This is already a massive problem in programs where we do require demonstrations of need. See NPR's expose on rampant disability fraud: http://apps.npr.org/unfit-for-work/
It's hard to see how eliminating safeguards will improve things.
If we have a program that helps 1 person and 1 person scams it, we might get rid of that program. What if it helps 10 for every 1 scammer? 1,000? 1,000,000? Certainly with the last we'd say it's ok.
I don't know where that point lives, but as NPRs expose demonstrates, that amount is certainly larger than zero and probably a lot larger than where we are now.
Unfortunately good government requires carefully understanding and administering a bureaucracy, taking into account individual incentives, and building something non-simple.
Basic income is just a cheap mental hack used to seduce the lazy. It's like looking at a webapp, realizing that 75% of your compute cycles are doing error handling and then saying "aha, the solution is to ignore all errors!" It's seductive, brilliant in it's simplicity, and complete idiocy.
Among other things, this is why essentially no basic income proponents are willing to even do a back of the envelope calculation to show how it would work. (Similarly, "eliminate all error handling" guy will refuse to write a proof of concept.)
[edit: I altered this comment to explain in better detail what I think is wrong with BI, but eliminated a sentence that SandBOx replied to. I believe the real goal of most BI proponents is to create a vote bank of government dependents.]
It's a reform of the French tax system based around a basic income and flat taxes on income and wealth. The resulting redistribution is similar to the current system without the nasty border effects and bureaucracy.
Also, since the purpose of the program is to reduce poverty, not to detect fraud, another effect is that the additional oversight will keep people away from the program, either by (as above) their inability to navigate the efforts to protect the program from fraud, but also by the effect of intrusive (and possibly personal and demeaning) questions and inspections has on people's self-image who choose to accept the aid (as per TFA), causing them to avoid taking it to avoid social stigma.
I know these are the types of points that laissez-faire libertarians laugh at i.e. "imagine someone who is taking my money refuse any indignity; they can always choose to starve," but those sorts of libertarians don't think that poverty is a concern anyway. When those types get to design programs like this, they end up largely populated by people who are willing to navigate them as a job, hence largely fraudulent, creating a self-fulfilling prophecy.
The vast bulk of overhead is ultimately fraud control in some form, and as that expands, so the program expands, while the number of people being helped stays steady or even shrinks. This massive administration is farmed out to contractors to reduce ballooning costs (cronies, friends of friends and/or benefactors - an externality that affects us all as a rise in corruption) who are rewarded for finding more fraud with a higher proportion of the budget of the program. Their primary motivation then becomes to find excuses to exclude people from the program.
This is depressing to even type. The reason one would have basic income is to eliminate this. I believe that every millionaire should receive a check. Means-testing is a scam.
If you consider giving basic income to people who spend $500 on weed "robbing", well you are entitled to your opinion, but that's not exploit of system, because system is working as intended.
Absolutely. If you don't like it, sell them weed and then
you have their $500.
If someone steals $5k from me and uses that $5k to buy my car, am I just as well off as I was before because I still have my $5k?
Or, more likely, we don't include disability programs (which are not purely or primarily means-tested programs) as among the primarily-means-tested programs that are replaced by UBI in the first place. To the extent that improvements are needed in disability programs, they come from elsewhere.
(OTOH, part of the problem creating incentive for disability fraud is secondary testing in primarily means-tested benefit programs, which leaves lots of gaps in basic poverty support.)
> What about parents who squander the money and the detrimental effects on their kids. Do we let the kids starve?
We deal with child neglect through child welfare systems, not social benefit systems.
> What about kids in foster care?
What about them?
> What if parents have lots of kids?
Then...they have lots of kids.
> Should kids also get a basic income?
Pretty obviously, yes, kids should get basic income (if nothing else, most of the primarily means-tested social benefit programs -- both welfare and EITC -- in the country are support programs for parents with dependent children that are strongly scaled by the number of dependent children, so if you want a system that does at least as good for current targets of benefits while removing the adverse effects, the obvious methods is that kids should be included as beneficiaries. There are a few programs that are not targeting such families -- e.g., General Assistance programs, but they are small both in their per-beneficiary benefits and their aggregate costs as a share of overall social welfare spending.)
The most sensible way to do a UBI is probably "all citizens and legal permanent residents".
> As we add more and more exceptions there are more opportunities for abuse of the system.
The whole point of the "U" in UBI is that you don't add exceptions. You define a broad universe of recipients with as few qualifications as you can sensibly make, and everyone within that universe gets the same benefit.
What about them? Those kids are themselves either citizens or (improbably) legal permanent residents (and thus, beneficiaries) or not (and thus not). This isn't rocket surgery.
> Will people in retirement continue to get their social security?
That depends whether Social Security is a replaced program or not (IMO, it shouldn't be, since its not a means-tested social benefit program.)
> How will we pay for all this?
With new taxes plus the redirected funds from replaced programs.
> Assuming 418M people
From a few different sources, I get that the US population is 319M, about 93% citizens and 3.6% lawful permanent residents. So, assuming 418M beneficiaries of a UBI is unreasonable.
> at $13K which I typically see mentioned as basic income
$13K/capita is a just about the point at which two-person household would clear the poverty line, so its not a bad point to consider a reasonably mature UBI; OTOH, I'd prefer to identify a funding mechanism that should grow with economic growth, and have benefits scaled so as to (in the long-term, smoothing short-term variability) follow that funding mechanism, eventually reaching such a mature level (and going to even higher levels with more growth) rather than setting a benefit level and then trying to fund it out of the gate.
And I wouldn't expect a mature UBI for a generation or so.
This is not the slippery slope that you're implying; you can certainly draw certain lines when the system that you're building has limited scope and leaves the outliers to other benefits systems.
1) Trust your brother, feed him and let him crash. Costs you $50.
2) Don't trust your brother. Hire an investigator to determine if he bought weed. Most of the time nothing is found so you wind up helping him, which now cost $70. Occaaionally you discover something and choose not to help. Still costs you $20.
Is #2 worth it? That depends on how often the investigator finds a reason not to help.
You actually have 4 options: do nothing and then put people in jail. Which will cost you WAYYYYYY more per person, per year, than just giving them money directly to "freeload".
Do nothing and wait for the mass revolt when half the population is starving to death when you've got someone like Martin Shkreli buying his fourth Ferrari "just because". If you think the masses will just roll over and die if they're starving to death, you're delusional (whether intentionally or not).
The fact there's a section of the population who
believes that poor people won't turn to crime
before starving to death simply amazes me.
How about designing public policy that provide incentives to work rather than incentives not to work? (earned income tax credits)
How about decreasing the cost of labor in order to increase employment while simultaneously providing programs that assist during periods of unemployment? (e.g., make it easier to hire and to fire and switch jobs while providing strong unemployment safety net, decouple health insurance from employment)
How about setting expectations that people be self-sufficient and not dependent upon others? This is a more of a cultural problem then a policy problem.
Most poor people work very hard to earn enough to survive; much harder per $ earned than most people on this website. They don't need an incentive to work, they need jobs that pay better for each hour they work.
Raising the minimum wage won't accomplish that by itself, because most companies would reduce the number of positions to keep their costs stable. We could raise the minimum wage and then provide tax credits to businesses to offset the additional labor cost, but that'd wind up complex to administer and there would probably be loopholes that allow companies to take tax credits and keep the cash to themselves instead of paying them through to employees. With Basic Income, we effectively raise the minimum wage by direct payments to the employee; their income per hour worked goes up. This is much simpler to administer: everyone gets the same amount, and it counts as taxable income.
A situation in which assistance is given to people who are working (albeit for a lower wage) is a much better situation than assistance being given to people who aren't working at all.
There is value in enabling people to have jobs, even low paying jobs.
Many workplace laws and regulations effectively increase the cost of labor in the aggregate. So "decreasing the cost of labor" is not all about lowering pay. Think of things like overtime rules, mandatory benefits, onerous compliance rules, shifting various legal burdens to the employer rather than the employee, making it more difficult to fire someone.
How many people with 3 kids do you think are going to stop working if they get an unconditional government benefit of $6,000?
I think the EIC does a good job of addressing the need some people have to moralize about the sanctity of labor, I doubt it has much of any impact on the labor market (it mostly just makes the lives of some kids better).
the practice of obtaining something, especially money, through force or threats.
But, the disability fraud is due in large part to the rampant unemployment, poverty, and gutted social safety net in that area. So, the option for those folks is disability or live on the streets. I wouldn't exactly say you are making the case for requiring proof of need.
Also interestingly you see use of drugs as reason to refute need. I believe there is a correlation between desperate poverty and drug use, I think it's because for those people with no hope of escaping poverty they need some kind of escape. Unlike you and I if we ever loose a job or get hit with an unfortunate circumstance we can get out of it fairly easy because of our education and in-demand skills. Now imagine a factory closing and 5000 folks with barely an education now out of a job, some percent of that cohort is going to end up resorting to drug use as an escape from their hopeless position. Idealistically, I'm hoping a basic income gives people like this some hope back. But, even then if there truly are no jobs for them, then if some % of the population enjoys weed then maybe that's ok--it's better than a lot of other possibilities they could be doing.
Are you somehow claiming that wealthy Americans are unable to make choices for themselves, i.e. they are incompetent? If so, lets find them caretakers who can manage their lives for them. Lets not let them continue making bad choices that cost the rest of us.
I have no problem with smoking weed and I do it myself sometimes. I have a problem with spending your own money on weed and then turning to me claiming you are hungry. Spend your own money before you spend mine.
Disability fraud is caused by desperation. Either that or 2% (IIRC) of the U.S. working population suddenly became either very sick or lying dopesmokers right after the housing bubble burst.
You are simultaneously claiming that cracking down on fraud won't save money, yet also saying disability fraud is huge but only because people are desperate to do it.
"Your honor, I didn't kill that guy and he was such a jerk that he deserved to die."
http://public.econ.duke.edu/~erw/197/forget-cea%20(2).pdf
Heck, even the reduction in bureaucratic expenditures might be enough to offset this cost.
Why don't you do a back of the envelope calculation to demonstrate how this could possibly work?
I have yet to see a single successful attempt at this.
What do you have against your brother putting $500 back into the economy? That's good for everyone
With technology there is no upper limit on productivity.
We will always be able to produce more than enough.
We could do it indoors in skyscrapers with robots. You
could grow enough weed for the whole world to chain
smoke, in one building in the desert if it came to the
point where that made sense (which it might in the
nearish future).
Capital is essentially imaginary and therefore limitless
given the right incentives.
There's no incentive for fraud in an unconditional benefit system.
> It's hard to see how eliminating safeguards will improve things.
Its actually easy to see, when the "safeguards" directly produce perverse incentives. Means-testing reduces the marginal benefit to finding additional income, encouraging a culture of dependence. And any type of conditional benefit scheme creates an incentive for fraud where the benefits of fraud outweigh the expected cost of committing it.
The "safeguards" are the problem, not a mitigation.
Back in reality, my application is not meeting business needs, and BI is still wasting a bunch of money on people who don't need it.
Means-testing reduces the marginal benefit to finding additional income, encouraging a culture of dependence. And any type of conditional benefit scheme creates an incentive for fraud where the benefits of fraud outweigh the expected cost of committing it.
A Basic Job Guarantee (if you need a job real bad, the government gives you a real bad job) does not create incentives for fraud. EITC also has minimal incentives for fraud.
No one needs a job. People need good and services, which (in a system that is basically market structured) income is a means to provide. A job isn't a need, its multiple steps removed from needs.
A "Basic Job" labor army programming is a reasonable means of providing stability in income, currency in marketable skills, and providing for infrastructure and other public needs during a short-term disruption in the private economy negatively effecting employment that does not involve a long-term transformation in the nature of the economy and the kinds of work likely to be in demand.
Its a very bad way of dealing with long-term structural unemployment, providing a social safety net during a period of substantial transformation of the jobs in demand which either makes people permanently unemployable or requires substantial time devoted to retraining to regain employability for displaced workers, etc. Its a good component of a set of policies to address the Great Depression, but not for an economic revolution driven by automation and other developments.
> EITC also has minimal incentives for fraud.
Sure, because EITC has a fairly gradual falloff of benefits with increasing income at the top end (and because, though risk of getting caught may be fairly low, sanctions for tax fraud are very steep), it creates only a fairly mild incentive to fraud through concealed outside income. Certainly, rolling all primarily means-tested (but not mainly conditioned on other needs) social benefit programs into EITC, both raising the cap and broadening the range appropriately, and keeping the fairly mild fall-off at the top would substantially reduce overall complexity, and reduce incentives for fraud, at the cost of directing less funds to the neediest at the bottom (due to the phase-in part at the bottom end of the scale with EITC.)
Of course, the only differences between an EITC and a UBI funded (insofar as funds are needed beyond those from replaced means-tested programs) increased high-end taxes in a progressive income tax system is:
(1) EITC doesn't reach the bottom end of the distribution as effectively, due to the phase-in,
(2) EITC is effectively (other than as mentioned in #1) equivalent to a UBI funded by an increased tax on a narrow range of income toward the low (but not absolute bottom) end of the scale (the range at which the UBI phases out.) rather than one funded by an increased tax at the top end of the scale, as in most UBI proposals.
UBI is basically EITC with those two problems fixed.
https://www.chrisstucchio.com/blog/2016/robots_didnt_take_ou...
We actually currently have a scarcity of labor and BI makes this problem worse (about twice as bad as the great recession did).
http://public.econ.duke.edu/~erw/197/forget-cea%20(2).pdf
EITC increases incentives to work as does a basic job guarantee. Welfare and BI have the opposite effect.
No, we have (arguably) the early phases of an economic revolution with rapid changes in the kinds of jobs in demand (which is the other thing I mentioned), long-term structural unemployment is a speculated future issue, both of those (as short and longer term concerns) are issues that are usually cited as motivations for UBI (personally, I'm more interested in the former than the latter, at least in the form of "unemployment" in the strict sense, rather than "decline in the relative value of the median hour of labor".)
You can disagree that either is something we ought to address, but by (earlier in the thread) presenting an alternative solution to BI, you are implicitly agreeing with the problem it is being offered to solve.
> We actually currently have a scarcity of labor
If we had a simple scarcity of labor, you'd see rapid, across the board increases in the market clearing cost of labor, you do not. We may have a scarcity of certain skills, but that's a problem that while a mature UBI addresses (by making it more possible for people to take time for retraining in the hope of future wage gains), a Basic Job as you have proposed does not.
> and BI makes this problem worse (about twice as bad as the great recession did).
The great recession didn't produce a scarcity of labor, it produced a surplus of labor. So "makes this problem worse (about twice as bad as the great recession did)" is simply incoherent.
Anyhow, the experiment you point to is not a BI, its a Minimum Income (a traditional, means-tested welfare program, with a 50% fall-off for outside income and the associated reduced incentive for outside income-earning activities, including work -- the central problem with means-tested benefit programs that UBI is directed at solving.)
Claiming that an experiment with the exact feature of traditional, means-tested welfare programs that UBI proponents point to as a reduced incentive to work that shows that such a program does, in fact, reduce work by some specific amount as proof that a UBI at the same level would reduce incentive to work by the same amount is unjustifiable.
> EITC increases incentives to work
EITC increases incentive to earn additional income within a narrow range at the bottom, has no effect on incentives just above that range for another narrow range, and then decreases incentives to earn additional income within another narrow range, and then has no additional effect above that range.
It increases the incentives for work at a minimal income, and somewhat decreases the incentives for moving beyond that for people who can achieve that but don't see a path to a very large increase.
> Welfare and BI have the opposite effect.
Even granting, arguendo, that that's true, the key issue in evaluating proposals to replace means-tested welfare programs with BI is the relative effect of the means-tested programs replaced vs. the BI replacement.
If we had a simple scarcity of labor, you'd see rapid, across the board increases in the market clearing cost of labor, you do not.
This is simply not true. The way to check for a scarcity of labor is simply to determine whether there is labor worth performing at some non-zero price. Scarcity is merely a situation where more of a good is wanted than is available.
You can disagree that either is something we ought to address, but by (earlier in the thread) presenting an alternative solution to BI, you are implicitly agreeing with the problem it is being offered to solve.
I'm proposing a solution to two completely different problems: the problem of people claiming they'll starve if others don't transfer them resources, and the problem of labor scarcity.
The great recession didn't produce a scarcity of labor, it produced a surplus of labor.
Not according to Keynesians - they believe there was productive work people people could do that wasn't getting done, simply because nominal wages were too high. That's why they proposed stimulus to inflate away the value of real wages.
https://en.wikipedia.org/wiki/Output_gap
I take it you believe stimulus was ill-advised?
EITC increases incentive to earn additional income within a narrow range at the bottom
And this narrow range is the place our slack labor force lives.
So? This seems to be an argument-to-people-you-don't-even-purport-are-authorities... (Not to mention that it seems to be a hostile caricature of the Keynesian argument, which I'll get to in a second.)
> they believe there was productive work people people could do that wasn't getting done, simply because nominal wages were too high.
"Work isn't getting done because forces outside of market rationality prevent prices from adjusting downward to reflect the reduced demand for good X" isn't a real "scarcity of X", its a surplus of X with non-market forces preventing existing supply and demand from connecting.
(Where it occurs, the solution is obvious, deal with the problem that prevents real prices from adjusting to the natural market clearing price, so if one perceived the problem you claimed Keynesians perceived, then the solution you claimed Keynesians preferred would be sensible.)
OTOH, that's not the problems Keynesians saw, and Keynesian stimulus isn't aimed at "inflating away the value of real wages" (nor did the actual stimulus in the great recession do that; inflation during the period remained unusually low). Keynesian stimulus (whether in the form of fiscal stimulus that Keynesians usually prefer, or monetary stimulus that Keynesians will usually complain is a poor mechanism but -- much like Keynes own example of burying banknotes and letting people dig them up -- better than doing nothing when good solutions are off the table) is aimed at increasing demand -- particularly for labor -- which is a solution directly aimed at surplus of labor, not scarcity of labor.
> I take it you believe stimulus was ill-advised?
More to the point, I disagree with your description of the Keynesian case for stimulus, and like most Keynesians, I believe that the form of stimulus was extraordinarily poorly chosen from the perspective of government-as-a-single-decision-maker, but perhaps reasonable (or at least understandable) on the part of the Fed given that the government isn't a single decisionmaker, and the key body deciding fiscal policy was nearly inert.
> And this narrow range is the place our slack labor force lives.
I suppose that this is a meaningful statement if your concern is merely maximizing the number of people doing some kind of work, rather than maximizing welfare, realization of human potential, etc. And, certainly, that seems to comport well with your preference for a permanent government army of economically-compelled labor as the main (or perhaps only, its not really clear) "social benefit" program.
This. We've been brainwashed by historical circumstances and the morals derived by them. A job, or theft, or theft disguised as a honest job, has been the only way to get those goods and services but this is becoming less and less true. We can automate the production of some goods and there is little need to work to make them. Hence there is less and less need for money to pay them. We can almost give them away. So basic income is a way to acknowledge this change and give everybody a share of the new commons that our automated factories can build. Do you want more than the basic? Then work, or create, or be special in any way people will acknowledge you.
Are you sure about that? For recipients, there is potential to slack off while still receiving pay. Possibly to the point of doing other work (under the table? for their own household?). While this can be construed as still comparing favorably to BI ("at least we're getting some work out of some of them") it is not at all the same as there being no opportunity for fraud.
Meanwhile, there is tremendous potential for abuse and fraud by those giving out the basic jobs. A long running program whose criteria for success is "employ a lot of people at marginally useful things" is a large pile of money just waiting to be spent on making improvements that especially benefit the connected few.
A point well-illustrated, in fiction, in The Green Mile.
Of course there is - money, the same incentive as always. The fraud just takes a different form. Now it's "people that don't exist" instead of "people that don't qualify".
Note, however, that "people that don't exist" may be easier to detect than "people who don't qualify", which involve all kinds of judgment about grey areas.
Some will get a basic income and choose not to work and continue to live, others will choose to work (while also receiving the basis income) and will have a better lifestyle because of them choosing to work. Is this not how this work or am I wrong?