The Mincome Experiment of 1974-79 | Hacker News Reader

The Mincome Experiment of 1974-79

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57 pointsNowyouknow96 comments

Where true basic income differs from this experiment by Canada is that true basic income should be for every adult, regardless of income, race, marital status, sexuality, etc. Not just for poor people, as with Mincome in this Canadian town.

A few arguments for:

1) It becomes a defacto emergency lifeline when a ostensibly middle class person loses their job or suffers an extremely expensive illness. In the US, it can take forever to get on disability. With true basic income, there's no need to worry about getting on disability, since you already have a basic income (and yes, this means that disability should be eliminated if this passes).

2) It becomes much less expensive to administer. No massive bureaucracy started up and growing larger just to weed out candidates for some shitty benefit. You're an adult person? Great, you're in!

3) When everyone gets it, it's much more politically feasible to start and maintain. No more questions of "them" doing this or "they" ripping off the hard working man.

4) It allows even healthy middle class people to take risks that might have a big payoff, such as starting up a new business, or embarking on a quest to invent some new technique. Or build an open source project!

I like this idea a lot, but what would stop goods/housing from rising in price to meet the influx of free money?

That was my initial response when I first heard this concept a few years ago, and the answer is somewhat surprising (Note: I'm not an economist, so please someone correct me if I get anything wrong here):

3 things can alter those prices: A change in supply, a change in demand, or general inflation/deflation.

The supply doesn't inherently change in this plan, nor does demand (*assuming everyone is getting these goods today.) And there's no inflation, as this is just redistribution, not printing new money.

Doesn't demand go up, as more people can afford a given house?

You're right in general, but there are second order effects. The poor are more likely to spend all of their income than the rich. Also, even if there isn't a general increase in prices (i.e. inflation) there can still be a change in the relative prices. So for example, luxury housing might come down slightly in price as a consequence of the increased taxes, but entry level housing might come up to reflect new household formation enabled by the universal stipend.

If you think inflation's only source is 'printing money', you may not be qualified to speak on economic issues. Liquidity, the monetary supply, and the cost of exchange are quite a bit more complex than that, and far more prone to being manipulated and falling over, as both the Housing Crisis and Libor Scandal taught us.

I'm sorry but you are wrong. Inflation is nothing but the increase of money supply without an equivalent increase in production.

What you are doing is being a good Keynesian and trying to make people believe that this stuff is too complicated for them to even start having an opinion on it. That strategy is condescending and not productive, and encourages helplessness in people.

> Inflation is nothing but the increase of money supply without an equivalent increase in production

Wouldn't that mean that inflation would also be caused by a decrease in production without an equivalent decrease in the money supply?

Yes. Google "stagflation".

The view that inflation is not solely driven by money supply is hardly limited to Keynesians. Especially since the 1990s, neoclassical economists also typically include other factors in their models, in part because a single-variable model doesn't appear to be empirically correct.

In this world, market segmentation is a thing. By moving people from segment to segment, you are very much changing demand.

So I submit that your assumption isn't really valid.

A basic income would create a larger supply of labor by increasing mobility.

And increase demand for labour by increasing consumption.

People who were previously homeless and living on handouts could end up participating in the economy significantly more.

People who were extremely miserly might spend a little more on better quality food, different forms of entertainment, or taking holidays further from home than the local park.

Taxes have to go up to pay for this so there isn't actually more money supply than there was before, it's just distributed differently.

That doesn't mean prices won't change because of it.

As a simplified example, let's say poor person A is renting an apartment from rich person B for $500/month. The new system gives everyone $500/month basic income, but to pay for this rich person B has to pay $1000/month more in tax (of which he gets back half as basic income), while poor person A doesn't pay more tax. So essentially poor person A is getting $500/month from rich person B. Obviously it wouldn't be that simple in reality, but roughly speaking that's what a universal basic income covered by taxes would mean - money flows from rich to poor, in varying degrees.

Now sticking to the simplified two-person version, rich person A thinks "well poor person B could afford my $500/month rent before, now their income has gone up $500/month, so if I charge them $1000/month rent I know they can still afford it". The end result would be wasting time on behalf of the government and indeed the individuals to update everything while money split would remain identical, the only difference being that $500 now flows from B to A (via tax and basic income) then back to B (via rent increase).

Obviously in the non-simplified world it wouldn't be as easy as saying "that person is now getting some money from my taxes so I can charge them that much more", and numbers wouldn't be exact... but as a rough theory, pricing definitely could alter at least to some extent.

All that said: I'm not an economist, I don't know if that would happen, or to what extent. And my personal non-educated opinion is that basic income would be a good thing anyway.

Your example doesn't work because it's a monopoly situation. That is, in your world there's only one landlord, so given that housing is a fundamental need and he controls 100% of the supply of housing, he can always raise his prices.

Now, that's not to say that a guaranteed income wouldn't necessarily cause inflation in some goods and services. It probably would! But the standard answer to "why doesn't the provider of a good or service just increase the cost of their service to the maximum disposable income of the buyer" is competition.

Sure competition is one of the many reasons it's way more complicated than my simple version, but it doesn't mean prices won't change to counter basic income. It's possible competition will force prices to remain where they are, but it's also possible that everyone raises prices, step by step in line with competition. Housing is one area I would assume would definitely go up in price, though not to 100% of the basic income. My biggest reason for thinking this is that housing costs in many (most?) areas are driven not by material costs but by demand. Give everyone basic income and the demand alone (i.e. competition between buyers/renters) would raise prices. This would happen if you, for example, gave everyone in NYC $1000/month and didn't tax anyone for it. Then add in motivation from owners who rent to make more money to balance out their tax losses..

But yes, my comment was a very, very simplified example, to counter "prices won't change, we're not printing more cash" arguments - not a direct tale of what could happen in the real world.

You haven't given any reason to believe that demand would go up. Demand doesn't increase because wealth increases.

Now, you MIGHT see increased demand in some areas! For example, some people who previously lived at home might look for an apartment if they had a higher income. Or people who are currently homeless might move into the housing market.

At the same time, some people would presumably graduate out the top of the lowest-income housing market, and put increased demand on the middle-income market. Or whatever. And of course we might say that it's a huge victory if a bunch of homeless people got out of the vicious cycle of homelessness, even if it does increase housing demand for the working poor.

The problem was not that your example was simplified, it was that it introduced a brand new element (monopoly) to the matter under discussion. If you want to make a simple example that actually shows some kind of demand-increase, rather than illustrating monopoly power, you should do so.

Cities like NYC and SF are a bit of an exception in the US - they're very desirable cities, and their housing stock is more or less filled. Getting a place to live, even with sufficient income, is a bit of a chore.

In other markets, there are houses that sit vacant. Bringing the minimum income up helps narrow the gap between the price floor on these properties, and the amount people are able to pay. That is, a basic income would help more efficiently distribute housing in less desirable areas.

If someone on basic income wants to move to NYC, they'll still need to work hard, and get enough money to compete with all the other people who want to live in NYC.

I would doubt that that would happen. If I was person A, and person B raised my rent by $500/mo, I would find a person C to rent from for much less than $1000/mo, rather than continuing to rent from person B.

Prices might go up a bit, but not by that much. The poverty rate in the United States is about 15%. That means that, assuming that the cost of that $500/mo will be spread (unevenly) across the other 85% of the population, or a bit under $100 per taxpayer. That also assumes that the mincome program would exist alongside existing welfare programs, where in reality it would most likely replace them.

Nothing.

Nothing is in place to stop basic income from causing housing prices to raise, and is one of the reasons we have food stamps and medicare instead of basic income.

Housing is a good/service with a price that is set by income-elastic demand. If you push up the income across the entire market (as true basic income would), then the price of housing and cars and other goods with income-elastic demand will increase. People who couldn't afford housing before wouldn't be able to afford housing still.

There are plenty of income-elastic affected goods that will increase increase in price to match or even exceed the amount of basic income per individual. Once you dissect the problem that basic income is trying to solve, you can address those needs individually without raising income for the entire population.

Raising the income for the entire population would indeed just inflate the currency.

But a basic income would not in fact raise the income of the entire population. It would lower the income of the rich and raise the income of the poor. Because it would be paid for with taxes, not deficit spending.

The rich would GET basic income, yes -- but their taxes would increase by an amount that would more-than-compensate for the higher influx of money. Their after-tax income would be lower.

Assuming that housing is fungible, sure.

But it's not. There are different segments by quality, location, etc. What percentage of the housing market is only for "the rich"? What extra tax percentage is middle-income going to pay?

Lower income isn't going to be taxed more, so lower income housing prices are going to raise, as their market segment gets a boost in income.

And now you're back at people who couldn't afford housing before still being unable to afford it - which was part of the problem that basic income was trying to solve.

It is certainly possible that some goods or services that are inelastic in supply will experience cost inflation if they are goods or services that are mostly or entirely consumed by a market segment that becomes richer from basic income. I'm not convinced that housing is generally an example of such a good, but some housing may well be.

However, the same is true of targeted assistance to only the poor for only housing -- it increases their effective wealth for the purposes of competing only for housing, and, if anything, it will make it worse than a more general guaranteed income would.

That was my point - Basic Income doesn't provide any additional benefits to targeted assistance, and would actually be a detriment in markets with income-elastic demand.

I know what your point is, but if you imagined that I repeated your point, you're wrong. What I said was that targeted assistance was MORE likely to cause price inflation in areas like, say, housing than guaranteed income was, precisely because it generates "income" that can only be spent in competition for this particular housing category.

The benefit of basic income over targeted assistance is that basic income is relatively low-administration cost to flexibly meet the needs of people who don't have housing needs, and in that it is a relatively non-market-distorting intervention.

Bureaucracy has overhead, I'll give you that, but I assume you're saying that UBI is a replacement for assistance programs, rather than being used alongside them?

That's the only way for cost administrative cost savings. What about when UBI isn't enough for something as trivial as Medicaid?

Would UBI cover the cost of health insurance for everyone, since it's replacing the "expensively adminsitrative" medicaid? Even if you took away employer insurance today, many people with steady income can't even afford their own health insurance.

I don't think that basic income could replace healthcare programs. It might replace section 8 housing and food stamps and at least some kinds of disability and unemployment insurance and some kinds of child credits and so forth.

I actually don't think it would successfully replace any of those things, which is one of the reasons I don't really support it. But it's an intriguing idea that should be debated on its merits.

For sure. I think that switching healthcare over to being a public utility would open the door to debating a lot of different programs, including basic income. Maybe then someone will figure out a way to handle the housing issue.

Basic income reduces the administrative overhead of providing assistance. Also it could create increased mobility in the job market compared the current system. (You could leave your current job without waiting weeks or months for unemployment/disability/EBT) Basic income would create an elastic supply of labor potentially reducing the prices of many goods that is not considered in the above analysis. (When one has a basic income provided already you don't have to charge as much for services. More people would be competing to provide the same services)

>reduces the administrative overhead of providing assistance.

Only if UBI replaces all other programs, and i'm guessing it won't be enough for people to afford a Medicaid replacement.

Typically you only qualify for unemployement, disability, etc. when you're been let go, not when you're quiting voluntarily (and it usually only takes a week to get).

Even then, it's certain percentage of your current income, so as to not disrupt your lifestyle. I doubt many people will voluntarily quit to be on a much lower UBI just so they can look for a new job. But then again maybe there are studies on this...?

> Lower income isn't going to be taxed more, so lower income housing prices are going to raise, as their market segment gets a boost in income.

Predictably, it will raise less proportionately than the increase in income in that segment, so housing will become more affordable, though not as much more affordable as it would be considering only the income increase and not the effect on price levels.

>Predictably, it will raise less proportionately than the increase in income in that segment,

How are you predicting this?

Its the consequence of assuming no change in supply and assuming that there are other competing goods (e.g., food) which will compete for the marginal dollars for the same population of buyers (and hence that demand is not perfectly inelastic.)

Engel's law (the food example) doesn't really impact it that much because the income elasticity of food is between 0 and 1. By your logic nothing has an income elasticity of demand greater than 1 because of competing with food.

This assumes that a UBI would be funded by redistributive income taxation. Many formulations of a UBI actually fund it through a land value tax. Connecting the two concepts basically amounts to land owners paying rent to society.

Your overall point stands, I just want to point out the LVT aspect as UBI is increasingly discussed as a topic separated from that original context.

> But a basic income would not in fact raise the income of the entire population. It would lower the income of the rich and raise the income of the poor. Because it would be paid for with taxes, not deficit spending.

Realistically, it would be paid for with both. Marginal increases in spending might be paid for purely with tax increases, but that rarely actually happens.

> Nothing is in place to stop basic income from causing housing prices to raise, and is one of the reasons we have food stamps and medicare instead of basic income.

Aside from any concerns about your basic premise, I think you've confused Medicare (the old-age/disability medical insurance system funded by payroll taxes) with Medicaid (the medical insurance system for the poor funded by general funds).

Definitely. Thank you for pointing that out that difference.

Most of the people who replied to you are wrong.

Basic income could be implemented by NOT raising taxes. So it would NOT cause inflation. Eliminate current social services (and all the financial overhead associated to it: entire government departments who sole job is to administer these services, etc), and just redistribute the funds that would have gone to these services to be, instead, redistributed as basic income. There. All you are doing is shuffling money around to change its distribution while reducing financial overhead. You are not raising taxes or creating new money. Money is just better distributed and hence spent on different areas of the economy.

(I don't know why, in the article, James Manzi says tax increases would be required. Maybe he has a certain opinion that in order to be effective, basic income should be greater than a minimum level that would not be met by my description above? I think my basic income would be sufficient. The US spends $1.5 trillion per year on welfare and pensions. If you take that money, one could redistribute it as a basic income of $1070 per month per household. That's significant enough to very helpful for society IMHO.)

The market greatly affected by the top end, in many cases more than the low end. This is not a zero sum relationship though.

>this means that disability should be eliminated if this passes

That depends whether you think the point of disability benefit is to allow disabled people to survive, or to allow them have a comparable quality of life to an able bodied person.

Which able bodied person? The idea behind some of our middle class social programs seems to be more in the nature of a climbing harness than a safety net. Why is someone who was once well off but fell on hard times entitled to more help than someone who was born into hard times?

>Which able bodied person?

That can be debated, but I'd argue for somewhere around the median.

>Why is someone who was once well off but fell on hard times entitled to more help than someone who was born into hard times?

I'm not sure what you mean? I'm just suggesting we might want a supplementary income for disabled people, since they don't have the option to supplement their basic income with a job.

The entire idea behind the basic income is to stop trying to make distinctions between the deserving poor and the undeserving poor and to get rid of the entire gate-keeping infrastructure. Keep the existing cobweb of special purpose programs and you've destroyed a major point of the exercise.

If the BI is too low for disabled people, then it is too low.

>If the BI is too low for disabled people, then it is too low.

Whatever level you set it at, disabled people will get less money than able-bodied people on average, though no fault of their own. I don't think that's fair however you frame it.

> The entire idea behind the basic income is to stop trying to make distinctions between the deserving poor and the undeserving poor and to get rid of the entire gate-keeping infrastructure

Bingo. Well, it's not the entire idea, but it's definitely a very compelling idea.

A person who "fell on hard times" has at least in theory had the chance to try to save past income, and has a realistic prospect of earning higher income in future, assuming the BI is insufficiently generous to dissuade them from seeking paid employment altogether. Given that the average annual income of an able bodied person over the course of their life really ought to be higher than that of a too-disabled-to-work person, it doesn't seem unreasonable to redistribute less money towards their needs in a period when they're not in work.

Which able bodied person should be the ceiling on too-disabled-to-work people's income? Not sure, but I'm reasonably confident that "the most unambitious and indolent one" is not the correct answer.

I really like the idea of basic income. I think you bring up an excellent point about degree of disability. I think it's really unlikely BI would be at the same level as someone on full disability. However, i do think the VA's model of % disability is helpful here.

BI would (i hope) replace the first say, 10-20% brackets. Hopefully, that would simplify VA administration, so they could focus on specializing support for higher % disability servicemen.

Why not just replace it with an insurance system like Aflac? Aflac is a type of insurance that bridges the game and provides extra money to bring the person back up to whatever level they were accustomed to before.

If minimum income is enough to allow everyone to live comfortably, I don't see why the government would need to provide additional insurance for emergencies.

>If minimum income is enough to allow everyone to live comfortably

That depends what you mean by "comfortably". Most basic income proposals suggest a level that is survivable, but which still provides significant incentive to supplement it with a job.

Living on the absolute minimum, for whatever reason, should be a choice. Disabled people don't get to make that choice.

A basic income would almost certainly improve the quality of life of many disabled persons.

Remember, disability is not a binary state, government mandate nothwithstanding. Many disabled persons could in fact do a limited amount of certain kinds work each week, say 10 hours. Also, many people get on disability at some time and find that over time, they get better, or adapt to their disability.

But under SSI regulations, all of these people would lose 100% of their disability if the government finds out they're working. What this does is condemn a lot of people to lives of poverty when they could be living a lifestyle closer to middle class with just 10-20 hours of employment each week.

Also, getting on disability is a long, drawn-out, humiliating process. Some people have philosophical objections to being on disability. And so many people who probably should be on at least partial disability forgo the whole process. A basic income would allow these people some relief.

Let's do some back of the envelope math here.

316 million Americans, at a $30k/year money sample works out to be $9 trillion dollars a year.

The budget that Obama just proposed is $4 trillion dollars (and that has no chance of getting implemented in full). Even if we say you can cut half of that out (Social Security, Medicare/Medicaid, etc), let's call it $2 trillion dollars.

So we need $11 trillion dollars of tax money to fund this. The total net worth of US private people is $67 trillion or so[1]. The aggregate net worth of the top 400 people in the USA is $2.3 trillion[2]. You could take all of their money, and still not even come close to paying for the program for ONE YEAR.

At that point, you start having to come down hard on the upper middle class. The top 25% owns roughly 73% of the wealth in the country, or ~$48 trillion. If you tax their NET WORTH at 25%, you could fund the program for a year.

Pretty quickly you're going to run into a situation where you're cutting a check to everyone, then collecting the money (and more) back in taxes. And in this case, it's terribly inefficient.

On a small scale, a program like this probably works well. On a large scale, it would be a disaster.

[1] http://en.wikipedia.org/wiki/Financial_position_of_the_Unite... [2] http://www.forbes.com/forbes-400/

$30,000 is a pretty big number.

If you made it $8,000, a family of 4 would still be above today's poverty line (which is still arbitrary, but it seems like a better "minimal income" than one that gives everybody approximately the current median personal income).

$9 trillion / (30/8) = $2.4 trillion.

According to [1], for a family of 4 the poverty line is just under $24k?

[1] http://aspe.hhs.gov/poverty/14poverty.cfm

Uh-huh. 4*8=32.

You used 316 million as one of your multipliers, that presumably includes children.

I think there would need to be some structure around children, what an incentive to make babies! $8k per baby per year, the Duggar family would be making $168k per year! I'd rather it be something as an adult. So the number of people 18 years or older is 242,470,820 [0]. Double the $8k to meet that poverty line as a couple. So at $16k per adult you come out to just under $3.9 trillion a year.

Edit: from the poverty data [1] you could say that only ~45 million people get the full $8k, the rest starts to taper off at the 50 cents to a dollar pace. That means this would cost considerably less. $360 billion is the minimum. The cost out would be $3.9 trillion, but those extra $8k checks would be collected at tax time. A one job two adult household, the job holder would have to pay back all the $8k, but the partner wouldn't if they didn't make any money.

[0] http://quickfacts.census.gov/qfd/states/00000.html

[1] https://www.census.gov/hhes/www/poverty/about/overview/

Maybe. I think people mostly see children as a responsibility though, so I wonder if the problem would live up to the concern.

I wonder if you could try to measure the differences in birth rates for people receiving the EIC, comparing across numbers of children (at some income levels the first child provides ~2x the benefit as the third).

edit: Searching "EITC birth rates" shows that people have looked at it.

also, if i understand the plan, it's not like everyone is getting an 8k check. most people are getting a tax deduction.

>316 million Americans, at a $30k/year money sample works out to be $9 trillion dollars a year.

I'm not sure if you read the article. But the proposition in Canada was essentially a negative income tax for the lowest tax brackets. And it didn't reach nearly your $30k a year - I have no idea where you came up with that number. Current deliberation on the issue would not even consider nearly that amount.

>On a large scale, it would be a disaster.

Only if we let you make the plan. There is plenty of other serious discussions about reasonable possibilities in this space.

>And it didn't reach nearly your $30k a year - I have no idea where you came up with that number.

The whole point of BI is to be a low-middle class income, which is currently about $30k/year.

> The whole point of BI is to be a low-middle class income

Some advocates of BI may support that as the desired level, but few even of those who support it as a target level see it as the point.

A couple things that people generally cite as the point of BI:

(1) replacing means-tested social support programs with high bureaucratic oversight costs and perverse incentives (disincentives to outside income from means-testing) with a simpler system with lower bureaucratic oversight costs and fewer perverse incentives,

(2) increasing labor market mobility, mid-career educational opportunities, and entrepreneurial opportunities by making voluntary temporary lack of outside income less catastrophic of a cost.

(3) accommodating a transition to more automated society where market income will increasingly go to capital holders and labor will drop in value by redistributing gains that otherwise would become intensely concentrated.

People can dispute about the ideal target levels (both initial and long-term goals) for BI while supporting it, and I don't see many people seeing "low-middle class income" or $30K/yr as the point of BI, or even necessarily either the short or long-term target level. (I personally think its both too high as a near-term target and too low as a long-term target level.)

For what it's worth, the experiment in the article didn't give everyone $X directly, the benefit slowly dropped off as their own income increased.

For example, let's assume X to be $30k/year, and a drop-off rate of 50 cents on the dollar. (the experiment used an inflation-adjusted $10k/year, and 50 cent dropoff).

With these assumptions, someone who had no other income at all would get the full benefit. Someone who earned $10k/year would get $25k of benefit, someone who earned $30k/year would get $15k, and someone earning $60k+/year would not receive any benefit at all.

So, let's apply this back-of-the-envelope math. according to http://www.census.gov/hhes/www/cpstables/032014/perinc/pinc0..., Total Work Experience, Both Sexes, All Races, there were about 252 million persons 15 or older in the US, 218 million of which had some income reported. Of these, about 174 million with $60k/year or less.

Assuming everyone gets a benefit equal to $30k - 1/2 their income, and everyone's income is at the bottom of their respective bucket, the total cost of this program would be about $3.26 trillion.

This is not a small amount of money, but it would also replace many existing welfare programs (many of which are implemented at the state or city level, effectively transferring budget from the federal to the local)

Charles Murray threw out a number like $30k for the average family but that was based on $10k per person.[1] But let's do a very generous envelope calculation and say that all of the 109 million Americans who current receive some form of welfare assistance suddenly become eligible for $10k per year. That's $1.09 trillion in new spending. BUT -- we currently spend about $450 billion annually on welfare programs, so your net increase is only $559 billion.

And that's assuming everyone gets $10k without considering the 50% decrease in aid for each additional dollar earned. If we use the $360 billion number someone else threw out, you could actually reduce spending by $90 billion annually if BI replaced large federal/state welfare programs.

And none of that is counting the extra economic activity when people on SSDI -- which has stopped being a long-term disability program and become a stop-gap aid for the "systemically unemployable" until they can collect Social Security at 62 -- are allowed to openly perform some work at their ability level. Right now they have to keep up the charade that they are "disabled" even if their SSDI qualification is only because they lack the skills to find a job during the 10-15 years before Social Security eligibility.

[1] http://www.pbs.org/newshour/making-sense/libertarian-charles...

Previous discussion of Mincome, prompted by a different article: https://news.ycombinator.com/item?id=8792192

I wonder if it would be feasible to pick a small town in the US and have private parties contribute enough to run such an experiment -- perhaps with better record keeping.

Say a town of 3000 adults and 1000 needed help to get to a 'living wage' level. Let's call living wage an average of $40K per year and, on average, the 1000 people needed about half that to get to that level.

$20m/year plus administrative costs, let's say $5m. $25m for the experiment. Say we run it for a guarantee of 5 years, so that is $125 million.

Too bad. A bit beyond a kickstarter level.

Maybe somebody could supplement it with a reality show.

I think reality TV would prefer if mincome made for worse outcomes.

There is was a negative income tax experiment in 70s in Seattle:

http://www.econlib.org/library/Enc1/NegativeIncomeTax.html

That article is very negative on the whole idea and is short on facts of the experiment and long on conclusions.

One point it made that had me thinking was that it would be impossible to cover enough of the population because the poverty line is so close to median income.

Well, what if we didn't cover everyone? What if we picked areas that are having a particularly rough time and used a negative income tax to prime the pump?

I don't understand the notion regarding feedback from participants in the experiment. Evelyn Forget said that opinions from respondents may skew positive because those with negative experiences would be less likely to reach out to her. I was under the impression that consumers with negative experiences provide feedback far more often than satisfied consumers. Has that been debunked or am I missing some factor?

Can someone explain to me how basic income could work? I'm really interested, not trying to start a battle. The biggest question: Where does the money come from? Massive taxes on the wealthy? You can't just pull a salary for everyone out of thin air. In the case of this town in Canada, the project was probably funded by taxes from other parts of the country, and could not have worked universally.

It's not as expensive as you think, if you run the numbers. Most of the money comes from dismantling welfare, social security, food stamps, et cetera. Tax rates on the middle class are increased enough to cancel out the basic income benefit, so that washes out. As long as the poor isn't the majority of your population, it's not a large tax increase on the rich.

Hope we start experimenting with this in the US also. Maybe at a state level.

There's the Permanent Fund Dividend in Alaska, though it only hit $3269 its peak year, and that was with a bump from a budget surplus.

yeah, but that one was neither designed as a social safety net, nor is it big enough to function as one. It's neat, but it's so small that it's basically apples and oranges.

That's one of the problems with practicality of such plans - the numbers are never "big enough".

People take into account today's income and capital gains revenues, and assume that they can safely increase those rates by a wide margin causing no change in underlying behavior.

In reality a top-income earner who made eight digits or above can safely take the next 2-3 years off without driving his family into the soup kitchen situation, and as far as capital gains goes, people become more cognizant of harvesting capital losses before they sell anything that appreciated in value (or simply sell a smaller chunk of their assets, if we're talking highly liquid investments).

It would have to be in an extremely liberal area. Socialism is still a four letter word in the US, and this is the epitome of socialist initiatives.

It seems like reducing socialism to me. Instead of the gov't hand-picking (centrally planning) benefactors of tax dollars, e.g. defense contractors or oil/ag subsidies, it's being returned to the people (and all the people - not just some according to their need or whatever).

It's probably an ever bigger problem than that. Regardless of liberal or conservative, if you want to raise taxes essentially across the board (which you'd have to do--even taking all of the wealth of "the 1%" would fund this project for maybe a year) you're going to have a really tough time convincing people that their taxes are going to be raised 500% or whatever it would end up being.

Just back-of-the envelope numbers, if 300 million Americans received $30k/yr, that's $9 trillion dollars per year that has to come from someplace. My guess would be that the majority of people would end up handing that $30k right back in the form of taxes. And at that point, it becomes an exercise in the government giving people money, then having to get it back via taxes, so then what is the point? Is it easier to give 10 people $10 or to give 100 people $10, then take $900 of it back?

Is it easier to give 10 people $10 or to give 100 people $10, then take $900 of it back?

If 100 people is the totality of the population, the cost of bureaucracy for monitoring which of those 10 people actually get the $10 (specifically ensuring a low fraud level) is near or greater than $100, and the social stigma of getting that $10 in the first place is reduced or eliminated, then yes, it could be "easier".

In other words, would it make sense to give everyone the same amount, and take it back from some in taxes, when weighing the cost of the current levels of enforcement and the possible social good done through reduced stigmatization of the poor.

Well, not all 300M are adults - I would assume this hypothetical program would only give to people past a certain age. And I don't think it'd be $30k - it would probably be just enough to survive, but not enough to live a lifestyle you'd enjoy. Maybe it'd scale a little with your age, so you don't end up with a windfall on your 18th birthday.

I'm not sure how'd you account for different costs of living in different areas. But I think the number would be closer to $20k.

Also, it could just be an untaxed amount, no need to muddy things up with that.

It's still a big chunk of money: $4-5T. But You could cancel out a lot of existing services if this was implemented. We're spending $1.2T for pensions ands $0.5T for welfare [1], so some of that could go towards this. But yeah, that's still a lot of money. Not sure where it'd come from. Maybe start with a low amount and scale upwards, hoping to reap some economic benefits from the improvements?

[1] http://www.usgovernmentspending.com/breakdown

True, but if I pay $60,000 in federal taxes each year, and only receive $25,000 in "mincome", then it's still "socialism" (as Americans seem to define it).

It seems that any tax plan that is remotely progressive is immediately labeled as "socialist" by the right.

Actually I think a red state like Mississippi could be the proving ground. The argument from right-leaning groups like the Cato Institute is that BI would replace existing social welfare programs (SNAP, SSDI, HUD, etc.) and reduce the incentive for special interest groups to lobby for special programs and transfers. Everyone gets a check for the same amount, if you're wealthy then you owe more in taxes than your check is worth.

Those programs can get really costly in states with low economic growth and high poverty rates. The idea that we should just give poor people money instead of funding huge government programs (often with no metric for success beyond "number of people enrolled") would play well in many red states.

In the States it should be called a "negative income tax". It's basically the same thing with a different name, but it's the name that Milton Friedman and other leading right-wing economists use.

Milton Friedman created a reasonable argument for conservatives that this program is in-line with conservative economic principles.

http://www.nytimes.com/2006/11/23/business/23scene.html?_r=0

It's a weird one, actually; lots of socialists like the idea, but so do lots of libertarians. Alas, conservatives hate it.

Socialists hate the idea because it's still based on capitalism.

Some socialists hate it, some don't. Lots of libertarian socialists are in favour.

Socialists and neoconservatives seem to hate it, but economic liberals and progressives seem to like it.

I'd take issue with your description that socialists seem to hate it. Plenty of socialists (especially libertarian socialists) like it a lot.

Yes, I'm sure socialists are the only ones who could ever possibly accept a basic income.

Oh wait http://en.wikipedia.org/wiki/Negative_income_tax

BI is NOT socialism at all. We still have private property and capitalism based economy, just like now.

If anything this is the pure form of the mixed capitalism/democratic economy/government model that every Western nation already has.

BI is a way of reconciling capitalism with the "post-work" work world we are moving into.

The modern mixed economy that every Western nation has is called that because it is a mixture of capitalism and socialism.

Its true that BI is consistent with that mix, but that's not a counterargument to it being from the socialist side of the capitalist/socialist divide. (Of course, the utility of that divide and the breakdown of arguments over economic arrangements into "which side of the divide does that fall into?" followed by "if capitalist, good; if socialist, bad", or vice-versa, is dubious.)

Strong arguments can be made for the necessity of basic income, but as a concept it is weakly socialist. The ideal that people have some fundamental right to sustenance beyond what the market value of their labor provides as income is by definition socialist, given that the corresponding capitalist ideal is that, if you're not worth paying enough to live, you die.

Actually, both economic liberals and progressives seem to like it.

Like Alaska http://en.wikipedia.org/wiki/Alaska_Permanent_Fund

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