Why Brink Lindsey opposes a guaranteed annual income

by on June 27, 2014 at 1:26 pm in Economics, Law, Medicine, Philosophy, Political Science, Uncategorized | Permalink

…my reading of the available evidence convinces me that a social policy that channels benefits through work and thereby encourages paid employment has important advantages over a UBI [universal basic income] in helping the disadvantaged to live full, happy, productive, and rewarding lives.

What evidence? Let’s start with the well-established finding that unemployment has major negative effects on well-being, including both mental and physical health. And the effects are remarkably persistent. A study using German panel data examined changes in reported life satisfaction after marriage, divorce, birth of a child, death of a spouse, layoff, and unemployment. All had predictable effects in the short term, but for five of the six the effect generally wore off with time: the joy of having a new baby subsided, while the pain of a loved one’s death gradually faded. The exception was unemployment: even after five years, the researchers found little evidence of adaptation.

Evidence even more directly on point comes from the experience of welfare reform – specifically, the imposition of work requirements on recipients of public assistance. Interestingly, studies of the economic consequences of reform showed little or no change in recipients’ material well-being. But a pair of studies found a positive impact on single mothers’ happiness as a result of moving off welfare and finding work.

There is more here.  And Ross Douthat offers related remarks on whether it really is possible to encourage work — how well have previous welfare reforms succeeded in this end?

Tom Noir June 27, 2014 at 1:31 pm

The idea that being unemployed with no income and being unemployed with a guaranteed annual income are the same strikes me as dubious.

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Phill June 27, 2014 at 1:56 pm

It seems especially absurd that an economist might make this prognostication without investigating _why unemployment is so deleterious_.

Unemployment is bad for you because having no income and thus security is incredibly stressful. Being on welfare is bad for you because there is a huge social stigma against being on welfare. There must be a dense, rich literature on the effects of stress.

Why on earth would you advance theories of utility that have no connection to how humans actually perceive quality of life?

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Brian Donohue June 27, 2014 at 2:10 pm

No. Unemployment plus welfare is bad for you. It’s soul crushing. Stigma, shmigma.

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Donald Pretari June 27, 2014 at 5:18 pm

How do you know this, Brian? Sat in a comfy share sipping tea and eating a biscuit, did you?

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Brian Donohue June 27, 2014 at 9:37 pm

Allow me to generalize, Donald, so perhaps you and your irrelevancies can understand: indolence is bad for you. More than one trust fund baby has squandered his life in a comfy chair sipping tea and eating a biscuit. Until recent times, what I’m talking about was a risk confined to the privileged, but now it’s for everyone. Hooray.

Daniel June 28, 2014 at 6:14 am

How ironic – a libertarian demanding people be put to work because “it’s good for them”.

If I didn’t know better, I’d say it betrays the mentality of a central planner, one who knows what’s good for others.

Brian Donohue June 30, 2014 at 8:44 am

@Daniel, I’m libertarian-ish, ok?

Where have I demanded anything? My message to everyone is that it is in your interest to occupy yourself in a way that is useful to other people. Be careful about things which interfere with this objective.

We produce enough surplus to carry some percentage of the population. That’s not the point.

So, no demands, except that, as someone called upon to help pay for those unable to be useful to others, I am free to express my views and concerns.

Jan June 27, 2014 at 8:38 pm

You’re forgetting the alternative. Tradeoffs.

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Dan Weber June 27, 2014 at 3:04 pm

It’s Germany, so presumably they had a safety net, but in my skimming I couldn’t see them correcting for that. It’s the obvious object so they ought to do more to talk about it.

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mathematical psychic June 27, 2014 at 10:29 pm

Makes sense, then, that Lindsey is not an economist. And calling Tyler one would be pushing it a bit, as well.

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derek June 28, 2014 at 12:37 am

In Germany?

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derek June 28, 2014 at 12:10 am

So what category would you put the German unemployed in?

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BC June 28, 2014 at 8:52 am

I believe that the claim, which some people seem to be missing, is that *even at a given level of material well being*, working people are happier than those that are on welfare. See the last quoted paragraph on welfare reform. So, there are negative effects of unemployment even if the unemployed are given a check that replaces the lost income.

The usual explanation for this is that employment provides one with a sense of purpose, identity, direction, etc. However, this explanation can’t be the complete story because it doesn’t explain why welfare recipients don’t simply fill those voids through volunteer work and hobbies. I can think of two explanations.

(1) Somehow, regulations prevent welfare recipients from working for free at for-profit firms and, for some reason, welfare recipients obtain more nonpecuniary fulfillment working at for-profit firms than at non-profits and charities. For example, do minimum wage laws prevent firms from taking on volunteers? (Aside: if so, how do non-profits get around these laws to “exploit” volunteer workers?)

(2) Nonpecuniary benefits of employment arise not from working per se but from the satisfaction of knowing that someone else values one’s work enough that they are willing to pay for it.

While some might find (2) much more plausible than (1) — including me at first blush — (2) is actually quite unsatisfying upon deeper reflection. Explanation (2) does not explain why welfare recipients don’t actively and continuously seek out employment — even if wages gained are completely offset by lost welfare benefits — to get the presumed nonpecuniary benefits of employment unless somehow welfare recipients are unaware of these nonpecuniary benefits. Although it may be plausible that never-employed welfare recipients are unaware of these benefits, it seems entirely implausible that people that have worked before receiving welfare have somehow “forgotten” about the nonpecuniary benefits of work. Perhaps, there is a difference in behavior between never-employed and at-least-once-employed welfare recipients?

Returning to (1), perhaps the nonpecuniary benefit of working at for-profits stems from a sense that one is gaining experience and skills that eventually can lead to higher wage employment. The existence of unpaid internships would support this explanation. Student interns are able to get around minimum wage laws and other employment restrictions if the internship plausibly has some educational benefit. Perhaps, workfare wage subsidies similarly allow welfare recipients to get around these employment restrictions. In that case, UBI need not deprive people of the nonpecuniary benefits of work if it were paired with the abolishment of the minimum wage, mandated benefits (e.g. healthcare), and other similar employment restrictions.

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HL June 28, 2014 at 12:55 pm

It seems that much of this is exacerbated by the atomized and nihilistic society we live in. For all the material goods we have, there’s still the question of why one should bother. I’ve always thought that what this country has been lacking is a purpose, or some sort of parental guidance. It is far easier to tune out than to deal with people who you don’t understand or care about. This is one of the advantages of having a homogeneous and high trust society. Your community’s problems are your problems as well. I don’t get that feeling anymore. :(

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Jake June 29, 2014 at 4:36 pm

Yeah, it’s a pretty dumb argument to say “Unemployment has huge negative effects on people, therefore let’s discourage it by opposing policies that would make it less bad.”

People are already trying hard not to be unemployed. There significantly more job openings than applicants right now, so no amount of additional effort looking for work is going to actually reduce the unemployment rate. If the basic income was implemented and someone decided to stop working for a while, that person wouldn’t have the usual financial pain of being unemployed, and given that they freely chose to be in that situation, they’d probably avoid the psychological pain as well.

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Brevity: my forte June 27, 2014 at 1:40 pm

Tyler,

What do you think of Morgan Warstler’s guaranteed income/choose your boss vision? Crazy awesome, or just crazy?

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Brian Donohue June 27, 2014 at 1:41 pm

oops. that was me. sock puppet, busted.

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T. Shaw June 27, 2014 at 2:06 pm

“Brevity is the soul of wit.”

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Daniel June 27, 2014 at 1:41 pm

I think Brink Lindsey would sing a very different tune if he ever had to work a demeaning sector service job.

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Jack June 27, 2014 at 3:01 pm

Truth!

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derek June 28, 2014 at 12:35 am

Funny you say that. I do service for those service sector locations you look down upon. Today I noticed one man who works there wasn’t dressed for work; I asked about it. He was there to purchase something, noticed something awry, and went about fixing it. He took pride in his job.

Have you been around some of these demeaning service sector jobs? I would agree that they aren’t the best, and the pay is terrible, but the people doing them seem to get something out of them. Many are people who otherwise would have no opportunities due to lack of education or even basic skills. They learn to work, accomplish things, have some order imposed upon their lives, some responsibility and expectations. There is turnover, either people finding they are worth more than they thought and moved on to better things, or others who can’t even function at that level and continue being social misfits, addicted or incarcerated.

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8 June 28, 2014 at 2:27 am

What is a demeaning service sector job? This term sounds very……European, at least unAmerican.

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Daniel June 28, 2014 at 6:12 am

A job that’s low-status, demands no virtuosity and requires you to be positive towards abusive bosses/customers.

If acknowledging the existence of such jobs in un-American … well, then, I take it American-ness isn’t about a realistic world-view.

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Casey June 30, 2014 at 12:58 am

Those jobs are only so awful because you’re stuck in them, though. With a guaranteed income, even if it was tied to employment, you’d have a lot more leverage in choosing when you could afford to quite to look for something better or even mostly the same but with a less abusive boss.

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twobeef June 27, 2014 at 1:43 pm

Wait, he’s saying that it’s incredibly terrible to be unemployed… so we should only provide benefits to the employed?

It sounds like he’s challenging the idea that some people will never find work, so we should give away a UBI so that some people never have to work. UBI proponents also point out that many unemployed people can’t qualify for benefits because of bureaucracy, and a UBI would deal with that lack of opportunity. They also point out that many benefits for the poor are incorrectly targeted, such as giving out food stamps when a poor person might really need the money to move to a location with less unemployment, and a UBI would be less restrictive. And then there’s the whole reduction-of-paperwork aspect, or being able to gain payment while retraining for a new job, and even that the actual implementation of a UBI may only be worth $7k a year and not enough to really live on with only those payments.

tl;dr, this seems to only address one small point of the UBI, then argues that a better program would be one that does nothing for the unemployed unless they can find a minimum wage job to supplement it.

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dead serious June 27, 2014 at 2:29 pm

I guess I should read the whole thing – but why not just raise the minimum wage to a livable standard?

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Dan Weber June 27, 2014 at 3:07 pm

The idea is to get people working. That is, “getting $15,000 in take-home pay from working 30 hours a week” is preferable “getting $15,000 a year in take-home pay from welfare.”

If someone’s labor is only worth $7 an hour, then subsidize their labor instead of kicking them out of the job market.

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NPW June 27, 2014 at 3:12 pm

Subsidize how? Buy paying people to be underemployed rather than unemployed? Who pays for this?

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Dan Weber June 27, 2014 at 3:36 pm

Presumably you already have a welfare state costing you money, so this is another way to run it. If you are letting people die on the streets, I don’t suppose any talk of EITC or GAI is of much interest to you.

dead serious June 27, 2014 at 3:12 pm

So basically you’re incentivizing companies to pay as little as possible with the understanding that taxpayers will pick up the rest.

Let me know the moment this passes so I can start a raft of services companies that pay $1/hr to employees.

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Dan Weber June 27, 2014 at 3:21 pm

I’m sure you can try paying $1/hour. But you will have to compete with all the other people offering $2/hour, who have to compete with the people offering $3/hour. Until we find the market-clearing wage for people who just need to find some job, somewhere.

You don’t have to get mad just because there is an employer involved. In one case the person is sitting at home being paid entirely by the government. In the other case, the person is getting paid partially by an employer, and partially by the government. The burden on government has been reduced. That’s a good thing.

When employers in certain European countries don’t pay for their employees’ health care because the state pays for it, do you call that corporate welfare?

dead serious June 27, 2014 at 3:30 pm

Admittedly I don’t see a plan or even hypothetical scenarios, but if the idea is that an employee’s wage is subsidized to the point that he/she hits some minimum federal salary, I think paying more won’t help the employee one iota.

If this is correct, the only thing that matters is whether you pay less than whatever that subsidized amount is (in which case you’re incentivized to pay as little as possible), or you pay more.

Dan Weber June 27, 2014 at 3:34 pm

Of course you don’t top off their wages to reach $N. That’s silly because it’s a 100% marginal tax rate.

Instead, you give them, say, $10 per hour negative tax, with marginal tax rates of about 40%.

carlospln June 27, 2014 at 4:07 pm

Walmart already has (@ US$5/hr)

NPW June 27, 2014 at 3:09 pm

Should every job lead to a livable standard? Wouldn’t that just mean acceleration of automation given that most minimum wage jobs would be

1. Replaced by a robot,

2. Eliminated due to unprofitability,

3. Bankruptcy of the company.

Oh, and what is a livable standard and how do we adjust for COL and inflation?

Without discussing the merits of raising the minimum wage to a livable standard how do you propose it is actually done? Federally?

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HL June 27, 2014 at 3:14 pm

Should we be encouraging population growth if there’s no more need for anybody else?

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dead serious June 27, 2014 at 3:15 pm

How would a guaranteed income work? How would this subsidized guaranteed income work? Federally?

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NPW June 27, 2014 at 4:53 pm

No idea how guaranteed income would work. Which is why I didn’t suggest it.

You suggested “raise the minimum wage to a livable standard”, and I was wondering how you thought it could be implemented.

dead serious June 27, 2014 at 5:28 pm

I think Seattle just passed a very high minimum wage so it could be statewide or citywide, aligned with some local minimum standard of living index.

For the record, I’m not necessarily in favor of this. But it at least makes more sense to me than what I think is being proposed, which is government subsidized pay. That, to me, is worse.

Cliff June 27, 2014 at 10:52 pm

Well, your idea would lead to much more unemployment and the whole point of this is that unemployment is bad.

dead serious June 28, 2014 at 1:33 am

No, it would have the exact opposite effect but thanks for trying.

dead serious June 28, 2014 at 1:58 am

I think you meant the minimum wage which, yes, would mean that some of those jobs and businesses might be shuttered.

In the other scenario I’m “creating jobs” sort of but really I’m paying a small % for normal labor costs and taxpayers are subsidizing the rest.

When all is said and done, which is worse:

1) paying unemployment for idle hands
2) encouraging businesses to hire at way below market wages with the expectation that taxpayers make up the rest? This would lead to a death spiral I think.
3) a higher minimum wage which short term might raise unemployment but long term would mean a reset in pricing for low end goods and services. That wouldn’t help poorer folks buy more fast food or Walmart baubles as those prices would have to rise, but the more expensive necessities – cars, homes, doctors visits – would be more within reach.

Andy June 27, 2014 at 1:45 pm

“How well have previous welfare reforms succeeded in this end?”

Somewhere between pretty well and extremely well. See Blank (2002) JEL’s article for an extensive coverage of the evidence. A quick summary would be: The AFDC->TANF change had a small/negligible impact, EITC reforms had a moderate impact, targeted mandatory work and financial incentives programs have an extremely large impact. To quote:

“Financial incentives programs (especially those with mandatory employment programs) provided strong work incentives at the same time they supplemented incomes. In these programs, both labor supply and income increased.”

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Hadur June 27, 2014 at 1:45 pm

The behavioral economist justification for a min income is that people starved of resources make short-term decisions and thus end up with bad life outcomes. Remove the immediate threat of poverty, and they can make smarter long-term choices and theoretically end up with better life outcomes.

Of course, at the same ivy league school where I encountered behavioral economists, I also encountered many classmates whose wealthy parents gave them a “minimum income” of sorts, and they did not strike me as particularly brilliant long-term thinkers…

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chuck martel June 27, 2014 at 1:45 pm

Very few people actually want a job. What they want is money, which is not the same thing. Some may have a feeling of inferiority for being on the dole but that’s just because of the prevalence of the protestant work ethic.

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Chip June 27, 2014 at 11:08 pm

It’s possible the stigma from not working simply predates widely available and free home entertainment on TV.

Before TV what did you do at home if not at work?

Then we go the Internet and smartphones. Not working has never been more interesting.

I argue this partly in jest but I think there’s a nugget of truth in the fact that low incomes have never been less dreary. Another ten years, with the Oculus Rift widely available along with virtual reality gaming and lives, and I don’t think a BI will seem that terrible.

I can see a huge swathe of society living on BI and in VR. Maybe we will call them Basics.

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jim@jimamberger.name June 28, 2014 at 8:58 am

And amid such riches as we now possess, I would not begrudge them their Angry Birds. But isn’t it obvious that in exchange, they not be encouraged to reproduce on other (potential parents’) dimes?

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Michael Foody June 27, 2014 at 1:48 pm

Once unemployed people mentally reclassify themselves as ‘retired’ many of the negative psychological effects disappear. If you’ve convinced yourself that being a factory machine, a bureaucrat desk jockey, or fast food slave is psychologically healthy for it’s own sake rather than as a result of cultural indoctrination you can go fly a kite.

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Daniel June 27, 2014 at 1:55 pm

^ This + 1

And then libertarians wonder why they’re not sitting at the grown-up table.

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LJM June 27, 2014 at 3:44 pm

And then libertarians wonder why they’re not sitting at the grown-up table.

Is that the table where you find the people who invade countries that pose no threat, hold suspects indefinitely without trial, put people in jail for putting politically incorrect things into their bodies, and collect massive amounts of citizens’ private correspondence?

If that’s the “grown-up table,” maybe it’s time to eat somewhere else.

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Daniel June 27, 2014 at 5:26 pm
Cliff June 27, 2014 at 10:54 pm

Did you read what you linked to? Because it has nothing to do with what you are responding to.

Jan June 27, 2014 at 8:41 pm

Oh thundering Jesus, that is_not_the problem people have with libertarians.

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Cliff June 27, 2014 at 4:10 pm

When you say “libertarian” do you mean “this one guy who wrote this post that was linked to”?

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Harun June 27, 2014 at 2:17 pm

Sure, people can call themselves retired at age 20 and they will have no problems.

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ummm June 27, 2014 at 2:31 pm

Ross Douthat is right more often than not and is correct again here. We’ve crossed the limits of reform conservatism. It’s time to accept that some people in this super competitive economic environment cannot be helped, no mater how much money and time we throw at the problem

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Donald Pretari June 27, 2014 at 5:15 pm

To Ummm, You don’t know any such thing. A guaranteed income might well help the truly needy and also cost less money. It’s time to accept that some people post without thought.

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Jan June 27, 2014 at 8:43 pm

No. Ross Douthat, like most most columnists, can only speculate and spout ideology.

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Brian Donohue June 27, 2014 at 3:30 pm

If you’ve convinced yourself that being a factory machine, a bureaucrat desk jockey, or fast food slave is psychologically healthy for it’s own sake rather than merely being preferable to the soul crushing reality of having nothing worthwhile to contribute to anyone and spending your life playing video games, than you are correct.

FTFY.

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Michael Foody June 27, 2014 at 5:05 pm

I think you’re probably wrong about how meaningfully and pleasant video games can seem if you don’t have to worry about providing subsistence, and socially constructed status and identity issues. Also the same sorts of cultural forces that are strong enough to get people to fight and die in wars and abstain from sex in submission to imagined celestial judgment or buy bottled water are probably strong enough to encourage people to spend their some of their time on things like taking care of their kids, elderly parents, spending time with friends, self study, and extra economic arts, music, crafts, and hobbies. At least enough non-video game activities to be subjectively more psychologically healthy than most work.

I also want to make it clear that I’m not Utopian. I think a lot of unpleasant work really does need to be done that can’t just be automated away and I think it’s important that incentives for that work remain strong enough to get people to do it. The only thing I’m rejecting is the “it’s for their own good” argument that strikes me as deaf to the power of culture in shaping behavior.

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mofo. June 27, 2014 at 7:50 pm

Is this what conversation at the “grown up table” is like? Because this sounds more like teenage pseudo-intellectual nonsense to me.

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Brian Donohue June 27, 2014 at 10:08 pm

Good comment. I have a bunch of thoughts:

1. The jobs you describe are horrible. But then I’m reminded of Adam Smith’s tale of mind-numbing drudgery. The automation we already have has displaced huge swathes of the most horrible jobs, right? I mean consistent, repetitive drudgery is what machines excel at.

2. Almost no one works these same horrible jobs for a career. Almost everyone moves on.

3. Yeah, but almost all jobs include a decent chunk of unpleasantness and tedium. That’s life.

4. I do think I’m talking about something that is basically biological in nature, almost akin to the need to exercise. To be doing something purposeful and useful to others. Even the lowliest job confers this dignity.

5. There are some “self-starters” who, free from work, will nourish all manner of social and familial relationships. My gut says maybe 10% of them (and most of them, as I ponder the matter, female), while most will succumb to the deathly allure of the lotus-eaters.

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derek June 28, 2014 at 12:27 am

But you are utopian. All of your list of endeavors that people could pursue if they didn’t work require work, hard work and dedication over a period of time to be able to master. Only a utopian would believe that everyone would be self directed and self disciplined to accomplish anything without some external incentive; hunger is a very good incentive to get up, get dressed, shave and brush your teeth and be out the door by 7am. Or hungry kids.

You say ‘identity issues’. ‘socially constructed status’. You mean someone who is skilled at what they do and take pride in it? Or status meaning you know who to call if you need a doctor, dentist, plumber, roofer?

The study described people who have lost status, not socially but personally, and have issues because they don’t have a place. When some normal life change happens to them, they have more difficulty than those employed adjusting. Employment, meaning someone earning a living by which they gain a modicum of freedom gives people identity and status. It also makes you part of a group, you have automatic social connections as well as the social discipline that keeps us healthy. Having a bureaucrat directed by a politician decide how much and when you and every other non productive person gets gives neither. You should talk to the people who actually live that way. They aren’t happy.

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Daniel June 28, 2014 at 6:10 am

Employment, meaning someone earning a living by which they gain a modicum of freedom gives people identity and status.

In the real world, people do enjoy working. When that work DEMANDS VIRTUOSITY from them. And when said virtuosity is recognized.

The people you’re patronizing don’t have access to such work. So, naturally, they hate their jobs.

What kind of privileged existence do you lead that makes you oblivious of such basic facts ?

derek June 28, 2014 at 10:49 am

Heh, I’m privileged to have met a genuinely stupid person today. Privilege. Is that a new concept you learned from some web site a few months ago?

Daniel June 28, 2014 at 12:59 pm

Try to be less of an idiot

Jan June 27, 2014 at 8:44 pm

“Than” FTW.

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Ed June 28, 2014 at 12:46 pm

Before the industrial revolution, there were no fast food slaves and very few desk jockeys or factory machines. There were lots of actual slaves. The hours were better.

I don’t get the impression the lack of regular, regulated, year round jobs with standard hours caused a big psychological problem.

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joan June 28, 2014 at 12:32 am

Most women use to stay home and care for their children and many still do without suffering negative psychological effects. It is the stigma society attaches to being supported by the government instead of their husband that causes most women problems if they do not have a job.

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Brian Donohue June 28, 2014 at 5:43 pm

I’m not talking about a job in the formal economy per se. I’m talking about having something to do that is useful to others. A job, any job, fulfills this need. As you note, some people can fill this need in other ways. Not most people, though , I don’t think.

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Maximilian June 27, 2014 at 1:50 pm

For more evidence from the US, see Cristobal Young, “The nonpecuniary costs of unemployment in the United States.”
“Drawing on the Panel Study of Income Dynamics, I track the subjective well-being of individuals as they enter and exit unemployment. Job loss is a salient trigger event that sets off large changes in well-being. The factors expected to improve the lot of the unemployed have limited efficacy: (1) changes in family income are not significantly correlated with well-being; (2) unemployment insurance eligibility seems to partly mitigate the effect of job loss, but is a poor substitute for work; and (3) even reemployment recovers only about two thirds of the initial harm of job loss, indicating a potential long-term scar effect of unemployment. This highlights the deep and intractable hardship caused by unemployment in America.”
http://muse.jhu.edu/journals/social_forces/v091/91.2.young.html

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mucgoo June 27, 2014 at 2:00 pm

His thoughts on a low basic income with a very strong negative income tax?

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DMS June 27, 2014 at 2:08 pm

The primary purpose of the UBI is to maintain Aggregate Demand and prevent riots in the street.
There are NOT ENOUGH JOBS.
And it is likely to get worse.
While UBI may have a host of benefits for individuals (e.g. giving time for creative types) as a practical matter we would adopt a UBI as a way to keep people feed/housed/doctored because there is a prospect of massive unemployment.

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Art Deco June 27, 2014 at 2:20 pm

There are NOT ENOUGH JOBS.

It is not a non-renewable resource. Jobs are ‘created’ when muscle and skill bearing individuals are brought together with people who have something for them to do; remove the impediments to those transactions. There is scant indication that there is in place a secular trend whereby demand for labor is consistently out paced by the growth of the working aged population.

Given that mass unemployment was horrendous during the period running from 1930 to 1942 (without riots) and that rioting was horrendous from 1964 to 1971 (with tight labor markets), I’d suggest the relationship between unemployment and rioting is somewhat fuzzy.

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HL June 27, 2014 at 2:31 pm

I can think of a few differences between those two periods other than a tight labor market in regards to rioting. We’re more similar to the latter than the former these days.

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Alise June 27, 2014 at 3:38 pm

There are jobs. Nonfarm job openings just came in at 4,455,000 for May, an increase from April.

Others in this thread have pointed out some of the obstacles to getting to those jobs, like relocation costs from an area with high unemployment to low unemployment. As another example, if you are poor and unemployed, it might not be getting the job that’s the problem but getting to the job. There is a transportation barrier for those unemployed who might be qualified for a position but have no vehicle to get them to the job across town.

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Max Factor June 27, 2014 at 4:37 pm

There are 4.4 mil openings but many magnitudes of 4.4 mil looking for work.

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JonFraz June 29, 2014 at 10:28 pm

We’re down to about three job seekers for each open job. Is “three” a synonym for “many magnitudes”?

Ed June 28, 2014 at 12:51 pm

Openings have be checked against the number of people entering the labor market. Job creation has lagged behind population growth for quite some time now.

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Becky Hargrove June 27, 2014 at 2:53 pm

“There are not enough jobs”
I completely disagree. There is very important work which is crying out to be done, and yet there is no one to fund it. When people approach that work and agree to compensate one another through equal time optimization, no debt results, No one has to beg anyone to support them or their work. New wealth is the result, and it comes from work that we actually want and need.

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dead serious June 27, 2014 at 3:33 pm

I’m with you.

We have low hanging fruit in manufacturing and installing solar panels on homes. The country is in desperate need of infrastructure repairs. There is plenty of work to be done.

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Brian Donohue June 27, 2014 at 10:23 pm

+1.

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Moreno Klaus June 28, 2014 at 4:58 pm

Of course there not enough jobs…in which planet are you living? In 30 years im afraid our children will view UBI not as an exception but as the standard. Very few people will be able to get a job.

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JonFraz June 29, 2014 at 10:27 pm

Most people of working age will still be working in 30 years, however they will not be making good incomes, and large numbers of people will need to supplement their meager income with public benefits. “Walmart” is the future model of work (Heck, it’s the present model for a lot of people).

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Nathan W June 27, 2014 at 3:03 pm

If 50% of jobs get outsourced to automation and no new explosive growth sector creates employment for the masses, damn straight I’ll be militantly in favour of a guaranteed minimum income if the aggregate negotiating position made it look like the working class was going back to 1825 London or any such thing. 1825 London is a poor comparison, but maybe you get the idea.

Facebook couldn’t have earned billions without the discovery of electricity, or even the wheel.

The gains belong to us all.

But in the meantime, we tolerate inequality because it helps us collectively to innovate.

In terms of pure effort, I acknowledge the right to approximately the yield you would achieve as a rice farmer. Say, about $300 or $1000 a year. After that, it’s just because we calculate that it’s better for society in the long run that we “let” people keep the rest. What about property rights? Well there are very logical arguments for that too. No inherent properties of the universe need to be rested on to defend that.

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Thomas June 28, 2014 at 12:22 am

Nathan W, literally a would-be Chairman Mao.

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Steve June 27, 2014 at 6:48 pm

But aren’t there really near-limitless jobs, just a shortage of people willing to do them for the offered price or prevented to do so by various laws? For instance, I would very happy pay $1 per day for someone to work as a footstool that I could rest my feet on during the day, and I wager many others would as well. The demand is there, but there just isn’t a supply for this type of job at this price.

I’ve always hated the “prevent riots in the street” justification for social welfare programs, because even if riots occur, we could solve the problem far more cheaply by just paying police or military to put them down. Literally bribing citizens to not commit violent, illegal acts really strikes me as the bottom of the ethical barrel, not to mention opening up a moral hazard trap. It’s basically volunteering to enter into the wrong side of a protection racket.

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Dennis J. Tuchler June 27, 2014 at 2:19 pm

Why help the poor at all? Previous comments have identified the reason add the prevention of social unrest, rancor. There’s also the social benefit to be derived from an increase in the number of productive persons in the social system. There is also the possibility that I or You will be among the poor for a while. So, a social safety net is a good idea. But it is also a bad idea because it deters work and produces a dependent class. So, we should keep enough holes in the net to push people to work. It also subsidizes lows-wage employment, discouraging employers from paying a living wage. BUT:

First, of course, there has to be work available to the person, AND the return from that work has to be sufficient to support subsistence, at least.

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Nathan W June 27, 2014 at 2:58 pm

Only in the West will you find anyone nodding with any level of respect for people who berate the helping of poor people.

In China, you will find people saying “hey, go make your own money”, but not people actively berating individuals and the state for efforts to help the poor. But then regional redistribution to reduce poverty in interior regions is one of the main thrusts of social policy now, so clearly the government is not against poverty reduction.

It seems that some abstruse combination of Puritanism and libertarianism leads some people to believe that it is WRONG to help a poor person. This is very different from holding a questioning attitude with respect to incentives, motivation, the need to learn to take responsibility, etc. But to tell the atomized homeless man that he is responsible for all their problems, and to speak those words from the comfort of a supportive family or religious community who can help with repairs, medical bills or even getting a job, is not exactly what I would call productive.

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The Anti-Gnostic June 27, 2014 at 3:08 pm

The objection is not to helping poor people. The objection is to using other people’s money to help poor people.

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Donald Pretari June 27, 2014 at 5:09 pm

That’s a childish point. The basis of representative government is that you will likely, at some point, be funding things through taxes to the government that you oppose. You must king in your world.

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triclops41 June 28, 2014 at 1:28 pm

It’s actually quite childish to dismiss that point. Almost everyone agrees that helping the poor who have had bad luck, but HOW our HOW MUCH to help are the sticky parts.
So since you live under a kind of representative government, you accept everything it does?
Who is being childish?

TMC June 27, 2014 at 3:22 pm

First world problems, as they say.
Where else but in the West do they subsidize those who are just not so interested in working?

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Cliff June 27, 2014 at 4:14 pm

Who the heck are you referring to? Not the person you are responding to, if you actually read what they wrote.

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Moreno Klaus June 28, 2014 at 5:04 pm

Lool poor people = people who are not interested in working ??? Seriously??? Is that what jesus taught you ;) ??? Try being born as a black person in a ghetto in your next life and tell me how did it go….

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byomtov June 27, 2014 at 2:26 pm

The phrase “macroeconomic policy” seems to be missing from this discussion.

Even Douthat admits that playing around with welfare policies and the like is not going to have a major impact on the problem. Just maybe, there are policies that would.

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Nathan W June 27, 2014 at 2:30 pm

I wouldn’t support universal guaranteed income unless tied to some requirement to put in say, 10 hours a week with some registered charity of your choice.

I think we’d get more Salvador Dalis under a guaranteed income, but maybe I’m wrong, maybe artistic genius requires poverty and suffering. What did Andy Warhol have to say about the matter?

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Oakchair June 28, 2014 at 12:31 pm

I think a Universal basic income should be tied to unemployment. So when unemployment is high the UBI is high and when its low the UBI is low.

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Ed June 28, 2014 at 1:06 pm

My thinking has been that the UBI be tied to either median income or the poverty rate. As it happens, in the U.S. the poverty line for a family of four happens to be very close to half the median household income, so you can pick either. I would use half the median income for individuals and that would be the rate for adults (children would get nothing since for unrelated reasons I think population growth should be discouraged).

Governments, particularly the U.S. federal government, have been gaming the unemployment rate. The median income figure is a more accurate measure of the availability of jobs that actually pay decently, it captures the effect of lots of $1 an hour human footstool jobs if we go that route. The median income figure also correlates enough with the overall wealth of society that if the country becomes less wealthy the guarantee would drop, and vice versa. Hopefully prices would behave the same way, if they rise when the society as a whole becomes poorer it should be a big issue.

To make things clear, I prefer a universal guaranteed income to a universal basic income. You can take a $1 an hour job as a human footstool, and the guarantee tops up your wages to the guarantee amount. Of course under these conditions there would be no incentive to take such a job other than psychological ones. But you would likely get lots of jobs where the net pay -taking into account things like commuting costs- takes the jobholders to just somewhere above the value of the guarantee. In this way the guarantee would substitute for the minimum wage.

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HL June 27, 2014 at 2:49 pm

Just posting this as a reminder at how out of touch some can be:

http://blogs-images.forbes.com/laurashin/files/2014/05/screen-shot-2013-07-18-at-4-57-59-pm.png

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Rich Berger June 27, 2014 at 2:53 pm

“And Ross Douthat offers related remarks on whether it really is possible to encourage work”. Sure – don’t provide benefits to those who don’t work. But that would not be compassionate.

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Donald Pretari June 27, 2014 at 5:06 pm

It might not be, depending upon why the people aren’t working, or the cost/benefit analysis of the program. It must be nice living in an a priori world.

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Jan June 27, 2014 at 8:46 pm

Yeah. How far can we push it? Physically torturing those who don’t work also might do the trick.

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Bingyan June 28, 2014 at 1:04 pm

Those are exactly alike, top notch comment.

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triclops41 June 28, 2014 at 1:32 pm

Donald, would you run the cost/benefit program of torture to fix unemployment? If we get our representative government to do it, it must be okay.

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Tony June 27, 2014 at 3:07 pm

Seems to me UBI is the path to Libertopia – put alll the things we call the “safety net” in one package, and you can justify totally deregulating employment and make the whole economy work much more smoothly. It’s not a matter of a subsidy displacing employment, it’s a matter of granting workers and employers alike the freedom to work things out on their own without throwing the workers to the wolves.

I think it is very important that it not be possible to garnish the UBI, however. It should never be used as collateral for loans, as there are a whole class of people that will sell it all up front for cash, blow it on nothing, and be right back to square one.

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Brian Donohue June 27, 2014 at 4:06 pm

Yup. But between here and there are millions of government workers.

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Jan June 27, 2014 at 8:49 pm

Yes. I agree with you, but there are those who for whatever reason are not equipped to handle UBI. They may have Alzheimer’s, be in deep debt or otherwise disabled.

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ummm June 27, 2014 at 3:14 pm

Not sure why this topic has gotten so much debate because the odds of it happening without strict preconditions are exactly zero. The government already gives too many freebies as it is.

What evidence? Let’s start with the well-established finding that unemployment has major negative effects on well-being, including both mental and physical health

so does watching your favorite sports team lose. Lots of things cause pain and anguish. Doesn’t mean it’s a crisis

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Donald Pretari June 27, 2014 at 5:07 pm

It good to hear that you’re not sure of something.

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Albigensian June 27, 2014 at 3:20 pm

The author’s point is, if people derive nonpecuniary benefits from employment then it surely makes more sense to support programs that encourage continued connection to labor markets (such as EITC) over those that don’t (let alone those that provide a positive reward for idleness).

I’m inclined to agree. If low-skilled work simply doesn’t produce much economic value anymore (due to automation and offshoring) and if enough voters don’t want to see others starving or homeless then some type of support seems likely. A weak point is, it’s not clear that there will be enough work to go around even with hefty taxpayer subsidies. Although perhaps government could be an employer of last resort.

Overall the primary political complaint against EITC seems to be that some insist it is a subsidy of employers and not of the employed. Nonetheless, I’d expect subsidies for working to be more politically palatable than subsidies for idleness.

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Dan Weber June 27, 2014 at 3:30 pm

A weak point is, it’s not clear that there will be enough work to go around even with hefty taxpayer subsidies.

Is there something you would pay someone $2 an hour to do? I’d pay someone $2 an hour to spend an hour a day picking up litter and/or recycling along the non-busy road where I work.

(One problem here is dividing up the work day. One-hour increments of labor are too burdensome to sell. Paying people to sit on a bus doesn’t seem useful, so perhaps labor needs to be purchased in blocks of at-least-4-hours.)

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T. Shaw June 27, 2014 at 4:02 pm

Is the concern fear that the lowly will come after (pitchforks) the achievers?

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Walter Benjiman June 27, 2014 at 4:37 pm

I think there are a large number of 20-somethings that would gladly “retire” with a guaranteed income and a fully-paid Medicaid prescription for medical marijuana.

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Donald Pretari June 27, 2014 at 5:03 pm

Walter, You sound like one of them.

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Bingyan June 28, 2014 at 1:08 pm

Donald- You would know.

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Dismalist June 27, 2014 at 5:01 pm

Intellectually, the easiest problem in the world to solve: Abolish the minimum wage and make EITC far more generous. Transfers only for those unable to work, with a strict definition of unable. Politically impossible, unfortunately, at the present time.

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Donald Pretari June 27, 2014 at 5:12 pm

The worst set of comments I’ve read recently, and that’s an amazing occurrence. At least read the arguments of Milton Friedman, James Tobin, Friedrich Hayek, Martin Luther King, and Charles Murray, just to begin, before posting a comment long ago dealt with.

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triclops41 June 28, 2014 at 1:38 pm

Your mediocre snark here would put you as the worst commentator of this thread. Every comment was something a petulant teenager could write, except the name dropping in the above comment. Have you anything insightful to add, or are we too unworthy to hear such pearls of wisdom?

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Donald Pretari June 29, 2014 at 9:02 am

You’re absolutely right, so I’ve given myself a time-out. I’ve written dozens of posts on this topic over the years on this blog and a few other others. When I discovered how many I’d written without prevailing once and for all, I became petulant. But if you look at the comments addressed, they’re not substantial either, especially if you’ve read a lot on this topic. For example, Palgrave Macmillan has a whole series of books on this topic, all of which I own, and all of which I’ve at least dipped into: ( I do realize that these books are expensive, which is why I’ve not mentioned them before. )

http://www.palgrave.com/series/exploring-the-basic-income-guarantee/BIG/

I take learning seriously. But, again, you’re right, in this thread, I was being a bit comical by mimicking the comments I addressed, and it came off petulant. I apologize.

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Tom June 27, 2014 at 8:09 pm

Not impressed by Douthat or Brindsley. There are a lot of angles to consider, but the one I’d most like to see economists taking on are the effects of workfare’s indirect subsidies to low-wage employers. I think it should be obvious that employers especially in retail and fast food have responded and built systems that maximize the low-wage component of their workforces. Walmart is the biggest example. I’m not saying subsidizing more idle wouldn’t have worse effects, but workfare proponents need to at least admit its flaws.

In the near term, maybe almost politically feasible realm, what I’d like to see is a redesign of workfare rules to accommodate the struggling self employed. Current rules give such people a choice of giving up on their career and taking a demeaning low wage job that workfare will supplement, or forsaking all aid except the EIC, and probably going into debt.

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Bill June 27, 2014 at 8:52 pm

I think guaranteed annual income from an

Inheritance

Has negative effects on mental health and well being of the beneficiary.

Right?

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byomtov June 27, 2014 at 8:59 pm

No, no.

That’s completely different, don’t you see?

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Brian Donohue June 27, 2014 at 10:36 pm

Holy crap Bill, you and I agree!

Scott Sumner linked to this the other day, under the clever title ‘Sumner Demolishes Piketty”:

https://tv.yahoo.com/news/sting-says-wont-let-kids-inherit-300-million-035500620.html

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derek June 28, 2014 at 12:02 am

I would say so. Evidenced by the aimless dissipated lives that many of them lead. The more balanced use the resources they have and find a job to do.

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Art Deco June 28, 2014 at 2:28 pm

On balance, that’s likely true, but it depends on aspects of the beneficiary: age at the time of the windfall, tendencies toward alcoholism or street drugs, sex, and temperament. While we’re at it, reaction to cash transfers likely varies as well according to these variables. A 57 year old suburban housewife who comes into a private income is likely to be much less trouble for the world around her than would be a 21 year old woman with loose morals and limited human capital applying for AFDC or TANF. People who inherit money tend to skew toward the older age groups, may suffer from skill deficits but not likely deficits in general intelligence, and (one surmises) are not more likely than anyone else to be melancholic or dipsomaniacal ex ante.

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Dan Weber June 30, 2014 at 8:46 am

That’s probably right. And the people providing the money should do what they think is best for their beneficiaries.

With the trust fund babies, its their parents who are deciding. With the welfare class, it is the government that is deciding. And the class receiving payment has just as much say: take it, or leave it.

TLDR: private people spending their money “incorrectly” doesn’t obviate the need for the government to spend correctly

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Floccina July 9, 2014 at 10:49 am

That is one of reason that Bill Gates and Warren Buffet give for not passing all of their wealth to their children.

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Turkey Vulture June 27, 2014 at 9:05 pm

I like my life more when I work less, but the lack of absolutely anything to do can be spirit crushing.

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DMS June 28, 2014 at 12:29 am

Maintenance of Aggregate Demand is the central job of every government.
Has been for millennia.

As to jobs.
Any suggestions on new jobs that the driverless car will create?
I haven’t heard any (though I am sure that there are a few.)
But there will massive loss of job loss if we introduce driverless car en masse.

Yes there are plenty things to do but few paid by market.
If you want to shift GAI to more government projects, that’s another way to maintain aggregate demand.

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Larry June 28, 2014 at 12:59 am

Wage subsidies are the way to go. We need to get people back to work. Start by canceling the employer side of the payroll tax for workers paid less than whatever you think the minimum acceptable wage should be. That will get more low-skilled workers on the job.

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Alan June 28, 2014 at 1:57 am

A proportion of libertarian economics is devoted to finding a mathematical proof for fuck you. The warfare queens of the Republican Party omit the word “mathematical”.

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msgkings June 30, 2014 at 12:52 pm

Harsh but kind of accurate.

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8 June 28, 2014 at 2:29 am

Work is good. “Slavery” is better than idleness.

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Larry June 28, 2014 at 4:27 am

You know nothing of slavery, only “slavery”.

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andrew' June 28, 2014 at 5:48 am

Why do people get free cash? I still don’t get it.

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Daniel June 28, 2014 at 6:00 am

The level of brainwashing in this thread is mind-boggling.

So people should work low-status jobs where they have to put with unpleasant bosses and/or customers … because it’s good for them ?

This is the kind of nonsense that only someone who’s never had a crappy job can say. Spend a year under an abusive boss, you’ll sing a very different tune.

And besides – not only is it taken for granted that low-status people should, in fact, be miserable (it’s for their own good, you see) – but where exactly are the extatic high-status people ?

If the best society has to offer is a mediocre life, while the worst is very bad – it would take a lot of obliviousness to defend such an arrangement.

Nice to see you people are up to the task.

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triclops41 June 28, 2014 at 1:46 pm

You don’t really understand what is being argued here, or you’ve commented in the wrong article’s comments section. Otherwise you just brought some strawmen along you had handy to beat up on.
Everyone cannot have a job that is fulfilling and fun %100 of the time. In fact, probably no one can have that job %100 of the time. So then, what is the best alternative in reality?
People here are arguing about whether working at a crappy job is better than being unemployed and on welfare of some kind.
Maybe if you can understand that now, you can abandon your MSNBC levels of understanding of libertarian arguments and make a useful point.

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Daniel June 28, 2014 at 6:33 pm

You’re an idiot. No, really.

Let me know when you’re able to stop begging the question.

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Boonton June 29, 2014 at 7:29 am

This would seem to present a major problem to Tyler’s ‘Average is Over’ ideas. That idea seems to present the future as a world of freeloaders. More and more of GDP will be produced by fewer and fewer people. Being a slacker type will be more rewarding and less stressful for many so-called ‘average people’. That would seem to view the economy as moving towards one of fewer and fewer high performing breadwinners supporting either larger households of non-breadwinners (I see kids living at home at 40, ‘friends’ crashing in guest rooms, live in roommates because they are entertaining or because people feel sorry for them…see Cato Cailen…) or via the welfare state.

But if we reject guaranteed income but the economy is moving towards a state where it just doesn’t make sense for many people to work anymore, then that seems to present a problem. I for one am fine with an EITC system and I would accept eliminating the min. wage *only* as part of a deal where conservatives agree to seriously beef up the EITC and never try to attack it as welfare. But Tyler’s arguments appear to be that work is going to disappear for most people except the exceptionally talented. If that’s the case where are we going to be?

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Charles June 29, 2014 at 7:58 pm

I wonder, without UBI, how can those unskilled people alive?
In this era, although we still need a huge amount of labor, the unskilled labor amount is still more than that.
For example, the average wage in the coastal area of China is increasing, so the company like Foxconn has moved their company into inland where they can spend less money to hire same amount of labors. This action generated some significant issues of those unemployed workers in the coastal area.
I agree with the author’s idea. But how can the government handle those unemployed worker?
We have to legislate a suitable law to replace the UBI.

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Floccina July 9, 2014 at 9:47 am

My best guess is that there are huge non monetary benefits to work so I would like the guaranteed annual income to put in place along with the elimination of the minimum wage.In that case would expect net employment to rise not fall.

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Floccina July 9, 2014 at 9:52 am

BTW it seems that the reason the not working decrease life expectancy for blue collar worker is because it allows them to start drinking when they get up in the morning:

http://www.marketplace.org/topics/life/freakonomics-radio/why-early-retirement-may-not-be-good-your-health

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Floccina July 9, 2014 at 10:53 am

BTW 5 years out of school at 27 years old I was working washing pots and pans at a restaurant. I do not consider it a bad job not soul crushing for me at all.

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