What is an appropriate level of Basic Income?(hawkins.ventures)
hawkins.ventures
What is an appropriate level of Basic Income?
http://hawkins.ventures/post/85265679392/what-is-an-appropriate-level-of-basic-income
14 comments
> The Federal minimum wage is $7.25/hour and is widely considered to be too low.
That's comparing apples and oranges. The Federal minimum wage is the wage below which it is illegal to pay an employee. If you're unemployed, you still get no wage. Basic income would, obviously, get paid to every single person regardless of employment. It makes sense for it to be lower than the wage someone would earn for working.
That's comparing apples and oranges. The Federal minimum wage is the wage below which it is illegal to pay an employee. If you're unemployed, you still get no wage. Basic income would, obviously, get paid to every single person regardless of employment. It makes sense for it to be lower than the wage someone would earn for working.
I'd also point out that not having to work has the potential to decrease expenditures quite a bit.
For starters, the post itself assumes that if you don't have to work, transportation costs decrease quite a bit. Keep in mind that people who have a hard time finding work often travel farther to find work or hold down multiple part-time jobs instead of one full-time job, which increases transportation costs. If you're living in the Bay Area and have to commute every day, e.g., San Jose to San Francisco, a Caltrain + MUNI monthly pass works out to an extra $300 / month in expenses that you wouldn't have to spend if you weren't working.
In addition, the fact that you don't have to work gives you more flexibility in choosing where to live -- if you're not concerned about employment, you can live where the cost of living was cheapest.
We're also assuming that that basic income will always be guaranteed. One reason the federal minimum wage might be considered too low is that it doesn't leave any income left over to save for unemployment, retirement, or other scenarios where your income source is lost. That becomes irrelevant if everyone gets a guaranteed income.
Finally, simply having an extra 8+ hours of free time each day makes it a lot easier to optimize your costs. You have more time to plan your meals, to research and compare prices on every kind of expenditure, to exercise and minimize long term health costs, etc.
For starters, the post itself assumes that if you don't have to work, transportation costs decrease quite a bit. Keep in mind that people who have a hard time finding work often travel farther to find work or hold down multiple part-time jobs instead of one full-time job, which increases transportation costs. If you're living in the Bay Area and have to commute every day, e.g., San Jose to San Francisco, a Caltrain + MUNI monthly pass works out to an extra $300 / month in expenses that you wouldn't have to spend if you weren't working.
In addition, the fact that you don't have to work gives you more flexibility in choosing where to live -- if you're not concerned about employment, you can live where the cost of living was cheapest.
We're also assuming that that basic income will always be guaranteed. One reason the federal minimum wage might be considered too low is that it doesn't leave any income left over to save for unemployment, retirement, or other scenarios where your income source is lost. That becomes irrelevant if everyone gets a guaranteed income.
Finally, simply having an extra 8+ hours of free time each day makes it a lot easier to optimize your costs. You have more time to plan your meals, to research and compare prices on every kind of expenditure, to exercise and minimize long term health costs, etc.
What does "too low" mean? Does "too low" mean that some testable negative consequences will result, or is it merely a moral judgement?
If there are testable negative consequences, we should look and see if Bulgaria suffers those consequences. Bulgaria has a PPP-adjusted GDP/capita that is $1/year less than your hypothetical 50 week, 40 hour min wage job. There are quite a few nations (generally considered "developed") with similar levels of income.
http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_...
If there are testable negative consequences, we should look and see if Bulgaria suffers those consequences. Bulgaria has a PPP-adjusted GDP/capita that is $1/year less than your hypothetical 50 week, 40 hour min wage job. There are quite a few nations (generally considered "developed") with similar levels of income.
http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_...
Negative testable consequences? How about not being able to buy basic goods like food? I believe that's quite testable, however cross-region comparison based solely on income is meaningless in this case as the cost of basic goods will vary. (http://www.novinite.com/articles/152387/20+of+Bulgarian+Hous...)
Your comparison does not take into account the relative cost of living of those places.
Furthermore, why do you say "merely" a moral judgement? Is a moral judgement that optimizes for human happiness somehow worse than a logical one that optimizes for efficiency?
Furthermore, why do you say "merely" a moral judgement? Is a moral judgement that optimizes for human happiness somehow worse than a logical one that optimizes for efficiency?
Your comparison does not take into account the relative cost of living of those places.
You didn't read what I wrote.
You didn't read what I wrote.
No, you've just edited it to say "PPP-adjusted" since I posted the comment.
I didn't edit it. See this comment from an hour ago which points out someone else ignoring it.
https://news.ycombinator.com/item?id=7724518
I adjust the numbers for PPP every time I ask this question. And for reasons I don't understand, people repeatedly ignore it.
https://news.ycombinator.com/item?id=7539966
https://news.ycombinator.com/item?id=6856005
https://news.ycombinator.com/item?id=7724518
I adjust the numbers for PPP every time I ask this question. And for reasons I don't understand, people repeatedly ignore it.
https://news.ycombinator.com/item?id=7539966
https://news.ycombinator.com/item?id=6856005
Would you prefer to live in Bulgaria or US? This seems to provide testable negative consequences.
I've never been to Bulgaria so I have no opinion. From what I hear it's quite pleasant. I'm currently in India and have a consumption level well below that of the average poor American. I'm suffering no particular adverse consequences.
You haven't answered the question. Is there some concrete bad thing you believe happens below $14,500/year, or do you simply feel it is morally wrong?
You haven't answered the question. Is there some concrete bad thing you believe happens below $14,500/year, or do you simply feel it is morally wrong?
I'm currently in India and have a consumption level well below that of the average poor American. I'm suffering no particular adverse consequences.
It doesn't make sense to compare the two. Basics costs are much lower in India and Bulgaria. I live on less than the average poor American too, but I also pay 80$/month to live alone in a large apartment.
I can only assume that the "concrete bad thing" that might happen below 14,500$ a year is some combination of malnutrition, homelessness, illness, etc. The number might be less than that, but it's not much less.
The only claim that GP made was that many people consider 7.25/hr or 14,500/year to be too low to cover for basic costs. Why are you taking such an obtuse and provocative tone?
It doesn't make sense to compare the two. Basics costs are much lower in India and Bulgaria. I live on less than the average poor American too, but I also pay 80$/month to live alone in a large apartment.
I can only assume that the "concrete bad thing" that might happen below 14,500$ a year is some combination of malnutrition, homelessness, illness, etc. The number might be less than that, but it's not much less.
The only claim that GP made was that many people consider 7.25/hr or 14,500/year to be too low to cover for basic costs. Why are you taking such an obtuse and provocative tone?
Basics costs are much lower
I wish HN allowed formatting beyond italics - then whenever I discuss this topic I'd put the phrase "PPP-adjusted" in bold 18pt font.
...some combination of malnutrition, homelessness, illness, etc...
The mean Bulgarian does not suffer these problems. Neither does the upper middle class Indian who lives on far less. When I say "far less" I mean after adjusting for PPP, i.e. adjusting for "basic costs", or however you want to phrase it.
I don't know why you consider my tone "provocative". It's not obvious to me what the phrase "too low" or "basic costs" mean.
Incidentally, when I said "live on less than the average poor American", I meant in terms of material consumption. I have no car (75% of poor Americans do). I can't drink the water coming out of my tap. I have a small living space. Most poor Americans have more possessions than I do.
I wish HN allowed formatting beyond italics - then whenever I discuss this topic I'd put the phrase "PPP-adjusted" in bold 18pt font.
...some combination of malnutrition, homelessness, illness, etc...
The mean Bulgarian does not suffer these problems. Neither does the upper middle class Indian who lives on far less. When I say "far less" I mean after adjusting for PPP, i.e. adjusting for "basic costs", or however you want to phrase it.
I don't know why you consider my tone "provocative". It's not obvious to me what the phrase "too low" or "basic costs" mean.
Incidentally, when I said "live on less than the average poor American", I meant in terms of material consumption. I have no car (75% of poor Americans do). I can't drink the water coming out of my tap. I have a small living space. Most poor Americans have more possessions than I do.
Incidentally, when I said "live on less than the average poor American", I meant in terms of material consumption. I have no car (75% of poor Americans do). I can't drink the water coming out of my tap. I have a small living space.
Americans believe everyone should have basic things like sanitation. Arguing that the poor somehow shouldn't just because India hasn't been as successful at infrastructure development isn't really a good argument.
Americans believe everyone should have basic things like sanitation. Arguing that the poor somehow shouldn't just because India hasn't been as successful at infrastructure development isn't really a good argument.
I made no argument, I merely asked a question.
To be explicitly clear, the question is this: Suppose there are concrete negative consequences to having ppp-adjusted ppp-adjusted ppp-adjusted ppp-adjusted income below $14,500/year. What are those consequences? Why don't middle class Bulgarians and upper middle class Indians suffer them?
(I overemphasize the phrase "ppp-adjusted" since you, llllllllllll, and many other people in other threads seem to repeatedly ignore it.)
To be explicitly clear, the question is this: Suppose there are concrete negative consequences to having ppp-adjusted ppp-adjusted ppp-adjusted ppp-adjusted income below $14,500/year. What are those consequences? Why don't middle class Bulgarians and upper middle class Indians suffer them?
(I overemphasize the phrase "ppp-adjusted" since you, llllllllllll, and many other people in other threads seem to repeatedly ignore it.)
Suppose there are concrete negative consequences to having ppp-adjusted ppp-adjusted ppp-adjusted ppp-adjusted income below $14,500/year.
That doesn't need supposition. They exist.
What are those consequences?
Not having adequate supplies of nutritious food, potable water, shelter from elements\other people, and access to information.
Why don't middle class Bulgarians and upper middle class Indians suffer them?
Well, A) they do, and B) ppp adjusted, $14,500 isn't upper middle class India or middle class Bulgaria.
That doesn't need supposition. They exist.
What are those consequences?
Not having adequate supplies of nutritious food, potable water, shelter from elements\other people, and access to information.
Why don't middle class Bulgarians and upper middle class Indians suffer them?
Well, A) they do, and B) ppp adjusted, $14,500 isn't upper middle class India or middle class Bulgaria.
Which part of "PPP-adjusted" you didn't understand? Bulgarian GDP per capita is 7,000/year in nominal dollars.
If I may reduce this to absurdity, I'd prefer to live in a mansion on Mars, so every conceivable income level is too low.
http://www.bulgarianproperties.com/Mansions_in_Bulgaria/inde...
http://melodydoesbulgaria.wordpress.com/2012/01/15/bulgaria-...
Not as simple as you thought... perhaps living in Bulgaria isn't nearly as bad as you seem to be implying.
http://melodydoesbulgaria.wordpress.com/2012/01/15/bulgaria-...
Not as simple as you thought... perhaps living in Bulgaria isn't nearly as bad as you seem to be implying.
You get this money without even working. Any money you earned while working (there would be no more minimum wage under this system) would be in addition to the $12,000 you got from the basic income. Also the basic income is presumably not taxed, as it's welfare income.
Note that the $12K/year is per person and excludes children. The federal minimum wage is considered to be too low, in part, because many of the people earning minimum wage have dependents.
The real answer is : it doesn't matter, unless you set it way too high. The economy will adjust until the value of basic income is equivalent to a particular value.
Now of course, what could happen is that you set it too high and we get massive inflation and dollar devaluation for a few months/years.
The reverse should also be true. Because fitting within basic income will massively expand client base for companies, there might actually be devaluation if it's set too low.
I think it's pretty obvious that one cannot choose the level of basic income. You can only do damage by choosing wrong. Given that it's currently zero, if you'd want to do this, start at a very low level (but still high enough to make companies want to provide services at that level), work out the kinks, and increase it over the course of a few years slowly until you see undesirable phenomena, then stop. Ideally, make this a state thing so regional differences can efficiently work.
Now of course, what could happen is that you set it too high and we get massive inflation and dollar devaluation for a few months/years.
The reverse should also be true. Because fitting within basic income will massively expand client base for companies, there might actually be devaluation if it's set too low.
I think it's pretty obvious that one cannot choose the level of basic income. You can only do damage by choosing wrong. Given that it's currently zero, if you'd want to do this, start at a very low level (but still high enough to make companies want to provide services at that level), work out the kinks, and increase it over the course of a few years slowly until you see undesirable phenomena, then stop. Ideally, make this a state thing so regional differences can efficiently work.
Ideally, make this a state thing so regional differences can efficiently work.
The problem with this strategy is it creates massive disparities between states, as the burden of caring for the poor will be disproportionately shifted to the progressive states providing a basic income, while the conservative states don't need to pay for anything.
Furthermore, state governments don't have anywhere near the tax base or cash reserves to implement a basic income. This can only be done on the Federal level.
A UBI provides mobility to citizens by not trying their source of food to their location. If a UBI can't support you in San Francisco or New York, you have the ability to move to where it will.
There's no need to have this be a state thing, except to screw up the program.
The problem with this strategy is it creates massive disparities between states, as the burden of caring for the poor will be disproportionately shifted to the progressive states providing a basic income, while the conservative states don't need to pay for anything.
Furthermore, state governments don't have anywhere near the tax base or cash reserves to implement a basic income. This can only be done on the Federal level.
A UBI provides mobility to citizens by not trying their source of food to their location. If a UBI can't support you in San Francisco or New York, you have the ability to move to where it will.
There's no need to have this be a state thing, except to screw up the program.
One side note to the "move to where the BI will support you" is that jobs will move to those places too - not all jobs, but more jobs than are currently there, as there will be more people and they will have some financial resources. In general, along with everything else, BI moves money away from concentrations of wealth and toward concentrations of people, where there is a disparity between those densities.
Ideally you'd want to make it adaptive based on a variety of economic metrics -- set it to a particular level, watch the effects on the economy, and then adjust for the next year.
Canada tried this as an experiment for a few years. While the Wikipedia[0] article is light on information, there are links to meatier sources.
[0] http://en.wikipedia.org/wiki/Mincome
[0] http://en.wikipedia.org/wiki/Mincome
An important factor has been overlooked in this analysis: synergy. Individuals with low income live with other people. When a group of people all start receiving a BI, their spending power will be more then the simple sum b/c they share and buy in bulk. Therefore the BI does not need to be quite as high as one might otherwise think. I have thought about the appropriate level of BI for years. The best I have been able to determine is that it should be pegged to half the minimum wage, i.e. equivalent to a 20 hour job at minimum wage, which works out to about $600/mo. I believe this strikes the right balance between work incentive and poverty prevention and also lies within the potential budget of the government at approx. $1.5 trillion per year.
Which explains why this bit FTA isn't strange at all:
"The 2014 US Poverty line is $11,670/year for an individual, and ~$4,060 for each additional person.3 It is strange to assume that some humans can live off of $11,670 and others can live off of $4,060."
"The 2014 US Poverty line is $11,670/year for an individual, and ~$4,060 for each additional person.3 It is strange to assume that some humans can live off of $11,670 and others can live off of $4,060."
An important factor has been overlooked in this analysis: synergy. Individuals with low income live with other people.
You make the assumption that they should be required to live with other people.
When a group of people all start receiving a BI, their spending power will be more then the simple sum b/c they share and buy in bulk.
So do rich couples. This is a non-sensical argument. I'd rather not keep repeating how wrong you are, but suffice to say, nobody lives on $600/month in America. Your number is simply unintelligent.
You make the assumption that they should be required to live with other people.
When a group of people all start receiving a BI, their spending power will be more then the simple sum b/c they share and buy in bulk.
So do rich couples. This is a non-sensical argument. I'd rather not keep repeating how wrong you are, but suffice to say, nobody lives on $600/month in America. Your number is simply unintelligent.
> For reference, the US Poverty Line is $11,670 and the US currently spends an average of $20,610/year per individual below the poverty line to combat poverty.
That seems -- on the face of it at least -- to be a remarkable statistic. The citation is:
http://www.cato.org/sites/cato.org/files/pubs/pdf/PA694.pdf
It notes that a large portion of poverty spending is Medicaid, which is completely unsurprising given the dire state of US health care for the less fortunate.
That seems -- on the face of it at least -- to be a remarkable statistic. The citation is:
http://www.cato.org/sites/cato.org/files/pubs/pdf/PA694.pdf
It notes that a large portion of poverty spending is Medicaid, which is completely unsurprising given the dire state of US health care for the less fortunate.
Only skimmed this, but as an aside, I think we should not index BI to inflation. A basic income higher than the economy can support seems likely to lead to inflation, and if that's the case then the real value of it will fall to something we can support, which seems a worthwhile safety valve.
Just tag the BI to a fraction of GDP; problem solved.
Assuming this ensures BI not to overshoot the correct value, how do you ensure BI not to undershoot the correct value?
I don't have a specific proposal. It would seem less likely to have some sort of "spiral out of control" type risk, though, since we've already got a BI of zero.
I should amend my previous statement, though - BI should track targeted inflation, it should not track actual inflation.
I should amend my previous statement, though - BI should track targeted inflation, it should not track actual inflation.
12,000 for 316 million people is 3.8 trillion dollars.
Total GDP was 16.8 trillion
Total federal tax revenue was 2.8 trillion in 2013
This would be an enormous tax increase if it was the only tool used to provide income to people.
Total GDP was 16.8 trillion
Total federal tax revenue was 2.8 trillion in 2013
This would be an enormous tax increase if it was the only tool used to provide income to people.
An enormous tax increase only if you figure there would be no compensating decreases in government expenditures. Unemployment benefits (60B$), medicare (600B$), social security (800 B$), welfare benefits (300B$) are just a start. [1] That's just at the federal level; there are a lot of state expenses that would go away as well. And there would be a lot of administrative costs eliminated, and a lot of corporate welfare programs could be cut as well, because everyone would have access to basic income.
[1] http://www.usgovernmentspending.com/us_welfare_spending_40.h...
[1] http://www.usgovernmentspending.com/us_welfare_spending_40.h...
> An enormous tax increase only if you figure there would be no compensating decreases in government expenditures. Unemployment benefits (60B$), medicare (600B$), social security (800 B$), welfare benefits (300B$) are just a start.
That's one of the more compelling arguments for BI: it's more sensible than the piecemeal programs we have. And don't forget the various tax credits and deductions that could go away, too. If done well, BI could be revenue-neutral or better.
But in practice, unless you delete all of those in the same bill that introduces basic income, you're going to find yourself stuck with both the basic income and those welfare programs.
That's one of the more compelling arguments for BI: it's more sensible than the piecemeal programs we have. And don't forget the various tax credits and deductions that could go away, too. If done well, BI could be revenue-neutral or better.
But in practice, unless you delete all of those in the same bill that introduces basic income, you're going to find yourself stuck with both the basic income and those welfare programs.
Without trying to be too flip, there is a poverty industry who benefit from every dollar that passes through the social service programs. Its naive to think that these bureaucrats NGO officers are going to sit idly by while their livelihood is taken away.
Average SS monthly income is around $1500, or $18K annually. That kind of puts a floor on Basic, because if you propose a pay cut to all retirees, you would have a mob of cranky oldsters on your back.
I think max SSR monthly payment is 2460 or so...
It seems like leaving old age social security alone for old people leaves a far higher chance of this being passable (and is arguably more fair). But don't give them BI on TOP of it by any means.
42 million people receive the type of social security you get for being old and having paid in. This takes the number of people you'd need to pay BI to from 320 million to 278 million.
It reduces the cost of social security on the federal government by 23% of the SS budget(814B) to count out a beneficiaries who aren't retired we save saved: $187 billion dollars
Between taking retirees off the roles, and this savings from knocking out disability, we're down to a total required revenue of 3.3 trillion, and a savings of 187 billion dollars in cut programs.
So find that other 3.113 trillion dollars and we're in business :D
It seems like leaving old age social security alone for old people leaves a far higher chance of this being passable (and is arguably more fair). But don't give them BI on TOP of it by any means.
42 million people receive the type of social security you get for being old and having paid in. This takes the number of people you'd need to pay BI to from 320 million to 278 million.
It reduces the cost of social security on the federal government by 23% of the SS budget(814B) to count out a beneficiaries who aren't retired we save saved: $187 billion dollars
Between taking retirees off the roles, and this savings from knocking out disability, we're down to a total required revenue of 3.3 trillion, and a savings of 187 billion dollars in cut programs.
So find that other 3.113 trillion dollars and we're in business :D
Since pacta sunt servanda, SS would need to be grandfathered. But that does not put a floor on BI, you are free to set BI below SS.
This may not sound fair, but is no more unfair than introducing new environmental regulation without punishing all past acts which would be in violation of new regulation.
This may not sound fair, but is no more unfair than introducing new environmental regulation without punishing all past acts which would be in violation of new regulation.
Cutting Medicare to give people BI would leave the people who need Medicare in the lurch, because there's no way in hell that you're going to get the medical treatment you need on that $12k.
Medicare provides for the sick by levying a disproportionate cost:benefit on the healthy. Distributing BI to the healthy and sick alike in lieu of Medicare eliminates that.
You might also notice the "Total Federal Spending" line in that chart you linked is $3.6 trillion...a full $200 billion short of the $3.8b mark.
Medicare provides for the sick by levying a disproportionate cost:benefit on the healthy. Distributing BI to the healthy and sick alike in lieu of Medicare eliminates that.
You might also notice the "Total Federal Spending" line in that chart you linked is $3.6 trillion...a full $200 billion short of the $3.8b mark.
The article proposes that everyone (healthy or sick, young and old) pay $350/month out of their BI for health insurance. Would that be enough to replace Medicare?
Sure, but all you've done is keep medicare in place and reduce BI to $7800/year. Note that medicare is only available to people over 65 in most cases - it isn't generalized health insurance, so now anyone under 65 needs to pay for health insurance on top of the Medicare tax. Which is exactly how it is now anyway.
[deleted]
Yes, this would be more than enough. South Koreans paid average $90/month in 2013 for National Health Insurance Service.
First off, I think the idea of BI is great, I just don't think we have the real taste of what that would look like yet from someone who knows how to write bills. Lots of handwaving from all corners.
I don't see how cutting medicare could work to solve income?
The reason we have socialized medicine for old people is it's too expensive for insurers to carry. $350 a month is not an annualized cost for EVERY american, it's for non old people. That's including sharp obamacare type subsidies still for many age brackets. I know even my (early 30's) healthcare premiums are above that.
I don't see how cutting someone who's reliant on a $2,642 dollar a month income social security retirement payment is going to work. At best, I see social security retirement largely staying at it's current level. Cutting Social Security Disability (and all the anti fraud apparatus around it) is likely very possible though
>would be a lot of administrative costs eliminated
Those costs are rolled up into the SSA numbers in the federal budget. A portion of the medicare cost is the medicare overhead, etc. So it's not the budget numbers + overhead: the budget numbers are inclusive already
I think a wage floor (minimum wage still), strong policing of unpaid internships, and a smaller form of BI is possible, possibly without any tax increases or with far more moderate ones, especially if many state responsibilities are taken over at the federal level.
I just don't see the list of things that can really be cut nor the total take we'd get from that to work with.
I don't see how cutting medicare could work to solve income?
The reason we have socialized medicine for old people is it's too expensive for insurers to carry. $350 a month is not an annualized cost for EVERY american, it's for non old people. That's including sharp obamacare type subsidies still for many age brackets. I know even my (early 30's) healthcare premiums are above that.
I don't see how cutting someone who's reliant on a $2,642 dollar a month income social security retirement payment is going to work. At best, I see social security retirement largely staying at it's current level. Cutting Social Security Disability (and all the anti fraud apparatus around it) is likely very possible though
>would be a lot of administrative costs eliminated
Those costs are rolled up into the SSA numbers in the federal budget. A portion of the medicare cost is the medicare overhead, etc. So it's not the budget numbers + overhead: the budget numbers are inclusive already
I think a wage floor (minimum wage still), strong policing of unpaid internships, and a smaller form of BI is possible, possibly without any tax increases or with far more moderate ones, especially if many state responsibilities are taken over at the federal level.
I just don't see the list of things that can really be cut nor the total take we'd get from that to work with.
If we don't touch SS Retirement or medicare because lets be realistic if we want something passable:
We can reduce the rolls of people who need to be paid to 278 million people.
We can get 396 billion by cutting welfare (but if we do this, children get the same bi, and that's not being sure there aren't protective services in here which would need to still exist) at the federal level, we get $187 billion by cutting the people who don't get SS because they are old.
That's a total of $585 billion, with a needed sum of 3300 billion total (aka, 3.3 trillion).
This means we're still at a deficit of 2715 billion (2.715 trillion) dollars
Where else does that come from? (I'm asking, legitimately)
With the money I can see that could be freed up at the federal level, I see a yearly benefit of 585B/267M -> $2191, or 183 a month.
This is an equivalent (for fulltime job holders) of a raise of the minimum wage by 1.10 an hour.
We can reduce the rolls of people who need to be paid to 278 million people.
We can get 396 billion by cutting welfare (but if we do this, children get the same bi, and that's not being sure there aren't protective services in here which would need to still exist) at the federal level, we get $187 billion by cutting the people who don't get SS because they are old.
That's a total of $585 billion, with a needed sum of 3300 billion total (aka, 3.3 trillion).
This means we're still at a deficit of 2715 billion (2.715 trillion) dollars
Where else does that come from? (I'm asking, legitimately)
With the money I can see that could be freed up at the federal level, I see a yearly benefit of 585B/267M -> $2191, or 183 a month.
This is an equivalent (for fulltime job holders) of a raise of the minimum wage by 1.10 an hour.
No, enormous tax increase regardless, with a balanced budget. If tax revenues are currently $2.8 trillion, and basic income alone would cost $3.8 trillion, then even if government eliminates all other spending, taxes would still have to increase by $1 trillion in order to only pay for basic income.
Edit: The US Government does run a deficit, but it was $680 billion in 2013. A deficit of $1-2 trillion would be new.
Edit: The US Government does run a deficit, but it was $680 billion in 2013. A deficit of $1-2 trillion would be new.
It's worth noting that increased economic activity would mean collecting more taxes even at the same rates. It's probably nonetheless true that, at the numbers given, there would have to be an enormous increase in tax rates - just trying to keep all the pieces in view.
Medicare expenditures would in no way decrease as a result of the implementation of a BI (unless you plan to pay for BI by causing the deaths of most of our senior population, as they couldn't pay for medical services or medication on $12K). Also, tax revenue would decrease as at least a portion of the population would simply drop out of the workforce.
BI, like socialism and communism, sounds good on paper to a certain set of people. It won't work in the real world. I have always wondered why otherwise intelligent and successful people keep bringing up ideas to give others' money away, and then I recently heard casino mogul Steve Wynn's interesting explanation for it (that they believe that everything should be given to everyone, because everything has been given to them):
https://www.youtube.com/watch?v=tCitAufBvu8
BI, like socialism and communism, sounds good on paper to a certain set of people. It won't work in the real world. I have always wondered why otherwise intelligent and successful people keep bringing up ideas to give others' money away, and then I recently heard casino mogul Steve Wynn's interesting explanation for it (that they believe that everything should be given to everyone, because everything has been given to them):
https://www.youtube.com/watch?v=tCitAufBvu8
> as they couldn't pay for medical services or medication on $12K
While their numbers do seem a bit low, they are not off by an order of magnitude. Canada's healthcare system averages $375/month expenses across all citizens. [0]
> tax revenue would decrease as at least a portion of the population would simply drop out of the workforce.
Even if the bottom 50% of earners drop out of the workforce, this is a loss of tax revenue of 2.25% [1]. So the first-order effect of reduced tax revenue isn't meaningful.
> It won't work in the real world. I have always wondered why otherwise intelligent and successful people keep bringing up ideas
It would be one thing if there was broad empirically-based consensus that BI "won't work in the real world" but if so you have not brought that evidence with you today. It is probably best to refrain from unsourced assertions that people who disagree with you are stupid.
[0] http://en.wikipedia.org/wiki/List_of_countries_by_total_heal...
[1] http://www.ntu.org/tax-basics/who-pays-income-taxes.html
While their numbers do seem a bit low, they are not off by an order of magnitude. Canada's healthcare system averages $375/month expenses across all citizens. [0]
> tax revenue would decrease as at least a portion of the population would simply drop out of the workforce.
Even if the bottom 50% of earners drop out of the workforce, this is a loss of tax revenue of 2.25% [1]. So the first-order effect of reduced tax revenue isn't meaningful.
> It won't work in the real world. I have always wondered why otherwise intelligent and successful people keep bringing up ideas
It would be one thing if there was broad empirically-based consensus that BI "won't work in the real world" but if so you have not brought that evidence with you today. It is probably best to refrain from unsourced assertions that people who disagree with you are stupid.
[0] http://en.wikipedia.org/wiki/List_of_countries_by_total_heal...
[1] http://www.ntu.org/tax-basics/who-pays-income-taxes.html
> Canada's healthcare system averages $375/month expenses across all citizens.
That sounds great, but that's an apples to oranges comparison. Medical care in the US is drastically more expensive than in Canada, and unless we implement single payer (which will not happen) those numbers will not come down. Therefore $12K (which also has to cover living expenses) won't come close to supporting the medical expenses of the Medicare set in the US.
That sounds great, but that's an apples to oranges comparison. Medical care in the US is drastically more expensive than in Canada, and unless we implement single payer (which will not happen) those numbers will not come down. Therefore $12K (which also has to cover living expenses) won't come close to supporting the medical expenses of the Medicare set in the US.
We are discussing fucking BI. Is BI more likely than single payer? "Medical care in US is drastically more expensive" is a problem to solve to implement proper BI, not a deficiency in BI proposal.
That is not an interesting explanation of anything, that is Steve Wynn trying to weasel out of something he said at dinner with George Clooney.
your conclusion doesn't match your statement.
BI as a supplement to wages and other resources already exists in the form of welfare and the like, its just a matter of reducing the conditions to nothing.
somebody mentioned 600 a month for BI, you could do something lower without needing to quadruple tax revenue
BI as a supplement to wages and other resources already exists in the form of welfare and the like, its just a matter of reducing the conditions to nothing.
somebody mentioned 600 a month for BI, you could do something lower without needing to quadruple tax revenue
600 a month BI is 7200 a year.
From the calculations above, that requires 5050*267 million more government revenue than we have, or 1.35 trillion dollars (after cutting the non-old age part of Social Security, and the welfare part).
How are you going to raise that 1.35 trillion dollars?
Also at 600 a month, we arguably cannot drop minimum wage.
From the calculations above, that requires 5050*267 million more government revenue than we have, or 1.35 trillion dollars (after cutting the non-old age part of Social Security, and the welfare part).
How are you going to raise that 1.35 trillion dollars?
Also at 600 a month, we arguably cannot drop minimum wage.
My conclusion does match my statement (that BI is generally a bad idea, and wouldn't cause significant decreases in other social programs).
As far as the rest of your comment, by reducing the conditions to nothing, you dramatically expand the expenditures while lowering the tax base by encouraging a portion of the population to not bother being productive. People like to say that welfare acts as a form of BI, but that is far from the truth. Most welfare programs in the US contain requirements that recipients at least look for a job, stay drug-free, etc. With BI, people that don't want to work will simply move in with each other. $12K/yr isn't really enough for 1 person to have a good life; however $60K/yr for a household of 5 with no taxes taken out comes alot closer.
As far as the rest of your comment, by reducing the conditions to nothing, you dramatically expand the expenditures while lowering the tax base by encouraging a portion of the population to not bother being productive. People like to say that welfare acts as a form of BI, but that is far from the truth. Most welfare programs in the US contain requirements that recipients at least look for a job, stay drug-free, etc. With BI, people that don't want to work will simply move in with each other. $12K/yr isn't really enough for 1 person to have a good life; however $60K/yr for a household of 5 with no taxes taken out comes alot closer.
How out of touch do you have to be to say that Hollywood stars are the only ones calling for some of the programs?
I didn't say that at all. The point is that people who were born lucky - parents that provided for them, or maybe they easily and quickly found success in their career etc., tend to have a world view that because things came relatively easy to them, that everything should be handed to everyone else.
That's not the actual reasoning behind redistribution, it's just a huge straw man and again an ad hominem attack on Clooney.
Can $12k/year actually replace medicare? Medicare is health insurance, so at the very least we would have to have a competitive market for self-health-insurance from which retirees could buy coverage, before Medicare could be scrapped.
As a citizen of South Korea, nationalized health insurance is no brainer at all, but it doesn't need to be as expensive as US.
South Korean National Health Insurance Service covers every citizen (not just for elderly, not just for poor) and is 1.5% of South Korean budget. Medicare is 15% of US budget. Medicare may provide better quality, but cost/benefit is unclear to me.
South Korean National Health Insurance Service covers every citizen (not just for elderly, not just for poor) and is 1.5% of South Korean budget. Medicare is 15% of US budget. Medicare may provide better quality, but cost/benefit is unclear to me.
Medicare and social security benefits are worth a lot more than $12,000.
> An enormous tax increase only if you figure there would be no compensating decreases in government expenditures.
Which is a safe assumption, since I rarely observe governments decreasing their expenditures.
Which is a safe assumption, since I rarely observe governments decreasing their expenditures.
Another non-obvious change would be the elimination of minimum wage, which would improve corporate profits, which should (theoretically, at least) increase the taxes they pay.
Corporations are notoriously poor vehicles to tax: They do hoops to make tiny amounts of extra money
That said, without massive tax revenue increases (on the order of 2x), minimum wage would still be necessary
That said, without massive tax revenue increases (on the order of 2x), minimum wage would still be necessary
I think 2.8 trillion to 3.8 trillion is a large tax increase no matter what spending you cut.
Btw, spending was 3.5 trillion.
Btw, spending was 3.5 trillion.
Most people would get most of their tax back, though, in the basic income payment. Break even would be like $68k.
That raises the question - why bother taking those people's money in the first place?
Well, you're not taking those people's money in the first place. The justification for including them in both calculations is so that there are no discontinuities in the system where producing a little more of value for others means taking home a lot less in resources for yourself (like many means-tested programs).
One time a year payments (tax returns) have a different spending pattern than many times a year payments (welfare programs, and pension programs). The second pattern is the one that sustains people at the bottom edge of wealth. The former is what causes extra consumption.
Additionally, poor people live in areas with literally no banks.
Both of those alone justify a monthly payment method.
Additionally, poor people live in areas with literally no banks.
Both of those alone justify a monthly payment method.
the argument is because that translates to tax credits, which basically means the exact system we have right now that everybody wants to scrap. So clearly we can't do that.
This assumes that you'd give BI to every citizen. One twist I haven't seen so far in any BI discussion is this: what if you only give BI to those who ask for it (but still with no strings attached)? I wonder how many people would bother. For example, why would Bill Gates or Mark Zuckerberg put in the effort, however small?
In general, I would expect rich people to sign up for it. Two reasons: First, they didn't get to be rich by passing up opportunities. Second, they hire people who work full-time to maximize their money, and those people will sign them up for this.
Say it takes 12 hours to apply for basic income each year... $1,000 an hour is still an absurdly good rate for all but the highest earners.
Sure, but the marginal benefit is almost inexistent. When you have billions (or tens/hundreds of millions), an extra $12k is practically nothing.
This makes me think of mail-in rebates for electronics, at a different scale. It's also weird to me to see an engineer making over $100k/yr to buy a hard-drive or GPU with a mail-in rebate, then put in the effort to send in the coupon to get that extra $10 back (I've done it myself, but I don't earn that much). To someone making >$6-8k/month, $10 is peanuts. That's also how I see this $12k for billionaires.
This makes me think of mail-in rebates for electronics, at a different scale. It's also weird to me to see an engineer making over $100k/yr to buy a hard-drive or GPU with a mail-in rebate, then put in the effort to send in the coupon to get that extra $10 back (I've done it myself, but I don't earn that much). To someone making >$6-8k/month, $10 is peanuts. That's also how I see this $12k for billionaires.
There aren't enough billionaires for this to translate into meaningful savings, if it's mostly billionaires who don't bother.
And the people earning more than $1000/hour can pay their $30/hour assistant to do it for them.
so the top 10 percent or so that cant be troubled to pick up 12k laying on the ground would reduce it to 2.3 trillion? How about something worthwile and make the tax rate on income over 2 million (out of the air) to 90 percent like it was post WWII and use that to help pay for it.
> so the top 10 percent or so that cant be troubled to pick up 12k laying on the ground would reduce it to 2.3 trillion?
I don't know, that's what I was asking.
I don't know, that's what I was asking.
One interesting consequence is that this gives a good way to value US (or any other nation) citizenship.
Clearly, US citizenship is extremely valuable, but hard to value because it's not traded in free market. With BI, you can estimate its value as a portfolio with monthly payout of monthly BI. This works even if BI is unused, since BI is supposed to be equivalent of existing welfare programs.
If there was any doubt, this also proves equal opportunity does not exist. Just by being born to a particular nation, which is random, you get an extremely large head start.
Clearly, US citizenship is extremely valuable, but hard to value because it's not traded in free market. With BI, you can estimate its value as a portfolio with monthly payout of monthly BI. This works even if BI is unused, since BI is supposed to be equivalent of existing welfare programs.
If there was any doubt, this also proves equal opportunity does not exist. Just by being born to a particular nation, which is random, you get an extremely large head start.
A consequence of providing basic income to everyone could be rise in prices of consumer goods. This already happens in the housing market and the education market, where house prices and college fees increase as cheap money comes in the market.
I think the fact that the money for college and the money for houses can't be used for other things has a huge impact on the dynamics, along with the fact that both housing and college are often purchased (partly) as display of wealth and the fact that both are oversold as investment. Which isn't to say we'd see no change in the price level, but rather that we'd mostly only see that where costs of production actually rise - otherwise, competition will still hold prices down.
How is an education purchased as a display of wealth? Education is the single most efficient way to raise your standard of living compared to that of your parents.
There is no question that much education and much housing is purchased for entirely practical reasons, and I'm not asserting otherwise. That is not incompatible with them sometimes serving as displays of wealth - a need for my children to go to the best schools, whatever the cost (of which tuition plays only a part, to be sure).
Rise in prices of housing and education is largely due to their investment-like nature. You won't be able to sell food as a great investment to the future.
This is obviously wrong. I learned from HN that the poverty line in Silicon Valley is $120K, and your life is an utter failure if you work a 9-5 job.
"For reference, the US Poverty Line is $11,670 ... The net result of these problems means that the official US Poverty rate is not really sensible measurement of poverty in the US. ... So implementing Basic Income at this amount [$12,000] would immediately eliminate poverty in the US."
This doesn't make sense. The current poverty line is two to three times below what it should be. Implementing a $12k a year basic income would only end poverty in theory based on the current definition and amount which is "not really sensible measurement of poverty in the US." It's impossible to deduce which of the mutually exclusive statements the authors agree with, although it seems to be that that the current US Poverty rate is actually a very accurate measurement of poverty in the US, off by only $330 from what is "not poverty."
"We feel there is very little necessary transportation today that is not related to work or entertainment, so is therefore excluded."
So this idea is based on the assumption that people on basic income should forget about finding a job in most of America, at least the parts without free or low-cost mass transit (pretty much all of it). Most of these people will never have a chance to work again. What about trips to the doctor or the supermarket. The authors are just completely out of touch with American reality here.
This doesn't make sense. The current poverty line is two to three times below what it should be. Implementing a $12k a year basic income would only end poverty in theory based on the current definition and amount which is "not really sensible measurement of poverty in the US." It's impossible to deduce which of the mutually exclusive statements the authors agree with, although it seems to be that that the current US Poverty rate is actually a very accurate measurement of poverty in the US, off by only $330 from what is "not poverty."
"We feel there is very little necessary transportation today that is not related to work or entertainment, so is therefore excluded."
So this idea is based on the assumption that people on basic income should forget about finding a job in most of America, at least the parts without free or low-cost mass transit (pretty much all of it). Most of these people will never have a chance to work again. What about trips to the doctor or the supermarket. The authors are just completely out of touch with American reality here.
Wouldn't the idea of Basic Jobs be more feasible than Basic Income?
HN is populated by people who love their work and would do it for free, given the luxury... but speaking from a legal background, other careers SUCK. Most lawyers I know would happily embrace Basic Income in exchange for sleep, family, and lifetime security. If the alternative to attorney life were picking up trash or scrubbing toilets as part of the Basic Jobs program, the workers who pay for Basic Income/Jobs might be less likely to stop producing wealth in the name of leisure.
I say this as a liberal who very much supports the idea of reduced work hours, mandatory vacations, and so on in a European vein... but there has to be middle ground between indolence and workaholism. Particularly when faced with the possible creation of a dependent underclass with little else to do but knock out kids they can't support.
HN is populated by people who love their work and would do it for free, given the luxury... but speaking from a legal background, other careers SUCK. Most lawyers I know would happily embrace Basic Income in exchange for sleep, family, and lifetime security. If the alternative to attorney life were picking up trash or scrubbing toilets as part of the Basic Jobs program, the workers who pay for Basic Income/Jobs might be less likely to stop producing wealth in the name of leisure.
I say this as a liberal who very much supports the idea of reduced work hours, mandatory vacations, and so on in a European vein... but there has to be middle ground between indolence and workaholism. Particularly when faced with the possible creation of a dependent underclass with little else to do but knock out kids they can't support.
I don't think it would be better. At the risk of excessive snark...
In exchange for your feeling of superiority making the underclasses earn their bread, you're getting political wrangling over what the jobs should be and tremendous misallocation of labor as the jobs aren't the best thing those people can be doing with their time, we take up the time they could be putting into making themselves more fit for more interesting (and more useful and better paying) jobs, and we do nothing to free people to work on projects they're passionate about which may have a harder time capturing value produced (unless a bureaucrat has specifically blessed them).
In exchange for your feeling of superiority making the underclasses earn their bread, you're getting political wrangling over what the jobs should be and tremendous misallocation of labor as the jobs aren't the best thing those people can be doing with their time, we take up the time they could be putting into making themselves more fit for more interesting (and more useful and better paying) jobs, and we do nothing to free people to work on projects they're passionate about which may have a harder time capturing value produced (unless a bureaucrat has specifically blessed them).
My idea of an alternative would be Basic Land: everyone who is poor/starving can get some free fertile land to work (enough to sustain a family). That way, they can become self-sufficient and live off their own work.
There are some extra issues with this, but I think they can be fixed. One would be housing: the land would also have to come with a house, and maybe transportation.
There are some extra issues with this, but I think they can be fixed. One would be housing: the land would also have to come with a house, and maybe transportation.
While farmland is incredibly cheap in the US, small farms are on a boom-bust cycle basically tied to luck and the weather.
Modern farming is also very dirty to the surrounding watershed.
Modern farming is also very dirty to the surrounding watershed.
Why is this on Hacker News?
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The Federal minimum wage is $7.25/hour and is widely considered to be too low.