyone familiar enough with the economists arguments to
explain this?

------
nraynaud
There is something I would like to point out: the State is the only
institution that can work at scale without having to extract benefits. It's
the only thing that can get the economies of scale without having to pay the
shareholders, it just has to break even. A State insurance is a quite
different beast from a private insurance on this aspect for example. So giving
money for people to buy a private insurance, or having the state running the
insurance is very different.

------
dreamdu5t
So, how do you propose to do this without having me pay more than the 25% of
my income I already pay in taxes?

As it is I'd rather spend my tax bill on my sick mother, rather than to some
person I've never met to do whatever he wishes with.

Let the people proposing the basic income be the first to pay into it - to the
maximum extent possible. The napkin math doesn't add up even for measly
amounts of income.

------
JJ216
This is Switzerland subtly dumping money into their economy in an effort to
devalue the CHF; they're pretty damn desperate, not hypers progressive. And it
would never work in the US because we have a strong belief in paternalism as
state policy in regard to welfare...the government simply knows better how to
spend money than a poor person ever could...

------
pkulak
Related: [http://www.npr.org/blogs/money/2013/10/25/240590433/what-
hap...](http://www.npr.org/blogs/money/2013/10/25/240590433/what-happens-when-
you-just-give-money-to-poor-people)

------
jl6
We talk about the disincentive to work. But do we actually need that much work
doing? Are there actually jobs for everyone? Seems like the main problem a
basic income scheme might cause is simply overpopulation.

------
strlen
I see a lot of comments here talking about unfairness of this system, about
how it would mean less motivation, etc... and general comments about wealth
redistribution.

First, this program would not create additional welfare dependants. Instead,
it would transfer SNAP recepients, able individuals living on social security
disability payments
([http://thelastpsychiatrist.com/2011/09/how_to_be_mean_to_you...](http://thelastpsychiatrist.com/2011/09/how_to_be_mean_to_your_kids.html)),
to a system that is market-based, less expensive, and (relative to the current
system) creates incentives to join and/or stay in the labour force (you don't
lose eligibility for this system the moment you get a job).

Second, overall welfare programs for the poor do not cost Americans nearly as
much as entitlements for the middle classes (medicare, ACA, social security,
etc...). So if you're a doctrinaire libertarian/conservative who is unhappy
that _any_ taxation/wealth transfer exist, then you should work towards
eliminating these programs before going after SNAP, ACA, or opposing reform
like this.

There's been multiple structural shifts over the last century: the second
industrial revolution, de-industrialization, and now job-less recoveries (see
Tyler Cowen's "The Average is Over" and "Great Stagnation" for discussion of
the later).

As nearly all jobs work becomes knowledge work (as many have -- e.g., move to
CNC for metal and wood working), each technology change means a bulk of
technical knowledge becomes obsolete. This leads to a bimodal employment
structure: those with the right technological knowledge (as well as those
at/perceived to be at the top of the talent curve) are rewarded
extraordinarily (driving up housing prices), while those without the
appropriate knowledge and who are unable to re-adjust fast enough (e.g.,
currently there's a resurgence of C/C++ programming, but yet we've got a
generation of programmers who have never bothered to learn manual memory
management) have to settle for lower wages until they're at a point where the
salary they will need to convince them to (again) take up full-time employment
will not be a salary any employer will pay. As a result you'll see many
workers working just enough to get by (remote freelance/consulting work) and
then eventually drop out of the labour pool altogether. A wise welfare state
policy should then be designed not to punish those with volatile incomes and
encourage continuous labour pool participation (until the workers gained the
technical skills needed for higher wage jobs, or perhaps the skills they've
already had have suddenly become in-demand).

Eventually, I think this work itself out: settlement of inland west, cheaper
housing construction techniques, a general socialization of the values of an
entrepreneurial workplace (vs. workplace of "company-men"/"company-women")
means there will once again be a middle class. However, I am very much scared
of the many stupid things an electorate desperate "to do something" coupled
with rent-seeking businesses might end up doing (that will cause serious long-
term damage to this country) in the meantime. Any move from a system that is a
mess of regulation (navigable best by those with "pull") to one that is more
market-based would help.

------
walshemj
no your replacing one type of welfare state with another arguably "fairer" one
- most welfare sates discriminate against childless single people.

------
goggles99
From what I remember reading about the Swiss giveaway, some thought that it
would actually save money overall because people would get this money, but the
plan was to cut away welfare and other social services at the same time. The
reduction of administrative costs and govt inefficiencies would be saved.

That is an interesting notion, but it seems that there is no plan for those
who will inevitably blow all their free money on possessions, drugs, gambling
ETC. and still need to eat, be clothed, housed, buy cable TV (like most
welfare recipients do) ETC.

I hope that they actually pass this new law because it is very interesting.
Assuming enough people don't just waste the money and still need the govt
cheese this could actually transform a society.

------
goggles99
> _Many welfare recipients are required to undergo drug tests, despite the
> fact that many Americans take illegal drugs while still being good parents
> and holding down a job._

Had to stop here and evaluate if I should read any further. The author is
suggesting that we give people money to directly break the law with it?

Even more importantly though, the percentage of welfare recipients who use
illegal drugs and are _good parents and holding down a job_ is less than 5%.
Thus the requirement seems common sense since we do not wish to merely
reinforce and enable bad/illegal behavior.

------
amerika_blog
If you start giving out "free money," more people will show up to claim it.

