For example, water and parking spaces could be priced at their actual cost, rather than being subsidized. This would make the water market function properly and allocate it efficiently, and remove a bunch of car-related externalities.
Need public housing? Not if you set a high enough basic income level.
Street crime? Possibly quite reduced.
Massive corn subsidies? Who needs 'em?
And think of all the otherwise great ideas that we don't do because they'd effectively be regressive taxation. For example, congestion pricing. We could revisit all those ideas.
And what about when the children of would-have-been-poor households grow up with an actual ladder up? Think of the things they'll invent, the contributions they'll make to society.
I'm fine with this. Maybe I'm in the paying end of the deal, but since I believe health is a matter of luck, I'd like to be able to be in the receiving end (and not be left to die) in case I have bad luck.
Of course this could be an exception, but I'm sure there are a lot more exceptions not taken into consideration in the basic income discussion. IMHO, basic income doesn't solve the problem and introduces new ones.
If everyone's income were increased, might not prices for things like housing go up as well, so some people could still be priced out?
My understanding is that people are happier with change if they feel that they have some choice in how to respond to it. If they were provided with a Basic Income then they could decide how to live within their means, maybe by extended families and friends picking where to live together.
(Education and public housing aren't quite the same thing, I know, but I'd still want to see some active work to prevent the same outcome.)
The only real way to fix housing is to flood the market with fixed price dwellings.
Assuming 280M adults[1], $200 a month, per person, would be over 672 billion dollars a year if I did my math correctly. So you have to take that cost and figure out how much crime and welfare expense would be removed from the system.
I think most politicians assume that no entitlement program is ever successfully removed from the system so they would just add it on to the annual budget in full. So it makes it a hard pill to swallow. The Department of Health and Human Services is only $961B [2] and a big chunk of that is the institutes of health, the FDA, etc.
That said, I tend to agree that if you set the amount high enough that it can drive a services market at the BI level then you convert an inefficent fiat economy into a more efficient market economy for basic human services.
[1] http://quickfacts.census.gov/qfd/states/00000.html
[2] http://www.hhs.gov/about/budget/budget-in-brief/index.html
Prime example here is Medicare - it has an (albeit limited) ability to dictate the prices to participating providers due to its size. Remove the program, and everyone is left out to negotiate with their medical provider on a case-by-case basis, and we already know how well that worked out in practice (googlable via "runaway healthcare costs").
Why do you think giving some people free money that do not get it now would not result in some of them becoming idle?
There is evidence as payments increase the idle increase. For example, I think the OECD has data showing there are more people on disability by a wide margin across countries, and this correlates with the benefits the various countries offer. Do you really think there are naturally more disabled people in the UK than the US, or that because they offer better support more people are inclined to try and get it?
>if I wanted to spend a couple of weeks cleaning up my local beach of garbage I should be free to do so - the benefit to society is obviously large but the effort might just be me or a small group of similar minded folks
Obviously large to whom? Why does this group or person not already pay someone to clean the beach? Apparently the value is so low that people spend their money on things they want, instead of hiring you to clean the beach.
What you're arguing is that people will produce things of lesser value to society, but of some value to their own belief set, things of such low value overall that no one will pay for it. This results in a lower amount of goods and services, which ultimately results in society getting poorer, not richer.
We have many programs: HUD (to help pay rent), Food Stamps, HEAP (fuel/electricity assistance), and others.
All of these have complex forms to fill out, and offices filled with staff that don't actually understand the complex rules, and the rules seem to change all the time.
Hiring these people costs money. Due to the complexity of the rules and forms, many families that qualify for these programs do not apply for them due to the frustration they cause, and when you're poor you only have a limited amount of frustration before you curl up and cry yourself to sleep every night.
Many consider just getting any aid from the state a full time job in of itself.
Not only that, programs like food stamps issue a card, the maintenance of these cards is probably not cheap as they outsource it to some company out of state. The minimum you can get on food stamps here is $15/mo (which helps absolutely no one, I'm sorry, but $15/mo could be a day's worth of food for a couple with a kid); what is the actual cost of doing that $15/mo? I read somewhere that a quarter of a million households qualify for food stamps in Maine, how much are money are we losing administering a program like this that has such little benefit? Could we be feeding another few thousand households with that waste?
I've been advocating a basic income program for years purely because of the efficiency of it. Once people no longer have to worry about where their next meal is, or their wife's next meal, or their kids's next meal, or if they will have a roof over their head tomorrow, or will their car be stolen, I mean, repoed by the bank tomorrow, they can actually focus on being gainfully employed, or go back to school, or just not be a fucking wreck.
I live in Maine. I suspect we are the poorest and most forgotten about state in the great experiment that is our nation. A program like this would create all the jobs we don't have, would end the constant bullshit people here have to deal with, and probably save lives as well.
Life here is so bleak that, as a non-alcoholic, people have assumed that I mean that I'm just in AA, and quit drinking. "No," I tell them, "I really don't drink. Never have." They look at me like I have two heads.
Maine is really two different states. There is southern Maine, centered on York and Cumberland counties (basically the Portland metro area), and then there is the rest of the state. The other half of Maine has very little industry, almost no white-collar work, and extremely low population density. There are entire regions of the state that are propped up by one or two paper mills that are still operating, or subsist off of tourism dollars during the summer months or the ski season. And even tourism and skiing took a beating during the recent financial crisis.
Basically, if there is not enough jobs for everyone - the raison d'etre of the basic income - then at some point, some aren't going to do anything: that's the point.
In other terms, the basic income is all about how do deal with the people which does nothing since we have reasons to think they couldn't do anything anyway according to the situation.
I have zero problems with this (for some levels of "comfortably"), the alternative is filled with drugs and crime.
Sure, some people are saying so, but there's a barrage of benefits programs that shows there is a subset of the native population who just can't be arsed trying to get a job, and who won't work for a job that earns them similar or less money than they get on benefits.
While these people are sitting around with their massive entitlment complexes and a subset or them are willing to go on channel4 and openly discuss it, you're never going to convince the public there's no jobs.
It's sad because, these people are supposed to be statsticly insignificant, but alas, I work full time and had to pay £500,000 for a 2 bed terrace. I resent the fact we can't move the non-working out of London when it costs a fortune to live somewhere nearby.
Of course the bigger problem is that money has a gravitational pull and the rich are getting richer, but they're not being idiots on channel4, so the middle class aren't taking it out on them.
We know that #2 is false. Coupling the assumptions together produces a group of people who are considered to be bad for reasons that are entirely beyond their control.
>Loafers could live comfortably without lifting a finger.
But, I do think that sentiment is a root part of the resistance against BI. People have bought pretty heavily into the current status quo that says, "you eat what you kill". So, if you don't work you are an undeserving freeloader or loafer.
Whereas, BI, for some, essentially acknowledges the common ownership of natural resources, etc., treating sustenance derived therefrom as more a natural right than something that must be earned.
The idea that it is "too expensive" just begs the question "too expensive to whom?" Eventually, our practice of giving the richest people more and more money will hit a breaking point, and we will have to figure out a way to take care of all the people whose livelihoods have been automated. Basic income is the best and easiest way to obviate that problem, and the richest can easily afford to pay for it.
I also think most BI supporters tend to shoot too high. The equivalent income of just a 16hr per week job at min wag would do wonders for the economy without putting a great deal of pressure on people not to work.
[1] http://www.usgovernmentspending.com/year_spending_2015USbn_1...
You could also probably greatly simplify the tax code, which has become a form of welfare with the poor paying less and the richer paying more relative to the amount they earn.
Then there's other potential benefits or reductions in cost, that are harder to quantify and predict. Would there be a reduction in crime? (which could reduce police costs) A decrease in sickness and health costs? (due to increased nutrition and better shelter) An increase in productivity and a boost to the economy? (due to people being in better health, being able to get more education and a tax code and welfare system that doesn't incentivize making less) What about all the non-profit organizations that spend millions helping the unfortunate? (What could that be spent on instead?)
I'm not necessarily in favor of a basic income to the extent mentioned in the article. I do wonder, however, if some limited basic income could be more effective than our current programs designed to help the poor and needy and if it would provide some better stability in people's lives generally. Either way, it would have a broader impact on the economy than simply removing welfare programs from federal and state budgets.
This adds up to a discount on the cost of BI. Increase taxes by X% and you get back Y% in increased spending. Of course everyone won't benefit equally, but there will be plenty of good times to go around. Don't worry about moral judgements regarding who is working and who isn't. As long as they're spending it will mean more for you.
But it can be used efficiently or inefficiently. For example, if there are two bread bakers, and I can pay $10 to one and he makes two loaves, or $10 to the other and he makes one, then the money has not disappeared but one use produced more goods for society.
>Money always trickles back up, especially when it's put into the hands of low income people who tend to spend more than they save.
Where do you think savings goes? It is most certainly invested back into society, and is not generally spent on consumption. Giving money just so people can consume will mostly make more of the goods they consume. If you want future looking invention and innovation, you need savings that can be lent to startups, businesses, and other uses.
A basic income would hopefully create some increase in consumption.
The more interesting question is what it would do to production. The big fear is that it would cause a drop in production, a drop big enough that mean consumption would have to drop below where it is today.
But you took the money to pay for basic income from someone else. They would have used it for consumption and possibly investment (or savings, which is also invested). So it is not at all clear this would result in a better economy.
1. Work +
2. Declare their income (i.e., file tax returns) +
3. Make below X amount
... is more financially reasonable and has the benefit of keeping the person working/trying/moving.
In this system, as an example, someone making below 30K year would gets the difference between what they make and the 30K mark given to them.
Otherwise, the only other solution is to just have the FED print out the 5-10+ trillion/year this guaranteed minimum income program needs - and distribute it each month.
Most people are already paying a 40-60% effective tax rate (all use, property, local, state, federal taxes - and other related fees - added up) on what they earn, and you really can't tax them more for obvious reasons.
I worked out the figures, and roughly the equivalent of a 16hr/week job at min wage would be close to optimal and affordable.
Taxes should be lower too, btw, but that has to do with wasteful spending in many areas, and nothing to do with BI which can actually help get rid of some that waste.
This assumes that work is good, and that not working is bad. How do you back up that assumption?
What happens when there is not enough work for everyone? If your value is intrinsically tied to your job, and there just aren't enough jobs to go around, are you supposed to just die and make way for someone who won the N lottery which let them get the job? Or should employers create unnecessary jobs just for the sake of giving everybody a job (and thus taxing us in another way, to support paying all of these unnecessary jobs)?
I paid close to 50% of my income in income and payroll taxes last year. I live in the US and am not in the top marginal federal tax bracket. I feel I am taxed more than adequately when compared to other economies that provide a much greater service level for their citizens.
The problems in the US are not on the supply side, they are on the demand (government spending) side, and simply - they are on the military complex side.
Here you go friend... http://fms.treas.gov/faq/moretopics_gifts.html
If what you just said is true, I'm sure you've already done this many times before. Lead by example, practiced what you preached, paid your real tax due.
And if not, no need to wait any more.
Here is also the public debt gift page (and stats) if you don't like the above one...
That seems like a less risky change than trying to provide enough income to cover housing, utilities, clothing, etc. all at once.
Personally, I think I would favor providing something like food through a system like food stamps first. It provides less risk of the money being wasted on addictions (drugs, gambling and other bad financial decisions) and better ensures the money is used to help someone (especially in the case of children, where they are not spending the money, but their parents are).
I think helping eliminate hunger (especially for children), is a good place to start, without having to make a massive change in how government is run without knowing how it will effect the economy.
This ensures that nobody ever needs to go hungry, it puts money in people's pockets because now they don't have to spend as much of their income on food, and it accomplishes this all without prying into the private details of anyone's life.
The goal in my opinion should not be to "give everyone an income" but rather to give everyone a safety net on top of which they can attempt to build a life for themselves. It trains people to be used to sharing and giving the things that we need to sustain ourselves, which is healthy and nurtures a cooperative spirit among men.
Taxation should not be a 'membership cost' for society. It should be a fee levied on the very wealthy, not out of some sense of spite, but in order that the system continues to produce reasonable outcomes for everyone.
When you do that, then basic income can be argued for reasonably.
Right now, poor/working class people fall over themselves to come up with reasons why BI won't work because they don't want their tax burdens to rise.
Land and capital owners should pay tax. Those with zero net worth really shouldn't. Why?
Because taxation on labour is effectively stolen labour. Taxation on capital is simply an adjustment in living standards. The two are hugely different.
The idea that the rich would just go fugitive if wealth were taxed is a total fantasy. Knightsbridge exists as a real place. I can cycle down the road and pop a letter through a letterbox. It might become marginally less attractive with a 1% annual tax. It might be that the economic boom caused by redistribution results in it increasing in value anyway.
What if we make an effort to assess the opportunity cost in longevity changes, public health indicators, crime rate, education levels and, perhaps, most encompassing and important parameter: human happiness.
I am quite sure that the opportunity cost which humanity and individual nation-states incur for not implementing basic income is absurdly, humongously huge.
Also expenditures where economies of scale can be achieved are better off as government expenditures as an individual would get nowhere near the cost effectiveness (healthcare, education) or the incentive to build as an individual (roads, parks, water networks, cleaning, etc).
There's also the prime issue of how it can be afforded in the first place, besides all the consequences of reallocating existing expenditure.
Control over the money supply ensures that prices can settle, which means that the income you earn (through UBI or otherwise) can give the basic quality of life we want to ensure all have access to. However, at the moment, the increase of money in circulation is largely driven by banks, who serve profit over people.
Solve the banking issue, and you'd have removed a road block for UBI as well as freeing up the capital to do it.
Alternatively, I like the idea of 'basic food' and 'basic shelter' that were mentioned elsewhere in these comments. They'd probably be easier to push through, as well as providing tangible benefits for those in need.
[1] - http://www.ssa.gov/policy/docs/chartbooks/disability_trends/...
People at the moment are influenced by the need for enough income to support themselves securely. Poor people spend all of their mental energy on this problem, and middle class people spend some of their mental energy ensuring they don't drop into the poor category.
This has all sorts of negative implications - people rationalising work they do that is bad for society; people making sure they meet the criteria to receive SSDI.
If you give everyone Basic Income, there will presumably still be people who seek to play the system, but you remove a lot of those automatic negative incentives.
If people can see work as a way of earning luxuries, rather than as something they are dependent on for personal security, there may be some people who choose not to work. It may be that non-prestige jobs (such as cleaning) have to be paid higher.
But, I feel 100% comfortable with that. I think non-prestige jobs are woefully unfairly paid, as it is.
On the other side, people who want to work on something transformative will have more opportunity to do so, if they don't have to take the risk of not being able to provide for their basic needs.
2. There is a fundamental assumption that we are at a technological stage where work can be automated. If there are not enough jobs that someone a standard deviation below average intelligence can fulfil, we could be coming upon a societal disaster.
If instead, we incentivize automation by saying, "no job is a superior alternative to an easily automatable, low value job where people are treated as disposable," there is no significant conflict. If people with low skill do not choose to work, and their skills are automatable, it is only our moral qualms that get in the way.
As it is now, significant portions of the population cannot provide enough value to ensure their subsistence, minimum wage or otherwise. Is it only our morals that require some work from them?
3. Incentivizing not working also means incentivizing spending a year on an idea that could advance society, or works of art and literature. Harry Potter was written by someone who decided not to work. There might be major value to society that we're losing because we don't have a basic income.
We have so ingrained in our minds that a person's value to society is defined by his/her economic contribution in the traditional sense (i.e. via a job or business ownership), that we assume that a person who does not work has no value by definition. In fact, they are even morally deficient. So, how can they possibly be of a quality/character as to contribute anything to society via arts, ideas, or otherwise?
It's a sneaky bit of circular logic that, for many, argues against a BI.
Some might see that as a good thing. Being forced to do something you hate for fear of not being able to feed your family is probably not healthy for anyone involved. Imagine if that person could quit their job and spend time with their kids instead.
Imagine the passionate painter or musician being able to paint or make music full time without worrying about having to pay rent next month.
Imagine the corporate programmer being able to quit his job and work 6 month on that open source project he always wanted to do.
As someone who actively enjoys his job and looks forwards to going to work most mornings, I think it would be kind of neat if more people could feel that.
Sure some people will just use their new freedom to drink beer and watch TV all day, but perhaps those people weren't contributing too much to begin with, making the net loss minor.
The main 'down' side would be that getting people to do 'shit' jobs will get harder and more expensive, but I think that might work out to be a reasonable price to pay.
Personally I'm not really convinced the numbers add up economically to make it actually viable, but I see it as an interesting utopia.
If the corporate programmer is willing to live a very frugal life (See Mr. Money Mustache, Jacob Lundfisker, etc.), then it won't take him or her very long at all to build up a 6-month cost-of-living fund. Perhaps it takes working three months to six months? (I know it's possible because I've done it.) And I'm not sure it's the job of society to support artists in their art independent of its value to society. At least I know I'm not interested in supporting it in my taxes. So I'm not so sure these examples are persuasive.
However, I do agree that it will become much harder to get people to do 'shit' jobs. One side effect is that it would give a serious additional kick towards automation, and so long as BI is implemented, that's good thing in terms of elevating the human condition.
Chart 3 shows quite some growth since 1980, but the per year increase is not exactly astronomical (and the page mentions that there are trends not accounted for in the data, such as the aging of the baby boomers).
It's also reasonable to expect a contingent benefit to have more impact on the incentive than an uncontingent benefit.
If you are a recipient of the basic income, you spend it all. Every last dollar. You don't build net worth and take it out of the economy. (If more than a small hardcore crowd even can, it's been set too high).
In a country like the UK, that gets taxed at 50%+ (providing the tax authorities are actually doing their job and have not been deliberately underfunded). So half of it almost immediately goes back into the Government coffers.
I don't understand why people spend so much time doing arcane analyses whilst seemingly missing how the economy works at a very basic level.
Government spending can be a net drain in two broadly defined ways, as far as I can see. There may be others that I am missing.
1. Giving money to the rich directly who then hoard it. 2. Inefficient allocation of human talent or natural resources (e.g. if the government paid me 200k pa to chew pens, and I gave up my real job).
Spending on the poor really cannot cost money unless you have issues with collecting taxes.
The latter sounds more fair, but is inherently less efficient - specialization means that for every doctor to work half as much, we have to train twice as many doctors for the same amount of 'product' (the practicing of medicine).
The math in this article seems to also have inexplicably paired 'basic income' with 'flat tax' - while I'm sure there are plenty of people who would like both, those two systems are completely separate, and there's no good reason not to consider the effects in isolation rather than together.
Instead of printing new money in this way, we could just give the new money directly to the citizens.
Quick napkin math shows that every person in the US would have gotten a check every year all the way back to the 30's (some years smaller than others), without needing to raise taxes at all. In fact cancelling some of the welfare programs made unnecessary by this system would likely result in lower taxes.
Loans would be more expensive, but more expensive loans seems like a small price to pay for basically ending homelessness and hunger.
Shortly to increase to £12,500 in George Osborne's next budget in July.
2. Increasing the personal allowance no longer makes much difference to the poor and underemployed: the disadvantaged in society. Thanks to the last parliament, they are out of this category.
Increasing the benefit is now primarily a small tax benefit for the working middle classes that has the significant advantage of appearing to be progressive.
This guy is giving the method a shot: http://www.basicincome.co/
"During the first week of the tax, the volume of bond trading fell by 85%, even though the tax rate on five-year bonds was only 0.003%. The volume of futures trading fell by 98% and the options trading market disappeared. 60% of the trading volume of the eleven most actively traded Swedish share classes moved to the UK after the announcement in 1986 that the tax rate would double. 30% of all Swedish equity trading moved offshore. By 1990, more than 50% of all Swedish trading had moved to London. Foreign investors reacted to the tax by moving their trading offshore while domestic investors reacted by reducing the number of their equity trades.
As a result, revenues from these taxes were disappointing. For example, revenues from the tax on fixed-income securities were initially expected to amount to 1,500 million Swedish kronor per year. They did not amount to more than 80 million Swedish kronor in any year and the average was closer to 50 million. In addition, as taxable trading volumes fell, so did revenues from capital gains taxes, entirely offsetting revenues from the equity transactions tax that had grown to 4,000 million Swedish kronor by 1988."
[1] http://en.wikipedia.org/wiki/Swedish_financial_transaction_t...
The TL;DR is that a transaction tax would primarily serve to increase bid-offer spread, which slows down the markets and results in every industry selling slightly less at slightly higher prices - which naturally means slightly shifting to favour those with more purchasing power.
At the moment, the poor get a mismash of benifits that all require administration.
replacing that with a single means tested universal income is far simpler.
for example:
every house hold is entitled to 10K, if you only earn 5k, you get a top up to 10k. This is no more costly that what already exisits in the UK (housing benefit, out of work, DLA, working tax credits) but is a magnitude more easy to administrate.
You get the added bonus of abolishing pensions that cost uber cash to maintain.
I think the economist is deliberately grasping at the wrong straws. Either that or the Swiss are batshit insane.
In a UBI world (also assuming socialized medicine), neither minimum wage nor de facto salary+benefits would be necessary, and labor would be free to seek its true market value, as the competition becomes over status rather than survival. My hunch is that even if all work was taxed (flat or progressive) to pay for it, the actual purchasing power of the dollar would increase to offset it due a more efficient market. (It would also be offset by the elimination of means-testing and beauracracy in existing social programs, as well as enabling a great deal more education and entrepreneurship.)
Admittedly, the idea is abstract and hand-wavy. But it's worth considering.
2. Flat but fluid Nationwide Sales Tax (would mean anyone visiting, or staying illegally has to pay taxes -- way better than an income tax.) -- Adjust this yearly as needed to compensate for basic income and other needs. When there's a surplus lower it the next year, when there's a deficit raise it 1-2 cents per dollar.
3. Higher taxes on luxuries like: 4star+ hotels, First Class plane seats, fancy cars, boats, private jets.
4. All recipients must have a roof over their head, and an address to mail the check to.
5. Congress / Senate pay and benefits capped at the national average as well.
6. Allow individuals, ceo's, etc who have more money to "pay it forward" and actually donate money to the government earmarked for the basic income fund. Some of the .01% may actually want to help out the rest.
7. Tax on automation, and companies that use robots to displace workers. The age of the robot worker is coming, this may slow that down if we can make it less of an incentive.
You are assuming that companies are all in a high margin low competition markets, and a bunch of other stuff that is simply not true.
Luxury Taxes: Not enough volume to make a difference.
Roof: Wouldn't you still need welfare, then? Doesn't this defeat the purpose of basic income (e.g. eliminating the administrative overhead of welfare payments)?
Congress/Senate: They don't make big money from paychecks.
Automation taxing: The overhead of levying that tax in a fair and effective way is dizzying.
1) let me fire a bunch of low income workers, this causes the media and average to go up + stock options go up. Oh actually let me take the entire thing in stock options. Also now I work for 1 company that exclusively owns the other companies and only have one other employee who makes millions.
2) I rent everything or move to a different country
3) Same
4) Mother of 3 starved to death because government lost her address notification - read all about it in the news.
5) Only idiots want to run for the Senate.. Oh never mind
6) This will probably work, but I wonder if it will do enough to offset the cost?
7) You want to further incentivize companies to move out of the country?
