24

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.

  • Will they? Looks like they're only halfway with the signatures? – gerrit Dec 19 '12 at 13:03
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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. – Danubian Sailor Dec 19 '12 at 17:37
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    For example 'what are the reasonable arguments for and against basic income guarantee'? – Danubian Sailor Dec 19 '12 at 18:48
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    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
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    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
23

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. – SoylentGray Dec 19 '12 at 13:14
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    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. – Affable Geek Dec 19 '12 at 14:41
  • Any income transfer scheme will, at best, make only 50% of the income get spread around could really use some support. The loss averison link is a good add btw. – SoylentGray Dec 19 '12 at 23:47
  • @Chad that is simple math- if wealth redistribution goes from rich to poor, every dollar to the poor must come from the rich. As such, the most you could do is redistribute every dollar that is "above average" to every person with dollars "below average." – Affable Geek Dec 20 '12 at 0:03
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    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
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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. – Avi Apr 13 '13 at 23:27
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    to your 3: simple: whoever's on the dole, don't get to vote. Only those who pay taxes, or serve the society otherwise (in police, army, education, health - even if not paying taxes) get to vote. For incentivizing, pay B.I.G. in food stamps, not money. Allow purchasing of any basic stuffs in food stamps. For "luxuries", you'd need to earn money. – Genli Ai Jul 3 '13 at 17:24
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    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. – Lennart Regebro 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. – Lennart Regebro 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
8

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. – Amy Blankenship 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. – Sinan Ünür 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. – Lennart Regebro Aug 17 '13 at 7:57
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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 may people who are not giving in to generic welfare-is-bad clichés think that the amounts just don't add up.

4
  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.

-1

I want to add that I agree with points 2 and points 3 of @user4012 answer.

I disagree with point 1. Most humans are useless anyway. Letting them be lazy won't be a problem. All we need is they stop breeding. Not like typical low level workers are needed for economy. They can so easily be replaced by machines and immigrants. Our economy don't need the low IQ people. We need the smart ones that can create automation and stuffs.

I like universal basic income. I am not one of those opposing it. If it replaces the contemporary welfare program, it'll be great. Universal basic income will also allow people to more easily how well their countries are run.

If the country is run well, there will be a bigger citizen dividend.

If the demographic is stable, then universal basic income is a good idea. At least, it will be better than welfare programs. Of course, pure capitalism will be even more awesome.

However, the demographic is not stable.

I raised the question here How would proponents of universal basic income handles those with 40 children?

However, the question is heavily downvoted for reasons beyond belief. We have a real measurable problem.

Humans choose to produce children depending on the costs. At least most humans do. That's what all carbon-based organism do. They reproduce. That's the purpose of life. If something makes you happy, that's because your genes tell you to do it. Those genes tell you to do it because those genes successfully reproduce in the past and now common in all organism.

Basically, human genes hardwired the brain to produce more serotonin and dopamine when humans achieve goals that are consistent with reproductive success. Humans' like that and well, have sex and reproduce. The same goes for cats, dogs, rats, chickens, etc.

We are all just animals after all.

When a child is subsidized by universal basic income, welfare, or child benefits, the kind of genetic encoding that encourage the organism that produce more children with little economic productivity will be huge.

Imagine if instead of breeding the fattest chicken that produces the most delicious meat, you produce the thinnest chicken?

Imagine if instead of breeding the best taxpayers and economic contributors you breed the poorest welfare parasites?

You will have more welfare parasites.

There is no way to escape the fundamental law of evolution.

Those who more successfully reproduce becomes many. It's just tautology.

When welfare parasites breed more children, there will be more of them in the future.

In a democracy, they will vote for more and more welfare. Now it's already happening. Universal basic income will make that even worse.

However, just like @user4012 say, the productive will leave somewhere else they're not oppressed by welfare and tax and minimum wage. So I guess voters too will see that the amount of UBI they receive will be less if they extend those UBI to children.

But yes. It'll be a concern.

-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

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