Why wouldn't all standard of living benefits of basic income get eliminated immediately by all relevant costs rising to soak it up?
This happens every single time the poor get any sort of money. In poor neighborhoods the rents cost as much as people are able to pay, no more, no less.
Do you know when most rental deposits are collected? Around the tax return season.
If suddenly the poor had some money to spare - the rents will simply go up. The water bill will go up. Electricity, gas. Etc.. until there's no extra income left. And then the poor will be in exactly the same situation as they are now.
Source: long time resident (and landlord btw) of poor neighborhoods of Philly.
P.S: Government is willing to help poor with mortgages? House prices balloon. Government is helping with education grants - colleges raise tuition. Borderline-broke municipalities with enormous unfunded liabilities are looking for any opportunity to collect back taxes and make up new ones. I can go on.
Why would this be any different? As the history shows it will provide a benefit for only a short amount of time until costs catch up.
P.P.S: I am not an opponent of helping poor, quite the opposite. I just don't know how to go about it in real world.
The orthodox theory says that, in a competitive marketplace, producers should not be able to "capture" gains in the wealth of consumers. If prices of a good rise, it's because consumers are purchasing more of the good, and the good has increasing marginal cost to produce. (I ignore some 2nd-order effects related to wages as a production cost).
That's the orthodox theory. You shouldn't buy it wholesale.
On the other hand, it would be a very heterodox environment indeed if producers were able to steal all the increases in wealth from consumers. That could only happen in an environment of no competition, not imperfect competition. Or an environment with 100% occupancy and no ability to build more units of housing.
Also, there would need to be no substitutes for the good. For instance, that people couldn't move between cities.
Surely the game is, to some extent, rigged. But can it be rigged so badly that it is possible to believe that transferring wealth from richer to poorer will not lead to an increase in the purchasing power of poorer people?
I don't have a decided opinion on guaranteed minimum income, but to deny that it would have a marked effect on purchasing power of the recipients of the wealth requires one to posit a truly exceptional economic theory. To attack minimum income on its efficacy of all things: that is either an ill-considered or truly radical view.
If minimum income can't help, what possibly could? The only option left would be the confiscation and redistribution of capital.
It depends on the elasticity of the commodity. Going to one of those contrived economics examples:
let's say you have 5 people who have the following amount available to spend on TVs:
$100
$80
$50
$30
$10
And you have 5 TVs to sell. What price do you sell them for?
If you price them at $100, you sell 1x$100 and make $100
If you price them at $80, you sell 2x$80 and make $160
If you price them at $50, you sell 3x$50 and make $150
At this point you see a trend - you should price your TVs at $80 and just eat the loss on the three TVs you don't sell.
So now we have a society in with 40% of people have a TV and 60% don't. As a government, you want 100% of people to have a TV, so you intervene to try to fix it.
First, you double everyone's income.
That doesn't change anything. The new price for TVs is $160 and two people get TVs.
So instead, you give everyone $50.
If you price them at $150, you sell 1x$150 and make $150
If you price them at $130, you sell 2x$130 and make $260
If you price them at $100, you sell 3x$100 and make $300
If you price them at $80, you sell 4x$80 and make $320
If you price them at $60, you sell 5x$60 and make $300
So now 80% of society gets a TV. Better! Sure, you haven't eliminated inequality, but you've reduced it.
But let's say it isn't TVs, it's houses. And you have three of them, not five.
Everyone needs a house. So you'll bid as much money as you have to to beat the next guy trying to get one.
So the first house will go for $80 to the person with $100.
The next house will go for $50 to the person with $80
The final house will go for $30 to the person with $50.
If you double everyone's income? Nothing changes. We've already seen that doubling people's income does nothing.
If you give everyone an extra $50? The distribution ends up the same, except everyone pays an extra $50 for each house.
TL;DR: inelastic goods like real estate will just go up in price. Elastic goods like electronics will, but less than the amount of the wealth transfer. The most important thing is to change the wealth ratio rather than the gross amount.
If all rents rise jointly that primarily indicates that housing is not competing on price, so remedying that anti-competitive environment is a separate and more important issue IMO.
The key difference is mobility. Basic income means people don't have to live in Philly near their job. They can move to Iowa and dramatically raise their standard of living.
I fail to see by what mechanism what you describes occurs. Do you constantly query your occupant of pay raises? Why would every raise be siphoned by rent? Poor people have problem making ends meet for clothes, food, etc. Sure, more money put inflationary pressure, but it's not a magic direct correlation and instant feedback. If the government is serious and declares that it will adjust basic income to match the market price for basic goods and regulate their prices, including building low-rent lodging, then the inflationary pressure will have to subsides into only unregulated items.
Why would rent go up? Some homeless people would rent apartments, sure, but they're a very small percentage of the population, and a good portion of homeless people have other issues that makes that unlikely. In other words, demand would not increase substantially. And supply wouldn't change. If neither supply nor demand changes, why would prices?
There would be some movement. The prices of the worst shit-holes would probably go down because people would gain the ability to move into a nicer place. That might cause a little increase in the price of low end apartments.
And any city that is currently supply-constrained would probably see upward movement on prices. But most cities that aren't San Francisco have vacancy rates around 3%, they aren't supply constrained. If one landlord raises prices, people can and will move to an cheaper apartment elsewhere. And if prices do rise, people will build more apartments, driving prices down. (again, assuming not San Francisco).
Because even though anybody relying on Basic Income may not be starving, they'll still be really poor, and really cost sensitive. If BI is $10,000 a year, a $100/month price increase is a huge chunk of their income, and worth the huge hassle of a move to avoid.
Even if nothing changed, it would have been worth it for the simple fact that it simplifies the bureaucracy of it all. That's basic income's most important feature
> If suddenly the poor had some money to spare - the rents will simply go up. The water bill will go up. Electricity, gas. Etc.. until there's no extra income left. And then the poor will be in exactly the same situation as they are now.
Remember that these "costs" are seen as revenue to providers of goods and services. What follows can be thought of as the opposite of trickle-down economics.
You might be right. But it's not just about the income level. The important bit is that it's guaranteed. This theoretically will give the poor more leverage in negotiating the salaries etc., and they'll be able to get higher quality jobs.
According to your view, you cannot change anything ever. Take a look at microcredits. Give women in Africa $50 or $100 to start up their own business. They know exactly what to do, and it really helps. Isn't this something similar?
It sounds like you have a point, but sometimes intuition and/or anecdotal evidence can be wrong. It would be nice to see some economic models that (dis)prove this.
> In poor neighborhoods the rents cost as much as people are able to pay, no more, no less.
This is a bit of a tautology.
Low-rent housing is usually pretty bad, so when people can afford to pay more they just move to a nicer place.
As far as I know, the first-time home buyer credit made a tiny ripple in the low-end housing market - where did prices "balloon"?
College education is quite different because the "market" has a massive barrier to entry (in terms of creating a new university).
Exactly - thank you. It's somewhat depressing to see the number of people who either don't understand this concept, or think that somehow it doesn't apply in this case.
It reminds me of Tobias Fünke in Arrested Development, when asked if open relationships ever work, saying "No, it never does. I mean, these people somehow delude themselves into thinking it might, but ... But it might work for us."
Well, the real question is, are you ready to pay for the Guaranteed Basic Income? Generously assuming that it's not indexed to inflation, probably what would happen is that costs would rise to account for the newfound money. Then, of course, there would have to be services that remain in place, because if people spend their income stupidly, we can't have them starving in the streets. Then you have the collection problem, that suddenly taxes would have to go up (and they would, of course, regardless of how many services you think you can cut).
The people who pay? In general, as with any tax increase, it's the middle class. It's the couple that went to college, saved their money, worked hard, bought a house and started a family. Regardless of how much you think you can raise tax rates on "the rich", the only way to pay for something like this is by getting to the middle class, which is where the tax revenue is.
I think we should just call it what it is a dividend. We have crossed a point where handing off 10% of everyone's income allows for a reasonable minimum standard of living. But, because progress is always going to cost some people more than others we need to align incentives.
Sorry, I know your a world class doctor, but Auto Scan (TM) just does a better job.
The important thing to remember is that % for a given standard is dropping over time. If 1% is enough to reach the current US standard then it's going to be really hard to say no.
PS: I don't think we will take this global any time soon. But, we could. World GDP is 106 dollars per person per day. 10% of that is 10.06$ per person per day. 80% of humanity lives on less than 10$ per day.
A 10% income tax increase redistributed to all US households would be ~$11,000 per household, which is right about what the poverty line is for 1 person. If your household makes less than $110k you get a tax cut, above $110k you will be paying more to prevent social unrest.
Some parents can put 850k in a account for their child when it's born that gets invested, say in the American economy (grows by say 7% over an average, long time period), which compounds until later in life, and when they grow up, they can access it. With good financial responsibility, this child won't have to work a day in their lives and can live off the returns.
Why can't we as a society do this for everyone, but you can never touch the account, only the returns? That is, wealth and a foot in the returns of humanity as a right.
You're born, you get $1mil put in an account that gets invested. When you turn 18, you start getting a monthly check, the return on that investment. You can never touch the account, only get its returns.
Someone tell me why this is a bad idea, worse than guaranteed basic income.
Honestly, it just sounds like you've restated one of the simple versions of how basic income actually would work (and why it should be economically "easy"), and its basically the way people think Social Security works (it's subtly different, but that's a tangential discussion). MMT (Modern Monetary Theory) isn't really that far from "pretend the government had an investment account for every person and then handed them a check for the interest returns on that account", just with a lot more subtlety in what constitutes that account (because money is something the government creates in how it taxes money) and where that interest return "comes from" (because it's already there in tax credits and 0% loans to big corporations and government debt bonding and even the nature of inflation itself and weirder things). Of course, I'm oversimplifying as well, but the point is you have found the rabbit hole.
Which is to say, spot on, you've hit near the right track and aren't too far from what a lot of guaranteed basic income discussions generally start from and are basically about.
There are about 4 million births in the US ever year, so that program would inject $4 trillion per year into the economy (assuming everyone currently living is left out). It would be impossible to pull in that much through taxation (today) so it would have to be pure money creation. $4 trillion is about 25% of GDP, so if the economy isn't growing by at least that amount every year, the value of the dollar will inevitably fall to compensate, most likely to a level where the return on the $1 million investment isn't anywhere close to a livable income.
Come to think of it, I'm not even considering the money multiplier. When that $4 trillion is spent or invested, eventually it ends up in someone's bank account, and because we have fractional reserve banking, it adds to the banks' deposits, allowing them to loan more money out. The banks' reserve requirement is 10%, so in the worst case (if the banks loan out as much as they possibly can), that $4 trillion becomes $40 trillion. (Each bank loans out 90% of their deposits, the loans becomes deposits at other banks, who loan 90% of that [81% of the original], and so on and so on.) That's 250% of GDP, so you'd probably see inflation severe enough to threaten social order in general.
If we imagine that the program has been running for several generations already and the whole population already has their $1 million trust fund, you can at least destroy about $2.4 trillion per year as people die, but the bigger issue would be that "$1 million" means a very different thing in a world where there's $300 trillion in citizen trust funds compared to today when the total of all physical currency and liquid bank accounts is about $10 trillion.
There's also the problem of who gets to decide how to invest the money, which would be a magnet for corruption.
This requires amassing the capital to get started. Does it seem harder to get all that capital than to get half of it? Really you only need to get 7% of it this year to pay the over-18s.
What investments should be used in the account exactly?
What do you do about the temptation of the administrators to "borrow" from the reserves, direct the investments to benefit themselves, hoard extra resources or underfund the plan by estimating the future revenues or expenses a bit too high or low?
Your idea isn't bad exactly, just complicated by these extra provisions such as "the basic income shall be derived from investment proceeds from individual accounts."
An earlier Freakonomics episode [1] discusses whether early retirement is bad for the health. According to the show it actually might be: "one additional year of early retirement causes an increase in the risk of premature death of 2.4 percentage points"
Guaranteed Basic Income sounds like an early retirement option for most people, so where it's probably a fantastic opportunity for self-starters, it might be lethal for everyone else. GBI's side effect can be weeding out non-entrepreneurs.
It is important to consider this as more and more white-collar jobs may become redundant due to automation [e.g. 1].
Moreover, it would be interesting to see what becomes of today's jobs if there were an basic income. E.g. what percentage of jobs would disappear and not be missed? How many people would continue to work at their current job?
Why? We have had "automation" in some form or another for many millennia and we have not needed a "basic income".
Every technological advancement from the invention of hand tools, to creating complex machines can be loosely classified as "automation" and in every case the standard of living has increased and resources were then allocated to some more productive means.
It was interesting that they used dogs as an example of a population that had its work taken away by technological progress, yet did not provide the obvious counter example (horses).
Negative. Those with money will fight like hell to keep from giving it up. However if by some chance/miracle a guaranteed income is ever instituted, it will become a political football, as politicians and advocacy groups seek to continuously push it higher and higher. Instead of a money handout, I would rather support money in exchange for public works and service. I don't believe handouts without some kind of exchange will ever really work.
In the past century we have countless examples of socialism failing, yet its proponents devise some new scheme, some new brand and try to sell it as if something will be different this time. Socialism will always fail because it is contradictory to human nature.
We have countless examples of capitalism failing too. But the argument that socialism is against human nature is obviously wrong, as humans are social animals. However, as any animal, if you corner them and put them in survival mode, things can get ugly.
The purpose of modern states is exactly to provide security in multiple ways, one of them being shared financial security, to remove the need of constant struggle for survival and allow the social side of humanity to flurish.
As an example on a smaller scale: There were enough articles recently for instance about Amazon, as an extreme example of hiper competitive anti-social environment that encourages people to backstab each other and play politics to advance. Pure survival mode. Compare that for instance with companies like Google, that spoil everyone and even give you 20% time for free. So far they haven't collapsed. Now you can argue that companies are not countries, but I don't see how such learning don't apply. That exactly is the human behaviour argument.
Sorry in advance for the ad-hominem, but that supposedly intelligent people even here on Hacker News keep reiterating old tropes about socialism and human nature unreflected, while any research in that regard or simple observations as illustrated above are contradictory to it, is baffling.
Have you spend significant time unemployed or not in school? It's really depressing after a while. Sure playing video games and watching movies all day is great for a week or two during vacation but if that's all you do you will quickly find something else to supplement your free time.
Why is this a moral problem? [1] Isn't this a market problem that the market can solve? Basic Income would add actual liquidity in the labor market. If workers actually have the option not to work, then the market has to finally figure out how to make the worker want to work.
Maybe that competition would lead to better companies and better work.
[1] Other than the lasting impact of the Puritans on American society, of course...
Precisely. The article cites one economist who opposes BI for this very reason:
ROBERT GORDON: As far as a guaranteed minimum income, I’m not in favor of that. I’m in favor of a modest increase in the minimum wage, and a substantial increase in the earned-income tax credit, which encourages low-income people to work.
DUBNER: Why would you not be in favor of the minimum guaranteed income?
GORDON: There’s too much of an incentive, if you guarantee income, to replace work. And if you provide a guaranteed minimum income to everybody, then those with low skills will drop out of the labor force and will no longer work. So I think it’s a matter of incentives. A guaranteed minimum income would put a very high implicit marginal tax rate on going to work, for those with relatively low skills.
It seems to me that the question of how to finance a UBI is probably the largest stumbling block.
Of course it could be done through taxes but a lot of people have legitimate concerns about government taxation. For taxation to work you need a coercive government and many of us are very aware of the downsides of such an entity. Of course taxation isn't the only reason we have a coercive government there's also the war on drugs and other policies which seem to ultimately derive from the need of a significant fraction of the population to dictate the choices of their fellow citizens. This tendency is of course inevitably amplified among those who self-select for government or political careers. There is also to some degree a legitimate need for self-defense which also inevitably leads to some degree of coercive government. But even if these problems could be solved, say for example through more rational and better focused defense policies and through evolution of ethical views to give greater weight to the desires of individuals to lead their lives as they see fit, if we are going to provide a safety net for everyone we will always need some form of government and if that government is financed through taxation a level of coercive and invasive policies is likely inevitable.
Could we find a better way to finance government and a UBI ? Some countries and regions with extensive natural resources have been able to leverage them to help finance their governments and provide assistance to citizens (examples I believe include Norway and Alaska). However most economies are not so strongly dependent on the exploitation of natural resources so this type of solution cannot be generalized. What if a nation's government became an investor in that nation's economy ? I'm not talking about nationalization of industry but allowing the government to acquire minority ownership of public corporations as a means not of exerting control but of generating income. Could we imagine government evolving to the point of relying for its financing on a financial portfolio much like some universities receive substantial income from their endowments ? I'm not an economist but I've never encountered this idea in the press. It would be interesting to know what the experts think of it.
One potential source of revenue-neutral money for it is reducing other social and welfare programs. The theory goes that a UBI program would have less administrative overhead, so the savings can go to "the people". And arguably this is the hardest way to do it, politically, because it would reduce the number of bureaucratic jobs available.
I've wondered if a "guaranteed basic goods" systems might make sense, either as an alternative to a basic income system, or as a way to slowly transition to one.
The idea would be that as we figure out how to automate things, we make those things essentially public goods. We end up with a mixed economy, where we have one class of goods that are produced in publicly owned automated factories and do not cost the consumer money, and another class of goods that work like they do now where private parties produce them and sell them for money which the buyers earn through paid employment.
For instance, consider vegetables. We're close to being able to make almost fully automated farms for many crops, and we're close to fully automating most of the shipping from farm to market. The idea would be that as we achieve this, the government buys up these farms (or starts its own farms), and everyone gets a daily allotment of the produce from these farms. Some meat production is also highly automated, and so we should be able to at some point in the not too distant future add meat to this.
At that point everyone who has a place to cook has their basic food requirements taken care of.
How about transportation? Automobile manufacture is very automated. At some point that too will be almost completely automated. Combine that with self-driving cars, and we should be able to have a publicly owned nationwide fleet of self-driving taxis. Ideally these would be electric cars, powered by publicly owned solar, wind, hydroelectric, or nuclear systems.
As automation gets more and more advanced, more and more goods can be added to the "made by publicly owned automated factories" list and made available to all.
When enough stuff is automated and turned into public goods to allow someone to survive reasonably without a job as long as they have housing, we can start making publicly owned housing in places where land and construction costs are cheap. That will be away from the big cities, but for people who decide to not work that would be fine, as it would for people who can work remotely. So we should be able to reach a point where everyone can have a basic apartment or small house and the necessities to survive reasonably there, without an income.
Will we ever be able to automate everything except creative intellectual work? I don't think so, at least not for a long time. I think that would require the development of something like the robots from Asimov's stories--robots that have human form factors (so that they can work anywhere that a human can work) and human level intelligence, and I don't think we'll be there anytime in the next 100 years.
A nice thing about this approach is that it can be done with minimal disruption. With basic income you have to give everyone enough to reasonably survive right from the start. With basic goods, you go item by item, industry by industry.
[+] [-] VincentEvans|10 years ago|reply
This happens every single time the poor get any sort of money. In poor neighborhoods the rents cost as much as people are able to pay, no more, no less.
Do you know when most rental deposits are collected? Around the tax return season.
If suddenly the poor had some money to spare - the rents will simply go up. The water bill will go up. Electricity, gas. Etc.. until there's no extra income left. And then the poor will be in exactly the same situation as they are now.
Source: long time resident (and landlord btw) of poor neighborhoods of Philly.
P.S: Government is willing to help poor with mortgages? House prices balloon. Government is helping with education grants - colleges raise tuition. Borderline-broke municipalities with enormous unfunded liabilities are looking for any opportunity to collect back taxes and make up new ones. I can go on.
Why would this be any different? As the history shows it will provide a benefit for only a short amount of time until costs catch up.
P.P.S: I am not an opponent of helping poor, quite the opposite. I just don't know how to go about it in real world.
[+] [-] ruggeri|10 years ago|reply
That's the orthodox theory. You shouldn't buy it wholesale.
On the other hand, it would be a very heterodox environment indeed if producers were able to steal all the increases in wealth from consumers. That could only happen in an environment of no competition, not imperfect competition. Or an environment with 100% occupancy and no ability to build more units of housing.
Also, there would need to be no substitutes for the good. For instance, that people couldn't move between cities.
Surely the game is, to some extent, rigged. But can it be rigged so badly that it is possible to believe that transferring wealth from richer to poorer will not lead to an increase in the purchasing power of poorer people?
I don't have a decided opinion on guaranteed minimum income, but to deny that it would have a marked effect on purchasing power of the recipients of the wealth requires one to posit a truly exceptional economic theory. To attack minimum income on its efficacy of all things: that is either an ill-considered or truly radical view.
If minimum income can't help, what possibly could? The only option left would be the confiscation and redistribution of capital.
[+] [-] dibujante|10 years ago|reply
let's say you have 5 people who have the following amount available to spend on TVs:
$100
$80
$50
$30
$10
And you have 5 TVs to sell. What price do you sell them for? If you price them at $100, you sell 1x$100 and make $100
If you price them at $80, you sell 2x$80 and make $160
If you price them at $50, you sell 3x$50 and make $150
At this point you see a trend - you should price your TVs at $80 and just eat the loss on the three TVs you don't sell.
So now we have a society in with 40% of people have a TV and 60% don't. As a government, you want 100% of people to have a TV, so you intervene to try to fix it.
First, you double everyone's income.
That doesn't change anything. The new price for TVs is $160 and two people get TVs.
So instead, you give everyone $50.
If you price them at $150, you sell 1x$150 and make $150
If you price them at $130, you sell 2x$130 and make $260
If you price them at $100, you sell 3x$100 and make $300
If you price them at $80, you sell 4x$80 and make $320
If you price them at $60, you sell 5x$60 and make $300
So now 80% of society gets a TV. Better! Sure, you haven't eliminated inequality, but you've reduced it.
But let's say it isn't TVs, it's houses. And you have three of them, not five.
Everyone needs a house. So you'll bid as much money as you have to to beat the next guy trying to get one. So the first house will go for $80 to the person with $100. The next house will go for $50 to the person with $80 The final house will go for $30 to the person with $50.
If you double everyone's income? Nothing changes. We've already seen that doubling people's income does nothing.
If you give everyone an extra $50? The distribution ends up the same, except everyone pays an extra $50 for each house.
TL;DR: inelastic goods like real estate will just go up in price. Elastic goods like electronics will, but less than the amount of the wealth transfer. The most important thing is to change the wealth ratio rather than the gross amount.
[+] [-] TTPrograms|10 years ago|reply
[+] [-] rayiner|10 years ago|reply
[+] [-] pierrebai|10 years ago|reply
[+] [-] bryanlarsen|10 years ago|reply
There would be some movement. The prices of the worst shit-holes would probably go down because people would gain the ability to move into a nicer place. That might cause a little increase in the price of low end apartments.
And any city that is currently supply-constrained would probably see upward movement on prices. But most cities that aren't San Francisco have vacancy rates around 3%, they aren't supply constrained. If one landlord raises prices, people can and will move to an cheaper apartment elsewhere. And if prices do rise, people will build more apartments, driving prices down. (again, assuming not San Francisco).
Because even though anybody relying on Basic Income may not be starving, they'll still be really poor, and really cost sensitive. If BI is $10,000 a year, a $100/month price increase is a huge chunk of their income, and worth the huge hassle of a move to avoid.
[+] [-] James001|10 years ago|reply
[+] [-] theseatoms|10 years ago|reply
Remember that these "costs" are seen as revenue to providers of goods and services. What follows can be thought of as the opposite of trickle-down economics.
[+] [-] perfunctory|10 years ago|reply
[+] [-] arviewer|10 years ago|reply
[+] [-] amelius|10 years ago|reply
[+] [-] strommen|10 years ago|reply
This is a bit of a tautology. Low-rent housing is usually pretty bad, so when people can afford to pay more they just move to a nicer place.
As far as I know, the first-time home buyer credit made a tiny ripple in the low-end housing market - where did prices "balloon"? College education is quite different because the "market" has a massive barrier to entry (in terms of creating a new university).
[+] [-] branchless|10 years ago|reply
People do not understand how prices are set and this is a major barrier to stopping rentier activity.
Rents are set by what the market can bear. I hope we get land value tax and stop the leeches.
[+] [-] curiousgeorgio|10 years ago|reply
It reminds me of Tobias Fünke in Arrested Development, when asked if open relationships ever work, saying "No, it never does. I mean, these people somehow delude themselves into thinking it might, but ... But it might work for us."
[+] [-] JonFish85|10 years ago|reply
The people who pay? In general, as with any tax increase, it's the middle class. It's the couple that went to college, saved their money, worked hard, bought a house and started a family. Regardless of how much you think you can raise tax rates on "the rich", the only way to pay for something like this is by getting to the middle class, which is where the tax revenue is.
[+] [-] Retric|10 years ago|reply
Sorry, I know your a world class doctor, but Auto Scan (TM) just does a better job.
The important thing to remember is that % for a given standard is dropping over time. If 1% is enough to reach the current US standard then it's going to be really hard to say no.
PS: I don't think we will take this global any time soon. But, we could. World GDP is 106 dollars per person per day. 10% of that is 10.06$ per person per day. 80% of humanity lives on less than 10$ per day.
[+] [-] asmithmd1|10 years ago|reply
A 10% income tax increase redistributed to all US households would be ~$11,000 per household, which is right about what the poverty line is for 1 person. If your household makes less than $110k you get a tax cut, above $110k you will be paying more to prevent social unrest.
All numbers in Billions and for 2014
Total earned income $14,700
Total income tax $1,000
--------------------------
10% = $1,370Total US households .125
basic income per household 1370/.125 = $11,000
[+] [-] Overtonwindow|10 years ago|reply
[+] [-] dota_fanatic|10 years ago|reply
Some parents can put 850k in a account for their child when it's born that gets invested, say in the American economy (grows by say 7% over an average, long time period), which compounds until later in life, and when they grow up, they can access it. With good financial responsibility, this child won't have to work a day in their lives and can live off the returns.
Why can't we as a society do this for everyone, but you can never touch the account, only the returns? That is, wealth and a foot in the returns of humanity as a right.
You're born, you get $1mil put in an account that gets invested. When you turn 18, you start getting a monthly check, the return on that investment. You can never touch the account, only get its returns.
Someone tell me why this is a bad idea, worse than guaranteed basic income.
[+] [-] WorldMaker|10 years ago|reply
Which is to say, spot on, you've hit near the right track and aren't too far from what a lot of guaranteed basic income discussions generally start from and are basically about.
[+] [-] evunveot|10 years ago|reply
Come to think of it, I'm not even considering the money multiplier. When that $4 trillion is spent or invested, eventually it ends up in someone's bank account, and because we have fractional reserve banking, it adds to the banks' deposits, allowing them to loan more money out. The banks' reserve requirement is 10%, so in the worst case (if the banks loan out as much as they possibly can), that $4 trillion becomes $40 trillion. (Each bank loans out 90% of their deposits, the loans becomes deposits at other banks, who loan 90% of that [81% of the original], and so on and so on.) That's 250% of GDP, so you'd probably see inflation severe enough to threaten social order in general.
If we imagine that the program has been running for several generations already and the whole population already has their $1 million trust fund, you can at least destroy about $2.4 trillion per year as people die, but the bigger issue would be that "$1 million" means a very different thing in a world where there's $300 trillion in citizen trust funds compared to today when the total of all physical currency and liquid bank accounts is about $10 trillion.
There's also the problem of who gets to decide how to invest the money, which would be a magnet for corruption.
[+] [-] arebop|10 years ago|reply
What investments should be used in the account exactly?
What do you do about the temptation of the administrators to "borrow" from the reserves, direct the investments to benefit themselves, hoard extra resources or underfund the plan by estimating the future revenues or expenses a bit too high or low?
Your idea isn't bad exactly, just complicated by these extra provisions such as "the basic income shall be derived from investment proceeds from individual accounts."
[+] [-] wskinner|10 years ago|reply
And why do you believe prices wouldn't rise to meet the new common standard of living afforded by this grant?
[+] [-] ryandvm|10 years ago|reply
[+] [-] beachstartup|10 years ago|reply
out of those two ludicrous requirements, i'm not sure which one is more of a challenge.
[+] [-] mistermann|10 years ago|reply
[+] [-] wimagguc|10 years ago|reply
Guaranteed Basic Income sounds like an early retirement option for most people, so where it's probably a fantastic opportunity for self-starters, it might be lethal for everyone else. GBI's side effect can be weeding out non-entrepreneurs.
[1] Early Retirement: Bad For Your Health? http://freakonomics.com/2012/03/29/early-retirement-bad-for-...
[+] [-] f_allwein|10 years ago|reply
Moreover, it would be interesting to see what becomes of today's jobs if there were an basic income. E.g. what percentage of jobs would disappear and not be missed? How many people would continue to work at their current job?
[1] http://books.simonandschuster.com/The-Industries-of-the-Futu...
[+] [-] ancap|10 years ago|reply
Every technological advancement from the invention of hand tools, to creating complex machines can be loosely classified as "automation" and in every case the standard of living has increased and resources were then allocated to some more productive means.
Why is today's automation any different?
[+] [-] klunger|10 years ago|reply
[+] [-] Overtonwindow|10 years ago|reply
[+] [-] vansteen|10 years ago|reply
[+] [-] ancap|10 years ago|reply
[+] [-] inflagranti|10 years ago|reply
The purpose of modern states is exactly to provide security in multiple ways, one of them being shared financial security, to remove the need of constant struggle for survival and allow the social side of humanity to flurish.
As an example on a smaller scale: There were enough articles recently for instance about Amazon, as an extreme example of hiper competitive anti-social environment that encourages people to backstab each other and play politics to advance. Pure survival mode. Compare that for instance with companies like Google, that spoil everyone and even give you 20% time for free. So far they haven't collapsed. Now you can argue that companies are not countries, but I don't see how such learning don't apply. That exactly is the human behaviour argument.
Sorry in advance for the ad-hominem, but that supposedly intelligent people even here on Hacker News keep reiterating old tropes about socialism and human nature unreflected, while any research in that regard or simple observations as illustrated above are contradictory to it, is baffling.
[+] [-] maxerickson|10 years ago|reply
(there are even several countries with 3-4 weeks of vacation for everyone and similar annual per person productivity to the US...)
[+] [-] vaadu|10 years ago|reply
[+] [-] AlwaysRock|10 years ago|reply
[+] [-] WorldMaker|10 years ago|reply
Maybe that competition would lead to better companies and better work.
[1] Other than the lasting impact of the Puritans on American society, of course...
[+] [-] judah|10 years ago|reply
ROBERT GORDON: As far as a guaranteed minimum income, I’m not in favor of that. I’m in favor of a modest increase in the minimum wage, and a substantial increase in the earned-income tax credit, which encourages low-income people to work.
DUBNER: Why would you not be in favor of the minimum guaranteed income?
GORDON: There’s too much of an incentive, if you guarantee income, to replace work. And if you provide a guaranteed minimum income to everybody, then those with low skills will drop out of the labor force and will no longer work. So I think it’s a matter of incentives. A guaranteed minimum income would put a very high implicit marginal tax rate on going to work, for those with relatively low skills.
[+] [-] mrfusion|10 years ago|reply
[+] [-] codeTheWorld|10 years ago|reply
[+] [-] tgflynn|10 years ago|reply
Of course it could be done through taxes but a lot of people have legitimate concerns about government taxation. For taxation to work you need a coercive government and many of us are very aware of the downsides of such an entity. Of course taxation isn't the only reason we have a coercive government there's also the war on drugs and other policies which seem to ultimately derive from the need of a significant fraction of the population to dictate the choices of their fellow citizens. This tendency is of course inevitably amplified among those who self-select for government or political careers. There is also to some degree a legitimate need for self-defense which also inevitably leads to some degree of coercive government. But even if these problems could be solved, say for example through more rational and better focused defense policies and through evolution of ethical views to give greater weight to the desires of individuals to lead their lives as they see fit, if we are going to provide a safety net for everyone we will always need some form of government and if that government is financed through taxation a level of coercive and invasive policies is likely inevitable.
Could we find a better way to finance government and a UBI ? Some countries and regions with extensive natural resources have been able to leverage them to help finance their governments and provide assistance to citizens (examples I believe include Norway and Alaska). However most economies are not so strongly dependent on the exploitation of natural resources so this type of solution cannot be generalized. What if a nation's government became an investor in that nation's economy ? I'm not talking about nationalization of industry but allowing the government to acquire minority ownership of public corporations as a means not of exerting control but of generating income. Could we imagine government evolving to the point of relying for its financing on a financial portfolio much like some universities receive substantial income from their endowments ? I'm not an economist but I've never encountered this idea in the press. It would be interesting to know what the experts think of it.
[+] [-] branchless|10 years ago|reply
Get rid of income tax, tax land. We want to stop rentiers, we don't want to stop workers. Right now it's back to front, by design.
[+] [-] kspaans|10 years ago|reply
[+] [-] tzs|10 years ago|reply
The idea would be that as we figure out how to automate things, we make those things essentially public goods. We end up with a mixed economy, where we have one class of goods that are produced in publicly owned automated factories and do not cost the consumer money, and another class of goods that work like they do now where private parties produce them and sell them for money which the buyers earn through paid employment.
For instance, consider vegetables. We're close to being able to make almost fully automated farms for many crops, and we're close to fully automating most of the shipping from farm to market. The idea would be that as we achieve this, the government buys up these farms (or starts its own farms), and everyone gets a daily allotment of the produce from these farms. Some meat production is also highly automated, and so we should be able to at some point in the not too distant future add meat to this.
At that point everyone who has a place to cook has their basic food requirements taken care of.
How about transportation? Automobile manufacture is very automated. At some point that too will be almost completely automated. Combine that with self-driving cars, and we should be able to have a publicly owned nationwide fleet of self-driving taxis. Ideally these would be electric cars, powered by publicly owned solar, wind, hydroelectric, or nuclear systems.
As automation gets more and more advanced, more and more goods can be added to the "made by publicly owned automated factories" list and made available to all.
When enough stuff is automated and turned into public goods to allow someone to survive reasonably without a job as long as they have housing, we can start making publicly owned housing in places where land and construction costs are cheap. That will be away from the big cities, but for people who decide to not work that would be fine, as it would for people who can work remotely. So we should be able to reach a point where everyone can have a basic apartment or small house and the necessities to survive reasonably there, without an income.
Will we ever be able to automate everything except creative intellectual work? I don't think so, at least not for a long time. I think that would require the development of something like the robots from Asimov's stories--robots that have human form factors (so that they can work anywhere that a human can work) and human level intelligence, and I don't think we'll be there anytime in the next 100 years.
A nice thing about this approach is that it can be done with minimal disruption. With basic income you have to give everyone enough to reasonably survive right from the start. With basic goods, you go item by item, industry by industry.