Advertisement
If you have a new account but are having problems posting or verifying your account, please email us on hello@boards.ie for help. Thanks :)
Hello all! Please ensure that you are posting a new thread or question in the appropriate forum. The Feedback forum is overwhelmed with questions that are having to be moved elsewhere. If you need help to verify your account contact hello@boards.ie
Hi all,
Vanilla are planning an update to the site on April 24th (next Wednesday). It is a major PHP8 update which is expected to boost performance across the site. The site will be down from 7pm and it is expected to take about an hour to complete. We appreciate your patience during the update.
Thanks all.

Basic income in ireland

  • 20-03-2014 5:48pm
    #1
    whats newxt
    Closed Accounts Posts: 431 ✭✭


    I'm all for the idea of a basic income to be introduced into Ireland but what are some of the downsides that a basic income would bring, what are it's main flaws?

    What are your opinions of a unconditional basic income and would you support the introduction of one?
    Tagged:


«1

Comments

  • #2
    Tiddlypeeps
    Closed Accounts Posts: 2,103 ✭✭✭Tiddlypeeps


    This is a really interesting concept that I haven't heard of before now. I just did a small amount of reading up on it and there doesn't seem to be any major red flags against it.

    The main arguments are cost and disincentive to work.

    With regards to cost one study (based on Canada, which has a generous welfare system similar to our own) has shown that the removal of the administrative costs of the current welfare systems would allow for a basic income of $7800 p/a without tax increases. I would really like to see a similar study done for Ireland.

    With regards to disincentive to work a few studies have been done and the results are fairly inconclusive. Most show a decrease in worked hours overall, but at the same time the demographics that reduced their working hours were mothers and young people who opted to spend more time on education. So this may not actually be a negative but it is still very much in question.

    One argument for it is an increased incentive to work due to the whole idea of a poverty trap, where people opt to stay on social welfare because the increased benefits from a full weeks work are sometimes minimal/negative. This has been shown time and time again to be a non issue tho.

    I can't say I'd be for the introduction of a basic income at the moment because I haven't done nearly enough research into it and as far as I can tell it hasn't been put into practice (correct me if I'm wrong, I couldn't find any large scale examples), but it definitely seems to be an option worth considering.

    My only major concern for Ireland would be that people have varying needs. We have a bunch of different initiatives that are available to people based on need such as rent allowance, medical card, family income supplement etc. Some people need more help than others and without a system to evaluate who needs what help it's possible some people might go without the help they need.

    One reason I can't see politicians touching this tho is the fact that it would temporarily increase unemployment. A large portion of the public service would be made redundant. While this is technically a good thing it might possibly be political suicide for any politicians involved in pushing it. This could be negated tho by the large number of people who find themselves with a bit of extra disposable income. Really hard to predict peoples reactions to this, especially when you try to predict the spin the media might put on it. No matter what way you look at it tho it's a huge risk career wise from the politicians point of view (one of the many large downsides to the type of democracy we use).


  • #3
    KyussBishop
    Closed Accounts Posts: 5,797 ✭✭✭KyussBishop


    I haven't read much on the basic income idea, but a similar scheme is that of a Job Guarantee, where instead of people getting a guaranteed basic income from government, they get a guaranteed job from government - with government as employer of last resort.
    There is, in my opinion, pretty much no downside to either scheme - however, neither can be practically implemented for a country with no control over its own currency, and right now we don't have control over our own currency, since we are in the Euro.

    There are solutions to that though, but they have limitations - it is no panacea, but it would give us a lot of breathing space, and allow room for such programs.


    The reason why control over our own currency is important: In times of economic depression, a basic income would likely be an expansionary fiscal policy (spending more than taxing), and a government without control over local currency, would probably have to run-up public debt and engage in austerity, in order to pay for it, whereas a government with control over the local currency, would have the ability to fund it without punitive public debt interest payments, and without austerity.
    This would solve the 'cost' problem, mentioned by Tiddlypeeps.

    I think that the Job Guarantee would solve the disincentive to work, but I don't think (even with the Basic Income) it would be a problem anyway: Both programs would just act as a floor on wages, and this means business would need to compete for workers, by offering higher wages - and those wages would have to offer a significantly increased lifestyle in order to entice people into the work.

    Lets remember also: We're already in a period of significant unemployment, which is proof that we can handle a significant number of people being out of work as well as under-employed, while still having a functional society.


    A very important note about both the Job Guarantee and Basic Income: They both act as 'automatic stabilizers' in times of economic depression.
    This means they keep consumer spending (and thus Aggregate Demand) up, which helps recover the economy faster from depression.


    This blog has done some good writing on both the Basic Income, and on the Job Guarantee - even on combining both of them into a Job and Income Guarantee:
    http://heteconomist.com/some-reasons-for-guaranteeing-both-an-income-and-job
    http://heteconomist.com/category/job-and-income-guarantee/

    I think I'd support something like the 'JIG' (Job and Income Guarantee), as it'd introduce the best of both worlds - so long as there aren't any unforeseen flaws with it.


    The first step to any of these programs though, would be regaining some control over our currency and the size of government spending - we can't do this directly, but we can do it indirectly, with alternatives like the solution I linked above.

    It's my opinion, that some set of policies like this, is required for recovering from the economic crisis - if we'd have engaged in policies like this 6-7 years ago, we would not still be in crisis today.


  • #4
    Tiddlypeeps
    Closed Accounts Posts: 2,103 ✭✭✭Tiddlypeeps


    KyussBishop wrote: »
    I haven't read much on the basic income idea, but a similar scheme is that of a Job Guarantee, where instead of people getting a guaranteed basic income from government, they get a guaranteed job from government - with government as employer of last resort.

    The two things are not the same thing. One provides everyone with a base level of income while the other guarantees a job which provides a base level of income.

    I'm not advocating one over the other, just pointing out that they are quite different and are likely to have very different effects on society and the economy.
    KyussBishop wrote: »
    There is, in my opinion, pretty much no downside to either scheme - however, neither can be practically implemented for a country with no control over its own currency, and right now we don't have control over our own currency, since we are in the Euro.

    I'm not sure about the job guarantee scheme but the basic income scheme does not require control over ones own currency. The money to fund it comes from the savings made from not needing a large administrative body to maintain the social welfare system, and any shortfall can be made up by increasing taxes effectively taking back some of the money handed out from higher earners. I don't think this holds true for the job guarantee scheme because it would likely need a larger administrative system.


  • #5
    KyussBishop
    Closed Accounts Posts: 5,797 ✭✭✭KyussBishop


    Tiddlypeeps wrote: »
    The two things are not the same thing. One provides everyone with a base level of income while the other guarantees a job which provides a base level of income.

    I'm not advocating one over the other, just pointing out that they are quite different and are likely to have very different effects on society and the economy.



    I'm not sure about the job guarantee scheme but the basic income scheme does not require control over ones own currency. The money to fund it comes from the savings made from not needing a large administrative body to maintain the social welfare system, and any shortfall can be made up by increasing taxes effectively taking back some of the money handed out from higher earners. I don't think this holds true for the job guarantee scheme because it would likely need a larger administrative system.
    Yes they're both very different alright - though they both serve a similar purpose, just implemented differently.

    I don't think you will get that far with a Basic Income, by using reduction in admin costs as a funding base, as that seems to only be a small part of the social welfare budget (about 3% - €0.5 billion a year, or about €111 per person per year), so you've got only limited choices for funding:
    1: Taxes/Public-Debt.
    2: Inflation-targeted money creation, using taxes to fight inflation (requires either EU agreement - impossible - or local control over currency); the inflation target means high taxes in good economic times, and low taxes in bad economic times.

    A Basic Income of €7000 (€134 per week - on the small side), for 4.5 million people, would cost €31.5 billion per year; that's quite a huge amount, and is an extra €11.5 billion added to the budget, above current welfare payments.

    That is the only real sticking point with this: Financing it is extremely controversial.

    By the way, I found this site while searching - looks interesting:
    www.basicincomeireland.com/


  • #6
    Iwasfrozen
    Registered Users Posts: 16,250 ✭✭✭✭Iwasfrozen


    I've waded into this thread and to be frank I find it fascinating, I think we as a society are too overly concerned with demanding people work. If a person doesn't want to work I say fair play to him, let him do whatever he wants. I get a sense of achievement out of my job but I realise it's not for everyone.

    Kyuss you mention having control over our own inflation levels would allow us to implement this plan without increasing taxes, why is that?


  • Advertisement
  • #7
    KyussBishop
    Closed Accounts Posts: 5,797 ✭✭✭KyussBishop


    Not control over inflation levels, but having control over our currency, and using that to target a specific level of inflation.

    It's as simple as this really: Pick a level of inflation you find acceptable - typically around 2-4% (I believe ECB targets 2%) - and then you can just spend using money creation, until you hit your target.


    That's pretty much what the ECB tries to do with the private banking system - adjusting the interest rate to encourage spending through borrowing/lending - but that is failing because there is too much private debt (and banks can only create more money, by creating more debt).

    The difference with what I advocate, is that I think government should do this instead, by directly financing government spending using money creation (this doesn't require the creation of any debt, and money is taken back out of circulation using taxes later, if inflation is getting too high) - and there's loads of room for doing this, because we are far below inflation targets (to the point that we are risking deflation rather than inflation).


    We can't do this while in the Euro, but there are alternative ways of doing something like it, while still staying in the Euro - and this can be used to fund a basic income, a job guarantee, or both.


  • #8
    Loire
    Registered Users Posts: 2,034 ✭✭✭Loire


    Iwasfrozen wrote: »
    I've waded into this thread and to be frank I find it fascinating, I think we as a society are too overly concerned with demanding people work. If a person doesn't want to work I say fair play to him, let him do whatever he wants. I get a sense of achievement out of my job but I realise it's not for everyone.

    Should I pay for this though? :confused:


  • #9
    Tiddlypeeps
    Closed Accounts Posts: 2,103 ✭✭✭Tiddlypeeps


    Iwasfrozen wrote: »
    I've waded into this thread and to be frank I find it fascinating, I think we as a society are too overly concerned with demanding people work. If a person doesn't want to work I say fair play to him, let him do whatever he wants. I get a sense of achievement out of my job but I realise it's not for everyone.

    Kyuss you mention having control over our own inflation levels would allow us to implement this plan without increasing taxes, why is that?

    I don't know about being ok with people not working, but it is a fact of life. These people do exist and it's next to impossible to make them work, any incentives to do so usually just push that demographic towards crime. They are however a very small minority so I don't think the system should be designed solely with them in mind, it should be designed to improve the quality of life of the majority.


  • #10
    KyussBishop
    Closed Accounts Posts: 5,797 ✭✭✭KyussBishop


    Loire wrote: »
    Should I pay for this though? :confused:
    In order to fund a basic income in a practical way (without either onerous public debt, or onerous taxes), you have to stop funding government using taxes, and give government the power to fund itself through inflation-targetted money creation (or alternatives that are similar) - with taxes being used to remove money from circulation, once inflation starts hitting its target.

    Once that is done, your taxes will no longer be funding government anymore, and you won't be paying for it - taxes will instead, be used to manage inflation, and can even be redistributed away from income (since taxes would no longer be necessary for funding government, only for managing inflation, then it would no longer make sense to tax income - i.e. to tax working).


  • #11
    Iwasfrozen
    Registered Users Posts: 16,250 ✭✭✭✭Iwasfrozen


    KyussBishop wrote: »
    In order to fund a basic income in a practical way (without either onerous public debt, or onerous taxes), you have to stop funding government using taxes, and give government the power to fund itself through inflation-targetted money creation (or alternatives that are similar) - with taxes being used to remove money from circulation, once inflation starts hitting its target.

    Once that is done, your taxes will no longer be funding government anymore, and you won't be paying for it - taxes will instead, be used to manage inflation, and can even be redistributed away from income (since taxes would no longer be necessary for funding government, only for managing inflation, then it would no longer make sense to tax income - i.e. to tax working).
    Surely taxing income is the most effective way to curb inflation? Taxing consumable products requires more regulation and in a small country like Ireland will encourage people to shop across the border.


  • Advertisement
  • #12
    KyussBishop
    Closed Accounts Posts: 5,797 ✭✭✭KyussBishop


    Iwasfrozen wrote: »
    Surely taxing income is the most effective way to curb inflation? Taxing consumable products requires more regulation and in a small country like Ireland will encourage people to shop across the border.
    You want to curb inflation where it actually occurs, not by picking a blunt/untargetted area like worker wages (and it's not a binary decision of targeting wages vs goods - there are innumerable ways of configuring taxation and dampening inflation); depressing entire swathes of the economy, through blunt measures, instead of targeting the areas that are actually inflating, is a lot less efficient.

    The reason peoples income is taxed, isn't anything to do with inflation anyway - otherwise there's not really a reason to be taxing that now, at a period where we are risking deflation; what can be done instead, is that (once government spending is uncoupled from taxation - though that isn't a requirement for doing this) economic 'rent-seeking' activity can be targeted for taxation instead:
    https://www.youtube.com/watch?v=Elg6i3NxvdE


    http://www.nakedcapitalism.com/2014/03/rent-global-warming.html


  • #13
    Iwasfrozen
    Registered Users Posts: 16,250 ✭✭✭✭Iwasfrozen


    KyussBishop wrote: »
    You want to curb inflation where it actually occurs, not by picking a blunt/untargetted area like worker wages (and it's not a binary decision of targeting wages vs goods - there are innumerable ways of configuring taxation and dampening inflation); depressing entire swathes of the economy, through blunt measures, instead of targeting the areas that are actually inflating, is a lot less efficient.

    The reason peoples income is taxed, isn't anything to do with inflation anyway - otherwise there's not really a reason to be taxing that now, at a period where we are risking deflation; what can be done instead, is that (once government spending is uncoupled from taxation - though that isn't a requirement for doing this) economic 'rent-seeking' activity can be targeted for taxation instead:
    https://www.youtube.com/watch?v=Elg6i3NxvdE


    http://www.nakedcapitalism.com/2014/03/rent-global-warming.html

    So how do you prevent capital flight in a country where income is not taxed but consumables are? Irish businesses, especially those near the border will suffer heavily.


  • #14
    KyussBishop
    Closed Accounts Posts: 5,797 ✭✭✭KyussBishop


    Iwasfrozen wrote: »
    So how do you prevent capital flight in a country where income is not taxed but consumables are? Irish businesses, especially those near the border will suffer heavily.
    You just ignored my whole post? Particularly "it's not a binary decision of targeting wages vs goods".

    I've described that the taxes would be better targeted towards 'economic rents' - in whatever forms they take.


  • #15
    Iwasfrozen
    Registered Users Posts: 16,250 ✭✭✭✭Iwasfrozen


    KyussBishop wrote: »
    You just ignored my whole post? Particularly "it's not a binary decision of targeting wages vs goods".

    I've described that the taxes would be better targeted towards 'economic rents' - in whatever forms they take.
    Ok well what kind of economic rents? Resource extractionfor example? The problem you're going to run up to again and again is that if you tax one industry in the economy disproportionately you're going to cause a disproportionate relative depression of growth in that industry. Not only that it's much harder to make taxes on economic rents progressive. Taxes on income fix both these problems. It's a much more efficient way of fairly taking money out of the economy in a progressive manner without favouring any industry.


  • #16
    KyussBishop
    Closed Accounts Posts: 5,797 ✭✭✭KyussBishop


    Iwasfrozen wrote: »
    Ok well what kind of economic rents? Resource extractionfor example? The problem you're going to run up to again and again is that if you tax one industry in the economy disproportionately you're going to cause a disproportionate relative depression of growth in that industry. Not only that it's much harder to make taxes on economic rents progressive. Taxes on income fix both these problems. It's a much more efficient way of fairly taking money out of the economy in a progressive manner without favouring any industry.
    That's the point. You tax the industry that's inflating, you don't tax everyone else as well - you want to disproportionately depress the growth of the industry that is inflating.

    Why should a worker have his labour taxed, if it's a completely different industry that's inflating? That's neither an efficient way of targeting inflation (you slow down areas of the economy that aren't inflating - completely inefficient), and it's certainly not fair on that worker either.

    Tax inflation where it happens, tax economics rents - all of them preferably - wherever they occur, and when there is inflation, tax the industry that is inflating.


  • #17
    Iwasfrozen
    Registered Users Posts: 16,250 ✭✭✭✭Iwasfrozen


    KyussBishop wrote: »
    That's the point. You tax the industry that's inflating, you don't tax everyone else as well - you want to disproportionately depress the growth of the industry that is inflating.

    Why should a worker have his labour taxed, if it's a completely different industry that's inflating? That's neither an efficient way of targeting inflation (you slow down areas of the economy that aren't inflating - completely inefficient), and it's certainly not fair on that worker either.

    Tax inflation where it happens, tax economics rents - all of them preferably - wherever they occur, and when there is inflation, tax the industry that is inflating.

    Inflation is measured by the economy overall. Trying to track inflation in every separate industry is an impossibly complex task. what even constitutes an industry in this context when you get down to it? Granted the efficiency of our methods of tracking inflation are nite perfect but a compromise has to be found between efficiency and feasibility.


  • #18
    KyussBishop
    Closed Accounts Posts: 5,797 ✭✭✭KyussBishop


    Iwasfrozen wrote: »
    Inflation is measured by the economy overall. Trying to track inflation in every separate industry is an impossibly complex task. what even constitutes an industry in this context when you get down to it? Granted the efficiency of our methods of tracking inflation are nite perfect but a compromise has to be found between efficiency and feasibility.
    Inflation is measured by the aggregate of prices from different sectors of the economy - there's no such thing as 'overall inflation', there's just a basket of goods inflation is judged by.

    It's not complex or unfeasible - it's what inflation is already measured with.


  • #19
    Iwasfrozen
    Registered Users Posts: 16,250 ✭✭✭✭Iwasfrozen


    KyussBishop wrote: »
    Inflation is measured by the aggregate of prices from different sectors of the economy - there's no such thing as 'overall inflation', there's just a basket of goods inflation is judged by.

    It's not complex or unfeasible - it's what inflation is already measured with.
    But they can only be acted upon on the economy overall, Inflation levels in individual industries are not the what statisticians would call independent random variables as your theory would necessitate. You are forgetting that many goods and services are complements or substitutes for other goods and services. If you depress one industry in an economy it will affect the other industries dependent on it. How much it will effect complements and substitutes, and what to do to cancel out unwanted shifts in other industries wthout affecting even more industries in the process is an impossible task as there are literally millions of facets to take into account. It's not possible to plan an economy to this degree.

    Also I intended to write this paragraph in my last post but my phone died. An income tax is a progressive tax if you remove it you remove one more avenue of wealth redistribution. Also if you artificially depress one industry in an economy you again disproportionately negatively affect lower income earners who have less substitutes available to them.


  • #20
    KyussBishop
    Closed Accounts Posts: 5,797 ✭✭✭KyussBishop


    Iwasfrozen wrote: »
    But they can only be acted upon on the economy overall, Inflation levels in individual industries are not the what statisticians would call independent random variables as your theory would necessitate.
    Quite simply, this is wrong - you can selectively tax any area of the economy that you like.
    Iwasfrozen wrote: »
    You are forgetting that many goods and services are complements or substitutes for other goods and services. If you depress one industry in an economy it will affect the other industries dependent on it. How much it will effect complements and substitutes, and what to do to cancel out unwanted shifts in other industries wthout affecting even more industries in the process is an impossible task as there are literally millions of facets to take into account. It's not possible to plan an economy to this degree.
    If there are other sectors that depend on the inflating industry, then you want to slow them down, because they're contributing to the inflation.

    You place taxes on the inflating areas of the economy and let 'the markets' do their magic, in distributing the cost burden - you don't start centrally planning it all, which is what you're talking about above - that's a straw man.
    Iwasfrozen wrote: »
    Also I intended to write this paragraph in my last post but my phone died. An income tax is a progressive tax if you remove it you remove one more avenue of wealth redistribution. Also if you artificially depress one industry in an economy you again disproportionately negatively affect lower income earners who have less substitutes available to them.
    If you're taxing economic rents, then you don't even need to redistribute wealth - you're tackling the problem at its source.

    If workers (lower income or not) are losing jobs because of the inflating industry being taxed: That's what you want, because there are too many people working in that overinflated industry - and that's why you have the Job Guarantee available to them, where they can go until they transition to another private sector job (likely in a different industry).

    That is what your policies would do anyway, except workers from all industries would lose jobs, because you wouldn't be targeting only the inflating industry, you'd be targeting all industries by reducing consumer demand, through increased income tax.


  • #21
    Idbatterim
    Registered Users Posts: 17,840 ✭✭✭✭Idbatterim


    A Basic Income of €7000 (€134 per week - on the small side), for 4.5 million people, would cost €31.5 billion per year; that's quite a huge amount, and is an extra €11.5 billion added to the budget, above current welfare payments.
    would basic income be paid to children though and if not, this would take 120,000 i.e.8.4 billion roughly off this figure, based on the below 2011 stats...

    http://www.cso.ie/Quicktables/GetQuickTables.aspx?FileName=CNA15.asp&TableName=Population+by+Age+2011&StatisticalProduct=DB_CN


  • Advertisement
  • #22
    Recondite49
    Closed Accounts Posts: 1,004 ✭✭✭Recondite49


    Idbatterim wrote: »
    would basic income be paid to children though and if not, this would take 120,000 i.e.8.4 billion roughly off this figure, based on the below 2011 stats...

    http://www.cso.ie/Quicktables/GetQuickTables.aspx?FileName=CNA15.asp&TableName=Population+by+Age+2011&StatisticalProduct=DB_CN

    Good point Idbatterim.

    I'd also be interested to know exactly how much the current welfare system is costing us per annum on average? Does anyone know where we can see this?


  • #23
    Geuze
    Registered Users Posts: 13,036 ✭✭✭✭Geuze


    I'd suggest reading the DSP annual report?

    www.welfare.ie

    What you want is the annual stats report:

    http://www.welfare.ie/en/Pages/Annual-Statistical-Information-Reports.aspx


    Here is the 2012 report:

    http://www.welfare.ie/en/Pages/Annual-SWS-Statistical-Information-Report---2012.aspx


  • #24
    Geuze
    Registered Users Posts: 13,036 ✭✭✭✭Geuze


    Rough answer = 20bn.


  • #25
    Iwasfrozen
    Registered Users Posts: 16,250 ✭✭✭✭Iwasfrozen


    Geuze wrote: »
    Rough answer = 20bn.
    it's been cut a lot since 2012.


  • #26
    Idbatterim
    Registered Users Posts: 17,840 ✭✭✭✭Idbatterim


    If oapsewre also put on basic income, rather than current rates, I'd say a universal income of 7k per head would be roughly at current welfare levels...


  • #27
    whats newxt
    Closed Accounts Posts: 431 ✭✭whats newxt


    Thats all well and good but it's not possible to live solely off 7K a year i was thinking of a basic income of 15K. How much does public healthcare cost yearly in Ireland? Was thinking you could privatize all healthcare since you are providing people a basic income so you know they can pay for private healthcare.


  • #28
    Recondite49
    Closed Accounts Posts: 1,004 ✭✭✭Recondite49


    whats newxt wrote: »
    Thats all well and good but it's not possible to live solely off 7K a year i was thinking of a basic income of 15K. How much does public healthcare cost yearly in Ireland? Was thinking you could privatize all healthcare since you are providing people a basic income so you know they can pay for private healthcare.

    Provided you did an Obamacare style kibosh on the private firms to prevent them from raising prices accordingly...!


  • #29
    whats newxt
    Closed Accounts Posts: 431 ✭✭whats newxt


    Privatising health care would allow for about another 13bn for a basic income. Ah it's pointless anyway to pay 15K per capita would cost 57bn per year.


  • #30
    Geuze
    Registered Users Posts: 13,036 ✭✭✭✭Geuze


    Iwasfrozen wrote: »
    it's been cut a lot since 2012.

    http://www.cso.ie/en/releasesandpublications/er/gfsa/governmentfinancestatisticsapril2014/#.U7HmN_ldWAU


    See table 4, see social benefits in cash

    2012 = 24,623m

    2013 = 24,043m

    Yes, spending on cash social benefits has fallen.

    By 2.3%.


  • Advertisement
  • #31
    Iwasfrozen
    Registered Users Posts: 16,250 ✭✭✭✭Iwasfrozen


    whats newxt wrote: »
    Thats all well and good but it's not possible to live solely off 7K a year i was thinking of a basic income of 15K. How much does public healthcare cost yearly in Ireland? Was thinking you could privatize all healthcare since you are providing people a basic income so you know they can pay for private healthcare.
    So automatically give everyone 15k a year even if they've never worked a day in their life? Yeah, I'm going to have to go with a no on this one.


Advertisement