What are the reasons for people to oppose Basic Income Guarantee?

Question

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.}

Answer 1

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)

Answer 2

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".

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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).

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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.

Answer 3

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.

Answer 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.

Answer 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.

Answer 6

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.

Answer 7

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.

Answer 8

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.