Friday, December 13, 2013

guaranteed income vs. open borders

I thought I'd muscle in on Mungo's turf and post about a guaranteed income for all Americans.

In principle, I'm in favor. Shall we say $12,000 / year  for every American 18 and over?

But as always, the devil is in the details.

(1) Is this going to add to our current mish-mash of "safety net" programs or replace it?

Obviously, I'd like to see it replace the current set of arrangements. I would think many libertarians would love this. Reduce paternalism, shrink the size of the state, what's not to like? If we used it to replace the current system, it wouldn't even be all that expensive. If we also phased out social security, we could up the annual guaranteed number to maybe $16,000 or so?

(2) Can a guaranteed income be compatible with significantly increased immigration?

In other words, if we allow more immigration must we restrict the guaranteed income program only to citizens for fear that masses of people would show up just to collect the 12 large and sit on their butts?

But I think there is a fundamental unfairness of collecting taxes from people to pay for a "universal" program that excludes them.

And, even if we did limit it to citizens, would we still fear that masses of people would show up, wait to become citizens, and then collect the 12 dimes and sit on their butts?

We could only allow increased immigration for higher skilled immigrants for whom $12,000 would not be a magnet, but that really reduces the incredible poverty-fighting power of allowing increased numbers of low-skilled immigrants.

If a guaranteed income program was an addition to existing safety net programs and required choking off immigration, I am not sure it would be worthwhile, no matter how attractive it is to me in the abstract.




17 comments:

James Oswald said...

This seems about right to me. I think most libertarians I know are in the "replace" category. If the amount is fairly small, immigrants could be included. If the amount were large, they could be excluded. Either way, since the decision to immigrate is voluntary, it would still make them better off to immigrate with or without basic income. If I had to choose between staying in the first world and paying taxes for no welfare or moving to the developing world, I'd chose the former any time.

doclawson said...

My worry is this: What if large numbers of people decide that $12,000 is "enough" and don't really work much (legally anyway)?

That doesn't bother me per se, but the likely growing inequality between the workers and the nonworkers would cause progressives to call for "more" and "more" and "more". Not much different from today--except that this would become a middle-class entitlement ala public schools or social security that takes on a life of its own.

The economics of a guaranteed income is easy. The political economy is not.

Peter McIlhon said...

I can already hear the "Guarenteed living income" speak. Ish.

John Thacker said...

Surely the current mish-mash of safety net programs offer more than $12k to people "sit on their butts" all day, right? Especially since we're talking about giving this $12k even to people with large incomes now? (And surely those who oppose immigration talk about immigrants coming here for welfare, and some immigration policies do prevent immigrants from getting welfare, such as if you sponsor someone for permanent residency.) So if we were really talking about a strict replacement, I'm not sure that it would be more a magnet than the existing program.

That said, I'm sure that the devils in the details, and I don't know exactly how people would react.

Anonymous said...

The easy solution is make guaranteed income scale up. $1200/year for every year you've worked at least 30 hours/week up to 10 years. Immigrants are more than welcome and can get $12k/yr after putting in 10 years of working crappy (or not so crappy) jobs.

Even after 1 year, that $100/month is a pretty sweet benefit.

The problem with guaranteed income is if it ever happens, the feds will setup a trust fund to ensure the money is there and no one can touch it...just like social security.

Pelsmin said...

I don't follow.

The American people would agree to give $12K to every adult, and in return they would agree to do what? Not work?

There's too big a risk that some would rather have a job and make their own living, so I think we should pay them closer to $30K or $40K, just to make sure they stay home.

And we can't leave it at that. For those few stay-at-home wards of the state who don't combine that behavior with frugality and wise saving, we need to pay additional money if they find themselves wasting the money on silly things, and therefore have nothing left for basics like clothing, housing and food. Surely you don't advocate letting someone starve in this county, just because they blew their $12K -- er, $30-40K?!

And won't you think of the children? Adults should get additional money for every child they have, to cover the additional costs of clothing, sneakers, video games and iPhones. Say, $10K for the first child, $20K for the second, and so on. Plus more, if they want to go to private schools. Or do you elitists think private schools are only for those "earning their own money"?

Dirty Davey said...

I think you overrate the buying power of $12K. See what a really crappy place to live takes out of that $1K/month, add a utility or two--don't worry about car expenses, you can't afford one--and you really aren't enjoying your life that much.

Anonymous said...

DD, it is 2k a month if you cohabitate. My wife and I got by okay on this during grad school without loans. I wonder though, would health care be totally unsubsidized under this policy? That is the killer if you don't want to work.

Angus said...

Jeez, guys, you don't have to promise not to work to get the money. I would expect most folks would earn income beyond the basic grant.

Atnor said...

Do you mean something like this? The NIT?
http://www.youtube.com/watch?v=xtpgkX588nM

Using that $12k number... then I guess that would be the subsidy for a $0 income, thus we'd also pay percentages (assuming the 50% rate) up to an income of around $24k...?

If it was done largely as a "replace" option... I'm likely down with that :)

As to immigration...my first inclination is that they shouldnt be eligible. If they're here and earning $0 income, or less than $24k for any extended period of time, I have to wonder about why we're letting them stay. And I dont think I have a problem with people residing in a probationary state, going through the process towards citizenship or permanent residency, that incurring these extra costs (well, not taking more money from the taxpayers) is all that out-of-bounds or unfair.

As for people "waiting to become citizens" and then soaking in the $12k? I dont know how many people would do that, assuming that the path to citizenship was of significant (but appropriately so) length. You shouldnt be able to become a citizen in 6 months :) Perhaps a condition of maintaining, not "continuous" employment, but at least a "steady" employment, should be a requirement to the path of citizenship?

Tom said...

First notice that "No State shall... deny to any person within its jurisdiction the equal protection of the laws." It says PERSON, not citizen. Immigrant? Still a person. So, maybe you can administer your program direct from DC? Okay, but $12K is a lot in rural NC, but not so much in New York City.

Second, consider that $12K won't even pay for the (unsubsidized) mandatory health insurance. So, forget about "replace" in regard to the current mishmash of programs. Even if there were SOME replacement in the initial bill, the mishmash would grown the next time any Democrat needed to be reelected.

As for support from libertarians, you'll certainly have to appeal to Mungo's Direction-not-Destination meme and then explain how the guaranteed income is more likely to fade away than the current system. After all, your program still takes money by force from some, for the benefit of others.

Don't count on support from this libertarian.

Anonymous said...

If the basic income were universal, wouldn't business owners count on everyone having X more dollars and raise prices by Y to try and capture the increase?

Pelsmin said...

Angus,
You say "you don't have to promise not to work to get the money." I assume you don't give the $12K to everyone, even if they make a lot of money. You give $12K to someone with no income, $4k to someone who makes $8K, and nothing to anyone making $12k or more? Is that the plan?

Then you pay people if they promise not to make money. Anyone making $10K will know that the government will agree to pay them $2K if and ONLY if they promise not to make it themselves.

This plan pays people at the bottom (and most of us start there) not to work. There's an inflection point in behavior around $12K, but this doesn't affect moderate to high earners.

This kind of plan would screw low earners and ensure they under-optimize their chances of lifting themselves out of poverty. The only question is whether it would screw them more or less than our current social welfare system screws them.

Angus said...

NO! $12K to everyone. no sliding scale. no paying not to work.

Anonymous said...

I think a great idea, but it'll never go anywhere because people from all sides of the political spectrum are too attached to their own personal deserving welfare recipients.

The recently unemployed (UI), senior citizens (SS), low income workers with lots of children (EITC + SNAP), disabled people who worked for at least 10 years (SSDI) -- many in these groups would be facing a net cut to their welfare and they and their supporters would scream to high heaven.

Jim Oliver said...

I would think that $200/week would be plenty for healthy people. Many SS recipients only get about $800/month now. The GI should definitely should replace SS along with TANF and SNAP. We would still need some programs for the very sick and the handicapped. We would also need to still subsidize schooling for the poor but I would like to means test the public schools so that people would be charged based on their income for every child that they have in Government schools with those above median income paying the full cost.

Jimbo said...

Discounted at a 3% annual real rate, a lifelong payment stream of 12K/year starting in 18 years has a present value of about $235K.

At 2%, it's worth about $420K.

What's your estimate of the supply response to this?

Maybe you're not down with that whole dynastic family stuff.