Guaranteed income not the answer. It’s too expensive.
September 22nd, 2009 | Published in Economics idea | 15 Comments
The idea of a guaranteed minimum income would be to pay everyone a base yearly amount from the tax base. For the guaranteed income to be effective, it would have to keep people above the poverty rate. If it didn’t, it wouldn’t protect people from the misery poverty brings.
Unfortunately, if people could live comfortably without working, many people would probably choose not to work. Since even a poverty level existence requires significant resources, the burden of supporting those who choose not to work would quickly overwhelm the tax system.
Until the day that robots can do all the work that is needed to keep the economy running, people need to work. Only a small fraction of the population can be carried by those who work.
Instead of guaranteeing people an income without requiring them to work, I think the answer is to guarantee people jobs. If jobs can be provided to everyone who is able to work, the society would only be obligated to support those who are truly unable to work, the sick and infirm. The solution to poverty is to find a way to make jobs plentiful.
It’s hard to create jobs in a market economy, for sure. However, I think it is the only sustainable solution to the problem of poverty.
September 23rd, 2009 at 10:19 am (#)
Stephen,
Are you differentiating between “mincome” and welfare? It seems to me that welfare has the same issues.
Eric
September 23rd, 2009 at 7:04 pm (#)
Eric.
The difference between mincome and welfare is that you have to qualify for welfare. Mincome would be something that you automatically got if your income was below the mincome level.
While there are problems with people staying on welfare for long periods of time, it isn’t a pleasant existence. Welfare rates leave people far below the poverty line.
September 24th, 2009 at 7:33 pm (#)
Stephen,
Solve this problem and win the Nobel prize.
The US does not have a greater problem than having sufficient jobs for the available workforce.
September 24th, 2009 at 7:57 pm (#)
ClydeB
I didn’t say creating jobs would be easy
September 24th, 2009 at 10:44 pm (#)
Stephen,
True you did not say it would be easy, but you imply that it is possible.
Too late.
Too few remaining resources, too little energy, too many immigrants and too many countries willing to do anything and everything to keep theit masses employed making stuff to sell to the US.
More devastating than all this is the insanity of the “man made global warming” swindle and its attendant cap and trade legislation.
We’re doomed to having many, many folks on the dole.
September 27th, 2009 at 1:09 pm (#)
ClydeB
I want to believe that no matter how bad things get, there is always room to improve in terms of creating jobs.
It may not be possible. However, to find ways to make the situation better, I have to assume that there are things that can be done to make it better. It is better to be cautiously optimistic than to give up at the start.
Perhaps this is a naive approach. For me, though, it’s better than giving up at the outset.
September 27th, 2009 at 1:40 pm (#)
I’ve not given up, just being realistic.
We have an administration determined to redistribute the wealth of the job creators, thus making job creation a very unlikely prospect.
We are spending the future income of the next two or three generations bailing out financial institutions that should have been allowed to fail.
We are driving existing manufacturing companies offshore with our confiscatory tax policies.
We have eliminated any possibility of energy independence by refusing to allow development of even our dwindling remaining natural resources.
We have a high enough percentage of the voting population not contributing taxes that they can continue to vote themselves increasingly larger and larger shares of the treasury (which is broke, by the way) without restraint.
We have a growing immigrant population that has no respect for the history of heritage of the country and no interest in assimilation.
It is just about a bleak a picture as we’ve seen in the hsitory of our country.
The bright spot is that we are innovative, resourceful and still allow individual initiative to survive. As I see it, this is our only hope for any kind of comeback, even then it will be a “dog-eat-dog” environment.
September 27th, 2009 at 11:43 pm (#)
Stephen,
Could you clarify the differences between welfare and “mincome”? I thought they were fairly similar approaches to the same problem.
In mind, to get welfare you need to qualify (not sure the criteria) and not have a job. I thought mincome essentially took away the criteria – EVERYONE gets a minimum income. For those with jobs who wouldn’t have received welfare anyway, the mincome would be taxed back. Is this right?
Eric
September 28th, 2009 at 7:35 pm (#)
Eric
Your understanding of mincome and welfare matches my understanding.
ClydeB
I agree with your assessment of what is happening in the US (and Canada). Free market democracies aren’t working well. The problems are many and serious.
Where we differ is in where we are looking for solutions. You see the government as the source of the problem. If I understand your comments, you would like the government to get out of the way so that people can start fixing the problems.
My tendency leans the other way. I believe that more freedom isn’t the answer. Few rules leads to chaos. What we need is a new and better system for running the economy. I’m not afraid of having more rules. I think the trick is to find better rules.
September 28th, 2009 at 8:47 pm (#)
Stephen,
The original concept for the US was that we have a severly limited central government. The founding documents spelled it out in detail. The Federal government would have “enumerated” powers and the remaining authority would be reserved for the states. This was a very successful scheme until the “progressive” movement started at the end of the 19th century. It has been downhill since then with a few exceptions.
For the most part, we have allowed the federal gov’t. to expand unchecked as we shifted more and more to an entitlement society. We have become the worlds largest debtor nation to support the growing population of non-contributors.
Our failure to keep spending in check has allowed segment of the financial community to develop extremely risky financial instruments that no one understands in hopes of creating wealth out of ‘whole cloth’.
Our population has expanded exponentially while our natural resources have dwindled and become more costly to extract.
The bottom line is that we have such a bloated and over grown central government functioning as a giant money sponge that has the effect of starving the general population. In addition, it has become totally unresponsive to the electorate. We have made acquisition of a federal office so lucrative that politicians will make any promise, take any gamble, enter any alliance to gain and retain an office.
More rules and more bureaucracy are the absolute last thing this countgry needs.
September 29th, 2009 at 6:34 pm (#)
ClydeB
What do you think of places like the Scandinavian countries such as Sweden or Finland? They have a successful economies and big government. In these countries, high government spending doesn’t seem to be impoverishing the country.
September 29th, 2009 at 9:18 pm (#)
What I saw there (Norway, Sweden and Denmark) was an extremely high percentage of the population living at or just above the subsistence level. Extremely high taxation has stifled effort while the welfare state has fostered a dependent population. One anecdote I heard (second hand, but I trust the source) was that a successful author had received a substantial advance for a new book. By the time all the taxes had been calculated, she owed the government 105% of the total revenue from the book. Sufficient to say, she did not offer any more books for publishing in Sweden.
September 30th, 2009 at 7:22 pm (#)
ClydeB
I just looked up Sweden on Wikipedia. Their per capita GDP is $52,789, 9th in the world. Their Gini statistic was 23 which is low, meaning that there aren’t big disparities in wealth.
I can’t see how Sweden could have masses of people living just above subsistence level.
Your tax story about the author might be true. My guess is that there are other factors relevant to the story that haven’t been given. It is highly unlikely that any tax system would levy a tax greater than someone’s income.
September 30th, 2009 at 9:11 pm (#)
High GDP does not mean the people get anything out of it beyond their welfare system. The typical story was that most people who worked got the minimum wage, which was generous compared to ours, and they got a pension. Health care was cradle to grave along with housing allowances. There did not seem to be a great disparity in income and very few signs of afluence.
October 1st, 2009 at 7:23 pm (#)
ClydeB
I guess it all depends on how efficiently the government in Sweden uses the resources it has available. I’m going to have to do more reading about their economy.