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Basic Income: Unintended Consequences

jonthewang.com

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Re: Basic Income: Unintended Consequences

#41

Post by bsbechtel »

TheOtherHobbes wrote: post #20
bsbechtel wrote: post #10

I feel like there would be a number of arbitrage opportunities that would become available as well, though it's late and I can't think of any off of the top of my head. How it affects the currency exchange markets would be interesting as well. IMHO, a better option would be to provide Tax credits to employers for each employee's pay up to the poverty line. If employers don't pay poverty level wages, the government is…

The UK does something like this. It's a disaster, because it gives employers an excuse to cut wages knowing that the government will cover the rest - effectively a handout to employers, who don't usually need the money, not to employees, who do. It's also a disaster because the UK gov is famous for changing payment rules, sometimes retrospectively. The most recent changes leave some of the poorest people owing betwee…

Could you link to what you're referring to so I can understand better? I think we are talking about different things. The tax credit would go to the employer, not the individual. Based on your statement, i think you are talking about the UK version of the EITC?

Re: Basic Income: Unintended Consequences

#42

Post by desireco42 »

jjxw wrote: post #23
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…

Maybe you didn't read it completely or I was not clear, I would just make it illegal to lend money expecting it to be paid by basic income.

Anyone getting basic income should be completely free to spend it any way they want. That is essential.

Re: Basic Income: Unintended Consequences

#43

Post by sokoloff »

bryanlarsen wrote: post #27
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.

At the youngest ages, kids learn more from the adults in their household than from all outsiders combined, including teachers.

I think that cultural islands such as GP is worried about would not be entirely or even substantially broken down by any educational system.

Re: Basic Income: Unintended Consequences

#44

Post by orthecreedence »

socalnate1 wrote: post #28
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)

No, in our current system everyone is equal and has the same opportunities as everyone else. The market is essentially a benevolent, moral being that cares for the sick and needy whilst rewarding the hard working.

Joking aside, I'd be really interested to see what happens in an economy where starting a business is easy because you don't have to worry about it covering your basic needs. I'd imagine many people within ghettos would finally be able to leave and seek opportunities elsewhere, or be able to create their own opportunities within their current situation.

Would some people sit around not working while spending money on drugs or booze? Of course. But those people exist already. I'd be interested to see how the ratio of these types of folks compares before and after BI, and also the ratio of people making money from jobs vs self-created small businesses.

I really want another country to try this out =]. Not saying I don't want it for the US (I do, and if nothing else than for an interesting experiment), but I really don't see that happening with the weird fear we have of anything even remotely perceived as socialism/communism.

Re: Basic Income: Unintended Consequences

#45

Post by plantain »

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.

Nonsense. Minimum wage in Australia is 18$ an hour and milk is still $2/L.

Re: Basic Income: Unintended Consequences

#46

Post by knights123 »

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.

In 40 years I'd expect most of these minimum wage jobs to have disappeared so it wouldn't really matter.

Right now in some cities, Amazon and other services will deliver your food. I'd expect this to gain popularity as delivery costs come down and the cost of running an Amazon warehouse type grocery store would be significantly cheaper than running a traditional grocery store. This will drive down prices and will eventually run traditional stores out of business. So you're left with an automated warehouse moving your food around and a self driving car to deliver it. Shouldn't need that over prices clerk after all.

Of course, you'll still need some workers, but if their jobs are still needed after mass automation, they're probably already worth a lot more than minimum wage.

Re: Basic Income: Unintended Consequences

#47

Post by ctdonath »

TrevorJ wrote: post #26
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.

Amazing how many people don't understand the concept of "supply and demand". Increase the availability of money, increasing demand, and the prices increase so long as supply can't keep up. This has been manifestly demonstrated by tuition, health care, mortgages, insurance, etc.

Re: Basic Income: Unintended Consequences

#48

Post by acgourley »

socalnate1 wrote: post #28
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)

The current poor areas we have in America are still connected by market forces - jobs, social service providers, affordable housing, transit, road infrastructure, and others. Short of being subsistence farmers they cannot break too far off geographically or culturally because of all the tethers.

BI lowers the bar from "people okay with sustenance farming" to "people okay with roughing it." In the extreme case the only tether needed is a dirt road or body of water suitable for a delivery vehicle to bring supplies[1].

You might ask who would be willing to break off from mainstream American culture so severely, and I think the easy answer is religions and cults. It could be this isn't as bad as I think - perhaps the cultural and religious development done in these communities would be valuable - but the point of this argument was to bring up something unexpected.

[1] Coordinating the exchange of the BI for the supplies could be arranged in various ways. I think clever people will find loopholes and thus there isn't a practical way to force people to be present in "civilized" areas.

Re: Basic Income: Unintended Consequences

#49

Post by curun1r »

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 think a lot of the push for BI comes from the realization that a lot of these jobs will go away through automation. We already see grocery stores with automated self check out stations. Soon, we'll see the same kind of automation at work in Amazon warehouses stocking the shelves too. An entire supermarket could operate with only a handful of employees. Yes, they'd have to be paid a bit more to create a gap between the pay and BI, but the overall costs of running the supermarket would go down.

Across all sectors of the economy, lots of low-income jobs will be eliminated. If we don't have BI to protect those soon-to-be-ex-workers, we're going to have a sizable portion of population in poverty, with no skills that let them outperform automated systems.

Re: Basic Income: Unintended Consequences

#50

Post by ap3 »

plaid_hatter wrote: post #14
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.

Actually, I think you'll find a lot of people will opt for part time lower income jobs than before as they are just supplementing the guaranteed income which means that there is net total more than before.

As opposed to right now when many people are only able to get low income part time jobs
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