What would a basic income do?

[Flying Pig]

I don't think our current system is optimal (again, statistically very unlikely that we just so happen to have the best system possible), but I think it's much closer to optimal than one at the very end of the spectrum.

And I actually agree with the general sentiment, that we've gone too far towards policing benefits. I think we probably spend too much on tackling benefit fraud; I doubt it makes sense from a cost-benefit perspective. How much do we spend on tackling fraud vs how much do we save (including deterrent effects)? The general goal that we could save money by simplifying our tax/benefit system is well worth pursuing.

But I think the starting point for that should be to focus on changing what we have now. Iain Duncan-Smith had the right idea, IMO: bundle benefits that are triggered by the same or similar means-tests together and pay them out as one single benefit. Aside from anything, imagine the upheaval for some families, who were used to receiving £13,000 in welfare benefits and have budgeted their whole lives around that number, but now have to deal with only £12,000? A £1,000 cut might not sound like much, but it could be the difference between survival and bankruptcy for some people. People have been protesting over far less.

It's a shame that benefits have now become seen as something which in-work people pay to a group of out-of-work people as a kind of charity. That's not how they were designed; it's supposed to be a kind of collective hardship fund, where people pay into it while they're in work so that they can benefit from it when they're not. The people paying into benefits and the people receiving them are fundamentally cut from the same cloth, and I think we've lost sight of that. It's an unfortunate side-effect of the Thatcherite mythos. On one level, it can only be helpful for people to believe that with enough hard work they can be wealthy enough to live comfortably, and that with a bit of talent, hard work and good luck they can be whatever they want. However, the side-effect of it is that it others those who don't succeed: the corollary to 'anyone can succeed if they work at it' is 'anybody who fails to succeed didn't try hard enough and still isn't trying'. That's still something which people believe, even if unconsciously.

 

[Masada]

It's got to the stage in Australia now that people aged 25 and under have a six month cooling off period before being able to access benefits (and not even the full unemployment benefit but a much lower study benefit) which basically means that people below a certain age are assumed to be able to rely on their parents - something that's not always tenable.

 

[brennan]

The sort of policies that make looking after certain groups of people - such as the young and unemployed - 'somebody else's problem' are a disgrace, amounting to hidden taxation - in this particular case of parents. As long as the cost of supporting them doesn't appear on the government's balance sheet nobody cares. Until it bites them on the ass. I'm currently putting up a friend whom the system is turning a bilnd eye to.

 

[warpus]

Why? It's aimed at the poor who can use the money to be more productive, not to eliminate homelessness.

It needs to be high enough for you to live off for a year. You can't sustain yourself for $10k a year.

 

[Borachio]

An awful lot of people do, Mr Warpus.

 

[Flying Pig]

Are we assuming that this would be the only form of social security?

 

[Borachio]

I don't think that's possible. Some severely handicapped people need a great deal more support than that.

And I can't see it covering housing costs either.

 

[warpus]

An awful lot of people do, Mr Warpus.

Not very well...

 

[Hygro]

Those of you who say the inflation will happen b/c people will leave the workforce might wanna see that line through: if they will leave because money incentives are that sensitive, and it actually did lead to large price increases, then inflation against a fixed 10k stipend means a bunch of those folks would just head right back to the workforce.

 

[Timsup2nothin]

It needs to be high enough for you to live off for a year. You can't sustain yourself for $10k a year.

Whether you can or not is a function of how you choose to live...but the object is to provide a minimum floor, not a high degree of comfort. The biggest benefit to society that comes out of this is that it makes the low wage job palatable. All the people who are working hard and barely scraping by are made fairly comfortable...and a lot of things that currently just cannot be affordably done in the US become possible, because you can create low skill manufacturing jobs at low wages and people can live comfortably enough on those low wages.

 

[Hygro]

Whether you can or not is a function of how you choose to live...but the object is to provide a minimum floor, not a high degree of comfort. The biggest benefit to society that comes out of this is that it makes the low wage job palatable. All the people who are working hard and barely scraping by are made fairly comfortable...and a lot of things that currently just cannot be affordably done in the US become possible, because you can create low skill manufacturing jobs at low wages and people can live comfortably enough on those low wages.

I really like this argument.

 

[Spidernova]

It's got to the stage in Australia now that people aged 25 and under have a six month cooling off period before being able to access benefits (and not even the full unemployment benefit but a much lower study benefit) which basically means that people below a certain age are assumed to be able to rely on their parents - something that's not always tenable.

Perhaps the assumption is also that "young people" are more likely to assist one another, or that they are better at dealing with this sort of thing.

 

[Borachio]

No. I don't agree. It's far more likely they're continuing to depend on their parents, imo. If they have any. And most do. It's a bit unfortunate for orphans, of course. But there you go.

 

[Flying Pig]

Indeed. Under 25s are almost all students, living at home or in casual work - if you think many of those will be able to support a friend, even with the best will in the world, I invite you to meet a few!

 

[Hygro]

Still, we're readier to let our homeys crash on our couches.

If we have couches.

 

[Timsup2nothin]

The key to couch surfing is adding value. The number of people who don't have time/inclination to eat sensibly is hilarious. The average couple, with two jobs, both stressed, often having difficulty working out a fair division of 'domestic duties'...and they end up eating take out fast food half the time. I can keep up their pad, do the shopping and cooking, and generally they will save money despite feeding a third mouth. They have less to fight over, they take leftovers to work for lunches instead of buying crappy work cafeteria food, and they are always sorry to see me go when I move on.

 

[Mise]

Surely it might also cause deflation, because employees can now accept a lower wage for their labour? At the very least, there are good reasons to think that there would be deflationary pressure, too.

 

[Timsup2nothin]

Surely it might also cause deflation, because employees can now accept a lower wage for their labour? At the very least, there are good reasons to think that there would be deflationary pressure, too.

Just because they can doesn't necessarily mean that they will. You would probably see some initial surge of 'take this job and shove it' from people who use the stipend to take a lower paid better lifestyle job, but the jobs they would be leaving are hard to fill anyway so wouldn't likely create a lowering of wage for that job.

As I've said, I would expect to see a lot of low end job creation which would lower the average wage, but the additional jobs would make a net increase in total wages paid.

 

[Mise]

Well you might also be less likely to apply for a higher paying but harder job, if you didn't need the extra money as badly.

 

[Timsup2nothin]

Well you might also be less likely to apply for a higher paying but harder job, if you didn't need the extra money as badly.

Right (though I tend to think of those jobs as requiring greater qualifications rather than as 'harder'). That's what keeps wages in those jobs from dropping. Employers with the high end jobs are always going to be struggling to find people qualified to fill them, and a 10K annual universal stipend wouldn't change that. In the middle. where people are spending everything they get, they still will...and they will still want more so they aren't going to allow wages to drop there either. At the low end is minimum wage, which doesn't change...and a lot of minimum wage jobs can be created by drawing low skill manufacturing back from the cheap labor camps of China and the third world.

So aggregate demand goes up by 10K times the majority of the population, the livability in the low end and middle is vastly improved, and low end jobs can be created that otherwise would go unfilled because a low end job is currently barely worth the hassle of having. Overall this seems like a brilliant plan to me...but it will never sell. Not enough of the population has clue one about economics.