"This article has gone haywire in its estimation of the the supposed costs. Tobin's calculation is based on national income. The article's first mistake is confusing national income with average income. We read that "Paying for a basic income worth 20% of the average income requires average taxes to be 20 percentage points higher, at 45%." No, that's the effect of paying 20% of National Income. Think it through: even if all GNI is allocated equally to individuals, the median income must be less than 50% of income received and 20% of the average income must therefore be less than 10% of GNI. It is actually much less than 10% because (a) GNI is not held exclusively by individuals and (b) people in the top half get more income share than the bottom half. The income share of the bottom half in the UK is just under a quarter of personal income, which means that the cost of a Basic Income at 20% of median income would be about 5% of total personal income.
Then there is the assumption that paying 60% of median income is equivalent to paying 60% of GNI. As the median income level is close to 25% of all personal income, 60% of the median ought to be about 15% of total personal income, not 60%. The actual cost would depend on the design of the benefit. Costs should be offset against social security reductions (which is one of the key reservations to make about Basic Income schemes)and the abolition of tax allowances."
Or this one: "Yes, the analysis full of errors. Most significant: (1) assumes payment of full basic income amount to all, regardless of current income, (2) conflates median and average.
In 2010, US household income median was about $50K, average was about $70K. To top up low-income households to 60% of median income ($30K) would require additional tax averaging about $4200 per household (all households), or a little less than 6% of average household income. (Source: commenter's spreadsheet using 2010 US census data)
It's bewildering and dismaying that the Economist would print a piece of such obvious poor quality."
Define "expanding." If you mean that (in raw numbers) more people will receive some form of welfare, then you are certainly correct since there are currently citizens who don't and BI gives the same exact size of welfare check to all of them at once. If you mean that more welfare money will be issued to people, that's not easily proven correct and the estimates I've seen for the cost of BI tend to float around the existing amount of the existing welfare systems that would be eliminated. If you mean that more welfare programs would exist, you're dead wrong because BI replaces the majority of existing programs with a welfare system that by its nature cannot be "unfair" in its disbursements.
If you're thinking "all the existing welfare programs will stick around and BI will just be added on top as yet another program" then you're missing that the entire idea of basic income is replacing the welfare patchwork with a fair, simple system of keeping people from "falling off a financial cliff." It is NOT supposed to be added to existing programs.
This takes away welfare and replaces it with a flat payment to all people regardless of situation. It will actually decrease the amount of money the welfare system costs due to the massive overhead being eliminated. It also forces employers to treat employees better since they won't be wage slaves anymore, and anyone who would "do fuck-all" because of BI probably isn't a person you want trying to do a job in the first place. Most normal people want more than the basics, and they'd still need to get a job to have that, so your statement doesn't really make sense.
Slashdot Mirror
You ought to click through and read the comments.
"This article has gone haywire in its estimation of the the supposed costs. Tobin's calculation is based on national income. The article's first mistake is confusing national income with average income. We read that "Paying for a basic income worth 20% of the average income requires average taxes to be 20 percentage points higher, at 45%." No, that's the effect of paying 20% of National Income. Think it through: even if all GNI is allocated equally to individuals, the median income must be less than 50% of income received and 20% of the average income must therefore be less than 10% of GNI. It is actually much less than 10% because (a) GNI is not held exclusively by individuals and (b) people in the top half get more income share than the bottom half. The income share of the bottom half in the UK is just under a quarter of personal income, which means that the cost of a Basic Income at 20% of median income would be about 5% of total personal income.
Then there is the assumption that paying 60% of median income is equivalent to paying 60% of GNI. As the median income level is close to 25% of all personal income, 60% of the median ought to be about 15% of total personal income, not 60%. The actual cost would depend on the design of the benefit. Costs should be offset against social security reductions (which is one of the key reservations to make about Basic Income schemes)and the abolition of tax allowances."
Or this one: "Yes, the analysis full of errors. Most significant: (1) assumes payment of full basic income amount to all, regardless of current income, (2) conflates median and average.
In 2010, US household income median was about $50K, average was about $70K. To top up low-income households to 60% of median income ($30K) would require additional tax averaging about $4200 per household (all households), or a little less than 6% of average household income. (Source: commenter's spreadsheet using 2010 US census data)
It's bewildering and dismaying that the Economist would print a piece of such obvious poor quality."
Define "expanding." If you mean that (in raw numbers) more people will receive some form of welfare, then you are certainly correct since there are currently citizens who don't and BI gives the same exact size of welfare check to all of them at once. If you mean that more welfare money will be issued to people, that's not easily proven correct and the estimates I've seen for the cost of BI tend to float around the existing amount of the existing welfare systems that would be eliminated. If you mean that more welfare programs would exist, you're dead wrong because BI replaces the majority of existing programs with a welfare system that by its nature cannot be "unfair" in its disbursements.
If you're thinking "all the existing welfare programs will stick around and BI will just be added on top as yet another program" then you're missing that the entire idea of basic income is replacing the welfare patchwork with a fair, simple system of keeping people from "falling off a financial cliff." It is NOT supposed to be added to existing programs.
This takes away welfare and replaces it with a flat payment to all people regardless of situation. It will actually decrease the amount of money the welfare system costs due to the massive overhead being eliminated. It also forces employers to treat employees better since they won't be wage slaves anymore, and anyone who would "do fuck-all" because of BI probably isn't a person you want trying to do a job in the first place. Most normal people want more than the basics, and they'd still need to get a job to have that, so your statement doesn't really make sense.