Comment by belorn | Hacker News Reader

Comment by belorn | Hacker News Reader

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I understand the confusion, but its mostly there thanks to misconception about how things works now,

> If you would like more than this, you can go and get a job and hopefully earn more (have a better lifestyle) than staying at home not working.

Staying home and not working today is not actually an option in most places in the world. The reason is why this new model is called unconditional basic income. The current system called income support is conditional.

And market forces love the fact that its conditional, since it allows exploitation. If income support is for example conditional on the unemployed not having received a job offering, then the market can exploit this fact and offer people jobs for below income support (or what ever is minimum). Unemployed people can not say no, or they loose the government income support, and thus become forced to accept a slave job or loose all income.

unconditional basic income would eliminate this issue from the board, and increase wages for unattractive jobs.

Inflation should also not be effected by much. The total amount of money in society is still the same finite amount as before. There is no "extra money available", only a different form of distribution. There is a larger group with money to spend on products, which drives prices both up (more demand), but also down (more incentives for large scale production). It also makes money change hands more often, and is often attributed as the reason why a income support system do not actually drive prices or wages down.

Your reasoning is severely flawed.

Nobody today wants to accept an income below what you need to survive because..you need to survive. Liberals don't want to see other people accepting an income below what is needed for them to survive in a way that we can accept, so pass rules about a minimum wage.

With this proposal, there is wage that it too low. As long as you make enough to afford something nice that you want that you couldn't otherwise afford, there is no reason not to take the job. Therefore at the low end, employers can pay LESS than they do now.

What it does instead is remove perverse incentives that make poor people receive less money for working than not working. The classic example being a single mom who, while working, and paying child care, makes less than on welfare. (Incentives that we've responded to by passing rules forcing poor people to take the otherwise irrational work option.)

Liberals don't want to see other people accepting an income below what is needed for them to survive in a way that we can accept, so pass rules about a minimum wage.

This is silly. If that were the motivation, then minimum wage would be a few dollars/day.

Here is a list of countries by GDP per capita, after adjusting for purchasing power. Lots of countries (e.g. Venezuela, Georgia, India) have a GDP/capita below the US minimum wage. The world GDP/capita is below the US minimum wage. Yet somehow people in those countries still survive.

http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_...

As long as you make enough to afford something nice that you want that you couldn't otherwise afford, there is no reason not to take the job.

Sure there is - you might value that nice thing less than you value watching tv instead of working.

I don't think you read what I wrote carefully enough. Here it is again.

Liberals don't want to see other people accepting an income below what is needed for them to survive in a way that we can accept, so pass rules about a minimum wage.

The key points being that liberals don't want to see it (they don't see other countries), and it is the liberals defining what seems acceptable.

As for your "after adjusting for purchasing power" comment, you know enough economics to know that such adjustments depend on the bundles of goods being purchased, and the poor purchase different bundles than middle class people would. (The same problem means that the quoted inflation figures do not accurately predict the experience of specific socioeconomic groups.) Thus the figures should be taken with a grain of salt.

But that said, yes, people survive on that. But do liberals like seeing them do that? I submit that liberals don't, and this is the motivation for the minimum wage. (See the sibling reply to yours for verification.)

As for watching TV versus working, I'm sure that would happen. I know some of those people. I also know people who would happily work for less than minimum wage just to get out of the house.

I definitely misunderstood what you said. Thanks for the clarification. I suspect your theory about what people like to see has more than a grain of truth to it.

>The classic example being a single mom who, while working, and paying child care, makes less than on welfare.

It can be worse that this.

At least in some states, every dollar you earn is deducted (at least in part) from your welfare checks. This was at least the case a while ago; I couldn't vouch for its truth today after welfare has been "reformed" several times. It was definitely true at one time, though.

When this was true, at the very least, it was a severe disincentive to working, since until you were able to make more than your welfare check, you would be at best be making pennies on the dollar by taking a job.

But how you cheat on universal income is to declare having more children than you actually have. Or just actually having them, treating them badly.

Or at least, every now and then, there's an article in various European news articles that someone pulled that crap. (Most Euro countries will give a monthly stipend of ~100 euro per child you have, no questions asked (in Belgium you have to work to get it, I believe, but no other qualifications. A bank director gets it, and so does the cleaning lady))

>But how you cheat on universal income is to declare having more children than you actually have. Or just actually having them, treating them badly.

Welfare also scales payments based on the number of kids you have. This is a common (and almost certainly apocryphal) accusation against people currently on welfare; if it's ever true, it's an exception and not the rule. (which is why it would be news)

What is true is that the vast majority of people want to feel useful -- and (at least when the women in question are even moderately educated) they don't want to have extra children just to have a higher stipend.

Not that original intent should in any way be binding, but it's an interesting cultural shift that "single mom who, while working, and paying child care, makes less than on welfare" is now a reason why welfare is bad, when "mothers shouldn't be working" was part of what motivated welfare in the first place.

This reminds me of the old paradox that a man who marries his maid is reducing GDP, because when she was the maid she would cook and clean and he would pay her enough to support her as a business transaction, but as husband and wife, she still cooks and cleans and he still supports her but it's not a business transaction anymore.

Likewise, a mother who goes to work and spends her whole paycheck on child care increases GDP, but if she just stays home and cares for the child herself, it doesn't count because it's not a business transaction.

What people need to survive is too low a standard given how much wealth there is in the world.

True, but it's a higher standard than what we have now.

The problem with making it unconditional is that it will completely break the ceteris paribus calculations as to what is good enough, making a lot of collateral damage on its way while being largely ineffective.

Showering money to everybody is very likely to make more harm than good to real people's economies. A transition to Friedman's proposal on a "moderate" negative income tax (it's not what the name suggests) makes a lot more sense than this. Although I'd just give conditional help as it's done in many European countries with a reasonable degree of success.

The Swiss suggestion aside, it's not really meant to be a free middle-class experience.

In the minds of most people it's more of a "you will not go hungry or get cold in the winter" level of support, and I would make the argument that the majority of folks would continue to work to supplement their income beyond the bare necessities.

It depends on your base axioms here. Most people don't like living with the bare minimum, and will try to work their way out of it. Most people aren't stuck at the bottom of the income range by choice.

Think of the entrepreneurial venues now open to people who no longer have to juggle two shitty jobs just to get by. I think we'd come along way towards reducing human misery without really harming the economy - with the exception of making jobs that are shitty for no good reason obsolete.

Yes, this.

My take is that capitalism is corrupted because people are unable to meet basic needs. We pretend that capitalism is a system where everyone is able to make informed decisions. We pretend that in capitalism, a 10% chance of making $1M a year in income has the same value as a 100% chance of making $100k a year. This is just not the case.

People have two different types of risk they can take. Income risk, and personal risk. Personal risk is your shelter, your food, your health, your family. Income risk is your expected income beyond what is needed to meet those basic needs.

If your personal risk is covered for some reason, then you are able to objectively evaluate income risk. But if your personal risk is not covered, you have to be more conservative. The downside is not that you might not make as much, it's that you might lose your home, health, or starve. You can't be logical about that.

If we have a system where personal risk is largely covered, then the free market will actually pay people what they are worth because people will feel free to actually take risks and (for instance) start companies and pursue their passions.

This is some stuff I wrote on it a while back, it's better written than what I put here.

http://neltnerb.tumblr.com/post/58818804903/an-entrepreneurs...

> In the minds of most people it's more of a "you will not go hungry or get cold in the winter" level of support, and I would make the argument that the majority of folks would continue to work to supplement their income beyond the bare necessities.

And that's the essential fallacy: You cannot control the prices of goods and services in the market.

Once you provide a basic income to everybody, that will create a scenario wherein the majority of people benefit from the income inversely proportionally to their level of other income. This is the intended effect: The poor benefit the most and the upper-class are largely unaffected. So it's a good idea, right? Not exactly: What are the poor going to spend their income on? Primarily food, housing -- the "not going hungry or cold" things. So they've got more money to go out and buy food and they will. And the lower-middle-class who make a bit more than that will now have enough money to buy more food and better housing and they will. And the middle-middle class have a little extra money to spend as they wish and they will. And so on. But the majority of that money will be spent. With more free cash to go around, prices will rise to capture the additional profits. When prices go up we have inflation and now the poor are back to not being able to afford food and shelter and the lower-middle-class are back to living hand-to-mouth and so forth. The market compensates for the additional influx of cash by providing opportunities to soak it up, so it doesn't wind up helping anyone in the long run.

Well we'll just peg it to the rate of inflation and the problem will be solved, right? Again -- it's not that simple.

See, only one in three Americans is working. If we determine that each American needs about $500 per month to "not go hungry or cold" then that means the average American will have to pay $1,500 in additional taxes. We'll burden the upper class with the majority of those taxes, of course, but this isn't good for the middle class either. The upper-middle-class winds up being saddled with enough additional tax burden that they join the middle-middle class. And the middle-middle class who were previously getting along fine on a household income of $50,000 just joined the lower-middle class because even with the added income they have to pay more for the basics: food and shelter because of the additional inflation.

So now we're saddled with a shrinking middle class, (sound familiar?) nobody being able to afford any more than they were before and the rich continue to remain largely unaffected by all of this. In the end it accomplishes the exact opposite of what you set out to do.

You're making a lot of completely unsupported predictions there...

It's not possible to effectively predict in scenarios like this, which is why you don't go overboard.

so did the parent, and everyone else in this thread.

... and this is why, selfishly, I would like to see the system implemented somewhere, albeit not necessarily where I live. People keep throwing peremptory statements here and there (on both sides of the argument), even though we really have no way to know what's going to happen. So let the Swiss implement it, and let the whole world see how it's gonna play out. If it works (which I sincerely hope, from the bottom of my heart), then that can give ideas to the rest of us. If it fails, we can draw the adequate conclusions too.

It's always refreshing to find someone who wants a good debate to be settled by experiment. Hopefully that would be enough. Portugal famously had great success with decriminalization of nearly all illicit drugs, but unfortunately I don't think too many countries have changed their own laws as a result. There's almost always too much politics involved, and it's usually easy to find a reason that is at least superficially convincing as to why what works elsewhere will not work at home.

There have been a few trials of related things on a small scale. Certainly nothing approaching the amounts or number of people in the Swiss proposal.

Some instances here:

http://en.wikipedia.org/wiki/Negative_income_tax#Implementat...

I wrote on this a while back (http://neltnerb.tumblr.com/post/58818804903/an-entrepreneurs...), and it is useful to note that mathematically a guaranteed income is completely identical to a negative income tax.

https://en.wikipedia.org/wiki/Negative_income_tax

That article contains a lot more information than most articles about stipends. Note that the US Earned Income Credit is a negative income tax, yet it doesn't seem to even make a blip on anyone's radar as communism.

It's "lose", not "loose". I'll delete this comment in a few hours.

Bah! I forgot! And now it's too late.

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