15 ms·

Basic Income is Practical Today, Necessary Soon

99 points by mchusma 12y ago

gerbal 12y ago
Basic income might make it reasonable to eliminate TANF, some portion of SNAP, and some unemployment, but it doesn't eliminate the core need for Medicare and Medicaid. In the basic income scenario outlined, the poor and the elderly will still need subsidized health insurance (assuming the current employer-provided health insurance model) or health coverage of some sort. Social Security is also something of a dicey proposition. While it would be possible to use basic income to reduce social security benefits, it's role as a social insurance scheme to provide for the elderly couldn't be substituted in its entirety by simple basic income. Social security disability and death benefits would also need some more thought.
- awt 12y ago
  What about allowing people to store wealth in a non-depreciating, attainable, liquid asset (something besides USD or mutual funds or a home made out of plywood), and limiting liability for health providers?
  - kasey_junk 12y ago
    "non-depreciating, attainable, liquid asset (something besides USD" What does that even mean?
    - prostoalex 12y ago
      TIPS?
      - kasey_junk 12y ago
        I guess, for some definition of liquid.
        deleted 12y ago
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    - zo1 12y ago
      Are you actually confused about the terms, or just trying to be facetious?
      - kasey_junk 12y ago
        No, I'm curious what financial instrument meets all those requirements.
    - sitkack 12y ago
      Glitter sprinkles?
      - kasey_junk 12y ago
        Glitter sprinkles are available where you are? Well aren't you just living the dream!
  - dustcoin 12y ago
    >mutual funds Vanguard offers many low-fee mutual funds. Non-depreciating: The long-term return of stock indices and some bond indices beats inflation. Attainable: $1000-$3000 minimum to open an account Liquid: Funds can be bought or sold easily (with no fee), money is accessible via ACH. I hope you are not suggesting that gold is a better investment than a diverse portfolio of stocks and bonds.
    - awt 12y ago
      Gold ETFs are fubar. Gold itself is not very liquid. There are all sorts of prohibitive fees and tax penalties for taking money out of a 401k or a mutual fund before a certain date. The barrier to accessing the value represented by any mutual fund or 401k holdings is substantial. It took me months to move money from one dead 401k to another one I controlled. Imagine the amount of effort required to spend $50.00 of a 401k on groceries.
    - zo1 12y ago
      They're still based on or valued in USD, which is what the OP wanted to avoid. A lot of good those USD-valued mutual funds are going to do for you when they're worth peanuts due to a devaluation of the currency or its buying power. "I hope you are not suggesting that gold is a better investment than a diverse portfolio of stocks and bonds." There are a lot of people that believe a big government/market crash is coming. And they're absolutely desperate for ways to weather it without eating their own toes off.
      - kasey_junk 12y ago
        "There are a lot of people that believe a big government/market crash is coming. And they're absolutely desperate for ways to weather it without eating their own toes off." Those people would be best served by buying ammunition.
    - kasey_junk 12y ago
      "Liquid: Funds can be bought or sold easily (with no fee), money is accessible via ACH." Just as a heads up, most finance folks don't consider being able to buy/sell something easily as the only bar to liquidity. Volatility is also a major component. That is, if something can change value dramatically from day to day it can be considered "illiquid". So lots of people do not consider mutual funds "liquid".
  - mikeash 12y ago
    Your comment seems to imply that there's a good store of wealth that fits these criteria, but that it's not allowed. What is it?
    - awt 12y ago
      There isn't right now. Someday Bitcoin might fill that role.
      - kasey_junk 12y ago
        I'm not trying to be argumentative but lets assume Bitcoin becomes as liquid as USD (ie you can spend it on everything you can on USD without paying any higher transaction fees) what keeps the availability/depreciation matrix in check. That is, if it is a great value store why won't people horde it, thus decreasing availability. If it becomes readily available, why wouldn't it become worth less?
        awt 12y ago
        Hmm, I'm not sure how to answer that. Hoarding increases the unit price relative to other assets, but doesn't make it any less liquid. Essentially infinitely small amounts of bitcoin can be transacted at any time.
        mikeash 12y ago
        I think one big problem is fact that there really can't be a long-term nonvolatile store of value. Economic activity is inherently continuous. There are a few goods that last more than a few years without maintenance or replacement. Economic output puts a hard limit on how quickly you can turn your value store into stuff you actually want. For an individual it doesn't make much difference, but when everybody tries to do it, it doesn't work. For an extreme thought experiment, consider if everyone puts half their income into a perfect store of value for a year, living off the other half, then the next year they live off the savings. Everyone would die of starvation the second year even though they supposedly have just as much value available as what sustained them the year before.
  - akgerber 12y ago
    TIPS already exist, and you can buy them online easily: https://www.treasurydirect.gov/indiv/products/prod_tips_glance.htm https://www.treasurydirect.gov/indiv/products/prod_tips_glan... It doesn't magically fix human nature, which prioritizes immediate needs over very distant ones.
    - awt 12y ago
      I suppose that would work if you trust the consumer price index. My own experience belies reported low inflation.
    - kasey_junk 12y ago
      TIPS are not normally considered "liquid" (at least not as liquid as cash, which is the standard most people have) as they have minimum terms of ownership.
- bradleyjg 12y ago
  The ACA exchange model is large risk pools with community rating. They implicitly cross subsidize the sick. So if the basic income is large enough to pay for an exchange policy without additional subsidies then you've replaced Medicare and Medicaid. However, a basic income of $12,000 is far away from that number at least for an individual. ACA subsidies the purchase of insurance at up to 400% of the poverty line. As for social security, politically I agree that a basic income that was lower than when many were expecting would be a non-starter. However I don't agree that it would fail a social insurance scheme. The social insurance aspect of social security is preventing elder poverty, a universal basic income does that by preventing all poverty. The regressive formula for calculating social security benefits was a canny political move (making it look more like a pension) but it isn't necessary to its social insurance function.
- Retric 12y ago
  I think subsidizing healthcare just for the elderly is a terrible idea. A fixed maximum annual benefit of say 30k would enable massive economies of scale, drive down costs, cover most issues, and not waste 100's of thousands of dollars on people who are beyond any known treatment and are effectively brain dead. Supplemental insurance for catastrophic problems would be optional as the vast majority of heath issues could be affordable. And vary few things are actually better treated by trowing lot's of money at them. Supplemental insurance even for the elderly would still be reasonably affordable by most people, but it remove the current model where hospitals maximize revenue by providing pointless and often cruel care for the dying. PS: I say this as someone that recently dealt with significant health issues. The ratio of actual costs vs delivered healthcare in the US is stupid and unsustainable. But, so is trying to write an unlimited check for any reasonably large group. Cap costs and you will see organizations operate within those limits. Edit: Yes, I realise this is one of those things you can't say, but that does not make it wrong. http://www.paulgraham.com/say.html http://www.paulgraham.com/say.html
- patmcc 12y ago
  Medicare and Medicaid should be eliminated in favour of some kind of universal healthcare, period. Basic income shouldn't come into the discussion.
deleted 12y ago
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com2kid 12y ago
Assuming social security is replaced by basic income seems to be a fallacy. SS payments are not the same for everyone. Knowing the distribution of pay rates for SS is very important. Reducing SS payments, perhaps by a dramatic amount, is not going to go over well. Likewise, giving straight cash versus Medicare/Medicade does not work. You are basically telling people "I'm sorry, but you can either die of a treatable condition, or starve". (Unfortunately the latter is more palatable in the current American political climate...) 1k per month for the elderly who have multiple medical conditions, is not acceptable. IMHO the author is viewing this through the lens of someone who is young and healthy. It is also odd that the author highlights some jobs (plumbing, cleaning) that are likely to be the last that will be automated. A Roomba is a far cry from a proper janitorial service. While eventually we will get autonomous bots that can do such tasks, we are really far away from that goal. And finally, statements like > It is not clear to me why it should be significantly different, as a 12 year old needs basically the same as an 18 year old. Make me wonder what sort of reality the author lives in. (And only further confirms that the author is likely young, and has obviously never had children!) The price of child care alone is huge. Medical expenses are higher for children. School expenses exist. Children are not cheap.
- kasey_junk 12y ago
  "IMHO the author is viewing this through the lens of someone who is young and healthy." And always will be.
- opendais 12y ago
  Ya, this is always the fallacy Basic Income proponents keep claiming will come to pass. The only vaguely realistic way to generate a Basic Income situation is, frankly, to raise taxes to provide for a good fraction of the benefit [I think you can get to something like 6k of the 12k on spending cuts].
- phkahler 12y ago
  If the basic income replaces social security but is available to all adults, a large number of working people are going to quit and retire prematurely. SS isn't supposed to be a total retirement plan, but it is for many and this would increase the number - probably to the point where it all falls apart. What is the incentive to work under this scheme?
lutusp 12y ago
It's true that computers and automation are rapidly eliminating most low-level jobs, but it doesn't follow that a non-merit-tested basic income is the best way to deal with this new reality. Even with an automated workforce, I think there should still be social incentives, and incentives require merit-based income differentials and some concept of "earned income". We've already witnessed the first large-scale social experiment designed to replace the dog-eat-dog nature of conventional human society, and everyone knows how that turned out. But doing nothing while most jobs are absorbed by teams of obedient robots, and expecting society to rearrange itself optimally with no new ideas, is naive. This is an open problem, and the solution is not obvious.
- wutbrodo 12y ago
  > Even with an automated workforce, I think there should still be social incentives, and incentives require merit-based income differentials and some concept of "earned income". A properly-implemented basic income barely touches this, on the margins. The majority of social incentives don't lie on the line between starving and subsisting. I don't see how putting a floor at subsistence level (not even enough to buy a TV, e.g.) would somehow remove (or even appreciably affect) the social incentives around getting more money. People want iPods and TVs and Xboxes and decent cars and bigger houses (both to use and to show off), and there's no reason a basic income would change that.
- jfoutz 12y ago
  In the original plan you could trade each dollar of basic income for $2 of tax free income. you work and make $1000, you keep all of the 1000 + 500bi. you make 2000, you keep all of it + 0bi, you make 10000, you keep the first 2000, you pay tax on the next 8000, and you get 0bi. something like that.
- yen223 12y ago
  The elegant thing about basic income is that you won't need to lose social incentives. We aren't talking about a soviet-style redistribution of wealth here. If you were earning $100,000/year, and you are now getting a $12,000/year basic income, you aren't going to be quitting your day job.
- 12y ago
aaron-lebo 12y ago
Basic income is not practical today, at least not in the political sense. The political climate is in no way configured to do so, and won't be for years. The Democrats are never going to be okay with removing federal programs (even if basic income could cover several of them), and the Republicans won't touch something that would be seen by many as socialism. I think proponents of BI are ignoring just how radical it is. Basic income is a massive change. It would more or less completely change our society (or require our society to completely change in order to even happen). Democrats and Republicans hardly work together on small issues today, what would cause them to work on something which threatens both parties in various ways?
- eastbayjake 12y ago
  You don't think millions of constituents would support the "Free $1000 Check Every Month" bill? Democrats get to claim a victory on income inequality, Republicans get a victory for cutting spending and government waste. It's the bureaucrats who administer these massive programs that would be the losers.
  - baddox 12y ago
    I do think that millions of constituents would support the "Free $1000 Check Every Month" option on the ballot, but I don't think the option would ever get close to being on the ballot.
  - bryanlarsen 12y ago
    I doubt that "free $1000 check every month" would receive any more support than "free healthcare". And it will be even more complicated than the so-called ObamaCare by the time it gets to the ballot box.
- dragonwriter 12y ago
  > The Democrats are never going to be okay with removing federal programs (even if basic income could cover several of them), and the Republicans won't touch something that would be seen by many as socialism. If the general public supports it strongly enough, then the entrenched political parties will either conform to the public demands or face a realignment which replaces them with political parties that do. While the US electoral system is structured in a way that duopoly at any given time is essentially guaranteed, it does not guarantee that today's major parties will be tomorrow's. The US has for almost its entire history had two major parties, but major parties have failed several times.
Havoc 12y ago
I don't know about practical, but purely from a theoretical point of view I'm getting a "this is happening" vibe. People can whine and theorize about it as much as they like but I don't see a path that leads to anything other than basic income happening...at least in 1st world countries.
- mahyarm 12y ago
  I doubt it. You see it mentioned frequently enough in HN-esque circles, but I've never heard it mentioned once outside of it.
  - scotty79 12y ago
    Never? 126,000 Swiss people formally requested a referendum about it. http://en.wikipedia.org/wiki/Basic_income#Switzerland http://en.wikipedia.org/wiki/Basic_income#Switzerland
  - Havoc 12y ago
    >I doubt it. Well what else are we going to do with the millions of people that will literally become unemployable due to automation?
    - mahyarm 12y ago
      It's definitely a solution, but I would posit it's more well known among the intellectual set than the general populace as a popular idea. You don't need to have a large core group to bring it up in a swiss election, and on the surface it's pretty easy to market to the typical person. 'Free money, hell yes!' is pretty easy to sell, or for the welfare recipient 'Welfare money without dealing with demeaning bureaucrats, hell yes!'
      - Havoc 12y ago
        >I would posit it's more well known among the intellectual set than the general populace as a popular idea. I agree. It does not have wide spread acceptance. Or even wide spread awareness. What I'm saying though (and I think we agree here) is that this is happening...whether the public likes it or not...we as humanity are barreling towards this..social factors will force basic income into existence one way or the other. Thats why I'm saying "This is happen". Oh and this is coming from someone who will be excluded from any basic income criteria...
winslow 12y ago
I must be the only one who thinks basic income is insane. Let me explain. On paper this sounds great, everyone gets income to cover living costs (housing, food, basic utilities) in an economy where the workforce demand is dwindling. However, I personally don't trust my government (US) to implement this properly without any special niches carved out for someone. The corruption is rampant and by the time it gets through our government they will absolutely put loopholes in it or help special interests groups with something. My second problem with this is those who mismanage their money. There will absolutely be people who abuse the system and use this money to not cover their required expenses and use it for a variety of things they don't need. At the end of the month if they don't have any money left how will they cover their necessary expenses? Everyone keeps looking at basic income as this perfect solution and I just don't buy it. In a perfect world where the government aren't so corrupted and incompetent along with people who knew how to properly manage their money I feel this could work. However, I just don't see this working and it will be another money sink from our government. Maybe someone can convince me otherwise.
- TTPrograms 12y ago
  You would prefer the current welfare system, which requires the government to make decisions about who gets what money, to a system that is designed to require zero judgement on the part of any government officials?
  - JoshTriplett 12y ago
    Never trust a government plan that says "we're going to add this new program, and replace these others", because the latter will never actually happen. The creation of the new program and the deletion of the old would need to happen in exactly the same bill.
- md341 12y ago
  And what would the alternative to basic income be? Letting the unemployed starve?
  - 12y ago
absherwin 12y ago
This math works because the average person over 65 receives approximately $24,000 in federal benefits which would be cut in half. There are other groups who lose but this one is by far the biggest.
baddox 12y ago
My main concern with most articles about basic income, and in fact most articles about the intersection of economics and politics, is that public choice theory is almost never satisfactorily addressed. Looking at raw numbers is very important, and this article seems to do a good job and make a compelling case. But there is very little mention on the internal economics of government, and whether such a system is actually feasible in some specific government, given the incentives that apply to political behavior.
lmarinho 12y ago
I think the best way to make people subservient to their government is to keep their subsistence dependent on it. There has to be a better solution for this. Automation might make many goods and services readily available without requiring extensive labor, but that also means more people will have access to cheaper goods. Who knows what demands might come up in this new society that people with low skills might be able to cover.
- scotty79 12y ago
  We depend on government for such a huge range of services by now that distributing basic income wouldn't be unique leverage the government has over us. The last thing any government want's is unrest. An you can bet that going late on monthly basic income could cause serious unrest.
deleted 12y ago
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patja 12y ago
Most rational people would agree we would all benefit from a wholesale scrapping of the current US tax code and restructuring of entitlement programs. If you thought getting the ACA through the political process was hard, just think for a moment on the fight all of the existing beneficiaries and rent-seekers (tax attorneys, H&R Block, etc.) will put up. It is fun to play what-if with the numbers but given our current oligarchy it is pure fantasy.
shams93 12y ago
If you look at the militarization of local police to me it seems to be clear that the ruling class are moving to eventually gun down 3/4 of the human population. Share the wealth? Hell no! Who needs consumers when you can gun them down and continue to make a fortune off of artificial financial instruments.
eastbayjake 12y ago
The Cato Institute had a post about this last week: http://www.cato-unbound.org/2014/08/04/matt-zwolinski/pragmatic-libertarian-case-basic-income-guarantee http://www.cato-unbound.org/2014/08/04/matt-zwolinski/pragma... Their argument for BI is that it sharply reduces rent-seeking behavior by lobbyists and special interests, which could reduce quite a bit of pork and wasteful spending. It also gives political cover to remove lots of expensive middle class entitlements, like the mortgage interest tax deduction. It would definitely take a massive compromise bill -- probably a constitutional amendment -- to make sure that entitlement programs are dismantled at the same time BI is instituted.
- zo1 12y ago
  "expensive middle class entitlements" It was an incentive created by legislators, so they could increase home-ownership in their populace. Wow, way to turn a government-legislated incentivization of middle-class individuals for home-ownership, into an "entitlement".
  - cortesoft 12y ago
    Umm it fits the definition of entitlement exactly: http://en.wikipedia.org/wiki/Entitlement http://en.wikipedia.org/wiki/Entitlement It is a benefit (tax credit) given to a specific group (homeowners). Whether the goal is worthy or the means effective is another question, of course, but it is CLEARLY an entitlement.
    - zo1 12y ago
      Interesting, didn't know that! Still, feels like a lot of the usage of that word that I come across is pejorative, as per the linked article.
      - kasey_junk 12y ago
        What makes you think we shouldn't be applying negative connotations to the mortgage credit? There is lots of evidence that it has been particularly harmful and it is a very regressive entitlement (if that's important to you).
11thEarlOfMar 12y ago
Basic Income cannot replace Social Security and Medicare. It can only provide a floor for it. Same for Welfare. The intent of basic income is to enable a family of minimum wage earners to have a much less stressful financial existence: 2 minimum wage jobs ($9.00/hour in California) + 2 adult basic incomes at $12,000 each = $61,440. By no means a king's ransom, but certainly gives a family of four a fighting chance to live in a less unsafe place, feed the kids a little better and maybe take a modest vacation once in a while. Lower financial stress across the entire country will free people up to focus more on raising their kids. Many, many social problems subside when families do better.
- falsestprophet 12y ago
  > certainly gives a family of four a fighting chance to live in a less unsafe place Of course if everyone has basic incomes, then everyone can bid more for housing and push up the costs of both safe and unsafe housing. It isn't clear that a basic income would make neighborhoods safer or make it easier for the poor to move to safer areas.
- dragonwriter 12y ago
  > Basic Income cannot replace Social Security and Medicare. It can only provide a floor for it. Same for Welfare. It can replace those things. Whether it is desirable is a matter for debate (but I don't see you make the argument that its not, just asserting it.) > The intent of basic income is to enable a family of minimum wage earners to have a much less stressful financial existence I disagree: the intended beneficiaries of Basic Income are not just "minimum wage earners", further, your calculation of minimum wage + basic income is misleading since many BI advocates advocate eliminating the minimum wage with the adoption of BI. (More libertarian and less liberal BI supporters tend to do so; more liberal and less libertarian supporters tend not to.) I would say that the intent of BI as a replacement for means-tested welfare is to (1) increase short-run efficiency but eliminating costs and perverse incentives associated with means-testing, (2) provide a system which is easier to scale up as automation reduces the relative demand for labor as compared to capital, and (3) reduce financial stress generally, and increase labor market fluidity.
logn 12y ago
What about just this: for every dollar that is created, 50 cents of it goes to a basic income fund. Right now, banks and government contractors receive a disproportionately high amount of the newly printed money. Also, we need to reform corporate taxation. That would reduce wealth disparity and ensure stability of the social safety net.
chris_va 12y ago
While I realize HN loves basic income, it honestly is not a good idea. I would love to hear people's arguments for it. Make no mistake, no one wants unemployment, poverty, starvation, poor health, etc. Like any government program, basic income will alleviate some of these issues. And in that sense, it sounds great. However, like any government program, it will create other problems. People seem to treat basic income like a panacea, as if somehow just giving people money (as a tax to the rest of society) will somehow solve all of their problems. People are not good at spending money. Why don't we give people money instead of food stamps? Is it because it was politically untenable? No, it was done because giving people food stamps (actually, now debit cards redeemable at grocery stores) is significantly more effective than just giving cash at solving hunger issues. Basic income, granted, looks great on paper. However, it only provides those benefits if people are rational and relatively interchangeable, which they are not. I didn't even get to the negative incentives it creates, which is a whole other can of worms. For example, subsidizing income on the lowest level generally leads directly to price inflation, which is highly regressive. It's not clear if that, by itself, will cause more problems that this helps.
- zenogais 12y ago
  You can find over an hours worth of arguments for the idea in Basic Income: The Movie http://www.youtube.com/watch?v=ViywrpAyVdY http://www.youtube.com/watch?v=ViywrpAyVdY
- syllogism 12y ago
  Could you provide sources for the efficacy of food stamps vs cash? From the perspective of someone outside the US, the food stamps program always seemed totally weird.
- cortesoft 12y ago
  Hmm, you make a lot of claims without backing them up. While I don't have the time to bring them all up, how about one: "People are not good at spending money... giving people food stamps ... is significantly more effective than just giving cash at solving hunger issues." A lot of evidence points to this not being the case: http://www.givedirectly.org/evidence.php http://www.givedirectly.org/evidence.php People actually do very well when given the power to make their own decisions about where to spend their money. There are, or course, arguments against direct aid, but it isn't nearly as simple as you make it out to be.
clouds 12y ago
Borrow more to serve your citizens a comfortable life? Isn't this madness?
golemotron 12y ago
There are two things that are hardly ever addressed when Basic Income comes up: 1) What problem is it trying to solve, and 2) what will the social effects be? For (1) the thing we hear is that BI will be a way to deal with the increasing automation of labor and progressive unemployment that it will bring. That's a decent motivation but we shouldn't delude ourselves into thinking that it will solve poverty. Whenever people have choices, some will make bad choices. A cheque for 1K a month can be used wisely or squandered immediately. The net effect is that the power-law distribution of wealth will not go away. For (2), it's easy to imagine our future being something like Star Trek where people don't have to work but elect to. Again, some will and some won't. When people have a lot of fee time, they can opt for self-enrichment and charitable work, or they can sit on the couch all day (every day) and play video games, or they can cause trouble - delinquency/crime. The path people take is really more influenced by culture than economics. Basic Income will take the issue of what people do with their time and make it a pressing issue for society. I'm liberal, but I do buy the conservative argument that work engenders responsibility. When work is unnecessary, hopefully there's some other social force that helps us stay healthy as a society. I think that Europe would handle a transition to BI better than the US would.

99 points by mchusma 12y ago

Basic income might make it reasonable to eliminate TANF, some portion of SNAP, and some unemployment, but it doesn't eliminate the core need for Medicare and Medicaid. In the basic income scenario outlined, the poor and the elderly will still need subsidized health insurance (assuming the current employer-provided health insurance model) or health coverage of some sort. Social Security is also something of a dicey proposition. While it would be possible to use basic income to reduce social security benefits, it's role as a social insurance scheme to provide for the elderly couldn't be substituted in its entirety by simple basic income. Social security disability and death benefits would also need some more thought.

awt 12y ago
What about allowing people to store wealth in a non-depreciating, attainable, liquid asset (something besides USD or mutual funds or a home made out of plywood), and limiting liability for health providers?
- kasey_junk 12y ago
  "non-depreciating, attainable, liquid asset (something besides USD" What does that even mean?
  - prostoalex 12y ago
    TIPS?
    - kasey_junk 12y ago
      I guess, for some definition of liquid.
      - deleted 12y ago
        [deleted]
  - zo1 12y ago
    Are you actually confused about the terms, or just trying to be facetious?
    - kasey_junk 12y ago
      No, I'm curious what financial instrument meets all those requirements.
  - sitkack 12y ago
    Glitter sprinkles?
    - kasey_junk 12y ago
      Glitter sprinkles are available where you are? Well aren't you just living the dream!
- dustcoin 12y ago
  >mutual funds Vanguard offers many low-fee mutual funds. Non-depreciating: The long-term return of stock indices and some bond indices beats inflation. Attainable: $1000-$3000 minimum to open an account Liquid: Funds can be bought or sold easily (with no fee), money is accessible via ACH. I hope you are not suggesting that gold is a better investment than a diverse portfolio of stocks and bonds.
  - awt 12y ago
    Gold ETFs are fubar. Gold itself is not very liquid. There are all sorts of prohibitive fees and tax penalties for taking money out of a 401k or a mutual fund before a certain date. The barrier to accessing the value represented by any mutual fund or 401k holdings is substantial. It took me months to move money from one dead 401k to another one I controlled. Imagine the amount of effort required to spend $50.00 of a 401k on groceries.
  - zo1 12y ago
    They're still based on or valued in USD, which is what the OP wanted to avoid. A lot of good those USD-valued mutual funds are going to do for you when they're worth peanuts due to a devaluation of the currency or its buying power. "I hope you are not suggesting that gold is a better investment than a diverse portfolio of stocks and bonds." There are a lot of people that believe a big government/market crash is coming. And they're absolutely desperate for ways to weather it without eating their own toes off.
    - kasey_junk 12y ago
      "There are a lot of people that believe a big government/market crash is coming. And they're absolutely desperate for ways to weather it without eating their own toes off." Those people would be best served by buying ammunition.
  - kasey_junk 12y ago
    "Liquid: Funds can be bought or sold easily (with no fee), money is accessible via ACH." Just as a heads up, most finance folks don't consider being able to buy/sell something easily as the only bar to liquidity. Volatility is also a major component. That is, if something can change value dramatically from day to day it can be considered "illiquid". So lots of people do not consider mutual funds "liquid".
- mikeash 12y ago
  Your comment seems to imply that there's a good store of wealth that fits these criteria, but that it's not allowed. What is it?
  - awt 12y ago
    There isn't right now. Someday Bitcoin might fill that role.
    - kasey_junk 12y ago
      I'm not trying to be argumentative but lets assume Bitcoin becomes as liquid as USD (ie you can spend it on everything you can on USD without paying any higher transaction fees) what keeps the availability/depreciation matrix in check. That is, if it is a great value store why won't people horde it, thus decreasing availability. If it becomes readily available, why wouldn't it become worth less?
      - awt 12y ago
        Hmm, I'm not sure how to answer that. Hoarding increases the unit price relative to other assets, but doesn't make it any less liquid. Essentially infinitely small amounts of bitcoin can be transacted at any time.
      - mikeash 12y ago
        I think one big problem is fact that there really can't be a long-term nonvolatile store of value. Economic activity is inherently continuous. There are a few goods that last more than a few years without maintenance or replacement. Economic output puts a hard limit on how quickly you can turn your value store into stuff you actually want. For an individual it doesn't make much difference, but when everybody tries to do it, it doesn't work. For an extreme thought experiment, consider if everyone puts half their income into a perfect store of value for a year, living off the other half, then the next year they live off the savings. Everyone would die of starvation the second year even though they supposedly have just as much value available as what sustained them the year before.
- akgerber 12y ago
  TIPS already exist, and you can buy them online easily: https://www.treasurydirect.gov/indiv/products/prod_tips_glance.htm https://www.treasurydirect.gov/indiv/products/prod_tips_glan... It doesn't magically fix human nature, which prioritizes immediate needs over very distant ones.
  - awt 12y ago
    I suppose that would work if you trust the consumer price index. My own experience belies reported low inflation.
  - kasey_junk 12y ago
    TIPS are not normally considered "liquid" (at least not as liquid as cash, which is the standard most people have) as they have minimum terms of ownership.
bradleyjg 12y ago
The ACA exchange model is large risk pools with community rating. They implicitly cross subsidize the sick. So if the basic income is large enough to pay for an exchange policy without additional subsidies then you've replaced Medicare and Medicaid. However, a basic income of $12,000 is far away from that number at least for an individual. ACA subsidies the purchase of insurance at up to 400% of the poverty line. As for social security, politically I agree that a basic income that was lower than when many were expecting would be a non-starter. However I don't agree that it would fail a social insurance scheme. The social insurance aspect of social security is preventing elder poverty, a universal basic income does that by preventing all poverty. The regressive formula for calculating social security benefits was a canny political move (making it look more like a pension) but it isn't necessary to its social insurance function.
Retric 12y ago
I think subsidizing healthcare just for the elderly is a terrible idea. A fixed maximum annual benefit of say 30k would enable massive economies of scale, drive down costs, cover most issues, and not waste 100's of thousands of dollars on people who are beyond any known treatment and are effectively brain dead. Supplemental insurance for catastrophic problems would be optional as the vast majority of heath issues could be affordable. And vary few things are actually better treated by trowing lot's of money at them. Supplemental insurance even for the elderly would still be reasonably affordable by most people, but it remove the current model where hospitals maximize revenue by providing pointless and often cruel care for the dying. PS: I say this as someone that recently dealt with significant health issues. The ratio of actual costs vs delivered healthcare in the US is stupid and unsustainable. But, so is trying to write an unlimited check for any reasonably large group. Cap costs and you will see organizations operate within those limits. Edit: Yes, I realise this is one of those things you can't say, but that does not make it wrong. http://www.paulgraham.com/say.html http://www.paulgraham.com/say.html
patmcc 12y ago
Medicare and Medicaid should be eliminated in favour of some kind of universal healthcare, period. Basic income shouldn't come into the discussion.

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com2kid 12y ago

Assuming social security is replaced by basic income seems to be a fallacy. SS payments are not the same for everyone. Knowing the distribution of pay rates for SS is very important. Reducing SS payments, perhaps by a dramatic amount, is not going to go over well. Likewise, giving straight cash versus Medicare/Medicade does not work. You are basically telling people "I'm sorry, but you can either die of a treatable condition, or starve". (Unfortunately the latter is more palatable in the current American political climate...) 1k per month for the elderly who have multiple medical conditions, is not acceptable. IMHO the author is viewing this through the lens of someone who is young and healthy. It is also odd that the author highlights some jobs (plumbing, cleaning) that are likely to be the last that will be automated. A Roomba is a far cry from a proper janitorial service. While eventually we will get autonomous bots that can do such tasks, we are really far away from that goal. And finally, statements like > It is not clear to me why it should be significantly different, as a 12 year old needs basically the same as an 18 year old. Make me wonder what sort of reality the author lives in. (And only further confirms that the author is likely young, and has obviously never had children!) The price of child care alone is huge. Medical expenses are higher for children. School expenses exist. Children are not cheap.

kasey_junk 12y ago
"IMHO the author is viewing this through the lens of someone who is young and healthy." And always will be.
opendais 12y ago
Ya, this is always the fallacy Basic Income proponents keep claiming will come to pass. The only vaguely realistic way to generate a Basic Income situation is, frankly, to raise taxes to provide for a good fraction of the benefit [I think you can get to something like 6k of the 12k on spending cuts].
phkahler 12y ago
If the basic income replaces social security but is available to all adults, a large number of working people are going to quit and retire prematurely. SS isn't supposed to be a total retirement plan, but it is for many and this would increase the number - probably to the point where it all falls apart. What is the incentive to work under this scheme?

lutusp 12y ago

It's true that computers and automation are rapidly eliminating most low-level jobs, but it doesn't follow that a non-merit-tested basic income is the best way to deal with this new reality. Even with an automated workforce, I think there should still be social incentives, and incentives require merit-based income differentials and some concept of "earned income". We've already witnessed the first large-scale social experiment designed to replace the dog-eat-dog nature of conventional human society, and everyone knows how that turned out. But doing nothing while most jobs are absorbed by teams of obedient robots, and expecting society to rearrange itself optimally with no new ideas, is naive. This is an open problem, and the solution is not obvious.

wutbrodo 12y ago
> Even with an automated workforce, I think there should still be social incentives, and incentives require merit-based income differentials and some concept of "earned income". A properly-implemented basic income barely touches this, on the margins. The majority of social incentives don't lie on the line between starving and subsisting. I don't see how putting a floor at subsistence level (not even enough to buy a TV, e.g.) would somehow remove (or even appreciably affect) the social incentives around getting more money. People want iPods and TVs and Xboxes and decent cars and bigger houses (both to use and to show off), and there's no reason a basic income would change that.
jfoutz 12y ago
In the original plan you could trade each dollar of basic income for $2 of tax free income. you work and make $1000, you keep all of the 1000 + 500bi. you make 2000, you keep all of it + 0bi, you make 10000, you keep the first 2000, you pay tax on the next 8000, and you get 0bi. something like that.
yen223 12y ago
The elegant thing about basic income is that you won't need to lose social incentives. We aren't talking about a soviet-style redistribution of wealth here. If you were earning $100,000/year, and you are now getting a $12,000/year basic income, you aren't going to be quitting your day job.
12y ago

aaron-lebo 12y ago

Basic income is not practical today, at least not in the political sense. The political climate is in no way configured to do so, and won't be for years. The Democrats are never going to be okay with removing federal programs (even if basic income could cover several of them), and the Republicans won't touch something that would be seen by many as socialism. I think proponents of BI are ignoring just how radical it is. Basic income is a massive change. It would more or less completely change our society (or require our society to completely change in order to even happen). Democrats and Republicans hardly work together on small issues today, what would cause them to work on something which threatens both parties in various ways?

eastbayjake 12y ago
You don't think millions of constituents would support the "Free $1000 Check Every Month" bill? Democrats get to claim a victory on income inequality, Republicans get a victory for cutting spending and government waste. It's the bureaucrats who administer these massive programs that would be the losers.
- baddox 12y ago
  I do think that millions of constituents would support the "Free $1000 Check Every Month" option on the ballot, but I don't think the option would ever get close to being on the ballot.
- bryanlarsen 12y ago
  I doubt that "free $1000 check every month" would receive any more support than "free healthcare". And it will be even more complicated than the so-called ObamaCare by the time it gets to the ballot box.
dragonwriter 12y ago
> The Democrats are never going to be okay with removing federal programs (even if basic income could cover several of them), and the Republicans won't touch something that would be seen by many as socialism. If the general public supports it strongly enough, then the entrenched political parties will either conform to the public demands or face a realignment which replaces them with political parties that do. While the US electoral system is structured in a way that duopoly at any given time is essentially guaranteed, it does not guarantee that today's major parties will be tomorrow's. The US has for almost its entire history had two major parties, but major parties have failed several times.

Havoc 12y ago

I don't know about practical, but purely from a theoretical point of view I'm getting a "this is happening" vibe. People can whine and theorize about it as much as they like but I don't see a path that leads to anything other than basic income happening...at least in 1st world countries.

mahyarm 12y ago
I doubt it. You see it mentioned frequently enough in HN-esque circles, but I've never heard it mentioned once outside of it.
- scotty79 12y ago
  Never? 126,000 Swiss people formally requested a referendum about it. http://en.wikipedia.org/wiki/Basic_income#Switzerland http://en.wikipedia.org/wiki/Basic_income#Switzerland
- Havoc 12y ago
  >I doubt it. Well what else are we going to do with the millions of people that will literally become unemployable due to automation?
  - mahyarm 12y ago
    It's definitely a solution, but I would posit it's more well known among the intellectual set than the general populace as a popular idea. You don't need to have a large core group to bring it up in a swiss election, and on the surface it's pretty easy to market to the typical person. 'Free money, hell yes!' is pretty easy to sell, or for the welfare recipient 'Welfare money without dealing with demeaning bureaucrats, hell yes!'
    - Havoc 12y ago
      >I would posit it's more well known among the intellectual set than the general populace as a popular idea. I agree. It does not have wide spread acceptance. Or even wide spread awareness. What I'm saying though (and I think we agree here) is that this is happening...whether the public likes it or not...we as humanity are barreling towards this..social factors will force basic income into existence one way or the other. Thats why I'm saying "This is happen". Oh and this is coming from someone who will be excluded from any basic income criteria...

winslow 12y ago

I must be the only one who thinks basic income is insane. Let me explain. On paper this sounds great, everyone gets income to cover living costs (housing, food, basic utilities) in an economy where the workforce demand is dwindling. However, I personally don't trust my government (US) to implement this properly without any special niches carved out for someone. The corruption is rampant and by the time it gets through our government they will absolutely put loopholes in it or help special interests groups with something. My second problem with this is those who mismanage their money. There will absolutely be people who abuse the system and use this money to not cover their required expenses and use it for a variety of things they don't need. At the end of the month if they don't have any money left how will they cover their necessary expenses? Everyone keeps looking at basic income as this perfect solution and I just don't buy it. In a perfect world where the government aren't so corrupted and incompetent along with people who knew how to properly manage their money I feel this could work. However, I just don't see this working and it will be another money sink from our government. Maybe someone can convince me otherwise.

TTPrograms 12y ago
You would prefer the current welfare system, which requires the government to make decisions about who gets what money, to a system that is designed to require zero judgement on the part of any government officials?
- JoshTriplett 12y ago
  Never trust a government plan that says "we're going to add this new program, and replace these others", because the latter will never actually happen. The creation of the new program and the deletion of the old would need to happen in exactly the same bill.
md341 12y ago
And what would the alternative to basic income be? Letting the unemployed starve?
- 12y ago

absherwin 12y ago

This math works because the average person over 65 receives approximately $24,000 in federal benefits which would be cut in half. There are other groups who lose but this one is by far the biggest.

baddox 12y ago

My main concern with most articles about basic income, and in fact most articles about the intersection of economics and politics, is that public choice theory is almost never satisfactorily addressed. Looking at raw numbers is very important, and this article seems to do a good job and make a compelling case. But there is very little mention on the internal economics of government, and whether such a system is actually feasible in some specific government, given the incentives that apply to political behavior.

lmarinho 12y ago

I think the best way to make people subservient to their government is to keep their subsistence dependent on it. There has to be a better solution for this. Automation might make many goods and services readily available without requiring extensive labor, but that also means more people will have access to cheaper goods. Who knows what demands might come up in this new society that people with low skills might be able to cover.

scotty79 12y ago
We depend on government for such a huge range of services by now that distributing basic income wouldn't be unique leverage the government has over us. The last thing any government want's is unrest. An you can bet that going late on monthly basic income could cause serious unrest.

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patja 12y ago

Most rational people would agree we would all benefit from a wholesale scrapping of the current US tax code and restructuring of entitlement programs. If you thought getting the ACA through the political process was hard, just think for a moment on the fight all of the existing beneficiaries and rent-seekers (tax attorneys, H&R Block, etc.) will put up. It is fun to play what-if with the numbers but given our current oligarchy it is pure fantasy.

shams93 12y ago

If you look at the militarization of local police to me it seems to be clear that the ruling class are moving to eventually gun down 3/4 of the human population. Share the wealth? Hell no! Who needs consumers when you can gun them down and continue to make a fortune off of artificial financial instruments.

eastbayjake 12y ago

The Cato Institute had a post about this last week: http://www.cato-unbound.org/2014/08/04/matt-zwolinski/pragmatic-libertarian-case-basic-income-guarantee http://www.cato-unbound.org/2014/08/04/matt-zwolinski/pragma... Their argument for BI is that it sharply reduces rent-seeking behavior by lobbyists and special interests, which could reduce quite a bit of pork and wasteful spending. It also gives political cover to remove lots of expensive middle class entitlements, like the mortgage interest tax deduction. It would definitely take a massive compromise bill -- probably a constitutional amendment -- to make sure that entitlement programs are dismantled at the same time BI is instituted.

zo1 12y ago
"expensive middle class entitlements" It was an incentive created by legislators, so they could increase home-ownership in their populace. Wow, way to turn a government-legislated incentivization of middle-class individuals for home-ownership, into an "entitlement".
- cortesoft 12y ago
  Umm it fits the definition of entitlement exactly: http://en.wikipedia.org/wiki/Entitlement http://en.wikipedia.org/wiki/Entitlement It is a benefit (tax credit) given to a specific group (homeowners). Whether the goal is worthy or the means effective is another question, of course, but it is CLEARLY an entitlement.
  - zo1 12y ago
    Interesting, didn't know that! Still, feels like a lot of the usage of that word that I come across is pejorative, as per the linked article.
    - kasey_junk 12y ago
      What makes you think we shouldn't be applying negative connotations to the mortgage credit? There is lots of evidence that it has been particularly harmful and it is a very regressive entitlement (if that's important to you).

11thEarlOfMar 12y ago

Basic Income cannot replace Social Security and Medicare. It can only provide a floor for it. Same for Welfare. The intent of basic income is to enable a family of minimum wage earners to have a much less stressful financial existence: 2 minimum wage jobs ($9.00/hour in California) + 2 adult basic incomes at $12,000 each = $61,440. By no means a king's ransom, but certainly gives a family of four a fighting chance to live in a less unsafe place, feed the kids a little better and maybe take a modest vacation once in a while. Lower financial stress across the entire country will free people up to focus more on raising their kids. Many, many social problems subside when families do better.

falsestprophet 12y ago
> certainly gives a family of four a fighting chance to live in a less unsafe place Of course if everyone has basic incomes, then everyone can bid more for housing and push up the costs of both safe and unsafe housing. It isn't clear that a basic income would make neighborhoods safer or make it easier for the poor to move to safer areas.
dragonwriter 12y ago
> Basic Income cannot replace Social Security and Medicare. It can only provide a floor for it. Same for Welfare. It can replace those things. Whether it is desirable is a matter for debate (but I don't see you make the argument that its not, just asserting it.) > The intent of basic income is to enable a family of minimum wage earners to have a much less stressful financial existence I disagree: the intended beneficiaries of Basic Income are not just "minimum wage earners", further, your calculation of minimum wage + basic income is misleading since many BI advocates advocate eliminating the minimum wage with the adoption of BI. (More libertarian and less liberal BI supporters tend to do so; more liberal and less libertarian supporters tend not to.) I would say that the intent of BI as a replacement for means-tested welfare is to (1) increase short-run efficiency but eliminating costs and perverse incentives associated with means-testing, (2) provide a system which is easier to scale up as automation reduces the relative demand for labor as compared to capital, and (3) reduce financial stress generally, and increase labor market fluidity.

logn 12y ago

What about just this: for every dollar that is created, 50 cents of it goes to a basic income fund. Right now, banks and government contractors receive a disproportionately high amount of the newly printed money. Also, we need to reform corporate taxation. That would reduce wealth disparity and ensure stability of the social safety net.

chris_va 12y ago

While I realize HN loves basic income, it honestly is not a good idea. I would love to hear people's arguments for it. Make no mistake, no one wants unemployment, poverty, starvation, poor health, etc. Like any government program, basic income will alleviate some of these issues. And in that sense, it sounds great. However, like any government program, it will create other problems. People seem to treat basic income like a panacea, as if somehow just giving people money (as a tax to the rest of society) will somehow solve all of their problems. People are not good at spending money. Why don't we give people money instead of food stamps? Is it because it was politically untenable? No, it was done because giving people food stamps (actually, now debit cards redeemable at grocery stores) is significantly more effective than just giving cash at solving hunger issues. Basic income, granted, looks great on paper. However, it only provides those benefits if people are rational and relatively interchangeable, which they are not. I didn't even get to the negative incentives it creates, which is a whole other can of worms. For example, subsidizing income on the lowest level generally leads directly to price inflation, which is highly regressive. It's not clear if that, by itself, will cause more problems that this helps.

zenogais 12y ago
You can find over an hours worth of arguments for the idea in Basic Income: The Movie http://www.youtube.com/watch?v=ViywrpAyVdY http://www.youtube.com/watch?v=ViywrpAyVdY
syllogism 12y ago
Could you provide sources for the efficacy of food stamps vs cash? From the perspective of someone outside the US, the food stamps program always seemed totally weird.
cortesoft 12y ago
Hmm, you make a lot of claims without backing them up. While I don't have the time to bring them all up, how about one: "People are not good at spending money... giving people food stamps ... is significantly more effective than just giving cash at solving hunger issues." A lot of evidence points to this not being the case: http://www.givedirectly.org/evidence.php http://www.givedirectly.org/evidence.php People actually do very well when given the power to make their own decisions about where to spend their money. There are, or course, arguments against direct aid, but it isn't nearly as simple as you make it out to be.

clouds 12y ago

Borrow more to serve your citizens a comfortable life? Isn't this madness?

golemotron 12y ago

There are two things that are hardly ever addressed when Basic Income comes up: 1) What problem is it trying to solve, and 2) what will the social effects be? For (1) the thing we hear is that BI will be a way to deal with the increasing automation of labor and progressive unemployment that it will bring. That's a decent motivation but we shouldn't delude ourselves into thinking that it will solve poverty. Whenever people have choices, some will make bad choices. A cheque for 1K a month can be used wisely or squandered immediately. The net effect is that the power-law distribution of wealth will not go away. For (2), it's easy to imagine our future being something like Star Trek where people don't have to work but elect to. Again, some will and some won't. When people have a lot of fee time, they can opt for self-enrichment and charitable work, or they can sit on the couch all day (every day) and play video games, or they can cause trouble - delinquency/crime. The path people take is really more influenced by culture than economics. Basic Income will take the issue of what people do with their time and make it a pressing issue for society. I'm liberal, but I do buy the conservative argument that work engenders responsibility. When work is unnecessary, hopefully there's some other social force that helps us stay healthy as a society. I think that Europe would handle a transition to BI better than the US would.