11 ms·

This is a fine piece of writing but I have a problem with the following statement: With the introduction of a UBI, employers would have a powerful weapon to fo

This is a fine piece of writing but I have a problem with the following statement: With the introduction of a UBI, employers would have a powerful weapon to force wages down, as they good argue that they needn’t pay as much any more, because they already had enough to maintain their standard of living. If this was true, the employers would already be forcing the minimum wage down on everyone. The UBI would give the lowest paid workers a powerful leverage they currently lack: the ability to choose not to work instead of accepting whatever wage the market offers. For other workers, the minimum wage or any viable UBI is small compared to their earnings, so it is hard to see how it could be used by the employer in salary negotiations.

crdoconnor 11y ago
That depends if it were enough to live on. If it was then it would give those minimum wage workers the freedom not to work. If not, then all it would likely do would be to let employers lower wages. IIRC there was actually a town in Canada that did this and this happened. Then it was taken away entirely and the poorest citizens ended up even worse off (wages did not go back up again).
- jessaustin 11y ago
  What mechanism do you propose to explain this phenomenon? ISTM that if an employer is paying a market-clearing wage, and then she decides to just pay less, she's going to have either fewer employees, or less capable employees, or both.
  - asgard1024 11y ago
    I propose a mechanism of free market being the wrong model of reality. ;-) Some people are simply greedy and they will pay less at the expense of having less capable employees. These people will "poison the well", so to speak, for other market participants who actually wouldn't actually mind to pay higher wages. And as was eloquently put by Keynes - "Markets can remain irrational longer than you can remain solvent". In short, asymmetric information is the key problem of free markets.
    - eru 11y ago
      Why don't they already pay less now?
      - asgard1024 11y ago
        Well, here's a model I propose. So-called "market equilibrium" is actually a steady state of various powers at oligopoly-oligopsony price point (therefore, there are non-zero profits and above-subsistence wages, unlike in the ideal free market, which predicts zero profits and subsistence wages). This implies some sort of "social contract" about profit sharing which can be enforced by strikes of either party, because they essentially need each other. So capitalists to pay less means breaking that contract (with consequences, that's why you cannot easily do it). However synchronized breaches of the contract may take some time before this settles into another steady state, because of information asymmetry - the information about contract breach takes time to propagate to all interested parties.
        eru 11y ago
        There's no such contract. And there's no coalition of neither workers nor capitalists. See http://slatestarcodex.com/2014/09/14/does-class-warfare-have-a-free-rider-problem/ http://slatestarcodex.com/2014/09/14/does-class-warfare-have...
        asgard1024 11y ago
        Facepalm. It's not an explicit contract in the sense of them coming to one table and agree with it, it's implicit in them having the common interest. Steve Keen did models where independent agents can become oligopolists even without any communication whatsoever, just by virtue of seeking maximal profit. There are many similar dynamical systems.
- zo1 11y ago
  Do you recall the name of that town/study? I've seen that a similar example used for pro-UBI points, and it'd be interesting to find out that it actually didn't work out as it's been claimed.
  - deleted 11y ago
    [deleted]
  - teh_klev 11y ago
    Dauphin, Manitoba. It's mentioned about a third of the way into the article...if you read it that is :P
- elgenie 11y ago
  From the article (read by all commenters, of course): """ The scale of the consensus on the idea is a far cry from a long-buried experiment in the rural Manitoba town of Dauphin in the 1970s, a comprehensive, five-year trial that is now regularly cited by advocates as the strongest proof yet that it works as a poverty reduction strategy. The experiment, known as ‘Mincome’, was jointly bankrolled by the then provincial New Democratic government and Pierre Trudeau’s Liberals, and offered an unconditional annual income to every family. Those that worked had their Mincome cut by 50 cents for every dollar earned. The idea was to offer a cushion for shifting crop prices or crop failures. The governments were interested to see whether such a support would produce a disincentive to work, a town full of lay-abouts. If successful, the long game was to roll out a similar plan nationwide. But the scheme ended up costing $17 million, much more than had been envisaged. It was scrapped as recession hit Canada at end of the decade. Almost 2000 boxes’ worth of data on the trial were packed away, not to be heard from again until University of Manitoba health sciences researcher Evelyn Forget tracked them down in 2009. She found that there was essentially no reduction in working hours with two notable exceptions: women who were mothers of young children, or had elderly or disabled relatives and who were now choosing to stay home, and teenagers, who now felt free to continue in school and not help out their parents on the farm. Meanwhile, there were fewer work-place injuries, fewer car accidents, less domestic abuse and hospital visits declined by 8.5 percent. """
zappo2938 11y ago
Of course, they would force wages down. Instead of money going directly from employer to employee, it would go from employers to government to employees. Nonetheless, the employer would still have to pay competitive wages on top to retain employees. Forces of socialism and capitalism will be in play at the same time. Socialism and capitalism are not mutually independent. Despite companies like Walmart and Home Depot having to pay more into the system, this would be a windfall for them as the availability of people with money to spend in places like this will drastically increase. The Laffer Curve is correct when the supply side and the demand side on the graph are switched to where they belong. Walmart would then have to hire more employees to meet the demand and put more tax money into the system. lol
ant6n 11y ago
The point of Universal Basic Income is not to provide a good standard of living, but to provide enough for bare necessities. A standard of being alive, if you will. The point is that there would be fewer people in precarious situations where they cannot afford food and shelter. With basic food and shelter not being the primary motivator to work, more people may do innovative things that could help the economy ... and humanity overall. Any employers of professionals, i.e. medium/high income would probably have to pay the same amount of money, because the higher taxes would cancel out the benefit of the minimum income - the net effect of UBI on medium/high incomes is relatively small.
- refurb 11y ago
  A bare standard of living where? San Francisco would be what? $50K per year? Or Kalamazoo, MI where you coulf get by on $15K? Do we force people to move?
  - quadrangle 11y ago
    The best answer is that we actually do keep having other universals like health care, education, access to water… $15k in SF with that other universal stuff could work if you have small space and roommates. So, get roommates, get some additional income, or move to Kalamazoo. We could also work on building more affordable housing too.
    - ant6n 11y ago
      And transit!
  - pen2l 11y ago
    Of course. That's completely within reason to request. The UBI should be something like $20K, you can survive in a lot of places in America for that money.
  - nugget 11y ago
    A variable basic income formula creates incentives for fraud and malinvestment and incurs more administrative costs and overhead. Keep it simple. Give the same amount to each citizen like Alaska does with their natural resources fund. In terms of behavior, create the proper incentives and you won't need to force people to do anything. It's my belief that if we had a national basic income, set at the same level for all citizens, we would see a lot of interesting revitalization of rural areas. Some hipsters will move to the middle of nowhere where it's dirt cheap to live and start to build desirable communities, and over time others will follow. You can live for $500/month off the beaten path in temperate climates, especially if you're willing to pool resources and get your hands dirty with a dozen or so like minded friends. Detaching (basic) income from work (proximity to urban job centers) would be a fascinating experiment and I just hope I live long enough to see it.
2noame 11y ago
You hit on exactly one of the biggest problems with the piece. It is the inability of anyone to say no to shitty paying jobs that requires the existence of minimum wage laws in the first place. As long as people can't say no, because they need the income to survive, they will say yes to shitty wages, hours, benefits, etc. This author should ask himself, if he earned $1k/money for breathing, would he accept a shitty job for $7/hr? If not, how much would it need to pay before he would accept? Then the next question is what the effective wage of automation would be. If because people have basic income, no one will work that job for less than $15/hr and a machine can do it for $10/hr, then it now makes more sense to automate that job out of existence. And that is the direction we should aim for as a civilization - full unemployment, not full employment. Humans should hand as many jobs to machines as we can, to free us up to do the work we each feel is most valuable, paid or unpaid. Enough with this pro-toil mentality that sees value in everyone being employed, even if for only 4 hrs a week in order to employ 100% of the population. As if that is even possible anyway. Like what, we're going to have 10 doctors share the work load of one doctor so that everyone can be employed? And what of all the work that goes unpaid? We should just keep not recognizing that? And what of all the jobs that don't need to exist? We should keep those around so that people can fill them to prove their right to live? Full employment in the 21st century is a bullshit goal. We as a species are better than that. Our goal should be to free ourselves to pursue what we each wish to pursue. And anyone who thinks people's ability to organize will be in any way diminished instead of monumentally expanded with basic income, isn't giving their fellow man enough credit. People will use basic income to give themselves greater voice. I guarantee it.
- SixSigma 11y ago
  One of my personal slogans has been : Full employment is a threat, not a promise.
  - eru 11y ago
    Involuntary unemployment is a scourge, though.
- aninhumer 11y ago
  >This author should ask himself, if he earned $1k/money for breathing, would he accept a shitty job for $7/hr? If not, how much would it need to pay before he would accept? I think it's better to compare inclusively here, because as much as people would be much more likely to reject shitty working conditions, they'd also be more likely to accept lower wages when their total income is still pretty good.
shkkmo 11y ago
I've been thinking that the best way to introduce UBI would be by pairing increases in the UBI with decreases in the minimum wage (potentially during economic slow downs to boost the recovery.)
danmaz74 11y ago
If: * basic income was unconditional, and thus, additional to your wage * basic income wasn't enough to live comfortably, but just enough to survive then most people would still be compelled to find a job, because most people don't want to just survive. In that situation, the assumption that employers could get away offering very low wages to the least skilled workers look quite credible to me.
- Peaker 11y ago
  People will be under far smaller pressure to work at all costs. They will search for a job much longer. They will sacrifice their pay and benefits far less. Thus, their overall wage will be much higher (though it may be subsidized by basic income and not fully paid by the employer).
  - danmaz74 11y ago
    In the end, it all depends on how minimal the minimum income is.

crdoconnor 11y ago

That depends if it were enough to live on. If it was then it would give those minimum wage workers the freedom not to work. If not, then all it would likely do would be to let employers lower wages. IIRC there was actually a town in Canada that did this and this happened. Then it was taken away entirely and the poorest citizens ended up even worse off (wages did not go back up again).

jessaustin 11y ago
What mechanism do you propose to explain this phenomenon? ISTM that if an employer is paying a market-clearing wage, and then she decides to just pay less, she's going to have either fewer employees, or less capable employees, or both.
- asgard1024 11y ago
  I propose a mechanism of free market being the wrong model of reality. ;-) Some people are simply greedy and they will pay less at the expense of having less capable employees. These people will "poison the well", so to speak, for other market participants who actually wouldn't actually mind to pay higher wages. And as was eloquently put by Keynes - "Markets can remain irrational longer than you can remain solvent". In short, asymmetric information is the key problem of free markets.
  - eru 11y ago
    Why don't they already pay less now?
    - asgard1024 11y ago
      Well, here's a model I propose. So-called "market equilibrium" is actually a steady state of various powers at oligopoly-oligopsony price point (therefore, there are non-zero profits and above-subsistence wages, unlike in the ideal free market, which predicts zero profits and subsistence wages). This implies some sort of "social contract" about profit sharing which can be enforced by strikes of either party, because they essentially need each other. So capitalists to pay less means breaking that contract (with consequences, that's why you cannot easily do it). However synchronized breaches of the contract may take some time before this settles into another steady state, because of information asymmetry - the information about contract breach takes time to propagate to all interested parties.
      - eru 11y ago
        There's no such contract. And there's no coalition of neither workers nor capitalists. See http://slatestarcodex.com/2014/09/14/does-class-warfare-have-a-free-rider-problem/ http://slatestarcodex.com/2014/09/14/does-class-warfare-have...
        asgard1024 11y ago
        Facepalm. It's not an explicit contract in the sense of them coming to one table and agree with it, it's implicit in them having the common interest. Steve Keen did models where independent agents can become oligopolists even without any communication whatsoever, just by virtue of seeking maximal profit. There are many similar dynamical systems.
zo1 11y ago
Do you recall the name of that town/study? I've seen that a similar example used for pro-UBI points, and it'd be interesting to find out that it actually didn't work out as it's been claimed.
- deleted 11y ago
  [deleted]
- teh_klev 11y ago
  Dauphin, Manitoba. It's mentioned about a third of the way into the article...if you read it that is :P
elgenie 11y ago
From the article (read by all commenters, of course): """ The scale of the consensus on the idea is a far cry from a long-buried experiment in the rural Manitoba town of Dauphin in the 1970s, a comprehensive, five-year trial that is now regularly cited by advocates as the strongest proof yet that it works as a poverty reduction strategy. The experiment, known as ‘Mincome’, was jointly bankrolled by the then provincial New Democratic government and Pierre Trudeau’s Liberals, and offered an unconditional annual income to every family. Those that worked had their Mincome cut by 50 cents for every dollar earned. The idea was to offer a cushion for shifting crop prices or crop failures. The governments were interested to see whether such a support would produce a disincentive to work, a town full of lay-abouts. If successful, the long game was to roll out a similar plan nationwide. But the scheme ended up costing $17 million, much more than had been envisaged. It was scrapped as recession hit Canada at end of the decade. Almost 2000 boxes’ worth of data on the trial were packed away, not to be heard from again until University of Manitoba health sciences researcher Evelyn Forget tracked them down in 2009. She found that there was essentially no reduction in working hours with two notable exceptions: women who were mothers of young children, or had elderly or disabled relatives and who were now choosing to stay home, and teenagers, who now felt free to continue in school and not help out their parents on the farm. Meanwhile, there were fewer work-place injuries, fewer car accidents, less domestic abuse and hospital visits declined by 8.5 percent. """

zappo2938 11y ago

Of course, they would force wages down. Instead of money going directly from employer to employee, it would go from employers to government to employees. Nonetheless, the employer would still have to pay competitive wages on top to retain employees. Forces of socialism and capitalism will be in play at the same time. Socialism and capitalism are not mutually independent. Despite companies like Walmart and Home Depot having to pay more into the system, this would be a windfall for them as the availability of people with money to spend in places like this will drastically increase. The Laffer Curve is correct when the supply side and the demand side on the graph are switched to where they belong. Walmart would then have to hire more employees to meet the demand and put more tax money into the system. lol

ant6n 11y ago

The point of Universal Basic Income is not to provide a good standard of living, but to provide enough for bare necessities. A standard of being alive, if you will. The point is that there would be fewer people in precarious situations where they cannot afford food and shelter. With basic food and shelter not being the primary motivator to work, more people may do innovative things that could help the economy ... and humanity overall. Any employers of professionals, i.e. medium/high income would probably have to pay the same amount of money, because the higher taxes would cancel out the benefit of the minimum income - the net effect of UBI on medium/high incomes is relatively small.

refurb 11y ago
A bare standard of living where? San Francisco would be what? $50K per year? Or Kalamazoo, MI where you coulf get by on $15K? Do we force people to move?
- quadrangle 11y ago
  The best answer is that we actually do keep having other universals like health care, education, access to water… $15k in SF with that other universal stuff could work if you have small space and roommates. So, get roommates, get some additional income, or move to Kalamazoo. We could also work on building more affordable housing too.
  - ant6n 11y ago
    And transit!
- pen2l 11y ago
  Of course. That's completely within reason to request. The UBI should be something like $20K, you can survive in a lot of places in America for that money.
- nugget 11y ago
  A variable basic income formula creates incentives for fraud and malinvestment and incurs more administrative costs and overhead. Keep it simple. Give the same amount to each citizen like Alaska does with their natural resources fund. In terms of behavior, create the proper incentives and you won't need to force people to do anything. It's my belief that if we had a national basic income, set at the same level for all citizens, we would see a lot of interesting revitalization of rural areas. Some hipsters will move to the middle of nowhere where it's dirt cheap to live and start to build desirable communities, and over time others will follow. You can live for $500/month off the beaten path in temperate climates, especially if you're willing to pool resources and get your hands dirty with a dozen or so like minded friends. Detaching (basic) income from work (proximity to urban job centers) would be a fascinating experiment and I just hope I live long enough to see it.

2noame 11y ago

You hit on exactly one of the biggest problems with the piece. It is the inability of anyone to say no to shitty paying jobs that requires the existence of minimum wage laws in the first place. As long as people can't say no, because they need the income to survive, they will say yes to shitty wages, hours, benefits, etc. This author should ask himself, if he earned $1k/money for breathing, would he accept a shitty job for $7/hr? If not, how much would it need to pay before he would accept? Then the next question is what the effective wage of automation would be. If because people have basic income, no one will work that job for less than $15/hr and a machine can do it for $10/hr, then it now makes more sense to automate that job out of existence. And that is the direction we should aim for as a civilization - full unemployment, not full employment. Humans should hand as many jobs to machines as we can, to free us up to do the work we each feel is most valuable, paid or unpaid. Enough with this pro-toil mentality that sees value in everyone being employed, even if for only 4 hrs a week in order to employ 100% of the population. As if that is even possible anyway. Like what, we're going to have 10 doctors share the work load of one doctor so that everyone can be employed? And what of all the work that goes unpaid? We should just keep not recognizing that? And what of all the jobs that don't need to exist? We should keep those around so that people can fill them to prove their right to live? Full employment in the 21st century is a bullshit goal. We as a species are better than that. Our goal should be to free ourselves to pursue what we each wish to pursue. And anyone who thinks people's ability to organize will be in any way diminished instead of monumentally expanded with basic income, isn't giving their fellow man enough credit. People will use basic income to give themselves greater voice. I guarantee it.

SixSigma 11y ago
One of my personal slogans has been : Full employment is a threat, not a promise.
- eru 11y ago
  Involuntary unemployment is a scourge, though.
aninhumer 11y ago
>This author should ask himself, if he earned $1k/money for breathing, would he accept a shitty job for $7/hr? If not, how much would it need to pay before he would accept? I think it's better to compare inclusively here, because as much as people would be much more likely to reject shitty working conditions, they'd also be more likely to accept lower wages when their total income is still pretty good.

shkkmo 11y ago

I've been thinking that the best way to introduce UBI would be by pairing increases in the UBI with decreases in the minimum wage (potentially during economic slow downs to boost the recovery.)

danmaz74 11y ago

If: * basic income was unconditional, and thus, additional to your wage * basic income wasn't enough to live comfortably, but just enough to survive then most people would still be compelled to find a job, because most people don't want to just survive. In that situation, the assumption that employers could get away offering very low wages to the least skilled workers look quite credible to me.

Peaker 11y ago
People will be under far smaller pressure to work at all costs. They will search for a job much longer. They will sacrifice their pay and benefits far less. Thus, their overall wage will be much higher (though it may be subsidized by basic income and not fully paid by the employer).
- danmaz74 11y ago
  In the end, it all depends on how minimal the minimum income is.