Switzerland’s Proposal to Pay People

http://www.nytimes.com/2013/11/17/magazine/switzerlands-proposal-to-pay-people-for-being-alive.html?_r=0&pagewanted=all

by webjunkie • 13 years ago

155 266 13 years ago

xacaxulu• 13 years ago

Loaded title much? American news outlets always have a way of making social safety nets and increased qualities of life sound bad.

http://www.dailymail.co.uk/news/article-2240002/Switzerland-...

scrabble• 13 years ago

I found it funny that the title of the article was really negative, but if you read the article itself the end of the second page says that maybe it is also a good idea for the US.

gress• 13 years ago

Titles are written by editors not the author. The are intentionally linkbait.

jamestc• 13 years ago

The title isn't negative, though. Just radical.

spuz• 13 years ago

Whether you believe it is loaded or not depends on your pre-existing beliefs. If you were brought up to believe in the American dream perhaps it seems controversial to expect to be paid just for having been born. But if you were brought up in a highly socialised society this would not sound controversial.

I've read quite a bit on basic income before and generally have the opinion that it might be a good idea so it does not sound negative to me to propose that people are paid to be alive. In that way I think it's a clever title as its meaning appears to change depending the reader's perspective.

jere• 13 years ago

To be fair, this is the same language used by the proponents of basic income, as noted in the article. That's probably what inspired the title.

Charles Murray of the conservative American Enterprise Institute... suggested guaranteeing $10,000 a year to anyone meeting the following conditions: be American, be over 21, stay out of jail and — as he once quipped — “have a pulse.”

gadders2• 13 years ago

Yes, that bastion of right-wing views, the New York Times.

lazyant• 13 years ago

See also http://en.wikipedia.org/wiki/Mincome . I don't see what's the theoretical problem of having a "socialist" minimum for everybody together with a "capitalist" system where you can make as much as you can.

yummyfajitas6• 13 years ago

The theoretical argument is that due to the diminishing marginal utility of income, you get less labor supplied.

Suppose the utility loss from taking a job is X, and U(income) is a concave function. Both of these are standard assumptions, well validated empirically.

With no basic income, people will take a job if U(job income) - X > U(income=0), or equivalently U(job income)-U(income=0) > X.

With a basic income, people take a job if U(job income + basic income) - U(basic income) > X.

By concavity, there are values of X for which the former inequality holds and the latter does not. So people falling into this regime will be deterred from taking a job by a basic income.

Society as a whole is poorer as a result by an amount equal to those individual's marginal productivity. I.e., fewer nails are manicured, fewer homes are cleaned, fewer restaurant meals are supplied.

Note that you can alleviate these negative effects by replacing a basic income guarantee with a basic job guarantee (i.e., just like a basic income, but you need to work for it). That also costs the taxpayer far less.

anonymoushn4• 13 years ago

The current policy of means-tested welfare is just a complex combination of minimum income and high (sometimes >100%) marginal tax rates for the poor. The proposal to get rid of these programs and replace them with a more simple system of basic income is just a proposal to lower the marginal tax rates for the poor, so that they are no longer the highest.

iSnow3• 13 years ago

you can alleviate these negative effects by replacing a basic income guarantee with a basic job guarantee

Since a lot of industrialized countries have had high unemployment for years, if not decades, that seems like an impossible idea. It might even be worse because if you send the unemployed to clean parks and plant trees, you effectively destroy a labor market for gardeners.

I don't know if a "Mincome" would work but if you want to guarantee everyone a job, you need some pretty clever ideas how to create those jobs - preferably without negative side-effects on existing low-wage markets.

chrisduesing• 13 years ago

You are leaving out a couple of details. First, there is already unemployment, so there are already people not filling jobs. Second, this is a redistribution of tax money, so society is not getting poorer that way. As for people not filling jobs, there would be new pressures on corporations that needed workers, McDonald's could continue to pay minimum wage (assuming it wasn't abolished) for people that cannot live on $10k, and startups could pay substantially less, as could not for profits or other organizations that had missions more aligned with people's worldview of themselves. New jobs might become possible that are not today. Who knows. The point is you cannot say the outcome of changing one variable while holding all others constant, because they are not constant. Also, your counter suggestion is based on the assumption that the government can redistribute jobs instead of tax money, it cannot.

blahbl4hblahtoo• 13 years ago

I think that there are assumptions made by your argument that sound reasonable on the face of it but that don't actually match reality. Not just yours but pretty much every economic argument that I've heard that takes this "forces of nature" form.

akjj• 13 years ago

This is a very reductionist view of worth. Your model implicitly values people's non-working time at zero, which is true as far as GDP is concerned, but is pretty clearly false as far as how actual human beings chose to live. If fewer people are doing nails or cleaning other people's houses, then those people must be doing something else. Maybe they're working a job which is less economically productive, but which they enjoy more. Maybe they're not working and they're spending more time with their grand-kids. In either case, it's a real improvement in their quality of life. If your model doesn't incorporate personal preferences not related to the purchasing capacity of your paycheck, then that's a flaw in the model, in my opinion.

djur6• 13 years ago

"With a basic income, people take a job if U(job income + basic income) - U(basic income) > X."

Which is the beauty of a basic income -- it means that employers no longer need to merely outcompete destitution, but instead offer a compelling reason for people to come work for them. Unpleasant but vital jobs would become better compensated, while there would be strong pressure to eliminate useless make-work jobs.

The world economy has not been suffering a labor shortage for a very long time. Basic income allows a lot of menial labor to be automated without destroying lives, and in the long term will redirect that output to creative and skilled labor, thus enriching society on more than one level.

ianbicking• 13 years ago

Another factor people take into account when deciding whether to take a job is what the effect is on their total benefits. Higher taxes for instance decrease the amount of benefit in taking a job (relative to the value to your employer of you having taken that job). But taxes aren't the only thing that decreases the benefit of taking a job, there is also the potential loss of other benefits.

When we have "means tested" programs (i.e., anything for "the poor" or "the unemployed") then the marginal benefit of a job (or doing more work) U(base or base job income + new job income) - U(base or base job income). When you factor in needs-based benefits U() can be a very peculiar function, and the marginal benefit can be small relative to the new job income, or even negative.

If we take the social safety net as a given, then we shouldn't abstract away the existence of that net. A basic income has the potential to remove the need for more sophisticated implementations of the safety net, ones that can lead to poor U() functions.

In fact I think that the bottom of the concave U() function cannot work as in theory, because of what is considered socially acceptable. Your first $1000 in income is very valuable because you are living in terrible deprivation. But some people are not able to make that income, no matter the utility. It may be job availability, it may be a disability, or an injury, or addiction to drugs, a criminal history. It could be a parent that has succumbed to any of these. It's hard to enumerate or easily define what any of these are, so to some degree we are willing to offer help simply because someone is experiencing deprivation.

Which is to say, the part of the U() curve that a basic income chops off is already really messed up.

xixi7710• 13 years ago

It's all true, but in practice, in the US, and I strongly suspect in Switzerland as well, there are all kinds of means-tested transfers, such as unemployment support, so the first equation is actually U(job income) - X > U(unemployment support) which (unlike the concavity issue) is a first-order effect, and keeps millions of people from working. I very much suspect that replacing that with basic income is going to bring more people into the workplace, not the other way around -- as long as the basic income is kept reasonably small.

Now, keeping it small is another matter.

summerdown2• 13 years ago

One of the arguments for wealth redistribution is that rich people tend more to spend money internationally on luxuries, while poor people tend to spend money in their local communities on essentials.

It's possible that under this system the Swiss will gain more employment because their people will be spending more on goods that proportionately employ other Swiss people in the value chain.

It's the reverse argument to the Trickle-down idea, I think.

ctdonath6• 13 years ago

1: Motivation. A lot of people will decide that their "minimum" income is sufficient and will try to live on that without contributing to society.

2: Entitlement. A lot of people will decide that they are entitled to that money, that it is not enough for whatever arbitrary minimum lifestyle they decide they are entitled to, and that the police power of the state should/will/must be used to confiscate the difference from taxpayers.

In fairness, all should contribute to society at least as much value as they derive from society (at least insofar as they are physically & mentally capable). Giving people enough to live on while requiring nothing of them screws up the human psychology of self-worth: they can exert $X of effort/skill and get $X, or do nothing at all and get $X ... meaning their effort/skill is worth nothing.

iSnow3• 13 years ago

A lot of people will decide that they are entitled to that money

Well, that's the point, isn't it?

icebraining• 13 years ago

they can exert $X of effort/skill and get $X, or do nothing at all and get $X ... meaning their effort/skill is worth nothing.

That's only with current welfare systems, not with basic income, where you receive it regardless of your income.

So under the regime being proposed, by not working you'd get $X, and by working $Y you'd get $X+$Y (less taxes).

InclinedPlane3• 13 years ago

1 & 2 are already problems, and huge ones, and not just with the poor. Lots of people get handouts from the government and you can bet that most of them think they are entitled to it. The problem is making sure the system is setup with appropriate feedback mechanisms to keep things at an appropriate level.

VLM5• 13 years ago

"A lot of people will decide that they are entitled to that money"

If you use the franchise fee model to talk about a basic income, that is the point. A crony capitalist business screws up everyone's environment, screws up everyone's health, screws up everyone's economic situation, screws up everyone's government, screws up everyone's wealth and income distribution by population graph and all the social issues that result from it, therefore everyone is equally entitled to a small cut of the action because they're already involuntarily getting a cut of the degradation. Seems fair enough.

There's an American tradition of privatize all the profits and socialize all the losses, this could be interpreted as socialize some of the profits and I'm sure we'll continue to socialize all the losses. Some worry about it, but it wouldn't really change that much.

One common argument against a basic income is assuming it can only be implemented with means testing. I see some of that at the end of your comment. Especially in the underground economy, which is already big and growing.

djur6• 13 years ago

How do you determine that a "lot" of people will prefer not to work? That assumes that they take no joy in labor, have no desire for the luxury and enjoyment that an increased income would bring, and are uninterested in the social advantages of being employed and financially comfortable.

The small set of people who are only motivated to work by the threat of destitution, and who would be satisfied by a pittance and choose not to pursue further labor, are people whose labor was likely never worth much in the first place.

VLM5• 13 years ago

There is a theoretical environmental problem relating to franchise fees.

If you want to run utility poles in most municipalities, you can, but you'll pay a franchise fee to the city. The theory is you're making a profit by inconveniencing all the residents by occasionally blocking streets and putting up ugly utility poles and the like. So you pay everyone a little bit of your profit because you're ruining everyone's property by a tiny little bit.

Now the environmental (or any regulatory) problem is demonstrated as "hey, I should be able to dump raw nuclear waste in the river, although it is true that it ruins the river for everyone, it is also true that everyone gets an equal fraction of my profits". Same argument for "I should be able to boom/bust the housing economy because everyone gets a cut" or avoid OSHA or whatever.

mercenario3• 13 years ago

So you pay your taxes so the government can gives you back that exact money you payed? What's the point?

I have a better ideia, why don't government cut everyones taxes by the same amount?

yread• 13 years ago

You've registered an account on HACKER news just to comment on a political article in NYTimes?

mercenario3• 13 years ago

I'm a old and frequent reader, but usually don't have much to say so I never bothered creating an account. And my english is not very good either. But the political links here are the ones who have always encouraged me to comment.

patrickaljord• 13 years ago

What kind of question is that? Do people need a specific reason to register an account on HN now? Sheesh.

lmm3• 13 years ago

The point is a) wealth redistribution, because the marginal value of money is much greater for those who have less of it b) a nationalized safety net against catastrophe, because individuals are bad at planning for disaster, or even entirely predictable futures (witness e.g. the US IRA system) c) the social benefits to everyone (in terms of crime, disease, general wellbeing, being able to have public facilities that don't get destroyed...) of not having a poor underclass

(Yes it's paternalistic, but without a certain level of paternalism, lots of citizens die. Handing out money is about the least paternalistic way of stopping that).

mercenario3• 13 years ago

If it's about wealth redistribution, why give money to the rich? If it's about anything else, why take the money in the first place just to give it back later?

GotAnyMegadeth• 13 years ago

The point is not everyone can afford to pay taxes, so simply reducing tax wouldn't help them at all

tete2• 13 years ago

It basically does the same thinf as insurances do. It reduces risks for the individual. The benefit of this version is that it has a way smaller overhead than an insurance has.

Insurances have a risk for the company/state giving out the insurance. This entity also has to deal with the requests, has to check who really is sick and who just claims to be. They have to be constantly adapated to what is covered and what is not. You have to employ doctors, (re)verifying stuff, you need people giving support, you have to deal with constant complaints of why X is covered and Y is not. It can be abused.

Another side effect is that doing your own venture doesn't mean you end up on the street.

People finally REALLY have to care for their health and stuff, because for not being sick, being hurt or whatever you can use the money for something else.

People can do learn stuff on their own, while being able to live.

All that complex balancing governments, etc. have to deal with all the time is gone or at least way less.

So baasically it is the realization that all that stuff is complex, makes everyone hate the system and taxes and reduces freedom by implementing and fixing laws, staying up to date, etc.

This was tried in a couple of poorer countries (they had nothing to lose). Outcome was lower crime rate, an actual economy, lower unemplyment, etc.

It's most likely not the answer to all question and not perfect, but it has many, many benifits. As the article states the problem is the same as with democracy. There was a time when nearly everboy was like "My decision might be good, thought of one, but what about all the others?". And all in all it sounded like a really naive and stupid idea in the beginning. Now we all know that Democracy isn't perfect, but then what really is?

aclimatt• 13 years ago

I don't see how inflation would not completely negate the effects of this without some strict fiscal policy in tandem. If you are essentially raising the average wage by X, would prices not rise accordingly? Those who make X plus a salary would not be able to afford the mansions of yesterday, because those who make X plus an even higher salary can afford to outbid them. Likewise, basic necessities like food can easily increase in price to what people can afford to pay.

anonymoushn4• 13 years ago

If the spending is funded by taxes rather than printing, why would we expect huge inflation to result?

eli_gottlieb• 13 years ago

Well, let's admit it: because under a debt-backed fiat currency, the value of currency is a function of income inequality. To reduce inequality is thus to dilute the currency and create inflation.

stevesearer• 13 years ago

I would expect price inflation to occur in some areas because people will have more money to spend which will have the effect of less downward pressure on prices.

In my life, if I started receiving $1000 extra dollars each month, I imagine I would first go and try to rent a nicer apartment. Unfortunately, I'd expect others to do the same, giving landlords the ability to charge more because there are more dollars chasing the same number of apartments.

yummyfajitas6• 13 years ago

Presumably you are taxing income to pay for this. The net result is a transfer of wealth from people who work to people who don't.

As a result the money supply does not increase. If any inflation occurs, it is caused solely by a shift of spending from goods/investments not measured by CPI (or the swiss equivalent) to those that are.

(I.e., if money shifts from investment in electronics research to pizza consumption, the price of pizza will rise and the price of of oscilloscopes will fall. Since CPI includes the price of pizza but not oscilloscopes, inflation will rise.)

maxerickson• 13 years ago

Doesn't research tend to put downwards pressure on electronics prices (I guess you've just made a typo...)?

An interesting side effect might be an increase in the ability of people who work to extract the value of their work from people that hold capital.

msluyter2• 13 years ago

I'm going to elaborate on the parent's confusion a bit. Even if, as you suggest, net inflation doesn't increase, price distribution might. That is, yacht prices fall, while food/rent prices rise. Since the poor spend the vast majority of their income on food/rent, much of the basic income would thus be recaptured. In fact, while the equilibrium might be different, it appears to me that the overall impact might be minimal, or at least less than expected.

OTOH, it might help with our aggregate demand problems.

It's quite possible I'm missing something, however.

axus• 13 years ago

Won't vendors and landlords charge what the market will bare? If all the people not receiving subsidized housing now have +$10,000 per year, they can all bid up to that much more.

Houshalter2• 13 years ago

If the prices of things like food rise that is a good thing. It means more people are buying them than before, it means more people have access to those things. It's a net benefit.

lmm3• 13 years ago

The proposal wouldn't change the average net wage; effectively higher taxes on the well-off will subsidize those on lower income - not so much the unemployed, who already receive quite a lot of public subsidy, but those on minimum-wage/part-time jobs do a lot better under this scheme.

So hopefully this will a) reduce income inequality b) give better incentives for the unemployed, which may improve overall productivity.

I guess you could argue that a higher velocity of money means an increased money supply that has the same practical effects as inflation. IIRC economic thought is divided on this?

InclinedPlane3• 13 years ago

Keep in mind what the background state is. Look at the US for example, where 40% of the GDP is routed through taxation and government spending, and where more than 4 trillion dollars a year is spent on welfare, pension programs (like social security), health care, and education.

Putting in place a minimum income system would merely redirect funds from those particular programs in many cases.

westward• 13 years ago

Is the price of something determined by how much it costs to make or how much someone is willing to pay for it? I believe the correct answer is "It depends and both".

If you think it's just cost+profit then, prices will rise only by the percentage of which labor is a part of that price. In the restaurant industry, for example, labor costs are about 35% or the total costs. If wages increase 10%, costs increase 3%.

OnACoffeeBreak• 13 years ago

One of the previous discussions here: https://news.ycombinator.com/item?id=6532738

trendoid• 13 years ago

Similar experiments are being tried in India : https://en.wikipedia.org/wiki/Basic_income_in_India

http://binews.org/2011/09/india-basic-income-pilot-projects-... here is an excerpt from the 2nd link :

"These projects are similar to the Namibian basic income pilot project and to the U.S. and Canadian governments’ Negative Income Tax experiments conducted in the 1960s and 1970s, but the rural project adds an important new innovation to the method: the project is being conducted on the village, rather than on the individual, level. All residents of eight Indian villages will receive the basic income, and their behavior will be compared with residents of twelve “control” villages. This method will allow project designers to study village-wide effects of the transfer.

Guy Standing, professor of economic security at Bath University (UK) and an honorary co-president of the Basic Income Earth Network, helped to conceive and organize the project. He argues that it needs to be conducted with scientific dispassion. But he’s hopeful of the outcome. Asked about the results of the Namibian pilot project—which he was also a part of—Standing said that organizers documented many positive effects: “Child school attendance went up dramatically, use of medical clinics went up. Those with HIV/ AIDS started to take ARTs (Antiretroviral Therapy drugs) because they’d been able to buy the right sort of food with the cash. Women’s economic status improved, and the economic crime rate went down. Income distribution improved.”"

bilalq3• 13 years ago

The discussion of basic income has been brought up here before. The article briefly mentions unemployment, but I think that is going to become a major issue in the future. Advances in technology keep cutting down the need for labor.

As automation erodes away at the need for workers, what will we be left with? Certainly, there will always be a need for people that can maintain and innovate our technologies, but why hire people to do the things that machines can do better, faster, and more cost-effectively? I think unemployment is something that is naturally going to increase in the long-term. I don't know if basic income would work or not, but it is worth considering.

sillysaurus2• 13 years ago

why hire people to do the things that machines can do better, faster, and more cost-effectively?

Because it's about 10,000x easier to program a person than to program a machine.

"Sudo make them a sandwich" works on people with almost no further instruction.

Daniel_Newby• 13 years ago

Mass markets are driven by marginal costs, not one-time engineering costs. The marginal cost of making food manually is extremely high.

mtgx• 13 years ago

Ultimately we may want robots to do everything for us, and making anything to be so efficient that governments or companies would even offer food or other stuff for free.

But until that happens, there will probably be a transition period of 50-100 years that will be very difficult for most humans. I think there are 2 solutions to fix that:

1) move humans "upmarket" (more complex work robots can't do very well yet) constantly through education. But this sounds very difficult to do and organize, as the skill to learn will always be a moving target, and I have very little faith governments are competent and fast enough to tackle this problem. So self-teaching from Internet courses and whatnot, might be the only solution here. The problem is humans also hate learning, and can't wait to get out of school to "stop learning stuff".

2) Pay everyone a living wage, for "free", by increasing taxes on capital for companies, all over the world, to sustain the increasing unemployment and the effects of automation.

Since governments are lazy, and like solutions that they don't have to think too hard about, this is probably the more likely scenario.

That's not to say they will do it willingly, though. Oh no, especially not with corporations basically owning many of the world's biggest governments right now. So there will be more mass protests and revolutions, until the governments get forced to come up with a solution - any solution (that works for the unemployed people).

jl6• 13 years ago

I too see unemployment (or rather, the diminishing demand for labor) as the key political issue of the 21st century. I can imagine a point by which the vast majority of humans simply aren't needed to provide services to the owners of capital.

I don't have any answers.

humanrebar9• 13 years ago

Convincing the 1% to waste money on labor-intensive services and renewable goods would help with redistribution of wealth. Like $50 hand-carved bamboo chopsticks or $15 servings of organic quinoa. Entertainment catering to the 1% probably qualifies as well.

bilalq3• 13 years ago

Yeah, it's scary to try and imagine what sort of society would come out even further in the future. An aristocracy with an elite worker class and the masses in relative poverty? Relative is the operative word here, of course. It may well be that the quality of life for someone in poverty in such a future would be better than a middle class person today.

PilateDeGuerre• 13 years ago

I think that is going to become a major issue in the future.

As hackers are fond of repeating: "The future is already here — it's just not very evenly distributed."

There are already huge surplus populations. This is in evidence in a brazen way in southern Europe as the crisis restructures economy and society and yet it is no less true in the USA.

One of the most pressing questions for contemporary liberalism is: What is to be done about these surplus populations? Switzerland has formulated one trajectory of response in the referendum for a basic income. Other wealthy countries take a different path towards control.

Consider this famous question posed by Michel Foucault: "Is it surprising that prisons resemble factories, schools, barracks, hospitals, which all resemble prisons?" Are these not all ways in which we already deal with surplus populations?

As one method of social control, work, is becoming less and less available and more and more precarious the other methods of social control are on the rise. Pupils are staying in school longer. Ever increasing numbers of people are being sent to prison. Wars continue to be waged.

The workplace, the school, the barracks, the hospital, and the prison are not all just places. They are conditions.

The conditions that typify each are being sublimated throughout all of society and increasingly so. Leisure now often has a productive aspect, e.g., vaporous web browsing is monetized through ads. The panopticon was an innovation in prison design and now it is our experience everywhere.

The line between society and prison is blurring as more and people are under state control in the form of parole and probation. More generally, entire populations are having the conditions of prison thrust upon them through constant surveillance and the constant threat of search and seizure of their person, e.g., stop and frisk.

The future is bleak because the present is bleak. This bleakness just isn't evenly distributed - yet.

To innovate, in the HN sense of the word, is invariably to hasten this ongoing distribution. Every time the Internet eats an industry power and money is re-consolidated into the hands of fewer and fewer and the surplus population grows.

"Understood as a class, programmers occupy the same position today that the bourgeoisie did in 1848, wielding social and economic power disproportionate to their political leverage. In the revolutions of 1848, the bourgeoisie sentenced humanity to two more centuries of misfortune by ultimately siding with law and order against poor workers. Programmers enthralled by the Internet revolution could do even worse today: they could become digital Bolsheviks whose attempt to create a democratic utopia produces the ultimate totalitarianism.

On the other hand, if a critical mass of programmers shifts their allegiances to the real struggles of the excluded, the future will be up for grabs once more. But that would mean abolishing the digital as we know it—and with it, themselves as a class. Desert the digital utopia."

from Deserting the Digital Utopia: Computers against Computing[1]

[1]http://crimethinc.com/texts/ex/digital-utopia.html

refurb• 13 years ago

Why would unemployment be any bigger of an issue in the next 10 years than it has over the last 150 years? We've had incredible increases in efficiency in both manufacturing and agriculture in the early 1900s alone, yet unemployment has rarely broken 10%.

bilalq3• 13 years ago

You bring up a good point, but I don't think the status quo will be able to persist. This is because of the pace of at which efficiency increases. To be honest, I haven't looked relevant data, but I imagine our rate of improvement is non-linear. As technology advances, it increases the rate at which technology advances. Thus far, demand has scaled in conjunction with the increases in supply. I don't believe it will be able to keep up in the long run though. You just won't need as many workers.

You'll also notice that the average worker now has far more education and training than in the past. This is a side effect of our increased dependency on technology. As more and more specialization is required, the barrier to entry in the workforce will just become too high.

mseebach5• 13 years ago

The problem with this proposal is that it will change dynamics a lot, and it's hard to predict how people will respond to those dynamics. In other words, what will the unintended consequences be?

Will people with non-great jobs around the basic income level keep going to work, or will they stay home and maintain their current living standard, or will they keep going to work, and roughly double it?

If many people choose to stay home, the cost of the services they provide will rise quite dramatically. This will have some hard to predict consequences across the economy. Some of the services will just be foregone with little tangible effect. Lawns will be mowed less often, street swept less often etc. Slightly worse impact on the economy will be when busy people decide to forego help, such as cleaners, babysitters, handymen etc. and do the job themselves, competing with either or both work and leisure time, which impacts either or both productivity and quality of life.

The most direct impact will be the rise in cost of services that can't be foregone or "taken in-house". Trash-collection, several bits of the retail supply chain etc. This will raise the cost of everything for everyone.

Also, besides these impacts, there's the human element. If a person makes the short-term decision to not work (and not studying or working on a startup or something similar), that person moves further and further away from ever participating in productive labour. I'm a bit old-fashioned on this, but I consider allowing people to go idle, long-term like that, is a grave failure of society. Many people who start in unpleasant low-wage jobs, don't end in them. Those who never start any job(/education/productive activity) at all have no chance of progressing beyond them.

But the worst is that taken together, the rise in prices will create a strong force towards getting rid of low income jobs, which will raise the bar significantly for those at the bottom, committing many of those willing to work to not work.

This is all speculation, and it's all dependent on the level to which low-income people will or won't chose to work.

siculars• 13 years ago

All good points. But that's the genius of it. Nobody knows what will happen. And what will happen will be affected by untold numbers of variables. Right now if you go to visit the Swiss you'll immediately notice how expensive everything is. Every. Single. Thing. I think it's absolutely the case that those prices will rise. With more disposable income, producers will start hiking their prices to capture more of it. Runaway inflation. As for what people will do. I think that's a bit less obvious. I'm sure there are those that will go on permanent holiday. How the economy will fill low wage/skill jobs is an open question. Will they have to import a 'serf' class? Non citizens who don't get payouts who actually have to work to live? Very exciting to see it all play out indeed. My gut is that this will be a net negative.

awt3• 13 years ago

One thing your analysis leaves out is sex. While I refute the idea that the only thing women/men consider when choosing a partner, money is a factor. So let's say you're a girl and two guys want to go out with you. They're both equally attractive, equally funny/smart. One is living frugally on basic income with roommates, the other has a nice apartment that he pays for with extra income earned from holding a job.

The guy with the apartment has certain advantages that may not appeal to all women, but certainly to some.

My point is that there is motivation to earn more than your peers, especially for young people.

mynewwork• 13 years ago

One guy has time to go walk in the park on weekday afternoons and can go out to a bar or to a show any night of the week, while the other is at work all day and can only do late nights on the weekend. One guy can lounge in bed then take you to brunch, the other has to leave for work at 7am. One guy has to schedule his vacation a month in advance, the other can be spontaneous to hop on a train somewhere today.

My point is that there is motivation to have more free-time than your peers, especially for young people.

VLM5• 13 years ago

"Many people who start in unpleasant low-wage jobs, don't end in them."

LOL that's not a problem in the country I live in (USA). Perhaps you're Swiss or live in some country where statistically significant upward mobility is possible, in which case, in your country, it could be an issue. Lack of class migration, other than downward of course, is a pretty significant problem other than anecdotally in the USA.

Other than that localization issue, a pretty good post but I'd factor in import goods, especially products that appeal to poor people. Put bluntly I think retailers would collect a lot of the money selling Chinese televisions and the like. And getting that support from retailers is likely to be critical to getting the support to implement this thing. So there would be certain balance of trade issues relating to higher imports.

Kluny• 13 years ago

"Will people with non-great jobs around the basic income level keep going to work, or will they stay home and maintain their current living standard, or will they keep going to work, and roughly double it?"

What would you do? Would you live a frugal life on basic, or would you use the extra to live a fuller life?

"Some of the services will just be foregone with little tangible effect. Lawns will be mowed less often, street swept less often etc. Slightly worse impact on the economy will be when busy people decide to forego help, such as cleaners, babysitters, handymen etc. and do the job themselves."

Speaking for myself, I have less than zero desire to mow my lawn, or sweep my street. I like having a mowed lawn and a swept street though, so if I suddenly had extra money, I would very likely pay someone to do those jobs, which currently aren't being done at my house. What would you do?

"If a person makes the short-term decision to not work (and not studying or working on a startup or something similar), that person moves further and further away from ever participating in productive labour. I'm a bit old-fashioned on this, but I consider allowing people to go idle, long-term like that, is a grave failure of society."

Why should anyone be forced to do work they hate for the sake of proving to those in power that they are not lazy? What would you do if you were unfortunate enough not have a college education and some skills that allow you to hold a good job, and your only option was working in fast food? Then suddenly you have this basic income, and you can afford to live without working that horrible job? Would you just start taking a lot of naps, or would you start pursuing hobbies and skills that you never had time or opportunity for before?

I know what I would do - I'd take a course on motorcycle repair, take up motorcycle racing, and travel to races. Maybe that's not valuable to society as a whole, but I would argue that it's relatively more valuable than fast food. Plus the intangible benefit of another person in the world who's happy and an expert in their field, rather than another unhappy, worthless minimum wage employee. What would you do? I'm asking you to trust other people to make decisions as good as you would make, rather than making assumptions on their behalf.

mseebach5• 13 years ago

So you admit that you would change your behavior in response to such a policy. That's my point: People change their behaviors in response to changed incentives.

Now, since society is a very dynamic, it is extremely difficult to predict the consequences of such changes in dynamics, or even to ascribe causation afterwards. That, however is not an argument to throw caution to the wind.

I'm asking you to trust other people to make decisions as good as you would make, rather than making assumptions on their behalf.

I find that very hard to do, as I have multiple, hard examples of people making poorer decisions than me. Mostly they consist of people asking my advice, then not following it, then failing.

By the way, by the same measure, I am guilty of making poorer choices than other people as well, it's not a linear ranking.

ibuildthings• 13 years ago

Coming from an academic world, the primary currency in my network is the number of publications/citations. Faculty/postdocs/Phd's salary in most universities are not worth bragging about; but it is not uncommon for people to put in regular 60+ hours week to get that extra publication so that you can stay ahead of the curve ( or at-least catch up )to your peers. From my perspective ( of course the domain bias exist) human ego is as powerful a motivator ( and we invariably have a desire to be ahead of people in our immediate network! ).

The fact that Switzerland is a really rich country, with the wealth distributed not so unfairly, makes this experiment even more interesting ( compared to the communist style takeover which happened in past in then poor nations including Russia or China).

To summarize, one of the things that makes capitalism work is competition; and money necessarily is not the only thing ( and might not be the primary thing) that we compete for!

mfringel• 13 years ago

"Will people..." "If many people..." "If a person...."

Who are these people? Are they not you? If they're not you, what makes them different from you? If they are you, what makes you think you'd do those things?

mseebach5• 13 years ago

They're potentially, halfway me in a world without celebrated computer programmers. I have struggled immensely with being a "slow starter", with self-motivation. I would have been an even slower starter in a world where I couldn't do my job alone, at home and late at night.

Come to think of it, one of my early learning-moments was pursuing a total dead-beat of a customer that I should have seen from a million miles away would never pay up, and incurring debt while I did. Having the till shut in my face (figuratively) at the bank was the push I need to face reality, cut my losses and move on to more productive work.

I totally see myself becoming an underperforming slacker pursuing dead-end/get-rich-quick "business" ideas. I have a couple of distinct kicks in the face to thank for being where I am today, and while not all being directly financial kicks (I'm privileged enough to never had to worry about missing a meal or not sleeping in my own room), is was definitely an element in all of them.

joseflavio3• 13 years ago

I believe that there is a second and more dark intention in this proposal. Today Switzerland is part of EU but they still have quotas for "work permits" depending on the nationality of the worker, this goes against the principles of Schengen (https://en.wikipedia.org/wiki/Schengen_Agreement) and there is lot of pressure for Switzerland to remove these "quotas" (mainly against eastern European countries). The problem is that the wages there are way higher than other Schengen countries, and without the quotas there would be massive immigration to Switzerland that would lower sharply the wages for jobs that don't require higher education. So, IMO, Switzerland wants to give a minimum wage to create a "virtual block" to the poor countries of Schengen... (I am French and I live near the border)

edit to clarify: if you are a Swiss citizen you would earn your wage + state wage, and if you are an immigrant you would earn just your wage... making virtually impossible to afford living there (considering your wage =~ state given wage), only for very well paid jobs that this would make no difference.

edit: typo

homeomorphic• 13 years ago

Today Switzerland is part of EU

No, it is not. [1]

[1] http://europa.eu/about-eu/countries/member-countries/index_e...

mongol• 13 years ago

That must have been a typo of some kind

joseflavio3• 13 years ago

Sorry, you are right, Switzerland is only part of Schengen (https://en.wikipedia.org/wiki/Schengen_Area), but still the long term objective of the Schengen Area would be borderless trade, immigration, workforce, etc.

mseebach5• 13 years ago

No, this is a separate problem. Free movement of labour is an EEA policy which permits nationals of one EEA country to work in another EEA country on the same conditions as that member state’s own citizens. "Same conditions" includes the right to the same benefits.

If Switzerland accepts the basic income, they would probably have to leave EEA or negotiate some pretty steep exceptions to its membership.

joseflavio3• 13 years ago

I agree with this in theory... but I know of at least one counter example: if you moved to Denmark, it would took 2 years (working or studying there) for you to considered a "resident" and be eligible to all state benefits as a Danish (at least was this way 7 years ago). I believe that it will be very interesting how they will solve this... they would need to add some barrier otherwise LOT of people will migrate to there... in France the minimum wage is around 1.400 euros for working 35 hours... people would even live in Switzerland and come to work in France or Italy...

guttermaw• 13 years ago

Actually, Switzerland is not (quite) part of the EEA either.

http://en.wikipedia.org/wiki/Switzerland–European_Union_rela...

dragonwriter8• 13 years ago

Free movement of labour is an EEA policy which permits nationals of one EEA country to work in another EEA country on the same conditions as that member state’s own citizens. "Same conditions" includes the right to the same benefits.

Aside from the fact that Switzerland isn't an EEA member, Basic Income is not a condition or benefit of working in the country, it is (like, e.g., voting) a condition of citizenship unconnected with whether or not the citizen is working.

chalst• 13 years ago

I think your suspicion may well be correct in terms of how the proposal will develop. At present the referendum questions reads "Soll jeder Mensch in diesem Land die finanzielle Grundlage zum Leben bedingungslos erhalten?" (roughly, Should every person in this country be given the financial basis to live decently?), but Switzerland has a fairly strong anti-immigrant lobby, and I would expect to see that interpreted to exclude non-national residents.

Beyond the increase in rents, I would also expect a consequence to be for the tax regime to become less progressive (perhaps a flat tax rate) and more rigorously enforced. This might add up to making Switzerland an unattractive country for people to work who do not intend to take citizenship.

hikarudo• 13 years ago

It would be great to see a discussion of this proposal from the point of view of Austrian economics. Anyone here cares to give an opinion?

rayiner• 13 years ago

I'm trying to think how a basic income would impact say inner city communities in the U.S. I'm not sure that the only problem in those communities is a lack of cash. Rather, there seems to be a collapse in the social structure that leads to crime, drug use, etc. Experiences with micro-finance abroad have shown that such programs are most effective when the cash comes with some social engineering. Maybe the same is true for domestic welfare. Simply giving everyone a check won't cause fathers to stay with their kids and won't keep gangs from filling in the power vacuum created by their absence. A check isn't going to replace work as a framework for structuring society nor give people the fulfillment that comes from work.

It's possible that paternalistic welfare is simply unworkable in practice. But I think advocates of basic income ignore the fact that there is a rationale behind paternalistic welfare that isn't addressed by basic income: that poor people lack more than just money.

rsingel• 13 years ago

Arbeit Macht Frei.

stackcollision2• 13 years ago

Despite the evil connotations associated with this phrase post-WW2, I have to say that I agree with it.

xxchan• 13 years ago

Other things can improve when you're not stressed and struggling on minimum wage (or not wage at all).

tonyedgecombe• 13 years ago

Exactly, it's got to be harder to convince people to push your drugs when they aren't cold and hungry.

andreasklinger3• 13 years ago

people lack education and possibilities for long-term planning.

if you provide the second the first will follow. if you provide the first your other mentioned problems will go down.

chc12• 13 years ago

As I understand it, the idea here is not really to replace work, but to make being un- or underemployed not be completely devastating. You're right that these communities' problems go deeper than money, but I think the poverty is still a blocking issue. You're not going to fix their society when the necessity to structure it around mere survival still exists.

dragonwriter8• 13 years ago

Simply giving everyone a check won't cause fathers to stay with their kids and won't keep gangs from filling in the power vacuum created by their absence.

That's true, basic income doesn't solve the problems resulting from the fact that the US is the most eager country in the world to incarcerate its citizens.

But neither does paternalistic welfare. Obviously.

A check isn't going to replace work as a framework for structuring society nor give people the fulfillment that comes from work.

OTOH, an unconditional check -- unlike means-tested paternalistic welfare -- avoids providing an economic disincentive to work, and avoids hampering the ability of work to promote economic and social mobility.

It's possible that paternalistic welfare is simply unworkable in practice. But I think advocates of basic income ignore the fact that there is a rationale behind paternalistic welfare that isn't addressed by basic income: that poor people lack more than just money.

The opponents of basic income ignore the fact that paternalistic welfare is a staggering failure at providing those things "more than just money", as well as being an incredibly inefficient mechanism for providing the money part.

ZeroGravitas• 13 years ago

"Simply giving everyone a check won't cause fathers to stay with their kids"

At least in the UK there are currently financial incentives in the welfare system for single parents to a) become single parents rather than couples, and b) be paid by the government to stay at home and raise the child rather than the government paying for childcare while the parent works.

"A check isn't going to replace work as a framework for structuring society nor give people the fulfillment that comes from work."

Again, current welfare systems heavily incentivize the poorest people not to work. This is a key benefit of the proposed system, you keep most of every extra dollar you earn, rather than facing punitive marginal tax rates because welfare benefits are clawed back.

Your "paternalistic" welfare is often a beaurocratic trap.

gremlinsinc• 13 years ago

That makes a lot of sense, -- Maybe our youth would grow up into better adults IF their parents--especially single parents had the means to support them withOUT taking a job. -- There should be the option of at least 1 full-time parent, whether it's in a 1 or 2 parent home.

erikpukinskis3• 13 years ago

Do you live in an inner city community? You're parroting out bizarre stereotypes (deadbeat Dads and gangs) as if they are the dominant phenomenon, which makes me think you don't actually live here.

I live in one of those "inner city communities" and basic income would be a godsend for a lot of people. I have been supporting one neighbor as he's trying to get on his feet, but it's incredibly costly to actually get a job. He needs money for housing, transit, clothes, food, all kinds of stuff to bootstrap him during the hiring, training, and onboarding process. It's hundreds if not thousands of dollars that you have to pay BEFORE you draw your first paycheck.

That's a guy who is doing everything right, except he has zero dollars in his pocket.

I can do it for one person, every few years. I would love it if the government would do it.

swombat4• 13 years ago

As a Swiss citizen currently living in the UK, who is earning a fair amount of money and planning to probably go back to live in Switzerland, I am going to vote for this proposal (unless the referendum documentation makes it look absolutely stupid, e.g. it has some really bad implementation idea).

I hate taxes as much as the next guy, but reducing risk of destitution for everyone in the country down to zero is one cause for which I'll be happy to pay taxes.

Why do I want more money? To buy toys, to buy time, and to buy security. The basic income resolves the last two items, and puts the first one well within reach for most reasonable toys.

frogpelt2• 13 years ago

It sounds good in theory doesn't it?

I hope it passes. It will be a great study case. I fear that it won't be pure welfare and therefore the conclusions we can draw will be limited.

sp33210• 13 years ago

If you support giving money to poor people, why are you waiting for the government to take your money and do it for you? Why aren't you already giving money to the poor?

Luc2• 13 years ago

Meh, sounds like a lot of work and worries.

cylinder2• 13 years ago

This is such a weak argument. In order to make a meaningful impact on society, you need mandated programs that require all to contribute. Do you propose that foreign aid, military spending, healthcare all be done on a peer to peer basis as well?

Ntrails• 13 years ago

Him giving to the poor doesn't achieve the same goal as a government providing a basic wage to all. Yes, you can help some people, but this is a change in the very fabric of society. In how people choose to live, to strive or to squander.

This is a remarkable piece of legislation and truly exciting to observe.

chc12• 13 years ago

Treating every instance of giving money as equal is like failing to distinguish between packing popcorn from real popcorn. The motives and effects are not the same for every exchange of money. There is no way that swombat could provide a basic income for everyone, which is the idea under discussion here.

Zigurd• 13 years ago

If you support a real free market economy, please, first, untangle banking and industry from overt and covert government involvement before you insist that the poor schlubs at the bottom of the economy be the experimental subjects for economic purity.

xixi7710• 13 years ago

It's a good question, but really, his government is already taking his money and giving it to the poor in the form of existing (means-tested) social programs, that have an additional effect of creating an extreme disincentive to work, since you get disqualified from those as your income grows.

Replacing all means-tested government aid to the poor with a simple check to everyone would dramatically cut program costs and abuse, and quite likely actually result in more people getting actual jobs. It would also be a good reason to repeal the minimal wage laws, since there would be no rationale for them any more. To me, this seems like a pretty good tradeoff, even if overall tax rates go up a little to pay for it.

The main danger I see in this is that with the system in place, there would be continuous public pressure on the politicians to keep increasing the basic income level, until productive employment becomes not profitable any more and the economy collapses. Of course this problem is inherent in any welfare society, but I think it's more dangerous here, because of the sheer transparency. But if anyone can make this work, it's probably Switzerland, and we would all learn a lot from the experiment.

k-mcgrady• 13 years ago

There's a big difference. You can donate and help a small number of people. The government can instantly pull everybody in the country out of poverty. That's not something you can do yourself.

lmg643• 13 years ago

i also agree the idea sounds pretty interesting.

i think the main problem is how to address cases where people mis-spend their basic income. someone is unemployed, and they blow the basic income on booze, etc. issue is how do we protect people from themselves. we can say damn the consequences and encourage prudence but i believe this is why most aid qualifications exist.

i know HN readers will be less likely to do have this problem (other than spending on a startup :) ) but HN readers are not a representative cross section of people.

andreasklinger3• 13 years ago

do you have sources that verify the disproportional "mis-spending" of welfare money.

i would doubt it is such a critical issue. and if usually related to problems/illness that could have been tackled earlier (alcoholism, depression eg)

mistercow• 13 years ago

If people waste their basic income on alcohol, well, so what? I don't know the tax situation in Switzerland, but in the US, that means a big chunk of that money is immediately reclaimed as taxes. The rest goes back into the economy, and the person is not really in any worse of a situation than they would have been without basic income.

It's one situation where basic income doesn't really help, but it doesn't really hurt either.

Spoom• 13 years ago

In a reasonable society with universal healthcare, misspending the universal income on things like booze could be treated as a health problem. As for how to feed people who fall into that trap, there might need to be some emergency income available for which a doctor would need to sign off.

Of course, we'd have to fix healthcare first in the US, which is its own giant political argument.

omegaworks• 13 years ago

Minimum cash transfers are one of the most effective methods of sustainably increasing the wealth of a population. There's a pretty successful charity that does this kind of work in Africa: http://www.givewell.org/international/technical/programs/cas...

There's a guy at Columbia University that's running studies about giving drug addicts guaranteed cash, and it's actually allowing them to more easily break their addictions:

http://www.nytimes.com/2013/09/17/science/the-rational-choic...

My only worry about this program is if it will indirectly inflate the cost of everything.

jamespitts2• 13 years ago

Well, as evidenced by this discussion, we do very often nerd-out on social psychology :) !

Here is a Seattle-based program that mitigates the huge costs of alcohol addiction by providing free housing and some realistic rules for staying there. The structure of the program both protects society from their addiction, and "them from themselves".

http://www.desc.org/1811.html

The built-in (and often clashing) drives for "fairness" and for "charity" often bubble up as we examine a program that helps someone who may not seem to deserve our help. But there are practical reasons to help people, with measurable results.

Still, when programs are developed, they must incorporate and mitigate the potential social side-effects!

godzilla82• 13 years ago

issue is how do we protect people from themselves.

Sorry, but I think something is wrong with this kind of thinking. For e.g. someone who knows "better", could protect "you" by not funding your start-up! Also, if you read the article, Schmidt says "I tell people not to think about it for others, but think about it for themselves".

manarth• 13 years ago

Something that's not been mentioned much is the impact on the benefits system - and specifically the cost. Presumably this would completely replace all benefits - everyone gets $X a month, as a universal benefit. No specific claim for housing benefit, jobseekers benefit, etc.

On the one hand, this massively reduces the bureaucracy/overhead of administering the system, reviewing claims, etc. On the other hand, all the public servants involved in the administration would presumably be out of work. But then, everyone's got this extra cash, to put back into the economy through their purchases…

Would be really interesting to see the effects at a large/national scale.

SeoxyS• 13 years ago

Like swombat, I'm also a swiss citizen living abroad (in San Francisco), and will be voting for this referendum. Basic income is the ultimate fair and bureaucracy-less social safety net: there is no burden of proof, and nobody gets left out.

andreasklinger3• 13 years ago

Also i would assume that the costs infrastructure for "proofing" and managing are high enough to put in as a factor.

gadders2• 13 years ago

When this has been discussed previously, the objection is always raised as to why would anyone want to do an unpleasant job if all their basic needs are already taken care of.

The reply always seems to be "Because robots!"

ffrryuu3• 13 years ago

Basic income is a universal human right.

breischl4• 13 years ago

I really wish people would quit declaring anything they want as a "universal human right."

The real universals are things you naturally have that must be taken away from you. If you were the sole person on an island, you could speak freely, practice whatever religion, pursue happiness, etc. You have those rights unless someone else shows up and takes them away from you.

Things like an income, health care, and all the so-called "positive rights" are just entitlements. You can stand alone on an island and scream about your right to an income, but it won't matter.

Maybe the entitlements are a good idea, but no matter how good they might be they're still not "universal human rights."

ffrryuu3• 13 years ago

You can give up that right, I'll take it away from you since you don't seem to want it.

VLM5• 13 years ago

Any discussion of a basic income on HN probably needs a captcha to prove authors have read

http://en.wikipedia.org/wiki/Alaska_Permanent_Fund

maybe by entering the annual individual payout in 2012 was (fill in the blank) 878 or $878 or $878.00 or whatever.

Most posts against it usually have a tinge of "keep the government out of my medicare" about them.

"Somebody should try this" or "Its too dangerous to try" and all the like almost intentionally seem to ignore this actual implementation.

graue• 13 years ago

Even in the best year (2008, $3269) this isn't remotely enough to live on. That's less than $9 a day, and that's an exceptionally high payout! In 2012 it was $2.40 a day. Maybe you could live on that in India or Vietnam, but not in the U.S.

VLM5• 13 years ago

I would disagree in that during my starving student years I occasionally submitted tax returns vaguely resembling those kind of figures. You need roommates and can't be too picky about food and entertainment, but its possible. Its certainly a lot easier to live on than $0 !

This does have certain implications where either it gets indexed to some kind of cost of living index, probably very corruptly, or it gets polarized into some kind of coastie/non-coastie or urban/rural issue.

frogpelt2• 13 years ago

I did not know about this program, thanks for sharing.

I see a glaring difference though. Instead of taxing everyone on their person income the government took a portion of the profits from the natural resources of the state and set it aside for an endowment of sorts. The fund itself is invested and the dividends are paid out. Most welfare plans do not operate this way, even if they started out with that intent.

mangeletti• 13 years ago

It's unfortunate that the Austrian School has taken a blow during the great depression, which was entirely due to government influence (see http://en.wikipedia.org/wiki/Federal_Reserve_Act (read "Putting the fox in charge of the hen house")), leading to the adoption of a new orthodox standard of tax and spend (Keynesian) and later increase in monetar(ism|y control and domination from above) (Friedman). Now, after the 2008 crisis, which was caused entirely by government influence (see http://en.wikipedia.org/wiki/Community_Reinvestment_Act#2008... (read "Bad credit? No problem.")), the resurgent attack against laissez-faire economics is regarded as something new by those who haven't read their history books

TL;DR

The fox is in charge of the hen house, blames the hens on their problems, and uses that as a justification to put an even large fox in charge of more hens.

tete2• 13 years ago

If you think it is a crazy idea and don't see the reason. Think about social insurance systems and how many people are needed just for the paperwork, support when it comes to question, doctors who (re)verify that someone is really sick.

And then think about all the overhead you have as an entropeneer and how much risk you have, just for trying out an idea.

And then think about the risks, if you dedicate your life to art or if you dedicate your life to help other people.

Maybe there are systems to fix all of this, but they will be complex and have a lot of overhead (in other words: Tax paid for paperwork).

Remving the "having bad luck" problem means more people that will actually go for something, meaning more chances of bringing ahead giant leaps.

And think about how people can focus on the actual problem without constantly having that "How to pay your fees next month" thought in the back of your head, that makes you makes you wanna cry, whenever you find that that's not the solution.... espcially when you have a family.

ricardobeat• 13 years ago

entropeneer

I like that word. Creators of entropy.

tehwalrus• 13 years ago

I literally laughed out loud at the accusation of Switzerland being a "Socialist" country. Having spent a summer in Zürich amongst the investment banks (although not working at one I hasten to add) the US-English insult was too much.

EDIT: Sorry, did I say investment banks? I meant Private Banks of course.

cl3m• 13 years ago

Unfortunately, I don't think there is any chance this will pass. Swiss are very risk averse and I don't think they want to mess with the successful economy they have now. There is way to much uncertainty.

The initiative to increase the minimum holiday (4 to 6 weeks) failed already.

For those interested, there is a initiative this month to limit the maximum salary to 12x the minimum salary in the same company (1:12) which might pass..

swombat4• 13 years ago

For the record, I voted against the 12x proposal. It's unnecessary meddling in the workings of a free market, meant to appease ideologists. The basic income proposal, however, is a pretty dramatic, wide-ranging change that could make a big difference. It's not appeasing: it's incendiary.

sunseb• 13 years ago

I live in Switzerland, I will vote for this idea, but there is absolutely no chance this referendum will succeed. The Swiss are very conservative people and don't want to change their model until it's proven more effective.

negamax• 13 years ago

Everyone here should watch that Ducktales episode where everyone in the valley gets lots of bottle caps and then there's no value to them.

It's a fallacy and shortsightedness to think there be no inflation. No country is a closed system. People will be spending money on imported goods. This will only leave inflating money supply as a resort; so state can fulfil its obligation.

macspoofing7• 13 years ago

Can someone explain how this is paid for?

As I understand it, the basic income involves paying each citizen $2800 per month, or $33600 per year.

For Switzerland that would mean a total expense of $270 billion ( $269,270,400,000 ) per year. If instituted in the US, that would mean an expense of $10 trillion ( $10,516,800,000,000 ) per year. Both numbers are around what the total GDP of each country is.

How does this math work out? I'm missing something, and no article actually explains it.

//EDIT

Does this mean that if you get a job that pays $34,000/year you would get no supplemental income? Whereas if you get a job that pays $30,000/year, the government will subside your income to the tune of $3600? That's the only way this makes sense any sense. Right?

stackcollision2• 13 years ago

I don't think it does. Just remember that an artist came up with this. The rotary engine was great in theory, too.

e98cuenc• 13 years ago

This is only for people that are earning less than $2800. In Switzerland that's basically only unemployed people. The unemployment rate when I was there was ~3.5%, so it's roughly $10B / year, which looks acceptable for a country as wealthy as Switzerland.

macspoofing7• 13 years ago

This is only for people that are earning less than $2800

Are you sure about that? From the article:

Every month, every Swiss person would receive a check from the government, no matter how rich or poor, how hardworking or lazy, how old or young.

PeterisP3• 13 years ago

Umm, the curreent Swiss proposal of basic income (and the meaning of that term) is not "only for people that are earning less than $2800" - if you're getting a salary of $2800, then the basic income would be on top of that.

m_a_u_r_i_c_e• 13 years ago

Gdp is equal.. isnt that the answer? Maybe coupled with a minimum wage? One could argue that iff gdp is lower than minimum living costs for all then some richer ones are enjoying it at the costs of some living below minimum living costs. How could you accept that?? The question is in what kind of society you want to live. Gdp is not a goal in itself.

macspoofing7• 13 years ago

I only used GDP to compare how astronomical the costs are. It's not a question of what kind of society you live in, I'm just trying to understand the plan. I personally think that at some point, every country will migrate to some form of basic income because robotics, and software will squeeze humans out from almost every corner of the economy.

bradleyjg2• 13 years ago

It's only adults, and only citizens. By my calculation that's 4.72 million people and $158.8 billion. Switzerland's GDP appears to $632B [1]. So that's 25% of GDP. High, but hardly equal.

Also:

It is unconditional (i.e. it is given to everyone regardless of wage) but it is also taxable. So if you have other income you get it, but some of is recaptured in taxes.

It replaces every other form of welfare: unemployment, maternity leave, student stipend, basic retirement support, health care premium subsidies, and so on. Some of these programs provide more income, so in those cases it is a net savings.

[1] https://www.cia.gov/library/publications/the-world-factbook/...

Edit: N.B. that's at the official exchange rate, which is what you want to use if you are directly converting the Swiss stipend into dollars. If you want to use PPP then you need to adjust the stipend that way too. You should still get the same 25% GDP.

jamespitts2• 13 years ago

Much of it will return to the economy in the form of spending.

Also, I imagine that wages will react to it to some extent, offsetting some of the cost over the long run.

Lastly, the mitigated effects of poverty -- from more IQ focused on productive ends to improvements in childhoods to reduced crime -- could lead to an actual "profit" from this whole scheme.

It will be interesting to see what actually happens!

xixi7710• 13 years ago

As someone else said, it's around 25% of GDP -- and while I am not sure how costly are the programs it replaces in Switzerland (such as unemployment benefits, etc.), eliminating those would go a long way towards paying for this.

CalRobert• 13 years ago

As we increasingly move to a post-scarcity economy, at least in terms of the most basic necessities of life, this kind of measure will be necessary to avoid civilization becoming teeming hordes of poor with a few billionaires (the ones who own the robots) sprinkled in.

Of course, this is all before climate change wipes out crops and antibiotics destroy the species!

RyanMcGreal• 13 years ago

Canada considered establishing a guaranteed income in the 1980s after the MacDonald Commission Report recommended it in 1985. It would have replaced most social welfare programs, which turned much of the left against it. Ironically, social welfare in Canada has since been stalled, stagnated, cut back and means-tested to the point where the guaranteed income proposal seems impossibly generous rather than parsimonious. As it happens, the Mulroney Government that received the MacDonald Commission report embraced the recommendation to pursue a free trade agreement with the USA and ignored the guaranteed income proposal. The idea has bounced around a bit since then but gained no political traction.

algorias3• 13 years ago

I think this is the most important vote we will get to cast in a long time, not just for us here in Switzerland, but for the world at large.

By and large, capitalism (as a political system) has failed the world. Capitalism is a very efficient, even beautiful, distributed algorithm that is very good at allocating resources in a reasonably close to optimal fashion, more efficient than central control in many aspects. It doesn't automatically make social justice happen, however. Its efficiency is at the same time its heartlessness. Too many people ignore this blatantly obvious fact (see prisoner's dilemma, tragedy of the commons, etc) because that realization is painful and requires a deep honest look at our own position in society.

If we want to see significant social change in the world within the next 100 years, experiments like unconditional basic income need to happen at a large scale. Switzerland is one of the few places in the world (if not the only) with the wealth an political freedom to make that possible.

Personally, I believe that voting for this proposal is a moral imperative rather than a choice. This is the first time in my life I feel compelled to campaign for a cause, so I'm brainstorming about how to get the message out. Any help would be appreciated!

bjt• 13 years ago

How is capitalism a political system?

algorias3• 13 years ago

For many modern societies, I would consider the fact that they're free market economies their defining characteristic, rather than their being democracies.

The idea of capitalism drives laws and lobby. It hides deep structural problems our societies face, influencing public discourse. A misunderstood idea of what capitalism is supposed to be causes many people think "not my problem", and "those lazy bastards" instead of actually looking at the problems others face with empathy.

In summary, it removes human dignity from the center of our considerations.

sambeau2• 13 years ago

Capitalism is a human-created system that stratifies and organises the behaviour and status of people.

How could that be anything other than a political system?

Capitalism is neither eternal nor universal it is merely a system that most humans adhere to currently.

humanrebar9• 13 years ago

Capitalism is an extension of the right to property; the details of what counts as rightful property is certainly a political question.

xixi7710• 13 years ago

I love capitalism, and think that the thing some people call "social justice" is anything but. However, we seem to be in agreement on this one. Isn't that nice?

As for help, my suggestion would be that your message definitely would have to be customized for the recipient :) Many people who could otherwise support you in this would be turned off by things like your 2nd paragraph, and not read much further -- and perhaps even discard the whole concept as pinko commie BS, which would really be a pity.

algorias3• 13 years ago

Thanks for the advice! Upon a second reading, I realize that the way I expressed my point lacks many of the nuances present in my own head. My next task will definitely be concentrating the essence of the argument into a form that's less politically charged and easier to explain and understand.

blisterpeanuts4• 13 years ago

I'm going to go out on a limb and say this is the most ridiculous idea that will have disastrous and unintended consequences across the board, leading to more poverty and crime and economic stagnation than ever, at least here in the U.S.

Once such a program is implemented, charities will dry up as the average giver realizes that the recipient already gets plenty. The more dedicated givers, the idealistic volunteers, will still be out there providing free meals and helping in shelters, but the vast majority of working people with some disposable income to share will no longer give; they'll just shrug and say, "I gave at the office" or, more literally, "My money was confiscated at the office".

Furthermore, this will provide a disincentive to find work, and we'll see a surge of immigration from Latin America to fill all those low end jobs that our comfortable native populace no longer feels a need to bother themselves over.

The Clinton/Gingrich welfare reform efforts were intended to move families off of public dependency and to a large extent they met with success. It's rather "out of the box" these days to propose the diametric opposite, but by all means, Switzerland, please use yourself as a laboratory so we can observe the results. According to Swiss friends, that country has to import guest workers to perform menial labor; will this mean that these guest workers will be shipped home, or will they also receive a stipend? And if they do, will they still have an incentive to mop floors and wash dishes?

dublinben• 13 years ago

If you'd read the article, you would know that this only applies to Swiss citizens, not migrant workers.

blisterpeanuts4• 13 years ago

If you'd read my posting, you would know that I was talking about citizens of a country. I asked, rhetorically, what the Swiss would do about the migrant workers, who, by the way, constitute 25% of the work force in today's Switzerland; excluding them would render the policy almost pointless.

JetSpiegel2• 13 years ago

If the homeless are citizens, they too will receive the money. So there won't be a need for so many charities. There is no disincentive to find work. Either you don't work and earn X, or you work and you earn X + Y. Just like it happens now, with less hoops to jump through.

hermannj314• 13 years ago

As a libertarian, I feel the government should stay out of people's lives, and yet I feel this actually achieves that over the current style in the US of needing to be deemed 'worthy poor' by the majority.

Assuming this replaces all other government payments: most tax credits, food stamps, social security it create an amazing administrative savings.

I'm thinking through the implications for the child support model in the United States. As I understand it, the child has a right to receive compensation from their birth parents to pay for housing, food, clothing; but if the government is taking ownership of all human beings, it seems the birth parent would have no responsibility to provide support in excess of the basic income.

Orphanages, foster parents, or current custodial guardians would just receive the basic income and act accordingly. The implications for this sort of program seem huge.

wavefunction• 13 years ago

>government is taking ownership of all human beings

I take the view that a basic income like the one proposed is actually all human beings taking ownership of our government from the current selected few privileged few.

rjdagost• 13 years ago

There's something fundamental I'm missing about this proposal: how will this not cause inflation on consumer products? People who earn above the basic income level will be hit with a double whammy: (1) They have to fund the basic income with higher taxes (2) They have to pay higher prices for consumer products due to the inflated supply of money being spent on consumer products

I just don't see the point, but I would be interested in seeing the practical consequences if another nation tried it.

cheez• 13 years ago

I think this is the only way governments should "assist" their people. Further, I think portions of a minimum income should be the only way of creating currency. Currently, it is done through debt. Money should be made by the people, for the people.

Perhaps it can be done as follows:

1. Institute a negative income tax 2. Any citizens who get a refund based on the negative income tax are paid by money that is created

This way, when the economy slows down and people are making less money, more money is created which is what we do anyway.

xixi7710• 13 years ago

This is a beautiful idea. Replacing the means-tested transfers, such as housing assistance, food stamps, unemployment benefits, etc.etc. with a simple check to everyone would provide dignity to all citizens, save on administration costs, remove the major disincentives to work that the current programs create, and even encourage entrepreneurship and creativity, since people would be less worried about their ideas not working out. It would even destroy the rationale behind minimal wage. I would gladly pay more in taxes for all that, although I suspect a lot of the program will pay for itself -- through elimination of all the above, and through the economic benefit of spending.

I do worry a bit though: with the system in place, given how simple and transparent it is, what would prevent politicians from continuously raising the basic income level, until productive work becomes completely unattractive, and the economy collapses? How can that be prevented?

Even though the current welfare systems are horrible in comparison on efficiency grounds, the fact that they tend to target specific small groups, makes it easier to keep them from blowing up.

breischl4• 13 years ago

Interesting idea. I hope Switzerland does it so the rest of us can watch from the cheap seats and see how it works out.

Human nature being what it is, there will still be some people who manage to wreck their own lives. The guaranteed income isn't much, it would be fairly easy to fritter it away on any number of vices addictions, or just garden variety fiscal mismanagement. So when people find themselves too broke for food or rent despite a minimum income, what then? There's an obvious argument that they had their chance and screwed it up, so they get to live with the consequences. But what if they've managed to drag their kids into the hole with them, or if their really old, or otherwise sympathetic? Do we restart the entire welfare conversation while taking a minimum income as a given?

This also seems like it would simultaneously provide a big incentive for people to want to become citizens, and an equal reason to not let them. I wonder how that will be handled?

Switzerland’s Proposal to Pay People

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