I'm not an economist either, but here's how I'd like to see the McDonalds example play out :

Presumably, McD's pay folks on top of their basic income to entice people to work for them.

Eventually, these wages get high enough (and robots become cheap enough / advanced enough) that it becomes cheaper to automate away those jobs. The gained productivity allows McDonald's prices to drop, and a (properly configured) tax eats a healthy portion of McDonald's new profits. That tax goes directly into the basic income fund, lifting all citizens basic income by some amount.

People are still incentives to do icky jobs now (because they get more than basic income) and as they disappear, those efficiencies become profit, which is taxed and dumped into basic income which then goes up (so we lift everyone to higher standards of living as we destroy jobs people no longer need to do)

Eventually, that process repeats in every business and every industry, until we live in a Star Trek style post-currency economy, where people only work for exercise / interest / fun, and all necessities are covered by machines for some amount near free.

It's not an overnight thing, it's a "spread out over the next century" type change, where basic income started at the US minimum wage, but (over 100 years) eventually gives folks the 100-year-from-now equivalent of 100k/year salary as basic income.

Time will only tell.

  Someone making   0k ends up with .8 *   0k + 10k =  10k.
  Someone making  10k ends up with .8 *  10k + 10k =  18k.
  Someone making  50k ends up with .8 *  50k + 10k =  50k.
  Someone making 100k ends up with .8 * 100k + 10k =  90k.
  Someone making 200k ends up with .8 * 200k + 10k = 170k.

Note: The government still needs to do other stuff so actual taxes would end up being higher. The assumption is because you have lower administrative costs than SS, unemployment, and other social programs the net effect is a smaller government and possibly lower taxes. (EX: Social Security is 12.4% for someone making 50k where basic income is 0 the disability and retirement payment can be much higher than 10k/year.)

Also I'm not sure what you'd do w/ payroll taxes.

You're just grossly understating what tax rates would have to be to accommodate this. You think there will be economies of scale that SS today doesn't already achieve that could somehow offset this in a meaningful way? I disagree.

I personally believe in "basic income" in a very elastic sense to increase demand in the economy when it's weak. It's something different than what's discussed here. And I'm not against it strongly, it's just I'm not able to see how we would accomplish that without tax rates similar to what you see in Europe and I don't relish that thought.

Also, the assumption is you cut a lot of government spending not just social security. So unemployment insurance, HUD, food stamps, etc. While writing a SS check has vary low overhead handling disability is a huge part of the SS administration that goes away. And those programs are not all paid for by personal income so assuming all the other taxes stay the same you free up a fair amount of spending for the basic income.

Even just eliminating social security reduces taxes by 12.5%. And, presumably that $3,900 exemption for each qualifying child goes away along with the home mortgage tax deduction as do a lot of other deductions which can lower taxes for the rich who would otherwise be getting most of the additional tax burden. I would also suggest removing the deduction for charitable giving. (The only difference between deductions and spending is accounting the math is identical.)

PS: Actually finding the correct tax rate takes quite a bit of economic modeling 20% is reasonable ballpark, but you need to figure out what's cut to get a good idea of how that actually impacts people.

Your comment about the 12.5% you save from social security should tell you what you need to know: In order to provide a "basic income" for JUST SENIORS we have to have a 12.5% tax. Now, nominally it's less, because social security taxes cap out at like $110k/yr so there are a lot of income dollars in the US above that amount that aren't paying Fica. Regardless, it's still a tax somewhere near 10% to provide about $15k/year to mostly just seniors. Disability and survivior benefits only make up 20% of social security.

I obviously looked up some facts here to test my assumptions -- everything is just on the social security website and usgovernmentspending.com

  ~23.5% of the population under 18 get 1/2
  prisoners get nothing or close to it.

PS: Only 65.5% of Social security goes to retired workers. Well over 63 million people get paid from social security but less than 40 million of them get traditional retirement benefits. http://www.ssa.gov/policy/docs/quickfacts/stat_snapshot/

It would start to make financial sense for McDonalds to invest in automating several tasks which are currently cheaper for McDonalds to hire someone for. Imagine if you order and pay through a machine (I saw one of these at Jack in the Box already).

The person behind the counter could instead be working on their dreams of being a musician, artist, studying for college, etc.

Well, someone needs a job for the system to work, since it's presumably funded by taxation. At least one person (more realistically, a large portion of the population) still needs to be creating wealth.

I don't know that we necessarily need to have jobs.

We could fund it by taxation of revenue and wages, rather than just wages.

A company who fires all it's employees, and uses only robots, would see a huge surge in profit from reduced overhead. That profit could be taxed at something like 60%.

The owner(s) of the business still see windfall from the cost savings of laying everyone off, and the basic income now rises for everyone and can now cover the lost wages of the newly unemployed, using the companies new profits as a funding source

Where is their revenue coming from?

When the music and movie industry wanted more protection for their IP, many people here made comments about the horse and buggy/automobile and they just needed to "change with the times".

Why should employment be any different? If your job is being taken by a robot..maybe you should think about learning another skill.

You may find that this is because not all of us value technology solely for what increased productivity it can provide over our current, but that we create and use technology to work /for/ us so that we can spend more time doing what we would rather.

Someone needs income that is taxed. That doesn't require a job, though in the short term (e.g., until we've reached a very advanced level of automation where most market income goes to capitalists who own completely automated firms), yes, it relies on lots of people still working -- its a replacement for poverty support programs which removes the disincentive for work that many of those contain in the eligibility criteria, and the administrative overhead that enforcing eligibility rules creates, not a replacement for work.

Most people, even if they aren't starving in the street, are willing to work more to get more. That certainly tails off at some level of combined work and income (as work has an increasing marginal cost and income a decreasing marginal value), but for the vast majority of the population, that's far above the level BI could conceivably be set at without vast technological progress.

Everybody can contribute or not, in their terms, I guess that's the magic.

Presumably, Child Support would no longer exist for anyone.

Children are people, with no income, they would essentially get a child-version of basic income, paid to their parents, to raise them, regardless of all other circumstances.

(Similar to US taxes today, where the government effectively pays you some a small amount of money simply for having a child)

If a couple conceives a child, and one parent abandons the other, the single parent keeps the whole state-provided income for that child, and uses it to raise the child.

It eliminates the whole "penalty" system for distant parents, and if those people eventually get jobs, they pay into the basic income system just as anyone else does (so they aren't dis-incentivized to work).

A recurring cash payment meeting or exceeding the costs of raising the kid on the other hand...

How does that make it less of an incentive, though? It's better than no paternal leave.

In the end, though, people usually don't get children on a purely economically rational basis. Sweden also has daycare prices that scale with income, free and relatively high quality public and private schools, child benefits and free dental and healthcare for children.

Other than "you can use it to pay debt", not at all.

> Can I get a lump sum payment in return for my future wage?

If you mean "will someone loan me money in return for me pledging an amount equal to my future basic income for some period", maybe, but it would be a really bad idea to let it be redirected.

> Can it be taken away to pay creditors, child support, back taxes, etc. ?

Probably not -- there is already, AIUI, a "first $X" (which may vary under specific local rules depending on context) of income which is protected against garnishments, etc., and BI probably ought to fall within that (at least until the economy advances enough to support a more than pedestrian lifestyle on BI alone, at which point it might only be part of the BI that is within that protection.)

e.g. Immigrants. I'm not sure if we should start calling them deltas or epsilons...

I think you missed the "worth it" part, which substitutes for the "fulfilling" part. Unattractive but low-skill jobs would see higher wages (and, thus, greater incentives to find labor-saving alternatives) until the utility people doing those jobs provided to others was reflected in the reward people doing those jobs received.

The jobs' salaries match what they are actually worth, and can't be offered as minimum-wage jobs that people take because they don't have any money and can't get a job elsewhere.

Which means burgers will cost much more than they currently do.

The same will be true for all domestic products/services where a significant part of the work force currently has low wages.

Which means that you and I will pay more for goods/services than previously. The effect will be similar to a significant sales tax, might as well try funding BI that way (at least imported goods will carry some of the tax burden) and look at published studies on the effects of sales taxes...

Don't worry, the hedonistic urge is stronger than laziness in most people. Especially since lazy usually implies watching TV which continuously bombards you with advertisements to buy things...

Basic income might lead to inflation. It's impossible for the basic income to become worthless, though, unless all money becomes worthless. Even if everyone gets $X a month, any other amount of money can be expressed as a multiple of X.

McDonalds in this situation could pay zero wage, if anyone wanted to work at this price. I doubt many would, though. Instead, they would pay $Y in addition to the $X that everyone already gets.

Ideally, no one works at McDonalds, because it's automated. If it can't be automated, then McDonalds has to pay people enough to make it worth working at McDonalds, not just enough to survive. This increases the price of things that aren't automated, which increases the reward for those who can figure out how to automate it.

(Objecting to this automation by pointing out how far away we are from AI / useful robots is like objecting to flight by pointing out how many joints are in a bird's wing. An automated McDonalds will look different than what we have today. Perhaps insisting on human hands preparing and serving their food will become an affection of the wealthy.)

Also, just because it replaces minimum wages doesn't mean McDonald's doesn't pay its employees. It means that both sides, employees and employers are working in an elastic, free market, so the wages will be set depending on labor supply and demand.

Think about inflation like this: More bidders for the same goods and services. Well, right now there are goods and services on the sidelines.

Means-testing is where a lot of the cost of social welfare systems comes into play, and where nearly all of the moral hazard starts (making it more expensive to work than to not work). It's best to keep means-testing out of it altogether.

Not necessarily. You'd expect some inflation, but if the level of basic income was set at a low enough level (what that is depends on the overall productivity of the economy) it wouldn't be "continual" (well, if you exclude all other effects on price level but the basic income and its effect on price and the effect of that price change on wages, and the effect of those wage changes on price, etc., the effect might be "continual", but it would be asymptotically approaching a finite limit, so not unbounded, which is really where there would be a problem.)

> Also: How does Macdonalds work in this situation, if the fixed income "replaces" minimum wage. Does Macdonalds pay on top of this wage?

Yes.

> Do they double it?

They pay whatever the work is worth to them.

> Do they pay zero? If they pay zero, what incentives workers to work at Macdonalds?

Nothing, so they don't pay zero.

In both cases, it would increase the purchasing power of the poor and reduce the purchasing power of the rich, because $5000 means more to somebody making $10000 than it does to somebody making $1000000.

To the second - they pay whatever they need to pay to get the workers they need. Everyone is already getting $X a week from the basic income. Fast food workers will make a total of $X+Y a week, and doctors will earn $X+Z, where Z is probably a lot more than Y.

Also, remember basic incomes are typically suggested to be enough to live on and no more - so if you want some luxury items (whatever we decide those are) you'll probably need to get a job somewhere. So there's still incentive to get a job.

Inflation is dependent on money supply, you don't need to print new money to apply basic income. You would worry as much of its inflation impact as you would for bailing out banks, if its the same printing. Its not a BI specific concern. Pricing, on the other hand, would probably change drastically, as there would probably be a solid market of goods for people that want to get by with BI alone, so essentials will probably be priced to fit perfectly with BI.

On the second point: Basic Income is guaranteed, regardless of other jobs. So you would work at McDonalds if you wanted more money. Otherwise it creates the perverse incentive not to work which you described.

BI could be nefarious or the savior socioeconomic rule, and it deserves experimentation.

Personally, I find its socio-economic impacts the most interesting and important in shaping a society. With BI, the jobs nobody wants to do will experience a reverse Supply/Demand.

Cleaning toilets today is cheap because you have enough people that need it to survive: when they dont need it anymore, the supply for those jobs will plummet, and suddenly they will start earning way more money. I find this to be such a strong positive force that this alone justifies doing BI to me.

Also, it will very quickly destroy crime. Petty theft and small crimes have no reason to exist anymore, since you dont need to steal to eat or to try to get out of a desperate situation. Specially if being in Jail means you dont get your BI (because its used for prison budgets) it creates a magnificent economical incentive not to do crime and to get out of jail as fast as you can. Organized crime like drug dealers would likely plummet as well: as most organizations they are heavily pyramidal and require a vast number of poor people to work for peanuts and take all the risk. Take them away, and they have no supply chain, so even large organizations will get wrecked quickly. Suddenly, White-collar crime goes way higher in the scale of important.

In terms of society education, you will prevent and help millions of people to be able to pursue education without having to sacrifice it to make ends meet.

Another strongly positive force is to eliminate government "fat". Firing government employees that are useless or provide little value is a very politically expensive move no-one makes, because nobody wants to throw people on the street. Now, this is not the street anymore, they have a strong safety net so we can stop worrying about politics and focus on making things productive.

I clearly see a lot of potential on BI, and I also appreciate it could have devastating downsides. But thats what experimentation is all about finding out.

Theres always going to be money crimes as long as there is money, but its very different to take a risk on your monthly stipend to get 200 bucks. Its just a huge economical incentive not to do it, particularly in the lowest class, where violent crime is concentrated.

Gangs, Mafia's and drug organizations are based on a worker class that is super cheap to them, those out of poverty and desperation. It would deal a major blow to everyday regular crime.

I don't think that inflation would be a huge problem, since this is wealth redistribution, likely through taxes, rather than printing money and giving it to people. However, I'm no economist either, so I may be far off base in regards to inflation.

The short term effects of redistribution downward on the income scale (and thus generally from those with a lower marginal propensity to consume to those with a higher propensity) would seem pretty clearly to be some degree of demand-pull inflation.

I don't think anything other than an economic and social Ragnarök is going to fix the poverty problem. Both capitalism and socialism don't seem to have the answers.

McDonald's would obviously have to pay something in order to get people to work there. It could certainly get away with paying less if there were no minimum wage and people had a basic income.

There are a lot of things people could do without: car, cell phone, internet, restaurants...