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Basic Income: Unintended Consequences

jonthewang.com

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Re: Basic Income: Unintended Consequences

#21

Post by phaer »

bsbechtel wrote: post #13
merpnderp wrote: post #9

The whole point of these unintended consequences are easily corrected by allowing penalty free (for the basic income at least) defaults. Just like the student loan issue would be solved overnight by allowing defaults, basic incomes would never have a problem in the first place with them.

So in addition to $12,000 a year from the government, someone could borrow from lenders and never pay it back?

No, because almost nobody would be lending money to people who have nothing to secure the loan beside their basic income.

Re: Basic Income: Unintended Consequences

#22

Post by dagw »

drcode wrote: post #7

The main unintended consequence is that nobody is going to want to be a grocery store clerk for minimum wage if they get BI. Hence, salaries for menial jobs will go through the roof... All of a sudden a gallon of milk will have to cost $20 to pay grocery store salaries... Now salaries will need to go even higher so that employees can afford food, themselves... And now you've got hyperinflation.

Hence, salaries for menial jobs will go through the roof

Or we'll find a way to survive with a lot fewer minimum wage grocery clerks in the future.

Re: Basic Income: Unintended Consequences

#23

Post by jjxw »

desireco42 wrote: post #2

I think this is an exceptionally stupid idea and I think part of basic income should be stipulation that it can't be used to get loans ie. make this illegal. Because first thing financial industry would use it against the poor, get them lump sum and eliminate benefits of basic income. I am sure this can be made in a way that wouldn't be limiting too much, yet prevent obvious abuses you are bringing.

In general, I agree, but there is a cost to such regulation in the sense that it would make banks more wary to lend to legitimate borrowers on the promise of future basic income payments. Making it illegal to seize basic income assets in the event of default creates a classic adverse selection problem where bad actors will have incentives to attempt to take a loan.

That being said, the point of a basic income in the first place is to introduce financial stability to all households so any costs associated with preventing lending on basic income collateral may be societally optimal.

Re: Basic Income: Unintended Consequences

#24

Post by bryanlarsen »

drcode wrote: post #7

The main unintended consequence is that nobody is going to want to be a grocery store clerk for minimum wage if they get BI. Hence, salaries for menial jobs will go through the roof... All of a sudden a gallon of milk will have to cost $20 to pay grocery store salaries... Now salaries will need to go even higher so that employees can afford food, themselves... And now you've got hyperinflation.

I predict the opposite is going to happen. Most proponents of BI also propose lowering the minimum wage. So let's suppose you're on BI receiving $12K a year. That's about enough to put a roof over your head, leaving very little for food or anything else. You see a clerk job advertised for $5 an hour. You don't have to take the job, but that $5/hr is the difference between eating rice and beans yet again or actually having a little bit of meat with your meal and being able to afford an occasional XBox game.

The big difference I see is that truly unpleasant and unsafe jobs will see wages rise. Being a clerk is not a great job, but it's not a bad job unless you have an awful boss. If your boss at the grocery store starts giving you trouble, it becomes much easier to just walk away and eat rice and beans for a while until you can find another job.

Re: Basic Income: Unintended Consequences

#25

Post by acgourley »

To expand on his migration point, I worry that BI will create inland ghettos where the BI allowance is enough on it's own to cover the cost of living. At least some people would choose this lifestyle. Over time these ghettos would evolve their own cultures and start to be very separate from the rest of us. While I value personal freedom of an adult to chose to do this with their life, I worry about their children who will have a hard time leaving and I worry about internal fragmentation of our nation.

I think overall the net positive effect of BI probably counteracts the concerns above - but it will be interesting to see if such a phenomenon develops in Finland.

Re: Basic Income: Unintended Consequences

#26

Post by TrevorJ »

andraganescu wrote: post #4

Would basic income still register in the collective mindset as “help”? Because if it registers as “free money” I fear prices will go up. I understand that since BI correlates with income tax no inflation should be created. Yet people have particular ways to understand how welfare happens. In a poor community, when you know for sure that everyone there can afford some stuff, wouldn’t that be an incentive to collective…

There's some evidence to suggest that this is what has happened with tuition rates due to the availability of student loans.

Re: Basic Income: Unintended Consequences

#27

Post by bryanlarsen »

acgourley wrote: post #25

To expand on his migration point, I worry that BI will create inland ghettos where the BI allowance is enough on it's own to cover the cost of living. At least some people would choose this lifestyle. Over time these ghettos would evolve their own cultures and start to be very separate from the rest of us. While I value personal freedom of an adult to chose to do this with their life, I worry about their children who…

The best protection against this is the same as it is without BI: a high quality universal education system.

Re: Basic Income: Unintended Consequences

#28

Post by socalnate1 »

acgourley wrote: post #25

To expand on his migration point, I worry that BI will create inland ghettos where the BI allowance is enough on it's own to cover the cost of living. At least some people would choose this lifestyle. Over time these ghettos would evolve their own cultures and start to be very separate from the rest of us. While I value personal freedom of an adult to chose to do this with their life, I worry about their children who…

Doesn't the exact same thing happen now with poor areas?

(i.e. evolve its own culture and make it hard for a child born in a poor area to leave)

Re: Basic Income: Unintended Consequences

#29

Post by icebraining »

TrevorJ wrote: post #16
merpnderp wrote: post #9

The whole point of these unintended consequences are easily corrected by allowing penalty free (for the basic income at least) defaults. Just like the student loan issue would be solved overnight by allowing defaults, basic incomes would never have a problem in the first place with them.

Really not following this line of reasoning.

Essentially the base line for credit would be raised to the level of basic income. Right now, if you have zero assets and no income, you can file for bankruptcy and discharge your obligations. Hence, nobody in their right mind lends money to such people. In this new situation, the basic income would be the "new zero" - you could file for bankruptcy if all you had was a basic income, and hence few people would loan you money if you were in that situation.

Re: Basic Income: Unintended Consequences

#30

Post by mindslight »

This really cuts to the heart of the matter. In fact, so much so that I'm left wondering if the recent publicity behind BI is simply yet another wall street scam in the making.

Rather than added to with BI, what really needs to happen is the reduction of rent. Specifically the financial rent paid to the cabal of moneyprinters for the "privilege" of partaking in the markets that said moneyprinters have inflated the fuck out of - housing, cars and education - via the Fed policy of forced inflation. Real goods get continually cheaper (that's central to economic competition) so to make the CPI inflationary in a time of increasing productivity gains, the credit-based expenses skyrocket. Their only limit is the carrying cost of the principal - if interest rates halve, home prices double.

Without addressing how the Fed and banks have perverted our society away from wealth-based independence and toward mass indentured servitude, I fear the only thing BI would do is turn the treadmill up correspondingly quicker.

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