Hacker News Reader

Would you please describe some of the faulty arguments for the "minimum guaranteed income" and also maybe link to the credible economic arguments to contrast? Otherwise you aren't really providing any information to further the discussion. Thanks!

Have you provided ANY links or details to provide a counter-argument too?

Would you mind expanding what you wrote in that third paragraph ? All the better if there was a nice youtube video interview with said economist explaining him/herself.

Came here to say the exact same thing; thanks for saying it better than I ever could.

I don't get the basic income thing - pay people to not work? What?

Where's the money come from? How to you prevent massive inflation and a massive decrease in economic output as people quit their jobs? Who decides who gets this basic income?

This all reminds me of a south park episode: https://www.youtube.com/watch?v=tO5sxLapAts

The money come from people who works, and everybody gets the basic income - so there are no need to track how much anybody deserves it, and no incentives to stop working to receive subsidy.

The idea is that some people will pay more than they receive anyway, but at any time that you can't sustain yourself, you still have the safety net and can survive until you can re-enter the productive workforce. Or if you're content with living with the bare minimum, that's OK too; you're not competing with others for scarce works, and you're not putting them at risk when you fight for your life - as it's not at risk.

Frankly, I am still waiting for a good introduction to general economic principles. I literally feel like an idiot when following economic discussions: it seems to me like it's all a long infinite chain of valid arguments and counter-arguments that are perfectly valid, true and completely opposite.

Hope you get something online soon.

There's a lot of great free lectures provided by Yale. If you have the time, I highly recommend it.

Economics in One Lesson by Henry Hazlitt is an amazing book, and there's a free PDF available: http://mises.org/books/economics_in_one_lesson_hazlitt.pdf

A considerable amount of macroeconomics is constructing airtight justifications for what you would like to be true, without any fear that your theories will ever be subjected to rigorous testing. Hence the situation you describe.

"Economics in One Lesson" by Henry Hazlitt http://mises.org/books/economics_in_one_lesson_hazlitt.pdf

This book is an outstanding place to start. It addresses a myriad of economic concepts in simple language. It's available for free through the Mises Institute.

"How an Economy Grows and Why It Crashes" by Peter Schiff http://www.amazon.com/How-Economy-Grows-Why-Crashes/dp/04705...

This book gives a simple overview of macro issues and is an interesting and well-presented tale about how economies grow from the basic "man on an island" scenario to a complex market. It also covers Austrian business cycle theory which explains the boom-bust cycle in economies.

Both of these books are from the "Austrian School" of economics, which is named for its Austrian founder, Carl Menger. I find these arguments compelling as they are firmly grounded in logic and are based on the principle that the human individual and her actions form the basis of all economic activity.

The giants of the Austrian school are Ludwig von Mises and Murray Rothbard (highly readable) if you want to seek out more advanced theory.

+1 on Mises Institute and Peter Schiff.

Say what you want about Austrian / free market economic schools, but these people and groups predicted the financial crisis and housing bubble: https://www.youtube.com/watch?v=LfascZSTU4o

As did anyone else who was watching the Case-Shiller index when it's 2nd derivative turned negative late in 2006.

Do not do this. The Austrian school of economics is neither scientific nor respected in the wider economic sphere.

If you want a good introduction to economics that is 1) amenable to the perspective of an engineer (i.e., mathematical theory and significant amounts of modeling and game theory) and 2) close to how actual professional economists approach economic problems, the best free textbook is one originally authored by an economist at CalTech who is also Yahooo!'s head of an economic research team.

http://www.mcafee.cc/Introecon/IEA.pdf

> The Austrian school of economics is neither scientific

This is a somewhat vague statement but I'm assuming you're referring to the Austrians' "a priori" approach to economics.

> nor respected in the wider economic sphere.

Given the adversarial stance that the Austrians take toward government intervention in the economy it is no surprise that their ideas are not endorsed by academics.

Individuals should make their own judgement about the persuasiveness of the Austrian arguments and not dismiss them because they are unpopular.

If you have the time, I'd welcome a critique of any argument contained in that Hazlitt book quoted above.

I assume that the complaint was not "no one should ever read the Austrians" but rather that it's not appropriate introduction to economics.

One may think that string theory is sound, but still think it unwise to introduce someone to physics starting with string theory.

"Individuals should make their own judgment about the persuasiveness of Austrian arguments"

I agree with this, but it seems wiser to do so once you have some basic knowledge of more mainstream economics so that you can critically compare the two schools of thought.

But that's a gross mischaracterization of Austrian economics. It's nothing like the 'string theory' of economics and is indeed rather simple.

All the seminal works (especially "Economics in One Lesson") are very elementary. You need no prior exposure to economics.

They say you can identify an Austrian work by flipping through it, as it will undoubtedly contain no graphs or formulas.

The only goal of the comparison to string theory was that it's an alternative theory that an educated observer should judge on its own merits. I'm saying that the background of one's introduction to economics should be based in the mainstream, just as one's intro to physics should not be based in mainstream physics vs string theory (saying nothing of how advanced the intro curriculum need be).

My fundamental point is that alternative theories are invaluable and essential, but being conservative and sticking with the mainstream is generally well-advised for beginners. Once you're confident in your grounding in the mainstream, you can approach alternatives with a critical, well-informed eye.

Astrology has no formulas. Astronomy has lots of formulas.

Whether you prefer Austrian or Keynsian approaches, FORMULAS ARE A GOOD THING.

That's because economic principles aren't scientific theories, they are political opinions (and weapons). That's why you have left-wing and right-wing economists, and a broad range of theories on how things work, but no agreement on the premises. There's also the fact that real-world economy is a much more complex beast than any existing models precisely because there are so many variables. Which is why most economical "predictions" are just post-hoc justifications.

I am beginning to turn to Praxology: economics is just psychology under conditions of scarcity. Because most discussion on economics and minimum wage is a peak behind people's own perceptions and prejudices.

So peak behind my veil. It may not be a coherent argument, but it is trying to form from a different direction I usually see on here.

1. Welfare payments (paying people not to work) are about avoiding the human cost of moving from one equilibria to another. We do not have an ethicall acceptable way to judge if one person is deservedly poor and another is a scrounging parasite. So we pay everyone.

2. Welfare payments are getting really expensive. Partly because of their complexity, partly because we fiddle with it too much.

2.a. Welfare payments act as insurance for society. You have a bad year its not worth forcing you and your family onto the streets.

2.b. Forever welfare payments (benefits scroungers, 13 kids and never had a job etc) may be a reflection of a persons true economic worth. see below

3. Paying everyone a minimum guaranteed income is not so crazy - it is merely a monetary reflection of the value and utility derived from other public goods like medicine, science, roads, clean air. I get a lot of value from these things. The NHS means I don't monetarily pay a US level insurance. So I can put a pretty accurate number on a minimum payment already made to me.

For me the situation now is paying people who are not currently econmically productive enough to survive, and turn into productive citizens. It is messy, it has problems, but for my ethical point of view it beats not having a welfare system and seeing people starve. Thats why we brought it in and thats why we want to keep it.

However we are seeing demographic changes (which is what the article is about) that may well negate a lot of this - more and more human beings, with moral value, may find they are no longer economically in the black.

So we might have a future that is golden, of robots growing food, houses built from nanostructures in days, of the human basics for 10 bn provided for tiny effort or cost.

But getting there is not a clear road. And for my money holding the people who will fail to cross that bridge to the future, and giving them a decent life with the bounty of new productive technologies, is a moral duty. And also a sensible hedge for hubris.

In short, we pay for welfare because it is the right thing to do, it is usually short term for each individual, we might need it personally, and as we transition into a new world, we have no idea how bumpy it will get - so safety nets are a good idea. But is the current system(s) perfect, desirable or sustainable. Almost certainly not, and we shall see wide experimentation with different variations before settling on something similar to Singapore.

But that is a long way off and I am late.

> we pay for welfare because it is the right thing to do

Or, it might be "the right thing" to give funds to fight poverty in some other way and welfare is counterproductive. Making such a claim a-priori is the crux of the problem.

Fairy Nuff

Perhaps then i should rephrase it as We pay for welfare because protecting the weakest and must vulnerable is the right thing to do and so far history has taught us that market forces can take a generation to come round and Workhouses are inhumane.

In short welfare is the economic equivalent of Churchill's "democracy is the worst form of government - apart from all the rest"

Again, I ask, why do you automatically assume paying for welfare "protects the weak and vulnerable"? If you've ever been to a strong welfare state like any country in Europe, etc, you'd know they also have homeless, broken people, as we see in the US. Where, I ask you, is the evidence that "lots of guaranteed welfare"->"better off poor people"?

I'm just saying that by making these a priori assumptions we're arguing past each other- I can't respond to an argument that says "Anyone against welfare is a morally inferior person" because I am not arguing against the moral aspects of welfare, I'm just saying that poverty can't be solved by handing poor people a check every month.

I'm not calling you a morally inferior person (I set a very low bar anyway :-). I agree that "ending poverty" cannot be achieved by handing people a cheque each month. Ending poverty is (or should be) a long term cross governmental policy issue. How it is achieved is an important, possibly the most important question in economics.

However "welfare" (note not the purely US term but a wider more European term) is in my view a smaller usually short term provision. IIRC The majority of non-retired welfare recipients recieve help for less than 14 months, and by far the biggest portion of welfare spend goes on retirees.

I am suggesting that welfare is mostly either a short term handout to prevent a vicious spiral of debt / problems or is a long term care for elderly.

Welfare is not a means to cure poverty but is a means to prevent the unlucky or vulnerable from falling into poverty.

I see the "scrounger" as a cost to be paid for such a system. Perhaps means testing can remove that cost, or perhaps not. But I know we shall not fix poverty this way but then a surgeon will operate to save me from a heart attack, even if he knows the real solution is better diet and exercise.

Edit: as for European countries having broken people, yes it's very true here in the UK as well as elsewhere. I also know from personal experience (and lots of well done studies) that the majority if the broken are either I eligible for help (often migrants) or far more common mentally unstable and often having substance issues.

Giving them a cheque helps far far less then the same cheque to a welder and his family who just got made redundant after his wife fell ill.

Lots of welfare in his case gives time to find new jobs or retrain and prevents a family joining the ranks of outcasts. That helps. We could even reduce the impact by extending welfare to immigrants (despite the likely consequences). But far and away, the biggest visible poor in our society are mentally challenged - and we have no fixes or cures there. Handing out welfare or withholding it is not going to help if the reason you can't hold down a job is the voices in your head.

All good points, lifeisstillgood. But I'll point out this thread was mainly about "guaranteed minimum income" and this is the first time you stated that you consider "welfare" to be a short term provision :-)

Ok, so welfare as an ideal is enough to cover the life-altering disasters that afflict us all, some more than others. Cover as in ensure they can be dealt with, and life return to normal productive one in reasonable amount of time.

That is the theory - in practise we have many muddled implementations of this - and I don't see a guaranteed minimum income as automatically bad. It will have market distorting effects but then the market has not historically been fast enough moving to help relieve people who have suddenly lost a job / limb. In fact a more laissez-faire period produced workhouses.

So ideally welfare is a short term provision. The current implementations are all a bit crap and I see no major reason why minimum incomes would be automatically worse.

I agree and I am looking forward to what you come up with! :)

Passing around statements like 'give everyone a guaranteed basic minimum income' seems to be no better than Marie Antoinette saying "Let them eat cake" ... it's cute because it has a bit of merit(cake would feed people as a basic gauranteed income would give people some money) but it completely and naively oversimplifies everything. :P