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Comment by fulafel | Hacker News Reader

> Where do the "efficiency savings" come from? Largely they come by cutting salaries associated with managing a welfare system

I think this is a misunderstanding. Those programs generally have low bureucratic overheads percentage-wise to begin with.

Some of the main benefits are 1) reducing welfare traps (accepting work doesn't cut your beneifits) and 2) encouraging independent behaviour by decreasing the stressful and dehumanizing busywork of continually reproving in various forms your entitlement to the benefits (and resulting economic uncertainty, mistakes derailing your finances)

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Don't underestimate how inefficient benefits systems can be - an IFS paper in the UK from 2005 suggests that for every £1 a benefit recipient receives, £5.30 is required - that is, of every £10 that goes into the benefits system via national insurance or what not, £1.88 actually reaches someone who needs it.

The principal cost is staffing for the vast number of people needed to means-test, scrutinise, shuffle paper and rubber stamp things - were you to dispose of much of this apparatus by going for a straightforward "everybody gets £x/month", your efficiency would rocket.

That is, of course, if the actual main cost isn't money being siphoned off into politicos pockets.

5x overhead? This would be easier to take seriously with reference, it's orders of magnitude away from the CBPP article for example.

Here are the figures for Australia:

http://www.abs.gov.au/ausstats/abs@.nsf/Latestproducts/6530....

6M or so people receive some kind of welfare benefit for a total of 77.8B dollars. Total expenditure on welfare in Australia: $154B (latest budget figures).

That's nowhere near a 5x overhead, but it is pretty damn inefficient.

You are linking to a 2009 study and comparing with this year's projected 154B budget. Aside from actual welfare spending changes there are all kinds of reasons why those might not be comparable.

You're right about the dates, but when I had a more convoluted set of figures for 2014 (which required doing quite a bit of arithmetic to get the raw inputs, and would have required linking several pages and so forth) the results were pretty much the same.

The fact is the Australian government spends in the ballpark of $2 for ever $1 of benefit handed out; whether it's $1.80 or $2.20 doesn't really matter -- it puts some actual figures behind the concept of simply giving out a basic income (versus trying to figure out who gets the benefit, means testing it, and so forth).

Australia's unemployment rate hasn't changed much over the period 2009-2014 (it was shielded from the great recession by commodity prices).

Another problem I just noticed - it seems your spending figures include more than just benefits paid in cash. Eg http://www.aihw.gov.au/expenditure-faq/ says

"In 2010-11, Australian Government and state and territory government welfare spending was estimated at $119.4 billion - $90 billion (75%) was in cash payments (including unemployment benefits) and $29.4 billion (25%) was for welfare services."

So to make your case you'd need to dig up figures about how much the administrative overhead related to the cash benefits is.

>> Those programs generally have low bureucratic overheads

What makes you say that? I have tried to look into this before and failed. But, from the way these things are structured I assume they have high overhead. The anti abuse/fraud work alone… What makes you say that? I have tried to look into this before and failed. But, from the way these things are structured I assume they have high overhead. The anti abuse/fraud work alone…

What kind of fraud do you anticipate?

I believe he's referring to fraud in the current system: inspectors working full-time to catch people claiming welfare while working odd jobs, processes to verify that people are entitled to various benefits that they're claiming, etc.

Here's a reference describing the US situation

http://www.cbpp.org/research/romneys-charge-that-most-federa...

(Also note that basic income proposals usually don't propose replacing all forms of means tested income transfers, including Finland's plan)

I see.

I'm don't really know much about the US case, but that article reads as a somewhat disingenuous response to a very disingenuous statement by and electioneering politician. They define "Benefits & Services" as opposed to "administrative costs" and report the first makes u 90% or more.

I assume that "Benefits & Services" includes various services that might be termed "administrative costs" in everyday talk.

But point taken, maybe this is not such a huge savings.

I don't remember the source but I do recall findings that the costs of investigations into welfare fraud in Germany significantly outweigh the (potential) costs of the fraud itself.

Of course the inefficiency is difficult to prove because it's impossible to correctly measure the amount of fraud that would exist if there were no investigations (the existence of the investigations might discourage fraud in the first place).

Still, it seems pretty intuitive that welfare fraud isn't actually as big a problem as people tend to think. Welfare fraud is one of these problems that are easy to exploit for public outrage. It's relatable ("they steal my (tax) money"), the people doing it are already stigmatised (if you're on welfare you either did something wrong or are simply not trying hard enough), the falsely accused are unlikely to retaliate, it's easily actionable (just add more inspections or simply reduce the benefits) and it's difficult to measure and nearly impossible to solve.

Sure, it may be a non-issue but it so wonderfully exploitable if you're a politician (or a "newspaper" that needs some inciteful headlines).

> The anti abuse/fraud work alone…

There is no concept of benefit fraud in a BI system. Everyone by default qualifies for the same level of BI. Your government paycheck starts at the max value and can only go down from there, which happens when you are paying back that money in the form of tax. The only type of fraud detection needed would be the tax fraud system that already exists.

I'm not saying everything about BI would work (although I hope it does), but the fact that you could cut benefit overhead is self evident I think.

Of course there can be fraud - what if you use multiple identities?

> Of course there can be fraud - what if you use multiple identities?

Either those people are living and will notice not getting their money, or they are dead and there is a problem with enforcement.

Any kind of BI seems contingent on an accurate census. At least in Finland, I believe their census is quite good. Fraud should be very minimal.

Well, that is already tax fraud correct? Someone already has to check for that. The savings come from all the additional checks you would no longer need to do to see if people are really disabled, what their marital situation is, where they live, etc.

In most of European countries, people has an ID card and SS number, and there is a centralized database controlled by the state. A single person cannot have 2 different IDs. At least, it is not something trivial to do.

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