This is not a meaningless distinction -- one of the features of UBI is that it is universal. If this just goes to unemployed people we cannot see the change in behavior with people who are earning close to their reservation wage. Do they stop working?
This is streamlined rebranded welfare. Not a paradigm shift.
- Anyone except previous winners can enter.
- You can only enter once per drawing.
- As the pool increases the payout does not, only the number of winners.
- Winners get a basic income for life.
- As another condition they agree to an amount of monitoring so that we can effectively study how they behave with the basic income.
- This one would be hard, but you might have to be made ineligible for other government assistance programs maybe?
State lotteries already offer annuity payouts and even better they sometimes have 100k for life lotteries. These aren't perfect as the amount is too high but it's worth studying anyway. The basic income lottery described above would be an even better approximation.
EDIT: I just did a bit of googling and it looks like this has been tried before [1][2] , but the amounts were time-limited and low. It would probably have to be state-sponsored to take off.
[1] http://www.businessinsider.com/germany-basic-income-lottery-... [2] https://www.indiegogo.com/projects/the-my-basic-income-proje...
Aside from that, I really like your idea. Given the number of people who want to see a UBI, this might be one celebrity endorsement away from getting crowdfunded.
These kinds of economic lotteries only create more inequality; which is against the whole point of UBI.
It makes more sense to start by giving out a really low UBI to EVERYONE and then gradually raise that amount over time.
Now, my parents run a company which mostly has physical workers - and for a physical worker, in the "poorer" part of the country, 1500PLN/per month(after taxes) is an ok salary.
The day the 500+ program started, several employees left, literally saying that they have 3-4 children, so by just getting the money from the government they will be better off than working and they don't need a job anymore. They are all jobless and living off 500+ as far as I know.
I would say that's a pretty good indication what will happen with UBI - I'm sure there's loads of people who wouldn't leave their jobs because they like having more money(me included) but for a lot of people if free money is enough to get by then that's what they are going to live on.
So not really sure what we can learn from that. Perhaps salaries are simply too low in Poland?
Yeah, yeah... I know that kind of story.
This isn't the complete picture. You are presenting anecdotal evidence, and omitting important details. Some important details you are ommiting:
1A) For the job you provide, is the QoL of the work low compared to the wage and potential health hazard(s)? This seems to be the easiest counterpoint to your entire argument. You also lack statistical relevance. 1B) You omit the question wether those workers were easily replaced. If yes, what type of income & benefits did those people receive? If no, why not?
Aside from that one:
2) Which other social benefits exist in Poland?
3) Are these affected by child support benefits?
4) How exactly do the various tax systems work in Poland?
5) Are/were they performing unreported work?
> I would say that's a pretty good indication what will happen with UBI - I'm sure there's loads of people who wouldn't leave their jobs because they like having more money(me included) but for a lot of people if free money is enough to get by then that's what they are going to live on.
Do you have children yourself? Children are a huge joy, but also a huge burden. It is a living hell to both work, and also have children. What some people with good wage do is work full time, both, and have child caretaker(s). Those are going to be employed.
There's also the problem that unskilled work in the West is in decline. I don't know if that is true for Poland though.
And there is the notion that you either work full time, or you don't work at all. Why these extremes? With 3-4 children you are overburdened by them, and it'd be an option for one of the parents to not work full time.
The interesting question is what would happen if it was for everyone and not just those with children. Do you think this would be a bad thing?
Looks like this isn't quite correct:
"The new, universal child-raising benefit of PLN 500 (EUR 114) monthly is granted for every second child under 18, and for the first child if the family income is below PLN 800 (EUR 182) per capita per month (PLN 1,200/EUR 273 in the case of child disability)."[0]
[0] http://ec.europa.eu/social/BlobServlet?docId=16077&langId=en [PDF]
There may be other issues baked into the implementation, but it will be hard to say the result until it goes into action and we start getting data
I think it's worth celebrating that Iceland is doing controlled tests to explore this way. To really understand the best design for UBI, we need more of this.
"It will give them benefits automatically, absent bureaucratic hassle and minus penalties for amassing extra income."
even though the taxes from that is exactly what would make the whole program absolutely free - and is the basic point behind a UBI. It really is "free" for the country.
A proper test of UBI has to make it available to everyone.
Advocate for the Unconditional Universal Basic Income. All citizens deserve an equal allotment of the benefits, especially because no nation's populace is ever 100% mobilized as workforce.
But a detail: it will not be 'streamlined'. Those government workers are not going anywhere.
It's worth an experiment, though.
Don't give them the money just for two years, but guarantee them the money over their whole life and you will see vastly different results.
Another "problem" with this kind of study is that they are giving money only to unemployed people. Because it would be also interesting to see what people with jobs would do. I suspect a lot of people would switch from full-time to part-time jobs (at least that's what I would do).
Since people born into wealth are "guaranteed money over their whole life", can't we study what they do with their life compared to what people who are not born into money do with their life? How or how not would this kind of study produce meaningful, legitimate results?
Another "problem" with this kind of study is that they are giving money only to unemployed people. Because it would be also interesting to see what people with jobs would do. I suspect a lot of people would switch from full-time to part-time jobs (at least that's what I would do).
There is some aspect of this kind of experiment/study to find out how individuals would perform if they didn't have the guaranteed income in the past but then suddenly do, but that's only meaningful for the transitional generation. If UBI were truly universal, it would need to be multi-generational. And how would those born with it, never having known anything else, treat/understand work? There's no such thing as "switching from a full-time to part-time jobs" in this context, or at least the impact and meaning of doing so is different than those who have a concept of what not having the guaranteed income means.
The time limit may, to an unrealistic degree, encourage the subjects to look for solutions for the long term. Then again the question of whether UBI encourages laziness seems to be out of scope already, since this targets only people who are already unemployed.
A proper study would be permanent and self-contained. Participants would need to give a portion of outside income to the program to simulate higher taxes and/or inflation.
Prior to UBI, the lowest possible income is zero. After UBI, the lowest income is X. The poorest people in the nation will have an income of X, so X becomes the new relative zero, the new baseline. Prices of everything (food, housing, whatever) will reset relative to X. So uni will become worthless shortly after it's introduced.... but only if it is truly universal.
Someone feel free to tell me if I'm missing something.
I am concerned about housing though. In some places, the supply is extremely inelastic, limiting competition, and the demand is also inelastic due to the difficulty of moving. Although UBI could make moving to a cheaper area easier.
Incidentally, I'm not declaring a belief in either means-tested benefits nor UBI, just exploring the territory.
If it is redistributed, then taxes seem an obvious method. And clearly the richer should be taxed more, since we're attempting redistribution.
Unfortunately we all know that trickle-down economics fail, and corporate/elite lobbyists work hard to restrain corporate/elite taxes, to keep worker wages low, and to engage in practices such as zero-hours contacts.... and so on.
So... introducing new money risks inflation. Redistributing money risks perpetuating the existing broken system.
I don't know enough to advocate for or against basic income, but I'm pretty sure that it doesn't amount to a no-op. Whether it's done through printing money or taxation, it ends up redistributing wealth from wealthier people to poorer people.
In the case of printing money, the resulting inflation would cause everyone's money to be worth less: rich people, having more money, would end up losing more. In the case of taxation, the redistribution is more direct.
It is assumed that someone without a job will still get some money in the form of unemployment benefits, so their buying power won't be $0. Therefore, your premise is wrong.
Consider in these terms. % of economy going to the bottom may raise from say A% to B% but it's that does not push inflation. Because X% of the population has slightly less money to pay for the wealth transfer ~B-A.
Poor people get 1000% more money rich people get 1% more.
Or a poor persons income goes from 1% of a rich persons to 2%
Worst. Idea. Ever.
I know -- it's a common feature of income support systems, including here in the US.
I don't know whether UBI is going to prove workable or not. But even if it doesn't, if we could just redesign the systems we do have so they never give recipients a disincentive to work more, that would be a huge, huge improvement.
It's already a problem that the benefits are such that net income from an actual job may be negative. But even with that, people might take a temporary job to get the experience. But they cannot afford it, because getting a job cuts the benefit payment instantly, and they can't afford to wait the time that it takes the bureaucracy to resume payments.
https://web.archive.org/web/20160321083817/http://mattbrueni...
What I care about is that the function from income earned to income (including subsidy) received be monotonic. Again, the income tax system (at least in the US) is carefully designed to have this property: when you make enough more money to move into a higher tax bracket, that higher rate is applied only to the amount of your income in excess of the lower bound at which that bracket applies. So the total amount of tax never jumps discontinuously, even though the marginal rate increases. Even though you keep less of your next dollar of earnings the more you make, there's never a point at which earning the next dollar will leave you with less money after tax.
The same should be true even if you're receiving a subsidy. That's all I'm saying.
Way to go towards helping people help themselves, encouraging middle class values, responsibility, yadda yadda, all the usual stuff Republicans blather about but don't actually care about.
Negative income tax (more emphasis) + basic income (less emphasis) would be a better system. A negative income tax would encourage people to work. Basic income by itself may just remove some barriers to working but may not result in a change (basic income > costs).
If you were to further lower the costs of labour, you risk stymieing actual economic growth which comes from improvements in efficiency. For instance, why use a machine when you can just hire more people?
Also what would the effect on monetary policy be? If this was funded though an income tax, would the lower savings rates of the poor, put more money in circulation, thus increasing inflation? Could you account for the change in prices driven by an increase in demand from those who's labour isn't actually valuable enough to sustain their consumption.
I don't claim to have the answers to welfare, but I really think that we should aim for a solution that provides as little market distortion as possible. I sincerely think that a negative tax would be a huge unwelcome and ineffective distortion in the labour market.
However, there would likely be implementation differences in practice as a consequence of their framing.
You need to understand how people react to the idea of "not doing anything and still get paid".
Do they give up? Do they get depressed? Do they create things? Does entrepreneurship increase? Violence rate?... These are all interesting questions
That's not what UBI is about at all. UBI is about getting paid no matter what you do. Which could be doing nothing. Or it could be studying or practicing or learning a new career or even working. The fact that UBI doesn't disincentivize spending ones time in a certain way (whether that's economically productive or not) is hugely important.
This is an aspect of where there's a huge misunderstanding about UBI due to competing economic theories. There are some people, a lot of people, who believe very strongly that the economy is fundamentally coercive. And, more so, that coercive economies are natural, beneficial, and overall desirable. A lot of that thinking has certainly been baked in to a lot of conventional wisdom, culture, laws, and regulation in the economy of western countries for centuries. There are other people who believe that the economy is or at least can be fundamentally cooperative, and more importantly that a cooperative economy is more beneficial and desirable and no less natural than a coercive economy. And this is where UBI comes in, because UBI is essentially how you bootstrap a more cooperative economy. One where people work not because they are coerced to participate in toil due to the alternative being starvation and privation but instead because they enjoy the work or are fairly compensated for it and treated well.
I think this is a huge factor that isn't getting enough focus. When people's jobs are replaced by automation and they are on UBI, how do they achieve self-worth? A lot of people get their self-worth from their work, even if their job is monotonous and relatively low-skill. We may be able to replace a low-skilled worker's wages with UBI, but we can't replace their feeling of self-worth. Not everyone can become an artist and even if they could, that may not be enough to give them a sense of purpose. In the long run, this may be a much bigger question than whether or not we implement UBI.
As long as it's within the law, on paper. If you're taking undocumented work then you're also taking a risk where you might lose your benefits if found out.
I think maybe there is a larger chance for undocumented work in countries like the US. I have an impression that there is a more prevalent culture of cash-in-hand jobs due to the sheer size of the country.
So maybe you react more to the quote than I would because I've always had documented work, whether it was 25%, 50% or 80% it was always documented and known to the government what I was doing so I could always apply for the necessary benefits I was eligible for.
Since I was looking for an advancement in my career (I left the company on good terms and my former boss ended up being one of my references) and not desperately looking for anything that pays, I ended up doing a lot of volunteer work while focused on increasing my skill set a bit and looking for the right opportunity. But I could have just as easily spent that time sitting on my ass.
Sure, some people who are not employed may be raising children or volunteering or doing something else beneficial to society,and encouraging them to work instead would be society's loss. But if we trust in the market economy, those people don't exist, and our real loss is people who are unproductive while on welfare who would be productive given a minimum wage job.
What motivates people to work is MASTERY, AUTONOMY and PURPOSE. This is very different from the profit motive, and is why people contribute to open source and science.
https://m.youtube.com/watch?v=u6XAPnuFjJc
And anyway, why in the 21st century does everyone need to work? Why should wages be the primary mechanism by which living wages trickle down to the plebes?
McDonalds will soon cut its workforce. So will Uber. Thanks to automation.
If you are jealous that someone somewhere is receiving free stuff, realize how much free stuff you have just by being alive in the 21st century!
If you are upset that you'd be taxed for the free stuff -- then make sure that we develop systems to tax machines. Yes you heard me, start taxing the machines.
If people were more free to choose what to do with their time, they'd probably spend more time with their family and study more and contribute more knowledge to society. Instead of working a dead-end job at McDonalds.
If you want to read more about the economics of this, I wrote an article:
The thing you are referring to is called taxes. The more money you make the more taxes you pay and there comes a point that you're paying more in taxes than the amount of the basic income.
Phase outs are a pure scam. Their purpose is to conceal imposing higher marginal rates on low and middle income people so that higher income people can pay lower rates.
That is, if you make below a certain amount, the government gives you money until your income reaches some base level.
The problem with this particular restriction is jobs that don't pay sufficiently, have wildly varying hours or are pretend part-time to stay under some benefits threshold. The solution can not be subsidize exploitative employers who don't provide a livable wage through UB. These jobs are a net cost to society and plain should not exist.
1. Anyone I know that has received benefits for being unemployed desperately wants to be employed again.
2. In the UK, unless things have changed, you can work up to 16 hours per week while receiving unemployment benefits and I believe the benefits you receive gradually falls with the amount of work you get paid for.
3. If you suddenly lose your job benefits aren't built so that you can maintain your current life style. You likely have car, insurance, and mortgage payments to make and the benefits you're receiving either just get you by or you have to renegotiate some of that debt. Not a situation you want to be in long-term.
How wide is your social network (by this I mean people you actually know and see)? How diverse is it? My experience, living in the Rust Belt in the US, just north of Appalachia, is that many people are more than happy to live on the dole for as long as possible. I chalk some of this up to laziness, and some of it up to the lack of reasonable work.
3. If you suddenly lose your job benefits aren't built so that you can maintain your current life style. You likely have car, insurance, and mortgage payments to make and the benefits you're receiving either just get you by or you have to renegotiate some of that debt. Not a situation you want to be in long-term.
Again, my sense is that your observations are true for some given demographic, but are probably not entirely accurate for people who are truly living at or near the poverty line. Those people may have been working, even steadily, but they probably didn't have a home, and may not have even owned a car.
You are right, of course, that if I lost my job (as a software developer), I'd be okay for three to four months without benefits, but it would be hard to maintain a home and a vehicle after that. That likely goes for many on HN. But we generally aren't the demographic best served by unemployment benefits.
This bug/feature in the welfare system is actually a major motivation behind the UK government's long beleaguered universal credit system, which is meant to support this kind of part-time work. The idea being that a worker should never ever be penalised by the benefits system for working, but should always earn significantly more in work than out of work and working more hours should always result in a net increase in income.
They are trying to do this by unifying almost all benefits (unemployment, disability, housing, child benefits, etc...) under a single administrative umbrella, and then only reduce the net benefit by £0.66 for each £1 earned through work. Its been delayed significantly because it requires a major IT overhaul, and that project has so far been a £1-2 billion black-hole of incompetence by a series of IT consultancies that have all failed to deliver the system needed to merge all these complicated means tested processes together.
Can't recall the specifics but they were not stupid people and I believe they'd done the math correctly.
My father makes so much money that when he's unemployed he actually doesn't really look for a job that urgently. This is because his unemployment benefits are enough for him to pay the bills. He'd like to make money to retire... but he does rest for a few months in between jobs.
The counter-argument of course is that you shouldn't have children if you can't afford to raise them, but the disincentives are there, and as crazy as it sounds people are incentivised to have a lot of children as a method of escaping work.
(Optional sad Futurama parody being: https://en.wikipedia.org/wiki/The_Cyber_House_Rules)
It should never be more beneficial for someone to sit at home than to go out and earn a living.
All the more reason not to discourage them by having them come out financially worse for doing so.
This is modern day slavery. There is nothing universal about this. It if was universal income than you must get that money irrespective of what choices you make in life. Just because you are getting money from government, government puts up a chain around your neck and says you cant work.
In USA such people might turn to underground economy such as drug peddling.
That last part is huge. A disincentive to work by cancelling benefits is a feature of nearly every current system. It is extremely important that someone test a system without this in it to see how a people react.
This looks like a very important test for the viability of UBI.
One example we can look at are university students in Finland. They get 340€ per month student benefit plus €200 student rent support, a total of 540€ per month.
This student benefit is not decreased as long as a student earns less than 1000€ per month from other income. And yes, the students are quite eager to take part-time and short-term jobs.
For me I was bumping on the limits while on receiving student benefit, so it made no sense for me to work any more hours than I did. Had I worked any more, the pay would have been effectively zero, which is crazy in my opinion.
edit: i misunderstood your comment, seems like your interpretation lines up with mine.
The problem is - Government Unions are the most powerful in every state, and they will never, ever allow any significant layoff of personnel.
So you get a 'new program' without the most important stated benefit.
The reality of government, is that it is systematically inefficient because of entrenched labour practices - no just because they 'may not be good and doing some thing'.
I love public transport.
In Toronto - we still have people at every station selling tickets and making change. 17 of them were on the 'sunshine' list last year as earning over $100K in the year. You read that right: the guys in the booth making over $100K. Granted, this is with 'overtime', but probably not more than many people in the private sector work.
So the government can't help put pay many of it's entities wages that are quite above normal, with massive add-ons and incentives.
Given that small tidbit - can you fathom why it's so gosh-darn expensive to add public transit services???
There are a few other fairly fundamental problems with the program as well, first being simply the cost (Ontario government that is 'pro' program said it would cost $175 Billion a year, basically our whole budget) - and then the moral/incentive issue: where I live in Montreal everybody is an 'artist' 'photographer' 'cinematographer' 'choreographer' 'dancer' 'writer'. But they all work in coffee shops and restaurants. Montreal would go bankrupt instantly because the 'cinematographer' that makes my latte in the morning will quit instantly. In my community - there is absolutely no sense of 'industriousness' in the Anglo sense - they see no problem with fussing about making quite bad films that nobody wants to watch. Were there some latent amazing output I might think it's a good tradeoff, but no, they're seasoned amateurs.
In a rational and sensible society ... this program would be amazing. But then, in a rational and sensible society, there would be very low unemployment, and streamlined government so that the 'means testing' issue would be moot.
It might work in some specific places.
The idea of BI is that you won't be able to live off it in Montreal. It might be sufficient to live off in some small remote town, but not in megapolis. They'll have to still wait tables, or move from Montreal.
This is a pointless discussion. Just give everyone enough food, shelter, and free access to medicine. It'll create a society where we don't stress over losing a job because we don't know how we're going to get our food tomorrow.
The reason that some people think this "disincentiveces" people to work is that they'd have to pay higher wages and wouldn't be able to exploit human beings, as all capitalist systems do. That's it. That's their whole argument. The rest is just dressing it up with empty moral questions about "giving away the fish instead of teaching how to fish".
For instance, food: Handing people a government decided food basket will not optimize for what people want to eat, or know how to prepare. Give them enough money to feed themselves, and we spend the same amount and we have happier people and less distortions. Same thing with shelter: Money means that we let people make their own choices, instead of recreating a new version of the projects. The one place where the market tends to fail is medicine, but that's because people's preferences there are a lot less valuable, as all people really want is someone to help them get healthy when they are sick. And even then, there are cases where giving people choices is better: The US' end of life care is so expensive and so dismal in part because what is covered and what isn't is decided by third parties: Often people prefer to end their life comfortably than to do many of the uncomfortable, but somewhat life extending things that we do to them.
That's the ultimate argument for money: Maximizing people's choices in how to go around getting the basic necessities of life. The trick is that the amount of money we give people would have to be modified to make sure said necessities can be met.
The moment someone stops producing, he is a burden. He must be carried on by someones else production. The government does not produce anything. The moment he starts handing over cash to people who do not produce, he is transferring the production of someone who works hard to someone who does not.
You want to help those people? Pay them to study, get some skills. Pay then to clean the streets or the public bathrooms.
But for God sake, do not pay them to do nothing. It's unfair with the rest of those who actually work really hard for this handed cash.
They're that way because the only jobs they can get are jobs that will have them work all day long for a pay that won't even cover their basic needs.
Human exploitation in several forms is all too real and happening right next to each one of us, and almost no one seems to recognize it.
Do you want to give them jobs? Fine. But don't provide minimum wage that will make them have to work 70 hours a week just to make ends meet, and want to kill themselves afterwards.
I'm not against basic income, but there absolutely is risk to society.
Notable source: https://theguardian.com/business/2016/jan/18/richest-62-bill...
We are wringing our hands over the perceived threat of "lazy" people when the cure for this alleged disease causes so much misery for so many people already. It's not a fear founded on empirical evidence.
There, you just solved the problem. Put money into creating this structure and it'll sustain itself.
I'm not trying to convince you that their worldview is better. But if you're talking about state-wide things, you have to take those people in consideration, too.
Do we need force to do this? Do we need cronyism? Do we need corruption?
The state can be efficient too, regardless of it being a monopoly. It just needs the same thing an efficient company does: overseers and the right push to be efficient (a.k.a. an informed and well educated population that knows when they're being scammed and demands better services for their taxes)
>> Now, the Finnish government is exploring how to change that calculus, initiating an experiment in a form of social welfare: universal basic income. Early next year, the government plans to randomly select roughly 2,000 unemployed people — from white-collar coders to blue-collar construction workers. It will give them benefits automatically, absent bureaucratic hassle and minus penalties for amassing extra income.
>> The government is eager to see what happens next. Will more people pursue jobs or start businesses? How many will stop working and squander their money on vodka? Will those liberated from the time-sucking entanglements of the unemployment system use their freedom to gain education, setting themselves up for promising new careers? These areas of inquiry extend beyond economic policy, into the realm of human nature.
Basically, no one knows how humans/societies will react to such a hand-out, and this is trying to figure out if an eventual universal income will be effective.
Also, this quote from later in the article:
>> Mr. Saloranta has his eyes on a former Nokia employee who is masterly at developing prototypes. He only needs him part time. He could pay 2,000 euros a month (about $2,090). Yet this potential hire is bringing home more than that via his unemployment benefits.
>> “It’s more profitable for him to just wait at home for some ideal job,” Mr. Saloranta complains.
>> Basic income would fix this, he says: “It would activate many more unemployed people.”
The "universal" quality is that all people will be eligible for UBI. Everyone will receive the difference between what they make and what UBI guarantees.
It's sort of like the popular phrase in the U.S. - "everyone is guaranteed the same opportunity but not the same outcome". Thus, while all will have access to UBI, the payout will be determined by individual circumstances.
Regarding Finland's program, it's likely they had to choose a group of individuals who were easiest to justify paying UBI under current popular-thought. Therefore, they chose a group already receiving or eligible for unemployment/assistance and argued they were simply replacing one for the other. That is of course just an educated guess on my part.
So, yes, UBI itself is in fact universal although the initial rollout, or test, is highly compartmentalized.
Edit: As someone pointed out, I'm probably confusing UBI with GMI - Guaranteed Minimum Income.
It's starting to feel like we're discussing rules on laying a foundation while others are already fast at work on their fourth and fifth floor, i/e, what's the point of giving everyone a ladder if the roof is consistently growing out of reach?
This isn't UBI either.
UBI would simply give everyone the same income without subtracting the difference for extra earned income. You could earn millions and still receive your basic income.
Starting with numbers: about 204M working age population in the US - hence the USD10K to each of them example would just make somewhere what is spend yearly for military and banks - the 8 times numbers cited in the article of what is spent today does not make any sense.
The linked article does not mention any amounts that Finland wants to provide to the 2k people - instead it is referring to Swiss calculations - last numbers I've heard with Finland were on par with current social security / poverty level pays (~EUR600 p/m) - this of course does not enable most of the key effects intended with an UBI (money into spending, freedom of choice for work etc) - it only continues the current system (with some potential savings within the administration).
To get a better understanding we have to at least repeat the Canadian experiments from the 1920s (proven that it is substantially beneficiary for the economy overall) - more money than poverty level, people must gain freedom by the possibility to live.
Given that soon a large proportion of people will not have a chance to find a job that will allow them to survive, we either go back to lords and serfs or actually look into potentially sustainable solutions.
For most of history, governments addressed unemployment by starting wars. By shipping off to war, the unemployed temporarily get a job. They either come back dead or ready to take a new job in an economy revitalized by the stimulus of government war spending.
John Maynard Keynes noticed this pattern, especially during the Great Depression and WW2, and made a brilliant suggestion: continue with these government interventions, but keep the government spending and drop the war part. We call it "Keynesian economics", but really, what Keynes invented was capitalist peace. And guess what, since then, no two countries that both had McDonald's had fought a war against each other since each got its McDonald's. [1]
We need a Keynesian boost today, not because of technological progress, but rather the contrary: the rapid technological progress of the 20th century that brought tremendous economic prosperity to humanity has finally come to a grinding halt. Let's stop denying this. The stream of lifechanging breakthrough inventions of the 20th century, from A (antibiotics) to Z (zippers), have ended. As a result, we now suffer from secular stagnation, something Keynes understood very well back then, and Larry Summers understands in the present. [2]
It's especially absurd to claim that automation is the cause of this. Automation has already upended society: it was called the Industrial Revolution and happened 200 years ago. The upheaval caused then to human lives and employment was far more dramatic than anything happening today.
And basic income is simply the most fair way to apply Keynesian policy. It is more fair to split the money up and distribute it equally to every individual than it is for the government to buy things on their behalf. Highly distributed spending will also avoid creating market distortions and liquidity traps. [3] And the resulting economic boost will lead to increased tax revenues and, who knows, maybe more jobs -- this time not subject to labor market distortions caused by people being desperate for work.
[1] https://en.wikipedia.org/wiki/The_Lexus_and_the_Olive_Tree [2] http://larrysummers.com/2016/02/17/the-age-of-secular-stagna... [3] https://en.wikipedia.org/wiki/Liquidity_trap
It ignores where the resources come from and the jobs being performed in other parts of the global economy that must be cut, often in some other country, because the resources are being used for something else.
If a country is going into debt to stimulate, its pulling resources from other countries where jobs have to decline. But perhaps those declines are more spread out and harder to measure and understand. So we can make the mistake of thinking they don't happen.
But what if a country stimulates by printing money, not borrowing? Money is only a medium of exchange, not an actual resource. Creating more of it just means more it has to be used to get the same result, if you look at what really happens over time, as opposed to comparing prices the day before you print with prices the day after.
For this, you should read Paul Krugman's babysitting co-op analogy, a basic description of how an economic depression functions: https://en.wikipedia.org/wiki/Capitol_Hill_Babysitting_Co-op
Finland is going to selecting 2,000 unemployed individuals, at random, and offering them cash without strings. Current unemployment schemes, they believe, hold back individuals from finding part time work / any work because the benefits outweigh the job opportunities. They hope that this new scheme promotes people to take work and have an adequate safety net to prevent homelessness and hunger.
If you just pay everyone X amount of money every month for whatever, it just means that in order to produce something you'll need to pay someone a lot more than that X amount in order to work and produce it and also it means that that item is gonna increase massively in cost in order to pay the items production itself.
I am highly against that idea.
You want to solve issues? Give free food/water and shelter for survival, thats all a human needs. It doesn't need to be a food from a chef or Evian water or a house with even an internet connection. All it needs is just to provide some safety that that person is not going to die of starvation or weather. Other than that if you want to have a better have and lifestyle well you have to work for it.
It is a try to save capitalism from itself. You see, today's tech is turning entire sectors obsolete (e.g. self-driving cars). In a standard capitalistic economy, you work at XCorp who pays you (the employee) in order to be able to buy their products. This model worked in the 20th century where industries (e.g. Ford) had thousands or even millions of workers all over the place. Now we have 5-member companies running startups with millions in turnover.
Today average Joe has a very hard time finding a job that will allow him to create a family and live well and no, not everyone can become an engineer, lawyer, doctor or banker.
So, we either find a way to re-distribute wealth or we're up for a bumpy ride that will end bad for everyone...
Universal income is an idea that is making rounds and is generally accepted by modern economists (left, right and liberals) in various forms of course. The idea is that someone with rather basic needs, will spend all his income in food, shelter, clothes, etc. So, since it's nearly impossible for them to find job, just give them money to spend buying stuff, even iPhones if possible...
I believe that we're in a phase of uber-consumerism. To sustain this kind of unnatural growth, capitalism needs to find virtual ways of creating demand or we need to start exporting to mars.
it's not gonna have much effect if only a few thousands people are paid (who may already get unemployment benefits by the way).
Inflation is generalized increases in prices.
I really dont understand why people make the argument that UBI would cause inflation due to demand: it would shift prices of many products (because increased demand in basic cheap goods) but probably marginally so and even then it would not affect inflation rates as a whole. High luxury cars are not going to have more demand.
> If you just pay everyone X amount of money every month for whatever, it just means that in order to produce something you'll need to pay someone a lot more than that X amount in order to work and produce it and also it means that that item is gonna increase massively in cost in order to pay the items production itself.
Outlandish claim! We dont know how its going to happen. Its not true that you have to pay more, actually you could argue you will have to pay less, as UBI supplements the income: i.e. someone that wants to make 1500U$S a month, and with UBI gets 500, might be satisfied with an easy 1000U$S job.
True, the jobs that nobody wants to do will probably have a higher premium: it gives higher leverage to every human being as they can choose not to work a bad job like garbage disposal, or cleaning up road kill. So some labor is subject to decreased supply,and others of increased demand. Its impossible to know what would happen without experimentation.
> You want to solve issues? Give free food/water and shelter for survival, thats all a human needs.
This is the exact opposite point of whats truly attractive about UBI. Free food and shelter is very expensive to give through the state ,and much cheaper to just hand out money!
For example, SF spent 241 million dollars in homeless programs in a year[1]. There are about 6,500 homeless people in SF[2]. Alternatively, the city could have given them 37k U$S cash and come out ahead, effectively putting them above the median income in the US[3]
In theory, the city could literally make the homeless people disappear overnight at no extra-expenditure.
http://www.sfchronicle.com/bayarea/article/S-F-spends-record...
http://projects.sfchronicle.com/sf-homeless/numbers/ [2]
https://en.wikipedia.org/wiki/Personal_income_in_the_United_... [3]
At some point it becomes worth automating the work and that means no rising pay and fewer humans having to do jobs they dislike.
There are plenty of entrepreneurs requiring people of various backgrounds, but these are generally unpaid positions. I am currently writing a web-app for a charity, and have just launched a customised wordpress site for a new business. These are of course unpaid, and like the article states, it's not worth the risk of starting my own business (being a freelancer for example) as it would mean coming off benefits completely and hoping you'll make enough to pay for everything you need to pay for. UBA would suit me great. I could become that freelancer instantly, and with no fear. That company, who's website I just launched wanted to pay me, but legally it was impossible due to the reason I just mentioned (freelancing).
I'm also currently writing a language learning app, a mashup of my favourite features of DuoLingo and Memrise in my free time. Perhaps monetising that in some way may lead me out of this stagnation.
It's by no means a perfect test of UBI, but "re-branded welfare" isn't really fair either.
1) for the immediately unemployed that have had a history of paying tax, give them generous payment coverage between jobs for a 3-6 month window type thing. Something like 60% of their pay.
2) after said time window, if no unemployment is found you are given guaranteed 30 hours (or whatever is right) work at minimum wage in areas that are as non competing the the economy as possible. E.g. Beautifying the city or helping seniors etc.
3) if you refuse to take minimum wage work you can get a set amount of food and basic accomodation to keep you from beng homeless/starving.
From point 2, as automation becomes more prevalent and effective the number of hours worked can be reduced to match this progress.
Now I'm all for spending money on the commons in ways the private sector is too petty to address, but do this for the results of the investment, not just for employment.
I'm more OK with adjusting UBI to cancel out fluctuations in infrastructure spending.
The government is eager to see what happens next. Will more people pursue jobs or start businesses? How many will stop working and squander their money on vodka? Will those liberated from the time-sucking entanglements of the unemployment system use their freedom to gain education, setting themselves up for promising new careers? These areas of inquiry extend beyond economic policy, into the realm of human nature.
I am not a fan of the idea of universal basic income, but I would love to see the existing social safety net system get tweaked to be less retarded. I hope this experiment goes good places.
I think we're a long way off from total automation of most industries.
> universal
Doesn't sound very universal. One of the big factors that make it a good idea is that receiving the basic income shouldn't make you disincentivized from doing more and getting a job, etc. Otherwise, how is it different from existing welfare programs and such?
http://www.npr.org/sections/money/2013/10/25/240590433/what-...
Hiding behind the money illusion doesn't fool anybody for long.
https://medium.com/modern-money-matters/is-basic-income-basi...
Square cube law: https://en.wikipedia.org/wiki/Square-cube_law
[1]: Okay maybe not a very rich king but but you'd definitely be doing more than fine.
The problem is the people coming in: how do you stop high levels of immigration from people that would not be as productive as finnish people and hence would quickly become a drain on the state. The greatest single enemy of open immigration is welfare.
Voters in Switzerland recently rejected a basic-income scheme
Edit: This was too snarky but also the parent comment is such a bold claim with no evidence justifying it. Counterclaim: Canada and the US have done plenty to destroy the fabric of native societies since their inception. As an example, the residential school system of Canada[1] which ended in 1996. History is so forgettable isn't it?
[1] https://en.wikipedia.org/wiki/Canadian_Indian_residential_sc...
What has always been more appealing to me than UBI is just the idea of sustainable living... i.e. people own their own houses and there is no property tax and they have very cheap renewable energy sources and maybe cheap robots to grow food. making really cheap stuff to survive just seems like a better long term plan to deal with technology than giving money away. that just devalues money causes inflation.. makes prices higher. seems to me.
Anything except universal basic income. You want cigarettes / alcohol? do some work on the internet. Amazon mechanical turk.
I heard/read Swiss denied this proposal though, what a shame.
Oh, and this is the most positive non-opinion piece I've seen on UBI in a major publication, people! How's that?
Somebody's going to have to pay for this...
So it's not UBI, it's a test.
I hope this won't create material to make a case against basic income in future.
Remember Bio-Fuel? How progressive and wonderful it was suppose to be? Until it caused a global food shortage and suddenly none of the media ever talked about it again.
Large companies are getting larger. There are only a couple of choices in any category, and single companies own many different markets. When you combine that with UBI, you have the government handing you a check, and then you have a choice of a couple of companies to spend that money. The difference between this world and communism is almost nothing.
I have never heard of any group of people who were happy on government welfare. Whatever the supposed problem this is supposed to address, it is not a solution. People who are not working at all are not happy.
If I were to guess, I would say the real problems that need to be addressed are:
too many extremely large companies, often supported by laws they lobbied to create.
corrupt government that has no interest in its own country
population increases.
I mean, many of these people proposing UBI are living in countries where they are actively increasing the population. If you have an unemployment problem, why are you increasing the population?
- UBI's lack of criteria is supposed to remove distortions. The population is minimaly incentivized.
- Employers loose leverage with UBI; large companies are major employers.
- Everybody loves to hate on population size, but shrinking/aging populations are dangerous for the economy. It's a much more complex problem.