Category Archives: policy

More on a Guaranteed Minimum Income

To follow-up on my previous post on the GMI, here are a few more links to other thought pieces about them.

Here’s a piece about an interesting thought experiment from Warren Buffet:

My political views were formed by this process.  Just imagine that it is 24 hours before you are born. A genie comes and says to you in the womb, “You look like an extraordinarily responsible, intelligent, potential human being. [You’re] going to emerge in 24 hours and it is an enormous responsibility I am going to assign to you — determination of the political, economic and social system into which you are going to emerge. You set the rules, any political system, democracy, parliamentary, anything you wish — you can set the economic structure, communistic, capitalistic, set anything in motion and I guarantee you that when you emerge this world will exist for you, your children and grandchildren.

What’s the catch? One catch — just before you emerge you have to go through a huge bucket with 7 billion slips, one for each human. Dip your hand in and that is what you get — you could be born intelligent or not intelligent, born healthy or disabled, born black or white, born in the US or in Bangladesh, etc. You have no idea which slip you will get. Not knowing which slip you are going to get, how would you design the world?

It really highlights the role of luck in people’s lives. There are simply many things that are out of your control, starting with who your parents are and where you’re born. Nobody gets to choose those.

That’s not to say that those obstacles are insurmountable, but that they play a part, sometimes a very large part, in our lives.

And the welfare state deals with specific instances of this. We have programs so children have health insurance (much of Medicaid), programs to reduce poverty among senior citizens (Social Security, Medicare), and programs to help low-income families (EITC, TANF).

These programs came up in a piecemeal fashion, in response to specific problems which were prominent at the time.

With rising income inequality, I’m not surprised that something like a GMI is now being discussed.

The second pair of articles discuss the guaranteed minimum income from a libertarian perspective.  The first attempts to find libertarian arguments in favor of a GMI.

1) A Basic Income Guarantee would be much better than the current welfare state.

 …

2) A Basic Income Guarantee might be required on libertarian grounds as reparation for past injustice.

 …

3. A Basic Income Guarantee might be required to meet the basic needs of the poor.

 It’s interesting reading, even though I’m not one of the intended audience, for its attempt to reconcile what, if implemented, could be one of the largest parts of the welfare state with a view that seeks to reduce the size of government.

The second is a response to that, and doesn’t agree that there can a be a case made on libertarian grounds for a GMI.

Concluding, so while I have a lot of sympathy for Matt’s suggestion for a Basic Income Guarantee I have major problems with his arguments for income redistribution. Hence, I continue to think a Basic Income Guarantee or a Negative Income Tax is a good idea as adenationalization strategy that could bring us (a little) closer to the ideal of a non-paternalitic classical liberal society.

The last article is the liberal case against the GMI (Universal Basic Income, or UBI in this article’s parlance).

Like good fiction, the way to read the UBI is not as a real proposal, but as a message about something else: our existing system. But the implicit critique of the existing system underlying UBI advocacy is not well-founded.

The alternative put forth in the article is to work with, and improve, the existing system.

I’m of the mind that the GMI is a proposal worth at least thinking about. As the author of the last piece says, GMI proposals are proposals, with none of the details worked out yet. But I can see the attraction in implementing one.

The Conservative Approach to Recessions

Related to my last post, but on the other side of the aisle, Republicans have no policies to help:

[C]onservatives favor the same set of economic policies when the economy is weak and when it is strong; when unemployment is high and when it is low; when few homeowners are facing foreclosure and when many are. The implication is that conservatives believe there is nothing in particular the government should do about economic cycles.

This is a big problem. Recessions are terrible. They create enormous misery by throwing people out of work and out of their homes. How can a political ideology have nothing to say about how to address recessions?

I’d actually go farther than this. The austerity policies that conservatives champion are not neutral toward unemployment and economic cycles. Europe’s experience with austerity is a large piece of evidence that austerity doesn’t help.

If there is a bright side for Greece, Spain and the like, it’s going to come with a huge amount of suffering attached. Let’s not copy the mistakes they’ve made.

Neat Yellen profile

A good profile on Janet Yellen, and how her journal could change Washington. The most important part, I think, lies here:

By a number of accounts, no one feels this more intensely than Yellen, who understands not just the human cost to individual lives and families but also the damage that a demoralized workforce can do to the economy as a whole. One of her most important papers, written with her husband, Nobel Prize winner George Akerlof, showed that workers who feel underpaid will be less productive. “She does see long-term unemployment, massive unemployment, as not only an economic problem or in terms of wasted resources but also as a human being,” says John Williams, president of the San Francisco Fed, who was Yellen’s research chief when she ran it. “It is very destructive to families.… This is passionate with her. Among economists, you don’t often see that human side. With her, it’s not just an abstraction, and if you try to treat it too much as an abstraction, she’ll react.”

There is a human cost to policy. What the Fed does affects the lives of millions of people, and the fact that five years after the financial crisis we’re still not near full employment is a huge loss of well-being.

I know there are downsides to pushing too hard, but I can’t believe that it outweighs the suffering that 5 years of a terrible labor market have created.

Elizabeth Warren Pushing the Overton Window

Good read on what most pundits are missing on Senator Warren.

But while Waldman is right, he’s answering the wrong question. It’s not his fault! Most pundits writing about “Warren versus Clinton” are answering the wrong question, because of the political media’s fixation on national elections and presidents. But the “economic populism” fight isn’t about Hillary Clinton and 2016. It’s about the entire Democratic Party and every policy fight and campaign it will be involved in in the foreseeable future.

(Emphasis mine)

It’s more about Warren pushing the Democratic Party toward adopting “economic populism”, rather than her getting elected because she holds her views. She has said that she wasn’t going to run for President, but I think that a single-issue (sort of) candidacy focusing on such an agenda would be a good way of pushing that agenda.

Single Payer in the States

With all the news about the healthcare reform implementation on the federal level, I wanted to check up on the couple of states that were going to/had passed single payer implementations.

California: I thought it got passed into law, but it turns out it was passed twice in the legislature and twice vetoed by then Gov. Schwarzenegger. And with Democratic supermajorities and a Democratic governor… nothing. From the article it seems like one of the main reasons is the California Nurses Association isn’t pushing for it now for tactical reasons (they believe it will go through ballots for repeal anyway, so they have to fight it there). So California is leading the states with Obamacare, but no longer with single payer.

That leaves Vermont. Single payer is law in the state, but won’t be implemented until ~2017. Looks like Vermont is focusing on its exchange, and it also needs a waiver from the Federal government and to raise funds.

So it won’t be for a while now, but there’s at least one state that will have single payer. It won’t be “true” single payer, as private insurers can still insure, but it’ll be as close as you can get with that caveat.

Minimum Income

I’m really interested in following what happens with Switzerland’s guaranteed minimum income  initiative. It seems like a really clean way to both shrink government bureaucracy and still keep the welfare state alive, and if set right, flourishing.

I do wonder if something like that will become mandatory in the future. With Labor losing its share of the pie to Capital (robots and computers and AI learning replacing much of the jobs humans have to do, among other things), are we going to hit a point where so many people aren’t getting paid enough that something like this will start to look like really attractive policy?