This is just my experience after working for ~1000 hours on healthcare.gov w/other YC alumni (relatively nonideological-liberal-or-libertarian engineer bias), but I think it's become increasingly clear to all of us that the implementation of well-meaning policies intended to separate the deserving from the undeserving ends up adding an incredible amount of complexity and overhead, along with unintentional side effects, edge cases, and bad incentives.
(This isn't why healthcare.gov had major issues, it's just another problem.)
That said, there's no way politically a basic income is going to fly anytime soon. So since this is HN... is there any way to get to an MVP without having a sovereign state to experiment with? Or is this solely in the realm of public policy?
Unless the overhead is truly massive (read: 5x more than the actual benefits), it doesn't matter. It's still vastly cheaper to pay only a small set of deserving people than to pay everyone.
Consider a BI paying 300M people $20k. Cost is $6 trillion.
Consider a targeted program paying 50M people $20k, no overhead. Cost is $1 trillion.
You need an overhead cost of 500% of benefits for a basic income to be cost competitive.
Can any BI proponents provide even a back of the envelope calculation suggesting how BI could possibly be competitive?
Listen to this investigation into Disability benefits. Listen to how the people who receive these benefits genuinely need the stable income that they provide, but are then prohibited from working part-time, tutoring, even volunteering for their community, for fear of losing the only available form of security. Listen to how trapped they become by the system. For them, being trapped by a conditional benefits program is better than the alternative -- anything is better than starvation -- but it is still a dehumanising and self-perpetuating institution.
The flipside to making benefits conditional is that we require employers to provide social support (eg., via minimum wage, etc). By setting an expensive threshold below which employers cannot create jobs, we impose enormous costs on industry and minimize job creation. A basic income should go hand-in-hand with the elimination of minimum wage. By removing the requirement that jobs must provide base-level income support, we would enable the creation of more jobs.
Between eliminating the steep marginal tax rates on the poor, and removing the steep threshold to job creation due to minimum wage, we would eliminate the two biggest factors in chronic poverty traps. So if you want to do a real calculation on the costs of our current policies, be sure to include the cost to industry of the minimum wage, as well as the Net Present Value of the future costs of letting the current poverty-trap system continue to grow.
There are cheaper policies than BI which don't do this. One example is Basic Job - if you need a job real bad the government gives you a really bad job.
This has no poverty traps, and (unlike BI) has no disincentive for work. You also get to avoid spending money on people who don't need it, and additionally society can derive some marginal benefit from the work people do (e.g. public spaces can be cleaner).
If you want to get out of poverty, a good way to do that is by getting more education and practicing skills that are valuable to employers. A Basic Job often conflicts with that.
If you want to get out of poverty, a good way to do that is by taking part-time and piecemeal work to build up your experience. A Basic Job often conflicts with that.
A government study of workfare programmes in the UK, Canada, and US concluded that: "There is little evidence that workfare increases the likelihood of finding work. It can even reduce employment chances by limiting the time available for job search and by failing to provide the skills and experience valued by employers."
Oftentimes the poor are those who most need to spend time taking care of children or the elderly -- types of work which are tremendously valuable to society despite not being part of the wage labour system. A basic job conflicts with that.
Furthermore, Basic Job programmes have vast bureaucratic overhead and are far more expensive to implement than Basic Incomes. What you consistently miss in your argument against Basic Income is that it is something which everybody receives. Most people contribute to it, but all people receive a benefit from it. The "cost" is not the total cost of the programme, but the difference between what you pay and what you receive.
Basic Job programmes have vast bureaucratic overhead and are far more expensive to implement than Basic Incomes.
Back of the envelope calculation, please.
Incidentally, your study merely shows there is very little evidence of anything due to workfare being poorly implemented and rapidly abandoned. For example, NYC had only 2800 people on workfare in 2003. Additionally, it claims that about half of people on workfare don't actually work and merely loaf about the work site (but presumably continue receiving benefits).
Obviously a BJ won't work if you turn it into a de-facto BI or welfare system.
With this comment, it becomes difficult to see how you're arguing in good faith. If your Basic Job tells you to work at a particular time of day -- and classes and/or a part-time job are in the middle of this work schedule -- then they conflict. Sure, you can go to school and/or take the part-time job instead, but then you starve.
How is it that you're incapable of understanding that this creates a conflict?
> Back of the envelope calculation, please.
Okay, using your straw-man scenario, there are 50M people requiring $20k worth of income. That costs $1T upfront (same as if we provided the $20k Basic Income to all 300M people). Now with our Basic Job, we're basically asking people to do work that they don't want to do -- since as you point out, if they're not closely supervised then they won't do the work.
So let's assume we need a poorly-paid supervisor for every 12 basic-jobbers, a somewhat better-paid line manager for every 20 supervisors, a somewhat well-paid district manager for every 50 line managers, and an actually well-paid regional manager for every 100 district supervisors. Furthermore, lets assume that all these jobs come from the ranks of the currently-unemployed, so that they're not pure overhead but are providing support in and of themselves.
Job description $/year No. of people Total cost
Basic Jobber 20k 45,973,453 919.5B
Supervisor 30k 3,831,121 114.9B
Line Manager 40k 191,556 7.7B
District Manager 60k 3,831 0.2B
Regional Manager 100k 383 -
I must commend you on actually thinking things through carefully and checking if, numerically, a policy is remotely plausible. It's so rare to see on threads like this.
Your $6T number is false. Even in your strawman, the cost of the Basic Income would be $1T: $6T less $5T as a "cash-back rebate", due to the fact that every single person paying for the BI is also receiving the BI. This has been explained to you many times on this thread, but you keep ignoring it.
> if a basic jobber costs $7.25/hour and they produce $0.30 worth of value, the Basic Job pays for it's own overhead.
But a Basic Income would have $0/hr worth of overhead -- and it can be assumed that a person who is able to seek work and education will produce more than $0.30/hr of value anyway.
> I must commend you on actually thinking things through carefully and checking if, numerically, a policy is remotely plausible.
Thank you. I have an MBA from Oxford and run two businesses. I am very comfortable with numbers.
This doesn't sound plausible to me. People are devilishly clever when it comes to bilking large bureaucracies out of free money. It's going to take a bit of work to prevent that from happening. Organized Crime is going to get in on something like this.
You mentioned earlier that BI disincentivizes work. How so? It seems to me that it would not, because the basic income doesn't disappear the instant you start working even a little bit.
Regarding each of these caveats in turn:
1) There are plenty of projects that we individually may deem socially worthwhile that we don't pay for. Parents raising their children being probably the strongest example, but there are other places where value is simply hard to capture. Incentive to work on these is not decreased by BI.
2) Incentive to work depends on what people are willing to pay you for your labor. If BI ultimately means people are willing/able to pay for more things then the total incentive to work may rise. So far as I'm aware, this is not a settled question (it seems a probable second-order consequence but possibly drowned by inflation, &c...)
3) Anyone currently receiving disability or welfare payments is not merely being paid despite not working, they're effectively being paid not to work. Transitioning to unconditional support will clearly increase their incentive to work.
What all this does in aggregate is not at all clear to me.
The incentive to continue working even if you receive BI is that BI won't be enough to have a luxurious lifestyle, just enough to meet basic needs and educate oneself.
So if anything BI incentives people to work even if only for once in a while.
But there is nothing that indicates this at all. In fact the Canadian experiment mincome although not conclusive did not show people in general stopping to work.
I agree with you that the evidence shows there is not even substantially reduced incentive. In the case of Mincome in particular, it did show a decrease in hours worked, which is consistent with the claim that you were objecting to - that BI reduces the incentives for work (relative to the same system with no BI). Asserting that the global disincentive is small and that conditional assistance provides far more disincentive would have been entirely appropriate. Asserting that there is zero disincentive - without an explanation for why we saw one in Mincome - is not, and your earlier comment was arguing that by asserting remaining incentive was not zero which just doesn't make sense as an argument.
What I said was that it always will pay off to work and therefore incentives people to work.
Thats a very different argument than the one you are arguing against.
"...This one is pretty straightforward. BI disincentivizes work because it stays with you if you stop working. On the common assumption that people are working for the money, not for the joy of showing up, this reduces the penalty for not working, which will cause a rise in... not working..."
More specifically this sentence:
"...On the common assumption that people are working for the money..."
"With BI it always is beneficial to work."
As an aside, this is not quite true - if I value my time more than the wages offered, or if working has associated costs that exceed my wages, it might not be beneficial - but it is certainly the case that you don't wind up with less money because you worked because of BI.
However, more importantly, this doesn't disagree with thaumasiotes's comment and I don't see how it's relevant to the parent discussion.
"Even if you only work for a couple of months a year (for instance picking strawberries) you will make more money than not doing anything."
This is true, and a great advantage that BI has over conditional transfers or assistance. It's still not actually relevant to the parent's point. Absent BI, this is still the case, and the incentive will be higher.
"So if anything BI incentives people to work even if only for once in a while."
This seems entirely false, in terms of anything that was presented here. It is the case that people remain incentivized, but it is not the BI that 8provides* that incentive. The change due to introducing BI is that paid work is less incentivized, which is the same as saying "BI disincentivizes work."
It doesnt work and never have. Denmark tried this too it does nothing cause it doesnt solve the basic problem.
There is not enough jobs for all of us and will increasingly be so.
BI is the best solution we know of and we should try it.
A lot of the comments here also ignore a lot of the factors that Basic Pay would provide which aren't directly measurable- increases to areas such as science and the arts which, while not tied to anything concrete like GDP or a country's economy, are indisputedly important to society.
BI would not provide increases to science nor art. It would dilute them. I get enough emails as it is from whacko's who think they've upturned Quantum Mechanics, Relativity, or created some perpetual motion machine. If society valued these people's output they would be financially rewarded already. There's already incentives in present society, called capitalism and competition! There's a reason why only a tiny fraction of actors, musicians, and artists earn a living. That living is what society thinks of their art.
Further, plenty of people on social programs are quite content with sitting on their ass. And some deservedly so, due to true disabilities. An able-bodied adult has no moral right to income which they did not earn. That is theft from the truly deserving individuals who either were born with extreme hardships, or became disabled.
Note: A few years ago I was a graduate student (24k/yr living) in Boston who made time to play drums. You can express your art (or science) without a handout.
If you can't differentiate between capitalism and scientific peer-review as separate processes for separating wheat and chaff, why should I take your word on the ethics underlying fundamental economics, ie: that "he who does not work deserves not to eat"?
Why do you think scientists want to publish in the best journals like science and nature? There is a healthy amount of competition in science too. It's what drives people to get into the academy, or get awards like the Nobel. It's what creates great science, but it also creates politics in research.
There's a number of parallels between capitalism and academic research.
Well, on a more serious note, it would be, "The subtle resource starvation will continue until you become more valuable and productive."
Would the "lower classes" in academia lacking health care result in more academic productivity? Actually, no one really disagrees about these things in an absolute sense. It's more where people want to draw the lines.
"The subtle resource starvation will continue until you become more valuable and productive."
Yes, and this is the reason society improves over time. Drastically so.
In other words, it is little value to me if you decide to pursue art history because there are enough art historians in supply. You would need to out-compete ones with greater experience than you to make a living. It doesn't help society to add +1 to that pool. On the other hand, it is quite valuable to pursue a STEM degree because the skills, research, and knowledge you attain are in demand.
The system, works. Society improves over time, and everyone is rewarded. Everyone is(should be) thankful.
Bull. The funding for your "STEM" (come on, tell us what field you actually did) grad degree didn't come from supply and demand on an open market; it came from government research funding.
>"The subtle resource starvation will continue until you become more valuable and productive."
>Yes, and this is the reason society improves over time. Drastically so.
The fact that you have noticed an optimization process acting on society optimizes society is not a great insight. The fact that you failed to notice the current optimization process profoundly mismatches our values and intentions is a major misstep of yours.
Which is driven by the market. If art historians were all of a sudden extremely profitable then you bet your ass there will be a massive increase in gov't funding at their graduate level, due to market demands. Grant applications have to stress the importance of their research (and often times potential for profit) to society. The fact that you fail to see immense competition in gov't research funding shows how high your blinders are.
>"The fact that you have noticed an optimization process acting on society optimizes society is not a great insight. The fact that you failed to notice the current optimization process profoundly mismatches our values and intentions is a major misstep of yours."
Don't shove your values on me. Un-targeted welfare steals limited resources from those who truly need it. Swallow those values whole.
How can that be? What direction is this going? How soon until everybody is subsidized in some way? (There are 2000+ federal housing assistance programs right now).
Market value for construction workers is misleading when the market is skewed. Because we currently play a game where people who want houses, have to hand over green coupons to people who build houses, isn't the whole story.
Consider that all this money-trading is by the 99%, who own a small fraction of the money. What if the 1% threw their money into the game? It would skew the prices and wages until some equilibrium was reached, maybe have no real effect on housing at all.
So the real question is, how do we motivate our workforce to create wealth (housing, food etc) for everyone? We have excess capacity to do this (Iowa creates enough food alone, to feed 2 USAs). Why aren't we doing it? Automation will make it not even take people at some point to accomplish it.
The money game will run out of steam at some point. Whether the robot overlords just give us all what we need, or let us starve, is up to our choices in the next couple of decades.
This is all tounge in cheek (sort of); but because today we use money to guide resource doesn't mean it will continue to be useful to do that.
Trust me when I say that the truly deserving individuals with true disabilities do not want to sit on their asses, deservedly or not.
The part where it's "psychologically healthy to want to make the most of your life" holds just as much for them as for everybody (and it's arguably even more important for them). It doesn't take a very long time of sitting on your ass to realize this, either.
Just wanted to point out that a lot of people who can't work, generally want to, very badly.
I don't understand why the 'Basic Job' idea doesn't get more traction. For all of the talk about a 'post work' world, I still see plenty of work that needs doing, every day.
Seriously, make-work is a horrible idea and a gigantic waste of resources. Basic income frees people to live their lives and contribute to society in ways that are undervalued by the labour market such as writing, creating art and music or caring for children, the elderly or chronically ill.
How many people might choose to start a small business if they have the security of a basic income? It seems to me like a potentially staggering number of people.
Imagine I, for whatever reason, accept a Basic Job from the government. The job is, by design, bad. I'd rather not do it. So my dream scenario is that I officially hold a Basic Job and draw its meager salary, but instead of doing whatever work it supposedly entails I sit at home and watch TV.
This scenario isn't just an improvement in my life -- it's also an improvement for everyone handling me! The work doesn't need to get done; it's only there as a penalty for me, to encourage me not to draw the Basic Salary if I don't really, truly need it. So when I save myself some effort by not showing up for work, I also save my handlers effort that might have gone into overseeing me. Just as it's easier for me to stay home, it's easier for them to pretend I didn't than to track whether or not I did anything. So overseeing Basic Job is conceptually pretty difficult.
I don't claim that this is more or less difficult to deal with than the problems of any other welfare system, but it is an obvious and fundamental flaw in the concept, and might help explain why it's hard for Basic Job to get traction. On a shallower level, the concept of "pay someone to dig a hole today and fill it in tomorrow" (a.k.a. The Basic Job Concept), has been the go-to example for exactly what we don't want government to do for a long, long time. That can also make it difficult to get traction.
This is a fundamental misunderstanding. BJ is work that is not worth doing at current market prices. I.e., picking up garbage in the park might be worth $4/hour, but minimum wage is $7.25/hour. If we spend $7.25 more and get $4.00 worth of value out of it, we lost $3.25.
If we are already spending $7.25 on welfare/BI and getting nothing in return, we are losing $7.25. If we demand that recipients work for their money we lose only $3.25. As long as the BJ workers are not destructive, we lose less money than we otherwise would with welfare or a BI.
Also, the jobs need not be "dig a hole and fill it in" - they can also be "walk around town and find potholes to fill tomorrow" or "there is garbage on the streets, go clean it up". It's not as if we have a shortage of things that would be beneficial if we did them. They just might not be worth doing at current prices.
If the work is digging holes one day and undigging them the next, overhead here is low. If there's some other system behind what the jobs are and how they get filled, potential for corruption seems extremely high. Say I'm a Denny's and I'd rather not pay so much for my kitchen staff. Can I list all the positions with Basic Job and kick back to the administrator when he sends me someone?
Germany has no minimum wage and extremely low unemployment. What would their Basic Jobs be?
Not at all. There are things that provide economic value that is hard to capture. Determining what those things are and how to value them is going to be messy, though.
Arguably the only good thing that came of this was that equal pay for men and women was also assured by their constitution.
Of course, that also doesn't mean we shouldn't eliminate the incentives that contribute to inefficiencies being preferable. There are plenty of scenarios where people are employed to dig a proverbial hole and others are paid to fill it (patents and copyright enforcing intellectual poverty; interest on public debt, etc), even if each side spares no expense and might use the best tools available. If we were actually solving problems, prices would be going down and people would be happily unemployed (because there were less problems to resolve and less to need money to buy) at the same time as quality of life were going up. That is not what is happening.
Capitalist corporations don't want/are unable to utilize them. Don't confuse them with the economy which is far more grandiose and inclusive than that. There are millions of ways for humans to create value for other people, most of which would be unprofitable for capitalist corporations to pursue.
Let's use the same numbers as you: 300M people, $20k each, only 50M people who actually "need" it.
In the BI scenario, 250M people are paying for the cost of program (since the 50M who actually "need" it presumably can't pay). That's $6B / 250m = $24,000 per person. However, each of those people is also receiving $20,000 worth of BI. Therefore, the cost to them is $24,000 - $20,000 = $4,000 per person. $4000 * 250M = $1B -- exactly the same as your conditional benefits program, except now there's vastly less overhead and no poverty trap.
Furthermore, a 4k tax on 250M of the U.S. could be crippling to a good chunk of them. If your true point is redistribution of wealth, our tax system already does that and can do it more. But that's a different discussion..
As for a $4k tax being "crippling to a good chunk of them" -- no, you misunderstand the nature of BI. If we're paying $20k worth of BI in this scenario, then the mean income should be about $40k (since a good level for BI -- in basically any economy -- is about 50% of the mean). We could then support a flat $20k/person BI with a flat 50% earned-income tax. This means that the payments and receipts, per person would look like this:
Income Tax +BI Net Effective tax rate
$0 -$0 $20k $20k N/A
$10k -$5k $20k $15k N/A
$20k -$10k $20k $10k N/A
$30k -$15k $20k $5k N/A
$40k -$20k $20k $0 N/A
$50k -$25k $20k -$5k 10%
$60k -$30k $20k -$10k 15%
$100k -$50k $20k -$30k 30%
$1,000k -$500k $20k -$490k 49%
Explain why after spending 10 years in school my tax burden should increase by 30k (making it an effective 60% rate not counting 10% sales tax in CA) to give to able bodied people who choose not to get off their ass. I guarantee you society is better off letting me keep what I earned rather than giving it to a completely untested individual. I didn't work my ass off for you.
PS: I hardly ever meet any of those "able bodied people who choose not to get off their ass" - they mostly show up in discussions like these - and I suspect they're a tiny minority. Let's not adjust policies to punish that tiny minority if, in the process, everybody else gets punished too.
I don't see where you're getting that. Presuming the numbers haven't changed since you commented, it looks to me like taking away half of every dollar earned.
How do you arrive at this?
We already do this with income tax forms.
That's what this is. It's very similar to Milton Friedman's negative income tax bracket.
It's still a big win, since you've taken all of the various benefits agencies and collapsed their roles into that of the IRS or equivalent tax agency, which has to exist anyway to fund other government functions.
> Its much better than giving tax breaks since you need income to begin with.
1. There is a difference between refundable and non-refundable tax credits. A big misconception is that tax breaks only help those who already have income exceeding the size of the credit, which is not necessarily true.
> Its like applying plaster to an uneven wall. The dents gets filled with plaster but the bumps stays at the same level!
In this analogy, where is the plaster coming from? It can't just come from nowhere.
 ("Just print more" isn't the answer, because that increasing the money supply doesn't actually "create" money (in the colloquial sense) - it's just a redistribution method that redistributes by changing the relative value of outstanding debt.)
Moore's Law, AI , other technological advances. Some bumps are producing way too much paster thats oozing out of the wall boundaries and into the emerging market wall of other countries.
Imagine a time in future when everyone is replaced by robots and no one is "employable" in a traditional sense. What would you do then? The economy is directly linked to the productivity of nations in producing goods and services , it has nothing to do with human effort directly.
Its actually always misleading, its just which way it is misleading varies.
For non-refundable credits, a credit only helps if your tax liability (not income) is greater than zero, and only provide full value if the tax liability is at least as big as the credit.
For a refundable credit, it gives full value all the time (well, independent of tax liability -- the eligibility criteria for the credit itself matter.)
We could get between $6k and $7k annually per citizen by swapping those plans for a basic income. If children don't count, we could bump that to maybe $10k. Obviously, this change would need to be taken gradually to not cause too much disruption.
To hit that $20k number, we'd need to increase taxes. Increasing consumption taxes would be fair. Since the flat credits is very progressive, it's OK to pay for it with a regressive sales or value-added tax.
I'm glad we are in agreement that a BI will cost a lot more than the current targeted welfare state. (Or alternately will require a drastic cut in benefits for the current crop of non-workers.)
If you didn't earn any money before you will get what was spend on you before + the saved overhead (+ a lot of wasted time and hassle). If you made a lot of money before you will still get a free handout but you also have to pay higher taxes so in the end you should have about the same amount. Obviously it will not be exactly the same for everybody but that doesn't mean it will be less fair.
Besides the saved overhead another major advantage of a bi would be to streamline incentive. Currently it can happen that if you start earning money you will lose a lot of benefits. This can lead to an implicit tax rate of > 50% for very poor people and therefore disincentives work.
I'm completely open to the idea of basic incomes but it seems that if it is possible, it should be easy enough to demonstrate the basic outline. This isn't something that can be discussed without arithmetic.
Excluding dynamic effects (more/fewer people will work), political necessities (program X must be excluded from the chopping block) is OK for a start. Picking and choosing countries is OK for a start.
The first question I would like to see answered is how much it would cost to bring every net recipient's income up to par with the biggest recipients'. Presumably the basic income needs to be set somewhere near this line or we'll have a situation where many current recipients are worse off.
The benefit they derive from the increased flexibility that $20k could easily exceed $20k by itself - you've probably seen the research on how people make bad decisions when they are financially unstable. And all that benefit is raw positive.
For a BI to be bad from the perspective you're talking about it has to actively make people less productive. Simply giving them $20k doesn't count as a 'cost' in itself - it all comes full circle.
For a BI to be bad from the perspective you're talking about it has to actively make people less productive.
You mean like a 10% reduction in work hours? https://decorrespondent.nl/541/why-we-should-give-free-money...
300M * $20k does equal $6 trillion but it is returned to the tax payer who stumped up the $6 trillion.
The 50M who aren’t contributing tax represent an actual cost of $1 trillion. The remaining $5 trillion is redistributed.
250M people contribute $20k.
300M people receive $16.6k.
300M * $20k - $6 trillion == $0
You thought that I thought they just sent the cheques back in the post? That would be bizarre indeed!
"250M people contribute $20k. 300M people receive $16.6k."
My framework and Maslow-hammer is the PPST framework from Tyler Cowan by way of Arnold Kling - Patterns of Sustainable Substitution and Trade. In this, the bulls get bigger and the china shops get smaller; people don't have jobs for the reason that employers can't or won't figure out how to hire because business is too hard now.
I think (from interviewing) there's a strong element of laziness, narcissism and incredulous cognitive dissonance to this, but whatever. If we hire and they're good, then the story we told ourselves about how special we were fails.
The U6 gap since 2007 is real now for seven years. It harder every day to call it a blip.
If you give dole money to people such that it does not drive them from doing something productive, the money flows back through the economy and doesn't harm anyone. The accounting, however, is horrendous. I don't have an answer for that.
...people don't have jobs for the reason that employers can't or won't figure out how to hire because business is too hard now.
People don't have jobs because they are unwilling to work at low wages. This is pretty well established empirically, is the foundation of Keynesian economics, and is even accepted by both Cowen and Kling.
Further evidence for this: US companies are still outsourcing and expanding overseas.
If you give dole money to people such that it does not drive them from doing something productive...
The little data we have about BI suggests it reduces productive work hours by about 10%. For comparison, the great recession resulted in a 1% drop. As usual in articles on this topic, original sources uncited.
Overseas expansion could be any of a number of things besides wages, it's waning and it fails frequently. Something like the manufacturers aggregated through Alibaba seems different from setting up bespoke manufacturing overseas.
Thanks for the link.
Note that the current level of welfare is $20k/person so you are advocating a massive reduction of consumption for the welfare class. (I don't object, just pointing it out.)
I'm pretty sure US welfare is somewhere around $500-900/mo, and if you get a job (thus, work towards becoming a 'productive member of society') you may lose it.
Consumption data agrees.
Unemployed people get something, disabled people get something, old people get something, and working get salary, pay taxes on them, get deductions or lower tax brackets, etc. All of that would be replaced by BI.
It's not just about saving overhead costs, it's also about making sure people always get ahead by working. Suppose you're on wellfare, but you might be able to work part-time against minimum income. That added income gets deducted from your wellfare and if it doesn't work out, you might not get it back. So you stand nothing to gain, and a lot to lose. Why even try? With BI, every additional hour you work, increases your income.
Such as capital gains, tax deductions, very low corporate taxes, the actual control etc.
The overhead is many times more than you seem to indicate when it comes to targeted programs.
Edit: rough calculation in other comment
I'm having trouble seeing how this could work. If gross income generated, not redistributed, doesn't change (this doesn't create more work completed, it just moves income to someone else). then how is new wealth generated? It seems like spending would likely be the same, if not be reduced due to friction and overhead which would reduce net income across the board (wealth redistribution isn't free, so if new wealth isn't generated, then net income seems like it must go down, and aggregate spending would also go down).
Are we really endorsing the idea that one person in six should be on welfare?
But there are problems in that not everyone can live off the same amount of money. This is especially true with disabled or very ill people who are the most likely to be unable to obtain employment. They also require more money to maintain the same living standard, often much more in the case of people who require full time care etc.
It would be a shame to not move to something better for those people simply because it isn't perfect.
So the amount of income necessary to survive is going to vary by location, sometimes substantially. So a universal income wouldn't be tenable either, as one dollar doesn't buy the same things everywhere. How would you calculate what that should be without market forces?
Conversely, why should we give less to people who live in more affordable places?
For the particular example of disabled or very ill people, universal government-sponsored health care might help, although that has its own side-effects that are perhaps undesirable. (I believe that people are more incentivized to do medical research in the US than in Canada, in part because Canada's nationalized health care encourages people to stick with existing, inexpensive treatments in most cases.)
There's a local "maximum" in the policy evolution process here, due to the difficulty of changing umpteen things at once. I always vote against any new policy proposal that says "we're going to add this tax and remove this other one" unless both happen in the same bill, because otherwise the removal tends to not happen. (For instance, "replacing" an income tax with a sales tax in two steps can easily fail at step 2 and end up with both.)
This is already the status quo. Less people being reliant on charity is a good thing.
I haven't seen the reduction in services implied anywhere. It may, however, be a reality when implemented, but the intention isn't simply to change how government funds are spent on the poor. Generally, the aim is to redistribute wealth from the 'rich'.
If we are talking about printing money, it would be similar. The lower end goods and services would get more expensive and the higher end goods and services would stay about the same.
You can make money if the market goes up, you can make money if the market goes down, and you can make money if the market doesn't go anywhere.
What if they leave? Should people be punished for being rich?
That, in turn, means that the remaining rich people would have to be taxed even harder to compensate for some of them leaving, which would then motivate even more of them to leave, and there you have a feedback loop that leads to the Basic Income party being over.
Feel free to visit any of these reservations and see the kind of lives they live. I grew up surrounded by them in Arizona and went to school with many Native Americans in both primary & high school. It's not a great way to live and the reason so many are leaving the reservations.
And is this squalor & dysfunctionality entirely absent in reservations without significant revenue to distribute?
I also agree that we are decades away from sufficient public outrage to fuel the political machine to make these changes. Much like the flat tax, it makes sense to most people but will never happen due to the strong motivation of current rent-seekers to maintain the status quo.
While I would much prefer a basic income to an increase in the minimum wage, I am torn by the fear that it would turn us into the world of Neal Stephenson's Anathem or Mike Judge's Idiocracy. I support Voltaire's assertion that "Work saves us from three great evils: boredom, vice, and need"
You could grant basic income only to people who are employed, similar to how the EITC is administered. This kills some of the administrative overhead advantages, but not all of it, as verification of employment is still less of an overhead than need verification (it's basically built into the income tax system by default). It's also more likely to fly politically.
Incidentally, this also suggests a feasible political path forward for implementing true basic income -- start with EITC expansion, then slowly roll back the employment verification.
It's an independent organization that functions as a voluntary tax collection. Everybody who believes in basic income signs up for it, and makes a monthly donation. At the end of each month, we divide the total pot of all donations by the number of users: if you need the money, you withdraw your portion. If you don't need it, you can leave it in, so that the next month's pot will be bigger.
That's the whole algorithm.
I think it's self-balancing - if I, as a software developer, have the opportunity to withdraw a small sum, I won't bother - I don't need an extra $5 or $50 or $500, really. But to someone in a lower income bracket, that might be a significant amount of money.
Basic Income is needed because while productivity increases the ownership of these productivity increases are centralizing in the hands of a few. Through system-effects these centralization are leading to further rent seeking than could have happened before.
To give an example. It is game theoretically highly likely that there can only be one centralized social network such as Facebook, simply because the cost of centralization is lower than that OF decentralization (think diaspora). However, the cost of switching to another service doesn't make sense to a single user, hence rent seeking becomes possible. Telcos are another good example. To change this paradime the cost of decentralization has to be significantly lower than the cost of centralization, even to each individual user.
So the real problem isn't that all people are not paying into such an insurance contract, rather that the rent seekers are able to seek out rent at increasing scale while contributing ever less to society. Any BI fund would logically need to be funded by taxing the rent seekers rather than normal people who's productivity gains normally don;t lead to rent seeking due to more liquid markets for employees.
Taxing land, monopolies, money (through demurrage rather than inflation) and adding all of those funds to BI would make a lot more sense. Think Norway Sovereign Fund or the Alaska Fund.
Tax codes don't make sense, because they get diddled every year to meet some Senator's (Lobbyist's) pet purpose. Stir and bake for 100 years, and we have the baroque mess we're in.
As somebody famous said, taxation is the art of 'getting the most feathers from the goose, with the least squawking'. Noting in there about making sense or being fair.
Taxing wealth is similar to the old idea of the property tax, used 100's of years ago to encourage working idle lands in the hands of useless absentee-landlord lords and ladies. Worked pretty good. Maybe its time to do the same for bank accounts, investments etc.
Other monopolies which can easily be taxed are natural resource extraction businesses.
Taxing modern monopolies such as Facebook or IP/Patent based businesses is a lot more tricky.
However, once you tax money, land, and monopolies, there is no sense in VAT, income tax, corporate tax or any of the other net-negative taxes. Minimum wage, to some extend even pregnancy leave would become obsolete. Laws protecting workers from getting fired could become more lose. This combined with some sort of UBI would extremely streamline the entire state apparatus and cut out the potential for power grabs by politicians. It would make business a lot more dynamic.
This scheme would also make business formation and entrepreneurship incredibly easy. Imagine 3 guys who have this great idea but can't just barricade themselves in a basement and built a product atm, with UBI they can. Once they have an actual company going they have easier access to capital because large capital holders have pressure to put it back into the economy and hold stocks rather than cash or land/property. Due to UBI more people have cash to actually buy their widget. The 3 founders could hire a lot easier because people can easily switch employers without the fear of red tape such as losing healthcare or some other nonsense. Hiring freelancers/consultants to help should also be a lot easier because there is going to be plenty of people out there who do it just for the projects and who don't have the pressure to get the next gig. Firing people would be easy because of the presumably easier employment laws. You might even be more competitive in the global marketplace because you just got rid of almost all taxes for the startup. You might only have to pay capital gains taxes on your stock gains, but you got a lot faster to that point without ANY risk. That's pretty much the wet dream of any VC, fast generation of companies, fast traction, access to further capital, easy hiring, super fast closure and multiples. Then the cycle begins again.
Still, I love the idea of making it's voluntary. It certainly would allow the BI proponents to put their money where the mouth is. I suspect what makes BI unlikely to succeed is when it's proposed as mandatory wealth redistribution, since it's never as far as I know been done successfully and the consequences of failure are potentially massive, the risks would seem to outweigh the hypothetical rewards.
Would a voluntary pay in system, you could prove it works or doesn't work without forcing anyone else to take the risk. I wonder if a local community could do this for it's residents?
My proposal is an e-currency with a time based demurrage (https://en.wikipedia.org/wiki/Demurrage_(currency)) fee. The demurrage fees would be paid out equally to all consumers. The demurrage fee pay outs would be equivalent to a basic income. Since it is an e-currency, it would be independent of governments.
Why would businesses accept such a currency? In the future wealth inequality will probably cause economic demand to shrink. By accepting these types of currencies, businesses could grow while remaining profitable.
I don't know, but technology like http://ethereum.org may make it possible to move some things from the realm of states into software. For example, given data feeds of births/deaths/retirements, it might be possible to implement a software contract for voluntary social security that pays contributing participants an annuity from retirement until death.
Building such an identity system algorithmically on top of a social network also doesn't seem to make sense because this can be cheated too.
One solution that might work would be to prove that you are a conscious person to a system like ethereum through a "Ghost Key" like in Ghost in the Shell. Assuming that there is a way to "fingerprint" each person's ghost, such as creating a hash of something that doesn't change, that could be like e key to such funds. I highly doubt that there is something constant in the human connectome though.
Scale it down? Seems pretty obvious to me. If you can make it happen in one city, you have a foothold.
It doesn't work scaled down, though. (I'd argue that it's a bug in existing policy voting and adoption frameworks that it can be enacted when scaled up, but that's a different argument.)
You can't sensibly enact a policy like this if it draws its funds from the taxes of people who aren't within the city in question (and it would be horribly unjust if you could). So you're talking about paying for a basic income within a city by adding a substantial tax to the residents of that city. That would result in a substantial motivation for any mobile business or person to relocate (and higher-income people are often more mobile), and for any new business to set up shop elsewhere.
Cities are small enough that it's entirely possible to relocate if your local government becomes too obtrusive. A policy like this only "works" if you have a scale large enough that the majority of people opposed to the policy are nonetheless forced into it by virtue of finding it less awful than moving.
The burden of moving to a new country is high enough to deter it for all but the most egregious issues; the degree of bad policy required to motivate leaving a country is far higher than the degree of bad policy required to motivate leaving a city or even a state. As a result, the average person will likely find themselves far less aligned with the policies of their country than their city or state.
I guess the more important question is does it even make a difference no matter what you do. The rich will find some way to break down the system sooner or later. This seems exactly what happened in the last 30-40 years.
The answer doesn't seem to be financial, it's social. And maybe it will take an entire generation to suffer(somewhat comparable to the Greatest Generation) to truly appreciate being poor and disenfranchised.
> Are there even any estimates on how much money is lost due to tax evasion?
Googling also yields some results that ballpark in the same area.
Generally, any communal institution either develops rules and mechanisms to prevent freeloading, or has an authority who acts to prevent such. Almost all of them succumb to a "Tragedy of the Commons" dynamic in terms of some aspect of quality of life.
That said, there are some institutions that are identified as being communal that last and even prosper somehow.
Many also cite things like the Cabrini Green projects as an example of how removing the stake someone has in society by guaranteeing their rent/income is somehow inherently dehumanizing. To fully address such a hypothesis, one would have to control for factors such as social class and social stigma attached to such benefits.
Seasteading might be an answer to your question.
More important than an isolated case in a jar, what you need to care about is immigration: any Southern European nationalist will decry your policy as a potential tsunami from Africa. The lack of tension between the oil-money-infused Norway and its neighbours are striking when you compare that to Irak and Kuwait; at best, they associate the higher-priced-better-quality Statoil gas station with Norwegian snobism (I didn’t notice any snobism).
The significant economic success of Finland seems to favor the model. It helps that their chosen field of specialty, video games, is a complex, creative endeavour where success is fleeting and hard to reproduce, revenues are spectacularly unbalanced and business models a constant struggle. This means that most of the ‘idle’ youngsters are actually creating something: playing and learning what makes games cool, or starting their own fan-art, mods, league, reprise… the stepping stones of creativity.
Same thing in more Southern countries: it seems to cost roughly the same to pay someone to stay at home and grow their garden rather than to pay an industrial conglomerate to stay and keep on hiring them. Job insurance is regularly described as the largest Angel fund.
The closest to an MVP you’ll get might be a small state, say Iceland, that has something similar already. The real issue is not product, but interoperability: what happens when you have migrants, double-nationals, and is it safe to end up with a generation that grew up not knowing anyone who works at all?
You might consider a different form of it, with some voluntary civil service to teach basic skills (say, open to elderly and handicapped, substitutable with pregnancy or child-rearing) and make that life revenue a retirement from service, or stipend.
Late last year I was in Denmark, where ATMs are rare and plastic is king. I was reliably informed that the government didn't like people using cash and that as a business owner if you used more than a few thousand kroner per year you were audited. Furthermore, when you put in tax returns the government would cross-reference it routinely with your mobile phone location .. without a warrant.
The upshot is this: sure, you can have a nanny-state utopia, but it means totalitarianism.
Sounds tight, but Denmark has a history of corporate corruption in the 70-80s they are trying to curb.
More importantly, not sure how that is related to individual benefits; on the contrary: seems like they are focusing on tax dodging.
Actually, it couldn't, except maybe for a small population. The trick is convincing a local government with major poverty issues to take a risk it probably doesn't think it can afford.
some scandinavian countries are close to this, in some respects. some oil countries too
some native peoples, within nations, also (tho other issues complicate it)
https://en.wikipedia.org/wiki/Mincome in Canada
http://www.socialjustice.ie/content/basic-income-schemes-28-... report on all kinds of experiments in Africa