3 ms·

True, the very liberal Dutch unemployment insurance which I was talking about was not BI. It had some similarities, but also some differences. The liberal unemp

True, the very liberal Dutch unemployment insurance which I was talking about was not BI. It had some similarities, but also some differences. The liberal unemployment insurance became too expensive. So the question is: where is BI different so that it becomes sustainable for the tax payer? > Unemployment insurance reduces the incentive to work because it pays people to not work. It similarly incentivizes black market labor. I'd say that BI also reduces the incentive to work, but I agree that it does this less than unemployment benefits. Same for black market labor. So a win for BI here. But there is one other difference where BI is far and far more expensive than unemployment benefit: BI is also paid to people who work. Maybe some BI advocate should try to convince me but to me it looks like this will far outset the advantage above.

yummyfajitas 10y ago
I did some arithmetic on this a while back. Paying BI to people who work utterly destroys any cost advantage. https://www.chrisstucchio.com/blog/2013/basic_income_vs_basic_job.html https://www.chrisstucchio.com/blog/2013/basic_income_vs_basi... This is why most BI proponents are so averse to arithmetic.
- AnthonyMouse 10y ago
  You're unjustifiably assuming that BI provides less incentive to work than existing welfare and then doing math based on that assumption to prove a conclusion which is trivial given the assumption. It's begging the question. Calculate the marginal tax rates people would pay under a BI funded by a flat tax vs. the existing welfare system when disqualification from benefits is calculated as a tax. The existing system has low and middle income people paying absurdly high marginal rates. BI would increase their incentive to work. BI would have high income people paying somewhat higher marginal rates (but not necessarily higher taxes net of BI because they would receive the BI), but high income people are extremely unlikely to give up their high income in exchange for a subsistence level basic income.
  - yummyfajitas 10y ago
    In the blog post I cited, I only compared Basic Income to a Basic Job. I left existing welfare out of it. The marginal utility changes from working vs not working in a BJ scenario are higher than in a BI scenario, almost by definition. Do you disagree that Utility(No Job, no money) < Utility(No job, money)? BI would have high income people paying somewhat higher marginal rates (but not necessarily higher taxes net of BI because they would receive the BI)... More words. Still no arithmetic. Why are BI proponents so averse to actually crunching numbers?
    - AnthonyMouse 10y ago
      > The marginal utility changes from working vs not working in a BJ scenario are higher than in a BI scenario, almost by definition. Do you disagree that Utility(No Job, no money) < Utility(No job, money)? That isn't the interesting question for a basic job. If you replace existing welfare with a basic job then the utility function for working is a binary value which asks if you want to starve to death. You can't actually say no. But most of the basic jobs are going to be makework jobs with minimal economic value. Things that have economic utility approximately equal to (and possibly less than) sitting on your couch and watching Netflix. The real question with the basic job is whether people will pick the makework basic job over an actually productive real job. The relevant utility function for a basic job is utility(Basic Job, $10,000) vs. utility(Real Job, $10,000), the equivalent of which for the basic income is utility(No Job, $10,000) vs. utility(Basic Income + Real Job, $20,000). But then the basic job falls on its face because people will too often choose the basic job which is easier to get, has more stability, may be easier to do, etc. The Basic Income doesn't have those problems because in that case the income from the Real Job supplements the Basic Income instead of replacing it, so you get compensated for the amount that getting a real job is worse than not getting one. A basic income also does a much better thing in the case where people choose not to work for a private business. In the basic job case that person is digging ditches and filling them back in, whereas in the basic income case it can be taking care of their children or writing open source software or doing investigative journalism without a wealthy patron -- choices that are socially beneficial but the basic job doesn't give you. > More words. Still no arithmetic. Why are BI proponents so averse to actually crunching numbers? The math and the words both mean the same thing. You want math, fine. Suppose the economy is full of Adams, Betties and Charlies in equal numbers. In the hypothetical existing system there is a progressive income tax where you pay nothing up to $50,000 and 20% thereafter. Adams make $20,000, pay no taxes and receive $6,000 in food/housing government assistance which the government withdraws at a rate of $.80/$1 if the Adam were to make more money. Betties make $30,000, pay no taxes, are not eligible for any of the food/housing benefits Adams get but receive $4,000 in government college assistance which the government withdraws at a rate of $.50/$1 if the Betty were to make more money. Charlies make $100,000, pay $10,000 in taxes (20% on everything over $50,000) and receive no government benefits. Now we throw away the existing welfare and tax system and replace it with a $10,000/year basic income and a flat tax of 20%. Adams make $20,000 but now receive a $10,000 BI and pay $4,000 (20% of $20K) in taxes. Their net transfers from the government are still $6,000 but now if they make another dollar the government takes 20% instead of 80%. Betties make $30,000 but now receive a $10,000 BI and pay $6,000 (20% of $30K) in taxes. Their net transfers from the government are still $4,000 but now if they make another dollar the government takes 20% instead of 50%. Charlies make $100,000 but now receive a $10,000 BI and pay $20,000 (20% of $100K) in taxes. Their net transfers from the government are still -$10,000 and their marginal tax rate is still 20%.
morgante 10y ago
Any BI advocate who pretends that BI won't require increased taxes is basically deluded. Of course BI will require increasing marginal taxes on the people who work. This shouldn't be economically catastrophic though, because you can structure the system such that there aren't disincentives to work and the UBI everyone receives is tax-free.

yummyfajitas 10y ago

I did some arithmetic on this a while back. Paying BI to people who work utterly destroys any cost advantage. https://www.chrisstucchio.com/blog/2013/basic_income_vs_basic_job.html https://www.chrisstucchio.com/blog/2013/basic_income_vs_basi... This is why most BI proponents are so averse to arithmetic.

AnthonyMouse 10y ago
You're unjustifiably assuming that BI provides less incentive to work than existing welfare and then doing math based on that assumption to prove a conclusion which is trivial given the assumption. It's begging the question. Calculate the marginal tax rates people would pay under a BI funded by a flat tax vs. the existing welfare system when disqualification from benefits is calculated as a tax. The existing system has low and middle income people paying absurdly high marginal rates. BI would increase their incentive to work. BI would have high income people paying somewhat higher marginal rates (but not necessarily higher taxes net of BI because they would receive the BI), but high income people are extremely unlikely to give up their high income in exchange for a subsistence level basic income.
- yummyfajitas 10y ago
  In the blog post I cited, I only compared Basic Income to a Basic Job. I left existing welfare out of it. The marginal utility changes from working vs not working in a BJ scenario are higher than in a BI scenario, almost by definition. Do you disagree that Utility(No Job, no money) < Utility(No job, money)? BI would have high income people paying somewhat higher marginal rates (but not necessarily higher taxes net of BI because they would receive the BI)... More words. Still no arithmetic. Why are BI proponents so averse to actually crunching numbers?
  - AnthonyMouse 10y ago
    > The marginal utility changes from working vs not working in a BJ scenario are higher than in a BI scenario, almost by definition. Do you disagree that Utility(No Job, no money) < Utility(No job, money)? That isn't the interesting question for a basic job. If you replace existing welfare with a basic job then the utility function for working is a binary value which asks if you want to starve to death. You can't actually say no. But most of the basic jobs are going to be makework jobs with minimal economic value. Things that have economic utility approximately equal to (and possibly less than) sitting on your couch and watching Netflix. The real question with the basic job is whether people will pick the makework basic job over an actually productive real job. The relevant utility function for a basic job is utility(Basic Job, $10,000) vs. utility(Real Job, $10,000), the equivalent of which for the basic income is utility(No Job, $10,000) vs. utility(Basic Income + Real Job, $20,000). But then the basic job falls on its face because people will too often choose the basic job which is easier to get, has more stability, may be easier to do, etc. The Basic Income doesn't have those problems because in that case the income from the Real Job supplements the Basic Income instead of replacing it, so you get compensated for the amount that getting a real job is worse than not getting one. A basic income also does a much better thing in the case where people choose not to work for a private business. In the basic job case that person is digging ditches and filling them back in, whereas in the basic income case it can be taking care of their children or writing open source software or doing investigative journalism without a wealthy patron -- choices that are socially beneficial but the basic job doesn't give you. > More words. Still no arithmetic. Why are BI proponents so averse to actually crunching numbers? The math and the words both mean the same thing. You want math, fine. Suppose the economy is full of Adams, Betties and Charlies in equal numbers. In the hypothetical existing system there is a progressive income tax where you pay nothing up to $50,000 and 20% thereafter. Adams make $20,000, pay no taxes and receive $6,000 in food/housing government assistance which the government withdraws at a rate of $.80/$1 if the Adam were to make more money. Betties make $30,000, pay no taxes, are not eligible for any of the food/housing benefits Adams get but receive $4,000 in government college assistance which the government withdraws at a rate of $.50/$1 if the Betty were to make more money. Charlies make $100,000, pay $10,000 in taxes (20% on everything over $50,000) and receive no government benefits. Now we throw away the existing welfare and tax system and replace it with a $10,000/year basic income and a flat tax of 20%. Adams make $20,000 but now receive a $10,000 BI and pay $4,000 (20% of $20K) in taxes. Their net transfers from the government are still $6,000 but now if they make another dollar the government takes 20% instead of 80%. Betties make $30,000 but now receive a $10,000 BI and pay $6,000 (20% of $30K) in taxes. Their net transfers from the government are still $4,000 but now if they make another dollar the government takes 20% instead of 50%. Charlies make $100,000 but now receive a $10,000 BI and pay $20,000 (20% of $100K) in taxes. Their net transfers from the government are still -$10,000 and their marginal tax rate is still 20%.

morgante 10y ago

Any BI advocate who pretends that BI won't require increased taxes is basically deluded. Of course BI will require increasing marginal taxes on the people who work. This shouldn't be economically catastrophic though, because you can structure the system such that there aren't disincentives to work and the UBI everyone receives is tax-free.