Switzerland and Guaranteed Income--Would it work here?

[Felix]

According to Charles Murray you can get started at $10.000 a year in the US by replacing what you currently have, which would be roughly in line with what Friedman and Hayek proposed.
http://www.fljs.org/sites/www.fljs.org/ ... Murray.pdf

[Felix]

Oh, and here's a Slate article:
http://www.slate.com/blogs/business_ins ... verty.html

[jennypenny]

Oh, and here's a Slate article:
http://www.slate.com/blogs/business_ins ... verty.html

That's the problem though. It won't end poverty. Some people think poor.

It might save the middle class. Maybe.

[Felix]

Technically, it bumps people up to the poverty line for the same money as whatever you have now costs.
Plus, you have a smaller government with less administration. What's not to like?

[Seneca]

That's the problem though. It won't end poverty. Some people think poor.

It might save the middle class. Maybe.

Agree with you on the first, wondering where you're coming from on the middle class though?

[Seneca]

Started Brave New World last night, Huxley's words in the foreward actually brought this thread to mind-

There is, of course, no reason why the new totalitarianisms should resemble the old. Government by clubs and firing squads, by artificial famine, mass imprisonment and mass deportation, is not merely inhumane (nobody cares much about that nowadays), it is demonstrably inefficient and in an age of advanced technology, inefficiency is the sin against the Holy Ghost. A really efficient totalitarian state would be one in which the all-powerful executive of political bosses and their army of managers control the population of slaves who do not have to be coerced, because they love their servitude.

[Felix]

Don't people who think poor still do better at $10.000 than below $10.000? Would it not be a drastic improvement for these people, actually especially because they are so poor at already managing what little money they have?

[Felix]

We already have everything else in Brave New World, so why not this part, too.

[jennypenny]

@Felix--Yes, it would help people. It just won't 'eliminate poverty' as advertised. Would people move out of rundown inner-city neighborhoods en masse? Or would they continue to live in sub-standard housing, just more comfortably? Would their education improve?

As long as it came with program cuts, I'm ok with it. I guess I prefer it to guaranteed employment. I was never a fan of dig-a-ditch/fill-it-in type work. It doesn't solve everything though.

@seneca--It would almost make up the difference in income that the middle class has lost over the last generation.

[jennypenny]

This goes back to a comment I made on Juniper's book. Everything comes down to money. I don't see it that way. Giving people money would help buy food, pay rent, and keep the heat on. Those are all good things, but none of that provides a way out of poverty. It doesn't provide mobility. It doesn't improve their environment. It's a part of the solution, but not all of it.

[Felix]

Poverty is currently defined as earning below $11,945. So bumping people up by 10.000$ would almost accomplish that. The lowest 20% makes on average over $3000 a year. That would bump most of them above the official definition of poverty. And that would certainly help put a lot of sociological pressure off these people.

Making it unconditional is key. Poor people face a tremendous effective marginal tax rate (I don't have the numbers for the US, but in Germany it's 84%!), which would be removed by that switch, too, effectively getting rid of what's termed the welfare trap.
http://en.wikipedia.org/wiki/Welfare_trap

That alone would be reason enough to implement the UBI.

[jennypenny]

It wouldn't prevent municipal governments from increasing taxes to get their piece of that $10K. I can also see more municipalities and corporations reneging on pension commitments (and courts letting them if they thought people would receive the guaranteed income instead).

Edit: Sorry, I forgot I'm supposed to be trying to be more optimistic.

[Felix]

What keeps them from doing it now? Aren't pension committments part of compensation? (I don't have much knowledge about what you're talking about here. Asking out of ignorance, not disagreement.)

Americans worrying about high taxes or gas prices always seems a bit strange from a European perspective - I always get the impression that we already live in your worst horror scenario.

[Seneca]

We already have everything else in Brave New World, so why not this part, too.

I don't understand why people are so eager for turning the government into Plato's Paychex.

@seneca--It would almost make up the difference in income that the middle class has lost over the last generation.

The middle class will end up paying the tax bill, one way or another, making it a net loss to them.

[Felix]

It's a reaction to other people being very eager at dismantling existing social safety nets.

[Seneca]

It's a reaction to other people being very eager at dismantling existing social safety nets.

Some might be eager to dismantle them, others might notice in actual fact they're crumbling under the demographic instabilities created by any entitlement plan, and throwing more cash at the problem will not fix it on either an individual or institutional scale, especially when incentivizing less people to work.

Of course...we don't agree whether there is even a possibility the government can run out of money to spend on entitlements...

[Felix]

I think there's a misunderstanding somewhere, so let me disentangle the argument a bit.

Part 1: The current welfare system does not work as advertised, is horribly inefficient at actually helping the poor and even provides disincentives to work through means-tested benefit programs.

Making it unconditional is key. Poor people face a tremendous effective marginal tax rate (I don't have the numbers for the US, but in Germany it's 84%!), which would be removed by that switch, too, effectively getting rid of what's termed the welfare trap.
http://en.wikipedia.org/wiki/Welfare_trap

That alone would be reason enough to implement the UBI.

The restructuring of welfare into a UBI actually removes a major disincentive to work.

I think on this one we could easily find agreement. It in no way asks for an increased deficit. This is not about increasing government spending at all. It is about taking the same money and using it more efficiently with less government bureaucracy. Should be right up your alley.

Part 2: I see it in this context.
Over the past 40 years, wages were stagnant while productivity has doubled. This additional half of the wealth creation that is being distributed to the capital side has increased income inequality, increased the need for private debt to make up for the gap and combined with a deregulation of the finance sector has led to the biggest economic crash since the Great Depression.

This has caused a higher demand for government assistance programs over the past 5 years as the economy tries to recover.

To distract from the PR nightmare of the collapse of unregulated finance, we now all worry about government debt. (Well, not all of us )

So a mere $10.000 would be under 1/3 of the median income in the US, which is actually low compared to the doubling of wages as productivity gains would justify. (And it doesn't even cut into any of the 50% of productivity pie as it just distributes the current crumbs more efficiently.)

To take up your argument that throwing more money at it doesn't solve the problem, clearly throwing more money at the entitled capital side has not worked at maintaining a strong economy, in fact the economic system is crumbling under the demographic instabilities created by any entitlement plan, and throwing more cash at the problem will not fix it on either an individual or institutional scale, especially when incentivizing less people to work.

So from this perspective, there's actually a lot of room for increase.

Here we might find some disagreement.

[jennypenny]

Can I change my vote?

The more I think about it, the more I think that there is no way to eradicate all poverty by handing out money. At first I thought it was a good solution if it meant getting rid of all entitlement programs. If the structure and culture doesn't change though, people will still be poor. The scale will just shift to absorb the new income level. Entitlement programs will creep back in to support those who, for whatever reason, can't manage a decent living standard on the guaranteed income.

I could still be talked into it if I thought it would repair the damage done to the middle class. Enlarging and supporting the middle class would relieve some of the burden on social services that support the truly poor and disadvantaged.

I don't agree that there is no incentive not to work. Wouldn't many people here immediately stop working because a guaranteed income at the $10K level would provide enough income? If one believes in Russell's (am I remembering correctly?) idea that increased productivity means we can all work part-time, then the guaranteed income brings us that closer to reality.

[Felix]

This whole incentive to work argument is horrible to begin with. It says that we need to force poor people to work by keeping them poor. This work focus is worse than the money focus, I think.

The results of the mincome experiment in Canada were increased amount of high school diplomas and better health/lower health care costs.

Also, removing the welfare trap is a great thing all by itself.

About just giving money to poor people:
http://www.npr.org/blogs/money/2013/10/ ... oor-people

[Felix]

There's now more research done on the education part:
http://www.bbc.co.uk/news/business-24821383