8 ms·

Where true basic income differs from this experiment by Canada is that true basic income should be for every adult, regardless of income, race, marital status,

by jnbiche 12y ago

Where true basic income differs from this experiment by Canada is that true basic income should be for every adult, regardless of income, race, marital status, sexuality, etc. Not just for poor people, as with Mincome in this Canadian town. A few arguments for: 1) It becomes a defacto emergency lifeline when a ostensibly middle class person loses their job or suffers an extremely expensive illness. In the US, it can take forever to get on disability. With true basic income, there's no need to worry about getting on disability, since you already have a basic income (and yes, this means that disability should be eliminated if this passes). 2) It becomes much less expensive to administer. No massive bureaucracy started up and growing larger just to weed out candidates for some shitty benefit. You're an adult person? Great, you're in! 3) When everyone gets it, it's much more politically feasible to start and maintain. No more questions of "them" doing this or "they" ripping off the hard working man. 4) It allows even healthy middle class people to take risks that might have a big payoff, such as starting up a new business, or embarking on a quest to invent some new technique. Or build an open source project!

intopieces 12y ago
I like this idea a lot, but what would stop goods/housing from rising in price to meet the influx of free money?
- ergothus 12y ago
  That was my initial response when I first heard this concept a few years ago, and the answer is somewhat surprising (Note: I'm not an economist, so please someone correct me if I get anything wrong here): 3 things can alter those prices: A change in supply, a change in demand, or general inflation/deflation. The supply doesn't inherently change in this plan, nor does demand (*assuming everyone is getting these goods today.) And there's no inflation, as this is just redistribution, not printing new money.
  - schrodinger 12y ago
    Doesn't demand go up, as more people can afford a given house?
  - bradleyjg 12y ago
    You're right in general, but there are second order effects. The poor are more likely to spend all of their income than the rich. Also, even if there isn't a general increase in prices (i.e. inflation) there can still be a change in the relative prices. So for example, luxury housing might come down slightly in price as a consequence of the increased taxes, but entry level housing might come up to reflect new household formation enabled by the universal stipend.
  - GauntletWizard 12y ago
    If you think inflation's only source is 'printing money', you may not be qualified to speak on economic issues. Liquidity, the monetary supply, and the cost of exchange are quite a bit more complex than that, and far more prone to being manipulated and falling over, as both the Housing Crisis and Libor Scandal taught us.
    - innguest 12y ago
      I'm sorry but you are wrong. Inflation is nothing but the increase of money supply without an equivalent increase in production. What you are doing is being a good Keynesian and trying to make people believe that this stuff is too complicated for them to even start having an opinion on it. That strategy is condescending and not productive, and encourages helplessness in people.
      - lowboy 12y ago
        > Inflation is nothing but the increase of money supply without an equivalent increase in production Wouldn't that mean that inflation would also be caused by a decrease in production without an equivalent decrease in the money supply?
        czr80 12y ago
        Yes. Google "stagflation".
      - _delirium 12y ago
        The view that inflation is not solely driven by money supply is hardly limited to Keynesians. Especially since the 1990s, neoclassical economists also typically include other factors in their models, in part because a single-variable model doesn't appear to be empirically correct.
  - Kalium 12y ago
    In this world, market segmentation is a thing. By moving people from segment to segment, you are very much changing demand. So I submit that your assumption isn't really valid.
  - gnopgnip 12y ago
    A basic income would create a larger supply of labor by increasing mobility.
    - manicdee 12y ago
      And increase demand for labour by increasing consumption. People who were previously homeless and living on handouts could end up participating in the economy significantly more. People who were extremely miserly might spend a little more on better quality food, different forms of entertainment, or taking holidays further from home than the local park.
- ars 12y ago
  Taxes have to go up to pay for this so there isn't actually more money supply than there was before, it's just distributed differently.
  - corin_ 12y ago
    That doesn't mean prices won't change because of it. As a simplified example, let's say poor person A is renting an apartment from rich person B for $500/month. The new system gives everyone $500/month basic income, but to pay for this rich person B has to pay $1000/month more in tax (of which he gets back half as basic income), while poor person A doesn't pay more tax. So essentially poor person A is getting $500/month from rich person B. Obviously it wouldn't be that simple in reality, but roughly speaking that's what a universal basic income covered by taxes would mean - money flows from rich to poor, in varying degrees. Now sticking to the simplified two-person version, rich person A thinks "well poor person B could afford my $500/month rent before, now their income has gone up $500/month, so if I charge them $1000/month rent I know they can still afford it". The end result would be wasting time on behalf of the government and indeed the individuals to update everything while money split would remain identical, the only difference being that $500 now flows from B to A (via tax and basic income) then back to B (via rent increase). Obviously in the non-simplified world it wouldn't be as easy as saying "that person is now getting some money from my taxes so I can charge them that much more", and numbers wouldn't be exact... but as a rough theory, pricing definitely could alter at least to some extent. All that said: I'm not an economist, I don't know if that would happen, or to what extent. And my personal non-educated opinion is that basic income would be a good thing anyway.
    - aetherson 12y ago
      Your example doesn't work because it's a monopoly situation. That is, in your world there's only one landlord, so given that housing is a fundamental need and he controls 100% of the supply of housing, he can always raise his prices. Now, that's not to say that a guaranteed income wouldn't necessarily cause inflation in some goods and services. It probably would! But the standard answer to "why doesn't the provider of a good or service just increase the cost of their service to the maximum disposable income of the buyer" is competition.
- bduerst 12y ago
  Nothing. Nothing is in place to stop basic income from causing housing prices to raise, and is one of the reasons we have food stamps and medicare instead of basic income. Housing is a good/service with a price that is set by income-elastic demand. If you push up the income across the entire market (as true basic income would), then the price of housing and cars and other goods with income-elastic demand will increase. People who couldn't afford housing before wouldn't be able to afford housing still. There are plenty of income-elastic affected goods that will increase increase in price to match or even exceed the amount of basic income per individual. Once you dissect the problem that basic income is trying to solve, you can address those needs individually without raising income for the entire population.
  - aetherson 12y ago
    Raising the income for the entire population would indeed just inflate the currency. But a basic income would not in fact raise the income of the entire population. It would lower the income of the rich and raise the income of the poor. Because it would be paid for with taxes, not deficit spending. The rich would GET basic income, yes -- but their taxes would increase by an amount that would more-than-compensate for the higher influx of money. Their after-tax income would be lower.
    - bduerst 12y ago
      Assuming that housing is fungible, sure. But it's not. There are different segments by quality, location, etc. What percentage of the housing market is only for "the rich"? What extra tax percentage is middle-income going to pay? Lower income isn't going to be taxed more, so lower income housing prices are going to raise, as their market segment gets a boost in income. And now you're back at people who couldn't afford housing before still being unable to afford it - which was part of the problem that basic income was trying to solve.
      - aetherson 12y ago
        It is certainly possible that some goods or services that are inelastic in supply will experience cost inflation if they are goods or services that are mostly or entirely consumed by a market segment that becomes richer from basic income. I'm not convinced that housing is generally an example of such a good, but some housing may well be. However, the same is true of targeted assistance to only the poor for only housing -- it increases their effective wealth for the purposes of competing only for housing, and, if anything, it will make it worse than a more general guaranteed income would.
- venaoy 12y ago
  Most of the people who replied to you are wrong. Basic income could be implemented by NOT raising taxes. So it would NOT cause inflation. Eliminate current social services (and all the financial overhead associated to it: entire government departments who sole job is to administer these services, etc), and just redistribute the funds that would have gone to these services to be, instead, redistributed as basic income. There. All you are doing is shuffling money around to change its distribution while reducing financial overhead. You are not raising taxes or creating new money. Money is just better distributed and hence spent on different areas of the economy. (I don't know why, in the article, James Manzi says tax increases would be required. Maybe he has a certain opinion that in order to be effective, basic income should be greater than a minimum level that would not be met by my description above? I think my basic income would be sufficient. The US spends $1.5 trillion per year on welfare and pensions. If you take that money, one could redistribute it as a basic income of $1070 per month per household. That's significant enough to very helpful for society IMHO.)
- gnopgnip 12y ago
  The market greatly affected by the top end, in many cases more than the low end. This is not a zero sum relationship though.
aninhumer 12y ago
>this means that disability should be eliminated if this passes That depends whether you think the point of disability benefit is to allow disabled people to survive, or to allow them have a comparable quality of life to an able bodied person.
- bradleyjg 12y ago
  Which able bodied person? The idea behind some of our middle class social programs seems to be more in the nature of a climbing harness than a safety net. Why is someone who was once well off but fell on hard times entitled to more help than someone who was born into hard times?
  - aninhumer 12y ago
    >Which able bodied person? That can be debated, but I'd argue for somewhere around the median. >Why is someone who was once well off but fell on hard times entitled to more help than someone who was born into hard times? I'm not sure what you mean? I'm just suggesting we might want a supplementary income for disabled people, since they don't have the option to supplement their basic income with a job.
    - bradleyjg 12y ago
      The entire idea behind the basic income is to stop trying to make distinctions between the deserving poor and the undeserving poor and to get rid of the entire gate-keeping infrastructure. Keep the existing cobweb of special purpose programs and you've destroyed a major point of the exercise. If the BI is too low for disabled people, then it is too low.
      - aninhumer 12y ago
        >If the BI is too low for disabled people, then it is too low. Whatever level you set it at, disabled people will get less money than able-bodied people on average, though no fault of their own. I don't think that's fair however you frame it.

by jnbiche 12y ago

intopieces 12y ago

I like this idea a lot, but what would stop goods/housing from rising in price to meet the influx of free money?

ergothus 12y ago
That was my initial response when I first heard this concept a few years ago, and the answer is somewhat surprising (Note: I'm not an economist, so please someone correct me if I get anything wrong here): 3 things can alter those prices: A change in supply, a change in demand, or general inflation/deflation. The supply doesn't inherently change in this plan, nor does demand (*assuming everyone is getting these goods today.) And there's no inflation, as this is just redistribution, not printing new money.
- schrodinger 12y ago
  Doesn't demand go up, as more people can afford a given house?
- bradleyjg 12y ago
  You're right in general, but there are second order effects. The poor are more likely to spend all of their income than the rich. Also, even if there isn't a general increase in prices (i.e. inflation) there can still be a change in the relative prices. So for example, luxury housing might come down slightly in price as a consequence of the increased taxes, but entry level housing might come up to reflect new household formation enabled by the universal stipend.
- GauntletWizard 12y ago
  If you think inflation's only source is 'printing money', you may not be qualified to speak on economic issues. Liquidity, the monetary supply, and the cost of exchange are quite a bit more complex than that, and far more prone to being manipulated and falling over, as both the Housing Crisis and Libor Scandal taught us.
  - innguest 12y ago
    I'm sorry but you are wrong. Inflation is nothing but the increase of money supply without an equivalent increase in production. What you are doing is being a good Keynesian and trying to make people believe that this stuff is too complicated for them to even start having an opinion on it. That strategy is condescending and not productive, and encourages helplessness in people.
    - lowboy 12y ago
      > Inflation is nothing but the increase of money supply without an equivalent increase in production Wouldn't that mean that inflation would also be caused by a decrease in production without an equivalent decrease in the money supply?
      - czr80 12y ago
        Yes. Google "stagflation".
    - _delirium 12y ago
      The view that inflation is not solely driven by money supply is hardly limited to Keynesians. Especially since the 1990s, neoclassical economists also typically include other factors in their models, in part because a single-variable model doesn't appear to be empirically correct.
- Kalium 12y ago
  In this world, market segmentation is a thing. By moving people from segment to segment, you are very much changing demand. So I submit that your assumption isn't really valid.
- gnopgnip 12y ago
  A basic income would create a larger supply of labor by increasing mobility.
  - manicdee 12y ago
    And increase demand for labour by increasing consumption. People who were previously homeless and living on handouts could end up participating in the economy significantly more. People who were extremely miserly might spend a little more on better quality food, different forms of entertainment, or taking holidays further from home than the local park.
ars 12y ago
Taxes have to go up to pay for this so there isn't actually more money supply than there was before, it's just distributed differently.
- corin_ 12y ago
  That doesn't mean prices won't change because of it. As a simplified example, let's say poor person A is renting an apartment from rich person B for $500/month. The new system gives everyone $500/month basic income, but to pay for this rich person B has to pay $1000/month more in tax (of which he gets back half as basic income), while poor person A doesn't pay more tax. So essentially poor person A is getting $500/month from rich person B. Obviously it wouldn't be that simple in reality, but roughly speaking that's what a universal basic income covered by taxes would mean - money flows from rich to poor, in varying degrees. Now sticking to the simplified two-person version, rich person A thinks "well poor person B could afford my $500/month rent before, now their income has gone up $500/month, so if I charge them $1000/month rent I know they can still afford it". The end result would be wasting time on behalf of the government and indeed the individuals to update everything while money split would remain identical, the only difference being that $500 now flows from B to A (via tax and basic income) then back to B (via rent increase). Obviously in the non-simplified world it wouldn't be as easy as saying "that person is now getting some money from my taxes so I can charge them that much more", and numbers wouldn't be exact... but as a rough theory, pricing definitely could alter at least to some extent. All that said: I'm not an economist, I don't know if that would happen, or to what extent. And my personal non-educated opinion is that basic income would be a good thing anyway.
  - aetherson 12y ago
    Your example doesn't work because it's a monopoly situation. That is, in your world there's only one landlord, so given that housing is a fundamental need and he controls 100% of the supply of housing, he can always raise his prices. Now, that's not to say that a guaranteed income wouldn't necessarily cause inflation in some goods and services. It probably would! But the standard answer to "why doesn't the provider of a good or service just increase the cost of their service to the maximum disposable income of the buyer" is competition.
bduerst 12y ago
Nothing. Nothing is in place to stop basic income from causing housing prices to raise, and is one of the reasons we have food stamps and medicare instead of basic income. Housing is a good/service with a price that is set by income-elastic demand. If you push up the income across the entire market (as true basic income would), then the price of housing and cars and other goods with income-elastic demand will increase. People who couldn't afford housing before wouldn't be able to afford housing still. There are plenty of income-elastic affected goods that will increase increase in price to match or even exceed the amount of basic income per individual. Once you dissect the problem that basic income is trying to solve, you can address those needs individually without raising income for the entire population.
- aetherson 12y ago
  Raising the income for the entire population would indeed just inflate the currency. But a basic income would not in fact raise the income of the entire population. It would lower the income of the rich and raise the income of the poor. Because it would be paid for with taxes, not deficit spending. The rich would GET basic income, yes -- but their taxes would increase by an amount that would more-than-compensate for the higher influx of money. Their after-tax income would be lower.
  - bduerst 12y ago
    Assuming that housing is fungible, sure. But it's not. There are different segments by quality, location, etc. What percentage of the housing market is only for "the rich"? What extra tax percentage is middle-income going to pay? Lower income isn't going to be taxed more, so lower income housing prices are going to raise, as their market segment gets a boost in income. And now you're back at people who couldn't afford housing before still being unable to afford it - which was part of the problem that basic income was trying to solve.
    - aetherson 12y ago
      It is certainly possible that some goods or services that are inelastic in supply will experience cost inflation if they are goods or services that are mostly or entirely consumed by a market segment that becomes richer from basic income. I'm not convinced that housing is generally an example of such a good, but some housing may well be. However, the same is true of targeted assistance to only the poor for only housing -- it increases their effective wealth for the purposes of competing only for housing, and, if anything, it will make it worse than a more general guaranteed income would.
venaoy 12y ago
Most of the people who replied to you are wrong. Basic income could be implemented by NOT raising taxes. So it would NOT cause inflation. Eliminate current social services (and all the financial overhead associated to it: entire government departments who sole job is to administer these services, etc), and just redistribute the funds that would have gone to these services to be, instead, redistributed as basic income. There. All you are doing is shuffling money around to change its distribution while reducing financial overhead. You are not raising taxes or creating new money. Money is just better distributed and hence spent on different areas of the economy. (I don't know why, in the article, James Manzi says tax increases would be required. Maybe he has a certain opinion that in order to be effective, basic income should be greater than a minimum level that would not be met by my description above? I think my basic income would be sufficient. The US spends $1.5 trillion per year on welfare and pensions. If you take that money, one could redistribute it as a basic income of $1070 per month per household. That's significant enough to very helpful for society IMHO.)
gnopgnip 12y ago
The market greatly affected by the top end, in many cases more than the low end. This is not a zero sum relationship though.

aninhumer 12y ago

>this means that disability should be eliminated if this passes That depends whether you think the point of disability benefit is to allow disabled people to survive, or to allow them have a comparable quality of life to an able bodied person.

bradleyjg 12y ago
Which able bodied person? The idea behind some of our middle class social programs seems to be more in the nature of a climbing harness than a safety net. Why is someone who was once well off but fell on hard times entitled to more help than someone who was born into hard times?
- aninhumer 12y ago
  >Which able bodied person? That can be debated, but I'd argue for somewhere around the median. >Why is someone who was once well off but fell on hard times entitled to more help than someone who was born into hard times? I'm not sure what you mean? I'm just suggesting we might want a supplementary income for disabled people, since they don't have the option to supplement their basic income with a job.
  - bradleyjg 12y ago
    The entire idea behind the basic income is to stop trying to make distinctions between the deserving poor and the undeserving poor and to get rid of the entire gate-keeping infrastructure. Keep the existing cobweb of special purpose programs and you've destroyed a major point of the exercise. If the BI is too low for disabled people, then it is too low.
    - aninhumer 12y ago
      >If the BI is too low for disabled people, then it is too low. Whatever level you set it at, disabled people will get less money than able-bodied people on average, though no fault of their own. I don't think that's fair however you frame it.