Minimum income - good thing or bad?

[RickFLM4]

Originally Posted by Z K

You can argue, fuck the min wage workers they're screwed anyway. But what will you say when automation starts replacing bankers? nurses? lawyers? accountants? engineers? doctors? It's going to happen, it's just a matter of time.

Inevitably, human population would shrink in that future world (which would also resolve many environmental issues). It doesn't make sense to pay pennies on the dollar for automation but then pay a many dollars to pay people to effectively do nothing but consume and multiply.

[Z K]

Originally Posted by RickFLM4

Inevitably, human population would shrink in that future world (which would also resolve many environmental issues). It doesn't make sense to pay pennies on the dollar for automation but then pay a many dollars to pay people to effectively do nothing but consume and multiply.

Population may shrink as you say, but the advancement of automation is much faster than shrinking population. Recent estimates put automation of most white collar jobs within 40-50 years. Blue collar jobs will disappear much sooner than that. So within a generation of people, most human jobs will be eliminated.

Your argument ("It doesn't make sense to pay pennies on the dollar...") only makes sense if there is a basic income or tax on automation. A company will definitely pay to automate and cut costs if there's nothing holding them back from doing so. So the only thing holding a company back from automating is a tax on automating or basic income.

An automated world means human labor has zero value to a profit driven company - a machine can do a better job for cheaper in almost all cases.

[Biorin]

Originally Posted by bimmer456

I think they are doing it in Switzerland but the amount isn't enough to survive on, something like $8K a person. But I agree it makes everything more costly for everyone and will raise prices.

This. Inevitable inflation.

[Taskmaster]

Originally Posted by Biorin

This. Inevitable inflation.

I don't believe it.

[Biorin]

Originally Posted by TheAxiom

I don't believe it.

Ok.

[Joekerr]

Originally Posted by Biorin

This. Inevitable inflation.

Originally Posted by TheAxiom

I don't believe it.

Originally Posted by Biorin

Ok.

That's how you win an argument with Biorin?

Noted.

[RABAUKE]

Originally Posted by Lobb

They voted against it.

Thats good news, but my experience has been that the asshats at Queens Park and on Parliament Hill always think they can do it better....what could possibly go wrong other than burning through a few more billion of our tax dollars.

[Biorin]

Originally Posted by Joekerr

That's how you win an argument with Biorin?

Noted.

Sometimes I like to make casual comments without opening up a full-scale economic debate. The Axiom always seems very sure of his beliefs - I don't see much of a purpose in trying to convince him otherwise.

[xQx]

tl;dr I'm all for Universal Basic Income.
* Don't stress if you're American, your country is so right wing you'll be the last people on earth to get UBI.
* It's not some commie left-wing bullshit, it's the flattening of complex social security schemes into a single payment.
* UBI is about encouraging people to work by removing barriers that keep them on social security.
* UBI is about removing the stigma of 'dole bludgers' in a world where automation gives them little opportunity to find full-time paid work.
* UBI is about replacing the 18th centuary tax system with a 21st centuary tax system. (Abolish minimum wage, abolish forced full-time conditions, abolish tax brackets)
* The real question is how much do we pay, and how quickly do we pay it back? Is it $5,000 or $15,000 and 30% maximum tax rate at $100,000pa or 65% at $50,000pa?
* In some countries, it costs not much more than the existing social services system because of efficiency gains. And the idea is it pays for its self by getting more people into part-time work.


I am 100% all for the Universal Basic Income (UBI). I'm an Australian (where we have an extensive existing social support network), A full-time employee and the owner of an online business with part-time employees. I'm not an expert on the issue, but as a tech company owner, high-income earner and huge contributor to a social support system - I think I'm in a pretty good place to talk about the pros and cons of UBI. Also, I'm no left-wing socialist, I'm dead against industry protection and unionisation. I'd like to share why I'm behind the UBI.

First, let me say, if you're a US resident, I don't think you have too much to worry about. Given the unpopularity and public support for the rollback of the basic social healthcare system introduced under Obama (ACA) - an idea as 'socialist' as the UBI isn't going to go anywhere in the USA any time soon.

In some ways, I am here to argue the value of a social safety net (social security) and a wealth redistribution tax system, but no argument from me is likely to change the view of a US citizen as you no doubt have years of conditioning of your current view. What I will say is that such a system has the following advantages:
1) It reduces crime. If you put people in a position where they can't afford to feed their family without resorting to crime, they resort to crime because the cost (of being locked up) is less than the benefit (of being able to keep yourself and your family alive).
2) It is more humane. People don't 'choose' poverty. Many are born into it, others fall into a cycle they can't break out of. (ie. You're hiring a barista. No experience necessary. Do you hire the 45 year old guy with worn out shoes and huge gaps in his resume, or the 23 year old guy just out of school?)
3) It helps break the cycle of inter-generational poverty. If you're born into a family that can't feed you, can't get you to an equally good school as someone born into better circumstances, and are surrounded by people in the same situation, you are far less likely to finish school, get a good job, and 'break the cycle'. Giving the poor access to good food and good education substantially reduces the certainty that your fortunes are going to be very similar to those of your parents.

Originally Posted by Delta0311

Look if you are 30+ and making minimum wage than that is your own damn fault. If that is your situation than it is safe to say you made a lot of bad decision in your life.

So, we've established that I say I'm a hard-nosed capitalist, but clearly compared to most US citizens I'm a bleeding heart lefty when it comes to government-funded social support. I doubt I've convinced any of you who believe in small government that giving free food and medical support to our underprivileged is a good thing, but we do in many countries in the world. Most people who live in those countries think it's a good thing, and ALL of us have lower crime rates than the USA. (search: "most incarcerated country")

What I will say, is if you want to see what unrestrained capitalism looks like (without any burden of wealth redistribution or social security) go for a holiday in India. It might change your view.

So, on to UBI. When you first hear UBI, you think "lefty communist system". It's not. It's the flattening of social security.

In Australia we have a social security payment - more for people with kids, more for people with disabilities, less for people not trying to find work - and social services only available to the poor: free dental, free child care, subsidised motor registration, free housing, etc. As you earn money, you reach thresholds where your income is cut, or you loose access to services. This means lots of people work to earn below those thresholds, or work for cash (where they pay no income tax) to avoid loosing their benefits. This encourages people to stay on welfare, and discourages them to find work.

Employers are forced to pay minimum wages. If I want to employ someone to do pick and pack work for me, the minimum I can pay them is $23.00 per hour. If I put someone on full time, I take the risk on their sick leave, holiday leave and have to jump through all sorts of hoops to fire them if they're not doing their job, so I don't get sued for unfair dismissal. These costs mean I have a huge incentive to either (a) pay people cash under the minimum wage where they don't pay income tax. (b) overload existing staff to do the job or (c) Automate.

UBI pays everyone an amount (say $15k). They get this if they work or not. For some people, this will be enough. For most, they'll want to supplement that income. If anyone wants dental care, child care, alcohol, food, transport etc - you buy it. It doesn't matter if I earn $15k or $150k, it costs the same. (Removing 'access to subsidised services' as a reason not to work). When you earn $1.00, you pay 1c in tax. When you earn $2.00, you pay 2.2c in tax. It goes up in a linear scale (no brackets) until it reaches a maximum tax rate (again, lets argue about what rate, but likely 30% - 60%). Thus, when you work you earn. When you work the government earns. The more you earn, the more the government takes but it caps out at a rate where high-achievers still want to work more.
*Note: disabled people still get extra handouts, and in Australia you still get free healthcare no matter what you earn.

The advantages over the current system are: easier to administer & no disincentives for working. There’s an additional incentive for governments, and that’s National ID.

Minimum Wage can be abolished (or at least reduced), so can many of the 'employment burdens' on business like healthcare, paid sick leave and redundancy payments. Because people can afford to not work, we don't need to protect them from evil employers. They can just choose not to work for evil employers. If someone wants to work for me $1 per hour, then they can. As an employer, I can set my rate of pay to match what employees are demanding I pay them. (that said, some professions have only one employer (eg. Who else is a police officer going to work for?) and still need employee protection.

The idea is to introduce more flexible working arrangements to get more people working part time, which means more people paying income tax, and more money to spend on the social security system.

If you give people the opportunity to not work for a living, I don’t think you’ll find a mass exodus from the workforce. I work with enough people who’ve made their fortune, retired, got bored and come back to work to know this.

Will it work? Well, I don't know, but I think it's worth a try.


Finally, Given Bill Gates history I think he is in a pretty good place to talk about taxes and automation, but I disagree with him. Taxing robots is silly. We're already automating people out of jobs, and it's not as clear-cut as robots. Having an online accounting system which integrates with my bank feeds means I have automated the job of a bookkeeper. I don’t pay extra tax for this, why should Ford have to pay extra tax when they automat the job of a labourer? Do the docks have to pay a tax on the cranes that allow them to load stuff on ships one container at a time, when they used to have to lift items by hand? No. Savings through automation are either passed on to customers in the form of lower prices, or onto shareholders in the form of company profits. A good balance of personal income tax, corporate income tax and consumption tax is all that is needed, and any systemic losses in income tax receipts needs to be compensated for by an increase in corporate or consumption taxes.

[Taskmaster]

Originally Posted by Biorin

Sometimes I like to make casual comments without opening up a full-scale economic debate. The Axiom always seems very sure of his beliefs - I don't see much of a purpose in trying to convince him otherwise.

Well, proof could convince me. (My last post sounded far too abrasive)

[GuidoK]

Originally Posted by xQx

UBI pays everyone an amount (say $15k). They get this if they work or not. For some people, this will be enough. For most, they'll want to supplement that income. If anyone wants dental care, child care, alcohol, food, transport etc - you buy it. It doesn't matter if I earn $15k or $150k, it costs the same. (Removing 'access to subsidised services' as a reason not to work). When you earn $1.00, you pay 1c in tax. When you earn $2.00, you pay 2.2c in tax. It goes up in a linear scale (no brackets) until it reaches a maximum tax rate (again, lets argue about what rate, but likely 30% - 60%).

The problem is that these are fictional numbers.
What if the tax rate goes up to 80% or higher for every $1 earned over say 70k?
Is that still a situation you'd be in favour of?
And dont say it wont come to that. Where I live (which was probably the pinnacle of the welfare state in the western world) we had tax rates that went up to 75%. (now its back to 52%)
This has a very averse affect, and that is that people with money emigrate.
That also means that consumer spending will be less, therefore the economy will shrink, people make less money, which leaves less consumer spending etc etc.
The only way the socialist countries (russia, china, eastern europe) held out for so long with their system (which was pretty much comparable), is that nobody was allowed to emigrate.
So I think that the 'likely 30-60%' is way off, especially if you want the government to be able to do some spending in education, healthcare etc.

So if this is a feasible system depends on real numbers, just as all real plans one wants to make in a national budget. But history has shown that a society pretty much only works if people have a healty impulse to work. It's much better to use all that money for giving people a chance to rise on the social ladder, for example by giving scolarschips on basis of intelectual achievements and parental income or having an educational system thats not divided between private and public schools.

[shoei]

It's not a good thing period...

There's actually some businesses in town moving out of the area or counties where minimum wage is raised... In particular, one of my favorite burger joints is departing to Orange County because - minimum wage being raised...

[Biorin]

Originally Posted by TheAxiom

Well, proof could convince me. (My last post sounded far too abrasive)

If there were what people view as concrete proof of the beliefs of any one school of economics, I don't think we'd be having so many debates. Everyone's got their own way to explain how things happen and why, it's up to us as individuals to decide what we agree with. I didn't find your post abrasive, but based on what I've seen from you in the past, I think you've found what you agree with. I cannot provide "proof" otherwise

[xQx]

Originally Posted by GuidoK

The problem is that these are fictional numbers.
What if the tax rate goes up to 80% for every $1 earned over say 70k?
Is that still a situation you'd be in favour of?

That's exactly the detail and discussion I think we should be having. I totally agree with you. Determining the base pay rate, the rate of the tax incline and maximum tax bracket is a balance between a) giving people enough incentive to work, but also enough money to live; and b) taxing enough to pay for government services but not so much that people move their income offshore.

This is a completely different proposition if it's $5,000 base pay, 30% maximum tax rate at $80,000 compared with $15,000 base pay then 80% maximum tax rate at $100,000.

But for some countries where they already have a complex and expensive social safety net (eg. Australia, Switzerland, Belgium & Finland) - UBI could be structured in a way where it provides better services for less than the current system by: a) being more efficient in its delivery and b) _increase_ the size of the workforce by removing the existing disincentives to work.

Australia's maximum tax rate is pretty shocking. It's published as 45%, but there's an unavoidable 2% medicare rate, 2% "budget repair" levy, 4.75% payroll tax (calculated into my pay), and 10% GST. So for every $1 I earn then spend in Australia, 63.75c goes to the government. That means I need to earn $2.75 for every $1 spent.

This is why it's being tested on a small scale in Finland.

[Taskmaster]

Originally Posted by Biorin

If there were what people view as concrete proof of the beliefs of any one school of economics, I don't think we'd be having so many debates. Everyone's got their own way to explain how things happen and why, it's up to us as individuals to decide what we agree with. I didn't find your post abrasive, but based on what I've seen from you in the past, I think you've found what you agree with. I cannot provide "proof" otherwise

Well, economics is not even a true science, it's a subset of sociology tbat people put way too much emphasis on...ie it's largely bullshit. I just look for general trends and try not to pretend there are hard rules.

[xQx]

Sorry, 3 things I missed before:

Originally Posted by Joekerr

It's a lousy idea. And the proponents go further to say it should be in ADDITION to all the other welfare programs we have.

Yes, that is crap. The only way a scheme like this can work is if it REPLACES the other welfare programs and gains efficiency benefits from its simplicity.

Your disability benefits should remain. Pension and family benefits generally should not.

Originally Posted by shoei

It's not a good thing period...

There's actually some businesses in town moving out of the area or counties where minimum wage is raised... In particular, one of my favorite burger joints is departing to Orange County because - minimum wage being raised...

You've jumped to the conclusion that most people do, which is that everybody will quit work and sit on welfare and not do anything. It's a reasonable conclusion to jump to, but the scheme is actually intended to do the exact opposite of that. UBI seeks to reduce or remove a minimum wage, along with all other disincentives toward part-time employment (ie. means-tested welfare benefits). If implemented correctly in countries with already high paying and complex welfare systems, it is intended to earn more than it costs.

Originally Posted by GuidoK

But history has shown that a society pretty much only works if people have a healty impulse to work.

Sorry, I didn't catch this before - $15,000 per annum isn't a lot of money to most people. I don't think there's many people on this forum, or many of our friends who'd stop working and be happy on a 'paid holiday' if we were offered $15,000 per annum to do nothing. Especially if there were no thresholds where you lost the benefit by working - ie. We'd happily accept the $15k, but most of us would continue to work to supplement it. A few of my friends who I grew up with are now welfare recipients, who refuse to work because they'd loose their welfare. They have to work three days a week full time before they broke even on what they're given for free. On of my colleges worked 3 days a week for us for four years because that's the threshold where the child care benefit cuts out, and she'd be working a whole day for free just to pay the additional childcare on those extra 2 days. So she chose to work 3 days instead of 5 because of a means-tested benefit. The removal of these thresholds where people choose not to work so they can cling onto a means-tested benefit is one of the key promises of UBI - leading to higher (not lower) productivity. (again, theory. As TheAxiom and Biorin seem to be arguing, you can't say this policy will lead to that behaviour, we need to implement it and see what people do)

Originally Posted by GuidoK

It's much better to use all that money for giving people a chance to rise on the social ladder, for example by giving scolarschips on basis of intelectual achievements and parental income or having an educational system thats not divided between private and public schools.

Yes, Yes and more Yes. If you look at the comic I posted earlier, universal education is where the cycle can be broken. Where you see extreme inter-generational poverty, it is where children are put into schools packed with other underprivileged children (or families are so poor they need their children to work, so they don’t finish school). If you have a government school system where the well-off leave their kids in public schools, children from poor families can make the social connections necessary to break out of their socioeconomic bracket. Australia is very good for this.

That’s why I say American proponents of small government need not worry – until the USA can wrap is head around the (selfish) benefits of universal schooling and universal healthcare there’s no point talking about universal basic income.

[sirdaft1]

Originally Posted by xQx

3) It helps break the cycle of inter-generational poverty. If you're born into a family that can't feed you, can't get you to an equally good school as someone born into better circumstances, and are surrounded by people in the same situation, you are far less likely to finish school, get a good job, and 'break the cycle'. Giving the poor access to good food and good education substantially reduces the certainty that your fortunes are going to be very similar to those of your parents.

I'm sorry but I have to call that comic and your viewpoint one flaming piece of dog sh**.

As someone who grew up on the "right side" of that comic, I think I may be qualified to speak as an expert on what it feels like to grow up in an extremely poor environment.

Dad dropped out of HS, Mom had me when she was just out of HS. Both came from terribly broken homes. I was born and raised in a trailer park. We never received any handouts or assistance. What DID matter was that my family refused to buy into the bullsh** "victim mentality" that you and too many others enable in society. My parents were dealt a shit hand, but they taught us to put our heads down, grind it out and Get Sh** Done. And it wasn't easy. I was a C student at best my entire academic career. I went to community college for two years to save money, and then transferred in to a 4 year college where I couldn't afford my own books because I was helping pay my parents mortgage so they didn't foreclose on their home. I didn't complain. I paid my entire way through college and continued working my ass off. It only pushed me harder to make sure that I would never have to endure the same struggles with my own family. I graduated top of my class w/ a 4.0GPA. After college, I knew that anything could be mine if I worked hard enough for it and provided enough value to my employer. Fast forward to today, 15 years later, and I'm one of the very top in my respective field and have been so fortunate to allow my wife to stay home to be a full time mom for our son, to live in a beautiful town, in a wonderful home, and have our cars paid in full.

I don't tell this story for praise. I couldn't give two sh**s less. What I DO care about is how you and others think that somehow your white knight idea of government intervention could have somehow done for me what I was able to do for me. As an expert in being poor and now experiencing the other side, you can keep your redistribution of wealth. Being a successful "hard nosed capitalist" why don't you instead go teach business courses pro bono at the local college for those who may benefit most from having an experienced mentor instead of the easy job of offering up other people's hard earned money?

That said, there are only two kinds of people in the world, those who say "poor me" and those who GET SHIT DONE. We need to quit enabling this victim mentality. Go help inspire more kids in tough situations like I was in, how to GSD.

</endrant>

[dreamingat30fps]

All I want to know is dafuq is up with the babies in that comic? They look like freaking sumo wrestlers in the first slide and seniors who fell off the couch in the second.

[shoei]

Originally Posted by xQx

Sorry, 3 things I missed before:

Yes, that is crap. The only way a scheme like this can work is if it REPLACES the other welfare programs and gains efficiency benefits from its simplicity.

Your disability benefits should remain. Pension and family benefits generally should not.

You've jumped to the conclusion that most people do, which is that everybody will quit work and sit on welfare and not do anything. It's a reasonable conclusion to jump to, but the scheme is actually intended to do the exact opposite of that. UBI seeks to reduce or remove a minimum wage, along with all other disincentives toward part-time employment (ie. means-tested welfare benefits). If implemented correctly in countries with already high paying and complex welfare systems, it is intended to earn more than it costs.

Sorry, I didn't catch this before - $15,000 per annum isn't a lot of money to most people. I don't think there's many people on this forum, or many of our friends who'd stop working and be happy on a 'paid holiday' if we were offered $15,000 per annum to do nothing. Especially if there were no thresholds where you lost the benefit by working - ie. We'd happily accept the $15k, but most of us would continue to work to supplement it. A few of my friends who I grew up with are now welfare recipients, who refuse to work because they'd loose their welfare. They have to work three days a week full time before they broke even on what they're given for free. On of my colleges worked 3 days a week for us for four years because that's the threshold where the child care benefit cuts out, and she'd be working a whole day for free just to pay the additional childcare on those extra 2 days. So she chose to work 3 days instead of 5 because of a means-tested benefit. The removal of these thresholds where people choose not to work so they can cling onto a means-tested benefit is one of the key promises of UBI - leading to higher (not lower) productivity. (again, theory. As TheAxiom and Biorin seem to be arguing, you can't say this policy will lead to that behaviour, we need to implement it and see what people do)

Yes, Yes and more Yes. If you look at the comic I posted earlier, universal education is where the cycle can be broken. Where you see extreme inter-generational poverty, it is where children are put into schools packed with other underprivileged children (or families are so poor they need their children to work, so they don’t finish school). If you have a government school system where the well-off leave their kids in public schools, children from poor families can make the social connections necessary to break out of their socioeconomic bracket. Australia is very good for this.

That’s why I say American proponents of small government need not worry – until the USA can wrap is head around the (selfish) benefits of universal schooling and universal healthcare there’s no point talking about universal basic income.

I don't even know where to start on this. First off, you were so excited to stand on your soap box, you decided to claim that I said something you were anxious to preach about. If anything, you jumped to conclusions that only you did. I'm not even going to bother wasting my time telling you all the repercussions of raising minimum wage that high...

[xQx]

Originally Posted by shoei

I don't even know where to start on this. First off, you were so excited to stand on your soap box, you decided to claim that I said something you were anxious to preach about. If anything, you jumped to conclusions that only you did. I'm not even going to bother wasting my time telling you all the repercussions of raising minimum wage that high...

Fair enough, especially since a UBI would DECREASE the minimum wage. In all my prior posts, I've said that one of the key benefits of such a system would be that it would DECREASE the minimum wage, and DECREASE the burden on employers employing part-time staff.

Thus your anecdote of "one of [your] favorite burger joints is departing to Orange County" because the minimum wage was raised is actually an argument FOR the introduction of such a scheme.

Nobody here is talking about increasing minimum wage.

[GuidoK]

Originally Posted by xQx

The removal of these thresholds where people choose not to work so they can cling onto a means-tested benefit is one of the key promises of UBI - leading to higher (not lower) productivity. (again, theory. As TheAxiom and Biorin seem to be arguing, you can't say this policy will lead to that behaviour, we need to implement it and see what people do)

I think it'll lead mainly to either inflation or huge state deficit (which also leads to inflation).

I dont know if you're familiar with the 'welfare state' of the Netherlands?
We had this system more or less, were welfare income and facilities was at such a high point (similar to the $15k), and all it did was create unemployment, and the total national state debt we now still have is for 90% created by that system in a timespan of about 15 years.
So to what it can lead to is pretty much obvious to me, and for me it shows that the vast majority of people need a healty impulse to be productive. To take the people on this forum as an exmple of what people drive in life is not representative.

Also to test a basic income on a small scale is also not very representative I think. On a small scale communism also works fine because of social pressure. If you scale that up, the social community pressure part fades away.
For instance, I live near a (very religious) village. Nobody there has any insurance. Still, if something happens to someone they're all right. Why?
Because if something happens and someone needs money (say his farm burns to the groune) in church they pass around a bag and it gets filled with enough money to rebuild his farm. Works fine in a small community, but on a national scale... no way

[c1pher]

I think the way you make universal basic income work in the US is by merging the unemployment and social security systems. You eliminate income taxes on that money, and go to a flat tax on anything above that amount which is whatever you earn. Then like Bill Gates said, any technologies or cost advantages that displace workers in the USA, you tax companies for that if they have a presence here. So not only automation tax but also a "I'm moving my workers to a 3rd world country" tax since Americans won't be working under that scenario either.

However as someone said above this is a slippery slope because what if you find process improvements that allow you to reduce a workforce by 10%? You're still displacing workers even though it isn't through automation.