Unconditional base income?

[Archbob]

In this theoretical scenario the numbers are much higher than they would ever be in real life, but the laborers we do remove from the workforce now mean the free hand of the market is more able to be applied.

How is this the "free hand of the market"? You are artificially removing laborers from the work force by giving them free money. That's not "free hand" or "free market". You can't call it "free hand" if your intervening specifically to reduce the supply of labor to make it more scarce.

Also this proposal isn't giving them a "barely living wage", its basically giving them almost a free middle class income. It will have major effects on people's living habits/working habits.

 

[Gucumatz]

Well you have to look at the current frictions that exist. Currently a worker has only a limited time-frame to look for his optimal employment level and labor vs leisue bundle, but if this individual were to have a guaranteed income the structural frictions would be pretty much reduced to nothing.

Therefore as time progresses every worker who decides to work will be paid exactly what they are worth. Those being overpaid now will be paid less, those being paid too little will be paid more, etc. until we achieve near optimal balance. Of course that IS the free hand at work.

Those who refuse to work form a baseline that exists already in pure economics, but doesn't exist in any realistic form of economics because those lazy workers currently can not choose to refuse to work. This therefore allows them the option to opt out of the market, creating a truer picture and a more pure capitalist system

 

[Archbob]

But see, if order to get these "optimal conditions" you have to intervene and give people incentives not to work which destroys the "free market" conditions. By providing them free money you are giving them a great deal of incentive to not work because there's very little point of working if you give them a middle-class income for free. You've already reduced the value of "work" by artificial means. A pure free market system requires no state intervention, perhaps aside from breaking up monopolies and oligopolies. Certainly not the government giving people free money to a point where work is not necessary.

 

[Gucumatz]

Yes but the point is there is no problem for people to not work, in fact in an economy like Switzerland's its probably preferable. And its certainly not middle class. It depends also on your terms of intervening.

This is creative destruction - destroying some low class jobs in order to get properly valued workers. It is still a free market as firms still can compete as they see fit. The difference is workers now have a better utility gauge. As a lazy worker can opt out they are therefore fulfilling the ultimate invisible hand of the market role. Government intervention, while costly and moving the baseline, actually makes this a freer market than before as it reduces the previous tensions that were restricting both firms and individuals

 

[Kyriakos]

Fun aside, this probably won't work, given that if virtually all of the swiss people have enough money to go by without working, then they won't be working. Of course there could be a clause in the law stating that "in order to get the state funding, one has to work at least for x hours each week".

In ancient Athens there was a (somewhat) similar system at one time, meaning that virtually all the Athenians had enough money to go by, but that was enabled due to the citizens also having slaves who worked, and moreover the cash flow from the Delian league.

 

[Gucumatz]

According to this link from 2010 on an economic study from Switzerland:

http://www.swissinfo.ch/eng/swiss_n...e_to_stay_afloat,_says_study.html?cid=8781130

"Some 38 per cent of middle-class families, which represent 60 per cent of the Swiss population, are stretched financially.

The German-language magazine defines a middle-class family as one whose head of household earns between SFr2,450-5,250 ($3,238-6,940) per head [Per Month]."

Under the proposal ~2.7k SFr is considered therefore middle class if one has no other family. Although with inflation the numbers are most likely closer now 3 years since, but yes without any family you are right this would put to a middle class income. For some reason I thought the conversion rate was significantly different so I thought initially this was significantly less, even still my main point still stands

 

[Gucumatz]

Fun aside, this probably won't work, given that if virtually all of the swiss people have enough money to go by without working, then they won't be working. Of course there could be a clause in the law stating that "in order to get the state funding, one has to work at least for x hours each week".

In ancient Athens there was a (somewhat) similar system at one time, meaning that virtually all the Athenians had enough money to go by, but that was enabled due to the citizens also having slaves who worked, and moreover the cash flow from the Delian league.

Although not exactly the Delian League - The Swiss banking league could allow for this experiment to float through its first few tough years. But again - as I know nothing about Swiss politics, for all I know we could be discussing a hypothetical fringe proposal

Edit: On further reading it appears the 2,500 SFr is the highest number in the proposed range. The actual range being proposed is between 2000 and 2500. Apparently the 2,500 is to attract more signatures for the petition but reading some german political blogs it appears the actual proposal would be closer to 2,000 than 2,500 which from a theoretical standpoint is much more on the lines of what I was thinking about in my previous posts ^

 

[Loppan Torkel]

Could this be a way devalue the Swiss Franc? There's some benefits through streamlining and effectivization in handing out money to all. People will buy more and the export industry will be happy. The foreigners that have invested in the Swiss Franc might not be, but who cares?
Regarding the willingness to work - after a few years the incentive will rise again since the prices all over will have gone up and you'd have to work to avoid poverty. Everybody wins!


Another note: given the inflation of the SFranc, the rise in interest rates, the coming housing market implosion and the catch-up in prices on goods, when those out of jobs won't be able to pay their huge loans - will there be some kind of reserve fund for them or will they be forced to move?

This unconditional SFr2500 - is there any condition that you must live in Switzerland or could you go and live like a king in Thailand or Greece?

 

[Kyriakos]

Things have deteriorated here, but still the average income is a bit higher than in Thailand :/

You could try to live in Kosovo though. Emphasis on "try" given the crime there

 

[Loppan Torkel]

I'm sure it is. Still, it's closer and as people move out of Greece, the prices on houses must go down, and Swiss capital can't hurt... It's basically free money from Swiss taxpayers.

 

[dutchfire]

Another thing: I expect this will stimulate entrepreneurship. If you start up a business, you're likely to make very little money the first couple of years due to start-up costs. So normally, you need to have basically a couple of years of income on hand before you can take the risk of beginning a company. In Swiss Utopia, this is not necessary.

 

[Ziggy Stardust]

Beaten to it on the last post. The safety net is not just there for the few lazy hippies to take advantage. It's also there for starting small businesses that have a hard time getting the ball rolling

 

[Cutlass]

How is this the "free hand of the market"? You are artificially removing laborers from the work force by giving them free money. That's not "free hand" or "free market". You can't call it "free hand" if your intervening specifically to reduce the supply of labor to make it more scarce.

Also this proposal isn't giving them a "barely living wage", its basically giving them almost a free middle class income. It will have major effects on people's living habits/working habits.

The labor market is an extremely coercive market. Labor works or labor dies. That's coercion. A proposal like this would remove the coercion, and that means that it would be a free market.

Free market is not "there is no government involvement". Free market is "either side can walk away from a bad deal without being harmed". This creates a free market.

 

[Tahuti]

The labor market is an extremely coercive market. Labor works or labor dies.

That's obviously true. However, it gets blurry when there are multiple employers. There is clearly a victim but there are hardly any directly identifiable perpetrators.

 

[Cutlass]

That's obviously true. However, it gets blurry when there are multiple employers. There is clearly a victim but there are hardly any directly identifiable perpetrators.

There are never as many jobs offered as there are people to fill them. So there is always a surplus of labor. That surplus allows employers to bid down prices to subsistence and below. Unless government levels the playing field.

 

[BvBPL]

To turn what Cutlass said on its head, unconditional base income would eliminate a lot of the risk in entrepreneurship. No longer would people worry about losing their shirts for investing in a small business venture. That could lead to a lot of people going out and starting their own businesses which would, in turn, raise employment.

 

[Mise]

Wasn't something functionally equivalent to this proposed by Milton Friedman? I think this has intuitive appeal, but would work only if the marginal utility of money doesn't drop off a cliff after 2,700 CHF or whatever it was. Otherwise, if the diminishing marginal utility of money is rather shallow (which I think it is, personally), then it shouldn't affect incentives much and we'd all benefit from a ridiculously simple, easy, and cheap form of welfare. I dare say our welfare budget would fall dramatically if the UK replaced its welfare system with a single universal payment like this.

 

[Cutlass]

Wasn't something functionally equivalent to this proposed by Milton Friedman? I think this has intuitive appeal, but would work only if the marginal utility of money doesn't drop off a cliff after 2,700 CHF or whatever it was. Otherwise, if the diminishing marginal utility of money is rather shallow (which I think it is, personally), then it shouldn't affect incentives much and we'd all benefit from a ridiculously simple, easy, and cheap form of welfare. I dare say our welfare budget would fall dramatically if the UK replaced its welfare system with a single universal payment like this.

Friedman suggested a Negative Income Tax. This would be like the basic income, but would phase out as incomes rose. Part of the reason for his suggestion seems to be that as a libertarian, he wanted both to minimize the administrative costs, and the restrictions on what recipients did with the money. Yet he still felt that some form of redistribution of income was a necessity.

 

[Labtec600]

Levy high taxes against the richest to subsidize the unconditional income.

What would be so bad if lots of people didn't work? They would find something more fulfilling to pass the time. People who continue to work will do so for the love the job.

Please tell me you're not serious. It wouldnt be a bad thing if a lot of people didnt work?

 

[dutchfire]

Another thing: I expect this will stimulate entrepreneurship. If you start up a business, you're likely to make very little money the first couple of years due to start-up costs. So normally, you need to have basically a couple of years of income on hand before you can take the risk of beginning a company. In Swiss Utopia, this is not necessary.

Please tell me you're not serious. It wouldnt be a bad thing if a lot of people didnt work?

A lot of people (10 million+ in the US) already don't work. Seems to work fine. There's no real shortage of goods.