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Comment by ck2 | Hacker News Reader

It's not a silly idea at all but I like to think of myself as progressive and I think it is a very bad idea in reality vs on paper.

Just look at how college costs magically rise to the availability of loans and grants. What do you think is going to happen to food and rent prices once those supply chains figure out there is much more profit to be made?

The Walton family alone has more wealth then the lower 42% rest of the USA. What do you think is going to happen when they know all their customers have a certain base income - you think prices are going to stay where they are?

So you will just make the wealthy more wealthy.

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Presumably a lot of the potential profit would be taxed to fund this basic income guarantee. In any case, it seems like your argument boils down to "Better not let poor people buy food, in case the price of food rises," which I think fails without significant deeper examination.

Nope, I say make sure poor people have that basic income.

You don't have to give it to everyone.

I live in a low income neighborhood - you can clearly see the difference in generational poverty and how help is needed.

You also can fix the problem by making sure that corporations like Walmart do not rely on their employees getting foodstamps as part of their income as a business model. It is a very unlevel playing field when entire cities are funding the "low prices".

Means testing is a lot of bureaucracy for less effectiveness. Giving everyone a basic income eliminates those issues.

> Nope, I say make sure poor people have that basic income. > You don't have to give it to everyone.

Then it's not a basic income. Giving it to everyone, period, is the defining characteristic of a basic income, and what makes it different than welfare.

Proponents believe it to be a superior model because it eliminates a lot of beaurocracy, bad incentives and paternalistic structures that communicate to poor people that they're inferior and might as well not even try to improve themselves.

Yes, but once you give everybody $X,000 dollars per month you'll spur inflation and in a couple years $X,000 will no longer be enough to live on. So then you've got to adjust your basic income to $(X+Y),000 per month to make sure everybody has enough, but that will spur more inflation and you'll be right back where you started. Meanwhile, that money has to come from somewhere and it will come out in the form of taxes. Remember, that only about one in three people in the US is employed. So now every working American has to be taxed enough to pay for three basic incomes plus their own incomes on top of that. The rich will complain about the added taxes, but it's the middle-class that really suffers, since they will NOT escape the added tax burden and their extra taxes combined with rising inflation mean they now make just barely enough to get by, effectively placing them in the lower-class. Now you've got a gigantic lower-class, a tiny middle class, and an upper class that only gets richer because they can accelerate the rate at which they siphon off income from the lower classes through price increases.

It's a nice idea, but it's not a good idea.

> once you give everybody $X,000 dollars per month you'll spur inflation

> Meanwhile, that money has to come from somewhere and it will come out in the form of taxes.

These two statements are contradictory. If it comes from taxes, it's not "printed" money and thus does not directly lead to inflation - unless it's through increased spending, in which case it means increased consumption and thus a growing economy.

They're not contradictory:

Prices for basic necessities such as food and housing would rise, causing an increase in inflation. Meanwhile, spending for luxuries would see a contraction as additional tax burdens shrink discretionary spending.

The net effect is to shrink the middle class, as I explained.

> Prices for basic necessities such as food and housing would rise, causing an increase in inflation.

Only if previously a significant portion of people could not afford basic necessities at all and/or it's impossible to produce more of those basic necessities. Both of these seem rather dubious.

> The net effect is to shrink the middle class, as I explained.

You didn't explain anything, you made a bunch of predictions.

Giving it to everyone, period, is not mathematically tenable. A thousand dollars per month to every adult US citizen would represent over 2 trillion dollars in additional spending per year. At the very least you have to change the tax structure to claw it back from people as they earn more money.

It would not be simply additional spending, as it would replace many existing (much more beaurocratically complex) social security programs.

And yes, the tax structure would have to change as well.

https://news.ycombinator.com/item?id=6809766

It would be a massive net increase in spending and it's not even remotely tenable without changing the tax structure specifically to claw the basic income itself back from most of the recipients.

You increase taxes to provide the basic income, so on net you're not providing it to everyone. On gross you provide it to everyone so that there's no sharp drop off at any point.

It's already worse than that. There are many products which have a smaller size of that's more expensive than the larger size because the smaller one is WIC-approved. There's targeted price-gouging for people who are forced by the government to buy specific products. There are also ridiculous loopholes. People buy soda and milk with returnable bottles, walk outside, pour it out, return the bottles for cash, and buy a beer. This happens consistently at grocery stores.

> People buy soda and milk with returnable bottles, walk outside, pour it out, return the bottles for cash, and buy a beer. This happens consistently at grocery stores.

This is a perfect example of how all people do not in fact act in a responsible manner as many people would have us believe when discussing topics such as this. Some people simply are unwilling or unable to even semi-wisely manage the life of a human being, which shouldn't be that shameful really considering how complex of a job it is nowadays.

In many cases, some people really do know what is better for certain others.

Okay, but you're talking as if this is the default behavior while it may very well not be. I'd like to see some numbers to back-up these claims as general behavior rather than "a friend of mine, saw a guy who's uncle was once in a grocery where a guy..."

I could show you POS records, but I'm not sure what that would prove. This us not what everyone does, but it was meant as an example of the kind of problems that arise from trying to control consumer behavior that go away if you just give cash. A more extreme example would be the economy of the former U.S.S.R., but I thought exchanging a two dollar milk bottle deposit for beer money was more relevant.

Actually, I'm not talking as if it is the default behavior, and your comment to me is an excellent example of why these things are so difficult to solve in society. Not all people are rational actors whose behaviors are in their or societies best interest. This is a fact, and it is important to the solving of this problem in a practical manner.

But your interpretation of a reported instance of this behavior is that the person pointing it out is asserting that this is common/normal/default (which is incorrect), so (implicitly) this opinion (and any related) can therefore be ignored and removed from the discussion. However, that it is the default behavior isn't in fact being asserted, and it is you who is most incorrect in this small subset of the overall conversation.

In my opinion, that seemingly most participants on both sides of the issue are inclined to pick and choose their facts and have little interest in the genuine objective reality of the situation is one of the main reasons that we will never solve problem of this kind in a reasonably efficient manner.

Really? You sound like a snopes advertisement. I believe the most generous glass bottle return is 10c, can return 5c, and that would be down at a recycling center. A six pack of crap beer is $5, meaning you would need to buy 50 bottles or 100 cans, pour them all out, take them to a recycling center and back (bus fair) and then buy some beer. I doubt this happens consistently at grocery stores.

In CA, that's basically the scenario.

In MI, can deposit is 10c, and many grocery stores have returns in the back.

The situation described still seems unlikely to be tremendously common, but is more feasible than your reasoning would suggest.

In MI, there are 10c deposits for cans and also larger deposits. There are $2.00 milk bottle deposits. Dumping is definitely not the best way to make money from food stamps, but I see it happen every week.

Interesting. Noted.

Who cares? The government pays for WIC, so the only people being defrauded in this circumstance are the government. There's no "price gouging" involved here; WIC recipients get a voucher that pays full price for the items on the voucher, no matter what they are or how much that is.

The government isn't a person, the taxpayer is being defrauded so pretty much everyone should care.

The point is it's a real-life example of what your parent believes will happen if basic income is implemented.

Stop for one second and ask where does the government get that money? Should taxpayers care nothing about being defrauded?

> People buy soda and milk with returnable bottles, walk outside, pour it out, return the bottles for cash, and buy a beer. This happens consistently at grocery stores.

No it doesn't, poor people aren't stupid; there's far simpler ways to convert food stamps to cash and poor people know them all and they certainly don't waste them like this. It's much simpler to buy groceries for someone else and take their cash for a dollar for dollar exchange.

I grew up poor, everyone I knew was on government assistance and they certainly did not and would not waste possible cash by dumping it out to get a few cents off a bottle.

The Walton family alone has more wealth then the lower 42% rest of the USA.

So do I, and so does almost anyone with a positive net worth.

That's 42% combined. They have more wealth than 42% of the rest of the population combined.

120 million people at, say, -$1000 in net worth == big negative number. Anyone with $1 of net worth is wealthier than them.

It is ridiculous to suggest that someone with a dollar but no access to credit is weathier than someone who is able to borrow the cost of a house.

Don't take it up with me, take it up with ck2. That's what his statistic (yummyfajitas and the Walton's have more wealth than the bottom 42%) is measuring.

Actually, while I do see what you are saying, I don't think it's that ridiculous. If they have a house with lots of equity they aren't included in this. If you have a negative net worth you aren't doing that great. If you happen to lose your job (like lots of people have over the last few years) now you are in an even worse situation than the guy with a dollar. Now you have no money, and lots of debt.

Having debt ("able to borrow the cost of a house") does not mean you have a negative net worth. It just means you have debt. Having 30k in credit card debt on the other hand...

Yes, it is, because the person with $1 and no access to credit was just made up for the purpose of convoluting a point about wealth inequality in America.

>and so does almost anyone with a positive net worth.

A recently graduated MD with $120K in debt is still massively more wealthy than a hobo on the streets who is technically in the green. In this knowledge economy a well respected degree is a valuable asset to hold.

Somehow this idea always comes from libertarian quarters, too(please, no 'no true scotsmen responses' replies about how nobody but a single mute hermit living on a mountaintop in South Dakota is a _real_ libertarian).

This seems like an incredibly market distorting policy. Social welfare programs provide hard floors on quality of life: you don't have food? food stamps. you don't have medical care? medicaid. Some people live longer than they financially planned? universal old-age poverty insurance (social security).

This has all the feel of letting the more financially/business-sophisticated citizens go hunting on one of those hunting ranches with borderline tame 'game'.

I look at what happens when a geographic area experiences a blanket jump in income. Generally housing prices go up across the board.

Why? Because its the one item the broad population bids against each other on.

The more pessimistic will say the money will be spent on gambling, drugs, and alcohol.

Not true. We're not talking about some kind of inflation that hits every dollar equally. The first 10000 dollars can't be made useless without affecting all the other money.

A basic income means everybody eats and has shelter. What part of the economy does that affect? Less and less. It may be time to just make that a civil right, and move on.

You assume that those minimum wage shelf stackers will work the same hours for the same pay in the same conditions.

Prices rise. But costs rise too. The wealthy would be no more or less wealthy than they were before.

College is different than food. Everyone cares about going to most prestigious school they can afford (that will accept them), which creates a bidding war. This is actualy very similar to housing markets in desirable neighourhoods - everyone wants to live there while there's room for maybe one person in ten, so the market forces set the price at a level beyond the means of the bottom 90%.

Food, on the other hand, is a globally traded commodity. There's no reason for the food prices in the US to go up if basic income was to be introduced there.

For college in particular, where it is quite specifically the fact that you are (better skilled and/or better connected and/or more able to pay) than everyone else that commands a premium this is very much the case - we can't just build more prestigious schools.

For housing, for most people, the bulk of what makes a neighborhood desirable is location relative to their work and social group and activities, cleanliness, and safety. Prestige is less of a component outside the very high end, where we don't care to subsidize anyway. The market (and the rest of society) can absolutely provide more "desirable neighborhoods" for the desires of the people who will be turning a net positive from BI.

Did you noticed how farmers are subsidized? This is actually form of basic income in artificially lowered food prices.

I think there will be some adjustments in real estate necessary for the rent not to skyrocket after introducing basic income. I'd go for tax rate on housing directly proportional to how much housing you own, reaching 100% tax when you won 50 or so times the amount of housing necessary for one family.

Availability of loans and grants for college that can't be used for other purposes is a very different situation, because there are fewer options competing for that money.

Is it silly to assume that competition in a free market will produce startups trying to upset this situation in markets that do not have a high barrier to entry?

Universal income can be cost neutral, that would mean that prices wouldn't increase on average.

"Just look at how college costs magically rise to the availability of loans and grants. "

That's the universal problem with subsidies. That, and reward for non-performance.

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