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But unless the welfare bill has an astronomical amount of waste (which I don't deny may be the case), surely this redistributes welfare from those who need it t

But unless the welfare bill has an astronomical amount of waste (which I don't deny may be the case), surely this redistributes welfare from those who need it to those who don't? At the moment, for example, I receive no welfare payments. Thus my "share" of welfare is actually going to people who require it. In the basic income universe, suddenly I get a share of this money, which must come from those who currently get it, thus reducing their share. Moreover, this is ignoring all the inflationary pressures that a basic income would induce.

rbanffy 13y ago
You also get rid of the administrative overhead required to ensure the people who need it gets it while the people who doesn't don't. That's a non-trivial expense.
msellout 13y ago
Since money is of diminishing returns, you'll notice your share to the extent that it's useful to you. That's better than coming up with some arbitrary threshold. Whether or not it would cause inflation is unclear, because wages may decrease correspondingly.
scarmig 13y ago
There's no reason a basic income would be inflationary. Sure, if it's funded by debt or printing money. But you can't simultaneously worry about it being costly to fund and it being inflationary. Beyond that: yes, you could in theory make things cheaper by only giving the basic income to people who need it. But that's a fool's errand: although that course would reduce average tax rates as a first order effect, it would drastically raise marginal tax rates, which are much more relevant for predicting behavior. On top of that you instantly add a whole lot of administrative costs and interest group jockeying about determining who deserves it and who doesn't. You get a huge amount of value out of an unconditional grant, and it distorts the market far less than any other structure of welfare scheme.
- yummyfajitas 13y ago
  This isn't really true. Inflation is defined as the cost of purchasing necessities (for a specific set of necessities designed by the BLS - basically housing, food, medicine, etc). If a BI shifted spending from investment/savings to consumption, demand for necessities would increase, driving up the cost. I.e., inflation. Also, there is another structure which distorts the market even less than Basic Income. It's called the Basic Job. You get a Basic Income, but you need to show up and do work to receive it. It solves all the same problems as Basic Income, but with far lower disincentive for work, and at far lower cost.
  - scarmig 13y ago
    1) Good point, but it's not clear to me demand for necessities would actually increase. Bear with me: virtually no one in the United States actually starves, and only a very small number lack a roof over their head or other "necessities." I might even be tempted to defined a necessity as something a person will consume regardless of income. What people do do instead is externalize the cost of their purchase, through shifting it onto their social networks, relying on public funds either implicitly (nonprofits, churches) or explicitly, or by debt. Debt acts funny, though, because it either shifts costs to their future selves (reducing future consumption of non-necessities) or to creditors (who'll eat some of the cost and pass the rest on to borrowers in general). We can theorize all day about what the actual effects would be--it seems a bit opaque to me, and I'd like a small sized country to play with a reasonably sized basic income to give us some real data. 2) I'm not too familiar with the Basic Job idea, and it's not very google-able. But I expect my general response would be two-pronged: firstly, I reject the idea that there's a huge disincentive to work with Basic Income. No one is materially satisfied at the basic income level, which my gut says should be $10k-$12k. Most working age Americans make more than that, and most are happy to take on more work when it means more money. (At some point most people do value time over money, but that's well above the minimum income level.) But more fundamentally I reject the idea that a government has the capability to designate what're jobs that involve real, economically valuable work and what're not. Should a person who dispenses psychoactive consumables be considered a worker? Yes, but try getting that through Congress. Should an NSA snoop? No, but same deal. What about an artist? An entrepreneur exploring a new market? An unpaid intern building up social and knowledge capital? A family caretaker? Even if I trusted bureaucrats in DC not to be subject to special interests and regulatory capture, it's a matter of capability. They just don't have the knowledge to make these judgments, and investing enough money into providing that knowledge would be a huge waste if not impossible. On-the-ground individuals have far more knowledge about their particular circumstances and the needs of their communities than anyone else. Building the ability for dispersed economic activity to leverage dispersed knowledge has to be a cornerstone of policymaking, because those knowledge costs are increasingly the costs that define our modern economy.
AlisdairSH 13y ago
I think you answered your own question. Present-day welfare systems have tremendous amounts of overhead to run. In a basic income system, most of that overhead goes away - you don't need an Office of Unemployment Benefits, or a Food for Underprivileged Children program - because everybody gets a check. Do the savings completely offset the cost? I have no idea. But, it seems reasonable that they could offset a substantial portion. Of course, getting a government to willingly reduce it's size is a whole other problem.
- scarmig 13y ago
  Eliminating administrative overhead would be a saving, but it's unrealistic to expect those savings to fund a substantial part of a basic income by themselves. Social Security and Medicare comprise a large majority of social spending in the USA. SS-OASI has overhead costs of 0.5%, and Medicare has around 1%. That's owing to them being unconditional, outside of age. Even their less efficient brethren aren't that bad: SS-DI is around 2%. Medicaid is much higher (~6% I think) because it is so targeted and is really administered by 50 different agencies on top of the feds. But after that you get to programs that might be super inefficient but just aren't big enough to generate the huge kinds of savings we might want.
  - dragonwriter 13y ago
    > Social Security and Medicare comprise a large majority of social spending in the USA. SS-OASI has overhead costs of 0.5%, and Medicare has around 1%. That's owing to them being unconditional, outside of age. Social Security is not unconditional; both whether you are eligible at all and the benefits for which you are eligible are based on your history of qualifying contributions, not merely your age.
  - YokoZar 13y ago
    The Social Security Administration considers interest on its special treasury bonds as pure free money (negative overhead). That's plainly ridiculous, as it's just tax money that came from the general fund.
  - dragonwriter 13y ago
beat 13y ago
Welfare politics are driven by resentment, and offense that "My tax dollars are paying for lazy welfare queens to drive Cadillacs!" Because of this, there's a tremendous amount of overhead built into fraud prevention and making sure no one who isn't utterly desperate gets it. With GMI, there's no justification for class resentment - you get the same benefit as everyone else.
- nkoren 13y ago
  Careful there -- a GMI is different than a UBI. Guaranteed Minimum Income is the idea that if your own income is insufficient, the state will step in and provide one for you. The conditionality in that definition, however, means that it would be a means-tested programme with all the attendant implications for marginal tax rates, poverty traps, class resentment, etc. A Universal/Unconditional Basic Income is different -- it's provided to everyone with no means testing whatsoever. I think that's what you meant, based on how you're using it. But just be aware that GMI/UBI are actually quite different things.
  - eropple 13y ago
    The complaints he's referring to do apply to both, though.
mpweiher 13y ago
"...suddenly I get a share of this money". No you don't. The basic income is set off against your income tax liability, in fact, it's also been referred to as "negative income tax". One of the nice aspects of the negative income tax is that it reduces the marginal tax rate at the bottom, which can often approach or even exceed 100% (you lose close to or even more benefits compared to the income from a low-paying job). Instead it's all just one smooth scale. Another aspect of this is that it is one way of distributing the "automation dividend" that technology has given to society more equitably: "if robots and algorithms replace us in the labour market, they should also substitute us as taxpayers." http://binews.org/2012/05/rieger-frank-2012-an-automation-dividend-for-all-robots-should-secure-our-pensions/ http://binews.org/2012/05/rieger-frank-2012-an-automation-di... Inefficiencies in the social insurance system are one aspect, but a rather small one, IIRC.
- toomuchtodo 13y ago
  > Another aspect of this is that it is one way of distributing the "automation dividend" that technology has given to society more equitably: "if robots and algorithms replace us in the labour market, they should also substitute us as taxpayers." As an IT professional who spends his days writing code to automate people away, I'm completely okay with this.
- wmf 13y ago
  Just to be clear, basic income is not the same as negative income tax. Guaranteed income is the same as negative income tax; it has the benefit that it should cost less overall since it only goes to people who need it but it has the cost of trying to catch all the people cheating on it.
dragonwriter 13y ago
> But unless the welfare bill has an astronomical amount of waste (which I don't deny may be the case), surely this redistributes welfare from those who need it to those who don't? For replacing poverty-targetted programs, this effect is limited if its used in a system which already has an appropriate progressive income tax system, further, it makes "needing it" less durable, as it doesn't prevent gains in personal earning potential from being negated by cutbacks in benefits that create a disincentives (because the costs to realize the gains + the cutbacks do to receiving the gains mean that gaining income-before-benefits actually reduces effective income-after-benefits.)
foobarian 13y ago
It's also possible the money comes from eliminating the welfare administration system. All the paper and offices and maintenance must cost a ton of money. (I don't count salaries because if you fired all those government workers their salaries would get replaced with the basic income.

rbanffy 13y ago

You also get rid of the administrative overhead required to ensure the people who need it gets it while the people who doesn't don't. That's a non-trivial expense.

msellout 13y ago

Since money is of diminishing returns, you'll notice your share to the extent that it's useful to you. That's better than coming up with some arbitrary threshold. Whether or not it would cause inflation is unclear, because wages may decrease correspondingly.

scarmig 13y ago

There's no reason a basic income would be inflationary. Sure, if it's funded by debt or printing money. But you can't simultaneously worry about it being costly to fund and it being inflationary. Beyond that: yes, you could in theory make things cheaper by only giving the basic income to people who need it. But that's a fool's errand: although that course would reduce average tax rates as a first order effect, it would drastically raise marginal tax rates, which are much more relevant for predicting behavior. On top of that you instantly add a whole lot of administrative costs and interest group jockeying about determining who deserves it and who doesn't. You get a huge amount of value out of an unconditional grant, and it distorts the market far less than any other structure of welfare scheme.

yummyfajitas 13y ago
This isn't really true. Inflation is defined as the cost of purchasing necessities (for a specific set of necessities designed by the BLS - basically housing, food, medicine, etc). If a BI shifted spending from investment/savings to consumption, demand for necessities would increase, driving up the cost. I.e., inflation. Also, there is another structure which distorts the market even less than Basic Income. It's called the Basic Job. You get a Basic Income, but you need to show up and do work to receive it. It solves all the same problems as Basic Income, but with far lower disincentive for work, and at far lower cost.
- scarmig 13y ago
  1) Good point, but it's not clear to me demand for necessities would actually increase. Bear with me: virtually no one in the United States actually starves, and only a very small number lack a roof over their head or other "necessities." I might even be tempted to defined a necessity as something a person will consume regardless of income. What people do do instead is externalize the cost of their purchase, through shifting it onto their social networks, relying on public funds either implicitly (nonprofits, churches) or explicitly, or by debt. Debt acts funny, though, because it either shifts costs to their future selves (reducing future consumption of non-necessities) or to creditors (who'll eat some of the cost and pass the rest on to borrowers in general). We can theorize all day about what the actual effects would be--it seems a bit opaque to me, and I'd like a small sized country to play with a reasonably sized basic income to give us some real data. 2) I'm not too familiar with the Basic Job idea, and it's not very google-able. But I expect my general response would be two-pronged: firstly, I reject the idea that there's a huge disincentive to work with Basic Income. No one is materially satisfied at the basic income level, which my gut says should be $10k-$12k. Most working age Americans make more than that, and most are happy to take on more work when it means more money. (At some point most people do value time over money, but that's well above the minimum income level.) But more fundamentally I reject the idea that a government has the capability to designate what're jobs that involve real, economically valuable work and what're not. Should a person who dispenses psychoactive consumables be considered a worker? Yes, but try getting that through Congress. Should an NSA snoop? No, but same deal. What about an artist? An entrepreneur exploring a new market? An unpaid intern building up social and knowledge capital? A family caretaker? Even if I trusted bureaucrats in DC not to be subject to special interests and regulatory capture, it's a matter of capability. They just don't have the knowledge to make these judgments, and investing enough money into providing that knowledge would be a huge waste if not impossible. On-the-ground individuals have far more knowledge about their particular circumstances and the needs of their communities than anyone else. Building the ability for dispersed economic activity to leverage dispersed knowledge has to be a cornerstone of policymaking, because those knowledge costs are increasingly the costs that define our modern economy.

AlisdairSH 13y ago

I think you answered your own question. Present-day welfare systems have tremendous amounts of overhead to run. In a basic income system, most of that overhead goes away - you don't need an Office of Unemployment Benefits, or a Food for Underprivileged Children program - because everybody gets a check. Do the savings completely offset the cost? I have no idea. But, it seems reasonable that they could offset a substantial portion. Of course, getting a government to willingly reduce it's size is a whole other problem.

scarmig 13y ago
Eliminating administrative overhead would be a saving, but it's unrealistic to expect those savings to fund a substantial part of a basic income by themselves. Social Security and Medicare comprise a large majority of social spending in the USA. SS-OASI has overhead costs of 0.5%, and Medicare has around 1%. That's owing to them being unconditional, outside of age. Even their less efficient brethren aren't that bad: SS-DI is around 2%. Medicaid is much higher (~6% I think) because it is so targeted and is really administered by 50 different agencies on top of the feds. But after that you get to programs that might be super inefficient but just aren't big enough to generate the huge kinds of savings we might want.
- dragonwriter 13y ago
  > Social Security and Medicare comprise a large majority of social spending in the USA. SS-OASI has overhead costs of 0.5%, and Medicare has around 1%. That's owing to them being unconditional, outside of age. Social Security is not unconditional; both whether you are eligible at all and the benefits for which you are eligible are based on your history of qualifying contributions, not merely your age.
- YokoZar 13y ago
  The Social Security Administration considers interest on its special treasury bonds as pure free money (negative overhead). That's plainly ridiculous, as it's just tax money that came from the general fund.
- dragonwriter 13y ago

beat 13y ago

Welfare politics are driven by resentment, and offense that "My tax dollars are paying for lazy welfare queens to drive Cadillacs!" Because of this, there's a tremendous amount of overhead built into fraud prevention and making sure no one who isn't utterly desperate gets it. With GMI, there's no justification for class resentment - you get the same benefit as everyone else.

nkoren 13y ago
Careful there -- a GMI is different than a UBI. Guaranteed Minimum Income is the idea that if your own income is insufficient, the state will step in and provide one for you. The conditionality in that definition, however, means that it would be a means-tested programme with all the attendant implications for marginal tax rates, poverty traps, class resentment, etc. A Universal/Unconditional Basic Income is different -- it's provided to everyone with no means testing whatsoever. I think that's what you meant, based on how you're using it. But just be aware that GMI/UBI are actually quite different things.
- eropple 13y ago
  The complaints he's referring to do apply to both, though.

mpweiher 13y ago

"...suddenly I get a share of this money". No you don't. The basic income is set off against your income tax liability, in fact, it's also been referred to as "negative income tax". One of the nice aspects of the negative income tax is that it reduces the marginal tax rate at the bottom, which can often approach or even exceed 100% (you lose close to or even more benefits compared to the income from a low-paying job). Instead it's all just one smooth scale. Another aspect of this is that it is one way of distributing the "automation dividend" that technology has given to society more equitably: "if robots and algorithms replace us in the labour market, they should also substitute us as taxpayers." http://binews.org/2012/05/rieger-frank-2012-an-automation-dividend-for-all-robots-should-secure-our-pensions/ http://binews.org/2012/05/rieger-frank-2012-an-automation-di... Inefficiencies in the social insurance system are one aspect, but a rather small one, IIRC.

toomuchtodo 13y ago
> Another aspect of this is that it is one way of distributing the "automation dividend" that technology has given to society more equitably: "if robots and algorithms replace us in the labour market, they should also substitute us as taxpayers." As an IT professional who spends his days writing code to automate people away, I'm completely okay with this.
wmf 13y ago
Just to be clear, basic income is not the same as negative income tax. Guaranteed income is the same as negative income tax; it has the benefit that it should cost less overall since it only goes to people who need it but it has the cost of trying to catch all the people cheating on it.

dragonwriter 13y ago

> But unless the welfare bill has an astronomical amount of waste (which I don't deny may be the case), surely this redistributes welfare from those who need it to those who don't? For replacing poverty-targetted programs, this effect is limited if its used in a system which already has an appropriate progressive income tax system, further, it makes "needing it" less durable, as it doesn't prevent gains in personal earning potential from being negated by cutbacks in benefits that create a disincentives (because the costs to realize the gains + the cutbacks do to receiving the gains mean that gaining income-before-benefits actually reduces effective income-after-benefits.)

foobarian 13y ago

It's also possible the money comes from eliminating the welfare administration system. All the paper and offices and maintenance must cost a ton of money. (I don't count salaries because if you fired all those government workers their salaries would get replaced with the basic income.