Basic Income is like you’re a child all over again
Any supporters of “Basic Income” out there? It’s a state-run welfare plan where every adult citizen is given the same monthly stipend regardless of income, age, or anything else. It’s like you’re a child all over again and your parents are paying you a monthly allowance.
There’s support from the Greens, Communist-sympathizing Left Alliance, and Nationalist True Finns about implementing this concept in Finland. How much would Mother Finland pay you each month? 440 euros…
Even Timo Soini, the chairman of the True Finns who is known as a proponent of basic income, said he would not grant it to the “very young”, while Martti Korhonen, the head of the pro-basic income Left Alliance, said he harboured doubts about the impact of basic income on the activity of jobseekers.
YLE did not reach Prime Minister Matti Vanhanen (centre) for comment but quoted him as saying earlier that “basic income is a wage for those interested more in partying than working”.
The Greens have of late promoted a basic income, saying it would encourage unemployed people to accept short-term work.
I’m not sure how increasing your welfare benefits will encourage you to find work. There’s around 4.2 million Finns of adult age, so that’ll cost us about 1.8 billion euros per month and around 22 billion euros per year. The government’s budget for 2007 was around 40 billion euros. So where’s this addition revenue going to come from? (= How much are they going to raise our taxes to fund this?)
I’m not sure how increasing your welfare benefits will encourage you to find work.
The claim concerned accepting short-term work, not finding work per se.
How much are they going to raise our taxes to fund this?
Quite a bit, but they’d also give you about 400 euros a month to help you pay for it. Whether that’d be enough to cover the tax hike depends on how much you make. I assume the tax code would be changed to be less progressive in the bargain, so it’s difficult to say where the cut-off point would be. The Greens may have made some calculations on this.
Comment by a lamb with no guiding light — Fri, Aug 17th, 2007 @ 6:12 pm
The idea that basic income is “additional” to what people already have is wrong, either due to ignorance or deliberate FUD campaigning.
The main point is to make sure that any increase in gross income translates into an increase of net income. This is currently not true in the lowest income brackets, as increasing your gross income frequently makes you ineligible for some benefits you have been receiving and your net income goes *down* (or, if you’re lucky, stays the same) as a result.
The Green model is intended to have zero net effect on government spending (there is likely to be a small saving on administration expenses) and mostly what people receive will also be about the same as now. In other words, the basic income is financed by cutting some current benefits (transferring those benefits to the basic income plan) and, of course, raising the nominal tax rate. Due to everyone getting the basic income payment, the real tax rate will not behave differently.
The Green model has two parts: everyone is handed a set sum (440 euros has been proposed), and any additional income is taxed by a high flat rate (well, flat up to a farily large income level). The effect is to create a graduated net tax rate in which the lowest income people have a negative net income tax.
Full disclosure: I am a member of the Green party
Comment by Antti-Juhani Kaijanaho — Fri, Aug 17th, 2007 @ 6:22 pm
Isn’t 440e / month a bit less than current unemployment benefit? Anyway, the basic income model I’ve heard of is almost the same as flat tax, but income and tax curves don’t meet each other at origo. By changing the parameters a and b in y=ax+b you can set the outcome to any direction (for instance, zero tax, zero basic income). I’m not saying I got this right. However I think it _could_ be much more rational than current model with gazillion different taxes to pay or allowances you can or cannot apply at the same time, which makes things complicated and bureaucratic. Considering the current tax progression levels, the proposed basic income model might even be more fair for those with very high income. Maybe.
Comment by hnd — Fri, Aug 17th, 2007 @ 6:23 pm
Damn.
… the real tax rate WILL behave differently …
(strike the “not”)
Comment by Antti-Juhani Kaijanaho — Fri, Aug 17th, 2007 @ 6:23 pm
The problem with the basic income promoted by the Greens and other leftists (incl. True Finns) is that they assume no or little reductions in the existing social security system, but the basic income comes on top of that.
But if you have negative income tax as your brand of basic income, as promoted by Milton Friedman, and it replaces all or nearly all of existing free monies, while also getting smaller as the recipients other income gets bigger, then I’m 100% for basic income.
But I really can’t support the reddishgreen massive extension of socialist welfare state that they call the basic income.
Comment by Pasi — Fri, Aug 17th, 2007 @ 6:24 pm
@3:
No, the basic income system is not a flat tax system. A basic income system is usually accompanied by a nominal flat tax rate, but the basic income payment makes the real tax rate progressive.
Comment by Antti-Juhani Kaijanaho — Fri, Aug 17th, 2007 @ 6:25 pm
It is nessecary to have a look at the whole picture, Basic Income and taxes at least.
It is right some proposals are talking, among other taxes, about a flat tax of 50 % but in some cases it is a flat tax with two thresholds, 0% to a certain level, in the Vivant (Belgium) proposal 1620 Euro, and from there on 50%. For example a total income of 172O Euro a month would pay 50 Euro income taxes. This is in a way a “progressive Flat taxâ€Â. Furthermore it is important to know if the basic income is a taxable income. Also in the Vivant proposal it is (like the Alaska fund, the state of Alaska has no income tax but the US has). The basic income (Vivant proposal) is also set equal to the legal minimum wage. This implies that a full time job at minimum wage would at least deliver an income of twice the basic income proposed. (the Vivant proposal in very short 18-25 year old 444 Euro plus school vouchers, 25-65 year old 600 Euro, 65 + 800 Euro a month, plus free health care for all http://www.vivant.org fully calculated for government revenue and expenses and step by step implementation ).
Because the Basic Income in the Vivant proposal is taxable with income tax it works as a NIT (negative income tax) only with an unconditional “prebateâ€Â.
As an example, the Brasil Basic income proposal has a provision that Basic Income (not taxable as far as I know) is reased when an income from “legal work†is declared.
Paul
Comment by Paul Nollen — Fri, Aug 17th, 2007 @ 7:21 pm
The problem with this proposal is that it doesn’t include any mechanism tha would cure the state from its incapability to making commitments. In principle the proposal sounds like a great way to reduce bureaucracy, make simple taxation & benefit rules and lay off a lot of special program people. But the danger is that after the state decides to commit to this model a bunch of people will appear arguing they should be treated as exceptions. And before you can say “streamlining tax and benefits structure” the additions, exceptions and exemptions are back, with the 440,- basic income added to the list. I think we are doomed to have a lot of bureaucracy if we do not address the ease of adding “targeted programs”. Unfortunately our institutions are tuned to serve industrial era progressive ideals.
Comment by Mara — Fri, Aug 17th, 2007 @ 7:39 pm
How does this differ from negative income tax?
Anyway, I wouldn’t debunk this so fast. I don’t this idea is very communist. SEems like killing some bureaucracy and complicated jungle of rules to me. Worth thinking about.
Comment by Annoyed Finn — Fri, Aug 17th, 2007 @ 7:43 pm
Should we follow a “free market” type state. Let’s let the weak disappear and the strongest stay????
I think a minimum amout of money is like giving some oxygen to some people :
- some will fight back and recover and will manage to come back to the system
- some won’t but have children, it will help at least their sibling to have chance
- some will use the system-> you need filter that.
I rather prefer have the semi-capitalist european ideology then have the US “hawk” system which might create more “dollar” wealth, the former will create more “mind” wealth…
why is richer you are and more selfish and greedy you become. On the opposite poorer you are and more open and sharing you are… that is something that the agressive capitalist “quant” model hasn’t integrated…the model should be revisited. WE should have something in between: a net for everybody (not a nanny state!) if one try hard but fails. So the minimum income is not all that bad…
Comment by Greetings from russia — Fri, Aug 17th, 2007 @ 8:08 pm
#8 Annoyed Finn, mathematically the outcome is the same, but the devil is in the details. For instance, I could not figure out if the tax % would be progressive or not.
The negative reactions of the politicians are understandable because this arrangement would take away a lot of their discretion, and thus would reduce their ability to promote special programs aimed to benefit their marginal voters and through that their own careers. This would be a great idea if it contained a mechanism that would restrict the politicians’ ability to water it down.
Comment by Mara — Fri, Aug 17th, 2007 @ 8:34 pm
Basic income is the best thing proposed in a loooong time. It would destroy the current mess of government aid programs, and replace it with a really simple and elegant solution: 440 euros to everyone. I really haven’t found any flaws in it yet, and I do not even belong to the Green party.
Most right-wingers claim that it would promote people to just lay around doing nothing. I find this to be complete nonsense. First thing, even now you are entitled to some money, even if you do nothing. And second, who would be satisfied with 440 euros per month? It barely pays your rent at the capital region, for example. But it does make accepting short-term work so much easier, plus it gives some financial stability to researchers, artists, stay-at-home mums etc.
Comment by Passer-by — Fri, Aug 17th, 2007 @ 8:37 pm
Simplify bureaucracy? What are you people smoking?
Hey, I have some cheap oceanfront property to sell in Arkansas, too.
Besides…what is that favourite saying of the churchy types…’give a man a fish and he’ll have dinner tonight. Teach him to fish and he won’t need your charity.’ Why not spend the money where it needs to be spent rather than throwing it at the people who either don’t need it or will waste it on booze and gambling?
Comment by hfb — Fri, Aug 17th, 2007 @ 9:17 pm
“This is in a way a “progressive Flat taxâ€Â. ”
I think you mean a ’stepped progressive’ tax. However, I’d prefer a continuous regressive tax in this case–or a flat tax of about 22%.
“I rather prefer have the semi-capitalist european ideology then have the US “hawk†system ”
I agree, and as you correctly stated, it doesn’t necessarily need to be a nanny state.
The idea currently proposed may not be the best solution, but it should be examined to uncover its good points. If people are entitled to welfare benefits regardless—and I believe that basic welfare should be part of any society—then finding ways to streamline the process is a big plus.
Also, making people choose between benefits and work income is the wrong approach; there should be no penalty for accepting job assignments.
I do believe that the overall tax rate needs to come downward by about 15-points or more and cartels should be broken. We have major problems with purchasing power that should be eliminated before anything like this can be successful; what’s the sense in paying someone 440€/mo if everything they buy is way overpriced?
Comment by Kristian — Fri, Aug 17th, 2007 @ 9:37 pm
In other words, the basic income is financed by cutting some current benefits (transferring those benefits to the basic income plan)
Sounds like a step in the right direction to me. Instead of the state providing X, Y, and Z services, give the money to the individual so they can choose the X, Y, and Z services they need.
Comment by Phil — Fri, Aug 17th, 2007 @ 10:16 pm
How about a regressive tax:
60% for the first euro after 440€/month_X_12. Then, regressive to 20% of about the 20,000th euro/yr. So, anything above 20K gets taxed flat at 20%.
Clearly, the incentive at the low income levels would be for a person to work. The more he works, the higher percentage he keeps. It would be a big improvement over the current system which penalizes work.
Comment by Kristian — Fri, Aug 17th, 2007 @ 11:45 pm
Wow, lets rob from peter and give it all to Paul.
Thats what this is. And to answer Phil “not sure how increasing your welfare benefits will encourage you to find work.”
That hits the nail on the head. It will create a welfare class with no end.
Talk about slavery, this will be the new slave class in society. Not moving up any ladder that I can see.
Comment by winter “Yea, Proton Power, now in remission†— Sat, Aug 18th, 2007 @ 12:34 am
“It will create a welfare class with no end.”
No, we already have that
Comment by Kristian — Sat, Aug 18th, 2007 @ 2:13 am
It is SLAVERY, pure and simple. You give, they take, they are hooked for life. Heck every fisherman knows these rules.
Comment by winter “Yea, Proton Power, now in remission†— Sat, Aug 18th, 2007 @ 2:49 am
As long as this is replacing the current programs and not being one on top of everything, I don’t see how this is ’slavery’. On the contrary, this makes some people think if they should rather be working.
440/month is not a lot of money. It’s about the same as the students make without loans. I don’t know a lot of people who would be willing to stay home with that kind of money. But if you got one of those low paying jobs, it’s a nice addition, so it makes sense to work even with minimum wage.
It all depends how the other services then work for a person who is unemployed. I think this is mostly aimed at people who make little money but keep working instead of staying home.
But that’s as far as I’ve thought about it, I don’t know the bigger picture mathematics. Does this cut the actual spendings overall or keep adding to them?
Comment by Annoyed Finn — Sat, Aug 18th, 2007 @ 4:09 am
Ever considered what an incredible bottomless pit the welfare organisations are? How futile and uneffective they are at what they do is another matter. Because often the result is the scammers know how to get the money, but the “real” customers lack the know how of the bureaucracy to effectively use/exploit it.
Also I suspect the numbers of people who would like to live their whole lives on this minium salary is rather small and the rest will pay theirs back with the taxes.
The basic thing I think is that Kela nor the Sosiaaliturva work in an efficient way and need to be eliminated. Basic income would solve this and actually assure anyone who needs benefits will receive them.
Comment by philtard — Sat, Aug 18th, 2007 @ 6:34 am
quote :”Clearly, the incentive at the low income levels would be for a person to work. The more he works, the higher percentage he keeps. It would be a big improvement over the current system which penalizes work.”
This is very important and in line with the findings of the most extensive social experiments with basic income ever (USA and Canada end sixties begin seventies with a “rebate NIT” system http://www.usbig.net/papers/068-Sheahan-right2big.doc ).
At those experiments it was shown that “taxing the first dollar earned” gives a great incentive to do illegal work. Compare this to the Brazilian proposal even to raise the basic income if a legal work is accepted. Or the Vivant (Belgium) proposal to work with a 0% income tax threshold up to 1620 Euro a month in a “prebate NIT” system where the basic income is a part of the total taxable income.
Paul
Comment by Paul Nollen — Sat, Aug 18th, 2007 @ 10:37 am
Paul,
I can’t disagree with you; it would indeed encourage illegal work. I guess I was looking at it from our perspective in Finland, where that condition would be slightly easier to control. But your point does highlight yet another good reason to reduce—or even eliminate—income taxation.
One of the problems in some of the European countries (including Finland) is that they ‘race to the bottom’ with corporate taxes—which is aimed at attracting big companies to reside—but they raise personal income taxes to compensate. In Finland’s case, both VAT and personal income taxes are raised to compensate.
It seems to be an unavoidable effect of international competition. Therefore it makes good sense to always impose downward pressure on personal income taxes. In this sense, I feel that Estonia is doing it exactly right by aligning its flat corporate tax to its flat income tax: 20% for both. Switzerland also seems to be doing it right by keeping personal income taxes low—and VAT, too.
Comment by Kristian — Sat, Aug 18th, 2007 @ 12:57 pm
Besides the whole issue of taxation and reducing bureaucracy there is usually more a basic income is proposed to solve. Almost all of the above described things are in one or the other way neat sideeffects (or better the results of trying to solve the cause of some of the problems the welfare-state suffers today from).
So usually one starting point for the basic income idea is to look at todays society (western world) and to try to identify the sources of the problems. Generalizing a bit, this is usually that work is increasingly being automated, more products can be produced all the time cheaper and with less human work needed. This is combined with the fact that today actually everybody depends on other people (the society) for being able to live (most people don’t anymore plant/grow their own food - in some countries there wouldn’t even be enough space to do so). Thus in order to live you have to take part in the society. As long as your income is ensured by getting an apropiate work after school and/or futher education this is fine, as more or less everybody is able to make a living. But due to technological developments the human-work to produce goods for other people gets less - so less people can make a living in this kind of production work. But also fact is, even though not as many people as before are needed, all the work is still done and still money is being earned, but less people participate in the produced wealth. So far that’s fine as well, after all it’s nice that less people have to do hard work and good if people have to work less today than they used to be. Now the people who used to work in production industries could switch to the human-oriented services industry. That’s also what’s happening, but this work tends to get less paid and even though the need (eg. for healthcare and old-people care) is increasing there is usually not enough money in there to pay it, as these industries get often paid by the tax-payer. But taxes only get paid if people get an income, which usually comes from the industrial or associated jobs. Anyway service-work is only additional, so some people doing a service for somebody else can only do so if they can get something back which ensures their living (e.g. getting the money for the potatoes). Now just assume almost everybody is in the services industry and we try to accomodate all needs (except the food/living-things production work) of the few people who are left with controlling the manufacturing plants. Now these few people have to be able to pay the other much larger amount in order for them to make a living from the services. This works as long as the few production workers have most of the money or they are still in a reasonable ratio, so the production of the production-workers can feed the service-workers. But it seams that the production workers don’t get all the time more money in order to feed their service workers (or has anybody seen that after setting free 10.000 people in a big company the rest of the workers get the money not needed for the people set free ?).
No the point here is not so much whether this is all that clear separable right now, but it’s about the tendencies and the big picture. So what a basic income in it’s basic form tries to achieve is to find a solution to this problem. It basically distributes the created wealth to all people. Now the nice thing in my opinion is that it’s not done the communist way (we define how the world/people has/have to be) but in a more natural way which takes into account the human nature and doesn’t preclude capitalism or the free market as self-organizing entity. The only assumption (which is usually the most debated one) is that the human-image which is required, is one that sees a human as a free entity which is willing to develop itself, and is doing so also without the pressure of pure survival. This pressure used to be there most of mankind, so it’s kind of hard to accept that there is another way. But given the reasoning above the question is whether there are much other possibilites. Probably we can go on like this for some more decades, but at somepoint it should be (even to the most critical people) obvious in which direction our technological development leads and how people not being able to participate in the basic wealth creation, are able to make a living. Unless we reverse our developments it’s hard to see how this will be possible in a democratic free way, a way where not the few people being the ones who control/develop/own production plants (and the like) have the power over the rest which still need to make a living somehow.
No to end this, somehow, if one starts to think in this way, starting with a basic income (almost at any niveau) will get us in the right direction. And one should never forget that this will take a long time to penetrate into our all minds, thus the thoughts what happends if everybody gets much more than the money needed for a living, has to be seen in a context where people get adjusted to that. After all today most people would kind of fall in a deep hole of freedom, if suddenly it would be possible for them to leave there job and just watch TV. Certainly not a nice future for any human being in the long run.
Now before this post gets punished to death, please all consider, that any single fact can be disproved in isolation easily and nitpicking about details is not what I tried to talk about.
Cheers
Michael
P.S.: Nice to see similar developments in Finland, just followed it in Germany the last years.
Comment by Michael (german basic income proponent :-) — Sat, Aug 18th, 2007 @ 1:55 pm
How does this affect permanent residents of Finland who work here but have not applied for citizenship? Every suggestion for this basic income thingy I’ve seen mentions ‘for citizens,’ doesn’t this leave us non-citizens in a grossly disadvantaged position? I mean I work and pay taxes but I don’t receive authomatically this basic income but my colleague who does the same job gets one every month? And my taxes get a raise to pay for his basic income, and I have to pay *way* more for everything considering the inflation will go through the roof with this basic income. — SIIRTYY HINTOIHIN ALTA AIKAYKSIKÖN–
So, I’d say it’s a lousy, populist idea to begin with.
Comment by bunsen_lamp — Sat, Aug 18th, 2007 @ 2:53 pm
I don’t know about the proposal in Finland but in most cases the intention is to pay a Basic Income to all “legal residents”.
The nice thing about Basic Income is that it can serve both welfare states and country’s with very poor people like Namibia.
http://www.vivant.org/forum/viewforum.php?f=64
There is a private initiative starting on the 1st of jan 2008
quote:”
The Basic Income Grant (BIG) Coalition has identified one village where residents would get a grant of N$100 every month.
This is a pilot project in which the coalition would give the grant to every community member below the age of 60 for two years.
The pilot project will be announced and launched this evening.
An invitation to the event said on Friday this was the first ever-BIG pilot project to try and tackle poverty, hunger and income security head on. ”
This initiative is about a Basic Income of 10 Euro a month. Not the kind we are talking about.
Paul
Comment by Paul Nollen — Sat, Aug 18th, 2007 @ 3:26 pm
440/month is not a lot of money. It’s about the same as SLAVES can make.
That’s it guys, you want a SLAVE class, so you can exploit them. Heck with the corporate ladder, you will just keep them down.
Comment by winter “Yea, Proton Power, now in remission†— Sat, Aug 18th, 2007 @ 3:38 pm
440 Euro a month is indeed not a lot in our (West european)case. But it is a start. It is about the same amount as is proposed by the Spanish EU delegation.
http://www.vivant.org/forum/viewtopic.php?t=2171
Quote:”
The President of the “Committee on Petitions” of the European Parliament,
Marcin Libicki, approved on June 2006 the processing of a proposal to study the viability of a Basic Income sent by the association “Arenci” (León, Spain) with the support of Spanish socialist representative at the European Parliament Elena Valenciano. As it is stressed in the text approved by the “Committee on Petitions”, the proposal will be considered “because the issues that are raised fit in the list of tasks the European Union is responsible for”. This proposal considers a Basic Income of 421 euros per month, to be paid with consumption tax revenues. Elena Valenciano hopes that, as a result of this proposal, the European Parliament will issue a report on Basic Income.
For more information, contact arenci@hotmail.com.
“Unquote”
Imagine such a Basic Income for Europe. Replacing all welfare allowances equal and below that amount for a start. It will always be a test case with adjustments on the road. But there are not many sustainable alternatives.
Paul
Comment by Paul Nollen — Sat, Aug 18th, 2007 @ 3:53 pm
“440/month is not a lot of money. It’s about the same as SLAVES can make.”
Yeah, it’s not a lot of money, and there will always be downward pressure on it. So people will be prompted to work for any extra niceties in life. Plus the overall wage of a low-wage earner probably won’t be affected—e.g. a net income of 1500e/mo before the BIG will be the same afterwards. Paychecks will adjust to it.
Just a small anecdote… I’m thinking about the little kiosks around the train station; they are closed all day and only open for a few hours at night. My first reaction is that I’ve never seen such lazy entrepreneurs in any other country. They only work a minimal amount in Finland.
But thinking about it some more, it might also be caused by entrepreneurs not being able to coax people into relinquishing their welfare benefits to work for them. That is, I assume if a person only wants to work—e.g.—25-hours/week (as many mothers would), then they’ll have to give-up welfare payments altogether. The kiosk pay might not match it.
With minimum income, they could work the extra hours without losing all the benefits. Again, I’m sure the hourly kiosk pay will adjust downward. Then, with increased p/t labor supply, I’ll get my tuplaporilainen any time of the day…at least theoretically
The fact that Finland’s food kiosk products and restaurant services are already well overpriced (about 1.5X or 2X other European countries’) is another story.
Comment by Kristian — Sat, Aug 18th, 2007 @ 4:03 pm
It seems that the people who are against basic income don’t even know what it is. It’s not a communist idea, it does encourage people to work, and it’s not opposed by Finland’s right wing as much as people like passer-by think. Anyone remember the presidential debate between Halonen and Niinistö where Niinistö said that he’s not against basic income, and Halonen was strongly against it (SDP’s official stance on the issue). Later Ben Zyskowicz (perhaps the most influential member of Kokoomus) suggested that Osmo Soininvaara (Greens) should be given the task of thinking of ways to eliminate “encouragement traps” (kannustinloukku in Finnish). Zyskowicz specifically said that basic income could be one way to do it, and he was open to the idea.
So people, please stop saying that us Kokoomus voters are all against basic income. We’re not!
Comment by Nirva — Sat, Aug 18th, 2007 @ 4:57 pm
I still don’t understand how this would be creating a slave class. Since when did slaves get paid for doing nothing? I think in order for a person to be a slave, they must work and not get paid. This kind of is the opposite?
I understand that people would consider it slavery if people got paid very little for their work, again, this would increase their income on top of the low wages.
Where is the slavery?
Comment by Annoyed Finn — Sat, Aug 18th, 2007 @ 6:31 pm
Indeed where is the slavery in the only state in the world with a basic income?
newsletter USBIG 34
http://www.usbig.net/newsletters/34jul-aug2005.html
Quote:
1. Jay Hammond, Father of the Alaskan Basic Income, Dies at 83
Jay Hammond, the governor of Alaska from 1975 to 1982, who led the fight to create the Alaska Permanent Fund, was found dead at his Homestead about 185 miles southwest of Anchorage, on Tuesday, August 2, 2005. He led an amazing life. Hammond was a laborer, a fur trapper (by dogsled), a World War II fighter pilot, an Alaskan bush pilot, a husband, a father of three, a wildlife biologist, a back woods guide, a hunter, a fisher with the U.S. Fish and Wildlife Service, and a homesteader. Hammond was one of the last people to take advantage of the Civil-War-ear U.S. law giving away land. Other than a requirement to build a house and farm the land for five years, it was given away freeâ€â€no strings attached.
Hammond was also hero to everyone who believes that no one should be barred from the resources they need to meet their basic needsâ€â€no strings attached.
Hammond got the idea for a resource dividend when he was mayor of a small town of Bristol Bay, Alaska in the 1960s. He realized that salmon were being taken out of the area without necessarily helping the town’s poor. He proposed a three percent tax on all fish caught in the area to be redistributed to all residents of the town. By an enormous stroke of luck, the man who had that idea (and saw it work in Bristol Bay) would be elected governor of Alaska just as the state was beginning construction of the Trans-Alaska oil pipeline. Oil companies stood to make billions of dollars, and of course, they argued that Alaskans would benefit through new job opportunities, but Hammond knew one way to make sure that every single Alaskan would benefit from the pipeline.
And so the Alaskan Permanent Fund was born. For the last 20 years every Alaskan has received income from state oil revenues. A portion of the state’s taxes on Alaskan oil goes into an investment fund, which pays dividends from the interest on those investmentsâ€â€hence the permanent fund. Dividends vary, but they are usually more than $1,000 per year for every man, woman, and child living in the state.
The system is not perfect. Hammond told Tim Bradner, of the Anchorage Daily News, that his biggest regret was to let the legislature eliminate the state’s income tax. Without the citizens’ responsibility to pay taxes to support state services the fund will be vulnerable, and the legislature has been trying to raid the fund ever since. So far, the enormous popularity of the fund has protected it fairly well. Hammond also regretted that the fund was too small. Only one-eighth of the state’s oil tax revenues goes into the fund. If half of oil tax revenues went into the fund, as Hammond envisioned, every Alaska family of four could expect to receive more than $16,000 this year. Hammond died campaigning to increase the size of the fund.
But the most important thing about the fund is that it exists. It’s simple, it works, and everyone in the state benefits from it every year. How many elected officials can say they did that? According to Sean Butler in Dissent Magazine, Nobel Prize-winning economist Vernon Smith, called the Permanent Fund, “a model governments all over the world would be wise to copy.†It is a pilot program for resource taxes and basic income plans all over the world. Economists have recommended the Alaska solution for resource-rich, poverty-ridden countries from Nigeria to Iraq. Just this summer the government of Azerbaijan sent a delegation to Alaska to study the Permanent Fund. You can’t keep a good idea down.
For a study on the effects of the Alaska fund see http://www.unternimm-die-zukunft.de/Ausgewaehlte_Texte/englisch/The_Alaska_Permanent_Fund_Dividend_An_Experiment_in_Wealth_Distribution.pdf
Paul
Comment by Paul Nollen — Sat, Aug 18th, 2007 @ 7:52 pm
“I still don’t understand how this would be creating a slave class. Since when did slaves get paid for doing nothing? I think in order for a person to be a slave, they must work and not get paid. This kind of is the opposite?”
look, ask any one on welfare, and they will say they work for their money. It takes lots of standing in a line, fillin out paperwork, etc.
No they are a class of slaves, that keep the Government in power.
Comment by winter “Yea, Proton Power, now in remission†— Sun, Aug 19th, 2007 @ 2:37 am
“seems that the people who are against basic income don’t even know what it is. It’s not a communist idea, it does encourage people to work”
please, this is about the most uneducated statement ever posted. You pay folks not to work and say they are encouraged to work?
Comment by winter “Yea, Proton Power, now in remission†— Sun, Aug 19th, 2007 @ 2:40 am
Quote:”You pay folks not to work and say they are encouraged to work?” Unquote
This is not what the BI income proponents are saying. There is no proof at all that a basic income discourage work.
But there is proof that most of the “illegal work” in Belgium (and W Europe) is done by people with an income (with the exception of illegal immigrants but this is a new phenomena). From welfare or work. The illegal work in Belgium is estimated to have a value of 20% of our GDP. Why are people on welfare working in the illegal economy? They already have a “basic income” and in most cases more than the 440 Euro suggested.
A study of lottery winners (win for life system) don’t give any proof that those people are not “working” any more, on the contrary. And here we are talking of far more money than the Alaska Basic income.
http://www.usbig.net/papers/106-Peters-Marx–LaborSupply.pdf
http://www.usbig.net/papers/068-Sheahan-right2big.doc
In Belgium and Germany (combilohn) there are systems on test now for years whereby people may keep their “unemployment benefit” and do some paid work. In that case the legal minimum wage (to pay by the employer) is lowered with the benefit (more or less). Those systems are working well. For employees this is changing nothing in regard to the earned money but if they loose their job they have their “basic income”, no questions asked. Mainly these systems are targeting the “illegal” work like cleaning and so on. This systems proves that people don’t stop working for a “basic income”. Working also has other benefits. But maybe we must give “working” a broader definition and not only the paid “work” in production. Artist are “working” also, to the pleasure of all of us, and so is anyone running a household.
Paul
Comment by Paul Nollen — Sun, Aug 19th, 2007 @ 11:18 am
“Artist are “working†also, to the pleasure of all of us”
No, that sort of artistry is illegal here for now. We go to other countries for that. But I’m sure our laws could be changed to accommodate.
Comment by Kristian — Sun, Aug 19th, 2007 @ 1:09 pm
“please, this is about the most uneducated statement ever posted. You pay folks not to work and say they are encouraged to work?”
Wow, it’s an honor to have my post considered uneducated by winter, means I must be doing something right. Paying folks not to work is what we’re doing right now. Basic Income would change it so that we would also pay those who work. How can any right winger see this as a negative change?
Comment by Nirva — Sun, Aug 19th, 2007 @ 1:42 pm
Nirva and Annoyed Finn,
I guess you have to look at it from an American’s perspective: The US had a huge underclass of people on welfare, and there was no incentive and limited opportunity for them to transcend their condition. The underclass was disproportionately Black.
A common metaphor is that they were ’slaves’ to leaders and activists who united them by virtue of a common goal: getting more welfare payments. And of course, if they’d have worked legal jobs, they would have lost all welfare benefits. The leaders and activists liked that aspect because it created a dependency relationship to both the leaders themselves and the state. Hence, they were ’slaves.’
During the 1990’s, the (center-right) Congress and (center-left) Clinton changed laws to ‘reform’ the system. It dramatically reduced the number of people on welfare—but perhaps not the number living in poverty.
The most notable side-effect is that it was replaced by the biggest Socialist government program in United States history. It’s called the military.
Comment by Kristian — Sun, Aug 19th, 2007 @ 2:13 pm
“During the 1990’s, the (center-right) Congress and (center-left) Clinton changed laws to ‘reform’ the system. It dramatically reduced the number of people on welfare”
and a funny thing happened to all those folks who went off welfare.
They started up the corporate ladder. They became ex-slaves.
Kinda kills the silly idea that paying one not to work, well actually works.
Comment by winter “Yea, Proton Power, now in remission†— Sun, Aug 19th, 2007 @ 2:49 pm
Look guys, we have hard proof that paying folks to not work, well keeps them in slavery. They don’t work.
We have hard proof that lowering taxes, well, it gives work to the entry level, and lowest paid workers.
We have hard proof that GDP growth accelerated in a country, that well cuts taxes, reduces the welfare roles.
It kills the welfare state model, but those are the facts.
Comment by winter “Yea, Proton Power, now in remission†— Sun, Aug 19th, 2007 @ 2:55 pm
“…biggest Socialist government program in United States history. It’s called the military.”
I forgot to mention, the OTHER US government program is called Prison. It’s where much of America’s underclass resides.
winter—point taken on lowering taxes. You got that part right for sure.
Comment by Kristian — Sun, Aug 19th, 2007 @ 2:59 pm
“The illegal work in Belgium is estimated to have a value of 20% of our GDP. Why are people on welfare working in the illegal economy? They already have a “basic income†and in most cases more than the 440 Euro suggested.”
wow, and for that they get a depressed GDP growth rate.
this is the liberal mind set. Let them work illegaly, and live on their dole. Frack the corporate ladder, and making any money.
The right wing says, let them go up the corporate ladder. Its a little harder to get started, but someone on the ladder is better off, than on the liberal slavery model.
Comment by winter “Yea, Proton Power, now in remission†— Sun, Aug 19th, 2007 @ 2:59 pm
“…this is the liberal mind set. Let them work illegaly, and live on their dole.”
Well, you might be getting your terminology confused. But you’re right about Belgium. As you can see, it’s a high-tax shithole just like the Nordics.
http://www.nationmaster.com/graph/tax_tot_tax_as_of_gdp-taxation-total-as-of-gdp
You might also notice that Switzerland has a low-tax model, yet it has welfare for the needy just like the Nordics and Belgium. Interesting, eh?
Oh, and what’s all this about the corporate ladder? Where’s your individualist and entrepreneurial spirit? A little touch of corporate socialism, winter? Hmmmmm?
Comment by Kristian — Sun, Aug 19th, 2007 @ 3:21 pm
Quote :”this is the liberal mind set. Let them work illegally, and live on their dole. Frack the corporate ladder, and making any money.”
This is not what I am saying. I don’t defend illegal work but it proves that people don’t stop working even if they receive a Basic income.
Quote :”We have hard proof that GDP growth accelerated in a country, that well cuts taxes, reduces the welfare roles.”
GDP is not the only statistic of interest to me. In 1997 (and the situation is not altered in the mean time) the US has 648 people in prison (per 100.000) while Finland has 56 , Sweden 59 , Denmark 62 and Belgium 82.
There are very interesting studies of the relationship between welfare and imprisonment (Loic Wacquant) and indeed the military and imprisonment are the alternatives for a military state. In the US the prison industry (private and government together) is the third employer (in 1997 with a budget of 129.8 billion dollar and 2.078.000 personnel, only Wall Mart and Manpower inc have more personnel)
Social housing in the US has a budget (1990) of 10.6 billion dollar and prison building 26.1
Well, we certainly have a choice what to make of our country.
Who is calling what a “shithole†;-)?? That only depends on your priorities.
Paul
Comment by Paul Nollen — Sun, Aug 19th, 2007 @ 5:01 pm
Paul,
Do you know if the Alaskan fund has any provisions to deter politicians from creating special programs besiden the fund? I.e. to keep the fund functioning as the only channel the government monies are doled out to individual residents?
Comment by Mara — Sun, Aug 19th, 2007 @ 6:34 pm
#24 Off-topic, a response to Michael,
What you are describing is an industrial society era view of production and productivity, where the economy consists of a more productive, industrial export sector and a less productive, domestic service sector. The big Europe wide problem has been (and still is) that we have protected our domestic service industries and in so doing let them lag ever more. This is quite evident in Germany and Finland. Finland has been a leader in the European productivity race since the 90’s mainly because the 90’s recession gave us a very rude awakening and we had to restructure a little bit. Our problem is that once we got out of the doldrums, we immediately stopped the structural renewal and declared ourselves the best economy on earth. Germany started the structural changes much later in the 2000’s when it became evident that it would stop still if it would not accept structural changes (like wage cuts for auto workers).
But once the society transforms into post-industrial phase, the services turn out to be at least as productive as material production. However, the services are not manual labor, but something heavily embedded in information. If you look at for instance metal industry, it’s main money making activities are services: informational, educational and maintenance services. The physical product is the cheap part, which can actually be outsourced to emerging countries. Like in the ITC sector.
Comment by Mara — Sun, Aug 19th, 2007 @ 6:56 pm
I don’t have any idea. I do know that in Alaska there exists a popular referendum and in that way the people have the opportunity to make a decisive choice themselves, if they want to.
It is possible in the near future that some politicians will propose an other formulae to calculate the fund payment in order to make the paiments more stable, but I don’t expect that it will be much more than a recalculation.
Personally I think the more stable the “basic income” the more effective. It is in a way also an adjustment to the “normal” bust and boom economic cycle where effects are only amplifying themselves unnecessary. Basic income will, in a way, secure a “basic consumption”.
Paul
Comment by Paul Nollen — Sun, Aug 19th, 2007 @ 8:16 pm
“I don’t defend illegal work but it proves that people don’t stop working even if they receive a Basic income.”
yes, but do they clinb the corporate ladder?
Heck no, you just want them on the dole. Forever.
Comment by winter “Yea, Proton Power, now in remission†— Mon, Aug 20th, 2007 @ 3:15 am
Kristian - Actually, the majority of folks on welfare are white.
Comment by hfb — Mon, Aug 20th, 2007 @ 4:36 am
hfb—blacks are disproportionately represented though. Gotta think in terms of relative percentages. Just ask winter. He and 9-homeless ex-slaves are living in his Hummer.
Comment by Kristian — Mon, Aug 20th, 2007 @ 4:43 am
Paul,
we should probably emphasize that Alaska’s case is convenient since it has a profitable, natural resource emanating from the ground. The same with countries like Norway and Denmark. So, experimentation in those places is relatively risk free.
Aside from the forests, I don’t think we can make the same argument for Finland—although some would like to say that Nokia is a natural resource
Even so, about 90% of Nokia is owned by foreign investors, and the profit dividends they receive get taxed in their respective lands rather than in Finland. Predictably, those investors reside mostly in low-tax countries.
So when you say, “depends on your priorities” to suggest (if I caught the vibe correctly) that you’d like to present basic income within a high-tax socialistic context, then you’ll probably meet a good deal of resistance since the trend is clearly toward economic liberalization.
I think people realize that they can’t have good healthcare, education and a high standard-of-living, without individual wealth in society and high GDP. People also realize that their purchasing power—over a wide range of products and services—depends on a balance between the big corporate sector and local economy. High-tax Finland is severely lacking in the latter, despite the former being pulled-along nicely by a strong global economy.
In my opinion, it’d be too bad if the basic income idea gets denied consideration due to an unpopular choice of bundling. I think it (or some variant of it) has some good features; in particular, as you mentioned, the income smoothing for those at the lowest end of the earning spectrum.
To make it successful, the overall economic system can’t discriminate against those with wealth or those who aim to achieve. Ultimately, they’re the ones who’ll be paying the bills. If you don’t let a relatively free market exist at the higher levels, then the possibility of helping those below will only be diminished.
Comment by Kristian — Mon, Aug 20th, 2007 @ 4:46 am
‘But the danger is that after the state decides to commit to this model a bunch of people will appear arguing they should be treated as exceptions. And before you can say “streamlining tax and benefits structure†the additions, exceptions and exemptions are back’ (Mara, post
Bingo. That’s the most likely scenario. I hate those exceptions and exception to exceptions and…
‘The basic thing I think is that Kela nor the Sosiaaliturva work in an efficient way and need to be eliminated.’ (philtard)
In your dreams. The bureaucracies do what the legislation tells them to do, nothing more, nothing less. The legislation is produced by politicians. The politicians will cave in to loud and aggressive pressure groups who think they should get BI on top of all the benefits they’re getting now. How do you think we got this jumble of laws in the first place?
Comment by prince of dorkness — Mon, Aug 20th, 2007 @ 10:10 am
Hello Kristian,
It is clear that I am a supporter of the “basic income” system and this for a lot of reasons (no or little bureaucracy, more freedom, elimination of poverty and social exclusion, and so on) but how are we going to pay for it.
In the cases of natural resources it is clear what can pay for a “basic income” of people, but even then, it does not always work like that.
Look at Nigeria or other countries with a wealth on natural resources and a lot of very poor people.
So the second question is how to redistribute.
I also don’t believe in an ever increasing GDP. Maybe like some Japanese economists and sociologist, a growing GDP per capita is still possible for the next future and even desirable because they already have an aging and declining population.
What are they aiming for? An fast increasing of productivity with more automatisation with less social repercussion for the unemployed because the workforce is also declining.
What will produce our standard of living now and in the near future?
Technology and energy.
Not capital, because that is also a creation of ourselves and it is created out of nothing as far it is needed.If done correctly, without or with little inflation ( http://www.socialcurrency.be ). For a technical reason deflation is avoided but this is a technical choice.
Not work in the production of consumer goods. If we are able to make work unnecessary we will do so without hesitation. And at that we seems to be very good.
But what are people shouting now? Work work work ??? Are we sure? I doubt it.
Of course we want to be active, creative, and so on. We like challenges and we will work to achieve a lot of things. Even rich people are “working”.
What mechanisms can be used in this new world to achieve what we want? A system like in Alaska is doubtful, it is a fund (capitalisation) and to much money chasing to few investments means inflation. Even the World bank is leaving this idea (pension funds only with capital investments). Repartition by taxes is the only other way. Or a mixed form of course.
Natural recourses, belonging to all of us, but a little more expanded, must do the trick.
Some ideas on wikipedia: http://en.wikipedia.org/wiki/Basic_income#Funding
* Income taxes
* Sales taxes
* Capital gains taxes
* Inheritance taxes
* Wealth taxes
* Luxury taxes
* Elimination of current income support programs and tax deductions
* Repayment of the grant at death or retirement
* Land and natural resource taxes
* Pollution Taxes
* Fees from government created monopolies (such as the broadcast spectrum and utilities)
* Collective resource ownership
* Universal stock ownership
* A National Mutual Fund
* Money creation or seignorage
* Tariffs, the lottery, or sin taxes
* Technology Taxes
* Tobin Tax
but perhaps there are some more propositions in the Basic income literature on http://www.usbig.net or http://www.basicincome.org
We must not forget that even some decades ago we could not foresee the live we living now. At least those of us living in this part of the world. What will we make of the world of tomorrow? What do we want to achieve?
Paul
Comment by Paul Nollen — Mon, Aug 20th, 2007 @ 11:54 am
elimination of poverty
Would basic income really eliminate poverty? If they were to piss that additional 440e away on gambling and booze, are you suddenly no longer “in poverty” anymore?
Comment by Phil — Mon, Aug 20th, 2007 @ 12:31 pm
So should the state treat it’s citizens like children or not? You seemed to oppose the idea earlier, for example your thoughts on legalizing drugs. Are people responsible enough to decide for themselves, or not?
Comment by Anonymous — Mon, Aug 20th, 2007 @ 1:31 pm
Phil,
they’re getting it now; it’s written into the constitutions of (probably all) European countries. The US also has it in practice. So I don’t think basic welfare is going away anytime soon.
There’s no major change here, except for letting recipients work legally. And that work would indirectly pay for some of the benefits they themselves receive.
If it can be implemented in a way to reduce overall taxation (which is probably the only way it’ll fly anyway) then it could be very positive—a nice opportunity to introduce a low flat tax.
Whereas I probably don’t agree with Paul on income and wealth distribution in the larger sense, I do agree about the social benefits such a system would have on the lower rung of society. Welfare people tend to hang out in welfare cliques. If they can work, then they’ll mix-into society better.
Adding to Paul’s comments about the economy, we’re now importing low-skilled work from 3rd World countries because our native populations don’t want to wash windows and clean floors for 40-hrs/week. No doubt these are shit jobs, but maybe 25-hrs/week wouldn’t be so objectionable.
So, whereas I don’t agree with Paul about GDP not growing forever (new technologies always create possibilities for GDP growth), we can’t keep basing our economies on the importation of cheap labor. That indeed can’t go forever.
By the way Phil, your (alternate) candidate supports the idea…
“Mike Gravel, a candidate for the 2008 Democratic nomination for President of the United States, advocates for a guaranteed annual income, which he terms a “citizen’s wage,” of $5,000 per person.”
http://en.wikipedia.org/wiki/Basic_income#Funding
A program like that might work if implemented and funded by the individual states. And there’d be plenty of local pressure to keep the amount low to encourage at least part-time work. There’d even be room to add private charities into the mix…
Comment by Kristian — Mon, Aug 20th, 2007 @ 3:03 pm
So should the state treat it’s citizens like children or not? You seemed to oppose the idea earlier, for example your thoughts on legalizing drugs. Are people responsible enough to decide for themselves, or not?
Basic income sounds like a more liberal idea (assuming taxes aren’t raised to cover it) because citizens are now freer to choose which services they want and need, opposed to the state directly providing it to them.
Comment by Phil — Mon, Aug 20th, 2007 @ 3:19 pm
Yeah, besides, who cares if they spend it on booze and gambling? They’ll bounce themselves straight into the homeless shelter.
In any case, gotta keep that lower rung of society placated. Otherwise, those bastards will vote commie on us. Then, so much for libertarianism
Comment by Kristian — Mon, Aug 20th, 2007 @ 3:31 pm
Kristian - Don’t you mean, vote Bolshevik?
Take away booze and god and the proles get restless.
Comment by hfb — Mon, Aug 20th, 2007 @ 3:50 pm
#52 - Prince, nice you noticed. This discussion has been like an introduction to a bait-and-switch of political measures: get people interested with a glowing picture and once they are in, switch to reality.
#54 - Phil, of course not. Don’t you remember, we already covered Finnish poverty much earlier. If you measure poverty in relative terms (was it 40%, 50%, or 60% of median income?) the more condensed the income distribution, the larger share of the population is classified as poor. So even if you managed to condence the income distribution from its current very condenced state, you would have more officially poor people.
Gotta be careful what one wishes for.
Besides, IMO this BI is not designed to eliminate poverty, but to simplify the current tax and benefit structure, aiming to eliminate disincentives to productive activities (like working and earning money). The expectation is that there would be great positive dynamic effects as people on BI would have no reason to stay on BI.
I’m repeating myself, but how credible do you consider the scenario of minister Pekkarinen voting for legislation that would ban him from proposing any new aid to a particular group of rural population/rural areas, if he hasn’t figured out a way to circumvent that ban? As long as there is no politician-proof mechanism to prevent politicians from watering down the fine idea, BI remains a mirage.
Comment by Mara — Mon, Aug 20th, 2007 @ 4:04 pm
“Kristian - Don’t you mean, vote Bolshevik?
Take away booze and god and the proles get restless.”
Perhaps…and in worst case, let’s remember what Joe Stalin said, “It’s not the people who vote that count. It’s the people who count the votes.”
Mara,
you might be right about the rural sector. I have a suspicion that half the population up there collects welfare payments, but works illegally in addition.
But they might even be getting more welfare payments now, than under a basic income model. That’s because the question always needs to be asked, “Is it enough to live on?” Normal welfare is always subject to means testing.
Under the basic income model, the answer is always, “Yes, with at least a part-time job, you should have no problem surviving.”
For that matter, some of those heavy labor jobs might be better suited for part time scheduling. Human bodies have a limited working life, physically speaking. You can work someone into the ground early, but then he’ll be a permanent welfare recipient when he turns 50.
People used to die around that age. These days, we’re supposed to live ’till almost 90. That’s 40-years of welfare for the construction worker or farmer, potentially….if he doesn’t first drink himself to death.
I guess we can keep importing expendable laborers from abroad… Difficult questions, I’ll admit.
Comment by Kristian — Mon, Aug 20th, 2007 @ 5:12 pm
Kristian,
It’s not that I don’t like the idea of BI. It’s that once such a streamlining of the tax & benefits system has been done, some politician like Pekkarinen will walze in and announce: “This BI thing is fine, but we need this extra program for folks that have this or that special condition.” And curously enough, just that kind of folks happen to reside in his electoral area or happen to have the typical characteristics of Pekkarinen’s constituency. “So let’s have BOTH the BI AND my special program on the side,” the politician will propose. After he gets his special program accepted, there will be about 199 other MPs demanding other very necessary programs for other specific kinds of people with very specific kinds of needs.
So the benefit of having a clean negative income tax -type arrangement will be buried under a new hodgepodge of special, targeted, individually understandable programs.
Unless the streamlined system somehow contains a mechanism that prevents these “targeted programs” to take hold. If there is no deterrent, the new set of “targeted programs” are more than likely to create all possible kinds of incentive traps in the benefits system. Which leads to the next step: hiring an army or bureaucrates to catch the welfare queens, execte the 200 exeption programs, and study & fine tune the now even more complex jungle of tax & benefit code.
So the most important thing in tax & benefit code renewal is to build a system that forces politicians to commit to their own initial choice, or at least requires a large majority to alter the system with additional programs.
I’m not trying to say that rural people get more benefits than urban ones, even though I have the impression that the overwhelming part of Finland’s GDP originates from the few largest cities. I took minister Pekkarinen as an example because he is known to be very good at getting state money to his constituency. After all, he inspired the terms “pekkarointi” (refering to just this activity) and “siltarumpu” for his ability to get useless road work done in his home area. (By the way, a bit like the Alaskan senators with their “freeway to nowhere” with the federal interstate freeway monies).
Your example of someone wishing to work part time because of exhaustion is a good example of complications that arise from a simplified system. There will always be a continuous stream of special cases that will evoke the question that should they be an exeption to the rule. There will always be marginal cases and individual disappointments. The more the system gives hope that you might get a break if you just keep asking.
Comment by Mara — Mon, Aug 20th, 2007 @ 8:29 pm
Mara—
Your point appears to be well grounded. Milton Friedman, who himself authored a basic income plan, had the same concerns…
http://en.wikipedia.org/wiki/Milton_Friedman#Other_public_policy_positions
Too bad Finland can’t shed its many layers of welfare statism. It’s such a shame to have that factor preclude any possible success of a basic income plan.
Comment by Kristian — Tue, Aug 21st, 2007 @ 4:19 am
# 60 quote :”If you measure poverty in relative terms (was it 40%, 50%, or 60% of median income?) the more condensed the income distribution, the larger share of the population is classified as poor.”
Very correct indeed. The system to classify “poor people” with a % of median income can’t be maintained in a system with a basic income. Even a very high basic income like some BI proponents are aiming for (1000 Euro a month) will result in a great number of poor people ( 60% of median income is the standard used in Europe). Maybe the GINI coefficient may gain importance. again.http://william-king.www.drexel.edu/top/prin/txt/factors/dist4.html
# 56 Quote :”So, whereas I don’t agree with Paul about GDP not growing forever (new technologies always create possibilities for GDP growth”
I don’t understand how anyone can claim a sustainable ever exponentially expanding growth. This is physically impossible. Cancer will kill his host if not halted. Try to calculate a for ever percentual growing population on this earth. It simply can’t be done.
Somewhere on the line we must change to a steady state economy. Perhaps not in the very near future but not more than some decades away I think (Global, not local). Of course the financial system like we know it will collapse but we will develop an other system (for instance the Huber Robertson system or whatever).
Paul
Comment by Paul Nollen — Tue, Aug 21st, 2007 @ 6:02 pm
Kristian,
Yes, it is a pity. Unfortunately Finland happened to set up its institutions in an ideologically progressive era, so our institutions cannot protect us from ourselves. In the long run I’m optimistic, though. Since I do believe the other Friedman’s thesis that the “world is (economically and informationally) flat”, I conclude that nobody can keep a good idea down. The welfare state will simply lose out in competition with more efficient ways to organize “societal sharing & caring”. The surrender may not happen in name, but thats OK, it is enough if the organization changes in substance.
US is luckier than Finland in this respect. US has a great constitution and a great governing principle of checks and balances. Most US citizens seem to have digested those principles at an early age. That’s why GWB’s totalitarian type influence is repairable within US and that’s why it was quite clear that eventually Americans would catch on and demand the goverment to return to good practises of governance.
We Finns have a much harder time mentally/emotionally to respond with unwavering demands of good governance in corresponding situations. We tend to feel guilty/shame for “acting powerful/pretencious” or not being “a good Finn” if we find ourselves in a situation where we have to admit that our national system sucks in some respect. That’s a situation where a typical Finn gets even more quiet, and a typical American starts voicing questions.
While the US institutions are by no means perfect, my impression is that they have contributed a lot to the success of the nation. They allow the nation to correct its course when it becomes clear that a correction is necessary. With less functioning institutions, a country may easily drift to a less desirable governance practises and will have no way to correct those practises.
Comment by Mara — Tue, Aug 21st, 2007 @ 8:25 pm
Paul,
Re #60 quote: Thanks for clarifying the 60%. Yes, Gini would be another measure for equality of disposable income within a given group/economy. However, the useful way to apply it would be within a larger than national economy, say EU or OECD. In this wider analysis, the ever more equal Finns would group ever more tightly together on the Gini curve.
What has been the concern here is that over time this tight group of Finns would also slide towards the poorer end of the curve, as other nations are doing relatively better and we end up sharing the shrinking pie into more and more equal pieces.
Re #56 quote: The continuous growth of GDP is possible because it is not physical growth, but economical. GDP grows in value, not in bulk.
Comment by Mara — Tue, Aug 21st, 2007 @ 8:55 pm
#66 quote :”What has been the concern here is that over time this tight group of Finns would also slide towards the poorer end of the curve, as other nations are doing relatively better and we end up sharing the shrinking pie into more and more equal pieces.”
#66 quote :”What has been the concern here is that over time this tight group of Finns would also slide towards the poorer end of the curve, as other nations are doing relatively better and we end up sharing the shrinking pie into more and more equal pieces.”
It all depends on what you want and on the definitions. What does it means “doing better”? Certainly a lot of people will give a different answer on this.
I just have the feeling that “growth” and “more” is not always the good answer. A shrinking pie is not at all necessary but what about a growing GDP per capita for starters? This is possible with a shrinking population (the nightmare of the “growth” disciples) and a better performing economy (higher productivity)and why not, even a better “social security”.
Paul
Paul
Comment by Paul Nollen — Tue, Aug 21st, 2007 @ 9:28 pm
Mara: “The continuous growth of GDP is possible because it is not physical growth, but economical. GDP grows in value, not in bulk.”
Paul,
therein you’ll find the answer. New technological invention creates value for society. Hence, it also creates GDP growth.
Consider that, hypothetically, if we were to still live under the agrarian-based technological standard of 500-years-ago, then we would probably be living in that theoretical, no-growth, “steady state economy” to which you refer. After all, there’s a limit to how fast we can perform physical work, right?
But obviously, innovation didn’t stop 500-years-ago. Since then, technological breakthroughs created new efficiencies and value for society. Hence, they also created economic growth.
You might remember a 100-year-old quote from a certain patent office official. It goes something like this: “Everything that can be invented has already been invented.” Well, a few short-years-later, the airplane was invented…and not surprisingly, the economy grew.
So if you want to proclaim that GDP can’t grow forever, then there might be a job waiting for you at the patent office
Oh, and it’s probably worth mentioning that new innovation isn’t enough; ideas actually needs to be brought to market so they can be distributed and used. Hence, value and its related growth is a combo of innovation and commerce.
Traditionally, within our lifetimes, America has been the innovator AND driver of commerce. We in Europe simply took the ideas and tried to copy them as well as possible. That illustrates the price of Socialism: being the laggard. But as European economies change to a more economically liberal stance, that relationship will probably change in Europe’s favor.
Comment by Kristian — Tue, Aug 21st, 2007 @ 11:02 pm
Mara: “The welfare state will simply lose out in competition with more efficient ways to organize “societal sharing & caringâ€Â.”
That’s what gives me hope about the Basic Income scheme; competition between countries would keep things in perspective. Generally, people crave ‘the best’ of everything—healthcare, appliances, homes, etc. If one country fall-behind the others, then it will be obvious (just like it is currently obvious in high-tax Finland). People would demand a correction—or at least Americans would. We Finns would probably just settle for what the state tells us we should have
Comment by Kristian — Tue, Aug 21st, 2007 @ 11:14 pm
Paul,
The usual way to use Gini index in welfare comparisons is to look at the relative shares of the pot (say GDP) each person gets. If everybody gets the same share, the curve is a diagonal straight line. If somebody gets a lot and others get a tiny share, the curve bends towards the corner. Usually people look at distribution of income after tax and transfers. In international comparisons maybe purchasing power would be a more informative measure. That’s what I meant, the usual stuff in welfare comparisons.
“Doing better” means that in comparison to the individuals of the whole group (EU or OECD population), an individual ranks closer to that end of the curve where the individual gets a larger share than an average individual. This, as far as I know, is the standard interpretation of an individual’s rank on a Gini index curve.
The GDP per person does usually not grow with shrinking population. because a shrinking population has usually low productivity for some other reason. For instanse some African nations with severe HIV/AIDS problem have a shrinking population and their young working age population is dying. Or population may shrink in some economically depressed areas, where young working age persons have left to look for work elsewhere and only the old and infirm are left. Finland as a nation had a baby bust for a while because a large part of population got more interested in careers and now, due to the top heavy population pyramid, we are one of the most rapidly aging EU countries (if not the most rapidly aging). That is definitely going to be a negative factor on the growth of average Finnish disposable income. It’s usually referrerd to as the pension bomb.
Comment by Mara — Tue, Aug 21st, 2007 @ 11:57 pm
Kristian,
As Niinistö would put it: jep jep
Comment by Mara — Wed, Aug 22nd, 2007 @ 12:13 am
Sauli! Sauli!
Paul, a question for you…
If you support BI as a simplified replacement for current welfare schemes, then how do you ensure that politicians don’t start creating all sorts of exceptions?
Do you know of any political strategy to reduce this possibility?
Comment by Kristian — Wed, Aug 22nd, 2007 @ 12:22 am
“replacement for current welfare schemes,”, so lets replace one Slave state with another.
Brother…..
Comment by winter “Yea, Proton Power, now in remission†— Wed, Aug 22nd, 2007 @ 3:08 am
I have to ask. With so much concern that everyone gets welfare, why no concern on getting them started up the corporate ladder?
Why zero concern here? Why do we just want to rearange the furniture with no end state in mind?
Comment by winter “Yea, Proton Power, now in remission†— Wed, Aug 22nd, 2007 @ 3:17 am
#68 :”Generally, people crave ‘the best’ of everythingâ€â€healthcare, appliances, homes, etc.”
Yes indeed, that’s a part of what we want. And do we want to do something in order to achieve that.
Yes, most of us will. But it is necessary to define targets and means. And that’s a very personal thing. I think, in a more general way, we want to achieve happiness. Not only for ourselves but also for all other people. In the past decades we saw very fast changes in every way and chances are that this will continue in the near future. What direction do we want to give that changes. Even I am retired and do not have personal ambitions to improve my standard of living, I hope at least that my grandchildren (my oldest one is 18) have “a good live”. What that will be I have no idea but I am working on it and I only can hope it is in the best way..
#71 : If you support BI as a simplified replacement for current welfare schemes, then how do you ensure that politicians don’t start creating all sorts of exceptions?
Do you know of any political strategy to reduce this possibility?
Apart from the Basic income Idea I am a strong supporter of the Direct Democracy system. On all levels and no subjects exempted.
We (www.democracy.nu) just have a new book published in several languages (for the moment in English, German, Danish, Dutch, French and Slovak )
http://www.european-referendum.org/book.html
Is this “direct democracy” perfect? Of course not but, like basic income, it has to be compared with the other systems.
#73 :I have to ask. With so much concern that everyone gets welfare, why no concern on getting them started up the corporate ladder?
Why zero concern here? Why do we just want to rearrange the furniture with no end state in mind?
This a personal question. I am sure some of us are interested and some are not.
# 69 : Finland as a nation had a baby bust for a while because a large part of population got more interested in careers and now, due to the top heavy population pyramid, we are one of the most rapidly aging EU countries (if not the most rapidly aging). That is definitely going to be a negative factor on the growth of average Finnish disposable income. It’s usually referred to as the pension bomb.
This question is of great importance. Some people have calculated that giving all people a medium standard of living, like most of us in the western world have, will take the resources of tree earths.
Don’t let us loose time on the discussion that it are four or two earths. I take the argument is correct. And a medium standard of living is also not the point, it will depend for sure on the climate. But in general I believe we have a full house if we want every people to give a decent live. Food, shelter, clothing, basic health care. Do you want this for your family at least? I hope I can provide better.
My conclusion is that I don’t like the hypocrisy about population growth to be positive. We (the world population) have met our end at that. And it is contradictory to strive for population growth locally and a declining population globally.
Look at the Japanese. They don’t like mass immigration and they have a declining population. What is their answer. Can it be done?
Not for very long the Chinese will meet the same challenge. Is population growth the answer? I doubt it.
Paul
Comment by Paul Nollen — Wed, Aug 22nd, 2007 @ 10:37 am
Paul,
I don’t think you’ll convince winter of anything. He only supports indirect welfare (i.e. military, prison). No problem mortgaging his grandchildren’s future on that
I agree entirely with your point regarding population growth. The world is packed-full with people, The number needs to decrease rather than increase. Europe’s population could be reduced by at least 50% and solve lots of problems.
In my opinion, all the reasons you present for BI make perfect sense. But, if you use those to predicate your entire argument, then you’ll only get the ‘lazy lefties’ on your side.
But you really need to appeal to the mainstream who—whether you like it or not—expect a material increase in their standard-of-living; not a decrease for the sake of having a more relaxed life.
Here’s how I’d present it…
Modified slightly from this version.
In my opinion, that’s a more compelling way to present it. Just a suggestion…
Comment by Kristian — Wed, Aug 22nd, 2007 @ 2:45 pm
“Indirect welfare”
No, I support an end state that makes folks rich, not slavery for life. No white flaggie thing here.
Comment by winter, "Yea, Proton Power, now in remission" — Wed, Aug 22nd, 2007 @ 4:17 pm
Hello Kristian and Winter,
Quote :”But you really need to appeal to the mainstream whoâ€â€whether you like it or notâ€â€expect a material increase in their standard-of-living; not a decrease for the sake of having a more relaxed life.”
Of course the way of presenting the BI proposal is of outmost importance. Look at the Fairtax proposal in the US. http://www.fairtax.org
They are proposing to shift all taxes to consumption and an unconditional (family calculated) “tax prebate” equal to the consumption tax up to the poverty line.
If the consumption tax is 25 % then the “tax prebate is 25 % of the poverty line (I think they use 40 or 50 % of median income to calculate the “poverty line” but taxable income is higher in the US compared to Europe)
In fact this is a “partial” Basic Income and the amount is comparable with the Alaska fund (altough this is individual).
But they absolutely refuse to talk about a “basic Income”, and they insist on “tax prebate”. To me it makes no difference how it is sold.
I saw what, even a low, “income security” can perform if people are free to start with what ever activity they want.
Look at what Muhammad Yunus did with his micro credit. The whole monetary system do not allow poor people to start with anything. Money creation (credit money) is only done by private banks on collateral. Poor people don’t have collateral and following this, no acces to money (more than 90 % of the money in circulation today is credit money).
Micro credit is delivering monney without collateral (but with interest).
Also this system do not have a 100% succes rate but it is accepted worldwide as a working system on the whole.
Micro credit give people the possibility for production, like Basic income will provide, on the other hand, the means to buy what is produced.
On a small scale of course, but most of us must start at the bottom.
Quote :”I agree entirely with your point regarding population growth. The world is packed-full with people, The number needs to decrease rather than increase. Europe’s population could be reduced by at least 50% and solve lots of problems.”
If you want some reading about this subject we brought together some documents on the subject (dutch site but documents in English, French, Dutch,..)
http://www.vivant.org/site/nl/documenten/
Quote :”No, I support an end state that makes folks rich, not slavery for life. No white flaggie thing here.
I don’t think you mean “all folks” but “some folks”. And yes, I would support a system to abolish all slavery, for all people. That’s why I am a member of the “Basic Income Earth Network” BIEN.
Paul
Comment by Paul Nollen — Wed, Aug 22nd, 2007 @ 5:34 pm
What Crap. “Poor people don’t have credit’?
Come on. A kid, age 18 gets hundreds of Credit Card Applications every month. Now if he abuses them, he gets cut off, but don’t ever say poor folks don’t have credit.
Giving someone a basic income, is saying to them, “be a bum”, here is the check. Thats basic Salvery 101.
Now cut off the check, after a time period, what happens? It empowers them to get a real job, with opportunities. The USA has millions out of Welfare and climbing the corporate ladder. Over 80% who were cut off by the Clinton welfare reform (Pushed to him by a veto proof Republican Congress, so you know he did not want to sign it), are up the ladder and climbing.
Thats the basic difference between you and I.
I want them to be rich, drive a Hummer, not dependent on anyone, for anything. You don’t care, as long as they feed off your free flow of money, you take from your neighbor.
Comment by winter, "Yea, Proton Power, now in remission" — Wed, Aug 22nd, 2007 @ 6:04 pm
“Now cut off the check, after a time period, what happens? It empowers them to get a real job”
Or go into the military/prison, which is the more likely case.
“I want them to be rich, drive a Hummer”
Well, they’re not getting rich, but they’re certainly driving Hummers…in Iraq.
http://www.csmonitor.com/2005/1018/dailyUpdate.html
I dunno winter, you might be looking a gift-horse in the mouth on this one. As I see it, BI is the least-cost alternative. Much less than what you’re paying now.
Comment by Kristian — Wed, Aug 22nd, 2007 @ 6:26 pm
#79 Winter,
Yunnus is the founder of Gameen bank in Bangladesh. The poor people Yunnus is dealing with are truly poor. He tells a story of a woman who earned 2 cents per day. This used to be her business plan: In the morning a local business man loaned her 25 cents to buy a bundle of basket material, she weaved the baskets all day, and the businessman bought the ready baskets at a total of 27 cents. She got this day loan on the condition that she sells her baskets only to the same local businessman. What she needed was a day credit of 25 cents in order to buy her daily need of basket material, weave the baskets, and to sell the baskets freely on the market for a higher price.
Yunnus lended her the 25 cents for a day. Those loans are not called micro loans for nothing! The basket weaver and her kind really were not able to get a day loan of 25 cents from the local banks. They were out of the market, in a way a regular American kid is definitely not. Nor a regular Finnish or Belgian kid.
Yunnus is very clear that he doesn’t give the 25 cents, but loans it. He stresses that anybody helping another should always respect the other person’s dignity, self-rule and initiative. He is so against free money as can be. Gameen bank uses higher interest rates than regular commercial banks, on both directions (deposits and loans), and its customers are also its owners. The bank gives its owner-customers a better deal than they have ever gotten before, and both parties are proud to make a *deal*, as a way to get out of real and concrete present-day slavery.
Winter, I suspect you would actually like the guy, if you got to know him.
Comment by Mara — Wed, Aug 22nd, 2007 @ 8:14 pm
Ops, the correct spelling is Yunus, not Yunnus.
Comment by Mara — Wed, Aug 22nd, 2007 @ 8:49 pm
For those interested, Muhammad Yunus and Basic Icome advocates have met several times recently (Deutsche sprache)
http://www.initiative-grundeinkommen.ch/content/blog/info3_07_07_kleinkredite.pdf
http://www.thueringen.de/de/buergergeld/neuigkeiten/27415/content.asp
Paul
Comment by Paul Nollen — Wed, Aug 22nd, 2007 @ 8:50 pm
He’s been talking to a lot of people, for instance Charlie Rose:
http://video.google.com/videoplay?docid=1986204406774837194
Comment by Mara — Wed, Aug 22nd, 2007 @ 10:18 pm
Wow, just load them money and all the world is cured. If the economics fit, then yes, but the government handout will cause the lady to quit working and keep her hand out.
Gee guys, what is your end state? Its not self sufficiency.
Comment by winter “Yea, Proton Power, now in remission†— Thu, Aug 23rd, 2007 @ 2:24 am
The economic cost of poverty (CAP)
http://policyalternatives.ca/MonitorIssues/2007/06/MonitorIssue1693/index.cfm?pa=bb736455
Quote :”The Center for American Progress (CAP), a progressive think-tank in Washington, recently did a study on the economic costs of child poverty in the United States. Their researchers’ estimated figures are staggering. They calculated that Americans who were poor as childrenâ€â€and there are now 37 million of themâ€â€are much more likely than other citizens to commit crimes, to need more health care, and to be less productive in the workforce.
One CAP researcher, Harry J. Holzer, described the results of their study to a House Ways and Means Committee hearing last January. He told the stunned Congressmen that the costs to the U.S. in crime, health care, and reduced productivity associated with childhood poverty amount to an estimated $500 billion a year. This breaks down to about $170 billion a year in increased crime, $160 billion in increased health care costs, and another $170 billion in decreased productivity. ”
About “self sufficiency” I don’t think this exist any more. We all depend on other people, their inventions, their work, their care and so on… . Even nations are not “self sufficient”. They are drowning in debt. Some of us were self sufficient in the stone age but this is long gone. Now we must do it together. If we don’t count on other people we will not be able to talk here for long. Most of us will even not survive for long.
Paul
Comment by Paul Nollen — Thu, Aug 23rd, 2007 @ 11:14 am
So Paul, no end state? Cou could have just said it. Or did you just say, dependency is a required end state? Everyone gets money.
Comment by winter “Yea, Proton Power, now in remission†— Thu, Aug 23rd, 2007 @ 2:33 pm
Well, winter, you don’t really have an end state in the US. Unless of course you consider rather permanent institutions like Super Max prisons. So all things considered, your end state is worse than Europe’s.
You should really be supporting BI. It’s the first step to minimizing dependence on welfare and perhaps even relegating it to the private charity sector. That was the Republican direction and original basis for America’s Earned Income Tax Credit.
Or course, I’m talking about the conservative Republicans, Ford and Reagan—and maybe Bush Sr. Not the faux-conservative, Bush Jr, who cares less about internal problems and more about harvesting additional cannon fodder from America’s poor.
Comment by Kristian — Thu, Aug 23rd, 2007 @ 3:15 pm
An end state where every one drives a Hummer is better than a end state where the hand is out, and the liberals all “feel good” with their failed system.
I kinda like the rich american approach, after all the poor EU approach has left your peasant class with 10 000 less to spend at Walmart.
Comment by winter, "Yea, Proton Power, now in remission" — Thu, Aug 23rd, 2007 @ 5:51 pm
Hello Winter,
An end state is fiction. We always are in an evolution. We can see where we are now, and even that is very difficult (poverty, health care, wealth, happiness, ..) and we can do our best to evaluate where we came from (even more difficult because everyone write his own history).
As a result we can only try to do our best to imagine a way to go for in the future and work in that direction.
Personally I hope that different socio economic systems will develop so there will be interaction to learn and improve things.
Paul
Comment by Paul Nollen — Thu, Aug 23rd, 2007 @ 7:50 pm
“we can only try to do our best to imagine a way to go for in the future and work in that direction.”
So, what did you Imagine? My Imagine is a Hummer in every driveway, not handouts for all.
Is your idea of a perfect future, one where we ALL start with hands out, become fully dependent on the state, that we just love it to death?
Comment by winter “Yea, Proton Power, now in remission†— Fri, Aug 24th, 2007 @ 12:42 am
May I answer this with a quote from Eduardo Matarazzo Suplicy
“The Brazilian Constitution as well as the majority of nations recognizes the right to private property, this means that we recognize the right of the owners of capital to receive rents, interests and profits.
The Brazilian Constitution does not oblige them, however, to work.
But in general, they do work, as well they send their children to school. Why? Because it is part of the human nature that people want to progress. Well, if we allow those who are rich to receive an income even without working, why shouldn’t we allow everyone, rich and poor, to have a modest basic income?”
This is about equality. Why do we only oblige poor people to work and why have some other people the right to live from the work from other people without any effort from themselve?
I am not interested to provide everyone with a Hummer and I am even sure not everyone is interested to have one.
But can we give everyone a start for a decent live ? I think we can.
Paul
Comment by Paul Nollen — Fri, Aug 24th, 2007 @ 8:49 am
Winter,
Yunus addresses the problem of not allowing everyone the right to act as a free economic agent. He is actually saying that he can half poverty. He is using the absolute definition of poverty: number of persons living with less than a dollar a day.
Yunus talks about the customer-owners of his bank getting out of powerty through being able to get credit, being able to invest (in raw materials, supplies, a cow, whatever), and being able reap the profits of their economic activity. In Yunus plan the end state *is* better than the current state. And he says poverty can be halved much faster than what the UN says. It’s about changing the institutions, not fighting about the levels of handouts within the current institutional frameworks.
Paul,
The discussion with you would be more interesting if you would provide the logical links between the facts and statements you present us. For instance, what does the fact of large opportunity costs of chilhood poverty have to do with the goodness of government handouts? One could as well argue that the US government has been giving out a lot of welfare throughout last century, and has failed miserably. And present as proof that after decades of government handouts there are still poor children and their opportunity costs just keep piling up.
If your argument is that BI is better than the other ways of giving handouts, please explain how you would make the government commitment plausible. If your argument is that it is always good to take from a wealthier person and give to the less wealthy, please build your case on that argument.
Just saying “I want a paradise” is not very convincing, because we all do want a paradise. Some of us just know that the road to hell is paved with good intensions.
Comment by Mara — Fri, Aug 24th, 2007 @ 1:58 pm
Mara—
I agree. Advocating for “paradise” is probably about as realistic as convincing us that poor people should buy Hummers with their credit cards
Insofar as the rich distributing small portions of their incomes to the poor, I see a very practical and compelling reason listed on Paul’s forum…
As you can see, Kurt Biedenkopf, the former Ministerpräsident of Saxony, supports the idea.
I know many people in Saxony who’ve been on welfare for a whole decade or more. All attempts to hold full-time jobs fail. They’d be fine with part-time jobs though; a few-days working, then a few-days drinking. Why not? They’re already doing the drinking part. Now they just need some work without losing all their benefits.
Then it could be justified to pay them even less benefits than they currently receive. It’s not very much.
By the way, there’s a political reason behind Biedenkopf’s support for the idea. Consider that he’s a Christian Democrat (center-right, like America’s Republicans and Finland’s Kokoomus). Obviously, BI takes power away from the union-oriented, center-left Social Democrats.
Comment by Kristian — Fri, Aug 24th, 2007 @ 4:20 pm
On my reaction to Paul:
Usually I do not comment on other people’s writing style, and maybe I should have just bypassed this one, too. It’s just so boring to read posts that instead of coherent arguments give long rants with lots of disconnected facts, statements, and copy-paste. That is, if the person posting those rants anyway expects others to read and react to the posts and not just bypass them as some kind of “verbosity spamâ€Â.
I bypass a lot of stuff on blogs I visit as I’m sure everyone does, but this particular blog connects such an enjoyable bunch of people and interesting topics that I do want to keep reading it and wish to encounter as little spam as possible on the way. That’s why I maybe over-reacted.
I read Winter’s posts as concise, poetic, fun, and making a point (well, usually). The way I read his point on this thread is not “Hummer to each slave†even when he is talking about Hummers to the slaves. A bit like a blues song about a mean woman is not exactly about a mean woman. I expect winter will set me straight on this one in his unique style.
On BI:
I see much good in social sharing and caring. But since there are many ways to realize it, I try to think aboutits effect as many steps ahead as I can. Not just the short run effect of the first release from a binding condition. I definitely support self-rule and free choice to the extent a person is capable of those. And when uncertain of the limit, I’m willing to err much more on the side of too much self-rule than too little. We Europeans have already experimented with two main alternatives to a self-rule system during the previous century. Those were extremely costly experiments and we should heed the evidence and try to not unintentionally drift to repeat them.
On crime-reducing benefits to not-poor from helping the poor:
The statistical association between poverty and crime is often quoted but not so often defended against competing hypotheses. One competing hypothesis is that crime is associated with poverty because the poor are denied their rights. (Which is the way e.g. Yunus among others sees things.) If a person is denied a legal job, he is more likely to do something illegal to get by. And even when he does something illegal, he is likely to earn less than when he is allowed to earn legally, because he is in a more exploitable economic position. Why do you think whores want to get their profession legalized? Because they love taxes or because legalization would provide them the right to demand the same kind of legal protection any other working person can ask from the police and the society at large? Which kind of protection is more costly for them? An other unprotected occupation is a drug dealer. Levitt has written a hilarious econ study about why drug dealers live with their moms. Levitt explains that the fancy sounding life of a regular drug dealed is a myth and they usually earn less per hour than at McDonald’s (where they moonlight). I’m leaning pretty much toward the explanation that the causal direction between crime and poverty goes the other way around than usually presented. The crime that mainly causes the poverty is the crime done to the poor people, not the crime done by the poor. If the society is interested in reducing both poverty and crime, establishing and enforcing rights is probably a more important factor than monetary handouts in any form.
On union role in BI:
Your point about circumventing old style union power is interesting, as I see unions keeping wage earners as captive customers and not providing as much bang for the buck as they could, a manifestation of an agent-principal conflict (Winter: slave alert!). But like our recent experience with the car tax shows, the center-right parties are not necessarily going to yield the benefits to consumers or wage earners, either. Maybe the election time rhetoric of “end of opposing politics†(vastakkainasettelun aika on ohi) meant just this: the center-rights want to replace social democrats as maximizers of government take, not to slim down the government. Neo-cons have arrived to Finland.
Comment by Mara — Fri, Aug 24th, 2007 @ 7:24 pm
“he says poverty can be halved much faster than what the UN says.”
wow, so the trillions spend on poverty were wasted?
The answer is yes. If those same dollars were not taken away from the system, they would have generated the jobs those folks never had.
Frak, he is smoking something to think giving a freebe away will solve any problem, it makes it worse.
Comment by winter “Yea, Proton Power, now in remission†— Fri, Aug 24th, 2007 @ 10:35 pm
- Yes, we waste a lot of money all the time.
- Well, they would have had different kind of jobs: concrete and real slave jobs. The jobs they are now generating for themselves are mostly entrepreneurial jobs. They decide for themselves, they have choice and dignity.
- No, he is running a non-loss operation, he gets a salary from the bank. He is not donating any money, he is lending it.
Comment by Mara — Sat, Aug 25th, 2007 @ 2:10 am
give me a break. This low GDP system you like so much has never helped any country gain USA status.
Try getting out of the market, the market works well with out you and your goodie tusu ideas.
The market moves money to high return on investments not low expectation investments.
Comment by winter “Yea, Proton Power, now in remission†— Sat, Aug 25th, 2007 @ 4:21 am
Have you ever heard anybody mentioning that globalization brings higher standard of living for everyone by including in the market economy large portions of mankind who previously didn’t have access to the markets?
Comment by Mara — Sat, Aug 25th, 2007 @ 12:36 pm
globalization brings econemy to the market, by letting every one specialize at what they do best.
Now thats good for all.
Comment by winter “Yea, Proton Power, now in remission†— Sat, Aug 25th, 2007 @ 2:27 pm
Mara: “On union role in BI:
Your point about circumventing old style union power is interesting, as I see unions keeping wage earners as captive customersR