The advantage of income over services is that with income the choice is yours, but with service the choice is upon the service provider. So you may get situation where the government gives you free Cola, but what you actually need is insulin injections. Less dramatically, government gives you free sausages, and you are a vegan; or government gives you free chocolate, and you prefer ice cream. Shortly, the service approach imagines a “model customer”, and if your needs differ significantly from this model, sucks to be you.
Even the construction of the “model customer” would probably not optimize for the majority of consumers, but would be subject to corruption (I lobby for including X in the “basic services” because my friends owns the X-producing factory), and applause lights (should “basic services” include art? yes; sex toys? no).
Another important aspect is feedback about quality. It is quite likely that the government-provided food would be tasteless; and the government-provided books either boring or stupid, probably both.
At one extreme, there could be a highly paternalistic welfare system, where the state is providing a somewhat optimized diet, healthcare, housing, etc. while at the other extreme the state would just grant basic income at the same cost level it could have provided the other services.
This sounds like a possible solution, and I wonder if something like this was already used somewhere.
Is the choice “all or nothing”, or can you choose to e.g. take the healthcare, but take cash instead of housing and live with your parents, and take cash instead of food and buy soylent? Can you change your mind once in a month, or once in a year? I wonder how flexibly could government react to mass changes, like one year million people want housing, the next year they all decide they would rather take cash (or the other way round, which would require building million new houses overnight).
I have no strong opinion on this. On one hand, it seems to be a universal experience that when government does something, it usually sucks, with a few exceptions now and then. On the other hand, hypermarket chains are able to provide cheap products under their own brand, and it is not obvious why the government shouldn’t be able to do the same thing, especially when citizens could opt out, so some pressure would remain. (This however assumes that the government wants to do the right thing. Maybe politicians would instead make the opting out more difficult, or perhaps make taking the services mandatory for some part of population. The problem is that politicians do not have to optimize within some given rules; they can also change the rules.)
I agree that it is a huge problem if the rules can change in a manner that evaporates the fitness pressure on the services: you need some sort of pegging to stop budgets from exploding, you can’t have gov outlawing competition, etc.
I also don’t have a strong opinion on how flexible the government should be here. The more flexible it is, the less benefit you get from constraining variance and achieving economies of scale, the more flexible it is, the more people can get exactly what they want, but with less buying power. I do think it is helpful to have the ability to individually opt out of services, and this would be a very useful signal for forcing both the government and service contractors to adapt. I’m not sure just how many services should be competing for a given service niche within the broader system. One idea would be you have a competition to come up with cheap standardized services, and then companies compete to provide them.
The big thing you are trying to achieve is providing a welfare floor at a much more sustainable cost via competitive pressure combined with the ability to centrally coordinate consumer preferences. The coordination doesn’t just give market power benefits, you also have increased legibility that decreases search and transaction cost for consumers and potentially the ability to do better large scale (though still not randomized) experiments in nutrition science and regulation design (e.g. food standards far exceeding regulatory requirements cheaply, exceptions to housing size requirements, etc.)
The advantage of income over services is that with income the choice is yours, but with service the choice is upon the service provider. So you may get situation where the government gives you free Cola, but what you actually need is insulin injections. Less dramatically, government gives you free sausages, and you are a vegan; or government gives you free chocolate, and you prefer ice cream. Shortly, the service approach imagines a “model customer”, and if your needs differ significantly from this model, sucks to be you.
Even the construction of the “model customer” would probably not optimize for the majority of consumers, but would be subject to corruption (I lobby for including X in the “basic services” because my friends owns the X-producing factory), and applause lights (should “basic services” include art? yes; sex toys? no).
Another important aspect is feedback about quality. It is quite likely that the government-provided food would be tasteless; and the government-provided books either boring or stupid, probably both.
This sounds like a possible solution, and I wonder if something like this was already used somewhere.
Is the choice “all or nothing”, or can you choose to e.g. take the healthcare, but take cash instead of housing and live with your parents, and take cash instead of food and buy soylent? Can you change your mind once in a month, or once in a year? I wonder how flexibly could government react to mass changes, like one year million people want housing, the next year they all decide they would rather take cash (or the other way round, which would require building million new houses overnight).
I have no strong opinion on this. On one hand, it seems to be a universal experience that when government does something, it usually sucks, with a few exceptions now and then. On the other hand, hypermarket chains are able to provide cheap products under their own brand, and it is not obvious why the government shouldn’t be able to do the same thing, especially when citizens could opt out, so some pressure would remain. (This however assumes that the government wants to do the right thing. Maybe politicians would instead make the opting out more difficult, or perhaps make taking the services mandatory for some part of population. The problem is that politicians do not have to optimize within some given rules; they can also change the rules.)
I agree that it is a huge problem if the rules can change in a manner that evaporates the fitness pressure on the services: you need some sort of pegging to stop budgets from exploding, you can’t have gov outlawing competition, etc.
I also don’t have a strong opinion on how flexible the government should be here. The more flexible it is, the less benefit you get from constraining variance and achieving economies of scale, the more flexible it is, the more people can get exactly what they want, but with less buying power. I do think it is helpful to have the ability to individually opt out of services, and this would be a very useful signal for forcing both the government and service contractors to adapt. I’m not sure just how many services should be competing for a given service niche within the broader system. One idea would be you have a competition to come up with cheap standardized services, and then companies compete to provide them.
The big thing you are trying to achieve is providing a welfare floor at a much more sustainable cost via competitive pressure combined with the ability to centrally coordinate consumer preferences. The coordination doesn’t just give market power benefits, you also have increased legibility that decreases search and transaction cost for consumers and potentially the ability to do better large scale (though still not randomized) experiments in nutrition science and regulation design (e.g. food standards far exceeding regulatory requirements cheaply, exceptions to housing size requirements, etc.)