28

The people of Switzerland will probably vote on implementing a citizen's income.

The idea does not, of course, have universal 100% support.

For some people (e.g. high income earners) there seem to be intuitively clear reasons to oppose it, as it will be funded through taxes, depriving them of more income.

However, there seem to be opponents of the concept even from people who would either benefit, or at least not be obviously directly hurt, by it (based on income level) - otherwise the proposal's support level would be a lot higher due to income distribution curve.

What are some of the possible reasons why people in lower income brackets would oppose the B.I.G. idea, despite no direct negative material impact on them?

An extra proof would be if there were demographic poll breakdowns for the idea - please edit those in if they exist.

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    Forming the question in such way you suggest that people thinking opposite are not rational. This is not constructive. Questions on SE should be as objective as possible. Dec 19 '12 at 17:37
  • 1
    For example 'what are the reasonable arguments for and against basic income guarantee'? Dec 19 '12 at 18:48
  • 4
    As a side note, please notice that aside from USA's EITC and possibly India, every single example of real world implementations is 100% dependent on either some external entity paying for it, or a sale of country's natural resources on commodity markets financing it (which works, as Russians found out, right until the commodity prices OR supplies fall). Neither is very sustainable.
    – user4012
    Dec 19 '12 at 20:32
  • 3
    Also, "working class" is a singularly poor and subjective term as well - see my answer elsewhere on the site. Also, most of the taxes are not paid by the "wealthy" (who have wealth and thus have no great need for income) but working middle class who need that income in hopes of accumulating at least some wealth. -1 until you fix that to precise definitions.
    – user4012
    Dec 19 '12 at 20:34
  • 1
    Adding the ability for the USA federal government to impose an income tax to the Constitution came with the promise that it would never go over 4%. It has gotten as high as 90%. You can't trust a word any politician says, especially when it comes to giving them the power to take more of your money. Thus, nobody in their right mind believes they aren't going to be paying through the nose to provide the benefit if they aren't expecting to receive the benefit. Plus, there are a lot of 'poor' people with dignity and respect for themselves who don't want handouts from anyone.
    – Dunk
    Mar 25 '19 at 23:09
27

A fundamental principle of economics is "There is no such thing as a free lunch." Any income transfer scheme will, at best, make only 50% of the income get spread around (minus any costs of administering the program but also neglecting any multiplier effects that result from people participating in the economy).

(Clarification because many people don't seem to understand this. Income redistribution does not create wealth, it only redistributes it. Let's say that there is only $100 in the world, and only two people. In the most unfair scenario, Amy has it all, and Bob has zero. The most radical proposal would be to force Amy to give Bob $50. Anything more, and Amy becomes the "poor" one. That is 50% of the wealth. Note that the situation only gets worse if Charlie is here. Now, each person gets a third, and there is only a 33% redistribution to anybody. - there is no way to create more than 50% gain for anyone)

Because people are aspirational and not rational, people tend to focus not on what they would gain below the 50% mark, but rather on what they would lose above it. (This assumes that redistribution is always from an asset pool with more money to an asset pool with less. As only half of the money could fall into the "above average wealth" category, I suggest the maximum 50% mark.)

Furthermore, studies have shown that people's happiness suffers more from losing what they have than what they get from gaining that which they didn't have. (Put another way, people hate loss more than they like a win)

None of this is to say that income transfer schemes can't benefit society. (Unequal distribution means that the total number of people can be made better off, and the stimulus effects help) But, as long as people vote with their hopes (of being rich) and not their present circumstances, it is unfair to call opposition to such schemes "irrational".

(Note: I'm not expressing a position for or against here - just explaining the other side)

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    I think this answer needs some references for some of your claims. Dec 19 '12 at 13:14
  • 3
    When I am not on a phone, I will link to the studies that show people prefer to avoid loss, although I would argue that is general reference, too. Beyond that, what needs to be sourced? The transfer scheme thing is pure math, with work shown. Dec 19 '12 at 14:41
  • 3
    Lots of speculation here and things that don't even make sense (50% why? Seems to confuse average with median…). Furthermore, it does not specifically address basic income guarantee.
    – Relaxed
    Oct 5 '14 at 23:14
  • 2
    The 50% of income figure is just wrong. Yes, typically redistribution only applies to 50% or fewer of the citizens but that doesn't imply only 50% or less of the income is redistributed, in fact the income gap suggests quite the opposite.
    – jim
    Jan 13 '15 at 1:09
  • 2
    [cont'd] If 99% of income was going to the top 1% of earners and the rest shared only 1% you could shift 98% to be shared among everyone else to ensure completely equal incomes. "At best 50%" also makes no sense. 2013 figures for the US have the top 20% of earners receiving 51% of income and the bottom 20% receiving 3.2%. You could double the income of the bottom 20% by taking just 6% of the top bracket's income.
    – jim
    Jan 13 '15 at 1:35
18

As @Sinan's answer hints at, the problem with "basic income guarantee" is that it is not a stable equilibra, for a variety of reasons.

  1. It's not sustainable financially.

    • A vast majority of people, if given a choice, would prefer to "be lazy", for lack of a better word (if you don't believe that, explain why you personally don't just spend your every waking moment volunteer working for whoever asks for your help). They won't work if they have an option not to.

    • As such, a great deal of people who work today but don't greatly enjoy their jobs (and dom't make gobs of money over that "basic income guarantee" would gladly switch to not working.

      • If you find that implausible, ask yourself (assuming that you work), if you would be willing to be paid, say, 33% less than you are paid now, if that means you get to not have to work. AT ALL. EVER. (remember that working usually entails extra expenses - childcare, for certain, plus cloths, transportation, extra pay for food that - not working - you can now afford time to cook for cheap). So in reality that 33% pay cut is much less; and with the high cost of child care, close to zero for many people at that income level.

      • In USA, 30Million people live at "just above" poverty level (100%-150% of poverty level income).

      • Congratulations, you just incentivized 30 Mil more people in USA to not work. Permanently. Forever.

  2. It's not sustainable demographically (which feeds into #1)

    By adding those notional 30Mil to the dole, you will drastically increase the phenomenon of "welfare moms", where poor women on welfare have tons of kids (usually, without being married), and get a nice sizeable boost to their income. If you raise that boost from "a bit of extra food money" (~33% per extra child for US poverty level) to "100% per child per year", the incentive to have many kids multiples significantly.

    • Guess what cultural values those kids will inherit? Hard work and success in life, or "sit on your ass and get the dole"?

    • And guess where the demographics equilibra shifts, when the few people who DO work have no time, or energy to have that many kids; yet those who live by the "gimme" principle multiply like rabbits? You got it. In a couple of generations, you run out of people who are willing to work, and your whole pyramid of welfare runs out of people to pay taxes for it (or to produce anything).

  3. It's not stable politically.

    Again, as you have a lot more people who are on the dole, they become a strongly dominant political voting block. What's to stop them to vote for whoever promises to increase and increase the amount of "basic income"?

    You already have a similar dynamic in USA - the combined amount of people who simply couldn't care less about federal budget as they don't have to pay any taxes at all; combined with people who sincerely believe in higher taxes even when they have to pay them, became a permanent majority. And the former amount multiplies, since the politicians are smart enough to promise even more people that "if you vote for us, you also get all the goodies out of public treasury 'for free' - e.g. that someone else gets to pay for".


Please note that this is not an ESS in either of the two localization cases:

  • If you implement such a scheme in one/some countries, people who are willing to work hard will simply bolt for better living elsewhere, eventually. Witness USSR. Tons of people bolted for the West the moment they were allowed to.

  • if you implement it globally, who do you think will produce all of your cheap material goods currently produced by low-paid workers in 3rd world? They are not idiots either - they will happily choose your "basic income guarantee with no need to work", given their current salaries. Guess where that leaves you? No more cheap material items. So you have to raise your "basic income" level higher since everything just got more expensive (or scarce, which will make it expensive).


Please note that none of the above logic would be true if we lived in a wonderful robot-working and robot-serving utopia of unlimited and cheap material wealth (hello, Gene Roddenberry) and energy, effectively making the price of many basic needs close to zero.

But until we do, SOMEONE needs to do all of low-skill and therefore low-paid work to produce all of the cheap material goods and services that allow your "basic income" to stay so low. So you have catch-22.

  • You either have those items and services cheap enough that "basic income" covers them sufficiently - but that causes the labor involved in producing them to be valued lower, which makes it more logical/rational for all the people employed in working that trade to choose to NOT work at all and live off of "basic income".

    • Eego, the supply of those goods and services drops, which naturally (Econ 101) causes their price to rise. Which make "basic income" not enough to purchase them.
  • Or you make those items and services more expensive right away, to incentivize people to work in those trades. Which make "basic income" not enough to puchase them again.

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    No citations and faulty assumptions. Would the majority of people choose to be lazy and eschew the possibility of greater income? does basic income need to match the poverty level? will people inherit values of laziness? These are seriously presumptive claims and you need to substantiate them.
    – Publius
    Apr 13 '13 at 23:27
  • 17
    It should be noted that most western European countries have a practical basic income guarantee, in as much as anyone not making enough money to sustain themselves will get social security. Hence, claiming that this is unsustainable requires overwhelming evidence, as reality contradicts it. Aug 17 '13 at 7:53
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    @Sweden, Germany, Norway, Denmark, Finland, Netherlands are the ones I can name off the top of my head. Of these, Sweden and Finland receive no backing from the US of any kind, nor from any other country, and are not a part of NATO. Norway is a part of NATO but I'm pretty confident they don't get any backing. Denmark I think is a part of NATO but has no military force to speak of, US backed or not. Greece' and Spains economic problems has nothing to do with them having social security preventing people from starving. That's a complete red herring. Aug 17 '13 at 10:57
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    Spain had balanced budgets and was even a poster child for good governance and reforms until the crisis. They also work much longer hours than in Germany. Their problems have nothing to do with a supposedly generous social safety net that does not exist. Switzerland incidentally has one that's much more generous and is not worse for it. The question is: Why are its citizens opposed to a basic income guarantee (as opposed to other forms of welfare, which they do support)? Clichés and generic welfare-is-bad arguments from a US context do not address it at all and are generally uninteresting.
    – Relaxed
    Oct 5 '14 at 23:21
  • 3
    Every job is being automated away. The problem isn't getting people to work, it's having work for people to do.
    – Tanath
    Dec 3 '15 at 22:56
10

It would indeed be more efficient (fewer distortions to earn income) to replace the current systems in place in almost all countries. These systems' stated goals are to provide a minimum acceptable standard of living to everyone. But, the systems involve multiple transfer schemes, programs with conflicting incentives etc, usually making it worse for people on both sides of the equation. Money is money whether you receive it through, say, a food stamp debit card, or through a housing voucher, or a school voucher. However, the fact that it is tied to consumption of specific goods prevent the poor from achieving all that they can achieve with the same amount of resources.

Therefore, I could support a system that guaranteed, say $25,000/year if it is coupled with the elimination of all the not so itty bitty labyrinth of targeted programs. Unfortunately, targeted programs that benefit small groups at the expense of larger ones are the bread and butter of politicians.

Philosophical support for things like basic income guarantees can be traced to Rawls' Theory of Justice whose implication is the maximization of the welfare of the worst off. While it sounds nice in the abstract, let's look at how Rawls arrive at this:

They are the principles that free and rational persons concerned to further their own interests would accept in an initial position of equality as defining the fundamental terms of their association. (emphasis mine).

That is, he envisions a hypothetical state where you and I are going to be given some cake from somewhere, and says the only fair and just thing is to assume that we have equal rights to this cake and takes off from there.

His work is all well and good as a consistent logical system. In the real world we have a slightly different situation.

In the real world, you and I each make our own cake, buying our ingredients, putting in time etc. Due to a combination of luck, skill, and effort, we produce our cakes. Let's say my cake is small and tastes bad and yours is ample and delicious. Applied to this situation, inappropriately I might add, the principle implies that part of your cake ought to be taken away from you and given to me.

I don't mean to imply that a nice person who shares her cake with her neighbor is doing anything bad. That would be a nice thing to do. But, distributive justice does not concern itself with what is nice. It gives rights to other people to consume the cake you made.

True, your bounty had something to do with luck. But, it also had something to do with skill (a combination of luck in natural endowments and past effort) and actual effort.

In a society where if you don't have cake, you are guaranteed a share of everyone else's, regardless of what effort you put in, there is an adverse incentive to making cake.

In general work is a bad, and leisure is a good. If it were otherwise, you wouldn't have to be paid to work. Everyone would prefer to get their current income without working to getting the same income by having to work. By not having to work, you wouldn't be completely idle, but you'd engage in activities that you find enjoyable but are probably not as highly valued as the goods and services you provide other people.

That is, there would be less cake to redistribute.

All that aside, I would still be in favor of a system that guaranteed a basic total income without multiple transfer schemes in place, because the complexity of the current system leads to an inefficient allocation of the resources of the poor and the rich alike.

Such a level of income is best achieved through a single lump sum transfer and without an individual's earnings affecting the level of the transfer. Things like minimum wage laws prevent unskilled workers from gaining experience by locking them out of the labor market.

Other examples abound, but this entry is already getting long.

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    I don't agree that the fact that people have to be paid to work means that work is bad and leisure is good. If I knew that I would always have food on the table and a roof over my head without the need for money, I'd probably keep doing what I do without being paid. After all, everyone here is working, unpaid, for StackExchange. The truth is that the current system means that people who don't get paid in some way starve. Dec 20 '12 at 4:53
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    @AmyBlankenship 'Money' is not essential here. To always have food on the table and a roof over your head and to be able to keep on doing what you are doing, you need others to provide you with resources. There are three ways to do that: 1) Depending on others' charity, 2) Taking it from others by force, 3) Providing goods and service to other people who value what you provide more than the value you put on doing other things. True, we are not paid on SE, but the benefit we derive from discussing things must be greater than the value we put on other things we can do in that time. Dec 20 '12 at 15:30
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    @SinanÜnür - plus, posting on SE fulfills some other needs on Masow's hierarchy. Social recognition, dopamine boost from winning gamified stuff, etc...
    – user4012
    Feb 8 '13 at 15:02
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    "there would be less cake to redistribute." all things being equal you mean. But they are not equal. Things are changing. 200 years ago 95% of the population were needed to feed the whole. Today that is just 5%. Less and less people are needed for general industrial production. More and more people do ephemeral stuff and pay each other real money for it. So no, cake is getting bigger and sweeter every year.
    – Genli Ai
    Jul 9 '13 at 12:24
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    I always find it fascinating that people that have money assume that the poorer classes would be happy with not starving, and would stop working if the threat of starvation didn't hang over them. Aug 17 '13 at 7:57
7
  1. It is a disincentive to work. Opponents argue the need to work to survive is eliminated if everyone has their basic needs met, reducing productivity.

  2. It is an additional tax burden on working taxpayers. More people, who would have otherwise fell into the welfare trap, would be able to get basic income who would have otherwise got nothing from the state, meaning more of a burden on people who are working.

  3. It could raise the rate of inflation. Shops, businesses and particularly landlords will raise their prices; they know people are getting the basic income, therefore they can charge more.

  4. People will get money for nothing. Many take moral issue with welfare, as recipients get something for nothing. They are even more opposed to the much more expansive policy of basic income.

  5. Rich people will receive basic income, as well as poor. Many will have a knee-jerk reaction to the idea of the rich being given even more money.

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    5 and 2 are inherently contradictory. You've either got one or the other problem. You'd have to be really incompetent to end up with both.
    – Jontia
    Jan 22 '20 at 13:50
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    2 and 5 are perfectly compatible. If it's paid by taxing income, then the idle rich who have no income but live off their savings will pay nothing but will get a check each month, while the working rich will pay for it.
    – Stuart F
    Jul 28 at 13:54
5

I don't think all the talk about people becoming lazy or the far off chance of becoming rich motivating people to try harder are borne out by the evidence or all that important in the debate.

A much larger issue is the level of the basic income and how much it would cost. If the level is high enough to live a decent life in a country like Switzerland, the whole scheme would be extremely expensive and eat out what's currently the budget of many welfare programs and then some. If the level is lower, it would not create the kind of freedom envisioned by its proponents.

For a given budget/contribution level, you can redistribute income more effectively and give more to the people who need it the most (people who are unable to get work, disabled, old and needy, etc.) with some sort of targeted welfare system than if you spread the money evenly. Of course, the claim that current systems should be replaced by something simpler, easier to manage and less intrusive (no need for endless paperwork, no constant suspicion that those who get benefits are “moochers”, etc.) is appealing but many people who are not giving in to generic welfare-is-bad clichés think that the amounts just don't add up.

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    This is an important fact. It's possible for a basic income to do little or nothing for the poorest, especially if it's set at current benefit levels: with reductions in tax allowances the poor may end up paying slightly more tax and be worse off, and even if they're no worse off they will still be very poor. Setting it a higher level (a living wage) will help the poorest but be far more expensive. In contrast, targeted measures may be cheaper. See jrf.org.uk/universal-basic-income-good-idea
    – Stuart F
    Jul 28 at 13:58
1

Well, according to what I have read up on, one of the reasons for opposition is how it might take money away from the social security system that guarantees money for Swiss citizens at a certain age:

"It argued that the goal of living a dignified life was already codified in the Constitution and was fulfilled by means of the social security system." -Switzerland: Voters Reject Unconditional Basic Income, Library of Congress

So, a lot of the money that could go to an already functional social security system for the workforce would go here instead. The cost would have to be met by a huge tax hike or getting rid of a tested system for a less tested one. Plus, another problem is that the initiative was apparently very vague and asked for a change to "guarantee the introduction of an unconditional basic income" with no mention of amounts or tight explanation of the methodology for calculating it. So, even those who would want government funds for a UBI are not being given something very specific like a Negative Income Tax form of Universal Basic Income popularized by Milton Friedman or the Alaska Permanent Fund Dividend: it was a vague proposal that only promised to start by giving 2500 francs monthly to each adult and 625 francs to every child. In fact, according to an interpretation from a political site called The Transformation Deal is that there is no strong long term plan in place to fund it with one potential method to fund it would be a 3% Land Value Tax, which would make the plan dependent on the not very reliable real estate market.

So basically, the issues some have with the plan is that the referendum starts from a broad proposition with only certain methods to fund it: one of which would include removing the Social Security system for something untested.

-2

The reasons for opposing the project of imposing such a system are very simple: It would increase the inequalities.

The basic income system is supposed to replace various parts of the current system of wealth redistribution such as :

  • Retirement
  • Invalidity annuities
  • Unemployment annuities
  • Student scholarships
  • Accident annuities
  • Farming subsides
  • Poor families subsides

etc...

The argument in favour of basic income is that the totality of people counting one way or another on the government to (at least partially) survive is so high than it would be simpler to just pay annuities to everyone no matter his situation.

However, another thing is that for such a system to work at all the total spending of the government would have to not increase. If the government spends more money than with the current system, it means that the government is basically borrowing money to feed people without any intention of ever paying back, leading to situations such as Greece, that nobody, rich or poor, wants to Switzerland.

Since we share the same budget than before, but between significantly more people, it means the current annuities or subsides will have to be proportionally decreased. I am unfortunately not sure, but let's pretend, very optimistically, that 50% of the Swiss population benefits of ones of the annuities/subsides mentioned above (in practice it is probably less). That means that all those annuities will have to be cut by half.

As a result, retired and invalid people, as well as unemployed people, poor families, students, farmers, etc... will get half of their annuities, while wealthy workers who have well paid jobs in a company will get a (rahter small) increase in their revenue. Such a situation is of course unacceptable.

I am of course assuming that nobody would chose to quit their jobs because of basic income, which is of course a wrong assumption. By doing so, former workers will stop paying taxes, making the basic income even lower, and the overall inequality situation even worse. Basically a return to XIXth century.

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    (-1) The notion that government spending absolutely cannot increase or that borrowing would turn any country into Greece is completely wrong. I agree with the general gist of the argument (basic income would cost a lot and could make some people worse off and/or be difficult to fund) and the notion that fear of a debt crisis plays a role in the debate (I have already heard many variants of this argument, apparently nobody in Switzerland understands what's going on in the eurozone) but such a simplistic assumption is not needed to answer the question.
    – Relaxed
    Dec 2 '15 at 10:51
  • The logic here is based on an oversimplification of how economies and budgets work.
    – user1530
    Dec 2 '15 at 18:29
  • 1
    Basic income can act as an economic stimulus, helping everyone. It's well known that the poor spend a higher percentage of their income and if you give them more money they're more likely to spend it. Taking from the rich, who may save or hoard offshore, and giving it to the poor could therefore increase GDP. (Against this, there is the risk of inflation, but it is debated.)
    – Stuart F
    Jul 28 at 14:03
-4

I cannot give a general answer because differents implementation of a basic income might have different effects. But based on the way it is implemented in Italy and judging from that perspective I can say:

  • Basic income fuels the shadow economy: The combination of high unemployment and the possibility to use the additional income to top up a salary paid under the table pushes a lot of people to accept off-the book jobs poorly paid and with absolutely no labour rights.
  • Basic income fuels exploitation: by accepting the above mentioned work paid under the table people end up participating in a big race to the bottom.
  • Basic income fuels fascism: by entering the shadow economy people break the law and therefore they are more keen to turn a blind eye on the violations committed by other people. In a while they find themselves in that classic network of exchange of favours on which Latin American style dictatorships build their power base.
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    To the best of my knowledge, Italy doesn’t have a UBI system. The citizens income seems more like a traditional welfare program with means testing, maximum income levels, and strict restrictions on how the money can be spent. The whole idea of UBI is that it’s universal, and therefore eliminates the incentive to not work or to work under the table that means tested welfare programs can sometimes create
    – divibisan
    Jul 27 at 14:09
  • @divibisan The Italian system is restricted to people below a threshold on certain wealth/income indicators, that is true, but removing the restriction and making it universal would not change the result. The problem is the implementation, not the size of the group of eligible people.
    – FluidCode
    Jul 27 at 14:20
  • 3
    No? The reason people worry that means tested welfare encourages under the table work is that if you get a new job that pays better, you could lose your welfare, so people could be incentivized not to work or not to report their income. With UBI, there is no incentive for this, since you never lose your basic income. Sure, there’s the incentive of not paying taxes, but that applies equally in any system. Why would someone with UBI be more likely to do under the table work than someone without it?
    – divibisan
    Jul 27 at 14:26
  • @divibisan A work paid under the table alone often is not enough to pay for the cost of life in a developed country. That is why a lot of people prefer to deal with unemployment rather than accepting such jobs.
    – FluidCode
    Jul 27 at 14:32
  • 2
    I still don't understand how UBI changes the incentives for under the table work. Those jobs are already illegal (it's simple tax-evasion) and so someone would only take them if either the benefit (higher pay + no taxes) is greater than the risk, or if that kind of work is the only thing they can find and they have no choice in order to survive. You don't explain how UBI would change the incentives driving the first reason, while it would clearly disincentivize the second reason, since no one would be forced to work by the threat of starvation or homelessness
    – divibisan
    Jul 27 at 14:53

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