> "How would we pay for it? We could start by getting corporations to pay their taxes."
I don't know why people keep harping on corporate taxes. If anything, taxing corporations is regressive -- the taxes ultimately get passed on to consumers through higher product prices, regardless of their income levels.
Taxing corporations doesn't produce magic money -- it's still taxing people in the end, but it's the consumers. Far better is higher tax rates on investments, and higher taxes on the rich. We should be taxing the people who own the corporations, or are paid huge salaries by them -- that is, if you believe in progressive taxation.
> the taxes ultimately get passed on to consumers through higher product prices, regardless of their income levels.
It increases producer prices which shifts the supply curve to the right, but its pretty self-evident that the effect on actual prices is dependent on price elasticity of demand in the markets for particular products, and that price elasticity of demand is not independent of the income of the people in the market for the product.
> Taxing corporations doesn't produce magic money -- it's still taxing people in the end, but it's the consumers.
No more than taxing labor income (which the US does disproportionately, as much capital income faces lower income tax rates and labor income is subject to additional, non-income taxes) is really taxing corporate stockholders, because it shifts the supply curve for labor increasing market clearing prices of labor and eating into corporate profit margins.
> We should be taxing the people who own the corporations, or are paid huge salaries by them -- that is, if you believe in progressive taxation.
But taxing high salaries is "regressive", just as much as taxing corporations, taxing consumers -- after all, if you shift the supply curve for management work and increase the market clearing price of that good, you are increasing producer costs and, therefore, shifting the supply curve for the good produced in a way which increases the market clearing cost, resulting in price increases to the consumer to pay the taxes. If you are going to make this argument for corporate taxes, you have to apply it to whatever you present as the alternative to corporate taxes, as well.
> but its pretty self-evident that the effect on actual prices is dependent on price elasticity of demand in the markets for particular products
Of course, but there's still the "minimum profitability" that a business seeks to have. Suppose three firms compete to sell widget X, and consumers are willing to pay up to $10 for it, but the companies sell it at $5 due to competition (it costs $4 to make and distribute). Then the price is determined by supply cost + reasonable profit, determined by competition. If the government removes part of that profit, they'll raise prices accordingly, and sell for $6 instead, since that's still within the demand price elasticity -- otherwise the firms would decide there wasn't enough profit and get out of the business entirely.
> No more than taxing labor income... is really taxing corporate stockholders
The difference is that taxing labor income can be intentionally progressive, which is widely believed to be a good thing.
> But taxing high salaries is "regressive"
That just doesn't make any sense -- words can't be redefined like that. The very definition of progressive taxation is taxing high salaries (EDIT: incomes) of individuals at a higher rate than lower ones.
I understand your overall argument -- it's certainly debatable to what extent you believe corporate taxes to affect prices, vs to what extent you believe personal income tax to affect market salaries. But that doesn't affect the point I was making, which is that corporate taxes are ultimately passed onto people, and that this is not done in a progressive way. But by taxing people directly instead, this can be done progressively.
>"corporate taxes are ultimately passed onto people"
I don't really get this argument. It's always made as if the taxes are applied in a vacuum where market forces no longer exist.
If corporations are operating in a competitive market, they will seek cost advantages and continue to compete for market share. Raised taxes represent an additional expense (for the purposes of this discussion), much like raised energy prices. It is not always the case that these costs are passed on to consumers. Rather, smart companies seek to become more efficient, reduce costs elsewhere, or even realize a slightly lower profit margin per unit in order to maintain or increase market share vs. other competitors.
There's also the option to reduce executive compensation, decrease shareholder dividends, and a host of other options available in the interest of remaining competitive. A smart company could actually outmaneuver other competitors, wind up with more volume, realize the same net profit after taxes, and pass lower prices on to consumers.
I mean, there are just a ton of other variables here. And, those who advocate low or no corporate taxes are frequently free marketers. So, it's very interesting to me that they all but completely ignore very relevant free market mechanisms that can countervail the effects of raised corporate taxes.
IMO, it's just an oft-repeated meme that "higher corporate taxes are automatically regressive because they automatically create higher prices for consumers".
Isn't it an easy solution though? Based on what you've said, companies have likely already done what they can to reduce expenses to what they consider an optimal place.
I'll try an example, although that might not be totally valid (I'm not really up on current tax laws). These are all made-up numbers and rates:
Say you sell a widget for $100, and it costs you $70 to make. Your profit on that is $30, of which let's say you pay $5 in taxes, so let's say you walk away with $25 per widget.
If the government bumps up the taxes by a percentage that makes the tax be $6. As a corporate policy, the easiest way to keep the same returns to investors is to tack on another dollar to the price and sell it for $101. Profit is $31, pay $6 in taxes, still walk away with $25/widget.
Your competitors are in the same boat as you are, regardless of what the tax rate was/is. Theoretically, if they weren't stealing your business at the lower tax rate, they won't steal it any more or less at the higher tax rate.
Sure maybe you consider some other areas to cut costs, but haven't you done that already? I know it's a silly over-simplified example, but if I own a company and I don't want to give back my profit, I raise my prices to compensate, and so do all competitors. The people that lose are the customers.
I see the rationale in that argument, but I think one of the things you're missing is that companies won't just automatically raise their prices in unison.
Smart companies may hold their prices constant and take a per unit profit hit to capture more share, allowing them to maintain or even increase overall profit. They may introduce higher margin products and/or develop entirely new strategies or lines of business.
And that is the free market mechanism that I mentioned: each company must adjust to the new reality and try to use it to gain an edge over its competitors. They do this all the time.
And, given this new incentive to maintain profits, they may be more aggresive in finding cost reduction elsewhere. One might argue that companies are doing all they can now, but you might be surprised at how new realities create new incentives.
The other important thing with returning shareholder value is how Wall Street works. It is very much a time-relative game. For example, how did the company do vs. last quarter or same quarter last fiscal year? Viewed this way, you can see why some companies pump the brakes on all out profit-maximization over a given timeframe, instead opting to ensure that the line keeps moving up and to the right over a longer period. So, it's more complicated than all companies are always maximizing profit at all times.
Finally, your example that the easiest thing to do is to raise the price by, say, $1 doesn't really hold, irrespective of what direct competitors do with their pricing. They must still keep prices in line with what the market will bear. If not, consumers may begin looking for substitutes or go without (depending on the product). So, while it might be the simplest thing for a company to try, it might not be accepted by the market.
This is all part of the free market at work. So, your simplification is tempting, but I think it goes back to creating that vacuum I mentioned, ignoring all of the many market variables that countervail the assumption that $1 in increased "cost" equals $1 in increased price.
If the market has reached the pre-tax equilibrium, would an added evenly-applied tax change competitiveness at all? I guess I don't see how that would change anything at all. If you and I are competitors, and we both pay the same tax rate, that's already factored into our businesses in some way. Sliding it up or down an equal amount on both of us won't change the me vs. you competitiveness right?
I get what you're saying regarding only pricing what the market will bear, but on the flip side of all this, consumers suddenly have more money, so I could make the argument that the consumers are willing to pay more because they suddenly have more in their pockets, and around the mulberry bush we go...
>would an added evenly-applied tax change competitiveness at all?
Any variable can change competitiveness, as companies may differ in their responses to it.
For example, look at fuel prices for airlines. When they increase across the board, some airlines may raise prices, others may cut back on services offered, still others may add baggage fees, some may focus on increasing volume on more profitable routes, some may lower prices and heavily promote their lower fares to gain market share, while others may risk prepaying for fuel at current prices or hedging with shorts, etc.
Point being, of course, that the same change that hits every competitor will produce different responses and effects. This can completely alter the competitive landscape. And, it's virtually a guarantee that you won't simply get some uniform, across the board price increase.
If we don't acknowledge this, then we are looking at the change in a vacuum, completely insulated from the realities of free market behavior.
>I could make the argument that the consumers are willing to pay more because they suddenly have more in their pockets
Yeah, I think I actually mentioned that in another post (too much risk/work to view another post mid-reply on this tablet). Anyway, it could definitely be the case that consumers can bear more, however, it is not neccesarily 1:1. That is, there are a lot of variables that might impact whether they'd be willing to spend that extra money on that product. Also, there is still some price that the market simply won't bear for a given product, irrespective of the extra money in consumer pockets. In any case, there is certainly no guarantee that companies can simply pass on the additional cost.
And, it can also be the case that some companies can, but others cannot, given their prior prices.
Possibly. Unless the tax code gave them incentive to cut costs elsewhere instead. I would guess such incentive to be logical, given the problem they're trying to solve.
In any case, one of the big premises of the article is that hiring less is happening anyway and contributing to the need for a basic livable income. So, that's a bit circular.
And, of course, that's just one of many potential cost-cutting measures.
> Raised taxes represent an additional expense (for the purposes of this discussion)
Raised income taxes aren't really an additional expense, because they are taken out of after-tax net income, not gross income. That complicates the analysis substantially.
This is precisely the reason I don't understand it when people say the cost of the tax will be passed onto consumers. What cost? The tax is on profits...
You may see it that way, but most businesses do indeed see tax liabilities as a cost of doing business. Just because the profits are taxed doesn't mean it's not a cost of some sort. For instance, you could say today's taxes are the cost of doing business next year or even quarter.
Depends on how the company applies the math. If a company wishes to treat tax liability as a cost of doing business, I fail to see how that couldn't be done.
But 'reasonable profit' isn't a constant. Just look at the airline industry - no single airline has had a consistent profit margin (most have not even been consistently profitable!). Thin margins aren't incentive to leave an industry - if they were then grocery stores would not exist (as they all have razor thin margins) and WalMart, Target, Kmart would all have switched industries.
In your example, if taxes of $0.50 are added, the firm may still sell widgets at the post-tax price of $5 and accept the reduction in margin from $1 to $0.50.
> That just doesn't make any sense -- words can't be redefined like that.
I used the quotes and the "just as much as..." reference because I was applying your logic about corporate taxes to the alternative you proposed. I don't agree that either is regressive, obviously, and I laid out exactly why that logic was wrong earlier in the post, before showing how if you ignored the fact that the logic was wrong and applied it consistently, it would say the same thing about your alternative as it said about the thing you proposed the alternative to.
> The very definition of progressive taxation is taxing high salaries of individuals at a higher rate than lower ones.
Actually, the usual definition is about taxing higher incomes at a higher rate. Confusing income with wages or salaries , so that one ignores non-labor (and, particularly, capital) income in considering the progressivity of taxes, is a pretty serious error.
>But taxing high salaries is "regressive", just as much as taxing corporations, taxing consumers
I disagree here. For this to hold, executives would have to strive to keep their pay where it is. But this simply isn't realistic. Executive pay has exploded beyond belief in the last half century, it's completely unprecedented.
There is no reason to allow individuals to siphon off so much capital, and no benefit to it. Standard of living with $1B is no different than $10B (which is why after Steve Jobs hit $6B he stopped bothering with making any more money).
It increases producer prices which shifts the supply curve to the right, but its pretty self-evident...
If you're taxing corporate income, it's pretty clear that Apple's and Google's supply curve will shift to the right. Not so much Samsung's or Nokia's. Taxing corporate income harms exports. Trying to tax only the corporate income from products and services sold in the US is in essence a VAT and then we're not talking about corporate income tax.
No more than taxing labor income (which the US does disproportionately)
If you have a point to make, please try doing it without blatantly lying. It's common knowledge that the US has substantially higher corporate tax rates than almost anywhere else:
The headline U.S. corporate tax is higher than that of many other countries, but it also has many more loopholes than the corporate tax of many other countries. As a result, the effective corporate tax rate in the U.S. is relatively low, around 13%: http://en.wikipedia.org/wiki/File:Effective_Corporate_Tax_Ra...
However I believe the parent's point was just that taxes on personal earned income represent a much larger share of total U.S. tax receipts than taxes on corporate income do, i.e. the U.S. mainly taxes labor income. And that is true; the corporate income tax accounts for only 10% of federal tax receipts: http://www.cbpp.org/cms/?fa=view&id=3822
> If you have a point to make, please try doing it without blatantly lying.
I'm not blatantly lying. US taxes on labor income are disproportionate to taxes on other income sources, both because of the favorable rates applied in the income tax system to capital income, and because labor income is subject to additional taxes.
> It's common knowledge that the US has substantially higher corporate tax rates than almost anywhere else
Whether that's true or not, its entirely irrelevant the claim I was making.
Seriously? What tax rate do you pay on your regular 40h a weke job? What tax rate do you pay on investments? Most people are taxed roughly 36% (28% income tax, 2% medicare, 6% social security) on their labor, however investments are only taxed at a flat 15%. Hence, the US disproportionately taxes labor over investments.
Do you have other evidence that shows that investment income is in-fact taxed higher than labor income in the US?
> (28% income tax, 2% medicare, 6% social security)
This year, the 28% tax bracket for a single individual stars at $87,850 taxable income. The Social Security cap is $113,700, and the Social Security tax is levied on all income below this. The individual standard deduction is $6100 and the personal exemption is $3900.
That means that for an individual, a 28% income tax rate means income is above $97,850 while paying Social security taxes means income is below $113,700. I sort of doubt this covers "most people".
For a couple, the 28% bracket starts at $146,400 taxable, the standard deduction is $12,200, and personal exemptions are $7,800. So in this case the rate you quote applies to income over $166,400 and below $227,400 if both members of the couple have equal salaries. Again, hardly "most people".
Of course the 15% bracket definitely has a marginal rate of 23% or so, again ignoring EITC and various other tax credits you can claim at those income levels that phase out with income, since they're certainly paying FICA at that point.
> investments are only taxed at a flat 15%
It really depends. Dividends are sometimes taxed at this rate and sometimes at your normal income rate, depending on whether they're qualified or not. Capital gains are, if you hold long enough. And capital gains can, of course, still affect your AMT exemption, meaning that if you're in the the AMT phaseout range your marginal rate on even long-term capital gains is about 22% (15% + 25%*28%, since the phaseout applies to normal income).
Of course once you make so much money that the AMT becomes irrelevant your marginal rate on capital gains drops back down to 15%.
Sure, but I assumed oijaf888 was talking about marginal rates on income, which affect whether you want your marginal dollar to be salary or investment income. If we start talking about overall rates, there is no plausible way at all to claim that "most people" pay an overall Federal rate higher than 15%.
Really the FICA portion (medicare + social security) is nearly twice that, because your employer has to match it. You explicitly see the 2X if you're self-employed, but even otherwise that's money they're spending to employ you that could be going to you and is instead being taken as tax revenue.
Except capital gains taxes don't include inflation in the calculations.
So let's say your stocks in aggregate rose 4% that year, and the inflation was 3%. You made 1% profit (in purchasing power). You pay 4% * 0.15 = 0.6% which is 60% of your profits and only 38% of your income.
Paying employees is a business expense, so the money is not taxed as corporate profit. Paying dividends (outside of the context of a co-operative where you've pre-committed to paying certain dividends) is not considered a business expense and so the money is taxed as corporate profit before being distributed.
I don't think it's the same thing, because your salary is an expense to the company, so they don't pay taxes on that amount. (Some states/cities do tax corporate revenue as well as corporate profit, but not federal taxes.)
I'm not saying they are taxed on the amount of money they pay you. Well, there is Social Security (US) taxes that they pay but you could argue that's money that should go to the employee anyway if there was no such tax. I'm saying the company makes money that is taxed and then they pay you out of that money in which you are taxed for receiving.
Ok, granted, not all the money that the company has on hand that is paid into your salary is taxed as corporate income, but the idea is valid. I agree not at the same level as taxing profits and then taxing dividends which is essentially the same money.
I'm just going with the notion that it is not uncommon for money to be taxed as it is exchanged from one entity to another.
"Most people are taxed roughly 36% (28% income tax, 2% medicare, 6% social security) on their labor, however investments are only taxed at a flat 15%."
"Double taxation" may not be an entirely accurate label (more like "an additional pass of taxation"), but the fact that dividends (in particular) are taxed as corporate profit before being taxed as individual profit makes that 15% figure misleading for dividends, which is what the child comment brought up: "Arguably, you get double-taxed if you own stocks."
Really, the number of times the money is taxed is irrelevant (except wrt paperwork) and we should be looking at the total tax level, but the point is that it's more than the nominal tax rate on qualified dividends if we're going to be comparing tax rate on labor income to tax rate on non-labor income, apples to apples.
Of course, that's specifically for dividends; bond premium payments and capital gains are a different discussion.
Various countries have dividend imputation for that:
> it reduces or eliminates the tax disadvantages of distributing dividends to shareholders by only requiring them to pay the difference between the corporate rate and their marginal rate.
I'm not in favor of corporate taxes for practical reasons--I think they're too hard to make work in an international setting. That said, it is not necessarily the case that taxes on corporate profits are passed on to consumers through higher product prices.
At always comes back to prices being the equilibrium of supply and demand. Taxes on corporate profits obviously have no impact on demand, so we must look at supply. Does taxing corporate profits reduce the amount of supply producers are able to put onto the market at a particular price? In a totally competitive market, profits approach a marginal amount and there is very little to tax anyway. So what about not perfectly competitive markets? If you tax Apple 10% of their profits instead of 5%, does that reduce the number of iPhones they are willing to supply at any given price? If taxes are applied uniformly through all industries, so that Apple can't get a lower tax rate by going into a different industry, then not really.
This is of course a very simplistic analysis. You have to consider things like elasticity of demand, etc. But basically, you can't ignore supply and demand. If you raise prices, quantity demanded will go down, and so the profit-maximizing price is not necessarily or even usually one in which the consumer bears the full amount of the tax.
I think Apple would offshore more and more businesses as every other large companies who can afford to has been doing for decades now. And that I think is always the problem with simply raising more corporate taxes in US.
As you raise more corporate tax in US, doing business in US becomes less and less attractive. As business move away from US, there will be less and less jobs in US. This already and undeniably happened with manufacturing sector. Unfortunately, people are now again arguing for increasing more taxes in US which will further lead to more business moving their business to other countries.
Right, I think practical reasons militate towards eliminating corporate taxes and shifting the burden to capital gains taxes. A number of companies have recently reincorporated from the U.S. to high-tax (but low corporate tax) jurisdictions like the U.K. and Switzerland. Companies have shown that they don't care about forcing their executives to move to jurisdictions with high personal income taxes, if they can get the benefit of lower corporate taxes to show higher earnings per share.
Not just in an international setting. Even in a closed universe it's a lot more difficult to measure, or even define, profit than revenue. Although they are both called income tax, individuals are largely taxed on income, corporations on profit.
Better would be trying to tax the beneficiaries of the corporation. The best measure of profitability is some benefit to the owner. Usually capital appreciation or dividends, but sometimes outsize cash or non-cash compensation in an employee context, or as a non-arms length counterparty.
Increase the dividend and capital gains* rates substantially, start taxing fringe benefits, transform the corporate income tax into a very small tax on revenue to prevent the multiplication of corporate entities, crack down on people who renounce US citizenship (by for example making them inadmissible) and call it a day.
*Also eliminate the capital gains basis reset when assets are transferred at death. That makes no sense at all.
Profits are also a cushion for the future years when the sales are not that great, and the company has to dip into its savings account or force layoffs and trim product offerings.
While high corporate taxation environment is great for boom years (unless your corporate constituents relocate), it necessitates bailouts during the bad years. Good example would be some European socialist economies overly reliant on state enterprises.
> If anything, taxing corporations is regressive -- the taxes ultimately get passed on to consumers through higher product prices, regardless of their income levels.
Actually, the studies show that corporate taxes are essentially a proxy for the taxing the ultra-wealthy - a cut in the corporate tax rate is very similar to cutting the highest marginal income tax rate.
After all, if corporate taxes truly fell on the poor, Republicans wouldn't be for cutting them.
You started off with an interesting addition to the conversation, and I was hoping for a reference regarding the relationship between corporate taxes and the ultra-weathy, but instead I got a gratuitous, tired, over-used, boring, ad-hominem about Republicans that added nothing to conversation.
No he didn't. The national Republican Party is outspoken about raising taxes on lower income people, in "broadening the base". In the election-year expose of Romney's secret fundraising speeches, we learned about "the 49%" of Americans who don't pay taxes. Well, we didn't learn about it, it's a very common trope for conservative politicians.
It's no secret that Republicans largely support "base broadening", as well as less-overt attacks on the finances of the poor like their CURRENT attempts to divorce the farm bill from food stamps, to further cut food stamps.
You're trying to enforce some politically correct echo chamber where a national political party isn't responsible for their votes and their policy.
Republicans are openly for raising taxes on the bottom 50% of Americans, are openly for decreasing wealth transfer like foodstamps, welfare and unemployment, and are openly for lowering (and abolishing) corporate taxes.
Those are their policies and it is utterly and totally fair to state that and reference it.
Your comment and jellicle's comment are not quite the same thing.
Even then, you are painting some of the party's platform in a negative light without showing why exactly that is their platform to begin with nor why you consider them terrible ideas. Some of their reasons may be bad, but that doesn't mean all of their reasons are.
No he didn't say they were bad, he was just agreeing with the person that said they were bad. But I think it's fair to say that the tone of the discussion implies these two people feel negativity towards the GOP's platform without stating why.
Disagreeing with someone's idea doesn't inherently make that idea bad. People who have the notion that another person's idea is bad solely because they disagree with them with no other evidence is simply a shallow person.
Who is blocking comprehensive reform of the banking sector (which arguably drove not only the US into a recession, but the world as a whole)? Republicans
Draconian anti-abortion laws? Republics
Raising student loan interest rates while keeping lending rates to banks near zero? Republicans
If only these issues were as clear-cut as you seem to think they are.
There is plenty of evidence that the risky loans associated with the home mortgage crisis were motivated by federal policies advocated by Democrats such as the implicit guarantees associated with Fannie Mae and Freddie Mac.
The student loan debacle is another example of unintended consequences of government loan subsidies and there is considerable evidence that those subsidies are simply captured by the colleges and universities when they raise their rates.
Regarding defense spending, it isn't a surprise that the US spends lots of defense since the US basically provides a national defense capability for itself and most of its close allies. There is certainly plenty of ways to be more efficient on defense spending but Congressional support for inefficient defense spending is hardly a Republican phenomena. It is a systemic problem.
Anyone who thinks that the ACA is the be-all-and-end-all of healthcare systems is delusional. It is a bureaucratic nightmare riddled with stupid incentives, accounting flim-flam, and ridiculous complexity. Add to that the completely reasonable thought that the more appropriate location for these services, if they are going to be provided, is the states.
Immigration reform: Unending posturing from Democrats who seem to want no limits to immigration and Republicans who seem to want no immigration at all. On top of that, I don't think the public knows what it wants (i.e. no real grassroots consensus)
Abortion: I'm not going there other than to say neither Republicans nor Democrats are uniform in their opinions on this topic.
My basic philosophy is that neither party is acquitting itself with much distinction these days. It is foolish to think that the flaws in our public policy are the fault of either party alone -- they are both complicit.
The issues are pretty clear cut, the issue is you're getting bogged down by political party labels that have little meaning. If someone performs a bunch deregulation that's not a "left" position no matter what party they claim to be in.
Maybe the reason they are blocking reform on the banking sector is because they feel it wouldn't be necessary if only the Executive branch would actually enforce the laws already on the books that apply?
Maybe the reason they oppose abortion laws is because they feel they are saving human lives who have no say in the matter?
Maybe the reason they support such amounts of military spending is because they feel it is the nation's responsibility to do its best to provide for a safe and secure world, including using the military for life-saving operations?
Maybe the reason they are blocking current immigration reform is because they disagree with the methodology being proposed that is possibly unfair to current citizens including the ones who immigrated here legally and followed the law to become citizens?
Maybe the reason they are trying to prevent implementation of universal healthcare is because they feel the current law is ripe with corruption, waste, fraud, eventual failure, and will in the end actually make things worse?
You are again one of these people going with the notion that since you disagree with the other people's ideas you get to assume that the ideas are somehow bad. Notice that in no way did you explain why these ideas are inherently bad, you simply disagree with them. You are perpetuating the fallacy that they are bad simply because you say they are while ignoring the possibilities that they have good reasons to think that way. Next thing on your agenda will be to ridicule them in some way to show your superiority over such backward-thinking people in a feeble attempt to convince us you are right without actually having to prove anything nor support your accusations.
You are again one of these people going with the notion that since you disagree with the other people's ideas you get to assume that the ideas are somehow bad. Notice that in no way did you explain why these ideas are inherently bad, you simply disagree with them. You are perpetuating the fallacy that they are bad simply because you say they are while ignoring the possibilities that they have good reasons to think that way. Next thing on your agenda will be to ridicule them in some way to show your superiority over such backward-thinking people in a feeble attempt to convince us you are right without actually having to prove anything nor support your accusations.
Not at all. Being young, I will simply wait until the older majority dies off. It happened with black rights. Its happening with gay marriage, and it will happen with other socials issues.
Yet again, I'm failing to see your explanation as to why the platform is bad. Nor do you even really attempt to counter the quote of my comment that you provide other than say "not at all". In fact, you ignore pretty much ignore everything I stated. You just continue with the snide comments that do not support your argument; they just stroke your ego and false sense of superiority.
If your ability to win a debate that involves deciding how society should function is based around outliving the people you simply disagree with then I foresee a sad future. Because one day the younger generation will follow your example to disagree with you and put your older self out to pasture as that stupid old person who doesn't know anything.
But I suppose they may be right.
By the way, read your history. Black rights didn't happen in the US because the older generation died off; a few brave souls of the generation that was in charge stepped up to make it happen. Some of them died for it so you should at least have some respect. At least they were able to make a valid argument as to why they were right and not fall back on meaningless talking points that made them feel smart.
Currently, I see gay rights moving forward without anyone waiting on people to die off. Your argument is not only comical, it doesn't exist.
I'm not going to debate why the republican's platform is bad, I'm just going to throw my opinion in that I believe it only serves a minority of the country.
I don't post here to stroke my ego. I could not care less what someone on Hacker News thinks of my ideas or perceptions, although I do enjoy quality discourse.
You can CLEARLY see how public sentiment towards gay marriage has changed over the last 10-15 years. Either this occurred because of people changing their belief structure (doubtful) or because people with one mindset aged out of the population.
Republicans are also openly for reducing burdens (both regulation and taxation) on the wealth producers so they can make more of it and spread it around. Taking half of earners' incomes with one hand and blocking ways to earn more with the other will NOT end well. I'm making a good buck, but at this rate of taxation I'm gonna have to resort to self-sufficiency homesteading with zero taxable income. Remember the goose & golden egg?
Totally not fair to present only the allegedly "bad" parts of a position without the good goals that necessitates it. Opening the paths to hiring more people is quite fairly coupled with telling the capable to stop sitting around collecting checks; if you're going to socialize health care payment, you'll need to stop giving companies reason to not have more than 49 employees.
> Republicans are also openly for reducing burdens (both regulation and taxation) on the wealth producers so they can make more of it and spread it around.
Wow, you really do drink the trickle-down effect Kool-Aid.
You can't "spread the wealth" if there isn't any. Printing more money doesn't make more wealth, it just diffuses it more. If I stop working, you can't tax my now-nonexistent income.
I don't believe there is correlation between a lessened burden on wealth producers and it being spread around.
The burden on wealth producers is very low, one of the lowest points in the modern era.
You would expect in this era of hyper-rich and low-taxation that the wealth would be spreading around.
But it's not. Record profits for corporations (read: wealth producers) is turning into record stock highs, record numbers of billionaires and record lows for the middle class.
I refuse your argument because the world around me clearly shows that our "wealth producers" have figured out how to depress labor costs and increase investor returns. Great for them, but that concept is 100% contrary to your "wealth producers spread wealth".
No, wealth producers rightfully squeeze labor costs and rightfully return the biggest amount of money to themselves, their boards, and their investors. That's not spreading wealth downwards, it's spreading laterally only.
This isn't something you need to believe or not believe. The stats are in, decades of trickle down have not had the intended effect and various sources have shown this.
It's a pretty well supported fact that lessening the tax burden on the mega rich doesn't cause them to go opening businesses and it's surprising people ever believed such nonsense. Why would a rich person take a risk on a new business venture when the a fund can provide a steady, predictable return year after year with very little downside?
I think it's because many people don't separate a businessman from the business.
A businessman doesn't open more businesses when he has more money.
A businessman opens businesses when investors will pay and the market will support it.
Turns out, a businessman doesn't need his own money to start businesses, because without a market, there's no point of starting the business, and with a market, there is investment available to seize it.
We do have problems indeed. And as long as people continue to get bogged down with the silly "Democrat/Republican" song and dance, the issues can't be addressed. The parties are practically the same thing (see: Bush Jr. vs Obama) so seeing one side as a friend and the other as an enemy is just a straw man boxing match.
> Actually, the studies show that corporate taxes are essentially a proxy for the taxing the ultra-wealthy - a cut in the corporate tax rate is very similar to cutting the highest marginal income tax rate.
If by "wealth" you mean "net worth", then because that is even harder to administer than income taxes.
If by "wealth" you mean "income", we do that, but earning income through an entity with separate legal entity whose income is not taxed and retaining it in that entity becomes an effective tax dodge if it is permitted. Which is why corporate "income" tax (which is effectively a tax on retained profits) is included as part of the income tax system.
Given that the vast majority of wealth in this country in held in liquid assets or in real estate which is already taxed based on value, why do you suppose that a scheme to tax it would be more complex than the corporate tax system which employs on the order of ten thousand people and generates returns that are often thousands or even tens of thousands of pages and has been shown to be amenable to a wide variety of gaming through manipulating the timing and geographic incidence of profit?
There will be some complicated edge cases but there will be relatively few and the ability to game them is less because wealth is a simpler concept than income.
> Given that the vast majority of wealth in this country in held in liquid assets or in real estate
Source?
> There will be some complicated edge cases but there will be relatively few and the ability to game them is less because wealth is a simpler concept than income.
How is wealth a "simpler concept" than income. AFAICT, income is far simpler (and, in fact, involves a strict subset of the assessments necessary in assessing wealth.)
Non-financial non-real estate assets account for 5.8% of the total according to the Fed's flow of funds report (Z.1) table B.100: http://www.federalreserve.gov/releases/z1/Current/z1r-5.pdf. Note this also includes non-profits but that's a relatively small distortion.
Wealth is the value of everything you have less what you owe. Every item can be valued by seeing what people would pay for it, which is usually just its current market price. How do you determine income objectively? You could merely take wealth at two points in time but our society has declined to define it that way because much of the money coming in might go to some sort of expense which ought to be excluded, which is neither objective or simple, and because some changes (such as fluctuations in asset prices) are assumed to be transitory and therefore impractical to tax. The latter is actually the source of most of the perfectly legal tax evasion in this country: Hold stocks, generate value, pay nothing until you sell which needn't be ever.
> Every item can be valued by seeing what people would pay for it
"What people would pay for it" is a controversial quantity that can only be speculatively and uncertainly answered unless you are actually selling it in an open, unrestricted auction (even actual sale under real-world conditions often doesn't answer this, since its possible that both buyer and seller have non-financial interests which motivate the sale decision such that the purchase price does not represent the market value.) For pure interchangeable commodities with robust markets, this is less of a problem, but for many real world assets (including real estate) this is not the case.
Note that while real estate is already subject to ad valorem taxes (and other value-based policies, such as eminent domain), valuation is not at all free from contention even with those taxes as just one piece of the overall tax picture; if wealth-based taxes were the primary tax system, that problem would be magnified.
> How do you determine income objectively?
If you can value wealth objectively, you can value income objectively, since income is just a subset of the changes in wealth. The problems in income valuation are problems in wealth valuation (which is why, e.g., capital assets are valued at sale for income purposes, which becomes less viable of a solution to the problem of valuation if you aren't taxing the change in wealth but taxing the wealth in each year it was held.)
> "What people would pay for it" is a controversial quantity
Yep. A friend thinks we should have a "You bought it!" law for insurance companies that assess the value of your belongs to calculate a premium. Basically once they give you their assessment, you have to right to say, "You bought it!" and they have to take it off your hands at that price. Not that such a law could work in the real world, but it is pretty clever. I bet a lot of people wish they could use such a law for property tax assessments.
The incentives do not necessarily work well there.
But I could imagine a "We The People Buy It" under a system of wealth taxes. That the gov't could choose to buy any asset for a modest premium over what the taxpayers asserts it was worth for purposes of taxes last year. Heck, maybe any citizen should be allowed in on that game?
"Hmmm, you say your restaurant business is worth only $300k? It is your lucky day! I just bought it for $360k."
Of course, there are imperfections in some assets. Let's not talk in the abstract. We've established that this problem applies to 5.8% of assets. Some percentage of those have reasonably computable valuations. If not or if the valuation is contested, we can allow tax to be paid on profits as an alternative or a cumulative tax to be paid at sale based on average value through the holding period which could be inferred given a standard growth curve.
Real-estate appraisals are imperfect but getting within 20% most of the time is quite achievable. The main problem is for unusual or expensive properties which could be handled similarly to hard-to-value assets.
Your statement doesn't follow unless defining that subset is easy. What should be included or excluded? As we're discussing corporations, we have ample evidence of the ability to game. You could suggest closing loopholes but most of the loopholes also have legitimate uses.
You write that "capital assets are valued at sale for income purposes" is a solution to the difficulty in measuring their value. Why is this the case? Remember that the origin of this discussion is whether it's better to tax corporate income or the wealth of those who own the vast majority of that income. Are you asserting that valuing a person's equity holdings is difficult?
Income is not simpler, as you can change around how people are compensated, which is exactly what's happened for the better part of a century at least [1]. But if you own a garage full of Ferraris, then you own a garage full of Ferraris. The only problem at that point would be foreign held wealth.
[1] One of the reasons the US got into the health care mess they have now was companies taking over the payment of health insurance instead of giving a salary increase. Workers liked this because it effectively meant they paid less taxes.
> If by "wealth" you mean "net worth", then because that is even harder to administer than income taxes.
That is the standard argument, but countries have been taxing property a lot longer than they have been taxing income. Some even manage to tax property at current market prices (e.g. Canada).
> That is the standard argument, but countries have been taxing property a lot longer than they have been taxing income.
That countries have been taxing selected forms of property longer than they have been taxing income is in no way inconsistent with taxes on net worth being harder to administer than taxes on income (and even if they had been taxing net worth longer than income, it wouldn't be), so that's not even a counterargument.
As you mention, inflation results in people losing real wealth proportionally to the amount of total (nominal) wealth that they have. On the whole, it's a fairly progressive form of redistribution, as long as wages are able to rise with inflation.
It would seem to me that an unconditional basic income could therefore be paid in part through this mechanism, with the inflation caused by simply increasing the amount of money in circulation. That is to say - the money could simply be created by the government. You can frame this as deficit spending (if you'd like) or you can frame it as the equivalent printing of money. This could (by act of Congress) be done without floating bonds to cover the deficit, but that might cause some conservatives to freak out.
Exactly - wages do rise with inflation, but as we know from intro macro, there's always a bit of a delay due to contracts etc. The problem with inflation is it drives people even further up the risk curve to find yield.
The other problem is that while inflation incentivizes moving up the risk curve, capital gains work in the opposite direction, incentivizing idle cash balances. One side of the government wants you find yield, the other punishes you for finding that yield.
At the end of the day, you're just going to make people find that yield (they have to) and you won't increase tax revenue. People can stomach _some_ risk, but not an infinite amount (especially the institutional guys).
As a seller of products or services, what motivation do you have to peg the price of your products or services to such an inflationary measure?
Developing countries frequently switch to USD/EUR in times of financial calamities, as marketplaces there gravitate towards currencies that preserve wealth, not erode it, which is what you're planning to institutionalize.
> After all, if corporate taxes truly fell on the poor, Republicans wouldn't be for cutting them.
That kind of presupposes that Republicans are all about saving big business and not the poor.
What if Republicans favor cutting corporate taxes because they are regressive, and their support of 'family' values means they want to protect the income and lifestyle of the poor to middle class families that make up the majority of the American voting population?
It's not that simple. Of course, the direct effect of corporate taxes is mostly on the wealthy who own most of the stock but that's not necessarily the group who gets most of the wealth--more on that below. Even in terms of direct payments, wealth isn't the only important factor. As significant is a company's willingness to be creative. I have never seen a corporate tax scheme that's ungamable that doesn't involve giving the IRS more discretion post-hoc in applying the law nor is one feasible in practice given the resources a company tends to devote to minimizing a multi-billion dollar tax bill. So we have the perverse situation where, to a significant degree, tax creativity is a productive economic activity and belief in adhering more closely to the spirit of the law of punished with higher taxes.
As for the economic payers. Consider what happens if we eliminate corporate taxes: The company has more money. It can use that money in three general ways: Lower prices, raise pay or return it to shareholders. In a company with little competition, the optimal calculation is fairly simple. Does the additional return enable new entrants at current prices? Do we have employees who could leave and create competition and to what extent does the additional cash-flow make it more likely? In a competitive environment, the right answer is based on the sensitivity of profit to talent, the sensitivity of talent to pay increases, and the sensitivity of consumers to price decreases.
Given this different factors, what's the empirical answer? It varies based on circumstance and no one can say definitively. Here's an example of one attempt to answer based on variation in European tax rates that suggests that 49% of the taxes are paid by workers: http://www.econstor.eu/bitstream/10419/51691/1/66322666X.pdf. You can find many more papers with different points of view through your favorite search engine.
It is somewhat the same as raising pay, except is it not true that the average worker's pay has been flat for many years now (even those employed by corporations" while executive pay has drastically increased?
And I personally don't think the harm is in what percentage of the profits is paid to them per se, I think the more harmful aspect is the perverse incentives that are created when executive compensation is tied to short term corporate performance.
You're absolutely right about where the risk lies. That's why large shareholders have become increasingly concerned about alignment. CEO pay is increasingly in equity and they are subject to minimum equity holding requirements and clawbacks. I'd like to see larger minimums relative to their equity compensation but in the grand scheme of things this is a small issue.
It's also worth noting that short-term investors are a greater threat to long-term focused decisions than pay incentives. Most CEO's aren't actually foolish enough to risk destroying their company for more money in the near-term. They like their jobs so what does terrify them is an investor demanding more leverage or adopting a riskier strategy on pain of advocating removal or a hostile takeover. When Chuck Prince said he couldn't sit down until the music stopped, he wasn't worried about a smaller bonus but about posting lower profits that would have led to calls for his removal. "There was a merchant in Baghdad..."
Yes, given executive compensation trends, I wouldn't be surprised if executives would get a disproportionate share. That's largely irrelevant to understanding the aggregate impact. At large corporations, CEO compensation is usually less than 0.1% of profits.
Increase in corporate taxes will be partially paid by consumers, but also it will reduce corporate profits. If they pass it completely to consumers, it will reduce demand -> reduce revenue -> reduce profits, so the increase will be paid by both parties. If anyone believes in market forces and the invisible hand (also if you took some basic economics courses) you should agree with this.
While I agree with the points you make, there are no easy answers here. The problem with technology concentrating wealth in the hands of fewer and fewer people is that it gets really hard to tax those individuals. Partly because these people can move around easily and avoid your taxes, partly because it becomes morally difficult when the amount you're taking off one person is literally 100,000x what you're taking off someone else but also because, unlike the middle classes, the sums involved make it worth those individuals' time to hack the tax system to avoid taxes. Companies at least have offices or retail outlets that are stuck in your territory and can be inspected by tax inspectors and have turnover that cannot be disputed. So successfully getting at the proportion of GDP that the government needs to be able to give everyone a basic income may well be easier if you go after companies.
> If anything, taxing corporations is regressive -- the taxes ultimately get passed on to consumers through higher product prices, regardless of their income levels.
This has never seemed like a strong argument or an accurate description of what actually happens to me.
If it's true that businesses just pass along taxes, then:
1) I'd think businesses wouldn't be so concerned with minimizing/fighting taxes. What we seem to see instead is that businesses seem to be concerned they will be carrying the cost and investors seem to be worried it will cut into profits.
2) I assume that's true for me, too, of course -- presumably, I don't pay income/payroll taxes either, I just pass along the cost of those taxes to my employer. My employer, as given, just passes those costs along to consumers. Consumer just figures in the costs of goods/services and calculates their asking price for their market offerings accordingly...
So nobody pays taxes?
It seems more likely to me that rather than people "just" passing costs along whole is that everybody pays the tax by finding some economic balance between what they can/must pass on and what they can/must absorb. How much is passed along probably depends on how competitive the market for each exchange is along every cascade and how price sensitive buyers are.
> Taxing corporations doesn't produce magic money
I don't think anybody really thinks it does. The idea is to distribute the load, which taxes (passed along or not) do.
On point 1, tax avoidance is more strongly incentivised if the costs are passed on to customers. Higher prices are a huge competitive disadvantage. A single company avoiding their taxes can undercut their competition and dominate the market, forcing all of their competition to follow suit.
>> If anything, taxing corporations is regressive -- the taxes ultimately get passed on to consumers through higher product prices
Tax on corporate profit does not need to have this effect, because it only applies to profits, not to revenue.
Sure, if a corporation wants to keep the same amount of profit after a tax hike it has to put its prices up. But because we're only taxing what's happening after deduction of costs, there's room for others to come in and compete with a lower margin (and lower taxes as a result).
It encourages firms to reinvest, to hire more people and to find other productive ways to use the money rather than either sitting on it or passing it directly to shareholders.
But most businesses need those profits to expand and innovate. If they require a certain level of profits to accomplish those goals then the recourse is to raise their prices for the next round of profits in the hopes being to accomplish those goals.
Now, if we're talking about a company that just puts all those profits in the pockets of their upper management then I suppose who cares. But the smaller companies, those that survive on razor thin margins and need every penny they can get to keep going, those are the companies that have to constantly adjust their prices to deal with tax liabilities.
If they don't use profits as part of their expansion plans, then how do they expand year-over-year without spending more money than the year before? If they spend more money than the year before then where did the extra money come from if not from the previous year's profits?
My feeling is that corporations shouldn't have a disincentive to make money.
Rather all ways of extracting money from corporations should be taxed at a high income tax level (rather than the low dividend and capital gains levels).
> My feeling is that corporations shouldn't have a disincentive to make money.
Corporate taxes are not a disincentive to make money. They are (since the structure of deductions applying to them makes them a tax on retained profits more than income) a disincentive to retaining profits within the corporation to avoid the taxation the stockholders would pay were the profits distributed (or earned by a business subject to personal rather than corporate taxes in the first place.)
So corporations should have literally zero disincentive to make money? Is that what you intend to argue? Because that seems to imply that corporations should be completely unfettered in every conceivable way, be it legal, economic, ethical, or otherwise. Am I missing something there?
"Disincentive" is not the same thing as "impediment." This isn't to say I necessarily agree with the parent comment, but you seem to be responding to an overly strident reading of something that wasn't quite said.
Yes, you are missing that the idea is to tax the money when individuals get it out of the corporation for private use. Right now capital gains and dividends taxes are relatively low.
The best policy argument I know of for taxing companies is that it adds a financial incentive to reinvest profits into the company to avoid taxation.
Raising corporate tax rates might or might not result in higher consumer prices. Depending on the company or industry, it might instead result in lower profits (which harms investors not consumers), or different management decisions--for example it might lead companies to invest in more growth abroad than domestically since the tax rate is lower abroad.
So in a no corp-tax world, if a US C-corp just keeps retained earnings and not pays out a dividend, then what? (Like Apple did for years.)
Granted, you still have capital gains from stock trading, etc. But if corporate profits not taxed, the company can simply sit on the money. They don't have to spend it on R&D, or anything else, as they do not need a tax write off.
It's a double-edge sword and there really isn't a silver bullet.
> you still have capital gains from stock trading, etc.
That's the whole point -- without corporate taxation, shares in corporations are more valuable, and the taxation is drawn from capital gains instead -- and capital gains tax should be far higher, of course (and ideally progressive as well, based on your total income).
Sure, companies can "sit on their money", but they already can. And that money is presumably invested anyways, so it's still being productive (on R&D in other companies, for example), and it certainly gets spent eventually.
> Sure, companies can "sit on their money", but they already can.
Not entirely, it is taxed at least once when earned (corp earnings tax).
Personally, high capital gains tax gives me a lot of hesitation, as you actually want to encourage people to invest and not dissuade them from doing it.
> Personally, high capital gains tax gives me a lot of hesitation, as you actually want to encourage people to invest and not dissuade them from doing it.
Interesting. I hold the opposite position as I would rather make company re-investments more attractive.
> ...Switzerland appears to be taxing total networth.
This is a wonderful idea! Though I could imagine the games that could be played with valuations.
You are only a quarter right (or whatever). The incidence of corporate taxation can fall on various entities including the consumers, the employees, and the shareholders. The better argument is that corporate taxation is double (or triple) taxation, as the corporate income gets distributed down to employees and shareholders, which then gets taxed again as personal income and capital gains.
My understanding is that the qualified dividend tax rate is technically a different thing than the capital gains tax rate, and they only happen to have the same value - not that that's very important to this discussion.
More importantly, this is partly incorrect as it applies to employees. Employee wages are an expense deducted before corporate profits are taxed; I believe (though I'm less confident) that in the case of profit sharing money going to employees could face double taxation.
Most importantly, though, "double or triple taxation" is misleading. Every time the money is taxed needs to be taken into consideration, to be sure, but the ultimate question is the overall rate, not the number of passes. (Please, please, please QUINTUPLE TAX me at 0.01% per pass...)
With loopholes and exemptions and deductions and sliding scales and different rates in different jurisdictions and everything, that's not a simple question, unfortunately.
Oversimplifying, though, for a single example...
Consider the following individuals in a State (fictional, if necessary) with no corporate or individual income tax and no tax on dividends, interacting with a corporation in the same State. The corporation turns a profit (income minus expenses) of $2 million/year, some of which it saves year-to-year and the rest of which it pays out in dividends.
1) Middle-class employee of the company.
2) Super-wealthy stockholder in the company.
3) Minimum wage employee of the company.
4) Middle-class stockholder in the company.
1) Makes 75000, takes standard deduction of $6100. Pays $14492 in income taxes, plus $9300 FICA (half of which comes from employer, but it's still a tax on the employee's income) for a total of $23792, or an overall tax rate of about 31.7%
2) Assuming their income is such that they can be reasonably assumed to be paying the top bracket on their average dollar (this person is really making a ton of money, and it's not all coming from this company): A dollar of corporate income that will wind up in this person's hands is taxed at approximately 34%. The $0.66 cents per dollar that he's receiving is then taxed at 20%, meaning a total of 47.2%.
3) $7.25 * 40 * 52 = $15,080 / year. They pay only $901 in income tax, but the $1870 they pay in FICA brings it up to $2771, which is about 18.4%. They may or may not qualify for assistance under one or more of our various current means-tested systems.
4) Profit within the corporation is taxed the same as for the wealthy investor, but now the $0.66 cents per dollar income is taxed at only 15%, for a total of 44% instead. This assumes they are making more than $36,250, which seems fair - but if they are not, the tax rate on the dividend income is 0%, so they are paying in total only the 34%.
I'm not making any particular point regarding what tax policy ought to be, just trying to shift the focus to numbers that are more meaningful.
What I personally don't understand is the reluctance to tax consumption as opposed to production.
From my point of view, it is easier to decide how much to tax a particular good or service e.g. a luxury car vs. a basic car vs. public transport. Another example would be a salon visit vs. a doctor visit. In addition, sales taxes are less personal (maybe even less controversial). As opposed to taxing "me" or "you", tax that "thing". Finally, sales tax seems easier to enforce since it is applied at the point of sale. However, I will admit that it's easy to avoid paying sales tax if transactions are paid for by cash.
It would not be regressive overall. The corporate tax and basic income need to be considered together. You are combining a corporate tax that might be regressive or flat, with a lump sum payment of equal magnitude. The net effect is most certainly progressive.
Taxing corporations may not produce magic money, but it is certainly more efficient than taxing individuals. Look, for example, at the Canadian tax system which offers near full integration for corporate taxes. Corporate taxes be a way of capturing money up front and limiting tax avoidance.
If we had a flat tax with basic income, one could scrap taxes on employment and just tax corporations by denying salary as a deduction. This would be equivalent to the standard approach of writing-off salary expenses and taxing individuals.
On a purely logical level, for sovereign nations issuing their own currency, taxation is completely decoupled from spending. You can increase taxes if there's an economic reason for doing so, but it is not a prior constraint on spending.
Not if you think runaway inflation is a problem. With fractional reserve banking, printing $1 adds well more than $1 to the economy (look at charts of M0 vs M1 vs M2). The government only gets to spend that $1. Meanwhile, threat of inflation makes it harder for the government to borrow money, meaning it needs to print more to cover the increased demands for interest.
This is not to say that printing any money ever is a disaster, but simply that there are absolutely constraints imposed by economic realities.
This assumes an erroneous loadable funds model where loans are supply driven; loans have always been demand driven. It's the same reason why QE isn't inflationary, just because there's more reserves in the system doesn't magically make creditworthy borrowers show up.
Doesn't adding dollars to the economy (through payment rather than loan) increase the ability to repay loans of those paid, those paid by those paid, etc, and thus their corresponding creditworthiness? Also, if people have money to spend, companies will borrow to service their needs. It's not about the ability of the banks to loan the money out (which is part of why QE isn't very meaningful).
If it is added where it will directly translate to demand (e.g. eliminating payroll tax) then you will get more spending, which will cause businesses to hire, take on loans to meet the new demand. At some point if you keep adding, you will surpass the ability of the market to absorb the demand and you will get inflation.
If it is added on top of already flush corporate balance sheets (e.g. eliminating corporate taxes), then you most likely won't see much difference in the current environment. They won't use it to hire more people because the demand isn't there.
Loans in and of themselves don't add net dollars to the private sector, as they create a liability for the exact amount of the loan (plus interest). For the domestic private sector to experience a net increase in financial assets, either the sovereign government (whoever's name is on the money) or the foreign sector must increase its deficit.
in which Murray goes into detail about how much a program of guaranteed income for everyone would cost in the United States, and some probable effects that would have on everyone's everyday behavior. I read the book a year or two after it was published.
may inform the discussion here. Big public policy proposals are not easy to discuss, but the big public policy proposal of a guaranteed basic income for all is a response to existing policy of supposedly targeted social welfare programs that are just about equally expensive, but more costly to administer.
The other problem with "targeted social welfare programs" is that it is very easy to dislike programs that someone else (particularly someone that you don't like) benefits from. A program that you yourself benefit from tends to be less likely to get eroded by future politicians.
Compare welfare and social security for a classic example of the difference.
This is my biggest concern with the idea, which I don't see being addressed (checked the entire conversation on this post to date). I don't think having the vote and having the basic income is compatible with each other. Why aren't people going to vote themselves larger basic incomes every year? How can you both have the (modern conception of the) vote, and a basic income at the same time?
Attempts to answer this question also need to deal with human beings as they are, not as they could be if we were all just really good and pure and all motivated by selfless interest only in the good of humanity as a whole or something, because presumably this is being proposed as a real policy for real people and not some fantasyland.
(Also, I do not consider "well we already have some programs like that today" to be a defense... I'm not entirely convinced that's just going to turn out peachy keen in the end either. I'm personally pretty convinced we've already passed a threshold at which a significant chunk of our government is actively pursuing government dependency as a conscious policy, and that's not going to end well either, as the same mechanics take sway... there is always a reason to grow benefits, it's always evil to cut them, and there's no feasible way to bound the growth of promised benefits to real growth, other than the really, really hard one of simply running out of resources.)
While this is a criticism of mine, and I am not trying to hide my general skepticism as seen in my second paragraph, I am posting this also in a genuine spirit of inquiry about what answers to this question may have been developed. I acknowledge the problems the BI idea is trying to solve, and I acknowledge that I have no answers (including, alas, BI, unless someone can convince me here).
Most of us have a representative system of government, not a purely democratic system. The problem with your thesis is that reality has not presented many examples where deep cuts have not been enacted. Austerity and Social Security cuts are common from elected politicians.
The parent idea reminds me of a certain system advocated by Thomas Paine, the famous American revolutionary who came up with a more liberal ideal of Social Security which offered every child a natural inheritance on coming of age. He suggested this in addition to subsidies for old age. Ironically, this is the same guy Tea Party members love to quote when they disparage taxes.
His pamphlet, Agrarian Justice, is well worth a read.
That's like asking why are taxes above 0%? There are plenty of rational people who understand what it takes to have a successful modern society. Looking at the current US feelings on money and welfare, do you really think that if this was done we would err on the side of too much assistance? I would bet it would be barely livable at first.
I think you're overweighting the relative influence BI can exert. Introducing BI as a tiny fraction of GDP does not make existing financial power structures disappear. Existing wealth will still wield the same influence it always has. There will be plenty of lobbyists to push back against corporate tax hikes, there will still be the usual capitalist incentives to start a business and increase production, the American people will still believe in upward mobility and the right of a business owner to make money. In short, I think you're imagining a slippery slope of a policy without any checks and balances where in fact there will be many. I could be wrong of course, but it's really rampant speculation on both our parts because humans don't really have an intuitive or historical understanding of how such a system would actually pan out in practice.
On balance it seems like a better risk than the current welfare and disability systems that dehumanize people and create a perverse incentive not to work in order to survive. If efficiency and automation trends continue some sort of wealth redistribution will become strictly necessary whether that is done through government policy, charity, or revolution. BI for its potential flaws doesn't look so bad compared to the alternatives.
OK, yes, but what's going to keep it a tiny fraction of the GDP? The BI's natural "lobbying organzation" is the entire public... not even the entire voting public, but the entire public. No current structures have that characteristic. For almost the entire population, $10,000 is a lot of money. Even people making $150,000/year are going to still appreciate $10,000, and we're now talking well above median.
If there was a lobbying force large enough to actually countervail the entire public's interest in voting themselves more money, I'm pretty sure it would not be hard to drum up a mob against them.
As I understand it, Basic Income's distinguishing characteristic is that everybody gets it. You can't use our experiences with things that well less than half the population gets to judge the effect it will have on voting patterns.
You can't just think about the first year of Basic Income's implementation. You have to think about the second year. You have to think about the tenth year. You have to think about the 18th year, when people who have never lived in a regime other than having BI exist start voting themselves. Are they going to understand that it's a bad idea to listen to the politicians promising to make it larger? Because there will be such politicians. Probably all of them, honestly.
A BI is generally associated with a flat tax to pay for it. Aka everyone gets 10,000 a year tax free but after that all income is taxed at ~20% to pay for it pluss whatever else the government needs, net result increasing the BI costs everyone making over around 50k per year more money than they gain. However, the good thing is it's revenue neutral for the person near 50k. And adds 5k to someone making 25k per year so there is no disincentive to work a low paying job to like with the current social programs.
> OK, yes, but what's going to keep it a tiny fraction of the GDP? The BI's natural "lobbying organzation" is the entire public...
Er, no, its not. The natural lobbying organization is the people whose have an expected positive net utility from an increased BI. That's not the entire public, as both increased public debt and increased taxation have negative consequences for members of the public. (And as, empirically, its been shown that increased income has a declining, and beyond a certain point, immeasurably small contribution to experience utility.)
> You have to think about the 18th year, when people who have never lived in a regime other than having BI exist start voting themselves. Are they going to understand that it's a bad idea to listen to the politicians promising to make it larger?
Sure. They'll probably understand the effects of BI level changes a lot better than people in the first year do.
> The BI's natural "lobbying organzation" is the entire public... not even the entire voting public, but the entire public. Even people making $150,000/year are going to still appreciate $10,000, and we're now talking well above median.
Then why couldn't we get universal health care passed through decades and decades of attempts?
I think you are assessing the human psychology factor incorrectly. The US population is not a lobbying organization. Just because something is in their interests does not make people rally behind a cause. A lobbyist has an agenda, but the very existence of BI does not make it everyone's agenda to increase it. The person making $150k has better things to worry about than exerting pressure to increasing BI, and in fact, will likely be a business owner and someone that is very receptive to the argument that raising taxes will hurt production. Similarly, raising BI is not a cause that fuels people's competitive spirit and drive for meaning. Certainly there will be a socialist contingent that does have that agenda, but I don't see why you are so convinced that it will inevitably become a runaway train.
> You can't use our experiences with things that well less than half the population gets to judge the effect it will have on voting patterns.
Exactly what I said previously—we're both speculating.
Your argument underlie some implicit assumptions, which are that (a) a BI that increases over time has negative consequences, and (b) these consequences would be invisible to the people.
Those seem some pretty strong assumptions to me, and they deserve to be further justified.
Why do you actually think that making the BI larger is a bad idea? And why do you think that people will disagree / not add one and one together?
If you think that increasing the BI requires tax increases, well, there will be people complaining about the tax increases, and your argument goes poof.
If you think that increasing the BI causes higher inflation, then either people will decide that having a higher BI is worth it, or there will be people complaining about the higher inflation, and your argument goes poof.
>The BI's natural "lobbying organzation" is the entire public...
I think you're misunderstanding the nature of lobby and power in the United States. It doesn't matter the size of your lobby, only the size of their wallet. An entire public who are only getting BI are going to have virtually no financial power to wield.
Also, your speculation ignores the fact that the "red states" are also the largest benefactors of welfare. It wouldn't surprise me at all to see a large percentage of the public saying that they themselves should be getting less BI because it's "socialism" or some such nonsense.
Having the vote hasn't given us any unholy powers to control the government's spending so far, so why would it? It's not even clear if any form of basic income would be voted for. We're just talking about changing from structure A to structure B in terms of how the government provides for people.
I don't see how the argument "people are going to vote themselves larger basic incomes so universal basic income isn't compatible with democracy" could hold any ground.
There are no democracy on this planet in this century and the last where people could vote _directly_ for any kind of numbers regarding money matter.
On the contrary, nowadays the elected leaders vote their own salaries (I live in Europe)... and force austerity upon the weakest.
> I don't think having the vote and having the basic income is compatible with each other. Why aren't people going to vote themselves larger basic incomes every year?
The same reasons that people vote themselves lower taxes every year, though they do vote themselves lower taxes sometimes:
1. We don't have a direct democracy, so people don't vote for policies directly;
2. Quite a lot of people, even if they can't analyze all the implications, can see that voting yourself a lower net contribution to government (either via lower taxes or greater benefits) has consequences that may be undesirable.
> How can you both have the (modern conception of the) vote, and a basic income at the same time?
The same way you can have the modern conception of the vote and have taxes at the same time. Mostly, this involves relying on an electorate that is largely composed of at least modestly responsible adults, rather than infants that gorge themselves on candy without limit given the opportunity without thought of the consequences.
"Mostly, this involves relying on an electorate that is largely composed of at least modestly responsible adults, rather than infants that gorge themselves on candy without limit given the opportunity without thought of the consequences."
Sometimes I'm not very confident we have that; but that's not really an argument against BI specifically as democracy in general...
"This is my biggest concern with the idea, which I don't see being addressed (checked the entire conversation on this post to date). I don't think having the vote and having the basic income is compatible with each other."
If you have well-enough educated, hopefully reasonable people I don't think this will become an issue. Swiss recently voted down to get more holidays (
http://www.telegraph.co.uk/news/worldnews/europe/switzerland...) and it wasn't even close of getting through. Now this of course doesn't prove anything (we also voted to ban minarets for instance, which definitely wasn't very rationally based), but it shows that people will not just take the short sighted approach only thinking of immediate rewards and instead try take the whole economic outcome into account.
>we also voted to ban minarets for instance, which definitely wasn't very rationally based
Of course it was. The law itself was stupid, but it highlighted a real issue. Notice that after that vote France, Sweden and a few others looked at the Muslim integration problem (i.e. a large portion of the Islamic community simply don't) as well.
There is an issue here that needs to be addressed, it was just the way they chose to do it was silly but the people didn't let that stop them from using it to voice their opinion.
The Muslim integration might be real issue, but it's also to a large part fear-based; that was definitely the impression I had back then from the advertisements and the media. In any case, I don't think laws should be enacted just to voice opinions and this one might at the end actually further hinder integration. This is all a bit OT now though :)
It should grow with inflation, but not necessarily automatically with CPI.
My quite tentative, back of envelope analysis:
If it grows at a fixed rate, then when inflation outpaces it we will see the real value shrink. Since a larger BI is likely to be inflationary, this shrinkage would lead to some deflation (or at least reduced inflation), which will grow it again. Hopefully this would act as some stabilization and give the Fed a hand at targeting a particular rate of inflation, and a predictable rate of inflation seems to be what's best.
And that increase in tax revenue will be offset by an increase in prices, which in turn will be offset by an increase in the UBI, ...
To expound on the point, absent other economic factors, an inflation-adjusted UBI pretty much guarantees that next year's inflation will be greater than this year's inflation.
I think you are falling for Zeno's paradox. There exists an equilibrium with a constant percentage rate of tax redistributed as a lump sum that will not affect inflation at all. If the lump sum is larger than the tax revenue, there will be inflation, and if it is smaller there will be deflation. Just look at the total money supply. Prices in general are not directly affected because this is a redistribution of income.
There is a near balance between those who would vote for and against a basic income based. The simplest implementation would involve a flat income tax that is distributed as a lump sum. For this case, families earning less than average would want an increased basic income and families earning more would want the opposite.
Some rational voters, however, would want to mitigate their downside risk, and therefore wish to have a basic income despite its cost.
Put it in a structure where it doesn't take a simple majority vote to raise (real) BI. Let's say the US did it with a constitutional amendment, for instance.
A basic income is much more like a change in tax rates. In fact, the existing Earned Income Tax Credit is already much like a basic income for a certain segment of the population.
Requiring a constitutional amendment would create much too high a barrier. One often needs a revolution to make a constitutional amendment. I don't think we want to go there.
> In fact, the existing Earned Income Tax Credit is already much like a basic income for a certain segment of the population.
It is impossible for something to be for a certain segment (defined in large part by income) of the population and for it also to be meaningfully like Basic Income.
EITC is a fairly standard limited-eligibility social welfare program, which is what BI is offered in opposition to.
> One often needs a revolution to make a constitutional amendment. I don't think we want to go there.
I don't think the facts justify that that is often the case, unless you mean "revolution" in some very loose sense that doesn't justify the "I don't think we want to go there" comment.
I mean, there are 17 amendments to the Constitution that weren't passed fairly contemporaneously with the original document: can you point to the "revolutions" which were necessary for these?
You could say the Civil War was a revolution necessary for the passage of the thirteenth amendment (and potentially the 14th and 15th).
Maybe the rise of organized crime under prohibition could be considered a revolution prompting the 21st amendment, but that seems quite a bit of a stretch...
If by "go there" you mean revolution, I agree - we don't want to go there.
In terms of whether the US could legally establish a BI without constitutional amendment, I am inclined to agree that it's allowed.
I think there is some argument for avoiding a simple majoritarian decision for how the rate is determined; I am not certain whether it is a sufficient one, but I don't think there's reason it shouldn't be part of the discussion, and constitutional amendment is the most secure process to elevate something above majority rule in the US.
I disagree that it "often takes a revolution" to amend the US constitution - if there is enough popular support that amending by that means would be practical, amending without it should be - and indeed, only twice of the 17 times we've amended the constitution has it involved a revolution (once successful, once unsuccessful).
Technically, they do not. The 27th Amendment (submitted for ratification 1789; adopted in 1992) states that any changes to Congressional compensation doesn't take effect until after the next general election.
My understanding sit hat Congress has the authority over the salaries of the congress following the next election. If they abuse it too horribly, that's not going to include them.
Agree with you. How does one enforce people hopping borders from places that have no universal income policy? How do we deal with sovereign states that are allowed to set their own tax policy and thus legally become an offshore tax haven?
I do not know what you mean and what "always have" means in your context.
The article asks to get more money from corporations which I do not think is feasible. I am in the UK now and this country decided to go for universal income we would have to either close the borders or convince at least the whole of EU to do the same at the same time.
I was speaking of the US, but I also live in the UK, and I have first-hand experience getting a UK visa as a highly paid professional, and it was not exactly easy. Also I might add that though the NHS is set up as a human right, all public funds are not. For instance, I have to pay for my daughter's school in full, which would be partially covered by the state if I were a citizen. So it's not a question of going from "open" borders to "closed", it's a question of degree.
> I am in the UK now and this country decided to go for universal income we would have to either close the borders or convince at least the whole of EU to do the same at the same time.
That's something of an issue of the EU being a union that is very much like a traditional state, limiting -- by design -- the ability of the subordinate elements to effectively manage certain kinds of policy on their own. That's not an issue with BI, that's an issue with the UK as the unit of analysis in considering BI.
You'd have the same problem considering BI in California, for instance.
The UK could surely apply BI only to their citizens. California would have more trouble, given the 14th Amendment, though might be able to do something similar to what we do with schools, requiring that you live there a certain amount of time before you start receiving BI.
This is assuming that the influx of population actually would be a bad thing, though, which I'm not sure of one way or the other - I see some arguments on both sides that hold at least a little water.
This is always the fear that if we raise taxes 1% all the people with money will hop on a plane and leave us, but it hasn't happened. Where would they go exactly? There are places that are a lot cheaper, tax-wise than the US right now.
Much of the special exemptions relating to health care and insurance which effectively tie it to employment, while restricting the ability for other groups to form for pooled risk. Addressed somewhat under Obamacare.
For instance, Detroit has created pension obligations that it cannot possibly make good on, and is having some difficulty dealing with those as it is bankrupt. Many other local governments have similar programs, but are not yet bankrupt.
Surely Social Security wasn't meant to be the biggest item on the Federal Budget. I suppose you can argue about its popularity, but it has become enormous.
Would you mind mentioning any one thing which federal government does which should be more costly than providing a livable income to everyone over the age of 65?
Our Federal Government is not responsible for most of the major functions of governance because our states cover most functions. Also, we aren't at war with a major foreign power.
One of the biggest problems with disability pay is the barrier it creates to joining the workforce. Losing payments when you get employed is a huge disincentive to looking for employment. That's the opposite of what UBI is trying to do.
There an elite few controlled all the money, and the middle classes simply had no economic room to exist. The result was patronage, on a scale equivalent to a welfare system, with ordinary Romans queuing each day to recieve a daily "wage" in return for loyalty / obligations / it's complicated - http://en.m.wikipedia.org/wiki/Patronage_in_ancient_Rome
I mention it simply because Rome also could afford to pay all its citizens a living wage, but instead choose to keep the money in the hands of the powerful and use it for political purposes
One key to thinking about how the Plan [improves quality
of life] is the universality of the grant. What matters is
not just that a lone individual has $10,000 a year, but
that everyone has $10,000 a year and everyone knows that
everyone else has that resource. - Charles Murray
This is the most important part of any UBI scheme. It's the "U" part - universality. Life is so much less stressful when the need for competition is removed from those who don't desire to compete.
Case in point, you'll be much less likely to be shot and killed for the contents of your wallet when both you and the mugger start from an equal footing. It's the mismatch between the mugger's means and his expectation of yours that motivates his malicious intent. When everyone gets a UBI, you straighten the Lorenz curve, and everyone gets closer to equality.
If you freely choose where to live, that means you get (at least) $3000 of value renting a $3000/month apartment no matter where you rent it. If it's more expensive for the same size of unit in one place or another, that means you're paying for amenities, or a short commute, or access to a particular job market. So giving people more money to live in SF would be subsidizing the consumption of the amenities that SF provides, or to put it less delicately, you're rewarding San Francisco residents just for living there. One could potentially argue that the subsidy is warranted, but generally I am skeptical that such a subsidy would be welfare enhancing. My suspicion is it would just cause people to overconsume San Francisco real estate relative to their latent preferences.
"My suspicion is it would just cause people to overconsume San Francisco real estate relative to their latent preferences."
Which seems like it would make the situation worse, long term. We can increase density further, but there's a limited amount of SF to go around, so driving overconsumption would raise prices, and then we'd need to raise the subsidy we give SF further.
Haven't read it but I'd suggest it shouldn't. Some areas will be more desirable than others and you shouldn't compensate people more because they happen to live somewhere everyone else wants to.
I think there could be a better explanation for this:
There is an impression that your IQ score is a fixed thing that you're born with, but in reality you can "study" for the IQ test and get better scores at it. There is also the whole issue that IQ scores have been rapidly rising in the past few decades.
This might just mean that IQ score merely acts as a proxy for socioeconomic status and education level and a bunch of other factors, and it doesn't really measure your true maximum intelligence potential.
Thus, the fact that some groups have lower IQ than others wouldn't necessarily point to them being inherently / genetically disadvantaged.
As an aside, I don't know anything about the book or the authors' alleged motivations, but if they truly had no agenda, it's not very fair to be called racist because the result of your research says something politically incorrect, and you conveyed your true results to the best of your knowledge. This kind of torches-and-pitchforks behavior is just as bad for the advancement of knowledge as fudging up the numbers for ideological motivations.
I think your explanations are largely incorrect. I’m currently partway through reading The Bell Curve; it investigates a number of things people often attribute to socioeconomic status and tries to compare the effects of socioeconomic status and intelligence.
An IQ score is literally your score on an IQ test; I think it’s more correct to talk about g (“general factor”) which is the principal component of intelligence you get if you measure a group of people on a battery of tests, and is the most predictive way to summarize an individual’s mental ability in a single number. A good IQ test is highly “g-loaded”, that is, it does a good job predicting someone’s scores on other tests that are g-loaded to some degree.
Intelligence, as with most traits, is influenced to some degree by genetics and to some degree by environments. This can be (approximately) measured by comparing differences in intelligence between people of varying degrees of relatedness (somewhere between being identical twins and being randomly selected people), who grew up either in the same families or separated. Usually people are interested in pairs of siblings or identical twins where one was raised by families of different socioeconomic statuses. When The Bell Curve was written, the authors said the consensus was that intelligence is between 40%–80% genetic, but I think it’s now thought to be on the high end of that. Intelligence is actually more influenced by genetics in adults than in children, which is the opposite of what you’d expect if environment actually did have a large effect.
When you say you can “study” for an IQ test, I think this is kind of tautological; e.g., you could memorize the answers to the hard problems, but intelligence is largely stable through life. It’s true that IQ scores have been rising for several decades (the Flynn effect), but I don’t think it’s ever been explained really well (maybe fewer people growing up in damaging environments?), it’s not clear whether or not people are actually getting smarter or they were just scoring better for some reason, and I think there’s evidence that the trend is starting to stall or maybe even decline since the mid 1990s.
Intelligence and socioeconomic status are certainly correlated, but I think it would actually be more correct to say “socioeconomic status is a proxy for intelligence” than the other way around. If intelligence is mostly genetic, with a small environmental factor, as it seems to be, and more intelligent people make more money on average, which they do, then socioeconomic status is certainly largely influenced by intelligence, and the heritability of intelligence at least partially explains why social mobility isn’t higher than it is. It’s probably the case that there’s some intelligence benefit from environmental factors resulting from socioeconomic status, but you can’t just try to throw out all the differences correlated with socioeconomic status, because there’s certainly some (likely more) influence in the other direction.
If measured average test score differences exist between genetic groups of people (they do), these differences again have to be some amount genetic in origin and some amount environmental. The amounts for between-group variation are probably similar to the amounts for within-group variation, but there are reasons why they might not be exactly the same. People often claim the tests are biased; what you can do to rule this out is to look at individual questions that certain groups of people get wrong more often, since it’s more likely that individual items are biased than that every question is biased by exactly the same amount. You can also look at things the tests predict, and see if they have the same predictive power across groups. For example, if someone claims the SAT is biased against racial minorities, you can look at college students in different racial groups and their SAT scores and see if the students in different groups with different average test scores do better or worse in college classes (I don’t know a good source off the top of my head, but to the best of my knowledge, the SAT is equally predictive across racial groups).
I strongly agree that the people claiming that psychometrics researchers have a racist agenda to prove white (or Asian?) superiority have a political agenda themselves, whereas the research in question seems to me pretty statistical, honest, and carried out without regard to the conclusions, and the researchers seem like they have to be very brave to carry out (or at least publicize) this research in the current political climate.
When I read it 16 years ago, I went to the length of actually looking up some of the twin studies. My impression is that they are not as compelling as it sounds. For example one study had 40 individuals, but they were not a homogenic group. It's not that you have 40 twins seperated at age 4 and then tested at age 40. It's actually very rare for twins to be separated and therefore the stories are usually complicated.
Some things in the papers made actually doubt them more. For example they mentioned one pair who they found wearing the same clothes and having given their kid the same name. I'm sorry, but there is no gene for tastes in clothes, at least not to that degree. Neither is there a gene for picking kids names. So those studies certainly overshot in some aspects.
In the actual IQ data there was also quite some variation.
Reading the summary at the top of the Wiki entry, it's already not surprising the book has been labeled racist. Any book that discusses race, inheritance, and socioeconomic class always gets called racist.
I’m reading it now; it is fascinating, because the idea that it’s possible to measure intelligence and used it to predict probabilities for individual and group outcomes is one of the most useful, strongest-supported ideas in all of the social sciences, yet many people either misunderstand the state of scientific consensus (“IQ doesn’t really measure anything, intelligence tests are largely bogus”) or actively try to deny that this is possible for political purposes (“many people are disadvantaged because of low socioeconomic status, but we can equalize everything with more government spending“). Understanding something other people don’t should allow you to gain an economic advantage somehow; there should be sort of arbitrage opportunities to profit from the knowledge differential. For example, many people think having a four-year college degree adds x amount of value because the average college graduate earns y more dollars over their lifetime than the average non-college graduate, and this means that everyone should go to college. But if you understand that a large part of x actually comes from the inherent value in being intelligent, and a large part of the reason students of top universities make better workers is that they were really smart even in high school, not necessarily because a university education is worth what students are paying, perhaps instead of hiring only from top universities, you can hire students straight out of high school based on their SAT scores (yes, the SAT measures intelligence) and train them yourself? Universities use a multitude of signals when deciding who to admit (test scores, essays, reference letters, extracurriculars), so in addition to trying to determine intelligence, they’re also trying to determine other character traits, but The Bell Curve (at least I think this is where I read it) presents some data related to job hiring that shows intelligence is the trait that’s most measurable and provides the most predictive power.
That's an incredibly cheap dismissal that's simply not true. There are plenty of books that look at those issues from a humanist perspective.
The Bell Curve is labeled racist because it is myopic about the existence and importance of race. Race is not a valid scientific categorization: it is not based on statistical grouping of DNA, or anything concrete other than "people used to be assholes to foreigners." There is an order of magnitude more genetic + cultural diversity among each race than there are between the races.
That's an incredibly cheap dismissal that's simply not true
Examples, please, of books that investigate socioeconomic status & race that have not been called racist? Because I can't think of any. By the way, I'm not talking about literary explorations of race like "Huckleberry Finn". Although that was called racist too.
There are orders of magnitude more genetic [...] diversity among each race than there are between the races.
Hold it right there, buddy. License, registration, and sources please. Mostly sources.
Well, you could read Stephen Jay Gould's The Mis-measure of Man.
Or you could read The Bell Curve. It is positing a small difference between "races", a difference so small that it is very minor compared to the expected range of deviation for a populace.
The idea that there is a scientifically definable thing called "race" lacks data. That is your row to hoe if you believe other. Skeptics are not required to disprove the existence of the tooth fairy, Nessie, or "race".
I wonder then, what about the Melanesians that have 6% of DNA of a unique population?
Or that asians and whites have wildly different reactions to milk.
Or that some diseases only affect blacks, or whites, or whatever?
This is not data? People use freely the same techniques to categorize humans, to categorize other animals with significant variations in their species, why only humans you must not use the word "race" and use other words to describe the same thing?
> Or that asians and whites have wildly different reactions to milk.
Asians and whites don't have wildly different reactions to milk. Adult mammals are generally lactose intolerant. There is a mutation that, in humans, is found far more often in people with ancestry in Northern Europe (which isn't coextensive with "whites") than any other origin, but which is neither universally absent in all other people or universally present in people of that origin that results in lactose tolerance.
Most supposed "racial" differences (EDIT: that is, most that refer to anything that is actually a measurable difference between real human populations at all) are of this type -- things that are statistically more or less common in a population of a particular origin that is not coextensive with any of the usual "race" categories with which the supposed hard-and-fast difference is popularly associated.
You've learned anything about the history of race relations and think "race" is a better word to describe that phenomenon than "lactose intolerant"? I'll be right back, going to inform my friends that because they aren't Chinese we can go get ice cream.
Doesn't genetic testing allow you to determine where your ancestors came from to an astonishing degree? I'm pretty sure there are lots of valid ways to define a race. The question is how useful it is. Also in the past a lot of people have been lumped together inappropriately, for example apparently the genetic diversity in Africa is the biggest of all continents, yet all people from there were lumped together as "blacks".
The distribution of genetic variants within and among human populations are impossible to describe succinctly because of the difficulty of defining a "population," the clinal nature of variation, and heterogeneity across the genome (Long and Kittles 2003). In general, however, an average of 85% of genetic variation exists within local populations, ~7% is between local populations within the same continent, and ~8% of variation occurs between large groups living on different continents,. (Lewontin 1972; Jorde et al. 2000a; Hinds et al. 2005) (Editied my previous post to reflect a single order of magnitude between 8% and 85%).
Thanks Wikipedia. Regarding being labelled racist, fine, everything gets labelled that. Even this post. I took your statement for something bit more meaningful than the cynic's "woe is the opinion of The Populous".
"The distribution of genetic variants within and among human populations are impossible to describe succinctly because of the difficulty of defining a "population," the clinal nature of variation, and heterogeneity across the genome (Long and Kittles 2003)."
BTW, I find it funny that you're wiki-scholaring using old sources that date back to before we learned all non-african humans have some neanderthal dna in them.
My own guess is that for some blacks, there has not been enough time for the Flynn Effect to occur for them to catch up with the general population. This is not due to any fault in them, but a result of no/substandard education for many generations. I imagine in a few generations any difference from the average will disappear. http://en.wikipedia.org/wiki/Flynn_effect
Well I read it because I wanted to know if it was really racist or not. Unfortunately that was 16 years ago, so I am not 100% sure of my conclusion anymore. But I think ultimately I didn't think it was racist. I seem to remember they explicitly wrote about the effect of environments.
Would have been curious to get an opinion by somebody who read it recently.
Basic income on top of everything else doesn't make much sense (cost-wise).
But if we could trade B.I. for Social Security, Medicare, Medicaid, SNAP, and other social progams-- it would probably be more cost efficient as individuals look after their money better than other people do.
Here's a video from Milton Friedman (not Tom Friedman!) who is advocating for a negative income tax-- a variation of basic income.
> The welfare bureaucracy is largely dismantled. No means testing, no signing on, no bullying young people into stacking shelves for free, no separate state pension.
Medicare and medicaid wouldn't really apply so much to this as there are systemic problems that make spending money on healthcare not such a good idea. Rather, with a BI we should also include a universal health care option to avoid the issues with consumer healthcare spending and marketing.
The problem is that when consumer make bad decisions (i.e. don't go to the doctor and develop serious health problems), the government in the end still has to foot the bill. You can't turn people away from emergency rooms and have them die on the street.
I often find that when somebody claims "you can't do x" that we learn a lot by asking, why exactly is that.
In your case I am wondering why exactly is that we can't turn people away - in aggregate it is likely to save more lives since seeing people dying would be an excellent motivating factor for others to make sure they pay their health care insurance -- and since they would therefore have it and would be able to get treatment earlier, which is cheaper, thereby causing the price of health care to be pushed down (treating people in ERs is frighteningly inefficient).
Frankly, reports from doctor-friends who work in ERs indicates that a large part of costs are treating people who are dealing with preventable often drug-related problems that create emergencies because the people involved are basically incapable of prevention. Seeing other people on the street homeless is apparently not enough incentive to keep people from becoming homeless themselves. I have no idea why seeing other people dying from internal bleeding because they didn't have the foresight to buy medical insurance to get the appropriate medication to treat their issue would curb behavioral patterns which seem to be flawed at a very fundamental level.
> In your case I am wondering why exactly is that we can't turn people away - in aggregate it is likely to save more lives since seeing people dying would be an excellent motivating factor for others to make sure they pay their health care insurance
How exactly does this help people in emergency situations? Or those who go undiagnosed with a condition despite having a primary care physician? What about those folks with a disability that makes it difficult for them to access health care? What about people who are discouraged from getting health care because of discrimination? What about people who live in rural areas far from some kinds of medical treatment?
Bottom line is that death is not a motivator for people in the way you think it is. Even if it was, what kind of society threatens its members with death for failing to participate in your model vision of capitalism?
Aside from all the obvious issues with poor people or people who just don't like the idea of insurance, I want to know how turning people away works with employed, well-paid, insured people like me who might just be coming in without ID after some sort of accident or medical emergency.
Indeed, but the point is that with BI, they would be on the hook for those excess costs. Preventative medicine is cheaper and when the excess cost of an ER visit comes directly out of patients' pockets, they will be more diligent about prevention.
Good analogy is car maintenance. Most people are very diligent about oil changes because they (inherently, I would argue) recognize the cost structure.
A lot of people aren't very diligent. It just so happens the old mantra of "every 3,000 miles" doesn't apply to newer cars, so when people forget and do it at 6,000 or 8,000, there aren't any negative effects.
And I would say people don't change their oil because they know their engine will die if they go too long. They do it because it's been ingrained in their head as required maintenance, and that sort of thing is normally taken care of nowadays in a much larger package that includes filters and belts (because people vaguely remember about oil, but they're clueless about the other things.)
I'm not the one you were responding to, but my point here is that people aren't going to ensure prevention without a ton of conditioning or some greater authority forcing them to do so. The voter turnout for Australia, where people are forced by law to vote, was 93% in 2010.[0] In the USA? 41%.[1] People can't be asked to run over to their local elementary school for 20 minutes and pick the first name that pops into their head once every four years, so I doubt any sort of repercussion not mandated by law will have an effect.
I agree, but unfortunately I don't think "basic income and no other welfare programs" is a politically stable policy. No sooner will it have been introduced than politicians will be tempted to screw with it to help a favored constituency.
Go to work as an inner city teacher? Here's an extra 20% in your BI.
Live in an area damaged by a hurricane? We'll bump your BI for a year or two.
I don't think a "simpler" tax code would last much longer for the same reason.
The only way I think it could actually work is if we turned over the whole thing to a bunch of unelected technocrats like the Fed (which might not be a terrible idea since it gives them another lever on economic policy...)
One of the proposed advantages of BI is its simplicity (which among other things means few loopholes and lower enforcement overhead). The point the poster you quote is making is that no tax code will remain simple for very long.
In fact you support that point. Many of the complexities we have now come from adding "just one more feature" to the tax code, until we end up with something so complex that there is an entire industry built up around paying taxes.
If he said "In exchange for supporting inner-city teachers, we will be indirectly subsidizing H&R Block to the tune of $2B" you might ponder whether or not it's worth it.
Why not? If you get BI out of any political process, you already had a majority in support of the simplification. It just requires vigilance, which our current track record for is terrible, but any economic system or any political process requires vigilance, and a BI isn't any different.
It is true that over the entire history of the United States, the American public has proven itself apathetic to the abuses of their politicians, but that is a cultural problem that needs to be solved regardless of having a basic income or not.
They already do. Working in an inner-city can substantially reduce your college loans as a teacher, especially if you were getting something higher, like an ED.D. (doctorate in education)
Substantially getting closer to zero assets is not really what I call society valuing education - but that is not your point. My point, though, was this: it turns out it's possible to provide incentives to people without manipulating a BI scheme - you just actually pay people money, like, you know, income from work they're performing. So there is no reason to assume that introduction of a basic income should be opposed because it would introduce unmanageable complexity as well, especially given that it would most certainly eliminate far more complexity.
It's true. While the basic income is a superior system to welfare in theory, political reality assures it wouldn't be handled in the way Friedman would prefer. It would just lay the foundation for all sorts of political redistribution, which would be very destabilizing.
There already is a negative income tax. It's called the Earned Income Tax Credit. The only catch on the EITC is that it's based on both income and the number of qualifying children.
You can't use Social Security funds to fund a Basic Income. It operates similarly to a pension fund so it would be equivalent to confiscate peoples lifetime savings. Good luck explaining that to someone who is just about to retire.
> You can't use Social Security funds to fund a Basic Income.
Yes, you can.
> It operates similarly to a pension fund
It presents itself as one, but it really operates as a general-tax-supported social-benefit program with a variety of eligibility criteria.
> so it would be equivalent to confiscate peoples lifetime savings.
Sure, some people would politically attack it that way, particularly if the general BI reduced the SS benefits to which people already qualified would receive. Its less subject to this political attack, however, if SS is merged into BI in such a way that no one currently paid into SS ends up with less BI at any point than they would have received from SS.
You can, however, say that going forward, people will pay into basic income instead of social security; and that no one born after [policy-change date] will receive social security in the future (since they never paid into it.)
Possible in theory. But then you have to explain to people why they are paying the same amount of tax as people one year older than them, but will still receive a lot less when they retire.
I think in the end this wouldn't work. It'd play out something like this:
A certain percentage of the population would stop working entirely since they no longer need to. (Particularly when politicians push the basic income amount up to placate constituencies)
Because workers bow out of the system certain industries lose productive capacity. Maybe we stop producing enough food, or enough fuel.
Prices rise (assuming a moderately free market), which causes the basic income amount to rise and it spirals out of control from there.
> A certain percentage of the population would stop working entirely since they no longer need to.
Everyone I've ever seen argue this has had strong opinions about how other (more greedy and venal) people would act. They, of course, would still work, but the great unwashed masses would sit on their backsides and take the money.
I suggest, instead, we try specifics. Given a basic income, I wouldn't be lazy. Nor would anyone I know, which includes some very poor people who would love to work if they could only do better than on benefits.
I suspect (though I don't know), that you wouldn't be lazy, either.
Also, the evidence of limited trials is that this increases work, not idle people:
They, of course, would still work, but the great unwashed masses would sit on their backsides and take the money.
The counter argument would be the existence of industries that people will already not work in.
For example Italy has a 38.5% youth unemployment rate. It also can't get enough workers for the garment industry. So why don't the youth of Italy want these jobs? Maybe the work is seen as menial (so a cultural condition) or maybe the wages are too low (they think they deserve more) or maybe Italy has made hiring citizens too difficult (so they shift to the black economy), but either way their reluctance is sustained by a welfare state that allows them to not work.
The same can be said in this country with the absurdly low unemployment rate in North Dakota while the disability rate has shot through the roof. Unless you think people have suddenly and inexplicably become disabled this is clear evidence that people are willing to go on the Government dole rather than get a job in North Dakota.
I'm not even saying these people are evil or irrational. (It actually seems entirely rational to me) In a similar situation I'd probably do the same thing.
The question is: how many people currently working would stop working if they didn't need to? (particularly in the areas vital for the basic functioning of society) That question is so impossibly difficult to answer that I don't think any system we come up with won't have potentially disastrous consequences.
The question is: how many people currently working would stop working if they didn't need to? (particularly in the areas vital for the basic functioning of society) That question is so impossibly difficult to answer that I don't think any system we come up with won't have potentially disastrous consequences.
I don't think it's all that difficult to answer. When I leave the office building I work at the end of my day, the janitors are just showing up. They probably already only get paid the basic livable wage (probably less), so why would they show up to work if they were getting the paycheck anyways? I can think of 100s of other jobs that someone wouldn't show up for because they aren't worth the time, they aren't fun, or even remotely interesting.
> When I leave the office building I work at the end of my day, the janitors are just showing up. They probably already only get paid the basic livable wage (probably less), so why would they show up to work if they were getting the paycheck anyways?
There's something that deeply bothers me about the notion that the above is a bad thing. Yes, you would no longer have access to low-wage janitorial services. But that's your problem, not your janitor's. Do you think he wants to be scrubbing toilets for a subsistence wage?
The world will not fall apart for want of janitors, or garbagemen, or baristas.
Imagine a world where, at some time t=0, there are zero people filling these jobs because of a basic income. It truly doesn't take all that much enterprise to see an opportunity in a world with no janitors. At t=1, there would still be janitors, but there would be fewer of them, the ones that exist would be better-paid, because they're now working for something approaching the wage that you might demand if someone asked you how much it would cost to clean their office.
Do you think he wants to be scrubbing toilets for a subsistence wage?
Thanks for proving my point. No, I highly doubt he wants to scrub a toilet for a subsistence wage. I think a janitorial job would go empty for a long, long time. So now, instead of me focusing on my job, I have to take time out of my day to do something I'd pay someone for.
It would be better if you get your basic livable wage but still have to work (exceptions made for childcare, students, disability, etc.) and depending on the job you get what the market deems as extra. So, if you get $20k per year as a livable wage (figure just chosen for easier math) and a job would've paid $25k, you get the $5k difference in your paycheck. This would help keep the low-interest, but easy, jobs staffed.
" I have to take time out of my day to do something I'd pay someone for. "
But apparently you wouldn't pay enough to have them do it, so it's more valuable to you to use your time to do that job.
If you paid more, you could more effectively utilize your time.
"So, if you get $20k per year as a livable wage (figure just chosen for easier math) and a job would've paid $25k, you get the $5k difference in your paycheck. This would help keep the low-interest, but easy, jobs staffed."
So you would only be getting paid 5k then. If I don't work at all, I get 20k. If I work, I get 25k.
I think that's what you're suggesting. Unless you're suggesting you get nothing if you don't work, at which point we don't have a basic income anymore, and this idea is moronic.
Basic income is just that - basic income. Some people who want to have more than that will work. Janitors still want iPads or cable television - and they will be incentized to work for that on a competitive market for those products and services.
0 hours of janitoring = small comfortable house and enough food
5 hours of janitoring = small comfortable hosue and enough food and cable televsion
If people simply stopped working when they could live "comfortably" why would they buy iPads, cable television, new cars? Employment history and reputation aren't going out the window with this plan either. A janitor will be good at his job because he knows if he gets fired he won't get reccomended for other janitorial jobs - and his chance of getting an iPad in the future goes way down.
I know janitors who buy lottery tickets, eat out at restaurants and have cable television - according to you those wouldn't exist because they could "janitor" less and live without those.
I never said any of those wouldn't exist, but I'm a firm believer in rewards. Right now a janitor is rewarding himself with a paycheck so he can do what he wants otherwise the flip side is poverty.
Here's the thing. Let's say you made $100k per year working 40 hours/week with benefits. If I were to pay you to not work but get a smaller wage (keeping your benefits), what percentage would be acceptable to you? 90%? 80%? 50%? What is it worth to you to not have to work?
There is a number that most janitors would probably accept. I think a fair number of retail employees too.
because they still would be better of working, just possibly at a lower hourly rate.
basic income: 1000 USD.
unemployed janitor: 1000 USD
employed janitor: 1300 USD.
He does not need to work anymore, but it might still be worth it.
> The same can be said in this country with the absurdly low unemployment rate in North Dakota while the disability rate has shot through the roof. Unless you think people have suddenly and inexplicably become disabled this is clear evidence that people are willing to go on the Government dole rather than get a job in North Dakota.
Or, people who are able-bodied and unemployed have chosen to move out of North Dakota (perhaps due to work available elsewhere), and/or people who are disabled have chosen to move to North Dakota for financial or environmental or other reasons. Either of these would both reduce the rate of unemployment and increase the rate of disability without people "choosing to go on the Government dole".
> The question is: how many people currently working would stop working if they didn't need to?
The price consequences of BI are such that this is self-limiting. Once you set a level of BI, the more people choose to opt out of work, the less affordable it is for people to choose to opt out of work. Less people working -> higher market clearing cost of labor -> higher market clearing cost of all goods and services -> reduced standard of living for people on fixed incomes (including whatever point the BI is set at.)
Although the unemployment rate is low in North Dakota there are actually only about 17,000 open jobs. This wouldn't even employ all the unemployed people from Minneapolis.
Compounding the issue are a lack of housing, and the fact that over half of those positions are low paying dead end jobs like fast food, walmart, etc. It's also very far away from almost everywhere - a four to nine hour drive from the closest major airport.
> That question is so impossibly difficult to answer
I agree, which is why I think we should not implement a basic income immediately, but that we should proceed with further trials and examine the evidence on the ground.
It's worth keeping in mind that a number of the people who would show up in statistics as not working would be devoting themselves to activities that are socially beneficial but not currently economically viable: community art projects, gardens, mentoring children, cultivating time-intensive abilities that are inhibited by the archaic idea that the only worthwhile way to exist is to work 40+ hours per week. I know that's what I'd do.
I'd also like to travel, and would be more than willing to work a sane amount of hours to contribute to the basic functioning of society in exchange for the means to do so. With respect to the Italy example -- raise wages enough and I'd bet the shortage would disappear. If the societal need is great enough, the prices will reflect that (maybe we don't actually need more garments?).
The basic functioning of society would need to be redefined a bit -- perpetual economic growth is neither sustainable nor desirable at least while it comes at the expense of the environment, or social and medical well-being (obesity, depression, etc).
> So why don't the youth of Italy want these jobs? Maybe the work is seen as menial (so a cultural condition) or maybe the wages are too low.
If you can't make a living wage at these jobs, then by taking the job you are hastening your own demise. If you already have a living wage, then taking a low-paying job will give you a supplemental income. If you can work part-time at a low-paying job, then you can still spend your other time educating yourself or looking for a better job.
Also, if you can't fill your factories with the wage that you're offering, then the free market is telling you that you need to either increase the wage, or learn to make do with less, i.e. decrease output.
Many of these arguments assume that in (say) 50 years, all the janitorial/toilet cleaning/fruit picking jobs (i.e. shitty) jobs won't have been replaced by robots. I think this will happen whether it puts people out of work or not, so maybe we stop people from needing these jobs in the first place. Sure there will be some manual labor left to do, but it'll be highly paid so you can do it 5 hrs a week instead of 50 for some extra cash for your house party.
If there were no work left in the world for humans (and yet I was still allowed to live), I might devote my entire energies to the education of my daughter.
Today, that is called idleness. But in that future world, perhaps it would not.
A certain percentage of the population would stop working entirely since they no longer need to.
True. The problem is, as things are now, a certain percentage of the population will be forced to stop working as they are made obsolete by increasingly efficient globalization and automation. As that percentage increases, eventually either society will collapse or something fundamental will have to change (such as implementing a basic income).
This is a powerful point to ignore. The Great Recession has shown this trend might be establishing itself already; the percentage of people not participating in the workforce in any fashion spiked, hasn't recovered, and isn't showing promising signs of ever recovering.
What a basic income will tend to do however is reduce the need for a minimum wage. Currently the minimum wage exists to solve a problem: People need to survive, and to do that they need to work enough to enable that. The problem is with workforce participation being compulsory, absent a minimum wage the price for labor in unskilled work rapidly drops. Where you can find someone desperate for 7.00 an hour, you'll find someone else equally desperate willing to take 6.90 an hour. There will be yet another person willing to take 6.80, and this trend continues until you reach a point where you're better off scraping whatever you can do to survive.
So it's actually preferential for the labor force to shrink some; instead of everyone competing for the tiniest slice of a paycheck just for survival, you'd have a labor force with much more power, ensuring that you don't have to settle for work at 7.50 an hour just to eat. On the contrary: You'll stand on a corner and flip a signboard around in the air for 20 bucks a day only if it's worth your time, and to buy the extra 6-pack or whatever you desire, but don't need to survive.
> You'll stand on a corner and flip a signboard around in the air for 20 bucks a day only if it's worth your time, and to buy the extra 6-pack or whatever you desire, but don't need to survive.
This is key here. Plenty of people are willing to work beyond survival for luxury goods.
On the contrary, I see a falling dollar in the world market which is reinvigorating the US Manufacturing industry. As China's middle class grows, they become impatient with China's loose policy of eradicating their own currency to promote local jobs. The Chinese middle class has begun to rise, and with it, the cost of production in China.
In the US, the weaker economy has hurt the US Dollar, making manufacturing cheaper again in the US. So for the first time in over a decade, Apple Computers is building a US Factory.
It's not just a weaker dollar causing manufacturing to return to the US, though (especially relative to China) that is definitely part of the cause.
Rising fuel costs threaten global supply chains. Especially in areas that have a less-than-cordial relationship with the US such as China, there is some uncertainty that things will stay as they are.
Another powerful trend that is reinvigorating the US manufacturing industry is the re-evaluation of the spoils of offshoring. Companies such as GE are discovering that there are many side benefits to bringing production back to the US: Shorter supply chains from manufacturing to retail, better quality from production, and greater feedback from shop floor to engineering.
One of the biggest unaccounted costs of offshoring was the effects it had on the lifecycle of a product. That article points out how GE was able to take a $1600 water-heater from China and sell it for a profit $1300, just by manufacturing it from the US. It turns out that in off-shoring the production, they lost most of the feedback in the product's lifecycle that enabled them to refine the design far beyond what they thought was 'final'.
No, it's basically a tautology based on continual technological progression. Imagine if we could build a robot that was exactly equivalent to a human. If it ran on less energy than a human, then basically no human would be needed for any task. Now imagine a continuum of less sophisticated robots that excel in certain tasks beyond what certain humans can do.
there was a type of employee at the beginning of the Industrial Revolution whose job and livelihood largely vanished in the early twentieth century. This was the horse. The population of working horses actually peaked in England long after the Industrial Revolution, in 1901, when 3.25 million were at work. Though they had been replaced by rail for long-distance haulage and by steam engines for driving machinery, they still plowed fields, hauled wagons and carriages short distances, pulled boats on the canals, toiled in the pits, and carried armies into battle. But the arrival of the internal combustion engine in the late nineteenth century rapidly displaced these workers, so that by 1924 there were fewer than two million. There was always a wage at which all these horses could have remained employed. But that wage was so low that it did not pay for their feed.
The arguments people make against this are that humans aren't horses. Humans can learn and adapt much better. But they can't do that infinitely, and some will reach their limits faster than others.
Automation. Can you imagine the consequences of a driverless car on transportation industry for example? Or automated cashing machines on cashiers? Or cleaner robots for cleaners? You see, simple jobs are going to be replaced in the future. These people will go unemployed, because there will be no simple jobs for them. This is a trend, yes, and it won't happen overnight. But there's one crucial fact -- it doesn't just stop at replacing simple jobs. It will eventually replace even more demanding ones, such as knowledge workers. Infact, only human creativity seems to be the only thing which we can't automate YET, but perhaps eventually will be able to. What this means is that the current capitalistic system has to fail eventually because we lose jobs, and it seems very certain that automation is going to be the beginning of the end.
This has been happening in China too -- recently(late last year) there was news about Foxconn replacing over a million jobs with robots in China. What this means is cheaper products which are also accessible to those who don't work. It narrows the purchasing power gap between those who work and those who don't.
You point has been argued a lot recently, but if it were true then surely nearly everybody would be unemployed by now? After all how many of you are scribes, weavers, carpenters and farmers (or farmers helpers)? Less than 20%?
Then why don't we have 80% unemployment? Because we found other jobs for those people, the economy is much, much bigger, life is much, much better and everybody is better of.
And it isn't like that hasn't happened again and again and again through history.
So I ask you, what proof do you have that this time it is really different? As opposed to every other time we thought it was different through history?
I'll tell you why this time is different. Each time we had growth in technology that had the potential to displace a huge number of workers that technology also enabled a massive decrease in the costs of transactions (railroads, motor vehicles, the internet, etc). This allowed a massive growth in the economy which enabled these displaced workers to find new jobs. Also consider that the growth in technology didn't eliminate jobs, but it shifted them. The technology of old still required a mostly proportional human energy input to produce output. New technology decreased that proportion, but it didn't eliminate it.
This last point is the difference that this new wave of automation has compared to the waves of past. It is unprecedented in human history to be facing a future where human effort can be multiplied by such enormous multiples that the value of labor approaches zero. This coming automation revolution would have to simultaneously grow the economy to greater proportions that automation reduces the cost of labor. I don't believe this will ever be possible, but definitely not in the time period that a properly developed AI and robotic technology could corner the market in labor (once developed, less than a decade). Society is not prepared for what is coming, and it will be disastrous.
To give one example the Google Car.
If this car works as advertised millions of jobs will get irreplaceable lost.
Cab drivers / Car Manufactures / Truck driver etc.
Maybe. But others will be created (or made simpler), to wit: a teenager can now rent a google car (since he isn't driving it won't cost much more than an adult) which will enable him to do things like wash peoples windows (which is neither technically difficult nor especially dangerous) thus driving down the cost per window washing, enabling more people to enjoy this luxury.
Or, assuming you are right and delivery men are unemployed in great numbers which I agree is likely, then (as transportation prices plummet) there will be more jobs for packaging. Imagine that instead of having to collect your kids in day care, go shopping and the go home and cook you can instead preorder your groceries, have your Google Car pick up your kids, spend the time talking with them in the car, go to the shop and pick up your package (which will take 10 minutes at most, since you have likely already been charged when you made the order) and then home to cook, which kids you actually get to talk to and who are now a lot less stressed.
Even then self-driving cars will also create other oppertunities, because there is no reason the car has to stay in the lot until you get home. It might as well drive to the nearby car cleaner (which can be out-of the way since the time is essentially free, although the gas used is not) for a cleaning. That is more business (and it is low skilled) and better, nicer cars.
> will enable him to do things like wash peoples windows
Until next year a new type of window will come that doesn't have to be washed.
> there will be more jobs for packaging
There won't. Humans are already being optimized-out of packaging by automated, self-adjusting warehouses and package machines.
> you can instead preorder your groceries
Being produced, packed and delivered by machines.
> It might as well drive to the nearby car cleaner
Which has been automated-out of his work years ago because how this job requires any skills cheap machines don't have right now?
Rest of the things you write about are things people will be able to do instead of working.
The point is, computers are not replacing particular jobs and creating new ones (of similar skill levels). They are replacing whole classes of skills humans have with jobs that have significantly higher requirements and significantly less open positions.
When the car was invented, millions of horse and buggy operators, manufacturers, and horse dung sweepers lost their jobs. Their jobs were then replaced by used car salesmen, mechanics, the tires industry, etc. etc.
But it is a bit presumptuous to believe that all future inventions will destroy jobs. A great example of the reverse is the compiler industry.
As compiler technology / programming languages have become easier and easier... smaller and smaller teams of programmers have been able to get more things done. This hasn't destroyed programmers... it has instead increased the demand of programmers.
> This hasn't destroyed programmers... it has instead increased the demand of programmers.
Nor has invention of internal combustion engine decreased the demand for cars. Programming today is far from its full potential, just like transportation was 100 years ago. Software is a very young technology and it is just beginning to take over the world, but keep in mind that developing it is a) high-skill job, and b) mostly aimed toward automating other people out of their jobs.
A certain % stop working for existing businesses. However, since there is greater money velocity in the system (vs. investments), there's still high demand (likely _higher_ demand). Businesses which had been slow to automate their production do so, spending more money on high-skill positions.
Prices temporarily increase to pay for this capital investment, but within a few years drop to below prices pre-BI.
Note that the author DOESN'T advocate necessarily doing this today, but that this is somewhat inevitable. I think I agree — eventually, the vast majority of jobs in our society will be automated / done by machines. Either we give these people a BI, or a very large segment of our population falls into poverty, which has other damaging political ramifications (revolution?).
It might be best just to have some portion of people become an idle class and another class of people become the productive class. (But allow people to move between them.)
I don't think it's compatible with universal suffrage, though. It ends up a lot like an aristocracy, albeit an aristocracy that people can join at will. Is that acceptable? I dunno.
I'd be far more worried about this sending a false prosperity signal that could exacerbate our already insane and unsustainable population levels. What's really depressing is that not a single comment here or on the article even mentions this.
Why the hell should I pay even more and subsidize those who have more than two kids?
> I'd be far more worried about this sending a false prosperity signal that could exacerbate our already insane and unsustainable population levels.
Strong social safety nets seem to be pretty strong contributors to reduced family size (which is why the developed world has low natural population growth and many of the places with the strongest safety nets have negative natural population growth) because people don't need children as a form of old-age insurance.
> Why the hell should I pay even more and subsidize those who have more than two kids?
A fixed basic income per adult is self-evidently not a subsidy for having more kids. In fact, compared to existing welfare policy (where the principal basis for cash benefits is number of dependent children), its a disincentive for that.
I don't think the number of kids goes up with prosperity. Developed countries and upper classes typically have much lower birth rates than their counterparts, and some countries are even experiencing negative population growth.
> I'd be far more worried about this sending a false prosperity signal that could exacerbate our already insane and unsustainable population levels.
Hello there, person I'm very glad entered this conversation as you did.
You're talking about a great taboo. No one wants to admit that not every precious snowflake can do exactly what they want to be a shining star. Saying that we have too many precious snowflakes, or that we shortly will, is akin to saying that and it makes people nervous.
But there are a lot of us, aren't there?
And our population plan seems to be "Reproduce however you want until nature starts killing us off."
It could be that our coming jobs shortage is the result of too many people. Our geographic area is big enough that there will always be a certain number of jobs because of the different specialized tasks necessary in each locality.
But everyone wants a kid, and it seems the people who don't plan for those kids, whether rich or poor, have the most.
This worries me more than global warming, nuclear proliferation and synthetic marijuana (mostly jk) combined.
You shouldn't, of course we could limit couples to replacement rate of birth, if that's 2.1 for couples or 1.05 for individuals, they could sell a fraction or all of their "right to reproduce" to people who want to have 3 or more kids.
It makes perfect sense that 2 people should be able to replace themselves with 2 people. Nobody said 1 child policy, plus I mentioned a market for people who don't want to have kids selling off their "rights to reproduce."
Your response is simplistic and doesn't even outline any of your concerns about what I've posted.
Trying to control people's reproductive rights goes against eons of human nature and evolution. And creating a "market" where you can sell these rights sounds like a horrible mash of Ayn Rand and Huxley.
And the real problem was they didn't adopt a two child policy a few doubles ago. (Basically the US is in the same position - we have the same landmass as china, but 1/4 of the population)
Yes, market forces can only be controlled by getting rid of the market. At that point social forces will only be materialized through physical force.
The difference between a socialist and an individualist is in how they think the physical force equation (applied to the society in which they live) will work out for them.
I don't understand how people oppose unconditional basic income without also opposing the fact that automation decreases the amount of working hours available for a person(or in other words, the amount of jobs), and thus decreases the amount of income per person, while maintaining productivity stable if not increasing it, thus making all sorts of goods cheaper.
Someone enlighten me. These discussions always seem so damn complex and heated for some reason. What am I missing, when I believe that UBI/BIG(basic income guarantee) is the future, and that in future people don't need to work 40 hours a week?
Before anyone counters with saying that "people don't need to work and thus just leech the system", I will cover this now. People will need to work, because UBI/BIG will not cover anything but the very basic income. This means cheap housing, cheap food, clothing and whatever else is considered basic income. Perhaps this would be something like 800 USD per month, or 200 per week, give or take some. People would most definitely want to have more income, and as such they would want to work. A full 40 hour week? Perhaps not -- maybe 20 or 30 hours a week. Whatever they feel fit best for them.
(note that I live in a country with the nordic welfare system, where most people live on a rent rather than own a house, which perhaps makes a difference, or then not. I don't know, hence why I discuss.)
Automation reduces costs and prices, creates new job fields, and permits for specialization. It's been happening since the cotton gin, and is a basic staple of an advancing society. We're able to sit on our butts in our chairs and make our livings punching keys on a little rectangle while staring at another little glowing rectangle because our societies are highly specialized and highly automated, making it economically viable for us to purchase and consume goods produced two thousand miles away, rather than having to spend our time tending our gardens so we can make sure that we have food to eat this week. Bemoaning automation as the death of the common man's ability to feed himself is just as silly as it was in Eli Whitney's time.
People will only need to stop working when automation reaches the point that their needs are met without it imposing a burden of work on anyone else. Of course, this will be the point at which the robot revolution will begin, and humanity is doomed.
I would just point out that from what I understand, automation isn't exactly what people outside of manufacturing/engineering believe it to be. There are still a lot of jobs that are not and will never be automated in the manufacturing industry. The cost of labor still ends up being cheaper than the design and maintenance of a machine smart enough to do fabrication and assembly.
I wish I could find a percentage of manufacturing down with automation, but I would guess that a fair number of things are still built by hand. I've taken a fair number of factory tours outside of the automotive industry and am always amazed to see skilled laborers at work.
> Automation reduces costs and prices, creates new job fields, and permits for specialization.
Specializing(education) takes time and effort. At what kind of rate can the technology make jobs obsolete that thesociety and workforce can keep up? As far as I am aware, technological progress is exponential, meaning that it accelerates at an accelerating pace. As such, it's inevitable that at some point people and the society as a whole can't keep up anymore.
At the point where it's simply easier to use machines, if not basic income or some other way of more or less equal resource distribution, what do you do?
> Automation reduces costs and prices, creates new job fields, and permits for specialization.
Currently automation has reached the point in which it replaces lower-skilled jobs by higher-skilled jobs. Many people who worked in the former will not be able to work in the latter (mostly because it takes years to specialize), so for them, those jobs are as good as gone.
Do you have any particular examples we could analyze? Yes, you're right, the jobs that robots can do better are gone, but any improvement in efficiency in an industry generally results in lower prices and an increase in job creation around that industry. Again, in the case of the cotton gin, while the gin itself reduced the need for manual labor to pick seeds from cotton, it blew the demand for labor to plant and harvest cotton through the roof, and the improved output of these larger plantations resulted in the creation of shipping ports and explosive growth in the textile industry. In fact, this is widely considered to be a socially negative effect of the cotton gin, since it dramatically increased the demand for labor, which was then filled by slavery. That was obviously not desirable, but the core point I'm trying to make there is that eliminating all those slaves' jobs resulted in a dramatically larger demand for labor in the supply chain.
Just because the old job is gone doesn't mean there isn't a new one to be done, and improvements in efficiency and costs of production result in economic growth that have positive impacts all over related markets.
> Do you have any particular examples we could analyze?
I'd look at every job that is being replaced by a robot or a computer system. I can't give you a particular example in form of "job A replaced by robots, workers can't move anywhere else", because so far we've been very efficient at reallocating labor. Throughout last 200 years, people out-automated in agriculture moved to manufacturing; optimized out from there they are moving to services, but the computer technology makes this sector fair game, and there doesn't seem to be anywhere else to go.
More machines are creating more opportunities for building them, but the manufacturing is already heavily automated, so this is the case of robots building robots. As a human, you can't compete there much.
Just imagine self-driving cars really taking off in few years and replacing most jobs in transportation industry. Where will those people go? What kind of jobs we can imagine they could have without years-long retraining that robots arleady can't do better?
> Just because the old job is gone doesn't mean there isn't a new one to be done
Yes, but my point is that jobs are not made equal, and just because you could do the old one doesn't mean you will be able to do the new one. It is increasingly not the case.
> I can't give you a particular example in form of "job A replaced by robots, workers can't move anywhere else", because so far we've been very efficient at reallocating labor.
Surely it makes sense to be able to cite examples of how we are failing to reallocate labor before complaining that we're not able to reallocate labor.
You're right. I can give you a fair share of personal anecdotes and general social lore related to rising unemployment for STEM-or-finance-educated people. I can point to first principles and proofs by enumeration. I can't provide examples of "elimination of an entire class of human skill and subsequent failure to move labour up the skill ladder" because this transformation is - I believe - underway, not yet finished.
Regarding the "skill class elimination", as far as I have read, basic manufacturing is already done; i.e. it's not completely automated only because robots are still a bit more expensive than low-wage workers. But even in China this seems to be changing (in favour of robots).
Personal anecdotes and social lore make for pretty crappy science. I would love you to point me at first principles and proofs by enumeration.
What I see, in looking at the numbers published by the government, is that the number of jobs has been consistently tracking with labor force since they started measuring it in 1925. If automation were wrecking jobs and making people unemployable, I'd expect that the 20th century - the century in which the human race made more significant technological advances than during the rest of human history combined - to have resulted in a consistent decrease in percentage of the employed workforce. Instead, we see that no such widening has occurred. There is certainly an argument to be made that people are being forced out of factory jobs and into foodservice jobs or whatnot, but I can't see any empirical evidence for the assertion that we're actually innovating ourselves out of the opportunity to work.
I think that giving only "basic" income is a bad stopping point. If the only thing most people can afford to buy is basics of food and shelter, then there won't even be any jobs for them if they want a better life than that.
If instead the basic income allows for discretionary spending, then there would be a huge market of consumers to serve, and jobs would appear to serve them. Some people will be willing to work occasionally so that they can have even more spending money for other things.
I believe the problem lies in where exactly do you get the money for BI? Who pays to provide it for millions of people - obviously you can't tax the BI itself, so what's left is the rich and corporations, which incidentally are the ruling class at the moment and will most likely oppose BI.
Also, health care will still need to be covered separately.
BI is a great concept, and I hope some country will make it work, but it's not going to be the US, that's for sure.
Not that I'm advocating, but the Fair Tax Plan (US) has a similar notion in terms of a rebate to cover the basic necessities.
But anytime you have a discussion about taking by force from one group to give to another, it gets complicated and heated rather quickly. Well, maybe that's different from culture to culture.
But it also systematically replaces low-skilled jobs with high-skilled ones. You can't expect a low-wage factory worker to change into control engineer overnight, nor a clerk will be able to program automated checkout machines.
Nowdays new jobs are simply not accessible to the people who get replaced. I think what people don't get when discussing it is that historical (XIX century) examples don't apply because our computer-based automation is something different than their mechanical automation; robots can do any low-skilled thing humans can, which wasn't the case during Industrial Revolution. It's not just about doing stuff faster.
I think the discussion is more about long-term change than short-term.
I'm sure operators of horse feeding stations had similar arguments when Model T came around, but you don't find many people in that occupation nowadays.
But that curve will start going downwards as soon as machines can fully replace people and most countries start using said machines.
It's kind of like slavery - you could have 1000 working citizens do the work of 50,000 people (because slaves were basically "free labor", like a robotic arm is nowadays)... Except slavery went away (thankfully), and automation will not (hopefully)...
First one. I would assume UBI is only available to adults.
The third one isn't really much of an option since it assumes that politics is more black and white than what it actually is. 50 shades of grey and counting. And of course people realize that UBI has it's drawbacks too.
That goes against the principle of requiring only residency or citizenship, why would you kick children out of it? Wouldn't you then need to provide a separate welfare program for needy children?
I am not sure -- perhaps if the proposal is that it's directly based on only the residency or citizenship then children too would have it, although I would find it somewhat questionable if it is needed(because it's the parents who need the money, not the children themselves for example). Perhaps the system could work better if it was for adults only, or that the money goes to adults.
The statement "people need to work 40 hours" is already obviously false. There are lots of people who don't need to work, because they already have more money than they could ever spend.
An interesting repercussion of such a system is the potential for unrestrained creative endeavour. Fear of meeting basic needs will no longer be the primary motivator for most workers. Free to think of and most importantly act on new ideas, our massive population will be able to attempt to function like a distributed network. There will be those who choose to only consume, but that is no different today, many people are simply required to perform a meaningless job in order to do so. I would imagine that the benefit of freeing millions of willing inventors outweighs the drain imposed by all those who only consume. Then again, this only makes sense assuming that most repetitive and "busy" work can be automated.
Australia already has essentially this setup. Every person in the country can be paid $492.60 every two weeks ($12,800 yearly) and up to another $121 every two weeks ($3,146 yearly) to help with rent.
Everyone qualifies, forever, irrelevant of past job history, education, family status, etc. etc. There is no time limit for the payments.
The only difference between this and the article, is that if you get a job, whatever you earn is deducted from your payments.
I personally think it does a fantastic job of making sure there is no poverty in the country, and it means Australia has an enormous middle class.
That's not a Basic Income. BI means you don't lose it when you start working. If you lose your benefits by working, that is a perverse disincentive and a divide between those on welfare and those working, and that's what's wrong with the U.S. status quo.
>The only difference between this and the article, is that if you get a job, whatever you earn is deducted from your payments.
That's a pretty significant difference considering that the major selling point of a UBI is that (relative to traditional welfare) it doesn't have the problem of penalizing people for earning money on top of the transfer payments.
The interesting part in the article is that in order to receive this payment, you have to be actively looking for work. Not sure how this is measured, but the qualification makes it philosophically different from the unconditional wage being advocated.
You are right, you must apply for x jobs per month, and keep a logbook of that activity.
In that sense, yes, it's philosophically different from the unconditional wage, but it's a good example of the effect on society (no extreme poverty, huge middle class, higher taxes, etc.)
I don't think it's the same. What you're describing is the unemployment scheme -- "the dole" -- and it's not so clear cut. There are asset tests: if you have a certain amount of savings in the bank, you can't get it immediately. You also need to go in for interviews frequently and keep diaries of your job search.
The basic idea is on track, though. You know that no matter what happens, you'll be able to eat and put some sort of roof over your head. I'm curious to see if the social welfare programs continue to remain generous as Australia's government deficits increase and non-white immigrants continue to flood into the country.
Though some more reasonable forms of this idea exist, this particular description has some major problems:
* What if the money you pay someone does not go as far as expected? Maybe they lose some of the money in various ways, or maybe they are just very bad at negotiating economic transactions or buy the wrong kinds of things from the wrong places. Maybe they are trying to live in an expensive area -- do we kick them out?
* There will be a significant class of people who simply know nothing at all about work or participation in the economy. That may have all kinds of bad effects for those people, one of which may be a greater likelihood of the problem above.
* Some people who would otherwise be productive will put off both education and work for a while. When the time comes that they want to be involved, it will be hard for them to make the transition, and many will just stay out of the workforce forever. So, some of the ultra-productive people the author is expecting to do the heavy lifting will not exist.
* There will be pressure to stop granting new citizenship/residency to almost anyone, because the potential cost will go way up. Even if, in the long term, immigrants are good for the economy, in the short term it could be crushing if each one gets a comfortable living regardless of work.
* There will be an imbalance in which jobs are actually done. The number of computer programmers might be higher, but the number of nurses might go way down. If having a nurse is required to make some people comfortable, how do we remedy that?
* "Comfort" in general is a moving target in this process because changing the basic income will have a big effect on the economy. It's hard to say whether you could ever really find a stable value that offers anything resembling "comfort" for those living on it.
If the number of nurses willing to work for current rates goes down, then the market rate for nurses will go up. Eventually it will be high enough that being a nurse is more attractive than being a programmer.
Nursing is hard work, and if someone is already "comfortable", there's not a lot of incentive to study for it and do it unless the pay goes WAY up.
There are a lot of jobs like this, where the threat of discomfort is the primary motivator. Across the economy it would take a huge amount of money to incentivize already-comfortable people to do them.
And if the jobs don't get done, then someone else is uncomfortable.
The market rate for investment bankers is more attractive than my job. Doesn't mean I can just be an investment banker tomorrow. Or a nurse.
If I live comfortably on my basic income doing whatever, how do I become qualified to work? Remember we have college grads who aren't qualified to work, and they've spent their entire lives being educated.
> The market rate for investment bankers is more attractive than my job. Doesn't mean I can just be an investment banker tomorrow. Or a nurse.
If the supply-demand imbalance is sufficient and durable, people looking for nurses / investment bankers / etc. will pay currently-unqualified people with the relevant basic aptitudes to train for those jobs (with a post-training commitment to accept employment if offered, or in the form of loans with guaranteed forgiveness and job placement with satisfactory completion of training, or in some other form.)
> If I live comfortably on my basic income doing whatever, how do I become qualified to work?
Living comfortably on basic income isn't going to be possible as long as the economy has substantial labor needs. BI is essentially the public holding equal, dividend bearing shares in the commons, for which taxes are use rents. The limit on the value of BI is basically that of the existing capital (including land) contribution to productivity; the potential comfort and value from BI grows with capital (e.g., via automaticn) displacing labor in production.
What BI can be is a means of managing the transitions in the economy as automation progresses.
Another problem is that it might devalue the currency. When most of it is given away, there's decreased competition for it, and thus its value in the market decreases.
> Another problem is that it might devalue the currency. When most of it is given away, there's decreased competition for it, and thus its value in the market decreases.
No proposed basic income would give away most of the currency in circulation as BI, which makes that argument somewhat irrelevant.
I think the main problem with this argument that software is eating everything and automation is replacing jobs is that it imagines the world as it is today, with the current set of jobs as fixed. Lest we forget a time when all goods were physical and there were no digital goods. The extent of what can be consumed by technology does have limits. But more than that, we as a society become wealthier, not poorer, when things become faster, cheaper, and easier to produce.
There was a time when people spent nearly half their income on food because food production was an incredibly inefficient process. Eventually much of food processing became automated and advances made it much more plentiful. What had a larger impact on the economy? The millions of people no longer needing to spend valuable time producing food, or the fact that people now had much more disposable income to spend on other things?
That's the thing, instead of giving people a universal basic income and distorting the prices we should really keep on striving to make the essentials that people need as cheap as possible.
Which basically means things that do not scale will skyrocket in price.
You already see this as prices of education and housing grow decade to decade.
Essentials are: bad food that doesn't taste well, bad housing, bad medical care, bad transportation and bad service.
That's what Soviet Union consistently delivered to every citizen and while there were vitrually no hungry, unemployed or homeless people, nobody felt happy too, everybody fought to be able to afford a tiny bit of something of quality.
Also, we're talking about world where robots produce those cheap essentials out of soil and solar/nuclear power, leaving many more unemployed competing for ever shrinking pool of jobs that are not done by robots out of free solar/nuclear power.
Basically it's not any kind of a solution, it's exactly where we are headed now.
I don't understand why this is a problem. A job is something you have to do to complete a task. Somebody pays you for it because it brings them some value. If they can get that task completed for a lower rate, why is that a bad thing?
Sure, in the short-term you lose the paycheck you received for completing that task, but in the long-term that person who paid you is now wealthier, which enables them to spend money elsewhere. This causes the jobs to migrate to where things need to be done. I assure you we are still a very long way from accomplishing all tasks that need to be done and for which people would be willing to pay. But if we ever did reach that point, nobody would need to work because everything would be free.
With basic income, wouldn't the economy adapt to the fresh money supply and rents and other costs raise to account for it? It would effectivly be additional currency inflation by a different name?
If the range of current monthly incomes in society is from $M to $N, and you add $X to all incomes, you'd expect price levels for goods to rise by varying ratios depending on the good but generally somewhere between (N+X)/N and (M+X)/M, meaning that goods would generally become more affordable for those on the lower end of the scale and less affordable for those on the higher end of the scale.
There would likely be inflation. However I would bet that it would not be to the point where the BI amount of money resulted in 0 value. Also another thing to consider is the effect it would have on salaries: they would rise (and not just in an inflationary way). Since now you have people grabbing any job they can even at shitty salaries (HN crowd likely largely excluded) companies would actually have to "compete" against the BI since the pressure to take an underpaid job is relieved.
Not entirely sure the system would work, but it seems more viable than the current efforts ("Let's do X again, but this time we'll call it Y!"). Great article.
If people are working for a combination of extra cash and personal satisfaction (as opposed to "not eating catfood under a bridge"), you could safely eliminate minimum wage and some jobs would probably be priced at close to or near $0. I can't tell you how many times I've gone to a bookstore or even library and had to fight my brain telling me to rearrange all the books in the correct order. Given unlimited free time, you'd have to pay someone to stop me.
On the other hand, I'd expect unsatisfying or unpleasant jobs to pay more, since people could fearlessly tell their bosses where to put it.
If I had to guess, though, you'd also have an uptick in part-time jobs, especially the shitty ones. Maybe most people don't want to be a garbage man 5+ days a week, but if the pay is good you might find quite a few people who are willing to be garbage man once a week or once a month.
It's not the same, with inflation people still own the same percentage of wealth (people with 0 still have 0). With UBI the distribution of income changes, it's minimum is no longer 0 but some hardcoded amount. So even if prices would adapt, you'd end up not only with different prices, but with a different distribution of wealth. In the extreme case, if the basic income was huge, everyone would pretty much be able to buy the same things, with the basic income set to 0, the distribution of wealth would be more exponential as wealthy people naturally get more and more wealthy and people with 0 stay at 0. You probably want something in between, with good incentives to work hard, but also good conditions for poor people and a higher velocity of money (if you give money to people with no money they'll spend a higher percentage of it, fueling the economy in the right areas).
You can go look up economics papers on Google Scholar or SSRN about the benefits of direct payments versus in-kind payments. You might worry that someone will use their direct payment and spend it on hooch, but you can't stop that: if you give them food stamps they will trade that for money and then spend it on hooch.
Actually you can stop it, by doing exactly what he says - you can eat free food at this particular place, but so can everybody else. It stops hunger, but it has a resale value of 0.
How's the government going to decide where to put people? The poor people get to live in the richest neighborhoods in NYC? Or do they get pushed out to the cheaper areas of Harlem? In the first scenario, the costs are insanely high. In the second, you're forcing the poor into a bad neighborhood.
Food: who decides who gets what? Vegan options OK? Food allergies? Only organic?
Whenever personal decisions are left to the government, things get bad.
> Maybe instead of giving everyone cash, the government could provide people with a default shelter, food plan, etc.
The problem that BI advocates see with that is that there is much greater overhead in managing a default shelter program, food plan, non-food-non-shelter-necessities-of-life-plan, etc., than just establishing and managing a single universal cash allowance plan.
It has a higher overhead now, but how many people would actually use it, versus BI?
Also you can always increase BI (and if everybody gets it, that is going to be a fairly popular campaing promise), but people can only eat so much food.
> It has a higher overhead now, but how many people would actually use it, versus BI?
It has a higher overhead even with a much smaller number of people using it, because the overhead is involved in enforcing the conditions which don't exist for unconditional basic income. (That is, the overhead in existing social welfare programs is largely costs expended to prevent people from using them, either at all or in the incorrect amounts for their particular qualifications. A fixed universal unconditional entitlement doesn't have that overhead because it doesn't have that function.)
> Also you can always increase BI (and if everybody gets it, that is going to be a fairly popular campaing promise), but people can only eat so much food.
People can recieve and derive utility from virtually unlimited amounts of food (just like money), even if they can only eat a limited amount, as food is a commodity.
And as much as the point you make about the politics of raising BI is frequently made about any social benefit, I don't think there's much reason to believe its true of BI. There are quite a lot of people who are already aware that benefits have costs (both personal and social), and the people who have the most interest in focussing on the personal cost also have the most resources to bring the social costs to the public eye.
That being said, there's no reason BI levels couldn't be managed by a politically insulated group (something like the Federal Reserve), and plenty of reasons why a legislature might prefer to leave those kinds of decisions to such a body.
The author of this is article is more than a little bit out of touch. To be honest, HN is the only place I have ever even heard people discuss the concept of an Unconditional Basic Income or call Bitcoin a "radical economic ideology". Most people in the US have never even heard of Bitcoin or an Unconditional Basic Income.
The author is so far removed from reality that it's almost humorous. He cites an example where Instagram has apparently replaced Kodak, an example as ignorant as it is misguided. Having known one of Kodak's chief inventors from before the company began its steep decline, it is evident that Kodak collapsed from a series of bad decisions and a failure to secure its territory in IP space. Comparing that to Instagram isn't a comparison of apples to oranges, it's a comparison of oranges to a desk lamp.
I could go on, but there's no need. This article is crap factually, logically, and intellectually. I understand that the title panders to the closely held ideologies of many on these boards, but if you have to look this hard to find arguments for why we're moving toward a UBI, then we're probably not moving toward it at all.
Agreed... he lost me as soon as he cited that idiotic Kodak to Instagram concept. The idea that the 13 people at Instagram are the effective replacement for all of Kodak's business (while ignoring the 500K-odd people involved in building the phones instagram runs on) is so dumb it's galling.
> Most people in the US have never even heard of Bitcoin or an Unconditional Basic Income.
Most people also don't understand technology and what it means that, to quote a Portal poster, "Robots are SMARTER than you, Robots work HARDER than you" [0]. Those people who have never heard of UBI will also, in 30 years, never hear of their jobs again.
However, Bitcoin is a radical economic ideology, and UBI is certainly not limited to HN -- it's been discussed all over the world for decades. Most people might not have heard of it, but they have not heard of most political ideas in general.
Wouldn't the basic income value need to vary across regions? For example, the notion that:
"Every single adult member receives a weekly payment from the state, which is enough to live comfortably on"
would mean a different value in San Francisco than in Grover, NC.
If the government adjusted the basic income to account for regional cost-of-living, I imagine it would be popular to maintain a fake residency in an expensive area while actually living somewhere cheaper.
If the basic income wasn't adjusted for different areas, you would probably see some areas become rich elite enclaves while other areas become basic income ghettos.
> If the basic income wasn't adjusted for different areas, you would probably see some areas become rich elite enclaves while other areas become basic income ghettos.
Some places have been rich elite enclaves and other places ghettoes for pretty much the whole history of human civilization; its pretty clearly already the case now (and not just between widely geographically separated areas like San Francisco and Grover, NC; its true within cities like San Francisco -- or any other city of substantial size anywhere in the world.)
A flat national BI doesn't create that problem, it just fails to completely eradicate it (it likely does reduce it by reducing overall income inequality, so, as far as the issue is even relevant, its one in favor of adopting BI, not against it.)
This would never work. You're telling me a grandmother who lives in Manhattan will be forced to leave her family and move to a small apartment in Kansas? That's political suicide to suggest anything like that.
If you want to live some place forever, buy the property. Buying and renting each have risks. Buying risks that you will lose your initial capital, but you get to live there. Renting risks that you might have to leave the property, but the landlord absorbs the risks of the property value declining.
We can't really have effective policy if someone experiencing some kind of risk vetoes it.
It's political suicide to suggest that a grandmother who is currently receiving $0 in basic income should instead receive more? You haven't thought this through.
Living in an expensive area is a consumption choice.
If I live in a mansion in that Grover, NC, would you say that my expenses were high so I deserve more basic income?
High prices are the market telling you to consider looking someplace else to live.
This is how the good ideas of progressive intellectuals get destroyed: other progressives want to weigh them down with all sorts of other social engineering baggage. (Conservative intellectuals have good ideas that get destroyed by other conservatives, too.)
I agree that choosing an expensive lifestyle is a consumption choice. I was just trying to make the point that it's difficult for a government to determine what basic income is "enough to live comfortably on".
Those kinds of decisions alienate voters and, as a result, are desperately avoided by congress critters.
>> If the government adjusted the basic income to account for regional cost-of-living, I imagine it would be popular to maintain a fake residency in an expensive area while actually living somewhere cheaper.
Good hack.
>> some areas become rich elite enclaves while other areas become basic income ghettos.
This is basically the direction we're already headed in already.
I am inclined to agree with you but I'm not certain. There are some arguments that those living off of BI would form a unique subset of the population and might effectively be ghettoized at least in terms of colocation as opposed to the more economic/social aspect due to their similar needs/means.
> There are some arguments that those living off of BI would form a unique subset of the population and might effectively be ghettoized at least in terms of colocation as opposed to the more economic/social aspect due to their similar needs/means.
The people living primarily off BI (that is "the poor") would likely continue to be segregated, to a certain degree, both physically and socially from those more well-off. But that's not an effect of BI, that's true of the poor now and basically for all of human history.
That doesn't mean those living exclusively on BI mightn't wind up ghettoized. I don't see why this would be any more true than in any other situation, though. (and as I've said elsewhere, I don't think BI should presently be enough to live comfortably on without draining savings).
How is that different from what happens now? How many poor people can afford to live in Manhattan penthouses right now? By leveling out people's relative wealth just a little bit, this should reduce the ghettoization, not increase.
Without having to depend on the job market, people are free to move to areas with no work and a very low cost of living, and not be bunched up in the areas with the best handouts.
The net result will probably be higher costs of living everywhere, but in the US there is so much space that the effect is diluted.
Add to that the increased demand for basic services in those areas, and you'll wind up with something that looks an awful lot like economic growth in those areas.
Add to that the ability to grow food for oneself, and I bet we see lots of people move somewhere they can rent a home with a large garden, and turn their basic income into a small scale farm with extra earned income at local farmers markets. As that money moves around in a community, even if %40 of every pay cycle is extracted by walmart, the local economy has people who have time to build small bussinesses. Now a mom and pop store doesn't have to support the family, it just has to pay the rent on the store and bring in enough extra money and or good will/personal satisfaction that mom and pop keep it running.
Given how often I've had the government send things to the wrong address for me, I am fairly sure that they don't know where I truly live (most of the time), even when I gave them the address.
Unlikely. I know of a lot of people who live in New Jersey but register their auto in another state under a relative's address for cheaper insurance. I also know people who use an old address or the address of an acquaintance/relative so their child can attend a different school district.
That just implies that communication in government is poor, particularly if it is a local or state government that wants to know something from the federal government. I am sure the IRS would have no problem finding those people if they were so inclined.
I became a South Dakota resident in January (while I was in CA.). Despite only having spent a week in the state last summer. I haven't been back since then.
I really like the concept (and have for at least a decade and a half). The linked article misses one thing which is that minimum wage legislation can probably be removed too.
What I don't know is actually what the level of the basic income could realistically be at what levels of income tax (I assume that there would be a single flat tax rate for all income additional to the Basic Income).
It would be great to get good statistics of earned/savings income distributions for a few countries and current income tax, capital gains tax and National Insurance takes and build a tool to see what incomes and rates a feasible. I picture being able to adjust basic income and see the effect on the tax rate and vice versa. Ideally you could make the income distribution adjustable so that you could try different scenarios such as the effect of more people doing no work.
I'm not sure how children should be handled in these models either as there are real costs and you don't want child poverty but you don't want to make breeding too profitable which may occur if they attracted the full rate Basic Income.
Arguments like this are completely selling ourselves short on our ability as a species/society to innovate and come up with new ideas that improve our life for everyone. I'm sorry, but it drives me absolutely nuts! Come on guys, are we really saying that we aren't capable of continuing to come up with new ideas and grow them into sustainable businesses that lift a majority of Americans out of poverty?? What a positive, optimistic this author has on our future, not to mention his faith in the capabilities of fellow human beings.
Instead of jumping into many of the circular arguments below of where costs are truly incurred from things such as taxes on the rich and on corporations, let's think of taxation in a different way - as valves controlling where capital flows in our economy. Think of taxes as valves in a hydraulic system or switches/relays in an electrical system. If those valves aren't directing the right amount of electricity or hydraulic oil to the right parts of the system, the entire system stops working. In the same line of thinking, if not enough capital is going to the right places in our economy, our economy slows down and stops working.
So, the question becomes, where do we need to adjust the valves to get the entire system working again? Where can we cut taxes, to give that sector of the economy a boost? It's small businesses, innovators/inventors, and early stage startups. Why? Because if 1 out of every 1,000 businesses started turns into the next Microsoft or GM and employs 100,000 people, then we need 10m people out of work right now/100,000 jobs per Microsoft startup*1,000 startup businesses = 100,000 startups.
There's a reason the first round of capital for starting a company typically comes from friends and family - because it's extremely risky, and those closest to the entrepreneur can make that investment at the lowest risk possible because they have insider knowledge of the entrepreneur's skillset. If we have a disappearing middle class, that means that very first round of capital is disappearing too, because it comes from the middle class, which means 10 years from now, we will have even fewer jobs for the middle class. I'll leave it up to everyone else to debate how we can get more money into the hands of the middle class, but taxing the rich and providing a basic income for everyone is not the answer.
> Come on guys, are we really saying that we aren't capable of continuing to come up with new ideas and grow them into sustainable businesses that lift a majority of Americans out of poverty?
Of course we are. The best of those ideas involve robots and weak AIs systematically replacing humans in everything they do.
What the author says is that the way to innovate ourselves out of this situation and end up well is not by doing more of the same. Capitalism is going to die as energy abundance and automation will make manufacturing essencially free, and smarter software will do the same to most service and knowledge jobs.
The idea seems to be that you can free up a lot of the money wasted on bureaucracy and pay out to everyone indiscriminately.
The Mincome experiment (http://en.wikipedia.org/wiki/Mincome) dabbled with this idea and the results were rather surprising. Most people seemed to want to work rather than loaf around and collect benefits.
Don't think you'd have to "tax the rich like crazy". Would returning to the tax rates of the 1990s be "crazy"? Would closing corporate loopholes be "crazy"? Would investigating why trillions of dollars in tax havens have somehow escaped oversight be "crazy"?
> The idea seems to be that you can free up a lot of the money wasted on bureaucracy and pay out to everyone indiscriminately.
This idea does not stand up to any scrutiny at all. The cost of administering a welfare bureaucracy is minuscule compared to the cost of a BI program.
> Don't think you'd have to "tax the rich like crazy". Would returning to the tax rates of the 1990s be "crazy"? Would closing corporate loopholes be "crazy"? Would investigating why trillions of dollars in tax havens have somehow escaped oversight be "crazy"?
None of those suggestions would come anywhere near the amount of money needed for a BI program.
> The cost of administering a welfare bureaucracy is minuscule compared to the cost of a BI program.
Most of the cost of administering a welfare bureaucracy is in validating and enforcing the conditions on beneficiaries. Unconditional Basic Income avoids these costs quite directly.
I honestly don't think any bureaucracy would be trimmed whatsoever; it'd be replaced. All of those government jobs wouldn't be cut, they'd be moved to the new program. No matter how simple you try to make it, something like this would end up ridiculously complicated. You'd need a bureau in charge of deciding how much a person in each zip code gets, how much taxes to raise, which taxes to raise, monitor improvement, monitor areas for local government abuse (billing the federal government for fake people to get the extra cash, as an off-the-cuff example), etc.
That's probably true, but its worth thinking through. If the rich leave and take their automation capital with them, then there will again be work for people to do, reducing the need for basic income. The question is: how much other capital can the rich take with them? They should be entitled to their property, of course, but how much of it is totally theirs to take over to say China? Google's IP is its capital. It is the result of the efforts of Google's founders and investors, of course, but was also massively subsidized. It was created by Berkeley and Stanford educated engineers, institutions that receive major federal support. It was a use of the internet, a system that was created by the DOD. They of course benefited from roads, etc, and all the other public utilities. How much of an equity share in the company would Google have given out to replace these services and inputs from scratch? That's a difficult and nebulous question but I don't think the answer is zero. I think that amount, whatever it is, would be a reasonable expatriation tax.
Google's capital is its social organization. If they "leave," the social organization collapses, and all of those engineers can reorganize. Thus, google leaving creates the conditions for its replacement. No worries.
Money and business moves to where it's most welcome for the same reason people move to neighborhoods with low rates of theft (after all, taxation and inflationary monetary policy is theft no matter which way it's painted).
The reason people can't find work now is due to the failures of central planning, not the lack of it. Communist and hard-socialist countries all have tried the basic income idea and failed. The only exceptions are where the basic income is funded through resources, not confiscation of wealth - and even this takes wise, benevolent leadership.
When you confiscate wealth to provide a basic income, you create a disincentive to create wealth and an incentive to not work in exchange for basic income. This creates a rapid increase in both, which backfires because you have more people to support with basic income and less revenue because business owners scale back.
It all sounds good in theory, but in practice...
Edit: Interesting on the downvotes without the explanations. Do any of you live in the real world?
> Communist and hard-socialist countries all have tried the basic income idea and failed.
I know of a few short lived experiments, but I'm not aware of any country that has implemented a basic income, let alone failed at it. Could you let me know where you're thinking of?
> It all sounds good in theory, but in practice...
You're looking at the effect, and not the cause. What caused the global banking crisis?
1.) Cheap money via gov't Fed Policy (created the artificial boom)
2.) Government mandates in mortgage lending (caused a lot of people to buy homes when they weren't in a realistic position to do so)
I'll bite. What I mean is people were paid a basic wage to do very unproductive (even counter-productive) work. So I suppose that's a little different than getting a basic wage without working at all.
I seem to have edited my post while you were answering a point I later took out because it didn't seem relevant to the main point (which is that I don't think anyone has introduced basic income yet).
However, I don't believe in your analysis of the banking crisis, either. You seem to have missed out a lot of other reasons. From wikipedia:
> In its "Declaration of the Summit on Financial Markets and the World Economy," dated 15 November 2008, leaders of the Group of 20 cited the following causes:
During a period of strong global growth, growing capital flows, and prolonged stability earlier this decade, market participants sought higher yields without an adequate appreciation of the risks and failed to exercise proper due diligence. At the same time, weak underwriting standards, unsound risk management practices, increasingly complex and opaque financial products, and consequent excessive leverage combined to create vulnerabilities in the system. Policy-makers, regulators and supervisors, in some advanced countries, did not adequately appreciate and address the risks building up in financial markets, keep pace with financial innovation, or take into account the systemic ramifications of domestic regulatory actions.
i.e. Though it was also a failure of other things, it was by large part a failure of corporate risk assessment and lack of regulation.
Communism didn't offer a basic income. People were paid for doing works at jobs. Which everyone had. The constituion of communist Poland even listed having a job as a citizens duty.
The reason people can't find work now is due to the failures of central planning, not the lack of it.
How can you ignore globalization and automation? Even if you think those things have had no impact to date, they undoubtedly will in the future, right? Particularly the latter.
Also, keep in mind that nobody is proposing communism. Milton Friedman advocated a basic income.
And where the money to pay for that will come from?
Apparently corporations will be subsidizing this:
"How would we pay for it? We could start by getting
corporations to pay their taxes. As I mentioned above,
corporate profit margins have hit an all time high, and
that money will circulate far faster if it’s placed in the
hands of consumers."
You tax everyone more and give everyone more money. The average person will receive x euros more every month and pay taxes x euros more every month in income tax. The richer than average will probably slightly lose net income and the poorer than average will probably slightly increase net income.
There are various income models, and that's just one example.
Are there any models that can prove/disprove these ideas? Like - take today's situation, plugin all the numbers starting from income taxes to welfare etc and simulate it and see? It would be very interesting to see that.
Also, these kinds of ideas should be tested on a smaller scale - may be a town of 25,000 people? That would be really interesting.
In the short term yes, but these trends are not limited to one region or country, they are global. Its likely that we will see most developed countries adopt some from of basic income sometime in the future, at which point there wont really be anywhere reasonable to go to escape it.
We have a light version of this in Denmark. It makes a lot of people not want to work and is the main reason behind why the effective tax is somewhere in the neighborhood of 70%. Pay 45% income tax, 200% car tax (literally - a 10.000USD car costs 30.000USD), pay high property taxes, "green" taxes like on gas - and when that is done, please pay 25% VAT of everything you buy after that.
And you know what? About 80% of the Danish love this system enough to not want to change it. A party suggesting a 40% flat tax is considered extreme in Denmark.
Can we come up with a solution that doesn't strong-arm workers into keeping society's dead weight around? Why make sure that every non-worker in society has enough money to eat McDonalds and watch cable TV at the cost of the freedom of everyone to make and spend money as they please?
thank you for this. I'm an empathetic person, but every morning I drive out of my driveway to work and look at the house across the street from me with three people who stay home all day in their house watching TV.
When I get home, their TV is still on and the other people in my building and I are exhausted from working and finally get some time for recreation, usually in the dark. The other neighbors say the across-the-street people are selling opiates. They should be made to do something in return for their government money: anything useful around town like cleaning up, repainting signs, babysitting- not just getting free government money to capitalize their opiate sales.
I love my job, but not enough that I would come here everyday first thing in the morning if I weren't being paid. That's why the Wikipedia example mentioned in the article is a _terrible_ counterexample for OP's point. First, Wikipedia is a _clone_, not an original work. Second, it's billions of micro-contributions, not people working 40-45 hours per week like the others in my building and myself. No one is that motivated. As posted yesterday, the theory of the Tyranny of Structurelessness is real. Only a small portion of society functions without leaders. And I admit that I am not one of its leaders (yet!), but I am comfortable for the most getting led toward productive efforts.
That's why I believe poverty is a failure of leadership. It's the inability or disinclination of leaders to herd those people into something useful. It's cheaper to pay them to stay home. It's got nothing to do with them being lazy, as someone else wrote. MOST of us are lazy, not merely the unemployed.
Have you considered the fact that you don't know anything about the lives of the people who live across the street from you and maybe you should refrain from judging them so harshly?
> Why make sure that every non-worker in society has enough money to eat McDonalds and watch cable TV at the cost of the freedom of everyone to make and spend money as they please?
To turn this question around, why do we want only slaves to live comfortably, while denying this right to people who are free?
Yes, slaves. Our culture, out of necessity, managed to successfully hide this fact from most of the people, that we are all slaves. We need to work, or else we starve. Some of us are lucky and do the things they would have done anyway living free, but for most of us, it's just global slavery we're in denial with.
Automation may finally free us all, and this is the point most people (suprisingly, even here on HN) seem to fail to understand.
It's a fascinating idea, and it's a real challenge to market capitalism as we know it in the long run.
But the biggest problem with any such system is unequal need. Need states are stochastic at the individual level. They might appear to be neater and more deterministic at the aggregate level, but a system designed in aggregate is bound to have challenges at the margins. I could easily see this system becoming, essentially, a fixed amount that just shifts everyone's personal needs/income graphs up by X amount a year. Above that point, everyone still needs income to fit any needs not met by X.
An unintended consequence, for example, would be that this system places an extra burden on the disabled, or the parents of multiple children, or the elderly, etc., to take on more work to meet their greater needs. By eliminating need-based welfare and replacing it with a flat payment structure, we'd basically be handwaving away the fact that need states are variable.
It's possible that I'm misunderstanding how this system works. And many of the same arguments I'm making against this system could certainly be leveled against our current system. I guess I'm struggling to see how this system has greater utility and fewer externalities than the current one.
I actually think Argentina would be a great place to impose basic income.
Argentina has a long time standing issue with 'welfare' programs being abused in corruptive ways, such as government employees cashing in, their relatives, etc.
Middle class despises the way those funds are used because they are not regulated or productive: as a foreign national, you could get welfare within 6 months of moving in to argentina. Plus free college education.
Also, argentina has a long-time standing issue with inflation, which in this case could be worked to its benefit, which is it can fund this strategy.
Currently, the government uses welfare programs to target vulnerable sectors and generate dependency, but if everyone got it, they wouldnt have that kind of edge anymore, and if they wanted to better one sector, they would be forced to help every sector.
But i will still think that although basic income is very forward-thinking, it has veery unforeseen consequences. We dont know what is going to happen to a city or a country if such a thing is implemented, for better or worse, in terms of sociology, more than economics.
I also wonder how to actually make it practical. By basic supply and demand, this should create a strong increase in demand, which raises prices and the very basic income would then become less effective.
I disagree with this article almost entirely. Yes, labor jobs are on the decline, but service jobs are staying steady if not increasing. The "demand for unconditional basic income" is a joke, yes it's possible to attempt to initiate something where every person receives $10,000 a year, but the money has to come from somewhere.
If the money for this basic income comes from taxation, then both the government loses net income and the corporations lose as well. You can think about it an entropy or friction, there is always a cost for doing something. If corporations essentially pay their customers (via the government) to buy their goods the world would eventually collapse.
If the money for basic income comes from printing money (or equivalent) it devalues to insignificant amounts too quick to do virtually anything with it.
This idea is a fantasy, perhaps the population of the world needs to DECREASE to maintain its stability in a technological world. If there are less jobs, maybe there's less need for humans.. If this is the case, perhaps it is time to move to Mars or something, like a cell that has replicated enough DNA/organelles to split in two and create a new daughter cell.
You cannot suitably hold by basic unconditional income. Any college economics class/text book would probably make this much more clearer than I, but the "trends," conclusions and potential sources for the basic income would fall apart under close inspection. For example, if the need for labor decreases, the cost of labor decreases (the net company expense), therefore people may have worse pay, but also the products are cheaper.
The point is basic economic theory define this as an impossibility.
> The point is basic economic theory define this as an impossibility.
Given that economic theory is often wildly divorced from reality, I don't really see a problem with this.
Snark aside, I don't see how service jobs are safe from automation. I've already seen videos of a robot that prepares your ice cream and puts it in a cup; I've interacted with automated checkouts; I've bought and had things shipped to my door (soon to be shipped with less human involvement than ever when self-driving vehicles get big) with no human interaction. Education is going through a phase of experimentation with teaching at massive scale (all the current ed startups, kahn, etc.) which is only going to get worse as we find ways to integrate teaching and game principles (fast feedback loops for faster learning, pacing adjustment based on student, learn by doing rather than hearing, etc.)
I don't see how if corps indirectly pay their customers to buy things this is going to cause the world to collapse. An economy relies on the flow of money between parties to exist; if we have full automation, and all the money gathers in the hands of the people producing things, we have no economy because no one can buy anything (except the top .001% who have everything). There simply isn't any way around this except to tax and redistribute the money. There's already mountains of friction in terms of bureaucracy, regulation, etc., and this has hardly stopped the economy from moving, so I just don't understand your point there.
And really, advocating a decrease in population for stability in a technological world? What on earth? Technology is what allows for MORE population, for more people to have food, places to live, and all the rest. The entire point of all the technology we've developed is to make human lives easier and better... but you think it means there's less need for humans? The logic astounds me.
300,000,000 people in the US. You give them each 10,000 dollars. That's 3T dollars, or roughly the size of the existing federal budget (~3.5T). US GDP is ~16T. It's a lot, but that's not beyond the pale of possibility, and the poorest people will spend that money nearly instantly, reving the economy and making the world a little bit better for everyone.
"If corporations essentially pay their customers (via the government) to buy their goods the world would eventually collapse."
I feel like this betrays a misunderstanding of how money works. First of all, 10k per person isn't enough to create an extreme situation. Secondly, it is the circulation of money that drives progress. If companies didn't disperse the money they accumulate somehow, the economy would stall.
On a more noble level, giving people the option to not work is simply removing additional coercive elements from society. People should be free to choose what they wish to do with their lives. 10k isn't enough to remove the incentive to better yourself, but it is enough of a cushion so that you don't need to submit to awful situations simply to survive.
If janitorial tasks become in high demand, they will pay appropriately or design machines to do it - just like everything else.
"Money" (or any currency) is just a means of trading one good for another, if there are no goods being transferred via the currency it cannot be considered a currency. That being said, if you simply hand out 3 trillion a year then you would be effectively taxing everyone by (3T/total wealth) then redistributing it does nothing because you've also taxed EVERYONE by that same amount.
To follow up my argument:
3T/16T is 25% that would be the inflation rate per year, of course each year it would increase as follows:
Of course this doesn't take into consideration the approximate 1% growth or what ever it currently is. The point remains that the redistribution of wealth will decrease the amount the currency is worth. Currency that is handed out WITHOUT something being traded for it does not apply to "currency circulation." Instead what you have is a situation where every person is taxed at about 25% and receives slightly less than that tax in return (which was used to disburse the collected taxes).
This is why NO COUNTRY ON EARTH gives out tax money to all of its citizens. It may on the other hand provide welfare checks to its needy, which again deflates the wealth of others (by inflating the currency), but keeps those poor from starving.
Hopefully my explanation is somewhat sufficient...
I do agree that it may cause some inflation (I'm not sure how much). I don't think those computations are correct though (3/16 = 18.75, not 25 for example). Inflation is measured as the cost for a basket of goods. Simply giving lots of people more money would not change the cost structure immediately. It would provide a larger consumer pool that companies can compete to server. The effects are complex and it's not immediately clear that inflation would spike to sky high levels, though a rise in inflation does occur when there is more trade because people are getting higher wages. A little bit of inflation is a positive indicator.
However, redistributing definitely does have an economic effect because richer people has an increase propensity to save. When you take 10k that they weren't using and give it to someone poor, that money starts flowing immediately. An analogy would be something like, say you have a lake with some water seeping out from a small waterfall. If you go and take 10,000 liters and put it in a dry lake (ignoring soil absorption :P), that water will start flowing net much faster since you now have two waterfalls going.
I'm not dismissing your inflation argument, I just anticipate that the magnitude of the effect is small (or at least able to be dealt with with monetary policy) compared to the benefit of giving people (especially poor people) some money.
As an aside, part of the reason for doing this is not economic (assuming that inflation does not outpace reasonable technical measures to oppose it). The real question is are we rich enough to afford taking basic care of all of our citizens, regardless of where they started in life? It's a question of justice. We may not have reached that point yet, but I think it's definitely arguable that we have.
You may reach a different conclusion, but ask yourself, if you were teleported outside of time and space, and didn't know if you were going to be rich or poor. What sort of system would you advocate for?
We may not agree on the conclusions, but my position is that we should not let people starve or suffer if we can afford not to. Secondly, we should allow people the ability to choose their life circumstances to the best of their abilities. 10k a year removes many coercive influences and allows them to eat and sleep in safety.
Wow, this is completely wrong. The idea that "there is always a cost for doing something" is trotted out so often, and almost every time, there's ignorance of the fact that the intent is for the benefit to be higher than the cost. Enforcing contracts has a "cost", maintaining a police and legal system has a "cost", a road/highway system has a cost, maintaining a currency has a cost, regulating food so there's no arsenic in it has a cost, etc etc etc. The entropy and friction created by these things are considered to be far below the benefits to economic efficiency (lowering barriers to trade, reducing non-productive expenditure on security, etc). Saying that introducing friction into an economy causes the world to collapse and completely ignoring the potential for economic gains in efficiency is beyond ludicrous.
I may be misreading that last sentence, but luckily the other possible interpretation is equally ludicrous. The idea that corporations paying their consumers who then buy their goods will cause the world to collapse is even more ridiculous than the previous claim. How do you think the economy functions exactly? The wages that employers pay to their employees ARE the money they use to buy products from employers (whether theirs or someone else's). "Any college economics textbook" can tell you this. In fact, if you partition each person's wages into subsistence wages (i.e. basic income) and "extra" wages, corporations are already doing exactly what you're claiming will cause the world to collapse. The only difference is that right now it's being done horribly inefficiently, and the gaps in coverage (unemployed people) have an even more inefficient system servicing them, welfare.
I have disagreements with parts of the article, including the following:
The result is that young people are not being allowed to grow up. In the 1960s the average first-time house buyer was 24 years old, and as late as 2002 it was 28. The average is now 37.
I have disagreement with the above because, generally, "young people" are delaying getting married and having children [1] as well as purchasing housing. And, for some, this is due to greater economic opportunities, especially for women.
Also, there is a type of "basic income" that is surprisingly increasing: disability.[2]
> The point is basic economic theory define this as an impossibility.
Because "basic economic theory" goes out of the window when technology starts doing everything for you. You can't escape from labor being free to services, because services are next for machines to eat. And after them are knowledge workers.
The pillar of our economics is scarcity. Money is needed to allocate scarce resources, because there is in general always more demand than supply. But the moment "resources" (food, manufacturing, energy) gets dirt cheap, the whole concept loses sense.
Every single adult member receives a weekly payment from the state, which is enough to live comfortably on. The only condition is citizenship and/or residency.
Sweet! None of us have to work anymore! Party at my place every night for life!
You get the basic income whether or not you’re employed, any wages you earn are additional.
Few, that's a relief. It'll be nice to close all of the school's down and tell kids they can go home, play video games indefinitely, and never have to worry about their future again.
The welfare bureaucracy is largely dismantled. No means testing, no signing on, no bullying young people into stacking shelves for free, no separate state pension.
Down with welfare, up with communism!
Employment law is liberalised, as workers no longer need to fear dismissal.
Hey boss, fuck you! Why? Because fuck you, that's why! What are you going to do about it? Fire me? Ha!
People work for jobs that are available in order to increase their disposable income.
That's cool. Make sure to tax them high enough to pay for all of my house parties.
Large swathes of the economy are replaced by volunteerism, a continuation of the current trend.
Who wants to volunteer to clean my toilet and mow my lawn? Anyone? Even if I say thank you when you're done?
The system would be harder to cheat when there’s only a single category of claimant, with no extraordinary allowances.
I can't figure a way to game it either; it's mathematically and economically perfect!
This is a really unhelpful comment. Why don't you think for a second next time before rushing out some snarky, superficial nonsense.
Of course people would still work, for the same reason you don't still live with your parents - although judging by your response, maybe you do. Are you personally going to be perfectly content with a $10K/yr subsistence allowance? And closing all schools? What are you talking about?
The fact is that many countries have something like this anyway, with probably a few more strings attached, and they haven't turned into anything like what you predict. The fact you name-drop "communism" just cements your obvious ignorance.
Among us highly motivated and educated people who read HN regularly, it seems somewhat foreign that large swaths of the population will revert to just drinking beer, smoking legal weed, playing video games, watching tv, eating McDonalds and living in their RV or subsided apartment and not use birth control. But large swaths of the population already do this.
>> large swaths of the population already do this.
They do indeed. And why not let them?
Most of what they could do with their time is being automated away, and the front-line service industries (restaurants, coffee houses) can only take on so many.
Does there not ever come a point when we can say we're rich enough as a society to support those who can't meaningfully contribute? That even without their effort we have wealth in excess and can afford to carry them?
> Does there not ever come a point when we can say we're rich enough as a society to support those who can't meaningfully contribute?
You are free to support those who can't meaningfully contribute, but where do you get the moral authority to demand that I do so as well, with my own money?
Besides the moral argument, isn't there a good chance that a permanent underclass with a guaranteed welfare income will overpopulate in relation to those who are "meaningfully contributing", to the point where the ratio is so bad that the system breaks down?
>> You are free to support those who can't meaningfully contribute, but where do you get the moral authority to demand that I do so as well, with my own money?
We're not quite there yet but what happens when all the food and goods a society need can be made by automation, run by a skeleton crew of (say) 5% of the population in facilities owned by 1% of the population? Nobody else can compete on price or availability, the makers don't need staff, and only so many can fit into the service industries.
Do the 1% continue to take the majority of wealth as rent, and the 5% live reasonably well, and f*ck everyone else? Or do we recognise that human progress has been a group effort and start to share the abundance with everyone?
Besides which, if you're asking where the moral authority to demand you help house feed and clothe people comes from... LOL. It's already here. What's not moral is the immature libertarian "I've got mine" attitude we see so much of these days. Tax to help the less fortunate and societal development is theft of my stuff by force and inherently immoral? That's a pretty stunted and selfish thought pattern right there.
>> isn't there a good chance that a permanent underclass with a guaranteed welfare income will overpopulate in relation to those who are "meaningfully contributing", to the point where the ratio is so bad that the system breaks down?
> if you're asking where the moral authority to demand you help house feed and clothe people comes from... LOL. It's already here.
Rather than snarky comments, try to actually think about the question. There are good arguments against unbridled capitalism, but "Libertarians -- LOL!!" is not one of them.
In fact, you already see this in places like Israel and the perpetually "studying" ultra-orthodox who refuse to do military service, have lots of kids, and, of course, take massive state subsidies.
We should welcome this. For those left in the job market:
- remuneration would likely improve
- only motivated people would be left, so "pretending" to enjoy a job and all other kinds of fakery diminishes
- artificial competition for jobs would decrease drastically
- the ability to change jobs becomes extremely fluid on both sides of the table(with liberalized hire/fire policies [employer-side] plus a lack of worry about winding up in the street [worker-side])
This is a very large net benefit to the motivated. The sooner those who don't want to be there get to stop working, the better for the rest. An "arts, sports, and leisure (which may take the form of beer or video games)" is going to happen, and we should be happy to allow it for those who want nothing more.
-"artificial competition for jobs would decrease drastically"
why is artificial competition important? You are saying that it will be easier for qualified people to get jobs because unqualified people won't bother to apply any more?
Rumeneration would improve because of the reduction in the number of people in the "reserved labor" pool, which means lower competition for each position (currently, there are 3 people for each available job opening, as an example), which raises wages. Additionally, the existence of an alternative income stream means that you cannot use the threat of "no income" to hold wages down. Finally, these same forces will mean that "dirty" jobs will no longer be able to bank on the marginal status of potential employees to keep their wages lower - the example of the toilet scrubber (before we get toilet cleaning Roombas, of course) is a useful one. If a potential toilet scrubber can think "do I do this dirty job for only slightly more than the BI, or do I find another one?", then the wage is forced to rise if you want someone scrubbing your toilet.
Artificial competition going away is important, because it reduces the "fake" demand for positions; those that would rather not be there won't, which takes the pressure off that position (reducing its perceived scarcity/value.) This has both the above-described wage effects, and a cultural effect: you no longer have people pretending that they want a job, lying to get jobs, inflating their resumes, gladhanding, etc. You're only there if you want to be.
Given a reasonable implementation, I would expect a rise in consumption. It would of course be one time (but sustained). So industries and jobs that serviced that consumption should be able to grow, which usually brings higher pay.
Also, if inflation stayed in hand, the basic income itself would look an awful lot like a raise.
In fact, why wouldn't improving education help with the claim that people are inherently lazy. I don't understand the objectivist assumption that there are huge numbers of lazy people who will always leech off of others. Instead of assuming that schools would be closed because they wouldn't need to be open to educate people, and that those people aren't worth it anyway, why not educate people and develop their curiosity, motivation, and empathy for others. It is those qualities that most people learn and then cultivate intrinsic motivation into passion to pursue goals that are not purely financial.
Helping people, building something great, improving the world are goals that can and are being taught in schools now. Unfortunately, the state of education is far from perfect. It seems feasible to correlate the laziness that is so feared by opponents of BI with a flawed education system. It is difficult to believe that better education cannot improve the intellectual curiosity and motivation of the supposedly "lazy." A flawed education system produces ignorance, laziness, and stifles intellectual appetite.
Instead of falling back on fundamental attribution error to assume there's something inherently wrong with the "lazy" person, maybe realize that without proper education and being shown opportunities and paths for contribution, people will certainly seem lazy. Not to say that university admissions are a perfect filter for people who are willing and capable of working hard, but even at top tier universities in the U.S., "Undecided" is a common major among students. Students who have a high school degree and have made it into selective schools, demonstrated at least some ability to work, but still don't necessarily know where to contribute.
Without data, but anecdotally I hear of many relatively wealthy middle-aged people who could retire comfortably, but don't, or they pursue a different productive interest (like teaching or volunteer work) after switching from their previous career. It seems reasonable that a better education system would go far to encourage people to better themselves and the world even in a BI scenario. It is hard to imagine someone who has learned curiosity, intrinsic motivation to contribute something, and empathy for others would sit around and leech from others all day.
>> Sweet! None of us have to work anymore! Party at my place every night for life!
That's the point. With increasing automation we don't need to work.
>> It'll be nice to close all of the school's down and tell kids they can go home, play video games indefinitely, and never have to worry about their future again.
You have aspirations for more than a roof over your head and enough to eat though, right?
>> Hey boss, fuck you! Why? Because fuck you, that's why! What are you going to do about it? Fire me? Ha!
Yeah, if you still want the money we pay you, or you can go back to your subsistence wage. You won't starve on the street but there won't be any fancy vacations either.
>> Make sure to tax them high enough to pay for all of my house parties.
How are you funding these parties? Your basic income feeds, clothes and houses you, and little else.
>> Who wants to volunteer to clean my toilet and mow my lawn? Anyone? Even if I say thank you when you're done?
No, those would be jobs you still have to pay money to get done, because they're unpleasant.
In fact you'll probably have to pay more for those because they're unpleasant and people don't need the work as badly.
I've never really heard of anyone proposing a weekly payment from the state, which is enough to live comfortably on
I've heard of lots of people proposing a very small guaranteed payment from the state, as in, bare minimum for subsistence-level food and shelter, on the order of $10,000/year. You would not be able to "party every night for life" on such a pension.
The idea is that it would lubricate the job market, reducing the costs of employment, by taking some of the social benefits-providing responsibility away from employers and giving it to the government, which arguably should own it. This would encourage entrepreneurship (less scary to quit your job and start your own business if you have a better safety net) and also potentially alleviate homelessness and various other social ills.
Those content to never work and do whatever "partying" they can afford on their tiny basic income would also be free to do as they wish, because who wants those people in the workplace anyway? Save the jobs for the people who actually want them, not the people who only need them in order to not starve.
I strongly suspect that the Basic Income Guarantee would receive increases in excess of the rate of inflation, as politicians use it to buy votes.
I think the $10k/yr figure that was quoted is unrealistic - that would cover food expenses with not much left over for housing costs. Even in a low-cost part of the nation, they'd have to perform work of some kind to earn more.
Ideally, increases would get tied to the CPI, or some other index. I also wouldn't mind a provision that would automatically adjust payments to ensure solvency.
Regarding the amount, it should be small enough to make it difficult to live off of. I don't think it would be a good idea if we created a class of BI dependents. There should still be fairly strong incentives to work. I think the main purpose of the BI would be to alleviate the need to rely on corporate america as a de facto social welfare provider. If you look at what happened to Detroit, for example, after the car industry tanked, the local economy went down with it. At the very least, BI would have provided a stabilizing force, slowing down the decline, and possibly giving residents a chance to re-build the local economy.
I think the main purpose of the BI would be to alleviate the need to rely on corporate america as a de facto social welfare provider.
Exactly. In America we still have social welfare benefits, we just get them mostly from our employers rather than from our government, because at some point, for some reason, we decided that we don't want the government to provide them. The implicit assumption being that people without jobs don't deserve them.
Social welfare benefits really should be in the scope of the government's responsibility, not private corporations'. They shouldn't be tied to a particular place of employment, especially as job positions get scarcer and shorter.
That's a crazy amount of money to spend on food. Does that figure include buying food for multiple people? As a single person that's more than 5X what I spend on food. In fact $10K would completely cover my food and rent for a year with a small bit left over. Obviously this will differ from place to place and person to person.
I think the $10k/year proposal was per person, not per household.
Although that begs the question, at what age should the benefit start?
$10k/year is $833/month. $500/month rent and $333/month (about $11/day) for food is pretty basic subsistence for a single person. Yes, you'd have to work if you wanted anything more than basic nutrition and shelter, or wanted to live in a high-cost urban center, but the idea here is just that you shouldn't face homelessness/starvation just because you can't find gainful employment.
If per-person, population of the US is currently about 330 million. Doing the math, that's $3.3 Trillion per year in payments to be made. Social Security expenditures in 2008 were about $615 billion. There are obviously other programs that people qualify for, and I'm specifically excluding Medicare/Medicaid because they're health programs, not living-expense programs.
Even so, if the income guarantee program were implemented, expenditures in this arena would go up by about a factor of 4 to 5.
> Sweet! None of us have to work anymore! Party at my place every night for life!
Given that a typical developer could earn a basic income in a month or two and then take the rest of the year off, yet almost nobody does, I think we can conclude that it is not as sweet as you think it might be. It might be fun for a week or two, but then it is time to get back to doing something productive.
> Sweet! None of us have to work anymore! Party at my place every night for life!
As Nursie said as well, that's the whole fucking point. The fact we don't live like this today is an atrocity.
It seems that you don't understand the kind of world we're headed to. Energy abundance + automation = dirt cheap manufacturing. At first mostly by economies of scale, later literally dirt-cheap, as pretty much everything you could imagine can be made from dirt, power and a bit of advanced manufacturing tech we don't yet have but we know how it will work [0]. Energy abundance + automation + ever better software = most service jobs gone, most knowledge jobs disappearning, and people getting quickly optimized out of economy.
There is a potential for everything to be free because it doesn't have to cost anything. The only reason we would like that not to happen is some kind of weird stockholm-syndromish love for slavery (i.e. work).
Maybe we should stop working on life extension as well because we were meant to work hard and then die.
[0] - actually, we have it, but it's not ours and we can't control it yet. But it works. You and I are examples of it. Biology is nothing but an highly advanced tech we haven't master so far.
I agree with these concerns; I really can't see how a system like this would possibly work. Why would anyone do anything if they had no incentive to work?
Do you want to live in poverty? No? There's your incentive!
You don't believe that is an incentive? Well do you personally do more than is required to survive in poverty? Could you work less and get by? See, the incentive works on you!
Where basic income really helps is with groups like single mothers. Single mothers have a strong disincentive to work - a job has to cover whatever they receive now, plus child care costs. If you don't have good job prospects, few jobs pay enough to do this. This is the fundamental economic reason that creates "welfare moms".
With basic income any job that exceeds the cost of daycare is a net positive.
> Why would anyone do anything if they had no incentive to work?
A lot of people wouldn't do anything; but they don't do much now, either.
Others, however, wouldn't be satisfied with basic survival.
I could probably quit my job and move somewhere cheaper and work 10 hours a week and be able to afford basic food and accommodations - but that doesn't equate to a party at my house every night, because the ultra-basic income wouldn't pay for any frills like alcohol, drugs, or entertainment.
This is absurd. People will work, they just won't "work for the man" if they don't want to. They will do things they enjoy. They will be creative. They will play sports. They will volunteer, etc etc.
Ask yourself: what would you do with your life if you had nothing to compel you into the daily grind for survival? If your basic needs were guaranteed to be met, what would you want to accomplish? Imagine a world where this were true for everyone. Why would anyone prefer this rat race to that? Just so you can continue to stratify society based on those who "contribute" in ways that have market value?
Being a waiter, cook, barista, janitor, retail floor worker, or cashier are all 'working for the man' that few people really enjoy. So restaurants, coffee shops and basically all stores disappear in your proposed only "do things they enjoy" world.
Which is good, because no one would work construction, or do plumbing, or review building permits for safety in a basement office in city hall for fun either, so there wouldn't be places for these establishments to exist soon anyway.
Society can't function with people only doing things they enjoy.
You don't think there is any amount of money you could pay people to do those things for you? If so, I think you're mistaken.
This may mean that costs for getting people to do unpleasant things for you will rise. Consider it a correction to the fact that median real wages have been falling for years, if you'd like. If - even with your new basic income - you are having a hard time finding someone to work for you, you'll just have to offer more money. This is preferable to forcing people to work for you out of fear of them dying for want of food or healthcare, in my book.
I think you also have a narrow-minded conception of what people can view as fun. I would very much enjoy being a chef, but it doesn't pay as well as my current gig and that's a larger motivator for me in part because of the lack of social net.
Robots and automation will continue to do more and more of the total labor that humans need; this provides a constant check against labor prices rising too much. It seems like we would steer our robotics and AI R&D towards replacing jobs that humans really don't want to do [at the amount you're able to pay them]. What's wrong with that?
I would be a lot more inclined to find value and even enjoyment in being a waiter or cook if my desire (quite plausible to imagine) was to own and operate a restaurant. Likewise, I wouldn't mind so much doing janitorial work or running the cash register in my own shop.
Maybe what would disappear is the huge retail / food service chains, in favor of passionately-run local businesses?
What people seem to be missing in this thread is the fact that the concept of the basic income is that it's _basic_.
Construction already (surprisingly) pays pretty well, so does plumbing, etc etc. More tedious jobs will either be automated (which is far more efficient) or if they absolutely require a human brain, there will be a rise in the cost of that labor until the work is worth the money for enough people.
Money is fungible enough that it can be converted into "doing things [you] enjoy". With a well-designed, subsistence level basic income, you won't have enough money to do things you enjoy (unless your hobbies start and end at eating, having shelter, and sleeping). If you work construction, or plumbing, or any "boring job", you'll make substantially more money than the "basic income", and can spend that money on things you enjoy.
You're right about your point in the short term. My comment was considering the extreme (though inevitable future) where the majority of labor is obsoleted by automation. Usually discussions about basic income have a component about the increasing obsolescence of unskilled and even skilled labor and the necessary changes to society to accommodate such a future.
We went from putting every ounce of labor into hunting/gathering/building shelter for oneself and one's family to early civilization where the surplus of resources generated by agriculture (i.e. technology) caused a labor surplus that allowed for new kinds of jobs to arise. More recently, the US went from 80% farmers at the time of the Revolution to 2% now. Along the way the definition of "low-level labor" and "skilled labor" changed; you'd be hard-pressed to get a job even at McDonald's or in a factory, if you're completely illiterate in modern America. It's hard to argue that these changes weren't for the better, for _everybody_, including those at the bottom of the new order. The bottom of society today is orders of magnitude better off than the middle of society in 1790, and we owe that pretty much entirely to technological advance. There are of course speed bumps along the way, and a generation of workers that are not skilled enough for the new order will have a hard time, but in a healthy economy, it's the role of the state to smooth that path using the resources that the economy at large gains from the advances in efficiency and wealth.
I'm a little skeptical of the idea that this wave of technology must be different from all the ones in the past (which isn't to say it's impossible) and obsolete jobs completely. Programming literacy may simply become the new literacy; Education may very well have to become a longer stage of life, but given lengthening lifespans, it won't necessarily be a drastically higher proportion of one's life than it has been in the past.
This isn't true. Our usual concept of ownership and hiring might have to change. There are people out there who dream about running a coffee shop. There are people out there who are the restless type who have to be working on "something". Yes, you'd have a hard time finding baristas to work for 5 dollars an hour. You could probably find plenty of people who would join a "co-op" type ownership situation where everyone shared in the less than pleasant responsibilities for a shared sense of ownership of the entire endeavor and a shared cut of the profits. No doubt society would look different than it does now, and there would be a lot of problems to solve. But these problems aren't unsolvable.
> Society can't function with people only doing things they enjoy.
Yes it can. Or rather it will. That's the whole point of this basic-income discussion. The source of the problem stems from the fact automation and software is systematically replacing humans in things they don't enjoy.
I think that's just it. Under our current system, that's what people believe because that's what we've been taught to believe in order to make the system work.
But, if we were free from the need to earn income, would we all just curl up and die? Or, would we pursue other interests and make (perhaps even more valuable) contributions to society? In fact, when you look at the financial incentives our society provides, they are frequently misaligned with their net value to society. But, that's another discussion.
The author makes the point that even now, much work is done for free and given away (software, music, content creation and information curation, etc.)
Then, remember, this is just a basic, livable income. There is still financial incentive for those who desire more.
Not having to work to live may be the best thing to ever happen to the planet. :)
Are companies going to stop paying employees? No, so there's still going to be an incentive to work. Like, say, having more than bare subsistence.
I don't know what you're arguing against, but its not what people mean by an unconditional basic income. Maybe you're arguing against pure communism, but that's not what this article is about at all.
[Peter, Michael, and Samir are chatting as they hang around the printer]
Peter Gibbons: Our high school guidance counselor used to ask us what you'd do if you had a million dollars and you didn't have to work. And invariably what you'd say was supposed to be your career. So, if you wanted to fix old cars then you're supposed to be an auto mechanic.
Samir: So what did you say?
Peter Gibbons: I never had an answer. I guess that's why I'm working at Initech.
Michael Bolton: No, you're working at Initech because that question is bullshit to begin with. If everyone listened to her, there'd be no janitors, because no one would clean shit up if they had a million dollars.
"You don't ever do anything - not any one single thing - without a <strike>profit</strike> motive?" [Corrected]
There are many non-profit motives, from simple hunger (i.e., when you're hungry you want food, not "profit") to curiosity (e.g., can I build a robot to beat Bill's bot?), from sex-drive (e.g., oh-la-la, she's hot, let me go chat her up and see if there's a "we" in our future) to helping friends and family (e.g., mom's yard has a dead tree in it, and she can't remove it herself, let me get some buddies together to go do it).
Yeah, but notice that most volunteer work has a special feel-good element to it? Feeding the homeless. Saving lost animals. Helping disadvantaged children.
There aren't many volunteer organizations that, to borrow dgallagher's example, mow lawns or rake leaves, and the ones that do, only do it for special places. Perhaps for a monument or a park.
Obviously people would mow lawns but the price would be higher because they don't have to. If you wanted someone to mow your lawn, you would probably need extra income. Or, since you have more free time, you can now mow it yourself and enjoy it instead of feeling like it's cutting into your only spare 48 hours.
The attractive part of basic income for me is that everyone has enough to buy food and housing, so suddenly menial laborers have an iota of bargaining power.
The article is assuming that there's no need to create incentives to work. Indeed, that the market will not provide incentives to work, because it won't be needed.
Well, you can solve the problem very easily. If they don't want to have a j-o-b, you can send them to Siberia. Now everybody wants a job. Of course being productive while at work becomes your next challenge. The travails of communism!
At the right price someone would do it. If BI covers my food, small but comfortable housing and general expenses but not an iPad and you offer me $50 to mow your yard each time. I'll mow your yard all summer for an iPad.
The incentive-based, consumer system still works and people will still do mediocre jobs - but they will do them at fair, negotiable wages because they aren't dependent on them.
Not necessarily. People will only, for example, buy luxury items that are affordable - laptops, nice clothes etc. So, if most of the population which are sustained mostly on this form of base income cant afford said items, corporations theoretically wont be able to offload their products, products for which if you consider automation trends, the cost of producing should go down even further. No idea if this is sustainable.
>>>As Jaron Lanier points out, Kodak once provided 140,000 middle class jobs, and in the smouldering ruins of that company’s bankruptcy we have Instagram, with 13 employees.
This argument is just plain wrong. Kodak was not replaced by Instagram. Kodak was replaced by Apple and Samsung and a bunch of other asian manufacturers. They have way more than 13 employees.
One worry I have with Basic Income discussion is that what most people think the minimum required just to live is very high, which frames the discussion wrong.
Basic Income probably shouldn't cover much beyond rent in cheap, shared accommodation, heat and some electric, and groceries, and healthcare, if that is provided separately.
Basic Income should never be enough to live comfortably on with no drain on savings, at least until we've reached a place where we don't need human labor for very many tasks (if ever). I say this as an avid supporter of a basic income.
> Basic Income should never be enough to live comfortably on with no drain on savings, at least until we've reached a place where we don't need human labor for very many tasks (if ever).
Its seems to me to be self-evidentally economically impossible for universal BI to do this (which, incidentally, means it probably can't replace all existing social benefit programs, because you probably still want to have some programs that people can live on without a drain on savings, though these would need to be time limited and almost certainly have other qualifications) unless we've reached that point of labor-irrelevance.
If you set the level of BI such that it would allow such comfortable living given pre-BI prices, the resulting effect on prices would quickly drive such comfortable living back out of reach for those relying solely on BI.
You can mitigate poverty and economic inequality with BI, because the inflationary effects will be no greater than the income boost given at the low end of the scale, but there is a declining marginal benefit of each additional dollar of BI.
> seems to me to be self-evidentally economically impossible for universal BI to [be enough to live comfortably on with no drain on savings] unless we've reached that point of labor-irrelevance
Why is it economically impossible? It seems quite possible to me.
For example, suppose that 20% of the population _must_ be engineers for society to survive. But the other 80% of the population is irrelevant to production. The 80% could be given a BI of $40k, while the 20% could be given a salary of $200k (or $2M if you like).
(The 20% and 80% figures could just as easily be reversed, if you consider 20% to be "labor-irrelevance" -- although it is not irrelevant if it is necessary to the survival of society to ensure it's done.)
It may be impossible, but that's certainly not self-evident. We tax things other than labor, and that portion is liable to grow as we approach irrelevance of labor - and not irrelevance broadly, but specifically as is necessary to provide that comfortable life.
That said, I'm not hugely stressed about determining precisely how impossible a policy is when I don't support it anyway.
Whatever means works out best, in theory and practice, of course. I don't have a strong opinion on what that looks like, in this case. Conceivably no increase, quite possibly a lesser amount that ramps up over time or a fixed lesser amount, or potentially the full amount but with much of it earmarked for medical and educational expenses.
Just imagine what one could do with one's life, backed by an unconditional income! One could strip off parts of the daily worries; one could try out more things; one could develop ideas, big ideas, without having to fear that a possible failure risks your and your family's lives.
Today, only very few people with a solid financial background can afford to work on big ideas. What a waste! Think of all those geniuses out there who can't just afford to take the time to read a book because they have to work so hard to feed their families!
I also want to argue, that merely the knowledge that you can't completely fail in your working life will cause a huge benefit for public health, physical and mental. I would bet that many diseases would just disappear, due to the lowering of the general distress level.
Actually, let me add that I would like to see another development which is something like a compromise on the unconditional income:
Sabatticals.
Sabatticals or semi-sabbaticals should be mandatory. Just imagine what a powerful motivation it would be for anybody, knowing that working hard for a few years will earn you a year off. Then imagine, what one could do during the sabbatical, learn, explore, re-think one's live ... And finally, imagine yourself at the end of your life, looking back saying "yes, maybe I got a bad a job, but I did so many great things during my sabbaticals, so non, je ne regrette rien ..."
Every single adult member receives a weekly payment from the state, which is enough to live comfortably on.
Maybe we at least start with "enough to live somewhat uncomfortably on"? That way nobody starves or goes without basic necessities, but still have an incentive to improve their lot- and it isn't that hard, because they are on the cusp of living comfortably.
Another important factor, IMO, is how you index how much the income should be. Do you index it based on where the recipient lives? (I.e. everyone who lives in New York should get enough to live comfortably in New York) Do you index it based on average nationwide cost of living? Personally I'd be inclined to the latter.
Fund basic income with a large tax on various CO2 producing activities. With the idea that - on average - people can pay this tax out of the basic income received from it. And people will have direct incentives to find ways to reduce CO2 consumption. Then get rid of silly specific legislation that tries to achieve the same goal in less successful ways. Thus fuel efficiency, California's attempts at cap-and-trade, incentives for renewable energy - all should become unnecessary.
See Australian politics for clues on why that probably won't be an attractive option for politicians where you are. We implemented a carbon tax. While not perfect, it's a pretty decent stab IMO, yet is very easy to demonise and as such is wildly unpopular with hoi polloi.
It's a real pity that many good legislative ideas seem to be susceptible to simplistic populist attack if you yell loud enough.
> It's a real pity that many good legislative ideas seem to be susceptible to simplistic populist attack if you yell loud enough.
I'm having trouble finding it now (so please take it with a grain of salt), but I remember once reading a quote by a southern US politician in the 1950s that went something like: "I used to talk about paving roads and better schools and no one listened. Then I started pounding tables about [black people] and suddenly everyone supported me."
Similarly, Joe McCarthy (of McCarthyism fame) was a pretty unremarkable Senator for his first three years in office. Then one day, he claimed he had a list of known Communists working in the State department, and the next day he was a household name.
Populism has always been a really easy way for politicians to drum up fervent support. A shame that it rarely ever solves any problems.
I've been struggling with this concept for a while. How can we have an effective democracy when it's so easy for stupid, essentially malicious, but persuasive-sounding "political memes" to infect the working classes and derail processes which are actually in the country's interest?
I still don't know the answer but realising that the media were actually part of the effective bureaucracy was a revelation.
We've been lucky, for a long time, that the media has basically done the right thing for the good of the country. Collectively, they are in charge. They slip up every now and again, giving air time to toxic memes like the carbon tax thing, and of course the example you raised - McCarthy suddenly got traction because he comes bearing gifts of news. But generally it's been not too bad.
Your suggestion has the same problems as most basic income proposals.
1) The numbers don't work out. Even a very steep CO2 tax will produce too little revenue for any form of meaningful BI.
2) The money collected on the CO2 tax could also be used for a general tax cut. So you still have the political problem of explaining to working middle class why their money is being handed out to lazy bums.
1) There are increasingly few people in the middle class
2) Very few poor people are lazy bums, in my experience. There "lazy bums" are also sometimes the people creating amazing music, Wikipedia, or other valuable (and un-monetized) cultural products
3) The author didn't specify a time period, simply that given the capital > labor trend, a BI will be necessary if we don't want absolute and complete inequality
1) The numbers don't work out. Even a very steep CO2 tax will produce too little revenue for any form of meaningful BI.
The USA currently consumes about 450 billion gallons of petroleum products per year, which is about 1.5 trillion pounds. We also mine about a billion short tons of coal per year, which is 2 trillion pounds. We have about 300 million people.
Taxing $0.75/pound on carbon fuels would generate a bit over $6k/year per man, woman and child. That's $4.5/gallon. This is enough to put a family of 4 at about $25K/year in basic income, which is just above the poverty line this year.
There is enough revenue. You just have to accept a higher tax.
2) The money collected on the CO2 tax could also be used for a general tax cut. So you still have the political problem of explaining to working middle class why their money is being handed out to lazy bums.
The middle class receives the money as well. This kind of program - where everyone pays and everyone receives - has proven very popular in the past. See social security for a demonstration.
Your carbon tax of $1500/ton of carbon is a couple of orders of magnitude bigger than any proposed carbon tax. Proposals are for $20/ton to reduce greehouse gas emissions to targets. Estimates of the social cost of carbon dioxide range from $50 to $200 per ton.
The level that I suggested is not out of line with what is already accepted as customary in many European countries. And the net impact on most would be minimal because the cost is returned fairly directly to the people paying it.
This idea seems to incur very high bureaucracy costs. What are CO2 producing activies? How much are each of them taxed? Who measures the tax and is responsible paying for it? Etc.
One selling point of basic income is that there's no loopholes and there's very little bureaucracy costs, therefore a larger portion of the money is actually used for consumption instead of doing unnecessary (for society) work.
Of course there are details to work out but it is fundamentally a solvable problem. A tax on any coal natural gas or oil should cover most of the bases (per ton of carbon contained). If it is being purchased for a use that won't end up in the atmosphere (IE carbon capture and storage), the burden is on the purchaser to prove the case for a tax write-off.
I don't think there's a reason to couple a CO2 tax to basic income. You can create a CO2 tax separately from basic income, as it has enough opponents as it is.
I suggested coupling them because I was looking for something that fits, "Solve as many problems with one go as possible, getting rid of as much legislation as possible."
If you create a significant CO2 tax separately from some specific program, like basic income, the fear is that it will be (and will seen to be) just a general supplement on government spending. Which has a tendency to grow until it cannot, so you're just putting off an inevitable crunch that we're already bumping up against.
But if you tie them together, the pain of the tax is balanced by the pleasure of the income. And people have been shown to enjoy that sort of thing. Witness the popularity of tax refunds, even though getting one is strictly worse for you than not getting one.
You don't need to tax actual CO2-producing activities. You just tax the production of CO2-containing fuels. The price is passed on to the buyer who produces CO2 with them.
You can then offer tax credits for CO2 capturing (with the burden of proof on the claimant).
Consider a tower of blocks with two legs, of equal height, and a problem that the tower is too short. If you lengthen one of the legs and not the other, the tower tips over. But that's not a necessary result of the tower being taller; it's a result of the tower being off balance. If you lengthen both legs by the same amount, the tower stands.
You can of course argue that tower height and tower balance are the systemic variables, with length of tower legs being incidental - and this is a perfectly reasonable point of view, but how would you propose we determine how to draw those lines in public policy? If we're free to draw them wherever we please, discussion by discussion, this seems like a fully general counterargument (http://wiki.lesswrong.com/wiki/Fully_general_counterargument) against any potential change: we can't raise the height of the tower, because that involves lengthening both legs, and I prefer to change one thing at a time; we can't lengthen one of the legs, because that changes height and balance and I prefer to change one thing at a time.
I think it would make a lot of sense to have a BI and to also double-down in R&D to improve all levels of understanding and capabilities in the fields of AI and robotics. The protestant work ethic is deeply engrained in this society, but perhaps now we should be thinking in terms of "how do we free as many people as possible for pursuits they haven't yet found" -- and investing heavily in removing jobs that the most hours are worked in.
The necessary investment in all levels and types of STEM would be huge, and the result would be tons of technology that can be used to replace current work. To prevent the technology from simply being used to make a very small number of people rich, vast amounts (if not all) of the research should be released as free & open source technology. I do admit however that FOSS is not a pancea to address concerns of excessive wealth concentration - and taxes will continue to play that role.
In a sense, the wealth created by the increases in automation will be captured back in the form of taxes, and use to fund additional investment in automation as well as a basic income to sustain all the residents of the society which decided that it was worthwhile to try to abolish work, instead of continuing to fetishize it as a moral obligation.
Regarding this quote: "I’ve lived in a country that had a period of 'full employment' and now has 14% unemployment, and I don’t see how anyone can be so misanthropic to claim that those 14% of people just got lazier."
I hesitate to take someone's radical economic ideas too seriously if they either can't do math or does not know the econ 101 definition of "full employment".
I disagree with the first couple facets of the new system definitions:
"Every single adult member receives a weekly payment from the state, which is enough to live comfortably on. The only condition is citizenship and/or residency."
- This is a government.
"You get the basic income whether or not you’re employed, any wages you earn are additional."
- This is welfare.
"The welfare bureaucracy is largely dismantled. No means testing, no signing on, no bullying young people into stacking shelves for free, no separate state pension."
- So a government run welfare program to replace the welfare bureaucracy. Doesn't sound to radical, in fact, it sounds the same.
"The system would be harder to cheat when there’s only a single category of claimant, with no extraordinary allowances."
- Some one can always cheat the system, and there will always be extraordinary allowances because there are people in the system whose desire is for those things. Opportunism has always been a part of evolution. Sure we don't "need" it
While I think this article makes some sweeping generalizations and assumptions, the question it poses is what's important. If we as programmers continue to automate the world (as is our job), and as previous jobs therein are rendered unnecessary, how does one reallocate the workforce? Is the workforce unnecessary at that point?
We could start by getting corporations to pay their taxes. As I mentioned above, corporate profit margins have hit an all time high, and that money will circulate far faster if it’s placed in the hands of consumers.
This is very wrong when you think about large scale. The model simply can't work when you apply it to all the population. Think about the point when it'll break.
There is no free money. Giving money to someone by taxing someone else, is not a stable equation. This will create a tension between those who produce and those who consumes. Corporations will move to States/Countries with better tax schemes.
My strategy is simpler: Liberalize everything. Everybody pays for his own consumption; and shared resources are paid by people equally. There should be no taxes, and also no subventions. That means people pays for the gov. bills equally.
Ok, yes to: "towards" and "trends." However, not "forces" the bring us "all the way to."
OP misses the point that even though I am listening to free electronica on youtube right now...
1. It was once sold for money by its creators
2. Its creators tolerate it being given away for free in order to develop their reputations and bring in an income through performance and sales. This an example of symbiotic capitalism, not volunteer work.
3. My listening is driving ad revenue for google.
So it's not really free out of the goodness of the creator's heart. It's free +to me right now+, b/c atm I'm not currently in its "for-pay whirlpool." Advertisers, clubs and music afficiandos are in its for-pay whirlpool.
Finally. OP claims "we are motivated by autonomy, mastery, and purpose, but not money." This is only true for a small cluster of artisans.
But what about Deviant Art, Wikipedia, and most of YouTube? Also, a lot of musicians can barely afford to eat, even with touring. I imagine it would be liberating if that wasn't even necessary.
Read NPR's beautiful article "UNFIT FOR WORK - The startling rise of disability in America" if you're not convinced on the costs of the current system and how people cheat it.
http://apps.npr.org/unfit-for-work/
For what it's worth Britain has around four million adults living on benefits (else they'd starve) who have never had a full- time job in their lives. No idea what they do with their time but aside from the odd part-time job, they depend on someone else working on their behalf. That is a truism not a criticism. Sounds like a pretty good experimental group for testing the suggestion mooted here.
The question is whether there's (1) something they can do that's more valuable than watching TV and (2) some reasonable way we can motivate them to do so.
If (1) and if a lower BI is an effective way of motivating that behavior, then that's a good argument for a lower BI. It doesn't follow that the optimal level is zero. I don't expect the number that would stay home and collect their $1 of basic income would be substantially greater than the number that currently stay home and collect their $0.
I thought it was a good thing that you don't have to work unless you want to do so for additional income.
Which one of us is wrong? Which one of us will be wrong in the future, as more and more jobs can be automated and thus disappear while the amount of people on this planet keeps increasing?
Given 300 million people, it's prudent to consider the net impact and not sweat the details too much.
Say a policy makes 200 million people better off in some virtuous manner but creates 10 million free loaders. Is that a horrible policy? Say the value of the virtuous benefit is 10x the cost of the free loading?
The single biggest issue with BI is that there is some fraction of the population that will fritter it away and starve.
Most people proposing BI are economic liberals so have the point of view "If we gave them enough money to live off of and they wasted it, it's no longer our problem" but that doesn't sit will with the rest of the population that aren't economic liberals.
Even if you buy into that view, you still have to deal with the increased crime from starving desperate people; it costs a lot more than $10k per year to keep someone incarcerated, so inevitably non-violent offenders will be paroled only to offend again.
[edit] Perhaps those downvoting me could let me know why? I'd like to know how my comment detracts from the conversation on this article.
There was an experiment with this called Mincome in Canada. They found that the only two groups of people who worked less were new moms and teenagers. https://en.wikipedia.org/wiki/Mincome
Note that "Guaranteed Minimum Income" is something else. From my reading Mincome is in fact a Basic Income system, despite the name, though I'm by no means an expert on the experiment.
What happens if I squander my basic income on something frivolous and I can't get a job? Wouldn't there still need to be social programs to prevent people who fuck up from just starving to death? How would a basic income coexist with current systems of debt?
Could this exist without VAST healthcare reform? What happens when people get (expensively) sick?
Who gets a basic income? Every citizen over 18? Every non dependent? Isn't a basic income for someone with 5 kids fundamentally different than a single person? Wouldn't a basic income even in the same state be vastly different (say Chicago vs Urbana in Illinois)?
This is certainly an interesting idea and I'm interested in people's thoughts on these and other details.
When someone has so lost control of himself that he can't feed himself -- even though he has the money to do so -- we put him into custody in a hospital, and hopefully rehabilitate him. That's severe mental disorder.
You're absolutely right about healthcare; you can't replace public healthcare with a basic income.
Food and basic healthcare should be free. Literally free. There's no reason for it not to be in the future, in the very same condition that encourage us to adopt BI.
And if people won't eat even then... well, there's only so much you can do if the other person doesn't want to live.
>"...wealth creation will increasingly be confined to those with capital, and things start to follow a Marxist logic. The middle classes (and their elected representatives) will not let that happen."
In the absence of real campaign finance reform, is the middle class really that empowered to "not let this happen" through their elected representatives? Those representatives, after all, are currently much more beholden to their financial masters--the corporations and its wealthier beneficiaries (executives, prominent shareholders) which provide large campaign donations.
Not that it can't change. There are just a lot of steps between here and there.
I agree that a basic income may be the best solution to the decline in demand for labor. And I consider myself economically conservative. There is still much to be learned about the societal effect. Its something we need to consider as an alternative to social upheaval.
However other parts of this article concern me, in particular:
"Employment law is liberalised, as workers no longer need to fear dismissal."
Employment laws should be entirely at will in such a system. Workers should fear dismissal. And after all, they have a basic income to fall back on.
Combining basic income with "liberal" employment law would be a disaster.
> Employment law is liberalised, as workers no longer need to fear dismissal.
I read that as "workers no longer need to fear dismissal because they can fall back on their basic income", and assumed that "liberalised" meant "doesn't protect workers from being fired". But you read that completely differently. Which does he mean? I agree with it as I read it, which is the same as what you're saying.
I don't think you understand what "liberalised" employment law means, since it means movement in the direction (if not necessarily to the exact point) you are arguing for in arguing against it.
Well, "liberalised" as a general term doesn't mean anything, so I wouldn't say I "don't understand" it. The language is ambiguous, but you may be correct on second thought.
I read this thread his morning and I'm having a really difficult time figuring out how the discussion has changed since then. Which comments are new? Which comments are valuable?
Does anyone else have this problem on HN? Any solutions?
I have that problem a lot in active discussions. I tend to comment in the good ones so I generally just look at the time of my last comment and skim the post times to see which ones came since then. This sounds like a good opportunity for an HN browser extension or greasemonkey script.
Taxes reward those who don't produce and punish those who do produce. But, taxes are the price of living in an organized society. Also, there is no such thing as a free lunch.
Money isn't the problem, it's a lack of education about how money work that is the real problem. If you give poor or lazy people money it'll just find it's way back into the pockets of people who understand how money works (the rich).
Even if we take everything from the rich, they'll just get it back because the average person, with no financial education, is incapable of preserving or creating wealth.
For all of these "Trends" that seem to "push us towards an unconditional basic income" I'm sure there are stronger "Real Quantified Trends" that push us in the opposite direction.
How would a system like this scale to different regions? I can see this working in a smaller country, not the US. I would need a much larger subsistence wage to survive in the SF bay area than I would in most other places in the country. And if certain (already overcrowded) regions are allowed larger wages, you'd probably see people flocking there for the increased wages. I can also see this placing strain on the system for the first few decades if people decide to have more children, since both parents don't need to work anymore.
Scaling it by region such that the increased benefits are greater than the increased expense is an obviously horrible idea. I think that scaling it by region at all is a bad idea, but am receptive to the notion that a slight increase might work out better if someone wants to present numbers.
What is the advantage of doing this in terms of "income" and "currency" rather than in terms of "rations" and "allotments"? Is it a purely rhetorical difference?
Basic income in the form of currency is fungible and cumulative with other income, rations/allotments, as usually understood, are non-fungible (for specific goods) and usually non-cumulative with other income (that is, a "ration" means you get that much and can get no more, rather than that you get a basic amount and can buy more freely.)
It misses the fact that work is fulfilling for (most) people.
I've heard talk of the government being the employer of last resort, which has its own problems. But just paying people to breath has problems as well.
I think you're missing the fact that wage labour isn't the only legitimate kind of work. Volunteering is also fulfilling for people. So is parenting and caretaking. So are any number of other activities which are hard work, very rewarding, beneficial to society -- and yet are uncompensated by a wage labour system. Under a UBI, those become more viable activities, so that wage labour no longer becomes the ONLY monetarily viable way of finding fulfilling work.
No argument there. I love the idea of creating a pool of money that goes to people who do work that is beneficial to society. Or even just to make art for personal enjoyment.
I'd just like to avoid having the government pay people to, say, drink and party. I think there does need to be some external social pressure / structure to motivate people. Otherwise, you wind up with the same political problems what current welfare programs have.
The best solution I can think of is that the government hires and trains people to do some form of public service if they can't find anything else they would rather do. Limit it to 20 hours per week. If people are really useless, give them a disability wavier. If not, have them plant free or clean up parks.
I've seen the impact of people living on the dole in Britain. It's not good for them or the society. It just abandoning them to lead a mediocre life.
Living on the dole is indeed terrible for people -- but it's terrible because it's a poverty trap. A poverty trap isn't created by supporting people who don't earn a wage: it's created by withdrawing support for people who do earn a wage (or engage in other forms of value-creation which the dole administrators disapprove of). Because a person on the dole is micro-managed in their activities, they are unable to volunteer or work part-time without risking losing their one reliable source of income. This is exactly what traps them in a life of unrewarding idleness.
Your proposal would create a poverty trap in exactly the same way as the dole (in fact this is how the dole currently works in Britain -- you've just described something quite akin to the Workfare program, aka slavery for the wageless). Unconditional basic income is not like this at all. It isn't paying people to be idle: it's paying people no matter how much they earn. Because you can never lose your basic income, you are never disincentivised from working. Thus people can volunteer, raise children, care for elderly parents -- or work part-time, or full-time, or in whatever situation they prefer -- without ever losing their safety net. This allows for nire diverse forms of value-creation to be created than in the kind of micro-managed nanny-state that you describe.
I don't like my proposal that much either. It has the flaws you mention, particularly if implemented by our current political class. I was being intentionally vague on the implementation and you assumed that current political forces turn it into a poverty trap. But current political forces also prevent an unconditional basic income.
It really comes down to how much you trust people to find their own path.
That clearly depends on how old they are. Below 18, you are required to be in school and you are not allowed to work. After 65, you get to live off our national pension plan and get free health care.
The other thing that makes me cautious about the unconditional income approach is the handful of rich kids that I knew in High School in Austin, TX. They had everything they could possible want handed to them and were miserable. It was puzzling as hell.
FDR had a really big internal debate over this during the Great Depression. Read a little of the history of that era -- it is not an easy tradeoff.
I think that any kind of micro-management of peoples' livelihoods create poverty traps. This isn't just a matter of current first-world political systems: it's also observable in developing-world charitable activities as well. Check out the evidence from GiveDirectly[1] to see how an Unconditional Basic Income works better in environments that are entirely unlike our first-world political environments.
Basically, I think that people are really good at finding their own paths. It's what people naturally do, providing that they aren't structurally prevented or disincentivised from doing so.
And yes, I've seen the miserable rich-kid phenomena first-hand, and agree with you that too much privilege can be a real handicap. That's why I think it's quite important that an unconditional basic income be genuinely basic: enough to survive on without any privation, but not enough to be decadent on.
I've found a neat mechanism for appropriately setting the level of a basic income: 50% of the mean individual income. Here in the UK, that would produce a basic income of roughly £12k/year -- a bit less than working a full-time job at minimum wage. Enough to live a fairly decent life in a (now) impoverished Welsh ex-mining village, or enough to barely scrape by with a bunch of flatmates in London. But not enough to be extravagant on, in either case.
The nice thing about pegging the amount of Unconditional Basic Income to the mean earned income is that it builds in an automatic self-correction mechanism. If too many people exit the workforce, the mean earned income would fall, and the UBI would fall exactly in sync with it. As the UBI falls, people would be increasingly incentivised to re-enter the workforce. As people re-enter the workforce and the mean income rises, UBI would increase along with the inevitable increases in inflation.
Basic income makes it easier to work, because one no longer has to choose between working and receiving benefits. There's currently a huge divide between working zero hours for unemployment benefit, and having to work many hours to get the equivalent in wages. With basic income there's no bureaucratic friction with signing on and off, or having to justify your need for support. Any extra hours worked give you extra money, and they'll be hours "on the books" - no need to hide the fact that you're working - which is a win all round.
>It misses the fact that work is fulfilling for (most) people.
Basic income is not against working, it's point is to let people work in all kinds of situations. Old-fashion social security usually makes the tax rate for certain part-time / freelancing work 100% (e.g. $100 increase in pay can reduce benefits $100, therefore the actual marginal tax rate is 100% and most people won't do that work).
> But just paying people to breath has problems as well.
You can do that in most Nordic countries, and it has many more benefits than disadvantages. For example, you can walk safely everywhere because everyone has sufficient social security. Street robberies and whatnot are practically non-existent.
> You can do that in most Nordic countries, and it has many more benefits than disadvantages. For example, you can walk safely everywhere because everyone has sufficient social security. Street robberies and whatnot are practically non-existent.
To me that sounds like an argument against BI. You're basically saying that we can have the social safety benefits of BI for only 10% of the cost by using means-tested programs . Since that's what the Nordic countries are doing, and according to you it works really well.
Nordic social security works better than American social security, that's fore sure, but it can be improved on. The main problem currently is that social security assumes that people are either unemployed or employed full-time. This assumption is increasingly false. There's more and more part-time (and 'part-period', e.g. full-time for 3 days only etc.) and freelancing work.
Basic income really means social security without that assumption. If you work 0h/month, you get 100% social security. If you work 120h/month, you don't get anything (because you'll pay for the basic income through taxes). If you work 60h, you'll get someting in-between.
1) Work is not nearly as fulfilling as doing nothing for most people. I have no trouble admitting this to myself. And while I'd probably still do something, I'd no longer see any need to make any compromises to work together with anybody else. That would be satisfying. It would also be an economically negative proposition, but I'd learn a lot. Or at least, I'd feel I do.
2) About the "Nordic countries". WTF ? Have you looked at the crime stats for Malmo ?
Please note that the nordic countries are in a somewhat special situation just because of their location. They also have very few homeless. Of course, homelessness is a death penalty there, merely because of the weather. That means that in Nordic countries everybody has a house, and not made from wood, double glazing, brick, generally solid and everybody's inside before the sun is down. Breaking and entering after dark is insane.
> And while I'd probably still do something, I'd no longer see any need to make any compromises to work together with anybody else.
How is this a problem, when all the essencial work is done by machines and people who do like to do those particular types of work?
"Work is fulfilling" is one of many illusions the society created to shield itself from the fact that we are still, as we have been for the entire history, slaves who can only either work or starve. We are used to this state of the world so much that we've invented many cultural memes so that we can feel good about it.
It is very similar to how people invent 1001 reasons why death is good and gives meaning for life. It doesn't. It's just we can't bear the sadness of our situation, so we invent excuses and stockholm-syndrome ourselves to avoid the pain.
>2) About the "Nordic countries". WTF ? Have you looked at the crime stats for Malmo ?
Yeah, well immigration can create major problems with crime.
>They also have very few homeless. Of course, homelessness is a death penalty there, merely because of the weather. That means that in Nordic countries everybody has a house, and not made from wood, double glazing, brick, generally solid and everybody's inside before the sun is down. Breaking and entering after dark is insane.
Yeah, because we have a good social security and everyone can get an apartment.
> It misses the fact that work is fulfilling for (most) people.
There are all kinds of work that people undertake today that are not paid for or economically rewarded. Providing a basic income allows those people to continue to do that work or explore new kinds of work that aren't paid for at this time.
> It misses the fact that work is fulfilling for (most) people.
No, it doesn't, instead, it leverages it. Basic income increases labor mobility and increases the ability of people to find the most fulfilling work (which may not be the most financially rewarding, especially in short term analysis.)
The big issue with UBI entirely replacing the welfare system is that it ignores those who require more money due to disabilities. Person X can subsist on £Y/week, but person Z needs fooprazatine which costs a non-negligable quantity of £Y (there are also other, more nuanced scenarios but drugs come to mind first). Of course there are ways around it and medical benefit fraud is already incredibly low (it's hard to fake that you need a carer or an expensive regimen of drugs (painkillers notwithstanding)).
I like this conceptually, but where you set that wage is the tricky part. If most folks don't have to work, most won't. Less people to tax too. That will in turn cause inflation, as there's less supply of goods. Then you'd have to increase the wage to follow suit.
To get any kind of equilibrium that preserves an incentive to work, you'd need that universal payment to be fairly low. This isn't to say, "Don't do it" - it's just to be careful with it.
If money is any object or record that is generally accepted as payment for goods and services and repayment of debts in a given socio-economic context or country,( https://en.wikipedia.org/wiki/Money ) then what are persons who receive this money paying? What changes hands? The state gives Chad cash and he gives them what in return? Is a minimum income even money anymore?
This is inane. So long as people in general are willing to accept it in exchange for goods and services and repayment of debts, it's money. Even if it somehow wasn't "money" per that definition but a money-like item that worked the same as "money" in all contexts but one, how is that an objection? Wikipedia's phrasing of the definition of "money" provides some kind of moral obligation?
This will be another nail in the coffin for the rights of those who are already neglected[1] in the current system : stateless people, and unpopular minorities who can be made stateless.
I find it interesting that the author mentions BitCoin early on, but then never addresses how an Unconditional Basic Income would work if corporations switched to BitCoin or other anonymous, decentralized monetary system.
In concept, I'm a firm proponent of a Unconditional Basic Income/Guaranteed Minimum Income/Negative Income Tax, but I think BitCoin is going to be a prohibitive cog in the financial wheel.
No matter how you shake around the minimum income scales, you'll end up near those types of massive figures.
That's $2 trillion dollars that doesn't exist right now and would have to be magically conjured up. And I suspect a comfortable wage would need to be higher than $20,000. I think the financial disaster of this arrangement would be closer to $3 trillion.
Can somebody explain to me how basic income can work in terms of the cycle of spending? If companies have to pay for all of people's income through a taxable percentage of their income, then these companies will only receive a share of that amount back through consumer spending? So the economy will shrink in a vicious cycle, right?
I think it is hard to be confident about what would happen. If most people elected to stop working the economy would probably contract. If instead the impact were to give more people the option of making longer term choices, you might see the economy expand.
If the basic income is set at a basic enough level, work should remain an attractive option.
Significantly fewer corporations with a drastically smaller workforce paying greatly increased tax rates with a substantially weaker dollar to benefit an unthinkably higher quantity of citizens? I assume we still want to keep our military, education, and surveillance programs funded, too.
Russians tried it with USSR.
Every time new technology is introduced everyone gets scared that jobs go away. Over time the level of service and innovation requirements go up providing more jobs for those that adapt. Such as life. Don't make the world what its not. It most likely won't work. :-)
Russians tried the exact opposite: everyone was required to work in the USSR. You'll get a minor prison sentence for avoiding work (IIRC it was called "went to jail for idleness"). The law was hard to enforce though.
What the blog post describes is, basically, communism. The official communist party line in USSR (correctly) identified the lack of automation (advanced technology) to make it a reality. Basically the official state goal of the Soviet Union was to advance the science and technology towards achieving that goal, hence the repressions against religion, endless attempts to identify and focus "more important" sciences and skip "less important" ones, introduction of pyatiletkas (5 year plans), etc.
Basically the government guaranteed to get you a job with a basic income. All seemed like a good idea "from each according to their ability, to each according to their need" until folks realized that the people deciding basically were the ruling class and the working class now worked out of fear of Gulag instead of financial rewards.
> - You get the basic income whether or not you’re employed, any wages you earn are additional.
>
> - The welfare bureaucracy is largely dismantled. No means testing, no signing on, no bullying young people into stacking shelves for free, no separate state pension.
Not in the slightest. It takes more bureaucracy to administer a system where decisions need to be made. If there's some other problem you're seeing, you'll need to use more than one word to convey it.
You've probably got a pretty good job right now, and some decent savings, right?
Why? Surely you could quit your job, find a much simpler one with less responsibilities, and move into a trailer and subside on tubers and rice. Much cheaper, you don't have to work nearly as hard, and less responsibility!
Of course you wouldn't do this because you like the lifestyle that your job allows you to have (and likely like your job as well).
The ability to be poor and not die does not automatically make people satisfied with being poor.
It's becoming increasingly clear that some people can't work despite their willingness. Full-time job growth is at an all-time low while temporary job growth is at an all-time high. Most of the jobs gained since 2008 have been temporary jobs or jobs with too few hours.
I think that's an entirely separate argument. Do you?
The fact that right now the economy stinks (P-U) and that some people who want to work, cannot, does not really have any bearing on future plans for guaranteed basic income.
My vote goes toward less hours, and higher wages. it's another way of solving the same issues. Everyone could work half as much, for twice as much, and you still double employment.
Worthless blabber. Giving people good social guarantees leads to more people unwilling to work. If you want examples take a look to Norway.
Also another dumb question how the hell this article ended up in frontpage of Hacker News in first place?
Did you mean "orthogonal" in place of "mutually exclusive"? If they were in fact mutually exclusive then any central planning should have a dramatic (and negative) effect on your business.
I also hate this idea, but I agree that the long term trend is for society to support very few jobs. Do you disagree that this is the trend? If not, do you have any better ideas for what to do about it?
I don't know why people keep harping on corporate taxes. If anything, taxing corporations is regressive -- the taxes ultimately get passed on to consumers through higher product prices, regardless of their income levels.
Taxing corporations doesn't produce magic money -- it's still taxing people in the end, but it's the consumers. Far better is higher tax rates on investments, and higher taxes on the rich. We should be taxing the people who own the corporations, or are paid huge salaries by them -- that is, if you believe in progressive taxation.