4 ms·

Has anyone considered "subsidizing jobs" as an alternative to BI? Would it work better if the government gives $X to a company when they hire someone?

fiatjaf 10y ago
The real idea behind basic income is not efficiency, it's marxism.
- paloaltokid 10y ago
  When viewed through Marx's lens of history, that it is Western countries proposing UBI this should not be surprising. https://en.wikipedia.org/wiki/Marx%27s_theory_of_history#The_stages_of_history https://en.wikipedia.org/wiki/Marx%27s_theory_of_history#The...
_rpd 10y ago
In the US, they could do that by reducing the payroll tax.
runako 10y ago
I posted a comment with a link to a NYT article that mentions subsidizing jobs. I do wonder though -- if the government subsidizes jobs by $X/hr, what incentive is there for companies to not just reduce their contribution by the same amount (so the net to the employee is the same)?
- simplify 10y ago
  I think you could solve that by increasing minimum wage at the same time. That would also make min. wage increases more palatable.
  - runako 10y ago
    I'm no economist, but I would imagine the effect of doing so would phase out quite rapidly for jobs above the currently-prevailing minimum wage. So while a $10/hr job might not be able to become a $7/hr job, I would expect that jobs at e.g. $20/hr would automatically become jobs at $17/hr in an environment of a $3/hr subsidy. But I admit I haven't spent a ton of time thinking about this and am probably missing something.
    - simplify 10y ago
      I am also just thinking this through for the first time :) If what you say is true, then I think we will have just successfully upgraded minimum wage to a living wage, and have allowed companies to hire more people at higher wages due to the wage subsidy :)
      - runako 10y ago
        I think most of that effect in the example was achieved by the minimum wage increase. The wage subsidy then ends up as a gift to the employers. Big employers in the US already do this to some extent, by paying unsurvivable wages with the knowledge that their employees will make up the difference through state-sponsored transfer payments. It seems that an across-the-board wage subsidy would simply extend this practice further up the income spectrum and increase margins for employers across the board.
        simplify 10y ago
        But isn't the argument against min wage increases that it would decrease jobs, since employers wouldn't be able to hire? Or, that robots will be cheaper than a higher minimum wage? That's why I suggest both of these ideas together might work. After all, you don't have to subsidize all jobs; perhaps only subsidize the lower-income jobs, while letting the market handle the higher-paying ones (like it is now).
rtkwe 10y ago
Then you get into a whole mess of determining what's actually a company and what's a job and lose one of the (hopeful) benefits of BI which is allowing people to explore creative endeavors like the arts which aren't totally job based or allowing people to study for a better job without having to compromise and basic living standards.
- simplify 10y ago
  Well it wouldn't be 100% subsidized, meaning that the company has to payout some money. With a subsidized payout, I imagine companies would hire even more people. And, even if someone gets away with not actually "working", there's a cap on the number of dollars the government subsidizes. As much as I like the idea of programming side projects by just relying on BI, I'm not sure how realistic that is; I think cost of housing and food – both of which are increasing – needs to get much lower for that to be possible.
  - rtkwe 10y ago
    You misunderstand me. My main point was that by making it a job subsidy you're limiting the benefits to jobs only where UBI would allow people to pursue non job endeavors like education or creative fields without being destitute. Not that some people could skirt the system by making a company just for themselves to get benefits. > As much as I like the idea of programming side projects by just relying on BI, I'm not sure how realistic that is; I think cost of housing and food – both of which are increasing – needs to get much lower for that to be possible. The point of UBI would that it would be set high enough to cover those costs. And if a particular location is expensive enough that it couldn't you'd have the freedom to move wherever it could to support you. Living in the mid-west is incredibly cheap compared to any big city or the coasts after all.
    - simplify 10y ago
      Surely we could work out education / creativity. For example, the gov could consider attending a university as a "job", and send funds that way. In any case, why worry about people "skirting the system" when the alternative (UBI) requires no work at all?
morgante 10y ago
Why should incentivizing the creation of economically unfeasible and unnecessary jobs be a goal? Such a system would be a huge mess of misaligned incentives.
- pizza234 10y ago
  False dichotomy A job is not either "feasible and necessary" or "unfeasible and unnecessary". Ultimately, the idea is that creating a job at a loss would be preferable to "giving money for free" because it could/would cost less, but not less importantly, it would be a potential for wealth creation. If, stupid example, somebody would be paid for running on a bike to produce electricity, that would create wealth by, say, reducing market prices, which the alternative, staying at home watching TV, wouldn't. Of course, I'm talking about large scale, and I stress that this is a st00pid example. I personally like this idea, but it may be too complex to put in practice - even at a loss, it requires effectively handling a business. But at the same time, would that business be necessarily worse than the (perceived) government efficiency?
  - morgante 10y ago
    I realize that "feasible" is a messy word. The problem with such make-work is that you're paying people to do work which shouldn't be done. You're assuming that "staying at home watching TV" doesn't create any value—but it creates entertainment value for the consumer. If it didn't have any value, nobody would buy cable. Let's say we have some totally trivial job. Say, generating electricity from running on a bike. The market wage for this would be $1. In the status quo, we might assume that nobody would do that job. If nobody is willing to do that job, it means that their opportunity cost is greater than $1—ie. that even if they are unemployed, their non-market activity is worth more to them than $1/hr. Let's assume their non-market activity is worth $5/hr to them. Now a government subsidy comes in and pays the employer $5/hr for everyone they employ. So the employer starts advertising bicycle jobs at $6/hr (in practice, they would keep some of the subsidy for themselves). Now the individual is willing to take the job at $6/hr. Somewhat counterintuitively, this has destroyed value. In the status quo, we were paying nothing (no subsidy) and total value was $5/hr (the value the person gains from their leisure time). With a subsidy, we pay $5/hr and gain only $1/hr in total value (the benefit of the person riding the bike). This is obviously worse. The only way that your system makes sense is if you treat leisure time as worthless. But that's clearly false: if leisure time was workless, everyone would work every possible hour and unemployed people would all be walking around the streets looking for pennies.

fiatjaf 10y ago

The real idea behind basic income is not efficiency, it's marxism.

paloaltokid 10y ago
When viewed through Marx's lens of history, that it is Western countries proposing UBI this should not be surprising. https://en.wikipedia.org/wiki/Marx%27s_theory_of_history#The_stages_of_history https://en.wikipedia.org/wiki/Marx%27s_theory_of_history#The...

_rpd 10y ago

In the US, they could do that by reducing the payroll tax.

runako 10y ago

I posted a comment with a link to a NYT article that mentions subsidizing jobs. I do wonder though -- if the government subsidizes jobs by $X/hr, what incentive is there for companies to not just reduce their contribution by the same amount (so the net to the employee is the same)?

simplify 10y ago
I think you could solve that by increasing minimum wage at the same time. That would also make min. wage increases more palatable.
- runako 10y ago
  I'm no economist, but I would imagine the effect of doing so would phase out quite rapidly for jobs above the currently-prevailing minimum wage. So while a $10/hr job might not be able to become a $7/hr job, I would expect that jobs at e.g. $20/hr would automatically become jobs at $17/hr in an environment of a $3/hr subsidy. But I admit I haven't spent a ton of time thinking about this and am probably missing something.
  - simplify 10y ago
    I am also just thinking this through for the first time :) If what you say is true, then I think we will have just successfully upgraded minimum wage to a living wage, and have allowed companies to hire more people at higher wages due to the wage subsidy :)
    - runako 10y ago
      I think most of that effect in the example was achieved by the minimum wage increase. The wage subsidy then ends up as a gift to the employers. Big employers in the US already do this to some extent, by paying unsurvivable wages with the knowledge that their employees will make up the difference through state-sponsored transfer payments. It seems that an across-the-board wage subsidy would simply extend this practice further up the income spectrum and increase margins for employers across the board.
      - simplify 10y ago
        But isn't the argument against min wage increases that it would decrease jobs, since employers wouldn't be able to hire? Or, that robots will be cheaper than a higher minimum wage? That's why I suggest both of these ideas together might work. After all, you don't have to subsidize all jobs; perhaps only subsidize the lower-income jobs, while letting the market handle the higher-paying ones (like it is now).

rtkwe 10y ago

Then you get into a whole mess of determining what's actually a company and what's a job and lose one of the (hopeful) benefits of BI which is allowing people to explore creative endeavors like the arts which aren't totally job based or allowing people to study for a better job without having to compromise and basic living standards.

simplify 10y ago
Well it wouldn't be 100% subsidized, meaning that the company has to payout some money. With a subsidized payout, I imagine companies would hire even more people. And, even if someone gets away with not actually "working", there's a cap on the number of dollars the government subsidizes. As much as I like the idea of programming side projects by just relying on BI, I'm not sure how realistic that is; I think cost of housing and food – both of which are increasing – needs to get much lower for that to be possible.
- rtkwe 10y ago
  You misunderstand me. My main point was that by making it a job subsidy you're limiting the benefits to jobs only where UBI would allow people to pursue non job endeavors like education or creative fields without being destitute. Not that some people could skirt the system by making a company just for themselves to get benefits. > As much as I like the idea of programming side projects by just relying on BI, I'm not sure how realistic that is; I think cost of housing and food – both of which are increasing – needs to get much lower for that to be possible. The point of UBI would that it would be set high enough to cover those costs. And if a particular location is expensive enough that it couldn't you'd have the freedom to move wherever it could to support you. Living in the mid-west is incredibly cheap compared to any big city or the coasts after all.
  - simplify 10y ago
    Surely we could work out education / creativity. For example, the gov could consider attending a university as a "job", and send funds that way. In any case, why worry about people "skirting the system" when the alternative (UBI) requires no work at all?

morgante 10y ago

Why should incentivizing the creation of economically unfeasible and unnecessary jobs be a goal? Such a system would be a huge mess of misaligned incentives.

pizza234 10y ago
False dichotomy A job is not either "feasible and necessary" or "unfeasible and unnecessary". Ultimately, the idea is that creating a job at a loss would be preferable to "giving money for free" because it could/would cost less, but not less importantly, it would be a potential for wealth creation. If, stupid example, somebody would be paid for running on a bike to produce electricity, that would create wealth by, say, reducing market prices, which the alternative, staying at home watching TV, wouldn't. Of course, I'm talking about large scale, and I stress that this is a st00pid example. I personally like this idea, but it may be too complex to put in practice - even at a loss, it requires effectively handling a business. But at the same time, would that business be necessarily worse than the (perceived) government efficiency?
- morgante 10y ago
  I realize that "feasible" is a messy word. The problem with such make-work is that you're paying people to do work which shouldn't be done. You're assuming that "staying at home watching TV" doesn't create any value—but it creates entertainment value for the consumer. If it didn't have any value, nobody would buy cable. Let's say we have some totally trivial job. Say, generating electricity from running on a bike. The market wage for this would be $1. In the status quo, we might assume that nobody would do that job. If nobody is willing to do that job, it means that their opportunity cost is greater than $1—ie. that even if they are unemployed, their non-market activity is worth more to them than $1/hr. Let's assume their non-market activity is worth $5/hr to them. Now a government subsidy comes in and pays the employer $5/hr for everyone they employ. So the employer starts advertising bicycle jobs at $6/hr (in practice, they would keep some of the subsidy for themselves). Now the individual is willing to take the job at $6/hr. Somewhat counterintuitively, this has destroyed value. In the status quo, we were paying nothing (no subsidy) and total value was $5/hr (the value the person gains from their leisure time). With a subsidy, we pay $5/hr and gain only $1/hr in total value (the benefit of the person riding the bike). This is obviously worse. The only way that your system makes sense is if you treat leisure time as worthless. But that's clearly false: if leisure time was workless, everyone would work every possible hour and unemployed people would all be walking around the streets looking for pennies.