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DanielLC comments on Open Thread, May 19 - 25, 2014 - Less Wrong Discussion
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Lots of people are arguing governments should provide all citizens with an unconditional basic income. One problem with this is that it would be very expensive. If the government would give each person say 30 % of GDP per capita to each person (not a very high standard of living), then that would force them to raise 30 % of GDP in taxes to cover for that.
On the other hand, means-tested benefits have disadvantages too. It is administratively costly. Receiving them is seen as shameful in many countries. Most importantly, it is hard to create a means-tested system that doesn't create perverse incentives for those on benefits, since when you start working, you will both lose your benefits and start paying taxes under such a system. That may mean that the net income can be a very small proportion of the gross income for certain groups, incentivizing them to stay unemployed.
One middle route I've been toying with is that the government could provide people with cheap goods and services. People who were satisfied with them could settle for them, whereas those who wanted something more fancy would have to pay out of their own pockets. The government would thus provide people with no-frills food - Soylent, perhaps - no-frills housing, etc, for free or for highly subsidized prices (it is important that they produce enough and/or set the prices so that demand doesn't outstrip supply, since otherwise you get queues - a perennial problem of subsidized goods and services).
Of course some well-off people might choose to consume these subsidized goods and services, and some poor people might not choose to do that. Still, it should in general be very redistributionary. The advantage over the basic income system is that it would be considerably cheaper, since these goods and services would only be used by a part of the population. The advantage over the means-tested system is that people will still be allowed to use these goods and services if their income goes up, so it doesn't create perverse incentives.
Another advantage with this system is that it could perhaps rein in rampant consumerism somewhat. Parts of the population will be habituated to smaller apartments and less fancy food. Those who want to distinguish themselves from the masses - who want to consume conspiciously - will also be affected, since they will have to spend less to stand out from the crowd.
I guess this system to some extent exist - e.g. in many countries, the government does provide you with education and health care, but rich people opt to go for private health-care and private education. So the idea isn't novel - my suggestion is just to take it a bit further.
In 2002, total U.S. social welfare expenditure constitutes over 35% of GDP
I think that would be too high anyway. Since anyone who bothers to work can make more than that, and the reduction in labor supply would increase pay, and any money you save will last you longer, there's little reason to make it enough for people to be well off, as opposed to getting just enough to scrape by.
It's also worth noting that most people will get a significant portion of that money back. If you make below the mean income (which most people do, since it's positively skewed) you will end up getting all of it back.
It seems unfair to charge people the entire price to get slightly better goods. Thus, if you want to get slightly better goods, the government should still reimburse you for the price of the cheap goods. At this point, it's just unconditional basic income with the government selling cheap goods.
As a minor point, Soylent as it is now can't be considered no-frills food. If you buy it ready-made, it costs around $10 a day.
What you do then is in effect (if I understand you correctly) to give them a "food voucher" (and similarly a "housing voucher", etc) worth a certain amount which they would be able to spend as they saw fit (but only on food/housing, what-not). Such as a system doesn't seem very clever (as you imply): in that case, it would be better to just give people money in the form of an unconditional basic income.
I'm not sure why it would be so unfair not to reimburse people who want more expensive goods, though. Of course, the government does to a certain extent discriminate in favour of those with more frugal preferences in this set-up. But one of my points is precisely that we want people to develop more frugal tastes - to spend less on, e.g. housing and food. There is a "conspicious consumption" arms race going on concerning these and many other goods which this system is intended to mitigate to some point.
Different people have different needs. Some people would be happy in cheap housing and others wouldn't - maybe they're more sensitive to sounds, environmental conditions or whatever else is the difference is between cheap housing and more expensive housing.
The point is, there's no basic standard that would satisfy everyone (unless that's a reasonably high standard, which isn't what is proposed here). Some people would consider more expensive goods and services NEEDS rather than luxuries, and for good reason - consuming cheaper alternatives might not kill them, but it would make them depressed, less healthy and less productive (for example)
So it is unfair to subsidize certain goods and services and not others - one might wonder "why is my neighbor getting her needs met for cheap, while I have to pay full price to meet my needs?"
If it costs $1.00 to make the basic food, and $1.10 to make slightly better food, and someone is willing to pay the difference, shouldn't they get the slightly better food?
Maybe it's not a big deal that nobody will eat anything that costs between $1.00 and $2.00. That's not a lot of deadweight cost. It's only around a dollar a person. But this will apply to everything you're paying for, which we have established is significant. If it costs $300 a month for cheap housing, and you virtually eliminate any housing that costs less than $600 a month, that is a lot of deadweight cost.