Sunday, November 30, 2014

Basic Income

A friend of mine asked for me to talk about basic income a while ago. That was during a glut of socio-economic blogs, though, and I didn't want to scare people away with more of my my socio-economic nonsense. Now that I'm coming off of a glut of movie reviews and D&D pantheon rants, though, I think I've scared off pretty much everyone. So, it's back to economics! Yay!

Basic income is the idea that the government pays every citizen in the country enough to cover their basic needs. This is an interesting concept that I've honestly thought about for a long time.

Way back in grade school I had an idea for taxation (don't we all?) that seemed to make a lot of sense to me at the time: tax everyone a flat 50% of their paychecks. The government would run itself with a portion of that revenue, then divide the remainder equally among the taxpayers. This seemed to me like a wonderful compromise between Communism (Socialism, really) and Capitalism: everyone gets a share to cover themselves, while the people earning more money still get to keep a higher standard of living by keeping half of what they make.

Basic income is very similar, but far more calculated: the government figures out how much it costs a person to live for a month/year/whatever length of time, and the government simply includes that in the budget.

There are some severe problems with both plans, though. For instance, neither plan really accounts for the variable cost of living from place to place.

In the Basic Income plan, the problem is that people living in, say, New York City have a dramatically different cost of living than someone in, say, Tucson. Would the basic income itself vary from place to place? That sounds like a bureaucratic nightmare that can easily get manipulated and torn to pieces through corruption. Would the basic income simply cover the highest reasonable cost of living for everyone? Then people in cheaper areas would be able to live extravagantly without having to work, which would contribute to a taxation problem (more on that later). If, instead, the basic income is based on a low cost of living, people relying on basic income in more expensive places would be forced to move, like a widespread gentrification effort.

In my grade-school 50% Plan, the high cost of living folks still get the short end of the stick. Jobs in high-COL places pay more, but that higher pay means less. So, likewise, high-COL taxpayers will be paying more and getting less out of it.

If the country had a more static cost of living to quality of life ratio this wouldn't be a problem so much, but it's there and it's a reality that throws a wrench into the practical applications of the idea.

Of course, that's absolutely nothing compared to the emotional backlash such a proposal would meet. America has a deeply-ingrained, anti-socialist, "work hard and earn your way" culture, and the public would burn the proposal and crucify the proposer without a second thought. Conservatives already froth at the mouth when they talk about welfare.

And I can understand that, to some degree. Nobody likes the idea of having someone else take advantage of them, and that's how they would see such a plan working out: the tax-paying workers out there breaking their backs while other people sit at home without a second thought to the people paying for their housing and meals.

That would, in fact, be a significant practical problem, too: if too many people take advantage of the system and simply stop working, whether out of laziness or out of spite, the system would collapse. Much like Obamacare, which relies on everyone to get health insurance in order to bring premiums down for everyone, most or all of the people benefiting from basic income would need to be working and paying those taxes to cover everyone's cost of living. That money has to come from somewhere, after all, not to mention the goods, and services that the money would be spent on.

That said, I don't want to dismiss this idea outright. In my next blog post, I'm going to try to put a more positive spin on the idea.

1 comment:

  1. I'm not sure I'd worry whether poor people living in high cost of living areas already have to move if they make more money. It's true that people do choose places to live based on cost of living all the time, but I don't necessarily see basic income incentivizing that any more than it already is. Like, if you're poor and live in New York, why are you forced to move now that you're making more money?

    The emotional backlash is definitely a barrier, but attitudes are definitely going to have to change when we reach extremely high levels of unemployment because of advances in automation. I'm not sure if the narrative of welfare recipients being lazy and unwilling to work will ring as true at 40% unemployment.