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Switzerland’s Proposal to Pay People (nytimes.com)
155 points by webjunkie 1469 days ago | hide | past | web | 287 comments | favorite



As a Swiss citizen currently living in the UK, who is earning a fair amount of money and planning to probably go back to live in Switzerland, I am going to vote for this proposal (unless the referendum documentation makes it look absolutely stupid, e.g. it has some really bad implementation idea).

I hate taxes as much as the next guy, but reducing risk of destitution for everyone in the country down to zero is one cause for which I'll be happy to pay taxes.

Why do I want more money? To buy toys, to buy time, and to buy security. The basic income resolves the last two items, and puts the first one well within reach for most reasonable toys.


It sounds good in theory doesn't it?

I hope it passes. It will be a great study case. I fear that it won't be pure welfare and therefore the conclusions we can draw will be limited.


i also agree the idea sounds pretty interesting.

i think the main problem is how to address cases where people mis-spend their basic income. someone is unemployed, and they blow the basic income on booze, etc. issue is how do we protect people from themselves. we can say damn the consequences and encourage prudence but i believe this is why most aid qualifications exist.

i know HN readers will be less likely to do have this problem (other than spending on a startup :) ) but HN readers are not a representative cross section of people.


Minimum cash transfers are one of the most effective methods of sustainably increasing the wealth of a population. There's a pretty successful charity that does this kind of work in Africa: http://www.givewell.org/international/technical/programs/cas...

There's a guy at Columbia University that's running studies about giving drug addicts guaranteed cash, and it's actually allowing them to more easily break their addictions:

http://www.nytimes.com/2013/09/17/science/the-rational-choic...

My only worry about this program is if it will indirectly inflate the cost of everything.


> My only worry about this program is if it will indirectly inflate the cost of everything.

I personally see this being too tricky for companies to try unless they're a monopoly.

If I run company A, and my competitors company B and company C raise their prices, I'm going to maintain mine, to increase my profit flow. Alternatively, company B and C don't even try raising their prices, for fear of competition doing what I mentioned.

Thoughts?


Here are my thoughts: Of course, you're talking about an efficient market keeping prices at an optimum. I think at the crux of the matter is the supply elasticity of goods consumed by the least wealthy. The worry goes as follows: basic income guarantee (BIG) would line consumer's pockets, but what if rent (etc.) goes up concomitantly such that people are just as poor off as before BIG. In other words, they receive X dollars per year, but pay X extra in rent (etc.)

I think a good counterargument goes as follows: people have true security to move to a new location with cheaper rent. Thus supply and demand of goods become more efficient as the mobility goes up and people can act more efficiently/rationally.

Thoughts?


Good points. I definitely see both sides of the coin playing out: with some landlords and sectors increasing prices, but others holding steady. I personally have no evidence to assert that over time, the battle would be won by the landlords and sectors that maintain reasonable prices, but your counter argument makes a great point.

I just feel like BIG would be ideal in so many ways. We can cut all social programs that are BIG for specific groups, and use those savings to help offset the massive cost of the program. The BIG would allow disenfranchised/unemployed persons security in food and housing (hopefully, as our discussion brings up the concerns), tt would allow part-time workers a chance to save money, and participate in the economy, and it would allow full-time workers to supplement their income, again allowing them to make larger purchases and save.

IMO, the current economic climate warrants experimentation. Where I'm from, we've had a study in BIG (http://en.wikipedia.org/wiki/Mincome), that showed promise not only in an economic sense, but a social sense as well. I truly think it could be a force of good. As a society, we need to either set the bar higher for our collective support towards to lower classes, or we need to come to grips with a class based reality that is projecting towards more inequality.

> I think at the crux of the matter is the supply elasticity of goods consumed by the least wealthy.

A very valid concern. I feel like landlords would be reticent towards increases initially, as their isn't any data to back your decision on the matter. Again, I feel like the holdouts combined with migration will pressure the groups wanting to raise prices enough to limit the increase. But then again, if everything raises in price by 15%, then you're not just paying 15% more, you're paying 100 dollars more for rent a month, 100 dollars more for food per month, etc...

We need to at least start implementing studies and experiments. I can't see any reputable economists dismissing the policy out of hand without proof of it's benefits/downfalls. Both you and I can only speculate. I'd love to change that and for us to talk about data regarding this someday.


If people waste their basic income on alcohol, well, so what? I don't know the tax situation in Switzerland, but in the US, that means a big chunk of that money is immediately reclaimed as taxes. The rest goes back into the economy, and the person is not really in any worse of a situation than they would have been without basic income.

It's one situation where basic income doesn't really help, but it doesn't really hurt either.


The money did come from someone else in the first place, where it would almost certainly have been better-spent than on getting wasted. And you may just be enabling a substance abuse problem to continue and worsen.

To put it another way, you end up where you would have without the guaranteed income, except that the alcoholic has done that much more damage to him/herself, and the taxpayers are that much poorer.

So I'd say that yeah, in that particular case it does hurt.


>issue is how do we protect people from themselves.

Sorry, but I think something is wrong with this kind of thinking. For e.g. someone who knows "better", could protect "you" by not funding your start-up! Also, if you read the article, Schmidt says "I tell people not to think about it for others, but think about it for themselves".


Well, as evidenced by this discussion, we do very often nerd-out on social psychology :) !

Here is a Seattle-based program that mitigates the huge costs of alcohol addiction by providing free housing and some realistic rules for staying there. The structure of the program both protects society from their addiction, and "them from themselves".

http://www.desc.org/1811.html

The built-in (and often clashing) drives for "fairness" and for "charity" often bubble up as we examine a program that helps someone who may not seem to deserve our help. But there are practical reasons to help people, with measurable results.

Still, when programs are developed, they must incorporate and mitigate the potential social side-effects!


do you have sources that verify the disproportional "mis-spending" of welfare money.

i would doubt it is such a critical issue. and if usually related to problems/illness that could have been tackled earlier (alcoholism, depression eg)


In a reasonable society with universal healthcare, misspending the universal income on things like booze could be treated as a health problem. As for how to feed people who fall into that trap, there might need to be some emergency income available for which a doctor would need to sign off.

Of course, we'd have to fix healthcare first in the US, which is its own giant political argument.


If you support giving money to poor people, why are you waiting for the government to take your money and do it for you? Why aren't you already giving money to the poor?


This is such a weak argument. In order to make a meaningful impact on society, you need mandated programs that require all to contribute. Do you propose that foreign aid, military spending, healthcare all be done on a peer to peer basis as well?


It's a weak argument because it's an accusatory personal question, which are poor arguments in general.

But the underlying objection isn't convincingly refuted by your assertion or hypothetical question.


Yes but the point is if you think it is a good idea to give money to poor people, why are you yourself not doing it already? Sure we would be better off if we required everyone to contribute, but helping only, say, 10 people would still be desirable right?


Take a look at Bill Gates and his fight against malaria. What they've done has had just enormous impact http://www.gatesfoundation.org/What-We-Do/Global-Health/Mala...

He could've gone two ways:

1) Spend time convincing the society to approve a mandated program by having everyone else pitch in.

2) Make money in private sector, and direct it to the causes that are relevant to him, free to run his foundation as he chooses.

Which way was more efficient?


Don't prove your point with outliers. He's literally the richest man in the world.


Precisely. Earned his money in the private sector and impacting public sector in huge way.

Imagine how much progress he could've made if he started pushing this idea as a mid-level bureaucrat.


It's not an argument. I'm curious why swombat is more comfortable with the government using his money for something he himself has decided not to do.


There's a big difference between donating money to the poor and creating a vast society-wide social safety net that enables riskier careers (like entrepreneurship and art) for more people. I support the latter, not the former, and I cannot anywhere near afford the cost of the latter by myself.

Think of it as a new social contract with a modern definition of human dignity that does not include having to toil at a horrible job just to survive. I'd sign up to that.


So, all the hundreds of thousands of people here in America who donate their time to charitable work are wasting their time because it's not "mandated"? The billions of dollars Americans (and, no doubt, Europeans as well) donate voluntarily to charitable causes should instead be confiscated by a tax collector and redistributed systematically to all citizens according to some bureaucratic process which determines eligibility?


No, money should be confiscated by a tax collector and redistributed systematically to all citizens __without__ some bureaucratic process which determines eligibility. That's what basic income means.


So why bother? They collect my money, then send it back to me in the form of a government check? Only, minus a few dollars for overhead and for redistributing to some other guy who doesn't pay any taxes? Why not allow a tax credit for donation to charity, which allows people to (1) feel good by helping fellow human beings, and (2) help those causes they really believe in?

Note that currently the U.S. allows a tax deduction but not credit for charitable giving.


The option you propose is largely what the current system looks like. The proponents of the basic income argue that basic income is better because it massively reduces the overhead of trying to figure out who is eligible and who isn't, and of administering many concurrent schemes designed to solve many specific problems.


A minor point of clarification in regards to the Swiss proposition is that there is no 'eligibility' beyond being a citizen. Not sure how much bureaucratic process is involved in that.


Can you see my eyes rolling in their sockets? No one suggested any of the stuff in the caricature you draw there.


User cylinder claimed that peer-to-peer aid cannot make a meaningful impact on society.


I don't believe he actually said that. I believe what he actually said was that there exist programs of giving which can only be effective when practiced on a large scale.


In order to make a meaningful impact on society, you need mandated programs

The contrapositive (logically equivalent) statement is: If you don't have mandated programs, you can't make a meaningful impact on society.


Taken in context, his statement does not appear to me to be a universal positive claim, so inverting it to a universal negative seems unfair. His point appears to be that this particular idea as well as some others are such that they cannot be effective when the scale is too small.


Him giving to the poor doesn't achieve the same goal as a government providing a basic wage to all. Yes, you can help some people, but this is a change in the very fabric of society. In how people choose to live, to strive or to squander.

This is a remarkable piece of legislation and truly exciting to observe.


Yes it does achieve the same on a per-capita level. Do the math, and just start doing the part you intend to compel others to. If you're not willing to voluntarily take on one complete stranger and pay him a "basic wage" out of your own pocket, don't compel (with threat of fine/imprisonment) everyone else to do the same.

This is a terrifying piece of legislation precisely because it is a change in the very fabric of society, in how people are compelled to support others regardless of whether they will strive or squander - and that anyone choosing to not support such a devaluing of human worth will be punished via the police power of the state.


If I'm not willing to go out into the wilderness and lay out ten square feet of asphalt, I shouldn't support a national highway system?

If I'm not willing to personally fly on a jet fighter, I shouldn't support a national defense system?

If I'm not willing to seek out and apprehend criminals myself, I shouldn't support a police force?

One role of government is to coordinate wide-scale activity that would be impossible to efficiently or equitably execute without the power to compel individual action. Once you have accepted the right of government to force you to do one thing under threat of punishment, further argument needs to be about the appropriate scope of that power, not whether the power itself is illegitimate.


If you're not willing to lay your own driveway, don't expect a highway to it.

If you're not willing to head for the front lines and fight as best you can, don't expect an effective national defense.

If you're not willing to confront criminals in your own home, don't expect police to track them down when they escape.

Yes, government's major role is to coordinate national-scale activities which serve everyone's interests. If you're not willing to do your part without that coordination, don't expect others to pitch in. Government is not some minor deity acting in pure benevolence, government is the aggregation of citizens doing their part and coordinating mutually beneficial activities. Government is the consequence of people consenting to negotiations over rights & responsibilities, not a bunch of know-it-all busybodies threatening to wreck the lives of anyone who does not submit to their whims.


None of those propositions make sense.

If I'm a renter, I don't have property to lay driveway on, and yet I have a need for highways. Combat is a job for trained soldiers; if a country needs to mobilize irregulars from the streets it has probably lost the war.

And the police generally advise that you do not confront intruders, but instead find a protected area and call 911. Apprehending criminals is the job of the police, regardless of whether they're in your home. Confronting them yourself is a great way to turn a burglary into a murder.

In a representative government, there is a legislative process required to authorize government action. It is neither necessary nor desirable to perform some small-scale imitation of a policy you would like to see enacted before advocating for that policy.


> Do the math, and just start doing the part

This provides the money transfer, but it does not provide the safety net.

> devaluing of human worth

There are two ways I can interpret 'devaluing' here, and I don't understand how either one makes sense.

Iff 'dropping the value of the money', it does not drop the value to move and spend money.

Iff 'devaluing people', how in the world does it devalue people to make a rule that they deserve a certain amount of the nation's production, to enjoy food and such with? I could understand if you said it devalued the ideal of gainful employment, but that's not what you said...


If you're not willing to provide at least a tiny part of the safety net for one person on your own, I don't think you're serious enough about it for me to give up what safety net I'm already providing to others without compulsion.

As for "devaluing", it's akin to giving kids awards for just showing up. If you're physically and mentally capable of caring for yourself, do so; giving you a "living guaranteed income" just for existing devalues what you're able to contribute to yourself and society. Yes, I understand the idea that it's somehow "fair and simple"; I also understand that such altruistic abstractions fail hard in reality.

I've seen the profoundly infirm earn a living, and I've seen the wholly capable wreck what they have on the premise that someone else would replace it. The truly needy I gladly give aid to; I despise these movements toward compulsory support of those whose only need is a reason to get up and produce.


>If you're not willing to provide at least a tiny part of the safety net

Nope, not a safety net. Safety nets are guaranteed. One person giving doesn't work, it needs to have the participation of many.

> I despise these movements toward compulsory support of those whose only need is a reason to get up and produce.

I don't. I feel that certain kinds of taxes that go toward the entire community are fundamentally reasonable, such as the ones applied to natural resources. And almost nowhere in the world do you have to produce simply to be a citizen. Why not turn part of that money into a check instead of dumping it into bureaucracy?

Why do you care if someone else wants to produce or not? Is the incentive to not be poor too weak? You insist it be an incentive to not starve that motivates labor? Productivity per hour worked has skyrocketed in the last 500 years. At what point do we decide that we can spare a few percent to ensure everyone has food and shelter? Never?


> Yes it does achieve the same on a per-capita level.

You're missing everyone's point here. It's like Kickstarter. Conditional support. I am willing to give a band $50 for a vinyl printing of their new album, but only if they actually can gather enough money to press the thing. It's an all-or-nothing proposition.


I think it's fair to ask tough questions before one experiments with the fabric of society.

It will likely be interesting and exciting if the legislation passes, but will it be better or even good?


Tough questions are welcome, but they won't sound like "Well, if you think a nationwide basic income is such a good idea, why don't you do it yourself?" That question is only tough because there is no underlying logic to respond to — it's a lazy talking point intended to impugn the other side's motives rather than address the actual issue at hand.


Ok, you're the 3rd person in this thread who thinks I'm making an accusation. What accusation am I making? What motives am I imputing to swombat?


It appears that I agree with you objection, but the heavy use of the word "you" in your question comes across hostile and personal. If you phrased your question in a more passive tone or otherwise referred to unnamed third parties, I'm sure this conversation would have much less of an edge.


You're not criticizing the idea swombat is proposing. Instead, you're questioning swombat's current actions.


I agree that the objection is unconvincing as phrased.

However, if we all agree that "Someone Should Do Something About X", then why does it necessarily follow that government should decree that "Everyone Must Do The Following Things About X: ..."?

There are some gaps in logic there that (commendable!) fervor about poverty does not cover. It's fair to ask whether poverty can be helped by channeling that fervor towards less coercive and bureaucratic (and possibly more effective) outlets.


It's a good question, but really, his government is already taking his money and giving it to the poor in the form of existing (means-tested) social programs, that have an additional effect of creating an extreme disincentive to work, since you get disqualified from those as your income grows.

Replacing all means-tested government aid to the poor with a simple check to everyone would dramatically cut program costs and abuse, and quite likely actually result in more people getting actual jobs. It would also be a good reason to repeal the minimal wage laws, since there would be no rationale for them any more. To me, this seems like a pretty good tradeoff, even if overall tax rates go up a little to pay for it.

The main danger I see in this is that with the system in place, there would be continuous public pressure on the politicians to keep increasing the basic income level, until productive employment becomes not profitable any more and the economy collapses. Of course this problem is inherent in any welfare society, but I think it's more dangerous here, because of the sheer transparency. But if anyone can make this work, it's probably Switzerland, and we would all learn a lot from the experiment.


The danger is more subtle than that. There is also the danger that productivity decreases enough that the Swiss GDP cannot support the entitlement at acceptable levels, even without blatant pandering to political factions.

I wonder if some sort of regressive payout as a function of income (as in a logarithmic curve) doesn't make more sense. With a guaranteed base income, this would actually encourage working- and middle-class productivity. The entitlement would then be a multiplier of work, not a substitute for it.


If the basic income is reasonably low (the income figure seems high for the US, but cost of living is much higher in Switzerland), I don't see a major decrease in productivity. If anything, I see an increase, due to elimination of extreme disincentives the means-tested programs create. But there surely is a level at which what you are describing would happen, and that is exactly what I am worried about.

The regressive payout sounds like a good idea, but isn't it equivalent to just flattening the income tax?


> there surely is a level at which what you are describing would happen, and that is exactly what I am worried about

Yes. Essentially the Swiss will be gambling that the legislated payouts won't be high enough to trigger that scenario.

I can take your question about income taxes several ways, but I will say that progressive income taxes make much less sense when coupled with a guaranteed minimum income.

Also, a regressive payout has the opposite effect of a progressive income tax since the regressive payout enhances a household's ability to net more income while a progressive income tax makes it harder to net additional income.

Though disincentivizing marginal productivity may acceptable if the ultimate goal is redistribution of wealth instead of simply reducing the tax burden of people with modest incomes.


I agree that with basic income, flat tax would make much more sense, and would be easier to sell too. Write that as another potential advantage :)


If you support a real free market economy, please, first, untangle banking and industry from overt and covert government involvement before you insist that the poor schlubs at the bottom of the economy be the experimental subjects for economic purity.


Treating every instance of giving money as equal is like failing to distinguish between packing popcorn from real popcorn. The motives and effects are not the same for every exchange of money. There is no way that swombat could provide a basic income for everyone, which is the idea under discussion here.


I'm not asking one person to provide a basic income for everyone. Here is my question: If a majority of the people in the country support this, why are they all not already doing it? And if they do not support it, then the referendum will not pass.


> Here is my question: If a majority of the people in the country support this, why are they all not already doing it?

Because they are not a psychically linked hive mind. The way the majority of people in a country coordinate the flow of resources through society is through the government. That's what's happening here.

This is a bit like asking, "If you want peace, why don't you just drop out of the war?" The coordination is an essential part of the outcome.


You have it backwards. I'm asking "If you want peace, why did you personally decide to start shooting those guys with no mandate from the government?"


You seem to be straining the analogy well beyond the actual comparison being made, to the point where I have no idea what you're talking about. The point is that one party in a fight stopping shooting does not constitute peace and one person giving a small amount of money to one other person does not accomplish the same goals as a basic income.

I do give to charity, but the net effect of this is not a proportionally scaled down version of the effect of a basic income.


This was never supposed to be a personal attack or pointed commentary. The question is not some rhetorical device. It's just a question: If the majority of people in a country want their money to go to the poor, why would they force themselves into the agreement? What's the advantage to being coerced by a government, over voluntary action?

Edit: changed "each other" to "themselves" since that's closer to what's confusing me.


It isn't that "they want their money to go to the poor," per se. This program is not means-tested. And it isn't really that they're forcing each other into agreement. As I said earlier, the idea is for the giving to be coordinated in a specific way. Individual transfers of money are not a scaled-down version of a basic income. The scale is essential to the integrity of the program.

Many of these people may very well already give money to the poor. I don't see why you assume they don't. But the guarantee is the killer feature here, and you can't accomplish that by your lonesome, or even as a small group. A version of this that doesn't cover everyone is not the same thing at all.


Meh, sounds like a lot of work and worries.


There's a big difference. You can donate and help a small number of people. The government can instantly pull everybody in the country out of poverty. That's not something you can do yourself.


Like swombat, I'm also a swiss citizen living abroad (in San Francisco), and will be voting for this referendum. Basic income is the ultimate fair and bureaucracy-less social safety net: there is no burden of proof, and nobody gets left out.


Also i would assume that the costs infrastructure for "proofing" and managing are high enough to put in as a factor.


Can someone explain how this is paid for?

As I understand it, the basic income involves paying each citizen $2800 per month, or $33600 per year.

For Switzerland that would mean a total expense of $270 billion ( $269,270,400,000 ) per year. If instituted in the US, that would mean an expense of $10 trillion ( $10,516,800,000,000 ) per year. Both numbers are around what the total GDP of each country is.

How does this math work out? I'm missing something, and no article actually explains it.

//EDIT

Does this mean that if you get a job that pays $34,000/year you would get no supplemental income? Whereas if you get a job that pays $30,000/year, the government will subside your income to the tune of $3600? That's the only way this makes sense any sense. Right?


It's only adults, and only citizens. By my calculation that's 4.72 million people and $158.8 billion. Switzerland's GDP appears to $632B [1]. So that's 25% of GDP. High, but hardly equal.

Also:

It is unconditional (i.e. it is given to everyone regardless of wage) but it is also taxable. So if you have other income you get it, but some of is recaptured in taxes.

It replaces every other form of welfare: unemployment, maternity leave, student stipend, basic retirement support, health care premium subsidies, and so on. Some of these programs provide more income, so in those cases it is a net savings.

[1] https://www.cia.gov/library/publications/the-world-factbook/...

Edit: N.B. that's at the official exchange rate, which is what you want to use if you are directly converting the Swiss stipend into dollars. If you want to use PPP then you need to adjust the stipend that way too. You should still get the same 25% GDP.


As someone else said, it's around 25% of GDP -- and while I am not sure how costly are the programs it replaces in Switzerland (such as unemployment benefits, etc.), eliminating those would go a long way towards paying for this.


Much of it will return to the economy in the form of spending.

Also, I imagine that wages will react to it to some extent, offsetting some of the cost over the long run.

Lastly, the mitigated effects of poverty -- from more IQ focused on productive ends to improvements in childhoods to reduced crime -- could lead to an actual "profit" from this whole scheme.

It will be interesting to see what actually happens!


Gdp is equal.. isnt that the answer? Maybe coupled with a minimum wage? One could argue that iff gdp is lower than minimum living costs for all then some richer ones are enjoying it at the costs of some living below minimum living costs. How could you accept that?? The question is in what kind of society you want to live. Gdp is not a goal in itself.


I only used GDP to compare how astronomical the costs are. It's not a question of what kind of society you live in, I'm just trying to understand the plan. I personally think that at some point, every country will migrate to some form of basic income because robotics, and software will squeeze humans out from almost every corner of the economy.


This is only for people that are earning less than $2800. In Switzerland that's basically only unemployed people. The unemployment rate when I was there was ~3.5%, so it's roughly $10B / year, which looks acceptable for a country as wealthy as Switzerland.


Umm, the curreent Swiss proposal of basic income (and the meaning of that term) is not "only for people that are earning less than $2800" - if you're getting a salary of $2800, then the basic income would be on top of that.


That's the way I understand it from the few articles that I've read. But that can't be it. The numbers just don't work out. It has to be merely a guaranteed floor (i.e. no matter what you do you will make at least that much, if you make more, you're on your own).


The "guaranteed floor" version of a basic income has a lot of harmful effects — for example, any work that pays anywhere close to the basic income would be a ridiculously bad deal that no rational actor would accept. In the "actually guaranteed" version, a job that pays 90% of the basic income would still be worth doing because you're nearly doubling your income.


You wouldn't want to make an actual hard floor, rather if you want something along those lines you do a graduated negative income tax which smooths out the incentives near the boundary.

Interestingly enough a negative income tax was proposed by Milton Friedman of all people.

It should also be mentioned that along with basic income and a negative income tax, a third grand idea for eliminating poverty and replacing welfare is guaranteed employment (i.e. the government is the employer of last resort). Right now that last is mostly being advocated by Australian adherents of the MMT school.


>The "guaranteed floor" version of a basic income has a lot of harmful effects — for example, any work that pays anywhere close to the basic income would be a ridiculously bad deal that no rational actor would accept.

Not necessarily. The types of jobs that people would do at wages close to the floor are the types of jobs that they would do regardless of salary. Writers, musicians, painters, artists, contractors, entrepreneurs, small-business owners, stay-at-home-parents, interns would appreciate a guaranteed floor. Seasonal jobs, sales jobs and other jobs with month-to-month variance (make a lot some months, make little other months) would be more attractive. Any job that has the potential of upward mobility (make less now so you can make more later) would be be more attractive with a guaranteed floor.

Jobs in retail or fast-food, jobs that require hard-labour, or are unattractive for various reasons would have to pay more - which isn't a terrible thing. Now MacDonald's and Walmart would have to pay a living wage else nobody would bother with those jobs.

So it may actually work. I'm still a believer. Besides, instead of a hard floor, you could introduce a scaling floor to provider further incentive to work.


> Now MacDonald's and Walmart would have to pay a living wage else nobody would bother with those jobs.

They would have to pay way more than a living wage — nobody's going to go from a life of leisure to a Walmart job for a 5% increase in income. This would drastically increase costs, would would simply spur inflation.


Drastically increasing costs for unskilled laborers wouldn't kill the companies - say, McDonalds wouldn't go out of business or double their burger prices because of that, as long as their competitors get the same labor cost increase.

For a bunch of professions it would accelerate automation - already there are a lot of jobs that could be better done without humans, simply minimum wage workers are cheaper than the automation. On the other hand, such basic income program would be also a fix for that rising unemployment.


> Drastically increasing costs for unskilled laborers wouldn't kill the companies - say, McDonalds wouldn't go out of business or double their burger prices because of that, as long as their competitors get the same labor cost increase.

I have to admit I don't quite follow. How would everybody getting the same labor cost increase prevent price hikes?


There would be a price hike for all companies, but it would be much, much smaller than the increase in wages - the price of a burger (unlike, say, price of a haircut) is mostly independent of the cook's wage, and to the extent that it matters, there are valid avenues for automation that put a cap on it.


>They would have to pay way more than a living wage

Say they'd have to pay 50% more. So what?

>This would drastically increase costs, would would simply spur inflation.

And inflation is a non-issue when you simply give everyone $30k/year on top of everything else?


No, the whole point is that it goes to everyone, and is not means-tested, so that there is never a disincentive to work.

But, since it will eliminate poverty, it would also eliminate existing government programs to help the poor, such as unemployment insurance etc., and that would be a major cost saving.


>But, since it will eliminate poverty

Poverty is usually defined in relation to others in your community. A poor American is richer than a poor Nigerian. So it won't eliminate poverty =)


That definition might stop working. The important thing is whether you can afford food, clothing, shelter, required transport, and still have some money left over to take care of everything else.

But that definition might not stop working. If you calculate the poverty line as, for example, median income multiplied by 0.6, it is possible to have every single person above that line.


It's not a guaranteed floor. Everyone gets it. For some people, the actual marginal after-tax value will be less because the basic income is income subject to income tax, and Switzerland does have a progressive federal income tax system, as well as canton and local income taxes which may or not be progressive (seems to vary).


That doesn't really work out. Otherwise unemployed people would earn the same as the lower paying jobs. If the people with jobs get this money, they surely raise their tax bracket by a big margin, so it's not all spending.


>This is only for people that are earning less than $2800

Are you sure about that? From the article:

>Every month, every Swiss person would receive a check from the government, no matter how rich or poor, how hardworking or lazy, how old or young.


This actually makes perfect sense. It represents a cleanly defined abstraction layer and awareness of separation of concerns.

The Swiss government pays everyone a check every month, rich, poor, whatever. Everyone now has income and feels fair because they all get the check. This also adds a wealth effect, because those with a great job now feel richer since they have $2800 more per month and spend more because of it. This is the welfare abstraction and has little to no waste or overhead because you only need to check if someone is or is not a system. This is completely binary and easily provable.

At the other end, you have taxation. The only interfaces between the guaranteed income system and the tax system are (1) the guaranteed income system provides a list of all citizens registered for guaranteed minimum income (i.e. drawing a check, which should be like 99+% of the population), and (2) the tax system collects taxes to pay for the guaranteed income system.

Everyone who gets a check, which is pretty much all Swiss citizens, now need to add one line item to their taxes, which the government can verify via interface (1) above. Those who make a lot of money via their job and the minimum income pay more in taxes. For pretty much everyone who is rich, the $2800/month actually comes right back out in taxes.

It's a pretty brilliant implementation. Nicely architected.


> Everyone who gets a check, which is pretty much all Swiss citizens, now need to add one line item to their taxes, which the government can verify via interface (1) above. Those who make a lot of money via their job and the minimum income pay more in taxes. For pretty much everyone who is rich, the $2800/month actually comes right back out in taxes.

From what I kind, the highest combination of federal and cantonal income taxes in Switzerland is less than 29%, so unless they have truly stupendous local income taxes, it will never be true that "the $2800/month actually comes right back out in taxes".

Obviously, those in higher tax brackets will get less additional after-tax income, but it looks like every citizen will get at least a significant fraction of the $2800.


Good point. Either way at the end of the day this program is going to enjoy a lot of popular support (because the overwhelming majority will benefit) and they will have to balance the cost of the program, which means taxing the richest the most. Since the richest gain the least marginal utility from their money, they need to balance that lost marginal utility against remaining a Swiss citizen. Some obviously will renounce their citizenship and shop for other places to live over this, but I suspect that this would be a minority of rich Swiss people and that these rich Swiss are going to be those not really contributing anything to Swiss society other than spending money.

If they are Swiss business owners, operating in Switzerland, it's not like they are going to be able to pack up entire businesses and leave Switzerland wholesale when they renounce their citizenship. John Donne once wrote, "no man is an island unto himself", and this is also a valid observation about economic success as well. Most rich people have been successful because of the society around them and not in spite of it. Those who are actually rich from a business that benefits from being in Switzerland serving some need wouldn't renounce citizenship since doing so would essentially be cutting off one's nose to spite their face.

Think of the people who have been in the media for having renounced their US citizenship? The example that springs to mind and is most indicative of my point is Eduardo Saverin. What value did he provide to the US? What value does he provide to Singapore where he now resides. I'd say he's hardly a loss for the US people. Of course, he's just one data point, so this is completely useless anecdotal evidence. However, I would expect investigative journalism looking into exactly what kind of citizens are renouncing their citizenship over tax policy to be among those that add the least value to society.

How many CEO's and other well-compensated C-suite executives in the US have renounced their citizenship while still working as a productive member of society?


I don't think it does. Just remember that an artist came up with this. The rotary engine was great in theory, too.


Loaded title much? American news outlets always have a way of making social safety nets and increased qualities of life sound bad.

http://www.dailymail.co.uk/news/article-2240002/Switzerland-...


Whether you believe it is loaded or not depends on your pre-existing beliefs. If you were brought up to believe in the American dream perhaps it seems controversial to expect to be paid just for having been born. But if you were brought up in a highly socialised society this would not sound controversial.

I've read quite a bit on basic income before and generally have the opinion that it might be a good idea so it does not sound negative to me to propose that people are paid to be alive. In that way I think it's a clever title as its meaning appears to change depending the reader's perspective.


I found it funny that the title of the article was really negative, but if you read the article itself the end of the second page says that maybe it is also a good idea for the US.


Titles are written by editors not the author. The are intentionally linkbait.


The title isn't negative, though. Just radical.


No, that's a very negative title to a conservative; that's no accident.


To be fair, this is the same language used by the proponents of basic income, as noted in the article. That's probably what inspired the title.

>Charles Murray of the conservative American Enterprise Institute... suggested guaranteeing $10,000 a year to anyone meeting the following conditions: be American, be over 21, stay out of jail and — as he once quipped — “have a pulse.”


Yes, that bastion of right-wing views, the New York Times.


I think this is the most important vote we will get to cast in a long time, not just for us here in Switzerland, but for the world at large.

By and large, capitalism (as a political system) has failed the world. Capitalism is a very efficient, even beautiful, distributed algorithm that is very good at allocating resources in a reasonably close to optimal fashion, more efficient than central control in many aspects. It doesn't automatically make social justice happen, however. Its efficiency is at the same time its heartlessness. Too many people ignore this blatantly obvious fact (see prisoner's dilemma, tragedy of the commons, etc) because that realization is painful and requires a deep honest look at our own position in society.

If we want to see significant social change in the world within the next 100 years, experiments like unconditional basic income need to happen at a large scale. Switzerland is one of the few places in the world (if not the only) with the wealth an political freedom to make that possible.

Personally, I believe that voting for this proposal is a moral imperative rather than a choice. This is the first time in my life I feel compelled to campaign for a cause, so I'm brainstorming about how to get the message out. Any help would be appreciated!


I love capitalism, and think that the thing some people call "social justice" is anything but. However, we seem to be in agreement on this one. Isn't that nice?

As for help, my suggestion would be that your message definitely would have to be customized for the recipient :) Many people who could otherwise support you in this would be turned off by things like your 2nd paragraph, and not read much further -- and perhaps even discard the whole concept as pinko commie BS, which would really be a pity.


Thanks for the advice! Upon a second reading, I realize that the way I expressed my point lacks many of the nuances present in my own head. My next task will definitely be concentrating the essence of the argument into a form that's less politically charged and easier to explain and understand.


How is capitalism a political system?


Capitalism is a human-created system that stratifies and organises the behaviour and status of people.

How could that be anything other than a political system?

Capitalism is neither eternal nor universal it is merely a system that most humans adhere to currently.


Capitalism combines the right to property with the right to return on investment. It's certainly political, but the idea that you should be able to keep your stuff and the proceeds from your work seem universal to me.


It seems universal to you because it is all you have ever known. If you had lived in a time before the Romans chances are you wouldn't understand money at all, let alone capitalism. If you grew up in any small community throughout most of history you wouldn't have practiced capitalism but, instead, some form of mutualism where there was a degree of shared labour and harvest (e.g. tribes hunting together, preparing food together).

Capitalism (with a capital C) is a bit more than just "property with the right to return on investment". I won't repeat it all here but Wikipedia has a detailed explanation of what it is. Be sure to click around the links at the bottom to see that there are many variants of Capitalism and Socialism that share some ideas.


In the U.S. capitalism goes beyond the right to the property in most places, and says, more or less, that ALL resources are owned and there is no commons. In effect taking away the right to homeland that people used to be born with.

Sure, we have a few public parks here and there, but I can't grow food or build a house unless I own property.


the right to property is not a universal one. If you have a right to live, and we lived in a society where we shared everything, why would you need a right to property?

Not saying that it's the way things should work, but very few ideas are universsal


Capitalism is an extension of the right to property; the details of what counts as rightful property is certainly a political question.


This. Modern capitalism simply wouldn't function without some rather non-obvious conclusions about property rights (existence of intellectual property, limitation of liability, enforceability of contract law, land as a privately owned tradeable asset, sovereign power participating in the market primarily as a regulator)


For many modern societies, I would consider the fact that they're free market economies their defining characteristic, rather than their being democracies.

The idea of capitalism drives laws and lobby. It hides deep structural problems our societies face, influencing public discourse. A misunderstood idea of what capitalism is supposed to be causes many people think "not my problem", and "those lazy bastards" instead of actually looking at the problems others face with empathy.

In summary, it removes human dignity from the center of our considerations.


The discussion of basic income has been brought up here before. The article briefly mentions unemployment, but I think that is going to become a major issue in the future. Advances in technology keep cutting down the need for labor.

As automation erodes away at the need for workers, what will we be left with? Certainly, there will always be a need for people that can maintain and innovate our technologies, but why hire people to do the things that machines can do better, faster, and more cost-effectively? I think unemployment is something that is naturally going to increase in the long-term. I don't know if basic income would work or not, but it is worth considering.


Ultimately we may want robots to do everything for us, and making anything to be so efficient that governments or companies would even offer food or other stuff for free.

But until that happens, there will probably be a transition period of 50-100 years that will be very difficult for most humans. I think there are 2 solutions to fix that:

1) move humans "upmarket" (more complex work robots can't do very well yet) constantly through education. But this sounds very difficult to do and organize, as the skill to learn will always be a moving target, and I have very little faith governments are competent and fast enough to tackle this problem. So self-teaching from Internet courses and whatnot, might be the only solution here. The problem is humans also hate learning, and can't wait to get out of school to "stop learning stuff".

2) Pay everyone a living wage, for "free", by increasing taxes on capital for companies, all over the world, to sustain the increasing unemployment and the effects of automation.

Since governments are lazy, and like solutions that they don't have to think too hard about, this is probably the more likely scenario.

That's not to say they will do it willingly, though. Oh no, especially not with corporations basically owning many of the world's biggest governments right now. So there will be more mass protests and revolutions, until the governments get forced to come up with a solution - any solution (that works for the unemployed people).


Why would unemployment be any bigger of an issue in the next 10 years than it has over the last 150 years? We've had incredible increases in efficiency in both manufacturing and agriculture in the early 1900s alone, yet unemployment has rarely broken 10%.


You bring up a good point, but I don't think the status quo will be able to persist. This is because of the pace of at which efficiency increases. To be honest, I haven't looked relevant data, but I imagine our rate of improvement is non-linear. As technology advances, it increases the rate at which technology advances. Thus far, demand has scaled in conjunction with the increases in supply. I don't believe it will be able to keep up in the long run though. You just won't need as many workers.

You'll also notice that the average worker now has far more education and training than in the past. This is a side effect of our increased dependency on technology. As more and more specialization is required, the barrier to entry in the workforce will just become too high.


I too see unemployment (or rather, the diminishing demand for labor) as the key political issue of the 21st century. I can imagine a point by which the vast majority of humans simply aren't needed to provide services to the owners of capital.

I don't have any answers.


Yeah, it's scary to try and imagine what sort of society would come out even further in the future. An aristocracy with an elite worker class and the masses in relative poverty? Relative is the operative word here, of course. It may well be that the quality of life for someone in poverty in such a future would be better than a middle class person today.


Convincing the 1% to waste money on labor-intensive services and renewable goods would help with redistribution of wealth. Like $50 hand-carved bamboo chopsticks or $15 servings of organic quinoa. Entertainment catering to the 1% probably qualifies as well.


why hire people to do the things that machines can do better, faster, and more cost-effectively?

Because it's about 10,000x easier to program a person than to program a machine.

"Sudo make them a sandwich" works on people with almost no further instruction.


Mass markets are driven by marginal costs, not one-time engineering costs. The marginal cost of making food manually is extremely high.


> Mass markets are driven by marginal costs, not one-time engineering costs.

If you define "mass market" as "a market in which the quantities delivered are so high as to render the amortized initial fixed costs negligible in the final cost of goods", this is, of course, tautologically true.

Of course, that that doesn't actually help with proving that any particular market is a "mass market" in that sense with regard to any particular proposed bit of one-time engineering.


>I think that is going to become a major issue in the future.

As hackers are fond of repeating: "The future is already here — it's just not very evenly distributed."

There are already huge surplus populations. This is in evidence in a brazen way in southern Europe as the crisis restructures economy and society and yet it is no less true in the USA.

One of the most pressing questions for contemporary liberalism is: What is to be done about these surplus populations? Switzerland has formulated one trajectory of response in the referendum for a basic income. Other wealthy countries take a different path towards control.

Consider this famous question posed by Michel Foucault: "Is it surprising that prisons resemble factories, schools, barracks, hospitals, which all resemble prisons?" Are these not all ways in which we already deal with surplus populations?

As one method of social control, work, is becoming less and less available and more and more precarious the other methods of social control are on the rise. Pupils are staying in school longer. Ever increasing numbers of people are being sent to prison. Wars continue to be waged.

The workplace, the school, the barracks, the hospital, and the prison are not all just places. They are conditions.

The conditions that typify each are being sublimated throughout all of society and increasingly so. Leisure now often has a productive aspect, e.g., vaporous web browsing is monetized through ads. The panopticon was an innovation in prison design and now it is our experience everywhere.

The line between society and prison is blurring as more and people are under state control in the form of parole and probation. More generally, entire populations are having the conditions of prison thrust upon them through constant surveillance and the constant threat of search and seizure of their person, e.g., stop and frisk.

The future is bleak because the present is bleak. This bleakness just isn't evenly distributed - yet.

To innovate, in the HN sense of the word, is invariably to hasten this ongoing distribution. Every time the Internet eats an industry power and money is re-consolidated into the hands of fewer and fewer and the surplus population grows.

"Understood as a class, programmers occupy the same position today that the bourgeoisie did in 1848, wielding social and economic power disproportionate to their political leverage. In the revolutions of 1848, the bourgeoisie sentenced humanity to two more centuries of misfortune by ultimately siding with law and order against poor workers. Programmers enthralled by the Internet revolution could do even worse today: they could become digital Bolsheviks whose attempt to create a democratic utopia produces the ultimate totalitarianism.

On the other hand, if a critical mass of programmers shifts their allegiances to the real struggles of the excluded, the future will be up for grabs once more. But that would mean abolishing the digital as we know it—and with it, themselves as a class. Desert the digital utopia."

from Deserting the Digital Utopia: Computers against Computing[1]

[1]http://crimethinc.com/texts/ex/digital-utopia.html


If you think it is a crazy idea and don't see the reason. Think about social insurance systems and how many people are needed just for the paperwork, support when it comes to question, doctors who (re)verify that someone is really sick.

And then think about all the overhead you have as an entropeneer and how much risk you have, just for trying out an idea.

And then think about the risks, if you dedicate your life to art or if you dedicate your life to help other people.

Maybe there are systems to fix all of this, but they will be complex and have a lot of overhead (in other words: Tax paid for paperwork).

Remving the "having bad luck" problem means more people that will actually go for something, meaning more chances of bringing ahead giant leaps.

And think about how people can focus on the actual problem without constantly having that "How to pay your fees next month" thought in the back of your head, that makes you makes you wanna cry, whenever you find that that's not the solution.... espcially when you have a family.


> entropeneer

I like that word. Creators of entropy.


I believe that there is a second and more dark intention in this proposal. Today Switzerland is part of EU but they still have quotas for "work permits" depending on the nationality of the worker, this goes against the principles of Schengen (https://en.wikipedia.org/wiki/Schengen_Agreement) and there is lot of pressure for Switzerland to remove these "quotas" (mainly against eastern European countries). The problem is that the wages there are way higher than other Schengen countries, and without the quotas there would be massive immigration to Switzerland that would lower sharply the wages for jobs that don't require higher education. So, IMO, Switzerland wants to give a minimum wage to create a "virtual block" to the poor countries of Schengen... (I am French and I live near the border)

edit to clarify: if you are a Swiss citizen you would earn your wage + state wage, and if you are an immigrant you would earn just your wage... making virtually impossible to afford living there (considering your wage =~ state given wage), only for very well paid jobs that this would make no difference.

edit: typo


> Today Switzerland is part of EU

No, it is not. [1]

[1] http://europa.eu/about-eu/countries/member-countries/index_e...


Sorry, you are right, Switzerland is only part of Schengen (https://en.wikipedia.org/wiki/Schengen_Area), but still the long term objective of the Schengen Area would be borderless trade, immigration, workforce, etc.


That must have been a typo of some kind


No, this is a separate problem. Free movement of labour is an EEA policy which permits nationals of one EEA country to work in another EEA country on the same conditions as that member state’s own citizens. "Same conditions" includes the right to the same benefits.

If Switzerland accepts the basic income, they would probably have to leave EEA or negotiate some pretty steep exceptions to its membership.


> Free movement of labour is an EEA policy which permits nationals of one EEA country to work in another EEA country on the same conditions as that member state’s own citizens. "Same conditions" includes the right to the same benefits.

Aside from the fact that Switzerland isn't an EEA member, Basic Income is not a condition or benefit of working in the country, it is (like, e.g., voting) a condition of citizenship unconnected with whether or not the citizen is working.


I agree with this in theory... but I know of at least one counter example: if you moved to Denmark, it would took 2 years (working or studying there) for you to considered a "resident" and be eligible to all state benefits as a Danish (at least was this way 7 years ago). I believe that it will be very interesting how they will solve this... they would need to add some barrier otherwise LOT of people will migrate to there... in France the minimum wage is around 1.400 euros for working 35 hours... people would even live in Switzerland and come to work in France or Italy...


Actually, Switzerland is not (quite) part of the EEA either.

http://en.wikipedia.org/wiki/Switzerland–European_Union_rela...


I think your suspicion may well be correct in terms of how the proposal will develop. At present the referendum questions reads "Soll jeder Mensch in diesem Land die finanzielle Grundlage zum Leben bedingungslos erhalten?" (roughly, Should every person in this country be given the financial basis to live decently?), but Switzerland has a fairly strong anti-immigrant lobby, and I would expect to see that interpreted to exclude non-national residents.

Beyond the increase in rents, I would also expect a consequence to be for the tax regime to become less progressive (perhaps a flat tax rate) and more rigorously enforced. This might add up to making Switzerland an unattractive country for people to work who do not intend to take citizenship.


I don't see how inflation would not completely negate the effects of this without some strict fiscal policy in tandem. If you are essentially raising the average wage by X, would prices not rise accordingly? Those who make X plus a salary would not be able to afford the mansions of yesterday, because those who make X plus an even higher salary can afford to outbid them. Likewise, basic necessities like food can easily increase in price to what people can afford to pay.


Presumably you are taxing income to pay for this. The net result is a transfer of wealth from people who work to people who don't.

As a result the money supply does not increase. If any inflation occurs, it is caused solely by a shift of spending from goods/investments not measured by CPI (or the swiss equivalent) to those that are.

(I.e., if money shifts from investment in electronics research to pizza consumption, the price of pizza will rise and the price of of oscilloscopes will fall. Since CPI includes the price of pizza but not oscilloscopes, inflation will rise.)


I'm going to elaborate on the parent's confusion a bit. Even if, as you suggest, net inflation doesn't increase, price distribution might. That is, yacht prices fall, while food/rent prices rise. Since the poor spend the vast majority of their income on food/rent, much of the basic income would thus be recaptured. In fact, while the equilibrium might be different, it appears to me that the overall impact might be minimal, or at least less than expected.

OTOH, it might help with our aggregate demand problems.

It's quite possible I'm missing something, however.


You're assuming the poor don't eat. I would argue the price of food would not be considerably affected. We all need to eat poor or not so unless their dead their still buying food. Rent on the other hand may rise since there's people sleeping on the streets at the moment.


Not exactly sure what you're suggesting, but I'm not assuming the poor don't eat. On the contrary, I'm saying that the poor spend a greater percentage of their income on food and rent, and that overall price inelasticities of food/rent would result in inflation for that class of goods.

Let me put it this way. If you were the only grocer[1] in the neighborhood and you knew that everyone in the neighborhood just got a 10k raise, would you not consider raising prices? Or, put another way, if you're the only grocer in the neighborhood, and everyone gets 10k/yr of free money, and that induces, say, 10% of your workforce to quit for various reasons, then you have to pay more for labor and pass the costs to customers. Either way, food prices rise.

[1] Note, that's not improbable in many poor areas.

[2] I'm just armchair speculating here... so, like I said, I could be way off base.


He is saying that the actual demand (amount of food people buy) is not going to increase much, so the whole argument rests on you being the only grocer -- and if you decide to increase your prices that much, that would only result in either (i) your former customers now carpooling to go to nearest Walmart, or (ii) more grocers opening nearby (since the grocery business in this neighborhood suddenly became much more attractive).


When everyone, even poor people, have an extra (say) $10k, basic cost of living could go up $10k because that's what the market will bear.


> When everyone, even poor people, have an extra (say) $10k, basic cost of living could go up $10k because that's what the market will bear.

If you assume a totally monopolistic marketplace (so that there is no competition to drive down prices but instead there is unlimited capacity to extract monopoly rents), sure. In a marketplace with any kind of competition you'd expect some increase in each the market clearing price and the market clearing quantity of each of the goods that would be purchased by the people who end up with a greater net income after the policy change.


Are you saying the cost of production doesn't have a say in the price of the product it's how much people are willing to buy it for?

Because if that's done with basic necessitate like food so people are force to starve because corporations want to charge as much as possible they should all be charged with the death penalty.


Cost of production sets a floor on the price of goods, not a ceiling.


True, but competition among sellers sets the ceiling.


In the long run, the price of food and housing should match the marginal cost of producing them. Since a relatively small portion of the (Swiss, at least) population is poor, we should expect that feeding and housing all of them won't move the price much, because the supply curve just isn't that steep. There's no reason to expect an objective material shortage in food or housing - it's relatively easy to make more of both if poor people have the money to pay for them.


Doesn't research tend to put downwards pressure on electronics prices (I guess you've just made a typo...)?

An interesting side effect might be an increase in the ability of people who work to extract the value of their work from people that hold capital.


Won't vendors and landlords charge what the market will bare? If all the people not receiving subsidized housing now have +$10,000 per year, they can all bid up to that much more.


In certain places where there is a limit on the supply of housing this will probably happen.

However, when rent prices go up, it encourages people to build more homes/apartments which in turn drives prices down. There is a feedback loop (granted, many times it's interrupted, and there is a delay)


If the prices of things like food rise that is a good thing. It means more people are buying them than before, it means more people have access to those things. It's a net benefit.


The proposal wouldn't change the average net wage; effectively higher taxes on the well-off will subsidize those on lower income - not so much the unemployed, who already receive quite a lot of public subsidy, but those on minimum-wage/part-time jobs do a lot better under this scheme.

So hopefully this will a) reduce income inequality b) give better incentives for the unemployed, which may improve overall productivity.

I guess you could argue that a higher velocity of money means an increased money supply that has the same practical effects as inflation. IIRC economic thought is divided on this?


Is the price of something determined by how much it costs to make or how much someone is willing to pay for it? I believe the correct answer is "It depends and both".

If you think it's just cost+profit then, prices will rise only by the percentage of which labor is a part of that price. In the restaurant industry, for example, labor costs are about 35% or the total costs. If wages increase 10%, costs increase 3%.


Keep in mind what the background state is. Look at the US for example, where 40% of the GDP is routed through taxation and government spending, and where more than 4 trillion dollars a year is spent on welfare, pension programs (like social security), health care, and education.

Putting in place a minimum income system would merely redirect funds from those particular programs in many cases.


If the spending is funded by taxes rather than printing, why would we expect huge inflation to result?


I would expect price inflation to occur in some areas because people will have more money to spend which will have the effect of less downward pressure on prices.

In my life, if I started receiving $1000 extra dollars each month, I imagine I would first go and try to rent a nicer apartment. Unfortunately, I'd expect others to do the same, giving landlords the ability to charge more because there are more dollars chasing the same number of apartments.


Well, let's admit it: because under a debt-backed fiat currency, the value of currency is a function of income inequality. To reduce inequality is thus to dilute the currency and create inflation.


Canada considered establishing a guaranteed income in the 1980s after the MacDonald Commission Report recommended it in 1985. It would have replaced most social welfare programs, which turned much of the left against it. Ironically, social welfare in Canada has since been stalled, stagnated, cut back and means-tested to the point where the guaranteed income proposal seems impossibly generous rather than parsimonious. As it happens, the Mulroney Government that received the MacDonald Commission report embraced the recommendation to pursue a free trade agreement with the USA and ignored the guaranteed income proposal. The idea has bounced around a bit since then but gained no political traction.


As a libertarian, I feel the government should stay out of people's lives, and yet I feel this actually achieves that over the current style in the US of needing to be deemed 'worthy poor' by the majority.

Assuming this replaces all other government payments: most tax credits, food stamps, social security it create an amazing administrative savings.

I'm thinking through the implications for the child support model in the United States. As I understand it, the child has a right to receive compensation from their birth parents to pay for housing, food, clothing; but if the government is taking ownership of all human beings, it seems the birth parent would have no responsibility to provide support in excess of the basic income.

Orphanages, foster parents, or current custodial guardians would just receive the basic income and act accordingly. The implications for this sort of program seem huge.


>>government is taking ownership of all human beings

I take the view that a basic income like the one proposed is actually all human beings taking ownership of our government from the current selected few privileged few.


Similar experiments are being tried in India : https://en.wikipedia.org/wiki/Basic_income_in_India

http://binews.org/2011/09/india-basic-income-pilot-projects-... here is an excerpt from the 2nd link :

"These projects are similar to the Namibian basic income pilot project and to the U.S. and Canadian governments’ Negative Income Tax experiments conducted in the 1960s and 1970s, but the rural project adds an important new innovation to the method: the project is being conducted on the village, rather than on the individual, level. All residents of eight Indian villages will receive the basic income, and their behavior will be compared with residents of twelve “control” villages. This method will allow project designers to study village-wide effects of the transfer.

Guy Standing, professor of economic security at Bath University (UK) and an honorary co-president of the Basic Income Earth Network, helped to conceive and organize the project. He argues that it needs to be conducted with scientific dispassion. But he’s hopeful of the outcome. Asked about the results of the Namibian pilot project—which he was also a part of—Standing said that organizers documented many positive effects: “Child school attendance went up dramatically, use of medical clinics went up. Those with HIV/ AIDS started to take ARTs (Antiretroviral Therapy drugs) because they’d been able to buy the right sort of food with the cash. Women’s economic status improved, and the economic crime rate went down. Income distribution improved.”"


I'm trying to think how a basic income would impact say inner city communities in the U.S. I'm not sure that the only problem in those communities is a lack of cash. Rather, there seems to be a collapse in the social structure that leads to crime, drug use, etc. Experiences with micro-finance abroad have shown that such programs are most effective when the cash comes with some social engineering. Maybe the same is true for domestic welfare. Simply giving everyone a check won't cause fathers to stay with their kids and won't keep gangs from filling in the power vacuum created by their absence. A check isn't going to replace work as a framework for structuring society nor give people the fulfillment that comes from work.

It's possible that paternalistic welfare is simply unworkable in practice. But I think advocates of basic income ignore the fact that there is a rationale behind paternalistic welfare that isn't addressed by basic income: that poor people lack more than just money.


> Simply giving everyone a check won't cause fathers to stay with their kids and won't keep gangs from filling in the power vacuum created by their absence.

That's true, basic income doesn't solve the problems resulting from the fact that the US is the most eager country in the world to incarcerate its citizens.

But neither does paternalistic welfare. Obviously.

> A check isn't going to replace work as a framework for structuring society nor give people the fulfillment that comes from work.

OTOH, an unconditional check -- unlike means-tested paternalistic welfare -- avoids providing an economic disincentive to work, and avoids hampering the ability of work to promote economic and social mobility.

> It's possible that paternalistic welfare is simply unworkable in practice. But I think advocates of basic income ignore the fact that there is a rationale behind paternalistic welfare that isn't addressed by basic income: that poor people lack more than just money.

The opponents of basic income ignore the fact that paternalistic welfare is a staggering failure at providing those things "more than just money", as well as being an incredibly inefficient mechanism for providing the money part.


Do you live in an inner city community? You're parroting out bizarre stereotypes (deadbeat Dads and gangs) as if they are the dominant phenomenon, which makes me think you don't actually live here.

I live in one of those "inner city communities" and basic income would be a godsend for a lot of people. I have been supporting one neighbor as he's trying to get on his feet, but it's incredibly costly to actually get a job. He needs money for housing, transit, clothes, food, all kinds of stuff to bootstrap him during the hiring, training, and onboarding process. It's hundreds if not thousands of dollars that you have to pay BEFORE you draw your first paycheck.

That's a guy who is doing everything right, except he has zero dollars in his pocket.

I can do it for one person, every few years. I would love it if the government would do it.


"Simply giving everyone a check won't cause fathers to stay with their kids"

At least in the UK there are currently financial incentives in the welfare system for single parents to a) become single parents rather than couples, and b) be paid by the government to stay at home and raise the child rather than the government paying for childcare while the parent works.

"A check isn't going to replace work as a framework for structuring society nor give people the fulfillment that comes from work."

Again, current welfare systems heavily incentivize the poorest people not to work. This is a key benefit of the proposed system, you keep most of every extra dollar you earn, rather than facing punitive marginal tax rates because welfare benefits are clawed back.

Your "paternalistic" welfare is often a beaurocratic trap.


That makes a lot of sense, -- Maybe our youth would grow up into better adults IF their parents--especially single parents had the means to support them withOUT taking a job. -- There should be the option of at least 1 full-time parent, whether it's in a 1 or 2 parent home.


As I understand it, the idea here is not really to replace work, but to make being un- or underemployed not be completely devastating. You're right that these communities' problems go deeper than money, but I think the poverty is still a blocking issue. You're not going to fix their society when the necessity to structure it around mere survival still exists.


Other things can improve when you're not stressed and struggling on minimum wage (or not wage at all).


Exactly, it's got to be harder to convince people to push your drugs when they aren't cold and hungry.


Arbeit Macht Frei.


Despite the evil connotations associated with this phrase post-WW2, I have to say that I agree with it.


people lack education and possibilities for long-term planning.

if you provide the second the first will follow. if you provide the first your other mentioned problems will go down.


See also http://en.wikipedia.org/wiki/Mincome . I don't see what's the theoretical problem of having a "socialist" minimum for everybody together with a "capitalist" system where you can make as much as you can.


The theoretical argument is that due to the diminishing marginal utility of income, you get less labor supplied.

Suppose the utility loss from taking a job is X, and U(income) is a concave function. Both of these are standard assumptions, well validated empirically.

With no basic income, people will take a job if U(job income) - X > U(income=0), or equivalently U(job income)-U(income=0) > X.

With a basic income, people take a job if U(job income + basic income) - U(basic income) > X.

By concavity, there are values of X for which the former inequality holds and the latter does not. So people falling into this regime will be deterred from taking a job by a basic income.

Society as a whole is poorer as a result by an amount equal to those individual's marginal productivity. I.e., fewer nails are manicured, fewer homes are cleaned, fewer restaurant meals are supplied.

Note that you can alleviate these negative effects by replacing a basic income guarantee with a basic job guarantee (i.e., just like a basic income, but you need to work for it). That also costs the taxpayer far less.


You are leaving out a couple of details. First, there is already unemployment, so there are already people not filling jobs. Second, this is a redistribution of tax money, so society is not getting poorer that way. As for people not filling jobs, there would be new pressures on corporations that needed workers, McDonald's could continue to pay minimum wage (assuming it wasn't abolished) for people that cannot live on $10k, and startups could pay substantially less, as could not for profits or other organizations that had missions more aligned with people's worldview of themselves. New jobs might become possible that are not today. Who knows. The point is you cannot say the outcome of changing one variable while holding all others constant, because they are not constant. Also, your counter suggestion is based on the assumption that the government can redistribute jobs instead of tax money, it cannot.


> "Second, this is a redistribution of tax money, so society is not getting poorer that way"

Unless it turns out to be more efficient than the social welfare programs it would replace, it would be a redistribution of additional tax money that would have to be collected. If you define "poorer" as "less output collectively produced" then the parent's point about the concavity of utility would hold and imply that society as a whole would indeed become poorer.

All this is based on a simplified model of things, but that's what most of economics is.

The biggest gains to be had in my opinion would be due to difficult-to-quantify human effects related to people having to spend less time worrying about making ends meet and being able to think and plan more than a few weeks ahead.


First, there is already unemployment, so there are already people not filling jobs.

If you believe the Keynesians or the Monetarists, it's because they refuse to work at a lower nominal wage than before. Unemployment/welfare/etc makes this an appealing prospect, and Basic Income only makes the problem worse.

* Also, your counter suggestion is based on the assumption that the government can redistribute jobs instead of tax money*

I didn't propose redistributing jobs. I suggest using people on the Basic Job for all low skill government labor, and creating additional (make-work if necessary) jobs if necessary. Make every park sparkling clean, no litter on any road ever, etc.

FDR got creative when he did this and we got a lot of great infrastructure out of it.


> If you believe the Keynesians or the Monetarists, it's because they refuse to work at a lower nominal wage than before. Unemployment/welfare/etc makes this an appealing prospect, and Basic Income only makes the problem worse.

How? One of the problems with qualification-based benefit programs is that they reduce the marginal benefit of work (both unemployment and welfare benefits go down with work, which reduces the marginal benefit of any given nominal wage level, which makes people more likely to seek to avoid work at any given nominal wage level -- which also makes the benefit programs more expensive to administer, since they then need mechanism to try to catch people avoiding work to maintain the benefits.)

If you have unconditional basic income, you assure that work always has a higher marginal benefit for the same nominal wage than it would have in a traditional system of means-tested benefits, which reduces the incidence of people rejecting work at any given nominal wage.


I was wrong, and you are correct. Replacing unemployment with a basic income could go either way, depending on the marginal taxation rates of reducing benefits and the rates of diminishing marginal utility.

However, a Basic Job guarantee can only go one way. You never get to avoid the disutility of labor (X in my formulation).

But I'll dispute one point: you assure that work always has a higher marginal benefit

BI assures that work has a higher marginal income. It does not assure that work has a higher marginal utility, which is what matters.


If you believe the Keynesians or the Monetarists, it's because they refuse to work at a lower nominal wage than before. Unemployment/welfare/etc makes this an appealing prospect, and Basic Income only makes the problem worse.

Sorry, how is that? Under the current scheme, if I increase my wages (from $0 to $10k or from $8k to $14k or whatever), I lose my benefits. Under Basic Income, I do not lose my benefits; I only gain by increasing my wages.


Re: job redistribution.

What about the New Deal's CCC?


Yeah, my gut feeling is that this sort of social safety net will allow more people to take on risky projects that have low probability of success but big potential payoff. This seems likely to be a net win for society even if most people don't try this and most of those that do fail.


The current policy of means-tested welfare is just a complex combination of minimum income and high (sometimes >100%) marginal tax rates for the poor. The proposal to get rid of these programs and replace them with a more simple system of basic income is just a proposal to lower the marginal tax rates for the poor, so that they are no longer the highest.


The policy of a guaranteed job achieves the same goals, without the incentives for idleness.

Society also benefits, since it gains some productive labor from the workers. Rather than paying $7/hour of Basic Income and getting $0 in value in return, society might pay $7/hour of Basic Job and get $4 of litter removed from parks in return.


Sure. I don't think we actually disagree about this. I just wanted to point out that the status quo has this problem of incentivizing idleness to a greater degree than the proposed Basic Income.

edit: Additionally, I think it would be harder to implement a Basic Job program well. Compared to Basic Income, we'll lose some amount of physical mobility and some amount of value from enterprises that take a long time to bear fruit. The Basic Job program will have to be pretty well managed to provide enough value to compensate.


> The policy of a guaranteed job achieves the same goals

It doesn't acheive the goal of reducing administrative overhead, since actually creating jobs has considerable administrative overhead.

It also doesn't achieve the goal of increasing labor mobility and facilitating experimental, entrepreneurial endeavours.

In fact, it doesn't do much of what Basic Income does.


Reducing administrative overhead specifically is pointless. It's looking at one part of the cost while ignoring everything else.

The relevant question is costs - benefits.

The cost of Basic Income is $20k x # of adults + overhead. The cost of Basic Jobs is $20k x # of adults willing to work who can't find work + overhead - value of labor provided.

I'll make up some USA-centric numbers to illustrate the calculation.

Suppose overhead for BI is $50/year and overhead for BJ is $5000/year. Suppose further that there are 250M adults, 50M of which are willing to work but can't find work. (The remaining 200M will keep their current job.)

Cost of BI is $5 trillion, cost of BJ is $1.25 trillion. This assumes that the Basic Jobs provide no value whatsoever and Basic Income provides no disincentive to labor whatsoever.

If you disagree, please cook up your own numbers and show me how this could be wrong. I'm just curious to see any mathematical model where BI makes sense - I haven't been able to come up with one myself.


This is a very reductionist view of worth. Your model implicitly values people's non-working time at zero, which is true as far as GDP is concerned, but is pretty clearly false as far as how actual human beings chose to live. If fewer people are doing nails or cleaning other people's houses, then those people must be doing something else. Maybe they're working a job which is less economically productive, but which they enjoy more. Maybe they're not working and they're spending more time with their grand-kids. In either case, it's a real improvement in their quality of life. If your model doesn't incorporate personal preferences not related to the purchasing capacity of your paycheck, then that's a flaw in the model, in my opinion.


Another factor people take into account when deciding whether to take a job is what the effect is on their total benefits. Higher taxes for instance decrease the amount of benefit in taking a job (relative to the value to your employer of you having taken that job). But taxes aren't the only thing that decreases the benefit of taking a job, there is also the potential loss of other benefits.

When we have "means tested" programs (i.e., anything for "the poor" or "the unemployed") then the marginal benefit of a job (or doing more work) U(base or base job income + new job income) - U(base or base job income). When you factor in needs-based benefits U() can be a very peculiar function, and the marginal benefit can be small relative to the new job income, or even negative.

If we take the social safety net as a given, then we shouldn't abstract away the existence of that net. A basic income has the potential to remove the need for more sophisticated implementations of the safety net, ones that can lead to poor U() functions.

In fact I think that the bottom of the concave U() function cannot work as in theory, because of what is considered socially acceptable. Your first $1000 in income is very valuable because you are living in terrible deprivation. But some people are not able to make that income, no matter the utility. It may be job availability, it may be a disability, or an injury, or addiction to drugs, a criminal history. It could be a parent that has succumbed to any of these. It's hard to enumerate or easily define what any of these are, so to some degree we are willing to offer help simply because someone is experiencing deprivation.

Which is to say, the part of the U() curve that a basic income chops off is already really messed up.


>you can alleviate these negative effects by replacing a basic income guarantee with a basic job guarantee

Since a lot of industrialized countries have had high unemployment for years, if not decades, that seems like an impossible idea. It might even be worse because if you send the unemployed to clean parks and plant trees, you effectively destroy a labor market for gardeners.

I don't know if a "Mincome" would work but if you want to guarantee everyone a job, you need some pretty clever ideas how to create those jobs - preferably without negative side-effects on existing low-wage markets.


The basic job doesn't need to be economically valuable; it can literally be make-work, and is there to correct the incentives, not to (say) clean the parks.


These are human beings we're talking about, with ideas and dreams and goals. I find the idea of wasting their lives with 'make-work' morally reprehensible. We should be trying to free them up to focus on their dreams and big ideas, not throwing away their potential uselessly.


I'm not sure what this has to do with my point. I was responding to a comment that worried that "basic job" programs would sabotage labor markets, and merely observed that problem had a simple solution.


I understood what you were saying. My point is that the "simple solution" you propose is not really a solution at all. If that's the best solution we have for implementing a "basic job guarantee", then such a thing is unworkable.


This is a Dickensian nightmare that kind of reminds me of the workhouse of old. Only problem is we don't need oakum today.


The need for people to live on state-issued subsistence wages seems like the nightmare to me.


"With a basic income, people take a job if U(job income + basic income) - U(basic income) > X."

Which is the beauty of a basic income -- it means that employers no longer need to merely outcompete destitution, but instead offer a compelling reason for people to come work for them. Unpleasant but vital jobs would become better compensated, while there would be strong pressure to eliminate useless make-work jobs.

The world economy has not been suffering a labor shortage for a very long time. Basic income allows a lot of menial labor to be automated without destroying lives, and in the long term will redirect that output to creative and skilled labor, thus enriching society on more than one level.


It's all true, but in practice, in the US, and I strongly suspect in Switzerland as well, there are all kinds of means-tested transfers, such as unemployment support, so the first equation is actually U(job income) - X > U(unemployment support) which (unlike the concavity issue) is a first-order effect, and keeps millions of people from working. I very much suspect that replacing that with basic income is going to bring more people into the workplace, not the other way around -- as long as the basic income is kept reasonably small.

Now, keeping it small is another matter.


One of the arguments for wealth redistribution is that rich people tend more to spend money internationally on luxuries, while poor people tend to spend money in their local communities on essentials.

It's possible that under this system the Swiss will gain more employment because their people will be spending more on goods that proportionately employ other Swiss people in the value chain.

It's the reverse argument to the Trickle-down idea, I think.


I think that there are assumptions made by your argument that sound reasonable on the face of it but that don't actually match reality. Not just yours but pretty much every economic argument that I've heard that takes this "forces of nature" form.


1: Motivation. A lot of people will decide that their "minimum" income is sufficient and will try to live on that without contributing to society.

2: Entitlement. A lot of people will decide that they are entitled to that money, that it is not enough for whatever arbitrary minimum lifestyle they decide they are entitled to, and that the police power of the state should/will/must be used to confiscate the difference from taxpayers.

In fairness, all should contribute to society at least as much value as they derive from society (at least insofar as they are physically & mentally capable). Giving people enough to live on while requiring nothing of them screws up the human psychology of self-worth: they can exert $X of effort/skill and get $X, or do nothing at all and get $X ... meaning their effort/skill is worth nothing.


"A lot of people will decide that they are entitled to that money"

If you use the franchise fee model to talk about a basic income, that is the point. A crony capitalist business screws up everyone's environment, screws up everyone's health, screws up everyone's economic situation, screws up everyone's government, screws up everyone's wealth and income distribution by population graph and all the social issues that result from it, therefore everyone is equally entitled to a small cut of the action because they're already involuntarily getting a cut of the degradation. Seems fair enough.

There's an American tradition of privatize all the profits and socialize all the losses, this could be interpreted as socialize some of the profits and I'm sure we'll continue to socialize all the losses. Some worry about it, but it wouldn't really change that much.

One common argument against a basic income is assuming it can only be implemented with means testing. I see some of that at the end of your comment. Especially in the underground economy, which is already big and growing.


they can exert $X of effort/skill and get $X, or do nothing at all and get $X ... meaning their effort/skill is worth nothing.

That's only with current welfare systems, not with basic income, where you receive it regardless of your income.

So under the regime being proposed, by not working you'd get $X, and by working $Y you'd get $X+$Y (less taxes).


> A lot of people will decide that they are entitled to that money

Well, that's the point, isn't it?


How do you determine that a "lot" of people will prefer not to work? That assumes that they take no joy in labor, have no desire for the luxury and enjoyment that an increased income would bring, and are uninterested in the social advantages of being employed and financially comfortable.

The small set of people who are only motivated to work by the threat of destitution, and who would be satisfied by a pittance and choose not to pursue further labor, are people whose labor was likely never worth much in the first place.


How much is having your office trash can emptied worth to you? floors swept? toilets cleaned? ...and other labors which aren't worth much, labors which have little joy therein, yet cannot be abandoned completely? Offer those current workers (of whom there are a lot) the option of doing nothing yet getting paid the same pittance they are satisfied with (and many are), heck yeah they're gonna quit and you're gonna start wondering who's gonna empty the trash and clean the toilets while you're enjoying your labor.

Their labor may not be worth much. It still needs doing, and you're compelling others to take away any incentive to do it.


It isn't worth so much to me that I would prefer people be compelled to clean up after me under threat of destitution, no. I want them to be paid what their work is worth, which is the amount a person free of the threat of poverty is willing to accept to do the work. That might be a lot more than it is now. It might not be much more at all.

If it's uneconomical to employ people solely to do those jobs, then the jobs can be automated, or fixtures and processes can be changed to reduce the need for that labor.


This will open up the jobs to teenagers- those not eligible by age to receive the basic income. They learn value of work, value of money and will be better off then many teenagers that can't get gas money/college savings since those jobs are taken by those that can't find any other work or have no more ambition to live more than to survive.


Well, maybe people will clean their own toilets and empty their own trash then. I do those at home (as do my housemates) because I like having a moderately clean home. If nobody else was cleaning the office I worked in, I'd clean it too, because it's basically a home.


So go calculate your "fair share" of office trash cans, toilets, and etc., work out how much laborers are being paid to do your "fair share", give them their cut out of your wallet, tell them to enjoy the money while you do the work, and proceed to clean those things yourself unpaid. If you're not actually going to do those things (but they still need doing), then re-hire & pay those laborers to do the work after all on top of the amount you're paying them to not do it.

Remember: they're hired to do that work because your time as a professional thinker is much more valuable than you spending hours doing mundane tasks. Better you spend an hour writing software for $X and paying someone else to empty the trash & clean toilets & etc. for 0.1x$X, than for you to spend that hour doing those mundane tasks for $0 while being compelled to still pay that someone 0.1x$X.

So yeah, because you're not really going to do all those little things you rely on low-wage laborers to do, you're going to DOUBLE their pay (giving them that "minimum" amount for not doing anything, plus giving them that amount to do that work after all) with no increase in output, and a likely decrease in work done because by definition that minimum guaranteed income is enough to live on.


1 & 2 are already problems, and huge ones, and not just with the poor. Lots of people get handouts from the government and you can bet that most of them think they are entitled to it. The problem is making sure the system is setup with appropriate feedback mechanisms to keep things at an appropriate level.


What do you mean by "entitled"? Yes, they are entitled to claim benefits from the government due to meeting certain criteria. This is value-neutral language, and yet it seems like you're suggesting there's something wrong with it.


"Entitled" meaning that they believe they are owed or deserving of those benefits due to some underlying fundamental principles. This doesn't just apply to social security beneficiaries or welfare recipients, there are millionaires who receive handouts from the government because they happen to have a ranch or a farm which falls under some criteria. I'm sure many of them think they deserve those benefits even if a more objective, unbiased appraisal of the situation would disagree.


There is a theoretical environmental problem relating to franchise fees.

If you want to run utility poles in most municipalities, you can, but you'll pay a franchise fee to the city. The theory is you're making a profit by inconveniencing all the residents by occasionally blocking streets and putting up ugly utility poles and the like. So you pay everyone a little bit of your profit because you're ruining everyone's property by a tiny little bit.

Now the environmental (or any regulatory) problem is demonstrated as "hey, I should be able to dump raw nuclear waste in the river, although it is true that it ruins the river for everyone, it is also true that everyone gets an equal fraction of my profits". Same argument for "I should be able to boom/bust the housing economy because everyone gets a cut" or avoid OSHA or whatever.


Something that's not been mentioned much is the impact on the benefits system - and specifically the cost. Presumably this would completely replace all benefits - everyone gets $X a month, as a universal benefit. No specific claim for housing benefit, jobseekers benefit, etc.

On the one hand, this massively reduces the bureaucracy/overhead of administering the system, reviewing claims, etc. On the other hand, all the public servants involved in the administration would presumably be out of work. But then, everyone's got this extra cash, to put back into the economy through their purchases…

Would be really interesting to see the effects at a large/national scale.


I literally laughed out loud at the accusation of Switzerland being a "Socialist" country. Having spent a summer in Zürich amongst the investment banks (although not working at one I hasten to add) the US-English insult was too much.

EDIT: Sorry, did I say investment banks? I meant Private Banks of course.


The problem with this proposal is that it will change dynamics a lot, and it's hard to predict how people will respond to those dynamics. In other words, what will the unintended consequences be?

Will people with non-great jobs around the basic income level keep going to work, or will they stay home and maintain their current living standard, or will they keep going to work, and roughly double it?

If many people choose to stay home, the cost of the services they provide will rise quite dramatically. This will have some hard to predict consequences across the economy. Some of the services will just be foregone with little tangible effect. Lawns will be mowed less often, street swept less often etc. Slightly worse impact on the economy will be when busy people decide to forego help, such as cleaners, babysitters, handymen etc. and do the job themselves, competing with either or both work and leisure time, which impacts either or both productivity and quality of life.

The most direct impact will be the rise in cost of services that can't be foregone or "taken in-house". Trash-collection, several bits of the retail supply chain etc. This will raise the cost of everything for everyone.

Also, besides these impacts, there's the human element. If a person makes the short-term decision to not work (and not studying or working on a startup or something similar), that person moves further and further away from ever participating in productive labour. I'm a bit old-fashioned on this, but I consider allowing people to go idle, long-term like that, is a grave failure of society. Many people who start in unpleasant low-wage jobs, don't end in them. Those who never start any job(/education/productive activity) at all have no chance of progressing beyond them.

But the worst is that taken together, the rise in prices will create a strong force towards getting rid of low income jobs, which will raise the bar significantly for those at the bottom, committing many of those willing to work to not work.

This is all speculation, and it's all dependent on the level to which low-income people will or won't chose to work.


"Will people with non-great jobs around the basic income level keep going to work, or will they stay home and maintain their current living standard, or will they keep going to work, and roughly double it?"

What would you do? Would you live a frugal life on basic, or would you use the extra to live a fuller life?

"Some of the services will just be foregone with little tangible effect. Lawns will be mowed less often, street swept less often etc. Slightly worse impact on the economy will be when busy people decide to forego help, such as cleaners, babysitters, handymen etc. and do the job themselves."

Speaking for myself, I have less than zero desire to mow my lawn, or sweep my street. I like having a mowed lawn and a swept street though, so if I suddenly had extra money, I would very likely pay someone to do those jobs, which currently aren't being done at my house. What would you do?

"If a person makes the short-term decision to not work (and not studying or working on a startup or something similar), that person moves further and further away from ever participating in productive labour. I'm a bit old-fashioned on this, but I consider allowing people to go idle, long-term like that, is a grave failure of society."

Why should anyone be forced to do work they hate for the sake of proving to those in power that they are not lazy? What would you do if you were unfortunate enough not have a college education and some skills that allow you to hold a good job, and your only option was working in fast food? Then suddenly you have this basic income, and you can afford to live without working that horrible job? Would you just start taking a lot of naps, or would you start pursuing hobbies and skills that you never had time or opportunity for before?

I know what I would do - I'd take a course on motorcycle repair, take up motorcycle racing, and travel to races. Maybe that's not valuable to society as a whole, but I would argue that it's relatively more valuable than fast food. Plus the intangible benefit of another person in the world who's happy and an expert in their field, rather than another unhappy, worthless minimum wage employee. What would you do? I'm asking you to trust other people to make decisions as good as you would make, rather than making assumptions on their behalf.


So you admit that you would change your behavior in response to such a policy. That's my point: People change their behaviors in response to changed incentives.

Now, since society is a very dynamic, it is extremely difficult to predict the consequences of such changes in dynamics, or even to ascribe causation afterwards. That, however is not an argument to throw caution to the wind.

> I'm asking you to trust other people to make decisions as good as you would make, rather than making assumptions on their behalf.

I find that very hard to do, as I have multiple, hard examples of people making poorer decisions than me. Mostly they consist of people asking my advice, then not following it, then failing.

By the way, by the same measure, I am guilty of making poorer choices than other people as well, it's not a linear ranking.


All good points. But that's the genius of it. Nobody knows what will happen. And what will happen will be affected by untold numbers of variables. Right now if you go to visit the Swiss you'll immediately notice how expensive everything is. Every. Single. Thing. I think it's absolutely the case that those prices will rise. With more disposable income, producers will start hiking their prices to capture more of it. Runaway inflation. As for what people will do. I think that's a bit less obvious. I'm sure there are those that will go on permanent holiday. How the economy will fill low wage/skill jobs is an open question. Will they have to import a 'serf' class? Non citizens who don't get payouts who actually have to work to live? Very exciting to see it all play out indeed. My gut is that this will be a net negative.


"Many people who start in unpleasant low-wage jobs, don't end in them."

LOL that's not a problem in the country I live in (USA). Perhaps you're Swiss or live in some country where statistically significant upward mobility is possible, in which case, in your country, it could be an issue. Lack of class migration, other than downward of course, is a pretty significant problem other than anecdotally in the USA.

Other than that localization issue, a pretty good post but I'd factor in import goods, especially products that appeal to poor people. Put bluntly I think retailers would collect a lot of the money selling Chinese televisions and the like. And getting that support from retailers is likely to be critical to getting the support to implement this thing. So there would be certain balance of trade issues relating to higher imports.


Coming from an academic world, the primary currency in my network is the number of publications/citations. Faculty/postdocs/Phd's salary in most universities are not worth bragging about; but it is not uncommon for people to put in regular 60+ hours week to get that extra publication so that you can stay ahead of the curve ( or at-least catch up )to your peers. From my perspective ( of course the domain bias exist) human ego is as powerful a motivator ( and we invariably have a desire to be ahead of people in our immediate network! ).

The fact that Switzerland is a really rich country, with the wealth distributed not so unfairly, makes this experiment even more interesting ( compared to the communist style takeover which happened in past in then poor nations including Russia or China).

To summarize, one of the things that makes capitalism work is competition; and money necessarily is not the only thing ( and might not be the primary thing) that we compete for!


One thing your analysis leaves out is sex. While I refute the idea that the only thing women/men consider when choosing a partner, money is a factor. So let's say you're a girl and two guys want to go out with you. They're both equally attractive, equally funny/smart. One is living frugally on basic income with roommates, the other has a nice apartment that he pays for with extra income earned from holding a job.

The guy with the apartment has certain advantages that may not appeal to all women, but certainly to some.

My point is that there is motivation to earn more than your peers, especially for young people.


One guy has time to go walk in the park on weekday afternoons and can go out to a bar or to a show any night of the week, while the other is at work all day and can only do late nights on the weekend. One guy can lounge in bed then take you to brunch, the other has to leave for work at 7am. One guy has to schedule his vacation a month in advance, the other can be spontaneous to hop on a train somewhere today.

My point is that there is motivation to have more free-time than your peers, especially for young people.


I imagine a basic income would change the social paradigm of full-time employment quite significantly. Without being so dependent on a job, more bargaining power would be on the side of the employee, so I presume there'd be a huge rise in part-time employment, and workers' liberties. So most of the restrictions you're associating with employment would potentially be much less repressive than they are today.


Can't hop on a train without money. Can't stay overnight at a nice hotel without money. Can't buy a plane ticket spontaneously without money. Can't pay for your girlfriend's ticket without money. Can't buy too much beer without money -- especially in expensive cities where young people like to aggregate.


Yet the penniless artist is not exactly socially ostracised. Even in the mentioned expensive cities.

Reality is that people tend to stay inside their bubbles and bubbles are self-reinforcing. The penniless artist isn't going to take a job at McDonald's to be able to stay at a nice hotel with their Wall Street romance. Rather, two equally penniless artists are going to go on a free/cheap picnic in a park and reinforce each other's beliefs that this is much nicer and more "real" than the more expensive alternatives.


True. Seems like a basic income would be good for penniless artists as they'd have more time to perfect their craft. It would not be good for people who just want to spend their time watching tv.


"Will people..." "If many people..." "If a person...."

Who are these people? Are they not you? If they're not you, what makes them different from you? If they are you, what makes you think you'd do those things?


They're potentially, halfway me in a world without celebrated computer programmers. I have struggled immensely with being a "slow starter", with self-motivation. I would have been an even slower starter in a world where I couldn't do my job alone, at home and late at night.

Come to think of it, one of my early learning-moments was pursuing a total dead-beat of a customer that I should have seen from a million miles away would never pay up, and incurring debt while I did. Having the till shut in my face (figuratively) at the bank was the push I need to face reality, cut my losses and move on to more productive work.

I totally see myself becoming an underperforming slacker pursuing dead-end/get-rich-quick "business" ideas. I have a couple of distinct kicks in the face to thank for being where I am today, and while not all being directly financial kicks (I'm privileged enough to never had to worry about missing a meal or not sleeping in my own room), is was definitely an element in all of them.


I'm going to go out on a limb and say this is the most ridiculous idea that will have disastrous and unintended consequences across the board, leading to more poverty and crime and economic stagnation than ever, at least here in the U.S.

Once such a program is implemented, charities will dry up as the average giver realizes that the recipient already gets plenty. The more dedicated givers, the idealistic volunteers, will still be out there providing free meals and helping in shelters, but the vast majority of working people with some disposable income to share will no longer give; they'll just shrug and say, "I gave at the office" or, more literally, "My money was confiscated at the office".

Furthermore, this will provide a disincentive to find work, and we'll see a surge of immigration from Latin America to fill all those low end jobs that our comfortable native populace no longer feels a need to bother themselves over.

The Clinton/Gingrich welfare reform efforts were intended to move families off of public dependency and to a large extent they met with success. It's rather "out of the box" these days to propose the diametric opposite, but by all means, Switzerland, please use yourself as a laboratory so we can observe the results. According to Swiss friends, that country has to import guest workers to perform menial labor; will this mean that these guest workers will be shipped home, or will they also receive a stipend? And if they do, will they still have an incentive to mop floors and wash dishes?


If the homeless are citizens, they too will receive the money. So there won't be a need for so many charities. There is no disincentive to find work. Either you don't work and earn X, or you work and you earn X + Y. Just like it happens now, with less hoops to jump through.


If you'd read the article, you would know that this only applies to Swiss citizens, not migrant workers.


If you'd read my posting, you would know that I was talking about citizens of a country. I asked, rhetorically, what the Swiss would do about the migrant workers, who, by the way, constitute 25% of the work force in today's Switzerland; excluding them would render the policy almost pointless.


There's something fundamental I'm missing about this proposal: how will this not cause inflation on consumer products? People who earn above the basic income level will be hit with a double whammy: (1) They have to fund the basic income with higher taxes (2) They have to pay higher prices for consumer products due to the inflated supply of money being spent on consumer products

I just don't see the point, but I would be interested in seeing the practical consequences if another nation tried it.


This is a beautiful idea. Replacing the means-tested transfers, such as housing assistance, food stamps, unemployment benefits, etc.etc. with a simple check to everyone would provide dignity to all citizens, save on administration costs, remove the major disincentives to work that the current programs create, and even encourage entrepreneurship and creativity, since people would be less worried about their ideas not working out. It would even destroy the rationale behind minimal wage. I would gladly pay more in taxes for all that, although I suspect a lot of the program will pay for itself -- through elimination of all the above, and through the economic benefit of spending.

I do worry a bit though: with the system in place, given how simple and transparent it is, what would prevent politicians from continuously raising the basic income level, until productive work becomes completely unattractive, and the economy collapses? How can that be prevented?

Even though the current welfare systems are horrible in comparison on efficiency grounds, the fact that they tend to target specific small groups, makes it easier to keep them from blowing up.


It would be great to see a discussion of this proposal from the point of view of Austrian economics. Anyone here cares to give an opinion?


Interesting idea. I hope Switzerland does it so the rest of us can watch from the cheap seats and see how it works out.

Human nature being what it is, there will still be some people who manage to wreck their own lives. The guaranteed income isn't much, it would be fairly easy to fritter it away on any number of vices addictions, or just garden variety fiscal mismanagement. So when people find themselves too broke for food or rent despite a minimum income, what then? There's an obvious argument that they had their chance and screwed it up, so they get to live with the consequences. But what if they've managed to drag their kids into the hole with them, or if their really old, or otherwise sympathetic? Do we restart the entire welfare conversation while taking a minimum income as a given?

This also seems like it would simultaneously provide a big incentive for people to want to become citizens, and an equal reason to not let them. I wonder how that will be handled?


Any discussion of a basic income on HN probably needs a captcha to prove authors have read

http://en.wikipedia.org/wiki/Alaska_Permanent_Fund

maybe by entering the annual individual payout in 2012 was (fill in the blank) 878 or $878 or $878.00 or whatever.

Most posts against it usually have a tinge of "keep the government out of my medicare" about them.

"Somebody should try this" or "Its too dangerous to try" and all the like almost intentionally seem to ignore this actual implementation.


Even in the best year (2008, $3269) this isn't remotely enough to live on. That's less than $9 a day, and that's an exceptionally high payout! In 2012 it was $2.40 a day. Maybe you could live on that in India or Vietnam, but not in the U.S.


I would disagree in that during my starving student years I occasionally submitted tax returns vaguely resembling those kind of figures. You need roommates and can't be too picky about food and entertainment, but its possible. Its certainly a lot easier to live on than $0 !

This does have certain implications where either it gets indexed to some kind of cost of living index, probably very corruptly, or it gets polarized into some kind of coastie/non-coastie or urban/rural issue.


I did not know about this program, thanks for sharing.

I see a glaring difference though. Instead of taxing everyone on their person income the government took a portion of the profits from the natural resources of the state and set it aside for an endowment of sorts. The fund itself is invested and the dividends are paid out. Most welfare plans do not operate this way, even if they started out with that intent.


I think this is the only way governments should "assist" their people. Further, I think portions of a minimum income should be the only way of creating currency. Currently, it is done through debt. Money should be made by the people, for the people.

Perhaps it can be done as follows:

1. Institute a negative income tax 2. Any citizens who get a refund based on the negative income tax are paid by money that is created

This way, when the economy slows down and people are making less money, more money is created which is what we do anyway.


One of the previous discussions here: https://news.ycombinator.com/item?id=6532738


Unfortunately, I don't think there is any chance this will pass. Swiss are very risk averse and I don't think they want to mess with the successful economy they have now. There is way to much uncertainty.

The initiative to increase the minimum holiday (4 to 6 weeks) failed already.

For those interested, there is a initiative this month to limit the maximum salary to 12x the minimum salary in the same company (1:12) which might pass..


For the record, I voted against the 12x proposal. It's unnecessary meddling in the workings of a free market, meant to appease ideologists. The basic income proposal, however, is a pretty dramatic, wide-ranging change that could make a big difference. It's not appeasing: it's incendiary.


As we increasingly move to a post-scarcity economy, at least in terms of the most basic necessities of life, this kind of measure will be necessary to avoid civilization becoming teeming hordes of poor with a few billionaires (the ones who own the robots) sprinkled in.

Of course, this is all before climate change wipes out crops and antibiotics destroy the species!


[deleted]


Incorrect - it is a basic income that is going to be paid to everyone, working or not.

http://www.businessinsider.com/behind-the-swiss-unconditiona...

> We are not proposing a minimum income — we are proposing an unconditional income.

> A minimum wage reduces freedom — because it is an additional rule. It tries to fix a system that has been outdated for a while. It is time to partly disconnect human labor and income. We are living in a time where machines do a lot of the manual labor — that is great — we should be celebrating.


The article describes a policy that is /absolutely/ that: "being paid for being alive". The policy described doesn't require you to work full-time, part-time, or at all.

"Every month, every Swiss person would receive a check from the government, no matter how rich or poor, how hardworking or lazy, how old or young."


Did you read the article? It is exactly that, a wage for being a swiss national (and alive). The title's a bit sensationalized because.. well.. fucking news can't get people to click on their stories otherwise, but it's technically valid.


It's unfortunate that the Austrian School has taken a blow during the great depression, which was entirely due to government influence (see http://en.wikipedia.org/wiki/Federal_Reserve_Act (read "Putting the fox in charge of the hen house")), leading to the adoption of a new orthodox standard of tax and spend (Keynesian) and later increase in monetar(ism|y control and domination from above) (Friedman). Now, after the 2008 crisis, which was caused entirely by government influence (see http://en.wikipedia.org/wiki/Community_Reinvestment_Act#2008... (read "Bad credit? No problem.")), the resurgent attack against laissez-faire economics is regarded as something new by those who haven't read their history books

TL;DR

The fox is in charge of the hen house, blames the hens on their problems, and uses that as a justification to put an even large fox in charge of more hens.

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