Minimum basic income idea

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167 posts

Master Geek

#1124748 8-Sep-2014 23:14

Vietnamese workers are ‘worth’ less than those of New Zealand because there is a greater supply of labour for a relatively smaller amount of jobs. Why there is this mismatch and how to solve it, or even if it is a problem is not the purpose of the market.

The market is there to allocate resources within an economy, how well this works is determined by how easy it is to enter and exit the market and the cost of information relevant to the market. As such when tinkering with a ‘market’ it should be towards the aim of achieving an open market with free information. [I have assumed that property rights are such that the all participants in the market bear the full cost and benefit of their actions]

The market is the best way to decide how resources are allocated. If there is a better way I would like to know?

The problem on inequality (which is not really a problem but more of an incentive, talk should be about inequity) should not be tied strongly to a market system (or capitalism) but is more a problem of society and those in it. They decide how to distribute income and how that effects their incentive to work and what value to attribute to this work. In a capitalist system (without any government intervention) this would be determined by your skills and your ’means’ (whereby means are determined by how much past consumption your family has given up to build capital).

If this is fair or not, is up to society to decide, in most cases they think a balance needs to struck between personal choice and having equitable opportunities (If every kid was given the same start there would be no incentive to own capital, and we would get the equivalent of a communist system – where all capital is owned by the people together). This allows dynasties (i.e multiple generations of families) choice over their consumption, if they want to save for future generations or consume more today.

How this balance is achieved seems to be the discussion of this topic ‘Minimum basic income idea’. This seems like a good strategy as it minimizes distortions to markets (minimum wage, targeted tax), while providing a good incentive to work (if you want more luxuries, or build up capital for your kids). The balance comes in setting the minimum amount and the trade-off between incentives to work and receiving a ‘basic’ standard of living.

A different method that I think has been mentioned is something similar to how our health system works. Provide the ‘basics’ of life to each individual and remove the choice aspect.

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#1124751 8-Sep-2014 23:15

joker97: i drove past a little town called Mataura.

to my horror a factory (or some work plant) that is just under 1km in length is being pulled down.

i have a feeling people in that town actually want to work there ... unlike certain places(?) - sorry if i'm wrong - where there are people who'd rather not work.

i think if you work hard you should be paid a living wage. but how to control that - apart from hiring someone to watch the webcam

kiwirock

685 posts

Ultimate Geek

#1124753 8-Sep-2014 23:28

Ragnor: You cannot legislate the poor into freedom by legislating the wealthy out of freedom.
What one person receives without working for, another person must work for without receiving.
The government cannot give to anybody anything that the government does not first take from somebody else.
When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that my dear friend, is about the end of any nation.
You cannot multiply wealth by dividing it.

- Dr. Adrian Rogers, 1931

I decided to re-read a few posts because I find this topic interesting. This one though about the end of a nation? It's the end of the monetary system in that example, not the end of a nation. If it was the end of a nation, it could be the end of poverty that is a result of it.

kiwirock

685 posts

Ultimate Geek

#1124754 8-Sep-2014 23:29

joker97:
joker97: i drove past a little town called Mataura.

to my horror a factory (or some work plant) that is just under 1km in length is being pulled down.

i have a feeling people in that town actually want to work there ... unlike certain places(?) - sorry if i'm wrong - where there are people who'd rather not work.

i think if you work hard you should be paid a living wage. but how to control that - apart from hiring someone to watch the webcam

Depends on the job. You don't need a webcam to monitor bank accounts for income.

edit: Which is why we have this whole mess. The most wealthiest in the world don't do the work of 1,000,000 men. They do the work of one, and make a lot of money doing exactly not much of that one either while 1,000,000 men do the work for them or pay their interest on their loans.

SepticSceptic

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#1124982 9-Sep-2014 12:52

oxnsox:
kiwirock:
oxnsox: Tax System Explained in Beer

Great example of something not sustainable.

To the home brewer who doesn't go to the bar, at home, that has the right ingredients and is capable of reproducing the ingredients on his own land also drinks for free. Under the current economic wealth mreasurement (GDP), this man would be making no growth as resources aren't being depleted or created in greater quanties than the year before. Sustainability is not economic growth. But to this home brewer on his farm, his prosperity of free beer doesn't require economic growth. That's something the tenth man can't understand cause he thinks without him there is no prosperity acorrding to his way of measuring. The tenth's man's rational is flawed and enforced upon the masses. Mr home brewer still couldn't care less and drinks his flat-lining beer production every year.

Ultimately, nothing is sustainable
it's just a matter of time.

What you don't spend on beer, and save on making beer, you then have resources to spend elsewhere, or invest.

So what do you do with the money that you dont spend on commercial beer ?

Buy some new toys ? Pay off your mortgage a bit sooner ?

Geektastic

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#1125132 9-Sep-2014 15:52

If we replace benefits with min income, what happens when a recipient spends it all on Woodys and the kids are starving?

Do they then get benefits on top?!

spronkey

117 posts

Master Geek

#1125156 9-Sep-2014 16:24

Geektastic: If we replace benefits with min income, what happens when a recipient spends it all on Woodys and the kids are starving?

Do they then get benefits on top?!

And here you've hit the real reason why minimum incomes are problematic in a country like New Zealand where we have a high degree of social irresponsibility.

However, some researchers believe that social irresponsibility and low incomes form a cycle of causation. If that's true, the question becomes how do you reduce the social problems while simultaneously improving income?

I think in our country, limited vouchers would work better - perhaps able to be spent on food, basic clothing, toiletries and cleaning supplies, electricity bills, medical expenses, maybe extending to housing costs, transport allowances etc. But this is a very communist view, and would be difficult to administer and police.

I would probably start by reforming the benefit system, so that spending of beneficiaries who are otherwise able to work is tightly controlled - i.e. no alcohol, no cigarettes, no luxuries. Work with housing companies like Harcourts to provide accommodation and remove the beneficiary from the payment side, work with retail companies like the Warehouse on items such as clothing.

Another good idea I heard previously was provide free personal finance and budgeting support - many lesser educated NZers won't have the skills required to create and stick to budgets, and as such won't be able to spend their money efficiently if they do manage to get into employment.

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JimmyH

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#1125261 9-Sep-2014 19:12

kiwirock:

edit: Which is why we have this whole mess. The most wealthiest in the world don't do the work of 1,000,000 men. They do the work of one, and make a lot of money doing exactly not much of that one either while 1,000,000 men do the work for them or pay their interest on their loans.

It's not about whether they do the work of 10, 100 or 1,000+ men. That's a fallacy and leads you into nonsense such as saying no CE can work 500 time as fast as a typist etc.

It's about whether the value of their work is worth 10, 100 or 1,000+ times as much as the value of the work of someone else. How is value decided? It goes back to the market and the point I made earlier about value being extrinsic not intrinsic. Value is set by the market - willing seller, willing buyer and equilibria.

Because, for example, a surgeon is paid 15x what a labourer is paid, it doesn't mean that the surgeon does the work of 15 labourers. Or that 15 labourers could do the work of a surgeon - in fact 100 or 1,000 labourers couldn't do this. If you disagree with this, I'm surely not checking into any hospital you have a hand in running

It's more that there are lots of labourers and few surgeons, and someone is willing/has to pay that much to secure the skill set of one of the scarce surgeons compared to what they are willing/have to pay to hire one of the very abundant labourers. Same principle applies to determining the market rate for chief executives, accountants, engineers, cooks, cleaners and bottlewashers. Market value is based on what clears the market, not the personal opinion of what you or anyone else, thinks is inherently "fair".

If I was (sadly I'm not) a billionaire then having a good chief executive run my company would be worth a lot to me in terms of bottom line. Even a slight improvement in decision making and judgement over a lesser CE is likely worth millions on the bottom line, and I would be prepared to pay a salary in the millions that reflected that. The rate I would be prepared to pay to get a slightly better than average receptionist or drainlayer - not so much.

Plus, really good CEs are an internationally sought after skill set. Adopting a daft proposal such as the one that has been floated in places that no one in a company should be able to earn more than 10x or 15x the lowest pay in the company wouldn't really drive down the wages of a good CE, or raise the pay rates of receptionists and drainlayers etc. It would just cause an exodus of really good CEs. Leaving the companies that drive NZ's economy and employment, and the investment of all our pension funds etc, in the hands of lesser candidates. Which would be a disaster.

Edit: Typing

MikeB4

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#1125316 9-Sep-2014 20:01

If we did not have welfare support most here would have been unemployed during the 80's crisis and the most recent financial crisis. A welfare state is many times better than a cardboard box state.

PhantomNVD

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#1125318 9-Sep-2014 20:11

Gotta way in here now.

As an only-one-working breadwinner, I earn within $5k of his reported earnings, work 40 hours too (all humans ARE animals, so I guess I work AS an animal too?)

I have 2 sons, and we choose to live frugally so they can be raised by my wife (who could work as she's a qualified teacher) instead of 'the system'.

I pay more than 500 per week on my Morgage, so must live on less than he does, and am typing this on an iPhone cos my iPad3 in cracked at the moment.😜 (2 year old tantrum)

We have 2 modest cars, and manage to fuel them both, AND afford a $5000/year private (Christian) School for my 5 year old.

BUDGETING is the key, and being non-smoking teetotallers is helpful (and smoking/alcohol ARE luxuries, not a "right" anyway!)

So am I poor?
NO, though I do have to count the cost of my luxuries, there are few I can't afford if I want them enough...

kiwirock

685 posts

Ultimate Geek

#1125320 9-Sep-2014 20:13

JimmyH:

Because, for example, a surgeon is paid 15x what a labourer is paid, it doesn't mean that the surgeon does the work of 15 labourers. Or that 15 labourers could do the work of a surgeon - in fact 100 or 1,000 labourers couldn't do this. If you disagree with this, I'm surely not checking into any hospital you have a hand in running

-----

I agree with this. I don't agree with the CE's of banks and financial institutions that know how to make money at big expense to others and if it goes wrong, expect a bail out from those that suffered at their hands.

The market is not as free as you make it out to be though. Most things that come to market are set above their real market value as the price settles down to what people are more interested in paying. Greed always starts off higher. Yes equalibrium does come in to it later down the track. Bad examples though where equalibrium doesn't work is booms and busts - which shows the markets are easily minipulated beyond their equalibrium.

-------

Plus, really good CEs are an internationally sought after skill set. Adopting a daft proposal such as the one that has been floated in places that no one in a company should be able to earn more than 10x or 15x the lowest pay in the company wouldn't really drive down the wages of a good CE, or raise the pay rates of receptionists and drainlayers etc. It would just cause an exodus of really good CEs. Leaving the companies that drive NZ's economy and employment, and the investment of all our pension funds etc, in the hands of lesser candidates. Which would be a disaster.

-------

I was referring to the CE's that know how to cut expenses, ruin staff morale yet on paper... have made the company a lot of money but I wouldn't want to be the one cleaning up the mess afterwards of such an aparent sucess to fulfilling contracted profit targets to qualify for a handsome bonus and payout at the end of their term.

When you've got CO's of NZX TOP 50 companies saying I earn to much and think its silly the bonus payouts on top of the million dollar salaries... I think that can be a fair indication of what the market is doing wrong.

Warren Buffet wants to pay more tax... so why aren't we capping income so there's more in the hands of those spending. True though, capping someone's income doesn't increase what people will be paid on the minimum wage etc... that needs to come from lower waged workers refusing to negotiate such low wages. I'm not saying most CEO's don't do a good job either, but if you have a few $14 an hour employee's putting thausands of dollars of profits in front of consumers that get traded everyday, the market doesn't always set the price right. Perhaps people need to become more self centered than we already have in order to raise the expectations of labour costs.

I think with the purposals going around though, money while not inherently good or bad, is not teaching how to fix the reality of social problems ie: poverty. I don't know if a basic income would fix this. I think the idea is one to look at and I like the morals and social responsibility behind it, but as an 'income' - well it can't be that because money doesn't grow on trees unless you steal from the rich to give to the poor. I don't advocate that either... but we're not going to find a balance to solving furthre financial and social problems in society by sticking with the tried and true and messy path we're already testing.

Sorry I had to repost, it moaned about tags being wrong and I tripple checked them, then lost it all because geekzone keeps timing out grrr. So I've just wiped the tags and re-posted differently.

kiwirock

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Ultimate Geek

#1125322 9-Sep-2014 20:15

KiwiNZ: If we did not have welfare support most here would have been unemployed during the 80's crisis and the most recent financial crisis. A welfare state is many times better than a cardboard box state.

If we didn't have welfare those the most well off would start feeling guilty about the transfer of wealth in the economy :o) Beside that though, in seriousness now, you can't have a utopian capitalist world without social responsibility. The two should be on the same set of scales. Either one goes, the other is unbalanced.

kiwirock

685 posts

Ultimate Geek

#1125332 9-Sep-2014 20:28

SepticSceptic:
oxnsox:
kiwirock:
oxnsox: Tax System Explained in Beer

Great example of something not sustainable.

To the home brewer who doesn't go to the bar, at home, that has the right ingredients and is capable of reproducing the ingredients on his own land also drinks for free. Under the current economic wealth mreasurement (GDP), this man would be making no growth as resources aren't being depleted or created in greater quanties than the year before. Sustainability is not economic growth. But to this home brewer on his farm, his prosperity of free beer doesn't require economic growth. That's something the tenth man can't understand cause he thinks without him there is no prosperity acorrding to his way of measuring. The tenth's man's rational is flawed and enforced upon the masses. Mr home brewer still couldn't care less and drinks his flat-lining beer production every year.

Ultimately, nothing is sustainable
it's just a matter of time.

What you don't spend on beer, and save on making beer, you then have resources to spend elsewhere, or invest.

So what do you do with the money that you dont spend on commercial beer ?

Buy some new toys ? Pay off your mortgage a bit sooner ?

I wouldn't have money if I didn't need it. At least not while I was happy making beer.

Besides, who needs money when there's beer. But then would beer become money and eventually bad when someone had to much of it and others not enough? Never may the pub run dry for those labourers at the bottom.

I wonder which came first, the money or the beer?

gzt

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#1125369 9-Sep-2014 21:41

Geektastic: If we replace benefits with min income, what happens when a recipient spends it all on Woodys and the kids are starving?

Even without mincome it is most likely that person needs assistance for alcohol addiction making decisions like that.

blackjack17

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#1125372 9-Sep-2014 21:48

gzt:
Geektastic: If we replace benefits with min income, what happens when a recipient spends it all on Woodys and the kids are starving?

Even without mincome it is most likely that person needs assistance for alcohol addiction making decisions like that.

This was my thought. We currently have a very ineffective mode of welfare delivery. Replace it with a universal income it is not going to fix people. But it will give people options. Remove a huge amount of admin and create a fairer mode of delivery

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