...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,...
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?
It's not about the immediate cost. It's about the fact that conditional social support creates poverty traps, by imposing the steepest marginal tax rates (sometimes exceeding 100%) on the poorest people in society.
Listen to this investigation into Disability benefits.[1] 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.
...conditional social support creates poverty traps, by imposing the steepest marginal tax rates (sometimes exceeding 100%) on the poorest people in society.
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).
Of course it has poverty traps. I live in the UK, where I get to see how the "workfare" programme creates poverty traps all the time.
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[1] 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.
I don't understand - how does a Basic Job prevent you from either going to school or taking part time work? No one is obligated to work a Basic Job. It's just what you do if you are unable to find anything better.
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.
> I don't understand - how does a Basic Job prevent you from either going to school or taking part time work? No one is obligated to work a Basic Job. It's just what you do if you are unable to find anything better.
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 -
...This would be an overhead of about 4.2%, compared to the effectively zero overhead which a Basic Income requires (all you need for BI is one-time-only verification of citizenship, and careful monitoring of when people die so that the payments stop. You don't need to employ millions of people to do that). So this would cost roughly $420M more than an equivalent Basic Income program, while simultaneously preventing 50M people from doing something more useful with their lives.
Going with your numbers, 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. And of course, $1T < $6T.
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.
But a Basic Income would have $0/hr worth of overhead
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 don't actually need all $6T, because most people will be paying taxes that equal or exceed what they receive from BI.
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.
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.
It's certainly true that BI will reduce incentives to work, 1) on paid projects, 2) first order, 3) amongst those who are not currently receiving assistance.
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 arguments for BI that I've read here on HN assert that this isn't a problem, because people who don't want to be working are a net drain on the systems in which they work, and/or they will be replaced by people who want to work a little bit but can't because they will lose disability.
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.
With BI it always is beneficial to work. 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.
So if anything BI incentives people to work even if only for once in a while.
All this shows is that BI doesn't entirely eliminate existing incentives to work. That's uncontroversial. It could still very well be that BI provides a disincentive relative to an identical system without BI.
No that is actually one of the major claims from opponents of BI and thus controversial. That it removes the incentive for someone to work.
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.
You think a major claim of BI opponents is that there is zero remaining incentive to work, as opposed to simply a substantially reduced incentive? Show me anyone (who understands that BI isn't lost when someone works) making that claim anywhere.
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.
"...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..."
Then please clarify, because it still reads like you were arguing past the post entirely.
You said:
"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."
You will cause entrepreneurs and job-creaters to leave the country. The U.S. isn't in a bubble. Why would someone making 6 or more figures want to be taxed 60%+ for their work?
Where's the calculation for how much it costs to give the $20K/person to the employed? Unless unemployment is above 96%, it will be more than the 4.2% overhead you hypothesize here.
Basic Job will likely leave you little time to train in an area where you could be more productive for society. Basic Pay is designed to provide you the time to do that. Sure there has to be a bit of trust that you're going to not just sit on your arse, but very few people actually want to do that (despite what a lot of people think), and it's psychologically healthy to want to make the most of your life.
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.
>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!
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.
So there has to be a requisite degree of suffering on the bottom-end to motivate the population to compete to better their station? Is that the society-scale version of "The beatings will continue until morale improves?"
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 lines are set by supply and demand. It's the reason why I got paid doing a STEM graduate degree, while someone in the arts or history would not.
"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.
>The lines are set by supply and demand. It's the reason why I got paid doing a STEM graduate degree, while someone in the arts or history would not.
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.
>"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."
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.
Funny, that $24k a year that allowed you to play drums (along side your graduate studies) is about in the range of what people generally propose for a basic income
But the reality is that we don't NEED everybody to work, or soon won't. The comforts of life will become a civil right. What then? Old Puritan work ethic becomes obsolete. Any thoughts on 'right behavior' in a post-work economy?
Close in America. Its rapidly becoming obvious that big business doesn't want/need even a fraction of the available workers. Folks resort to entropic work, where they sort out fad and fashion for one another while producing no useful product. A way to keep everybody busy in pursuit of the fantasy of 'full employment'.
Not. Even. Close. Call me when shelter, food, and water costs are so low that any able person can attain each for minimal work. The fact that electricians and construction workers are still in high demand and get paid 80k+ shows how far away we are.
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.
I don't think you understand how money works. Remove money, and people will trade items for items. Money is the intermediate unit of your effort and time. "We" motivate our workforce in a natural way by choosing how we trade our (effort and time) for items they have. The value of those items changes as supply and demand changes anyways. The reason "we" are not letting Iowa feed us is because we don't want to eat 3 meals of corn all day every day. How would you "motivate" them to? Force? Which single entity would decide all these things? You, our new overlord? Sorry, I'll take my chances with the current, awesome, system ^_^
That misses the point of the discussion again. People trade for things because of scarcity. This new 'post-scarcity' economy won't/can't/shouldn't work like that, at least for the necessities of life. The whole question is what to do when folks DONT trade for things.
> 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.
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.
Addition, it's too late to edit now, but reading back my comment, there should be scare quotes around the words "truly" and "true". I very clearly don't want to mean to imply I have the position to decide who is "truly deserving" or "truly disabled".
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.
Excellent! Give everyone a shovel. Half the people can dig the hole, the other half will fill it in again!
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.
Well, Basic Job is sort of by definition work that doesn't need doing. There's a fundamental conceptual problem with it:
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.
Basic Job is sort of by definition work that doesn't need doing.
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.
This raises a pretty interesting question. Suppose I apply for a Basic Job at your institution, where all the work is sort of worthwhile, but not worthwhile enough to happen unsubsidized. What job do you assign to me? How do you choose it? I assume you're not choosing the "most worthwhile" of the jobs, because how would you know?
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?
The basic income goes towards making sure the worthless jobs don't get done anyway. It's more like eliminating the minimum wage and then using the existing welfare state mechanisms to float everyone's consumption up to a floor of $20k / year as long as they have a job.
"Well, Basic Job is sort of by definition work that doesn't need doing."
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.
This has been done in the German Democratic Republic. They had a "right to work" article in their constitution that was basically fully implemented. Almost everyone who could work except for older pupils and university students had a job. In fact, not working despite being able to do so was an offence punishable with up to two years in prison.
Arguably the only good thing that came of this was that equal pay for men and women was also assured by their constitution.
Because it would be cheaper to use a machine to build the bridge, give the money you save to the people, and then let them add value to society in some other way.
But the economy doesn't want them, or is unable to utilize them under present conditions. Eating what you have in front of you is still more filling than waiting (or letting someone wait) for that next, bigger meal.
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.
He said "let them add value to society", not the economy. The two are not synonymous. If the economy is unable to make use of them under present conditions, then giving them a job is useless. Giving them a basic income lets them make non-economic contributions to society.
You're assuming the value of a person's time to themselves is zero. If it's positive, and if the economic value we're deriving from the make-work is less than it, then the make-work program is actually destroying value.
But the economy doesn't want them, or is unable to utilize them under present conditions.
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.
Sure. That other thing is self improvement, looking for normal employment and helping their family / community or whatever else they think is important. In other words it is a basic income for the unemployed...
Because people would rather pay a small fraction of their wages to buy a machine to do their job for them. And they should. Basic income basically allows that to happen - you're employer gets the extra profit from automating you away, but the money is taxed and given back.
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.
How do you decide the "50M who actually 'need' it" with vastly less overhead? There is a cost to run the IRS and determine (correctly) peoples income.
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..
You don't decide. The point of Basic Income is that it's unconditional and universal. If somebody can prove they're a citizen, they get the BI, no need to determine their income.
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:
As you can see, people making the mean income or less would make nothing at all. People making moderately more than the mean income would pay a little bit, but no more than they currently pay to support benefits programs. The only people paying a lot would be the people who could afford it.
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.
It's called "paying it forward". Assuming, of course, that some form of BI would be in place, you would have spent those 10 years in school supported by a BI. So paying those taxes, you're making sure that people just like you can afford to spend 10 years in school and become great and awesome too.
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.
"It looks like you are taking away someones first dollar earned?"
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.
I guess I don't understand what 'Net' is. Is it the cost of the government, so if I earn 20k on the open market, are given 20k and taxed 10k (I have 30k in my pocket, and the gov has spent 10k)?
Net here is the amount received by the individual in basic income, less the portion of their taxes going to pay for the basic income, assuming it is funded with a 50% flat tax. So yes, if you earn $20k, are given $20k, and are taxed (for the purposes of funding the BI) $10k, the net (direct) effect of the basic income program on your bottom line is $10k.
How do you decide the "50M who actually 'need' it" with vastly less overhead?
We already do this with income tax forms.
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..
That's what this is. It's very similar to Milton Friedman's negative income tax bracket.
Naturally you have to "raise taxes" (in a nominal sense) at the same time you add a basic income, so that the added income is cancelled out for middle-class and wealthy people, and the net amount of redistribution stays more or less constant.
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.
If it's really more efficient than the current system, it should be fundable from the existing entitlements. Just dismantle the programs, fire all the bureaucrats running them, and divert all these funds toward the basic income. If it requires another tax then it's not an alternative, it is an expansion of the welfare state.
Its like applying plaster to an uneven wall. The dents gets filled with plaster but the bumps stays at the same level!
Its much better than giving tax breaks since you need income to begin with.
> 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.
Second,
> 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[0].
[0] ("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.)
>>In this analogy, where is the plaster coming from? It can't just come from nowhere[0].
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.
> 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 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.)
"In 2013, the total Social Security expenditures were $1.3 trillion, 8.4% of the $16.3 trillion GNP (2013) and 37% of the Federal expenditures of $3.684 trillion" (Wikipedia). Medicare adds another half billion, rapidly increasing.
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.
To hit that $20k number, we'd need to increase taxes.
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.)
It costs more on a nominal basis but if implemented right nobody will have less money in their pocket even after taxes.
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.
In this Canadian experiment [1], initial results indicated some disincentives, but a lot of data was not analyzed, until many years later. Some of the surprising results include a reduction in medical costs.
Exactly how is it a plus? The goal isn't to make a nominal "unemployment" statistic go down; it's to create valuable things. Your comment makes me think "a receding tide lifts all boats".
People will create what they want to create. For some people growing a nice garden and working on cool stuff around their cheap house will mean more than creating something "more valuable" to society at large. Creation of value or productivity should not be the standard we measure societies by, but instead equity and happiness.
The market doesn't capture and represent all value created by labor. When I call a tow truck to jump start my car, that transaction is captured by the market, but when I call my friend with cables to do the same thing, it is not represented in the GDP. The same thing goes for a lot of "work" that is not done for compensation but adds a great deal of value to community. Basic income recognizes this fact that merely existing as part of a community you are providing some basic value even if you're not paid for that work. I think the critics are right that there are potential cultural problems around entitlement and an unwillingness to contribute in any form, but I'm more optimistic about human nature.
Aren't income taxes a logical fit here? You would still have graduated tax brackets, so you wouldn't have an enormous cliff once you started earning, but all tax brackets could be increased such that the middle class end up about the same, and the poor are better off. With the added efficiencies described by the parent comment, this should even be possible without reducing net income to those in the higher brackets, but it might be desirable to do that to some extent as well for greater redistribution.
You're assuming that the remaining $4trillion is lost. It's not. It goes to other people who will spend it on other things worth, in total, $4tril... even though some of them may need it less.
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.
I'm sure you didn't mean this, but let's be clear the 6T is not returned to the tax payer that stumped it. Since this isn't generated wealth, just redistributed, it's a cost to someone. Someone's getting 20k, and someone's paying for it. And some people are going to be paying a lot more than 20k, and some people won't be paying in anything.
What does "competitive" mean? Against what? More realistically, figure $20k to 15 million - much less trouble. A mere $0.3T :) But it'll go close to 100% to the Metric Formerly Known as M3 and dissipate.
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.
"Competitive" means "against alternate policy proposals". For example, Basic Job/Employer of last resort, or the current welfare state.
...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.
Agreed; sticky wages is also part of PSST, but the new thing is perceived fragility of potential hiring companies.
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.
Only about 200m people are over the age of 18 and 20k per person seems high. 200M at 10k per year is around 2 trillion. Seems doable if we are willing to scrap things like social security.
10k/year for 50m is 500b. Throw in 100% overhead and targeted welfare providing equivalent benefits is still half the price of BI.
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.)
It didn't say people on welfare get $20k/person. They don't get anywhere near that. That's how much the government spends to administrate giving them welfare (including managing means testing to prevent people from abusing it) as well as the welfare itself.
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.
The number of deserving people isn't small, it's large. It is very nearly everyone.
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.
That's not the cost of the program. The net cost of a BI is actually much lower than the net cost of the targeted program. The actual cost of the program is the expense of administration, how much resources are used by the government in running the program.
Exactly how does consumer spending increase if it's just redistribution? And assuming it does, why is that good? What about consumer savings being reduced due to less net income for the earners?
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).
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?