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India floats the idea of a universal basic income

economist.com

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Re: India floats the idea of a universal basic income

#171

Post by jondubois »

whack wrote: post #67
felipeccastro wrote: post #38

I used to think a universal basic income would make sense, especially in developed countries, only for the near future scenario of machines taking ever more jobs. We know that this has always happened in history, and new jobs were always created, but that doesn't mean that the rate of job creation vs destruction will remain the same, forever. What made me change my mind about UBI was to realize that a) human desires…

The reasoning you're using is very flawed. Yes, we'll never get to a state where a small number end up with 100% of the wealth. Yes, there will be an equilibrium reached between the wealthy and the middle class. But this equilibrium point can shift more and more towards the wealthy. In fact, this has already been happening in the past few decades, as illustrated in books such as Capital. And as this equilibrium shift…

Well said. I also have a theory that as inequality increases, the economy starts to become increasingly 'luxury-oriented' - So everyone ends up working to cater the whims of the wealthy but no one is working for the greater good.

It's already kind of happening with startups; to a significant extent, startups are essentially luxury goods for the super-rich. They've become a collectible/status symbol. Like a yacht or a private jet. Wealthy investors love to brag about all their big exits.

Re: India floats the idea of a universal basic income

#172

Post by aninhumer »

ozy wrote: post #151

My vote goes to redistribution of wealth, by means of a progressive tax that starts negative. It is the human thing to do. But it also aligns with economics and politics. Redistribution: because more money at the bottom, means a larger overall market, and I think a more stable economy. Progressive tax: any paying work will always improve your situation. (So people stay motivated to work.) Taxing wealth creation (and…

>My vote goes to redistribution of wealth, by means of a progressive tax that starts negative.

Just to note, Negative Income Tax is mathematically equivalent to UBI, in that given any NIT scheme you can produce a UBI scheme that results in the same income function.

However, I think the framing can make lot of difference here, in terms of expectations, and likely implementation.

Re: India floats the idea of a universal basic income

#174

Post by onion2k »

lngnmn wrote: post #155

India is very special, traditionalist society. As person who have spent a considerable time living in North India, I would say that people will turn this free money into gold and garments and other status symbols, like mobiles, which in turn, will cause inflation and soaring of prices of gold and other assets. The analogy could be a land in the great plains of US. In San Francisco or New York the value and the price…

As person who have spent a considerable time living in North India, I would say that people will turn this free money into gold and garments and other status symbols, like mobiles, which in turn, will cause inflation and soaring of prices of gold and other assets.

Simply distributing money to a bank account will obviously eradicate some corruption, the problem is that, perhaps, a third of population in some areas have no bank account.

The economist Harrison Price used to talk about there being two different sorts of people - the "no, because" people and the "yes, if" people[1]. A "no, because" person will look at a seemingly impossible idea and state why it won't work, with some pretty damning reasons. That's what you're doing here - universal basic income won't work in India because people will spend the money on status symbols if they can get it, and many won't be able to get it due to not having a bank account. Those are fair criticisms.

A "yes, if" person would look at this idea and say "yes, if we can persuade Indian people living in poverty to spend their income on things to lift themselves out of poverty, and we can figure out a way to get them bank accounts, then this could work."

There's nothing wrong with being a "no, because" person, but "yes, if" tends to be a better approach for creative problem-solving.

[1] https://toddpack.com/2011/09/07/saying-no-gracefully/

Re: India floats the idea of a universal basic income

#175

Post by ropeladder »

aninhumer wrote: post #172
ozy wrote: post #151

My vote goes to redistribution of wealth, by means of a progressive tax that starts negative. It is the human thing to do. But it also aligns with economics and politics. Redistribution: because more money at the bottom, means a larger overall market, and I think a more stable economy. Progressive tax: any paying work will always improve your situation. (So people stay motivated to work.) Taxing wealth creation (and…

>My vote goes to redistribution of wealth, by means of a progressive tax that starts negative. Just to note, Negative Income Tax is mathematically equivalent to UBI, in that given any NIT scheme you can produce a UBI scheme that results in the same income function. However, I think the framing can make lot of difference here, in terms of expectations, and likely implementation.

"...and likely implementation."

It's true that you can make UBIs and NITs equivalent, but I think it's important to emphasize the implementation part: they are very unlikely to be implemented the same way. This is because, for them to be equivalent, you need the drop-off rate as incomes increase for an NIT to be equal to the increase in taxes on income earners below 2x the UBI level.

In other words, an NIT is likely to come with a high marginal "tax" (aka loss of NIT) rate for low earners, while a UBI is likely to keep marginal tax rates for low earners low.

Re: India floats the idea of a universal basic income

#176

Post by rjsw »

smallnamespace wrote: post #115
bitJericho wrote: post #92

Earlier quoted context omitted.

Ubi should never be about owning anything. It should be about providing housing, food, healthcare, clothes, and nothing more. It should be for all citizens, including children. This way you can have a family. But if you want a tv, phone, car, you're going to have to work. Since people are living to their 70s plus, lounging around isn't a big deal. I think you'll find people become very creative too, or focus on high…

In theory, making UBI only provide 'essentials' is a good idea, but in a large country like India (or the US, or China), the cost of living in different localities varies wildly. A person receiving UBI who lived in San Francisco proper and got free housing would essentially get 5x - 10x effective benefit than someone living where rent is $500 / month. Cue the inevitable conflicts over who gets to live where, and caps…

I would favour a fixed amount in a fairly large geographical area.

Areas that are expensive to live in also have a need for jobs like cleaning the streets. If people have the choice of living somewhere cheap on UBI then the pay for lower skilled jobs in these expensive areas will have to rise to get people to take them. I would expect the cost of this to have to come from higher property taxes in these more expensive areas which could act to bring down the difference in costs between the different areas.

Re: India floats the idea of a universal basic income

#177

Post by intended »

geraltofrivia wrote: post #154
aylmao wrote: post #139

Earlier quoted context omitted.

>> Any income that can sustain a household without any pressure to grow as people will probably hinder their progress more so than help them. I disagree. I believe the better place where one should do this is where it's needed the most. People tend to believe that when given money, others will just sit back and get lazy doing nothing. Matter of fact is you need money to do anything; to give your children a better edu…

While I agree with you on the perks of a UBI, I think India is not yet in a place where UBI could work. As mentioned in the article, the pay would be a meagre Rs. 7000 per annum. To put it in perspective, I found it hard to keep my expenses per month to under Rs. 8000, living frugally as a student, with basically free housing and subsidized food. Sure there are millions of people who would appreciate this sum and mig…

What the??

8k a month is good for a huge chunk of our country.

The poverty line is in the mere tens of rupees per day when I last checked.

32 rs/day for rural india and 47 rs/day in cities.

32x30 is ~1000 rs.

Additionally, 25% or so are below the poverty line.

That's how bad it is. I think discussing welfare programs without knowing what the poverty line is resulted in misplaced goalposts.

Re: India floats the idea of a universal basic income

#178

Post by intended »

hashhar wrote: post #50
RangerScience wrote: post #33

Earlier quoted context omitted.

> Any income that can sustain a household without any pressure to grow as people will probably hinder their progress more so than help them Are you basing this off of any familiarity with poor Indian culture? Why do you expect "free money" to translate into "lesser progress" rather than "progress of their choice"? Here's a different question: Have you learned more through self-directed learning, or other-directed lea…

Most of the poor (and the rich too) here (I mean in India) look at such social programs as nothing more than cash-grabs. I have known people who make money by registering for multiple CNG connections and distributing them to other people in return for full price of the CNG cylinder (the cylinders are subsidised and the subsidy is paid by the government directly into the bank account of the person with whom the connec…

But you Also don't hear of the person who didn't get to eat cooked food because he didn't have gas regularly either.

Re: India floats the idea of a universal basic income

#179

Post by intended »

pharrlax wrote: post #55
harigov wrote: post #17

In other developed countries, I think universal basic income makes sense, but not in the case of India. India has several systemic problems and a significant portion of the population has little to no education. Any income that can sustain a household without any pressure to grow as people will probably hinder their progress more so than help them. For a country with no lack of problems to solve, they are much better…

>I am of the opinion that India is better off spending that money by identifying all the organizational systems that it lacks like waste processing, water purification, security, monitoring, etc., and funding several startups in those areas. Or just spend the money and build it directly. The idea that UBI should be higher on the priority list than basic infrastructure is pretty crazy.

It's not. This is happening now any way. The debate is on which system is more effective at helping People out of poverty.

Re: India floats the idea of a universal basic income

#180

Post by statictype »

That means either a return to flawed means-testing, or a hope that the better-off will voluntarily opt out.

₹7000 per year is an absurdly small amount. Why wouldn't everyone opt out of it?

I'm kind of stunned that this small amount of money every year is enough to wipe out poverty down to 0.5%

I'm also perplexed at how the rich will gain from it. If you force people to jump through a few minimum hoops to get it, most of the working class will not even bother trying to claim it. Am I correct?

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