Guaranteed Basic Income

“‘It seemed to me that I had happened upon humanity upon the wane. The ruddy sunset set me thinking of the sunset of mankind. For the first time I began to realize an odd consequence of the social effort in which we are at present engaged. And yet, come to think, it is a logical consequence enough. Strength is the outcome of need; security sets a premium on feebleness. The work of ameliorating the conditions of life—the true civilizing process that makes life more and more secure— had gone steadily on to a climax. One triumph of a united humanity over Nature had followed another. Things that are now mere dreams had become projects deliberately put in hand and carried forward. And the harvest was what I saw!”

–Time Machine

The Swiss are voting on a referendum that if passed, would require the state to supply every Swiss citizen a basic income of 2,500 Swiss francs per month. That’s roughly $2500 or £1,755. For my one Japanese reader, that’s a trillion yen. This story in the BBC does a respectable job of covering the topic. The news suggests the referendum has little chance of passing. The Swiss are a practical people and this proposal has too many unanswered questions. That and the proponents are something less than assuring.

These proposals are following the typical course of reform efforts. They bounce around the academy for a while as intellectuals work over the concepts. Then they are sold to the political class in fits and starts. If the political class is resistant, then maybe an activist group or industry group is enlisted to move the effort. Over time, what was once a radical idea is being discussed by respectable people. Before long the debate is over who can best implement the new idea.

There are some good arguments in favor of the guaranteed basic income. One is it is simple. Like the flat tax, the GBI replaces the myriad of welfare programs and the government vipers that come with them. The other point in its favor is it addresses the growing problem of mass unemployment. In the robot future, most people don’t work so this solves the problem of people not having a way to earn money. There’s also the fact that it is value neutral. People get the money to spend on whatever they wish, without the nanny state harassing them.

There are many arguments against it, with the most obvious being that welfare programs never go away. In America, the US Congress has repealed exactly one welfare program in the last century. The WPA was passed in the 1930’s and later replaced by Comprehensive Employment and Training Act, which was such a hilarious disaster, it was replaced by a program called the Jobs Training Partnership Act. That was eventually repealed in the 90’s. That’s a long time to kill one horrible welfare program.

The most likely result, at least in America, is a basic income on top of existing welfare programs. There are 79 means tested welfare programs in America. Everyone of those programs has a federal agency employing thousands of people who do nothing but administer welfare programs. Congress will get rid of those right after they do something about the unicorn infestation. Until the inevitable fiscal crisis forces a mass retrenchment of industrial era government programs, there will be no reform of welfare in America.

Putting that aside, there are other problems. Spend time in the ghetto and you see the effects of the dole on the human spirit. A man not working quickly falls into bad habits. Families dependent on public money soon start to act like zoo animals, because they are essentially zoo animals. The state gives them an allowance, tells them how to spend it and supervises their living conditions. Granted, most got into that state because they lack the ability to manage their own affairs, but the corrosive effects of dependency are well known.

Even so, for all of human history, nature solved the problem of too many people by killing off the excess people either through famine, warfare or migration. In other words, supplying enough food, shelter, water and security for the population required all hands on deck. If a society out bred its resource supply, then that meant starvation or expanding territory through conquest in order to get more resources. Often, it just meant killing off a lot of people in wars over resources, thus solving the problem.

We are now able to produce all the food we need long into the future. More important, automated food production is well on the path to producing all the food we could ever need with very little human labor. The robot future has been discussed to death at this point, but even allowing for a fair bit of hyperbole in the predictions, we are facing a future where human labor is decreasingly necessary. That means the value of human capital will plummet, assuming the current economic models.

In a world of scarcity, society can carry the old and very young, along with a ruling elite. The modern industrial society could carry many more people who produced nothing because technology made those who did produce vastly more productive. Welfare programs knocked the edges off the inequality by transferring wealth from the rich to the poor. In the mature technological society, vast numbers will be idle, but provided for as there will be more than enough resources.

How that is resolved will be the greatest intellectual challenge in human history.

31 thoughts on “Guaranteed Basic Income

  1. @ thezman – I recently learned Alaska has a program called the “Alaska Permanent Fund” which pays Alaskan residents around $2K per year. It’s actually part of their state constitution.

    Given the billions in profit earned by other corporations in other states across the US, why couldn’t this concept be duplicated to equally distribute benefit to citizens in other states? I would think instead of depending on the traditional tax-based revenue where only working people contribute, it would make sense to use the billions in corporate profits from companies in other states, and create a similar funding schedule for the rest of the US.

    With employment and jobs in decline across the US, it would seem the idea Alaska has implemented isn’t a bad way to go. Certainly taxing the few that work, to pay for those that can’t or won’t, is not a long term solution. Creating a fund from corporate profits, rather than a direct tax on profits, seems to be working for Alaska.

  2. Poorhouses are the only practical way to provide a social safety net, anything else will inevitably result in an infestation of entitled parasites, and worse yet – the sociology grads who manage all the programs and vote for more.

    Situating the mens and womens poorhouses on opposite sides of town, far enough out for cheaper land would limit the breeding of the less successful who inhabit the barracks. Having little money will reduce problems with criminals feeding on them.

    This would restrict thug culture – how will useless thugs and criminals get laid, when girls face the prospect of the poorhouse if they choose some fly by night ahole? How will lowlifes look cool when they can’t get laid?

    Another thing to do after that pesky unicorn infestation is dealt with. Or more likely, maybe future civilizations built on our rubble will be more careful about creating entitled aholes and passing such stupidities as the civil service act of 1883 (which was supposed to make govt jobs non-partisan, but instead makes them all one party – the big govt gang). Imagine if Trump could fire all the partisan hacks who have been using their power to harass non-leftists. What if every department head faced the prospect of an opposing partisan freely looking at all records, with the power to fire employees who obstructed them?

  3. Why is the issue of GBI coming up now? We are told that it is a response to anticipated automation, and that makes sense, but I don’t agree with that. I think that is merely a cover for the fabled “helicopter money” the FED wishes to rain down on the economy. They tried to deliver stimulus using the banks as a disbursement mechanism, but it didn’t work. The banks ended up sitting on tons of it, or just using it to gamble in the markets. They’ve had to rethink that whole strategy and now they think that direct stimulus to the consumer is the way to go, now they’ve just got to sell it.

  4. Nixon and Moynihan almost implemented a Basic Income scheme right here in the good old USA. In retrospect, it really didn’t seem like such a bad idea.

    “The perplexing problem the Nixon had to tackle was how to reform the welfare system as he had campaigned on, but how to do it in a manner that was soft in delivery, did not increase the deficit and was acceptable to the Democrat majority in Congress. Moynihan and Nixon put together a Family Assistance Plan (F.A.P.) that acted as a universal basic income.”

  5. Note that the losers in this had a big party to celebrate the fact that they had convinced 22% of Swiss to support this dangerous nonsense. Like all Leftist campaigns, they look at this loss as a momentary setback in the Great March. This referendum will be brought up again and again – until they start winning them. Remember: The Left only has to win once and their policy is written in stone for all time.

  6. Back in 2012 the crazy Swiss even rejected six weeks of mandatory vacations, they also voted against a public smoking ban that year, both proposals were rejected by around 66% of the voters! But they did approve “sex boxes” for prostitution with special parking spaces, to keep prostitution away from suburban areas.,_2012

    That’s one way to tell if you live in a libertarian paradise, sex drive ins!

  7. “Families dependent on public money soon start to act like zoo animals, because they are essentially zoo animals.” Yes. And therefore should not have the vote. But other than that — and it’s yuuuge — I’m not seeing the problem. As you say, absent famine, plague, and war — the old Malthusain population-limiters — there’s no natural selection, so you get a large group of people who can’t manage their own affairs in an industrial society, and need to be managed. (Or, put another way, representative democracy really only works with a self-selecting population on a wild frontier). You can’t say that and not sound like a Nazi –yet — but it’s true and everyone knows it. Maybe President Trump can get to work on it in Year 2. After all, what worse names can they possibly call him?

  8. From Franklin D Roosevelt’s 1935 state of the union address:

    “Continued dependence upon relief induces a spiritual disintegration fundamentally destructive to the national fiber. To dole our relief in this way is to administer a narcotic, a subtle destroyer of the human spirit. It is inimical to the dictates of a sound policy.”

  9. “Robot Future” is for nerds as “Climate Change” is for environmentalists: an excuse for wholesale social and economic change in order to avoid an apocalypse which, despite little or no rational or empirical evidence, is just around the corner. Pay me now or pay me later. Basic Income is to Robot Futurists as Cap and Trade is to Climate Changists. If collectivists can’t sell their political philosophy based on economics, then why not try to usher it in through the backdoor by means of histrionics?

    • @ ciribiribin – Were you aware that last year, HP laid off nearly 30,000 employees and Foxconn just laid off 60,000 workers because they automated their production lines to reduce costs? In the banking sector, HSBC plans to lay off up to 50,000 employees by 2017 – and this is just the tip of the iceberg. People are expensive. Machines by comparison, are cheap; they work 24-7-356, without pay or benefits and in the dark. So no, automation is not some “nerdy” concept – it’s a fact.

  10. The Swiss rejected it today so that’s the end of it for now.

    For anyone who’s interested, I recommend you read up on the European Revolutions of 1848* as this will help you understand why the Swiss are even considering a basic income. In 1849 many of the Swiss social undesirables (e.g. the poor, the elderly and anyone who didn’t have a job) was given a one way ticket to the USA and handed cash by a Swiss representative once they were actually on the ship. Not that the Swiss were trying to do them any favors, they simply didn’t want to support a population who didn’t or couldn’t support themselves. Today that same concept wouldn’t go over so well so they know they have to somehow deal with the employment problem internally rather than shoveling their poor onto someone else’s door step as they did in the past.

    The Swiss understand that work in the traditional sense is going away. Switzerland is one of the wealthiest European countries where the medium income is around 36,000-CHF, unemployment is around 3.5%, personal income tax is around 6%, and the country is as clean as it is on time – something even Germany can’t match. The Swiss have a very high standard of living, that is to say housing is as expensive if not more so than say San Francisco or New York. And even though wages are high, it’s very difficult for the poor in this country to get by – the top 20% of the Swiss population earn more than four times as much as the bottom 20%.

    Poverty in Switzerland affects around 7.7% of the population, according to recent figures from the Swiss Federal Statistical Office**. This means that about 590,000 people do not have enough income to provide for their own subsistence (food, clothing, transportation), find a place to live, and obtain the legally required health insurance. People here who have low paying jobs are having a very tough time of it.

    While most of you are probably familiar with Swiss watches and chocolates, the Swiss are also a huge exporters of Industrial automation and manufacturing tools for heavy industry, pharmaceuticals and the chemical industry. They know every time one of their transmission gear grinding machines ends up in a Ford motor plant in Mexico or China, another machinist will be out of work. And while I’m not necessarily in favor of a national income, I like the fact the Swiss, along with Finland, Canada and the Netherlands are also looking at how to deal with this problem.

    You may recall last year the Swiss also voted for 25-CHF/hour minimum wage which was rejected by around 75% of the voters. Swiss law does not specify any minimum wage or average earnings. In most cases, pay levels are agreed between the employer and the employee during the recruitment process. Whether or not these two issues will end up back in referendum again, we will see.

    [i]*Exiles from European Revolutions: Refugees in Mid-Victorian England By Sabine Freitag.[/i]
    [i]**In 2014, the poverty line in Switzerland was set at single people earning less than CHF2,200 a month or a household comprising two adults and two children with an income of less than CHF4,050.[/i]

    • Switzerland is the San Francisco of Europe. They let their cost of living discriminate so they don’t have to, but they are perfectly willing to discriminate if necessary. There’s nothing wrong with it and I’m a big fan of how the Swiss run their country. It’s just not a model that can scale up.

      As an aside, American cities used to do the same thing as the Swiss with their hobo population. They would put them on buses and give them cash as a incentive to go away. Finland does this with migrants. The Romans did it with the Huns, for a while. This practice stopped in the US when it became impossible to conceal.

      My own view on this is slamming the door on immigration is one immediate fix to the jobs issue. Go anywhere in American and you can see idle American blacks watching illegal Hispanics doing work. There’s work that needs doing that is not being done because we piss away billions on nonsense, but importing helot labor is an insane policy at all times and places. That’s the lesson of the sack of Carthage. Shutting off the flow of cheap labor and refocusing resources to domestic projects will solve a lot of problems. Automation is going to be a challenge, but I tend to think it is over sold. The robot future is a long, long way away.

      • Switzerland is much smaller than people realize – the entire country has a population that’s almost the same as the city of London! So I agree…scaling up how they do things won’t always work. The big difference here is a Swiss citizen can vote for or against measures like this directly through referendum. Unlike in the US (or Germany) where government officials “know what’s best” and shove various social programs, and the cost, down our throats. The Swiss really practice democracy in it’s most basic form – the Swiss people really do have the power over their government. In 2014, they blocked a $3.5 billion deal to buy fighter jets, and in 2009 they banned the building of minarets.

        However I don’t agree with you on your perspective of the robot future. It’s actually much closer than you think. As one who’s in the industry, automation is really much more subtle than people realize. Consider how many times you use an automated device that was once done by a person – such as bank ATMs or a gas pump that takes credit/debit cards. Then consider automated check in at airports and rail stations along with automated kiosks at fast food like McDonalds (where they are common in France) and self-checkouts at grocery and hardware stores. Stamp machines, vending machines, coffee machines – the list is endless and growing. While subtle, automation is – and will – continue to eliminate low paid, low skill jobs which are the primary jobs of the unskilled middle and lower classes. Automation, not robotics per se, is happening at a very rapid, if not exponential rate.

        This is why we have to deal with a rapidly growing unemployed society. It’s not that people don’t want to work, it’s just that there’s no work for them to do. The welfare state will never go away, but that doesn’t mean we can’t require recipients to do some work in exchange. From that perspective, a basic income makes sense only when society receives something in return (e.g. being required to pick up litter in parks, streets, or caring for the elderly would be a good place to start.)

        If you’re interested, here’s a good link for what’s going on in Switzerland in English. I recommend it to my American ex-pat colleagues.

        • ATM’s have been around a very long time. I was child when the local bank introduced something called “The Magic Money Machine” that let you get cash 24×7. Food kiosks are nothing new either. There’s a local chain here that has been using them for 20 years. I know a guy who started selling these to retailers twenty years ago.

          The point is, much of what is held up as the great robot future has actually been with us for a long time. As is always the case with futurists, they tend to get ahead of themselves. There’s also that fact that the robot future depends on a credit economy that is most likely unsustainable. That means we’re going to have some long periods where nothing much happens.

          • As an engineer in this industry, it’s not the automation you see everyday that’s a concern, it’s what you don’t see on factory floors. As for a “credit economy”, again, I disagree. Even the most basic automated machine in a factory is a huge benefit for improved safety, reliability, repeatability and quality over hand operations. Plus the cost of automation is rapidly declining and pays for itself very quickly in terms of near-zero defects and higher productivity. There are few areas in a manufacturing – from electronics, to machine parts and even agriculture and meat processing – that can’t be fully automated.

          • I don’t disagree, but this has been true for decades. Car plants in the US started automating in the 70’s. That reduced assembly line workers, but increased robot repairmen and robot maintenance men and robot software engineers. The same is happening with transport and warehousing. Again, in the US this has been happening for decades.

            The real leap is when office work can be automated. I’m not so sure it will happen as fast as futurists imagine.

      • “They would put them on buses and give them cash as a incentive to go away….This practice stopped in the US when it became impossible to conceal.”
        It was still going on in the US as late as the 1990s. Anyone who spent time in NYC in the early 1990s knows that the homeless street population exploded under the Dinkins administration– they were everywhere on the island of Manhattan. But it wasn’t long after Giuliani took over in 1994 when the street people suddenly began to vanish, almost overnight. By 1995 you’d almost forgotten there ever was a homeless problem; sure, you’d see one occasionally to remind you they were still there, but the days of seeing them on every block were history. The rumor was, Giuliani had given them all a wad of cash and one-way tickets to California.

  11. I tend to disagree with your over abundance–welfare state progression model. Human dysfunction will overwhelm function in a short time when dysfunction is being subsidized. The structure that collapses only recently appeared to be sound.

    • There’s a side of my brain that agrees with you. The long story of history says we are due for a collapse, massive war, great retrenchment, or some unknown pestilence. Nature abhors leisure.

  12. No helicopter money for the Swiss. Good on them! It’s time to give the bastards the finger.
    Lot of signs all over the world the dirt people have had enough. Think about the sphere of your life, how many people are happy with the bullshit the sonofabitches running things here are pulling? Never mind had enough? Are you fighting mad yet? You will be, guarantee it. When you look at it objectively, the “governments” of the world are nothing but the largest organized crime syndicates in human history. Demetri Orlov and compatriots published a scathing screed on the NeoCons: Look at this guy the newly elected President of the Philippines: Duterte was elected because the dirt people have had enough of the corruption. Trump called the legacy media scum last week. Icelender’s had enough, you screw with their economy, you go straight to jail, there are no passes for connections and influence, don’t matter who you are. Look at Brazil, it’s a powder keg, Venezuala, The Brits with Brexit, Catalonia and Texas with secession, even Lord Moncton said the only way a semblance of the west was going to be persereved was if Texas secedes and becomes a sovereign nation, that of all places, Texas has what it took to accomplish it.

    • Therein lies my main criticism of libertarians. They insist on talking about this stuff in the vacuum of space. When he says “replace the welfare state” he may as well be saying “when I begin to luanch nuclear leprechauns out my arse.”

      • That is a true statist for you. Rob the dirt people through administrative tyranny of every means of free unfettered economy, outlaw self determination and self reliance, shake em down for every penny of intrinsic wealth, then give them a handout using fiat created out of thin air. WTF?

      • And where the liberty, oh libertarian? Voluntary enslavement in exchange for an annual (ha! as if that would ever work!) handout? What would you call such state? A kinder, gentler fascism? And just how long do you suppose that it would remain benign? There can be no citizens in such a state, only a kind of human livestock for the state to manage as whim invites.

      • In fairness to Murray, he goes to great pains in his book In Our Hands to underscore the importance of using a guaranteed income to replace all existing governmental transfer programs. IIRC that’s how he comes up with what the annualized figure will be.

        This has no bearing on the fact that it’ll never happen, of course, but he’s aware of it. This is a perpetual problem with putative reforms of any kind–to get “bipartisan” support, they split the difference, which essentially comes down to bringing on the new but keeping the old.

        A national sales tax has a lot to recommend it if it replaces the income tax. If it doesn’t–and it won’t–it has to be resisted. This resistance, like all the rest, is a perpetual rearguard action.

        • The history of reform says it comes during crisis. The social welfare programs of today are from the crisis of the late Industrial Revolution. Most of this stuff was cooked up in the 19th century. America was late to the party, but we industrialized later too. Sometime after our next near death experience, there will be a flurry of reforms junking the old social welfare programs with new, modern ones.

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