I think this is a misunderstanding. Those programs generally have low bureucratic overheads percentage-wise to begin with.

Some of the main benefits are 1) reducing welfare traps (accepting work doesn't cut your beneifits) and 2) encouraging independent behaviour by decreasing the stressful and dehumanizing busywork of continually reproving in various forms your entitlement to the benefits (and resulting economic uncertainty, mistakes derailing your finances)

The principal cost is staffing for the vast number of people needed to means-test, scrutinise, shuffle paper and rubber stamp things - were you to dispose of much of this apparatus by going for a straightforward "everybody gets £x/month", your efficiency would rocket.

That is, of course, if the actual main cost isn't money being siphoned off into politicos pockets.

http://www.abs.gov.au/ausstats/[email protected]/Latestproducts/6530....

6M or so people receive some kind of welfare benefit for a total of 77.8B dollars. Total expenditure on welfare in Australia: $154B (latest budget figures).

That's nowhere near a 5x overhead, but it is pretty damn inefficient.

The fact is the Australian government spends in the ballpark of $2 for ever $1 of benefit handed out; whether it's $1.80 or $2.20 doesn't really matter -- it puts some actual figures behind the concept of simply giving out a basic income (versus trying to figure out who gets the benefit, means testing it, and so forth).

Australia's unemployment rate hasn't changed much over the period 2009-2014 (it was shielded from the great recession by commodity prices).

"In 2010-11, Australian Government and state and territory government welfare spending was estimated at $119.4 billion - $90 billion (75%) was in cash payments (including unemployment benefits) and $29.4 billion (25%) was for welfare services."

So to make your case you'd need to dig up figures about how much the administrative overhead related to the cash benefits is.

What makes you say that? I have tried to look into this before and failed. But, from the way these things are structured I assume they have high overhead. The anti abuse/fraud work alone… What makes you say that? I have tried to look into this before and failed. But, from the way these things are structured I assume they have high overhead. The anti abuse/fraud work alone…

Of course the inefficiency is difficult to prove because it's impossible to correctly measure the amount of fraud that would exist if there were no investigations (the existence of the investigations might discourage fraud in the first place).

Still, it seems pretty intuitive that welfare fraud isn't actually as big a problem as people tend to think. Welfare fraud is one of these problems that are easy to exploit for public outrage. It's relatable ("they steal my (tax) money"), the people doing it are already stigmatised (if you're on welfare you either did something wrong or are simply not trying hard enough), the falsely accused are unlikely to retaliate, it's easily actionable (just add more inspections or simply reduce the benefits) and it's difficult to measure and nearly impossible to solve.

Sure, it may be a non-issue but it so wonderfully exploitable if you're a politician (or a "newspaper" that needs some inciteful headlines).

There is no concept of benefit fraud in a BI system. Everyone by default qualifies for the same level of BI. Your government paycheck starts at the max value and can only go down from there, which happens when you are paying back that money in the form of tax. The only type of fraud detection needed would be the tax fraud system that already exists.

I'm not saying everything about BI would work (although I hope it does), but the fact that you could cut benefit overhead is self evident I think.

Either those people are living and will notice not getting their money, or they are dead and there is a problem with enforcement.

Any kind of BI seems contingent on an accurate census. At least in Finland, I believe their census is quite good. Fraud should be very minimal.

http://www.cbpp.org/research/romneys-charge-that-most-federa...

(Also note that basic income proposals usually don't propose replacing all forms of means tested income transfers, including Finland's plan)

I'm don't really know much about the US case, but that article reads as a somewhat disingenuous response to a very disingenuous statement by and electioneering politician. They define "Benefits & Services" as opposed to "administrative costs" and report the first makes u 90% or more.

I assume that "Benefits & Services" includes various services that might be termed "administrative costs" in everyday talk.

But point taken, maybe this is not such a huge savings.

The concerns I have are: a) a ratchet effect along the lines of state pensions where the basic income keeps being put up in populist moves but is never reduced b) that specific entitlements (with their administrative burden) either continue to exist or again get created by politicians in "something must be done" mode. Specifically things like disability benefits, state pensions, child benefits are all likely to still stick around

Finally many of the lessons we've seen in the where welfare reform has been attempted over the past 5 years is that it is the detail which gets you. Young healthy people are not the majority recipients, it is questions over how to support the partially disabled, children of separated parents with joint custody etc. Giving a new entitlement is easy as it is something that wasn't there before. Taking it away is incredibly hard politically.

Sure, you could convert state pensions in the public sector into a voluntary retirement fund but the basic idea behind pensions is that the government gives you money in old age so you can afford not to continue to work -- this is entirely solved by BI.

Likewise, child benefits are intended to be spent to accommodate the child, exactly like the child's BI.

Of course good luck convincing prospective pensioners that their pensions are not going to be.

Disclaimer: I have only a vague idea of what the welfare and pension systems are like in the US.

Basically, government workers agreed to work for a lower current salary for many years, with the coincident agreement that they'd get X% of that (via some complex formula) for life after Y years of service. That X% provides a modest but certainly comfortable lifestyle.

There's no way you can set basic income levels high enough to provide everyone with that same level of lifestyle before they've lifted a finger of productive work. Basic income must be more basic and spartan than that in order to work mathematically/economically/practically.

(My parents both retired as school teachers with 25-ish years of service and a full pension. I'm not privy to the details, but it's enough for them to live reasonably well, but that didn't fall out of the sky; it came from them raising kids and living 25 years on school teachers' modest salaries.)

I concur that child benefits need not exist (unless/except to the extent that children receive basic income of their own).

Rising unemployment is partly due to a rise in automation and industrial efficiency. The ultimate limit is, (almost) nobody needs to work, yet goods are still available and continue to increase.

If you use basic income to replace the pension money, but don't confiscate the 401K savings, you've massively disadvantaged the pension holders. If BI is $25K/yr, now one person is living on $75K per year (or $65K/yr and passing along a $1MM inheritance) and the other is living on $50K and will die without a nest egg to pass along.

Trust me, those pensioners are one pretty well-organized voting bloc... ;)

Ideally (state) pensions would become obsolete and retirement funds would become an entirely personal issue (as they've largely become in Germany btw -- the tax-funded pensions will at best barely keep you above the poverty line even if you've worked every day since from 18 to 65).

So as far as pensions go you will have to go with an unfair transitional period. You could freeze the pensions and pay them out in proportion to the (now discontinued) contirbutions (which at least in Germany is how it works already) on top of the BI. But for pensioners you pretty much end up allowing them to "double dip" or drawing some arbitrary cut-off line for who will receive BI or only grant BI in proportion to the pensions.

But as you may have noticed I'm not well-versed when it comes to US pension systems. I'm assuming it's similar to ours but considering even healthcare was purely defined by the employment contracts until fairly recently I wouldn't be surprised if it's drastically different.

There might be a more utopian concept of paying everyone enough that they don't need to work at all, but that isn't what is meant by this Finish scheme and what is meant by "basic income" normally.

We should be deeply ashamed by the fact that there is people in our rich developed countries who do not have access to that simple things.

In Germany outside the public sector pensions put you so far below the poverty line welfare has to jump in and bridge the gap. For anyone entering the workforce today that is.

State pensions need to exist as long as you expect state workers to work for (pension excluded) below-market compensation for the jobs they do. BI has no effect on this one way or the other.

> Sure, you could convert state pensions in the public sector into a voluntary retirement fund but the basic idea behind pensions is that the government gives you money in old age so you can afford not to continue to work

No, the idea behind pensions is that, as part of the exchange for work now, you accept a deal which provides payment later (including specified contribution of the funds from your nominal current income, as well as the rest being contributed by your employer.)

You're thinking of how it will shuffle money around, you aren't considering how it will shuffle opportunity around.

You may very well be right that the relatively small group of people who like to do creative things in their free time would make a big impact, though.

- Enormous stigma

- Being a powerless pawn of Kafkaesque bureaucracy

- Poor nutrition, distracting hunger, nagging uncured illness

- Pressure, stress, fear and suffering

- Low access to anything not in walking distance, or which costs money to get in

- Easy access to distracting pop culture and particularly TV

It's basically unsurprising that a person here and now who's unemployed DOESN'T behave like a person in a society that distributes Basic Income without stigma.

If you want to look at a group which might make a better comparison, look at retirees, or lottery winners.

Dropping back to ages 65-74 is mostly similar, except they only read half as much.

[1] http://www.bls.gov/news.release/atus.t11.htm

[2] http://www.bls.gov/news.release/atus.t03.htm

Also, many types of work are just not possible outside of a company context because you need infrastructure and, well, company. Some people may be willing to do a bit of today's work for free, just for socializing, if they have basic income and if it's socially acceptable to work without pay. Or maybe not. But it's hard to know, from just looking at this data.

If I have a basic income, I would love to go out and do something productive, take classes to benefit myself to get a better job. I have a few family members who doesn't have a job for a few years and they cannot take any free classes, they all cost money, especially the intensive technical courses.

I would love to go to the arts and stuff but the moment I step out as an unemployed person with no income, it will only incur expenses I can't afford. Rent, Bus fares, food, clothing and so on are vital expenses that I need to save for, I can't do that with no income. I've met people who can barely make any profit after paying their expenses.

The benefits of BI can be summarized in that it eliminates the foundation of the hierarchy of needs from everyday considerations. Even minimum wage can't aspire to solve this (simply because at some point minimum wage becomes so high the jobs become unprofitable if they can be avoided -- also because minimum wage does nothing for those who don't collect a wage).

Whilst there are plenty of people who wonder how they'd fill their day if they didn't have computers to program or interesting research to complete, there are an awful lot of people who work long, tedious and unsocial hours simply to make ends meet. Any feasible value of BI is going to be set at much closer to the current incomes of the latter group of people than the former. Even if the first group is vastly larger than the second group, they're still going to have to pay significantly more for the drudgery to be done.

On the other hand, any feasible BI program couldn't pay anything close to the annuity possible by winning a lottery, so a lot of Danes should still be 'stuck' trying to make their desired income level.

I agree we may be able to count on the Scandinavian mindset to make social programs work that couldn't in a place like the United States, but even in Denmark, I don't think this particular program can deliver the desired benefits without giving out enough money to cause problems.

1. The study does not say that 44% would stop working - they just wouldn't continue working in their current company/occupation, with a portion of them probably moving on to more fulfilling work (as opposed to living a life of pure leisure).

2. The stats refer to winning a lottery, which solves one's all financial problems and desires. Basic income does neither for a majority of people.

If that pressure went away, a lot of automation would arrive very suddenly.

Exactly this. You can already see in the article this process is happening in Finland. At first it talks about basic income, then about how the income should be below a living wage (which at least waters down many of the benefits). It then ends with a suggestion that maybe it won't actually be a basic income, but a stipend for poor people.

Stipends for the poor are hardly a revolutionary new idea being tested for the first time, and calling it a "basic income" is just wrong.

I also am not sure that testing such a thing in only a part of an existing economic area is a valid indicator of how it would function over the whole. If only some people get the benefits it may create some perverse economic incentives.

So, people with disabilities and people who are unemployed would be left worse off, with an amount they can barely live off. Not exactly the situation we want after enacting our utopian basic income program.

The only way around that would be to give people with disabilities and the unemployed more money. But then that means you can't eliminate the welfare institutions needed to identify them and cut them checks.

One way of modelling basic income is as a negative income tax.

However one of the advantages of making it "unconditional" (but not necessarily actually beneficial to high income people) is that it buys political acceptance from the middle classes especially.

A 20% increase in marginal rates is definitely going to affect the incentive to work. Middle class wage earners will be paying 50% to 60% of their income.

If you want to save on the cost by scrapping existing benefits, the $12,000 a year would probably not fully replace the social security pension, disability benefits, or EITC/food stamp/TANF benefits people get, or at best be approximately the same. So you haven't changed things much for people at the bottom, in exchange for a massive tax hike.

A massive tax hike combined with a simplification in government should result in larger revenues. If things don't change for people at the bottom, who did they change for - all that extra money has to go somewhere, holding all other government spending constant. Presumably the lower middle classes ended up the recipients of this massive tax hike, in your perspective. But this is just a function of the progressive tax curve; it and the fixed payment can both be adjusted to achieve a particular redistribution.

The more interesting thing, to me, about an unconditional fixed income, is that it changes the nature of work at the margin. Benefits don't turn into poverty traps if they're unconditional. Incremental part-time work doesn't come hand in hand with the risk of losing your benefits. I think employment overall, and productivity, would increase.

Pensioners/disabled/people receiving unemployment benefits would be worse off.

The big winners would be people who are not working and not receiving benefits today, and presumably the people who live in the same household as them.

1. It's not going to be an amount barely above the poverty line. If it's implemented "correctly" it needs to be enough to do away with all the other welfare programs. Think way, way higher than $12K per person per year.

2. With less revenue coming in, guess who's going to be hit with higher taxes? All those suckers working to make a marginally higher income.

3. If the BI is sufficiently high (think in the $45K range), there will be a lot of people leaving their jobs to live a life of leisure and avoid having their income taxed at a >50% rate. I know I would.

This utopian idea is like every other: sounds great on the surface, may even work reasonably well at a small level, but doesn't scale. Human nature is what it is.

OTOH, BI does not disincentivize recipients from working, like current schemes do.

The specifics vary by place but almost everywhere unemployment benefits recede rapidly when you are.. employed. If you are disabled but manage to work part time, that can be used to invalidate your disability claim.

The whole point is to get more people working, and make it worth their while. If BI results in fewer people working, it has failed.

So is minimum wage + all eligible welfare benefits. What's the cash value of that? That's your new BI.

e.g., 0% on first $20k, 30% on the next $20k, 40% on the $60k after that, and so on.

I think in Australia, the tax-free threshold these days is around $12k.

You need to look at this in the "end game" scenario, which is, we need BI because there will be so much automation that hardly anyone needs to work anymore. You're not going to sell this to the poor by telling them that they're now unemployable and their BI is going to be less than their previous income + food stamps + housing subsidy + etc. So right off the bat, yeah, the BI floor needs to be the cash value of a person with full welfare benefits. And that's a lot more than $12K.

You're also discounting the inevitability that politicians will promise bumps to the BI for votes, people protesting that they can't afford to live in Manhattan on their BI, etc. It will quickly reach a point that even skilled workers will say "F this" and join the ranks of the unemployed.

Assuming your household consists of 5 kids, your spouse and you. 7 people x $12K/person = $84K. That would be 2x the average family income in the US today!

I don't think this is impossible, but it's pushing the limits of what's possible.

To take one example, "social welfare" in Ireland is widely quoted as costing 20bn, about €370 per person. Maybe close to 500 per adult. If you could scoop 75% of that amount into a BI fund, you would be about half way to funding a BI scheme.

The other half would come from increased income tax, a low band increase. Realistically, there will be a break even point that probably should sit around median income. IE, for a median income person, their increased tax equals their BI income, more or less. So, a lot of that tax come from people who are still net beneficiaries. Most people are close to break even.

There is an extra tax burden but it's not an impossible one.

That would indeed be basic and probably too low to achieve what proponents want, which is to allow the elimination of other welfare programs for the truly disabled, etc.

If that's the case, then the amount is a whole lot less than $3.8 trillion. The calculation is then 12000 * (Amount_of_people_that_get_less_than_12k).

Latest poverty numbers (2013) that I could find indicate only 45million are living in poverty. Assuming that poverty maps to less than 12k (and assuming they get all of it, and not simply the difference), then the calculation is:

12000 * 45,000,000 = $540 billion.

Which is a lot less than what you mentioned, and would probably be even less. That is definitely do-able, if the political and social will is there.

It's often called a Universal Basic Income for this reason.

Those who earn more than $12k in the above example would still receive it, but it would mostly be taken back off them in taxes.

Here are two articles arguing that it's entirely affordable even at the level you suggest:

http://www.huffingtonpost.com/scott-santens/the-economist-ju...

https://medium.com/basic-income/universal-basic-income-as-th... (particularly interesting, IMO)

If we cut existing beenfits, it still seems to me many disabled/unemployed people would be worse off with BI, or about the same, as the current system. So we're left with massively higher taxes, and people who can't work will be left poorer.

The second article mentions all the secondary social benefits, and all the costs we'll avoid associated with people living in poverty. I buy that, but a 18%-35% tax rate itself is also going to have a massive deadweight losses as well which he's not accounting for. Current marginal rates are 30-40%, so we'll now have 48%-75% marginal rates (or assuming a 35% increase, 65% to 75%). Think that won't make society poorer and decrease the incentive to work?

I want a stronger social safety net. But BI seems to me like a extremely costly way to do it. There are many things we can do that would have higher bang for the buck.

321.5 million residents gives $3.86T.

Looks like each year of age under 18 makes up about 1.33% of that, for a total of 77M residents under the age of 18.

Suppose you don't give a cent to anyone under 18 (which is not consistent with the UBI arguments I've seen, but whatever). 244.5M residents, times $12k, gives $2.9T.

Sure, that's "residents", not "citizens". Otoh, non-resident citizens might be entitled as well. Either way, how can you argue with "over 300M times over $10k gives over 3 trillion"?

Edit1: screwed up reading the graph, fixed above numbers.

Edit2: oh, just saw your comment suggesting "18 to 65" Fine, integrating by eyeball the graph from my link, I see 47 years at more than 1.2% of the pop per year, gives roughly 60% of the population in your age bracket. Now it's 200M recipients, or $2.4T.

Next $9,226-$37,450 is at 15%, bump that to 39.6% and someone making 37,450 costs -9269.4 + 6943.104 = -2,326.30$.

Now if you continue this you find a medean income gets a bigger tax break than 12,000$ per year from the graduated tax rates. Also, with BI you don't need a standard deduction...

Net impact BI's are not simply whatever the BI is * the population.

If we decide that 12,000$ is enough to live on then it calls into question why people get a larger payout from SS on top of a large tax break from low incomes.

Add it all up and a 12k BI costs less than SS + all other tax breaks and subsides. But, people rarely think of tax breaks as a subsidy so there is a lot of cognitive dissonance on this topic.

PS: Another way of looking at it is to consider the Canadian government spends less per person on healthcare than the US government while covering their entire population. Presumably the US government could do the exact same thing which makes it a worthwhile thing to consider.

However, I don't understand your next point. If you're saying a $12K BI wouldn't cost anything extra after getting rid of social security and all tax breaks in our tax system, well then maybe. But then you've made SS pensioners much poorer. And increased taxes on all the rest of the population. Also keep in mind the standard deduction is sort of like a BI for people who earn above a small threshold so if you get rid of it the net benefit of implementing a BI for low income people is even less than $12K.

BI sounds attractive in theory, but the math around it seems hand wavey. When you try to add up the numbers, there's no way around increasing taxes massively, or leaving large groups like the retired/disabled/unemployed worse off.

Which subsides to remove becomes an open question. EX: With BI do we still pay post doc's a small amount for living expences?

PS: If nothing else BI is an interesting comparison point for the current system. EX: You get more from SS as a married couple than an unmarried couple.

You're going to struggle to sell BI on the basis that the person with a median income should make higher net tax contributions to subsidise those that won't work as well as those the present system determines "can't" work at the moment...

In the UK, there's a tax free allowance of ~10k then an income tax rate of 20%. If we gave everyone in the country £2k/year and dropped the threshold to 0, nobody earning more than £10k would get any extra money. This is just an example that seemed nice because the figures were pretty clean.

If you start getting to more life-changing money, like £6k a year, you're starting to talk about >10% increase in taxes on the whole working age population. The top rate will go from 45% to over 55%. And again, it won't add a penny to anyone who's earning more £10k.

On top of that, some people would presumably drop out of the work force, and the higher tax rates would reduce the incentive to work, so your tax base will be even smaller. That'll push up the tax rates a few more percentage points at least.

My math: Going along with the example, around 65% of the UK is working-age, and about 62% of working age people work. So 15 million people in the UK don't work at all, let's assume they don't earn anything. Assuming you restrict the BI benefit to just to working age population (no pensioners or children), there are suddenly 15 million people who didn't get anything before who now get BI, costing £30 billion pounds. The UK collects/spends about a £1 trillion, so that would be a 3% rise in spending.

> 3% rise in taxes on all workers

A 3% rise in tax revenue, how that affects people will depend on how it's applied (changes to tax on businesses, for example).

We must consider at least

* Knockon effects of changing the tax thresholds / amounts

* Benefits that are being paid out that no longer need to be

* Changes in employment when people have a more reliable safety net

For example, with the £6k case, we can now remove JSA, ESA, Incapacity Benefit and Income Support I think at the least. That's about £20B we can knock off, while increasing the amount those people receive and removing the problems that come with things like benefits sanctions. The UK spends about £85B on welfare other than the state pension, and any of that spending that gets people's income up to £6k is completely covered already.

I would like to see more involved analysis for specific figures to know what the true cost might be.

> (no pensioners or children)

Children, yes, but any pensioners claiming more than this sum in state pension don't cost more.

> Also, in this case you literally wouldn't help any poor wage earners at all, since a minimum wage job in the UK is already making more than £10k.

Full time workers, true, but several forms of benefits now are restricted to those working fewer than 16 hours. A 20yo could be earning less than £4300 (£5.13 * 16 * 52).

Not a great source, but precise figures here aren't too important:

http://www.theguardian.com/news/datablog/2013/jan/08/uk-bene...

The moment you add conditions and variables, you basically turn it into the complex mess that's the current welfare system.

For example, a pensioner gettin $40k/year would get $25k under a $15k UBI. You would have to get them to agree to the renegotiation, so I suppose it's not a realistic solution.

Unless you are talking about replacing Social Security, but even there the math isn't as straightforward.

As for 18 and under, I think it's a bit tough. A 6 person household with 4 kids needs much more than a 2 person household. If we don't supply UBI to the children / wards of the children then we risk needing to recreate social assistance programs. Although it does run the risk of having kids for money, which admittedly probably already happens.

However, I think this pilot will at least tell us if a basic income works from the point of view of whether it can be sustainable on itself and whether 90% of the working people will quit working or not. Right now we have no clue whether something like that would happen or not, and it's probably the riskiest thing about a basic income - having 9 out of 10 people sit around and do nothing while the other 1 out of 10 have to support them.

If the outcome for that is a positive one and most people continue to get jobs, then we can start making a well thought-out plan on how to do the transition with the minimum damage possible to the society (until the transition is complete and then there's a net positive from the basic income for everyone).

Implementation, however, looks tricky. I'm not at all sure it will roll out the way people think it's going to roll out. There's a lot of hand-waving about the effects, but it's mostly smoke and no fire. We really need some real-world data from various experiments to make better choices. There's also a vast difference between the slogan "basic income" and the actual details of how it would all work.

But as you point out, aside from all of that, there's a very real political problem: we've created a large political caste that likes identifying some great misjustice and passing various social programs to fix them. These cost money. For existing programs, lots of folks have intricate ideas about how to tweak things so that they work even better. These take simple systems and make them opaque. In short, we might be able to create enough wealth over the next few decades such that we could see an incredible change in the living styles of most people -- but dang if I can see the political system actually letting that come to pass. Oddly enough, it's not because of direct opposition. It's the "embrace and extend" folks that could cause far more damage than anybody else.

How about a city?

"The city of Utrecht announced that it would give no-strings-attached money to some of its residents, other Dutch cities are getting on board for social experiments with “basic income,” a regular and unconditional stipend to cover living costs."

http://qz.com/473779/several-dutch-cities-want-to-give-resid...

I worry that these trials being conducted in certain regions and cities that are part of a larger economic area will end up being used to argue against BI due to the strange incentives that are created. One way I could see this going is that a large chunk of people who are on welfare today will move to the city to get a better deal. At the end of the trial, the numbers will show that productivity for the city as a whole declined. But that may not be representative of what would have happened if the whole country/EU/whatever had done it.

(This is just one example of how this could be spun in the media. I'm sure there will be many perverse incentives created that will cause inefficiency that can be pointed to as a case that BI "does not work").

  One of the big selling points is that basic income is
  funded largely by replacing different welfare state
  institutions

People in wheelchairs who can no longer afford the specially adapted vehicle they need to get to the shops. Hard-working parents losing their homes (in the city where all homes are expensive) because they can't afford the rent, even though they've only been out of work for a few weeks.

Setting the basic income high enough to cover specially adapted vehicles and family homes in expensive cities would of course be an expensive affair.

If you're income and asset poor, you'll get some minimal benefits, even housing. But these benefits are heavily means tested and much less generous than the regular system.

Scandinavian countries have some of the highest workforce participation rates in the world, so I think they've structured the incentives right. They need to, to make they generous systems possible. It would be interesting to see Finland take a different path.

My impression was that the savings were from reduced externalities and increased spending power by those on basic income.

Why not simply add it to the mix?

Politically, the way to make it happen would be to campaign for a small one to be introduced. This would get the infrastructure in place. Then ramp it up gradually over time.