For comparison, Dutch students receive between 200-400 euro monthly (and do pay a heavily discounted 1800 euro college tuition), "bijstand" (which is sort of a last resort income) is 600-700 euro, unemployment compensation is 70% of the last earned wage for a limited amount of months.
People above the 65 receive a "basic income" called "AOW" (algemene ouderdoms wet) which is between 750 and 1400 euros (in addition to a pension).
Minimum wage for a fulltime job is around 1400 euro (1200-1300 after taxes). A starts position for someone without college pays around 10-13 euro per hour before taxes.
With the current high un-employment numbers a lot of students and young people have to life on a income of 400-800 euro per month which is incredible tight.
1000 euro is a lot of money, I guess I could support something like a 400-600 "basic income" with strong incentive for people to work.
Then again the AOW is incredible high and although I do support the idea behind it I do wonder how we're going to support AOW payments with the coming demographic shift.
The situation is somewhat similar in Sweden, especially regarding the 'bijstand.' In our case, you'd have to re-apply each month and they would audit your spending for the previous 3 months (so that, for example, you didn't spend it all on alcohol or an Xbox.) It's also not a fixed sum but based on what they consider necessary, but beyond what I know about U.S. (specifically, California) welfare.
This is not the same as unemployment benefits, but, as you say is a last resort. Unemployment benefits here are given on the condition that you show that you are currently applying to jobs. We used to get a few of these applications at our old office. People would come who weren't remotely relevant to the job, but did it just to keep getting the payments, so that's something to think consider when you mention "with strong incentive for people to work."
Thanks for explaining the overall situation. I wish I knew more about Sweden's but maybe someone else can post Sweden's corresponding information with details.
Communist countries dictated by political fiat where labor resources were allocated, what industries would be engaged in, and how the capitalized wealth of the country would be reinvested.
They didn't just go around giving everyone an income that kept them from living in a gutter.
Very, very theoretically. Communism definitely had many people much more equal than others. It seems that if you hand over all the power to a glorious central authority they will, you know, use it.
Socialism in Europe manifested itself in the form of huge public sectors, where virtually everybody was guaranteed a job doing something; the complete opposite of this proposal.
Twen cen communists failed by trying to pick winners. It proved impossible for central planners to, for example, determine exactly how many meters of type 2 copper pipe to manufacture. They would end up in absurd traps like not being able to expand copper pipe production because of a shortage of copper wire.
That is nothing like giving people €1000 and letting them decide how much if any copper products to buy.
You might be right, but your reasoning is not good. Only in a (local) minimum you can improve by choosing any direction; otherwise, you might go down as well as up. If rent/price controls are not working, it doesn't follow that basic income will improve the social inequality and reduce poverty.
Think of it this way: we're near a local optimal point using the current policies, and we're not going to dramatically improve if we just keep using a gradient descent type algorithm.
It's time to start fresh and aim for a global optimum instead of just the local one we've been living with for so long. Is it guaranteed that we'll find it? No. Is it worth it? In my opinion, yes.
>Costs will rise to the minimum that everyone is known to afford
Isn't the point to have a minimum that everyone can afford?
There's also an unstated (and wrong) assumption that however much food / apartments / transportation / etc is fixed and unchanging, rather than a variable that tracks the demand for these products - so presumably if you add a lot of money you will have to produce/spend however much energy it costs to extract rocks and wheat from the ground, but everything after that is mostly free since the infrastructure for turning rocks and wheat into iphones and pizza already exists.
> Isn't the point to have a minimum that everyone can afford?
The right way to do that is to expand cities and build community housing. The correct assumption is that costs will rise above the minimum everyone can afford, keeping inequalities at bay.
At least in the USA, "community housing" is a hellscape for most of its residents.
I have no problem with giving people money so they can find a place to rent of their own from a landlord that will make profit. I just have a problem with landlords who then all raise their rents to the maximum amount they know people are going to get.
but that is exactly what they will do, because when each landlord raises the rent slightly every month, via pure experimentation/intuition, they will reach a point where someone will still rent their house/apartment at the highest price they can ask for.
The only way to drive rent/cost of housing down is to produce more houses/apartments.
Not really. Basic income will force companies that hire unskilled workers to automate their business processes aggressively that in turn may lower prices for basic products.
Rent control is much more prone to inefficient bureaucracy as the amount of regulation and border cases is higher.
Costs will rise to the minimum that everyone is known to afford (or higher to deny the minimum income).
How do you support such a claim? If I was a business and all my competitors did this, I would undercut them and make a killing!
Basic income (or something similar) is an inevitable outcome of our development as a civilization. As technology continues to drive up productivity, the demand for labour falls. As the demand for labour falls, so does employment and consequently the demand for goods and services fall as well.
It may be a very rough transition to get there but eventually we will have a society where robots make everything we need and we are forced to devise a system for allocating these products to the people.
Anecdotally, we have witnessed prices of products soaring in southern europe after the introduction of the euro and real estate bubbles due to cheap loans. Prices are adjusting back due to cuts now, only the profit margins are reduced.
Similarly to how cartels work, free money just creates inflation.
If everyone around you tripled their prices, you would make a killing, but then you'd quickly run out of product, have massive lines and frustrated customers. At some point you might even realize that if you raise your prices 2.5x, you'd probably make more money while still undercutting the competition.
Really? Is that how things like healthcare costs in the USA work out? Competition solves all?
Because we have unlimited hospitals and doctors and yet a Tylenol in the hospital is hundreds of dollars (Obamacare won't fix that either because now more people can pay hundreds).
Internet, Cable, Cellphone service, all seem to rise to the most people can afford. Rent on apartment complexes near each other owned by different management companies magically stay within a several percent of each other.
If you gave everyone $1000 a month, rent will magically rise to at least half that for even the smallest efficiency.
We actually don't have unlimited hospitals or doctors.
New hospital constructions will often require a 'Certificate of Need' - existing hospitals can essentially veto any expansions.
We haven't expanded our medical school supplies in 30 years either. We essentially graduate the same # of doctors as we did in 1980, although demand for medical services has increased significantly over that period.
https://www.aamc.org/download/153708/data/charts1982to2012.p...
If you gave everyone $1000 a month, rent will magically rise to at least half that for even the smallest efficiency.
You do realize that there is a minimum wage in The Netherlands (Euro 1469 per month gross) and welfare (e.g. for a married couple Euro 1323, single up to Euro 926 per month)? So, that should've happened already.
Besides that, we have a system for social housing, which everyone with a low income can use, which is regulated. E.g. when I was still a PhD candidate, I made a bit over 2000 Euro (gross) per month, but could rent a house with three bedrooms for 390 Euro. The price is determined based on size, facilities, etc.
I like the idea of a basic income, since it would kill a lot of bureaucracy that checks that people who are able to work actively solicit positions, etc. It'd be nice if the CPB (the organization that is responsible for making guestimations of economic effects) could work it through.
We don't have a whole lot of competition in healthcare. Few of us pay for healthcare out of pocket, and many who do so use the finicky and artificial construction on top of the current employer-subsidy system called health savings accounts. Don't get me wrong, given our current system of employer-provided health insurance, the HSA is my preference by a wide margin. But I'd prefer if it were economically viable to purchase my health coverage directly rather than through my employer. I don't want my employer providing this kind of thing for me. It's a market perversion. Just give me a salary, please.
To my mind, competition (in the meager form we have today) is the only force our healthcare system has keeping prices low. And the prices are not low, at least in most medical fields, which goes to show how little competition we have. Third-party payers drive prices upward because the first-party consumer has no incentive to seek a fair trade. Many of us with health insurance use the insurance to pay for everything including routine visits and check-ups. It's as if oil changes were covered by car insurance—you wouldn't care how much an oil change cost—or replacement batteries were included in cell phone loss insurance—you wouldn't care how much a battery cost. Oh, my battery is being finicky, better get a new one since they're free.
I prefer a basic income versus the current central-planning approach to safety netting. The central planners cause the price problems by inhibiting the market's ability to transmit unmolested price signals.
Internet, cable, cellphone service—all services with significant terrestrial regulation. Periodically an innovator attempts to get around the regulation by delivering via a new means (e.g., Internet by line of sight), but it can hardly be said that, for example, cable is not a public/private hybrid. Regulatory capture means we don't have market competition.
> Rent on apartment complexes near each other owned by different management companies magically stay within a several percent of each other.
Because you are setting a floor. First, if you make a minimum income of 1,000, anyone making less or around that will demand a raise, after all why would I work if I could get the same amount loafing around the house. So the mid-lower tiers get a raise, and now the tier above that doesn't want to make the same as the lower tier and they get a raise, so there is inflation as everyone suddenly as a lot more money to spend.
Which feels great for maybe a month or maybe a day, but with everyone making more money, goods in that area will rise in price, as landlords find they can make more money etc... and then we're back in the same situation. In theory goods outside of this economy with a floor would remain the same, but since the people that need to import it, store it, etc... would also be affected by the inflation in the end it doesn't net anything.
TLDR; a basic income is an illusion, and inflation would quickly catch up.
>First, if you make a minimum income of 1,000, anyone making less or around that will demand a raise, after all why would I work if I could get the same amount loafing around the house.
You've misunderstood the concept. Everybody gets this. If you're currently making 900 a month, then you now make 1900 a month. You go to work because you want more than the basic 1000.
You are confusing "minimum income" and "basic income". "Basic income" is something everyone gets, employed or unemployed. Whatever you make in salary comes on top of that. So there is no "why would I work if I could get the same amount loafing around the house".
Ok, then why not adjust the basic income by the percentage of inflation on a regular basis? I mean we can cope with inflation without basic income. Why not with basic income?
I don't think anyone can make less than 1,000 if that is the basic income. Everyone gets 1,000 plus whatever they earn from a job. If someone's job previously paid 500, then their new income is 1,500.
I don't understand why peoples with small income will suddenly feel entitled for a raise. After all they just got a 1000 euros raise on top of their small income?
For inflation I think the macro economic of Europe will not allow a drastic increase in prices. At least not in the prices of goods. Shops will still have to compete on prices and as there will probably be some people trying to live on the 1000 euro alone you might see very cheap shops flourish.
If there is enough vacancy in real estate, people that have now more money will be able to afford a nicer/bigger apartments and might just drive the price of the least interesting ones down. Landlords will be forced to fix their apartment or lower the price.
The situation at the end is that there a wealth redistribution that is guarantied and equal for everybody.
"people that have now more money will be able to afford a nicer/bigger apartments"
No not at all. The median dude will always live in the median house and nothing about this will change it.
The primary real estate related effect is a dramatic change in macro societal debt to income ratios which in the long term has some interesting effects on bank assets and liabilities. Its very much like a stealth interest rate cut, with pretty much identical effects. The price of real estate will of course increase across the board, because the sellers know the buyers will have more money to pay mortgages with. The median guy will still sit in the median home, it'll just involve larger numbers in some bank account.
"equal for everybody."
LOL capgains are going to asset holders aka land and business owners and banks, not the joe 6 pack. The primary effect on J6P is getting kicked into a higher income tax bracket thus paying more taxes on a percentage basis. So .gov wins. Pretty much everyone wins but J6P as usual, as designed.
> Its very much like a stealth interest rate cut, with pretty much identical effects.
No, it's even better. The basic income can create an effective negative interest rate without giving the bankers an infinite Santa Claus, and most of the money will turn the crank of the consumption machine instead of being parked in safe havens.
>> Because you are setting a floor. First, if you make a minimum income of 1,000, anyone making less or around that will demand a raise, after all why would I work if I could get the same amount loafing around the house.
I don't think you understand the proposal. Everyone gets the minimum income. There is no means-test. It is not a welfare benefit. It comes with citizenship. If you work and earn $1000 a month, that is in addition to the $1000 a month basic income you receive. However, you will also now pay tax on that $1000 additional income, even if prior to the basic income you did not earn enough to pay taxes. However, you still come out ahead overall.
>> with everyone making more money, goods in that area will rise in price, as landlords find they can make more money etc... and then we're back in the same situation.
>> inflation would quickly catch up.
The basic income amount would be inflation-adjusted each year. This is no different from how SSI and welfare benefits work now. Or for that matter regular wages and costs, which rise with inflation each year, to allow relative adjustments without the disruption of falling prices.
Another, perhaps more effective way to phrase it, is the median income dude is always going to live in the median house and eat median food and send his kids to median school.
It is a controlled form of inflation however in that as a one time event, the median dude's fixed median debts are smaller as a fraction of his income and/or he can go deeper into debt in an absolute sense as a one time change.
"a lot more money to spend." Well thats relative because its a low fixed amount and personal incomes vary quite a bit. At my current income an extra 1000 would be nice but wouldn't really change anything at all in the short term. For a rich dude that's not even a rounding error. For a starving student it would be a huge amount of money. So I would expect no inflation in things appealing to the upper classes, minimal effect for the middle classes, but huge effect on the lower classes. Even on supposedly interchangeable things like food, this is going to have a huge effect on the price of hot pockets and malt liquor but not much change in the price of lobster tails and beef tenderloin.
Giving out "free" money is the equivalent of the government printing money. You don't have to be an economics major to realize that printing money (or dropping it out of an airplane) cheapens the value of that money. Hence, you end up with higher prices (inflation).
Exactly, and most basic income proposals would cut other social safety net systems in like amounts. So the net outlay by the government (in money it doesn't actually create; it just confiscates or prints) is the same. The latter gives the recipient the freedom to choose how to use their basic income, giving them incentive to select fair trades rather than just consuming all of the free stuff regardless of actual cost. This actually drives prices downward.
However, it does remove the political power of the central planning committees. And that is concerning to some.
One factor, unless you owned the building your rent would go up until they took all your profits - or shut you down for not agreeing to their price increase when it comes contract renewal time.
You're assuming there is no competition in the market. If you have a single grocer you'd be right but if there are more than one they will compete for their share of the market.
It sounds like you're assuming inflation. But this money won't be printed out of thin air, it will come from taxes and thus aggregate demand won't change. (Not sure if you were clear on that.)
Government is supposed to collect taxes and spend them to benefit the community as a whole. Free subsidies seem to reinforce individual consumerism, which in the end does not benefit the people.
It improves the economy (because the velocity of money is higher in the hands of consumers) and thereby benefits the people. The system as a whole is a form of progressive taxation, and so benefits people on average (because the marginal value of money is higher for the poor).
> Better to have rent control and other cost-of-living regulation.
Rent control is another government program that messes with the natural order of things (aka the free market). It kills the incentive of developers to build affordable housing. Why build a building if you can't turn a profit? It keeps people from moving. Why move if your rent is 50% below market? Which in turn causes a shortage of new housing stock, which drives rental prices up.
Haha, yes it does funny things with some sentences. :) The original text uses a relatively rare dutch way to phrase that the Republican Nixon was in favour of a certain type of basic income.
Similarly, the dutch expression that's oddly translated here to "with straw money" would perhaps be better translated as "throwing money around".
I'd be very happy to replace unemployment benefit/welfare with this - and then to remove the income tax allowance, so that people pay income tax on everything they have over it.
This instantly removes the "benefit trap" whereby earning can make you worse off.
I agree with you and with the idea of unconditional basic income, but I would only support it if means tested welfare were completely eliminated and the basic income amount were inflation indexed to a broad spectrum of consumer goods.
It also instantly removes the concept of personal responsibility, or any incentive to try.
Communism failed. Remember?
Why bother getting a job when you can just vote in whichever party is going to raise the 'basic income' the most?
Why bother, as a political party, with having good solid policies that will benefit everyone, when you can just bribe the electorate with money, by promising to raise the 'basic income' paid for by future debt!
Here we go, already declining Europe turning even more socialist. The problem is that most countries in Europe are not like Switzerland where the common culture is economically educated and work oriented. If this passes in Switzerland or Netherlands it may actually work, but if it spreads to and passes in e.g France, Spain or some post communist countries in EU it may lead to completely different outcome and EU economies are increasingly co-dependent.
Even worse thing is that there is a lot of populism in Europe spreading lately, I fear this will be quickly adopted as a tool to get more voters in countries that respond to populism well, eventually gaining support for economically illiterate parties.
Have you any concept of the percentage of GDP that most European governments take in through taxation or on what sort of programs that money tends to be spent? Europe has already been socialist for a long time, some places much more so than others.
Here we go, already declining Europe turning even more socialist.
This almost feels like an insult. The modern capitalist wellfare state as it is implemented in The Netherlands, Germany, and Scandinavia have given the population at large huge and equal opportunities. It's actually the solidarity that have given such a wide group a high education.
Spain and communist countries were recent authoritarian states. It is not surprising that haven't been able to gain as much resilience yet.
The countries that are doing badly are countries that are corrupt, lived on EU subsidies for decades, or are strangled by unions.
(In fact, it's funny that you mention Spain, since it had one of the lower levels of social expenditure.)
I assume this is akin to Milton Friedman's negative tax: http://www.youtube.com/watch?v=xtpgkX588nM I think it's brilliant. The major issue would be how to do a transition to it and what the "magic number" is.
I agree. However, this will never happen. Our Dutch society is entrenched with 'big governement' on a scale a US citizen could not grasp. Such a proposal would delete most cival servants (and their contractors).
Wikipedia: "While the private sector is the cornerstone of the Dutch economy, governments at different levels have a large part to play... In addition to its own spending, the government plays a significant role through the permit requirements and regulations pertaining to almost every aspect of economic activity. "
As I understand it, a negative tax can be used to implement basic income, but more typically refers to schemes which only give money to those on low incomes. Basic income is argued to be preferable, because it's simpler to administer and minimises the poverty trap.
The major issue, as Milton Friedman noted, is you can't have such social systems and substantial immigration. It's one or the other. Western elites seem to much prefer importing millions of people over anything like solid nets.
I think that this is a great idea. I would rather people got their $1,000 and stayed at home playing with their kids or studying on Udacity (or watching movies and eating junk food) than flipping burgers for 12h a day.
I would be totally in favor of a basic income as long as it was a replacement for (some of) unemployment insurance and the minimum wage. We as a society really want people to have an incentive to work and don't want to price out people who are only marginally employable, but we also want to help poor people. There is some disincentive effect to a basic income since working for $6/hour when the alternative is nothing is more alluring than when the alternative is just getting by on the basic income.
But on the gripping hand, it's ridiculously simple to administer and doesn't have breaking points like other policies. I think that people consistancy underrate the importance of simplicity in government programs, especially in democracies where voter attention is often the binding constraint on good policy.
And if robots do eventually replace human labor - something I'd say is unlikely but possible, then we'll be needing something like this.
Robots may not replace human labor, but a combination of automation and outsourcing to another nation could significantly reduce the required labor for the original nation.
I agree -- and I think the amount of innovation that would happen would be unprecedented. I'm deeply disappointed in HN, that it killed this discussion. This is one of the most important ideas around.
Indeed, if I think of how much time I waste working on project that the world doesn't need... so many people could spend so much more time on things (also out side of software development) that matter more.
Economic growth has historically brought much more wellness and brought up more people from poorness than any kind of State initiative. Let's keep this in mind when reading these news. What we are doing here is saying that taxing more the "rich" and giving to the "poor" brings more wealth than leaving these money to who earned it for investing.
Edit. Please, do remember that disagreeing!=down voting
No sorry. The labor movement and state initiatives have brought much more wellness and brought up much more people from poorness than any kind of investor.
Also, historically speaking, state initiatives have created the most economic growth.
Please, go look at the charts of GDP and GDP per capita growth and see it yourself.
What we need is growth. Look at our public loans. We have been betting for _decades_ that we would grow more than we are. What do you think will happen if we miss the growth bet with an aging population in need of expensive health care?
Looking at GDP per capita over the past century it looks like it rises sharply around WWII and there is a slight rise in the 80s, but for the most part it has steady growth.
Considering WWII and the 80s saw the highest increases in deficit spending, I think that just proves my point?
The Netherlands may wish to reevaluate its immigration policies before subsidizing citizenship. There are many billions of people in the world who are not being paid to reside in their respective nations. A basic income coupled with open borders would likely act as a draw for further economic migration.
I have always found this to be the deep irony embedded in socialism. Let's make things really nice and humane. But only for the people born between these lines.
You could argue that globalization and a true free market don't make this nationalistic distinction, and are in essence fairer to the human population on a whole.
This won't work. Prices will rise because ultimately there won't be enough supply to satisfy the increased demand of goods required at the most basic level of living. The only way to help the poor and unemployed is to find innovative ways to increase supply, which will lower the cost of producing said goods. This is why, in the United States, even the poorest citizens have access to food and housing - our government subsidizes the production of these products, which spurs an increase in supply and lowers the price.
Because it puts an extra $1,000 in everyone's pocket, not just the poor, so everyone will have additional money to spend on higher quality goods, driving up demand along the entire spectrum of price/quality for a given item.
I'm not a huge fan of subsidies because it distorts international markets and hurts other countries (mainly poor ones), but a better alternative might be to give large corporations a tax incentive to pay their minimum wage workers more, or provide them with additional benefits. Redistribution of wealth through the government is a great idea in theory, but it eventually breaks because you get a crooked politician in office or someone who can't manage the redistribution program effectively, as we're seeing in the US (look at our current debt problem). Plus, redistribution programs involve the government, which is an unnecessary step and complicates the process. If you encourage corporations to just pay their employees more, governments don't need to 'tax the rich' to 'feed the poor'.
I think if this was implemented in the US, the best way to do it would be to include a mandatory financial education class every x time (one a year, every quarter, etc). Have it online or at local community (YMCA, library, etc). If I had an extra 1k coming in every month, I would totally put all of it back into blasted student loans. How many would love to be able to have it go directly to student loans, mortgage/rent payments, car/credit/other loans? Get rid of a majority of the personal debt in the country, see a boom in the economy. Teach everyone (children and adults) how to save for education, emergency, health, retirement, large purchases- healthy economy.
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[ 3.4 ms ] story [ 171 ms ] threadPeople above the 65 receive a "basic income" called "AOW" (algemene ouderdoms wet) which is between 750 and 1400 euros (in addition to a pension).
Minimum wage for a fulltime job is around 1400 euro (1200-1300 after taxes). A starts position for someone without college pays around 10-13 euro per hour before taxes.
With the current high un-employment numbers a lot of students and young people have to life on a income of 400-800 euro per month which is incredible tight.
1000 euro is a lot of money, I guess I could support something like a 400-600 "basic income" with strong incentive for people to work.
Then again the AOW is incredible high and although I do support the idea behind it I do wonder how we're going to support AOW payments with the coming demographic shift.
This is not the same as unemployment benefits, but, as you say is a last resort. Unemployment benefits here are given on the condition that you show that you are currently applying to jobs. We used to get a few of these applications at our old office. People would come who weren't remotely relevant to the job, but did it just to keep getting the payments, so that's something to think consider when you mention "with strong incentive for people to work."
Thanks for explaining the overall situation. I wish I knew more about Sweden's but maybe someone else can post Sweden's corresponding information with details.
They didn't just go around giving everyone an income that kept them from living in a gutter.
That is nothing like giving people €1000 and letting them decide how much if any copper products to buy.
I like to think I am progressive but I think this is the wrong approach.
Costs will rise to the minimum that everyone is known to afford (or higher to deny the minimum income).
So rent will go up, food costs will go up, clothing etc.
You are just transfering wealth from the state to a few individuals who own property and own chain stores.
Better to have rent control and other cost-of-living regulation.
It's time to start fresh and aim for a global optimum instead of just the local one we've been living with for so long. Is it guaranteed that we'll find it? No. Is it worth it? In my opinion, yes.
It's dangerous and very worrying that people are trying to repeat mistakes.
Isn't the point to have a minimum that everyone can afford?
There's also an unstated (and wrong) assumption that however much food / apartments / transportation / etc is fixed and unchanging, rather than a variable that tracks the demand for these products - so presumably if you add a lot of money you will have to produce/spend however much energy it costs to extract rocks and wheat from the ground, but everything after that is mostly free since the infrastructure for turning rocks and wheat into iphones and pizza already exists.
The right way to do that is to expand cities and build community housing. The correct assumption is that costs will rise above the minimum everyone can afford, keeping inequalities at bay.
I have no problem with giving people money so they can find a place to rent of their own from a landlord that will make profit. I just have a problem with landlords who then all raise their rents to the maximum amount they know people are going to get.
The only way to drive rent/cost of housing down is to produce more houses/apartments.
Rent control is much more prone to inefficient bureaucracy as the amount of regulation and border cases is higher.
How do you support such a claim? If I was a business and all my competitors did this, I would undercut them and make a killing!
Basic income (or something similar) is an inevitable outcome of our development as a civilization. As technology continues to drive up productivity, the demand for labour falls. As the demand for labour falls, so does employment and consequently the demand for goods and services fall as well.
It may be a very rough transition to get there but eventually we will have a society where robots make everything we need and we are forced to devise a system for allocating these products to the people.
Similarly to how cartels work, free money just creates inflation.
But you'd still have raised your prices.
Because we have unlimited hospitals and doctors and yet a Tylenol in the hospital is hundreds of dollars (Obamacare won't fix that either because now more people can pay hundreds).
Internet, Cable, Cellphone service, all seem to rise to the most people can afford. Rent on apartment complexes near each other owned by different management companies magically stay within a several percent of each other.
If you gave everyone $1000 a month, rent will magically rise to at least half that for even the smallest efficiency.
New hospital constructions will often require a 'Certificate of Need' - existing hospitals can essentially veto any expansions.
We haven't expanded our medical school supplies in 30 years either. We essentially graduate the same # of doctors as we did in 1980, although demand for medical services has increased significantly over that period. https://www.aamc.org/download/153708/data/charts1982to2012.p...
That's a MASSIVE amount of overlapping resources. Yet every cost in a hospital, even to get to one via ambulance, is breath-taking.
There are countries with far fewer resources (ie. Canada) with far lower costs.
You do realize that there is a minimum wage in The Netherlands (Euro 1469 per month gross) and welfare (e.g. for a married couple Euro 1323, single up to Euro 926 per month)? So, that should've happened already.
Besides that, we have a system for social housing, which everyone with a low income can use, which is regulated. E.g. when I was still a PhD candidate, I made a bit over 2000 Euro (gross) per month, but could rent a house with three bedrooms for 390 Euro. The price is determined based on size, facilities, etc.
I like the idea of a basic income, since it would kill a lot of bureaucracy that checks that people who are able to work actively solicit positions, etc. It'd be nice if the CPB (the organization that is responsible for making guestimations of economic effects) could work it through.
In which case basic income guarantees could work.
In the USA it would become a predatory market to squeeze money from.
To my mind, competition (in the meager form we have today) is the only force our healthcare system has keeping prices low. And the prices are not low, at least in most medical fields, which goes to show how little competition we have. Third-party payers drive prices upward because the first-party consumer has no incentive to seek a fair trade. Many of us with health insurance use the insurance to pay for everything including routine visits and check-ups. It's as if oil changes were covered by car insurance—you wouldn't care how much an oil change cost—or replacement batteries were included in cell phone loss insurance—you wouldn't care how much a battery cost. Oh, my battery is being finicky, better get a new one since they're free.
I prefer a basic income versus the current central-planning approach to safety netting. The central planners cause the price problems by inhibiting the market's ability to transmit unmolested price signals.
Internet, cable, cellphone service—all services with significant terrestrial regulation. Periodically an innovator attempts to get around the regulation by delivering via a new means (e.g., Internet by line of sight), but it can hardly be said that, for example, cable is not a public/private hybrid. Regulatory capture means we don't have market competition.
> Rent on apartment complexes near each other owned by different management companies magically stay within a several percent of each other.
Yeah.
Wait, are you saying this is inherently bad?
Which feels great for maybe a month or maybe a day, but with everyone making more money, goods in that area will rise in price, as landlords find they can make more money etc... and then we're back in the same situation. In theory goods outside of this economy with a floor would remain the same, but since the people that need to import it, store it, etc... would also be affected by the inflation in the end it doesn't net anything.
TLDR; a basic income is an illusion, and inflation would quickly catch up.
You've misunderstood the concept. Everybody gets this. If you're currently making 900 a month, then you now make 1900 a month. You go to work because you want more than the basic 1000.
I don't understand why peoples with small income will suddenly feel entitled for a raise. After all they just got a 1000 euros raise on top of their small income?
For inflation I think the macro economic of Europe will not allow a drastic increase in prices. At least not in the prices of goods. Shops will still have to compete on prices and as there will probably be some people trying to live on the 1000 euro alone you might see very cheap shops flourish.
If there is enough vacancy in real estate, people that have now more money will be able to afford a nicer/bigger apartments and might just drive the price of the least interesting ones down. Landlords will be forced to fix their apartment or lower the price.
The situation at the end is that there a wealth redistribution that is guarantied and equal for everybody.
No not at all. The median dude will always live in the median house and nothing about this will change it.
The primary real estate related effect is a dramatic change in macro societal debt to income ratios which in the long term has some interesting effects on bank assets and liabilities. Its very much like a stealth interest rate cut, with pretty much identical effects. The price of real estate will of course increase across the board, because the sellers know the buyers will have more money to pay mortgages with. The median guy will still sit in the median home, it'll just involve larger numbers in some bank account.
"equal for everybody."
LOL capgains are going to asset holders aka land and business owners and banks, not the joe 6 pack. The primary effect on J6P is getting kicked into a higher income tax bracket thus paying more taxes on a percentage basis. So .gov wins. Pretty much everyone wins but J6P as usual, as designed.
No, it's even better. The basic income can create an effective negative interest rate without giving the bankers an infinite Santa Claus, and most of the money will turn the crank of the consumption machine instead of being parked in safe havens.
I don't think you understand the proposal. Everyone gets the minimum income. There is no means-test. It is not a welfare benefit. It comes with citizenship. If you work and earn $1000 a month, that is in addition to the $1000 a month basic income you receive. However, you will also now pay tax on that $1000 additional income, even if prior to the basic income you did not earn enough to pay taxes. However, you still come out ahead overall.
>> with everyone making more money, goods in that area will rise in price, as landlords find they can make more money etc... and then we're back in the same situation. >> inflation would quickly catch up.
The basic income amount would be inflation-adjusted each year. This is no different from how SSI and welfare benefits work now. Or for that matter regular wages and costs, which rise with inflation each year, to allow relative adjustments without the disruption of falling prices.
It is a controlled form of inflation however in that as a one time event, the median dude's fixed median debts are smaller as a fraction of his income and/or he can go deeper into debt in an absolute sense as a one time change.
"a lot more money to spend." Well thats relative because its a low fixed amount and personal incomes vary quite a bit. At my current income an extra 1000 would be nice but wouldn't really change anything at all in the short term. For a rich dude that's not even a rounding error. For a starving student it would be a huge amount of money. So I would expect no inflation in things appealing to the upper classes, minimal effect for the middle classes, but huge effect on the lower classes. Even on supposedly interchangeable things like food, this is going to have a huge effect on the price of hot pockets and malt liquor but not much change in the price of lobster tails and beef tenderloin.
However, it does remove the political power of the central planning committees. And that is concerning to some.
Rent control is another government program that messes with the natural order of things (aka the free market). It kills the incentive of developers to build affordable housing. Why build a building if you can't turn a profit? It keeps people from moving. Why move if your rent is 50% below market? Which in turn causes a shortage of new housing stock, which drives rental prices up.
Also, addicts will be addicts. I'd rather they get the money than steal it or kill for it.
Similarly, the dutch expression that's oddly translated here to "with straw money" would perhaps be better translated as "throwing money around".
http://translate.google.se/translate?hl=sv&sl=sv&tl=en&u=htt...
http://translate.google.se/translate?hl=sv&sl=sv&tl=en&u=htt...
This instantly removes the "benefit trap" whereby earning can make you worse off.
Communism failed. Remember?
Why bother getting a job when you can just vote in whichever party is going to raise the 'basic income' the most?
Why bother, as a political party, with having good solid policies that will benefit everyone, when you can just bribe the electorate with money, by promising to raise the 'basic income' paid for by future debt!
Even worse thing is that there is a lot of populism in Europe spreading lately, I fear this will be quickly adopted as a tool to get more voters in countries that respond to populism well, eventually gaining support for economically illiterate parties.
Have you any concept of the percentage of GDP that most European governments take in through taxation or on what sort of programs that money tends to be spent? Europe has already been socialist for a long time, some places much more so than others.
This almost feels like an insult. The modern capitalist wellfare state as it is implemented in The Netherlands, Germany, and Scandinavia have given the population at large huge and equal opportunities. It's actually the solidarity that have given such a wide group a high education.
Spain and communist countries were recent authoritarian states. It is not surprising that haven't been able to gain as much resilience yet.
The countries that are doing badly are countries that are corrupt, lived on EU subsidies for decades, or are strangled by unions.
(In fact, it's funny that you mention Spain, since it had one of the lower levels of social expenditure.)
Wikipedia: "While the private sector is the cornerstone of the Dutch economy, governments at different levels have a large part to play... In addition to its own spending, the government plays a significant role through the permit requirements and regulations pertaining to almost every aspect of economic activity. "
But on the gripping hand, it's ridiculously simple to administer and doesn't have breaking points like other policies. I think that people consistancy underrate the importance of simplicity in government programs, especially in democracies where voter attention is often the binding constraint on good policy.
And if robots do eventually replace human labor - something I'd say is unlikely but possible, then we'll be needing something like this.
Edit. Please, do remember that disagreeing!=down voting
Also, historically speaking, state initiatives have created the most economic growth.
What we need is growth. Look at our public loans. We have been betting for _decades_ that we would grow more than we are. What do you think will happen if we miss the growth bet with an aging population in need of expensive health care?
Considering WWII and the 80s saw the highest increases in deficit spending, I think that just proves my point?
You could argue that globalization and a true free market don't make this nationalistic distinction, and are in essence fairer to the human population on a whole.
I'm not a huge fan of subsidies because it distorts international markets and hurts other countries (mainly poor ones), but a better alternative might be to give large corporations a tax incentive to pay their minimum wage workers more, or provide them with additional benefits. Redistribution of wealth through the government is a great idea in theory, but it eventually breaks because you get a crooked politician in office or someone who can't manage the redistribution program effectively, as we're seeing in the US (look at our current debt problem). Plus, redistribution programs involve the government, which is an unnecessary step and complicates the process. If you encourage corporations to just pay their employees more, governments don't need to 'tax the rich' to 'feed the poor'.