Thoughts on economics and liberty

Rejecting the communist idea of ‘basic income’. Bludgers, parasites. Sorry to disappoint you, but no one owes you a living.

For my record, my initial comments against basic income:

My comments at Tim Harford:

Tim, you are incorrect to link this with Friedman’s negative income tax model. That model is a TOP UP of earned income to allow it to reach a social minimum. It is not a LUMP sum payable for NOT working.

This idea is purely communist. Let’s reject it outright.

If you wish to read more about NIT, please check my book, Breaking Free of Nehru, for details.

 

b) Catallaxy Files

This idea of ‘basic’ income is fundamentally problematic on many grounds:
a) No one owes anyone anything. Let people earn their own keep in life.
b) The idea ‘income’ implies it is an entitlement. That is a communist idea (to each according to his ‘need’). There is no entitlement to anyone else’s charity.

The idea of Milton Friedman (commonly mixed up in such discussions) is entirely different.

a) It is NOT an income. It is not an entitlement. It is part of the social minimum – a really frugal level just needed to survive, no more.

2) It is a top-up. Say, the social minimum (really frugal) is $5,000 per year per capita in Australia today. Let’s say that a person works very hard and earns $4,800. Then the system would top up with $200, as part of social insurance.

We should thoroughly and vigorously oppose this communist nonsense of “basic income”. Let people work as hard as they can, and if they fail to achieve a FRUGAL social minimum, let them be given a top up. Anything beyond that is the responsibility of charities.

My comments on FB on 28 April 2016: 

https://www.facebook.com/sabhlok/posts/10154118660533767  and here. Extract from the latter comment:

Human needs are infinite. As one gets sorted out, other needs come to the fore. There’s NEVER a shortage of things that people, whether skilled or unskilled, can do.

Technologists don’t have the slightest clue about economics and make a song and dance about this thing. Ignore them.

I’m not by any means implying that there will not be massive job loss from the current structure of the economy. I’m also not implying that everyone who loses their job will get a fancy new job.

I’m saying that there will never be a shortage of jobs to do.

The ONLY reason people won’t work is because the government stops them from working.

Today, for instance, Australia stops people from working because it offers them a pension at age 67. This means it doesn’t make sense to work and save money because the more you save the more you lose the pension.

Similarly, minimum wages stop people from working.

Basic income will create an astounding barrier to work incentives, and most people will stop working. That’s how unemployment will be generated, **not** through technological change.

My video of 28 October 2016:

SENSIBLE ECONOMISTS AND THINKERS – WHO OPPOSE BASIC INCOME

We need a Negative Income Tax, not a Living Wage

Taking the ‘G’ Out of BIG: A Comparative Political Economy Perspective on Basic Income – by Peter J. Boettke and Adam G. Martin

PB argues that BIG is a form of redistribution and that is fundamentally a problem.

“We remain unconvinced that BIG is sufficiently different from other redistributional policies to overcome a well-grounded general mistrust of the welfare state.”

Further:

Redistributive policies entail not an exercise in but an abdication of selfgovernance.
BIG policies are no different in this regard.

and:

BIG does not seem to pass either the coherence or the vulnerability tests

And now, Don Bourdeeaux clarifies that he, too, opposes this idea: I Oppose A Universal Basic Income

The Worst Thing about a Basic Income: You’ll Never Get Rid of It

Universal income would cost the earth Simon Cowan 30 OCTOBER 2015

A Philosophical Economist’s Case against a Government-Guaranteed Basic Income by DAVID R. HENDERSON

Three ways to do a UBI: None are feasible – Scott Sumner

Universal Basic Income is a disastrous solution to a nonproblem – Jack Adeney

David H. FreedmanBasic Income: A Sellout of the American Dream

And now Bryan Caplan comes out against Basic Income: http://econlog.econlib.org/archives/2017/01/caplan-wilkinso.html

Even Fair Observer: Is a Universal Basic Income a Good Idea?

Basic Income: A Sellout of the American Dream – David H. Freedman

Universal Basic Income Has Been Tried Before. It Didn’t Work. FEE  Vijay Menon

THE CONFUSED TYLER COWEN

Why I am increasing skeptical of a universal basic income – Tyler gets confused too often – he seems to not have his basics in place. The idea of a basic income violates the most basic economics. Not just 101, even the definition of economics.

OTHERS

National Basic Income: A Bad Idea on the Rise

The universal basic income is a bad idea whose time will never come

Why could the universal basic income be a bad Idea?

How Free Money Leaves Everyone Poorer: Bill Bonner

It is the problem with all frauds… all cockamamie, jackass redistribution programs… and all something-for-nothing schemes. And it is the same whether you are “stimulating” an economy with artificial, phony-baloney “money”… giving aid to foreign dictators… or handing out free lunches to voters at home. Free money is a blind menace: It ruins the rich and the poor alike. And the more money you apply to the task… the more people you can ruin. Taking money for nothing is an easy habit to get into… and a hard habit to break. [Bonner]

Why a Universal Basic Income Will Not Solve Poverty

I’M GLAD MISES INSTITUTE IS AGAINST THE COMMUNIST IDEA OF BASIC INCOME
“at the end of the day, someone will have to pay for it. … This whole discussion about UBI reminds us of the following quote by Thomas Jefferson: A government big enough to give you everything you want, is a government big enough to take away everything that you have. [Source]

Further, apposite to this case: “Government is the great fiction, through which everybody endeavors to live at the expense of everybody else.'” — Bastiat

Universal Basic Income has Failed in Theory and in Reality

DUNCES AND SOCIALISTS MASQUERADING AS LIBERALS

Some dunces have been distorting the words of Hayek and Friedman to “prove” their communist demands for basic income, e.g.

These are the words being distorted:
hayek-distortion-basic-income
and, of course, this kind of gibberish: Why Milton Friedman Supported a Guaranteed Income (5 Reasons) NIT has NOTHING to do with “basic income”.

A Government-Provided “Basic Income” Would Be a Recipe for Bigger Government and More Dependency by Dan Mitchell

Looks like Cato Institute has joined the bandwagon: The Pragmatic Libertarian Case for a Basic Income Guarantee. These are fake “liberals” who are in their heart nothing but socialists.

An experiment on basic income

https://blog.ycombinator.com/moving-forward-on-basic-income – my comment here. (“Most things in economics don’t need “research”. Deductions from invariant laws of human nature provide rock solid proof.”)

FURTHER BAD IDEAS IN “FAVOUR” OF BASIC INCOME

A Guaranteed Income for Every American [My comment: Charles is very wrong, Michael. This system attacks the roots of the production system. It is communism in disguise.]

ADDENDUM


keywords

Basic Income, Basic Income Guarantee, BIG, Universal Basic Income, UBI, Friedman, Hayek, falsehoods, wrong understandings, misrepresentations, Singularity network, very bad idea, socialism by stealth

ADDENDUM 2 OCTOBER 2017: Haven’t watched this but support the total and comprehensive demolition of the communist idea of basic income.

Sanjeev Sabhlok

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16 thoughts on “Rejecting the communist idea of ‘basic income’. Bludgers, parasites. Sorry to disappoint you, but no one owes you a living.
  1. Raoul

    So what about the decentralized, non communist version of basic income where there’s no commune deciding on how labor is to participate in the production of goods and services? Where means of production remain in the hands of whoever has em.
    I took out the defining points for communism, because I’ve never heard of those being associated with basic income, please elaborate how it’d work if there wasn’t a trace of communism involved.
    Practical example would be with an inflation based unconditional basic income, or taxation based unconditional basic income.

     
  2. Raoul

    Also, Milton Friedman’s NIT concept is NOT a top up sceme. He propposed the grant to get faded out at the tax rate for every dollar earned, leaving work income untaxed till the break even point. every dollar past break even point is subject to taxation.
    So in principle unconditional basic income and Friedman’s NIT are equal, at least looking at the income development of unemployed/low wage(/as well as high wage) earners.

     
  3. Sanjeev Sabhlok

    I think you’ve not paid attention to the key underpinning assumption of communism: that we are a SOCIETY in which we (or our talents) are somehow avaiable to others for their benefit.

    I insist that each individual is a separate entity with the ONLY legitimate way of getting my money being to provide me with services that I want, in the marketplace. In other words, you provide me with servicies that I am willing to pay for, THEN you get my money. Some public goods can be provided through taxes.

    Outside of the market system there are NO legitimate actions to transfer money to others.

    However, I have shown at length in the draft manuscript DOF (http://sanjeev.sabhlokcity.com/book2/discovery.pdf) that I may voluntarily agree to social insurance as a public good. Only to the extent of social insurance, therefore, can ANY transfers be made from MY MONEY (including the public exchequer) to others. That is in the form of a top up only. And VERY frugal. Not a lump sum fixed amount.

    In brief, there are NO non-socialist/communist arguments for basic income. All such arguments that invent an obligation for others are communist, be default.

     
  4. Sanjeev Sabhlok

    If you examine the principle of NIT, you’ll note it is effectively a top-up UP TO the point of minimum income.

    The HUGE difference (which I don’t understand why you can’t seem to see!) is that NIT is based on EARNED income. The operative phrase is “for every dollar EARNED”. You MUST work and MUST struggle to live. Only then – if  you fail to achieve a minimum income – will I agree to top up your income a FRUGAL level through NIT.

    I have no obligation to give you a minimum income for sitting at home and watching TV.

     
  5. Raoul

    The NIT is actually paid UP TO around twice poverty line level income. assuming a 50% tax rate, the break even point. And has no work requirement. (If that wasn’t clear feel free to look up milton friedman NIT on youtube or something, he’s a good talker.)

    Now it’s true that for every dollar EARNED, you can keep half of it, technically.

    Getting away from poverty line level income steadily the better you are/more you work. It’s just that technically that’s equivalent to giving every citizen a check for poverty line level income and flat taxing their further income.

    Basic income/NIT is just that, “The assurance of a certain minimum income for everyone, or a sort of floor below which nobody need fall even when he is unable to provide for himself” as hayek said it, a sort of FRUGAL level so to say, no questions asked. With an elegant way to reward individual initiative.

    If you want to propose a system where work is a requirement to get the benefit, and additional income is harshly clawed back, then say hi to germany where we have just that, fitting with the nice 86% effective tax rate when on benefits.
    Now between you and me but I think socialism and communism as they exist/existed will fall on forcing people into unproductive jobs instead of looking for something monetary attractive on their own.

     
  6. Sanjeev Sabhlok

    Raoul, regardless of what Friedman or Hayek may have said, I do not agree to ANY level of assured “basic income” for anyone. It amounts to communism fair and simple, and will distort all incentives to work, apart from creating an obligation on workers to support non-workers.

    I have take the concept of NIT and developed it in my book/s. The social minimum is the “minimum income”. This is FRUGAL (and I mean really frugal) level of income below which a person will literally starve to death. That is, by buying and cooking their own food. This doesn’t allow for any one to buy stuff from McDonald’s.

    This amount would be set as the tax-free threshold. Say it is $100. In this model, if someone earns $95, he gets back $5 from the tax system (top-up).

    In any event literally no one ever receives $100 – unless that person is totally disabled and incapable of earning anything.

    The idea is to eliminate extreme poverty. There is no intention in this model to allow anyone even a TOLERABLE level of income, leave alone a “basic” income which is pure nonsense. It must be an INTOLERABLE level of income. To barely survive.

    And the test for work will need to be quite extreme. If someone is able bodied and has not worked as a day labourer but puts out his/her hand, then that person will be denied this top up. The state will not supply work, but determine ability to work.

    The system I have in mind is extremely harsh and punitive. It has no scope for socialist dilly-dallying and “welfare”. It insists that taking anyone’s money forcibly to feed another person is a CRIME. There is no concept of “basic needs” here. It is a punitive, survival-based system. No mercy for shirkers.

     
  7. Atul

    Almost all of the evidences collected so far in studies related to NIT are pessimistic.
    I think Israel was the first country (and I think only country) to try this but I have not heard of any astonishing success they have achieved with this. There were some private studies done which showed at best mediocre/pessimistic results.
    Its impossible for us to determine if somebody is objectively working hard to meet his/her ends or merely just acting to avail any such benefits. In a population where 40% people are near threshold or well below, by giving NIT are we not creating the same problems NIT was supposed to solve. It will at best create a moral hazard for people near and below threshold, who will start taking some kind of vacations or other means to avoid work because anyway top-up is guaranteed to make it up for them. Looking at even more practically it will just turn into any other socialist welfare scheme. It does not solve the root of the problem but is merely a more sophisticated looking form of same welfare schemes unless I have missed something in this article and would be open to corrections.

     
  8. Sanjeev Sabhlok

    Atul, it is a mistake to write off something without even understanding what the person is saying. Should you wish to understand what I’m saying, read BFN and the paper I’ve written on this subject. Things will become crysal clear. I’ve anticipated all issues and addressed them systematically to eliminate moral hazard.

     
  9. Sanjeev Sabhlok

    I think your arguments are purely communist, being driven by an urge for “equality”, not freedom.

    You also make the weird claim that people must receive an “equal share” of oil royalties. That’s absurd. The royalties should be used to fund government, and reduce taxes.

    There are NO rights to get cash from anyone. People need to work and earn the max. they can. There may be scope, as part of social insurance, to top up the incomes of the poor AFTER they have worked hard enough.

     
  10. Prakash

    Coming to this page from your comment on Bryan Caplan’s website.

    In the indian context, your concept of the topup income which is determined by the government official determining your disability is an open invitation to corruption. Depending on how your conversation goes, you can leave the government office with 1000 in your bank account or nothing. The official certifying your “ability/disability/whether you worked hard enough” has power over you. This is comparable to the MNREGA corruption.

    One of the nicest bits of the UBI in the Indian context is the fact that it is simple and undisputable. The UBI for the week is announced and the next day morning, everyone can verify his/her bank account whether it has been credited or not. There is no scope for corruption.

    If the government goes for such a system, then anyway the amount that it can disburse to people is going to be a punishing low level number only. The indian government doesn’t have the capacity for much more than that. So, atleast currently, there is no need to worry about disincentive against work.

    Anyway, the georgist perspective on this is that such a minimum income should be disbursed from land rent and that land should be taxed, otherwise all gains will go back to the land owners. If you wanted to add a note to your glossary.

     
  11. Sanjeev Sabhlok

    You do need to read and understand what I’ve written about how the NIT type model will work in India (and it will cost FAR LESS than all anti-poverty schemes- combined; probably not more than 1 per cent of GDP in all. No, there will be absolutely no scope for corruption. Do read BFN.

    The key issue is with the theory and with incentives. On both fronts, BIG bombs.

     
  12. Prakash

    Quoting the relevant sections from BFN

    To your credit, you have already identified my potential objection.

    “Given India’s huge population, the most obvious ‘flaw’ in this
    approach appears to lie in steps 1 and 2.”

    To which your answer is that technology improves and it is possible to do it now which you illustrate using the following

    “As an illustration, during 1986–8 I organized intensive household
    income and asset surveys of all registered voters at the village level
    in selected villages of Dhubri district in Assam and created perhaps
    the first such computerized database in India. After that survey, the
    data were sorted automatically in the computer using pre-set criteria,
    and the sorted data was verified in a village meeting by at least two
    independent functionaries. This verified income data then generated
    the final list of the poorest of the poor in that village. This kind of
    survey was feasible even then. By using far better technology and
    analysis, it should be quite feasible to identify each of the poor
    individually and to clearly estimate the distance of their income from
    the poverty line within a narrow range of accuracy.”

    There are a few potential concerns here.

    1. Identification – Maybe in your case study, the village was united enough to identify the situation on the ground accurately, but it need not always be so. The villages could have great caste based conflicts and people would not want to put rival caste’s people’s names on the BPL list. Who are these independent functionaries? In India, there is really no such person. Everyone has some or the other unwritten loyalty.

    2. It does not deal with the problem of people falling into poverty after the survey was completed, say due to a failed monsoon.

    3. It is assuming a 100% income tax filing, which is far from reality. Things are getting better on this front with JAM.

    It is an empirical question on whether the costs of this administration will be higher or lower than giving everyone a basic income and not bothering further with how they fall or rise.

    If the JAM reach is indeed getting universal, then there is another way of doing it and that is via proportional matching transfers. If a person gets X amount transfered into his account, then the government transfers Y amount, until the UBI limit.

     
  13. Sanjeev Sabhlok

    YOUR COMMENT
    1. Identification – Maybe in your case study, the village was united enough to identify the situation on the ground accurately, but it need not always be so. The villages could have great caste based conflicts and people would not want to put rival caste’s people’s names on the BPL list. Who are these independent functionaries? In India, there is really no such person. Everyone has some or the other unwritten loyalty.

    ===RESPONSE ==I trust you’ve read the process of conduct of these surveys – by private contracted agencies, with further private agencies to check on the work of these agencies, and if ANY falsehood is found, then HUGE penalties to apply. Estimating income is not rocket science. With photographic evidence (and biometric identification) there is no likelihood of false identification.

    YOUR COMMENT
    2. It does not deal with the problem of people falling into poverty after the survey was completed, say due to a failed monsoon.

    ===RESPONSE===
    It is based on forecast income for the next year. Extreme variations could prompt immediate relief actions which are in addition to any NIT.

    YOUR COMMENT
    3. It is assuming a 100% income tax filing, which is far from reality. Things are getting better on this front with JAM.

    – Income tax filing is essential and a key part of the process. That’s the basis of all calculation. Income tax return will be filed through the surveyor. You need 100 per cent accountability, since the income top up is ONLY a top-up. No more.

     

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