Hacker News Reader

Comment by segmondy | Hacker News Reader

When I hear people ask for basic income, it reminds me of the scene in the Matrix where Neo asks for his phone call, and the Agent replies, “What good is a phone call if you have no mouth?”

What good is basic income if you can't afford to survive on it?

So what good is basic income of $1000 if a burger costs $100 or rent costs $3000. Basic income is garbage, pump in free money into the economy and price of everything will rise relatively. Then the question begs, instead of basic income, how about basic survival needs. Free housing, free food, free water. Well, how about education, legal system, health care, should those who don't wish to work earn all the privileges payed for those that do all the work?

I haven't thought much about this, but strong intuition leads me to believe that neuroeconomics and game theory can prove that this will not work.

View on HN

If you gave everyone an amount of money proportional to how much money they already had (or proportional to how much income they had) then it would, indeed, make no difference because it would not change the wealth distribution, just the denomination of notes. Like a stock split.

But most basic income proposals (aka "citizens' dividend") suggest giving the same amount of money to all people (possibly with less for young children). This would actually change the income distribution. It would not necessarily require the government to print more money or even to increase taxes since (most of) the proposals also suggest eliminating existing spending on food stamps, welfare, social security, and other such expenses.

"pump in free money into the economy and price of everything will rise relatively"

This makes no sense. Runaway inflation is always a worry in any economy, but "free money" does not cause inflation. The government distributes plenty of "free money" as it is right now, and we're not seeing runaway inflation.

Those who support basic income argue that implementing the policy would more likely lead to the so-called "virtuous cycle" where, because people have money to spend, the economy improves etc. and because you're cutting out the current safety net and bureaucracy that surrounds it, you can afford to give people an income that will provide for their basic survival needs.

>but strong intuition leads me to believe that neuroeconomics and game theory can prove that this will not work

Strong intuition and game theory can probably prove that theoretically nobody will want to buy an Apple watch edition ... humans are not rational, not at all. Humans are way more complex than our models currently can describe. Preferences can be modelled but how correct are they?

Even though it might not be feasible, I think it's a goal we should strive for. I feel that if every basic need of a human is taken care of. That we can progress as a human race, as one unit. Am I more important because of the decisions my parents made to raise me well and to focus me on my studies? Am I 'worth more' than some kid in Africa who does not have the privilege to go to school, to have a 'normal' life? Would homeless people pick themselves up if they we're given the chance? How much of the homeless would pick themselves up given the chance. How many 'regular people' would 'drop down', 'just quit' if they had the chance?

I feel like basic income (or some sort) should be a moral goal of humanity as a whole.

> humans are not rational,

Okay, stop with this. Just stop for a moment and define rationality: chosing the best course of action based on the agent's available information (let's call information data evaulated according to the agent's preferences, maybe even mention utility function). Now, if people value shinyness over solving poverty, you get a lot of Apple customers.

Lo and behold, that's what's happening. People's utility functions are not simple money, time, iPhone, Nexus 6, what should I buy!? It also includes the whole spectra of every walk of life, spending 1000 USD on a shiny iWhatever is not just a device for iWhatevering, but also has the value you gain by having a nice device that your peers will want to look at. (Or maybe having a non-iWhatever will have a negative value because you'll feel left out, peer pressure, embarrasement! People are rational social agents.)

Yes, models usually don't deal with these stuff, but that's changing, mostly because now we have ways to quantify it (from twitter mentions to FB likes and easy sentiment analysis and DIY machine learning/NLP/etc.).

Just think about the discussion regarding healthcare. From an economics standpoint the continous situation for the past decade is a clusterfuck, a government mandate in such a well-developed state such as the USA would solve the problem, in a few years. Done. Cheap, effective, healthy, pick three. Oh wait, you can't because politics, because social status, because discrepancies in how people view the world. And even though you can model politics itself, there's not much point in it, because the actors/agents/dickwads are either too simplistic (so some kind of personal agenda driven) or too influenced by invested parties (healthcare providers) to care about your models, or your models about them not caring about your models.

And that's (one) full circle, but of course we could go on.

It just doesn't work that way. Price competition is still a thing. Businesses will be just as happy to have more customers at their current prices. Money from those extra customers will find it's way back into the economy, to lawyers and accountants and programmers. Economists are far from certain as to whether rising wages drive price increases, or rising prices drive wage increases. There's no reason to assume that prices will rise linearly.

Multiple studies have shown that it's better to give people money and let them decide how to use it than it is to create layer upon layer of social programs. We can figure out how much 'basic' housing, food, medical and child care cost and give everyone that amount. They can figure out how best to use it to suit their individual needs.

I agree with your argument. Basic income will never work in our society if we are giving it out in the form of spendable money. Basic income in the form of a free amount of utilities provided by the government such as X amount of water and electricity every month I think could work in our capitalist society. Even 'universal' healthcare falls prey to the same flaws as the $1000/month since the quality of the free healthcare will be reduced and the wait times will increase. The best doctors will continue to have private practices that will charge rates that only the richest can afford. As long as capitalism is an integral part of our society, I do not foresee basic income being a good solution to any of our social issues.

Producing apartments or food or water remains a competitive industry. If the people purchasing them gain more income, I could in theory see the existing suppliers deciding "we will just increase prices," but a new supplier could enter the market using the old players' old model and steal all their market share.

(If the basic income is done just by giving everyone a check, then I could see costs rising, because people refuse to work for current wages. The more sensible way to implement a BI is with a wage subsidy so people still work.)

If there are millions of people trying to live on $1000 per month, then there is huge opportunity in pricing a package of goods that fit within that budget.

>So what good is basic income of $1000 if a burger costs $100 or rent costs $3000.

Basic income would only become a reality when the costs to produce goods significantly decreases due to automation. If the price of a hamburger is $100, then the price for a machine to automate production is going to be insane, at which point hiring people would be cheaper, meaning there would be jobs and no need for basic income.

We already have free healthcare and education in Italy. Wouldn't be much of a stretch to think of free food and housing either, no? I agree that perhaps giving money to people isn't the best way to do this, but "being forced to work" is a type of slavery we don't need in a healthy and ethical society.

If it doesn't cover the cost of food, clothing, shelter, health care, and education, then by definition the thing you're criticizing is something other than a basic income proposal.

I think you have a very, very oversimplified and course view of this topic. Nice hook though!

Reply on news.ycombinator.com