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India floats the idea of a universal basic income

268 points by Mz 10y ago

OJFord 10y ago
> proposal stops a little short of true universality: for his sums to add up, take-up must be limited to just 75% of Indians. That means either a return to flawed means-testing, or a hope that the better-off will voluntarily opt out. That's easy: just wrap it in social stigma. I'm sure there's plenty of (socially) lower-middle class Britons who are eligible for one or other benefit scheme that they either don't realise, or couldn't bare to enrol in.
- adrenalinelol 10y ago
  While I agree that wrapping it in social stigma would help w/the numbers, it'd set a very bad precedent for the idea of basic income in general.
  - yummyfajitas 10y ago
    Why? It seems like a great way to discourage people from consuming it unnecessarily while making sure no one actually suffers in dire poverty unnecessarily. In fact, this might be a good idea in general - sumptuary laws based on net payments to the government. Contributors to society would gain visible social status while those who are a net drain lose status but do not materially suffer. Of course, I doubt you could implement this in India. I'm pretty sure everyone will shamelessly take the money.
    - clock_tower 10y ago
      That's an interesting idea, but sumptuary laws have a history of being widely evaded and hard to enforce; I'd refer you to Fernand Braudel's Structures of Everyday Life, dealing with European life in the 1500s-1700s.
      - yummyfajitas 10y ago
        You are probably right about enforceability. As a thought experiment one could imagine other enforceable variations, however - displaying on Facebook/Twitter/Tinder/etc whether you are a social benefactor or parasite, for example.
        clock_tower 10y ago
        I'm sorry I'm being so relentlessly negative, but I'm skeptical of this approach too. There's the obvious Orwellian angle -- it sounds like you might be legally required to have an online presence tied to your real name and identity -- and if you stigmatize basic-income recipients as parasites, you'd risk generating the political will to repeal basic income entirely. (See also Bill Clinton, in a memorable only-China-can-go-to-Nixon moment, promising to "end welfare as we know it" in the 1990s.) I think it's better to just push through with the idea and accept the inefficiencies of everyone getting it -- once a given country has the tax base to pull it off.
    - AnthonyMouse 10y ago
      > Why? It seems like a great way to discourage people from consuming it unnecessarily while making sure no one actually suffers in dire poverty unnecessarily. The problem is the entire principle only works because it's universal. Having lower or middle income people opt out of it would defeat the entire purpose of having it, and having upper income people opt out of it wouldn't save you very much money because they're not a large enough percentage of the population to make any real difference.
      - yummyfajitas 10y ago
        What does "work" mean to you? By "work", I mean that we solve poverty at a cost as low as possible. Having the BI consumed by non-poor people doesn't help that goal. Also, India is a low inequality country - Gini is comparable to France since everyone is equally poor. So preventing the middle class from consuming a BI would significantly reduce the cost.
        AnthonyMouse 10y ago
        By "work" I mean you take some money from upper income people, give it to lower income people and by and large leave the middle class alone. Having the middle class pay $100 in tax and then receive $100 in UBI works perfectly well for that. Changing that so the middle class pays $75 in tax but receives no UBI is exactly how you bring about the sort of hollowing out of the middle class we've seen recently in the US. It makes the middle class pay for the subsidies to the poor so that wealthier people can pay lower taxes. And phasing out the UBI for middle class people so they don't have to pay the tax would imply having a UBI phase out rate that just substitutes for the equivalent tax rate, which is mathematically the same as having the higher tax rate and giving them the UBI, but is less transparent about what is actually happening.
        yummyfajitas 10y ago
        Ok, I guess I don't really care about redistribution for it's own sake - I only care about fixing poverty. I guess that's why we disagree. Incidentally, your scheme wouldn't work so well in India. In India there are far fewer rich people (proportionately) than in the US. Europe needs to tax the middle class for much the same reason. If you want to have massive wealth redistribution that skips the middle class, the only way to make that viable is to increase inequality.
- pkd 10y ago
  The problem is that it is hard to pull off in a bigger population like India's. Social stigma doesn't work if all your friends are doing it too. My perspective is that the problem runs way deeper than this and any kind of social welfare scheme will be abused in India. This is because majority of the tax paying population thinks that they don't get enough for their taxes. This might be somewhat justified because taxes in India can jump quite high (up to 30% of income) without seeing much increase in your net savings in major cities. This is compounded by the fact that a very low fraction of the eligible population actually pays taxes (this is due to most people being employed in the unorganized sector) which leads the government to try to maximize whatever it can get from the ones who actually pay. This is evident in how so many relatively well off people haven't given up their LPG subsidy even after repeated requests by the government.
- geodel 10y ago
  Social stigma will be real difficult to attach there. In India a lot of people take pride in being called backward or lower caste so they can mooch off some or other government subsidy or reservation to jobs/education. As the article mentioned it is almost always better offs who game the system to their benefit.
  - toomuchtodo 10y ago
    No snark intended, but it seems India is the best place to test a basic income for both durability and uptake.
    - geodel 10y ago
      I would not disagree. It is just that financial wherewithal to have this implemented is not present in India. Also here is the experiment conducted in India for basic income[1]. Results were promising but it is too small a experiment to be conclusive. 1. http://isa-global-dialogue.net/indias-great-experiment-the-transformative-potential-of-basic-income-grants/ http://isa-global-dialogue.net/indias-great-experiment-the-t...
  - praneshp 10y ago
    I didn't downnvote you, and I think your point is very true. I wish people had found it less insulting so there could've been discussion. There are many that need help, and many that want a certificate calling themselves backward.
    - geodel 10y ago
      You are right. It is interesting point which does not sit well with normal understanding of self-respect, pride etc.
Shivetya 10y ago
Interesting idea, for a country with so many in real poverty it would be a good step forward. This is a country which had to build toilets to improve sanitation so their issue with a very established lower class is easily seen. If all members of a house hold receive the benefit, set a minimum age so as not to encourage more births, then even that low proposed amount will add up in for a poor family. The new issue is to make sure those who provide goods and services in those areas don't exploit this new income unfairly
mars4rp 10y ago
I guess Iran is the only country with universal basic income already in place then! the income is not much and you probably can't live of it without working, but it is universal!
- vkou 10y ago
  Alaska, a thoroughly red state has universal income. Likewise, it is not enough to live off.
  - maxxxxx 10y ago
    Isn't that more like an oil dividend?
    - gizmo686 10y ago
      Does it matter? Alaska found a source of income (oil), and chose to spend it by giving a no-strings-attached check to every (eligible [0]) Alaskan citizen; instead of any other thing the government could chose to spend money on. As a side note, my understanding is that the payment is not a direct dividend of oil profits, but rather from the Alaska Permanent Fund, which is funded principle from oil, but designed to be able to continue payments in perpetuity despite the eventual lack of oil income. As a result of this, payments are corralated with the general market which (from a macro-economic point of view) is probably the opposite of what we want from a basic income, which could double as a form of stimulus during economic downturn. [0] It is not, however, means tested. Eligibility is based on being a permanent resident, and not having been convicted of a crime in the preceding year.
      - meanduck 10y ago
        > Does it matter? Yes there is a pretty big difference. Its not wealth redistribution. You are just spending the money created by natural resource. Its Govt/Peoples wealth to spend as they see fit.
- umeshunni 10y ago
analyticbastard 10y ago
Isn't this the wishful thinking again of free energy, or infinite motion engine? Weren't we done with that already?
- civilian 10y ago
  It's not the same. This isn't trying to break the rules of physics. It's just a very large welfare program that would benefit from not having a bureaucracy behind it. And it would rely on the theory that enough people will still want work, so that they can afford luxuries, live where they want to, and get other trappings of social status.
  - yarou 10y ago
    Sounds like living in a libertarian paradise. Except if you get stabbed and your doctor doesn't take your particular private healthcare plan. Then you bleed out while singing the praises of deregulation.
    - civilian 10y ago
      ??? You're getting downvotes because your comment was apropos of nothing. I was just correcting analyticbastard's conception of UBI, I wasn't stating support for anything.
    - felipeccastro 10y ago
      How is a scenario where the people is even more dependent of the government for subsistence a libertarian paradise?
analyticbastard 10y ago
Isn't this the wishful thinking again of free energy, or infinite motion engine? Weren't we done with that already?
brilliantcode 10y ago
I feel like universal basic income will only work in progressive societies that have gotten used to various social programs before. They might go bankrupt long before any of it's population actually receive money due to corruption. In country's with high poverty level where people don't possess the minimal quality of life, I highly doubt the spirit of basic income will even be recognized but seen more of a cash grab where you'd be considered stupid for not taking advantage of. Such is the effect of poverty-removes the ability to seek long term societal gains for short term selfish gain at the cost of rest of society. There may be cultural differences but they all boil down to economics of that specific region and country. My feeling is that a basic quality of life and the infrastructure to support it must be present for universal basic income to work. It's just too easy to cheat when so many of your peers will undoubtedly do it at your expense. It's expensive to cheat when none of your peer are willing to do it due to social stigma and shame.
- hsuresh 10y ago
  > I feel like universal basic income will only work in progressive societies that have gotten used to various social programs before. They might go bankrupt long before any of it's population actually receive money due to corruption. I actually think it is the opposite. UBI might work better precisely because corruption prevents other welfare schemes reaching the target population. At least in theory, the direct cash transfer should help pull out a lot of people from abject poverty. The article quotes a jump from 22% absolute poverty to 0.5% - if it does that, it would go a long way in accelerating growth in India.
  - brilliantcode 10y ago
    The bigger question is how they will fund this. India is know for the capital flight. Rich people aren't paying taxes in India so the government doesn't have much money to spend on social welfare. Unless I'm wrong here? I'm not too familiar with India so please excuse any cultural ignorances.
    - harigov 10y ago
harigov 10y ago
In other developed countries, I think universal basic income makes sense, but not in the case of India. India has several systemic problems and a significant portion of the population has little to no education. Any income that can sustain a household without any pressure to grow as people will probably hinder their progress more so than help them. For a country with no lack of problems to solve, they are much better off to incentivize people to learn, teach or do charity than to just hand over some money for being citizens. Similarly, I am of the opinion that India is better off spending that money by identifying all the organizational systems that it lacks like waste processing, water purification, security, monitoring, etc., and funding several startups in those areas. This is similar to how YC funds startups so it is using market forces to solve systemic problems without resorting to centralized planning and execution.
- RangerScience 10y ago
  > Any income that can sustain a household without any pressure to grow as people will probably hinder their progress more so than help them Are you basing this off of any familiarity with poor Indian culture? Why do you expect "free money" to translate into "lesser progress" rather than "progress of their choice"? Here's a different question: Have you learned more through self-directed learning, or other-directed learning? How have you chosen what to learn, and would you still have that drive-to-learn if you had free money? Remember that UBI is in addition to salaries / wages, not instead of.
  - hashhar 10y ago
    Most of the poor (and the rich too) here (I mean in India) look at such social programs as nothing more than cash-grabs. I have known people who make money by registering for multiple CNG connections and distributing them to other people in return for full price of the CNG cylinder (the cylinders are subsidised and the subsidy is paid by the government directly into the bank account of the person with whom the connection is registered).
    - sunwooz 10y ago
geodel 10y ago
Indian finance minister has already said that Indian politics is not mature to have this idea implemented. Activists/Politicians support idea of UBI along with all the other subsidies. So it won't replace anything, just an addition to already financially burdened state. To put in perspective Indian per capita income is just 3% of USA. Even with PPP (Purchasing Power Parity) it is still 1/10th of US. I think most generous implementation might not even be able to provide 2 basic meals a day, forget housing and healthcare etc.
Havoc 10y ago
Surprised by this - I would have thought "poor" countries like India would not be able to fund this. Hell I have doubts about 1st world funding it.
- AnthonyMouse 10y ago
  Because of the way the math works, you can always fund it at some level, because everyone receives it. It doesn't actually "cost" $1 for you to pay $1 in tax and then get back $1 in UBI. If everyone in the country has the same income then the UBI is a no-op (but in theory you could still have it). All it ever does is cause money from wealthier people to go to poorer people, the same as any other redistributive program, but more efficiently and with less central planning of what people are allowed to do with their money. And the cost of living in poorer countries is much lower, so the necessary UBI is that much lower.
  - Havoc 10y ago
    Thanks for this. Hadn't realised this before but makes sense.
- CaptSpify 10y ago
  I would imagine that "poor" countries are going to the most affected by automation, though
  - Havoc 10y ago
    Yeah that's going to be ugly. Human labour too expensive to be competitive & country to poor to massive automate.
felipeccastro 10y ago
I used to think a universal basic income would make sense, especially in developed countries, only for the near future scenario of machines taking ever more jobs. We know that this has always happened in history, and new jobs were always created, but that doesn't mean that the rate of job creation vs destruction will remain the same, forever. What made me change my mind about UBI was to realize that a) human desires are infinite, and there'll always be more work to be done and b) the more work is done by machines, the richer the population as a whole will be, as products and services automated tend to be cheaper. I do expect the work dynamic to change a lot, and that in the future we'll see a lot more gigs and maybe freelancing for a few hours each week will be enough to sustain a reasonable lifestyle (for whatever that means). That said, I believe our political efforts are best invested in removing all the artificial constraints that make it hard for new jobs to be created, like excessive regulations for example.
- devwastaken 10y ago
  >the more work is done by machines, the richer the population as a whole will be, as products and services automated tend to be cheaper. There is no such thing as trickle down economics. Wealth does not get distributed in equal to its gain, it is distributed based upon many other markets. For example, if your company makes double this year, you're not going to get paid any more than you were, but if what you said was true, you should be getting paid near double. Infact, how much wealth your company makes has little to do with how much you will be paid when it comes to investment. You're going to get paid what you can negotiate for, which will be competative to the market of other individuals. Just because your company is doing good does not mean they're going to pay anywhere near double for their employees when they can get them at market rate, which is always pressured to be lower. The products also don't have to be cheaper. Infact I don't know of any good examples of automation making things cheaper that aren't just competing with other products. Products do not have to be priced near what they cost to make, as examplified by apple products and tech in general. They're priced to what people give it value, which is manipulated by advertising and patents/copyrights that give them the ability others need or want.
  - harryh 10y ago
meanduck 10y ago
Here some official fact http://indianexpress.com/article/india/india-news-india/data-shows-only-1-of-population-pays-income-tax-over-5000-pay-more-than-1-crore-2779065/ http://indianexpress.com/article/india/india-news-india/data... For 2012-13 FY, 12.5 Million (1%) paid any Income tax, averaging Rs 21,000 ($350). The 3 individuals in the top-bracket of Rs 100-500 crore ($16M-$83M) paid a total tax of Rs 437 crore ($72M) — resulting in an average tax outgo of Rs 145.80 crore ($24M). Indian statists cant help but screw the country funders even more. Disgustingly inhumane.
- deleted 10y ago
  [deleted]
f_allwein 10y ago
From the longer (paywalled) version: "Over a fifth of its population lives below the poverty line. The scheme outlined this week by the chief economic adviser to the Indian government, Arvind Subramanian, would cut that figure to less than 0.5% by transferring about $9 a month to all adult Indians. If doled out to everyone, that would cost around 6-7% of GDP; the 950 welfare schemes soak up 5% of GDP." http://www.economist.com/news/leaders/21716027-india-should-replace-its-thicket-welfare-payments-single-payment-india-debates-case?fsrc=rss%7Clea http://www.economist.com/news/leaders/21716027-india-should-... Fascinating as few people probably would have thought UBI would be remotely feasible in a country of 1.3B people. Yet there is also massive inequality, as well as corruption and inefficiency in handling all the various aid programmes. Plus the country has Aadhaar, a digital-identification scheme that covers 99% of adults. Probably still not feasible for now, but interesting to see how relatively cheap it would be to lift so many people out of poverty.
- ouid 10y ago
  This is only tangentially related, but I remember there was a problem some time ago where India simply did not have the infrastructure to count all of its citizens. How is Aadhaar sure of its 99% figure?
  - suraj 10y ago
    Adhar relies on biometric data. Iris & fingerprint scanning is done when you get your Adhar card.
    - ouid 10y ago
      that is not even remotely an answer to my question.
- nickpeterson 10y ago
  I guess I don't grasp how this will prevent companies from raising prices to capture some of that 9 dollars, effectively making the wealthy even wealthier.
aminok 10y ago
Forcibly redistributing income from low resource generators to high resource generators creates an incentive for people with fewer resources to have more children than they are capable of supporting. This dynamic will in the long run lead to more people that produce fewer resources. Currently government is redistributing income upward by economic prohibitions (regulatory barriers): http://cepr.net/publications/reports/working-paper-the-upward-redistribution-of-income-are-rents-the-story http://cepr.net/publications/reports/working-paper-the-upwar... and it is redistributing downward with social welfare spending, with the US massively increasing social welfare spending since 1972: http://fivethirtyeight.blogs.nytimes.com/2013/01/16/what-is-driving-growth-in-government-spending/?_r=1 http://fivethirtyeight.blogs.nytimes.com/2013/01/16/what-is-... Annual spending growth on various components of social welfare spending (1972 - 2011): >Pensions and retirement: 4.4% >Healthcare: 5.7% >Welfare: 4.1% Annual economic growth over the time frame: >2.7% The only thing it has to show for giving people more "free money" to spend is a higher trade deficit, stagnant wage growth, and, I would argue, an explosion in the amount of single parenthood: http://pinetreewatchdog.org/500-rise-in-single-parenthood-fueling-family-poverty-in-maine/ http://pinetreewatchdog.org/500-rise-in-single-parenthood-fu... But hey, since 40 years of social democracy has failed, let's keep doubling down and giving people more "free" money. The end result of this bidirectional forcible redistribution is the productive middle class being destroyed, and two classes becoming increasingly significant: a small upper class controlling a growing share of national output, and a large unproductive underclass that is dependent on the taxes that upper class pays, constituting an increasingly large portion of the population.
- jjoonathan 10y ago
  > Currently government is redistributing income upward by economic prohibitions (regulatory barriers) Forgive me for the double post, but part of a sibling comment of mine is especially relevant here: > I'm regularly floored by people's ability to talk about network effects, economies of scale, information asymmetries, moats, winner-takes-all games, and mergers/acquisitions with one breath -- all of which are non-regulatory market forces that suppress competition and innovation -- and then with the next breath assert that deregulation is the most straightforward way to spur innovation and competition. I agree that eliminating rents should be a (if not the) primary goal of government, but I don't agree that eliminating regulation is synonymous.
aminok 10y ago
This would be devastating for the Indian economy in the long run.
aminok 10y ago
>But as things stand now, the owners of the machines get richer, and the displaced workers get significantly poorer. No they don't. We've had 200 years of massive automation fueled job destruction, and wages and the demand for labour are massively greater now than 200 years ago. The last 20 years in particular have overseen the most rapid wage growth in human history.
- MarkMc 10y ago
  In 1995 the real median US household income was $52,664. In 2015 it was $56,516 [1]. US Hourly Wages for nonsupervisory workers has certainly grown over the last 20 years, but not in the past 40 years [2]. [1] https://fred.stlouisfed.org/series/MEHOINUSA672N https://fred.stlouisfed.org/series/MEHOINUSA672N [2] https://en.wikipedia.org/wiki/Household_income_in_the_United_States#/media/File:U.S._Hourly_Wages_-_Real_or_Adjusted_for_Inflation_1964-2014.png https://en.wikipedia.org/wiki/Household_income_in_the_United...
  - aminok 10y ago
    The US isn't the world. The US has many traits that are peculiar to it, and not universal to economies that are becoming increasingly automated. The world has seen more wage growth over the last 20 years than any other period in history: http://csmonitor.com/World/2016/0207/Progress-in-the-global-war-on-poverty http://csmonitor.com/World/2016/0207/Progress-in-the-global-...
    - aylmao 10y ago
      Well, but doesn't that mean that you already have a counter-example? In the US it IS the case that rich is getting richer and the rest aren't really benefiting too much from all this automation. The world is certainly doing better, but I also have to wonder how much of this is thanks to automation, and how much thanks to the fall of colonialism over the past century.
      - aminok 10y ago
        There are other factors at play in an economy besides automation, like forcible income redistribution. That the rich are benefiting from automation while the rest are not could be due to one of these extraneous factors. >and how much thanks to the fall of colonialism over the past century. It has to do with massive economic growth, and economic growth is really just a measure of automation. The wage growth accelerated after the fall of Communism, as market institutions gained strength.
perseusprime11 10y ago
I also think having a ceiling on how much money you can have go hand in hand with UBI. Imagine Bill Gates can have only 3 million dollars of money in his total assets. It will be intetesting to model such a civilization and see the effects.
aminok 10y ago
Computers and horses don't have property rights or the means to exercise them. All of this automation is augmenting humans because we do. We've gone from 122 million people owning smartphones in 2007 to 2.5 billion people owning them at the beginning of 2017 for example.
- ouid 10y ago
  could you elaborate on how this is meant to be a response to my comment?
  - aminok 10y ago
    Isn't that obvious? I'm not sure how I could be more explicit..
    - ouid 10y ago
      no, I failed to perceive the connection. I'm sorry.
      - aminok 10y ago
        Humans cannot be made obsolete by technology because we come to own the technology.
        aylmao 10y ago
        Problem is "Humans" is not a singular. "CEO of multibillion corporation" won't be made obsolete by technology because he/she comes to own the technology. Everyone else, could.
        aminok 10y ago
        I'll just quote my own comment from further up the comment chain: "Computers and horses don't have property rights or the means to exercise them. All of this automation is augmenting humans because we do. We've gone from 122 million people owning smartphones in 2007 to 2.5 billion people owning them at the beginning of 2017 for example." The last sentence is particularly relevant to your point.
Proven 10y ago
First the state screws them up, then takes (invalidates) their savings and now wants to "rescue" the people with a socialist basic income scheme.
ram_rar 10y ago
UBI definitely makes sense for developed countries. But, India is far away from it. Considering UBI is like taking a defeatist approach towards skill training for your countrymen.
ram_rar 10y ago
UBI definitely makes sense for developed countries. But, India is way far from it. Considering UBI is like taking a defeatist approach towards skill training for your countrymen.
aminok 10y ago
People being able to exercise their right to freely contract and control their own private property is sickening? You'd prefer people being thrown in prison for refusing to surrender their private property rights, or for engaging in a voluntary economic interaction that some other party created a prohibition against? Please help me understand your preference for authoritarian violence against peaceful people.
- aninhumer 10y ago
  >You'd prefer people being thrown in prison for refusing to surrender their private property rights Yes, I'd prefer people be thrown in prison for refusing to feed the starving, rather than people starving to death. I think property rights are valuable in-as-far as they improve overall utility, but insisting on enforcing them to the point where it could cause people serious harm is clearly beyond that point. We can argue about the extents of property rights, but suggesting there be no limits is arguing for legalised economic murder. EDIT: Just to note that I edited this quite extensively after posting.
  - aminok 10y ago
    >Yes, I'd prefer people be thrown in prison for refusing to feed the starving, rather than them starving to death. So I guess you won't complain when some self-righteous modern-day Robin Hood engages in armed robbery against you to feed children in an orphanage in Africa. And if you resist? Well, the consequences fall on you. Who are you to deny others who are in need your income. That actions that are unconscionable by any normal moral standard suddenly become socially acceptable to endorse when done through the political process shows how detached political ideology has become from humanity/morality. The political ideology you endorse is sociopathic and narcissistic to the extreme.
    - aninhumer 10y ago
      >So I guess you won't complain when some self-righteous modern-day Robin Hood engages in armed robbery against you to feed children in an orphanage in Africa. An ad-hoc process controlled by an individual? Of course I'd complain. A world-spanning democratic process? Well, it's hard to know if I would truly be willing to give up the standard of living that I'm used to, but in principle I would happy to do so if it would lift the entire world out of relative poverty. >That actions that are unconscionable by any normal moral standard suddenly become socially acceptable to endorse when done through the political process shows how detached political ideology has become from humanity/morality. Actions on behalf of a democratic system are different to actions of an individual, because they have the consent of a majority of the governed. How do you intend that property rights be enforced? Who decides who owns what, and what gives them the right to make that decision? Would it be acceptable for an individual who disagrees (i.e. doesn't consent) to take action on their own to reallocate property as they see fit?
hashin 10y ago
One reason why the poor stay poor is that they simply don't know how to spend money. Financial literacy doesn't penetrate well into India's rural poor because of the lack of quality education. Another big problem is the gender inequality prevalent in the nation. This will simply lead to income getting concentrated at the hands of the male head of family. Buying nutritious food (which govt is directly providing as of now) or educating girl child (govt subsidise it as of now) may not be his priorities, not out of malice, but simply because he doesn't know about it. Superimpose the corruption and caste dynamics, where wealth transfer has to go through a bureaucratic sieve that is dominated by upper caste or privileged Indians. The atrocities we hear from the average govt. office are gruesome because majority of govt employees simply doesn't understand the plight of the poor Indian. To make an understanding for Indians and others, I will suggest the book "The Feast of Vultures" a book that metes out excellent objective treatment to the state of govt affairs in India. It is penned down by a veteran journalist named Josy Joseph. If we start to appreciate how this huge system that thrive in chaos, you will almost instantaneously pick up why this won't work. I am not going to the objective arguments for UBI even given a perfect system to disburse it. This won't work for India.
_andromeda_ 10y ago
The world is going to hell. Socialism is making a come back. May be even communism soon enough.
known 10y ago
Dominant minority communities will oppose UBI http://www.livemint.com/Leisure/3u2QUPuXBEFPaBQXU2R8mJ/When-will-the-BrahminBania-hegemony-end.html http://www.livemint.com/Leisure/3u2QUPuXBEFPaBQXU2R8mJ/When-...
ozy 10y ago
My vote goes to redistribution of wealth, by means of a progressive tax that starts negative. It is the human thing to do. But it also aligns with economics and politics. Redistribution: because more money at the bottom, means a larger overall market, and I think a more stable economy. Progressive tax: any paying work will always improve your situation. (So people stay motivated to work.) Taxing wealth creation (and to a lesser extend, wealth) makes sense. It needs a society with law and order and property rights. That needs to be payed for. But of course not so much as to discourage wealth creation. Most societies already redistribute wealth. Minimum wage, social programs, health programs, pensions, some form of subsidies. UBI is a more disciplined way of doing this. And just like these programs, you can tune that knob from low to high.
- aembleton 10y ago
  A negative tax subsidises employers so that they don't have to pay so much. If everyone got the money whether they worked or not then the low wage employer would need to improve the incentive to go and work for them. It would also reduce the amount of administrative work required.
  - aninhumer 10y ago
    I think it's an interesting question as to what effect NIT/UBI would have on the labour market. On the one hand, it's a labour subsidy, so employers theoretically don't need to pay as much to offer a decent quality of life as an incentive. But on other hand, people no longer need a job to survive, which reduces the incentive to work. I think the end result here might be a notable improvement in job quality. When you're not struggling to survive, it's much easier to weigh job quality in your decisions, and take less money in exchange for a more pleasant job. In particular, I think a lot of service jobs, could be more enjoyable if companies actually had to care about work environment.
  - ozy 10y ago
    A NIT or UBI are basically equivalent. But is easier to see why we give to those who are lesser off. E.g. why give UBI to a millionaire? One of the points is to give power back to those who on the labor market are almost powerless. Both forms would do that. What would the impact be? Likely price for labor goes up. Describing only one of the options as a subsidy is not likely correct.
smprk 10y ago
I agree with the second part of this exceprt from the article, first having already been taken care of -- It will take time before 1.3bn Indians receive such a transfer. Keen as Mr Subramanian is, he concludes that UBI is “a powerful idea whose time even if not ripe for implementation is ripe for serious discussion.”
lngnmn 10y ago
India is very special, traditionalist society. As person who have spent a considerable time living in North India, I would say that people will turn this free money into gold and garments and other status symbols, like mobiles, which in turn, will cause inflation and soaring of prices of gold and other assets. The analogy could be a land in the great plains of US. In San Francisco or New York the value and the price of land is ridiculously huge, while in plains it is almost free - no one needs it. Similarly, free money will simply lose any value and some new form of wealth storage and accumulation would emerge very quickly. BTW, in India there is a free food available in many big temples, but for some reasons lots of people prefer to eat at home. In India people do not run after money per se, but for social status, which is a cornerstone of the Indian culture. India is special. They have many local government programs to give nutrition to the poor, which does not work well due to rampant corruption. Simply distributing money to a bank account will obviously eradicate some corruption, the problem is that, perhaps, a third of population in some areas have no bank account.
- TheArcane 10y ago
  > a third of population in some areas have no bank account. That was probably true before demonetisation.
- balladeer 10y ago
  > in India there is a free food available in many big temples, but for some reasons lots of people prefer to eat at home Okay, it needs some clarification :-) The free meal is supposed to be for people who need it but can't afford it but not supposed to be on a regular basis - for the destitute and people in general who find it difficult to buy a meal. But they (called "langars" at Gurudwaras, run by the Sikh community) never turn anyone away (regardless of faith or background or anything). Never! Some other temples and even some mosques do that, but it's not at all "all are welcome" like langars. So not the temples. So purpose isn't to be the meal provider even though they wouldn't return anyone. So those langars aren't meant for eating in general for people. Also, people are not often alone. There are families with them and it would be very hard to conceive eating at those temples with entire families. > In India people do not run after money per se, but for social status, which is a cornerstone of the Indian culture. That is not entirely true. Like any other place people of course go for status and respect but saying that Indians don't go for money is missing the point. As a matter of fact money is a driving factor here. Especially for the people for whom this plan might be aimed at - the people below the fringe. There's a term here "BPL" - below poverty line. And trust me when I say it "Poverty Line" is estimated so generously that it is a shame even from a developing country standards. Otherwise a lot more people would have fallen below poverty line here. You are spot on about rampant corruption which is uniformly present at every level - bottom to top. But remember that starts right at the top or bottom - depending at how you want to look at it. Govt is aiming at giving the people bank accounts too and hope it catches up and succeeds.
Advaith 10y ago
If this happens, India will progress at a rapid pace. Money is te primary issue in almsot all cases.
Jaruzel 10y ago
Linked is now maxxed out and blocked (detected via HN referer?) Have to get to it via a google search now: https://www.google.co.uk/search?hl=en&q=http://www.economist.com/news/finance-and-economics/21716064-powerful-idea-unfeasible-now-india-floats-idea-universal&gws_rd=ssl https://www.google.co.uk/search?hl=en&q=http://www.economist...
statictype 10y ago
That means either a return to flawed means-testing, or a hope that the better-off will voluntarily opt out. ₹7000 per year is an absurdly small amount. Why wouldn't everyone opt out of it? I'm kind of stunned that this small amount of money every year is enough to wipe out poverty down to 0.5% I'm also perplexed at how the rich will gain from it. If you force people to jump through a few minimum hoops to get it, most of the working class will not even bother trying to claim it. Am I correct?
thrgyuhlko 10y ago
It's amusing how India has always aspired for Sweden like 'socialism' with a Zimbawbwean economy. I can't wait to see the ways the state will now find excuses to impinge on my freedoms. It's also rather spooky how India has followed the NWO playbook. It has only accelerated under Modi's term. Does anyone believe that a state which can barely provide education/ healthcare can really take this forward ?
azernik 10y ago
Interestingly, this appears to be motivated less by economic arguments than by the ease of administration. India has a notoriously corrupt bureaucracy, which has undermined existing welfare schemes by giving welfare to whoever pays the bribes rather than whatever criteria are specified in law. With the (very) recent national ID program, and associated electronic bank accounts, UBI can be administered on autopilot, with few bureaucrats available to bribe (and those isolated in central locations rather than on the ground near potential shakedown targets).
tejas1mehta 10y ago
This is a very one-sided article. I would have hoped The Economist would do a fair analysis of the pros and the cons of such an implementation. The cons in this case are very clear. 1. First of all, diverting funds from vital food and fertilizer supply to the poorest of the poor in order to fund this scheme is a self-defeating idea. 2. Corruption in cases involving direct money would be far higher than schemes involving food. 3. The poorest of the poor would not have a bank account and therefore, would not be able to benefit from this scheme. A large population of India happens to live in slums. This is the population that is in the most need of such a program but would not receive its benefits. Just because of these conditions, UBI is far more likely to help the rich than the poor. Fundamentally, UBI would only work for advanced societies. For poor societies, there just wouldn't be enough wealth to be distributed amongst everyone. This is the reason why UBI has worked well in the Scandinavian countries - their GDP per capita is already in the $50K-$70K range compared to India's $3K-$5K. It is far more likely that the politicians floated this idea to appease the citizens after the hardship they faced during the demonetization scheme.

268 points by Mz 10y ago

> proposal stops a little short of true universality: for his sums to add up, take-up must be limited to just 75% of Indians. That means either a return to flawed means-testing, or a hope that the better-off will voluntarily opt out. That's easy: just wrap it in social stigma. I'm sure there's plenty of (socially) lower-middle class Britons who are eligible for one or other benefit scheme that they either don't realise, or couldn't bare to enrol in.

adrenalinelol 10y ago
While I agree that wrapping it in social stigma would help w/the numbers, it'd set a very bad precedent for the idea of basic income in general.
- yummyfajitas 10y ago
  Why? It seems like a great way to discourage people from consuming it unnecessarily while making sure no one actually suffers in dire poverty unnecessarily. In fact, this might be a good idea in general - sumptuary laws based on net payments to the government. Contributors to society would gain visible social status while those who are a net drain lose status but do not materially suffer. Of course, I doubt you could implement this in India. I'm pretty sure everyone will shamelessly take the money.
  - clock_tower 10y ago
    That's an interesting idea, but sumptuary laws have a history of being widely evaded and hard to enforce; I'd refer you to Fernand Braudel's Structures of Everyday Life, dealing with European life in the 1500s-1700s.
    - yummyfajitas 10y ago
      You are probably right about enforceability. As a thought experiment one could imagine other enforceable variations, however - displaying on Facebook/Twitter/Tinder/etc whether you are a social benefactor or parasite, for example.
      - clock_tower 10y ago
        I'm sorry I'm being so relentlessly negative, but I'm skeptical of this approach too. There's the obvious Orwellian angle -- it sounds like you might be legally required to have an online presence tied to your real name and identity -- and if you stigmatize basic-income recipients as parasites, you'd risk generating the political will to repeal basic income entirely. (See also Bill Clinton, in a memorable only-China-can-go-to-Nixon moment, promising to "end welfare as we know it" in the 1990s.) I think it's better to just push through with the idea and accept the inefficiencies of everyone getting it -- once a given country has the tax base to pull it off.
  - AnthonyMouse 10y ago
    > Why? It seems like a great way to discourage people from consuming it unnecessarily while making sure no one actually suffers in dire poverty unnecessarily. The problem is the entire principle only works because it's universal. Having lower or middle income people opt out of it would defeat the entire purpose of having it, and having upper income people opt out of it wouldn't save you very much money because they're not a large enough percentage of the population to make any real difference.
    - yummyfajitas 10y ago
      What does "work" mean to you? By "work", I mean that we solve poverty at a cost as low as possible. Having the BI consumed by non-poor people doesn't help that goal. Also, India is a low inequality country - Gini is comparable to France since everyone is equally poor. So preventing the middle class from consuming a BI would significantly reduce the cost.
      - AnthonyMouse 10y ago
        By "work" I mean you take some money from upper income people, give it to lower income people and by and large leave the middle class alone. Having the middle class pay $100 in tax and then receive $100 in UBI works perfectly well for that. Changing that so the middle class pays $75 in tax but receives no UBI is exactly how you bring about the sort of hollowing out of the middle class we've seen recently in the US. It makes the middle class pay for the subsidies to the poor so that wealthier people can pay lower taxes. And phasing out the UBI for middle class people so they don't have to pay the tax would imply having a UBI phase out rate that just substitutes for the equivalent tax rate, which is mathematically the same as having the higher tax rate and giving them the UBI, but is less transparent about what is actually happening.
        yummyfajitas 10y ago
        Ok, I guess I don't really care about redistribution for it's own sake - I only care about fixing poverty. I guess that's why we disagree. Incidentally, your scheme wouldn't work so well in India. In India there are far fewer rich people (proportionately) than in the US. Europe needs to tax the middle class for much the same reason. If you want to have massive wealth redistribution that skips the middle class, the only way to make that viable is to increase inequality.
pkd 10y ago
The problem is that it is hard to pull off in a bigger population like India's. Social stigma doesn't work if all your friends are doing it too. My perspective is that the problem runs way deeper than this and any kind of social welfare scheme will be abused in India. This is because majority of the tax paying population thinks that they don't get enough for their taxes. This might be somewhat justified because taxes in India can jump quite high (up to 30% of income) without seeing much increase in your net savings in major cities. This is compounded by the fact that a very low fraction of the eligible population actually pays taxes (this is due to most people being employed in the unorganized sector) which leads the government to try to maximize whatever it can get from the ones who actually pay. This is evident in how so many relatively well off people haven't given up their LPG subsidy even after repeated requests by the government.
geodel 10y ago
Social stigma will be real difficult to attach there. In India a lot of people take pride in being called backward or lower caste so they can mooch off some or other government subsidy or reservation to jobs/education. As the article mentioned it is almost always better offs who game the system to their benefit.
- toomuchtodo 10y ago
  No snark intended, but it seems India is the best place to test a basic income for both durability and uptake.
  - geodel 10y ago
    I would not disagree. It is just that financial wherewithal to have this implemented is not present in India. Also here is the experiment conducted in India for basic income[1]. Results were promising but it is too small a experiment to be conclusive. 1. http://isa-global-dialogue.net/indias-great-experiment-the-transformative-potential-of-basic-income-grants/ http://isa-global-dialogue.net/indias-great-experiment-the-t...
- praneshp 10y ago
  I didn't downnvote you, and I think your point is very true. I wish people had found it less insulting so there could've been discussion. There are many that need help, and many that want a certificate calling themselves backward.
  - geodel 10y ago
    You are right. It is interesting point which does not sit well with normal understanding of self-respect, pride etc.

Shivetya 10y ago

Interesting idea, for a country with so many in real poverty it would be a good step forward. This is a country which had to build toilets to improve sanitation so their issue with a very established lower class is easily seen. If all members of a house hold receive the benefit, set a minimum age so as not to encourage more births, then even that low proposed amount will add up in for a poor family. The new issue is to make sure those who provide goods and services in those areas don't exploit this new income unfairly

mars4rp 10y ago

I guess Iran is the only country with universal basic income already in place then! the income is not much and you probably can't live of it without working, but it is universal!

vkou 10y ago
Alaska, a thoroughly red state has universal income. Likewise, it is not enough to live off.
- maxxxxx 10y ago
  Isn't that more like an oil dividend?
  - gizmo686 10y ago
    Does it matter? Alaska found a source of income (oil), and chose to spend it by giving a no-strings-attached check to every (eligible [0]) Alaskan citizen; instead of any other thing the government could chose to spend money on. As a side note, my understanding is that the payment is not a direct dividend of oil profits, but rather from the Alaska Permanent Fund, which is funded principle from oil, but designed to be able to continue payments in perpetuity despite the eventual lack of oil income. As a result of this, payments are corralated with the general market which (from a macro-economic point of view) is probably the opposite of what we want from a basic income, which could double as a form of stimulus during economic downturn. [0] It is not, however, means tested. Eligibility is based on being a permanent resident, and not having been convicted of a crime in the preceding year.
    - meanduck 10y ago
      > Does it matter? Yes there is a pretty big difference. Its not wealth redistribution. You are just spending the money created by natural resource. Its Govt/Peoples wealth to spend as they see fit.
umeshunni 10y ago

analyticbastard 10y ago

Isn't this the wishful thinking again of free energy, or infinite motion engine? Weren't we done with that already?

civilian 10y ago
It's not the same. This isn't trying to break the rules of physics. It's just a very large welfare program that would benefit from not having a bureaucracy behind it. And it would rely on the theory that enough people will still want work, so that they can afford luxuries, live where they want to, and get other trappings of social status.
- yarou 10y ago
  Sounds like living in a libertarian paradise. Except if you get stabbed and your doctor doesn't take your particular private healthcare plan. Then you bleed out while singing the praises of deregulation.
  - civilian 10y ago
    ??? You're getting downvotes because your comment was apropos of nothing. I was just correcting analyticbastard's conception of UBI, I wasn't stating support for anything.
  - felipeccastro 10y ago
    How is a scenario where the people is even more dependent of the government for subsistence a libertarian paradise?

analyticbastard 10y ago

Isn't this the wishful thinking again of free energy, or infinite motion engine? Weren't we done with that already?

brilliantcode 10y ago

I feel like universal basic income will only work in progressive societies that have gotten used to various social programs before. They might go bankrupt long before any of it's population actually receive money due to corruption. In country's with high poverty level where people don't possess the minimal quality of life, I highly doubt the spirit of basic income will even be recognized but seen more of a cash grab where you'd be considered stupid for not taking advantage of. Such is the effect of poverty-removes the ability to seek long term societal gains for short term selfish gain at the cost of rest of society. There may be cultural differences but they all boil down to economics of that specific region and country. My feeling is that a basic quality of life and the infrastructure to support it must be present for universal basic income to work. It's just too easy to cheat when so many of your peers will undoubtedly do it at your expense. It's expensive to cheat when none of your peer are willing to do it due to social stigma and shame.

hsuresh 10y ago
> I feel like universal basic income will only work in progressive societies that have gotten used to various social programs before. They might go bankrupt long before any of it's population actually receive money due to corruption. I actually think it is the opposite. UBI might work better precisely because corruption prevents other welfare schemes reaching the target population. At least in theory, the direct cash transfer should help pull out a lot of people from abject poverty. The article quotes a jump from 22% absolute poverty to 0.5% - if it does that, it would go a long way in accelerating growth in India.
- brilliantcode 10y ago
  The bigger question is how they will fund this. India is know for the capital flight. Rich people aren't paying taxes in India so the government doesn't have much money to spend on social welfare. Unless I'm wrong here? I'm not too familiar with India so please excuse any cultural ignorances.
  - harigov 10y ago

harigov 10y ago

In other developed countries, I think universal basic income makes sense, but not in the case of India. India has several systemic problems and a significant portion of the population has little to no education. Any income that can sustain a household without any pressure to grow as people will probably hinder their progress more so than help them. For a country with no lack of problems to solve, they are much better off to incentivize people to learn, teach or do charity than to just hand over some money for being citizens. Similarly, I am of the opinion that India is better off spending that money by identifying all the organizational systems that it lacks like waste processing, water purification, security, monitoring, etc., and funding several startups in those areas. This is similar to how YC funds startups so it is using market forces to solve systemic problems without resorting to centralized planning and execution.

RangerScience 10y ago
> Any income that can sustain a household without any pressure to grow as people will probably hinder their progress more so than help them Are you basing this off of any familiarity with poor Indian culture? Why do you expect "free money" to translate into "lesser progress" rather than "progress of their choice"? Here's a different question: Have you learned more through self-directed learning, or other-directed learning? How have you chosen what to learn, and would you still have that drive-to-learn if you had free money? Remember that UBI is in addition to salaries / wages, not instead of.
- hashhar 10y ago
  Most of the poor (and the rich too) here (I mean in India) look at such social programs as nothing more than cash-grabs. I have known people who make money by registering for multiple CNG connections and distributing them to other people in return for full price of the CNG cylinder (the cylinders are subsidised and the subsidy is paid by the government directly into the bank account of the person with whom the connection is registered).
  - sunwooz 10y ago

geodel 10y ago

Indian finance minister has already said that Indian politics is not mature to have this idea implemented. Activists/Politicians support idea of UBI along with all the other subsidies. So it won't replace anything, just an addition to already financially burdened state. To put in perspective Indian per capita income is just 3% of USA. Even with PPP (Purchasing Power Parity) it is still 1/10th of US. I think most generous implementation might not even be able to provide 2 basic meals a day, forget housing and healthcare etc.

Havoc 10y ago

Surprised by this - I would have thought "poor" countries like India would not be able to fund this. Hell I have doubts about 1st world funding it.

AnthonyMouse 10y ago
Because of the way the math works, you can always fund it at some level, because everyone receives it. It doesn't actually "cost" $1 for you to pay $1 in tax and then get back $1 in UBI. If everyone in the country has the same income then the UBI is a no-op (but in theory you could still have it). All it ever does is cause money from wealthier people to go to poorer people, the same as any other redistributive program, but more efficiently and with less central planning of what people are allowed to do with their money. And the cost of living in poorer countries is much lower, so the necessary UBI is that much lower.
- Havoc 10y ago
  Thanks for this. Hadn't realised this before but makes sense.
CaptSpify 10y ago
I would imagine that "poor" countries are going to the most affected by automation, though
- Havoc 10y ago
  Yeah that's going to be ugly. Human labour too expensive to be competitive & country to poor to massive automate.

felipeccastro 10y ago

I used to think a universal basic income would make sense, especially in developed countries, only for the near future scenario of machines taking ever more jobs. We know that this has always happened in history, and new jobs were always created, but that doesn't mean that the rate of job creation vs destruction will remain the same, forever. What made me change my mind about UBI was to realize that a) human desires are infinite, and there'll always be more work to be done and b) the more work is done by machines, the richer the population as a whole will be, as products and services automated tend to be cheaper. I do expect the work dynamic to change a lot, and that in the future we'll see a lot more gigs and maybe freelancing for a few hours each week will be enough to sustain a reasonable lifestyle (for whatever that means). That said, I believe our political efforts are best invested in removing all the artificial constraints that make it hard for new jobs to be created, like excessive regulations for example.

devwastaken 10y ago
>the more work is done by machines, the richer the population as a whole will be, as products and services automated tend to be cheaper. There is no such thing as trickle down economics. Wealth does not get distributed in equal to its gain, it is distributed based upon many other markets. For example, if your company makes double this year, you're not going to get paid any more than you were, but if what you said was true, you should be getting paid near double. Infact, how much wealth your company makes has little to do with how much you will be paid when it comes to investment. You're going to get paid what you can negotiate for, which will be competative to the market of other individuals. Just because your company is doing good does not mean they're going to pay anywhere near double for their employees when they can get them at market rate, which is always pressured to be lower. The products also don't have to be cheaper. Infact I don't know of any good examples of automation making things cheaper that aren't just competing with other products. Products do not have to be priced near what they cost to make, as examplified by apple products and tech in general. They're priced to what people give it value, which is manipulated by advertising and patents/copyrights that give them the ability others need or want.
- harryh 10y ago

meanduck 10y ago

Here some official fact http://indianexpress.com/article/india/india-news-india/data-shows-only-1-of-population-pays-income-tax-over-5000-pay-more-than-1-crore-2779065/ http://indianexpress.com/article/india/india-news-india/data... For 2012-13 FY, 12.5 Million (1%) paid any Income tax, averaging Rs 21,000 ($350). The 3 individuals in the top-bracket of Rs 100-500 crore ($16M-$83M) paid a total tax of Rs 437 crore ($72M) — resulting in an average tax outgo of Rs 145.80 crore ($24M). Indian statists cant help but screw the country funders even more. Disgustingly inhumane.

deleted 10y ago
[deleted]

f_allwein 10y ago

From the longer (paywalled) version: "Over a fifth of its population lives below the poverty line. The scheme outlined this week by the chief economic adviser to the Indian government, Arvind Subramanian, would cut that figure to less than 0.5% by transferring about $9 a month to all adult Indians. If doled out to everyone, that would cost around 6-7% of GDP; the 950 welfare schemes soak up 5% of GDP." http://www.economist.com/news/leaders/21716027-india-should-replace-its-thicket-welfare-payments-single-payment-india-debates-case?fsrc=rss%7Clea http://www.economist.com/news/leaders/21716027-india-should-... Fascinating as few people probably would have thought UBI would be remotely feasible in a country of 1.3B people. Yet there is also massive inequality, as well as corruption and inefficiency in handling all the various aid programmes. Plus the country has Aadhaar, a digital-identification scheme that covers 99% of adults. Probably still not feasible for now, but interesting to see how relatively cheap it would be to lift so many people out of poverty.

ouid 10y ago
This is only tangentially related, but I remember there was a problem some time ago where India simply did not have the infrastructure to count all of its citizens. How is Aadhaar sure of its 99% figure?
- suraj 10y ago
  Adhar relies on biometric data. Iris & fingerprint scanning is done when you get your Adhar card.
  - ouid 10y ago
    that is not even remotely an answer to my question.
nickpeterson 10y ago
I guess I don't grasp how this will prevent companies from raising prices to capture some of that 9 dollars, effectively making the wealthy even wealthier.

aminok 10y ago

Forcibly redistributing income from low resource generators to high resource generators creates an incentive for people with fewer resources to have more children than they are capable of supporting. This dynamic will in the long run lead to more people that produce fewer resources. Currently government is redistributing income upward by economic prohibitions (regulatory barriers): http://cepr.net/publications/reports/working-paper-the-upward-redistribution-of-income-are-rents-the-story http://cepr.net/publications/reports/working-paper-the-upwar... and it is redistributing downward with social welfare spending, with the US massively increasing social welfare spending since 1972: http://fivethirtyeight.blogs.nytimes.com/2013/01/16/what-is-driving-growth-in-government-spending/?_r=1 http://fivethirtyeight.blogs.nytimes.com/2013/01/16/what-is-... Annual spending growth on various components of social welfare spending (1972 - 2011): >Pensions and retirement: 4.4% >Healthcare: 5.7% >Welfare: 4.1% Annual economic growth over the time frame: >2.7% The only thing it has to show for giving people more "free money" to spend is a higher trade deficit, stagnant wage growth, and, I would argue, an explosion in the amount of single parenthood: http://pinetreewatchdog.org/500-rise-in-single-parenthood-fueling-family-poverty-in-maine/ http://pinetreewatchdog.org/500-rise-in-single-parenthood-fu... But hey, since 40 years of social democracy has failed, let's keep doubling down and giving people more "free" money. The end result of this bidirectional forcible redistribution is the productive middle class being destroyed, and two classes becoming increasingly significant: a small upper class controlling a growing share of national output, and a large unproductive underclass that is dependent on the taxes that upper class pays, constituting an increasingly large portion of the population.

jjoonathan 10y ago
> Currently government is redistributing income upward by economic prohibitions (regulatory barriers) Forgive me for the double post, but part of a sibling comment of mine is especially relevant here: > I'm regularly floored by people's ability to talk about network effects, economies of scale, information asymmetries, moats, winner-takes-all games, and mergers/acquisitions with one breath -- all of which are non-regulatory market forces that suppress competition and innovation -- and then with the next breath assert that deregulation is the most straightforward way to spur innovation and competition. I agree that eliminating rents should be a (if not the) primary goal of government, but I don't agree that eliminating regulation is synonymous.

aminok 10y ago

This would be devastating for the Indian economy in the long run.

aminok 10y ago

>But as things stand now, the owners of the machines get richer, and the displaced workers get significantly poorer. No they don't. We've had 200 years of massive automation fueled job destruction, and wages and the demand for labour are massively greater now than 200 years ago. The last 20 years in particular have overseen the most rapid wage growth in human history.

MarkMc 10y ago
In 1995 the real median US household income was $52,664. In 2015 it was $56,516 [1]. US Hourly Wages for nonsupervisory workers has certainly grown over the last 20 years, but not in the past 40 years [2]. [1] https://fred.stlouisfed.org/series/MEHOINUSA672N https://fred.stlouisfed.org/series/MEHOINUSA672N [2] https://en.wikipedia.org/wiki/Household_income_in_the_United_States#/media/File:U.S._Hourly_Wages_-_Real_or_Adjusted_for_Inflation_1964-2014.png https://en.wikipedia.org/wiki/Household_income_in_the_United...
- aminok 10y ago
  The US isn't the world. The US has many traits that are peculiar to it, and not universal to economies that are becoming increasingly automated. The world has seen more wage growth over the last 20 years than any other period in history: http://csmonitor.com/World/2016/0207/Progress-in-the-global-war-on-poverty http://csmonitor.com/World/2016/0207/Progress-in-the-global-...
  - aylmao 10y ago
    Well, but doesn't that mean that you already have a counter-example? In the US it IS the case that rich is getting richer and the rest aren't really benefiting too much from all this automation. The world is certainly doing better, but I also have to wonder how much of this is thanks to automation, and how much thanks to the fall of colonialism over the past century.
    - aminok 10y ago
      There are other factors at play in an economy besides automation, like forcible income redistribution. That the rich are benefiting from automation while the rest are not could be due to one of these extraneous factors. >and how much thanks to the fall of colonialism over the past century. It has to do with massive economic growth, and economic growth is really just a measure of automation. The wage growth accelerated after the fall of Communism, as market institutions gained strength.

perseusprime11 10y ago

I also think having a ceiling on how much money you can have go hand in hand with UBI. Imagine Bill Gates can have only 3 million dollars of money in his total assets. It will be intetesting to model such a civilization and see the effects.

aminok 10y ago

Computers and horses don't have property rights or the means to exercise them. All of this automation is augmenting humans because we do. We've gone from 122 million people owning smartphones in 2007 to 2.5 billion people owning them at the beginning of 2017 for example.

ouid 10y ago
could you elaborate on how this is meant to be a response to my comment?
- aminok 10y ago
  Isn't that obvious? I'm not sure how I could be more explicit..
  - ouid 10y ago
    no, I failed to perceive the connection. I'm sorry.
    - aminok 10y ago
      Humans cannot be made obsolete by technology because we come to own the technology.
      - aylmao 10y ago
        Problem is "Humans" is not a singular. "CEO of multibillion corporation" won't be made obsolete by technology because he/she comes to own the technology. Everyone else, could.
        aminok 10y ago
        I'll just quote my own comment from further up the comment chain: "Computers and horses don't have property rights or the means to exercise them. All of this automation is augmenting humans because we do. We've gone from 122 million people owning smartphones in 2007 to 2.5 billion people owning them at the beginning of 2017 for example." The last sentence is particularly relevant to your point.

Proven 10y ago

First the state screws them up, then takes (invalidates) their savings and now wants to "rescue" the people with a socialist basic income scheme.

ram_rar 10y ago

UBI definitely makes sense for developed countries. But, India is far away from it. Considering UBI is like taking a defeatist approach towards skill training for your countrymen.

ram_rar 10y ago

UBI definitely makes sense for developed countries. But, India is way far from it. Considering UBI is like taking a defeatist approach towards skill training for your countrymen.

aminok 10y ago

People being able to exercise their right to freely contract and control their own private property is sickening? You'd prefer people being thrown in prison for refusing to surrender their private property rights, or for engaging in a voluntary economic interaction that some other party created a prohibition against? Please help me understand your preference for authoritarian violence against peaceful people.

aninhumer 10y ago
>You'd prefer people being thrown in prison for refusing to surrender their private property rights Yes, I'd prefer people be thrown in prison for refusing to feed the starving, rather than people starving to death. I think property rights are valuable in-as-far as they improve overall utility, but insisting on enforcing them to the point where it could cause people serious harm is clearly beyond that point. We can argue about the extents of property rights, but suggesting there be no limits is arguing for legalised economic murder. EDIT: Just to note that I edited this quite extensively after posting.
- aminok 10y ago
  >Yes, I'd prefer people be thrown in prison for refusing to feed the starving, rather than them starving to death. So I guess you won't complain when some self-righteous modern-day Robin Hood engages in armed robbery against you to feed children in an orphanage in Africa. And if you resist? Well, the consequences fall on you. Who are you to deny others who are in need your income. That actions that are unconscionable by any normal moral standard suddenly become socially acceptable to endorse when done through the political process shows how detached political ideology has become from humanity/morality. The political ideology you endorse is sociopathic and narcissistic to the extreme.
  - aninhumer 10y ago
    >So I guess you won't complain when some self-righteous modern-day Robin Hood engages in armed robbery against you to feed children in an orphanage in Africa. An ad-hoc process controlled by an individual? Of course I'd complain. A world-spanning democratic process? Well, it's hard to know if I would truly be willing to give up the standard of living that I'm used to, but in principle I would happy to do so if it would lift the entire world out of relative poverty. >That actions that are unconscionable by any normal moral standard suddenly become socially acceptable to endorse when done through the political process shows how detached political ideology has become from humanity/morality. Actions on behalf of a democratic system are different to actions of an individual, because they have the consent of a majority of the governed. How do you intend that property rights be enforced? Who decides who owns what, and what gives them the right to make that decision? Would it be acceptable for an individual who disagrees (i.e. doesn't consent) to take action on their own to reallocate property as they see fit?

hashin 10y ago

One reason why the poor stay poor is that they simply don't know how to spend money. Financial literacy doesn't penetrate well into India's rural poor because of the lack of quality education. Another big problem is the gender inequality prevalent in the nation. This will simply lead to income getting concentrated at the hands of the male head of family. Buying nutritious food (which govt is directly providing as of now) or educating girl child (govt subsidise it as of now) may not be his priorities, not out of malice, but simply because he doesn't know about it. Superimpose the corruption and caste dynamics, where wealth transfer has to go through a bureaucratic sieve that is dominated by upper caste or privileged Indians. The atrocities we hear from the average govt. office are gruesome because majority of govt employees simply doesn't understand the plight of the poor Indian. To make an understanding for Indians and others, I will suggest the book "The Feast of Vultures" a book that metes out excellent objective treatment to the state of govt affairs in India. It is penned down by a veteran journalist named Josy Joseph. If we start to appreciate how this huge system that thrive in chaos, you will almost instantaneously pick up why this won't work. I am not going to the objective arguments for UBI even given a perfect system to disburse it. This won't work for India.

_andromeda_ 10y ago

The world is going to hell. Socialism is making a come back. May be even communism soon enough.

known 10y ago

Dominant minority communities will oppose UBI http://www.livemint.com/Leisure/3u2QUPuXBEFPaBQXU2R8mJ/When-will-the-BrahminBania-hegemony-end.html http://www.livemint.com/Leisure/3u2QUPuXBEFPaBQXU2R8mJ/When-...

ozy 10y ago

My vote goes to redistribution of wealth, by means of a progressive tax that starts negative. It is the human thing to do. But it also aligns with economics and politics. Redistribution: because more money at the bottom, means a larger overall market, and I think a more stable economy. Progressive tax: any paying work will always improve your situation. (So people stay motivated to work.) Taxing wealth creation (and to a lesser extend, wealth) makes sense. It needs a society with law and order and property rights. That needs to be payed for. But of course not so much as to discourage wealth creation. Most societies already redistribute wealth. Minimum wage, social programs, health programs, pensions, some form of subsidies. UBI is a more disciplined way of doing this. And just like these programs, you can tune that knob from low to high.

aembleton 10y ago
A negative tax subsidises employers so that they don't have to pay so much. If everyone got the money whether they worked or not then the low wage employer would need to improve the incentive to go and work for them. It would also reduce the amount of administrative work required.
- aninhumer 10y ago
  I think it's an interesting question as to what effect NIT/UBI would have on the labour market. On the one hand, it's a labour subsidy, so employers theoretically don't need to pay as much to offer a decent quality of life as an incentive. But on other hand, people no longer need a job to survive, which reduces the incentive to work. I think the end result here might be a notable improvement in job quality. When you're not struggling to survive, it's much easier to weigh job quality in your decisions, and take less money in exchange for a more pleasant job. In particular, I think a lot of service jobs, could be more enjoyable if companies actually had to care about work environment.
- ozy 10y ago
  A NIT or UBI are basically equivalent. But is easier to see why we give to those who are lesser off. E.g. why give UBI to a millionaire? One of the points is to give power back to those who on the labor market are almost powerless. Both forms would do that. What would the impact be? Likely price for labor goes up. Describing only one of the options as a subsidy is not likely correct.

smprk 10y ago

I agree with the second part of this exceprt from the article, first having already been taken care of -- It will take time before 1.3bn Indians receive such a transfer. Keen as Mr Subramanian is, he concludes that UBI is “a powerful idea whose time even if not ripe for implementation is ripe for serious discussion.”

lngnmn 10y ago

India is very special, traditionalist society. As person who have spent a considerable time living in North India, I would say that people will turn this free money into gold and garments and other status symbols, like mobiles, which in turn, will cause inflation and soaring of prices of gold and other assets. The analogy could be a land in the great plains of US. In San Francisco or New York the value and the price of land is ridiculously huge, while in plains it is almost free - no one needs it. Similarly, free money will simply lose any value and some new form of wealth storage and accumulation would emerge very quickly. BTW, in India there is a free food available in many big temples, but for some reasons lots of people prefer to eat at home. In India people do not run after money per se, but for social status, which is a cornerstone of the Indian culture. India is special. They have many local government programs to give nutrition to the poor, which does not work well due to rampant corruption. Simply distributing money to a bank account will obviously eradicate some corruption, the problem is that, perhaps, a third of population in some areas have no bank account.

TheArcane 10y ago
> a third of population in some areas have no bank account. That was probably true before demonetisation.
balladeer 10y ago
> in India there is a free food available in many big temples, but for some reasons lots of people prefer to eat at home Okay, it needs some clarification :-) The free meal is supposed to be for people who need it but can't afford it but not supposed to be on a regular basis - for the destitute and people in general who find it difficult to buy a meal. But they (called "langars" at Gurudwaras, run by the Sikh community) never turn anyone away (regardless of faith or background or anything). Never! Some other temples and even some mosques do that, but it's not at all "all are welcome" like langars. So not the temples. So purpose isn't to be the meal provider even though they wouldn't return anyone. So those langars aren't meant for eating in general for people. Also, people are not often alone. There are families with them and it would be very hard to conceive eating at those temples with entire families. > In India people do not run after money per se, but for social status, which is a cornerstone of the Indian culture. That is not entirely true. Like any other place people of course go for status and respect but saying that Indians don't go for money is missing the point. As a matter of fact money is a driving factor here. Especially for the people for whom this plan might be aimed at - the people below the fringe. There's a term here "BPL" - below poverty line. And trust me when I say it "Poverty Line" is estimated so generously that it is a shame even from a developing country standards. Otherwise a lot more people would have fallen below poverty line here. You are spot on about rampant corruption which is uniformly present at every level - bottom to top. But remember that starts right at the top or bottom - depending at how you want to look at it. Govt is aiming at giving the people bank accounts too and hope it catches up and succeeds.

Advaith 10y ago

If this happens, India will progress at a rapid pace. Money is te primary issue in almsot all cases.

Jaruzel 10y ago

Linked is now maxxed out and blocked (detected via HN referer?) Have to get to it via a google search now: https://www.google.co.uk/search?hl=en&q=http://www.economist.com/news/finance-and-economics/21716064-powerful-idea-unfeasible-now-india-floats-idea-universal&gws_rd=ssl https://www.google.co.uk/search?hl=en&q=http://www.economist...

statictype 10y ago

That means either a return to flawed means-testing, or a hope that the better-off will voluntarily opt out. ₹7000 per year is an absurdly small amount. Why wouldn't everyone opt out of it? I'm kind of stunned that this small amount of money every year is enough to wipe out poverty down to 0.5% I'm also perplexed at how the rich will gain from it. If you force people to jump through a few minimum hoops to get it, most of the working class will not even bother trying to claim it. Am I correct?

thrgyuhlko 10y ago

It's amusing how India has always aspired for Sweden like 'socialism' with a Zimbawbwean economy. I can't wait to see the ways the state will now find excuses to impinge on my freedoms. It's also rather spooky how India has followed the NWO playbook. It has only accelerated under Modi's term. Does anyone believe that a state which can barely provide education/ healthcare can really take this forward ?

azernik 10y ago

Interestingly, this appears to be motivated less by economic arguments than by the ease of administration. India has a notoriously corrupt bureaucracy, which has undermined existing welfare schemes by giving welfare to whoever pays the bribes rather than whatever criteria are specified in law. With the (very) recent national ID program, and associated electronic bank accounts, UBI can be administered on autopilot, with few bureaucrats available to bribe (and those isolated in central locations rather than on the ground near potential shakedown targets).

tejas1mehta 10y ago

This is a very one-sided article. I would have hoped The Economist would do a fair analysis of the pros and the cons of such an implementation. The cons in this case are very clear. 1. First of all, diverting funds from vital food and fertilizer supply to the poorest of the poor in order to fund this scheme is a self-defeating idea. 2. Corruption in cases involving direct money would be far higher than schemes involving food. 3. The poorest of the poor would not have a bank account and therefore, would not be able to benefit from this scheme. A large population of India happens to live in slums. This is the population that is in the most need of such a program but would not receive its benefits. Just because of these conditions, UBI is far more likely to help the rich than the poor. Fundamentally, UBI would only work for advanced societies. For poor societies, there just wouldn't be enough wealth to be distributed amongst everyone. This is the reason why UBI has worked well in the Scandinavian countries - their GDP per capita is already in the $50K-$70K range compared to India's $3K-$5K. It is far more likely that the politicians floated this idea to appease the citizens after the hardship they faced during the demonetization scheme.