The benefits of a basic income // much higher min wage

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bluejoey
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Post by bluejoey »

In a different thread, a fellow member (Felix) elegantly outlined the benefits of a basic income for people. I think it's a fine idea. What do you think?
We are all working towards ERE here. One day we'll be able to live off our dividends and have a low-impact frugal lifestyle without having to work. The real-world benefits of this are low consumption of actual resources, a smaller carbon footprint, and more self-actualization in terms of work. For this, we work for wages and save for 5-10 years.
It is also the general consensus on this forum that this is a good thing and that it would be good if more people did this instead of crazy work-slave-consumerism.
So a basic income would be the shortcut towards this goal for most people. Even those without the motivation and insight to go there by saving for 5-10 years can be capable of living a low-impact lifestyle. Even if most people spend their time surfing the web, smoking weed and eating ramen, it's still a low-impact lifestyle.
Why is it okay for us to do this and not for everyone else? It would give people quite a head-start. Is it because we worked for 5-10 years already living the low-impact lifestyle?
I would think a basic income would be a major shift towards a more frugal consumption pattern for people motivated to avoid pointless work. And isn't that part of why we are all doing this?
Just think about the lower requirements for cars and gas if people didn't commute to work every workday.
Wouldn't the real-world benefits in terms of lower resource-depletion be worth it?
An alternative way to this route would be through a much higher minimum wage (e.g., $16, as in Australia) tied to a certain percentage of GDP per capita. From what I've read elsewhere, between the 50s and 70s, the minimum wage in the US used to be around 60% of the GDP per capita, while it's been allowed to drop in recent times to around 30% of GDP per capita. Pegging the min wage to this ratio (60%) would perpetually insure that the profits of the country were distributed at a basic, sustainable level for everyone.
Incidentally, in Australia, when you combine their universal healthcare with their $16 minimum wage, two people can marry, buy a home, and raise a family on a pair of basic jobs (cashiers, baristas, whatever) without forfeiting their lives to student loans or slaving for decades for $8 jobs without benefits, as is common in this country. If this can work there, there's no real reason why it can't work here, except that we aren't interested in supporting people directly through basic incomes here or indirectly through living minimum wages.

noskich
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Post by noskich »

While I absolutely agree with the concept of guaranteed income which would cover all very basic necessities (http://mondediplo.com/2013/05/04income), I do think you are idealising Australia. The basic healthcare doesn`t cover pretty much anything except GP and examinations unless you are on welfare and even then you would have to wait long for service.

Furthermore, for unskilled jobs it is not unusual to be paid below minimal wage in cash. Finally taxes are not that low. 18K is tax free, but if you are a professional with a job close to 100K you will pay close to 30%.

The biggest problem is the real estate bubble. Average 2 bedder in major cities is easily half a million. Rent for it would also easily be 2K monthly.


aussierogue
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Post by aussierogue »

I agree with Bluejoey. He is spot on.
Noskich I think you are underestimating how well we have it here.
Spend some time in the USA and there problems with health care and low minimum wages are real and cannot be compared with our excellent system.
It is correct that 2 people with fairly menial jons can still buy a house, raise a family and get excellent healthcare and can retire on a decent pension for life.
There is a realestate bubble but that's a different argument. You can move to the country in Australia and buy cheap if you really need to.


noskich
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Post by noskich »

Aussie, Ive never been in US. You can live in the country but can you find a job there, not that easy. A couple can buy the house under the condition that they keep paying it off for 30 years. Healthcare - any dental 0 cover, hospital, surgery, physio, vision all out of your own pocket. Luckily I havent had much problems due to my age.

I see some advantages in the US. A person in a US city working in IT banking like me would have at least the same salary if not higher, would most likely pay less tax and would be able to purchase a flat in inner suburbs for around 100K. Here I pay almost 30% tax and flat in inner suburb of Sydney would be 500K+.


secretwealth
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Post by secretwealth »

"It is correct that 2 people with fairly menial jons can still buy a house, raise a family and get excellent healthcare and can retire on a decent pension for life."
It was like this in America for my parents' generation. My parents were lower middle-class and, if they'd stayed married and both employed, would have easily been able to afford that middle class life. I can even quickly go over the numbers:
Spouse 1: $7.25/hr. income at full time employment.

Spouse 2: $5.25/hr. income at full time employment.

House: $60,000 sell price, 90% 30yr mortgage at 7% interest. ($421.76 monthly payment).

Medical insurance: $45 month for a family of four.
The question is whether this is still doable and/or easier now with two lower middle-class salaries. Anyone else want to do the math?


jacob
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Post by jacob »

Of course it's possible, see ERE.
DW currently works for $9/hr and if she went full time, her job could cover the entirety of both of our expenses.
However, how many today would live in a 1000sqft house without 3 unused bed rooms to store their stuff, have a phone without a dataplan to download lolcats, stick with the same size TV, not upgrade their [non-existing] computers, fix their own stuff, and cook their own food? You know, like our parents did.
Not that many.
It could be argued that it's now impossible to be stupid with money unless you're middle class. It could also be argued that the only reason the middle class are currently capable of being money-stupid is their newfound (since interest rates started ever dropping since 1980ish) access to financial leverage in the form of easy credit---such access is not available without a salaried middle class job.


secretwealth
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Post by secretwealth »

ERE is only possible if you cut down consumption to a level lower than what my parents did. They were average American consumers who lived paycheck to paycheck.
The question is: can you maintain that lower middle class lifestyle today at the same level of median consumption of my parents' generation? So, 1000sq ft. house, full medical insurance, two cars, etc. Is this level of consumption still affordable for lower middle class people?


jacob
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Post by jacob »

To calculate, take current minimum wage and CPI-adjust it back to the previous generation and see if the adjusted amount was affordable then.


secretwealth
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Post by secretwealth »

I'd love to, but it's Saturday. Anyone else want to do the legwork?


Felix
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Post by Felix »


secretwealth
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Post by secretwealth »

So to earn the same today as my parents did in their day, a couple would have to earn $35.27 per hour in total, or $14.82 and $20.45. My mother was a administration assistant at a local police force and my father was an entry-level technician for the phone company. Would those positions earn $14.82/hr. and $20.45/hr., respectively, today?
I'm not sure, but it sounds about right.


secretwealth
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Post by secretwealth »

Thanks, ffj--that sounds about right and shows that low-paid middle class Americans can still squeeze by with an almost middle class income, but I'd say two working parents will usually need two cars.
One thing I'd point out: "trim their food budget or any of the other things like selling the car and riding a bike to improve their situation."
Well, trimming a food budget or selling a car is (to a middle class American, not to this crowd), a lifestyle sacrifice. I'd also say it's a sacrifice for this crowd too, but they'd rather not admit that...


noskich
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Post by noskich »

Secretwealth, all depends on ones starting point, my family never had a car and thus Ive never had the need for it. I still don`t have a license.


noskich
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Post by noskich »

Just converted 1000sqft and have to say I am very surprised to see it s nearly 100 sqm. In my home country 100 sqm is considered luxury unless you live in a village. Most families of 4+ live in around 50ish sqm, living room plus a bedroom is considered to be a 2BD flat.

I think what is missing in this forum is a wider international perspective. Way too much US-focused.

Actually I only had my own room for around 3 years of my life, always shared with family/gf or roommate.
I guess us expats from less developed countries are natural ERE people, no adjustment required.


aussierogue
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Post by aussierogue »

Noskitch
This from wiki (where Australia ranks hjighest in the world for 'end of life health care)
http://en.wikipedia.org/wiki/Health_care_in_Australia
Health care in Australia is universal. The federal government pays a large[quantify] percentage of the cost of services in public hospitals. This percentage is calculated on:
1.Whether the government subsidises this service (based on the Medicare Benefits Schedule. Typically, 100% of in-hospital costs, 75% of General Practitioner and 85% of specialist services are covered.
2.Whether the patient is a concession or receives other benefits[5]
3.Whether the patient has crossed the threshold for further subsidised the service (based on total health expenditure for the year)[5]
Where the government pays the large subsidy, the patient pays the remainder out of pocket, unless the provider of the service chooses to use bulk billing, charging only the scheduled fee, leaving the patient with no extra costs. In some countries, this is commonly referred to as a copayment. Where a particular service is not covered, such as dentistry, optometry, and ambulance transport,[6] the patient must pay the full amount (unless they hold a Low Income Earner card, which may entitle them to subsidised access)
** the one major blight in Australia is the health of the first Australians..


LonerMatt
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Post by LonerMatt »

Moskitch - my best friend received 3rd degree chemical burns at the start of 2012 and had the entire cost of the hospital stay, skin graft and operation paid for, completely, by the government here.
As someone who lives in the country, it is actually pretty easy to find a job here, even easier to find a work-life balance (if the lifestyle is your deal) and absolutely easy to save.
I earn below median income, live 5 minutes from the heart of town, 5 minutes from work, live in a brand new house and pay $100 pw rent. I could have a job here for life if I wanted it, and very quickly establish a great savings rate (I'm 50% at the moment).
If I wanted to move to the Northern Territory I could be making 80-90k in 2-3 years (I'm a teacher, so that's 80k per year with 2.5 months holiday, free computer, subsidised rent in NT, free flights (depending on location)).
We do have it good, better than most countries, certainly better, in many ways, than the USA. Property is ridiculous in Melbourne, Sydney, Perth and Darwin, but that's ok.
AR - talking to an Indigenous student today about NAIDOC (national Indigenous Culture day at schools) she asked "Mr. LonerMatt, like I don't understand why there's a day off just for us." - once I reminded her that, like, the country was literally taken from them she reconsidered her views.


bluejoey
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Post by bluejoey »

Hi all - been away for a day and this thread takes off! Going back to read your thoughts...


aussierogue
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Post by aussierogue »

@lonermatt - Nice story....I would have thought in mildura they may teach aboriginal history is some shape or form. Important stuff to know. I have been getting into the history of Australia recently 9wasnt too interested at school) and reading accounts of the first white settlements in Botany bay then Sydney and then eventually port Philip some 50 years later. Interesting and trajic...


LonerMatt
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Post by LonerMatt »

AR- due to Wannik educational policy - the teaching of Indigenous culture and history to Indigenous students is left entirely in the hands of Indigenous communities (the ones up here are shockingly bad at it, though).
But, Australia wide history is non-compulsory.


Seneca
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Post by Seneca »

So a basic income would be the shortcut towards this goal for most people. Even those without the motivation and insight to go there by saving for 5-10 years can be capable of living a low-impact lifestyle. Even if most people spend their time surfing the web, smoking weed and eating ramen, it's still a low-impact lifestyle.
Why is it okay for us to do this and not for everyone else? It would give people quite a head-start. Is it because we worked for 5-10 years already living the low-impact lifestyle?

There are many differences between earning your own money/skills to support yourself to have the option to sit around and smoke dope and eat ramen (ERE), and not earning the money/skills but taking the money from someone else who forgoes the dope and lazing around to go earn (evil-ERE).


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