What is an appropriate level of Basic Income?
hawkins.ventures
hawkins.ventures
The Federal minimum wage is $7.25/hour and is widely considered to be too low.
Now of course, what could happen is that you set it too high and we get massive inflation and dollar devaluation for a few months/years.
The reverse should also be true. Because fitting within basic income will massively expand client base for companies, there might actually be devaluation if it's set too low.
I think it's pretty obvious that one cannot choose the level of basic income. You can only do damage by choosing wrong. Given that it's currently zero, if you'd want to do this, start at a very low level (but still high enough to make companies want to provide services at that level), work out the kinks, and increase it over the course of a few years slowly until you see undesirable phenomena, then stop. Ideally, make this a state thing so regional differences can efficiently work.
The problem with this strategy is it creates massive disparities between states, as the burden of caring for the poor will be disproportionately shifted to the progressive states providing a basic income, while the conservative states don't need to pay for anything.
Furthermore, state governments don't have anywhere near the tax base or cash reserves to implement a basic income. This can only be done on the Federal level.
A UBI provides mobility to citizens by not trying their source of food to their location. If a UBI can't support you in San Francisco or New York, you have the ability to move to where it will.
There's no need to have this be a state thing, except to screw up the program.
That's comparing apples and oranges. The Federal minimum wage is the wage below which it is illegal to pay an employee. If you're unemployed, you still get no wage. Basic income would, obviously, get paid to every single person regardless of employment. It makes sense for it to be lower than the wage someone would earn for working.
For starters, the post itself assumes that if you don't have to work, transportation costs decrease quite a bit. Keep in mind that people who have a hard time finding work often travel farther to find work or hold down multiple part-time jobs instead of one full-time job, which increases transportation costs. If you're living in the Bay Area and have to commute every day, e.g., San Jose to San Francisco, a Caltrain + MUNI monthly pass works out to an extra $300 / month in expenses that you wouldn't have to spend if you weren't working.
In addition, the fact that you don't have to work gives you more flexibility in choosing where to live -- if you're not concerned about employment, you can live where the cost of living was cheapest.
We're also assuming that that basic income will always be guaranteed. One reason the federal minimum wage might be considered too low is that it doesn't leave any income left over to save for unemployment, retirement, or other scenarios where your income source is lost. That becomes irrelevant if everyone gets a guaranteed income.
Finally, simply having an extra 8+ hours of free time each day makes it a lot easier to optimize your costs. You have more time to plan your meals, to research and compare prices on every kind of expenditure, to exercise and minimize long term health costs, etc.
If there are testable negative consequences, we should look and see if Bulgaria suffers those consequences. Bulgaria has a PPP-adjusted GDP/capita that is $1/year less than your hypothetical 50 week, 40 hour min wage job. There are quite a few nations (generally considered "developed") with similar levels of income.
http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_...
You haven't answered the question. Is there some concrete bad thing you believe happens below $14,500/year, or do you simply feel it is morally wrong?
It doesn't make sense to compare the two. Basics costs are much lower in India and Bulgaria. I live on less than the average poor American too, but I also pay 80$/month to live alone in a large apartment.
I can only assume that the "concrete bad thing" that might happen below 14,500$ a year is some combination of malnutrition, homelessness, illness, etc. The number might be less than that, but it's not much less.
The only claim that GP made was that many people consider 7.25/hr or 14,500/year to be too low to cover for basic costs. Why are you taking such an obtuse and provocative tone?
I wish HN allowed formatting beyond italics - then whenever I discuss this topic I'd put the phrase "PPP-adjusted" in bold 18pt font.
...some combination of malnutrition, homelessness, illness, etc...
The mean Bulgarian does not suffer these problems. Neither does the upper middle class Indian who lives on far less. When I say "far less" I mean after adjusting for PPP, i.e. adjusting for "basic costs", or however you want to phrase it.
I don't know why you consider my tone "provocative". It's not obvious to me what the phrase "too low" or "basic costs" mean.
Incidentally, when I said "live on less than the average poor American", I meant in terms of material consumption. I have no car (75% of poor Americans do). I can't drink the water coming out of my tap. I have a small living space. Most poor Americans have more possessions than I do.
Americans believe everyone should have basic things like sanitation. Arguing that the poor somehow shouldn't just because India hasn't been as successful at infrastructure development isn't really a good argument.
To be explicitly clear, the question is this: Suppose there are concrete negative consequences to having ppp-adjusted ppp-adjusted ppp-adjusted ppp-adjusted income below $14,500/year. What are those consequences? Why don't middle class Bulgarians and upper middle class Indians suffer them?
(I overemphasize the phrase "ppp-adjusted" since you, llllllllllll, and many other people in other threads seem to repeatedly ignore it.)
That doesn't need supposition. They exist.
What are those consequences?
Not having adequate supplies of nutritious food, potable water, shelter from elements\other people, and access to information.
Why don't middle class Bulgarians and upper middle class Indians suffer them?
Well, A) they do, and B) ppp adjusted, $14,500 isn't upper middle class India or middle class Bulgaria.
http://melodydoesbulgaria.wordpress.com/2012/01/15/bulgaria-...
Not as simple as you thought... perhaps living in Bulgaria isn't nearly as bad as you seem to be implying.
Furthermore, why do you say "merely" a moral judgement? Is a moral judgement that optimizes for human happiness somehow worse than a logical one that optimizes for efficiency?
You didn't read what I wrote.
https://news.ycombinator.com/item?id=7724518
I adjust the numbers for PPP every time I ask this question. And for reasons I don't understand, people repeatedly ignore it.
"The 2014 US Poverty line is $11,670/year for an individual, and ~$4,060 for each additional person.3 It is strange to assume that some humans can live off of $11,670 and others can live off of $4,060."
You make the assumption that they should be required to live with other people.
When a group of people all start receiving a BI, their spending power will be more then the simple sum b/c they share and buy in bulk.
So do rich couples. This is a non-sensical argument. I'd rather not keep repeating how wrong you are, but suffice to say, nobody lives on $600/month in America. Your number is simply unintelligent.
That seems -- on the face of it at least -- to be a remarkable statistic. The citation is:
http://www.cato.org/sites/cato.org/files/pubs/pdf/PA694.pdf
It notes that a large portion of poverty spending is Medicaid, which is completely unsurprising given the dire state of US health care for the less fortunate.
I should amend my previous statement, though - BI should track targeted inflation, it should not track actual inflation.
Total GDP was 16.8 trillion
Total federal tax revenue was 2.8 trillion in 2013
This would be an enormous tax increase if it was the only tool used to provide income to people.
This makes me think of mail-in rebates for electronics, at a different scale. It's also weird to me to see an engineer making over $100k/yr to buy a hard-drive or GPU with a mail-in rebate, then put in the effort to send in the coupon to get that extra $10 back (I've done it myself, but I don't earn that much). To someone making >$6-8k/month, $10 is peanuts. That's also how I see this $12k for billionaires.
I don't know, that's what I was asking.
Additionally, poor people live in areas with literally no banks.
Both of those alone justify a monthly payment method.
[1] http://www.usgovernmentspending.com/us_welfare_spending_40.h...
Edit: The US Government does run a deficit, but it was $680 billion in 2013. A deficit of $1-2 trillion would be new.
That's one of the more compelling arguments for BI: it's more sensible than the piecemeal programs we have. And don't forget the various tax credits and deductions that could go away, too. If done well, BI could be revenue-neutral or better.
But in practice, unless you delete all of those in the same bill that introduces basic income, you're going to find yourself stuck with both the basic income and those welfare programs.
South Korean National Health Insurance Service covers every citizen (not just for elderly, not just for poor) and is 1.5% of South Korean budget. Medicare is 15% of US budget. Medicare may provide better quality, but cost/benefit is unclear to me.
Medicare provides for the sick by levying a disproportionate cost:benefit on the healthy. Distributing BI to the healthy and sick alike in lieu of Medicare eliminates that.
You might also notice the "Total Federal Spending" line in that chart you linked is $3.6 trillion...a full $200 billion short of the $3.8b mark.
BI, like socialism and communism, sounds good on paper to a certain set of people. It won't work in the real world. I have always wondered why otherwise intelligent and successful people keep bringing up ideas to give others' money away, and then I recently heard casino mogul Steve Wynn's interesting explanation for it (that they believe that everything should be given to everyone, because everything has been given to them):
BI as a supplement to wages and other resources already exists in the form of welfare and the like, its just a matter of reducing the conditions to nothing.
somebody mentioned 600 a month for BI, you could do something lower without needing to quadruple tax revenue
As far as the rest of your comment, by reducing the conditions to nothing, you dramatically expand the expenditures while lowering the tax base by encouraging a portion of the population to not bother being productive. People like to say that welfare acts as a form of BI, but that is far from the truth. Most welfare programs in the US contain requirements that recipients at least look for a job, stay drug-free, etc. With BI, people that don't want to work will simply move in with each other. $12K/yr isn't really enough for 1 person to have a good life; however $60K/yr for a household of 5 with no taxes taken out comes alot closer.
From the calculations above, that requires 5050*267 million more government revenue than we have, or 1.35 trillion dollars (after cutting the non-old age part of Social Security, and the welfare part).
How are you going to raise that 1.35 trillion dollars?
Also at 600 a month, we arguably cannot drop minimum wage.
While their numbers do seem a bit low, they are not off by an order of magnitude. Canada's healthcare system averages $375/month expenses across all citizens. [0]
> tax revenue would decrease as at least a portion of the population would simply drop out of the workforce.
Even if the bottom 50% of earners drop out of the workforce, this is a loss of tax revenue of 2.25% [1]. So the first-order effect of reduced tax revenue isn't meaningful.
> It won't work in the real world. I have always wondered why otherwise intelligent and successful people keep bringing up ideas
It would be one thing if there was broad empirically-based consensus that BI "won't work in the real world" but if so you have not brought that evidence with you today. It is probably best to refrain from unsourced assertions that people who disagree with you are stupid.
[0] http://en.wikipedia.org/wiki/List_of_countries_by_total_heal...
[1] http://www.ntu.org/tax-basics/who-pays-income-taxes.html
That sounds great, but that's an apples to oranges comparison. Medical care in the US is drastically more expensive than in Canada, and unless we implement single payer (which will not happen) those numbers will not come down. Therefore $12K (which also has to cover living expenses) won't come close to supporting the medical expenses of the Medicare set in the US.
Which is a safe assumption, since I rarely observe governments decreasing their expenditures.
This may not sound fair, but is no more unfair than introducing new environmental regulation without punishing all past acts which would be in violation of new regulation.
It seems like leaving old age social security alone for old people leaves a far higher chance of this being passable (and is arguably more fair). But don't give them BI on TOP of it by any means.
42 million people receive the type of social security you get for being old and having paid in. This takes the number of people you'd need to pay BI to from 320 million to 278 million.
It reduces the cost of social security on the federal government by 23% of the SS budget(814B) to count out a beneficiaries who aren't retired we save saved: $187 billion dollars
Between taking retirees off the roles, and this savings from knocking out disability, we're down to a total required revenue of 3.3 trillion, and a savings of 187 billion dollars in cut programs.
So find that other 3.113 trillion dollars and we're in business :D
That said, without massive tax revenue increases (on the order of 2x), minimum wage would still be necessary
Btw, spending was 3.5 trillion.
I don't see how cutting medicare could work to solve income?
The reason we have socialized medicine for old people is it's too expensive for insurers to carry. $350 a month is not an annualized cost for EVERY american, it's for non old people. That's including sharp obamacare type subsidies still for many age brackets. I know even my (early 30's) healthcare premiums are above that.
I don't see how cutting someone who's reliant on a $2,642 dollar a month income social security retirement payment is going to work. At best, I see social security retirement largely staying at it's current level. Cutting Social Security Disability (and all the anti fraud apparatus around it) is likely very possible though
>would be a lot of administrative costs eliminated
Those costs are rolled up into the SSA numbers in the federal budget. A portion of the medicare cost is the medicare overhead, etc. So it's not the budget numbers + overhead: the budget numbers are inclusive already
I think a wage floor (minimum wage still), strong policing of unpaid internships, and a smaller form of BI is possible, possibly without any tax increases or with far more moderate ones, especially if many state responsibilities are taken over at the federal level.
I just don't see the list of things that can really be cut nor the total take we'd get from that to work with.
We can reduce the rolls of people who need to be paid to 278 million people.
We can get 396 billion by cutting welfare (but if we do this, children get the same bi, and that's not being sure there aren't protective services in here which would need to still exist) at the federal level, we get $187 billion by cutting the people who don't get SS because they are old.
That's a total of $585 billion, with a needed sum of 3300 billion total (aka, 3.3 trillion).
This means we're still at a deficit of 2715 billion (2.715 trillion) dollars
Where else does that come from? (I'm asking, legitimately)
With the money I can see that could be freed up at the federal level, I see a yearly benefit of 585B/267M -> $2191, or 183 a month.
This is an equivalent (for fulltime job holders) of a raise of the minimum wage by 1.10 an hour.
Clearly, US citizenship is extremely valuable, but hard to value because it's not traded in free market. With BI, you can estimate its value as a portfolio with monthly payout of monthly BI. This works even if BI is unused, since BI is supposed to be equivalent of existing welfare programs.
If there was any doubt, this also proves equal opportunity does not exist. Just by being born to a particular nation, which is random, you get an extremely large head start.
This doesn't make sense. The current poverty line is two to three times below what it should be. Implementing a $12k a year basic income would only end poverty in theory based on the current definition and amount which is "not really sensible measurement of poverty in the US." It's impossible to deduce which of the mutually exclusive statements the authors agree with, although it seems to be that that the current US Poverty rate is actually a very accurate measurement of poverty in the US, off by only $330 from what is "not poverty."
"We feel there is very little necessary transportation today that is not related to work or entertainment, so is therefore excluded."
So this idea is based on the assumption that people on basic income should forget about finding a job in most of America, at least the parts without free or low-cost mass transit (pretty much all of it). Most of these people will never have a chance to work again. What about trips to the doctor or the supermarket. The authors are just completely out of touch with American reality here.
HN is populated by people who love their work and would do it for free, given the luxury... but speaking from a legal background, other careers SUCK. Most lawyers I know would happily embrace Basic Income in exchange for sleep, family, and lifetime security. If the alternative to attorney life were picking up trash or scrubbing toilets as part of the Basic Jobs program, the workers who pay for Basic Income/Jobs might be less likely to stop producing wealth in the name of leisure.
I say this as a liberal who very much supports the idea of reduced work hours, mandatory vacations, and so on in a European vein... but there has to be middle ground between indolence and workaholism. Particularly when faced with the possible creation of a dependent underclass with little else to do but knock out kids they can't support.
In exchange for your feeling of superiority making the underclasses earn their bread, you're getting political wrangling over what the jobs should be and tremendous misallocation of labor as the jobs aren't the best thing those people can be doing with their time, we take up the time they could be putting into making themselves more fit for more interesting (and more useful and better paying) jobs, and we do nothing to free people to work on projects they're passionate about which may have a harder time capturing value produced (unless a bureaucrat has specifically blessed them).
There are some extra issues with this, but I think they can be fixed. One would be housing: the land would also have to come with a house, and maybe transportation.
Modern farming is also very dirty to the surrounding watershed.