Will the Swiss vote in a guaranteed annual income?

by on October 5, 2013 at 1:17 am in Current Affairs, Law, Political Science | Permalink

Switzerland will hold a vote on whether to introduce a basic income for all adults, in a further sign of growing public activism over pay inequality since the financial crisis.

A grassroots committee is calling for all adults in Switzerland to receive an unconditional income of 2,500 Swiss francs ($2,800) per month from the state, with the aim of providing a financial safety net for the population.

Organizers submitted more than the 100,000 signatures needed to call a referendum on Friday and tipped a truckload of 8 million five-rappen coins outside the parliament building in Berne, one for each person living in Switzerland.

With that, a married couple could piece together more than 67k and simply not work, so this sum appears infeasible.  There is more information here, hat tip goes to Evan Soltas.

Brett October 5, 2013 at 1:34 am

That definitely seems too high, even if they abolished every other form of welfare. I support a Basic Income, but it needs to set at the point where it provides enough to pay for basic housing, food, and clothing – if you want anything more, you have to work some hours at least.

guest October 5, 2013 at 1:36 am

maybe the cost of livings in Switzerland are that high because of all the money launderers.

systemized October 5, 2013 at 4:16 am

But what does basic housing and clothing mean? Diogenes lived in a barrel. Maybe today a person could live in a small container.

Yet I bet there would be huge anger if welfare came down to that.

Jeremy October 5, 2013 at 9:49 am

This.

I too support a universal basic income in America (combined with a replacement of all welfare and getting rid of 99% of the massive regulatory state.) But this? This would never work. $15k a year is probably the highest anyone could afford, and even that’s pricey.

Z October 5, 2013 at 10:58 am

This is like saying you support a guaranteed income if and only if it comes with leprechauns riding magic carpets. No ruling class would every voluntarily give up their ability to control the populace. That’s suicide for them. The last 150 years of western history has been about making social democracy work for the ruling elites. That and a guaranteed income would probably be a disaster. Wherever you set the line would result in those just above the line demanding it be raised and eventually it would rise. Eventually, the middle class would demand rules on who qualifies and we end up in the same place it always ends when you try to re-engineer the human condition.

Alexei Sadeski October 5, 2013 at 11:41 am

A guaranteed income _increases_ the ruling classes’ control over the population.

Z October 5, 2013 at 12:11 pm

I don’t see how. We are at “peak control” as it is. Just because it is less violent and more colorful than Orwell imagined or Stalin implemented does not make us “free” in any real sense. There’s not a single thing you do today that is not controlled directly or indirectly by government. Giving up all those regulations, taxes, fees, codes, transfers and approvals as Jeremy suggests gives them less control, even with the minimum income stuff.

Don’t get me wrong, I’d take the deal in a heartbeat. Rebuilding the edifice that is the modern state would take longer than my years. I can dodge the required taxes to fund this minimum income scheme. Getting around the labyrinth of rules laid out by the custodial state is impossible.

William Wright October 6, 2013 at 1:54 pm

You’re confused. There is no “line”. Everyone gets the monthly income. Thus, there is no incentive to choose not to work to prevent yourself from crossing the “line”.

Sean Fellows October 15, 2013 at 6:58 pm

I think the point is, if the monthly income is $X and I want 3% more than that, I can either get a job and work (haha) or I can petition for an increase in X.

BC October 5, 2013 at 10:06 am

Maybe the amount does need to be tweaked, but I would actually be in favor of something like this in the US if it did replace *all* welfare, including public provision of private goods that we don’t necessarily always think of as “welfare”. Suppose this money was intended to do all of the following: replace all college financial aid; pay for health insurance (no need for Obamacare); some portion by default saved in private accounts for retirement (replaces Social Security and Medicare); pay for primary and secondary education tuition (replaces public schools). If the amount were chosen based on what we currently spend on these entitlements, then that would make it feasible by construction.

What is the difference between a guaranteed income, a negative income tax, and the earned income tax credit? (Not a rhetorical question; I really would like to understand the differences, if any.)

jtf October 5, 2013 at 11:15 am

A basic income is not a policy per se but a goal. It can be achieved by a variety of methods, one of these being direct cash payments as I presume are being proposed by the Swiss and another of these being a negative income tax. The devil is in the details; for example, most negative income tax proposals tie their income transfer proposals to employment, and some improperly designed ones fail to provide continuous and smooth (in the mathematical sense) incentives for increasing earned income.

As I understand it, the EITC and negative income tax are broadly similar from a high level. The EITC is designed with some hard limits that cause discontinuities in people’s utility functions such that making $1 above a certain limit can cause a sharp drop in the incentive to work, but overall it’s considered to be successful in providing additional income for the working poor. I’m sure someone with a more detailed understanding can elaborate.

@YoungEcon October 9, 2013 at 12:41 am

It is not so much EITC by itself, but when you start to add cutoffs for Medicaid etc. The decisions about where the cutoffs would be were not made at the same time and without thought it seems to previous supports. More info here:

http://johnhcochrane.blogspot.com/2012/11/taxes-and-cliffs.html

Centralizing it under one roof in the Federal Government I would hope would help, but somehow I don’t think a Dept. of Income Redistribution is going to work out.

Tom T. October 5, 2013 at 10:31 am

If the point of the transfer is to reduce income inequality, then the amount has to be high. By definition, it has to be higher than what low-wage earners make in the working world now.

BC October 5, 2013 at 10:42 am

Only if you expect the low-wage earners to quit working (which would be an interesting definition of the “earn” in earners). The amount is in *addition* to what workers earn through working, so the amount does not need to exceed their present wages to make a dent in income inequality.

William Wright October 6, 2013 at 1:58 pm

Exactly. And it eliminates the incentive not to work (i.e., the penalty for working).

Abelard Lindsey October 5, 2013 at 4:51 pm

I think a basic income scheme is fine as long as those on it are not allowed to have kids (e.g. mandatory contraception in some form or another).

William Wright October 6, 2013 at 2:00 pm

You believe entire nations should stop having children?

Aaron October 7, 2013 at 8:59 am

As for Switzerland it’s actually quite low, the cost of living there is Extremely high, and this would only just cover a months living expenses including rent bills and food.

Doug October 5, 2013 at 1:35 am

I may be pessimistic, but if this actually gets to referendum I don’t see how it wouldn’t pass. In fact there doesn’t seem like a single Western nation where a plurality of the electorate wouldn’t vote this in. Voters are simply too innumerate and this is too viscerally appealing.

prior_approval October 5, 2013 at 3:38 am

Germany hasn’t – though the Piratenpartei (2.2%/second vote 2.2% – up .1%/.2% over 2009) explicitly, and Die Linke (8.2/8.6, down 2.9/3.3) implicitly, promise just that.

Not all electorates reduce themselves to American levels of political governance. For example, when was the last time the Swiss or the Germans shuttered their federal governments (though Switzerland just doesn’t have that much of a federal govermment) because of a debate over providing health care?

Da October 5, 2013 at 3:43 am

The Germans could not ‘shutter their government’ because of any debate even if they wanted to. Since the parliament elects the government there is basically no seperation of powers between legislature and executive.

A few weeks of government shutdown every few years seems like a small price to pay for proper checks and balances…

prior_approval October 5, 2013 at 9:11 am

So, a proper set of checks and balances includes breaking the system they are supposed to serve? There is something so touching about how seeming American observers look at things.

Michael October 5, 2013 at 9:27 am

“There is something so touching about how seeming American observers look at things.”

This is one of the best blogs on the internet. Please don’t sully it with low effort posts.

Turkey Vulture October 5, 2013 at 10:25 am

I’d like to see Germany go at least 100 years since last giving a violent lunatic absolute power before you reference Germany in putting down the American system of checks and balances.

Thomas Sewell October 5, 2013 at 12:36 pm

The “shutdown” actually means that they send home the 20% of the government employees declared “nonessential”. Hardly shuttering the government as a whole.

Speaking as someone who would like to see most of those nonessential folks go find a more essential job in the private sector and contribute to society in a meaningful way, it’s not something for most Americans to worry much about.

Max October 5, 2013 at 5:17 pm

“Non-Essential” here simply means that things won’t break in a week or two if they are not there. It does not mean that their jobs are useless. In some cases – research, say – you can argue that these are actually some of the most essential jobs in our society, in terms of our long term development.

Da October 5, 2013 at 3:39 am

In the Swiss the voters are actually asked quite often to vote on important matters – in the last few years they have proven again and again that can vote smartly and against the wishes of the typical western elitist.

Alexei Sadeski October 5, 2013 at 11:43 am

The Swiss electorate has approved some of the most braindead, nonthought policies you’ll find anywhere.

Someone from the other side October 5, 2013 at 11:54 am

All of which (thankfully) have very limited relevance in the real world.

Florian October 5, 2013 at 8:01 am

“I may be pessimistic, but if this actually gets to referendum I don’t see how it wouldn’t pass. ”

Switzerland is an interesting laboratory for direct democracy.

I dimly recall a very interesting study by (I believe) University of Zurich (maybe 20 years old).

They analyzed for each of the 26 Swiss cantons (=states):
(1) influence of direct democracy on canton politics
(which varies by canton. Some cantons don’t have all that much direct democracy. Others such as Appenzell-Innerrhoden don’t even have a parliament because EVERY single law is passed directly by the people).
(2) fiscal situation of the state.

The highly fascinating result was this:

the stronger the people can directly influence public spending and taxes, the healthier the canton’s budgets (!!).
The people tended NOT to spend more than they had.
Rather, the professional politicians (or the canton’s that gave elected officials greater power) tended to be more fiscally irresponsible.

That said:
I would strongly bet on the “no” vote.
Swiss people can be trusted not just to see their income rise but to see the other side of the picture.

Adrian Ratnapala October 5, 2013 at 9:33 am

That result is fascinating, but to me it is not surprising that politicians are less responsible than voters.

What I want to know is what the hell is wrong with California? Are there institutional differences between CH and CA? Or is it down to culture? How do each compare to other American polities with varying measures direct democracy? Or is California’s bad reputation just the US media being over-obsessed with its own back yard?

tt October 5, 2013 at 4:57 pm

why bring up california ?

Careless October 5, 2013 at 10:39 pm

They do more direct democracy than the other big US states. A number of famous ballot propositions. 8, 13, 187

Turkey Vulture October 5, 2013 at 10:32 am

That is a very interesting result I had never heard of before. It makes sense on many levels, although it also challenges my priors about the Pauls always voting to rob the Peters. I guess it’s more likely that the elected intermediaries will be fast and loose with other people’s money in the interest of continuing in office. Hopefully I can find the study.

I’d be interested to see the result with another variable – relatively homogeneity or heterogeneity of the population/culture – thrown in.

Claude Emer October 5, 2013 at 10:49 am

I’d like to see the study but I suspect all it means is other Western voters are better educated and more responsible voters. This maybe because of a longer history, having learned from the past or some other, less obvious cultural differences.

My other guess is every democracy is headed towards the U.S. way because it’s the least demanding of citizens.

Someone from the other side October 5, 2013 at 8:37 am

It’s very unlikely to pass. For all the silliness in Swiss politics right now, we voted down quite strongly an union driven proposal to extend minimum vacation days from 20 to 30 p.a…

Adrian Ratnapala October 5, 2013 at 9:43 am

And yet later in this thread you say you (sort of?) like the idea. I suppose I do to – as a replacement for other kinds of welfare. Though Presumably this is more expensive than all the others put together.

Then is the reason it is unlikely to pass (a) that it is too expensive, or (b) that the Swiss are too much in love with their other welfare payments.

Someone from the other side October 5, 2013 at 11:51 am

Sorry, that was a bit confusing – I was referring to the 1:12 stuff, not the guaranteed minimum income

William Wright October 6, 2013 at 2:02 pm

Innumerate? How is it innumerate to claim for yourself what welfare mothers are already getting?

Yancey Ward October 5, 2013 at 1:38 am

Never underestimate people’s stupidity is a good general rule, but I have to believe the Swiss are smart enough to see why this is a terrible and literally unworkable proposal.

Adrian Ratnapala October 5, 2013 at 1:43 am

Can anyone from Switzerland explain the system for proposing laws? I had it from untrustworthy sources (i.e. American journalists writing about California) that referendums were only on legislation proposed by the parliament. Also, is there any institutional mechanism to make sure the money that people vote themselves is actually raised from taxes? (Not that Switzerland is facing a debt crisis right now).

Someone from the other side October 5, 2013 at 8:51 am

You need 50K signatories to oppose parliamentary proposal (unless the parliament decides to have a vote anyway or is constitutionally required to do so) or you can get your own proposal (technically these can only be changes to the constitution but that does not matter much in practice) to be voted on if you can gather 100K. Overall, with the exception of some less than smart decision in the past decade, it works quite well. Though I do wish they would increase the limits as they were set when Switzerland’s population was much smaller…

DM October 5, 2013 at 2:14 am

Adrian, referenda may be on legislation proposed by parliament or on issues proposed by a sufficient number of voters.

I’d make two points as a Swiss resident:

2,800.- in, say, Geneva doesn’t go very far to feed and house a family of 4. Although I am sure there are places where it would be more than adequate.

Comments about people exploiting it so not take into account the Swiss work ethic. Anyone doing so would be at best looked down on, possibly actively shunned.

Adrian Ratnapala October 5, 2013 at 2:41 am

Excellent! I was right not to trust US journalists: they so often portray California’s problems as a result of their kind of democracy, without bothering to look outside their borders. But to clarify, my comments on tax: wasn’t criticising the law itself, I was asking if the rules meant that laws like this had to be self-funding.

But now that you bring it up, I will criticise the law. Or at least your defense. First, a family of four will receive SRF 5000, if it has two adults. Second, over time cultural norms coevolve with law, so if you value the Swiss work-ethic you might not like this law. Finally, if this is an unconditional, then even hard working people will receive this benefit and potentially bankrupt the state.

Or perhaps everyone on this thread is misunderstanding the world “unconditional”.

Chris H October 5, 2013 at 3:21 am

In response to your two points I have a few questions/points.

If cost of living differences are so significant within areas of Switzerland (which doesn’t surprise me in the least), then why have a one size fits all basic income? Switzerland has a strong federalist tradition and doesn’t it make more sense to tailor the income based on each individual canton? That seems like it would come a lot closer to hitting that sweet spot between being too generous and too stingy.

Also the Reuturs article said that this would be available to all adults in Switzerland. That family for four would only receive 2,800 francs if it was one adult and three kids. But if it was two adults wouldn’t that mean they were receiving 5,600 francs a month? And given that the Swiss have an average child per woman rate even less than the EU (at 1.42 children per women) how common is a 4 person household with only one adult? http://www.swissworld.org/en/people/families/family_life/

Beyond that, couldn’t it be that the Swiss work ethic is not fully independent from the incentives given to Swiss workers? Scandinavian work ethic didn’t stop Sweden from stagnating during the height of it’s welfare state nor for the economy to pick up after putting in place reforms to the welfare state.

The shaming approach may work to an extent, but would that approach be a permanent feature? And if it did fade overtime, wouldn’t that make it more difficult to reform the program as living off the dole is viewed as less problematic?

I’m really skeptical of the value of this proposal (unless it’s a replacement for a welfare system as generous or more so), and one of the likely consequences seems to be greater unemployment and a greater movement of people from high cost of living cities to low cost of living rural areas (which has the potential harms of increasing infrastructure and education costs in more rural cantons due to a greater population, and making it more difficult for companies in the relatively high productivity/high cost of living areas to find workers due to the increased incentive to live in cheap cantons where without this program the pay cut might be greater). Even if poverty is a significant problem in Switzerland (given Switzerland’s high per capita GDP and low Gini rating that really seems unlikely https://www.cia.gov/library/publications/the-world-factbook/rankorder/2172rank.html?countryname=Switzerland&countrycode=sz&regionCode=eur&rank=117#sz), this doesn’t seem like a well designed way to tackle it. Most fundamentally, why abandon a canton-by-canton basis for the basic income in favor for a flat rate? That seems crazy in a country with a long federalist tradition.

anne October 5, 2013 at 8:36 am

+1 Excellent analysis!

Jan October 5, 2013 at 10:29 am

These are all very good points and relevant where I live as well. Why does the U.S. have a national minimum wage–why is the poverty level calculated at the same threshold for rural Alabama and NYC?

mike October 5, 2013 at 4:53 pm

It seems like you are ignorant of the fact that the federally imposed minimum wage is a floor, and that places like NYC are free to impose a higher one locally.

Jan October 5, 2013 at 7:51 pm

Nah, I know that. Most places don’t do it though, even if they are higher earning. Usually it is at the state level, which still doesn’t make sense, considering large metro areas have much higher costs of living than more rural locales.

Turkey Vulture October 5, 2013 at 10:38 am

It seems like a single nation-wide income (and minimum wage) can have some benefits. Namely, it encourages people to respond to the market signals: stuff is more expensive here because it is in greater demand (in particular, land), so if I want my money to go further I should move elsewhere.

To put it in fairness terms and a U.S. context, I see no reason why I should pay for a guy to keep living in Manhattan. He can get the same income as everyone else is guaranteed, and move to Buffalo.

Pshrnk October 7, 2013 at 1:36 pm

+1

Someone from the other side October 5, 2013 at 8:57 am

It does not even really go far to house, feed and clothe a one person household. You can do it, but it’s not very likely you would want to.

Jan October 5, 2013 at 10:26 am

A combo meal at McDonald’s is like $15 in Geneva.

Adrian Ratnapala October 5, 2013 at 12:07 pm

How much do you get? Here in Germany, it’s only around 6-7 Euro. But I always feel unsatisfied. Not enough burger. And don’t get me started on the breakfast …

Jan October 5, 2013 at 12:25 pm

This was a couple years ago, but the drink and french fries were noticeably smaller than what you’d get in the U.S. Burger seemed comparable.

Adrian Ratnapala October 5, 2013 at 12:51 pm

Maybe the burgers are the same everywhere, but I only find them inadequate in context. I always get OJ anyway, so I don’t care about the drink.

Tom October 5, 2013 at 2:16 am

Citizen’s dividends—the replacement of all government transfer programs with a simple cash dividend paid equally to all citizens—is the single-plank political platform that can, in the present climate, be used by a minor party to capture control of virtually any parliamentary government in the West.

The rationale is simple: Immigrants are not citizens and they would be deprived of public benefits. This would be immensely popular. Moreover, it would “empower” the populace to fight for their “entitlement” to their own country in a manner far more effective than any “get out the vote” campaign.

The response by the political parties now in power—traitors that they are—would, of course, be to fast-track “a path to citizenship” for immigrants, but they would be doing so in an economic environment far from conducive to popular apathy toward such shenanigans.

This can’t work in the United States without the take over of one of the 2 major parties because of the way the electoral system works in the US. But in parliamentary governments, minor parties can get a foot in the door. That’s all it takes because once this idea is aired in the halls of power, it will necessarily attract an enormous amount of attention from the usual suspects:

“Isn’t this racist? Isn’t this inhumane? Isn’t this xenophobic? What about refugees? Why should immigrants pay taxes if they aren’t going to get a citizen’s dividend?”

It would be wonderfully clarifying.

As for the economic effects, I’ll simply point out what should be fairly obvious by now: The current economic crisis is caused by centralization of wealth to the point that the populace isn’t simply impoverished, but is so deep in debt that the consumer base has collapsed. This was caused not by “easy money policies of the central banks” but by the subsidy of wealth built into any society that protects property rights by taxing economic activity. The would-be upwardly mobile pay the bills—not the recipients of the primary government service: protection of unnatural concentrations of wealth. Although it is true that this means the proper source of revenue for the citizen’s dividend would be a net asset tax on in place liquidation value—a tax that eliminates taxes on economic activity—it is not essential to political success that such a tax reform be another plank in the platform of the citizen’s dividend party. That change would come in due course as people were empowered to fight back against centralized wealth’s capture of government. However, once the tax reform is adopted, the populace would be very motivated to maximize the net in-place liquidation value of the nation’s assets. They will become keenly interested in the real externalities of immigration, graphically demonstrated in places like California. They might even start thinking other taboo thoughts about human ecology, sociology, economics and politics.

Hopaulius October 5, 2013 at 8:00 pm

“unnatural concentrations of wealth” How is a condition, concentrations of wealth, that has prevailed in every human society beyond the hunter-gatherer stage, “unnatural”?

Claude Emer October 6, 2013 at 8:18 am

Are you saying nature is capitalist? It’s pretty clear from the comment that it’s not about the concept of concentration of wealth but rather about how concentration of wealth was exacerbated in an unnatural way by the economic and political systems practiced [in Switzerland]. Context matters…

Tom October 5, 2013 at 2:25 am

Citizens’ dividends are a good idea. With the exception of basic functions of government and the pay down of debt, the government budget should be dispersed to citizens as cash, rather than being spent in government programs or even limited in the form of vouchers. This is “market democracy” in which the citizens and their markets, rather than central planning and politics, influence the selection of goods and services to be capitalized and provided.

Tom October 5, 2013 at 2:28 am

With that, a married couple could piece together more than 67k and simply not work, so this sum appears infeasible.

No. What’s really infeasible is a society based on rent-seeking in either the public or private sectors: Public sector rent seeking in the form of delivering social goods to people so they can afford to engage in politics to get a bigger slice of social goods. Private sector rent seeking in the form of refusing to tax the network effect value of assets.

“Democracy” can function just fine with nothing but retired people if it is market democracy based on a citizen’s dividend as the vehicle through which social goods are delivered and which enfranchise “voters” through their market choices.

Hopaulius October 5, 2013 at 8:03 pm

““Democracy” can function just fine with nothing but retired people if it is market democracy based on a citizen’s dividend as the vehicle through which social goods are delivered and which enfranchise “voters” through their market choices.”

I suppose this could work in a small country surrounded by others not so arranged. But as a general economic organization, if everyone were retired, everyone would also soon be dead.

David C October 5, 2013 at 2:46 am

The CHF2500 isn’t as high as it seems, given the cost of living and prevailing wages. A person dishing up food and clearing tables in a cafeteria makes more than that. And remember that the unemployment rate here is 3% .. more like 1.5% in the Canton where I reside, Lucerne. The employment situation is worse in the southern Cantons like Ticino, and wages/cost of living are lower as well.

In parallel with this proposal is one that is even more interesting. A referendum will be held on the proposal that no one in a firm can earn more than 12 times the earnings of the lowest paid employee. Earnings are broadly defined, including salary, benefits and other compensation like stock options. It is estimated that this would affect only about 5000 people, but these pay a whopping percentage of taxes.

Businesses are opposed, of course. The government is opposed, as well, fearing the impact on tax receipts. But polling shows that there is at least a chance it will pass. The general reaction in the public is “What do they need more money than that for?”

RF October 5, 2013 at 2:54 am

That’s the stupidest thing I’ve ever heard. That just means that anyone with real talent will not be working in Switzerland. Or I guess you could set up some convoluted system where high-talent firms outsource all their lower-value functions to other firms, but I think most would just move out.

Da October 5, 2013 at 3:47 am

Never worry. The low skilled low payed labor will just be outsourced. This will add overhead in costs but not change anything really.

Someone from the other side October 5, 2013 at 8:56 am

That’s already being done anyway (if done correctly, it actually reduces overhead). It will just increase in scale.

brian h. October 5, 2013 at 5:21 am

Limiting pay to 12 times the lowest earning employee doesn’t seem all THAT extreme. Remember that in the 1960s in the United States CEOs typically made 8x their average employee’s salaries. Since Switzerland has high wages for even low level workers, 12x would provide for a VERY good quality of living, and of course Switzerland is one of the most desirable countries in the world in which to live, which makes people less likely to leave just so they can make more cash.

I think of Switzerland as being “zeroeth world country.” It’s a country so awesome that it puts other first world countries to shame.

Someone from the other side October 5, 2013 at 8:42 am

As a Swiss with a decent but far from at risk to be cut income, I would still be *severely* tempted to move to Singapore if that vote ever passed. And I know that a lot of my peers feel the same.

BC October 5, 2013 at 10:37 am

Consider employees at firms where the CEO currently earns more then 12x those employees’ salaries. If the law passes, the CEO will face the following choice: either find a way to get rid of those employees or take a pay cut. It would not seem very wise (unless one has something against low-wage workers) to pass laws that impose penalties on CEOs for not firing low-wage workers or not outsourcing their jobs.

Dan Weber October 5, 2013 at 1:21 pm

I’m sure we can fix that problem by passing another law.

Jamie_NYC October 5, 2013 at 12:06 pm

Just a side question: did anyone ever provide any support for this measure, other than they don’t like high income disparity? Would it make sense to pass a law demanding that no fruit can be priced more than 12 times price per kg of any other fruit, for example? This is just the price of labor, right? Income from capital is not limited by this law, as I understand.

TallDave October 7, 2013 at 3:53 pm

Walmart’s CEO makes something like 300x the lowest-paid worker. However, there are over 2M such workers at WalMart.

mike October 5, 2013 at 2:54 am

If this could work anywhere, it would be Switzerland. The proposed amount does seem a bit high, though. It’s not clear if this is in addition to or in lieu of current programs. I find this bit more extreme:

“A separate proposal to limit monthly executive pay to no more than what the company’s lowest-paid staff earn in a year, the so-called 1:12 initiative, faces a popular vote on November 24.”

Yikes. I wonder if the people promoting this realize that they’re also effectively setting the minimum wage at 1/12 of what it takes to attract a minimally competent manager. Then again, a law like this would certainly deter manager types from lobbying for the importation of third world helot labor so maybe I’m being too hasty…

maros. October 5, 2013 at 5:05 am

“…*monthly* executive pay…no more than…lowest-paid staff earn in a *year*”.

That sounds more like 1/144 to me

mike October 5, 2013 at 7:09 am

Your calendar has 144 months in a year?

Zach October 5, 2013 at 9:00 am

No Mike.

What he means is that the proposal would limit monthly executive pay to no more than the total pay of one year’s earnings for the lowest level staff.

In effect, the executive would make over 12 months what it would take the low level earner 12 years, or 144 months to do.

That’s where his misleading 1/144 figure comes from (1 year/144 months)

Adrian Ratnapala October 5, 2013 at 9:39 am

Whot?

William Wright? October 6, 2013 at 2:12 pm

How is that misleading? It’s what the quoted language said.

mw October 5, 2013 at 3:01 am

Boy TC sounds agitated…And yet, this is what we in the business refer to as “chickens home to roost”: You don’t get to turn a cynical, fatalist, blind eye to decades of financial & corporate theft, “self-regulating” markets, and “meritocracy” and then cry “oh the horror” when the people getting shafted overreact. Perhaps this can be the first revision to the 2nd edition of Average is Over (Until Poor People Tire Of Getting Screwed).

mike October 5, 2013 at 7:38 am

I don’t know what “business” you’re in, but in my experience people who use that expression are idiots. And more generally, when people use inapt similes where plain English is perfectly capable of succinctly expressing the meaning I usually discover that their underlying reasoning is as muddled as their attempt to express their conclusions.

prior_approval October 5, 2013 at 9:17 am

Sounds liks someone’s discussion needs contracepting.

Jan October 5, 2013 at 7:56 pm

“I don’t know what “business” you’re in, but in my experience people who use that expression are idiots.” Classic Mike. Says nothing, directly insults someone. Larger point exists only in mike’s head.

Corey October 5, 2013 at 3:44 am

$2800 a month… jeez. I only make $860 a month and I work 40 hours a week.

Eric s October 5, 2013 at 7:51 am

I presume you aren’t American as that is less than minimum wage. What country do you live in?

John October 5, 2013 at 8:25 am

You should probably spend less time posting comments online and more time in school.

John Smith October 6, 2013 at 3:38 am

That is likely because you are a worth less person.

Steven Clarke October 5, 2013 at 4:31 am

I like the Basic Income idea and it’s great it might be tried out, but I suspect the monthly payment should be an order of magnitude lower, and they should be more explicit about what other forms of tax and benefits spending are being replaced.

JonFraz October 5, 2013 at 10:07 pm

An order of magnitude lower would be $280 a month, which is sub-poverty level. I agree that 2800/mo seems too high (without my knowing anything about the cost of living in Switzerland) but 280/mo is definitely too low.

Topper Harley October 6, 2013 at 12:44 am

Technically speaking, 999 is one order of magnitude less than 2800.

Steven Clarke October 6, 2013 at 7:13 am

It is only meant to be a safety net – I don’t think it should be set too high. Because it is unconditional, it isn’t withdrawn on the recipient finding work or earning more. Those high marginal tax rates that so blight targeted benefits are gone, work incentives are improved. People will find it easier to supplement their basic income with an earned income.

ChrisA October 5, 2013 at 4:44 am

The current Swiss federal budget is 62 billion francs is about 11% of GDP and which works out to be about US$8,000 per person. But about 20% of the population are immigrants, and probably another 20% or so are children, so without changing the current tax rates, you could probably give every adult citizen about $12,000 per year. Interestingly, the total US federal state and local taxes collected in 2013 add up to $5.9 trillion last year, which is about equal to $25,000 per US adult citizen per year. I guess you could make the sums work by still taxing any wages about $25k per year and still have a functional, though minimal government, consisting of law courts, police and some armed forces for defense. Prisons could be paid for by confiscation of a persons “”dividend” while they were in prison.

I am sure that many people would simply give up working in this kind of society, but I guess that would be better than all the pretend work that people engage in Government, which would be eliminated by this proposal.

Yancey Ward October 6, 2013 at 10:53 am

I am sure that many people would simply give up working in this kind of society

They would try to give up working- they wouldn’t succeed.

ChrisA October 6, 2013 at 10:17 pm

? – need to explain your point more I think.

guest October 5, 2013 at 5:40 am

Sounds good but how would the government finance this project. it is perfect for immigrant families where many live in the same apartment, they could get a few hundred thousand.

Hugh October 5, 2013 at 5:56 am

Charles Murray proposed something similar as a replacement for all government transfer payments in his 2006 book “In Our Hands : A Plan To Replace The Welfare State”.

It makes a big (huge) difference as to whether or not the Swiss payment is in place of or in addition to the existing welfare state programs.

Someone from the other side October 5, 2013 at 8:44 am

It will replace them

Horhe October 5, 2013 at 6:07 am

And so it begins… once the public realizes that they can vote themselves any largesse from the common accounts, boom tadada dum.

In all seriousness, it’s too much, they’re not Norway, but I could definitely support guaranteed shares of natural resource exploitation, it’s the closest thing we’ll get to Georgism

http://en.wikipedia.org/wiki/Georgism

I’m not too optimistic about the idea of a guaranteed basic income at this stage of our robot economy development, but I’m all for a bit of experimentation.

As the joke once said:
“Daddy, who invented communism? The scientists or the philosophers?
The philosophers, son.
Why is that?
The scientists would have conducted animal trials first”

MG October 5, 2013 at 8:14 am

Some of you say is idiotic to do what the Swiss are alegedly proposing, but what is even more idiotic is the following:

To offer programs which cost more than that to run, which actually transfer almost as much in cash/goods/services to recipients, and yet which do so conditionally (on income) and non-transparently as possible, so that those who receive these benefits are disincentivized to work and those who finance them believe poverty abounds and there is little of a safety net. Welcome to a good deal of the US of A.

Someone from the other side October 5, 2013 at 8:47 am

I am about as libertarian as people come in Switzerland (think Milton Friedman if you want a reference, not Ron Paul) and even I have a certain liking for the idea.I think the figures and terms need fine tuning (household income with two adults should be lower), but fundamentally, negative income taxes are not such a bad idea – especially if it gets rid of all the bureaucrats administering current transfer schemes…

jk October 5, 2013 at 9:10 am

Is anyone one aware of any “serious” research on bedingungsloses Grundeincommen (unconditipnal basic income). It’s a big topic in Germany and Switzerland but all writing is German-style, qualitative. Is there anything written about it that would make it into an a-journal?

Stan J October 5, 2013 at 9:52 am

It’s too bad that all the articles here and there focus on the 2,500 francs while the initiative set to be voted actually does not claim for a specific amount for the basic income. Rather it demands that the principle of basic income to be embedded in the Swiss federal constitution.

The means of financing and level of basic income remain to be discussed and democratically decided.

Steve Sailer October 5, 2013 at 10:09 am

“All adults in Switzerland” or “all citizens in Switzerland?”

Axa October 5, 2013 at 3:43 pm

Good clarification. To become a Swiss citizen you either marry a Swiss and wait 5 years or live at least 12 years over there to apply for naturalization.

I’m surprised no one has mentioned the fixed costs of living in Switzerland. 85% of the population pays rent for life. Also, the state does not provide health services at all. Every legal resident must pay their own health insurance. http://www.szgerzensee.ch/fileadmin/Dateien_Anwender/Dokumente/working_papers/wp-1109.pdf

If the Swiss Federation reduces public services even more in the name of a guarantied annual income, I’m not sure if low earners win or lose.

ThomasH October 5, 2013 at 10:46 am

I think the concern that people would not want to work if there were a minimum income — like the idea that food stamps, Medicaid, Medicare, Social Security — reduces the eagerness of people to work is greatly exaggerated.

Someone from the other side October 5, 2013 at 11:53 am

Probably true – 2500CHF/month is really not a lot. It gets more interesting with multi person households where I think it needs some calibration, still.

TallDave October 5, 2013 at 12:11 pm

That was the basic theory behind most Marxist states.

TallDave October 5, 2013 at 12:15 pm

With that, a married couple could piece together more than 67k and simply not work,

Probably less relevant than you think. People can not work on a lot less than that.

Still, incentives matter. Some people at the margins would stop working, though the institutional work ethic would remain strong, at least at first. I think the real impact would be long-term — young workers face bigger incentive problems (work is hard, pay is low, prestige is small) and the effects accumulate in their habits over time.

Someone from the other side October 5, 2013 at 12:38 pm

Even in the lowest end jobs, new entrants to the workforce still get substantially more than 2500 CHF/month. In many jobs easily twice (most contractors) to even almost three times that (banking).

Even today, welfare would probably not be all that much lower (bottom line, currently housing is paid out of a different pot).

TallDave October 7, 2013 at 11:28 am

I highly doubt the median Swiss income for people in their 20s is more than 35K.

TallDave October 7, 2013 at 11:35 am

Here’s an example from the U.S. which has similar PPP GDP per capita:

Median income for 20-somethings with a BA declined from $35,231 in 2000 to $30,547 in 2011.

Read more: http://nation.time.com/2013/05/09/income-inequality-its-not-just-for-older-people-anymore/#ixzz2h3Ca4ULG

Median income for 20-somethings with a BA declined from $35,231 in 2000 to $30,547 in 2011.

And that’s people with a college degree!

I don’t know what the heck you think a “lowest end” job is that pays $70K a year to new entrants. There are a LOT of jobs that don’t pay that.

Brian Donohue October 5, 2013 at 3:02 pm

Isn’t his a way to clean up the whole EITC marginal tax rate mess at the low end, and maybe much more.

1. Give every American $10K per year. That’s $3.1 trillion. 19% flat tax on all income pays for this.

2. $52,652 in income is “breakeven” (zero net taxes.)

3. Tack on a second bracket, say 35% above $250K, however much you need to pay for defense and miscellany.

4. Send armies of government workers home.

Tom October 5, 2013 at 3:26 pm

Take the Constitution seriously starting with the “general welfare” clause of the preamble which will be taken to imply that any benefits paid out to the citizenry must be paid out without any discrimination whatsoever—obviating what Charles Murray thought would necessitate a Constitutional Amendment in his plan, but also eliminating all spending that does not fall under the umbra of the Constitution’s enumerated powers. Henceforth, falling under the penumbra of the Constitution is not construed as falling under the powers of the Federal government:

The US Federal Budget is currently around $3e12/year.

Eliminating all unconstitutional activities and privatizing those Constitutionally authorized services, such as the postal service, that no longer need be public monopolies, the budget can be reduced to just 4 basic items, all of which can be funded for well under $1 trillion dollars:

1) Executive is reduced to national border defense and investigation of interstate criminal activity.
2) Legislative
3) Judiciary
4) Interest payments

That leaves $2e12 to divide up among less than 2e8 adult resident citizens.

$2e12/2e8 adult resident citizens = $1e4 or $10,000 dividend per citizen per year

All federal mandates on the States would be repealed as well, freeing them to each solve their problems in their own manner so there is a return to the laboratory of the states intended by the Founders. If one State wants a Drug Administration to test and approve all medical procedures, while another wants to eliminate all medical licensing and malpractice torts, the Federal government would be as powerless to interfere as would those States be to interfere with each other’s preferred policies.

Chris October 5, 2013 at 10:04 pm

How can the country sustain a payout like that. Where will the revenue come from to fund this insane plan? If you think it will be the rich, most of them will be leaving the country.

Richard Besserer October 5, 2013 at 10:09 pm

Okay, let’s see. Swiss GDP per capita was USD79033 in 2012, or USD6586 a month. The proposed “national dividend” of USD2800 a month (give or take) would be nearly 43 percent of that.

Even assuming children (perhaps 23 percent of the population) don’t get a dividend, we’re still talking about a third of the national income going towards these dividends. There’s simply no way for the Swiss government to carry out this proposal, and any attempt to do so would bankrupt the Swiss government, cause runaway inflation, or both.

Regardless of whether the referendum passes, Swiss voters could be waiting a long time for their guaranteed income. Where I live, Albertans are still waiting for the $25 a month the Social Credit Party promised them in 1935.

TallDave October 7, 2013 at 1:18 pm

Less than that, because it’s a minimum income i.e. means-tested (which also makes the the incentive problem worse).

Otto Maddox October 5, 2013 at 10:29 pm

Interesting to see everyone working so diligently on the perfect socialist state.

glory October 7, 2013 at 8:25 am

you mean by such august austrian and chicago school luminaries like hayek and friedman?
http://en.wikipedia.org/wiki/Friedrich_Hayek#Social_and_political_philosophy
http://www.indiapolicy.org/lists/india_policy/2000/Jun/msg00007.html

maybe if you pair with with progressive consumption taxation :P
http://www.nytimes.com/2011/09/18/business/darwin-the-market-whiz.html

cheers!

A.B Prosper October 7, 2013 at 12:42 am

I suspect that in the long run most societies will have either social democracy or social credit like this. It won’t be nearly as much though and it won’t be for some yarsuntil automation and technology render too many people without income for the State to survive for more importantly for thr business too.

Think of it this way, robots make stuff, robots load trucks, robots drive trucks., robots stock shelves, self checkout machine handle much of the rest. We cannot all be creative entrepreneurs and content provider or synergy experts and we need regular folks to buy things or the system implodes fromlack of demand.

Thus social creditata alevel to kep the rich rich.

Ady Andon October 7, 2013 at 8:34 am

Am I the only one that understood that they are actually trying to push a law that would guarantee a minimum wage of 2800$/month? This doesn’t mean that the state will pay every citizen 2800$ for staying at home. It means that a company like Mc Donald’s for example will be obliged to pay all it’s employees a minimum wage of 2800$/month.

http://rt.com/news/swiss-adult-minimum-wage-794/
http://en.wikipedia.org/wiki/Minimum_wage_law

Ady Andon October 7, 2013 at 8:38 am

” Anything less than the proposed amount would be deemed illegal, even for people working in the lowest paid jobs. A typical fast-food worker in the US earns roughly $1,500 per month. “

Floccina October 7, 2013 at 10:43 am

Wow I love the idea but IMHO the amount should be more like 150/week (=$645/month, = $7,740/year)!

cost of living switzerland October 31, 2013 at 6:32 am

This a is good idea of voting whether to introduce basic income or not.

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