India floats the idea of a universal basic income

http://www.economist.com/news/finance-and-economics/21716064-powerful-idea-unfeasible-now-india-floats-idea-universal

by Mz • 9 years ago

268 233 9 years ago

OJFord• 9 years ago

proposal stops a little short of true universality: for his sums to add up, take-up must be limited to just 75% of Indians. That means either a return to flawed means-testing, or a hope that the better-off will voluntarily opt out.

That's easy: just wrap it in social stigma.

I'm sure there's plenty of (socially) lower-middle class Britons who are eligible for one or other benefit scheme that they either don't realise, or couldn't bare to enrol in.

adrenalinelol• 9 years ago

While I agree that wrapping it in social stigma would help w/the numbers, it'd set a very bad precedent for the idea of basic income in general.

yummyfajitas6• 9 years ago

Why? It seems like a great way to discourage people from consuming it unnecessarily while making sure no one actually suffers in dire poverty unnecessarily.

In fact, this might be a good idea in general - sumptuary laws based on net payments to the government. Contributors to society would gain visible social status while those who are a net drain lose status but do not materially suffer.

Of course, I doubt you could implement this in India. I'm pretty sure everyone will shamelessly take the money.

pkd• 9 years ago

The problem is that it is hard to pull off in a bigger population like India's. Social stigma doesn't work if all your friends are doing it too.

My perspective is that the problem runs way deeper than this and any kind of social welfare scheme will be abused in India. This is because majority of the tax paying population thinks that they don't get enough for their taxes.

This might be somewhat justified because taxes in India can jump quite high (up to 30% of income) without seeing much increase in your net savings in major cities. This is compounded by the fact that a very low fraction of the eligible population actually pays taxes (this is due to most people being employed in the unorganized sector) which leads the government to try to maximize whatever it can get from the ones who actually pay.

This is evident in how so many relatively well off people haven't given up their LPG subsidy even after repeated requests by the government.

geodel4• 9 years ago

Social stigma will be real difficult to attach there. In India a lot of people take pride in being called backward or lower caste so they can mooch off some or other government subsidy or reservation to jobs/education. As the article mentioned it is almost always better offs who game the system to their benefit.

toomuchtodo• 9 years ago

No snark intended, but it seems India is the best place to test a basic income for both durability and uptake.

praneshp• 9 years ago

I didn't downnvote you, and I think your point is very true. I wish people had found it less insulting so there could've been discussion. There are many that need help, and many that want a certificate calling themselves backward.

Shivetya• 9 years ago

Interesting idea, for a country with so many in real poverty it would be a good step forward. This is a country which had to build toilets to improve sanitation so their issue with a very established lower class is easily seen.

If all members of a house hold receive the benefit, set a minimum age so as not to encourage more births, then even that low proposed amount will add up in for a poor family. The new issue is to make sure those who provide goods and services in those areas don't exploit this new income unfairly

mars4rp• 9 years ago

I guess Iran is the only country with universal basic income already in place then!

the income is not much and you probably can't live of it without working, but it is universal!

vkou• 9 years ago

Alaska, a thoroughly red state has universal income.

Likewise, it is not enough to live off.

maxxxxx• 9 years ago

Isn't that more like an oil dividend?

umeshunni• 9 years ago

Don't other oil rich countries (Saudi, Kuwait etc) have some form of basic income for their citizens?

AnimalMuppet• 9 years ago

I know Saudi does (or at least did). It was enough to live off of, too (though perhaps not in the style you would like to become accustomed to...)

analyticbastard• 9 years ago

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

civilian2• 9 years ago

It's not the same. This isn't trying to break the rules of physics. It's just a very large welfare program that would benefit from not having a bureaucracy behind it. And it would rely on the theory that enough people will still want work, so that they can afford luxuries, live where they want to, and get other trappings of social status.

yarou• 9 years ago

Sounds like living in a libertarian paradise. Except if you get stabbed and your doctor doesn't take your particular private healthcare plan. Then you bleed out while singing the praises of deregulation.

brilliantcode2• 9 years ago

I feel like universal basic income will only work in progressive societies that have gotten used to various social programs before. They might go bankrupt long before any of it's population actually receive money due to corruption.

In country's with high poverty level where people don't possess the minimal quality of life, I highly doubt the spirit of basic income will even be recognized but seen more of a cash grab where you'd be considered stupid for not taking advantage of. Such is the effect of poverty-removes the ability to seek long term societal gains for short term selfish gain at the cost of rest of society.

There may be cultural differences but they all boil down to economics of that specific region and country. My feeling is that a basic quality of life and the infrastructure to support it must be present for universal basic income to work. It's just too easy to cheat when so many of your peers will undoubtedly do it at your expense. It's expensive to cheat when none of your peer are willing to do it due to social stigma and shame.

hsuresh2• 9 years ago

I feel like universal basic income will only work in progressive societies that have gotten used to various social programs before. They might go bankrupt long before any of it's population actually receive money due to corruption.

I actually think it is the opposite. UBI might work better precisely because corruption prevents other welfare schemes reaching the target population.

At least in theory, the direct cash transfer should help pull out a lot of people from abject poverty. The article quotes a jump from 22% absolute poverty to 0.5% - if it does that, it would go a long way in accelerating growth in India.

brilliantcode2• 9 years ago

The bigger question is how they will fund this. India is know for the capital flight. Rich people aren't paying taxes in India so the government doesn't have much money to spend on social welfare. Unless I'm wrong here? I'm not too familiar with India so please excuse any cultural ignorances.

notahacker• 9 years ago

But as the article outlines, the schemes that India needs to cut to fund it comprise half of India's annual budget - which means less spending on things India desperately lacks like infrastructure - and each recipient gets $113 per annum, which is a undoubtedly a real boon to some of them but really doesn't go that far towards accelerating growth in India. And the corrupt are not going to find it any harder to siphon funds from unworldly, unbanked and often illiterate people living (or better still, recently deceased) in remote villages than they are to siphon off funds spent in other ways. Unless and until India gets dumbphone-based banking, the sheer logistics of dispensing money to a billion people is pretty mindboggling.

yummyfajitas6• 9 years ago

They might go bankrupt long before any of it's population actually receive money due to corruption.

The explicitly stated purpose of UBI here is that it can be implemented via direct electronic transfers to the recipients. That's pretty easy to audit electronically, particularly with biometrics which India is implementing.

In contrast, something like the LPG subsidy (which involves the physical delivery of gas cylinders) is insanely hard to police. How can the central government ensure that cylinders don't go to people who don't need them, that they contain the appropriate amount of gas, etc? It's virtually impossible.

zimzam• 9 years ago

This seems like a poorly thought out comment: the point of UBI is that everyone is signed up for it. Everyone gets it and that simplicity makes it far easier to audit. AFAIK, having only ever read about India online, everyone has a biometric-backed ID already, making it easier to link payments to individuals.

Another anticipated benefit of UBI is that once people are out of desperate poverty there is less incentive to cheat.

(We have seen that paying police officers a living wage is one way of reducing police asking for bribes: I imagine that a similar dynamic would be at play with UBI)

harigov2• 9 years ago

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

RangerScience• 9 years ago

Any income that can sustain a household without any pressure to grow as people will probably hinder their progress more so than help them

Are you basing this off of any familiarity with poor Indian culture?

Why do you expect "free money" to translate into "lesser progress" rather than "progress of their choice"?

Here's a different question: Have you learned more through self-directed learning, or other-directed learning? How have you chosen what to learn, and would you still have that drive-to-learn if you had free money?

Remember that UBI is in addition to salaries / wages, not instead of.

hashhar• 9 years ago

Most of the poor (and the rich too) here (I mean in India) look at such social programs as nothing more than cash-grabs. I have known people who make money by registering for multiple CNG connections and distributing them to other people in return for full price of the CNG cylinder (the cylinders are subsidised and the subsidy is paid by the government directly into the bank account of the person with whom the connection is registered).

scdoshi• 9 years ago

This is basically the same argument in general against basic income, prepended with "in the case of India, it won't work because... "

I don't know if basic income works, but that's why experiments in the field are required. None of the reasons you have pointed out seem to be apply only to India.

RogtamBar• 9 years ago

...developed country?

pharrlax• 9 years ago

I am of the opinion that India is better off spending that money by identifying all the organizational systems that it lacks like waste processing, water purification, security, monitoring, etc., and funding several startups in those areas.

Or just spend the money and build it directly.

The idea that UBI should be higher on the priority list than basic infrastructure is pretty crazy.

intended3• 9 years ago

It's not. This is happening now any way. The debate is on which system is more effective at helping People out of poverty.

clay_to_n• 9 years ago

Isn't one goal of UBI to allow people to invest in something like education (lowers wages for a long time; promises to increase them after relevant schooling) instead of forcing them to choose the long-run suboptimal strategy of leaving education to pursue wages that they need today?

parennoob• 9 years ago

...they are much better off to incentivize people to learn, teach or do charity than to just hand over some money for being citizens.

A lot of money does get earmarked for this purpose, and then gets funneled into the pockets of corrupt officials and politicians. I think that's what this income is supposed to help prevent. It's not the only way -- tracking money flow in general helps.

(The previous demonetization move was also supposed to help accomplish something similar, i.e. track if money is going to corrupt politicians instead of the impoverished people it is meant for.)

sasaram• 9 years ago

I think in contrary this is the ideal experiment since aspirations generally float high in aggressively growing economies. This is the exact opposite of Mao's' communism where people were forced to pick up skills based on a notion of a common good. A UBI can enable individuals to select, educate and work on tasks big and small, knowing that the govt. is behind them.

snambi• 9 years ago

It can be done anywhere.

ManlyBread• 9 years ago

I find it amusing that people went from "raising a minimum wage is a bad thing to do" to "unconditionally giving everyone a set amount of money will be the best thing ever".

anonnyj• 9 years ago

Different people.

aylmao3• 9 years ago

> Any income that can sustain a household without any pressure to grow as people will probably hinder their progress more so than help them.

I disagree. I believe the better place where one should do this is where it's needed the most.

People tend to believe that when given money, others will just sit back and get lazy doing nothing. Matter of fact is you need money to do anything; to give your children a better education, to buy tools to help you at your job, to buy appliances that free your time to have other projects, etc. Do you think these people are comfortable with their lifestyle? Handing them free money, IMO, more than being an excuse to "hinder progress", will be an investment that finally allow them to get over working to "just survive" and into the realm of working to actually ensure their kids are better off than they were.

This is similar to how YC funds startups. Or in fact, how anyone funds startups. No one says "Oh, if we give you a nice economic cushion, that'll probably hinder your progress, you need to be under the constant stress and problem of having no money to really get clever and do cool things." Of course not, that's nuts. You invest money to make money.

geraltofrivia• 9 years ago

While I agree with you on the perks of a UBI, I think India is not yet in a place where UBI could work.

As mentioned in the article, the pay would be a meagre Rs. 7000 per annum. To put it in perspective, I found it hard to keep my expenses per month to under Rs. 8000, living frugally as a student, with basically free housing and subsidized food.

Sure there are millions of people who would appreciate this sum and might gain some benefits from them, but it would be inconsequential to about 70-75% of the population. That's a lot of money wasted. It might br better to have focused welfare programs which would put this money to better use. For instance, government sponsored vocational training programs. India has a vast network of NGOs, and many of them have such programs. Another venue to invest this money might be on rural education systems. A disturbing number of them are not functional, where both teachers and students infrequently visit a shabby one room building to have free mid-day meals (I don't have any woes with this program, btw). Better infrastructure, better teacher training programs, are all venues that would benefit from the money. Ofcourse these venues are riddled with a corrupt administration which would substantially diminish the returns, but UBI distribution too might have similar problems.

Basically, in a country with this population, and with a huge wealth divide, I think UBI is a very ineffective welfare program.

johndoe4589• 9 years ago

And people are going to learn when they are trying to fill their belly from day to day? You are putting this backwards. [Maslow's hierarchy of needs](https://en.wikipedia.org/wiki/Maslow's_hierarchy_of_needs) comes to mind.

I travelled to India for 3 months some years ago. I could live there with 300 EUR a month in a nice little hotel in Himachal Pradesh no less. I could have gotten a room for just 1 EUR a day which I saw with my own eyes, simple room clean in a Tibetan run building. But this hotel had wifi downstairs which they changed the password only every few days, I had a TV, full size bed, private bathroom and toilet with running water (no carrying buckets or rationing like the people living in the area), etc.

I remember back then, 2010 is not so long ago, I could eat plenty for less than 300 INR a day (so approx. 2-3 EUR). Like a nice bowl of Tibetan noodles was 80 INR if I remember, and that was filling for a third of the day, and that's not even 1 EUR (Of course if I bought a coca cola then I would have paid 100 INR or more).

When a foreigner can live there with 300 EUR a month and be quite comfortable;, just imagine the change of quality of life it makes to people in poverty if they had just 100 EUR a month.

geodel4• 9 years ago

Indian finance minister has already said that Indian politics is not mature to have this idea implemented. Activists/Politicians support idea of UBI along with all the other subsidies. So it won't replace anything, just an addition to already financially burdened state.

To put in perspective Indian per capita income is just 3% of USA. Even with PPP (Purchasing Power Parity) it is still 1/10th of US. I think most generous implementation might not even be able to provide 2 basic meals a day, forget housing and healthcare etc.

Havoc3• 9 years ago

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

AnthonyMouse5• 9 years ago

Because of the way the math works, you can always fund it at some level, because everyone receives it. It doesn't actually "cost" $1 for you to pay $1 in tax and then get back $1 in UBI. If everyone in the country has the same income then the UBI is a no-op (but in theory you could still have it). All it ever does is cause money from wealthier people to go to poorer people, the same as any other redistributive program, but more efficiently and with less central planning of what people are allowed to do with their money.

And the cost of living in poorer countries is much lower, so the necessary UBI is that much lower.

Havoc3• 9 years ago

Thanks for this. Hadn't realised this before but makes sense.

CaptSpify• 9 years ago

I would imagine that "poor" countries are going to the most affected by automation, though

Havoc3• 9 years ago

Yeah that's going to be ugly. Human labour too expensive to be competitive & country to poor to massive automate.

felipeccastro7• 9 years ago

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

NeutronBoy• 9 years ago

What made me change my mind about UBI was to realize that a) human desires are infinite, and there'll always be more work to be done and b) the more work is done by machines, the richer the population as a whole will be, as products and services automated tend to be cheaper.

I agree with this sentiment. Looking into the (very long term) future, it's interesting to look at a fictional post-scarcity society (Star Trek) (with a grain of salt - it's really the writer's imaginations and what you see in the movies/shows) and see what the impact would be. My key takeaways are:

* everyone still works, or studies, and the culture is that you still contribute to society rather than sit around and do nothing. This requires a significant culture change from our current society.

* They often visit colonies and planets that are decidedly not post-scarcity - they are often poor or middle-class colonies, with an agricultural bent. In theory this shouldn't be the case in a post-scarcity society, but it becomes apparent that there's still a cost (resources and time) associated with production and transport unless you want to be ruled by AI overlords.

tluyben22• 9 years ago

You work, in that case, but not for money. There might be a lot of work but a lot of that work might be not something anyone wants to pay for. Hell, things we do want, like nurses and teachers we already do not pay enough for, let alone all kinds of niche things. A lot of people who do not have to work still work, and while not many of that kind of worker pops up on HN, many millionaires I know do work in their or other communities, for no money; they also help out with their money. People who like to work, will work, people who want to live on holodecks will live on holodecks. And that is fine. Why would anyone care if we are post scarcity / full UBI?

perfmode• 9 years ago

b) the more work is done by machines, the richer the population as a whole will be, as products and services automated tend to be cheaper

This assumes the existence of a "good" distribution of generated wealth. This tends to not be the case.

How does that factor into your thoughts?

felipeccastro7• 9 years ago

The less money you need to buy goods and services, the richer you are because your money is more valuable.

You don't need a direct money transfer from big companies to benefit from them.

boardwaalk• 9 years ago

I'm not clear on how your realizations turned you against UBI.

If (a) is true, people will still work (because they want money above their UBI), and will still create progress (i.e. little will change). I'm not sure how (b) connects. Perhaps it assumes people will do less work towards automation under UBI?

I would like to think people will still work on UBI. In fact, I wouldn't be surprised if the percentage that don't is similar in some respects to drug use in those places where all drugs have be decriminalized (and perhaps similar to true unemployment numbers now). There is a question of what people will do with their freedom to choose what they will do. Would we get more and more creative art? More inventions and entrepreneurs? More things that are "useful" (by whatever metric: technological progress, preservation of the environment, internal well-being e.g.) or less?

Trying to speculate seems fairly silly, though perhaps one could look to history (patronage, for example). I think it'd be even more silly to think we have things right right now (esp. considering fairly objective things like suffering that could be prevented or environmental damage that could be checked) and the idea should be given a shot at least in a limited setting.

felipeccastro7• 9 years ago

I'm not fundamentally against UBI. It's a different form of social welfare, and it could be more or less efficient depending on how it's applied.

My point is, until recently, I believed it was absolutely the only way forward, we wouldn't be able to avoid it, because this time "robots will really steal our jobs". My realizations imply that this is not the only way forward, even if robots take 100% of the currently existing jobs.

jjoonathan6• 9 years ago

Human desire may be infinite, but that doesn't mean there is an infinite source of jobs if we just try hard enough.

Problem 1: the economic notion of value is weighted by wealth, but the notion of "human desire" you discuss is not. Entertaining a king is valuable, in the economic sense, but feeding and housing a poor is not. It doesn't matter if there are plenty of things that people want to be done, it matters if there are plenty of things that people with money want to be done. If all the money flows into a few hands, the demands of the many do not count towards stimulating the economy, and the economy is not stimulated.

Problem 2: leverage. The economic value you create is an upper bound to what you earn, not a lower bound. The lower bound is determined by your next best option, which effectively, in light of correlated risk, means there is no lower bound. The service you provide may be critical to the functioning of society, but if you are easily replaced, well, you aren't going to earn very much. In other words, even if demand increases exponentially forever, and you play a critical role in satisfying that demand, the economy does not guarantee that you will be able to extract money for yourself out of the process. See: crowd of artists trying to pawn their wares off on the king. Also, farmers.

Problem 1 and problem 2 combined are what make the "capitalist dystopia" a plausible, stable, and terrifying state of affairs.

Problem 3: deregulation does not necessarily return markets to a pristine state of natural excellence. No such state exists. Quite the opposite, in many cases. Regulatory capture is a real problem, a big problem, but it's only one of many factors that lead to sclerotic, anti-competitive markets. I'm regularly floored by people's ability to talk about network effects, economies of scale, information asymmetries, moats, winner-takes-all games, and mergers/acquisitions with one breath -- all of which are non-regulatory market forces that suppress competition and innovation -- and then with the next breath assert that deregulation is the most straightforward way to spur innovation and competition. See: Enron, where deregulation of the energy markets led to artificial supply shutdown (the infamous rolling blackouts) in order to drive prices higher and profit. Listen to the recordings of the traders literally giggling as they order plants offline, and tell me again that deregulation is a cure-all. Sometimes more regulation leads to better functioning markets. Utilities are the canonical example.

tn133• 9 years ago

but that doesn't mean there is an infinite source of jobs if we just try hard enough. Job = Time.

As long as human beings can use their muscles and brains in the time to change outcome of some events and as long as people vary in their ability to do so, I think jobs will always exist.

winstonewert2• 9 years ago

Entertaining a king is valuable, in the economic sense, but feeding and housing a poor is not.<

No, actually. The economic notion of value is subjective. Economic thought, despite popular perception, does not view value in purely monetary terms. Instead, value is seen as subjective: something is valuable because humans value it. Human desire is the very definition of what makes something valuable.

felipeccastro7• 9 years ago

About the capitalist dystopia, I really don't see it that way. What you described as its weakness is actually its strength.

It's the natural mechanism that balance demand and supply, and ensure we'll always have enough food for everyone. It's the natural incentive that draws more people to an area that is under-served (e.g. IT) and away from another that is over-served (e.g. farming). The examples may not be the best possible, but you get my point.

About deregulation: I agree it's not a single factor, but it's a pretty important one on the subject of "creating new jobs". I understand there are several other factors getting in the way of a competitive market, but monopolies aren't all created the same. The kind of monopoly that Facebook or Google have is not the same kind of a state-enforced monopoly which rules out competition by force of the law.

blackoil• 9 years ago

It is possible for a software engineer/lawyer/MBAs today to reduce the work week and live reasonable life, but as human desires are infinite we see them working a 90 hour week. So the smartest will keep working longer and harder to be richer, rest will start going out of work bottom to top

sokoloff4• 9 years ago

I love what I do and don't intend to stop anytime soon, but when the time comes that I do want to stop, I want to make sure there's more than ample money in the retirement and investment accounts to fund our lives post-career.

foxylad• 9 years ago

b) the more work is done by machines, the richer the population as a whole will be

True - as a whole. But as things stand now, the owners of the machines get richer, and the displaced workers get significantly poorer.

My concern is this. In ten years time, trucks and taxis will be automated, and vanishingly few truck drivers will be able to retrain as truck computer techs. Truck and taxi driving is the last bastion of badly-educated men, (apart from the military, but automation will be gutting military employment too). So we're going to have a huge (many millions) population of (to generalise horribly) redneck men who like guns and feel worthless.

Even now, 2/3s of gun death in the US is that exact demographic suiciding. I believe these guys gave Trump his victory, and when they realise even he's let them down, those that don't kill themselves are going to revolt.

A UBI could be part of the solution to this nightmare, because it would take the economic aspect out of the equation. It would mean unemployment lost its stigma, because at least some people chose to do their own thing (playing music, carving wood, reading at schools) instead of working for the man. So it would become socially acceptable not to have a paying job.

Sadly I think it's very unlikely to happen, unless the rich figure out that their wealth is going to be redistributed violently if they don't do voluntarily.

tarr11• 9 years ago

The average age of a commercial truck driver in the US is 55. Many of these people will be retired, and younger people are (rightfully) avoiding this industry.

harryh3• 9 years ago

The US suicide rate has been pretty flat for about 50 years. There was a decent drop from the mid 80s until 2000 that has since reverted to norm but it's not historically high.

Increasing automation of lower skilled jobs has been going on for a long time. It's hard to see that correlating with any increase in the suicide rate.

reddytowns5• 9 years ago

Sadly I think it's very unlikely to happen, unless the rich figure out that their wealth is going to be redistributed violently if they don't do voluntarily.

Do you really think this will be possible in a decade? With the advances in technology such as the military robots, you yourself describe, it seems increasingly unlikely.

vacri4• 9 years ago

those that don't kill themselves are going to revolt.

There has already been civil revolting in recent times. The police being shot at during the BLM stuff is what it looks like. The days of organising a 'continental army' and taking the current government head on are long gone (in developed countries, at least). Making an organisation large enough to even start to annoy the US military would be nipped in the bud long before it happens. But there will be lots of small-scale or individual revolting.

The methods of government in the US are not going to change (eg: the Electoral College) because fairer systems would work against the current parties in power, and changing the constitution itself is extremely difficult, even for something as conceptually simple as 'no more alcohol' ('new electoral process' doesn't stand a chance). So, barring massive social disaster, things will carry on as-is. Trump will do a lot of damage to convention and will highlight lots of edge-cases, but the underlying systems will barely move.

There will be revolts, but it's not going to change anything structurally.

devwastaken• 9 years ago

the more work is done by machines, the richer the population as a whole will be, as products and services automated tend to be cheaper.

There is no such thing as trickle down economics. Wealth does not get distributed in equal to its gain, it is distributed based upon many other markets. For example, if your company makes double this year, you're not going to get paid any more than you were, but if what you said was true, you should be getting paid near double. Infact, how much wealth your company makes has little to do with how much you will be paid when it comes to investment. You're going to get paid what you can negotiate for, which will be competative to the market of other individuals. Just because your company is doing good does not mean they're going to pay anywhere near double for their employees when they can get them at market rate, which is always pressured to be lower.

The products also don't have to be cheaper. Infact I don't know of any good examples of automation making things cheaper that aren't just competing with other products. Products do not have to be priced near what they cost to make, as examplified by apple products and tech in general. They're priced to what people give it value, which is manipulated by advertising and patents/copyrights that give them the ability others need or want.

harryh3• 9 years ago

If a particular company is making outsized profits other firms will enter the market to capture them. Those firms will bid up the cost of the labor necessary to serve the market.

The historic share of labor as a % of GDP is pretty constant. It has dipped slightly in the last ~15 years and some people see this as the beginning of a major change but that's highly speculative.

felipeccastro7• 9 years ago

The products become cheaper because of competition with other products, automation is just part of what allows business to have a lower cost themselves.

Apple and tech in general are actually a good example of my point. Why is it that in several third world countries, lacking basic sanitation for a large part of the population, it's so common to see people in slums with last generation smartphones and big flat screen TVs?

What I meant about everyone getting richer is not that the money flows equally, but that when you need less money to buy goods and services you are, in a way, richer. Another example is Uber: I don't get a single dollar of what they make, but I have access now to a service that it wasn't accessible before (taxi cabs).

whack• 9 years ago

The reasoning you're using is very flawed. Yes, we'll never get to a state where a small number end up with 100% of the wealth. Yes, there will be an equilibrium reached between the wealthy and the middle class. But this equilibrium point can shift more and more towards the wealthy. In fact, this has already been happening in the past few decades, as illustrated in books such as Capital.

And as this equilibrium shifts in favor of the wealthy, you'll see the effects of inequality get more and more exacerbated. You might even get to a point where the inequality is so extreme, that the "masses" have much more to gain through wealth appropriation, as opposed to wealth creation. And when that point comes, democracy will collapse and give way to a communist or fascist revolution.

Basic income offers an escape valve to the corrosive effects of inequality. It distributes more fairly the fruits of globalisation and automation. It gives every citizen a share in the national prosperity. It gives us all a reason to cheer for the greater good, and not just our own advancement.

tluyben22• 9 years ago

Basic income offers an escape valve to the corrosive effects of inequality. It distributes more fairly the fruits of globalisation and automation. It gives every citizen a share in the national prosperity. It gives us all a reason to cheer for the greater good, and not just our own advancement.

I think this hits the nail on it's head; opponents of basic income (usually rich or might-become-rich people in my experience) do not see this clearly. We would be able to cheer for greater good as we do not have to struggle for money anymore in our own tiny world of our household.

I think that UBI would be a good plan with or without robots taking over. But robots forces us into it as people will simply die; sure there might be some other jobs (although I think this revolution is so different than past ones that it will not happen like that, but we can only see as everyone of their generation says this) but for many people these jobs will come too late or are not achievable.

In the factories we work with, most people were replaced by robots, there are only a few people in the very big buildings. Some of the assembly line people I did speak to because I was curious, but really, they have no up potential: they cannot do anything else but actual robot work. I would be highly surprised (and so would the owner of the factories who tried this) if anyone could retrain them for a non robot like task. These people will not die (I am told) in China as thr gov find something for them, like standing on a street corner to watch the traffic or sitting in front of a building to see who goes in and out (but nothing else: not like a porter), but in many other countries it means you cannot buy food or pay rent. And that is it without UBI.

I am in no way for a distribution of wealth equally; we know that will not work as countries tried, but we are now at a complete opposite and that does not work for many either. When there are less (well paid) jobs it will not work for most suddenly.

jeffdavis2• 9 years ago

I think you are ignoring some bad things that could come out of UBI.

The greatest danger is that people may be comfortable near the BI level until they are about 30, and not really work or educate themselves much (lacking motivation). Then, they want to have a family, and all of a sudden their desires for consumption skyrocket. They can't just join the workforce then, because it will be 10 years before they advance enough to get what they want.

Then you have a bunch of undereducated, inexperienced people who want a lot of stuff.

I'm not saying it will happen, but we have to be careful.

huh333i• 9 years ago

You want to thwart communism using UBI? That's like thwarting floodwater by calling your basement a swimming pool.

jondubois• 9 years ago

Well said. I also have a theory that as inequality increases, the economy starts to become increasingly 'luxury-oriented' - So everyone ends up working to cater the whims of the wealthy but no one is working for the greater good.

It's already kind of happening with startups; to a significant extent, startups are essentially luxury goods for the super-rich. They've become a collectible/status symbol. Like a yacht or a private jet. Wealthy investors love to brag about all their big exits.

ouid6• 9 years ago

I present the analogy of the obsolete computer for your consideration.

Perhaps it is the case that what the market decides is best for people who cannot perform any task more efficiently than a computer is to simply stop being powered.

felipeccastro7• 9 years ago

Unlike obsolete computers, humans have the capacity of adapt themselves and learn/do different jobs.

lend000• 9 years ago

It's an implementation problem -- UBI just has to be very basic to incentivize productivity. Contrary to what many think, there will always be jobs in a fully automated world (until robots can be indistinguishable from humans, that is, both physically and mentally) -- we will shift from a labor-intensive economy to one based on social value and experience.

The more concerning problem which comes up in this article is that you cannot have both UBI and lax immigration/easy freedom of movement. The first country to institute a UBI would be quite appealing to the billions of people living in destitute poverty, and they would all want to emigrate, making it almost impossible to get into the country. How do you decide who gets in? Do you require the person was a citizen for 18 years before qualifying? You certainly can't have open borders or the welfare system would quickly be overrun.

meanduck2• 9 years ago

Here some official fact http://indianexpress.com/article/india/india-news-india/data...

For 2012-13 FY, 12.5 Million (1%) paid any Income tax, averaging Rs 21,000 ($350). The 3 individuals in the top-bracket of Rs 100-500 crore ($16M-$83M) paid a total tax of Rs 437 crore ($72M) — resulting in an average tax outgo of Rs 145.80 crore ($24M).

Indian statists cant help but screw the country funders even more. Disgustingly inhumane.

f_allwein• 9 years ago

From the longer (paywalled) version:

"Over a fifth of its population lives below the poverty line. The scheme outlined this week by the chief economic adviser to the Indian government, Arvind Subramanian, would cut that figure to less than 0.5% by transferring about $9 a month to all adult Indians. If doled out to everyone, that would cost around 6-7% of GDP; the 950 welfare schemes soak up 5% of GDP." http://www.economist.com/news/leaders/21716027-india-should-...

Fascinating as few people probably would have thought UBI would be remotely feasible in a country of 1.3B people. Yet there is also massive inequality, as well as corruption and inefficiency in handling all the various aid programmes. Plus the country has Aadhaar, a digital-identification scheme that covers 99% of adults.

Probably still not feasible for now, but interesting to see how relatively cheap it would be to lift so many people out of poverty.

ouid6• 9 years ago

This is only tangentially related, but I remember there was a problem some time ago where India simply did not have the infrastructure to count all of its citizens. How is Aadhaar sure of its 99% figure?

suraj• 9 years ago

Adhar relies on biometric data. Iris & fingerprint scanning is done when you get your Adhar card.

nickpeterson• 9 years ago

I guess I don't grasp how this will prevent companies from raising prices to capture some of that 9 dollars, effectively making the wealthy even wealthier.

aminok16• 9 years ago

Forcibly redistributing income from low resource generators to high resource generators creates an incentive for people with fewer resources to have more children than they are capable of supporting. This dynamic will in the long run lead to more people that produce fewer resources.

Currently government is redistributing income upward by economic prohibitions (regulatory barriers):

http://cepr.net/publications/reports/working-paper-the-upwar...

and it is redistributing downward with social welfare spending, with the US massively increasing social welfare spending since 1972:

http://fivethirtyeight.blogs.nytimes.com/2013/01/16/what-is-...

Annual spending growth on various components of social welfare spending (1972 - 2011):

Pensions and retirement: 4.4%
Healthcare: 5.7%
Welfare: 4.1%

Annual economic growth over the time frame:

2.7%

The only thing it has to show for giving people more "free money" to spend is a higher trade deficit, stagnant wage growth, and, I would argue, an explosion in the amount of single parenthood:

http://pinetreewatchdog.org/500-rise-in-single-parenthood-fu...

But hey, since 40 years of social democracy has failed, let's keep doubling down and giving people more "free" money.

The end result of this bidirectional forcible redistribution is the productive middle class being destroyed, and two classes becoming increasingly significant: a small upper class controlling a growing share of national output, and a large unproductive underclass that is dependent on the taxes that upper class pays, constituting an increasingly large portion of the population.

jjoonathan6• 9 years ago

Currently government is redistributing income upward by economic prohibitions (regulatory barriers)

Forgive me for the double post, but part of a sibling comment of mine is especially relevant here:

I'm regularly floored by people's ability to talk about network effects, economies of scale, information asymmetries, moats, winner-takes-all games, and mergers/acquisitions with one breath -- all of which are non-regulatory market forces that suppress competition and innovation -- and then with the next breath assert that deregulation is the most straightforward way to spur innovation and competition.

I agree that eliminating rents should be a (if not the) primary goal of government, but I don't agree that eliminating regulation is synonymous.

aminok16• 9 years ago

All regulations, except on natural resources like land, should be eliminated in my opinion, as they are forceful interventions against people exercising their legitimate right to freely contract and utilise their own private property. In industries where network effects emerge, the government should fund open-source protocols that can compete with privately owned options. For example, applications built on a distributed consensus public blockchain (e.g. Ethereum) could be competitive with many existing centralized services.

baddox• 9 years ago

Why is that contradictory? It only seems contradictory if you expect government regulations to reliably (i.e. on net) decrease market inefficiencies. That is certain a plausible argument, but it needs to be made rather than just assumed.

neffy2• 9 years ago

That argument (Malthusian) goes back to the beginning of the industrial revolution. But since pretty much every technologist, scientist and engineer currently working can trace their lineage in less than 4 generations back to the working class, I think I'll go with greater and better distributed wealth and education solving more problems than it creates.

The fundamental issue addressed by positive incomes is simply that money serves two processes in economies that are at complete odds with each other, 1) a store of value and 2) the fluid that drives economic activity. The more money that is held in the fewer hands, the less well it is able to fulfil the second and far more important purpose. In the limit, all the money is held by very few people, and shortly after that, those people find themselves at the hands of a very angry mob.

Which just never ends well.

aminok16• 9 years ago

The Malthusian argument has never been tested for an extended period in a situation where resource usage has been decoupled from resource generation.

From the brief experiment we've had with massive forcible income redistribution (social democracy), we've seen the following:

* slow down in wage growth and improvements in life expectancy

* slow down in productivity growth

* explosion in the rate of single parenthood (perfectly in line with economic theory on how availability of resources affects child rearing choices)

But hey since 40 years of social democracy has failed so utterly, clearly we should keep blaming the free market and doubling down on social democracy.

vacri4• 9 years ago

But hey, since 40 years of social democracy has failed, let's keep doubling down and giving people more "free" money.

... you mean the countries with the highest quality-of-life measures? The Scandanavian nations, Canada, Australia, NZ, all of which have vibrant economies, high average wages, and strong middle classes?

The US with their pathological fear of their own government is not what I'd use as a particularly characteristic example of social democracy.

aminok16• 9 years ago

They don't have "vibrant economies". They have strong economies, that long ago stopped being "vibrant" (by vibrant, I mean fast-developing).

Europe and Canada have seen stagnant wage and economic growth since adopting social democracy. What are you basing your claim that these policies are working on? I strongly advise you to stop assuming that what you're told by the media and echo chambers on the internet is correct, and actually do research on these issues, by looking at statistics.

Social democracy has not worked in Scandinavia. The author of Scandinavian Unexceptionalism explains how it has harmed Sweden:

"From 1870 until 1970, Sweden was a free market success story. Sweden had the highest growth rate in the industrialized world. .. [After taxes were raised in the late 60s and 70s] Sweden stagnated":

https://youtu.be/D0hnA341AWE?t=5m23s

Sweden was the 3rd wealthiest country in the world in 1968. After it created a massive welfare state in the 1970s and 80s, its growth stagnated, and by 1991, it was 17th highest income country in the world.

Other important facts:

http://iea.org.uk/sites/default/files/publications/files/San...

• Scandinavia is often cited as having high life expectancy and good health outcomes in areas such as infant mortality. Again, this predates the expansion of the welfare state. In 1960, Norway had the highest life expectancy in the OECD, followed by Sweden, Iceland and Denmark in third, fourth and fifth positions. By 2005, the gap in life expectancy between Scandinavian countries and both the UK and the US had shrunk considerably. Iceland, with a moderately sized welfare sector, has over time outpaced the four major Scandinavian countries in terms of life expectancy and infant mortality.

• Scandinavia’s more equal societies also developed well before the welfare states expanded. Income inequality reduced dramatically during the last three decades of the 19th century and during the first half of the 20th century. Indeed, most of the shift towards greater equality happened before the introduction of a large public sector and high taxes.

If you want a more equal society, you need a more free market. It is regulatory prohibitions (anti-free-market policy) on economic activity that are contributing to growing income disparity:

"Make elites compete: Why the 1% earn so much and what to do about it":

http://www.brookings.edu/blogs/social-mobility-memos/posts/2...

The US with their pathological fear of their own government is not what I'd use as a particularly characteristic example of social democracy.

By every broad-based objective measure, the scale of forcible income redistribution has massively increased in relative and absolute terms in the US. The raw statistics show that the US has by every objective measure moved drastically in the direction of social democracy over the last 40 years. The same applies to every other major Western economy.

dang4• 9 years ago

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aminok16• 9 years ago

But as things stand now, the owners of the machines get richer, and the displaced workers get significantly poorer.

No they don't. We've had 200 years of massive automation fueled job destruction, and wages and the demand for labour are massively greater now than 200 years ago.

The last 20 years in particular have overseen the most rapid wage growth in human history.

MarkMc• 9 years ago

In 1995 the real median US household income was $52,664. In 2015 it was $56,516 [1].

US Hourly Wages for nonsupervisory workers has certainly grown over the last 20 years, but not in the past 40 years [2].

[1] https://fred.stlouisfed.org/series/MEHOINUSA672N

[2] https://en.wikipedia.org/wiki/Household_income_in_the_United...

aminok16• 9 years ago

The US isn't the world. The US has many traits that are peculiar to it, and not universal to economies that are becoming increasingly automated. The world has seen more wage growth over the last 20 years than any other period in history:

http://csmonitor.com/World/2016/0207/Progress-in-the-global-...

FullMtlAlcoholc3• 9 years ago

No they don't. We've had 200 years of massive automation fueled job destruction, and wages and the demand for labour are massively greater now than 200 years ago.

This is different. In the past, technology has been a multiplier for the productivity of workers. The confluence of robotics and AI will mean the eventual evaporation of low-skill and/or laborious jobs as they are completely replaced by automated agents.

Unless we somehow go through a revolution in education in one generation, start augmenting humans, or place greater value and importance on artistic/creative endeavors, there simply won't be many things that humans are better/more cost-effective at than machines. Certainly not enough to make up for the displacement of jobs.

For example, there are ~3.5 million truck drivers in the US currently. Add those to the number of Lyft, Uber, taxi, etc. drivers. In less than 10 years, those jobs will most likely be completely gone except for bespoke, upscale professional drivers as a luxury. These people do not have a unique skill set they can apply to something else. Remember, low-hanging fruit jobs like working at fast food restaurants and jobs involving manual labor are also gone. That's not even mentioning jobs like customer service via phone or online chat, air traffic controllers, etc. which will be gone.

The last 20 years in particular have overseen the most rapid wage growth in human history.

Globalization can only happen once.

dang4• 9 years ago

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perseusprime11• 9 years ago

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

aminok16• 9 years ago

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

ouid6• 9 years ago

could you elaborate on how this is meant to be a response to my comment?

aminok16• 9 years ago

Isn't that obvious? I'm not sure how I could be more explicit..

reddytowns5• 9 years ago

The first neathenderals to figure out how to use tools didn't have property rights, but the tools still augmented them. We are not so different from them, and faced with an overwhelming opposing power, (tech + extreme wealth) we don't have much of a chance, either.

aminok16• 9 years ago

Neanderthals faced a different species of humans whose culture they were not capable of integrating into. Humanity right now forms one unified global culture through which ideas and technology freely flow. The rising tide of technology is lifting all boats (massive wage growth globally).

Moreover, it's not clear that your premise is accurate. Neanderthals constitute 3 percent of Eurasian human genes, meaning that their genes were evolutionarily successful (3% * 6 billion > 100% * 100,000), and this is ignoring the success of their close kin, with whom they already shared >99% genes.

dang4• 9 years ago

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ram_rar• 9 years ago

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

aminok16• 9 years ago

People being able to exercise their right to freely contract and control their own private property is sickening?

You'd prefer people being thrown in prison for refusing to surrender their private property rights, or for engaging in a voluntary economic interaction that some other party created a prohibition against?

Please help me understand your preference for authoritarian violence against peaceful people.

aninhumer6• 9 years ago

You'd prefer people being thrown in prison for refusing to surrender their private property rights

Yes, I'd prefer people be thrown in prison for refusing to feed the starving, rather than people starving to death.

I think property rights are valuable in-as-far as they improve overall utility, but insisting on enforcing them to the point where it could cause people serious harm is clearly beyond that point.

We can argue about the extents of property rights, but suggesting there be no limits is arguing for legalised economic murder.

EDIT: Just to note that I edited this quite extensively after posting.

aminok16• 9 years ago

Yes, I'd prefer people be thrown in prison for refusing to feed the starving, rather than them starving to death.

So I guess you won't complain when some self-righteous modern-day Robin Hood engages in armed robbery against you to feed children in an orphanage in Africa. And if you resist? Well, the consequences fall on you. Who are you to deny others who are in need your income.

That actions that are unconscionable by any normal moral standard suddenly become socially acceptable to endorse when done through the political process shows how detached political ideology has become from humanity/morality. The political ideology you endorse is sociopathic and narcissistic to the extreme.

dang4• 9 years ago

You'd prefer people being thrown in prison
your preference for authoritarian violence

We've banned this account for egregious ideological flamewar and repeated incivility. Indeed, you've been using HN for almost nothing else. That's a serious abuse which destroys the culture we're hoping to build—thoughtful discussion—and stokes the flames the rest of us are working hard to damp down.

It's not a matter of the politics you espouse, much as it doesn't matter what brand of matches arsonists use. The patterns of flamewar are invariant across ideological flavor.

If you don't want to be banned, you're welcome to email hn@ycombinator.com and give us reason to believe that you'll follow HN's rules in the future.

We detached this subthread from https://news.ycombinator.com/item?id=13595551 and marked it off-topic.

hashin• 9 years ago

One reason why the poor stay poor is that they simply don't know how to spend money. Financial literacy doesn't penetrate well into India's rural poor because of the lack of quality education.

Another big problem is the gender inequality prevalent in the nation. This will simply lead to income getting concentrated at the hands of the male head of family. Buying nutritious food (which govt is directly providing as of now) or educating girl child (govt subsidise it as of now) may not be his priorities, not out of malice, but simply because he doesn't know about it.

Superimpose the corruption and caste dynamics, where wealth transfer has to go through a bureaucratic sieve that is dominated by upper caste or privileged Indians. The atrocities we hear from the average govt. office are gruesome because majority of govt employees simply doesn't understand the plight of the poor Indian.

To make an understanding for Indians and others, I will suggest the book "The Feast of Vultures" a book that metes out excellent objective treatment to the state of govt affairs in India. It is penned down by a veteran journalist named Josy Joseph. If we start to appreciate how this huge system that thrive in chaos, you will almost instantaneously pick up why this won't work. I am not going to the objective arguments for UBI even given a perfect system to disburse it. This won't work for India.

known• 9 years ago

Dominant minority communities will oppose UBI http://www.livemint.com/Leisure/3u2QUPuXBEFPaBQXU2R8mJ/When-...

ozy5• 9 years ago

My vote goes to redistribution of wealth, by means of a progressive tax that starts negative.

It is the human thing to do. But it also aligns with economics and politics.

Redistribution: because more money at the bottom, means a larger overall market, and I think a more stable economy.

Progressive tax: any paying work will always improve your situation. (So people stay motivated to work.)

Taxing wealth creation (and to a lesser extend, wealth) makes sense. It needs a society with law and order and property rights. That needs to be payed for. But of course not so much as to discourage wealth creation.

Most societies already redistribute wealth. Minimum wage, social programs, health programs, pensions, some form of subsidies. UBI is a more disciplined way of doing this. And just like these programs, you can tune that knob from low to high.

aembleton• 9 years ago

A negative tax subsidises employers so that they don't have to pay so much. If everyone got the money whether they worked or not then the low wage employer would need to improve the incentive to go and work for them. It would also reduce the amount of administrative work required.

aninhumer6• 9 years ago

I think it's an interesting question as to what effect NIT/UBI would have on the labour market.

On the one hand, it's a labour subsidy, so employers theoretically don't need to pay as much to offer a decent quality of life as an incentive. But on other hand, people no longer need a job to survive, which reduces the incentive to work.

I think the end result here might be a notable improvement in job quality. When you're not struggling to survive, it's much easier to weigh job quality in your decisions, and take less money in exchange for a more pleasant job. In particular, I think a lot of service jobs, could be more enjoyable if companies actually had to care about work environment.

ozy5• 9 years ago

A NIT or UBI are basically equivalent. But is easier to see why we give to those who are lesser off. E.g. why give UBI to a millionaire?

One of the points is to give power back to those who on the labor market are almost powerless. Both forms would do that. What would the impact be? Likely price for labor goes up.

Describing only one of the options as a subsidy is not likely correct.

aninhumer6• 9 years ago

My vote goes to redistribution of wealth, by means of a progressive tax that starts negative.

Just to note, Negative Income Tax is mathematically equivalent to UBI, in that given any NIT scheme you can produce a UBI scheme that results in the same income function.

However, I think the framing can make lot of difference here, in terms of expectations, and likely implementation.

ropeladder• 9 years ago

"...and likely implementation."

It's true that you can make UBIs and NITs equivalent, but I think it's important to emphasize the implementation part: they are very unlikely to be implemented the same way. This is because, for them to be equivalent, you need the drop-off rate as incomes increase for an NIT to be equal to the increase in taxes on income earners below 2x the UBI level.

In other words, an NIT is likely to come with a high marginal "tax" (aka loss of NIT) rate for low earners, while a UBI is likely to keep marginal tax rates for low earners low.

gizmo4• 9 years ago

The negative income tax is not a progressive idea. It was originally proposed by Milton Friedman as a way to dismantle the social safety net and get rid of the minimum wage, food stamps, social programs, pensions, and all those other programs previous generations have fought and died for. What do people get in exchange? Well, a bunch of money, but nowhere near enough to buy all the services they just lost from the free market.

A single mother with 2 children needs more money to make ends meet than a single student in their 20s. Subsidies take that into account, the negative income tax does not. People with a physical or mental handicap need assistance. The negative income tax has abolished the programs that help you, so good luck. Pensions? Same. If you've not invested wisely during your working years you'll have to eat dogfood when you're old, because social security is gone.

The problem with the negative income tax is that there's no way to make the math work, because you can't raise the minimum amount every citizen gets high enough so that every citizen can live a dignified life with that amount of money. Not even when you tax the highest earners at 90% does the math work. The special aid programs we have today exist for a reason: they specifically help vulnerable groups in society, who would otherwise be in desperate straits.

Make no mistake: the proponents of the negative income tax want to shrink the government to the size where it can be drowned in a bath tub. It's a far right idea that, if executed, would have horrific consequences for the poor. I urge people on the left of the political spectrum to stop and do some napkin math on how the negative income tax would end up redistributing wealth.

ozy5• 9 years ago

"Subsidies take that into account, the negative income tax does not."

In my country there are both subsidies, and tax breaks for such situations. Is anything I said implying we abolish that? I would suggest it translates to more negative tax for such situations.

"It's a far right idea that, if executed, would have horrific consequences for the poor."

It is wealth redistribution. Which is not a far right idea. Any kind of wealth redistribution is good for those who have little. (Unless you redistribute it only to the rich, but that is not commonly understood with the term.)

But you imply it does not? Would you mind doing that "napkin" math and show us what you mean?

azernik3• 9 years ago

"Progressive tax" is not a comment on the political origins of the idea. It is a technical term for any tax which has a higher effective tax rate for richer people (the opposite being a regressive tax).

Eridrus• 9 years ago

I think this argument holds some water in developed countries, but India has a serious problem with graft and a Ubi would ensure that the money actually gets to people and doesn't get stolen by government officials.

The economics are also not always destined to fail, they depend a lot on local conditions, such as how much it costs to survive.

UBI may be a huge boon to India's largest rural population without significant cost.

smprk• 9 years ago

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

lngnmn3• 9 years ago

India is very special, traditionalist society. As person who have spent a considerable time living in North India, I would say that people will turn this free money into gold and garments and other status symbols, like mobiles, which in turn, will cause inflation and soaring of prices of gold and other assets.

The analogy could be a land in the great plains of US. In San Francisco or New York the value and the price of land is ridiculously huge, while in plains it is almost free - no one needs it. Similarly, free money will simply lose any value and some new form of wealth storage and accumulation would emerge very quickly.

BTW, in India there is a free food available in many big temples, but for some reasons lots of people prefer to eat at home. In India people do not run after money per se, but for social status, which is a cornerstone of the Indian culture.

India is special. They have many local government programs to give nutrition to the poor, which does not work well due to rampant corruption. Simply distributing money to a bank account will obviously eradicate some corruption, the problem is that, perhaps, a third of population in some areas have no bank account.

TheArcane• 9 years ago

a third of population in some areas have no bank account.

That was probably true before demonetisation.

balladeer• 9 years ago

in India there is a free food available in many big temples, but for some reasons lots of people prefer to eat at home

Okay, it needs some clarification :-)

The free meal is supposed to be for people who need it but can't afford it but not supposed to be on a regular basis - for the destitute and people in general who find it difficult to buy a meal. But they (called "langars" at Gurudwaras, run by the Sikh community) never turn anyone away (regardless of faith or background or anything). Never! Some other temples and even some mosques do that, but it's not at all "all are welcome" like langars. So not the temples. So purpose isn't to be the meal provider even though they wouldn't return anyone.

So those langars aren't meant for eating in general for people. Also, people are not often alone. There are families with them and it would be very hard to conceive eating at those temples with entire families.

In India people do not run after money per se, but for social status, which is a cornerstone of the Indian culture.

That is not entirely true. Like any other place people of course go for status and respect but saying that Indians don't go for money is missing the point. As a matter of fact money is a driving factor here. Especially for the people for whom this plan might be aimed at - the people below the fringe. There's a term here "BPL" - below poverty line. And trust me when I say it "Poverty Line" is estimated so generously that it is a shame even from a developing country standards. Otherwise a lot more people would have fallen below poverty line here.

You are spot on about rampant corruption which is uniformly present at every level - bottom to top. But remember that starts right at the top or bottom - depending at how you want to look at it.

Govt is aiming at giving the people bank accounts too and hope it catches up and succeeds.

onion2k2• 9 years ago

As person who have spent a considerable time living in North India, I would say that people will turn this free money into gold and garments and other status symbols, like mobiles, which in turn, will cause inflation and soaring of prices of gold and other assets.

Simply distributing money to a bank account will obviously eradicate some corruption, the problem is that, perhaps, a third of population in some areas have no bank account.

The economist Harrison Price used to talk about there being two different sorts of people - the "no, because" people and the "yes, if" people[1]. A "no, because" person will look at a seemingly impossible idea and state why it won't work, with some pretty damning reasons. That's what you're doing here - universal basic income won't work in India because people will spend the money on status symbols if they can get it, and many won't be able to get it due to not having a bank account. Those are fair criticisms.

A "yes, if" person would look at this idea and say "yes, if we can persuade Indian people living in poverty to spend their income on things to lift themselves out of poverty, and we can figure out a way to get them bank accounts, then this could work."

There's nothing wrong with being a "no, because" person, but "yes, if" tends to be a better approach for creative problem-solving.

[1] https://toddpack.com/2011/09/07/saying-no-gracefully/

lngnmn3• 9 years ago

Skipping the "people types" nonsense, the "yes if" disconnected from reality assumption is the mark of an utopia, be it Platonic society or communism or extreme liberalism, which is always based on some unrealistic "ifs" instead of taking into account "what is".

Evolutionary and social dynamics, caused by environmental constraints and necessary following competition for everything related to passing genes to a future generation, and so called human nature, which is, basically, the behavioral answer to these fundamental challenges, cannot be dismissed by any amount of empty hipster's "progressive" rhetoric, used to gain attention.

Any proposal should be viewed as a constraint-satisfaction problem against the closest possible approximation to the actual reality. This is the only valid approach - to perform reality checks first, and it is habit for a scientifically inclined, trained mind and almost unknown skill to hipsters obsessed with their feelings and abstract, based on disconnected from reality oversimplified views and theories, like that naive "ethical" philosophy based on theology, wrong premises and naive assumptions.

In other words, I did some simplest constraint-satisfaction checking, and the idea seem to fail to pass the first few fundamental social constraints. According to laws of logic, a single flaw is enough to destroy the whole thing. I found at least two.

piyush_soni2• 9 years ago

You say as if there are temples offering free food on a daily basis in every nook and corner in India. The reality is so different from your experience.

aptwebapps2• 9 years ago

I don't think that the GP's point was that free food is ubiquitous, merely that it is underutilized where it is available. I'm not commenting on whether that's actually the case, mind you.

piyush_soni2• 9 years ago

One of the major efforts of the current (Narendra Modi lead) government has been to accelerate bank account opening for poor people, and has been quite successful. This will continue, as the benefits of having a bank account and an 'Aadhaar card' (something like SSN in US) keep on increasing.

aptwebapps2• 9 years ago

" ... which in turn, will cause inflation and soaring of prices of gold and other assets."

Whether they do that or not, it is not likely to cause much inflation. Funding for the scheme is meant to be taken from other, existing, programs, so the total stimulus is zero or near zero. Even if it does boost the price of some luxury items, and I am skeptical that will do so to any significant degree, that would simply reduce the consumption of said luxuries. Also, you aren't going to buy much gold with 7k p.a..

jgalt212• 9 years ago

perhaps, but it will most certainly boost the prices of the products that are disproportionately consumed by those who suddenly have more money.

overall inflation will be determined by how the plan is funded.

azernik3• 9 years ago

Essentializing and exoticizing much?

stubish• 9 years ago

Yes, give people money and they will spend it. Which means other people are selling things to them, giving them more money, which can also be spent. Stimulating the economy like this is a touted benefit of schemes that redistribute distribute wealth to the poorer segments of society, like UBI or minimum wage increases.

Advaith• 9 years ago

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

Jaruzel• 9 years ago

Linked is now maxxed out and blocked (detected via HN referer?)

Have to get to it via a google search now:

https://www.google.co.uk/search?hl=en&q=http://www.economist...

statictype• 9 years ago

That means either a return to flawed means-testing, or a hope that the better-off will voluntarily opt out.

₹7000 per year is an absurdly small amount. Why wouldn't everyone opt out of it?

I'm kind of stunned that this small amount of money every year is enough to wipe out poverty down to 0.5%

I'm also perplexed at how the rich will gain from it. If you force people to jump through a few minimum hoops to get it, most of the working class will not even bother trying to claim it. Am I correct?

thrgyuhlko• 9 years ago

It's amusing how India has always aspired for Sweden like 'socialism' with a Zimbawbwean economy.

I can't wait to see the ways the state will now find excuses to impinge on my freedoms.

It's also rather spooky how India has followed the NWO playbook. It has only accelerated under Modi's term.

Does anyone believe that a state which can barely provide education/ healthcare can really take this forward ?

azernik3• 9 years ago

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

tejas1mehta• 9 years ago

This is a very one-sided article. I would have hoped The Economist would do a fair analysis of the pros and the cons of such an implementation. The cons in this case are very clear.

1. First of all, diverting funds from vital food and fertilizer supply to the poorest of the poor in order to fund this scheme is a self-defeating idea.

2. Corruption in cases involving direct money would be far higher than schemes involving food.

3. The poorest of the poor would not have a bank account and therefore, would not be able to benefit from this scheme. A large population of India happens to live in slums. This is the population that is in the most need of such a program but would not receive its benefits. Just because of these conditions, UBI is far more likely to help the rich than the poor.

Fundamentally, UBI would only work for advanced societies. For poor societies, there just wouldn't be enough wealth to be distributed amongst everyone. This is the reason why UBI has worked well in the Scandinavian countries - their GDP per capita is already in the $50K-$70K range compared to India's $3K-$5K.

It is far more likely that the politicians floated this idea to appease the citizens after the hardship they faced during the demonetization scheme.

India floats the idea of a universal basic income

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