Swiss to vote on 2,500 franc basic income for every adult(reuters.com)
reuters.com
Swiss to vote on 2,500 franc basic income for every adult
http://www.reuters.com/article/2013/10/04/us-swiss-pay-idUSBRE9930O620131004
566 comments
As a swiss citizen, I'm really happy we'll have to vote on this. I'm not sure yet what I'm going to vote (I'm slightly bending towards a yes), but I think this is a very interesting debate to have. Especially because this is not a traditional left-right fight.
On the left, you have some unions saying this is going to be counter-productive and that it will reduce the leverage of employees in negotiation ("You've already got 2500, stop complaining"). Some other unions say it's going to give employee more leverage ("If you don't pay me more, I leave").
There are some people (including right-wing "economy-friendly" politician) who think this is a boost for innovation. By letting people work on what they want, without the risk of becoming homeless if it fails, you'll have more people trying to become independent / create companies.
And finally, you have what is still the majority reaction when told about this idea, which is that this is encouraging laziness.
On the left, you have some unions saying this is going to be counter-productive and that it will reduce the leverage of employees in negotiation ("You've already got 2500, stop complaining"). Some other unions say it's going to give employee more leverage ("If you don't pay me more, I leave").
There are some people (including right-wing "economy-friendly" politician) who think this is a boost for innovation. By letting people work on what they want, without the risk of becoming homeless if it fails, you'll have more people trying to become independent / create companies.
And finally, you have what is still the majority reaction when told about this idea, which is that this is encouraging laziness.
I would greatly prefer a basic income to the thousands of poorly run programs that aim to help the poor. The poor are not helpless but simply don't make enough money for some minimal standard of living (i.e. they are poor). A side effect of many existing programs is that they make the poor dependent and actually discourage self-improvement. A basic income would minimize these unfortunate but real consequences of helping them.
More info http://en.wikipedia.org/wiki/Basic_income
More info http://en.wikipedia.org/wiki/Basic_income
I think it's worth explaining how swiss legislation works. There are several ways to propose a new law, one of which is for enough citizens to petition, which leads to a referendum style vote.
The basic income vote followed this process, and though it gathered enough interest to warrant people voting on it, it has little chance of passing.
Interestingly a similar vote recently passed which limited the income in a company to a factor of 12 (i.e: the CEO can not make more than 12 times the lowest salary of his company) which wasn't expected of switzerland (a rather liberal and conservative country)
The basic income vote followed this process, and though it gathered enough interest to warrant people voting on it, it has little chance of passing.
Interestingly a similar vote recently passed which limited the income in a company to a factor of 12 (i.e: the CEO can not make more than 12 times the lowest salary of his company) which wasn't expected of switzerland (a rather liberal and conservative country)
I've always liked the idea of a base salary for all citizens. However, this plan appears to set the base level far too high -- it needs to be barely enough to fund the most basic of life's essentials, and indexed to an inflation rate of essential commodities. Life on this salary needs to be difficult and unsatisfying.
The model I imagine would also:
* Be paid to all citizens from age zero. Which means it can replace many existing systems, from child support payments and old age pensions.
* Child salaries from ~3 onwards could come in the form of vouchers with limited scope, e.g. accredited education providers, accredited child care services.
And you need to combine it with some further reforms, e.g:
* No minimum wage.
* Pretty much all existing welfare scrapped.
* Reduced work rights (e.g. less onerous unfair dismissal rules)
The underlying goal of such a system would be to dramatically simplify the role of the welfare state, and put the responsibility back on the individual to manage their own welfare.
The model I imagine would also:
* Be paid to all citizens from age zero. Which means it can replace many existing systems, from child support payments and old age pensions.
* Child salaries from ~3 onwards could come in the form of vouchers with limited scope, e.g. accredited education providers, accredited child care services.
And you need to combine it with some further reforms, e.g:
* No minimum wage.
* Pretty much all existing welfare scrapped.
* Reduced work rights (e.g. less onerous unfair dismissal rules)
The underlying goal of such a system would be to dramatically simplify the role of the welfare state, and put the responsibility back on the individual to manage their own welfare.
FYI: You have to live 12 years consecutively in Switzerland, pass a tests and a personal hearing done by the local government to get a citizenship by naturalization.
Switzerland has one of the most strict immigration rules in Europe.
Source: http://www.bfm.admin.ch/content/bfm/en/home/themen/buergerre...
Switzerland has one of the most strict immigration rules in Europe.
Source: http://www.bfm.admin.ch/content/bfm/en/home/themen/buergerre...
Obviously people proposing this aren't thinking it through or have no training in basic economics. Intuitively you can think of money as amount of labor that you owe from other human beings [1]. So let's say in some country you need minimum of $1000 /mo to satisfy your basic needs. What this means is that someone needs to grow your food, weave your cloths, run electricity plants etc and that amount of labor costs $1000 at the moment. Now imagine a government suddenly guarantees $2000 of income to everyone. What happens next? A lot of these people who were supposed to grow food for you, weave your cloths and run electricity plants for you will drop out of labor market. This means human labor gets in less supply and its demand suddenly increases. That means cost of labor suddenly increases. That means very soon $2000 is no longer enough to buy enough labor to satisfy your basic needs. In essence, $3000 would now be new minimum that is required for your basic needs. You are back to the square one with only effect being government essentially inflated the currency.
[1] In this simplification we assume that most raw material required to satisfy basic needs is available in sufficient quantity so the cost of goods is strongly a function of human labor rather than raw material.
[1] In this simplification we assume that most raw material required to satisfy basic needs is available in sufficient quantity so the cost of goods is strongly a function of human labor rather than raw material.
Before anyone gets too excited, let's remember that this is also the country where the people voted against raising the required paid holidays (2012), for substantial cuts in unemployment allowances (2010), and for increasing the VAT (2009), just to give some recent examples. Regardless of its merits, it is going to be nearly impossible to gather popular support for an idea such as basic income. But hey, at least we'll talk about it.
There are so many people excited about all these "equality" bills, and nobody criticizes it.
So I'll just leave it there: http://paulgraham.com/inequality.html
So I'll just leave it there: http://paulgraham.com/inequality.html
Maybe I am too obtuse to understand how such things could work.
What happens if nobody has a job?
OK, that's a little extreme. Let's see, a family of five would get 12500 F per month unconditionally. That's probably a pretty good chunk of money for doing nothing.
I see images of five to ten people living together to collectively earn 25000 F per month.
In the same story they talk about limiting executive pay to 12x the salary of the lowest paid employee. Again, I just don't see it. In a global market I just don't see intelligent and capable people not looking past their borders seeking better compensation for what they have to offer.
How can you build a sustainable and competitive society this way? Again, I'll admit to not being mentally equipped to comprehend how this can work. Perhaps someone can educate me.
What happens if nobody has a job?
OK, that's a little extreme. Let's see, a family of five would get 12500 F per month unconditionally. That's probably a pretty good chunk of money for doing nothing.
I see images of five to ten people living together to collectively earn 25000 F per month.
In the same story they talk about limiting executive pay to 12x the salary of the lowest paid employee. Again, I just don't see it. In a global market I just don't see intelligent and capable people not looking past their borders seeking better compensation for what they have to offer.
How can you build a sustainable and competitive society this way? Again, I'll admit to not being mentally equipped to comprehend how this can work. Perhaps someone can educate me.
We have about 3% unemployment rate in Switzerland. You have to know something about us, we love to work. Why? Because we are raised with the thought that's our strongest asset. Pretty small country with zero resources. Last year we voted for the increase of our holidays from 4 to 6 weeks. Result? 66,5% voted against it.
This vote will get something like 80% no votes because people are affraid this will change how people think about work.
This vote will get something like 80% no votes because people are affraid this will change how people think about work.
A country that values science, education, peace AND cares about the poor! Have I stepped into another dimension?
Meanwhile, in America, the government is shut down to try to stop poor people from receiving subsidies on their private health insurance.
Atlas shrugged... and the leaches attacked. I find it hard to believe Swit doesn't already have some welfare system that provides for those who actually need it... but now, 30k a year just for breathing? Sounds like communism to me.... only you don't have to produce anything. Utopianism like this doesn't last. Eventually you run out of payers. it's human nature to eventually grow tired of working hard so someone else doesn't have to. When that time comes, you either join the leaches or you leave the environment. Eventually, you always end up with a negative balance. It is doomed to failure.. Eventually.
Wouldn't basic income just lead to higher prices and inflation?
The text of the Swiss initiative can be found at http://www.admin.ch/ch/d/pore/vi/vis423t.html. Please note that it does not mention 2'500 Swiss francs as a basic income.
Rough translation into English:
Federal People's Initiative 'For an uncoditional basic income'
The federal constituion shall be amended as follows:
Art. 110a (new) Unconditional Basic Income
(1) The Confederay introduces an unconditional basic income.
(2) The basic income shall allow the whole population a decent life and participlation in public activities.
(3) The law defines funding and amount of the basic income.
Rough translation into English:
Federal People's Initiative 'For an uncoditional basic income'
The federal constituion shall be amended as follows:
Art. 110a (new) Unconditional Basic Income
(1) The Confederay introduces an unconditional basic income.
(2) The basic income shall allow the whole population a decent life and participlation in public activities.
(3) The law defines funding and amount of the basic income.
I like to think I am progressive but this minimum income idea is a horrible idea in my eyes.
It is like student loans in the USA, everything will rise to the maximum price that people can obtain money.
It is like student loans in the USA, everything will rise to the maximum price that people can obtain money.
As a swiss I'm quite excited about this. Even if I'm pessimistic about a successful vote.
I want to mention a side-point which I haven't encountered so far: In the 'problem of lazyness' (i.e. "who will do the boring work if you are paid anyway?") one answer that often comes up is automation. Menial/low-skill jobs will be done by robots.
It's a common image that in the future robots will clean our toilets and grill our burgers while the humans have ample time to enjoy life, build rockets and do fulfilling work.[1] However, if AI research has told us one thing it's that this view is quite wrong - the opposite is true. Things humans think of as 'easy' like walking around or doing laundry are actually very difficult engineering problems and 'hard' stuff like playing chess or doing rocket science are easier in an absolut sense.
The reason behind is simple: Evolution had millions of years to perfect walking on legs and interacting with the environment. Our bodies almost literally have an walkTo(Place) API, so the only thing 'we' (our conscious self) have to do is to call it. Abstract thinking is something new and our brains have to do it manually. It takes you less time to run over debris than to multiply large numbers and so we have a distorted picture of what is hard in an absolute sense.
The picture is true for humans but it falls apart when we want to automate it. We are still decades away of beating humans in soccer but Jeopardy is a solved problem.
I'm not convinced that 'low'-skill jobs are the first to fall into the hands of machines. [2]
---
[1] Ignore for the moment the fact that unclogging toilets can also be fulfilling.
[2] This is of course a broad argument. We still have no clue what Intelligence or Creativity actually is - It may still turn out to be very complicated. But I nevertheless think there's a good chance that we will figure out hard AI before you can buy a robot which washes your socks, mows the lawn and fixes your plumbing.
I want to mention a side-point which I haven't encountered so far: In the 'problem of lazyness' (i.e. "who will do the boring work if you are paid anyway?") one answer that often comes up is automation. Menial/low-skill jobs will be done by robots.
It's a common image that in the future robots will clean our toilets and grill our burgers while the humans have ample time to enjoy life, build rockets and do fulfilling work.[1] However, if AI research has told us one thing it's that this view is quite wrong - the opposite is true. Things humans think of as 'easy' like walking around or doing laundry are actually very difficult engineering problems and 'hard' stuff like playing chess or doing rocket science are easier in an absolut sense.
The reason behind is simple: Evolution had millions of years to perfect walking on legs and interacting with the environment. Our bodies almost literally have an walkTo(Place) API, so the only thing 'we' (our conscious self) have to do is to call it. Abstract thinking is something new and our brains have to do it manually. It takes you less time to run over debris than to multiply large numbers and so we have a distorted picture of what is hard in an absolute sense.
The picture is true for humans but it falls apart when we want to automate it. We are still decades away of beating humans in soccer but Jeopardy is a solved problem.
I'm not convinced that 'low'-skill jobs are the first to fall into the hands of machines. [2]
---
[1] Ignore for the moment the fact that unclogging toilets can also be fulfilling.
[2] This is of course a broad argument. We still have no clue what Intelligence or Creativity actually is - It may still turn out to be very complicated. But I nevertheless think there's a good chance that we will figure out hard AI before you can buy a robot which washes your socks, mows the lawn and fixes your plumbing.
At the risk of mowed over by the crowd, I want to propose not calling it income. It's welfare. In no way should we equate it to result of someone's work.
Wow, I hope they vote no. I moved to Switzerland recently to avoid the dominant socialism in northern Europe. But they are one of the last liberal stands down here, so there is a good chance it will fall through.
A basic income only serves to maintain the status quo for those at the top. It's a release valve on political pressure to bring fundamental changes to the system to better serve the lower classes.
In the US, one can look how the Section 8 housing program serves a similar pressure-relief function in the housing rental market. By giving essentially free rent to those who cannot afford current market rate rents, it relieves political pressure to reform housing policies that keep rental rates high while also inflating rents and property values, heavily distorting the rental market. I think one can easily view the Section 8 program more as welfare program benefiting property owners rather than lower class renters.
A basic income would have a similar effect on the general cost of living, inflating values and benefiting the wealthy. Again, like the Section 8 program, this will be a welfare program benefiting the wealthy because this basic wage will simply flow upward and concentrate at the highest economic rungs.
In the US, one can look how the Section 8 housing program serves a similar pressure-relief function in the housing rental market. By giving essentially free rent to those who cannot afford current market rate rents, it relieves political pressure to reform housing policies that keep rental rates high while also inflating rents and property values, heavily distorting the rental market. I think one can easily view the Section 8 program more as welfare program benefiting property owners rather than lower class renters.
A basic income would have a similar effect on the general cost of living, inflating values and benefiting the wealthy. Again, like the Section 8 program, this will be a welfare program benefiting the wealthy because this basic wage will simply flow upward and concentrate at the highest economic rungs.
There have been experiments with NIT (Negative Income Tax) in the US. My impression was that they were a disaster, but in looking for them I found this article,[1] which explains some of the history of NIT in the US.
http://www.city-journal.org/2011/21_1_income-tax.html
http://www.city-journal.org/2011/21_1_income-tax.html
This "might" lead to people actually working more in a certain sense. If a person is to receive an X amount of francs per month then employers will require 40 hour / weeks leading to approximately 15 francs per hour (€12.5), which for a place like Switzerland is kind of fair.
Those who choose not to work enough might have to face inflationary affects in housing etc. needing to catch up to the median (not average) population income levels.
Eitherways, if the Swiss go wrong on this their system of voting is flexible enough to allow for change back.
Those who choose not to work enough might have to face inflationary affects in housing etc. needing to catch up to the median (not average) population income levels.
Eitherways, if the Swiss go wrong on this their system of voting is flexible enough to allow for change back.
I expect massive inflation on particular necessities (likely rent/housing, utilities) as rent-seekers squeeze the available money.
Necessities within competitive, or border-crossing markets (likely food) might not be subject to such inflation.
The consequences for luxuries are harder to predict, but perhaps they would still be out of reach of the unemployed/underemployed. This could motivate a majority to continue work.
If this balances to the point that 'poor' people can maintain a fair lifestyle without working, wages for cheap/exploitative labour will rise wherever people don't find value in the work. This will be balanced by pressure to take on immigrants to work. (Based on my understanding of Swiss politics, it feels unlikely they will receive the same benefits)
Not without economic consequences but overall, exciting stuff. A lot of people will have vastly more freedom: risk-taking, entrepreneurialism and general creativity will boom.
Necessities within competitive, or border-crossing markets (likely food) might not be subject to such inflation.
The consequences for luxuries are harder to predict, but perhaps they would still be out of reach of the unemployed/underemployed. This could motivate a majority to continue work.
If this balances to the point that 'poor' people can maintain a fair lifestyle without working, wages for cheap/exploitative labour will rise wherever people don't find value in the work. This will be balanced by pressure to take on immigrants to work. (Based on my understanding of Swiss politics, it feels unlikely they will receive the same benefits)
Not without economic consequences but overall, exciting stuff. A lot of people will have vastly more freedom: risk-taking, entrepreneurialism and general creativity will boom.
I wonder if that just raises the bar and everything becomes the same again:
- everyone gets at least X for basic income
- for some people it makes more sense to not take low-paid shitty jobs because deducting commuting and lunch expenses from the low-paid salary you can probably make the same money on basic income, especially if you're willing to be a bit frugal
- more money gets offered for low-paid shitty jobs because there's high demand and low supply of workers
- the extra money is charged from the customers of the companies who employ the workers who do the not-so-low-paid shitty jobs
- the costs trickle upwards and cause inflated prices which in turn makes landlords raise rents accordingly
- the rents and price of food become painfully high for those who live on basic income
- we're back at square one: poor people have to take shitty, relatively low-paid jobs to make a living because the amount of basic income, X, is baked into pretty much all prices in the market
- everyone gets at least X for basic income
- for some people it makes more sense to not take low-paid shitty jobs because deducting commuting and lunch expenses from the low-paid salary you can probably make the same money on basic income, especially if you're willing to be a bit frugal
- more money gets offered for low-paid shitty jobs because there's high demand and low supply of workers
- the extra money is charged from the customers of the companies who employ the workers who do the not-so-low-paid shitty jobs
- the costs trickle upwards and cause inflated prices which in turn makes landlords raise rents accordingly
- the rents and price of food become painfully high for those who live on basic income
- we're back at square one: poor people have to take shitty, relatively low-paid jobs to make a living because the amount of basic income, X, is baked into pretty much all prices in the market
"It is an elementary requirement of economic incentive as well as justice that the man who works for a living should always be better off because of that, other things being equal, than the man who refuses to work for a living." [1]
[1] Henry Hazlitt, The Conquest of Poverty
[1] Henry Hazlitt, The Conquest of Poverty
Economically speaking this is not going to help anyone... If every person makes a specific lower bound limit all that happens is prices are increased. It probably takes a year or so for the full effect to be felt, at which point there is the choice to either raise it to combat the prices or set limits on how much stuff will cost. Either option sets a limit goods or wages in your country that will not be beneficial.
Not to mention, in combination with the other stuff being passed by the swiss there country can have some major problems coming up here.
Not to mention, in combination with the other stuff being passed by the swiss there country can have some major problems coming up here.
If they did that in America 50% of the population would quit working and prices would quickly shoot up to MARS!
Less workers, higher wages, more money in circulation... What an inflationary mess that would be.
Less workers, higher wages, more money in circulation... What an inflationary mess that would be.
For those in the EU, there is currently an official (run by the European Comission) on-line petition in which EU citizens can vote for encouraging the application of the Basic Income idea at https://ec.europa.eu/citizens-initiative/REQ-ECI-2012-000028... .
This is not a "let's apply this now!" thing, but a petition to study the ways and means of how it could be applied.
This is not a "let's apply this now!" thing, but a petition to study the ways and means of how it could be applied.
It's a good idea, but that's too high. You want to keep people from starving and living on the streets; not keep them from doing something productive with their lives.
It would cover all my current expenses handily. Of course, I'm young and single but by no means frugal. (I find that the little costs involved in worrying about my expenses easily outweigh the money saved.) So this is quite an income.
One of the main questions about something like this is about who would do boring, low-paid work with this sort of basic income. What I would really hope is that people would still do many of those jobs, but for far fewer hours--largely as a way to get money for incidental expenses and luxuries beyond the basic income. One problem I find with most jobs is that it's much easier to get more pay than less hours, even if I really want the latter. There is a large drop-off between full-time and part-time work.[1]
Beyond a certain level, I would value having more free time far more than making more money. Unfortunately, mostly for social reasons, it's hard to express this preference. A basic income could make this much easier to do.
While I suspect this might not pass, I think it would be very valuable for the entire world. One of the unfortunate realities in politics is that it is really hard to run experiments; small countries like Switzerland can act as a test subject for the entire world. Or perhaps like a tech early adopter for modern policies.
Either way, this passing would be very interesting.
[1]: For me, this is not quite as simple. In reality, there are plenty of jobs where I would be happy to work relatively long hours. But this stops being a question of pay, or even "work": after all, I'm happy to spend hours and hours programming for free. Being paid to do something I really like is wonderful, but it really changes the dynamics in ways that probably do not apply to most people.