Whatever your moral position is, government benefits to low-income workers are a subsidy to their employers.
If the government awarded benefits only to the unemployed, many low-income workers would find preferable to quit their jobs if their employers didn’t increase their wage. Since employers need employees, employers would find preferable to increase their employees’ wages enough that they don’t need government benefits. The net effect would be a redistribution of wealth from employers (especially those who use lots of low wage labour, like Walmart) to the government (and hence to taxpayers). On the other hand, increasing government benefits to low-income workers would redistribute wealth in the opposite direction: from the government to Walmart-like employers. Note that neither policy significantly affects the welfare of low-income workers, since their effective purchasing power remains approximately the same.
Therefore, if you think it is morally preferable to redistribute wealth from Walmart to the taxpayers, support unemployed-only benefits (and/or minimum wages), if you think it is morally preferable to redistribute wealth from the taxpayers to Walmart instead, support guaranteed basic income and/or other low-income workers benefits.
if you think it is morally preferable to redistribute wealth from the taxpayers to Walmart instead, support guaranteed basic income and/or other low-income workers benefits.
...only if the workers don’t mind lower wages (such as in a Silicon Valley startup). See, among many other benefits, basic income can serve as a permanent strike fund for those who are still employed. These employed strikers would not receive anything from your solution of “unemployed-only.” Furthermore, your targeted solution can be demonized as “lazy-only” and cut by politicians. Look at stigmatized food stamps today. Such drastic cuts are very unlikely with a non-stigmatizing basic income provided to everyone.
On a related note, GiveWell appears to be removing Against Malaria Foundation as their top charity, making GiveDirectly their new top charity. Donating to GiveDirectly may help legitimize the idea of an unconditional basic income. I don’t think basic income is as important as mass cryonics, but I still defend it in my upcoming “cryonics and basic income for everyone” website. Here’s hoping I finish the website someday.
...only if the workers don’t mind lower wages (such as in a Silicon Valley startup).
workers would be getting about the same amount of many whether it came only from their employers or partially from their employers and partially from the state.
If I had a choice between e.g. $3000 monthly for working and $500 for staying at home, it would feel very different from choice between $3000 for working and $0 for staying at home. I could probably translate the “very different feeling” to better position at negotiating either higher salary or better working conditions.
It’s not obvious whether I could translate it exactly to $3500, or whether the additional money would be split between me and my employer. Please note that the labor market behaves a bit differently from typical markets, because when you pay people more, their free time becomes more valuable. For example, if you paid me 10 times more money than I make now, a likely consequence would be that I would work for you only shortly, and then enjoy an early retirement. (An effective altruist would keep working, though.) By increasing the market price, the supply can go down. So in some circumstances it could create a spiral of skilled people demanding more money, then leaving the labor market soon, which would increase the salaries of the remaining ones, etc.
If I had a choice between e.g. $3000 monthly for working and $500 for staying at home, it would feel very different from choice between $3000 for working and $0 for staying at home. I could probably translate the “very different feeling” to better position at negotiating either higher salary or better working conditions.
Right, and that’s the point of unemployment benefits.
Well, yes and no. To get the unemployment benefits, there are some conditions (depending on the country). If I decided I want to stop working now, I probably wouldn’t get the unemployment benefits, unless I had a good excuse. They might just offer me another job, and I would have to take it, or lose the unemployment benefits. Also, I would have to do a huge amount of paperwork. All these inconveniences are big enough for me to not take this option voluntarily. If I tried this for one month, it is likely I would spend a large part of the month just visiting the bureaucrats and doing the paperwork.
With basic income without any conditions and paperwork attached, it would be like taking a vacation.
By “unemployment benefits” I mean benefits which are given to any able person of working age who doesn’t work, for whatever reason.
Some countries have unemployment benefits which have limited duration and/or are conditioned to the requirement to accept any job. That’s not what I’m talking about.
The bureaucratic hassles could be reduced to virtually zero if the government keeps track of who is employed and who isn’t. Yes, there is a risk of fraud: people could work without declaring it (with the complicity of their employers if any) and earn both their wage and the benefits. The judicial system can deal with that.
Is there a specific country having the unemployment benefits in the way you described here?
(The way I described exists in Slovakia, and I would expect it to be in many other countries too, although I have no data about that.)
By the way, if there is a rule of “if you are not employed, you automatically get $X, no questions asked”, I hope there is also a gradual reduction of X instead of jumping from full value to zero when the person makes some money. To avoid situations like: “Sorry, this month your webpage made you $0.01 from adsense, therefore you are not eligible for the $500 from the government.”
Is there a specific country having the unemployment benefits in the way you described here?
I don’t know, possibly not. But that also applies to basic income.
By the way, if there is a rule of “if you are not employed, you automatically get $X, no questions asked”, I hope there is also a gradual reduction of X instead of jumping from full value to zero when the person makes some money. To avoid situations like: “Sorry, this month your webpage made you $0.01 from adsense, therefore you are not eligible for the $500 from the government.”
There are various forms of income which are tax-exempt, I suppose that these should not count as employment.
The important part of my comment about gradual reduction was that people should never be put in a situation where if they make $N, they get additional $500 from the government, but if they make $N+0.01, they get nothing.
Regardless of how big is the $N, and how specifically they received the $0.01. Even if they received the $N using tax-exempt forms and the $0.01 using taxable forms. Or if $N is the limit for the tax-exempt form, and the $0.01 is the first cent above the limit.
Otherwise we get various kinds of crazy situations where people are punished for doing something that would otherwise be rewarded. Especially with poor people these kinds of situations are known to often lead to bad outcomes, both individually and socially.
...and the relevant part for this debate is that if this gradual reduction is implemented, the outcome is more similar psychologically to basic income than to unemployment benefits, because there is not a sharp dividing line between “not working” and “having a low-paying job”.
(A hypothetical example of a gradual reduction of government support which still does not lead to giving money to everyone would be giving people max(0, $500 − 0.2 X) money if they made $X otherwise. Which means that an unemployed person would get $500; a person who made 0.01 from adsense would get $499.99 regardless of whether adsense income belongs to some bureaucratic category or not; a person getting $200 from their job would get $460, which would make their total income $660; a person getting $2500 or more from their job would get nothing; etc.)
when you pay people more, their free time becomes more valuable. For example, if you paid me 10 times more money than I make now, a likely consequence would be that I would work for you only shortly, and then enjoy an early retirement.
Whether your time becomes “more valuable” depends on what your baseline for value is. If your baseline is dollars, then your time hasn’t become more valuable. Rather, your time has the same value, but with more money, it is easier for you to purchase time. Your time becomes more valuable only relative to dollars and for many purposes this situation could more usefully be described as “dollars go down in value” rather than “time goes up in value”.
In particular this matters when comparing to poor people. Time is still valuable to them, but they are forced to use it up in order to get dollars or in order to avoid losing dollars.
Not necessarily. That’s why I brought up the example of basic income serving as a permanent strike fund to help employees demand higher wages. Employers can respond by meeting their demands, and/or automating more quickly, etc. Then society can respond to increased automation by increasing the basic income. Or not. I won’t talk about society’s transition into a gift economy here because that would take too much space.
I know you’re trying to paint Basic Income as a subsidy to employers, but it’s really not like the Earned Income Tax Credit. At all. I’ll continue this in the Luke_A_Somers thread.
Even so, payments to those who aren’t working can’t reasonably be classified as ‘redistribution of wealth from the taxpayers to Walmart’
I’m not sure that the drop will be as much, though—if everyone has a basic income, some people who are now driven to work despite hardship would not be so driven and could finally quit. Those who do work will not need to compete with them for jobs. ALSO, those on basic income would be able to buy things they presently cannot, which would increase the demand for labor further.
Even so, payments to those who aren’t working can’t reasonably be classified as ‘redistribution of wealth from the taxpayers to Walmart’
Right, in fact I was referring to payments to those who are working. A guaranteed basic income would not discriminate between the two, thus, in the proportion it was given to workers, it would be a subsidy to their employers.
I’m not sure that the drop will be as much, though—if everyone has a basic income, some people who are now driven to work despite hardship would not be so driven and could finally quit. Those who do work will not need to compete with them for jobs. ALSO, those on basic income would be able to buy things they presently cannot, which would increase the demand for labor further.
Unemployment benefits would be sufficient to obtain these effects without transferring wealth from the taxpayers to the employers.
in the proportion it was given to workers, it would be a subsidy to their employers.
No. To illustrate, look at the starting point of the aforementioned subsidy to employers: the Earned Income Tax Credit. You can only make use of the EITC once you are employed, so all else being equal, the EITC contributes to the idea: “If you don’t work, you starve.” I may then feel pressured to work at McDonald’s or Walmart. By contrast, Basic Income exists external to the market, serving as a base amount for everyone to live on. Since I don’t have to worry about starving anymore, I now have more leverage in choosing if/where I want to work. Any amount I earn on top of the base amount is of my own volition for luxury items not needed for my survival. If I later want more money and my employer resists, I can use the basic income as a strike fund.
Unemployment benefits would be sufficient to obtain these effects without transferring wealth from the taxpayers to the employers.
Three things. First, you seem to be forgetting my earlier point regarding staying power. Even if you rally society today to support your targeted “unemployment benefits” (I put it in quotes because I know you mean it in a welfare context that is wider than merely unemployment compensation), your welfare solution is still at risk of being stigmatized in the future and then cut by politicians. Basic income for everyone avoids this risk, and will have much greater staying power.
Second, you seem to be under the impression welfare is handed out like free candy. In reality, welfare can be a pain in the butt, whether it’s the intrusive paperwork, stressful delays, or the threat of fines and probation. Basic income bypasses this mess.
Third, you keep suggesting “taxpayers” and “corporations” are two separate things, even though corporations pay taxes too. Yes, corporations are quite adept at avoiding taxes, which is why tax reform also needs to be a part of this discussion.
No. To illustrate, look at the starting point of the aforementioned subsidy to employers: the Earned Income Tax Credit. You can only make use of the EITC once you are employed, so all else being equal, the EITC contributes to the idea: “If you don’t work, you starve.” I may then feel pressured to work at McDonald’s or Walmart. By contrast, Basic Income exists external to the market, serving as a base amount for everyone to live on. Since I don’t have to worry about starving anymore, I now have more leverage in choosing if/where I want to work. Any amount I earn on top of the base amount is of my own volition for luxury items not needed for my survival. If I later want more money and my employer resists, I can use the basic income as a strike fund.
My point is that you can do that with unemployment benefits without the side effect of subsidizing the employers.
Three things. First, you seem to be forgetting my earlier point regarding staying power. Even if you rally society today to support your targeted “unemployment benefits” (I put it in quotes because I know you mean it in a welfare context that is wider than merely unemployment compensation), your welfare solution is still at risk of being stigmatized in the future and then cut by politicians. Basic income for everyone avoids this risk, and will have much greater staying power.
Any policy is potentially subject to being reversed in the future. I don’t see why basic income would have more staying power than unemployment benefits.
Second, you seem to be under the impression welfare is handed out like free candy. In reality, welfare can be a pain in the butt, whether it’s the intrusive paperwork, stressful delays, or the threat of fines and probation. Basic income bypasses this mess.
Seems like these costs could be reduced to the point of irrelevance.
Third, you keep suggesting “taxpayers” and “corporations” are two separate things, even though corporations pay taxes too.
Not all taxpayers are corporations, and corporations have conflicting interests when they are in the role of taxpayers rather than the role of potential subsidy recipients: a corporation that employs mostly high pay labour (e.g. Google) has no interest to subsidy Walmart.
My point is that you can do that with unemployment benefits without the side effect of subsidizing the employers.
No. You can’t. One example I’ve stressed is that your unemployment benefits don’t help employees who wish to go on strike. Union dues can be decreased via Basic Income because unions won’t have to worry about strike funds anymore. Even if you’re not officially unionized, you know your coworkers get paid a Basic Income each month, and they know that you know. This simplicity-induced transparency can help you persuade/guilt-trip your co-workers to go on strike with you over, say, safer workplaces or shorter hours. And going on strike is an easier sell than getting everyone to quit for “unemployed-only” welfare (which, as I’ve stressed, your coworkers may not even end up receiving), especially if your coworkers are getting paid quite handsomely. After all, we’re not just talking about Walmart employees going on strike.
Any policy is potentially subject to being reversed in the future. I don’t see why basic income would have more staying power than unemployment benefits.
Think of the aforementioned fight over food stamps today. Heck, many Americans don’t even know it’s called SNAP now, and SNAP advocates have to actively campaign to teach Americans what recipients receive. By contrast, Basic Income won’t need active campaigning once adopted: everyone will be passively reminded each month via their monthly payments. Furthermore, the endowment effect (yes I see the criticism section at that link) makes it much less likely that everyone will support a politician’s decision to cut their Basic Income monthly payments.
Seems like these costs could be reduced to the point of irrelevance.
No. You can’t. One example I’ve stressed is that your unemployment benefits don’t help employees who wish to go on strike.
Sure, but employees could threaten to quit their job. Anyway, how much money is currently locked as strike funds?
And as Aaron Swartz emphasized, it can even help encourage employees to become entrepreneurs.
So can unemployment benefits: If you business fails, you have a safety net. Sure, you would have to give yourself and your employees a wage while your business is still unproductive, but that could be dealt with subsidies specifically targeted at startups.
Your repeated argument that Basic Income is subsidizing Walmart reminds me of this psychicpebbles video
Think of the aforementioned fight over food stamps today. Heck, many Americans don’t even know it’s called SNAP now, and SNAP advocates have to actively campaign to teach Americans what recipients receive.
If the government started to give money to everybody who turns 18 and doesn’t work I suppose that people would tend to notice.
By contrast, Basic Income won’t need active campaigning once adopted: everyone will be passively reminded each month via their monthly payments. Furthermore, the endowment effect (yes I see the criticism section at that link) makes it much less likely that everyone will support a politician’s decision to cut their Basic Income monthly payments.
The same endowment effect applies to taxes which affect most of the population. When the government proposes tax raises there is always some opposition, but this doesn’t prevent tax raises from occurring from time to time.
But only if society cares to reduce the costs! Again, people don’t even know the foods stamps program is now called SNAP. And they think recipients are all like Jason Greenslate.
Food stamps are considered something extremely low status which only the filthy poor and social parasites would ever accept. Most people don’t care about the issue except as a social cost.
Sure, but employees could threaten to quit their job. Anyway, how much money is currently locked as strike funds?
If threatening employers with the words “We’ll quit” is all that’s needed, then why do employees bother with strikes in the first place? Action gives power to words. As for your (rhetorical?) question, I’m not sure I follow. Non-unionized employees certainly don’t have a strike fund.
that could be dealt with subsidies specifically targeted at startups.
Hackers’ hobbies and experimentation technically don’t count as startups, even though they can lead to official companies in due time. Basic income can help support such experimentation. Furthermore, subsidies targeted specifically to startups can be opposed by established businesses as government meddling.
The same endowment effect applies to taxes which affect most of the population. When the government proposes tax raises there is always some opposition, but this doesn’t prevent tax raises from occurring from time to time.
When an average American interviews for a job, which of the two is more likely on his mind: the wage, or the tax implications of the new job? Tax reformers face the uphill battle of a public perplexed by the complexity of taxation, as well those who feel protected from tax increases via possible deductions and loopholes. By contrast, an income stream is an easier thing to grasp. If everyone is given this income stream, any attempts to cut this income stream won’t be met with “some opposition.” It will be met with widespread opposition.
If the government started to give money to everybody who turns 18 and doesn’t work I suppose that people would tend to notice
But your “lazy-only”… I mean, “unemployed-only” solution won’t fly because it will be demonized in the manner that you demonize SNAP here:
Food stamps are considered something extremely low status which only the filthy poor and social parasites would ever accept. Most people don’t care about the issue except as a social cost.
Basic income does not actively discourage work. Instead, it gives people leverage to choose their work if they so desire. Yes, I agree it is, to put it mildly, optimistic to expect adoption of basic income in the near future. However, I’m in it for the long-run.… unless, of course, someone convinces me that basic income is a bad idea. You’re currently not succeeding in this regard.
If threatening employers with the words “We’ll quit” is all that’s needed, then why do employees bother with strikes in the first place?
Because they would be in serious troubles if they quit and don’t have another form of income.
Hackers’ hobbies and experimentation technically don’t count as startups, even though they can lead to official companies in due time. Basic income can help support such experimentation. Furthermore, subsidies targeted specifically to startups can be opposed by established businesses as government meddling.
So either these hackers are unemployed, therefore they would be getting unemployment benefits if they existed, or they are employed, hence they can fund themselves with their salary. Until they can find an investor, of course.
But your “lazy-only”… I mean, “unemployed-only” solution won’t fly because it will be demonized in the manner that you demonize SNAP here:
Nope. Cash from unemployment benefit is indistinguishable from cash from another form of income, unlike food stamps which automatically signal you as “poor” any time you use them to buy something.
Whereas many SNAP recipients actually are employed, your “unemployed-only” solution actively discourages work.
Not any more than basic income does.
Appeal to ridicule ----- (earlier this year) ----- So cryonics induces people to commit suicide. Nice.
Off topic.
Appeal to authority
You are not helping to keep the level of this discussion high.
Back from my Thanksgiving break. Delighted to see another turkey.
Because they would be in serious troubles if they quit and don’t have another form of income.
So what you’re saying is that your “unemployed-only” solution will make the words “We’ll quit” into a more credible threat, and employers will meet their demands because employers are too stupid to call their bluff? You do recognize there are benefits to being employed other than the wage, right? Health care, networking, friends, knowledge, experience, etc? And, as I suggested before, what if the employees are paid well above your “unemployed-only” solution but wish to strike for shorter hours or a safer workplace?
My great-grandfather was on the receiving end of a strike in 1940, and he lasted for two months without blinking an eye. If you tried your simple threat of “We’ll quit and go live off the benefits” on him, it would have come across like this scene from Cable Guy.
they would be getting unemployment benefits if they existed
One of my contentions is that basic income has a much better chance of coming into existence than your solution, although I’ll hedge this notion with Milton Friedman’s Negative Income Tax discussed below.
Nope. Cash from unemployment benefit is indistinguishable from cash from another form of income, unlike food stamps which automatically signal you as “poor” any time you use them to buy something.
Nope. We’re not talking about signalling “I’m poor” to the cashier at the supermarket. We’re talking at the level of policy. You know, Washington D.C. and all that. By the way, maybe you should have looked at a SNAP card before going all scarlet letter on me. Look at this mountain of shame. And here’s a film about the people who carry such cards. Maybe the film will help you stop calling them “filthy poor and social parasites.” Even Tyler Cowen praises SNAP.
Not any more than basic income does.
Randomized control trials (here’s one for example) indicate that basic income encourages work. RCTs often inspire hipster cynics to complain: “Oh, they continued working just because they knew the RCT would end. If you guaranteed them basic income for life, they would quit their jobs.” Of course, such complaints are merely handwaving, unlike the empirical evidence just presented.
Are there any RCTs for your idea? If no, why? As it turns out, the Negative Income Tax RCTs decades ago were probably the closest to your idea, since it tapers off as you earn more (similar to Viliam_Bur’s suggestion in this thread). The results inspired mixed reactions, with many critics claiming a drop in labor. This paper tries to sort out the mess.
Jodie T. Allen of the Nixon administration dealt with the NIT RCTs firsthand, and she immediately noticed some practical problems. For example, just like the EITC today mistakenly gives out billions of dollars to technically ineligible recipients, the NIT will probably mistakenly give out many billions more and turn the IRS into an even bigger bureaucracy as it deals with millions of ever-changing recipients. You seem quite naive to such administrative issues, per your professed belief to Viliam_Bur:
The bureaucratic hassles could be reduced to virtually zero if the government keeps track of who is employed and who isn’t. Yes, there is a risk of fraud: people could work without declaring it (with the complicity of their employers if any) and earn both their wage and the benefits. The judicial system can deal with that. I have no idea what I’m talking about.
As I’ve stated before, basic income has its implementation problems. But it’s nowhere near the level of complexity of your idea, which you insist is not that complex, because you haven’t spent much time actually thinking about it. This brings me to my main complaint against you.
Off topic. You are not helping to keep the level of this discussion high.
On topic, because I’m actually the one keeping the level of this discussion high, just like in past encounters. See, when I pointed you to this article last year, I discovered that you didn’t actually read it, and you went right back to ridiculing cryonics advocates. Then when you gave this half-assed one-liner above, I realized you probably do this with every subject. Just to double-check, I provided more links. As far as I can tell, the only ones you click on are the ones you judge to be an assault to your character, because those links are easier to process. So tell me: why should I continue to provide links if all you’re going to do is respond with half-assed one-liners? The only link you’ve provided thus far is an off-topic Wikipedia entry.
I understand you may be pressed for time, so instead of inefficiently talking past each other, let’s just exchange some links to books of our respective ideas. I’ll go first: here’s a huge anthology of Basic Income research. Your turn.
So what you’re saying is that your “unemployed-only” solution will make the words “We’ll quit” into a more credible threat, and employers will meet their demands because employers are too stupid to call their bluff?
If a single employee threats to quit, it’s not credible, just like if he or she threats to strike. If they many employees threat to quit, and they have the means to support themselves without a job, then the threat is credible.
You do recognize there are benefits to being employed other than the wage, right? Health care, networking, friends, knowledge, experience, etc?
If health care isn’t free then it should be at least included in the unemplyment benefits. The other stuff are real benefits, but they aren’t necessarily decisive to make the threat empty.
And, as I suggested before, what if the employees are paid well above your “unemployed-only” solution but wish to strike for shorter hours or a safer workplace?
If they are payed well above the unemployment wage then they can afford to strike. And basic income wouldn’t make much differnce to them anyway. You are making up increasingly contrived scenarios.
Nope. We’re not talking about signalling “I’m poor” to the cashier at the supermarket. We’re talking at the level of policy. You know, Washington D.C. and all that. By the way, maybe you should have looked at a SNAP card before going all scarlet letter on me. Look at this mountain of shame. And here’s a film about the people who carry such cards. Maybe the film will help you stop calling them “filthy poor and social parasites.” Even Tyler Cowen praises SNAP.
What is your point? Are you going to argue that food stamps are not low-status?
Randomized control trials (here’s one for example) indicate that basic income encourages work.
So if you give starving people cash, then maybe they don’t starve and improve their condition. How surprising...
Are there any RCTs for your idea? If no, why? As it turns out, the Negative Income Tax RCTs decades ago were probably the closest to your idea, since it tapers off as you earn more (similar to Viliam_Bur’s suggestion in this thread). The results inspired mixed reactions, with many critics claiming a drop in labor.
These weren’t unemployment benefits, but anyway it’s unsurprising that giving away money, in whathever way, reduces incentive to work.
As I’ve stated before, basic income has its implementation problems. But it’s nowhere near the level of complexity of your idea, which you insist is not that complex, because you haven’t spent much time actually thinking about it. This brings me to my main complaint against you.
Oh, come on. If the government can collect taxes, then it knows how much each of its citizen makes, with the exception of criminals, who face the risk of legal prosecution. Yes, unemployment benefits would have implementation costs. Still, these costs are probably less than the costs of the subsidy to Walmart, McDonald’s, et al. that basic income would impose on the government.
On topic, because I’m actually the one keeping the level of this discussion high, just like in past encounters. See, when I pointed you to this article last year, I discovered that you didn’t actually read it, and you went right back to ridiculing cryonics advocates.
A desperate person forfeiting the last months of her short life by starving herself to death, for a most likely misguided hope in a pseudoscientific and quite prossibly fraudulent procedure is not something I would call ridiculous. “Tragic” seems a much more appropriate description.
Anyway, you are arguing ad hominem. Just to give you a taste of your own medicine, if I were to lower myself to the this level of discourse I could say that since you buy into cryonics, which is bunk, then your general ability to form rational judgments on any topic is probably deficient, therefore you are probably wrong on basic income. I suppose that this would make sense from a Bayesian point of view. But that would be an ad hominem, hence I’m not going to make that argument.
I understand you may be pressed for time, so instead of inefficiently talking past each other, let’s just exchange some links to books of our respective ideas. I’ll go first: here’s a huge anthology of Basic Income research. Your turn.
Here’s another Wikipedia entry. Search “Argument by verbosity”.
government benefits to low-income workers are a subsidy to their employers.
This isn’t true, literally. Why do you think it’s true figuratively? If you have in mind the counterfactual situation in which benefits to low-income workers were removed, well, I think the economic consequences of that are complicated—much more complicated than a simple subsidy.
If the government awarded benefits only to the unemployed, many low-income workers would find preferable to quit their jobs if their employers didn’t increase their wage. Since employers need employees, employers would find preferable to increase their employees’ wages enough that they don’t need government benefits.
But the real problem is caused by the government giving more benefits to unemployed people than to employed people. It’s hardly a serious ethical critique of Wal-Mart to say that its actions are harmful given the weird distortative incentive-misaligned modern economic world.
If the government awarded benefits only to the unemployed, many low-income workers would find preferable to quit their jobs if their employers didn’t increase their wage. Since employers need employees, employers would find preferable to increase their employees’ wages enough that they don’t need government benefits.
They would also hire fewer employees while doing so.
The demand for unskilled, low pay labour would be fairly inelastic if per-worker productivity was fixed, because these wages are set by a bargain between the employers and the workers where the employers have the majority of bargaining power.
If per-worker productivity can significantly increased by investing in optimization and automation, then yes, demand for labour becomes more flexible, and increases in labour costs would create more unemployment.
It seems to me that the gains in general efficiency of the economy would compensate for the extra costs of unemployment benefits to more people. After all, the government could always increase corporate taxes to gather the money it need to pay benefits.
In principle it is possible to imagine an hypothetical (utopian? dystopian?) future where the vast majority of people are unemployed and live on unemployment benefits, while the few people who earn an income from a job or investment pay all the taxes. I haven’t considered this scenario in enough detail to say that this scenario would be likely or desirable, but it does seem like an intuitively plausible high-automation scenario.
where the employers have the majority of bargaining power.
Why? Most labor markets aren’t monosponies.
If per-worker productivity can significantly increased by investing in optimization and automation, then yes, demand for labour becomes more flexible, and increases in labour costs would create more unemployment.
Or if the workers are doing something that adds some value but isn’t strictly necessary, e.g., Wall-Mart greeters.
It seems to me that the gains in general efficiency of the economy would compensate for the extra costs of unemployment benefits to more people.
What gains in efficiency? After all automation and other capital investments cost money, and if it was a pure efficiency gain to invest in them, the company would already have done so.
You seem to be confusing being capital intensive with being efficient. These are frequently not the same thing, for example, a company that works with metal when faced with higher labor costs might decide to simply throw out its scrap rather than reprocessing it, this is more capital intensive (the company needs to buy more raw metal) but not more efficient.
Whatever your moral position is, government benefits to low-income workers are a subsidy to their employers.
If the government awarded benefits only to the unemployed, many low-income workers would find preferable to quit their jobs if their employers didn’t increase their wage. Since employers need employees, employers would find preferable to increase their employees’ wages enough that they don’t need government benefits.
The net effect would be a redistribution of wealth from employers (especially those who use lots of low wage labour, like Walmart) to the government (and hence to taxpayers).
On the other hand, increasing government benefits to low-income workers would redistribute wealth in the opposite direction: from the government to Walmart-like employers.
Note that neither policy significantly affects the welfare of low-income workers, since their effective purchasing power remains approximately the same.
Therefore, if you think it is morally preferable to redistribute wealth from Walmart to the taxpayers, support unemployed-only benefits (and/or minimum wages), if you think it is morally preferable to redistribute wealth from the taxpayers to Walmart instead, support guaranteed basic income and/or other low-income workers benefits.
That’s incorrect. Basic income is provided to everyone, even to those who choose not to work. Perhaps you were thinking of the Earned Income Tax Credit, which is provided only to low-income workers.
Therefore it allows employers to pay lower wages.
...only if the workers don’t mind lower wages (such as in a Silicon Valley startup). See, among many other benefits, basic income can serve as a permanent strike fund for those who are still employed. These employed strikers would not receive anything from your solution of “unemployed-only.” Furthermore, your targeted solution can be demonized as “lazy-only” and cut by politicians. Look at stigmatized food stamps today. Such drastic cuts are very unlikely with a non-stigmatizing basic income provided to everyone.
On a related note, GiveWell appears to be removing Against Malaria Foundation as their top charity, making GiveDirectly their new top charity. Donating to GiveDirectly may help legitimize the idea of an unconditional basic income. I don’t think basic income is as important as mass cryonics, but I still defend it in my upcoming “cryonics and basic income for everyone” website. Here’s hoping I finish the website someday.
workers would be getting about the same amount of many whether it came only from their employers or partially from their employers and partially from the state.
If I had a choice between e.g. $3000 monthly for working and $500 for staying at home, it would feel very different from choice between $3000 for working and $0 for staying at home. I could probably translate the “very different feeling” to better position at negotiating either higher salary or better working conditions.
It’s not obvious whether I could translate it exactly to $3500, or whether the additional money would be split between me and my employer. Please note that the labor market behaves a bit differently from typical markets, because when you pay people more, their free time becomes more valuable. For example, if you paid me 10 times more money than I make now, a likely consequence would be that I would work for you only shortly, and then enjoy an early retirement. (An effective altruist would keep working, though.) By increasing the market price, the supply can go down. So in some circumstances it could create a spiral of skilled people demanding more money, then leaving the labor market soon, which would increase the salaries of the remaining ones, etc.
Right, and that’s the point of unemployment benefits.
Well, yes and no. To get the unemployment benefits, there are some conditions (depending on the country). If I decided I want to stop working now, I probably wouldn’t get the unemployment benefits, unless I had a good excuse. They might just offer me another job, and I would have to take it, or lose the unemployment benefits. Also, I would have to do a huge amount of paperwork. All these inconveniences are big enough for me to not take this option voluntarily. If I tried this for one month, it is likely I would spend a large part of the month just visiting the bureaucrats and doing the paperwork.
With basic income without any conditions and paperwork attached, it would be like taking a vacation.
By “unemployment benefits” I mean benefits which are given to any able person of working age who doesn’t work, for whatever reason.
Some countries have unemployment benefits which have limited duration and/or are conditioned to the requirement to accept any job. That’s not what I’m talking about.
The bureaucratic hassles could be reduced to virtually zero if the government keeps track of who is employed and who isn’t.
Yes, there is a risk of fraud: people could work without declaring it (with the complicity of their employers if any) and earn both their wage and the benefits. The judicial system can deal with that.
Is there a specific country having the unemployment benefits in the way you described here?
(The way I described exists in Slovakia, and I would expect it to be in many other countries too, although I have no data about that.)
By the way, if there is a rule of “if you are not employed, you automatically get $X, no questions asked”, I hope there is also a gradual reduction of X instead of jumping from full value to zero when the person makes some money. To avoid situations like: “Sorry, this month your webpage made you $0.01 from adsense, therefore you are not eligible for the $500 from the government.”
I don’t know, possibly not. But that also applies to basic income.
There are various forms of income which are tax-exempt, I suppose that these should not count as employment.
The important part of my comment about gradual reduction was that people should never be put in a situation where if they make $N, they get additional $500 from the government, but if they make $N+0.01, they get nothing.
Regardless of how big is the $N, and how specifically they received the $0.01. Even if they received the $N using tax-exempt forms and the $0.01 using taxable forms. Or if $N is the limit for the tax-exempt form, and the $0.01 is the first cent above the limit.
Otherwise we get various kinds of crazy situations where people are punished for doing something that would otherwise be rewarded. Especially with poor people these kinds of situations are known to often lead to bad outcomes, both individually and socially.
...and the relevant part for this debate is that if this gradual reduction is implemented, the outcome is more similar psychologically to basic income than to unemployment benefits, because there is not a sharp dividing line between “not working” and “having a low-paying job”.
(A hypothetical example of a gradual reduction of government support which still does not lead to giving money to everyone would be giving people max(0, $500 − 0.2 X) money if they made $X otherwise. Which means that an unemployed person would get $500; a person who made 0.01 from adsense would get $499.99 regardless of whether adsense income belongs to some bureaucratic category or not; a person getting $200 from their job would get $460, which would make their total income $660; a person getting $2500 or more from their job would get nothing; etc.)
Whether your time becomes “more valuable” depends on what your baseline for value is. If your baseline is dollars, then your time hasn’t become more valuable. Rather, your time has the same value, but with more money, it is easier for you to purchase time. Your time becomes more valuable only relative to dollars and for many purposes this situation could more usefully be described as “dollars go down in value” rather than “time goes up in value”.
In particular this matters when comparing to poor people. Time is still valuable to them, but they are forced to use it up in order to get dollars or in order to avoid losing dollars.
Not necessarily. That’s why I brought up the example of basic income serving as a permanent strike fund to help employees demand higher wages. Employers can respond by meeting their demands, and/or automating more quickly, etc. Then society can respond to increased automation by increasing the basic income. Or not. I won’t talk about society’s transition into a gift economy here because that would take too much space.
I know you’re trying to paint Basic Income as a subsidy to employers, but it’s really not like the Earned Income Tax Credit. At all. I’ll continue this in the Luke_A_Somers thread.
Even so, payments to those who aren’t working can’t reasonably be classified as ‘redistribution of wealth from the taxpayers to Walmart’
I’m not sure that the drop will be as much, though—if everyone has a basic income, some people who are now driven to work despite hardship would not be so driven and could finally quit. Those who do work will not need to compete with them for jobs. ALSO, those on basic income would be able to buy things they presently cannot, which would increase the demand for labor further.
Right, in fact I was referring to payments to those who are working. A guaranteed basic income would not discriminate between the two, thus, in the proportion it was given to workers, it would be a subsidy to their employers.
Unemployment benefits would be sufficient to obtain these effects without transferring wealth from the taxpayers to the employers.
No. To illustrate, look at the starting point of the aforementioned subsidy to employers: the Earned Income Tax Credit. You can only make use of the EITC once you are employed, so all else being equal, the EITC contributes to the idea: “If you don’t work, you starve.” I may then feel pressured to work at McDonald’s or Walmart. By contrast, Basic Income exists external to the market, serving as a base amount for everyone to live on. Since I don’t have to worry about starving anymore, I now have more leverage in choosing if/where I want to work. Any amount I earn on top of the base amount is of my own volition for luxury items not needed for my survival. If I later want more money and my employer resists, I can use the basic income as a strike fund.
Three things. First, you seem to be forgetting my earlier point regarding staying power. Even if you rally society today to support your targeted “unemployment benefits” (I put it in quotes because I know you mean it in a welfare context that is wider than merely unemployment compensation), your welfare solution is still at risk of being stigmatized in the future and then cut by politicians. Basic income for everyone avoids this risk, and will have much greater staying power.
Second, you seem to be under the impression welfare is handed out like free candy. In reality, welfare can be a pain in the butt, whether it’s the intrusive paperwork, stressful delays, or the threat of fines and probation. Basic income bypasses this mess.
Third, you keep suggesting “taxpayers” and “corporations” are two separate things, even though corporations pay taxes too. Yes, corporations are quite adept at avoiding taxes, which is why tax reform also needs to be a part of this discussion.
My point is that you can do that with unemployment benefits without the side effect of subsidizing the employers.
Any policy is potentially subject to being reversed in the future. I don’t see why basic income would have more staying power than unemployment benefits.
Seems like these costs could be reduced to the point of irrelevance.
Not all taxpayers are corporations, and corporations have conflicting interests when they are in the role of taxpayers rather than the role of potential subsidy recipients: a corporation that employs mostly high pay labour (e.g. Google) has no interest to subsidy Walmart.
No. You can’t. One example I’ve stressed is that your unemployment benefits don’t help employees who wish to go on strike. Union dues can be decreased via Basic Income because unions won’t have to worry about strike funds anymore. Even if you’re not officially unionized, you know your coworkers get paid a Basic Income each month, and they know that you know. This simplicity-induced transparency can help you persuade/guilt-trip your co-workers to go on strike with you over, say, safer workplaces or shorter hours. And going on strike is an easier sell than getting everyone to quit for “unemployed-only” welfare (which, as I’ve stressed, your coworkers may not even end up receiving), especially if your coworkers are getting paid quite handsomely. After all, we’re not just talking about Walmart employees going on strike.
Long story short: Basic Income subsidizes employee leverage. And as Aaron Swartz emphasized, it can even help encourage employees to become entrepreneurs. Your repeated argument that Basic Income is subsidizing Walmart reminds me of this psychicpebbles video :p
Think of the aforementioned fight over food stamps today. Heck, many Americans don’t even know it’s called SNAP now, and SNAP advocates have to actively campaign to teach Americans what recipients receive. By contrast, Basic Income won’t need active campaigning once adopted: everyone will be passively reminded each month via their monthly payments. Furthermore, the endowment effect (yes I see the criticism section at that link) makes it much less likely that everyone will support a politician’s decision to cut their Basic Income monthly payments.
But only if society cares to reduce the costs! Again, people don’t even know the foods stamps program is now called SNAP. And they think recipients are all like Jason Greenslate.
To be fair, there are practical bottlenecks in the implementation of a basic income, so I do support already-existing welfare programs. It’s just that I also point out the weakness of those programs. I’m not much fun at parties.
Sure, but employees could threaten to quit their job. Anyway, how much money is currently locked as strike funds?
So can unemployment benefits: If you business fails, you have a safety net. Sure, you would have to give yourself and your employees a wage while your business is still unproductive, but that could be dealt with subsidies specifically targeted at startups.
Appeal to ridicule
If the government started to give money to everybody who turns 18 and doesn’t work I suppose that people would tend to notice.
The same endowment effect applies to taxes which affect most of the population. When the government proposes tax raises there is always some opposition, but this doesn’t prevent tax raises from occurring from time to time.
Food stamps are considered something extremely low status which only the filthy poor and social parasites would ever accept. Most people don’t care about the issue except as a social cost.
If threatening employers with the words “We’ll quit” is all that’s needed, then why do employees bother with strikes in the first place? Action gives power to words. As for your (rhetorical?) question, I’m not sure I follow. Non-unionized employees certainly don’t have a strike fund.
Hackers’ hobbies and experimentation technically don’t count as startups, even though they can lead to official companies in due time. Basic income can help support such experimentation. Furthermore, subsidies targeted specifically to startups can be opposed by established businesses as government meddling.
When an average American interviews for a job, which of the two is more likely on his mind: the wage, or the tax implications of the new job? Tax reformers face the uphill battle of a public perplexed by the complexity of taxation, as well those who feel protected from tax increases via possible deductions and loopholes. By contrast, an income stream is an easier thing to grasp. If everyone is given this income stream, any attempts to cut this income stream won’t be met with “some opposition.” It will be met with widespread opposition.
But your “lazy-only”… I mean, “unemployed-only” solution won’t fly because it will be demonized in the manner that you demonize SNAP here:
Whereas many SNAP recipients actually are employed, your “unemployed-only” solution actively discourages work. Therefore, your belief that the problems of targeted welfare “could be reduced to the point of irrelevance” seem, to put it mildly, a bit optimistic to me.
Basic income does not actively discourage work. Instead, it gives people leverage to choose their work if they so desire. Yes, I agree it is, to put it mildly, optimistic to expect adoption of basic income in the near future. However, I’m in it for the long-run.… unless, of course, someone convinces me that basic income is a bad idea. You’re currently not succeeding in this regard.
Appeal to authority
Because they would be in serious troubles if they quit and don’t have another form of income.
So either these hackers are unemployed, therefore they would be getting unemployment benefits if they existed, or they are employed, hence they can fund themselves with their salary. Until they can find an investor, of course.
Nope. Cash from unemployment benefit is indistinguishable from cash from another form of income, unlike food stamps which automatically signal you as “poor” any time you use them to buy something.
Not any more than basic income does.
Off topic.
You are not helping to keep the level of this discussion high.
Back from my Thanksgiving break. Delighted to see another turkey.
So what you’re saying is that your “unemployed-only” solution will make the words “We’ll quit” into a more credible threat, and employers will meet their demands because employers are too stupid to call their bluff? You do recognize there are benefits to being employed other than the wage, right? Health care, networking, friends, knowledge, experience, etc? And, as I suggested before, what if the employees are paid well above your “unemployed-only” solution but wish to strike for shorter hours or a safer workplace?
My great-grandfather was on the receiving end of a strike in 1940, and he lasted for two months without blinking an eye. If you tried your simple threat of “We’ll quit and go live off the benefits” on him, it would have come across like this scene from Cable Guy.
One of my contentions is that basic income has a much better chance of coming into existence than your solution, although I’ll hedge this notion with Milton Friedman’s Negative Income Tax discussed below.
Nope. We’re not talking about signalling “I’m poor” to the cashier at the supermarket. We’re talking at the level of policy. You know, Washington D.C. and all that. By the way, maybe you should have looked at a SNAP card before going all scarlet letter on me. Look at this mountain of shame. And here’s a film about the people who carry such cards. Maybe the film will help you stop calling them “filthy poor and social parasites.” Even Tyler Cowen praises SNAP.
Randomized control trials (here’s one for example) indicate that basic income encourages work. RCTs often inspire hipster cynics to complain: “Oh, they continued working just because they knew the RCT would end. If you guaranteed them basic income for life, they would quit their jobs.” Of course, such complaints are merely handwaving, unlike the empirical evidence just presented.
Are there any RCTs for your idea? If no, why? As it turns out, the Negative Income Tax RCTs decades ago were probably the closest to your idea, since it tapers off as you earn more (similar to Viliam_Bur’s suggestion in this thread). The results inspired mixed reactions, with many critics claiming a drop in labor. This paper tries to sort out the mess.
Jodie T. Allen of the Nixon administration dealt with the NIT RCTs firsthand, and she immediately noticed some practical problems. For example, just like the EITC today mistakenly gives out billions of dollars to technically ineligible recipients, the NIT will probably mistakenly give out many billions more and turn the IRS into an even bigger bureaucracy as it deals with millions of ever-changing recipients. You seem quite naive to such administrative issues, per your professed belief to Viliam_Bur:
As I’ve stated before, basic income has its implementation problems. But it’s nowhere near the level of complexity of your idea, which you insist is not that complex, because you haven’t spent much time actually thinking about it. This brings me to my main complaint against you.
On topic, because I’m actually the one keeping the level of this discussion high, just like in past encounters. See, when I pointed you to this article last year, I discovered that you didn’t actually read it, and you went right back to ridiculing cryonics advocates. Then when you gave this half-assed one-liner above, I realized you probably do this with every subject. Just to double-check, I provided more links. As far as I can tell, the only ones you click on are the ones you judge to be an assault to your character, because those links are easier to process. So tell me: why should I continue to provide links if all you’re going to do is respond with half-assed one-liners? The only link you’ve provided thus far is an off-topic Wikipedia entry.
I understand you may be pressed for time, so instead of inefficiently talking past each other, let’s just exchange some links to books of our respective ideas. I’ll go first: here’s a huge anthology of Basic Income research. Your turn.
If a single employee threats to quit, it’s not credible, just like if he or she threats to strike. If they many employees threat to quit, and they have the means to support themselves without a job, then the threat is credible.
If health care isn’t free then it should be at least included in the unemplyment benefits. The other stuff are real benefits, but they aren’t necessarily decisive to make the threat empty.
If they are payed well above the unemployment wage then they can afford to strike. And basic income wouldn’t make much differnce to them anyway.
You are making up increasingly contrived scenarios.
What is your point? Are you going to argue that food stamps are not low-status?
So if you give starving people cash, then maybe they don’t starve and improve their condition. How surprising...
These weren’t unemployment benefits, but anyway it’s unsurprising that giving away money, in whathever way, reduces incentive to work.
Oh, come on. If the government can collect taxes, then it knows how much each of its citizen makes, with the exception of criminals, who face the risk of legal prosecution.
Yes, unemployment benefits would have implementation costs. Still, these costs are probably less than the costs of the subsidy to Walmart, McDonald’s, et al. that basic income would impose on the government.
A desperate person forfeiting the last months of her short life by starving herself to death, for a most likely misguided hope in a pseudoscientific and quite prossibly fraudulent procedure is not something I would call ridiculous. “Tragic” seems a much more appropriate description.
Anyway, you are arguing ad hominem.
Just to give you a taste of your own medicine, if I were to lower myself to the this level of discourse I could say that since you buy into cryonics, which is bunk, then your general ability to form rational judgments on any topic is probably deficient, therefore you are probably wrong on basic income. I suppose that this would make sense from a Bayesian point of view. But that would be an ad hominem, hence I’m not going to make that argument.
Here’s another Wikipedia entry. Search “Argument by verbosity”.
That’s an interesting point against Basic Income Guarantees. Thank you for making me consider it.
This isn’t true, literally. Why do you think it’s true figuratively? If you have in mind the counterfactual situation in which benefits to low-income workers were removed, well, I think the economic consequences of that are complicated—much more complicated than a simple subsidy.
None of this makes it a subsidy.
But the real problem is caused by the government giving more benefits to unemployed people than to employed people. It’s hardly a serious ethical critique of Wal-Mart to say that its actions are harmful given the weird distortative incentive-misaligned modern economic world.
And then this is is combined with a minimum wage, and things continue to get complicated.
They would also hire fewer employees while doing so.
Why?
Basic supply and demand, if something costs more you buy less of it. Unless their demand for labor is completely inelastic which is rarely the case.
The demand for unskilled, low pay labour would be fairly inelastic if per-worker productivity was fixed, because these wages are set by a bargain between the employers and the workers where the employers have the majority of bargaining power.
If per-worker productivity can significantly increased by investing in optimization and automation, then yes, demand for labour becomes more flexible, and increases in labour costs would create more unemployment.
It seems to me that the gains in general efficiency of the economy would compensate for the extra costs of unemployment benefits to more people. After all, the government could always increase corporate taxes to gather the money it need to pay benefits.
In principle it is possible to imagine an hypothetical (utopian? dystopian?) future where the vast majority of people are unemployed and live on unemployment benefits, while the few people who earn an income from a job or investment pay all the taxes.
I haven’t considered this scenario in enough detail to say that this scenario would be likely or desirable, but it does seem like an intuitively plausible high-automation scenario.
Why? Most labor markets aren’t monosponies.
Or if the workers are doing something that adds some value but isn’t strictly necessary, e.g., Wall-Mart greeters.
What gains in efficiency? After all automation and other capital investments cost money, and if it was a pure efficiency gain to invest in them, the company would already have done so.
You seem to be confusing being capital intensive with being efficient. These are frequently not the same thing, for example, a company that works with metal when faced with higher labor costs might decide to simply throw out its scrap rather than reprocessing it, this is more capital intensive (the company needs to buy more raw metal) but not more efficient.
...or support government benefits directly to Walmart.