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.
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 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.
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:
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.
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.
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.
It's one situation where basic income doesn't really help, but it doesn't really hurt either.
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.
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".
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".
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!
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)
Of course, we'd have to fix healthcare first in the US, which is its own giant political argument.
But the underlying objection isn't convincingly refuted by your assertion or hypothetical question.
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?
Imagine how much progress he could've made if he started pushing this idea as a mid-level bureaucrat.
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.
Note that currently the U.S. allows a tax deduction but not credit for charitable giving.
The contrapositive (logically equivalent) statement is: If you don't have mandated programs, you can't make a meaningful impact on society.
This is a remarkable piece of legislation and truly exciting to observe.
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 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 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.
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.
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...
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.
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?
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.
It will likely be interesting and exciting if the legislation passes, but will it be better or even good?
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.
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.
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.
The regressive payout sounds like a good idea, but isn't it equivalent to just flattening the income tax?
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.
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.
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.
Edit: changed "each other" to "themselves" since that's closer to what's confusing me.
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.
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.
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 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.
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.
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!
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.
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.
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.
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.
I have to admit I don't quite follow. How would everybody getting the same labor cost increase prevent price hikes?
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?
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.
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 =)
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.
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.
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.
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.
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'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.
>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.”
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!
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.
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 (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.
Sure, we have a few public parks here and there, but I can't grow food or build a house unless I own property.
Not saying that it's the way things should work, but very few ideas are universsal
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.
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.
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).
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 don't have any answers.
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.
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.
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
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.
I like that word. Creators of entropy.
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.
No, it is not. 
If Switzerland accepts the basic income, they would probably have to leave EEA or negotiate some pretty steep exceptions to its membership.
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.
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.
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.)
OTOH, it might help with our aggregate demand problems.
It's quite possible I'm missing something, however.
Let me put it this way. If you were the only grocer 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.
 Note, that's not improbable in many poor areas.
 I'm just armchair speculating here... so, like I said, I could be way off base.
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.
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.
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.
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)
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?
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%.
Putting in place a minimum income system would merely redirect funds from those particular programs in many cases.
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.
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.
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.
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.”"
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.
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.
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.
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.
if you provide the second the first will follow. if you provide the first your other mentioned problems will go down.
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.
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.
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.
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.
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.
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.
What about the New Deal's CCC?
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.
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.
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.
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.
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.
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.
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.
Now, keeping it small is another matter.
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.
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.
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.
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).
Well, that's the point, isn't it?
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.
Their labor may not be worth much. It still needs doing, and you're compelling others to take away any incentive to do it.
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.
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.
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.
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.
EDIT: Sorry, did I say investment banks? I meant Private Banks of course.
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.
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.
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.
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.
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!
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.
My point is that there is motivation to have more free-time than your peers, especially for young people.
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.
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?
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.
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?
I just don't see the point, but I would be interested in seeing the practical consequences if another nation tried it.
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.
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?
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.
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 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.
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.
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..
Of course, this is all before climate change wipes out crops and antibiotics destroy the species!
> 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.
"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."
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.