Slashdot Mirror
Dutch City To Experiment With Paying Citizens a "Basic Income" (theguardian.com)
BarbaraHudson writes: The Guardian is the latest to report about experiments with a basic income, in this case in Utrecht. The idea has been around for more than 2 centuries, and has become a bit of a hot-button topic on slashdot. It seems to be gaining political support now that job insecurity has become the new normal. "To those who say it is an unaffordable pipedream, Westerveld points out the huge costs that come with the increasingly tough benefits regimes being set up by western states, including policies that make people do community service to justify their handouts. 'In Nijmegen we get £88m to give to people on welfare,' Westerveld said, 'but it costs £15m a year for the civil servants running the bureaucracy of the current system. We will save money with a "basic income."' Horst adds: 'If you receive benefits from the government [in Holland] now you have to do something in return. But most municipalities don't have the people to manage that. We have 10,000 unemployed people in Utrecht, but if they all have to do something in return for welfare we just don't have the people to see to that. It costs too much.'"
Our economy depends on consumption. Local consumption to boot because another thing that is true for our economy is that it is highly dependent on the tertiary sector, i.e. services. Services are really tough to export. But also rather hard to import. Services are also the first thing people cut down on when money gets tight. For obvious reasons, if you're running out of money, what are you going to pay for, food so you can eat another day or the plumber to fix that dripping faucet? My guess would be that the faucet has to keep dripping for a while longer.
Sure. And if you had a magic well to pour funding into the economy that would be nice, but for the most part being able to put money into the economy involves pulling the same money out of the economy through taxes. The net effect is really to encourage or discourage savings, which can temporarily affect the total flow of money. That is to say in good times you want to encourage people to save excess capital rather than spend it and in bad times you want to encourage spending rather than savings. Which is why the main control is interest rate, if you get high interest you save more and low interest you spend more. Not everybody of course, but the fraction of the population who are in a position to choose.
The problem is that many politicians think the interest rate is the ends, rather than the means. If people have been encouraged for a long time to spend, spend, spend people are already at the limit of their spending. Those with money in the bank have already given up on bank saving and the ones living on credit knows another credit crunch will come and don't want to bankrupt themselves on "free" loans. You've outplayed the temporary measures and you have go back to the basics and create long-term economic growth. And that's a slow and tedious process that can't just be willed into existence by the law, but must be nurtured like a farmer tending his crops.
Live today, because you never know what tomorrow brings
Amazing how often people seem to think this would be a net "money sink" by definition. Compare the following situations:
Person A is unemployed, and receives, say € 700 as benefits.
Person B has a job, and makes € 2000 per month. Versus
Person A is unemployed, but gets a basic income of € 700.
Person B gets a basic income of € 700, and has a job to earn an additional € 1300 a month.
It's simply a matter of choosing the numbers appropriately, and adjusting tax levels (and -perhaps- hourly wages etc) as necessary to compensate. Oh wait, that's not counting the large # of government bureaucrats who aren't needed anymore because the rules are simplified. So those bureaucrats can go do something that's more productive than count beans and meddle in other people's private affairs.
In short: there is money to pay for this, period. If only the political will exists. Especially in modern, wealthy western countries.
Personally I'm a big believer in this. For one, it could help greatly to equalize the power balance between employers and employees. In a largely capitalist society, that balance is skewed strongly towards employers. Employees are like water in the ocean, so employers can pick & chose at will. In theory employees can do the same. But in practice, they can't. If they refuse a job offer, they may be unable to put food on the table, lose the roof over their head, etc. A bureaucrat may be breathing down their neck, threatening to cut benefits if they don't take a job. So in practice, they often don't have much of a choice.
When worries about job security (and income security that comes with it) are gone, that could have huge positive effects on the mental well-being of the population. Less fighting between spouses over money, fewer troubles between low-income tenants and their landlords, drug addicts that don't have to go out stealing to pay for their habit, etc, etc, etc. And that's not even taking into account that people will have greater job satisfaction when given the freedom to pursue the jobs they want.
I think over time, the way things are currently done, simply won't work anymore and something will have to change if large-scale social unrest is to be avoided. A basic income would be a big step in the right direction, with potentially huge positive effects on society. The time is ripe for it, let's hope experiments like this will show it's a good idea and actually works.
Looks like the Dutch have plenty of money to spare and are taking steps to remedy this dire situation.
Or perhaps the Dutch have more courage? I think it is bit like how we tackle problems with drugs; we all know that drug use causes big health problems and ruins lives, and that this costs society a lot of money. However, what is more expensive - spending enormous amounts on policing drug users as well as the cost of health care because the available drugs are cut with all kinds of poisons etc, or legalising, taxing, save on policing and health care? A loaded question, I know, but it is the same with unemployment; there are always people who can't find work for very legitimate reasonsthey don't have the skills for the jobs, they can't get the training, and if they get trained, they are tainted by the fact that they have been long-time unemployed etc. What do we do about them?
- Leave them to: rot this was the situation at the time of Dickens; levels of crime and disease were miles high.
- Give them money, but administrate it tightly: this is what they do in Denmark, among others, and the fact is that the administration costs more than what society would lose if people simply got the money and we re allowed to cheat.
- Citizen salary: done right, this may be the cheapest option. There will have to be incentives to lure people out of not even trying, but it may be a lot easier than we think. Most people don't want to sit around idle, believe it or not; having a job gives you status and social contact - what people on benefits don't want, of course, is being "punished" for taking up work, and if having a job leads to you losing your social benefits, that feels like being punished for working.
It may be the Dutch are on to something. (yes, yes, I know, in a country where cannabis is legal, perhaps they are ON something as well, but that's separate matter)
Your figures are off a bit from what I'd think.
It's more along the lines of
A: Unemployed: Paid $700 in benefits. This could be through traditional welfare programs(costing $900 because of management expenses), or through a BIG, costing approximately $0 in expenses because 'direct deposit to every citizen' is cheaper when you're not trying to means test it.
B: makes $2k/month no matter what in salary or whatever. However, in the current situation he's paying $700 of it in taxes, but for the purposes he's at the 'break even point' he's paying $1400 in taxes, but receiving a $700 BIG. Even though he's seeing no benefit from the BIG, the automatic deposit means that if he loses his job he automatically, without the need to file, still gets the BIG, so it acts like unemployment insurance.
And yes, people need to realize that the BIG payments are 'tunable'. You don't have to, and probably shouldn't, set it at a level where a person can live comfortably in his own place. Let's look at the USA: $500/month would probably 'work' if you separate out health care. A household of 4 adults(or children if they're included), would receive $2000/month, which is around poverty level for a family of 4.
Besides reducing management expense, arranged right it eliminates welfare cliffs where somebody is better off working/earning less.
I remember reading the write-up of the experiment in Canada. The results were that people really didn't work less*, did take a little longer to find a job, but generally obtained better ones as a result.
*Well, except for women staying home with newborns and teenagers staying in high school and actually graduating.
I don't read AC A human right
That's overlooking at least one thing: research has shown that when income inequality is kept in bounds, everybody gets happier. Including the rich folks.
Some difference is okay. It motivates people to go out & earn money by producing stuff, or provide useful services.
Too much difference just causes trouble. Poor folks who are struggling every day to make ends meet, rich folks who have waaaayy more than their fair share of the overall wealth. Enjoying that share less than the poor folks would enjoy it if distributed more equally. Take rich <-> poor differences too far, and you get riots in the streets or even all-out war. Which makes everybody worse off. Including the rich folks.
This holds both for differences between people in one country, as for between countries as a whole.
Secondly: as the poor folks become richer, their increased buying power adds new customers to the economy. We're seeing that right now with countries like China. They used to be mostly poor people who scraped a living by producing goods for western countries. In return, their average wealth / middle class has grown, making them potential buyers for a lot of western countries' products. Win-win.
In Western Europe, there are many government handouts that will replace all or part of your income. Maternity leave, unemployment benefits, retirement benefits, sick leave, disability benefits etc. These are the lion's share of the payouts that the basic income will replace... social benefits to the poor are dwarfed by these.
These are typically tied to what you have been earning, either as a full compensation or partyly/capped. If all of these were to be replaced by basic income, the levels would be dramatically decreased - and losing your job, getting a child or being sick would imply severe consequences.
I'm a big believer in this too. Welfare systems are big expensive patchworks, and you can simplify or eliminate vast chunks of them. Think of all of the different things that could be partially or completely subsumed by basic income:
Welfare
Social security
Unemployment benefits
Disability benefits
Minimum wage
Healthcare support for low-wage earners (US medicaid, for example)
Food stamps
Parental leave pay
Subisidized housing
* ... and about 50 other things. Think of all of the overhead in running these programs and all of the headaches for participants and gaps that they can fall through. Think of the burden on private companies for dealing with all of this. The reality is that, for better or for worse, most societies have decided on the principle that we don't want people starving in the streets and tried to set up safety nets - one group at a time - to prevent this from happening.
It's about time we just consolidate it to a single basic payment and get rid of all of these programs and corporate requirements that effectively amount to an inefficient approximation of the same thing. And then most of the debates between the left and right will simplify down to simply whether to increase or decrease that base level of income.
The consolidation process can be simple and relatively painless.
1) Start out by baselining it at near the middle of typical Social Security payments - call it "Social Security for All" if you want. Benefits paid out should be relatively constant from person to person, but include benefits for dependents.
2) Deduct every individual's basic income payment from all other forms of government support. This will effectively eliminate the majority of people from all forms of government subsidy, while not reducing the net benefit for any citizen.
3) For any program in which a person hasn't received benefits from in several years, automatically unenroll them from it. The membership roles on most forms of subsidy will plummet, vastly reducing their overhead - many will become so devoid of enrollees that there will be no point to keeping them around, further reducing overhead. Such benefits programs should be culled automatically when their budget drops to, say, 1% of its pre-basic-income budget.
4) Eliminate minimum wage requirements, and impose a corporate tax that approximates what companies had previously been paying in terms of minimum wage baselines on everyones' salaries, with the expectation that corporations will reduce salaries correspondingly with the tax.
Steps 1-4 should be implemented in one block and be approximately revenue neutral.
5) Step by step, phase out each remaining welfare program, funneling the funds into raising the basic income payments; however...
6) Programs that were specifically "pay-in", and were paid in unevenly (such as Social Security) should ideally instead be "cashed out", so that recipients feel a sense of fairness.
The above should still be relatively "status quo, but with greater efficiency, fairness, and less headaches for everyone"
7) Conservatives should now be expected to begin trying to reduce basic income to lower taxes on the corporations and top income earners, while liberals should now be expected to begin trying to raise basic income at the expense of higher taxes on corporations and top income earners. Basically the same struggle that's always played out, but on greatly simplified terms.
Isn't this something that both liberals and conservatives could support? I mean, liberals, come on, everybody in the country having a safety net? And conservatives, isn't your dream to drown the government in a bathtub? If you want to shrink it down, here's your chance. To both: it's just the status quo, only more efficient and fair. You can then change it from there.
Shiny New Australia.
Or you only give the benefits to Dutch nationals who've lived in the city longer than X years.
Just like the David Cameron wants to do in the UK... but cannot because it is against the EU rules.
After as little as 3 months (I believe), they have to treat any migrant from within the EU _exactly_ the same as a Dutch national resident for 50 (or whatever) yrs. The EU migrant can also claim local benefits for non-resident family back home, we know this because they already do it with UK benefits and it cannot be stopped because "EU rules".