The article alludes to the fact that you remove marginal disincentives to work by doing something like this. Many existing systems have some form of means test, which in practice results in very high effective tax rates.
Once we decide we want to support people on low incomes, there's a question of how the best way to do that is. The Nordics especially have built up enormous bureaucracies that in themselves cost a lot to administer various handouts and benefits. It might make more sense just to cut a cheque to everyone.
Means testing actually increases the disincentive to work. Working usually results in greater income which can diminish the benefits. This amounts to an effective higher marginal tax rate, when benefits are removed as you earn more.
It's hard to imagine a system that disincentivizes working more than means tested welfare. A few examples from SNAP can be found here [1], CBO study showing up to 80% marginal tax rates on the poor here [2].
This is precisely the insight driving basic income: by removing means testing, we can avoid perverse disincentives to work: higher income always results in higher pay.
In Germany we have a welfare system that requires you to take on pretty much any job if you become unemployed. If you only qualify for low-income jobs this can mean you end up taking on a job that pays you below welfare and welfare actually has to bridge the gap and pay you the difference.
This not only means you're working for the same money you would have if you didn't work, it also means there's pretty much no way for you to improve your income unless you can change jobs to a significantly better paid one. Even a raise or bonus wouldn't change your bottom line as the welfare is adjusted 1-to-1 for every cent you make.
This is IMO the greates disincentive of our welfare system. There's no advantage to finding an actual job when you're on welfare and don't qualify for jobs that pay significantly more than welfare. It's unsurprising that some game the system by intentionally failing job interviews and doing ludicrous amounts of trainings instead of finding and getting a (low-paying) job.
I don't know whether a blank check is the right solution here, but a frequently mentioned alternative for the skeptical is basically a negative income tax: for every two cents you make on top of basic income, you pay one cent (or whatever fraction -- the actual percentage is irrelevant to the idea as long as it's below 100%). This avoids the financial "dead zone" created by the 1-to-1 adjustments of the current welfare system.
>In Germany we have a welfare system that requires you to take on pretty much any job if you become unemployed. If you only qualify for low-income jobs this can mean you end up taking on a job that pays you below welfare and welfare actually has to bridge the gap and pay you the difference.
For as much as people say that the US "far to the right" social programs compared Europe, something like this would be a political nonstarter in the US.
To be fair, you merely have to prove that you keep applying for jobs and go to interviews arranged by the agency if you couldn't find anything. Also, these reforms are relatively new (historically speaking) and were justified with economical arguments (because the economy is always a good justification if you can't think of anything).
But I have heard about postgraduates having to take on so-called "1 euro jobs" (i.e. busy work like collecting trash in parks) in order to maintain unemployment benefits while working on their theses.
Yeah, these exist. They're called "1 Euro jobs" and the government likes to pretend they're a good thing (probably because they keep people busy so they can't complain about not actually having a real job).
The funny thing about most of these social reforms is that they were introduced by the more social of the two major parties -- although at this point they're social in name only.
They also legalised temp agencies creating an entire market of quasi-but-not-really employed people who don't show up in unemployment stats even if they're sitting around not getting paid.
What could be great about basic income is that you can safely fire a lot of bureaucrats without harming them. Some of them might even welcome the change from being paid to do meaningless job to being paid for literally nothing.
The problem with combining smaller towns in Finland has been, that the now redundant workforce in each town has been given a long period of dismissal protection. Five years has been quite common. And in Kuopio some people gained even 15 years of dismissal protection!
We Finns may occasionally have great ideas, but then we manage to execute the great plan in a bad way. How can the combined towns save a single dime, if they don't do the work with smaller workforce. So far those new bigger cities have been just losing money, because everything from health care to education has to be renewed.
One way basic income could potentially backfire is that rent could, and will go higher and swallow all the free money distributed to average people.
In effect robbing the ones that rely on just basic income of opportunities to get a roof over their head and transferring most of the distributed wealth to property owners.
I think introduction of basic income must be accompanied by laws that highly penalize owning unoccupied apartments to prevent that scenario.
Just pay for basic income by levying progressive property taxes. Right now, most societies have very regressive property taxes. The wealthy (who own vast amounts of property) pay very, very little tax on all of it while small homeowners pay very large property taxes.
You could even pin the basic income to a % of revenues. If landlords started raising the rent to try and capture the basic income, their property values would skyrocket and then they'd pay a higher tax rate which would bring in more revenue to support basic income. This would effectively create a feedback loop until the landlord class would no longer be able to afford to raise the rent.
I would contradict you by saying that in my opinion, the performance (execution) of plans is in fact reasonably good, and I think is a lot better than in many other countries.
But: even if municipalities are allowed to dismiss workforce, they won't. It appears that no public servant wants to have his/role and power diminished.
In fact, it seems that the larger a municipality is absolutely, the higher proportion of its workforce will be in public administration.
The highest cost of public administration and municipal services per head is in Utsjoki (a remote and poor area in the North with extremely disadvantageous geography), and Helsinki (the largest municipality with lots of well-to-do people and very high income). The lowest cost of public administration and most efficient organisation of services is in municipalities whose size is somewhere in between; record lows are in small communities where each and every inhabitant is committed to what they see is a common good.
Another factor for people not wanting to have their municipality merged into a larger one is the track record of previous mergers, where local services of the old, smaller municipalities where wiped out simply out of pure spite (I'm looking at you, Hämeenlinna, and how you managed Lammi and others.).
You would harm the bureaucrats by firing them, though. Most people would take a pay cut going down to a basic level of income. You can see this for yourself by examining public pay tables (common salaries for individual contributors are $30-$50,000 in the US.) This is much more than any feasible BI number.
I suppose this depends on country. In Poland bulk of low level gov bureaucrats earns barely above minimum wage. Mostly young (or old) women are hired for that positions.
People tend to want to work, really. But to your point, many people can't find work that pays the money they need to survive, so they become depressed. Also, people often lose their jobs.
Disclaimer: I'm stupid broke, live in a van and take a highly-effective antidepressant, so I might have a little authority on this subject. ;)
Depression is terrible (anti-social, self-destructive, painful, etc.) but useful when it's grounded in an existential crisis... it makes people reflect on themselves and think about what else they can do or change.
They're not worries, they're concerns. Also, that resource doesn't list a single successful, large-scale deployment. Finland is considering it. (The US will never, ever have such a fanciful thing because the plutocracy prevents it, even with Bernie 2016.)
And another concern: if people don't earn money themselves, the tendency is to waste, in all regards. This tends to reinforce learned helplessness, even farther away from the brutal reality of life/business/nature.
"And another concern: if people don't earn money themselves, the tendency is to waste, in all regards."
I have not observed the same.
My impression is that the trend is we, people, like to waste when we don't have to pay, but if the money come from our accounts, we start to get careful, independently how the money arrived to our account. People would not like to waste their money even it's from a basic income.
The motive for wasting is that the money-giver might want to see your bank account balance before giving. Not having savings is generally a requirement for receiving welfare after unemployment benefits have run out. It's something basic income would do away with.
That's the thing. Meaningless busywork is making people stressed and depressed.
Basic Income on the other hand would free people to pursue whatever purpose they themselves desire. You can make up your own meaningful job, cause you're already getting paid.
That's a sweeping generalization which presumes far too much. It depends on the person. Some people enjoy monotonous factory work because it removes the burden of thinking. Other people need a manager because they don't want to, or can't, plan the next logical thing. Others need constant variety or don't like being told what to do.
The other issue is that getting paid for a "meaningful job" which doesn't turn a profit is not going to scale. Millions of people suddenly wouldn't work in fast food, farm fields, industrial tanneries or meat processing plants because they're really shitty/dangerous/disgusting jobs. (But I'm sure some scary/crazy people enjoy them.)
And, when people have infinite choices and opportunities, the Paradox of Choice comes in to play and people become even more dissatisfied. See also: Zillions of wealthy housewives in perpetual existential boredom (depression) filling psychology & psychiatry offices.
Also, there are lots of people whom already do things they love. My stepsister is a special ed TA and loves it, but makes peanuts. Would this help her family, absolutely.
With wide-scale deployment, a common issue will be too many people doing all sorts of terrible# crafty work without making something people would actually want to buy like bric-à-brac kitsch shops that wealthy spouses subsidize while having zero foot traffic.
# Terrible because it's far too common for people to make the novice mistake of asking opinion of friends and family whom will say only nice things, and those people to base their perception on those lies.
> "That's a sweeping generalization which presumes far too much. It depends on the person. Some people enjoy monotonous factory work because it removes the burden of thinking. Other people need a manager because they don't want to, or can't, plan the next logical thing. Others need constant variety or don't like being told what to do."
If you like monotonous factory work, then you are free to choose to do it. There's no problem here. Again, you get to choose what you do yourself.
> "The other issue is that getting paid for a "meaningful job" which doesn't turn a profit is not going to scale. Millions of people suddenly wouldn't work in fast food, farm fields, industrial tanneries or meat processing plants because they're really shitty/dangerous/disgusting jobs. (But I'm sure some scary/crazy people enjoy them.)"
If a job isn't turn a profit and can't pay a decent wage, it means that that job is being out-competed by something else. And risky jobs should pay for the risk involved. If the pay is high enough, then someone will choose it over basic income.
> "And, when people have infinite choices and opportunities, the Paradox of Choice comes in to play and people become even more dissatisfied. See also: Zillions of wealthy housewives in perpetual existential boredom (depression) filling psychology & psychiatry offices."
You don't have infinite choices. You are only good at a few things. Only able to do meaningful work in a few ways. With Basic Income the culture would change. People would start learning about meaningful work. Wealthy housewives would learn to do meaningful work. The culture right now is not helping wealthy housewives, because it says that they should already be happy without meaningful work.
It depends on quality of the human contact. Often people feel most lonely when they are in company of people who don't behave friendly towards them. That often happens at bs job.
I see that it could help people start their own businesses since at the worst case you'll end up back on the minimum income. So that takes one element of stress out of it and you can focus on the business more.
I can see some arguments against this that would say the owner would be less hungry for success, and while that's true not every business that starts needs to be the next big thing.
In practise, this is more or less the case already in the nordics. The social safety net is so wide that even if you fail spectacularly at life, you won't hit rock bottom.
Except if you do badly at business, you have to lose everything before they help you. If you have anything that can be turned into money, or your spouse does, you have to use that first.
Another facet of the Nordic system, and not great for entrepreneurs.
Of course, one problem with the current bureaucratic system in the Nordic countries, is that some people slip through. If for example you start a personal company, and later fail, you won't get unemployment benefits (unless your company was a corporation and you hired yourself, of course). At least, that is the case in Norway.
That's the case in many European countries with sophisticated welfare systems. In Austria, we can pay extra (I think ~1.5% of income) as self-employed to get unemployment benefits but I don't know how popular that option is in practice.
Personally (as a highly employable, fairly senior software developer, so I'm unlikely to be out of a job as long as I can work) what's worse than lack of unemployment benefit is dealing with times of sickness. I suffered from Lyme disease for about 2 1/2 years until it was diagnosed properly and treated, and in addition to the reduced income due to being unable to work at times, and the extra cost of healthcare (despite the insurance it's not exactly free) in Austria, they still expect you to pre-pay taxes and pension & health insurance contributions based on your earnings 1-2 years ago. In theory you can claim some money for a few weeks if you get sick, but (a) you have to completely shut down any business activity for that time and (b) you have to be declared unable to work by a doctor. (Unlikely, considering the doctors were all telling me there was nothing wrong with me and it was "stress"…)
A basic income would at least help deal with the reduced income due to sickness & extra costs due to healthcare. The pre-payment aspect is probably peculiar to Austria and apparently frequently bankrupts profitable small businesses.
In Germany (which has socialized healthcare) I've heard of plenty of entrepreneurs and freelancers who aren't on health insurance because they can't afford it. What's worse: if they eventually do sign up they are legally required to pay fees for the entire time they didn't have health insurance. Good luck paying the backlog if you've been off healthcare for a few years.
If you're self-employed, a lot of the welfare system doesn't really apply to you either. Heck, if you are self-employed (or running your own company) and get pregnant, you don't even get the benefits an employee would (you get child benefits because those are for the child not you but that's pretty much it).
You get those benefits if your employer pays you for them. The problem is that you, as the employer, have chosen not to pay you, as the employee, those benefits. That money has to come from somewhere and if the employer doesn't pay it, the employee doesn't get it.
Unless I'm misinformed, you're actually wrong. As far as I was told, you can pay into the social welfare system but as you don't qualify for certain benefits the only thing you can do is get a refund of the most recent payments (not all of them, mind you).
So you're of course free to pay into the system, but as you're neither required to pay nor eligible for the benefits, it's mostly a waste of money.
In the case of parental leave, the employer only pays as much as 50%. The rest is paid by the tax payer (or the government agency, rather). Plus, of course, the employer has no say in whether they pay this or not. They're required by law -- thanks to the arm's length principle ("Fremdvergleich") it wouldn't matter whether you as associate ("Gesellschafter") pay for yourself as the employee; at least if you're incorporated, not merely a civil law partnership ("GbR") or DBA ("Kaufmann").
Of course the situation is entirely different when it comes to healthcare: if you're an employee of your own company (i.e. you incorporated, otherwise you are the company) it's considerably more difficult to opt out of healthcare entirely. The healthcare-free entrepreneurs I was talking about are regular DBAs or freelancers and the only reason they don't have healthcare coverage is that they can't afford it (which of course technically means they should actually be insolvent as a business but it's difficult to draw the line between trying to survive as a business over a rough patch and desperately holding on to a sinking ship).
Oh, and another fun excerpt of German law: senior staff (which includes general managers, i.e. you if you incorporate and employ yourself) is exempt from a fair share of labour laws. On the plus side this means you don't have to obey vacation rules for yourself, but I'm sure you can also think of some of the negative implications.
I find your question a bit unclear, but I'll try to answer.
Even in a best-case scenario where the politicians who are creating the laws/rules are well-intentioned and really are trying their best, I guess it's impossible to think of every single real world scenario. Thus, there will always be people who will fall through a complicated safety net.
As for why entrepreneurs aren't always covered in Norway? I'm just speculating here, but anyway: Since WW2, Norwegian politics has been dominated by The Labor Party (Arbeiderpartiet). They usually look out for ordinary workers, which tend to have it pretty good in Norway. Others groups, such as entrepreneurs, drug (ab)users, farmers etc. aren't always treated so well.
Does running the welfare system actually cost a lot? Last time somebody claimed that about US social security another person responded with data showing that it's less than 1% overhead.
> The final totals are $59 billion, 3 percent of the total federal budget, for regular welfare and $92 billion, 5 percent of the total federal budget, for corporations.
> The Nordics especially have built up enormous bureaucracies that in themselves cost a lot to administer various handouts and benefits. It might make more sense just to cut a cheque to everyone.
Not only that you could argue that it is also more efficient to have the spending decisions done by the individual and not the state.
Once we decide we want to support people on low incomes, there's a question of how the best way to do that is. The Nordics especially have built up enormous bureaucracies that in themselves cost a lot to administer various handouts and benefits. It might make more sense just to cut a cheque to everyone.