UBI vs GMI: Utopia vs Realism, or just different packaging?

by John Quiggin on March 26, 2013

One of the examples of real utopia put forward by Wright is the idea of a Universal Basic Income (UBI). In its simplest, and arguably most utopian form, the idea is that every member of the community would receive a payment sufficient to sustain a decent standard of living. Implementing a UBI in this fashion would pose a huge, arguably insuperable, financing challenge in the context of a market economy. The same isn’t obviously true of a closely related idea, a guaranteed minimum income (GMI)

A simple calculation using Australian data illustrates the point. A person over 65 with limited income and assets, and who does not own a home, is entitled to a pension of a little over $20 000 a year, including rent assistance ($A currently trades near parity with $US, but purchasing power is about $US0.80). This amount has been set to provide a minimum standard of living above the poverty line. (Other lower benefits, such as those paid to unemployed workers are assumed, not always accurately, to be temporary, and are admittedly inadequate for a decent standard of living on a long-term basis).

If everyone in Australia received this payment on an unconditional basis, the cost would be nearly $500 billion a year, or close to 40 cent of national income. There would be a limited offset from the replacement of existing benefits (amounting to around 10 per cent of national income in Australia). Given the need for public spending on health, education, defence, public infrastructure and so on, this would require governments to spend at least 60 per cent of national income, more than the Scandinavian social democracies at their peak.

So, there’s no doubt that such a policy would represent a substantial transformation, sufficient to justify the ‘utopian’ label. On the other hand, it’s reasonable to ask whether it can be made ‘real’, in the sense that there is some plausible path by which we might reach this position from our present starting point.

The obvious route would be to start with a small payment and increase it gradually to an adequate level. But if the payment was less than the value of the benefits it would eventually replace, it would make no difference to most people, while still requiring higher tax rates. It’s hard to see how to mobilize support for such a policy, and easy to see how it would attract opposition.

Now think about a closely related alternative, a guaranteed minimum income. This could be achieved by raising existing income support benefits to the target level, then making access to the basic income unconditional for those with no other source of income. I calculate here that this could be done for around 6 per cent of national income.

The guaranteed minimum income obviously lends itself to an incremental approach, based on gradual increases in rates and relaxation of conditions. To quote myself:

We can imagine a few steps towards this goal. One would be to allow recipients of the minimum income to choose voluntary work as an alternative to job search. In many countries, a lot of the required structures are in placed under ‘workfare’ or ‘work for the dole’ schemes. All that would be needed is to replace the punitive and coercive aspects of these schemes with positive inducements. A further step would be to allow a focus on cultural or sporting endeavours, whether or not those endeavours involve achieving the levels of performance that currently attract (sometimes lavish) public and market support.

An Australian example might help to illustrate the point. Under our current economic structures, someone who makes and sells surfboards can earn a good income, as can someone good enough to join the professional surfing circuit. But a person who just wants to surf is condemned, rightly enough under our current social relations, as a parasitic drain on society. With less need for anyone to work long hours at unpleasant jobs, we might be more willing to support surfers in return for non-market contributions to society such as membership of a surf life-saving club. Ultimately, people would be free to choose how best to contribute ‘according to their abilities’ and receive from society enough to meet at least their basic needs.

Compared to a universal basic income, then, a guaranteed minimum income seems a lot more feasible. On the other hand, while a guaranteed minimum income would certainly represent a radical challenge to social values, it certainly seems a less utopian. It’s easy to imagine a capitalist system similar to the one we have today, or at least to the one that prevailed during the postwar ‘social democratic moment’ coexisting with a guaranteed minimum income – much less so with a universal basic income.

At least, that’s the way it seems to me. It’s worth observing though, that, in a certain sense, the two are theoretically equivalent. Think about a universal basic income, financed by a 40 per cent tax on market income. For people whose market income is more than the universal basic income, it would make administrative sense to use the some or all of basic income as an offset against the tax liability, so that the tax system would become, in effect, a flat tax with a threshold equal to the basic income. On the other hand, an income-contingent guaranteed minimum income could be implemented with a combination of a clawback rate and a marginal tax rate equal to 40 per cent over the relevant range, and a 40 per cent marginal tax rate on incomes above that level. I don’t think, however, that this equivalence would hold precisely in reality.

I’m going over this somewhat esoteric dispute because I think it raises some crucial questions regarding how we should think about utopian ideals. In particular, can utopia be realised within the context of a market economy, with significant private ownership of capital? If so, we can imagine a path of radical but incremental reform, starting by regaining some of the ground lost to global financial capital over the last few decades, and then revitalising the social democratic project that seemed, in the 1960s, to be on the verge of victory.

Such a program is well outside the bounds of current political reality, but political reality can change fast. In particular, the change in US political debate over the last couple of years has been striking. The facts about growing inequality and declining social mobility have finally been admitted, and the elite consensus on the need for drastic cutbacks in ‘entitlements’ has been shattered. The Occupy movement made a big contribution to this movement. In a negative way, so did the Tea Party, which emphasised the extent to which the Republican party base is disconnected from reality. In Europe and the UK, the failure of austerity policies is becoming clear to the general public, and opens the way for a radical challenge to grow out of current defensive struggles.

Leaving aside the political obstacles, we must confront the question of whether such a program is economically feasible in an economy where most production of goods and services is undertaken for the market. In such an economy, capital and profit would have to play an important role, but would nevertheless be subject to social control, through the state and through expanded ownership of capital by workers (as, for example, in the Swedish Meidner plan).

The crisis of the 1970s, and the subsequent resurgence of financial capital and market liberal ideology raises some important questions. My response, argued in more detail Zombie Economics, the crisis of the 1970s was the result of over-reach and excessive wishful thinking, rather than fundamental defects in the Keynesian social-democratic analysis and program. But that’s a minority view.

If, on the other hand, the only feasible utopias are those involving a complete end to capitalism, then the path must involve changes that make capitalism untenable. In this context, the impossibility, or great difficulty, of organizing a universal basic income within our current economic appears as a positive merit.

To sum up even more simply, there’s an inherent tension between the ‘real’ and the ‘utopian’ in Wright’s title. Any idea that appears capable of being realised can be criticised as falling short of the ideals that would justify the term ‘utopian’, and vice versa.

That doesn’t mean that this discussion is pointless. Even the prosaic goal of regaining the ground lost over the last three or four decades is far outside the range of ideas considered realistic within the frame of standard political debate. If we are ever to motivate large numbers of people to demand something more than an alternation between ‘centre-right’ and ‘centre-left’ versions of capital managerialism, we need a utopian vision, and maybe more than one.

{ 76 comments }

1

lupita 03.26.13 at 4:06 am

Does the UBI scheme include babies? That is, does a mother taking care for her baby receive a UBI for herself and another one for her baby? Or is all this yet to be determined?

2

Josh G. 03.26.13 at 4:12 am

The fundamental problem with a guaranteed minimum income is that it changes incentives in a politically and economically toxic manner. Suppose we had a GMI of $20,000; if you earn less than that, the government tops you up, but if you earn more, then you’re on your own. In that case, why would anyone want to work a crappy retail job that pays $25,000 a year? You’d be busting your ass for a marginal gain of $5,000 per annum, which simply isn’t worth it. Businesses will hate it because it makes it very difficult to find workers for low-end jobs, and a large portion of the public will hate it because they will see it as hard-working people subsidizing freeloaders.
A universal basic income doesn’t have these problems. Under that system, everyone would get the $20,000 from the government – the unemployed, the middle-class, even Bill Gates – and there would be no problem with incentives because people would still keep a sizable portion of what they earned. Obviously marginal tax rates would have to be higher to make a UBI workable, but even at a tax rate of 50% for middle-class incomes, there would still be an incentive for people to do some economically useful work. In contrast, the GMI would involve effective marginal tax rates near 100% for many workers. (Existing welfare systems in the US have often had similar problems, often commented upon by economists of all political persuasions.) The UBI is a heavier lift, but I think it’s more politically and economically sustainable once it is in place.

3

UserGoogol 03.26.13 at 5:06 am

Josh G: You could have the GMI phase out gradually to make that less of an issue, although doing that also further blurs the line between the two concepts.

4

Sandwichman 03.26.13 at 5:08 am

Here’s a third alternative: instead of disbursing money income, the state could distribute an aliquot number of work time credits to each adult, say, between the ages of 18 and 64. The total number of credits would be determined by a formula tied to the necessary annual reduction in greenhouse gas emission. Hours of work and greenhouse gas emission are yoked together like a horse and carriage.

People who were unable to work, are subsisting outside of paid employment or simply choose not to work could sell their surplus hour credits at the going rate through an organized market. People who want to work “overtime” (say in excess of 20 hours a week) or their employers could buy these hour credits.

There would be no need for a minimum wage because a effective floor on the price of labour would be set by the market price of work-hour credits. I develop the rationale for this policy initiative further at Ecological Headstand, “The Moon Belongs to Everyone.”

http://ecologicalheadstand.blogspot.com/2013/03/the-moon-belongs-to-everyone.html

5

PlutoniumKun 03.26.13 at 8:31 am

Josh G – its been argued (usually by Henry George devotees and physiocrats) that the disincentive to work associated with a UBI could be addressed by funding it not from income taxes, but from property and resource taxes. Obviously, it would be highly dependent on the particular countries economy as to whether the figures would stack up. But I think that it would be (perhaps marginally) more politically sustainable to see it arising from taxes on property.

6

PlutoniumKun 03.26.13 at 8:36 am

One thing that interests me about the mechanics of GMI and UBI is how do you address funding for other big ticket government cost items such as health and education? Obviously, the financing becomes very hard to sustain if the government remains in charge of funding base public services (although I suppose you could argue that if both were universally free, you could have a ‘living wage’ at a much lower level). But I could envisage a system whereby both health and education are paid for through compulsory national insurance systems, which would be deducted from each individuals share.

The reason I bring this up is that I think the complications involved in figuring what to do with existing health/education/infrastructure etc institutional structures makes the issue of implementing either option much more difficult.

7

ajay 03.26.13 at 9:44 am

In that case, why would anyone want to work a crappy retail job that pays $25,000 a year? You’d be busting your ass for a marginal gain of $5,000 per annum, which simply isn’t worth it.

A couple of points:
1) I can walk down any high street in Britain and find people who are working crappy retail jobs for free.

2) Is there, then, a reason why crappy retail jobs wouldn’t simply start paying, say, $30,000 rather than $25,000? We’re talking about a massive rejigging of the national economy and fiscal/taxation structures with this policy anyway; why assume that retail wages will remain exactly the same as they are? In a sense, existing unemployment payments provide a sort of GMI.

8

Shining Raven 03.26.13 at 9:47 am

In Germany, there is currently a very active discussion about the UBI (“Grundeinkommen” in German), because the newly-founded “Pirate Party” promotes it as part of their platform.

It is generally received extremely critically, even by economists who are very much on the side of labor and very critical of the increasing inequality. A very prominent critic is the economist Heiner Flassbeck (http://www.flassbeck-economics.de/, mostly in German, though), formerly of UNCTAD, who wrote a whole book with several coauthors, arguing against the idea (“Irrweg Grundeinkommen” – “Universal Basic Income – A wrong turn to take”, http://westendverlag.de/westend/buch.php?p=67, alas, also only in German).

The main point of criticism there to, my understanding, is that the necessary tax base would have hugely distortional effects, and that under almost all plausible scenarios the price structure of the whole economy would change in such a way that the basic income would not remain sufficient to sustain any kind of normal lifestyle, as it is envisioned by the pirate party platform in Germany.

The main problem really seems to be how to deal with wage development. A long history of experiments with “combination wages” in Germany, where the employer and the state pay for part of a combined wage in order to subsidize work and decrease unemployment, shows that this ends up undercutting wages across the board, subsidizing employer profits, and not doing anything for unemployment (and it certainly does not lower prices for consumers).

It is hard for me to see how a basic income would not end up doing the same, and reduce the wages paid out by exactly the basic income portion. And I bet that prices would not in turn fall by the same amount that the employer saves in wages, and most likely the employer would not have to reimburse the state by the amount she now saves in wages. As a consequence, income tax revenues would fall and would not be available to pay out as UBI.

This leaves consumption taxes to finance an UBI, which then would essentially have to raise the prices of all products again quite significantly (to make up for the loss in taxed wages), and if I am right and base prices do not fall by the amount saved in wages, this would lead to a very significant increase in the effective prices that consumers have to pay – which then decreases the real purchasing power of the universal basic income.

So the way I understand the argument is that it is indeed naive to believe that it is possible to implement a universal basic income (which would require redistribution of something like 40% of GDP) on top of the existing system without completely disrupting the structure of wages and paid work, upsetting the structure of all prices, and generally lots of unintended consequences.

I really wish I could point to some of the German debate in English, but alas, I am not really aware of any sites providing this.

9

Tim Worstall 03.26.13 at 10:25 am

“Universal Basic Income (UBI). In its simplest, and arguably most utopian form, the idea is that every member of the community would receive a payment sufficient to sustain a decent standard of living. “

The debate changes quite a lot if the UBI is taken to mean a “basic” income rather than a “decent” income.

It changes so much in fact that the UBI becomes not utopian at all, simply a reasonable method of getting out of the problems with the current welfare state setup (vast marginal tax rates as tax kicks in, benefits decline, for example).

10

Martin Bento 03.26.13 at 11:35 am

If you make a radical change in one thing and suppose that all else stays the same, you’re not really engaging in utopian thought in my view. You’re also doing something unlikely, as a big change is likely to entail other changes. Specifically, you are assuming, for example, that private land ownership continues as it is, so that everyone pays either a mortgage or rent. IF you amortize the cost of building a house over its useful life, and then add the cost of upkeep, you end up with something quite a bit lower than most any rent, much less mortgage. Now, there are all kinds of reasons one might object to universal, or at least general, public housing, and that’s the kind of discussion you have about the utopian proposal (I would like to see analysis of why public housing has generally gone so bad – before i push people’s buttons again, let me note that I lived in public housing as a child myself, so I well know that not everyone there is a drug addict or criminal. Still, the stereotypes are not *completely* baseless – and how that can be repaired). Still, I don’t think utopian thought is about proposing one big change.

11

Katherine 03.26.13 at 12:24 pm

The UBI has all the problems of any universal benefit, which is that it is, well, universal. What’s the point of giving 20,000 dollars to Bill Gates? He doesn’t need it. Lots of other people don’t need it.

It’s also worth bearing in mind that the reason so many libertarians are for the UBI is it allows the state/government to hand over some cash and then wash their hands of everything else. None of this “equality” nonsense, thankyouverymuch. People have got what they need, so can sod off with all this fairness and justice guff.

12

Harald K 03.26.13 at 12:43 pm

Katherine: The point is to avoid the question of who needs it, because that’s a hard and contentious problem. Sure, we could probably agree that Bill Gates doesn’t need it, but since the increased tax burden on people like him will be vastly more than the UBI, it’s really just another form of progressive taxation.

13

Josh G. 03.26.13 at 1:34 pm

Katherine @ 11: “The UBI has all the problems of any universal benefit, which is that it is, well, universal. What’s the point of giving 20,000 dollars to Bill Gates? He doesn’t need it. Lots of other people don’t need it.

Sure, Bill Gates doesn’t need it, but what about the family earning $50,000/year; do they? If you were to top up everyone making less than $20,000/year, then that family would actually be worse off, because they would have less ability to compete for positional goods such as housing. In practice, means-tested programs are restricted to the very poor, and have crappy political support as a result. Imagine how much stronger the public support for food stamps would be if they were a universal benefit and the average middle-class family was counting on them as part of their normal budget. The whole point of a universal entitlement is that it is a entitlement: we don’t worry about whether you “deserve” it or not. Compare the different political fates of Social Security vs. AFDC to see why this is a good idea.

14

Katherine 03.26.13 at 1:41 pm

In practice, means-tested programs are restricted to the very poor, and have crappy political support as a result. Imagine how much stronger the public support for food stamps would be if they were a universal benefit and the average middle-class family was counting on them as part of their normal budget.

You are talking specifically about a US programme and US politics. I am not, nor was John.

15

rf 03.26.13 at 1:56 pm

“crappy retail job that pays $25,000 a year? You’d be busting your ass for a marginal gain of $5,000 “

Because 5,000 is a lot.
And because people would still aspire to things other than being a beach bum on 20k a year. That 25k would probably increase as their career progressed, whereas the GMI would be for life

16

Harald K 03.26.13 at 2:41 pm

The problem with a GMI is that it will breed resentment among the people who are not receiving it, and this will be a large majority, naturally. (Some of them will even be more deserving than the ones who receive it) . It’s really hard to convince people to see the wider benefits they get from it.

The UBI works around that by explicitly throwing out the idea of who deserves it or not. I think that’s a lot easier in practice. Debates about who deserves what are contentious, and I think even people who think they themselves deserve a lot and others deserve little, are sick of such debates. (UBI’s relative popularity with libertarians is evidence for this, I think.)

But it has to be gradually increased. There’s just no other way to do it; the effect on wages and work would be too dramatic otherwise. Many jobs are going to go the way of the personal servant and the economy would need a long time to rejig itself (probably vending machines are going to come back in fashion!) If it can’t be done gradually, it can’t be done at all.

17

Mao Cheng Ji 03.26.13 at 3:18 pm

“being a beach bum on 20k a year”

You won’t get $20K in the US. The federal poverty line for a single person is under $12K, and that’s what you can expect to be paid; anything above that would be, of course, outright hedonistic.

18

lupita 03.26.13 at 3:36 pm

I think you need two economies for UBI to work, meaning two sets of currency, one being your regular capitalist currency that you can exchange, borrow, lend, launder, save, earn interest on, pay taxes with, etc. The other one would be a system of electronic points that disappear when used rather than being transferred to another account. This is because the provider of the good or service already has an UBI and does not require extra points as income.

In order for the point economy to work, there would have to be about 70% of the population of a given community working to provide locally the basic requirements for life for all members of the community. The capitalist economy would shrink considerably but it cannot disappear because it is necessary to procure capitalist currency for trade, certain types of innovation, experimentation, a sense of individual freedom and autonomy, travel, etc.

Point communities can be poor or rich, successful or unsuccessful. If a community produces an adequate and varied amount of food, clothing, and shelter and has sufficient hard-working doctors, plumbers, teachers, care-givers, cleaners, cooks, and artisans, then the UBI will provide community members with a comfortable life. If everybody just goes out surfing, then the points cannot be exchanged for anything because there is nothing to exchange them for.

The capitalist economy would be taxed and the money used to procure resources not found in the community, so capitalism is a very important part of the system. It is the part where there is growth and destruction. Individuals can operate in both economies, though the point economy is more properly a society than an economy.

Support for this system would come mainly from exploited peasants, mothers, and daughters whose work is terribly undervalued in the capitalist economy. There would be private property. Babies would receive an UBI.

19

Josh G. 03.26.13 at 4:15 pm

Katherine @ 14: “You are talking specifically about a US programme and US politics. I am not, nor was John.

Are things that much different in Europe? My impression was that the Scandinavian social democracies had a fairly wide range of universal programs for housing subsidies, health care provision, daycare, etc. and that these were available to everyone, not just the poor. But I could be wrong. What are some current means-tested social programs that are successful and popular?

20

arw 03.26.13 at 4:24 pm

From Crooked Timber’s blogroll, an example of this idea in practice to a degree:

http://bloodandtreasure.typepad.com/blood_treasure/2013/03/the-boss-says-were-all-in-it-together.html

Getting these ideas into a discussion is critical in taking them from Utopian daydreaming to realistic consideration.

The Randian libertarians are successfully advocating a return to some fuzzy Utopian past and getting lots of coverage in doing so. The fact that it fits the media ownership’s goals and narratives is clearly why they are getting that coverage.

But this topic might actually resonate with the readers if for once they could see-through the kabuki and stop acting against their own self-interests. Although that sounds Utopian, it appears that the Congressional Progressive Caucus recently got a bit of visibility for their People’s Budget, so you never know…

21

Almaz Zelleke 03.26.13 at 5:02 pm

The plausibility and utopianism of basic income are country-specific, but the commonalities include the radicalism of unconditionality, the importance of considering labor market effects, and the integration of the tax and benefit structures. Conditionality on volunteer work, amateur endeavors, or care work detracts from the freedom maximizing effects of an unconditional income. This will play differently in the Nordic states, where work is plentiful and an accepted part of a generally egalitarian social contract, from the US, where it just extends the supervisory and stigmatizing social assistance model. Basic income’s unconditionality enables labor force participation in contrast to means-tested and categorical benefits for which unemployment, or unemployability in the case of disability, are required for eligibility. This effect will vary widely depending on the type of benefit systems in place in a given country. A basic income provided as a universal dividend, rather than as a negative income tax, is actually a very flexible tool for redistribution. Bill Gates will no more “receive” the basic income than he receives the preferential tax rates that are reserved for lower-income tax payers in the US, and a focus on this red herring detracts from the fact that he already receives far greater benefits from the trillion dollars the US government “spends” on tax expenditures that go to high income earners in the US. In the US, a modest basic income tied to the poverty threshold and recouped through the tax system could make a huge difference in the lives of those living under or just above the poverty threshold while increasing work incentives. Is that utopian? Only because our political parties are so dysfunctional right now. Does it perpetuate capitalism or lead to it’s destruction? In the short term, clearly the former. In the long run, it gives individuals a bit more power to determine the contours of their local economies. It’s hard to know where that will take us.

22

chris 03.26.13 at 5:42 pm

In particular, can utopia be realised within the context of a market economy, with significant private ownership of capital?

Ownership is a legal fiction. The important parts (at least from this perspective) are control and the right to receive the fruits of the capital, and those can be addressed by regulation and taxation respectively.

That is, supposing you’re just allowed to handwave political difficulties, which apparently we are for purposes of this discussion. That’s leaning more toward the “utopia” than the “real”, but I’ll play along.

Under either a UBI or GMI regime, having your boss’s boss’s boss run the company into the ground isn’t nearly as much of a personal calamity for you as a worker, so it’s not clear to me that the workers need actual ownership interests to help them prevent such an outcome (even if you assume it would). And the UBI/GMI itself addresses the capital/labor split, in a sense, since it would be insignificant for the lords of capital, but much more noticeable for workers on the edge.

P.S. One other problem with GMI as opposed to UBI — off-books income. I’m not about to jump to the conclusion of assuming widespread lotus-eating, although I’m sure someone will, but it’s bound to occur to lots of people that you can make money off the books and still collect full GMI, which you couldn’t do with a legitimate job.

23

sanbikinoraion 03.26.13 at 5:43 pm

@JQ:

You tell us that a UBI is economically infeasible, then that a GMI is feasible, and then that the two are equivalent anyway. There is something wrong there.

Also, what TW said — it’s supposed to be a “basic” income, not a “decent” income; imagine $12k instead of $20.

24

Freddie deBoer 03.26.13 at 6:13 pm

I don’t have the economics chops to say which is better, but this I know: the idea that people would simply be idle if they didn’t have to work to live is flat wrong. People engage in tons of productive, creative work every day for which they are not compensated– indeed, for which they actually have to pay. That work will continue under an UBI. People want to create and to share, but they are frequently so drained from working 50 hours a week that they feel that they can’t. Far from being the end of human productivity, I believe a UBI would result in a great flowering of it.

25

Anarcissie 03.26.13 at 6:30 pm

Speaking of $12K or so per year, this tale from NPR, about how people are moving or being moved from Welfare and unemployment insurance to SSDI* may be interesting if somewhat to the side of the subject.

* Social Security Disability Insurance for you un-USAns.

26

GiT 03.26.13 at 6:45 pm

Why would one ever consider a sort of either/or 20k for doing nothing or 25k for a shitty job, such that the 25k/job is really only a 5k/year gain for a 20 or 30 or whatever hour work week? It’s easy enough to cock up a sort of negative income tax or other progressive structure that mitigates that sort of thing.

27

Almaz Zelleke 03.26.13 at 7:45 pm

@ GiT: “Why would one ever consider a sort of either/or 20k for doing nothing or 25k for a shitty job, such that the 25k/job is really only a 5k/year gain for a 20 or 30 or whatever hour work week? It’s easy enough to cock up a sort of negative income tax or other progressive structure that mitigates that sort of thing.”

You’re right, but to return to John Quiggan’s initial comparison of GMI and BI, the GMI approach is generally to top up low-incomes and phase out the subsidy, whereas the BI/citizen’s dividend approach is to provide a floor of income and regular income taxation above it, with higher marginal rates for higher earners to pay for it. If the BI is $10,000, recipients still have lots of incentive to work, since every dollar earned increases total income, but can be choosier about jobs, tending to drive wages up. If workers and employers know that low wages will be topped up, there’s no upward pressure on wages, and may even be downward pressure as labor supply increases to take advantage of the topping up, if it’s conditional on employment. If it’s not conditional on employment, but is an unconditional subsidy up to a certain level of income, say $20,000, which is then phased out for incomes above $20,000, the incentive to work for less than $20,000 falls to zero, and the incentive to work for more than $20,000 depends on the steepness of the phase out rate. The policy details matter and strongly affect admittedly back of the envelope calculations like Mr. Quiggan’s.

28

cripes 03.26.13 at 9:55 pm

There is much to recommend the refinement of universal basic/decent wage schemes, not least because production efficiencies observed at least a century ago render “full” capitalist employment impractical. Instead of increased leisure, we have been given increased insecurity, stress and poverty. And violence, due to extreme resource disparity and economic exclusion. The question is not whether, but how, to accomplish this in a socially beneficial process, once having overcome primitive objections inter basis of social drawings delusions. And the US social science model of soft authoritarianism will also need scrapping along the way. What is the point of all our shiny technology is it can’t deliver less harm and more (widely distributed) benefit? German executive responds when asked why he doesn’t object to “excessively” high taxes: I don’t want to live as a rich person in a poor country.”

29

Martin Bento 03.26.13 at 10:01 pm

In terms of actual government support, in California, someone applying for state public assistance such as food stamps or Medi-cal (local incarnation of medicaid) has a “maintenance need” of $600 a month. That’s what they are expected to live on sans provided service. So for medical, they must spend their entire income above $600 a month on medical expenses before anything is covered. And California is one of the most liberal and expensive states. Just so people understand what the status quo is.

30

Ben 03.26.13 at 10:01 pm

Nobody has mentioned the biggest problem with a UBI. It’s completely unjust.

Why on earth should someone working 40 hours per week have to buy lunch for a beach bum who is happy to lounge around on the UBI? For the beach bum to lounge, even on beans on toast, hundreds of people working crappy little retail jobs will be essentially waiting on him, havesting crops, transporting them, baking bread, tinning baked beans, shipping them to shops, stacking them on shelves, and manning the checkout when the beach bum comes in to buy them.

Why. The. Hell. Should. They.

Let HIM get a crappy little retail job, do a tiny slice of work for hundreds or thousands of customers, and EARN the right to ask others to do tiny slices of work for him.

@rf, the person who said “And because people would still aspire to things other than being a beach bum “.

Why do you think that? People are doing this now, they just have to tell a few white lies about their back, depression, or nerves first. Even if you are right, are you sure it will be good? Maybe what they will aspire to is terrorising their neighborhoods, clockwork-orange style.

The problem only exists in our society of plenty because of tax. The labour required to earn enought to keep body and soul together is taxed. Food is taxed – not directly (unless served hot!), but the labour that produces it, and the fuel to transport, and the non-food inputs such as IT, logistics etc. Clothes are taxed. Shoes are taxed. The tiniest hovel, flat or bedsit is taxed. The electricity or gas required for heating is taxed.

It is immoral to tax the essentials of life. Just. Stop.

If it wasn’t for tax, a bum could live on less than 10 hours labour, per week, at minimum wage. Including rent, mobile phone bill, and a night out.

Ah, but we need the tax.

So that we can afford to pay him benefits instead.

Right.

31

cripes 03.26.13 at 10:02 pm

“Social Darwinist delusions” and “technology if it can’t deliver” sorry, cellphone typing faux pas.

32

Martin Bento 03.26.13 at 10:06 pm

I think the efficient way to provide UBI would be to directly supply the needs, rather than hand out money. You can get modest, but safe and liveable housing, including second hand furnishings and clothes and access to a cafeteria that serves decent and nourishing but inexpensive food. You can get medical care. All of that is free. You want more, you have to work. All of that can be provided cheaply, as that actual cost of producing it is small. There is a problem with the housing on how to quickly vary supply to account for the state of the economy at the moment, but that’s what I would support.

33

cripes 03.26.13 at 10:18 pm

Ben: you will understand our skepticism towards your inner motivations when you become so worked up over the prospect of the archetypal beach bum (insert welfare queen) looting the commonweal. Save your ire for banker bums looting our flesh for baubles. While you’re at it, educate yourself on the actual conditions people on meagar benefits are forced to endure. With a son like you, let’s hope your mom has a good advanced-care policy. Cheers.

34

cripes 03.26.13 at 10:23 pm

And while we’re all busy trying to keep the standard o living as low as possible, to motivate the unmitigated, perhaps take time to consider: how low should the living standard be for your elderly mom, mentally ill brother or sister with downs syndrome, who can’t work? How about someone else’s mom?

35

Salem 03.26.13 at 10:55 pm

Ben: you will understand our skepticism towards your inner motivations when you become so worked up over the prospect of the archetypal beach bum (insert welfare queen) looting the commonweal.

Remind me, who was that notorious Randian reactionary who said ‘He who does not work, neither shall he eat’?

36

Martin Bento 03.26.13 at 11:17 pm

Cost of providing it is small except medical care, i should have said. But some form of socialization is proven the most efficient way to provide medical care to all, and if we want to provide it only to some, well, that’s a different debate, but you’re talking an odd sort of utopia.

37

GiT 03.26.13 at 11:38 pm

@27 – Sure, I follow that, and I know the policy chosen matters but it just seems to me that “topping off” to some hard maximum is patently silly. It has obviously perverse consequences for no good reason. Why even consider it in the first place? Just diminish the transfer as income rises so you preserve ordinality among earned income levels.

38

Matt 03.26.13 at 11:54 pm

What is this nonsense about how easily someone can live on even the lowliest job? Did nobody notice that the USA and EU have had more unemployed people than open job positions for years? It’s a mathematical impossibility to tell everyone just get a job, unless you want to use a non-market mechanism to provide those jobs. And as long as we’re talking about something so daring as not trusting the market to provide, why not a UBI?

People tend to blame globalization for the scarcity of good manufacturing jobs in the West, but according to the BLS, Chinese manufacturing employment peaked in 1996, at 125 million people. It was down to only 98 million as of 2008, despite huge growth in manufacturing output over those 12 years. Likewise, the market value of manufacturing in the USA is greater than 30 years ago but employment is way down, and the job trend started decades before NAFTA or Chinese WTO accession. Manufacturing jobs are being automated away. So are basic legal research, middle management positions, IT operations, call center jobs, warehouse work — there’s even a company with working prototypes to replace fast food prep workers. Where are these millions of workers with vulnerable jobs supposed to just get a job after their current positions are eliminated?

It seems to me that we are entering an age where the marginal market value of a lot of labor is less than zero. You might let your young child “help” bake a cake, even if it’s likely to be messier and slower than working solo. You probably don’t let an unemployed cook or paralegal “help” operate a petroleum hydrocracker or search engine, even if they work for free. Letting non-experts near these systems is more likely to destroy value than increase it. So “eliminate the minimum wage” doesn’t solve unemployment, even if it didn’t have other problems. Neither does “cut taxes,” because your tax rate has nothing to do with whether an unqualified person will be allowed to work on/with expensive systems. Neither is “learn a new skill,” because even presuming that everyone could retrain as a chemical engineer or applied statistician, there still aren’t enough open positions for these plum jobs to provide full employment. We’d just end up with lower wages in those occupations and still millions of unemployed, now with specialized skills but little better job prospects.

“He who does not work, neither shall he eat” — fine if the government can provide employment for everyone that amounts to more than digging holes and filling them again. It’s a slogan for starvation on a grand scale if you expect the market to provide everyone with jobs.

Finally, it’s maddening to see “unemployment still high” in business news one week and “declining fertility portends worker shortages” the next. Italy has had sub-replacement fertility for two generations; when is that promised/threatened worker shortage going to sweep away unemployment?

39

cripes 03.27.13 at 2:49 am

Excellent, Matt. The “just get a job” crowd doesn’t imagine themselves scrapping for minimum-wage, no benefit McJobs. That’s for the parasitic wage worker class,ain’t it?

40

Gareth Wilson 03.27.13 at 4:14 am

A UBI requires a general consensus that it’s not morally wrong for able-bodied people to choose not to work, and instead choose to be supported by other workers. That’s not only a big change from the current consensus, but from the consensus of the Left itself. Can’t see it getting much traction in the Working Men’s Clubs, or the Labour Party, or even the Socialist Worker’s Party.

41

Matt 03.27.13 at 4:15 am

Insecurity sucks. I’m in the top quintile of American earners, averaged over the last 6 years, but I’ve also had 4 different jobs and two of them ended abruptly with a phone call that went “the company is ceasing operations today.” Compared to workers in many other fields my prospects for rapid re-employment are good, but I still have that nagging worry that at any moment I could find out that my last pay check isn’t coming on time and the clock is ticking on affordable health insurance access.

I worry even more for my younger sister, who has ongoing health needs and works in a field with fewer and lower-paying job prospects. I doubt she’d be able to work at all today if she hadn’t been treated through her early twenties on my father’s (quite good) company health plan. I’m glad she caught a break on that, but it’s nauseating that women just like her go untreated because they weren’t born to a father who had good job benefits.

I’d halve my income, and gladly pay the price of seeing slacker “beach bums” enjoying permanent leisure, if I knew that everyone I know would be provided for, regardless of the cycles, trends, and whims of private employment.

42

Matt 03.27.13 at 4:29 am

A UBI requires a general consensus that it’s not morally wrong for able-bodied people to choose not to work, and instead choose to be supported by other workers. That’s not only a big change from the current consensus, but from the consensus of the Left itself. Can’t see it getting much traction in the Working Men’s Clubs, or the Labour Party, or even the Socialist Worker’s Party.

Yes, this is one of the popular stupidities that has endured to the present, to consider labor a moral calling rather than a contingent input to production. It’s ripe for retirement along with “suffering is good because it builds character.” But at least if it’s a general consensus that able-bodied people should not be supported by other workers instead of their own labor, conditions are ripe to expropriate inherited wealth (and, really, any wealth or means of production accumulated in a structure grander than sole proprietorship) and demand everyone to work or putter a few hours per week using the redistributed property.

43

Gareth Wilson 03.27.13 at 4:31 am

Right, but that’s completely different from a UBI.

44

Jim Buck 03.27.13 at 7:34 am

There is already a party to the left of Labour. The Greens. Is there a particular reason why they are being Ken Loach…

As long as the sun is shining in Cannes, why should Loach care about climate change? He is
a Romantic cineast in a lucrative niche market. Loach’s unconcern about environmental matters is perhaps indicated by him filming scenes for Navigators (2001) in the British Rail depot at Lumley Street, Sheffield. The RMT had had the asbestos-rich building closed. Loach wanted it reopened so he could move his actors in there. He got his way.

45

Mao Cheng Ji 03.27.13 at 8:31 am

Yes, a conceptual underpinning for the UBI would require some adjustment to the concept of ‘property’.

You could do what lupita 18 suggested (two separate economies), but that seems complicated.

Or you could, for example (well, not really, but theoretically), nationalize all the land and natural resources in the country, declare every citizen a co-owner (with no transfer rights), collect the rent, and pay it out as a dividend. And that is your UBI.

But that would probably require a revolution, and perhaps even the shooting kind.

46

Tim Worstall 03.27.13 at 9:37 am

BTW, on a UBI. Back in the archives here at CT somewhere is a discussion of Charles Murray’s (yes, I know, Bell Curve and all that) book “In Our Hands”.

He shows that a UBI of $10k a head per adult in the US is entirely achievable on roughly current tax rates/expenditure sums.

Even if that’s not utopian it sounds to me like a hell of a good start, certainly better than the current system in the US (and I’d argue better than UK too).

47

Martin Bento 03.27.13 at 11:09 am

Ben, Gareth, the Earth is the common birthright of all or it belongs to no one. It is the product of no one’s labor, yet every material good is made from it, and, in modern terms, most are made using energy derived from it. So asking for a share of the common wealth is not simply asking a share of the labor of others, because not the entirety of society’s wealth is a product of labor, Marx notwithstanding. It is true that labor and technology – and increasingly more technology than labor – greatly magnify what can be made of the natural material of the Earth, but this is ultimately a product of the entire system, and people who cooperate with the system can claim some of its fruits. It’s like a ship. If you don’t have sufficient crew, you cannot obtain the value of the ship, but that doesn’t mean the ship itself has no value. Remove the ship and you have no crew; only a bunch of drowning men. The Earth is the ship, and it belongs to all. Quantifying what that might entitle one to is a difficult matter, but a think the choice of a spartan existence so that all can have security is something people might come to accept.

48

Rich Puchalsky 03.27.13 at 12:13 pm

“It is the product of no one’s labor, yet every material good is made from it, and, in modern terms, most are made using energy derived from it. So asking for a share of the common wealth is not simply asking a share of the labor of others, because not the entirety of society’s wealth is a product of labor, Marx notwithstanding. “

Yes. And this is where the contemporary left, still influenced by Marx, goes the most wrong. I’d hoped we’d get into this on the Bill Barnes thread, but that became just more of the usual apocalyptic theories.

The Earth, if we consider it as ecosystems and not just as a chunk of minerals, has a natural economy, based on solar power (mostly) as used to a degree dependent on biodiversity. Human labor is a subset of that. Even things that are “a product of labor” are a product of the natural system, in that labor requires inputs of food, water, and so on that are limited and that use resources in turn that humans do not provide.

49

Trader Joe 03.27.13 at 12:57 pm

Isn’t part of the challenge with GMI type programs figuring out how to constantly inflation adjust them without causing them to become inflationary themselves.

The issue with, say a $20k guarantee isn’t that some beach bum will choose art and surfing over stocking Wal-Mart shelves its that Wal-Mart needs to pay some amount sufficiently greater than $20k to entice labor and the job of stocking shelves really only has an economic value of <$20k to Wal-Mart. This means they will need to raise product prices to compensate….which cycles back to the original $20k not being adequate to provide the agreed upon standard of living.

The problem is typically exacerbated during periods of recession when the number of folks on the GMI roll increases at the exact time when businesses are less able to provide either jobs or raise prices to pay for them.

I think the economic theory would be that the market would find an equilibrium at a lower level of total employment and loss overall productivity in order to "make room" for the GMI support.

Equally, as some noted above, it seems that the consensus liberal view is that minimum income support needs to be at a level slightly below the bottom of the job market (i.e. somewhat less than 2000 hours x the minimum wage). Recall that it was Clinton administration, not the Bush republicans, that began paring the welfare and unemployment rolls and raising the bar on qualifications….

50

cripes 03.27.13 at 1:45 pm

“the job of stocking shelves really only has an economic value of <$20k to Wal-Mart." (You might say less than $10K. You don't qualify for food stamps on $20k).

Not necessarily. Crappy, menial jobs that pay only $7.25 stateside routinely pay $15-$18 dollars hourly in places like Denmark and Australia, and come with 4 weeks paid vacation (part-time jobs included here) medical benefits and sick leave.

For Mcdonald's, Wendy's and yup, if they can swing it, even Walmarts in Europe.

Funny how they can still manage to make a profit in countries with decent labor conditions, but can't do it in the US.

51

Trader Joe 03.27.13 at 1:58 pm

Cripes
Actually Wal-Mart recently closed in Germany after 14 years of losses. The only country in Europe where Wal-Mart has been even modestly successful is the UK and the profitability is far below the US and the UK employment costs are far below Europes.

You actually make my point quite well – McDonalds for example, does manage to compete, but they do it by charging $2 for a hamburger that costs $1 in the U.S. Yes the worker gets paid more, but his cost of living is materially higher….this is certainly the case in Denmark and throughout the Eurozone…I don’t know Australia enough to comment but I doubt there is a ‘free lunch’ in there.

52

SamChevre 03.27.13 at 2:08 pm

I’m a proponent of a UBI (and think a GMI is so hard to implement well that it’s unlikely to be a good idea). But John’s UBI value is hugely higher than I would support–my idea would be a “you can live on it” BASIC income. California’s $600 a month maintenance income is about the right size; that will rent a cheap shared room and buy groceries.

53

JohnTh 03.27.13 at 2:29 pm

I don’t understand how the points above answer Gareth Wilson’s point at #40. Inthe absence of a benevolent dictator having UBI requires a consensus that a) as per Gareth, all who can have an obligation to contribute, and all who contribute (‘contribute’ hopefullybeing broadly interpreted) deserve a decent income or b) everyone who exists deserves a decent income because they are fellow human beings. I admire the feelings of the many people on the thread who clearly believe that the consensus should be (b), but it does seem to me that consensus (a) is substantially more achievable and deals with the risk of shirking leading to underproduction of goods critical to maintain modern society at its current scale.

54

mds 03.27.13 at 2:51 pm

From the original post, pertaining to the US:

The facts about growing inequality and declining social mobility have finally been admitted,

One of the most prominent ways in which it has been “admitted” is by one party’s presidential candidate calling 47% of the population worthless parasites and moochers, and subsequently receiving 47% of the popular vote. A similar sentiment is shared by the party which is likely to retain control of the US House of Representatives until at least 2023. See, for example, the Ryan Plan Redux, aka “Burn All Ladders and Bootstraps.” So the facts haven’t necessarily been admitted enough, and if they have been admitted, they’ve frequently been hailed as a good thing.

and the elite consensus on the need for drastic cutbacks in ‘entitlements’ has been shattered.

I would like some specific examples of this, because as far as I’ve seen, the elite pundit class haven’t so much as paused to draw breath in their assaults on “entitlements” that will bankrupt us all any second now. Paul Krugman, Dean Baker, etc, naturally continue to point out that this is claptrap, but are still ceaselessly belittled by the elite punditocracy. A majority of one chamber of Congress, and at least a substantial plurality in the other, likewise continue to spew falsehoods about current deficits and “out of control entitlement spending.” Hell, the just re-elected President of the United States won’t shut up about chained CPI. So I’m skeptical that the consensus has been shattered. What, has Pete Peterson suddenly run out of money?

55

lupita 03.27.13 at 3:04 pm

I do not think the bum problem is that great. The only totally unproductive people I know are addicts and that is entirely another problem.

If we think of family units with one worker, in how many of these is the wife (in most cases) and children bums? The norm is that they all perform their duties with no exchange of money, simply to sustain a nice household.

UBI has be extended to all, no questions asked, to cover the social work performed by (mostly) women. UBI has to be divorced from the concept of productive work (work that produces goods and services to be consumed) to include family and social work. After all, it is the work of cleaners, cooks, parents, and son and daughters of the world that is excluded from the capitalist wage scheme by assuming that society reproduces and maintains itself effortlessly or by ignoring social considerations entirely.

And whenever a woman needs help with a heavy object, she can just go down to the beach and pick up a cute bum.

56

Rich Puchalsky 03.27.13 at 4:37 pm

“UBI has to be divorced from the concept of productive work (work that produces goods and services to be consumed) to include family and social work.”

Not to mention that we also need a lot less productive work done. We could probably use more social work (of the type stereotypically done by women), but in terms of production of goods, what we really need is more equitable distribution, not much greater production. Productivity is already at the point where making people desperate to get “productive jobs” making something is going to result in overproduction and running up against environmental limits.

57

James Wimberley 03.27.13 at 8:19 pm

A long OP and 56 comments, and no mention of Speenhamland?

58

UserGoogol 03.27.13 at 9:10 pm

Well, Speenhamland is obviously the stupid and wrong way to do UBI/GMI, since “topping off” people’s income amounts to a 100% marginal taxation rate until you meet the top-off point.

59

Peter T 03.27.13 at 10:43 pm

re Trader Joe

If Walmart could not make it in Germany, I’ll bet it was because they could not compete with Aldi (the German equivalent). Yet Aldi is not only successful, it has expanded well beyond Germany. How come? It meets European standards for wages and conditions.

As well as Speenhamland, I am surprised no-one has mentioned the Harvester case and related Australian and NZ experience with centrally fixing the normal wage well above basic subsistence.

There is a feedback between a high basic wage and high productivity that makes such systems perfectly viable, but they seem to be vulnerable to competition from low wage, low productivity systems. Both have the problem of accommodating people who cannot access the formal wage structure.

60

cripes 03.27.13 at 11:25 pm

Lupita and Rich have the right idea. We don’t need more value-added manufacturing; it leads to over production and unemployment and, not to mention, plastic junk fouling the landscape. And the panty twisters moning about freeloading po’ folks are primitives dragging out hoary old shibboleths popularized by Ronald Reagan and long discredited. They should be shunned on Crooked Timer.

The mis-valuation of social work (not “Social Work”) as uncompensated and lowly is an ahistorical aberration from which Americans especially, though not uniquely, suffer. Again distribution, not capacity, is the problem, and only +/- 40% of any population “works” in the wage-slave sense of the term so worshipfully held up as a virtue. There is just no prospect of anywhere near “everybody” “working” in the capitalist sense of the word. Unless, of course, you still believe that 30 million US workers woke up one morning in October 2008 and just decided to quit their jobs and become…beach bums. Man, I wish you could afford the bridge I’d like to sell you.

And for those still twisting their panties over beach bums not contributing enough to the slave labor pool they might want to take a closer look at the social/economic value of John Thain’s golden toilet after they finish scrubbing it over at Merrill Lynch’s old headquarters where they’ve built a shrine to the “producers” of past bubbles.

Just sayin’

61

cripes 03.27.13 at 11:39 pm

Peter T:

Quite so. The point of discussing Walmart, et al, in Europe is not to say they were a success in Germany specifically, but to point out many US corporations pay living wages there, sick leave and vacations AND STILL MAKE A PROFIT. Trader doesn’t want to hear that, so he zeros in on one exception.

PS: Aldi is a Mondragon company I’m pretty sure.

Even Trader admits Walmart has a modest success in England, mistakenly thinking their lower profits in UK are a bad thing. Compared to the rank exploitation of american workers, of course their profit margins are less. That’s the good news. People buy stuff. Workers get paid and take vacations. Walmart makes a little less, so what?His telescope is on backwards.

As you point out, rising incomes and lower wealth disparity is a virtuous cycle that capitalists bragged about going back to at least Henry Ford. It still is. The race to the bottom occasioned by supra-national corporate globalization undermines that admittedly precarious phase of capitalist growth cycle, and should be opposed, by labor organization, progressive taxes, protectionism or any means that benefits the society at large.
Stop. Worshipping. Corporate. Profits.
Corporations were designed to be servants to the state and disbanded when that purpose is exhausted.

62

Tim Worstall 03.28.13 at 11:27 am

“PS: Aldi is a Mondragon company I’m pretty sure.”

Eh? There are two Aldis, originally only one. Owned by two brothers. They split over, I think it was, whether to sell ciggies or not. Now one is owned by one brother, making him the richest man in Germany, the other by the two sons (??) of the second brother.

I rather think that’s a bit different from the worker owned cooperative which is what I usually think of as “Mondragon”.

As to pay rates and so on. WalMart isn’t the correct comparison for Aldi. Much closer would be Costco. Which pays something like European wages with benefits. The thing is, they use about one quarter of the staff per $x amount in sales. Showing that you can certainly have high cost labour (or well paid labour if you prefer) if you use a lot less of it.

The business model is really rather different.

63

ajay 03.28.13 at 11:55 am

If Walmart could not make it in Germany, I’ll bet it was because they could not compete with Aldi (the German equivalent). Yet Aldi is not only successful, it has expanded well beyond Germany. How come? It meets European standards for wages and conditions.

Also, Aldi is really good at the kind of lean logistics that represent profit in the supermarket business. Wal-Mart isn’t. It’s just really good at blackmailing local governments in the US into subsidising its stores with tax breaks and so on. When it tried to go up against a real supermarket chain on equal terms, it got blown out of the water.

64

cripes 03.28.13 at 3:47 pm

Yup. And they’re paying workers in US stores about $12-$16 to start.
Kind of demolishes the claim retail can’t pay above minimum wage because of “competition” and those sacrosanct corporate profits.

65

Trader Joe 03.28.13 at 7:08 pm

cripes
Amazing how you manage to take a post (@49) which spends nearly all of its words discussing the notion that GMI programs have a tendency to be inflationary and somehow – no doubt because I chose to use the nameWal-Mart in an example rather than ‘Company X’ – somehow contorted my comment into some brazen defense of corporate profits and greed in multiple subsequent posts.

Its a refusal to address legitimate concerns and intentional efforts to misdirect motives that cause so many liberal minded ideas to be viewed as ‘utopian’ and ‘theoretical’ rather than the practical solutions they might become.

If you’d like to explain why everything costs 50% more in Europe and why unemployment is always 50% higher than in other developed nations have a go…if you can do it without mentioning high wages, high taxes and a lack of workforce mobility you’ll be the first. Only the people with the $15/hr jobs are glad of that fact…would it be better to pay 2 people $7.50 each or 1 person $15?

66

Harold 03.28.13 at 7:29 pm

In Europe “unemployment is always 50% higher than in other developed nations” ??

Where are these “other developed nations”, pray tell?

67

Trader Joe 03.28.13 at 7:58 pm

Harold

Australia 5.4%
Canada 7.0%
Japan 4.2%
Switzerland 3.4%
UK 7.8%
US 7.7%

Eurozone 11.9%

These are February reported data from Eurostat…actual mileage may vary over the course of the last decade or two, but my quip wasn’t far from the pin.

68

Stephen 03.28.13 at 8:42 pm

Seems to me, basic problem. GMI or UBI, matters not, are we looking at Worldwide Utopia or Utopia In One Country (or a few linked countries).

Worldwide: well, the GMI/UBI appropriate for US, or Australia, or any other developed country, can’t without abolition of nation-states be extended to other parts, even if corrected for purchasing power parity (and ppp would be considerably deflected by attempt to introduce such income). Other parts can’t afford it themselves, taxation of developed countries to attempt it would reduce GMI/UBI in those countries remarkably.

If in one (or a few, or even only) developed countries: is income to be available to all within the borders, or only to accredited citizens? If the former, GMI/UBI will only be possible if combined with rigorous barriers to immigration/removal of unauthorised immigrants. Problem is, people in favour of that are very likely to oppose GMI/UBI: and vice versa. (Also, barriers in countries less blessed with silver moats than Australia are likely to be porous.)

If the latter, then country with GMI/UBI will acquire large underclass of non-citizens, willing to work for well under GMI/UBI which is still more than they could hope for at home: with obvious problems.

Is ther a way out of this?

69

Mao Cheng Ji 03.28.13 at 9:28 pm

Good point, Stephen. Something like Dubai.

70

Matt 03.28.13 at 9:42 pm

According to the latest Eurostat chart I could find, unemployment within the Eurozone ranges from 7.9% in Finland to 27% in Greece.

This raises two questions: why use an average for “the Eurozone” when there’s higher variance between its member nations than between the chosen out-of-Eurozone nations?

How enormous are Greek workers’ wages that their unemployment rate is greater than triple that of Finland?

Or looking at individual states of the USA, why does Washington state, with the nation’s highest minimum wage, have lower unemployment than North and South Carolina, Mississippi, Georgia, Tennessee, Indiana, and Arizona, which all have the lowest minimum wage allowed by federal law? Or why is North Carolina’s unemployment rate within a percentage point of France’s, when its minimum wage is 40% lower?

71

rf 03.28.13 at 10:06 pm

Lowest in that chart is Austria 4.9, Germany 5.3 .. I agree that it doesnt seem to make much sense to take the eurozone average (especially now) to prove a larger point as per Trader Joe

72

Matt 03.28.13 at 10:29 pm

Damn! Somehow I started looking only to the right of the UK on the chart. The variance is even greater than I thought. The Eurozone has a single currency, not a single wage level.

73

GiT 03.29.13 at 12:57 am

How comparable are unemployment rate stats? The US’s incarceration rate certainly distorts things.

74

cripes 03.29.13 at 2:13 am

This discussion raises many interesting and valuable ideas, rarely heard in the MSM media bubble, that deserve more exploration. I am pleased to contribute a small part to the discussion.

For Trader Joe’s and others to his right, left or otherwise, I am trying to highlight in my posts that we all need to make a conscious effort to free our thinking from the insidious constraints of a false consensus foisted on us for decades now by the likes of corporate think tanks and their prostitutes in the media and political worlds.

False consensus that tells us:

There are not enough resources in the US or the planet to support a decent life for every person and that scarcity is a material restraint preventing us from realizing that objective. (See: top 1% of Americans saw their real income rise 700% between 1980 and 2007)

A minimum standard of material well-being established for all citizens would promote unsustainable “free-riding” by the poorest classes, because they are not motivated by starvation to peddle their labor at the lowest rate to profit-making corporations. (See: golden toilets at Merrill Lynch in this regard).

Low wages are established by some magical, infallible, market mechanism that dictates seven bucks for back-breaking work and an early death in the county hospital. Conversely, meddling with said magical market mechanisms will result in catastrophic collapse of the superior, innovative American economic system. We could add the total lack of health care, sick leave and vacation standards that puts the US in the toilet of the planet’s nation-state rankings. (See: how badly this really sucks and why does anyone believe this is not purely by evil design)

And so on, ad infinitum.

This kind of stuff has been pushed at us so relentlessly, for so long, it requires a real effort to think outside the confines of this pack of lies.

If we lived in a family, a small clan or a village, it would be unthinkable that members of that grouping should be condemned to abject poverty without recourse or assistance, because it would threaten us all, if for no other reason. We shouldn’t expect less from our society.

Thanks everyone!

75

shah8 03.30.13 at 12:36 am

I’m not really interested in basic income or minimum incomes (which are a seriously bad idea–plenty of examples, with some variance, in history, so in practice, not an alternative to UBI)

Why are people poor?

Why are people rich? Or at least doing better?

What happens to many asset redistribution plans, like shock therapy privatization in Russia, or various failed land redistribution initiatives?

My thinking is that people are poor because they lack *opportunity*, and not so much cash, specifically. Cash can buy opportunity, but only for *some* people. Some assets make their owners poorer! Rich people are rich because people pay attention to them, they don’t cross them, and let them know about opportunity before anyone else. They are close to levers of power, and they can hire armies of thugs, or indeed, go the full Crassus.

To think strictly in terms of cash income plays to our disadvantage wrt various glibertarian strains of reasoning. Same ole shit as the voucher wars. People have to have power, and material capability to determine their paths in life. That essentially means that matters is service provision. Cash vouchers does nothing to aid a senior to access health care. Nor does it give parents real access to good schools for their children. Food stamps does a shitty job of nutrition, not least because of how much like cash it works.

We shouldn’t be thinking of Universal Basic Incomes. We should be thinking of Universal Basic Outcomes. Of service provisions that permeate the totality of society. Nobody starves, and isn’t allowed to, simply from neglect. Nobody is homeless. Everyone has child care and quality education. When you’re sick, you just go to the doctor, or a hospital in some emergency. You walk the streets because the police do police work and are accountable to you, rather than to society’s patrons. Transportation, telecoms, work and are accessible to all.

Now that you look at all that…Does UBI sound like anything like a solution? Or just a way to temporize about doing something about what is a barbaric society in the US?

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Matt 03.30.13 at 7:22 pm

When I imagine a UBI it’s certainly on top of government-provided universal health care, infrastructure, education, fire service, law enforcement, etc. and not an alternative to them. I don’t think any level of cash guarantee is utopian if the government abdicates on all those things and becomes Libertopia where you have to privately buy security guards, fire fighters, food inspectors, and so on (plus lawyers to bring suit against those parties if they turn out to be frauds, if you survive discovering they’re frauds).

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