Basic Income Could Be the Moonshot of Our Generation
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I too want a world where people are not on a treadmill that forces them into wage slavery. But the first step is recognizing that the primary driver of modern individuals' needing to work is the payment of rent on assets that are becoming ever-less feasible to purchase outright.
This is the direct result of the past few decades of extreme inflationary monetary policy. In a time of such technological process, prices should be steadily dropping at an unprecedented rate. But instead, the Fed actually has an explicit policy of forcing them to rise, with the actual professed goal to keep everybody working full time!!
Since new money is created by loaning against specific assets, the newly created money just ends up bidding up the book-prices of consumer-desired assets, closing the CPI feedback loop when the rent (interest) has finally risen enough to take up consumer surplus.
Basic income is thus just an extension of this ongoing policy that naively adds to this inflationary treadmill - giving everyone in SF $1k/mo will result in housing rent going up by roughly $1k/mo.
The real solution we need is the exact opposite - a return to sane monetary policy where individuals are able to save and able to reasonably purchase assets like houses. The ability to save and build wealth gives people stability (not worrying about being out of work for a few months) and thus economic bargaining power to demand higher real wages and fewer working hours. This is the equilibrium mechanic that will constructively respond to the need for ever-less work, finally letting wider society see the gains from increased productivity.
In my experience, people don't have very much bargaining power even if they are financially stable, own a home and have savings when a force such as globalized trade comes through town - there is no bargaining power big enough to avoid shutting down a plant or a business, or moving it across state or country lines.
People need income before being able to save, before being able to purchase assets regardless of their price. Whats more likely is that a factory that previously paid 400 people $10 an hour would rather pay 20 people $30 an hour, and that 380 people have no negotiating power.
So this aspect is orthogonal to what I addressed in my original comment, hence my example of "$1k/mo to everyone in SF" - ruling out someone still getting $1k/mo after leaving SF. Economic feedback most immediately applies to in-demand housing markets where one can't simply cheaply acquire their own land and put up their own structure. But these type of concentrated areas are where the bulk of our economic activity is now occurring.
The flip side of this is that if BI were at a national level, there would be a demand to move to rural areas where land was cheap, to reduce the largest rent. But since, as you point out, the economic opportunities are quite limited there such areas would be entirely reliant on BI. This would further cement the divide between urban "rat racers" and rural poverty, making it harder for those involuntarily caught in the latter to leave.
> Whats more likely is that a factory that previously paid 400 people $10 an hour would rather pay 20 people $30 an hour, and that 380 people have no negotiating power
BI won't restore those 380 people's negotiating power. Since their labor isn't demanded, they will effectively become wards of the state. With the economics I'm talking about, the 20 (40hr) people that are still employed gain bargaining power as they build liquid wealth. Rather than spending their entire life working, they demand fewer hours per week which actually restores demand for the other 380.
This seems less convincing in the context of your extreme example (before all 400 could work 2 hours/week, other factors will start to matter), but the point is that this is the trend that should have already been happening for the prior decade instead of overleveraging encouraging sink-or-swim overworking.
I'm actually not categorically ruling out the idea of BI. It's just that current calls for it completely ignore any feedback due to our official economic policy, and are actually just a continuation of the broken policy that has largely put us in this situation to begin with.
I'm not so sure myself - if you have nothing but time to pursue whatever it is that you want to do, would people not spend a lot of that time working on hobbies and interests? The amount of time that potentially highly productive people spend performing and just mentally/physically recovering from menial/dead-end work could be put to much better use. There's no reason with the internet today that that person couldn't become a rocket scientist despite living in a cheap area.
Escaping the trap of these cheap rural areas is only difficult for economic reasons - its harder to save money when almost every bit of the low paying job goes to rent - you are spending your time spinning your wheels instead of experimenting, educating yourself or others.
> This seems less convincing in the context of your extreme example (before all 400 could work 2 hours/week, other factors will start to matter), but the point is that this is the trend that should have already been happening for the prior decade instead of overleveraging encouraging sink-or-swim overworking.
> I'm actually not categorically ruling out the idea of BI. It's just that current calls for it completely ignore any feedback due to our official economic policy, and are actually just a continuation of the broken policy that has largely put us in this situation to begin with.
Asset inflation would surely happen in some areas, but we'd at least establish a basic floor. Everything could become higher priced, but it would allow for more fluidity and risk taking, and much more focus on education and learning. I feel like it'd be worthwhile to continue to experiment.
> giving everyone in SF $1k/mo will result in housing rent going up by roughly $1k/mo.
It would rise, but there's no reason to expect it to be close to 1/1.
Note that this is very different than inflation, where the money they're being asked for is worth less (it might also cause some inflation, but that's a bit of a separate question). It is also very different from loans or grants marked specifically for housing, where recipients can't turn around and spend the money on something else.
In this setting, competition remains in full force. And not simply competition of perfect substitutes. Say it rises $500/mo. If I live with parents longer, we save an extra $500/mo. If I take on an extra roommate, we save a collective extra $500/mo. There is plenty of drive to save that money, and those with the flexibility to do so will do so. Some extra cash each month will grant that flexibility to more people than currently have it. That decrease in demand will be reflected in a lower price than your analysis would suggest.
(It would also probably mean fewer units bought by investors from outside the city left to sit idle. I've heard mixed reports as to how much of an impact that's had on the present situation.)
1. What percent of the population will just take their guaranteed income and do drugs/play video games/party all day, instead of being ambitious?
2. What will be the cultural effects of a large segment of the population living a life devoid of duty and consequences?
3. Will we allow these overgrown children to vote? And what would they possibly vote for except a bigger basic income and more freebies? And if you did restrict the franchise, then what incentive will the franchised class have to rule for the benefit of the disenfranchised?
4. Won't this new underclass reproduce much more rapidly than the productive class? Again, what are the social consequences of this?
5. How do you reconcile a basic income with open immigration, which we seem to be moving towards? A basic income in the US would probably be greater than the yearly income of most working people in the world.
We won't know what'll happen till we see it in the real world, but please don't shoe-horn it into "overgrown children playing video games all day".
That's not an encouraging stance to take if you're trying to convince people to undertake a massive and irreversible social experiment that would fundamentally alter our society.
Surely only citizens would get basic income? If an immigrant wants it, they'll have to become a naturalized citizen which takes enough effort that they probably deserve it.
In any case, legal immigrants sound okay to me. Obviously illegal immigrants aren't going to get it.
At first? Probably.
Eventually? No. It is too ripe of a target for pandering politicians.
Additionally, they might not be directly pandering to the non-citizens, but to advocacy groups and their supporters.
Lastly, I think the chances of politicians pandering to non-citizens are at least somewhat greater than basic income being implemented in the United States. So there's that to chew on.
To a great extent, that doesn't matter. Many people will choose to do that, but that is ok. Three things will happen:
1. Wages will rise until they are attracted into jobs.
2. Rents required to live a basic life will go up to partially (but not completely) offset the effect of the basic income
3. These people who are just living off the UBI will still be generating demand. Which, in a society characterized by extreme supply efficiency, is the side of the equation that needs to be stimulated. Their economic contribution will be spending their UBI on things they want.
> 2. What will be the cultural effects of a large segment of the population living a life devoid of duty and consequences?
We already have people who largely do this. We won't be creating something new, we'll just be expanding it a bit, and raising their quality of life.
This may end up having a negative effect, but I kind of doubt it personally. But this can only really be answered via experimentation.
> 3. Will we allow these overgrown children to vote? And what would they possibly vote for except a bigger basic income and more freebies? And if you did restrict the franchise, then what incentive will the franchised class have to rule for the benefit of the disenfranchised?
That's an interesting question. I'd say yes, but keep in mind that everyone will receive the basic income, whether they're working or not.
As of right now, people on welfare are allowed to vote, and for the most part that seems to be working out ok (some may disagree here, though).
> 4. Won't this new underclass reproduce much more rapidly than the productive class? Again, what are the social consequences of this?
I'd say no. It seems to be the case that when people become wealthier they reproduce less. It's unclear why that is exactly, but it just seems to happen that way.
> 5. How do you reconcile a basic income with open immigration, which we seem to be moving towards? A basic income in the US would probably be greater than the yearly income of most working people in the world.
Maybe a policy like you have to work for X years before receiving it? That'd actually be an interesting replacement for immigrations policy. Open borders, but you don't get social services until you've been here employed productively for say, 5 years.
I think that "expanding it a bit" is understatement.
>As of right now, people on welfare are allowed to vote, and for the most part that seems to be working out ok (some may disagree here, though).
Is it working? The unsustainable budgets of all Western countries seem to suggest otherwise. The collapse in family stability and the workforce participation rate since the introduction of the welfare state also suggest otherwise. The rational behavior for someone who collects of significant portion of their income from welfare is to always vote for more welfare. It is almost always in their short- to medium- term interests, and in the long run we're all dead anyway.
>I'd say no. It seems to be the case that when people become wealthier they reproduce less. It's unclear why that is exactly, but it just seems to happen that way.
Richer people have less kids because it's extremely expensive and time consuming to raise kids the way they'd want to, investing heavily into their educations and life experiences, going to PTA meetings, being involved with school activities, etc.
I don't think this logic applies to people that are collecting checks for doing nothing.
>Open borders, but you don't get social services until you've been here employed productively for say, 5 years.
As I pointed out elsewhere in this thread, that would be totally unworkable. If the basic income is to become law, then everyone living in the country would have to receive it. If everyone else is pocketing twenty grand a year for doing nothing, then it's going to be impossible for immigrants to afford to live here without that same free money. Much in the way that it's become very difficult for single-earner households, since most households now have two earners.
I'm not sure that's true. If you implemented a UBI, you'd eliminate all current welfare programs. Since a UBI does not act as a disincentive, you should actually, overall, get more labor participation.
Current welfare is actively disincentivizing of labor participation. If you get a job, your overall wealth will sometimes decline. UBI does not have this problem - it simply raises the standard of what it means to be poor. Working more will always get you more resources.
> Is it working? The unsustainable budgets of all Western countries seem to suggest otherwise. The collapse in family stability and the workforce participation rate since the introduction of the welfare state also suggest otherwise. The rational behavior for someone who collects of significant portion of their income from welfare is to always vote for more welfare. It is almost always in their short- to medium- term interests, and in the long run we're all dead anyway.
They don't really suggest that, unless you are counting things like social security and medicare in your calculations. Straight up welfare programs are about 10% of the federal budget [1]. And social security definitely shouldn't be counted (even though it isn't necessarily a great idea), medicare you could arguably call a welfare program, but it's not exactly comparable to cash payments, and has problems that go well beyond those of a simple cash transfer program, so I would argue isn't particularly well suited to comparison here.
> Richer people have less kids because it's extremely expensive and time consuming to raise kids the way they'd want to, investing heavily into their educations and life experiences, going to PTA meetings, being involved with school activities, etc. > I don't think this logic applies to people that are collecting checks for doing nothing.
That is a nice story, but if it were true, it'd suggest that the richest people, who presumably have more free time also have more kids. But, they do not [2]. Now, this chart doesn't break it down beyond >200k a year, but what you see is a very steady decline. The more people make, the fewer children they have. There isn't a single group for which the trend isn't met.
> As I pointed out elsewhere in this thread, that would be totally unworkable. If the basic income is to become law, then everyone living in the country would have to receive it. If everyone else is pocketing twenty grand a year for doing nothing, then it's going to be impossible for immigrants to afford to live here without that same free money. Much in the way that it's become very difficult for single-earner households, since most households now have two earners.
Well, i'd say two things in response to that:
1. So what? All that means is that the barrier to immigration is high. That shouldn't be a problem, and it makes for a neat market-based solution to the problem of "how many immigrants do we let in".
2. In a society where everyone is given a basic income of 20k, then wages will have to rise to incentivize people to do any kind of work at all. What this means is that we can do away with the minimum wage, and allow wages to float freely in response to supply and demand. The market rate will always be a 'living wage' because people simply won't work for it if it's not. This, right here, is why UBI is so elegant. It doesn't distort markets, it just moves their boundaries, which allows them to operate with maximum efficiency, while still maintaining reasonable living standards for everyone.
Now, don't get me wrong, it's entirely unclear that we can actually afford a UBI. Even if we get rid of all welfare programs and account for the economic growth that would result (or at least, that I think would). However, if and when we do have the sufficient wealth to implement a program like this, I think it makes an enormous amount of sense.
Once you implement a UBI, you can wipe out tons of entire government agencies. You can get rid of rent control, minimum wage laws, all kinds of things that mess with markets and create various forms of deadweight loss. There is so much uncaptured value lying on the floor because of the inefficient ways the government tries to alleviate poverty or subsidize behavior, and every single one of them can be eliminated by the implementation of a UBI.
[1] http://www.cbpp.org/research/federal-budget/policy-basics-wh...
[2] https://www.statista.com/statistics/241530/birth-rate-by-fam...
You must definitely count these programs, especially Social Security, which is effectively a UBI for old people (it is sold as a public pension plan that you buy into, but there's been much analysis that debunks this. Social Security is: 1) A tax program and 2) a welfare program that is vaguely and in some circumstances somewhat based on how much of the tax you payed.)
>In a society where everyone is given a basic income of 20k, then wages will have to rise to incentivize people to do any kind of work at all. What this means is that we can do away with the minimum wage, and allow wages to float freely in response to supply and demand. The market rate will always be a 'living wage' because people simply won't work for it if it's not.
The market rate for wages will not be a living wage. For unskilled labor, I could see it being as little as a quarter of the UBI. Most certainly not enough for a low-skill worker to sustain themselves without a UBI.
I actually agree that it would be a good thing to stop taking low-skill immigrants, given our surplus of low-skill labor. Why are people so adamant about keeping the southern border open then?
>That is a nice story, but if it were true, it'd suggest that the richest people, who presumably have more free time also have more kids. But, they do not [2]. Now, this chart doesn't break it down beyond >200k a year, but what you see is a very steady decline.
Your data proves nothing of the sort. 200k a year for a household is not "rich", they would certainly not call themselves rich.
The actual rich do seem to be having more children. http://grist.org/population/2011-03-03-are-rich-americans-ha...
I don't disagree that it is similar in effect, but your original point, I think, was that people would keep voting for an increase in it. But that just hasn't happened with social security.
> The market rate for wages will not be a living wage. For unskilled labor, I could see it being as little as a quarter of the UBI. Most certainly not enough for a low-skill worker to sustain themselves without a UBI.
Well, i'm not sure exactly how we can resolve this point without an experiment. But a priori, why do you think someone who is receiving a UBI would work full time for 5k more? It doesn't seem worth it to me. I mean, don't get me wrong a few people would. But to meet the demand for labor you'd need to see very large numbers of people working at this rate.
> I actually agree that it would be a good thing to stop taking low-skill immigrants, given our surplus of low-skill labor. Why are people so adamant about keeping the southern border open then?
I have no idea. A misplaced sense of ethics, perhaps. It's really a very weird thing.
> Your data proves nothing of the sort. 200k a year for a household is not "rich", they would certainly not call themselves rich. > The actual rich do seem to be having more children. http://grist.org/population/2011-03-03-are-rich-americans-ha....
It's interesting, so, the data I cited included 200k and above. The data you cite seems to refer to the top 1 percent or so as having more kids. According to this: http://www.usfunds.com/investor-library/frank-talk/what-does... the top 1% is about 500k/year.
That suggests that somewhere in the 200k-500k range the trend reverses. I'm not sure exactly what to make of that. I do concede the point that you are right, it seems that at a certain point along the curve wealth does seem to beget more children.
However, i'm not sure how exactly how that relates back to our original point. Since, at least in your citation, its discussed as an ostentatious display of wealth. And it's also discussed as being extremely expensive.
I suppose there are two models of child-having that would produce different outcomes:
1. The poor have lots of children because they're either dumb, unaware of contraception, don't have access to it, or have religious opposition to it. Because it does seem clear that when you are poor (unless you live in an agrarian society), having kids is a burden. Having wealth tends to ameliorate some of these things (religiosity and wealth are fairly inversely correlated - though this could be a function of the correlation between religiosity and intelligence, and intelligence and wealth, which would of course break down under a UBI).
2. Free time begets children. The people at the very top and very bottom of the income distribution presumably have more time, so they have more kids. UBI expands free time so it expands child-having.
It's not exactly clear to me which of these is the case, and the truth is probably some mixture of the two. I'd be willing to concede that people receiving a UBI might be more likely to have more children, but I think it'd be offset to a fair degree by the increased access to knowledge and contraception. It'd be worth looking for instances of natural experiments to establish exactly what the numbers might look like though.
This probably depends quite a bit on just what level the income was set to.