Well, in Denmark we have the equivalent of Basic income and I'd say we have a major problem with peoples willingness to work. Some families are on welfare for generations now.
I'm looking for a job and every time I apply to a job, I have a little voice in my head saying : are you sure you want to work there ? You currently have the opportunity to do what you want and learn whatever you want for free, but if you work there it will be boring af and you will not be able to do what you want.
So currently I'm reading a lot of books, doing coursera course I'm interested in and doing a lot of sport which is impossible when I have a job because reading takes hours just to read one book.
If I work (even part time, I will loose all welfare).
If I find a job I will earn only 400-800E more than I earn with welfare.
But as an average of ~500 euros improvement of my current "salary" and loosing at the same time 40h/week + getting tired and not being able to do intense intellectual things after work I don't know if it's really worth it. And as I said, I "earn" enough money to not have to use my saving.
I think many are quick to conclude motivation is the cause without considering any less visible underlying reasons that cause people to be in those situations.
Things that I typically read:
- the lower class struggle even to sustain themselves for days/weeks in between jobs
- in the middle class there is people who fear not having health insurance in between jobs
How can one survive in US without any job at all? US's welfare is radically different from Denmark's.
People who are out of work for short periods of time may not be familiar with all of the various programs and how to sign up for them, and it may take some time to do so. They may also have budgeted their expenses with their employment income in mind. This is why things are particularly difficult for people who intermittently lose their jobs.
But in general, anyone who finds their income unexpectedly unstable or close to the minimum amount necessary to meet their expenses will have a tough time, no matter where that income is coming from, or what value it is.
This article says UBI has been controversial for a long time in Denmark but is on the political agenda again recently:
https://basisindkomst.dk/basic-income-borgerloen-in-denmark-...
If I guessed correct, then the Danish is significantly different from UBI, because that system discourages working. Starting work means losing your welfare. Or at best every euro you earn from working is subtracted from your welfare. Besides that, in such systems you need a complicated bureaucracy to figure out who should and should not get welfare. This bureaucracy needs to contend with fraud, and is probably rewarded for giving as few people welfare as possible. This leads to a bureaucracy that is somewhat hostile to those it is meant to serve.
With Universal basic income, you lose the discouragement to work. You lose the very complicated and hostile bureaucracy (with exceptions for emigrants and immigrants probably). And you lose some of the political pressure to cut welfare, because everyone gets UBI so there is less jealousy.
In the Netherlands there have been cases of people on welfare needing to pay back thousands of euros because sometimes their mother did groceries for them. That was officially 'income' they failed to declare, and therefore their welfare was retroactively cut. That is just inhumane, and stupid. It means anyone on welfare who cannot make ends meet cannot ask anyone for financial help, because that would cost them their welfare.
Often the way that welfare is implemented is that if you can't work, you get welfare. This seems like a really obvious, logical, good idea. But there's a trap (a welfare trap!). Because on the other side, when you start working again, you stop getting welfare. And your net income might actually go down.
A rational actor might therefore end up stuck in this local optimum where they stay on welfare and never start working.
One argument for UBI is that it eliminates the drop in income associated with the return to work (because you get it unconditionally: whether you are working or not) . A theoretical prediction might therefore be that more people would work if UBI is available.
In practical tests so far this doesn't seem to have quite panned out. This is due to UBI having multiple effects simultaneously. However, I would be most amused to see if in some situations this does became the dominant effect, and the number of working people went up.
Denmark having high tax in general is another story, but at least with UBI not everyone who is getting paid will be thinking "hmm I lose all that income if I take a job, plus I can't be at home so much".
Current welfare systems, if you plot the effective marginal tax rate as a function of gross income (i.e. if you earn one more dollar, what percentage of that dollar does your net income increase including all government systems), have by far the highest marginal rates for the lower incomes. With the marginal tax-rate actually generally decreasing as your income increases. Notably in some broken systems (like the Dutch one) there can be cases where your marginal tax rate is above 100%.
Note that the tax burden ratio [(gross income - net income) / gross income] as well as the actual tax burden [gross income - net income] still increases with as gross income increases. If you graph the tax burden as a function of gross income, then the marginal tax rate is essentially the slope of this plot.
Importantly, it is the marginal tax-rate that affects a rational actor looking to weigh whether it is worth it work harder to earn more money. Hence very high marginal tax rates are very discouraging to working more / harder / trying to become more productive.
Moreover, why does that matter at all - how is it fair to those still working, who are forced to pay for those who don't want to? I'm all for welfare - helping people in need. But I'm not going to fund someone's lifestyle.
With the cost of childcare these days, staying home to earn $28,000 in welfare instead of working a job making $30,000 isn't laziness, it's a no-brainer. You have to consider the non-monetary "income".
$28K < $30K is the wrong math. It really is: $28K + 2000 hrs of opportunity cost > $30K
And to your second point: being fair is not the only reason to have assistance programs. Even if I don't think assistance programs are not fair I still support them so that there is less crime in my neighborhood, etc.
But I disagree with your comment on the second point. As I said, I'm all for welfare/assistance given generously to those in need, but that's different from funding non-working lifestyle of those who have good working options and simply don't want to work.
Some part of UBI might overlap with the welfare part, but it's going to significantly increase the number of people who don't work just because - and it's not fair to fund that from the money made by those who work, and especially not fair to take it from those who must work because UBI is not enough in their situation.
UBI could be funded from sources like sovereign funds - why not. But let's not take money from people who need it just so a group of people can quit their job. Classic welfare at least says that those who receive it need it more that the person that pays.
I don't really know if that's worth worrying about. We're not living in a subsistence economy where if someone isn't carrying their weight the whole tribe dies. I think it's perfectly acceptable to have a certain amount of non-participatory portion of the population, we should make sure it doesn't get to the point of unsustainability but trying to police absolutely everyone in society is a recipe for disaster.
> But let's not take money from people who need it just so a group of people can quit their job.
The people who need that money aren't going to bear the majority of the burden - when you get down into the range of poverty wages people are already exempt for non-transactional taxation and end up receiving more money than they pay. I don't think it's fair to paint any new expenditure as "But how will the poor bear this cost" - when, in the end, the middle and upper classes are where we look to for funding.
The 1980s perpetuated the idea of a "welfare queen" that we should all be really mad at - there are folks that take advantage of the system but it's such a small cost that, honestly, whatever. Most people can't enjoy that kind of a lifestyle so if a few people get to live content lives that would otherwise be ground into the dust I'm perfectly happy for them.
I guess what I’m getting at is that someone options for employment might not make sense given their life circumstances. A good job for someone is not a good job for everyone because of the opportunity cost.
On one hand, we can make our benefit systems so barebones that any minimum wage job is better, even including opportunity cost, but then the people who actually need those programs are starving.
If we make those benefit programs generous to properly support those who truly need it, then minimum wages are going to have to support more than bare survival to be a better option.
It’s really not an easy dilemma to solve because incentives are working against you.
Really, I think the best way to get people off welfare is not to decrease welfare benefits, but increase the incentives to get a minimum wage job.