Powerful Political Forces Are Aligning Behind Minimum Income
nerdinvest.blogspot.com
nerdinvest.blogspot.com
Currently everything else depends on your job: Either you have one, and you have income, benefits, and all that goes with them in a society where everything costs money; or you don't and you have nothing (or very little). But if you don't lose you house, still can afford decent healthcare, and your kids still eat and go to college, etc., then employees can be more flexible:
Firings and layoffs are less of a crisis; when everything doesn't depend on having that job then I expect there will be fewer lawsuits. Protections for jobs in law and regulations can be reduced.
Also, workers, especially those with mortgages and kids, would be less desparate to keep their jobs. I think that is a healthy thing; they can take more chances and invest more in training and skill acquisition. Also, they are not compelled to do odious or unethical things (such as working off the clock, tolerating abusive environments, particpating in and/or not reporting illegal activities, etc.) due to a sort of employment extortion. It probably would be better for managers to get more honest feedback too (though some would have to learn ways to motivate people besides abusing them!).
Some of that is speculative but I believe a European country, I think Denmark, worked out a compromise of high and long-term unemployment benefits in return for making workers easy to terminate.
In part it's also a political solution to the concentration of wealth: If you are going to accumulate so much of the wealth due to the way the economy is structured, then in return pay for these social benefits and we all can retain labor market liquidity and maintain political harmony. U.S. workers have less to bargain with: They gave away many of their labor market protections and lost negotiating power by weakening their unions.
* Eliminating poverty and reducing economic inequality
* Simplifying the social safety net
* Preparing for a future where jobs have been automated
* Stimulating entrepreneurship
* Giving people the freedom to pursue their passions
* Paying caregivers for their economic contributions to society
* Recognizing a livable income as a human right
* Paving the way for a new American Dream in the 21st century
Taken from this survey: https://www.surveymonkey.com/r/5NFBGBV
I was with you until that one. The fundamental right to other people's wealth is a very slippery slope. I believe human rights should only be negative rights.
> Paving the way for a new American Dream in the 21st century
reads like political marketing fluff. dilutes the message.
All rights - everything a society does - require contributions from others. The premise that people somehow create wealth all by themselves and therefore have no obligation to share it is false.
Everyone's wealth depends on enormous contributions from everyone else, current and past. How did they build their app without the free K-12 education (and the education of your teachers), the roads, telecommunications, laws, protocols, police ... the economists whose centuries of work have provided the wealth your investors and customers have; the scientists who developed the theories; all the open source developers who gave away their work and set open statndards; the soldiers who work for paltry wages in the crappiest working conditions in the world, and some of whom died, to provide the security necessary for our economy and society to survive; the political leaders who generation after generation have built democracy and civil rights ... whoever developed English and the ones who developed C++ ...
All these people give us the opportunity to thrive. Do you think we would do so well without them? Are many startups happening in Somalia or Syria? Why should you or I be excluded from contributing and pulling our weight?
The concept of positive and negative rights is pretty well defined. If you are going to assert that all 'rights' are positive rights you need to do a tad bit more explaining.
> The premise that people somehow create wealth all by themselves and therefore have no obligation to share it is false.
You are throwing up a straw man. No one asserts that wealth is created 'all by themselves' at least according to the definition you seem to be using. It is also difficult to know what 'obligation to share' means. Does that mean "obligated to pay my taxes" or does it mean "obligated to support arbitrary redistribution schemes and government policies" or does it mean something else?
Morally, that any one person, by virtue of their relative wealth alone, is judged a provider, at gunpoint if necessary, to others who, by virtue of their relative lack of wealth alone, is considered worthy of substance, is such an inversion of right and wrong as to warrant some serious soul-searching about what makes one worthy of punishment or reward. Yes, poverty is a problem. Yes, there are institutional barriers to getting out of poverty. I don't see how doubling down on those problems does anything than ease the conscious of the haves.
That makes quite a few assumptions about the nature of money, the ownership of money, and how it is accumulated. Given, those assumptions are shared by most people in capitalistic systems, but that doesn't mean they are sacrosanct and we should reexamine them from time to time.
For example, one possible interpretation is that it's the system that allows this accumulation of wealth, and that the system favors certain people and starting conditions over others. If we accept that the system is responsible for quite a bit of the wealth (could the same be achieved in a drastically different system, say, North Korea?), then it can be viewed less as taking money from one and giving to another as much as fees and discounts, or incentives and disincentives built into the system in the hope of either making it more efficient in the end or better in some desired respect.
Note: I'm not necessarily pushing the above view, but instead using it to illuminate that perspective informs our opinions quite a bit, and that stepping back and reexamining our assumptions may have benefit or change how we think. At worst it will be a waste of time and we'll come away with the same opinion.
Basic human morality is that those who can help those who can't. Once we moved beyond the tribal village the whole question of how that works exploded in complexity and has never been satisfactorily answered, but that basic principle remains.
If Basic Income doesn't work, then obviously that's problematic. But I see no moral problem with the concept.
I've been talking about how minimum income can make the minimum wage obsolete and thus allow for the existence of a wider variety of jobs (and creation of wealth) that was previously unviable while also fixing the market inefficiencies created by putting an artificial price floor on labor.
> Morally, that any one person, by virtue of their relative wealth alone, is judged a provider, at gunpoint if necessary, to others who, by virtue of their relative lack of wealth alone, is considered worthy of substance, is such an inversion of right and wrong as to warrant some serious soul-searching about what makes one worthy of punishment or reward.
No, completely wrong.
> by virtue of their relative wealth alone
Wealth exists only within an economy and thus is a social construct that makes it's owner intrinsically beholden to that society. Wealth thus increases the moral obligation to the society from which that wealth is derived.
> by virtue of their relative wealth alone, is considered worthy of substance
It is not their lack of wealth, but their mere existence that makes them 'worthy of substance'.
> warrant some serious soul-searching about what makes one worthy of punishment or reward
Taxes on wealth are not a punishment, they are the cost of maintaining and improving the society and allows the wealth to exist.
Minimum income is not reward since it is given to everyone.
This notion pops up quite a bit in HN discussion of basic income. Can anybody provide some references to any sort of scholarly work on this concept? Presumably it has been described and discussed in depth and I'd like to be able to understand it better or even associate a name to the concept.
In any case, I'm not sure I follow the logic in this particular description. Why does wealth being a 'social construct' make the 'owner intrinsically beholden' to that society? What does 'intrinsically beholden' mean? These seem like arbitrary and poorly defined assertions to me.
> Minimum income is ... given to everyone.
Define minimum income. Do you imagine it enough to provide food, shelter, clothing? If so explain what other mechanisms would prevent the emergence of a large group of people who simply lived off the efforts of others as a choice. What mechanism would keep that sort of system in equilibrium rather than the consuming group growing and the producing group shrinking and the resulting tensions escalating? And don't we want to construct a system that moves towards a state that maximizes the number of self-sufficient people rather maximizing the number of dependent people?
A stab at it: 1) Money is a social construct, as are many other things necessary to make wealth valuable and meaningful; 2) Any person's wealth is due to the 'society' they live in, to a great degree. Consider the roads, laws, political system, safety, education (of the wealthy person, their employees, and customers), wealth of customers/vendors/investors, science, etc. Compare the prospects for wealth and the value of it (i.e., uses for it) for someone in Syria with someone in the Bay Area, for example.
I agree; I'd like to find something more authoritative bout the topic.
I didn't realize this concept wasn't self evident. If you have a million dollars, but the economy doesn't value dollars, you have no wealth. I don't have any scholarly references but I would guess you would find discussion of this in the philosophy of economics.
> What does 'intrinsically beholden' mean? These seem like arbitrary and poorly defined assertions to me.
Beholden means "owing thanks or having a duty to someone". 'Intrinsic' (like 'Natural') is a rather empty word, but I was intending it to express that the beholdenment to society arises from the wealth's reliance on society for its existence.
Since the value and existence of your wealth is due to your presence within an economy and society, you are beholden for your wealth to that economy and society in that your wealth would not exist without that economy and society.
> Do you imagine it enough to provide food, shelter, clothing?
Eventually? Yes. I would personally slowly phase in the minimum income as I phased out the minimum wage. Ideally this would cover basic needs and then it would be up to society to determine how much past basic needs would be covered.
> If so explain what other mechanisms would prevent the emergence of a large group of people who simply lived off the efforts of others as a choice.
We all 'live off the efforts of others'. I do not farm the food that I eat, nor do I enforce the laws that allow me to live in safety.
I think what you mean instead, is probably more along the lines of 'live without working'.
Our current model of being dependent on perpetual growth is unsustainable. We already do not have enough low skill jobs for our low skill population. As automation and machine learning take more and more jobs, this problem will only become worse. The new jobs that are being added, tend to be higher skilled knowledge economy jobs.
Thus, we are left with two choices:
1) don't allow people who don't work to live
2) allow people who live without working.
Since I don't support genocide, I feel we have to go with option 2), and the best way of doing that is providing a Minimum Income.
I would also point out, that there is a great deal of work that gets done without expectation of financial reward. This ranges from volunteering time working on open source software, to creating art, to caring for sick friends and relatives. Thus I don't buy into the "work only happens when people are paid" and I think plenty of value will be produced by people who rely on minimum income.
Besides money: Boredom, Social Status, Altruism and Passion can all be strong motivations to work.
A final point here is that by replacing the minimum wage with a minimum income, we greatly increase the number of jobs that can be profitably created. I may not be able to afford to pay the current minimum wage to have a gardener take care of my yard, but with a lower minimum wage I might.
> What mechanism would keep that sort of system in equilibrium rather than the consuming group growing and the producing group shrinking and the resulting tensions escalating?
This is not an easy problem, but I would point out that we have a similar problem with wealth distribution currently.
As far as reducing tensions, I think we need to make an effort to keep classes from segregating themselves socially.
As far as maintaining equilibirium, I don't have any easy answers but I do believe they exist and probably involve some clever use of markets to maintain the equilibirium.
A slow initial introduction of the minimum income helps find tools to maintain the equilibrium as we go.
> And don't we want to construct a system that moves towards a state that maximizes the number of self-sufficient people rather maximizing the number of dependent people?
Like I said before, we are almost all dependent on each other and very few of us are truly self-sufficient.
I don't want to maximize the number of self-sufficient people. I want to maximize the number of people who have the opportunity to do what they love. I want to maximize the amount of enjoyable work that is accomplished.
Further, if you tax a company at 10% or 20% the same investments are going to profitable. So, for the most part they behave the same which makes corporate tax breaks a very poor investment.
PS: More generally, people with a safety net are far more likely to invest in things like a home.
Appeals to fairness as an argument for or against various wealth redistribution schemes always strike me as odd for this reason. Neither side gets an exclusive claim to fairness. Both situations can end up equally unfair for equally reasonable definitions of fairness. No society-level policy -- especially doing nothing -- can possibly hope to be remotely fair in at least an infinitely of possible senses of the word.
If an economic system exclusively rewards the lucky and the corrupt, like ours, then it deserves its destruction. Wealth has no virtue if its source is exclusively non virtuous. Or rephrased, where did the virtue come from that wealth supposedly has? Certainly not from honest labor and skill, not in this economic system, not in the future we're headed toward.
> The fatal flaw in all of this...who is going to pay for it?
Well, the simple, possibly simplistic answer is "the same people that pay for wellfare". Which is everyone not receiving it. To be sure, it would need quite a lot of work on the details to even be possible in an economically viable way.
Edit: Added more references.
1: http://www.businessinsider.com/this-dutch-city-is-giving-bas...
2: https://news.ycombinator.com/item?id=11273482 (Alaska)
3: https://news.ycombinator.com/item?id=11273482 (Ontario)
It actually has been "field tested" - and in the US of A, no less.
The entire state of Alaska has a guaranteed minimum income.
Granted, it isn't much - on average it's been about $1,000 per anum.
UBI would see a dramatic shift in the valuation of jobs, in the ways employers can treat their employees, and in what work society values having done. I postulate often how I believe a lot of the tremendous flow of working into the advertising and service sectors has been due to the subconscious social desire to avoid the collapse of work, so we produce fictitious work with minimal or no net productive gains or utility to keep people busy. There are millions of white collar workers who wake up every day in fear of their job being replaced with software, and of truckers fearing the inevitable self-driving vehicle revolution on the horizon, because we are not starting on the path towards automation, we have been on it for decades, we have simply subliminally skewing our society to try to compensate for the implication that real productive labor has been moving out of the hands of human beings for a long time now.
2. UBI would lead to a huge jump in inflation (as a %, nearly as much as the initial UBI stimulus % of total money in circulation) as the vast majority of UBI recipients would have a large propensity to immediately spend that money, thereby simply releasing it into circulation and ramping up inflation. If UBI were made into a sustained payment, the market would simply adjust prices up on consumption goods accordingly.
UBI doubled the amount of money in circulation? Bread, milk, eggs, and rent cost 2x as much. Of course the effect would not be immediate (rent is sticky) but UBI would not leave much (if anything) left over for the poor today. In the mid-long run the poor are no better off, other than having a few immediate debts paid off through the first few rounds of UBI.
3. UBI leads to the misdirection of resources. People who are not financially secure enough to bring children into this world will suddenly find themselves with the resources to have children. Some, not all, will. We observe fewer and fewer jobs available to the general population, but we have hit a glut in productivity. We do not want to redirect resources to bring more labor into the economy before we hit another period of high productivity brought on by whatever technology drives forward the next paradigm shift in information/goods transportation and synthesis.
For #3, the overall trend is that people have fewer children, not more, when they have more money. Maybe UBI money would be different somehow, but since you're positing the opposite effect from what we've seen so far, I think it needs way more support.
#3 - yes, in agrarian societies poorer people have more children to help out with labor-intensive work. I think the situation would play out different in a services-based economy like the US.
The monetary aspect of UBI would not influence the wealthy, educated cohort's decision to have more children (usually capping out at 3). It would give lower-income individuals an incentive to have more children in order to claim more benefits, as is common for contemporary social services programs. If UBI was substantial enough to allow lower/middle income individuals to quit their jobs, they would also have much more time to have and raise children - not out of necessity, but out of ability.
Agreed that the effect on population size is uncertain and needs an actual study.
Not everyone receiving UBI would be in debt.
> 2. UBI would lead to a huge jump in inflation
Your argument assumes a fixed supply of resources. In a perfect market, rising inflation means higher prices means higher profits for suppliers which then results in increased production and, eventually, lower prices again. The market isn't perfect of course -- supplies for some resources (e.g. real estate) expand very slowly, so we might see increased rent eat up a lot of UBI in the short term.
But the increased liquidity mentioned by the parent post counters that problem. For instance, in theory, rising rent prices should encourage renters to move elsewhere. But in reality, the cost of moving itself (plus the difficulty of finding a job in a distant location) is high enough to discourage people from making that move. UBI alleviates both concerns by helping pay for moving costs and by providing some cushion for job-seekers.
And most markets actually do a decent job of increasing supply in response to spending. At most, this argument calls for phasing in UBI a pace slow enough for markets to adapt rather than not doing it.
> 3. People who are not financially secure enough to bring children into this world will suddenly find themselves with the resources to have children.
Empirically, this doesn't seem to happen as much you might think. Poverty reduction usually results in a drop in birth rates. Bill Gates raises this point quite a bit when discussing public health. http://www.gatesfoundation.org/Who-We-Are/Resources-and-Medi...
This assumes that production of these things won't rise - almost certainly false.
For milk in particular, we've recently had price supports.
And for rent, a basic income inherently increases the supply of "real estate near enough to sufficient income".
Sure, demand-pull inflation fears are slightly overblown since any remotely feasible plan relies on taxing the hell out of the middle classes responsible for much of the discretionary spending in the economy, and the poor generally get enough to eat through other subsidies anyway. But basic income will have a whole host of negative effects, many of them region or size specific, and those will undoubtedly include things like huge relative price rises in certain types of labour, sharp rises in property prices in working class districts of expensive cities and "baby farming" if the child grant is the same as or a sufficiently large portion of the adult grant. This is true of most welfare programmes, but BI happens to be the most expensive and least flexible of all possible options.
There are more details involved, but roughly speaking: If you fulfill certain minimum requirements of being in training, beyond retirement age, medically inhibited from working or prove to the state that you send at least two job applications per month, the state guarantees you a certain quality of life.
You're guaranteed decent housing (rent, phone, internet, water, electricity, heat other utilities), health insurance (and various other small insurances), and in addition to that receive (currently) 391€ per month per person, and if you have extraordinary expenses (usually medical or social stuff) they're covered for you. (And yes, my own sister lives on this. She's well cared for. It's honestly an amazing boon on the rest of the family.)
And despite all this workers here aren't even easy to terminate. For early termination the workplace has to prove active illegal acts, or prove that they informed you of low performance and you did nothing to improve, with limits on both lay-offs or quitting usually being between 3-6 months (depending on the contract).
But we're already paying out the nose for universal healthcare in the US. It's just done poorly, and has a lot of fraud and abuse, as well as insurance companies taking a lot off the top.
[0] https://np.reddit.com/r/pics/comments/3dngld/this_is_the_cos...
There may be many design flaws in the system that prevent people most in need of getting those funds from getting them, but "not being available to every citizen" isn't necessarily one of them. Plus if you're saving huge amounts by not subsidising the voluntarily economically inactive, you have an awful lot more to spend on helping those actually desperately in need.
... yes? They aren't breaking even, and they'll have to find something to do for more income (or move) pretty soon, but it certainly extends their runway.
In keeping with HN guidelines, I don't like to comment on why I flag articles, but I'm going to continue to flag the nearly content-less Basic Income posts that seemingly rocket up the front page a few times a week.
I'm sure there are comprehensive, insightful articles on BI out there. If they're ever posted, I'll probably vote them up.
Sounds like HN is also one of those powerful political forces
If you can do such an experiment (by, for example, instituting BI in a small country) then there are certainly outcomes that would indicate BI isn't feasible. The big questions are whether people in a BI scheme will continue to work, and whether the higher taxes needed to pay for it will kill the economy. If everybody quits their jobs and the taxes strangle the economy then that indicates BI isn't feasible. If everybody keeps working and the economy proceeds as usual then that indicates it is.
I don't think Social Security is a useful example precisely because it's aimed at retirees. You don't get much useful information about people's willingness to continue working when you target it at people who have retired. The tax rates needed to support it also look artificially low because the SS tax base is much younger than the SS recipients, and population growth means the former group is disproportionately large. Finally, it doesn't really look much like a BI scheme, because what you get out of SS is based on what you paid in, it's not at all universal.
What if you started everyone out at $50/month, and increased it slowly over the course of say 10 years or 20 years, or 100 years to whatever target you liked? Or do you think a gradual introduction would invalidate the results, or that you couldn't extrapolate from people's behavior at $300/mo, what they might do when the payout is $1000/mo?
Or what if you started walking the social security age backwards gradually, making people eligible at the age of 60 in the year 2020, and 55 in 2025, and 50 in 2030, etc.?
Can anyone shed insight on Indian reservations and basic income. For some reason I thought that some reservations with casinos had payments to all the tribe members?
>You don't get much useful information about people's willingness to continue working when you target it at people who have retired.
What about the other claims that some people make with BI, like an explosion of new exciting art/music/novels, etc.. Is that testable with SS recipients (say looking at how many novels they write the year before, and the year after they retire, counting the number of hours they watch TV before and after retirement). Or are they an invalid group because they are old? Or are the "other" category of BI claims mostly just feel good claims that no one really believes?
* https://en.wikipedia.org/wiki/Mincome
* https://decorrespondent.nl/541/Why-we-should-give-free-money...
* http://freakonomics.com/podcast/fighting-poverty-with-actual...
The problem is that it often isn't possible to falsify or confirm ideas based on limited tests. You can set up a minimum income for one town, or give money with no strings attached to several groups of people, but it won't answer a lot of the long term societal questions. It's like asking if you can test social security or universal healthcare. Those tests might not illuminate problems that could occur on a large scale, 50 years down the line.
Sometimes the only way to test something is to do it.
First of all, I think we need a pretty large experiment to reach a conclusion, this because I don't think we are ready to measure the outcome until the experiment has had time to alter our perception of what is desirable. I'm afraid current measuement would be to tied to the current way of thinking, where productivity and gdp is overly emphasized.
I'm a proponent of basic income and do believe there are many economic and social benefits in practice, but it's primarily an ethical conclusion. So even if the theoretic benefits turns out to be false, I'd probably still need something else to change my ethical reasoning.
Like Thomas Paine, my primary argument for an UBI is that it is the way to make property rights fair. See https://en.m.wikipedia.org/wiki/Geolibertarianism , but in general my line of thinking is that the right to exclusive control over a resource is not derived from labor alone, as is the popular interpretation of Locke today, but from the agreement with all competing interests. From that I derive that property title must be bundled with full compensation for the opperunity cost incurred on those who now lack access to the resources. To me the most efficient way to implement such a compensation is to demand a rent, equal to what the next highest bid for the resource would be. This rent is distribute equally to all citizen, and thus acts as the compensation for respecting the property owners exclusive rights.
I also happen to believe that it would be an effective way to balance the hoarding effect of capitalism. In the simple tax and divide scheme usually thought of it would at least create a flow in the other direction, increasing circulation.
But hopefully it would also remove some of the rent seeking possibilities from the market and make sure that resources are employed for more productive uses.
However, if you implement UBI my way you probably won't reach levels that would make most UBI proponents happy, which means an additional grant must be distributed according to those people. Perhaps the failure to recognize the true ethical reasoning and instead insisting on treating it as welfare would make me lose hope in ever reaching a workable implementation.
If you insist on treating it as welfare you're probably going to end up taxing he middle class to support the lower class. That would probably turn out pretty horrific for everyone.
Now UBI is implemented and Alice and all fellow citizens receive $1,000 per month. What will keep the market from easing the entry level rent up to $1,500 and food to $1,000 since the money is available? At first glance it seems like we'd just be choosing a different number representing "broke".
Consider a society with 2 members, Mr Rich (net worth $10M) and Mr. Poor (net worth $100). Mr. Rich is 100,000 X richer than Mr. Poor right now.
Institute a ridiculous UBI of $1M/year for everyone. At the end of the year, Mr. Poor has $1,000,100 and Mr Rich has $11M but Mr Rich is now only ~ 11 X richer than Mr Poor.
Now sure cheeseburgers at Micky-D's are now $700 but the fact has changed that before, Mr Rich could buy a hundred thousand burgers for every one Mr Poor could buy. Now he can only buy 11.
UBI works like gravity. Continually pulling the unequal towards a center. The rich will still stay rich, but unlike today where rich automatically makes richer, the force will be reversed. It will take "energy" to stay rich.
And the cheeseburgers are still the same price. Mr. Poor was buying cheeseburgers before he got BI and he's still buying cheeseburgers; neither supply nor demand has changed. Mr. Rich bought caviar before and after.
If McDonald's gets greedy and raises its prices because it thinks it can, Burger King is still making money selling at $5.
This aspect of Piketty has been pretty well refuted. To begin with, he failed to properly account for depreciation. That server software system that you built and is making you money today, isn't going to be worth squat in 10 years.
Otherwise, as has been seen countless times before, the value of the government benefit will be mostly captured by those best positioned to monetize it.
The alternative is to provide the housing and food benefit directly, rather than distributing dollars and employing a middleman. If UBI provided 3000 kcal of food per person per day directly, as pantry staples, rather than with a $500 check, it is much more difficult to skim rents out of that. Even restricted use food stamps fuel scams that convert them into cash. There may be people who rent out their government-provided housing as storage units, storefronts, or offices as they live in a non-gratis premium residence, but assigned tenement space is not quite as liquid as cash in the wallet, and therefore less able to be sucked out of the local economy.
Twice as much of the same apartment you already have is simply less valuable to you than twice what one apartment is worth to you, so anyone trying to rent it out cannot demand the same price as it might otherwise cost for the first apartment you live in. Imagine where you live now. Now make an exact copy of it. Would you pay twice as much as you currently pay to live in both places at once? Would you cook twice as much or twice as often if you had two identical kitchens? Would you sleep twice as long or twice as restfully if you had two identical bedrooms? If housing is a benefit guaranteed by UBI, rental prices for the non-gratis residences crash, because the only people willing to pay are now only those looking for a better place to live, rather than those looking for any place to live.
Whereas if the benefit is up to $500 in cash to the person who rents you an apartment, that's just fueling an economic bidding war where everyone in the auction has another $500 to spend.
Currently, if you want access to much redistributed income, you can only use it to eat what USDA allows you to, or live where HUD tells you to. I find that a rather degrading way to treat our fellow citizens.
... for what people must spend on, and where it's hard to create new competition. So, rent - exactly where most middle-class surplus is going today (and I think a large part of what makes people yearn for BI).
Imagine you're a landlord who runs a property for those of normal income. How much do you raise rent because people who currently earn below the poverty line suddenly have $1,000 extra per month? You can raise rent on everyone, but then most of your middle class tenants will move out to seek better prices. The same is true for the price of groceries and other staples.
A smart business will maintain their prices and benefit from a larger customer base. Since everyone doesn't experience an increase in income, raising rents of all forms will only open those businesses up to price competition.
In any mutually-agreed upon transaction, both parties to the transaction will gain some amount of value ("utility" in economics jargon) relative to the amount they're giving up. Because $X is now worth (slightly) less (say, by $Y) to each BI recipient, the seller (or landlord in this case) can demand $X+$Y in exchange for his product. That is, he's demanding that the buyer continue to sacrifice the same amount of value, because the value of his own asset hasn't decreased. So you'll see prices increase.
There are other forces in play, too. One of them is price elasticity of demand. This tells us that things that people are less willing to go without (housing, fuel...) put more bargaining power in the hands of the seller than those that we're more willing to flex on (say, going out to movies). In this context, goods like housing and fuel will have a larger degree of price rise than will those where the consumer has greater bargaining power.
What will change is an increasing demand for quality. If I've got more money, I might want healthier food, or tastier food, or food that I perceive as being more "upper class" than I have been eating so far. I might move to wine from beer, or to steak from hamburger, or to organic from factory food.
(kidding)
The only actual "benefit" I can see from UBI is laying off a half million welfare workers.
While that addresses inflation on an economy-wide scale, there are also arguments that apply to specific items. Take milk for example. Currently, if you are poor, you buy milk using SNAP vouchers or some other form of welfare. Under a BI system, the demand for milk doesn't change - we simply replace SNAP vouchers with cash from the BI.
I think it's a reasonable question because UBI doesn't change much about the structure of capitalism. And also just like every other welfare program, it will be rolled back inch by inch every time there's a systemic shock and the poors are held to blame.
Sure about that? Some fraction of the population will buy a new iphone, some will experience the rare luxury of health insurance, some will repair the car they use to get to work or buy a better car to get to work, some will spend money on higher education, some can finally afford dental work, some will pay up whatever had garnished their wages (child support,taxes?), catch up on bills. Most of that money is not going to be available for basic food or rent.
The experience will vary greatly depending on the socioeconomic class and the size of the UBI. It'll also vary based on institutionalization status. College students will likely be expected to pay 100% of it toward tuition. Prisoners will likely either not get it or the state will keep it for restitution and court fees. On the other extreme the average slumlord likely will not see an additional penny.
i.e. Your taxes go up $10,000, but you get a $10,000 payment. I haven't seen a cost calculation that explicitly factors this in. I imagine it's still expensive, but perhaps less than it seems?
It's a good article though. A lot of people vastly overestimate current social payment expenditures. They're much lower than I thought, and I am not in the camp that thinks basic income will be costless to implement by replacing social programs.
I guarantee that if/when this gets implemented, it won't be a wash for the middle class. The middle class is where the tax money is, and they'll be the ones bearing the brunt of the bill, as usual.
edit: more recent stats [0] show 104bn coming in, 5bn spent is social tax breaks, 0.5bn spent in food pensions.
[0] http://www.stat.gouv.qc.ca/statistiques/economie/comptes-eco...
[1] http://www.revenuquebec.ca/fr/salle-de-presse/statistiques/r...
Each time we hit a rough patch we could boost the minimum income to increase liquidity, and drop the minimum wage to stimulate job creation.
This has the potential to fix some of the inefficiencies of the job market. There are jobs that people enjoy or find fulfilling that don't provide enough 'value' to exist (or only exist in the black/barter market where minimum wage is not enforced). There are also jobs that nobody enjoys or find fulfilling, that should have been automated already, but haven't because we force people to work to support themselves and thus create a glut of cheap labor with the minimum wage as the price floor.
As far as to how we pay for minimum income, I love the idea I ran across on HN of directly and progressively taxing capital/assets rather than income.
[1] http://www.planalto.gov.br/ccivil_03/_ato2004-2006/2004/lei/... (Portuguese)
The original proposal seems interesting to me, but I don't see government efforts to implement it as defined in law.
[1] http://www.basicincome.org/news/2013/06/opinion-a-three-step...
I've never heard about it, I don't think it has gone anywhere.
Note that this won't actually help with many social problems. For example kids who go to school hungry because mom spent todays money on crack will after UBI merely go to school hungry because mom spent todays money plus UBI on crack. Neither the slumlord nor the supermarket will see a penny more. Cultural changes are much harder to make than mere economic changes.
If competition doesn't work, the entire premise of capitalism is unsound.
It's interesting how UBI is the way of the future, while America's own way of thinking is opposed to it.
But even as someone without a lot to worry about, I can't think of a fair way to tax wealth outside of land taxes, which would greatly disrupt the economy.
A wealth tax and an income tax are two different things.
Things have to get much worse (and they will) and we will need some active social unrest (on the scale of Occupy Wall Street or Black Lives Matter, except informed about UBI and fighting for it in a unified message) before the wealthy will acknowledge that if they want to stay wealthy, they need a society to be wealthy within, and we won't have one if people are destitute and starving by the millions because traditional capitalist expectations of work and compensation break down in the face of growing automation.
It's almost as if there are different people with different opinions in the tech community.
And what's wrong with applauding the government when they make a policy decision that helps your average person, while critisizing them when they make a decision that hurts your average person?
The hilarious part is, the rabid anti-government "libertarians" are always the first ones to also be rabidly pro military (the largest socialist entity in the government).
But then again I don't advocate the B in UBI, I'm content with any amount that is fair and efficient. If the state want to add a complementary redistribution scheme on top of that, it's fine, but there should be a component they can't touch.
For example, one component might be in hands of the central banks as a way to control inflation and such.
Another component might be an institution representing the commons. An organization charged with deciding what should remain a commons, and what could be rented out as private property. F.ex. pollution rights could be their mandate to allocate.
Edit: Also, checkout https://en.m.wikipedia.org/wiki/Geolibertarianism it doesn't have to be either or
With UBI, if you hold a job you'll still be able to survive even if your benefits are revoked. You're not forcibly dependent on the state (at least not beyond the ways we are now, for roads and utilities and such), it's just an option. I imagine most people here would continue to hold their nice high-paying jobs even if UBI were implemented.
BTW, my 'smug one liner' I learned in school was uttered by President Abraham Lincoln who is widely regarded as our nations greatest President.
By the same logic I can say that not having minimum wage in the 12th century was the reason why people were suffering. It's entirely true there wasn't a minimum wage at that time either, but it completely ignores that: - It would have been impossible to implement during that period because of the way the job market worked and because of the technology of that time. - Their suffering is attributable to other things than the lack of legislation.
Until advances in technology makes safety regulations and safety equipment cheap, legislating them means putting people out of a job because the employer cannot pay for all of that, so they can't operate their business anymore. Have you ever considered that perhaps that was the case in the early half of the 20th century?
As far as I can tell society and the market does all the heavy lifting and then the government comes and enacts laws for things that were already becoming safer and better. Graphs like this are what lead me to the conclusion I've mentioned:
https://danieljmitchell.wordpress.com/2012/09/25/assuming-yo...
Oppressive power structures want freedom for large structures at the top (themselves), to enable domination over individuals on the bottom - a lack of workers' rights fits right into this. Libertarians want freedom for the bottom and should only be secondarily concerned with freedom for the top, lest their philosophy be coopted into supporting standard tyranny.
Believe it or not - there are states with virtually no working poor and no minimum wage laws.
- It goes into their pockets
- It reduces their cost of living
If they vote in large numbers, as retirees do, that creates a large constituency to remove red tape.
The problem is making sure there is still enough profit motive to invest.
QE was not the same as the "helicopter drop". The helicopter drop (HD) is much closer to basic income (BI), except that HD might be a one-time thing, whereas BI is ongoing.
QE is creating money to buy bonds. This raises the price of bonds, and injects money into the system. But where does it inject the money? To everyone? No, only to those who currently hold bonds - that is, to the wealthy, and to financial institutions. HD and BI, by contrast, give the money to everyone.
QE didn't do much to solve the problem of inadequate demand. HD and/or BI may do better. They may do it at the price of increased inflation, true. But under the current circumstances, the Fed would welcome a bit more inflation...
Replacing existing programs with "free choice" is a well-worn playbook. See also: pensions vs. 401k plans.
You can't trust pensions. Companies can go bankrupt, and even governments have been going bankrupt and have renegotiated pension plans. I'd much rather slowly tuck away a portion of my own income and have it be labeled as mine, rather than have it be a future debt on some organization's account book.
Not coincidentally, this is also how you can sell the idea to people with libertarian leanings: universal basic income means much less discretion for unelected administrators, and more discretion for each individual on how dollars get spent.
A common misunderstanding. BI is not socialism.
Socialism: A political theory advocating state ownership of industry.Unlike yours, it encompasses regulation (which redistributive taxation is generally recognized as a form of) and the focus is on "the community as a whole" (for which the state may be the tool used, or may not) and not just the "the state" as the focus (which is important, since without that it wouldn't include libertarian socialism.)
Minimum income means guaranteed maximum prices for things like rent and food that you cannot live without.
You think your $500 a month apartment isn't going to become $800 when the landlord knows everyone is getting at least $1000?
ok, so the author clearly hasn't got a clue how qe works.
This way money taken from people for taxes is funneled right back to them instead of having government decide what to do with it.
The main complication I see is handling taxes for import+export, you'll probably have to refund taxes on exports, and harder, figure out pollution levels for imports.