Sunday, January 8, 2017

Basic income: a good idea, or Big Brother writ large?

Readers are probably aware that Finland has just begun an experiment to see whether paying a basic income to citizens might replace its current patchwork of welfare programs and systems.  The Guardian reports:

Finland has become the first country in Europe to pay its unemployed citizens an unconditional monthly sum, in a social experiment that will be watched around the world amid gathering interest in the idea of a universal basic income.

Under the two-year, nationwide pilot scheme, which began on 1 January, 2,000 unemployed Finns aged 25 to 58 will receive a guaranteed sum of €560 [about US $590]. The income will replace their existing social benefits and will be paid even if they find work.

Kela, Finland’s social security body, said the trial aimed to cut red tape, poverty and above all unemployment, which stands in the Nordic country at 8.1%. The present system can discourage jobless people from working since even low earnings trigger a big cut in benefits.

“For someone receiving a basic income, there are no repercussions if they work a few days or a couple of weeks,” said Marjukka Turunen, of Kela’s legal affairs unit. “Working and self-employment are worthwhile no matter what.”

The government-backed scheme, which Kela hopes to expand in 2018, is the first national trial of an idea that has been circulating among economists and politicians ever since Thomas Paine proposed a basic capital grant for individuals in 1797.

Attractive to the left because of its promise to lower poverty and to the right – including, in Finland, the populist Finns party, part of the ruling centre-right coalition – as a route to a leaner, less bureaucratic welfare system, the concept is steadily gaining traction as automation threatens jobs.

There's more at the link, including a discussion of other countries that are experimenting along similar lines.

I can see one possible advantage to a system of basic income;  it might replace a host of other welfare and entitlement programs with a single payment.  That would eliminate the need for tens of thousands of bureaucrats and dozens of federal, state and local government departments, saving their annual cost.  On the other hand, it's unlikely in practice that such savings would be realized, because politicians can't be trusted to give up leverage and patronage positions like that.  What's more, I'm sure there would be pressure to maintain some additional welfare programs, on the basis that this or that group was 'disadvantaged' and needs 'additional assistance'.  That would turn a basic income program into just another welfare or entitlement scheme.

The biggest single danger I can see - one that effectively disqualifies basic income from consideration, in my book - is that it's Big Brother's wet dream.  It would put enormous economic power over the electorate into the hands of the state.  It could be used as a bribe by the party in power - "Look how much we're giving you!  Vote for us!"  On the other hand, a party wanting to gain power could promise a bigger, better, more generous basic income payment if they come to power, irrespective of whether or not the country can afford it.

That might also affect freedom of speech, freedom of association, and freedom of conscience.  When a significant slice of one's purchasing power is dependent on the goodwill of Big Brother, one's unlikely to 'rock the boat' for fear of seeing it reduced or cut off altogether.  The government could choose to cut, or deny, the basic income allowance to members of certain groups, or criminalize certain conduct (e.g. protests) and impose cuts in basic income as punishment for those convicted of them.

I think basic income is too strong a lever over the people to put in the hands of any government.  I simply don't trust politicians and bureaucrats not to misuse it.  It makes everybody a dependent . . . and that might well be fatal for personal and national independence.  As President Gerald Ford so wisely noted:

“A government big enough to give you everything you want is a government big enough to take from you everything you have.”

Truer words were never spoken.



Dave said...

Don't forget the possibility that the people receiving the stipend could organize, and use their votes to demand ever increasing stipends from their elected officials.

Kind of like public sector unions already do. Except it would be everyone.

(See also the fictional descent of the Republic of Haven into the People's Republic of Haven in David Weber's Honorverse.)

C. S. P. Schofield said...

The problem isn't just that “A government big enough to give you everything you want is a government big enough to take from you everything you have.”. Sure, that can happen, and has often enough. But although they loom large in peoples' minds, Maos and Stalins don't come around all that often. The message that people will (I think) take as of more immediate concern is that the government that is big enough to give you everything you want is also big enough to crush you like a bug without noticing. Anyone who looks can find examples of that every day.

Simon said...

In my opinion citizens wage would be a good thing for nations like Sweden and Finland, provided it is based on a carefully worded law with a wide basis in parliament, and provided that it is not something you apply for, it must be a right and extended to every adult citizen (or every adult citizen residing in the nation).
It must replace all entitlement programs (but not insurance programs).
It should n0be on a legs to live on, but not to live comfortably. Many entitlement programs serve as an incentive not to work, citizens wage done right would serve as an incentive to work.

Will Brown said...

The biggest poorly considered question attached to the Universal Basic Income idea IMO is that of ownership. The Finns seem to be attempting a tax giveaway (traditional welfare payments, however "streamlined"). Creating a National UBI Investment Fund - in which citizens are granted a minimum of individual ownership (at birth or upon achievement of citizenship) and have the ability to increase that level over the course of their lifetimes - seems to me to be a less easily manipulated politically and more easily address illegalities through established due process.

One UBI share qualifies the owner for the minimum UBI payment upon application at the time of attaining legal majority. Citizens can purchase (or be gifted with by others) additional "shares", which pay a fixed percentage of the amount of growth in the fund those shares create. As a hypothetical example, a minimum UBI payment of US$2,000/mo would receive a supplement of US$25/mo for each additional share owned.

A related funding question poorly examined; who's going to put up the original capital for all these robots that are going to put us out of work? A UBI fund that provided the investment capital (and collected the lease payments) for them might be one source of funding for such a concept that can be structured to not easily respond to spontaneous political tampering.

The UBI concept has merit, if it can be structured to be financially self-supporting and tamper resistant. If that can be achieved successfully, the government then becomes "big enough to protect what you own from government itself" (if only because government employees and politicians would be UBI owners themselves).

Steffen said...

Someone pointed out to me a while back that we basically already have this in place at many of our Tribal Reservations. Pine Ridge here in South Dakota makes a fine example. It's not really a very nice situation.

In one interpretation of the fall of man in Genesis, someone told me that men are cursed to work. If we fail to do so, self loathing sets in.

RandyBeck said...

This is going to be necessary sooner than most people think. Computers and robots will eventually be capable of doing everything we can do.

The trouble is, we're just not there yet. This is very dangerous when people should still be working.

There are also ways to make this worse. It would be terrible if working would mean losing benefits.

m4 said...

As if the welfare system doesn't already do all those things, Peter. That's one of the things that's so wrong with it, and changing it is very difficult. In England this problem is quite widespread.

Moreover, the current system requires a large proportion of people to be receiving benefits - in some cases they are expected to be taxed too much and receive benefits to counter this.

You just don't get that with a flat, no questions asked, bare minimum income. The key is that it is only enough, and that it is not too much. That way those who do not work will only get by, and those who do work will be rewarded all the more for it. This would provide an incentive to work, where the current system is more advantageous to those who do not work at all. Even working a day a week would be enough to improve your life, and this immediate gain would be plain to see - an important psychological aspect.

There are pitfalls, but if the ground is laid properly, most can be avoided with ease. It'll also prepare us for the inevitable decline of the work-for-a-living economy, which is simply not going to be sustainable.

Unknown said...

I can come up with several ways to do it, but they all quickly run afoul of human nature. For starters, sloth is bad, m'kay?

Given an advanced AI, it could conceivably be made to work. But it would be susceptible to GIGO. So it would have to monitor all transactions. But since we're taking about a system where it would be very, very difficult to correct errors, people would have to have their identification numbers stored in such a way that they couldn't be lost, stolen, or forgotten. Perhaps by implanting an RFID in the back of the hands or the forehead. Perhaps by just using advanced levels of biometric security based on fingerprints or facial recognition.

Surely, no one but the superstitious could object.

Unknown said...

Somehow, I omitted the "/sarcasm" tag.

Anonymous said...

On the "Big Brother" aspects of this... that was all there already, this is supposed to cut at least some of that too.

It's actually a cut in the "welfare" grants a skilled Finn could theoretically get already if they really knew how to work the system and were on good terms with the bureaucracy.

However, certain groups were in practice unable to get even a fraction of this, due to either malicious bureaucrats, excessive honesty when filling out the forms, or whatever. Or working part-time in a low-paying job, or even worse, studying, instead of being completely idle and unemployed.

So, yeah. They're actually trying to improve things. Too early to tell if it'll work.

Old NFO said...

But you'll never get rid of the bureaucrats, they are too deeply embedded...

Richard Blaine said...

The problem with all these schemes is that you can design one that works today - but nothing is static. Even if you get all the correct laws to prevent abuse, changes to population growth one direction or the other can mess you up - then there are the disruptive technologies which are unpredictable by nature.

Sadly when you have welfare you have that regardless of the payout system. My preference would be a single check system to minimize bureaucratic overhead, fraud, and waste. It is also auditable - where getting payments from fourteen different federal bureaucracies, four state, and one or two local ones is beyond hope of audit. Which I suspect is one of the reasons it functions that way.

I know it annoys the hell out of people to see EBT card users buying junk at the minimart - essentially wasting money but the truth is - once we've decided to give it to them, it's theirs. Barring that, we should just move them into dorm rooms, and they can eat at the dining hall.

So, if we're going to give them money - I'd rather have it be one deposit each month that can be audited and if they screw up - too damn bad.

RandyBeck said...

The bureaucrats will be less of a problem when computers are doing all of their work. They'll be out of a job just like everyone else.

The only caveat I'd add is that unions and politicians will keep them in the system longer than necessary, but they'll eventually want to kick back like everyone else.

bruce said...

Milton Friedman liked the basic income concept. Pat Moynihan liked programs aimed at everyone, not just one party. I like to see programs sold as 'see how it works' and not 'only literally Hitler could object. You look like Hitler. Prove you aren't Hitler by giving me money. And power.'

Not Provided said...

Unknown (above) inadvertently steps into the trap: proposals such as this frequently become the "how" as the "why" fades into the background.

As I often explain to my clients, using better technology to do the wrong thing faster is not a benefit.

Much has been written about the tyranny of the majority, eg., the inherent flaws in democracy and why the United States is, in fact, a representative republic and not a democracy; establishing such a broad-based financial control system as a "national basic income" is a very large step toward democratic tyranny.

Not that a well enforced federal minimum wage or a group of stipends from the fed dot gov would be similar things, of course.....

Anonymous said...

Yeah, do note that this is in Finland, and experiments involving a single fairly small and homogenous nation-state don't really scale up very well, and even less sideways.

So not likely to be generalizable to the EU level and most certainly not into the USA.

Mike said...

As Trotsky predicted, "In a country where the sole employer is the state, opposition means death by slow starvation. The old principle: 'who does not work shall not eat,' has been replaced with a new one: 'who does not obey shall not eat.'"

Jason said...

I'd prefer a system where the government didn't interfere in letting people succeed or fail on their own merits. UBI runs afoul of the old adage "that which we gain too cheaply, we esteem too lightly". Plus it'll just drive up costs sufficiently to capture the "free" money, resulting in a return to the status quo ante.

You actually discussed this issue not too long ago, in February of last year (2016).

As for the assumption that the UBI would be "just enough to get by"...HA! Two or three adults, all receiving the same benefit can pool their resources to live a quite comfortable life. Squalid by the standards of people who have to work for a living, but attractive to a growing segment of the population who think of work as something for sucker.

Thomas W said...

A true, simple UBI might make sense -- everybody gets a certain amount (or is credited that against taxes). But it won't fly politically.

As soon as there's any sort of budget crunch politicians will be screaming "why should Warren Buffet get UBI, he has enough money". A few years and we'll be back to today's means tested system. We already see this in demands that Social Security and Medicare be means tested.

If we could create a simple UBI and eliminate other welfare programs, it makes sense. Give everybody a UBI. Get rid of welfare. Get rid of the tax personal exemption (or similar) which offsets UBI payments to higher earning individuals. You now have a system without the various welfare cliffs (earn $1 more, lose over $1 in benefits) and similar disincentives to work.

LastRedoubt said...

Stefan Molyneux recently had a video on this topic well worth watching

kamas716 said...

Manitoba did an experiment with it back in the 70's or 80's I think. AFAIK they never released their full findings on how well it worked.

On a Wing and a Whim said...

Great, now try mixing that with open borders and see how well it works. Who's paying for that basic income? Will they be able to pay once the "refugees" and "undocumented immigrants" start flooding in and demanding theirs?

m4 said...

Two common themes recurring in this thread...

One is the idea that the government is the gatekeeper and only source of money. The idea of a basic income is not that the government gives you all you have, only that it gives you all you need. You're still welcome to work, and honestly most people still would out of sheer boredom, but they may be more likely to attempt craft, research, or art, which would not normally reliably put food on the table.

The other is, almost conversely, that people would have to work for a living and would begrudge those who don't. Again, the idea of a basic income is that you don't have to work for a living. Besides, how can you with the looming job crisis as all the menial labour and even some of the skilled labour is slowly replaced by robots, AI, and self-service in store or online.

The questions on where the money is supposed to come from are far more interesting, and would likely take a lot of feasibility studies. One does have to wonder though, just how much does the current welfare system cost, and how much would a basic income cost by comparison? And if that doesn't get you anywhere, one might also remember that the highest paid executives earned more by mid last week than us mere mortals will earn in the entire year.