Free Money: The Surprising Effects of a Basic Income Supplied by Government

https://www.wired.com/story/free-money-the-surprising-effects-of-a-basic-income-supplied-by-government/amp

by stevekemp • 9 years ago

56 89 9 years ago

ytNumbers• 9 years ago

I can see how basic income could help some types of people, but it can also hurt other types of people. If only there was a way to determine who it would help/hurt, and then to only give it out when it would actually help.

https://ifstudies.org/blog/what-can-we-learn-from-native-ame...

mikeash• 9 years ago

Extrapolating from the experience of people who were genocided, displaced, systematically oppressed, and excluded from productive economic activity strikes me as likely to be inaccurate.

Simulacra2• 9 years ago

This is very interesting, but is it not also worth noting that the community allowed this money is very controlled? The idea of a basic income is that everyone gets it, regardless of where you live in the country, and other factors. My problem with basic income is that once you start, there will always be a demand to increase it, and enormous political pressure to increase it, along with people from all over the world wanting into the system. For a small population of native Americans, it seems to work very very well, but I don't think it's sustainable for an entire country.

sputknick• 9 years ago

Another problem that I see is that it will very quickly become "not basic" in that we might give everyone $2,000 a month, but then quickly politicians will advocate for certain constituents to get more. "People who work as teachers in poor neighborhoods should get an extra $500 a month" or "People who have been convicted of X Y or Z crime should get $500 less for the rest of their lives".

ravenstine2• 9 years ago

We might also see the same thing that's happened with minimum wage and student loans. (where basic income no longer covers even the basics)

Simulacra2• 9 years ago

Good point. Another for the mix that I think someone may have already touched on, and that is if you're low income, and if business, etc. knows the government is giving you a basic income, then they'll just raise prices to offset that income. Kind of like the arguments against raising the minimum wage.

ravenstine2• 9 years ago

It would probably require either isolationism or a true global government, and neither of those are feasible or desirable. That's undoubtedly why our economies tend to be mixed because basic income in a place like America would require too much sacrifice to sustain in the long term. This is going to become more of a challenging problem as humans become obsolete. Before an actual post-scarcity society, we will need government provided basic income, which is simultaneously a scary thought if we don't solve a bunch of other global problems first.

rizzom5000• 9 years ago

It's also worth noting that these payments are funded by casino revenue for that very small population.

This article would look very different if some members of the tribe were taxed heavily to provide the payments to other members.

frgtpsswrdlame4• 9 years ago

My problem with basic income is that once you start, there will always be a demand to increase it, and enormous political pressure to increase it

How is this a problem? If enough people support an increase in the UBI that politicians feel they have to raise it, isn't that a good thing?

xaqfox• 9 years ago

Sometimes it would need to be raised and sometimes it would need to be lowered. It will, however, always be a politically unpopular position to lower it, even if it needs being done.

colemannugent3• 9 years ago

When do you stop raising it?

If people could vote themselves more money the voter turnout would be insane. How would anyone control something like that? Anyone who ran against the increases would be easily defeated with something like this: "My opponent wants to take the money you deserve!".

At some point you would be giving people more money than you produce as a country and then it's only a matter of time until the money runs out. Once the money runs out then your government will evaporate as the enraged populace tries to pin the blame on one group.

This of course is on of the central issues with government run wealth redistribution programs, nobody wants less money and they will go to the polls to protect it. Whatever you think of the ACA/Obamacare in the US, once it got established and started paying out there is almost no way to repeal it as no one wants to lose their benefits. Even establishment Republicans learned their lesson and are now leaving it alone after seeing that they angered many Americans who enjoyed those benefits and threatened their chances of being re-elected.

vec2• 9 years ago

As an empirical observation, in the US we currently have one group of politicians advocating for a larger safety net and a different group strongly advocating for lower taxes.

Sometimes the bigger safety net people win, taxes go up, and payouts go up. Sometimes the lower taxes people win, taxes go down, and payouts shrink. Eventually these forces hit a stable equilibrium (or a semi-stable "pendulum") and the tax and benefit rates don't seem to explode or contract endlessly.

I don't see any reason to expect that a basic income would be any different.

Retric• 9 years ago

I suspect the reverse. Once basic income exists there will always be pressure from the top (who don't directly benefit) to reduce it.

In the end it's the classic choice. People want more from the government and they also want to pay less taxes which ends up at a balance point.

r00fus• 9 years ago

My problem with basic income is that once you start, there will always be a demand to increase it, and enormous political pressure to increase it

This same logic applies to corporate welfare as well - and you can see the results (see latest tax bill).

The differentiating factor is that, in one case you give to those without much political power vs. giving to those who have enough power to play havoc with your politics (or have already controlled/captured it).

A bit of perspective helps to balance the slippery slope danger you presented.

gumby2• 9 years ago

My problem with basic income is that once you start, there will always be a demand to increase it, and enormous political pressure to increase it...

Edmund Burke famously made this argument in the 18th century as an example of a problem with universal franchise (letting non-property owners vote). Supposedly the "masses" would vote for more and more handouts.

Personally, I think the universal franchise has worked out pretty well overall, and this problem has, if anything, gone the wrong way even during the big bouts of progressivism in the late 19th and early 20th centuries.

And even when they went overboard as they did in the UK, they recovered, perhaps over-recovered. But in the long run it seems to converge fine.

gooseus2• 9 years ago

I can't help but think that UBI is the modern grain dole[0] and while it sounds like a great idea on the surface and would probably work out great for a number of individuals in the short run... it will also inevitably lead to the use of UBI as an easy political tool for populist leaders to use to come to power, leading to the a further degradation of the republic.

[0] https://en.wikipedia.org/wiki/Cura_Annonae

tareqak• 9 years ago

Doesn't that mean that non-populist politicians should get together and actually implement some form of effective UBI to head off a dangerous and competent populist?

trendia• 9 years ago

That sounds a lot like Otto von Bismarck [0] . Fearful of the socialists, he tried banning them, but that didn't work. So, instead, he introduced "Soclialism-lite" with improved worker conditions, social benefits, and semi-public medicine.

[0] https://en.wikipedia.org/wiki/State_Socialism_(Germany)

creaghpatr2• 9 years ago

That's exactly what's happening right now. It's no coincidence Tech barons are pushing this concept before Congress cracks down.

gooseus2• 9 years ago

That doesn't really make sense to me... any public policy can be rendered ineffective by subsequent politicians.

So a non-populist politician implements an "effective" UBI policy, but since it's only effective for a short amount of time because things change and people realize later that it's not as fair/effective as they thought... or else you can only pass a compromise bill and it's really not effective at all, but you're told it will be (assuming you keep voting for X!).

I mean, why should everyone get the same amount? Or why should the percentage difference between my UBI this other groups be different by X amount?

Suddenly the UBI is just a new way to target voting blocks with promises of adjustments in their favor... essentially like how the tax code is used politically.

The only way to implement UBI effectively is to implement it a way where it can't be used as a populist political tool ever, which I think is impossible.

The most messed up thing I find about UBI is that it's the solution put forth by companies which are actively avoiding paying taxes through loopholes and havens.

Rather than someone like Zuckerberg thinking "Hmm... maybe I could help impoverished people by spreading my wealth to my employees more evenly and by paying my fair share in corporate/personal taxes to the local/state/federal govt?"

Instead they say "I deserve billions of dollars in personal wealth and to stay competitive (despite my effective monopoly) I must utilize every tax loophole possible and it's up to the government to find some other way to find the revenue to keep my users/employees at a living wage."

creaghpatr2• 9 years ago

A grain dole can't be manipulated or inflated away.

dsfyu404ed• 9 years ago

This (and every other article I've read) fails to address how "universal" basic income would result in something other than a proportionate increase in the cost of living.

I don't want my taxes pissed away into some slumlord's bank account any more than I want them pissed away on APCs for a small town police department.

learc833• 9 years ago

Assuming you believe free markets work (and assuming the UBI is paid for by tax increases instead of just printing more money), the answer to "how universal basic income would result in something other than a proportionate increase in the cost of living" is: that's not how markets work.

Increased demand will result in increased supply except in markets/locations where the supply can't increase.

alacombe• 9 years ago

Basic income based on other's addictions ? I doubt people around here would welcome drug money being redistributed to a close community distinguishing itself from outsiders by blood, but somehow, this is acceptable.

That being said, there is an easy counter argument to this article: Canada's "first nation". They receives millions in government funding which ends up to be redistributed arbitrarily by "band chief's", often in the pocket of their own direct family. It is not uncommon to have their income in the seven figures while other members of their band fall to real vice, drugs and drinking. (facts confirmed by many first nation members when I living on treaty land). Also, it is not uncommon to see natives who tried to integrate with Canadian society being ostracized by their own community and seen as "traitors" (once again, step family experience).

runeks• 9 years ago

The fundamental issue with a basic income, as I see it, is that it's impossible to guarantee, since the revenue, out of which basic income is paid, comes from taxes. This makes it impossible to know how much money the government will have to pay out a basic income next year. So a family that has gotten used to, say, $15,000 in basic income one year, may only get half of that the next year, because government can't predict its tax income for the next year.

Add to this the fact that basic income takes away, at least some of, the reason to work in the first place, which means that the very foundation of governments paying out basic incomes -- income from taxation -- is affected by paying out basic income. The result is an unstable system with feedback loops, where paying out a lot of basic income one year results in fewer taxes the next year, which means the government has less money to pay out in basic income that year, causing people to need to a job, which increases taxes the next year, after which the government can pay out more in basic income. Predicting this oscillation is essential to making basic income work, and I'm not confident it's possible at all, at least not when we need to be as sure about it as we do when we're talking about money that people need to buy food.

jknz• 9 years ago

This criticism also applies to unemployment benefits in western European countries. If a large chunk of the population suddenly becomes unemployed, then the gov has less tax revenue but more employment benefits to cover. Unemployment benefits cannot be guaranteed without either expanding the national debt or printing money.

A sane government behavior would be to spend in year n the known tax revenue of year (n-1), and nothing more.

ZeroGravitas• 9 years ago

And this is in fact sometimes suggested as one of the key benefits. If an area suddently has a lot of people out of work with no safety net it causes a ripple effect as they curtail their spending massively at local businesses, and the next domino gets toppled.

With unemployment benefit the goverment automatically injects cash into the area to forstall this outcome.

aetherson• 9 years ago

The government manages to fund the military and social security and medicare despite the fact that tax returns vary from year to year. It can deficit spend and inflate the currency as needed.

In the very long term, nothing is guaranteed, but there is no basis to believe that the tax base will drop by 50% next year, and ample reason to believe the contrary.

learc833• 9 years ago

where paying out a lot of basic income one year results in fewer taxes the next year, which means the government has less money to pay out in basic income that year, causing people to need to a job, which increases taxes the next year, after which the government can pay out more in basic income.

There are problems that need to be solved, but the one you have here you just invented. Government programs don't work like this. They aren't pegged to revenue.

The problem you described with oscillations and feedback loops is exactly one of the primary criticisms of attempts at forcing the government to balance the budget each year.

jhayward• 9 years ago

Government spending does not work like household budgeting. There is no significant reason for revenue and expenditure to be matched over any given period. There is almost literally nothing one can intuit about how government spending works that compares it to households or individual spending.

bbctol• 9 years ago

What? The government sets budgets for the long term all the time, even leaving aside the fact that it's pretty able to predict its tax income for the next year.

dragonwriter7• 9 years ago

The fundamental issue with a basic income, as I see it, is that it's impossible to guarantee, since the revenue, out of which basic income is paid, comes from taxes. This makes it impossible to know how much money the government will have to pay out a basic income next year. So a family that has gotten used to, say, $15,000 in basic income one year, may only get half of that the next year, because government can't predict its tax income for the next year.

This is only a problem for a government constrained to short-term budget balance (U.S. states largely are for their operating budgets, but the federal government is not.)

evo_9• 9 years ago

Main take-away summarized in the closing paragraph:

"...if anything is to be learned from the Cherokee experiment, it’s this: To imagine that a basic income, or something like it, would suddenly satisfy the disillusioned, out-of-work Rust Belt worker is as wrongheaded as imagining it would do no good at all, or drive people to stop working. There is a third possibility: that an infusion of cash into struggling households would lift up the youth in those households in all the subtle but still meaningful ways Costello has observed over the years, until finally, when they come of age, they are better prepared for the brave new world of work, whether the robots are coming or not."

Hasz5• 9 years ago

I'd like to see a version of "basic employment".

Can't find a job? The government will guarantee you some baseline pay and give you a job and healthcare benefits almost unilaterally. You've still gotta show up and do your work, but you are guaranteed something to do.

It might be cleaning up roads and parks, building trails, washing streets, and planting trees, but it's a basic job that will provide you with enough money to get by.

There would be career counseling, skills-based training, and opportunities to manage other workers. Essentially, an Army without the guns; a group focused on not only improving the public environment, but also the part of the public employed by the program.

gregman1• 9 years ago

One day we'll discover socialism.

Hasz5• 9 years ago

The USA had the WPA, which did something akin to my proposal. Its budget was 1.3bn in 1935 (23.5bn in 2017), and relative to the US military expenditure (521bn in 2016), it's just not that much money for an incredible amount of public good.

Wikipedia has an excellent page about what the WPA administration accomplished over 8 years -- I think it's an idea worth reviving.

breckinloggins2• 9 years ago

You jest, but I think one day we'll discover something that looks a little like socialism, a little like "Star Trek-style" communism, and a little like free market capitalism. And it won't be ideologically driven, but based on all the little experiments that worked combined with all the things that technology and social changes have enabled.

Ideologies are epistemic pathogens.

eikenberry• 9 years ago

Once the marginal costs of all essentials is at or close to 0 we will have a chance.

kiliantics• 9 years ago

This exists to a certain extent in some European countries. I heard in Denmark there is also "basic-education", where you get unemployment welfare if you enroll in job training programmes.

jadell• 9 years ago

Does something like AmeriCorps fit your description? https://en.wikipedia.org/wiki/AmeriCorps

Hasz5• 9 years ago

AmeriCorps seems to be highly targeted at students, with loan deferral and forgiveness programs.

I'd like to see such a program for people who recently got out of jail, for example, or at least an addition to AmeriCorps that targets those individuals.

650,000 people get out of jail every year -- having a strong public works program could help those individuals get back to becoming functioning and contributing members of society.

napa15• 9 years ago

That already exists in the form of minimum wage + an economy that isnt bad. Going to that extra step to say that government should provide the job itself is just an admittance of failure that the economy is so bad that there are no good jobs and the gov has failed to provide an environment for them to be created.

snakeboy• 9 years ago

Isn't the societal benefit received by public works a key component of the parent's proposal? I don't see how the jobs outlined would be accomplished profitably by a private entity.

Frondo• 9 years ago

I'd like to see both: a basic job for someone who wanted something to do, and a basic income for everyone.

For me, the goal is not to have everyone engaged in busywork. For me, the goal is to end mandatory work.

Freedom comes not when no one has anything to do, but when everyone gets to do what they want.

QAPereo2• 9 years ago

Instead of a thousand failed experiments to invent work, minimize our impact on the environment, all of our various shortages from housing to opportunities to basic human dignity... maybe we should address the root cause?

Population. It’s one of those things we all tend to stay the hell away from because in the past attempts to address it have been so toxic, and frankly it’s hard not to see attempts today being toxic. Having said that however, it just adds to the difficulty of the problem, it doesn’t make it any less real, pressing or important. A lot of the problems we have today are the result of having geometric growth in the numbers of people for a sustained period of time.

I’m not proposing a specific solution, I’m nowhere near that bright or compassionate. There are obvious pitfalls to avoid such as eugenics and outright genocide, but beyond that I don’t have any answers. Someone had better before the issue forces itself though, because when that happens we won’t get to choose from the best of the bunch of bad options.

learc833• 9 years ago

The answer to population growth is poverty reduction, healthcare, education, and free access to birth control.

Developed countries tend to have birth rates below the replacement rate for native born populations.

As much as people like to point out that humans have a problem with understanding exponential growth. There probably just as many people who have a problem extrapolating the growth of dynamic systems without understanding that growth rates are subject to feedback pressure.

breckinloggins2• 9 years ago

I've had this thought as well. I call it a "Guaranteed Basic Job". I think it should be the "next rung" on the income ladder. In my opinion, we should always have a GBI safety net and then a GBJ would give you a raise as well as a path to a better job if you want it.

fallingfrog3• 9 years ago

This seems like it might have some unintended consequences. First off, it doesn't help people like students who both need to pay rent and also need time to study. Secondly, if the only jobs available to a large segment of the population are low paying jobs in the employ of the federal government, which they don't have any realistic way to opt out of, it starts looking like a form of forced labor like many prisoners are subjected to now.

randyrand• 9 years ago

it doesn't help people like students who both need to pay rent and also need time to study

What's the issue? You'd work, save money for awhile, then enroll in some school after a few years.

Your forced labor argument makes little sense to me. Particularly this argument: "which they don't have any realistic way to opt out of." Why not? You still have free time with a basic-employment job. Learn a skill in your free-time, and then get a job in that skill.

Hasz5• 9 years ago

Students have a number of opportunities available to them in both academic and private settings, so I doubt a significant amount of them would opt into a program like this. Another comment suggested AmeriCorps, which seems to be aimed at students.

As for the second point, I would argue such a situation already exists in the private space. If Walmart is the only employer in your area, and you can't live on SS/Disability/Pension alone, you've got a similar situation -- work for a low wage or go hungry ad infinitum.

A public works program with a mandate to improve both the worker and the public good presents a more attractive alternative to a private corporation with little care for the individual worker.

Prisons, at least the one's I've visited, have no such mandate to improve prisoners, thus the forced labor.

markshead3• 9 years ago

You aren't alone. From the article:

Hughes is no basic income purist. He believes, for instance, that for this economic moonshot to be politically palatable, it would have to be tied to work. “Not just because it seems more intuitive for people,” he says, “but because work is a key source of purpose in our lives.”

The Works Progress Administration and Civilian Conservation Corps are pretty close to what you are describing. Many of the parks, lakes, and stadiums in my town were built under those programs.

A guaranteed paycheck basically creates an incentive to not work very hard. Potential employers didn't look on WPA experience as being a positive thing. A Senate inquiry found that there didn't seem to be much incentive for a supervisor to expect or require good work from the workers.

If there were a way to quantify work to the point where everyone is getting paid for what they are contributing I think something like what you describe could work very well. Maybe the solution is a bunch of non-profit businesses that have the goal of creating jobs and breaking event. I think Good Will stores are supposed to do something like this.

Hasz5• 9 years ago

I agree. With the ability afforded by technology to quantify and manage work, I think a modern day equivalent of the WPA could be held to a higher standard than the original WPA.

MaysonL• 9 years ago

Imagine how many people stuck in shit jobs with abusive bosses might be able to quit. Just as Obamacare enabled many people, especially those with existing medical problems, to quit the job that tied them to their health insurance.

jpao79• 9 years ago

I agree. Could the basic income payout be at least tied to:

* build your own sustainable house to code in a non-hyper inflated coastal city and keep it maintained/painted according to the local home owner's association CC&R's

* grow your own food sustainably at the local CSA

* don't get into trouble

* (optionally for additional income) teach others how to do the above

dragonwriter7• 9 years ago

I'd like to see a version of "basic employment".

That is a clever way to avoid many of the key benefits of basic income, particularly its ability to improve the ability of the labor force to adapt organically by weakening the degree to which present minimal support and retraining for better prospects are at odds.

“Basic employment” may make sense as a solution to temporary economic downturns, where it amounts to simple countercyclical spending; unless the goal is to have an ever growing share of the population economically coerced into being a perpetual involuntary government labor force, it's not a good way of dealing with any long-term need.

11thEarlOfMar2• 9 years ago

Whether statistically significant or not, this provides a ray of hope that some of the benefits proponents foresee will be realized and many of the concerns that opponents foresee may not be, respectively, improved outcome for families, versus, reduced participation in the work force:

"Before the casino opened, Costello found that poor children scored twice as high as those who were not poor for symptoms of psychiatric disorders. But after the casino opened, the children whose families’ income rose above the poverty rate showed a 40 percent decrease in behavioral problems. Just four years after the casino opened, they were, behaviorally at least, no different from the kids who had never been poor at all. By the time the youngest cohort of children was at least 21, she found something else: The younger the Cherokee children were when the casino opened, the better they fared compared to the older Cherokee children and to rural whites. This was true for emotional and behavioral problems as well as drug and alcohol addiction.... Other researchers have used Costello’s data to look at different effects of the casino payments. One fear about basic income is that people will be content living on their subsidies and stop working. But a 2010 analysis of the data, led by Randall Akee, who researches labor economics at the UCLA's Luskin School of Public Affairs, found no impact on overall labor participation."

empath752• 9 years ago

It's pretty remarkable that money apparently cures psychiatric disorders. Maybe we should be prescribing cash instead of ritalin to kids with ADD.

11thEarlOfMar2• 9 years ago

It's about family dynamics. Parents who can focus on providing for and raising their kids will have a better outcome than those those that struggle to put food on the table. If the parents have hope and a means to deliver, the whole outlook of the kids changes from a life of coping with hopelessness to looking towards a future that they have influence over.

dragonwriter7• 9 years ago

It's pretty remarkable that money apparently cures psychiatric disorders.

Actually, the results are that it reduced the risk of developing such disorders; that there are environmental factors for psychiatric as well as other medical disorders and that many are correlated with poverty and/or economic insecurity is decidedly not news.

PatientTrades• 9 years ago

Universal basic income is already a thing in America. Free food stamps, free public housing, free k-12 education, free government provided cellphones, free wifi, etc. "Universal basic cash" is what this article is about. No, I don't think its a good idea to give people cold hard cash for basic income

gumby2• 9 years ago

The bigger problem in my mind is people getting past the Industrial Age idea that you need a "job" to be a worthwhile human being, and that the nature of said "job" determines your value to society.

I don't really mind if there's lots of crappy poetry and tremendous non-enumerative attention to child rearing and looking after the elderly. I don't mind in the slightest if someone decides they just want to watch TV all day à la "Fahrenheit 451".

But in an abundance economy where the marginal cost of production is essentially nil and money is more useful as a signalling mechanism rather than a store of value, it's the mindset that will be most psychologically dangerous.

RickJWag• 9 years ago

Facebook and Google should expand the experiment and provide a basic living wage to everyone in San Francisco.

It'll be interesting to see what happens to the homeless population.

Free Money: The Surprising Effects of a Basic Income Supplied by Government

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