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Scrap the Welfare State and Give People Free Money

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Re: Scrap the Welfare State and Give People Free Money

#101

Post by saosebastiao »

kiba wrote: post #8
saosebastiao wrote: post #3

Some libertarians may not be fans of a guaranteed or basic income because such a system would, they argue, disincentivize work. Murray believes that his surtax scheme would incentivize work after someone began earning over $25,000. I'm fairly libertarian and also agree with the concept of a basic income or negative income tax, but phrases like this are very dangerous. It would only begin incentivizing work after you…

It would only begin incentivizing work after you make 25k? And what about people like me that took 28 years to get to that point? Incentive to work is only one issue. Another is that people don't want to lose their job because it would mean that they die. That mean technological improvements are more likely to be opposed by workers. With basic income, programmers and other job destroyers will be able to automate at w…

I'm not saying people should have looming threats of poverty in order to work. I'm saying that having too much too soon is a disincentive to self improvement.

I've wanted to do what I currently do for a very long time, but there was no entrance to it without college, which was something I struggled with immensely. A $10k income with some pell grants would have meant food and health care while working my way through college (which I achieved by being a truck driver on weekends), but a $25k income would have meant "fuck it, I'm just gonna do nothing".

Solutions like "Then find a way to incentivize yourself to work" might be good advice, but not a good policy.

Re: Scrap the Welfare State and Give People Free Money

#103

Post by Roboprog »

How about the idea of actually hiring people, rather than handing out money? As in, the employer of last resort hires people to clean and fix roads and parks, etc. Or perhaps in some cases, being paid to go to school or doing basic research in fields deemed to be relevant at the time? (even if it means you do research for a couple of years for low pay, then bail out)

There are enough things in the commons that need doing, I can't see just giving the money away to the able bodied/minded.

What's wrong with using tax money to approach 100% employment, and if you want a larger salary, get a private job? (as for the more grungy private jobs, if they can't find people to do them for $MIN wage, maybe they should up the automation or fold, in some cases)

Note that I am NOT advocating government ownership / communism, just basic Keynesian spending directed at useful activity, with the goal to keep unemployment near 0%. I suppose that in itself could be a nightmare for some corporations, but screw 'em. Treat people w/ dignity, or they can/will work elsewhere. (at least in the fantasy world in my head :-))

Recapping some other comments in this thread:

"Money for nothing" is very likely to cause inflation. So would full employment, but perhaps actually having something of value produced by the employed would offset that some?

Not many people would be satisfied sitting around doing nothing all day. Even in high school, most people got a bit bored after the end of summer break.

Re: Scrap the Welfare State and Give People Free Money

#104

Post by djur »

cobrausn wrote: post #11
drcube wrote: post #7

I've been saying this for years now. Give people the freedom to make their own economic decisions without the fate of crushing poverty over their heads. Give them the financial breathing room to learn a new skill, start a business, or simply find a better job than the one they currently have. Basically, the freedom to take risks. Rich people have been telling us for decades that is what they bring to the table. Risk.…

And what happens when it decreases the number of people who choose to get an education to seek greater opportunities? After all, the thought of perpetual poverty is a huge motivator. With that gone? Won't we see a higher divide between skilled and unskilled, rich and poor? I'm a bit skeptical about this supposed panacea that cures crime, disease, and teen pregnancy, all in one fell swoop.

"After all, the thought of perpetual poverty is a huge motivator."

Pain, fear, and force are by far the least effective means of motivating labor, and they massively undercut the more effective means (enjoyment of the work, pride in the product of your labor, identification with and emotional investment in the enterprise, etc.). The threat of destitution is not necessary to procure labor, but only to procure it at a bargain rate.

Re: Scrap the Welfare State and Give People Free Money

#105

Post by venomsnake »

Xdes wrote: post #69
pinaceae wrote: post #60

As a European we are bit further down that path than the US. I assume most of the readers here are "wealthy", would not need basic guaranteed income. So let me explain why this is a good idea from a rich man's perspective. You give poor people a basic sum of money so they don't climb over the fence and kill you in your sleep. That's it. Behind all the nice language this is what it boils down to. It is paying off poor…

Or a good reason for private security.

Security don't helps when the poor are motivated. There are a lot of kidnappings in Mexico City.

Re: Scrap the Welfare State and Give People Free Money

#106

Post by ALee »

Three interesting pieces of data that help this discussion:

1) To combat extreme poverty, a lot of great studies show that giving direct cash is better than giving non-profit services. http://www.economist.com/news/international/21588385-giving-...

2) Instead of expanding the welfare state, it's probably better that we expand the Earned Income Tax Credit (EITC) which has HUGE support on both sides of the aisle. It was first created by Milton Friedman and is one of the only things that is a policy that we predicted would be successful and became hugely successful. The issue is that each party in the United States has found that public opinion polling finds that "SNAP" or other parts of the federal government are hugely popular compared to the wonky sounding EITC.

3) Some studies also show that despite poverty, human beings will also forgo basic necessities (as determined by the state) and buy things like smartphones, text messaging plans, etc.

All in all, really, what we should be doing is likely cash infusions to the extremely poor, expanding EITC (which somewhat supports the article), and keeping the important parts of the state alive, e.g. healthy food, early childhood pre-school, etc.

Re: Scrap the Welfare State and Give People Free Money

#107

Post by venomsnake »

Roboprog wrote: post #103

How about the idea of actually hiring people, rather than handing out money? As in, the employer of last resort hires people to clean and fix roads and parks, etc. Or perhaps in some cases, being paid to go to school or doing basic research in fields deemed to be relevant at the time? (even if it means you do research for a couple of years for low pay, then bail out) There are enough things in the commons that need d…

Be careful. You are moving into Keynes heresy territory. The imperial inquisition (aka the very serious people) may want to have a word with you.

Re: Scrap the Welfare State and Give People Free Money

#108

Post by ctdonath »

prostoalex wrote: post #56

Do the "welfare state" programs include Medicare and Medicaid? Otherwise $3 trillion spend ($10,000 x 30,000,000 people) is pretty close to US budget expenditures today, but that figure includes all healthcare, defense and bond interest payments. http://www.heritage.org/research/reports/2013/08/federal-spe... It's probably an affordable program at $1,000 a year, but at that level, is it going to make a difference?

The article references $10,000/yr BGI for all over 21. Thats some $2,400,000,000,000 which is 15% of USA GDP.

Re: Scrap the Welfare State and Give People Free Money

#109

Post by DougWebb »

ams6110 wrote: post #22
ataggart wrote: post #4

Whatever the economic effect, I have a hard time imagining the political class giving up the power that comes from being the middle men between dispersed costs and concentrated benefits.

I have two concerns: the first is basically the one you identified: welfare and similar programs are less about helping people and more about keeping a large voting block in a state of dependency. I'm not sure the alternative of basic income changes that, it might actually increase it since more people would be getting basic income than are currently getting welfare and other forms of assistance. Any program which en…

How much inflation would be necessary to make $68000 worthless? If obviously can't be reduced to the buying power of $0 in today's dollars, because that would require infinite inflation.

Let's break it down: $68000 annually is $5667/month or $186/day. Let's say 20% is intended to go to food: $37/day. That's a reasonable amount: for a couple they'd have to shop and prepare most of their own meals and wouldn't eat extravagantly, but they wouldn't be eating rice and beans for every meal either.

For $37/day to become essentially worthless for the purposes of feeding a couple, I think it's buying power would need to drop 66% to 75%. The latter gets you down to $9.25/day, which is rice and beans territory. It's still survivable, but you can't survive well on it.

This couple would still have the equivalent of $17000/year, which is about what one person working full-time at minimum wage would earn. So, if one of them gets a minimum wage job, they'd be earning as much as two people working minimum wage, while one stays home (perhaps to care for children and avoid the costs of child care.) That's already better than the system we have today, where both of them would have to work to earn that much and any children are left to fend for themselves much of the time.

If they both get minimum wage jobs, they're now earning as much as three minimum wage workers instead of two. Again, much better than today. This keeps one of their teenage children in school instead of joining the minimum wage workforce to help support the family.

All this is assuming that the entire economy is hammered by enough inflation to cause a 75% reduction in the earning value of a dollar. Historically, it takes decades for that to happen under normal circumstances, and I don't think that changing the way the government spends money that it's already spending anyway is likely to cause hyperinflation.

Re: Scrap the Welfare State and Give People Free Money

#110

Post by nraynaud »

There is something I would like to point out: the State is the only institution that can work at scale without having to extract benefits. It's the only thing that can get the economies of scale without having to pay the shareholders, it just has to break even. A State insurance is a quite different beast from a private insurance on this aspect for example. So giving money for people to buy a private insurance, or having the state running the insurance is very different.
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