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Thread: Swiss Socialism - Guaranteed Income?

  1. #1

    Default Swiss Socialism - Guaranteed Income?

    Quote Originally Posted by Dreadnaught View Post
    Two thousand Euros
    Each month, they demand welfare
    Here is the pride of Neukölln

    She wants two thousand
    Euros a month to make "art"
    And yet she is not joking
    Hilariously enough the NYT article mentions how this is popular in Berlin. But this idea really seems to be all the rage. The NYT tries to make this seem like there is much right-wing support for this kind of idea, but totally fails to address how this could cause rampant inflation. Is this thing really going to win or are there all sorts of weird proposals that end up on the ballot in Switzerland?

    November 12, 2013
    Switzerland’s Proposal to Pay People for Being Alive
    By ANNIE LOWREY

    This fall, a truck dumped eight million coins outside the Parliament building in Bern, one for every Swiss citizen. It was a publicity stunt for advocates of an audacious social policy that just might become reality in the tiny, rich country. Along with the coins, activists delivered 125,000 signatures — enough to trigger a Swiss public referendum, this time on providing a monthly income to every citizen, no strings attached. Every month, every Swiss person would receive a check from the government, no matter how rich or poor, how hardworking or lazy, how old or young. Poverty would disappear. Economists, needless to say, are sharply divided on what would reappear in its place — and whether such a basic-income scheme might have some appeal for other, less socialist countries too.

    The proposal is, in part, the brainchild of a German-born artist named Enno Schmidt, a leader in the basic-income movement. He knows it sounds a bit crazy. He thought the same when someone first described the policy to him, too. “I tell people not to think about it for others, but think about it for themselves,” Schmidt told me. “What would you do if you had that income? What if you were taking care of a child or an elderly person?” Schmidt said that the basic income would provide some dignity and security to the poor, especially Europe’s underemployed and unemployed. It would also, he said, help unleash creativity and entrepreneurialism: Switzerland’s workers would feel empowered to work the way they wanted to, rather than the way they had to just to get by. He even went so far as to compare it to a civil rights movement, like women’s suffrage or ending slavery.

    When we spoke, Schmidt repeatedly described the policy as “stimmig.” Like many German words, it has no English equivalent, but it means something like “coherent and harmonious,” with a dash of “beauty” thrown in. It is an idea whose time has come, he was saying. And basic-income schemes are having something of a moment, even if they are hardly new. (Thomas Paine was an advocate.) But their renewed popularity says something troubling about the state of rich-world economies.

    Go to a cocktail party in Berlin, and there is always someone spouting off about the benefits of a basic income, just as you might hear someone talking up Robin Hood taxes in New York or single-payer health care in Washington. And it’s not only in vogue in wealthy Switzerland. Beleaguered and debt-wracked Cyprus is weighing the implementation of basic incomes, too. They even are whispered about in the United States, where certain wonks on the libertarian right and liberal left have come to a strange convergence around the idea — some prefer an unconditional “basic” income that would go out to everyone, no strings attached; others a means-tested “minimum” income to supplement the earnings of the poor up to a given level.

    The case from the right is one of expediency and efficacy. Let’s say that Congress decided to provide a basic income through the tax code or by expanding the Social Security program. Such a system might work better and be fairer than the current patchwork of programs, including welfare, food stamps and housing vouchers. A single father with two jobs and two children would no longer have to worry about the hassle of visiting a bunch of offices to receive benefits. And giving him a single lump sum might help him use his federal dollars better. Housing vouchers have to be spent on housing, food stamps on food. Those dollars would be more valuable — both to the recipient and the economy at large — if they were fungible.

    Even better, conservatives think, such a program could significantly reduce the size of our federal bureaucracy. It could take the place of welfare, food stamps, housing vouchers and hundreds of other programs, all at once: Hello, basic income; goodbye, H.U.D. Charles Murray of the conservative American Enterprise Institute has proposed a minimum income for just that reason — feed the poor, and starve the beast. “Give the money to the people,” Murray wrote in his book “In Our Hands: A Plan to Replace the Welfare State.” He suggested guaranteeing $10,000 a year to anyone meeting the following conditions: be American, be over 21, stay out of jail and — as he once quipped — “have a pulse.”

    The left is more concerned with the power of a minimum or basic income as an anti-poverty and pro-mobility tool. There happens to be some hard evidence to bolster the policy’s case. In the mid-1970s, the tiny Canadian town of Dauphin ( the “garden capital of Manitoba” ) acted as guinea pig for a grand experiment in social policy called “Mincome.” For a short period of time, all the residents of the town received a guaranteed minimum income. About 1,000 poor families got monthly checks to supplement their earnings.

    Evelyn Forget, a health economist at the University of Manitoba, has done some of the best research on the results. Some of her findings were obvious: Poverty disappeared. But others were more surprising: High-school completion rates went up; hospitalization rates went down. “If you have a social program like this, community values themselves start to change,” Forget said.

    There are strong arguments against minimum or basic incomes, too. Cost is one. Creating a massive disincentive to work is another. But some experts said the effect might be smaller than you would think. A basic income might be enough to live on, but not enough to live very well on. Such a program would be designed to end poverty without creating a nation of layabouts. The Mincome experiment offers some backup for that argument, too.“For a lot of economists, the issue was that you would disincentivize work,” said Wayne Simpson, a Canadian economist who has studied Mincome. “The evidence showed that it was not nearly as bad as some of the literature had suggested.”

    There’s a deeper, scarier reason that arguments for guaranteed incomes have resurfaced of late. Wages are stagnant, unemployment is high and tens of millions of families are struggling in Europe and here at home. Despite record corporate earnings and skyrocketing fortunes for the college-educated and already well-off, the job market is simply not rewarding many fully employed workers with a decent way of life. Millions of households have had no real increase in earnings since the late 1980s. Consider the current debate over fast-food workers’ wages.

    The advocacy group Low Pay Is Not OK posted a phone call, recorded by a 10-year McDonald’s veteran, Nancy Salgado, when she contacted the company’s “McResource” help line. The operator told Salgado that she could qualify for food stamps and home heating assistance, while also suggesting some area food banks — impressively, she knew to recommend these services without even asking about Salgado’s wage ($8.25 an hour), though she was aware Salgado worked full time. The company earned $5.5 billion in net profits last year, and appears to take for granted that many of its employees will be on the dole.

    Absurd as a minimum income might seem to bootstrapping Americans, one already exists in a way — McDonald’s knows it. If our economy is no longer able to improve the lives of the working poor and low-income families, why not tweak our policies to do what we’re already doing, but better — more harmoniously? It’s hardly uplifting news, but minimum incomes just might be stimmig for the United States too.

    http://www.nytimes.com/2013/11/17/ma...ing-alive.html

  2. #2
    As long as this doesn't come from extra money being printed, it's not the worst idea. It really is no different to a regressive tax. The problems caused by such a scheme would be no different than those caused by excessive taxation. I guess how harmful it would be would depend on the amount each person would receive. If we're talking $10,000 per person, then it would destroy the economy. $1000 per person would be bad, but not disastrous.

    It wouldn't cause inflation as long as it's based through taxes. If it was, not an extra penny would be created.
    Hope is the denial of reality

  3. #3
    Horrible title, Dread. Even worse, you used an article from a source you hate (the NYT), while ignoring citations from right-wing "think tanks" like the American Enterprise Institute, and right-wing conservatives like Charles Murray.

    You're guilty of the same linguistic incontinence as Lewk (credit to Rand for that term ). Minimum wages for work, or a sustainable working wage, isn't some lay-about welfare program.

    a Swiss public referendum, this time on providing a monthly income to every citizen, no strings attached. Every month, every Swiss person would receive a check from the government, no matter how rich or poor, how hardworking or lazy, how old or young.
    Sounds just like Alaskan residents who get a monthly check from the Oil Industry, no strings attached. It's a fairly generous amount, too. Is that Guaranteed Income different from Swiss SSSocialism?

  4. #4
    It's actually under $1000, and you have to live in Alaska for something like 5 years to get it.
    Hope is the denial of reality

  5. #5
    Quote Originally Posted by Dreadnaught View Post
    Is this thing really going to win or are there all sorts of weird proposals that end up on the ballot in Switzerland?
    You need 100'000 signatures to make a proposal. You might guess that it's easy to find 100 thousand that will profit from such a system. To convince 50% of the population and a majority in at least the half of the cantons is quite a different thing though. From 420 proposals about 185 actually made it to the ballot box and 20 succeeded there.

    On 24th of November we will vote on the 1:12 initiative, which would restrict the ratio between the highest and lowest salary of a company to 1/12. As this is from a similar background I would expect a similar result.
    "Wer Visionen hat, sollte zum Arzt gehen." - Helmut Schmidt

  6. #6
    I actually support a similar concept to this which I heard at uni as called a Negative Income Tax and do not view it as overly socialist and it can in fact be very right-wing on certain conditions.

    1: Abolish ALL other forms of income-related welfare.
    2: Grant a minimum amount to everyone as a direct amount (or reduction on income tax) - whether impoverished or millionaires.
    3: A simple low and preferably flat income tax on any incomes then earned.

    Abolish complicated layer after layer of complicated bureaucracy, and make sure that work always pays. The current welfare system and means tested benefits disincetivises and penalises work.

    EG suppose you set the system up at a $15000 minimum and 0% tax rate

    Someone who is totally unemployed will receive $15000 pure and simple
    Someone working part time earning just $10,000 would receive net $12,500 and get a total of $22,500
    Someone earning $30k will get $7.5k so be on $37.5k
    Someone earning $60k will neither get any payments nor pay any taxes.
    Someone earning $100k will pay $10k in net tax so get $90k net
    Someone earning $1mn will still get that $15k amount but net on their tax would pay $235k and keep $765k

    Work always pays.
    Quote Originally Posted by Ominous Gamer View Post
    ℬeing upset is understandable, but be upset at yourself for poor planning, not at the world by acting like a spoiled bitch during an interview.

  7. #7
    Quote Originally Posted by earthJoker View Post
    You need 100'000 signatures to make a proposal. You might guess that it's easy to find 100 thousand that will profit from such a system. To convince 50% of the population and a majority in at least the half of the cantons is quite a different thing though. From 420 proposals about 185 actually made it to the ballot box and 20 succeeded there.

    On 24th of November we will vote on the 1:12 initiative, which would restrict the ratio between the highest and lowest salary of a company to 1/12. As this is from a similar background I would expect a similar result.
    I find the 1:12 initiative interesting, but this "minimum income" a lot more provocative because "students" and "arists" in Berlin wouldn't stop talking about it last year and now it's actually up for a vote down south in a country next door. Will you be voting for any of them?

    Quote Originally Posted by RandBlade View Post
    I actually support a similar concept to this which I heard at uni as called a Negative Income Tax and do not view it as overly socialist and it can in fact be very right-wing on certain conditions.

    1: Abolish ALL other forms of income-related welfare.
    2: Grant a minimum amount to everyone as a direct amount (or reduction on income tax) - whether impoverished or millionaires.
    3: A simple low and preferably flat income tax on any incomes then earned.

    Abolish complicated layer after layer of complicated bureaucracy, and make sure that work always pays. The current welfare system and means tested benefits disincetivises and penalises work.

    EG suppose you set the system up at a $15000 minimum and 0% tax rate

    Someone who is totally unemployed will receive $15000 pure and simple
    Someone working part time earning just $10,000 would receive net $12,500 and get a total of $22,500
    Someone earning $30k will get $7.5k so be on $37.5k
    Someone earning $60k will neither get any payments nor pay any taxes.
    Someone earning $100k will pay $10k in net tax so get $90k net
    Someone earning $1mn will still get that $15k amount but net on their tax would pay $235k and keep $765k

    Work always pays.
    Quote Originally Posted by Loki View Post
    As long as this doesn't come from extra money being printed, it's not the worst idea. It really is no different to a regressive tax. The problems caused by such a scheme would be no different than those caused by excessive taxation. I guess how harmful it would be would depend on the amount each person would receive. If we're talking $10,000 per person, then it would destroy the economy. $1000 per person would be bad, but not disastrous.

    It wouldn't cause inflation as long as it's based through taxes. If it was, not an extra penny would be created.
    The Swiss proponents seem to suggest this would cost 30% of Swiss GDP. I extrapolated the numbers to the US economy and came up with about $10.7 Trillion/year, or about 66% of US GDP. We're talking about 2,500 Swiss Francs per MONTH.

    But does work always pay in a negative income tax? And, on the inflation part, won't providers of semi-essential services have a lot of pricing power knowing what share of wallet they are targeting for even the poorest people?

    EG, if I'm selling paint to a room of bored "artists" in Berlin who are too anticapitalist/lazy to find jobs. I can easily back-into a price because I know that everyone in the room is making at least $$$/month. And that room of bored "artists" will go along with it right up until they decide they want more paint, in which case they will likely just protest for price controls or protest for more welfare.

    My fear is this kind of idea looks like it provides an incentive for work, but really just inculcates learned dependance/learned helplessness.

  8. #8
    Why on earth would it remotely cost 66% of US GDP that's absurd. The point is to replace existing welfare with a single source rather than a plethora of them, simplify the system. Couple that with a single, flat, low income tax rate (my suggestion not necessarily these guys) and you get a very sensible right wing policy. Overly bureaucratic, nanny state knows best, complicated systems should be done away with.

    Would work always pay? Yes, if you just have a simple tax policy and do away with all your ridiculous complex means testing etc then the fear of "losing my benefits" that stops people from taking jobs go away. As a matter of principle you should never be better off not working than you are working and a byzantine mess makes that possible today. Do away with our welfare state and that goes away.

    As for inflation so long as this is not new money supply, no it won't cause inflation. Prices are set by supply and demand, if you charge too much for your paints then another supplier will undercut you. That is the most basic economics.
    Quote Originally Posted by Ominous Gamer View Post
    ℬeing upset is understandable, but be upset at yourself for poor planning, not at the world by acting like a spoiled bitch during an interview.

  9. #9
    Quote Originally Posted by Dreadnaught View Post
    I find the 1:12 initiative interesting, but this "minimum income" a lot more provocative because "students" and "arists" in Berlin wouldn't stop talking about it last year and now it's actually up for a vote down south in a country next door. Will you be voting for any of them?
    As I said, 1:12 is scheduled for this November. The guaranteed income is not yet scheduled at all. The initiative has been just entered, which means now the government and the parliament can decide whether they want to propose their own variant. The initiative committee can then withdraw their proposal if they like the proposal of the parliament better.

    The Swiss proponents seem to suggest this would cost 30% of Swiss GDP. I extrapolated the numbers to the US economy and came up with about $10.7 Trillion/year, or about 66% of US GDP. We're talking about 2,500 Swiss Francs per MONTH.
    One of my problems with this system is, that you actually can live thom 2500 Swiss Francs if you don't need a car and a fancy apartment. This means it's suddenly an option to not work at all, which then will have an impact of the GDP and taxes.
    "Wer Visionen hat, sollte zum Arzt gehen." - Helmut Schmidt

  10. #10
    Excellent, I see a bright future for xenophobic anti-immigration sentiments.
    "One day, we shall die. All the other days, we shall live."

  11. #11
    Quote Originally Posted by earthJoker View Post
    One of my problems with this system is, that you actually can live thom 2500 Swiss Francs if you don't need a car and a fancy apartment. This means it's suddenly an option to not work at all, which then will have an impact of the GDP and taxes.
    That ship sailed decades ago. The European welfare state model has long countenanced an option of not working at all. By doing it this way and not means testing it, it means that while you can live without working (as you already could) you will earn far more by working.
    Quote Originally Posted by Ominous Gamer View Post
    ℬeing upset is understandable, but be upset at yourself for poor planning, not at the world by acting like a spoiled bitch during an interview.

  12. #12
    Quote Originally Posted by RandBlade View Post
    That ship sailed decades ago. The European welfare state model has long countenanced an option of not working at all. By doing it this way and not means testing it, it means that while you can live without working (as you already could) you will earn far more by working.
    It was always an option, right. But it was not that lucrative. 2500 Swiss Francs are not that little if you live somewhere outside of the city.
    "Wer Visionen hat, sollte zum Arzt gehen." - Helmut Schmidt

  13. #13
    Not "that little"? That's one heck of an understatement. This is 2/3 of the median Swiss GDP per capita.
    Hope is the denial of reality

  14. #14
    Where's this 2500 figure come from?

    EDIT: Just seen that's the figure. Well that's idiotic. Completely unfundable. Its a good idea in principle but at a much lower level than that.
    Quote Originally Posted by Ominous Gamer View Post
    ℬeing upset is understandable, but be upset at yourself for poor planning, not at the world by acting like a spoiled bitch during an interview.

  15. #15
    Switzerland is a wealthy nation, though. What do other small, rich places (like Monaco) have as policy, so all its citizens can afford to live there?

  16. #16
    Not that wealthy.
    Quote Originally Posted by Ominous Gamer View Post
    ℬeing upset is understandable, but be upset at yourself for poor planning, not at the world by acting like a spoiled bitch during an interview.

  17. #17
    Quote Originally Posted by Loki View Post
    Not "that little"? That's one heck of an understatement. This is 2/3 of the median Swiss GDP per capita.
    Median GDP? I only know the median income (salary) and that's around 6000 Swiss Franks (brutto), so actually 2500 is probably the lower quartile. Which means that 1/4 could stop to work if they want to.
    "Wer Visionen hat, sollte zum Arzt gehen." - Helmut Schmidt

  18. #18
    Hm, it seems my source is crap. The median income is 6k CHF. Regardless, giving every person 2.5k CHF a month means taxing people an additional 40% of GDP, which means increasing existing tax rates by about 150%...
    Hope is the denial of reality

  19. #19
    I don't think this is so off the mark. It can be quite progressive if you just tweak the tax code to always have an incentive for working, but you can still claim it's 'universal' (though, net, the majority of people won't make anything extra). In that context, it makes sense to use some form of a cash transfer instead of the complex web of welfare products most countries (especially the US) have nowadays. No food stamps, tuition assitance, unemployment benefits, etc. - just a single income-sensitive payment. Hell, it even allows you to cap total welfare payments like they're bandying about in some countries (especially the UK - did that ever get into law?).

    The disincentive issue is obviously a big one, so the total amount can't be too high ($33k seems a bit high given how much your average menial laborer makes, at least in the US). Barring that issue, it's not a crazy idea at all. It's far more efficient than a patchwork system with all sorts of perverse incentives, far more fungible than things like food stamps, and doesn't introduce crazy distortions like a minimum wage or MedicAid and the like. There's always the risk that having no-strings attached money in the absence of other social safety nets might lead to people making exceedingly poor choices, though, and that's where we get into the sticky issues. Most people, left and right, agree that alleviating poverty is worthwhile, and many on the right even buy into the basic idea of things like the EITC or negative income taxes in general. But how do you do so in a manner that's both relatively efficient but also actually getting the desired outcome? The more strings you attach to assistance, the less efficient it is... but you might still get better outcomes.

    There's some interesting experiments going on in the 3rd world with development aid... a lot of countries (notably Mexico and Brazil, IIRC, though they're on the more developed end) have been using huge conditional cash transfer programs to provide incentive-based welfare (want money? make sure your kids go to school, etc.). But some development aid people have started trying to just give money to the poorest of the poor, no strings attached, and see if market mechanisms result in a better outcome than a conditional transfer. The jury's still out on whether it's better, but it's an intriguing question.

    I would submit that for the very poorest people in the world, unconditional cash has its merits - they aren't likely to waste it on something when their very survival/food security/etc. is questionable, and they also likely know how best to invest a jolt of cash to improve their lives. Yet when you get to the 'poor' in the developed world, the calculus changes - their basic needs are generally taken care of, so there's lots of scope for wasting resources on frivolities rather than things that would really enhance their lives and that of their children (better education/training, healthier living, etc.). So some strings should probably come attached. How to manage this efficiently is a challenging problem, though, and I'm not sure I have the right solution.

  20. #20
    Quote Originally Posted by wiggin View Post
    I don't think this is so off the mark. It can be quite progressive if you just tweak the tax code to always have an incentive for working, but you can still claim it's 'universal' (though, net, the majority of people won't make anything extra). In that context, it makes sense to use some form of a cash transfer instead of the complex web of welfare products most countries (especially the US) have nowadays. No food stamps, tuition assitance, unemployment benefits, etc. - just a single income-sensitive payment. Hell, it even allows you to cap total welfare payments like they're bandying about in some countries (especially the UK - did that ever get into law?).
    Unfortunately the text of the initiative doesn't say anything about replacing the current welfare system. It also doesn't include any changes to the tax system (which is mostly cantonal anyway).

    Chances are we would end up with this system additional to the current welfare system.
    "Wer Visionen hat, sollte zum Arzt gehen." - Helmut Schmidt

  21. #21
    Then it's dumb.

    Yes the UK now has a legal cap on benefits that can be received (excluding limited exceptions like disability assistance). It's set at IIRC at £27k per annum and a case challenging it as "against human rights" has just been defeated at the Supreme Court. There are multiple claims capped by this its typically a combination of ludicrous housing benefits and lots of children that causes people to reach the cap.
    Quote Originally Posted by Ominous Gamer View Post
    ℬeing upset is understandable, but be upset at yourself for poor planning, not at the world by acting like a spoiled bitch during an interview.

  22. #22
    Quote Originally Posted by earthJoker View Post
    Unfortunately the text of the initiative doesn't say anything about replacing the current welfare system. It also doesn't include any changes to the tax system (which is mostly cantonal anyway).

    Chances are we would end up with this system additional to the current welfare system.
    Well, I'm sure the proposal is crazy-dumb. But I'm also sure that there are nuggets of reasonable policies in there, if only they were implemented with care and thought. In my fantasy world, that is.

  23. #23
    Well the parliament and the council have both now the chance to make a better direct or indirect counter proposal. A direct proposal would also end up in the constitution an indirect counter proposal would just end up as a federal law. Counter proposals have proven to be a very effective instrument for both the parliament to make a good law as initiatives are often over the top.

    I have my doubt though that the parliament will make a counter proposal to this initiative.
    "Wer Visionen hat, sollte zum Arzt gehen." - Helmut Schmidt

  24. #24
    I cant believe I am hearing this everywhere this will never be voted for period, its just a nonsense populist vote, if mandatory 6 week vacation was voted down this surely will. There are much more important referendums like stopping FATCA , if anything id say these nonsense ones are there to diver attention.

  25. #25
    It is an interesting solution to the over population issue. Over population in the sense that most work that is left out there is basically non essential. The essential stuff is already fairly efficient so no new work there.

    Don't think it would change much if anything more people would not bother looking for work but they certainly would contribute back to the economy by spending and possibly upping general quality of life, seems like it would work on paper, no matter the value given. Would just mean the actual jobs would have to pay more to give people the incentive to actually work assuming they wanted more than they could get with the free handout.

    The primary problem capitalism has is the end game is basically one person/group ends up with everything and everyone else ends up with nothing, just takes a while for that number one group to appear. They don't need anything but they keep accumulating because the fundamental greed switch says keep going, no need to stop.

  26. #26
    This must be why median income in capitalist countries has been declining for the last century...
    Hope is the denial of reality

  27. #27
    I need a source for that. Don't believe that. Decade maybe, never last century.
    Quote Originally Posted by Ominous Gamer View Post
    ℬeing upset is understandable, but be upset at yourself for poor planning, not at the world by acting like a spoiled bitch during an interview.

  28. #28
    So here are the results of the 1:12 initiative. I expect a similar result for the guaranteed income. Actually it could be even more devastating as the guaranteed income would need to be financed somehow.

    "Wer Visionen hat, sollte zum Arzt gehen." - Helmut Schmidt

  29. #29
    Quote Originally Posted by RandBlade View Post
    I need a source for that. Don't believe that. Decade maybe, never last century.
    I was being sarcastic...



    Hope is the denial of reality

  30. #30
    Median income means nothing when the actual purchasing power of the $ has been slip sliding so much more. Even if you were on a $150-200K pay bracket per anum you are actually poor person in the US, not middle class and not well off not by a long shot. The federal definition of low income would be more analogous to basic threadbare life support, it would almost be better off at that point to be a homeless person at those income levels.

    Yes life would be comfortable with that kind of money relative to poverty line as defined by the tax code, but it really isn't significantly better. You will not be living the American Dream at that income level. You might if you were closer $400K to $500K but that is still low in my opinion, due to weak purchasing power effects, inflation and a few other things that are hard to define in one word.

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