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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.'"
Wait and see.
People, especially those that have little, tend to spend locally. In other words, drive the local economy as long as they have money. That they don't is exactly the reason our economy is in the slump it is in: People cannot spend.
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.
I'm really interested to see how this works out.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
Unlike the USA, which prides itself on having a balanced budget each year, and on the rare occasion when it runs a deficit one year, it immediately runs a surplus for the following years until that debt is paid off.
Sleep your way to a whiter smile...date a dentist!
Since they admit to not having the people to manage a system where you have to do something in return for the money, you are going to just give it away? No questions asked? And is there a system that requires you to be a resident for a minimum time before you are eligible? If not, you will attract a lot of people who want free money. That can not be sustained. You will run out of "other people's money". Either because people move away because they don't want to keep paying for a perpetual welfare machine, or because you've raised taxes to pay for it to a point that it destroys your local economy. Or a combination of the two.
-- Will program for bandwidth
That goes only so far. You can employ capos, but you also need a few real wardens at the top of the chain gang.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
Famous right-wing rag The Guardian had a piece not so long ago on why basic income doesn't work:
http://www.theguardian.com/com...
Religion is what happens when nature strikes and groupthink goes wrong.
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
You cannot affect the rich with the interest rate, and that's where the money is concentrated today. They have various other means of stashing money available, none of them being in any way directly influenced by the interest rate. They are also not the ones to consume. They want to invest. Problem is, to make investments viable, someone has to consume.
And those that would do that cannot due to a lack of funds. So either we find a way to give them the means to fulfill their role in our economy or we watch the economy grind to a halt while clinging to our money as if that shit meant anything as long as it can't move about.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
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
Your two statements have no financial differnce so where does the extra money come from?
Person A is given â 700, a net total of +â 700
Person B has his â 700 given and then taken away, for a net total of â 0
The fact Person B also pays back his â 700 has no bearing on costs.
Uh, guys? I'm politically liberal and in favor of a basic income, but it really doesn't work on a small local scale with open borders. Utrecht says it's cheaper to pay their 10,000 unemployed people a basic income than to administer a draconian welfare bureaucracy, but if you're handing out money with no strings attached, a lot of unemployed people from around the EU are going to move in to take you up on the deal. How does the cost/benefit look when you're trying to support ten times as many unemployed people as you had before? Sure, the idea is that some of them will get back on their feet and start contributing to the tax base, but that's not going to happen if you can only afford to pay them 1/10th of a basic income, or if you up the taxes on their potential employers by a factor of 10.
To keep this from happening, you need to either restrict immigration into the basic income zone -- which you can't do in the EU -- or implement it on a large enough scale that the tax base can handle the immigration spike, and national, cultural, and language barriers limit the size of the influx.
You can do this across the EU or US. Doing it for one small European city is just madness.
We get that here in America where people get in a tiff because their public school or charity wont accept their "kind donation" of
an XP machine and tube monitor.
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.
Well said, Sir. I think fundamentally, we humans as a group, like to see the power ladder maintained; some want to feel they are in control of others. I think it's in basic human nature [even in a family the elder brother controls the younger..the origin of the term 'big brother']. With the aid of runaway capitalism, we see the result - extreme polarization of wealth. And all rules/laws are setup to accelerate/maintain this wealth/income inequality.
As you said it's the lack of political-will.. there is no shortage of resources. And today (probably ever since two humans came together) the powerful (read rich) control the policies/politics. So it's a catch-22.. can only move very slowly. But with the free flow of information (internet) and educated masses, we may see real good change (ie forces against the wealth/income equality) in future (hopefully sooner)
Your two statements have no financial differnce so where does the extra money come from?
Ehm... that was kind of my point. Choose the numbers right, and the financial end result is the same. There is no 'extra' money needed.
But in the old situation, people might be more or less forced to take some job, and you'd need a lot of bureaucrats to keep tabs on people's affairs. Costs for the latter can be cut, and those bureaucrats can go do something more productive.
In the new situation, nobody would be forced to take some job just to have food on the table or a roof over their head. Just a very low minimum standard, not to be confused with: "enjoying the good life" @ other people's expense. Employers may enjoy a lower minimum wage, so they'll be able to get their work done for less. At the same time, they'd lose much of their power to abuse employees simply because they can.
Tax euros predominantly come from the middle class, not from the happy few who can afford to spend large sums on gaudy frippery. And that's where the downsides of this scheme will be felt. In principle it sounds simple. Instead of giving only unemployed people €800 / month, we'll simply give everyone that amount, but if you have a job we'll take most of that back in taxes. Where do those taxes come from, though? A 65% tax on the first €2400 of your wages (the tax in that band is already at 35%, not counting the deductible)? Doable, but keep in mind that not everyone makes that much, so taxes for higher earners will have to be increased even further.
In the Netherlands, the marginal tax burden is enormous. In some specific cases (single earner, two child household), the difference between gross minimum wage and the "modal" income is over €16,000 a year. However the net difference is... only €1,800, because of taxes and no longer being eligible for additional benefits. Which is due to another important issue: the complexity of the Dutch benefits scheme is not in the base stipends like dole money, state pensions or workman's comp. It's in the Byzantine maze of extra measures piled on by the state or the councils: child support, health care subsidy (health care is not provided; you need insurance but low incomes get a subsidy to pay for it), rent subsidy, tax breaks for the chronically ill, waiving of certain local taxes for low incomes, transport subsidy, aid in kind, and so on. Many of these measures are not to compensate for low incomes but to account for differences in composition of households. None of this will disappear with a universal basic income.
So why work at a minimum wage or even a better-paying job? You'll be better off just taking the basic income and all it's additional benefits, perhaps doing a few odd jobs on the side, off the books, for a couple of hours a week. The rest is leisure time. And that's the real issue: even if we could make the scheme work at current levels of unemployment, some people will decide that getting up every morning to sit in traffic and work at a sucky job for 40 hours a week isn't worth it. Already economists complain that the gap between the dole and minimum wage is too small to encourage people to find a job; in some cases the gap is negative due to losing many of the aforementioned additional benefits. Opponents to this scheme argue that no one will want to work anymore; proponents argue that people will still find fulfilment in the work itself and will want the extra cash, however small the amount. And the truth is probably somewhere in the middle... and that middle part will have to be paid for. It will be expensive. And it will be paid, as always, by the middle class.
If construction was anything like programming, an incorrectly fitted lock would bring down the entire building...
Same here in Belgium, in some cities in Wallonia you lost up to 200€ per month if you got off unemployment into a minimum-wage job...
The end game for the 1% is similar to the medieval feudal system. Consumerism was great for them when they were accumulating wealth, but once your rulers are established it will no longer be needed.
Sorry, giving out foodstamps, rent stamps, and other "use-assigned" benefits really is no different from giving out free money. All that happens is that a black market in stamps arises. There is no neat, tied-in-a-bow solution which allows personal choice.
One thing that WOULD work is giving out meals and housing, etc. in lieu of any kind of money or chits. Somebody with common sense would make the selections. No fine cuisine in palatial restaurants; no glitteringly expensive housing. And usage is AUTOMATICALLY regulated. You can only eat so much food with your own mouth. You can't occupy two separate housing units with your one body. When things get REALLY BAD (Great Depression, other hellish conditions), people do get the point and resort to this (soup kitchens, tent cities), but powerful interests keep them from seeing it as a policy which should always be in place.
But my idea is just inviting brainwashed stupid people from labeling me as a nut.
This is nonsense. What Utrecht and Nijmegen are doing is simple welfare reform. It has absolutely nothing to do with basic income. I don't get how The Guardian failed to see that. Why these politicians keep calling it "basic income" is completely beyond me.
For real basic income, look at Finland; they're actually doing it.
0x or or snor perron?!
Who's paying for the welfare programs that BI completely replaces? There's your answer.
"Paying for social peace" is entirely fine by me and it usually is an excellent investment. The problem just arises when some think they can have other pay for it and line their own coffers instead. That does not work.
Most ACs are not even worth the keystrokes to insult them. Be generically insulted by this and ignored otherwise.
A basic income, and attempts to make a minimum wage into a livable wage, suffer from the same problem - an assumption that money has a fixed value.
Money doesn't have a fixed value. Its value is the sum total of all the productivity of your citizens, divided by (roughly speaking) the sum total of how much everyone is paid. Consequently, an increase in real income (amount of stuff you can buy with your income, not the amount of money you're paid) depends entirely on increasing the average productivity of your citizens.
If you try to increase income by just increasing the amount people are paid, without a corresponding increase in productivity, you're just increasing the denominator. A fixed amount of productivity is now represented by a greater amount of income. Or in other words, the price of staple goods and services will rise to match your legislation mandating increased wages. Think about it. If the government announced that on Jan 1, everyone's income and savings would be increased 100x, would that really turn everyone into millionaires? No, prices would just rise 100x to match, and you would be able to afford to buy exactly what you can now. The only change would be that the denomination of your bills would have a couple more zeroes on it.
That's not to say these programs are useless. They're essentially wealth redistribution, which can be handy to counter forces leading to income inequality (e.g. the stratospheric pay of CEOs, though IMHO these these are better tackled directly). And as temporary income (e.g. unemployment pay) they can help increase economic stability. But a system built entirely upon their premise will simply see prices rise until it's no longer a livable wage.
The only way to avoid that fate, the only way for this to actually work, is if your average productivity is sufficiently high enough that a livable wage constitutes a small fraction of the mean productivity. Small enough to basically be roundoff error so (1) those doing more productive work don't really notice nor care and the incentive to do more productive work remains, and (2) the excess income it generates isn't enough to cause a large rise in prices. But considering the GDP per capita of the U.S. (one of the wealthier nations) is only around $55k/yr, a modest livable wage of say $20k/yr is a substantial fraction of that average. A 5:1 or 10:1 ratio is about where I think it would start to have a shot of working. To reach that point, you'd first need to massively increase average productivity, which is why this sort of thing works in futuristic settings like Star Trek. But that sort of massive productivity increase relies upon using cheap energy to leverage each individual's work to multiply their productivity. And ironically the people advocating a livable wage are often the very same people advocating more expensive energy and a throwback to older inefficient production methods like growing your own food in a garden.
Anyways, never forget that real wealth, real income increases come only from increased productivity. It's not something you can legislate by mandating higher incomes. People have to actually go out there and do more work, or figure out more efficient ways of doing the same thing with less work (and use the time that frees up to do more different work).
Re: "for the most part being able to put money into the economy involves pulling the same money out of the economy through taxes"
This reminds me of a joke I once read: a CEO, a govt. minister, and a citizen are sitting at a table with a plate of 20 cookies. The CEO takes 18 cookies and when the govt. minister reaches out to take one, the CEO screams, "Watch out! The govt's taking all your cookies!"
The majority of people who comment on this stuff haven't informed themselves sufficiently to know what poverty is and how a basic income works. Why not learn a little from someone who actually implements basic income programmes and studies the effects and outcomes?: http://www.guystanding.com/
Wait a minute...
USA right? 319 million people. 800 a month. 12 months a year.
(* 12 800 319e6) = 3,062,400,000,000.0 = over 3 trillion dollars.
https://en.wikipedia.org/wiki/United_States_federal_budget#Total_outlays_in_recent_budget_submissions shows the 2014 budget (most recent data) at 3.5 trillion.
I think I see a problem here...
Our employment/population ratio floats at around 60%. http://data.bls.gov/timeseries/LNS12300000
China (one of the BRICs) has enough foreign reserves to pay off its foreign debt twice over and still have change. The US only has enough foreign reserves to pay of 4% of its debt. It's pretty obvious that if push came to shove, China (which already on a purchasing parity basis has a larger economy than the US, and will have a larger economy than the US ignoring differences in purchasing power by 2020), can do whatever it wants, because dumping their US-denominated foreign reserves will pretty much be the sword of Damocles, the elephant in the room, in the calculus for any potential military confrontation.
Everyone has known since the accumulated debt passed $10 trillion that it will never be paid back. The question is, who will pull the trigger, and who will be left without a seat when the game of musical chairs stops.
"Transparent" is a shit show that trades on every stereotype going. A man in drag is NOT a transsexual.
True, but you can also assign those people to all the menial task jobs, street cleaners, park and rec workers, road work crews, politicians, secretaries etc
The types of jobs where intelligence doesn't matter.
With an attitude like that, maybe you'll eventually figure out why you don't seem to be able to get past the receptionist and secretary to see the boss. When I was working as one, one of my jobs was to make sure you never got any further. When a boss really wants to know what's going on elsewhere in the business, he doesn't ask the yes-men around him - he asks the people whose "intelligence doesn't matter."
"Transparent" is a shit show that trades on every stereotype going. A man in drag is NOT a transsexual.
Check out this excellent short story, it contemplates 2 possible paths in the scenario you describe: http://marshallbrain.com/manna...
That's why the solution won't come from Wall Street. Actually, they're just part of the problem.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.