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Astral Codex Ten Podcast

May 30, 2018

These are some of the best comments from Basic Income, Not Basic Jobs: Against Hijacking Utopia. I’m sorry I still haven’t gotten a chance to read everything that people have written about it (in particular I need to look more into Scott Sumner’s take). Sorry to anyone with good comments I left out.

Aevylmar corrects my claim that Milton Friedman supported a basic income:

Technically speaking, what Milton Friedman advocated was a negative income tax, which (he thought, and I think) would be much more efficient than basic income – I don’t remember if these are his arguments, but the arguments I know for it are that the IRS can administer it with the resources it has without you needing a new bureaucracy, it doesn’t have the same distortionary effects that lump sum payment + percentage tax does, and it’s probably easier to pass through congress, since it looks as though it costs less and doesn’t have the words ‘increasing taxes’ in it.

And Virbie further explains the differences between UBI and negative income tax:

The main difference is that discussing it in terms of NIT neatly skips over a lot of the objections that people raise to flat UBIs that are abstractly and mathematically (but not logistically or politically) trivial. Many of these focus on how to get to the new policy position from where we are now. For example, people ask both about how a flat UBI would be funded and why rich people should receive a UBI. Given that the tax load to fund a basic income plan would likely fall on the upper percentiles or deciles, a flat UBI + an increase in marginal tax rates works out to a lump sum tax cut for high-earners and a marginal tax increase. Adding negative tax brackets at the bottom of the existing system and modifying top marginal rates is a simpler way to handle this and extends gracefully from the current system instead of having to work awkwardly alongside it.

In the example above, the NIT approach has the logistical advantage of the bureaucracy and systems we already have handling it more easily. And the political advantage of the net cost of the basic income guarantee looking far smaller than for flat UBI, since we’re not including the lump sum payments to upper-income people (that are more than offset by their marginal tax increases).

There’s some further debate on the (mostly trivial) advantages of NIT or UBI over the other in the rest of the thread.

Tentor describes Germany’s experience with a basic-jobs-like program:

We had/have a similar thing to basic jobs in Germany and it worked about as well as you would expect. Companies could hire workers for 1€/hour and the state would pay social security on top of that. The idea was that long-term unemployed people would find their way back to employment this way, but companies just replaced them with new 1€-workers when their contract was over and reduced fully-paid employment because duh!

Plus people on social security can be forced to take jobs or education. As a result a lot of our homeless are depressed people who stopped responding to social security demands because that’s what caused their depression.

(Links are to German Wikipedia, maybe Google translate helps)

Another German reader adds:

I agree that it doesn’t work as expected in Germany, but I think it it important to point out that not everyone is allowed is to hire workers for 1€. The work has to be neutral to the competition and in the public interest. So people are hired at a lot of public institutions (e.g. schools, universities, cleaning up the city).

Additionally these jobs improved the unemployment statistics at a low cost for the government, as people who are working in these jobs count as employed although most of these jobs are only part time jobs.