Author Topic: What would you do if your country provided a guaranteed minimum income of 20K?  (Read 37998 times)

th0rbahn

  • 5 O'Clock Shadow
  • *
  • Posts: 8
This idea has been in Canadian news lately: http://www.ctvnews.ca/business/are-canadians-worth-20k-a-year-guaranteed-1.1891794

I've been thinking about the concept and trying to imagine what I would do if such a policy came into effect. While I imagine that most folks with expenses higher than 20K would continue on their career and retirement plans as usual, would it be wrong for we who live on less to just retire immediately (on maybe volunteer, pursue hobbies and contribute to society in ways other than working)? My gut instinct is that it feels like a "cop-out" to take advantage of the system, but on the other hand, my goal right now is to basically guarantee myself an income of about 20K through investments and then quit working.

What's your take?

LibrarIan

  • Pencil Stache
  • ****
  • Posts: 537
I like the idea because it does positive things for people in poverty, but I have some questions. I'm not asking these because I have a better idea or asking rhetorically - I really want to know.

- If everyone gets the same amount of money, doesn't that just make this amount the new zero?
- What does this do to inflation rates?

I'm the last person you'll want to ask about economics :-)

lauren_knows

  • Pencil Stache
  • ****
  • Posts: 846
  • Age: 42
  • Location: Annandale, VA, USA
  • Happiness is a choice
    • The Crowdsourced FIRE simulator
I like the idea because it does positive things for people in poverty, but I have some questions. I'm not asking these because I have a better idea or asking rhetorically - I really want to know.

- If everyone gets the same amount of money, doesn't that just make this amount the new zero?
- What does this do to inflation rates?

I'm the last person you'll want to ask about economics :-)

I've always liked Reddit's Basic Income FAQ: http://www.reddit.com/r/basicincome/wiki/index

The short answer:  It would probably effect inflation in the short-term, but in specific areas and not by much.

To the original post:  I'd retire immediately. For both my wife and I, $40k is more than enough to live on.


teen persuasion

  • Handlebar Stache
  • *****
  • Posts: 1226
I like the idea because it does positive things for people in poverty, but I have some questions. I'm not asking these because I have a better idea or asking rhetorically - I really want to know.

- If everyone gets the same amount of money, doesn't that just make this amount the new zero?
- What does this do to inflation rates?

I'm the last person you'll want to ask about economics :-)

I've always liked Reddit's Basic Income FAQ: http://www.reddit.com/r/basicincome/wiki/index

The short answer:  It would probably effect inflation in the short-term, but in specific areas and not by much.

To the original post:  I'd retire immediately. For both my wife and I, $40k is more than enough to live on.

I initially thought of this as $20k household income, not per capita.  $20k each would be ridiculous for my family!  Not that I'd turn it down, though.

yandz

  • Stubble
  • **
  • Posts: 122
For me to participate in something, I think "Is this sustainable if everyone did it?"  The answer here is a clear "No." We need to structure our lives in a way that is sustainable for society, not just for ourselves. 

For myself, I also have to draw a clear distinction between needing help vs. choosing passiveness. If you need help, yes, use the resources available. But just because very early in my career my low salary qualified for me for food stamps doesn't mean I used them. I didn't need help. I had roommates and ate cheap and pinched pennies and worked my butt off and got a raise.  Now if I had needed help, I would have sought it out.  But can and should are a blurry line for most that I would love to help them define.

lauren_knows

  • Pencil Stache
  • ****
  • Posts: 846
  • Age: 42
  • Location: Annandale, VA, USA
  • Happiness is a choice
    • The Crowdsourced FIRE simulator
I like the idea because it does positive things for people in poverty, but I have some questions. I'm not asking these because I have a better idea or asking rhetorically - I really want to know.

- If everyone gets the same amount of money, doesn't that just make this amount the new zero?
- What does this do to inflation rates?

I'm the last person you'll want to ask about economics :-)

I've always liked Reddit's Basic Income FAQ: http://www.reddit.com/r/basicincome/wiki/index

The short answer:  It would probably effect inflation in the short-term, but in specific areas and not by much.

To the original post:  I'd retire immediately. For both my wife and I, $40k is more than enough to live on.

I initially thought of this as $20k household income, not per capita.  $20k each would be ridiculous for my family!  Not that I'd turn it down, though.

Most estimates I've seen are $13-15k per adult and that would be without any tax increases, if I recall correctly.  Simply changing how social aid is delivered.  If it were $30k combined for my wife and I, I think we'd still have plenty to ditch employment immediately.

Albert

  • Handlebar Stache
  • *****
  • Posts: 1244
  • Location: Switzerland
I'd continue working, first of all because 20k is far too little to live on here and second because I also don't believe in living on someone else's money unless that's the only option available. Also it's clearly unsustainable and our civilisation would collapse very quickly indeed if even 50% of us tried it.

MrFancypants

  • Pencil Stache
  • ****
  • Posts: 605
I'd retire the day my house was paid off. 

$40k (me + wife) + other passive income = PARTY TIME

warfreak2

  • Handlebar Stache
  • *****
  • Posts: 1136
  • Location: UK
    • Music by me
This excellent article makes a compelling case, and debunks a lot of the common counter-arguments.
« Last Edit: June 30, 2014, 11:56:02 AM by warfreak2 »

ChrisLansing

  • Bristles
  • ***
  • Posts: 348
I'd quit my full time job, my wife would quit her part-time job, and we'd realize a slight raise in our annual income.    We can't pass this into law fast enough.   

Pegasus

  • 5 O'Clock Shadow
  • *
  • Posts: 37
Programs like that have an impact on a lot of things that make the unintended consequences outweigh any benefits.  Politicians bent on vote buying always ignore secondary effects.  Where will the money come from?  Taxpayers?  Employers?  Wealth taxes that redistribute your nest egg?  And what is always the impact when government hands out money?  Fraud and price increases.  Like the minimum wage, it just ends up resetting prices higher so people end up where they were.  (Twain explains this extremely well in CT Yankee, as does Walter E Williams in his essays on min wage).  Big difference between an experiment with a dozen people in that article and country-wide.

Erica/NWEdible

  • Pencil Stache
  • ****
  • Posts: 881
    • Northwest Edible Life - life on garden time
I don't think any case is being made for 20K per person in the US, but somewhere in the neighborhood of 10-12K per year seems to come up pretty frequently. I'm generally in favor of a federal minimum income entitlement to displace the current welfare system. That's based on an impression that it would be a far more efficient and less expensive way to redistribute wealth. I'd prefer to see as little Puritanism and bureaucracy as possible to efficiently get the job of entitlement spending done. I don't think a guaranteed income will happen any time soon in North America, but if I woke up tomorrow and the US was handing out $20K to every adult, I would keep doing exactly what I am doing and my husband would most likely retire assuming that the wealth taxes necessary to fund this didn't totally gut our stash. (Which they might, who knows what the details would be....)

FIPurpose

  • Handlebar Stache
  • *****
  • Posts: 2061
  • Location: ME
    • FI With Purpose
It seems that at least on a micro-economic scale, this system seems to work. Though the article seems to lack macro-economic possibilities. I would love to see an article that discusses possible outcomes if it were to happen on a larger scale. The article seemed to assume that if it worked on a small scale then it would work on a larger one.

lauren_knows

  • Pencil Stache
  • ****
  • Posts: 846
  • Age: 42
  • Location: Annandale, VA, USA
  • Happiness is a choice
    • The Crowdsourced FIRE simulator
Programs like that have an impact on a lot of things that make the unintended consequences outweigh any benefits.  Politicians bent on vote buying always ignore secondary effects.  Where will the money come from?  Taxpayers?  Employers? 

If you've never read about the idea of Universal Basic Income, I suggest you read some of the FAQ type articles that are out there.  Most of the ideas revolving around it state that the money would come from simply eliminating most or all of the current social safety nets, and simply distributing that money directly to the people.  No bureaucracy, no sense of unfairness, everyone gets the same amount.

There are a lot of discussions on the impact that it might have on inflation.  There is no consensus, but many think that it wouldn't have much of a direct impact. http://www.reddit.com/r/basicincome/wiki/index#wiki_wouldn.27t_this_just_cause_inflation.3F

ChrisLansing

  • Bristles
  • ***
  • Posts: 348
I don't think any case is being made for 20K per person in the US, but somewhere in the neighborhood of 10-12K per year seems to come up pretty frequently. I'm generally in favor of a federal minimum income entitlement to displace the current welfare system. That's based on an impression that it would be a far more efficient and less expensive way to redistribute wealth. I'd prefer to see as little Puritanism and bureaucracy as possible to efficiently get the job of entitlement spending done. I don't think a guaranteed income will happen any time soon in North America, but if I woke up tomorrow and the US was handing out $20K to every adult, I would keep doing exactly what I am doing and my husband would most likely retire assuming that the wealth taxes necessary to fund this didn't totally gut our stash. (Which they might, who knows what the details would be....)

This is why economists on the right have supported the idea - it streamlines the process and let's people make their own spending decisions.      Most variations I've seen over the years suggest  50-75%  of the poverty line for an individual.    Right now I think the poverty line is about $11,670.   I'd favor closer to 100% of the poverty level myself, but then I'm not overly worried about disincentives to work.   

shotgunwilly

  • Pencil Stache
  • ****
  • Posts: 548
This is a stupid idea.

tooqk4u22

  • Magnum Stache
  • ******
  • Posts: 2833
I like the idea from the perspective of efficiency/streamlining but it can only work in countries that have a very high amount of natural resources per capital, which means it can't work in the US (maybe Canada though), in reality only countries with high natural resources per population can have a healthy economy AND fund significant social programs. 

The US spends about $11k per capital ON EVERYTHING and we still can't pay for that - about half goes to social programs as it is.  So we have about 225mil people that are age 20 or older - so you could give all these people $10k a year each if you wipe out the other social outlays (SSI, Medicare, Medicaid, various housing/food/health subsidies, etc.)  Even if that were ok, it would be ignoring the health and welfare of those under 20 years of age and anybody that couldn't survive on $10K (such as an 85 year old who has significant health care needs).

Sorry cant work in the US.

ChrisLansing

  • Bristles
  • ***
  • Posts: 348
I like the idea from the perspective of efficiency/streamlining but it can only work in countries that have a very high amount of natural resources per capital, which means it can't work in the US (maybe Canada though), in reality only countries with high natural resources per population can have a healthy economy AND fund significant social programs. 

The US spends about $11k per capital ON EVERYTHING and we still can't pay for that - about half goes to social programs as it is.  So we have about 225mil people that are age 20 or older - so you could give all these people $10k a year each if you wipe out the other social outlays (SSI, Medicare, Medicaid, various housing/food/health subsidies, etc.)  Even if that were ok, it would be ignoring the health and welfare of those under 20 years of age and anybody that couldn't survive on $10K (such as an 85 year old who has significant health care needs).

Sorry cant work in the US.

Could you explain this please? 

lauren_knows

  • Pencil Stache
  • ****
  • Posts: 846
  • Age: 42
  • Location: Annandale, VA, USA
  • Happiness is a choice
    • The Crowdsourced FIRE simulator
This is a stupid idea.

Such a great contribution to the discussion. We'll take it into consideration.

PloddingInsight

  • Bristles
  • ***
  • Posts: 320
I think it's a terrible idea.  Money is just an intermediary between production and consumption.  Think about it:  In aggregate we make a bunch of stuff.  In aggregate we use and dispose of a bunch of stuff.  The money just organizes it all.

According to this thread, a lot of people would stop making things if this law passed.  With less stuff made, we'd all have to make do with less.

Or in other words... hell yeah prices would rise.  They would rise a lot.

(Now cue the responses claiming I'm promoting consumerism and excess consumption...)

lauren_knows

  • Pencil Stache
  • ****
  • Posts: 846
  • Age: 42
  • Location: Annandale, VA, USA
  • Happiness is a choice
    • The Crowdsourced FIRE simulator
I think it's a terrible idea.  Money is just an intermediary between production and consumption.  Think about it:  In aggregate we make a bunch of stuff.  In aggregate we use and dispose of a bunch of stuff.  The money just organizes it all.

According to this thread, a lot of people would stop making things if this law passed.  With less stuff made, we'd all have to make do with less.

Or in other words... hell yeah prices would rise.  They would rise a lot.

(Now cue the responses claiming I'm promoting consumerism and excess consumption...)

To take this to the logical extreme:  Imagine a world where everything is automated, to the point that only 5% of the population needs to "work" to provide all of our current needs.  I think consumption is still going to happen, you're just going to need to change the way that society allows for it.

Plus, people would still want to work to get more money. For every mustachian that would retire immediately, there'd be people willing to take their job for more money and more consumption.

sobezen

  • Bristles
  • ***
  • Posts: 371
  • Age: 894
If this minimum 20k existed now, it still would not dramatically change my life until I saved enough to pay off my home.  This would be the key for me to achieve the semi-retirement that MMM outlined by eliminating his housing debt.  After that the 20k could supplement my overhead (assuming I still needed to pay property taxes, insurance and other necessary costs) or simply serve as gravy to save up for something special.   :)

gillstone

  • Bristles
  • ***
  • Posts: 392
  • Age: 42
  • Location: The best state in the Union (MT)
I would still work but I would be free to leave if I was faced with miserable workplace or pressure to be unethical.  I'm still not completely sold on minimum income but I'm intrigued. 

How many people would walk away from unnecessarily unsafe working conditions when they don't have to risk their lives just to eat?  How many whistle-blowers would come forward when being fired and blacklisted are not the threat they are now?

I work with government funding for housing and know how tangled up in red tape the program can be so it can prevent fraud on the part of property managers, developers, tenants & owners.  I know how much rent-seeking activity on the part of all sorts of stakeholders defines how the programs work.  The idea that the whole thing could get wiped away in one fell swoop is tempting.

One thing gnaws at me though, a quote from HL Mencken, "...there is always a well-known solution to every human problem — neat, plausible, and wrong."


FIPurpose

  • Handlebar Stache
  • *****
  • Posts: 2061
  • Location: ME
    • FI With Purpose
The only issue with that the big difference is that there is already a lot of money being handed out via welfare, projects, income-based rental prices, and tax credits. What if instead of offering all those programs, they were stream-lined into a single process removing all beauracracy of the different sections, and just handed out the money. You would no longer be paying to make sure that money was being spent correctly, only that the person is a verified citizen (automatable) and still alive.

The number I would like to see is what do we currently spend on all welfare programs, and would this reduce costs to effectively reach a 10,000 - 15,000 per person.

There would also probably be a phase out at about 3-4x poverty so anyone making 60 - 70k would receive about half, and above 90k would receive nothing.

To simplify things let's run some napkin math:

If we are only talking about giving 50% of the population this money, then the phase out would be somewhere around 50k.

US population is about 318 million. Let's say that children make up 73-million leaving about: 245 million adults and 123 million that would receive this money.

Let's assume that we set our amount at about 12k per person. This leaves us with a program that will cost 1,476,000,000,000 or 1.5 Trillion plus operating costs.

All current welfare spending fed and state is 524 billion leaving a deficit of 952 billion dollars.

The article above says that medical spending was reduced by about 10%. Health care spending is at 1.27 Trillion so we ca reduce our deficit to 825 Billion.

So now let's reassume some numbers: instead of everyone under 50k, let's say everyone under 30k which is about 25% of pop. Which brings us to saving another 738billion and a deficit of about 87 billion which is close enough to 0 for napkin math.

But there are still a lot of unknowns, such as who would stop working. What affect does this have on lower wage jobs? and how does this affect supply/demand chains for lower economic products?

All numbers from: http://www.usgovernmentspending.com/year_spending_2014USbn_15bs2n_401080#usgs302 and http://en.wikipedia.org/wiki/Household_income_in_the_United_States

galliver

  • Handlebar Stache
  • *****
  • Posts: 1863
I can't believe how many people apparently work solely for the paycheck.  :(

I find the concept interesting because I think that having a basic income that guaranteed necessities would create an honest labor market: how much money do you have to offer someone to give you an hour of their life to run a cash register...when they aren't desperate?

tooqk4u22

  • Magnum Stache
  • ******
  • Posts: 2833
I like the idea from the perspective of efficiency/streamlining but it can only work in countries that have a very high amount of natural resources per capital, which means it can't work in the US (maybe Canada though), in reality only countries with high natural resources per population can have a healthy economy AND fund significant social programs. 

Could you explain this please?

The premise is that when a country has an over abundance of natural resoureces they can essentially harvest those resources, monetize them, and use those funds to invest in other productive pursuits and/or pay for social programs.  Because these resources are exported out and typically correlated with inflation the country really doesn't have to produce anything to be able to pay for its citizen - but it really only works if you monetization of the resources is used to create a diversified economy (this is hard to). 

However, there is a dark side to this is as well because there is something known as the Resource Curse where countries like this become complacent and don't invest in other business sectors making them succeptiple to currency issues, weak demand for commodities put the country into an economic tailspin, opens it up for corruption/unstable governments, etc.

CarDude

  • Pencil Stache
  • ****
  • Posts: 609
  • Location: Chicago, IL
  • Beep Beep!
    • The CCD
I think this would be a great idea, and have been a fan of the idea for years since reading about the Canadian experiment involving it back in the 70s or 80s.

And in response, my wife and I would definitely drop in our working hours if we hadn't already to make it easier to raise kids and have a life together. :D

Daisy

  • Handlebar Stache
  • *****
  • Posts: 2263
I like the idea because it does positive things for people in poverty, but I have some questions. I'm not asking these because I have a better idea or asking rhetorically - I really want to know.

- If everyone gets the same amount of money, doesn't that just make this amount the new zero?
- What does this do to inflation rates?

I'm the last person you'll want to ask about economics :-)

Put me in the "nay" column.

I believe people should earn their FIRE. If it's not earned, it's not appreciated.

How sustainable is this? Does everyone get $20k? If so, then I agree it will become "the new zero". Easy access to money will then translate into inflation and higher prices. Look at the housing market in the 2000s and the college costs that are skyrocketing as people have easier access to money and credit.

If only those with lower incomes get the $20k, then who will work for anything less than $20k? How will those jobs get done?

Also, where is this $20k per person coming from?

The only positive I see is if it replaces current safety net programs that involve a lot of red tape and fraud.

taekvideo

  • Bristles
  • ***
  • Posts: 273
I wouldn't depend on that to live... who knows how long it'd be around.
But I'm all for it... probably at something closer to 5-10k though.

ChrisLansing

  • Bristles
  • ***
  • Posts: 348
I like the idea from the perspective of efficiency/streamlining but it can only work in countries that have a very high amount of natural resources per capital, which means it can't work in the US (maybe Canada though), in reality only countries with high natural resources per population can have a healthy economy AND fund significant social programs. 

Could you explain this please?

The premise is that when a country has an over abundance of natural resoureces they can essentially harvest those resources, monetize them, and use those funds to invest in other productive pursuits and/or pay for social programs.  Because these resources are exported out and typically correlated with inflation the country really doesn't have to produce anything to be able to pay for its citizen - but it really only works if you monetization of the resources is used to create a diversified economy (this is hard to). 

However, there is a dark side to this is as well because there is something known as the Resource Curse where countries like this become complacent and don't invest in other business sectors making them succeptiple to currency issues, weak demand for commodities put the country into an economic tailspin, opens it up for corruption/unstable governments, etc.

One cannot help but wonder how the Japanese manage to make public expenditures.   

shotgunwilly

  • Pencil Stache
  • ****
  • Posts: 548
This is a stupid idea.

Such a great contribution to the discussion. We'll take it into consideration.

Glad you enjoyed it.

tooqk4u22

  • Magnum Stache
  • ******
  • Posts: 2833
I like the idea from the perspective of efficiency/streamlining but it can only work in countries that have a very high amount of natural resources per capital, which means it can't work in the US (maybe Canada though), in reality only countries with high natural resources per population can have a healthy economy AND fund significant social programs. 

Could you explain this please?

The premise is that when a country has an over abundance of natural resoureces they can essentially harvest those resources, monetize them, and use those funds to invest in other productive pursuits and/or pay for social programs.  Because these resources are exported out and typically correlated with inflation the country really doesn't have to produce anything to be able to pay for its citizen - but it really only works if you monetization of the resources is used to create a diversified economy (this is hard to). 

However, there is a dark side to this is as well because there is something known as the Resource Curse where countries like this become complacent and don't invest in other business sectors making them succeptiple to currency issues, weak demand for commodities put the country into an economic tailspin, opens it up for corruption/unstable governments, etc.

One cannot help but wonder how the Japanese manage to make public expenditures.

They can't - their debt to GDP is 227% and growing.  The largely services driven economy was stagnant in the late 80's then deflationary and then they implented this thing called quantitative easing with a zero rate policy which didn't really stave off deflation, then more recently they started buying their own bonds to lower long term rates to promote inflation (has helped increase the Japan stock market and asset prices) but time will tell if works but in the meantime debt to gdp has gone from 165% (still high) in 2005 to 227% in 2014.  This all sounds very familiar.....where have I seen this story? 

Ian

  • Bristles
  • ***
  • Posts: 364
  • Location: South Korea
Budgetary or ethical questions aside, I've always wondered if this is even vaguely politically feasible. Given the (metaphorical) riots that take place over far less drastic changes, it seems hard to believe anything like this could be seriously discussed.

Must_Stash

  • 5 O'Clock Shadow
  • *
  • Posts: 58
In cases such as those defined in the article below, of course the recipients would not work.

http://www.vancouversun.com/news/Participants+with+mental+illness+addictions+thrive+after+being+given+apartments+five+year/9979290/story.html

And the net cost might be small.  If the program eliminated the SNAP or Section 8 bureaucracies, maybe it would even be a wash.

Meanwhile, I'd start working for myself.  And soon I would not need my guaranteed floor.

marty998

  • Walrus Stache
  • *******
  • Posts: 7372
  • Location: Sydney, Oz
Could be possible in Aus. We spend $11k per adult on average on welfare.

I like the idea from the perspective of efficiency/streamlining but it can only work in countries that have a very high amount of natural resources per capital, which means it can't work in the US (maybe Canada though), in reality only countries with high natural resources per population can have a healthy economy AND fund significant social programs. 

Could you explain this please?

The premise is that when a country has an over abundance of natural resoureces they can essentially harvest those resources, monetize them, and use those funds to invest in other productive pursuits and/or pay for social programs.  Because these resources are exported out and typically correlated with inflation the country really doesn't have to produce anything to be able to pay for its citizen - but it really only works if you monetization of the resources is used to create a diversified economy (this is hard to). 

However, there is a dark side to this is as well because there is something known as the Resource Curse where countries like this become complacent and don't invest in other business sectors making them succeptiple to currency issues, weak demand for commodities put the country into an economic tailspin, opens it up for corruption/unstable governments, etc.

One cannot help but wonder how the Japanese manage to make public expenditures.

Our whales are their resource. They seem to think there's a renewable supply of whales. It's gotten so bad that Antarctica(!) is now labelled a Japanese traditional hunting ground and they come down here farming our minkes. When they go extinct down here then Japan will definitely be out of resources. I'd like to say thats a sarcastic response, but no, there's too much truth in there.

I like the idea from the perspective of efficiency/streamlining but it can only work in countries that have a very high amount of natural resources per capital, which means it can't work in the US (maybe Canada though), in reality only countries with high natural resources per population can have a healthy economy AND fund significant social programs. 

Could you explain this please?

The premise is that when a country has an over abundance of natural resoureces they can essentially harvest those resources, monetize them, and use those funds to invest in other productive pursuits and/or pay for social programs.  Because these resources are exported out and typically correlated with inflation the country really doesn't have to produce anything to be able to pay for its citizen - but it really only works if you monetization of the resources is used to create a diversified economy (this is hard to). 

However, there is a dark side to this is as well because there is something known as the Resource Curse where countries like this become complacent and don't invest in other business sectors making them succeptiple to currency issues, weak demand for commodities put the country into an economic tailspin, opens it up for corruption/unstable governments, etc.

i.e Australia. Our muppet politicians squandered the latest resources boom from 05 onwards.

Norway has an 800 billion sovereign wealth fund to stabilise their economy. We have no blue collar jobs anymore, but it doesn't matter - we have cars, boats, flatscreens, smartphones and high property prices. She'll be right!

frugalnacho

  • Walrus Stache
  • *******
  • Posts: 5055
  • Age: 41
  • Location: Metro Detroit
I think it's a terrible idea.  Money is just an intermediary between production and consumption.  Think about it:  In aggregate we make a bunch of stuff.  In aggregate we use and dispose of a bunch of stuff.  The money just organizes it all.

According to this thread, a lot of people would stop making things if this law passed.  With less stuff made, we'd all have to make do with less.

Or in other words... hell yeah prices would rise.  They would rise a lot.

(Now cue the responses claiming I'm promoting consumerism and excess consumption...)

How many people would be looking at it through consumer lenses and simply view it as a $20k bonus?  I mean I make $70k and I can barely pay my bills! How do you think i'm gonna all of a sudden live on 20k?! Plus I need a boat.

daverobev

  • Magnum Stache
  • ******
  • Posts: 3961
  • Location: France
Not sure if people are just saying "no" without knowing anything about it or not, but FYI:

They tried it in Manitoba in the 70s. https://en.wikipedia.org/wiki/Mincome

AFAIK there would be no 'clawback' - it's a basic human *right* effectively, to live not in squalor.

But of course there would be no actual income earned that would not be taxed (no allowance), and tax rates would no doubt go up.

It's very interesting. Love the angsty 'PEOPLE SHUD WURK FOR THERE RETIREMENT!' as if... working in an office for $60+k compares to working in the tea plantations or whatever. Early retirement is a massive *gift* for not being money-stupid and blinded by the consumerism lights. It's luck.

Would Canada see massive immigration spikes? Perhaps. Would the price of a Timmies go up? Probably. New car? Likewise.

IMHO $20k is generous. But imagine! Imagine you are free to be an artist and not worry about paying for heating! How free life could be!

It's kinda crazy. Kinda. But we certainly need to move to a new model, as much of the real work is done by machine, and most of us do paper pushing pointless shite (and get paid too much - or can't find a job because too many people are better at bullshitting about how good they'd be at a job). Yeah, really, I used to deal with *exhibition registration systems*. Did it pay the bills? Absolutely. Did it make the world a better place? Does it "matter"? Fuck no.

Crushtheturtle

  • 5 O'Clock Shadow
  • *
  • Posts: 51
It's wealth redistribution, which is obviously popular among those without. That's why is has been tried in such wildly successful economies as the Soviet Union, Venezuela, Ireland, Spain,...

 "A democracy cannot exist as a permanent form of government. It can only exist until the majority discovers it can vote itself largess out of the public treasury. After that, the majority always votes for the candidate promising the most benefits with the result the democracy collapses because of the loose fiscal policy ensuing, always to be followed by a dictatorship, then a monarchy."

- Elmer T. Peterson (9 December 1951). "This is the Hard Core of Freedom". Daily Oklahoman. p. 12A.

taekvideo

  • Bristles
  • ***
  • Posts: 273
My favorite quote about it:

‘You can't pull yourself up by your bootstraps if you have no boots.’

MrFancypants

  • Pencil Stache
  • ****
  • Posts: 605
It's wealth redistribution, which is obviously popular among those without. That's why is has been tried in such wildly successful economies as the Soviet Union, Venezuela, Ireland, Spain,...

 "A democracy cannot exist as a permanent form of government. It can only exist until the majority discovers it can vote itself largess out of the public treasury. After that, the majority always votes for the candidate promising the most benefits with the result the democracy collapses because of the loose fiscal policy ensuing, always to be followed by a dictatorship, then a monarchy."

- Elmer T. Peterson (9 December 1951). "This is the Hard Core of Freedom". Daily Oklahoman. p. 12A.

The problem is that those societies didn't rest on a foundation of heavily automated industries.  There is no precedent for this.

Spartana

  • Guest
Well I'd retire - if I wasn't already retired that is :-)! Even though I don't agree with this sort of wealth redistribution at all.  And if the good taxpayers are OK paying me to play beach volleyball all day then who am I to argue with them. Of course if everyone choose to retire rather then work to pay into the fund then.........
« Last Edit: June 30, 2014, 04:41:19 PM by Spartana »

warfreak2

  • Handlebar Stache
  • *****
  • Posts: 1136
  • Location: UK
    • Music by me
AFAIK there would be no 'clawback'
Well, if you are paying $20k in tax and the government pays you $20k for being a citizen, your citizen's income has been clawed back and you're now at a 0% tax rate. The $20k appears on everyone's balance sheets because that's more efficient than means-testing it, but not everyone gets the benefit from it in practice. Not that this is a good or bad thing. It's just a necessary feature of such a system, however it's accounted for.

It's wealth redistribution, which is obviously popular among those without. That's why is has been tried in such wildly successful economies as the Soviet Union, Venezuela, Ireland, Spain,...
And the rest of Europe, and the US, and pretty much every other developed country in the world, not to mention a bunch of successfully developing countries. Which successful states don't redistribute wealth via taxation? We are all already on the spectrum between capitalism and socialism, and even a big thing like a citizen's income is, in isolation, a relatively small move along that spectrum. (It's even arguably a step towards capitalism, to let people choose themselves how they will use the resources the government would otherwise allocate to them through welfare and public services). Wealth redistribution is not a yes or no choice, and it doesn't help to frame it as one.
« Last Edit: June 30, 2014, 04:52:37 PM by warfreak2 »

daverobev

  • Magnum Stache
  • ******
  • Posts: 3961
  • Location: France
AFAIK there would be no 'clawback'
Well, if you are paying $20k in tax and the government pays you $20k for being a citizen, your citizen's income has been clawed back and you're now at a 0% tax rate. The $20k appears on everyone's balance sheets because that's more efficient than means-testing it, but not everyone gets the benefit from it in practice. Not that this is a good or bad thing. It's just a necessary feature of such a system, however it's accounted for.


I disagree. While I see that money is fungible, "that" $20k everyone gets is not being clawed back. You'd merely be taxed on your earned income from the first dollar.

It might be semantics, but I don't think so. Note that in Canada there is actual talk of 'clawback' for certain benefits, that is in addition to the normal tax rates. So you have x as income, you get taxed on that. But if you got old age security (OAS, an actual program), and got greater than a certain amount of income, in addition to the normal tax, you also get OAS clawed back. Not the same.

terrier56

  • 5 O'Clock Shadow
  • *
  • Posts: 99
wow almost every person on this thread says "yep i would FIRE" and yet people are still claiming it would be sustainable.

also some very solid napkin maths which successfully debunk it.

Christof

  • Pencil Stache
  • ****
  • Posts: 717
  • Age: 47
  • Location: Germany
I really like the idea... but everything I read about psychology and my experience says that people will compare income not to their needs, but to those of their peers. Whatever the amount being paid, it will soon be disregarded as inhuman and not sufficient to live on.

Gerard

  • Handlebar Stache
  • *****
  • Posts: 1570
  • Location: eastern canada
    • Optimacheap
I think the idea and the amount are two separate issues.

The idea of replacing cumbersome, invasive, expensive, and punitive existing programmes with straight cash probably makes sense on the grounds of efficiency and probably decency. Canada already has this for old people, the Guaranteed Income Supplement, which basically makes sure everybody gets about $16K a year. It's been hugely successful at reducing poverty among the elderly. But those are mostly people who wouldn't otherwise be working. Which leads me to...

The amount would have to be high enough so people could live, but low enough that not everybody would stay home. Governments already deal with that issue when they set welfare rates, or (depending on the country) income cutoffs for health insurance, subsidized education, child benefits, food stamps, reduced bus passes, and basic tax deductions.

A couple of spinoff effects strike me, which have probably been discussed in detail elsewhere but not here:
1. Consumption taxes might increase, so that people getting the benefit would share some of the burden of paying for it.
2. Businesses that cater to people earning the benefit would spring up, in the same way that British Columbia got a whole bunch of hotels-slash-rooming-houses that charged exactly the same amount as the provincial government's housing allowance for welfare recipients. But these businesses would probably aim a little higher. 


warfreak2

  • Handlebar Stache
  • *****
  • Posts: 1136
  • Location: UK
    • Music by me
But if you got old age security (OAS, an actual program), and got greater than a certain amount of income, in addition to the normal tax, you also get OAS clawed back. Not the same.
Yes, "clawing back" is usually not the same as a particular marginal tax rate for everyone in a particular income bracket; but this is only because it applies to people who receive particular benefits, and hence it isn't clawed back from everyone. The tax code which funds a citizens income also only applies to the people who receive that particular benefit; it's that in this case, that is everyone. So I don't see a qualitative difference.

wow almost every person on this thread says "yep i would FIRE" and yet people are still claiming it would be sustainable.
You may have noticed that we aren't a representative sample of any country's population. (We aren't even all from the same country.) Most people in the US (or the UK) don't seem to want to live only on $20k/year, otherwise they wouldn't be working full-time to earn so much more than that; back-of-the-napkin logic says that the number of people who are OK with working much less and only having $20k/year is smaller than the large majority who already have this option but don't choose it.

Also, FIRE doesn't mean you don't work for money, just that you don't need to. (Count me among those who would still work for money given $20k/year for free, even though my annual expenses are lower than that anyway.)

Gerard

  • Handlebar Stache
  • *****
  • Posts: 1570
  • Location: eastern canada
    • Optimacheap
I'm reminded of Eric Idle's line (about England, but relevant here):
"There is no incentive at all to be rich in this country. It's amazing how many people still prefer it."

Left

  • Handlebar Stache
  • *****
  • Posts: 1157
I don't know, it may drive the economy, if everyone knew they could be FI with the basic income, they wouldn't have incentive to save, so they would just spend it all
not that they aren't doing it now but they still try to "save" a little... but then they blow it on something else

I mean even with 20k/year, it doesn't mean people will become mustachian... they sill want to play the "keeping up with the _______" game and will need to work to do so

but even mustaches spend money, right now it seems like most people on here are in the saving phase, but I'd like to know if people in FI stage keep the mentality of "saving" still'; or if they are ER, do they worry about their savings rate, I see it more as I'd be more worried about how much I spend, but I'd still be free to spend up to that point. I can't really comment on this issue since I'm still in the saving phase myself. I don't mean that I'd buy an extra car because I had money "left" over, but I wouldn't mind spending on a bit higher quality of stuff that I already buy, and maybe not clip as many coupons? Or I'd spend money to do hobbies, building things takes materials, gardens takes tools/seeds, art takes supplies, start a business?
« Last Edit: June 30, 2014, 06:20:06 PM by eyem »

Crushtheturtle

  • 5 O'Clock Shadow
  • *
  • Posts: 51
"It’s amazing to me how many people think that voting to have the government give poor people money is compassion. Helping poor and suffering people is compassion. Voting for our government to use guns to give money to help poor and suffering people is immoral self-righteous bullying laziness.

People need to be fed, medicated, educated, clothed, and sheltered, and if we’re compassionate we’ll help them, but you get no moral credit for forcing other people to do what you think is right. There is great joy in helping people, but no joy in doing it at gunpoint."

- Penn Jillette

 

Wow, a phone plan for fifteen bucks!