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.

Angus Is Right, As Usual!

Holy cow, why so much hatin' on Angus?

Look, the welfare economics case for free trade could be built on (a) the Pareto criterion, or (b) the Kaldor-Hicks Compensation Principle.

As Angus notes, no way you can say moving from protection to free trade is a Pareto improvement. There are winners and losers.

And no Libertarian can invoke the KHCP, because it's collectivist and utilitarian. KHCP does not require compensation be made, and doesn't even require individual consent, and so it is inherently coercive. A majority decides on a policy, and the minority is harmed without its consent. Yes, perhaps the harm was caused by eliminating a policy (protection) that was itself coercive (consumers were harmed without THEIR consent), but you can't get to free trade unless you go the collective-coercion route. Angus is obviously right about that.

Two points: First, less of a problem if compensation is actually made, as I suggested last summer at the Takeaway.

Second, I have a paper coming out in an edited volume that points out the equivalence of KHCP and Coase, in terms of costs (in both cases, you are adding up costs and benefits). Differences are (a) KHCP doesn't require consent or compensation, while Coase requires both, and (b) KHCP faces the Hayek problem, because there are no prices to measure welfare costs. Coase forces bargaining and honest preference revelation, EXCEPT when transactions costs of collective action and preference revelation are too high.

Mungos a'coming

People I am happy to announce that K.G. Mungowitz will be in Oklahoma later this month:

(click on the pic for a more glorious image).

Thanks to Jacque B. for the cool poster.

My 5 favorite places in Latin America

Today's NY Times travel section is all about Latin America. Mrs. Angus and I have spent a fair amount of time there, so I thought I'd offer up my favorite spots.

1. The Pantanal. A huge swamp. Jaguars, giant river otters, caiman, capybaras, and an amazing variety of birds and lizards. Probably the least well known great place for wildlife viewing anywhere.

2.Rural Guatemala. Really! OK, being more specific, Lago Atitlan, Tikal, Antigua, or pretty much anywhere in the countryside. Amazing sites, incredible cheap food, big fun.

3. Patagonia. We have only been to Chilean Patagonia, and it is an incredible pain the the butt to get there but wow, it is so worth it. In Torres del Paine park, you can hike to see glacial lakes and incredible peaks, and still stay indoors in refugios with indoor plumbing, hot water, and hot food.

4. Mexico City. Really it's impossible for me to pick one only place in Mexico and uninformative to simply list the whole country so let me apologize to Oaxaca, the Yucatan, and the states of Guerrero, Chiapas, and Baja Sur. Mexico City has the best food, museums, suburbs, and outlying attractions of anywhere in Latin America, if not the world. A great place to spend at least a couple of weeks.

5. Urubamba valley, Peru. This is where I want to retire! I think it may be the most beautiful spot on earth. It's also close to Cusco and Machu Picchu. Here's a pic:

When enough is enough

I am not a big fan of the "must get 50% of the vote to avoid a runoff" electoral system in Presidential Democracies.

Consider the current case of Colombia:

Santos got 46.5% and his nearest challenger, Mockus, got around 21.5%.

Where I come from, people, that's an ass-whoopin'.

There's no need for the time and expense of another round of voting.

Couldn't you make the runoff conditional?

Like if one candidate gets 40% or more and more than twice as many votes as the second place finisher, then no second round will be held?

Shouldn't Mockus just back down now and accept that, in the words of Mo Udall, "the voters have spoken, those bastards!"

Whats wrong with just letting the highest vote getter win, regardless of their absolute percentage, like the USA and Mexico?

Repeat after me: Opportunity Cost

Holy half-wit, Batman! This person has zero concept of opportunity cost.

Hard to tell, exactly, but I think the implied value of this person's time is about $6 per hour. So, if you are making minimum wage, by all means take his advice.

Otherwise, read this, and stop shopping once you have to make a new reservation for $1 decrements in plane fare.

Just do it?

An interesting new NBER working paper by Aizenman and Marion (ungated version here), tries to figure out how much we will use inflation to reduce the debt to gdp ratio, which is predicted to hit 70, 80 and 100 percent in 2019 by the OMB, CBO and IMF respectively.

They argue that shorter debt maturities weigh against using inflation while increased debt holding by foreigners increases the attractiveness of using inflation and come up with a 5% inflation semi-prediction:

"When economic growth is stalled, the U.S. debt overhang may trigger an increase in inflation of about 5 percent for several years."

Go Ben, get busy.....????