Finland to test 'universal basic income' for the unemployed

WhiteMemento9 · 05-01-2017 01:42AM

Good conversation here on the topic.

http://freakonomics.com/podcast/mincome/

05-01-2017 09:50AM

Permabear wrote: »

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Because the number of "Jane's" will have (approximately) halved, is the theory.

Meaning inflation would have the dual effect of removing half of the potential market - (thus increasing costs, etc.) while simultaneously leaving half the population in a perpetually deprived position, which would be extremely difficult to rise above.

Want to educate yourself from home? Tough! You're not in the sector that can afford the course that would enable you to find employment, etc.

Whereas I'd love to see protection for people in the event of automation/A.I eliminating vast numbers of jobs, and I believe some system will become necessary - I'm not convinced that UBI will deliver that - and I'm not sure what will, either, short of Government investing heavily in firms, and distributing the profits, which also carries significant risk...

seamus · 05-01-2017 10:06AM

Permabear wrote: »

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No, Jane would continue to earn €700 a week, but the first €250 of that will be completely untaxed. It increases the spending power of those on the baseline income, without affecting those on higher incomes.

There is of course an in-between cohort where things get iffy. If someone is earning €300 for a 40-hour week, then they're not going to continue killing themselves for an extra €50 a week. So a level of rebalancing will have to take place where that person will now get, say €350/week for their 40-hour week. But by and large it won't be that big a deal.

Inflation is far more complicated than "people have more money, so let's charge them more". I don't disagree that UBI will likely lead to an increase in demand in some areas and possible price inflation in those areas, but it can equally lead to improved profits for companies, which stimulates supply and may even cause price deflation.

Applying traditional capitalist economic rules is fraught with problems when discussing UBI because it's anathema to those traditional rules.

Let's not forget we already effectively have a UBI in Ireland in the form of social welfare. So whatever flaws exist in UBI should be visible when it comes to social welfare. The only difference is that social welfare is a safety net amount, just enough to subsist on. UBI aims to provide a baseline income on which anyone should be able to lead a comfortable and independent life. Social welfare doesn't aim to do that.

AnGaelach · 05-01-2017 02:33PM

seamus wrote: »

No, Jane would continue to earn €700 a week, but the first €250 of that will be completely untaxed. It increases the spending power of those on the baseline income, without affecting those on higher incomes.

So, Jane saves €50 while Joe is given €250? That's not universal income then, it's just using tax credits is it not?

I thought the entire idea for UBI was that everyone is given a basic income, not that you're just paying a little less tax on the money you make to fund a more expensive welfare program for other people.

seamus · 05-01-2017 02:56PM

AnGaelach wrote: »

So, Jane saves €50 while Joe is given €250? That's not universal income then, it's just using tax credits is it not?

I thought the entire idea for UBI was that everyone is given a basic income, not that you're just paying a little less tax on the money you make to fund a more expensive welfare program for other people.

It makes no odds which way the money is moved around and what different ways you look at it. In all cases, people receive €250 that is theirs and not subject to income tax. That's the baseline. Your entire tax regime kicks in above that level. So Jane doesn't declare her income as €700 and get an exemption on the first €250, she effectively declares her income as €450.

And for the purposes of calculating hourly income and entitlements, €450 is the figure that's used, not the €700.

How that money gets to the citizen is also somewhat irrelevant. For efficiency purposes it probably makes more sense for employed people to receive the €250 directly through payroll rather than having to make two separate claims. The company can then apply back to the state for reliefs and exemptions based on the amount of UBI they've paid.

Permabear · 05-01-2017 03:02PM

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seamus · 05-01-2017 03:13PM

Permabear wrote: »

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No, just giving an illustrative example of why UBI isn't all that different from social welfare with the exception that it's universal. My previous post probably explains it better.

So when you say that Jane would get €700 before UBI and €700 after, that's wrong. She'd get €700 before and €950 after

Why? It doesn't have to work that way. And makes no sense to work that way.

As I mention above, you have companies provide the UBI to employees through payroll and then sort it out with the government after, rather than have the complications that come with direct provision and the leaps in income that come with it.

AnGaelach · 05-01-2017 03:18PM

seamus wrote: »

It makes no odds which way the money is moved around and what different ways you look at it. In all cases, people receive €250 that is theirs and not subject to income tax. That's the baseline. Your entire tax regime kicks in above that level. So Jane doesn't declare her income as €700 and get an exemption on the first €250, she effectively declares her income as €450.

If she is being paid €700 from her job then her income isn't declared as €450. She would still have €700 taxable (from her job) and the €250 from UBI, unless you think she is going to only going to get €700 in total - in which case it's not universal income, it's a tax credit. One which isn't anything like what Joe gets since he physically gets €250 as a basic income.

steddyeddy · 05-01-2017 03:19PM

What I hate about economics is it relies on predictions about human behaviours. A lot of economic arguements start with "people would" rather than people have. I'm out on the idea of universal income as I have no data on which to make a decision. This experiment should provide that data and therefore can only be a good thing.

cinnamony · 05-01-2017 03:23PM

steddyeddy wrote: »

What I hate about economics is relies on predictions about human behavious. A lot of economic arguements start with "people would" rather than people have. I'm out on the idea of universal income as I have no data on which to make a decision. This experiment should provide that data and therefore can only be a good thing.

Agree completely. We should wait until we have data on this until we can have a fair idea of the effect of a UBI. Regardless I do think it will be a necessity in the future as automation continues to replace even high paying jobs.

Permabear · 05-01-2017 03:25PM

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cart man · 05-01-2017 03:34PM

AnGaelach wrote: »

seamus wrote: »

It makes no odds which way the money is moved around and what different ways you look at it. In all cases, people receive €250 that is theirs and not subject to income tax. That's the baseline. Your entire tax regime kicks in above that level. So Jane doesn't declare her income as €700 and get an exemption on the first €250, she effectively declares her income as €450.

If she is being paid €700 from her job then her income isn't declared as €450. She would still have €700 taxable (from her job) and the €250 from UBI, unless you think she is going to only going to get €700 in total - in which case it's not universal income, it's a tax credit. One which isn't anything like what Joe gets since he physically gets €250 as a basic income.

Tax credits would vanish, she would pay income tax on every euro. So yes she would still be paid 700 each week but the net pay would be less; in addition though she would get 250 paid centrally (ubi). The idea is that centrally everyone is paid the same, there is no need to work out who is getting paid through employer or other. Also no need to work out credits as everything is taxed.

seamus · 05-01-2017 03:39PM

Permabear wrote: »

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The bureaucratic system would have to remain in place. UBI applies at the individual level, but would still need balancing for individuals with different needs - people with a disability will require additional supports for equipment, housing, medication, etc. People with dependents will require a fixed increase per dependent.

And so forth. Realistically UBI doesn't mean the complete disassembly of the benefits system. All it functionally does is remove the concept of an unemployment benefit (and the crazy multiple-claim system that entails) and instead replaces it with a continuous guaranteed lifetime payment for everyone.

Ultimately someone would still need to "claim" UBI by declaring that they exist and are resident in the country.

I think you're making this more complicated than it needs to be.

cart man · 05-01-2017 03:43PM

seamus wrote: »

The bureaucratic system would have to remain in place. UBI applies at the individual level, but would still need balancing for individuals with different needs - people with a disability will require additional supports for equipment, housing, medication, etc. People with dependents will require a fixed increase per dependent.

Don't disagree with most, but would dependent's not also get UBI (eg €125 u/ 18 and €250 above)?
Children allowances etc would all be replaced.

seamus · 05-01-2017 03:48PM

cart man wrote: »

Don't disagree with most, but would dependent's not also get UBI (eg €125 u/ 18 and €250 above)?
Children allowances etc would all be replaced.

Yeah, same system by a different name in reality.

Children's allowance is in fact a perfect analogue for UBI. Everyone with a child is entitled to children's allowance, but you still have to "claim" it.

Permabear · 05-01-2017 03:49PM

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inforfun · 05-01-2017 03:55PM

Similar thing is going on in Nijmegen, Netherlands as well afaik.

Sounds great in theory but you can wait for the moment all kinds of supplements will be reinstated.

Muhammed_1 · 05-01-2017 03:56PM

seamus wrote: »

...UBI aims to provide a baseline income on which anyone should be able to lead a comfortable and independent life. Social welfare doesn't aim to do that.

Who said that UBI intends to provide a comfortable life?

It is intended that UBI would provide a basic level of life, a subsistence level.

If you're going to argue against it can you at least argue against what's proposed instead of arguing against made up things.

UBI replaces social welfare. It's fairer and easier to administer.

CruelCoin · 05-01-2017 04:34PM

Matteo Fat Jug wrote: »

This will be the only option for governments worldwide due to automation/robotics/ai.

By 2030, 2bn jobs worldwide will be lost to progress. Approx 50% of all current positions.
Due to this efficiency and 'economies of scale' it's unlikely that many new roles will need to be created.

And yet, the weavers and candle makers managed to find work elsewhere.

seamus · 05-01-2017 04:40PM

Muhammed_1 wrote: »

Who said that UBI intends to provide a comfortable life?

That is of course it's intention ultimately. It's a recognition that the onward march of automation means that the need for people to work is going to start diminishing, and therefore the need to earn must diminish too.
Of course, "comfortable" is relative. The intention of UBI is that someone doesn't need to work in order to live. And they don't feel like they're on the verge of destitution or homelessness. That's being "comfortable", in my eyes. In someone else's eyes, "comfortable" is having 50 grand in the bank.

Unemployment benefit is intended to fill a gap between employments. It's not supposed to be enough money to live comfortably, long-term.

If you're going to argue against it

I'm not?

Permabear · 05-01-2017 04:56PM

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KyussBeeshop · 05-01-2017 05:06PM

I'm against the UBI as I've explained earlier in the thread, and I think I've provided plenty of good reasons for people to view it as a Trojan Horse policy - but the inflation argument against it is lacking numbers.

The ECB's desired inflation rate is 2%, and Ireland currently hovers around ~0% inflation - exactly how much are people claiming the UBI will raise our inflation rate by?

AnGaelach · 05-01-2017 05:17PM

seamus wrote: »

I think you're making this more complicated than it needs to be.

But the entire thing will be complicated... We can't even find out what the definition of the term is - that it's a lifetime guaranteed payment of, in this instance, €250 - but that it's deducted from someone's tax bracket instead of actually given to someone (Jane), while it actually is given to another person (Joe).

05-01-2017 05:18PM

AnGaelach wrote: »

But the entire thing will be complicated... We can't even find out what the definition of the term is - that it's a lifetime guaranteed payment of, in this instance, €250 - but that it's deducted from someone's tax bracket instead of actually given to someone (Jane), while it actually is given to another person (Joe).

Eh?

AnGaelach · 05-01-2017 05:19PM

Deleted User wrote: »

Eh?

Look at the discussion on the previous page. UBI was floated as a means of being a tax credit for workers, instead of an actual income.

Arcade_Tryer · 05-01-2017 05:22PM

Permabear wrote: »

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Sounds satirical.

Of course it's not fair if extremely wealthy individuals receive the same UBI as 'Joe Soap'. They should obviously not qualify for it. And yeah, the wealthy do have too much, in fact, it's reported on by eminent economists pretty much every other day. That wealth redistribution needs to be redesigned to benefit the whole economy is pretty much universally agreed upon by economists. UBI is not.

Permabear · 05-01-2017 05:23PM

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05-01-2017 05:23PM

AnGaelach wrote: »

Look at the discussion on the previous page. UBI was floated as a means of being a tax credit for workers, instead of an actual income.

Ah!

It seems everyone has a different idea of how UBI might work.

I wouldn't have compared it to a tax credit from my understanding (ie. That every person is actually given the allowance, in addition to their taxable income).

Permabear · 05-01-2017 05:25PM

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AnGaelach · 05-01-2017 05:27PM

Arcade_Tryer wrote: »

Sounds satirical.

Of course it's not fair if extremely wealthy individuals receive the same UBI as 'Joe Soap'. They should obviously not qualify for it. And yeah, the wealthy do have too much, in fact, it's reported on by eminent economists pretty much every other day. That wealth redistribution needs to be redesigned to benefit the whole economy is pretty much universally agreed upon by economists. UBI is not.

So the wealthy person who pays 45% tax* shouldn't get €250 because he's wealthy, but the poor who pays 6.5% tax should?

The wealthy person would be contributing a net of €67,250 while the poor would be contributing a net of €920.

Why should the wealthy person not be entitled to it, when he's the one funding it, exactly?

*https://www.kpmg.ie/budget2015/sbp-rewards-are-low-for-irelands-risk-takers.htm

Finland to test 'universal basic income' for the unemployed

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