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ChristianKl comments on Open Thread, May 19 - 25, 2014 - Less Wrong Discussion

2 Post author: somnicule 19 May 2014 04:49AM

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Comment author: Stefan_Schubert 20 May 2014 01:43:34PM *  5 points [-]

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.

Comment author: ChristianKl 30 May 2014 06:39:54PM 2 points [-]

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.

You are missing the point. It's cheaper to give the poor unconditional basic income than to have a huge bureaucratic administration that makes sure that they pass certain conditions to be eligible for welfare payments.

That might mean a low basic income but it would still be an unconditional basic income. Don't confuse the debate for a unconditional income with the debate about how high it or welfare payments to the poorest should be.

I guess this system to some extent exist - e.g. in many countries, the government does provide you with education and health care

Actually you are looking at the wrong countries. Countries like Iran would be an example where essential goods like food get's heavily subventioned.

There are many reasons why subventions are a bad idea. The produce incentives for companies to lobby heavily to be included. The encourage people to waste products that get subventioned. They need bureaucracy to be organised. The prevent innovation because new products usually don't fit into the template along with old products are subventioned.

Comment author: DanielLC 04 June 2014 12:41:20AM 0 points [-]

It's cheaper to give the poor unconditional basic income than to have a huge bureaucratic administration that makes sure that they pass certain conditions to be eligible for welfare payments.

I decided to see what I could find on how much the administrative costs are, and I found this: http://mediamatters.org/research/2005/09/21/limbaugh-dramatically-overstated-administrative/133859

The most useful part seems to be this line:

Finally, the report estimated that the federal administrative costs amounted to $12,452,000,000 for the 11 programs studied -- 6.4 percent of total federal expenditures on these programs.

That doesn't sound like much of an issue.