advael comments on On Walmart, And Who Bears Responsibility For the Poor - LessWrong

13 Post author: ChrisHallquist 27 November 2013 05:08AM

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Comment author: drnickbone 04 December 2013 05:11:46PM * -2 points [-]

Why a bad idea, though? I guess you are disputing this point:

(so discouraging low-productivity work, and incentivizing training for higher productivity work).

Here's a simple model. Assume that full-time employees cannot live on less than $8 an hour (they starve, can't pay rent etc.) Also assume that an employer can offer untrained staff two sorts of job:

Job 1 has very low productivity, total value of $6 per hour, but a pay-rate of $3 per hour. $3 a hour is too low to live on, but employees will accept it where that supplements a minimum guaranteed income.

Job 2 has higher productivity, total value of $14 per hour, but staff must be trained to do it, and because they now have transferable skills, the employer must offer $10 an hour to retain them. The training costs average at $2 per hour over the typical duration of the employment.

The employer offers staff Job 1 because that gives a higher profit ($3 per hour, rather than $2 per hour). Staff take it because $3 is better than nothing. But there is more economic value created if employers offer Job 2 instead. A minimum wage requires them to do that. You can argue the details, but that's the general principle.

There is clearly a counter-argument that the minimum wage is a market intervention and can cause inefficiencies (it may result in some folks who just can't be trained losing their $3 per hour jobs). But the counter to that counter-argument is that the minimum income guarantee is already a market intervention which is encouraging employers to offer Job 1 (as it allows employees to accept it). So a corrective intervention is needed.

Comment author: advael 04 December 2013 06:57:47PM 1 point [-]

My knee-jerk assumption is that Job 1 would actually not be accepted by almost any employees. This is based on the guess that without the threat of having no money, people generally would not agree to give up their time for low wages, since the worst case of being unemployed and receiving no supplemental income does not involve harsh deterrents like starving or being homeless.

Getting someone to do any job at all under that system will probably require either a pretty significant expected quality of life increase per hour worked (which is to say, way better than $3 per hour) or some intrinsic motivation to do the job other than money (e.g. they enjoy it, think it's morally good to do, etc.)

It's more likely that a well-implemented basic income would simply eliminate a lot of the (legal) labor supply for low-wage jobs. I both see this as a feature and see no need for a minimum wage under this system.

Comment author: drnickbone comment score below threshold [+] (8 children)

Comment author: advael 04 December 2013 08:14:41PM * -1 points [-]

Some real-world benefit systems have strings. The entire premise of a basic income is that it's unconditional. Otherwise you call it "unemployment," and it is an existing (albeit far from ideally implemented) benefit in at least the US. It might be reasonable to discuss the feasibility of convincing e.g. the US to actually enact a basic income, but as long as we're discussing a hypothetical policy anyway, it's not really worthwhile to assume that the policy is missing its key feature.

Comment author: drnickbone 04 December 2013 08:58:32PM -1 points [-]

OK, there seems to be a terminology difference between basic income which is unconditional and guaranteed minimum income which usually comes with conditions, such as willingness to work.

Somewhere up the thread we were discussing "guaranteed" income and also "basic minimum income" so I wasn't clear which was meant.

Honestly, I just can't see an unconditional minimum income being feasible at all in the English-speaking world: critics will brand it as a "layabouts charter" and no party with a serious desire to be elected will support it. Whereas a minimum income which a) is granted conditional on willingness to work and b) is still paid to those in work (so avoiding a high effective tax rate) looks much more feasible.

Comment author: Lumifer 04 December 2013 09:24:06PM * 5 points [-]

Honestly, I just can't see an unconditional minimum income being feasible at all in the English-speaking world

Well, a Franco-Italo-German-speaking world will, evidently, hold a referendum on it soon

Comment author: advael 04 December 2013 09:21:12PM * 0 points [-]

Ah, I guess that clears up our confusion. I wasn't aware of that distinction either and have heard the terms used interchangeably before. I will try to use them more carefully in the future.

At any rate, I definitely agree that an actual basic income would be a hard sell in the current political climate of the US. (I'm less inclined to comment on the political climate of the English-speaking world in general, due to lack of significant enough exposure to significant enough non-US parts of it that I wouldn't just be making stuff up).

I'd also argue that a guaranteed minimum income in the manner you describe is a far less interesting (and in my opinion desirable) policy, as it just simply doesn't have the game-changing properties that a basic income would. As far as I'm concerned, the primary purpose of implementing a basic income would be to eliminate the economic imperative that everyone work.

If successful, this would hopefully do a number of useful things, like making the employer/employee relationships of those who still worked more of a balanced negotiation, depoliticizing automation efforts, and generally eliminating the level of human suffering produced by being between jobs, taking time to improve one's mental health by relaxing, doing volunteer work, doing work no one will pay for, etc., in one fell swoop.

While I obviously can't claim to know that it would work perfectly or at all, I would contend that these are desirable outcomes and that there is at least a reasonably high likelihood that a successful implementation of a basic income would produce them, and therefore that attempting to implement such a policy is worthwhile. I'd argue that the current model where a job occupies a large chunk of a given human's time, is required (for the most part, with obvious caveats for the independently wealthy, etc.) to live, and where a given job can only exist if the market will pay for it, is broken, and will only get more broken as more automation exists, the population grows, and several other current trends continue.

Comment author: Lumifer 04 December 2013 09:33:54PM * 1 point [-]

this would hopefully do a number of useful things

Do you think there is also a list of not-useful things to go with your list of goodies? You seem to be forgetting the TANSTAAFL principle.

Comment author: advael 04 December 2013 10:00:22PM * 1 point [-]

Well of course. It would definitely facilitate a lot of people being, by many measures society cares about, completely useless. I definitely don't contend for example that no one would decide to go to california and surf, or play WoW full-time, or watch TV all day, or whatever. You'd probably see a non-negligible number of people just "retire." I'm willing to bet that this wouldn't be a serious problem, though, and see it as a definite improvement over the large number of people who are, similarly, not doing anything fun with their lives, but having to work 8 hours a day at some dead-end job or having crippling poverty to deal with.

Comment author: Lumifer 04 December 2013 10:08:25PM * 2 points [-]

Right. But then there are consequences to many people being "useless", or, in econospeak, dropping out of the labor pool.

For example, the GDP of the country will go down. The labor costs will go up which means the prices will go up which means the basic income will lose some of its purchasing power. The government's tax revenues will go down as well and that might create a problem with paying for that basic income for everyone.

And that's just major, obvious, first-order consequences.

Comment author: advael 05 December 2013 12:14:50AM * 0 points [-]

I agree that that is a possible consequence, but it's far from guaranteed that that will happen. Although in sheer numbers many people may quit working, the actual percent of people who do could be rather low. After all, merely subsisting isn't necessarily attractive to people who already have decent jobs and can do better than one could on the basic income. It does however give them more negotiating power in terms of their payscale, given that quitting one's job will no longer be effectively a non-option for the vast majority.

This may mean that a lot of low-payscale jobs will be renegotiated, and employers who previously employed many low-paid workers would have to optimize for employing fewer higher-paid workers (possibly doing the same jobs, depending on how necessary they are, or by finding ways to automate). I don't claim any expertise in this, but I'd find it hard to believe that there isn't at least some degree to which it's merely easier to hire more people to accomplish many tasks people are currently hired for, rather than impossible to accomplish them some other way. This also is an innovation-space in which skilled jobs could pop up.

As for high-payscale jobs, I could see good arguments for any number of outcomes being likely to occur. Perhaps employers would be able to successfully argue that they should pay them less due to supplementing a basic income. Perhaps employees would balk at this and, newly empowered to walk more easily, demand that they keep the same pay, or even higher pay. The equilibrium would likely shift in some way as far as where the exact strata of pay are for different professions, and I can't claim to know how that would turn out, but it seems unlikely people would prefer to not work than to do work that gives them a higher standard of living than the basic income to some significant degree.

Similarly, people who own profitable businesses certainly wouldn't up and quit, and thus most likely any service that the market still supports would still exist as well, including obvious basic essentials that presumably would exist in any economic system, such as businesses selling food or whatever is considered essential technology in a given era. Some businesses might fail if they're unable to adapt to the new shape of the labor market, and profitability of larger businesses may go down for similar reasons, but the entry barrier for small businesses would also decrease, since any given person could feasibly devote all of their time and effort into running a business without failure carrying the risk of inability to continue living.

There would probably be a class of people who subsist on basic income, but we already have a fairly large homeless population, as well as a population of people doing jobs that could probably go away and not ruin the economy for anyone but that individual.

My point isn't that everything will turn out perfectly as expected, or that I have any definitive way of knowing, obviously, but there do exist outcomes that are good enough and probable enough to pass a basic sanity-check. The risk of economic collapse exists with or without instituting such a policy, and I'm not yet convinced that this increases the likelihood of it by a considerable margin.

advael comments on On Walmart, And Who Bears Responsibility For the Poor - LessWrong

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