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.'"
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.
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.
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
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.
a whole pile of minor jobs which are simply not economic
Why are they not economic? I challenge the base assumption. Why should a simple job such as mowing lawns be paid a starvation salary? Why can't someone who mows lawns for a living not make enough money for a simple life?
I will tell you why, the real reason: Because then the minimum-wage jobs would need to move upwards in salary. Someone who does something a little more qualified than mowing lawns would have to be paid slightly more. But that means the tier above that also needs to move up.
In other words: If you would cut out starvation salary jobs, and enforce minimum wage, all salaries would have to increase.
And now magic happens: People who couldn't afford to pay the cleaning lady or the lawnmower man a decent salary now can. Because they are making more money as well.
All this additional income will, of course, have to come from somewhere. There are two possible sources. One is inflation - which would create a self-reinforcing cycle because then you would have to raise wages to compensate for inflation. The other is less profits for those who own the companies, i.e. who make their money not out of salaries.
Guess who has in the past, is currently and will in the future spend millions and millions to both politicians and media to ensure that real minimum wage with no loopholes and exceptions doesn't happen.
Assorted stuff I do sometimes: Lemuria.org
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...