"Talks a good game about freedom when out of power, but once he’s in – bam! Everyone's enslaved in the human-flourishing mines."

Money, Money, Everywhere, But Not A Cent To Spend

The DSM is written mostly by academics, which is why it gets so excited about distinctions like schizoid personality versus schizotypal personality. If it were written by clinicians, it might better reflect the sort of cases that make it into a hospital.

There would, for example, be an entire chapter on the scourge of ‘My Boyfriend Broke Up With Me’ spectrum disorders. More attention would get paid to the plague of chronic ‘I Got Angry At My Dad And Told Him I Was Going To Kill Myself To Freak Him Out And He Overreacted And Called The Cops And Now Here I Am In Hospital But Honestly I Didn’t Mean It’. Society would finally wake up to the epidemic of ‘I Wanted To Take My Medicine But My Hand Slipped And I Somehow Took The Entire Bottle All At Once Even Though I Would Never Do Something Like Intentionally Overdose’. And the sufferers of ‘This Patient Probably Has Some Kind Of Complicated Neurological Problem But Neurology Is Tired Of Trying To Figure It Out So They Have Declared It To Be Psychiatric’ might at last get some relief.

But the biggest change to the medical lexicon would be the introduction of ‘Poverty NOS’.

I recently got a patient, let’s call him Paul…

(all of my patient stories are vague composites of a bunch of people with details changed to protect privacy)

…who was in hospital after trying to hang himself. He said he was so deep in debt he was never going to get out. He’d been involved in a messy court case, had to hire a lawyer to defend himself, lawyer ended up running to the tune of several thousand dollars. He was a clerk at a clothing store, barely made minimum wage, maxed out his credit cards, then maxed out other credit cards paying off the first credit cards.

He didn’t seem to have major depressive disorder, but when someone comes in admitting to a serious suicide attempt, procedure says he gets committed. He wasn’t thrilled about this, saying if he missed work then he might lose his job and this was just going to make him further behind on his payments, but I checked with my attending and as usual the answer was “admit”.

Something especially bothered me about this case, and after thinking about it I’ve figured out what it is.

It’s not just that the psychiatric hospitalization won’t help and might hurt. That’s pretty common. The ‘My Boyfriend Broke Up With Me’s, the ‘I Got Angry At My Dad’s, unless they have some underlying disorder all of these people get limited value from the psychiatric system and tend to just sit in hospital for a couple of days, go to some group therapy, get asked a hundred times if they’re depressed, then go home. And then they’re still broken up with their boyfriend or still have a terrible relationship with their dad and the same thing’s going to happen again.

In this case, it was that – well, the guy is a minimum wage worker from inner city Detroit. He didn’t tell me exactly how much money this debt was, but from a couple of numbers he mentioned I got the impression it was in the ballpark of $5000. That might not seem like an attempt-suicide level of money to some people, but to this guy with his job the chance of ever paying it off seemed low enough that it wasn’t worth waiting and seeing.

So what bothered me is that psychiatric hospitalization costs about $1,000 a day. Average length of stay for a guy like him might be three to five days. So we were spending $5,000 on his psychiatric hospitalization, which was USELESS, so that we could send him out and he could attempt suicide again because of his $5,000 debt which he has no way of paying off. And probably end up in the hospital a second time, for that matter.

I assume that since he was poor, Medicaid paid his hospital bill. I’m not complaining that the cost of the hospital bill was added to his debt, I’m pretty sure it wasn’t, although in some other cases it would be. I’m complaining that here’s this guy, so desperate for money that he wants to kill himself over it, and he has to sit helplessly as we throw thousands of dollars at getting a parade of expensive doctors and nurses and social workers to talk to him, conclude that yup, his problem is definitely that he’s poor, and then throw him back out. I feel like this fails to be, as the buzzwords say, “patient-centered care”.

Problem is, you don’t have to be an economics PhD to realize that “give $5,000 to anyone who attempts suicide and says they need it” might create some bad incentives.

I have no good solution to this. Offering people who are so poor they want to kill themselves very expensive psychiatric care seems maybe a little better than doing nothing. But it also seems insulting, patronizing, paternalistic, wasteful, and occasionally heartbreaking.

And this is why I can never decide whether to identify as a libertarian or a liberal. On the one hand, top-down institutionalized bureaucracies seem so ridiculously inefficient at solving problems that it’s an outrage and a disaster. On the other hand, there are a lot of problems that really need solving, they don’t seem to have solved themselves yet, and governments are the only entity with enough coordination power to attempt the task.

Solution there, it seems to me, is to create unimpoverishable populaces. I think if we were to implement a Basic Income Guarantee we might save more money in psychiatric care than we think – since we compete with the prison system to be the warehouse for people who can’t make it out in the world and nobody knows what to do with. It might produce some of the same kind of savings as giving the homeless people houses. If I got fired because we’d solved all the problems relating to poverty, and the population of seriously mentally ill people was too small to support the current number of psychiatrists, that would be a pretty neat way to go.

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515 Responses to Money, Money, Everywhere, But Not A Cent To Spend

  1. JYS says:

    As a hospitalist in a safety-net hospital that serves a vulnerable population, I’ve observed and commented on the same (generally in the context of medical illness confounded with poverty and sometimes psychiatric illness.). It’s a source of awful tragedy for patients and frustration for providers.

    Does it really matter how you identify? Why can’t you just be for efficient and effective solutions (and thus governance). Ideology can help drive the creative process, but at the end of the day, why not experiment and revise as you would in any other domain.

    • cypher says:

      I think for most people, ideology is caught up in moral beliefs as well, not just practical ones.

      To a Consequentialist, “use either the private sector or government, according to which most improves peoples’ lives in practical terms” is straightforward. But, to someone who takes property really seriously as a moral imperative, not so much.

      • Alex says:

        There aren’t really that many of those out there, though. Most people are vague consequentialists, I think, though with a horrible tendency to conflate “I think this will work”, “I find this appealing”, and “This has no negative effects”.

        • cypher says:

          While I believe that most people intuitively fall back on Consequentialism when they find themselves in an argument over which non-Consequentialist moral system to use, my experience is that, on the other hand, people find explicit Consequentialism highly counter-intuitive.

          That said, I do think people conflate those things.

          Take the very private property-focused people. They seem to believe that not only will heavily property-based systems be highly moral, but that they will also, conveniently, be highly prosperous.

          • Omegaile says:

            Maybe they think heavily property-based systems are highly moral because they think it would be highly prosperous.

            While most of libertarians or even ancaps are not consequentialists (but so aren’t most people anyway), I wouldn’t be surprised to find many who are. Specially because many of their core beliefs can be seen from a consequentialist optics.

          • Typically, AnCaps have a rights based moral philosophy, where no one has the right no one has the right to tax someone else, whereas their opponents justify taxation consequentialistically.

          • “Typically, AnCaps have a rights based moral philosophy, where no one has the right no one has the right to tax someone else, whereas their opponents justify taxation consequentialistically.”

            Then I’m an atypical anarcho-capitalist.

            I have moral intuitions about rights, and they have some effect on my views. But it’s pretty easy to construct hypotheticals where a small violation of rights produces an enormous consequentialist benefit, and in those cases I think I have to favor it. When I put such cases to other A-C types, as I have been doing for some decades, I don’t find many willing to follow out the logic of the pure natural rights position all the way.

            I don’t think I’ve met any Anarcho-capitalists who believe that an alternative would produce better consequences. Consider the case of redistribution, which is pretty clearly where Scott feels most sympathetic to the non-libertarian position. If you ask “is it a good thing for the government to take some money from the wealthy and give it to the poor,” it’s pretty easy to argue that it is. Rephrase the question as “is it good for the government to have the power to take money from some people and give it to others” and the answer becomes a lot less clear—especially after you notice both that the pattern of actual redistribution quite often is not in the direction you favor, and that, when transfers are possible, people spend resources trying to make sure they are on the receiving end instead of the paying end.

          • houseboatonstyx says:

            If you ask “is it a good thing for the government to take some money from the wealthy and give it to the poor,” it’s pretty easy to argue that it is. Rephrase the question as “is it good for the government to have the power to take money from some people and give it to others” and the answer becomes a lot less clear [….]

            This is not a rephrasing, it’s a different level of question. The following are parallel questions:

            Is it okay to take money from the rich to give to the poor?
            Is it okay to take money under other circumstances?
            …[Or list several possibilities on the same level as “from poor to rich”]

            Or you could make it parallel by:

            Is it okay to take money from some to give to others, when…
            ….it is taken from the rich for the poor?
            ….it is taken under other circumstances?

            Or you could use:

            Is it okay to take money from some for others?
            Answer: “Sometimes” … “it depends”….

          • Cerebral Paul Z. says:

            If it’s a different level of question, then it’s the level that most needs to be addressed, since “the power to take money from some people and give it to others” is what you’re actually granting the government– “take some money from the wealthy and give it to the poor” is merely the use you hope (but have no guarantee) they will make of that power.

          • Shenpen says:

            @David Friedman

            This is really what creates the US-EU gap in libertarianism. The question of social democracy in e.g. post-WW2 Germany was a lot like “Government ALREADY had the power to do terrible things, now do you want it to be used for something good instead?”

            Even better:

            “No longer spending on waging a world war on two superpowers at the same time, we can now afford to pay you welfare AND cut your taxes at the same time. Deal?”

            And that is a deal obviously very hard to refuse, and an alternative deal like “How about somehow making all this power disappear into thin air and see what happens after that?” would not sound very realistic.

            The idea of being able to take power away from government or at least not grant it is such a uniquely American idea… the rest of us thinks if you want to deny power to a government you need to have more power than them, in which case you are the de facto government. And who is this you? The people? How can the people act in a coordinated way, and yet not call that coordination government?

          • Irrelevant says:

            @Shenpen: Yes, what you’re describing is the essential reason why Americans consider the European conception of human rights to be a meaningless nicety. Rights must exist irrespective of time period or government, otherwise they’re just a fancy name for “things we have not yet made illegal.”

        • onyomi says:

          There are a fair amount of us out here.

    • ryan says:

      On the subject of what to experiment with:

      It seems way too easy for people to end up with debts they have no realistic hope of paying back.

      The principle cause of foreclosures is unforeseen and gigantic medical bills. Universal insurance against catastrophic medical costs is probably a relatively inexpensive solution to the problem. Medicare for all if you get in an awful car accident or develop cancer. Take care of yourself if you get strep throat. Of course any such laws would end up with mission creep “should medicare cover all broken bones? Not just those that require over $50,000 to treat?”

      The principle cause of petty unpayable debts is credit cards. The industry can function because while it loses money on every customer who doesn’t run a balance, it gets to charge 20-30% interest on those who do while pulling in late fees because they of course can’t pay on time. In the olden days they would have been called usurers and forbidden from such business.

      I look at it sort of like the numbers racket. Maybe we can’t design a society where people don’t want to play. But if that’s the case, at least put a government monopoly in place (like the lottery). And then when the usury monopoly jubilees away Paul’s debt they have perhaps happy voters to answer to instead of angry shareholders.

      • William O. B'Livion says:

        The principle cause of foreclosures is unforeseen and gigantic medical bills.

        This is not true, or is true if you blame the last straw added to the load for breaking the back.

        Megan McCardle has looked into a couple of the studies regarding medical bills and bankruptcy and found problems here and there as well as towards the bottom on this piece.

        I strongly suspect that that the whole kerfuffle regarding foreclosures and medical bills is very similar.

        I followed the real-estate/foreclosure thing and there were *lots* of problems, from fraudulent applications (I spoke to an “independent auditor” who is a FOAF who asserted that at 1 large bank 1/3 of the applications in 2005/6 were fraudulent ON THEIR FACE (this was a bank in San Diego), to people doing “cash out” refinancing on inflated valuations (or just doing cash out to the maximum value allowed, and then having a minor cash flow issue) to really, really bad loan instruments (negative amortization loans, etc.) to predatory loan officers to crazy regulations.

        The notion that medical bills were/are the principle cause, unless stupidity and avarice are medical conditions, is really, really hard to believe.

        • Paul Torek says:

          RE real estate foreclosure, liars’ loans are called that for a reason. And banks designed the terms. Something tells me that the fraudsters (the individuals, not the banks; banks don’t seek treatment) aren’t the ones showing up in Scott’s hospital for attempted suicide.

  2. “Problem is, you don’t have to be an economics PhD to realize that “give $5,000 to anyone who attempts suicide and says they need it” might create some bad incentives.”

    I am an economics PhD and I have a solution. You have a machine that with some probability will kill you, but if it doesn’t kill you, you get $5,000. If the probability of the machine killing you is sufficiently below the attempted suicide death rate, it might actually save lives, unless lots of people use the machine who wouldn’t otherwise attempt suicide.

    • Scott Alexander says:

      Yes, that is definitely an Economics PhD solution.

      • Dale says:

        Another solution would be to treat individuals like we treat companies. The man would file for Chapter 11 and raise new equity financing. This would allow the debt to be paid off and a new, better capitalized individual to emerge from bankruptcy.

        If you had objections about equity investments in people they could be non-voting shares, although voting shares would presumably allow him to raise financing at a much more attractive valuation.

        Example covenants you might use could include “I agree to take any third-party job my investors arrange for me unless I can arrange a higher-paying one” which would be pretty neat because it would incentivize his investors to match him up with a good job / get him training. Another would be “no cable TV until my investors are earning a X% return” which would incentivize him to act in a shareholder friendly way.

        I really like this idea because the income-sharing means ordinary people can get operationally-benevolent, financially-savy investors who are incentivized to help them do well.

        • Multiheaded says:

          I really like this idea because the income-sharing means ordinary people can get operationally-benevolent, financially-savy investors who are incentivized to help them do well.

          And you Greys wonder why people accuse you of wanting to bring back the Confederacy.

          smh

          *looks at URL*

          Wait, you probably actually do. My bad.

          Another would be “no cable TV until my investors are earning a X% return” which would incentivize him to act in a shareholder friendly way.

          I feel ashamed to even have to read such a thing in the 21st century. For more than two hundred years, workers subjected to industrial discipline struggled, bled, died and gave their all so that they and their children could live their LIVES in a less “shareholder-friendly” way.

          • Viliam Búr says:

            And you Greys wonder why people accuse you of wanting to bring back the Confederacy.

            So, what would you prefer to bring back?

            We have a problem. There are various solutions; all of them suck in different ways. Saying: “your solution sucks”, while true, seems like a nirvana fallacy.

            We should try to find a solution that sucks the least. Which is difficult because a) people are stupid; b) different people disagree about what sucks more and what sucks less; c) trying a new solution may bring previously unexpected problems when people start focusing on how to exploit the new situation; and d) there are coordination problems in implementing the solution. And still, even if we would succed at a), b), c), d), as long as the outcome is not perfect, someone will come and say: “you know what, guys? your solution sucks”. Thanks, Sherlock.

            If you do have a perfect solution, I apologize for the tone of my reply, and in the name of humanity I beg you to explain it.

          • jsnead says:

            Well said, especially the last bit.

            Fortunately, a vastly better alternative than this sort of neo-indenture exists – guaranteed minimum income seems to work exceptionally well, and in addition to the savings of being able to eliminate many other social support programs, the savings in prisons and mental health expenses means that in the long and medium term it might actually save money.

            Sadly, in the short term, conservatives loathe the idea and paying for it would initially require increased taxes. Although the ultra-wealthy in the US are the obvious (and from my PoV by far the most preferable) target for such increased taxation, forcing them to part with any of this wealth is sadly quite difficult.

          • Brett says:

            No, this time it’ll be better than the Confederacy, you see, because they’re going to enslave all the poor people, not just the blacks. Way more efficient that way. And hey, it’s a lot easier to manage those vague feelings from your conscience when your slaves are working in factories 200 miles away rather than when you can look out your front window and see them being whipped for laziness.

          • Andy says:

            No, this time it’ll be better than the Confederacy, you see, because they’re going to enslave all the poor people, not just the blacks. Way more efficient that way. And hey, it’s a lot easier to manage those vague feelings from your conscience when your slaves are working in factories 200 miles away rather than when you can look out your front window and see them being whipped for laziness.

            Except for the pretty ones chained to your bed.
            And too bad for the (debt)free people living next to the factories, because they’ll get the worst of it when the peons eventually revolt. But no skin off your nose, you’re just an investor. Don’t dare let anyone question the benevolent institution of debt-slavery!

          • Dale says:

            > *looks at URL*

            Unfortunately the truth is somewhat more banal. My blog is primarily about me commenting (i.e. reacting) to various effective altruist ideas and economics papers. I’ve changed the title of the blog as some people weren’t fond but am not technologically literate enough to change the url.

            Previous discussion here: http://slatestarcodex.com/2014/10/23/book-review-a-future-for-socialism/#comment-155376

        • Andy says:

          Another solution would be to treat individuals like we treat companies. The man would file for Chapter 11 and raise new equity financing. This would allow the debt to be paid off and a new, better capitalized individual to emerge from bankruptcy.

          Conservatives have absolutely nothing on us progressives for blind faith in the basic goodness and decency of people.
          Isn’t “financing” just a euphemism for “debt”? How many debt systems have we had on this planet that could be manipulated to be impossible to get out of? All I see, when I look at this proposal, is another set of slavemasters, congratulating themselves for “improving” the masses. I would wish you success in implementing this, just so you could get the revolt you deserve, except I don’t particularly fancy living on the same planet as this kind of abomination when we have a much simpler solution in GBI.

          • Arthur B. says:

            Equity, compared to debt, shifts a lot of the risk taking from the individual to the financier, who is generally in a better position to assume such a risk.

            But please, go on, show us how much you care about people.

          • Andy says:

            Equity, compared to debt, shifts a lot of the risk taking from the individual to the financier, who is generally in a better position to assume such a risk.

            And the financier has much less “risk” if they can beat the crap out of the individual, or have the police do it for them.
            As I understand it, if I sell “equity” in myself to a corporation, I am giving the corporation the right to dictate what I do. If I am sufficiently attractive and sufficiently indebted, my investors might well set up a “I agree to take any third-party job my investors arrange for me unless I can arrange a higher-paying one” clause in the equity contract, and then deny me any communication access so I cannot seek a better job, then put me to work in a brothel. And if it’s in the contract, it’s all perfectly legal.

            Equity, compared to debt, shifts a lot of the risk taking from the individual to the financier, who is generally in a better position to assume such a risk.

            I don’t understand what you mean by this.

          • houseboatonstyx says:

            Equity, compared to debt, shifts a lot of the risk taking from the individual to the financier, who is generally in a better position to assume such a risk.

            Loan companies and such already assumed the risk when they loaned money to a bad credit customer. Better they should take the loss.

          • Arthur B. says:

            @Andy

            Well for one, no it wouldn’t be legal. But since I deplore that it isn’t, let’s say it is made legal.

            A contract like this would typically include a covenant restricting the duration of the engagement, and/or what the investors can ask of the person.

            What if it didn’t? There could be two reasons to that.

            1) The person signing the contract is desperate, and this is still better than nothing. In that case, by preventing such contracts from being signed, you are making that person worse of. Every demand is elastic in the long run, and mandating better term is unlikely to result in better terms being offered.

            2) The person is being careless and getting into a bad contract => there are already laws against entering leonine contracts.

          • Arthur B. says:

            @houseboatonstyx

            You’re thinking about this backward. In a debt, the risk is great for the borrower. For instance, they lose their job, or become sick, they may find themselves unable to pay the interest of the debt, or the principal. Yes, it’s possible to declare bankruptcy, but the creditors could go after all of your assets.

            In contrast, if you sell equity in your cash flow, the investor will take on the risk associated with the variations in your income, not you. Committing to paying a fixed % of your monthly income is a much less risky proposition than committing to pay a fixed sum.

          • houseboatonstyx says:

            Better cancel the debt and let the debtors take the loss. They assumed the risk when they loaned to someone unable to pay, and have collected some payments and interest from him already.

          • Arthur B. says:

            How do you define unable to pay? What you’re suggesting is called bankruptcy, and it’s not exactly a panacea.

          • houseboatonstyx says:

            In a debt, the risk is great for the borrower. For instance, they lose their job, or become sick, they may find themselves unable to pay the interest of the debt, or the principal. Yes, it’s possible to declare bankruptcy, but the creditors could go after all of your assets.

            This would need a chart to figure out the various combinations, but I was thinking of someone like Paul, who would be more or less judgment proof. That is, his important assets would be already under the exemption his state provides both for bankruptcy and for just plain getting sued. That would be something like $2000 in cash, one cheap car, tools of trade, personal belongings, and whatever home or trailer he declares as homestead. So he can’t lose much of this, and bankruptcy keeps his creditors from any more collection action (such as interfering with his job).

            I was thinking of a legitimate creditor who had sold him something of real value, such as a new refrigerator. Depending on how many payments and how much interest Paul has already paid (perhaps very few), she has lost a valuable refrigerator with little to show for it (even if she can manage to retrieve the refrigerator in good enough shape to resell as used).

            A crooked used car dealer can make a practice of selling the same junk car over and over, repossessing it each time, and keep whatever payments/inteest have been made, each time more than the car is worth. If the Buyer here has valuable assets and a respectable job and a credit rating to protect, then as in your scenario, Buyer is taking a risk but Seller is not.

        • ddreytes says:

          What… what do you do in situations where the market decides that the person is not economically viable

          I mean that’s something that happens with corporations, it’s not like it’s a crazy hypothetical

          • Ialdabaoth says:

            You have mergers & acquisitions divide up their assets (organs) and auction them off to the highest bidders.

          • Dale says:

            Yeah it might not solve all cases of the problem but few things will. Scott’s prefered option of a universal income won’t help people who immediately gamble it all away. Mine won’t help people who are incapable of creating value (though I do not think there are many such people). But I think it could still help a lot of people.

          • ryan says:

            Revert back to normal old bankruptcy?

        • Jaskologist says:

          How is this different from the individual filing for bankruptcy and then trying to take out a new loan?

          The trouble is that he’s probably a bad credit risk, and so won’t be able to get a new loan. (This happens to companies all the time as well.)

          • Gbdub says:

            That was my issue with the proposal – “investing” in someone with “non-voting shares” seems functionally indistinguishable from a line of credit. And if the person could effectively/responsibly manage credit, they probably wouldn’t be in the bankruptcy situation in the first place, or already have the means to get out of it.

          • Jeff says:

            Lenders often seek out people who have recently declared bankruptcy to lend to, at least in the US. They can garnish one’s wages if they don’t pay and the person has no recourse since they can’t file for bankruptcy for seven years.

          • Dale says:

            Bankruptcy has many negative effects which this doesn’t. You wouldn’t have to sell your assets, and you wouldn’t be prevented from doing various things that people who have recently done Chapter 7 are barred from. Furthermore, you have investors who are incentivized to help you earn more money, as opposed to angry creditors.

            Yeah, that was part of my thought process. It’s generally easier to raise equity than debt – hence why startups are funded that way, and financially-stressed firms will raise new equity, not debt.

        • Eli says:

          General rule: the more someone resorts to weasel-words like “shareholder-friendly”, “incentivize”, and “operationally-benevolent”, the more evil their proposal will actually enact.

          • Wrong Species says:

            Most people aren’t “evil”. They simply have different values than you.

          • Nita says:

            @ Wrong Species

            So, what’s your definition of “evil”?

          • Eli says:

            If they aren’t consciously aware of doing something nasty and harmful, why do they feel the need to euphemize and subsequently pretend to value all kinds of obscure second- and third-order details rather than the primary matter of whether a human being lives or dies?

        • switchnode says:

          This happened! Well, sort of.

        • haishan says:

          I think this could be disastrous if implemented widely — investors are not exactly famous for letting things like “human dignity” and “common sense” get in the way of profit — but at the same time I suspect that this would be a really smart thing for me personally to do, if I structured it right and it wasn’t questionably legal.

        • cypher says:

          I don’t see how this results in an equilibrium point where poor people can still watch television. Human beings have value independently of economic transactions.

          Alternatively, thanks to automation, in about 20 years we could just cut him a check using our massive economic power. Then his life isn’t ruled by tyrannical shareholders that only care about squeezing the maximum amount of “value” out of him before discarding what’s left of his husk.

          • Dale says:

            Standard labor markets have (currently, at least) an equilibrium where people can watch TV; there’s no clear reason why this should differ.

        • William O. B'Livion says:

          The problem with this sort of solution is that most of the people in the position Scott is talking about, were they companies, would be denied Chapter 11, and would be, ahem, liquidated, because no one would be willing to finance them.

          A much better solution would be to evaluate *why* these people are having the problems they are, and attack the root cause.

          “Paul” was where he was because he (a) lives in the Detroit Area, and (b) is only capable of making minimum wage *in that area*.

          What “Paul” needs is, in this order, relocation, job training and a better education. The Detroit School System (I am assuming, that or some other public school system) utterly failed Paul, and his parents could have done a better job, but at least they inculcated him with the notion that those were *his* debts and he was responsible for them.

          That at least gives him a chance if someone will give him a hand. “We” should be willing to lend that hand (note that this is not a call for Government to Do Something, they’re part of the problem).

          It would make much more sense to look at someone like Paul and spend 5000 on training for *something* than for sitting around a hospital.

        • Shenpen says:

          Excellent idea! Then all and Evil Mastermind needs to do is to create really shitty jobs, of the type of shovelling really smelly stuff, dump all these people there, which they have to take as long as they don’t find a better one. A week or two after, he can ask them privately “Look… you don’t have to do this job if you are willing to do something illegal for me. Deal?” and a class of perfectly exploitable people is made.

    • A Jealous Monk says:

      “…unless lots of people use the machine who wouldn’t otherwise attempt suicide.”

      Only let people who have attempted suicide have a go at the machine?

      This…now sounds like an even worse idea. I should probably stop trying to improve it.

      • Omegaile says:

        Easy, the machine is actually a russian roulette. A gun with a modified cartridge to support the desired amount of bullets. No one who wouldn’t be willing to commit suicide would just pull the trigger on it’s own head.

        …except maybe for a dare (social pressure)…

        Ok, back to the scratchpad. (I don’t know why it’s fun to think on an idea that will never be implemented anyway)

    • Watercressed says:

      The machine can be constructed at home; it is casinos + a cyanide pill for if you lose at the casino

      • True if you have sufficient money or credit.

        • Alex says:

          With roulette, a $5000 uptick requires about a $150 bankroll. Even the poor can usually scrape that together, at least if they know they’re not going to need to worry about living expenses for the month.

          Come on, haven’t you ever seen Run Lola Run?

          • Zakharov says:

            I think the system would be more economically efficient if it were less likely to kill its participants.

          • Nita says:

            @ Zakharov

            Uh, why? If the participants are people whose economic needs exceed their economic abilities (by self-selection), the efficiency of the system will rise with the likelihood of killing.

          • Tracy W says:

            @Nita: you’re ignoring consumer surplus. Eg if the Poverty NOS works for a coffee shop that sells coffees for $3 each, but the customers would pay $10 to get their coffee if they had to then the Poverty NOS is adding more value to the economy than they can personally capture.

          • Nita says:

            @ Tracy W

            I (like the old socialist slogan) meant the ability to generate value, not to capture it, so I’m not. But on the other hand, the self-selection can be imperfect, of course.

            Also, it’s a bit weird to refer to a person, even an imaginary one, by their “diagnosis” o_O

          • Tracy W says:

            Also, it’s a bit weird to refer to a person, even an imaginary one, by their “diagnosis”

            Really? Thank you. I didn’t expect to fulfil my daily quota of weirdness so early.

        • Harald K says:

          You can also become a gangster. Life has plenty of opportunities for those who are desperate enough to risk a lot for a little, but we don’t want people to take them, for obvious reasons.

    • Randy M says:

      This seems to me to be functionally equivalent to letting rich people hunt willing poor people for sport, with a high license fee and strict bag limits. If you only open the program up to organ donors, you’d kill two oft-discussed birds with one stone while ushering us into a hunger-games like dystopia.

    • Tracy W says:

      Don’t forget the moral hazard problem: your machine might encourage more people to go into debt up to $5000 because they figure they can gamble on the machine to get out of it.

      • Sniffnoy says:

        I’m not sure I follow. If a person thought the machine was a good bet, they could take it whether they were in debt or not.

        • Tracy W says:

          I’m not sure I follow your objection. I mean, yes, indeed, someone could do that, didn’t James D Miller initially point this out?

          • Sniffnoy says:

            OK, but then how is it more of a moral hazard than any other way of potentially getting $5000? “X might encourage more people to go into debt up to $5000 because they figure they can gamble on X to get out of it” could apply to a lot of things?

            Or did you mean it’s a moral hazard because the person can get out of the debt either way, either by gaining $5000 or by dying, and in the latter case the debt is never actually paid off? That I’d agree is more of a moral hazard. It is limited by the number of people actually willing to use such a machine, but I suppose it’s possible that would be large enough to cause a problem.

          • Tracy W says:

            The more of a moral hazard problem is that the machine kills some of the people who use it, with no offsetting benefit to society.
            At least most other ways of making an extra $5000 while risking your life add economic value generally. (eg working as a forester, to pick a dangerous job).

          • Sniffnoy says:

            Ah, OK, that makes sense.

    • Kevin P says:

      Planning to die anyway? Write a will leaving everything to your favourite charity, then use the machine repeatedly until you get (un)lucky.

      • Good point, and significant for people with terminal illnesses.

      • Anonymous says:

        I don’t think the funds should be dispensed if the user dies. It sounded good initially but I grew increasingly uncomfortable of incentivizing death. Many possible sketchy situations and no clear way to regulate for them without making the entire system another bureaucratic tumor.

    • vV_Vv says:

      But it may give bad incentives to those who take the many-world interpretation of quantum mechanics very seriously. LoL 🙂

    • Jason B says:

      And then you realize that science fiction writers got there 30+ years ago: http://aboutsf.podomatic.com/entry/2011-09-19T13_04_55-07_00 (Frederik Pohl’s “Spending the Day at the Lottery Fair”)

    • Conuly says:

      Did they do that on an episode of Sliders?

    • RCF says:

      They already have those. They’re called “coal mines”.

  3. Apoplast says:

    First time commenting, although I’ve been reading you for a while:
    You are my favourite blogger in the world, I haven’t stopped plugging you everywhere, you are SO much more aware of the level the common demoninator is operating at than your average intellectual is, and yet sometimes you’ll suggest solutions like a Basic Income Guarantee without a thought as to how that can sound to a newcoming reader or to the man on the street. I see you putting out wonderful arguments for so many viewpoints that, I believe, will be instrumental to reforming so many of the systems that we need to work, but it never occurs to you to engage the core beliefs stopping these reforms before they’re even conceptualised.
    I guess what I’m saying is, stay awesome, but somehow be more awesomer, because I sure as hell don’t feel up to writing anything as insightful as you do.

  4. haishan says:

    I have no good solution to this.

    “Wait, can’t you just offer everyone $5000…?”

    Solution there, it seems to me, is to create unimpoverishable populaces. I think if we were to implement a Basic Income Guarantee we might save more money in psychiatric care than we think

    “Oh, there it is.”

    Unfortunately, it’s politically and maybe practically impossible to implement a universal basic income. But I wonder if it’s possible to ameliorate the externalities created by poverty in other, slightly more realistic ways. In particular, I suspect that if we had freely available personal financial advice and support it would lead to a lot fewer people doing things like trying to kill themselves over a $5000 debt.

    Another thing that might help — this intersects with the first thing to an extent — is increased access to credit unions; as I understand it, geography is currently a major limiting factor there. If we got a working mobile payment and money transfer system up and running in America this would be much less of a problem. Kenya has one, I have never understood why we can’t.

    • eqdw says:

      In particular, I suspect that if we had freely available personal financial advice and support it would lead to a lot fewer people doing things like trying to kill themselves over a $5000 debt.

      I completely agree, and I’m flabbergasted at how bad some people are with money. In hindsight, while my parents might be terrible in some other ways, they taught me proper financial skills. Importantly: The government didn’t. Public school didn’t. Secondary school didn’t. My job didn’t.

      If I hadn’t had my parents drill into me “Don’t spend more than you make”, “prioritize investing asap”, and “talk to an accountant before you do anything”, I don’t know where I’d be, but I suspect I’d be in a much, much worse position.

      I work in tech now. I make a generous salary, and I know other people who make even more generous salaries. Meanwhile, I’m no debt banking ~30% of my take home per month, and they’re out wasting money like crazy and have nothing left to show for it. They’re long term fucked, and I think some of them may even technically be in the 1%.

      And then I think about the situation poor people face. They have the same lack of financial education that my rich friends have, but they don’t have a massive paycheque as a safety net to fall back on. That is *horrifying* to me.

      There should definitely, definitely, DEFINITELY, be a personal finance/economics/taxes aspect of public school education. This strikes me as so obviously important, and its omission so glaringly obvious, that conspiracy theories tempt me

      • charred-triumph says:

        I feel like parents’ comfort with the idea may be part of it? Maybe they feel like the government shouldn’t tell their kids how to spend money, or they’re worried about the implicit criticism of their own financial decisions. For my parents (solidly upper-middle-class Blue-sphere), I think they would definitely dislike it on the basis that “school should be about Learning and Learning to Learn, not petty accounting!”

        It does seem like a very obvious, important thing to do, though, and I don’t think the above are great hypotheses. Maybe it’s just initial conditions + general inertia (since parents want their kids to be taught what they were, and teachers/education admins want to teach what they think is important for kids to learn, which is probably strongly based on what they learned?)

      • Omegaile says:

        I am a little skeptical on the teachable aspect of finantial responsability. I believe it has much to do with personality and little to do with knowledge/skills. Sure you can change someone’s personality, and everyday interactions like you had with your parents will do it. But in a classroom? I don’t think so.

        Maybe you could change the school environment entirely to acommodate these life lessons. For example giving money to students based on grades (which has other merits) and even an investiment option where the student can leave grade money to be withdrawn later with interest. In other words, simulate “adult world” in school.

        But all of this can be made worthless with more well off parents pumping money into their allowances.

        Anyway, the idea above is not important. What is important is that I don’t think you can just put a finances class and solve the problem. Actually, I think people overestimate the impact of classes, and I think we should get less of it, not more.

        Now, if by personal finance in public education you mean a change in the environment like the one I mentioned above, and not adding classes, then I’m listening. But you have to realise it’s much more difficult to implement.

        Unless I’m talking bullshit and there were studies that proved otherwise. In this case, please point me to it.

        • ^ This.

          Everyone in my house received the same financial training from our parents. As a result, I am extremely frugal, my sister constantly has money problems, my brother is about like me, and my other sister is somewhere in the middle. Personality and temperament determines financial behavior a lot more than explicit teaching and modeling, and the impact of school classes would be approximately 0.

        • Reluctant Engineer says:

          As I recall, the studies done on personal finance classes in high school find that they indeed have little or no effect on adult behavior:

          http://www.economist.com/blogs/freeexchange/2014/07/financial-literacy

        • Jaskologist says:

          I find myself in only partial agreement here. I agree that there’s no educating people out of poor judgement. However, I also think when it comes to finances that there is a large amount of “not knowing what they don’t know” (Spoon theory is proof of how little grasp people now have of basic budgeting). There are some very basic rules that should be hammered into everybody’s head:

          -Do you have enough saved to cover all your expenses for 3 months? Because if not, you’re screwed. You will lose your job at some point in your life.
          -Do you put some % of every paycheck in an interest-bearing account? (I don’t even know what the correct baseline percentage should be; that’s how deep the problem is! And for my first year post-college, my savings all went into a checking account.)

          • roystgnr says:

            Even the definition of “saved” is a bit complicated. I could stop paying my credit card in full, and cover 3 months expenses without going over the limit, but that’s hardly “savings”. I can remove more money than that from the principal in a Roth IRA without penalty, but even though that is clearly “savings” the idea of dipping into it sounds insane. More so with other retirement counts for which there would be penalties.

            This isn’t just a theoretical question or a quibble about word definitions, either. Mortgage and auto interest rates aren’t high, but paying off even secured debt has a better return than savings bonds or a checking account, so every saved dollar that I keep liquid for emergencies has a few cents a year of opportunity cost attached.

          • And says:

            The problem is that absolutely none of these rules will help you if you literally *don’t have enough*, and that is true of a lot of people.

          • Daniel H says:

            @Jaskologist, roystgnr: That doesn’t even count all the other, higher-risk/higher-reward accounts. Keeping money in an interest-bearing savings account (beyond what’s needed for immediate liquidity) is almost as bad an idea as keeping it in a checking account or a coffee can. This is especially true now, when savings account interest rates often don’t keep up with inflation.

            @And: Yes, a lot of people don’t have enough, but with proper financial knowledge, that’s fewer people than you might think. A full-time minimum-wage job, which admittedly a lot of people don’t have, is in fact enough to live on and even save some money.

        • Stella says:

          Scott had a post once about the “lottery of fascinations.” One fascination I’m really fortunate to have gotten is a fascination with saving money. Not only am I interested in the details of personal finance, I *love* watching the number in my savings account rise. At a certain point, I get more enjoyment out of watching the number in my account go up by $100 than $100 worth of a purchase–clothes or a car or a night on the town or what-have-you. Partly due to that fortunate personality trait, I’ve never been in debt, and my buffer has been able to handle every emergency I’ve run across.

      • Tom Ash says:

        There’s a movement to introduce it in the UK.

      • Randy M says:

        “The government didn’t. Public school didn’t. Secondary school didn’t. My job didn’t.”

        Seriously, you expect any of them to give you good advice? Unless you worked for a small business or went to a private school run by someone who went through the depression (the 1920’s one), the view is certainly going to be that debt is a good thing and savings are repugnant.

        Not only have we forgotten that dept, like fire, is a dangerous servant and a fearful master, but our corporations and governments run on debt, both their own and that of their customers. Nevermind that it’ll lead to situations like that described here among a non-insignificant portion of the population, we need to keep the economy humming.

        • Ben Anhalt says:

          The level of Stockholm syndrome society has with credit cards is unbelievable. It is conventional wisdom that you must use them in order to “establish credit”. I know from experience it is simply not true, having never used consumer credit in my life. But people swear up and down that you can’t rent cars, book hotels or get approved for home loans without a credit card, even though I’ve done all of those.

          Some people seem to be able to use credit cards safely, like lots of people can drink responsibly. For others they seem to be completely toxic and lead to financial ruin. But unlike booze which we are constantly warned about growing up, the only message people get about credit is that it is something they absolutely must utilize.

          • Jiro says:

            But people swear up and down that you can’t rent cars, book hotels or get approved for home loans without a credit card, even though I’ve done all of those.

            “You can’t do ___ without ___” doesn’t normally mean that it is literally impossible. It means that there are much bigger barriers. So the fact that you have done all of those means nothing, unless you’ve done them with similar ease and with similar costs.

          • thirqual says:

            Ok, as a non-American, here is what “no credit rating” meant for me (only the case where I was not told “no credit rating”, and not “no credit rating + you are not American”):
            – increased deposits for renting: two months of rent instead of $500
            – deposit for opening a cell phone line (reimbursed after 6 months)
            – deposit for gas company (reimbursed after 1 year)
            – deposit for electricity and water connection (also 1 year)
            – 2 weeks to open a bank account wher I wanted (not a free choice because of previous accounts in French branch)
            – increase scrutiny when trying to rent, with some renters telling me no directly (before knowing I was not an American citizen).

            I was asked to make a deposit for renting a car once, but was able to say no.

          • thirqual says:

            Precision: as a non-American who came to work in the US.

          • Ben Anhalt says:

            In my experience there have no big barriers. I think I did have to make a $50 deposit to get cellphone service in 2003. Many utilities require a deposit. $50 didn’t seem excessive and, of course, it was refunded.

            Other than that, I can’t think of a single instance where using a bank card instead of a credit card has made any difference. Maybe it depends on where you live. I’m in the midwest.

            @thirqual: I’ve had several roommates from overseas. They had similar difficulties, but getting approved for a credit card was quite difficult for them also. So it just seems like trading off one headache for another, as far as I can tell.

          • thirqual says:

            I’ll have to check my records for the exact numbers for the utilities, but none were below $150. I would not qualify this as a small hindrance for someone who is poor (or not even poor, $150 is about a month of decent food for one person).

          • Ben Anhalt says:

            Utilities typically require a deposit for new accounts, no matter what. See: http://ask.metafilter.com/91589/Can-the-electricity-company-charge-a-deposit-regardless-of-credit

          • I think you can’t rent a car in the US without a credit card.

          • thirqual says:

            @Ben My point was that I was told (by the utilities people) that the deposit was higher because I had absolutely no credit history (Los Angeles area, may vary with the city according to a colleague in a similar situation).

            @Nancy: I have rented cars while I had only a (US) debit card, and no credit history. Family members on vacations have also been able to rent cars with foreign debit (not credit) cards.
            Did you mean you cannot rent with just cash?

        • moridinamael says:

          But debt *is* awesome. If people actually sit down and go through the math, and make a battle-proof budget, they can determine how much debt they should be taking on given their income. Problems happen when people don’t go through the math and just get the car that they want and the house that they want and then are forced to start using credit cards.

          Games can be useful in teaching these concepts. Any simulation or strategy game I’ve ever played hammers home the lesson that you should think carefully about how much you borrow and at what rate.

          Another addressable problem is that, currently, if you try to get a home loan, the loan granting agencies will offer to loan you you about twice the amount of money that would actually be prudent. Unless you have – again – sat down and done the math, there’s a tendency to assume that “they wouldn’t be offering me this if they didn’t know I could afford it.” And of course this line of thinking is incentivized by the fact that you can buy a much bigger house if you borrow the maximum that’s being offered.

          • William O. B'Livion says:

            and make a battle-proof budget, they can determine how much debt they should be taking on given their income.

            * No battle plan ever survives contact with the enemy.
            * Most people are bad at math.
            * Most people are even worse at risk analysis.
            * A 60 inch television v.s. saving up 6 months of living expenses means that they get to watch the Superbowl in HD.

      • Scott Alexander says:

        A lot of the poor people I talk to aren’t bad with money. I spend a while trying the condescending “Well, did you consider balancing your income and expenses like this…” thing, but in most cases they’d thought about it a lot longer than I had.

        There are of course some people who are terrible with cash, but they don’t really register as this kind of patient. Usually I just think “Yeah, you’re poor and you spend $200 a week on cocaine, if you haven’t figured out your problem yet me telling you probably isn’t going to help.” But a lot of people aren’t like that.

    • orangecat says:

      I might be hopelessly optimistic, but I can envision many libertarians and conservatives supporting a basic income if presented properly; Milton Friedman and Charles Murray make compelling arguments based on economic efficiency and individual freedom and responsibility.

      • Viliam Búr says:

        In my opinion, the only problem with the basic income is “how much?” More precisely, who and how specifically will decide the number, because it will have to change depending on the economics, so we must have a mechanism for updating the value.

        If the answer is “all people will decide by a democratic vote”, I am afraid of what would happen at the moment when there is a sufficient block of voters a) living solely on the basic income and b) willing to vote for anyone who increases the number; i.e. a positive feedback loop.

        A possible solution could be that the amount of basic income would be decided by a median vote of people who don’t receive the basic income, thus creating a negative feedback loop.

        This would also allow starting the system easily: today, nobody has the basic income, therefore everyone can vote on how high will it be for the next year.

        • Slow Learner says:

          Um – whole point of the Basic Income is that everybody gets it. Who can vote on it in year 2?

          • Maybe going on BI requires you to relinquish the right to vote? I might support such a system. Anything that decreases the amount of voting is a net positive.

            However, such a law would never pass constitutional scrutiny.

          • Thanks Scott says:

            “Maybe going on BI requires you to relinquish the right to vote?” Interesting idea, but I think you’d start to see voting restricted to relatively wealthy political extremists… i.e. not just people concerned with politics, but people who are sufficiently *passionate* about politics to effectively pay thousands of dollars to vote, *and* feel they have the financial means to do so.

          • social justice warlock says:

            Interesting idea, but I think you’d start to see voting restricted to relatively wealthy political extremists… i.e. not just people concerned with politics, but people who are sufficiently *passionate* about politics to effectively pay thousands of dollars to vote, *and* feel they have the financial means to do so.

            That’s a feature, not a bug, from an NRx perspective. The state, and most everything else, ought be in the hands of market-approved philosopher kings.

          • haishan says:

            I’m not NRx, but I definitely lean that way, and I’m highly pessimistic that “only let rich people vote” would change much. There are a lot of rich progressives out there, and unless you’re restricting the franchise to a few hundred, I’d expect that the distribution of political positions among voters would not be distinguishable from some of the more skewed elections we see today.

            That said, hey, there’s a pretty excellent natural (non-controlled) experiment (replicated here, here) that suggests that people are at least sometimes willing to forgo political freedom in exchange for economic security.

          • Irrelevant says:

            We could have done a proper experiment, but the President never got back to me on my proposal that we buy out the King of Bahrain and turn it into a model state.

          • William O. B'Livion says:

            There are several variations of “basic income” and unless you specify exactly which one you’re thinking about you’re going to get people thinking of others schemes that only “guarantee” a certain level of income, not actually cut every person a check.

            I also have extreme doubts about the efficiency of such a program, and have no doubt at all that my idea of a “basic income” would make progressives in the US call me all sorts of racist/bigot/radical reactionary evil minion of evil.

            Then again I’ve lived over 4 years of my life in barracks/dorm environments eating at communal dining facilities. and having all my worldly goods in a wall locker, 3 drawers and a 2 shelves of books, and another year in similar situation, only without the shelves of books. So I’ve got a good idea of what a person “needs” to live a marginally comfortable life.

            You get 400 cubic feet of space, a twin sized bed that can fold out into a couch, a chair and a desk. 6 days worth of clothes and a kindle with the Gutenberg library for entertainment. Breakfast is served between 6 and 8, lunch is 11 to 1, dinner 4 to 6. Midnight chow from 11 to 1, but you only get 3 a day.

            At that you’re still living better than 1/2 the world.

          • Irrelevant says:

            Well, Will, you’re proposing better conditions than at the work programs they had back in the Depression, so there’s at least some historical precedent there.

            But I don’t think slotting people into camps is going to have good results without some sort of labor attached, because Day 2, people are going to get bored and start fights. And once you’ve imposed enough controls to keep that down, you’re just left with a nicer, sorta-voluntary prison.

          • jaimeastorga2000 says:

            @William O. B’Livion: The quality of life in such an environment is almost entirely dependent on the type of people you fill it with. If you only let in the sorts of bright kids who can get into Harvard, Yale, Princeton, MIT, Caltech, or Stanford, you get a college dorm. If you take the exact same facilities and you fill them with inner city gang members, drug addicts, ex-convicts, alcoholics, prostitutes, and single mothers, you get a housing project. I would be very happy if someone offered me free lifetime accommodations in the former, not so much in the later.

            As GLaDOS said, “a ghetto/barrio/alternative name for low-class-hell-hole isn’t a physical location, its people“.

        • anon says:

          So just make it a percentage of tax collection, since it’s evenly distributed anyway. You have a “basic income tax” that’s levied from certain segments of the population, you get the sum of what was levied and just divide it by the amount of citizens you have. You vote for how to structure the tax, or politicians decide it, whatever – if the tax is too low, everyone will be getting less basic income than the max possible, if it’s too high, all your rich people will run off to China and everyone will still be getting less than the max. This also addresses another argument against basic income: If it actually does make everyone stop working, the money levied will also decrease, and so will the basic income doled out, until people start working again.

          The problem becomes: “The tax gathered last year was 10^12, so this year our 10^9 citizens will each get 10^3 split over 12 months. To increase the basic income for next year, do we increase the tax on the rich, or do we decrease it so we can attract more investors, or do we maybe increase the one on the middle class, or do we start taxing everyone at 10% flat?”

          • Irrelevant says:

            This also addresses another argument against basic income: If it actually does make everyone stop working, the money levied will also decrease, and so will the basic income doled out, until people start working again.

            That ignores the psychological problem where, in close situations, people will be willing to quit just to screw the free riders they see taking advantage of their work.

        • Scott Alexander says:

          Yeah, I think the best way to pass a basic income would be by constitutional amendment (yeah, I know, that’d be even harder), in some way linked to GDP growth/inflation so it doesn’t have to be adjusted much.

          On the other hand, you’d think everyone would selfishly vote in lower taxes, but they very often don’t. So maybe it wouldn’t be as bad as we think.

          • keranih says:

            Does everyone who votes for lower taxes do so ‘selfishly’? (I suspect the people who view the majority of government actions as unhelpful don’t view opposition to funding those actions as selfish – and here I include anti-war, anti-oppresion, anti-farm subsidy people as well as the ‘more typical’ Tea Party sorts.)

            Does everyone votes against higher taxes expect to have to pay those higher taxes themselves? (It’s not ‘unselfish’ to make a rule that costs someone else, after all…)

          • houseboatonstyx says:

            Does everyone votes against higher taxes expect to have to pay those higher taxes themselves?

            Apparently some do, or did in 2000. There was a campaign issue about raising taxes on the “top 3%”. A poll found that 29% of the general public thought they were already in the 3% and 13% expected to get there. ( Numbers from memory )

          • Tracy W says:

            That’s unusual. Normally people underestimate their position in the income distribution.

      • LTP says:

        As a libertarian-leaning moderate, I could accept a fairly generous guaranteed minimum income if *and only if* a great portion of the rest of the welfare state was eliminated and was guaranteed not to return.

        • cypher says:

          As more of a liberal, that’s about 1/3rd of the point of basic income. All of the means testing insisted on to make sure the “wrong people” don’t get welfare, or that there isn’t fraud, is expensive and tends to shut out people who need it while not adequately capturing the fraudsters.

          Since “big government bureaucracy” isn’t what my actual value is, reducing it while improving the situation for the poor (and setting up a safety net in case things don’t turn out well for me (and establishing a precedent that will keep humans around in a 90% robot economy)) isn’t a problem.

        • Ialdabaoth says:

          I think most citizens would take that deal if offered, which is why it’s so important to bureaucratic self-perpetuation that no such deal is ever offered to us.

    • Harald K says:

      Unfortunately, it’s politically and maybe practically impossible to implement a universal basic income.

      That has been said of many excellent social policies which we have today. It shouldn’t really be all that much more controversial than progressive taxation; flat tax + UBI is progressive taxation.

      I hear it from more and more people, aloud. It would probably be easier to list the influential writers I read who don’t support UBI, than the ones who do. What’s even better, like sortition (another excellent political idea), it crosses ideological lines. Many on the left are prejudiced to think of it as a left-wing idea, but Hayek wasn’t exactly left-wing, and he was an early UMI proponent.

      • suntzuanime says:

        Flat tax plus negative income tax is progressive taxation; flat tax plus UBI is null. And flat tax is probably politically impossible at this point, though the occasional Republican presidential candidate makes noises about it.

        • Harald K says:

          > flat tax plus UBI is null.

          I don’t get what you’re saying here. Null pointer exception in your code?

          For “brackets” over the UBI amount, UBI+Flat tax is a smooth and sensible progressive tax. For below, well, whatever you want to call it there it’s not very different from negative income tax in that range (unless you favor the “tax refund” version of that, which punish those who are too poor to even have any tax to get refunded).

          • suntzuanime says:

            Give everyone $5000 + Tax everyone $5000 = you haven’t done much. What you’re talking about is a negative income tax, which is not really the platonic form of UBI. It’s basically UBI + progressive taxation, as long as we’re doing math. So if UBI + flat tax = 0, then it’s pretty clear why UBI + progressive taxation + flat tax = progressive taxation.

          • Sniffnoy says:

            There may be a terminological mismatch here. “Flat tax” often means a flat percentage of income (or whatever it is that’s being taxed), not a flat amount of money.

          • Harald K says:

            I still don’t get what you’re saying at all.

            It’s not give everyone $5000 + tax everyone $5000, it’s give everyone a fixed $5000, tax everyone 20% more. Or however much necessary to tax everyone $5000 more on average. (Obviously, no redistributive proposal gets away from taking just as much as it’s giving on average).

            Maybe what I’m calling UBI, you call negative income tax? What you call UBI is maybe what I would call UGI or UMI, universal guaranteed/minimum income?

          • Harald K says:

            Oooh, thanks Sniffnoy, now I get what he’s saying. Well, the common way of using those words, an income-independent fixed tax is called a head tax or a poll tax, not a flat tax. Flat tax is always about a flat percentage (in other words, only one income bracket). Head tax plus UBI is of course nonsense.

        • AR+ says:

          It says something about how progressive taxation is taken as a given that it is even called a “flat tax.” “Proportionate tax” would be more accurate. “Flat” should be what you’d have if the $5,500 per capita federal income tax took the form of an actual $5,500 tax bill for every individual.

      • suntzuanime says:

        And while we’re adding things together to get innocuous stuff let’s not forget that chlorine plus sodium equals salt.

    • Wrong Species says:

      I really doubt that work. Personal finance is not hard. People are just bad at it because they have no self control.

    • William O. B'Livion says:

      A huge problem with issues like GAS/GAI is that the old saw about “Idle hands being the devils workshop” is true, and that’s EXACTLY the sort of problems we see with long term unemployed, inner city/trailer park populations on multi-generational “welfare[1]”, indigenous/aboriginals/first-peoples and trust fund kids.

      It’s like the response one wit had to Obama’s “We need an economy that works for everyone”, to which the response was “No, we need an economy were everyone works”.

      [1] Yes, I know about welfare reform in the late 1990s and it’s “not possible” to spend your life on welfare. No, it’s not. but when most people say “welfare” they don’t mean just that specific program, they mean “government aid”, and it is possible to spend a LOT of time on “government aid”.

      • houseboatonstyx says:

        Otoh, there are informal but long-term shabby trailer ‘communities’ that fit most of those points — no jobs, residents totally supported by government or pensions, somewhat socially isolated from the surrounding town — that are very pleasant and peaceful, with nice though tiny yards. Most residents are retired or disabled; there is reasonable garden space adjoining each trailer.

        It would be interesting to compare these with the “idle hands” enclaves. These are not ‘inner city’; they’re in peaceful towns with clean air. The incomes are steady; no hassle to keep applying for or renewing a variety of different government aid programs. Apparently the incomes are sufficient for their lifestyle.

        • keranih says:

          I think your question is answered by a comparison of assault & property damage by age of persons involved, regardless of income or SES.

          A retirement community is quiet and peaceful for reasons which absolutely do not apply to communities which are providing laborers to repair those houses, run electricity, and manufacture the washing machines and scooters.

          • houseboatonstyx says:

            Old/disabled people are less likely to assault or damage property, but can have more feuds and fantasies, which are less likely to show up on police statistics.

            On fixed income without work,
            the peaceful low-budget enclaves I described were mostly legal ‘campgrounds’ that have deteriorated and gradually filled up with trailers no longer roadworthy and dysfunctional people. The further down the scale below that, correspondingly have the kind of problems you describe.

            My observations come from several years of travel in our comfortable self-contained motorhome, staying for days to weeks sometimes in homeless unofficial camps, in legal ‘campgrounds’ that have deteriorated and gradually filled up with trailers no longer roadworthy and dysfunctional people, in KOA-type RV parks that allow some long stays, etc — not the type of corporate-owned middle-class ‘retirement communities’ you mention.

  5. 27chaos says:

    Oversimplification that seems probably rather true to me nonetheless: All the incentives that cause problems such as this will also incentivize never creating a Basic Guaranteed Income. To say that we need basic income is to ignore the deeper underlying problems of the economy in the same way as to say that we need a benevolent dictator is to ignore the deeper underlying problems of politics.

    • Andrew says:

      That’s right. We can’t abolish poverty, because it is the threat with which we force the masses to work.

      • Ialdabaoth says:

        But why is it so damn important that the masses work?

        • Multiheaded says:

          To ensure a certain distribution of certain well-known positional goods, of course.

          *spits*

        • Andrew says:

          Historically, we needed to force the masses to work because we had an infinite need for labor.

          Today, our need for labor is more limited, but we must force everyone to work, or else those whose work we need will feel jealous.

          • Viliam Búr says:

            Today, our need for labor is more limited

            How much is this actually true?

            When I look around myself, I see hundred things that are not done, and that would be nice to do. You could always have more teachers, more doctors, more nurses, more people cleaning the streets, or maybe more people to help senior citizens, etc. Almost anywhere you look, there would be nice to have some more people to help.

            Sometimes it is a problem of qualification. Even if we need more neurosurgeons, we can’t just take a random person from the street. Not even if we would provide them education; their IQ may be not enough for the task.

            But often this is a problem of money distribution. For those tasks where it would be nice to have more people to help, you don’t have money to pay them.

            Basic income could fix this, if the people who don’t work and live on the basic income would decide to help. But maybe they would just decide to play videogames and debate on social networks instead.

            I would like to see some solution in between. A solution where people could get some decent money for doing the things that are nice to do but don’t generate enough profit, but couldn’t get the same amount of money for playing videogames.

            Seems to me that many debates about this topic are black and white: either people generate profit, or they get money for staying at home. It would be nice to have an option of doing useful but unprofitable work for money. Because I think there is a lot of useful but unprofitable work to do. A big machine may replace dozen workers in a factory, but will not take care about their grandparents.

          • Anonymous says:

            >When I look around myself, I see hundred things that are not done, and that would be nice to do. You could always have more teachers, more doctors, more nurses, more people cleaning the streets, or maybe more people to help senior citizens, etc. Almost anywhere you look, there would be nice to have some more people to help.

            But those aren’t /new/ needs. Those are needs that have existed forever, /in addition/ to needs we’ve now satisfied.

          • jaimeastorga2000 says:

            @Viliam Búr: I disagree with your specific examples (teachers are largely ineffective except as sitters, doctors are artificially scarce), but I agree that there is a lot of work that still could be done, which is not done because nobody who would benefit from that work can afford to hire someone to do it. The way basic income is supposed to fix is that someone who wants extra money on top of his monthly check gets paid to do those things by other people who don’t mind spending part of their monthly check to get those things done. You once gave the example of a government who hired unemployed people in a village to take care of local children, which their mothers needed done. In theory, the way this should have worked under basic income is that some people would have been willing to earn a little more money taking care of children and the mothers would have paid them using a fraction of their basic income.

        • social justice warlock says:

          Even zero marginal product doesn’t mean zero average product; if there weren’t people doing all sorts of very unpleasant manual and service labor things would grind to a halt almost immediately. (Hence why unions work.) So it’s not just positionality.

          Of course in a just society “who would clean the toilets?” would be answered by paying that more than relatively fun jobs like law or finance or whatever, but it’s not the toilet-scrubbers who make the rules.

        • Walter says:

          Left seeks to perpetually improve overall uh, call it quality of life. Right seeks to attain fairness/justice. It is an unhappy marriage.

          Right: Everyone gets what they earn.

          Left: What about those who CANNOT earn? They die under your scheme?

          Right: Ugh, that doesn’t seem right…hmm…ok, let’s say they get paid for existing, out of the public dole.

          Left: Agreed.

          *Time Passes*

          Left: I want to help those who WILL NOT work as well.

          Right: No.

          Left: If you say that, they’ll just have to pretend that they CANNOT work. Either way, you are paying for them, and it is WAY less efficient to make them all invent reasons that you’ll pretend to believe.

          Right: …

          **********************************

          You could do this exact dialog with the Death Penalty: Right wants it as part of his fairness fetish, Left is against it because she wants more people more happy, and death penalty means less people.

          Right: Folks who commit bad crimes should die for it.

          Left: What about those who didn’t know they were commiting the crime due to their mental illnesses. Or those who never had a shot due to their extenuating circumstances?

          Right: Fine, those people can’t be killed.

          Time Passes:

          Left: I want to abolish the death penalty.

          Right: No way

          Left: The amount of checks and double checks necessary to make sure they aren’t part of the ever growing “can’t be executed” group are super expensive. It is cheaper to jail and feed them for life. You wouldn’t want to be inefficient, would ya?

          Right: …

          *************************************

          Basically, I’m saying, expect Left to win any given argument (eventually), because she can complicate Right’s schemes and then appeal to his love of efficiency. You’ll get your personal income guarantee some day, and like all of Left’s victories it’ll be irreversible once attained.

          • Nita says:

            Left is against it because she wants more people more happy, and death penalty means less people.

            Uh, no. The problem is that we can’t resurrect someone if we make a mistake. And we cannot prevent such mistakes with certainty.

          • Jiro says:

            Having some chance X of being able to reverse a death penalty sentence (while they are on death row but have not yet been executed) and having zero chance of being able to reverse the sentence after that (since they have been executed) is mathematically equivalent to having a smaller chance Y of being able to reverse their sentence and being able to reverse it up to the end of a normal lifespan. If there is some chance Y that you would accept, then there is some chance X that you should accept, even though X involves not being able to resurrect them after the execution. and Y does.

          • jaimeastorga2000 says:

            Uh, no. The problem is that we can’t resurrect someone if we make a mistake. And we cannot prevent such mistakes with certainty.

            Really? You think that’s the left’s only problem with the death penalty? Then how come Anders Breivik and Brenda Spencer are still breathing? How come there are other murderers whose probability of being innocent is as epsilon who are not sentenced to death?

          • Whatever Happened to Anonymous says:

            I find the assignment of Death Penalty to Left vs. Right to ve very counterintuitive. On the one hand, the idea of death as a fair punishment to a horrible crime is something I’d definitely associate with the Right. However, the idea that one can measure the value of a life in such a way feels like a very progressive idea, opposed to the conservative notion that a life is priceless.

            Maybe I’m defining these term wrong, maybe it’s a bad idea to try to box this issue in the Left-Right dichotomy.

          • 27chaos says:

            That’s an interesting dynamic, I’d like to see more speculations about whether it actually exists.

          • Nita says:

            @ jaimeastorga2000

            It’s not the only problem, but it’s an argument you might actually hear from any leftist, as opposed to Walter’s idea, which is 1) specific to total happiness utilitarians, and 2) implausible because prisoners tend to be unhappy.

            @ Jiro

            Perhaps. But that’s not how moral reasoning works in most people.

            @ Walter

            You might be interested in some of Jonathan Haidt’s research.

          • William O. B'Livion says:

            That was very, very confused.

            The Right isn’t (generally) against helping people, and we (to the extent I can speak for them) are perfectly fine with, and even support the sorts of charities that provide help for unemployables and those who need a little more help. We’re just pretty sure the Federal Government isn’t the place to do it, and we’re not so sure about State governments either.

            If the left is really so concerned about helping people, why do the areas they control keep winding up like Venezuela, Cuba, Detroit, St. Louis, New Orleans, etc.?

          • Limi says:

            Yeah, or Denmark, Finland, Canada or New Zealand? Oh wait.

            Can we please not do right-left peeing contests here?

          • Tab Atkins says:

            Really? You think that’s the left’s only problem with the death penalty? Then how come Anders Breivik and Brenda Spencer are still breathing? How come there are other murderers whose probability of being innocent is as epsilon who are not sentenced to death?

            Because we have to resolve the Sorites paradox somewhere, and there no bright line between “totes guilty” and “very probably guilty, but small chance of innocent”. There aren’t that many of the truly terrible, and it’s not that expensive to imprison them for life, so setting the execution line at “never” means we don’t have any people which we maybe wrongly kill. It’s nice and easy.

            It’s also easy to translate “never kill” into a simple deontological rule; these are generally easier to hold and apply than a more nuanced consequentialist rule.

            Finally, definitely-guilty murderers aren’t necessarily going to murder again. Maybe they can be reformed into productive members of society. Even if you never release them, they might do useful artistic or mental work in prison that benefits society as a whole.

            There are a bunch of reasons to support life in prison over execution in all cases.

    • Thanks Scott says:

      More generally, I wonder how much political discussion falls prey to an “Attempted Telekinesis” problem where the discussant assumes they have complete control over the political system and pontificates aloud on how things would work if they were in charge.

      • ……if they were in charge, and everything was as simple as it seems to them.

      • 27chaos says:

        All of it. Actually, to a certain extent oversimplifications like this are necessary for thinking about agency at all. Thinking about decisions is necessarily about holding some factors constant while imagining that other factors can be altered.

        Nonetheless, some instances are more or less egregious than others. I’m not sure if there’s a general way to assess egregiousness or not, but it would seem to have something to do with the amount and type of power that the speaker or their audience actually has. Since no one here has much power, what Scott’s really doing is trying to get these ideas out into the general consciousness, which is acceptable. But IMO the ideas are already in the general consciousness, and we need to start taking the next few steps which involve more pragmatism.

        • Paul Torek says:

          necessary for thinking about agency at all. Thinking about decisions is necessarily about holding some factors constant while imagining that other factors can be altered.

          That is absolutely right. Except for this part:

          oversimplifications like this

          Some factors really can be altered by a given person, or cooperating group. Although “all of politics” never qualifies as such a factor.

      • ChristianKl says:

        They way to get to be in charge is to think clearly 10 years before being in charge.

        Blogging isn’t a bad vehicle for convince a lot of people that Basic Income is a good idea.

    • William O. B'Livion says:

      To say that we need some sort of basic guaranteed income is to believe that:

      1) There are a significant number of people who will be content to sit on their couch and consume while still maintaining an intellectual connection to the world around them and *not* engaging in the sorts of activities that have serious negative externalities.

      2) That most people will be *content* with what is today basically the borderline between technical poverty and being poor, and not seek to increase their income either through getting GAS/BGI/GAI increased, or through black market dealing, robbery and theft.

      • Irrelevant says:

        black market dealing

        In a world where you can pass basic income, you can probably also resolve that problem by legalizing prostitution, drugs, the sale of human blood, etc. until the “black market” doesn’t contain much beyond actual slavery.

        • John Schilling says:

          Does ‘etc’ include guns? Because O’blivion is right, bored people are going to be picking fights.

          What about gambling and loan-sharking? Poor people aren’t going to be satisifed with not starving or freezing, and a lot of them are going to be unrealistically optimistic about their clever schemes to double their subsistence-level income. Give ten people a GBI, and you’ll likely get: five people surviving on GBI, one two-bit crime lord on five times the GBI, and four people walking into Scott’s office saying “I made some bad choices and now I’m broke and I’m thinking about committing suicide”.

          No, saying that those debts are unenforceable and it serves the greedy loan sharks right that they lose their money doesn’t address that problem, because see point #1 about the black-market guns.

          These are some of the real problems that face impoverished communities where people are mostly just getting by on the current patchwork of government assistance plus the occasional minimum-wage job. GBI, legal drugs, and legal prostitution would I think modestly improve things at the margin, but they don’t really make the underlying problems go away.

          • Irrelevant says:

            O’blivion is right, bored people are going to be picking fights.

            Hmm? He might have also said that, but the comment that brings to mind is one of mine:

            I don’t think slotting people into camps is going to have good results without some sort of labor attached, because Day 2, people are going to get bored and start fights.

            So obviously I agree that’s a practical concern. I don’t think banning guns is either an effective or reasonable response to the problem though. Maine and Louisiana have the same gun laws, after all.

            I was making the observation that in a world where anti-paternalistic sentiments are strong enough to promote basic income over welfare, they’re probably also strong enough to make people refrain, at least on the legal level, from judging prostitutes and drug users. With a hint of tongue-in-cheek “I can define away this problem!”

      • Andrew says:

        “2) That most people will be *content* with what is today basically the borderline between technical poverty and being poor, and not seek to increase their income either through getting GAS/BGI/GAI increased, or through black market dealing, robbery and theft.”

        What? Why wouldn’t they seek to increase their income by obtaining “white market” employment?

        And why would people receiving a basic income *in particular* be prone to choosing “black market” employment over regular employment? If black market employment is really the superior option, wouldn’t it be superior regardless of whether you are getting monthly checks from another source?

        • Irrelevant says:

          If black market employment is really the superior option…

          It’s not. Crime pays terribly at the low levels.

  6. Noah S says:

    “On the other hand, there are a lot of problems that really need solving, they don’t seem to have solved themselves yet, and governments are the only entity with enough coordination power to attempt the task.”

    I think that whether or not governments are less prone to coordination failures than markets is an unresolved question.

    • Watercressed says:

      Regardless of whether governments are less prone overall, they are prone to different coordination failures than markets, and can intercede where markets fail.

      • Andrew says:

        Yes, but how often will they intercede where markets actually fail, how often will they ignore market failures, how often will they intercede when markets are working fine and how often will they leave well enough alone?

      • 27chaos says:

        I’ve contemplated along these lines before, hopefully you will have some insights for me or I for you.

        Are they truly prone to different coordination failures? Can you elaborate on what you mean by this, or give examples? Surely you don’t mean this in a qualitative sense? Even in terms of degree, I’d expect their problems to be very similar. If there is a difference though, especially a qualitative one, that would be very promising.

        Empirically, I guess I agree that the types of problems each has sometimes look superficially different. But I’m uncertain whether this is actually the case or just an illusion, and I have no strong theoretical understanding of why differences might emerge.

        The main difference I can think of is that governments are sovereign within their territory while businesses are not. But it’s unclear to me what the implications of that should be. Also, “sovereignty” is not the same thing as actual power, which is what I expect to actually have its hands on the levers. Insofar as democratic countries are susceptible to lobbying and such, shouldn’t this difference be insignificant?

        Could the difference simply be psychological? Perhaps government inspires more genuine ideas about patriotism and cooperation than businesses, or has a different sort of culture?

  7. pliny says:

    What of this?

    Sadly, this may mean that increasing happiness by reducing economic inequality could paradoxically produce more suicides as a “side effect.” But this is one problem we are unlikely to have, as economic inequality is high and rising in the U.S.

    • pliny says:

      I’d be curious to know if higher suicide rates result from lower inequality because less inequality in general means more social mobility, which means more sharp declines in position.

    • Scott Alexander says:

      I think boosting the lowest 20% or so would eliminate some problems based on actual absolute poverty without doing much to fight inequality. There’ll still be the super-billionaires to worry about.

  8. pegnose says:

    Are there no social workers who help impoverished debtors? It seems like it would help to sit him down, walk him through options like bankruptcy, and tell him how to avoid debt collectors. They could even spend a few hours making calls on his behalf and making sure the debt collection is legal. Maybe write him a prescription for a new phone number he only gives to friends and family?

    • Menno says:

      There are lot of places like this. I’ve worked for and with some of them.

      Only speaking for the organizations I know, we’ve tried countless ways of just getting people in the door. Free financial counseling. Free credit reviews. Free tax return prep. Free legal advice. We’ve partnered with local banks and credit unions to make loans contingent on completion of a financial course.

      In the end, though, we can’t force people to change. We can’t put them on a 72 hour financial hold. We can give them pamphlets, teach them basic math, show them how to budget, and in some cases, even manage their finances. But similar to the mental health field, our options for helping people who can’t or won’t change are limited.

      • Daniel H says:

        The last paragraph makes sense; change is hard, even when necessary, and not everybody does it. On the other hand, if Scott could refer people with “Poverty NOS” to you, you wouldn’t have trouble getting people in the door, and I think somebody who has actually attempted suicide might be desperate enough to try whatever strategies you give.

        I was also thinking when I saw this post that, even if basic income is politically impossible, a much better use of the several days would be learning to live on $1000/month (not comfortable for everybody, but not impossible). This probably gives enough room to start paying down the $5000 debt if you assume Paul can get a full-time minimum-wage job (which I know is potentially big assumption).

        • Menno says:

          Bankruptcy courts often order financial education classes, and as a lender we’ve required classes in certain situations. Results are mixed, probably slightly lower success than walk-ins.

          Honestly, the only guaranteed success is an individualized financial plan, with monthly (or more often) check-in sessions and some appropriate financial products.

          The one-size fits all classes and online instruction and books aren’t a bad thing; those resources do help. Most people in serious trouble are there because of their own unique mix of laziness, mental limitations, external pressures, and terrible luck. Unless you can lay out with them why they are in their current situation, it’s hard to make a lasting change.

          • Daniel H says:

            That makes sense, and I get why one-size-fits-all classes would still exist even if individual sections are more effective. Would doing the individual instead of group sections cost more than the amount of money spent on psychiatry in these cases, though (using the $5000 from the post as an estimate of cost of psychiatry)?

  9. Michael Crone says:

    First time commenter here too.

    I think we already have what people several centuries ago would have considered a basic income guarantee, since moderns, even the poor, are not threatened by famine. The definition of extreme privation has merely adjusted.

    Scott, have you addressed before what level a basic income guarantee should be? And what is to keep the basic income from becoming the new depressingly poor?

    • Multiheaded says:

      I think we already have what people several centuries ago would have considered a basic income guarantee, since moderns, even the poor, are not threatened by famine.

      Wrong, wrong, WRONG! So fucking wrong that actual history has gone the opposite way around, in fact!

      http://exiledonline.com/recovered-economic-history-everyone-but-an-idiot-knows-that-the-lower-classes-must-be-kept-poor-or-they-will-never-be-industrious/

      • haishan says:

        Problem is, peasants could be fat and lazy 90% of the time, but as soon as there’s a volcanic eruption halfway around the world…..

        • Harald K says:

          It’s somehow less repugnant to be starved by an impersonal volcano than being starved by a baron who proclaims it’s for your own good.

          • haishan says:

            And yet approximately nobody starves to death in the industrialized capitalist world. It may be that we’re shunting off all the famine deaths to Africa or something, but I’d like to see hard data before I believe that. More plausibly, the decline in famine is linked to technology rather than economic systems… but would Borlaug have happened in the socialist utopia?

          • haishan says:

            By the way, if capitalism is responsible, directly or otherwise, for drastically reducing the rate of famine, I think it’s well worth the admittedly shitty stuff in Multi’s link. Here’s what famine is like:

            When there was still cattle, it was eaten first, then – the domestic animals. Some were eating their own children, I would have never been able to eat my child. One of our neighbours came home when her husband, suffering from severe starvation ate their own baby-daughter. This woman went crazy. People were drinking a lot of water to fill stomachs, that is why the bellies and legs were swollen, the skin was swelling from the water as well.

            In the second half of 1959, I took a long-distance bus from Xinyang to Luoshan and Gushi. Out of the window, I saw one corpse after another in the ditches. On the bus, no one dared to mention the dead. In one county, Guangshan, one-third of the people had died.

            (Note that the Holodomor and the “Three Difficult Years” are two data points suggesting that Communists maybe don’t have the best record in terms of famine; there’s also North Korea in the ’90s, plus the Khmer Rouge, although the “Pol Pot wanted to kill a bunch of people and was highly successful at this” thing is admittedly kind of a confounder.)

      • Tracy W says:

        The link attributes views to Adam Smith entirely the opposite of what he actually said in The Wealth of Nations. Yasha Levine should be thoroughly ashamed of such a piece of intellectual dishonesty. Noticeably, the article never quotes anything from Adam Smith directly.
        To quote some of what Adam Smith actually said:

        Is this improvement in the circumstances of the lower ranks of the people to be regarded as an advantage or as an inconveniency to the society? The answer seems at first sight abundantly plain. Servants, labourers and workmen of different kinds, make up the far greater part of every great political society. But what improves the circumstances of the greater part can never be regarded as an inconveniency to the whole. No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable.

        ….

        The liberal reward of labour, as it encourages the propagation, so it increases the industry of the common people. The wages of labour are the encouragement of industry, which, like every other human quality, improves in proportion to the encouragement it receives. … Where wages are high, accordingly, we shall always find the workmen more active, diligent, and expeditious, than where they are low; in England, for example, than in Scotland; in the neighbourhood of great towns, than in remote country places. .

        (Both quotes from Ch.8, Of the Wages of Labour, feel free to read the whole thing to check that I’m not quoting out of context.)

      • Whatever Happened to Anonymous says:

        What the hell is that site? It looks like an angrier, uglier and less clickbaity Salon.

        • social justice warlock says:

          So nothing like Salon, then, other than that they don’t like conservatives and libertarians all that much.

      • LTP says:

        Or maybe that scholar was exiled because he was a crank…

        If peasant life was so great, why did so many peasants voluntarily move to cities to work industrial jobs? If peasant life was so easy, why were life-expectancies so much lower in the pre-industrialized world?

        • The Anonymouse says:

          If peasant life was so great, why did so many peasants voluntarily move to cities to work industrial jobs?

          A persistent feature of left-dreaminess is this idea that somehow peasants live/lived some sort of rural idyll, full of ennobling labor and honest authenticity, only disrupted when evil markets come in and ruin everything.

          The problem is, any time real peasants are allowed to move to the city and work for wages (even in sweat-shops, however you wish to assign that term), they do so. Real people aren’t interested in being set-dressing for your armchair Maoist hypothetical; real people want nicer things, want their children to have a different life than they have had. We watch the greatest human migration in modern times–of peasants from the Chinese provinces to the cities–happen in real time, and still western bien pensants sit there and ask “why would anyone move a thousand miles to work in a sweatshop?” Perhaps instead we should wonder why, after this happens tens of millions of times and in only one direction, we haven’t changed our priors.

      • anon says:

        I don’t know if your comment was truthful or necessary, but damn, it reads terrible. I reported it because it reads to me as a pretty aggressive pounce, even after having reread it about ten times.

    • Andrew says:

      Actually, the homeless would have been considered to be suffering extreme privation even several centuries ago. And modern people are subjected to homelessness.

      It should also be noted that food stamps have not existed for a full century yet. At the time that program was established, Americans were indeed threatened by famine. That is why the food stamp program (and the rest of the New Deal; Social Security, etc.) was created.

      (At _that_ time, the #1 cause of poverty was old age — people who were too old to work became poor. The Social Security program cut poverty rates roughly in half.)

      It’s true that if you go back far enough in technological development that homelessness was not considered extreme privation. But you have to go back to hunter-gatherer societies — millenia, not centuries, if we’re talking about the West.

      Anyway, the typical amounts proposed for basic income seem to be the amount that would be necessary to pay for housing (including utilities) and food. Basically, the same kind of amounts that people already receive through welfare (TANF) — just guaranteed to everyone, without means-tests and without the various work requirements and miscellaneous indignities. Similar amounts are also available through Social Security.

      • Isabel says:

        It used to be that if you didn’t have a house to live in you dug a hole in the side of a hill, put a simple roof over it and lived there. That was not considered extreme privation because it was not so much worse that how other poor people lived. Today if you lived like that you would probably be considered homeless, and it certainly is not a solution to homelessness.

  10. Anonymous says:

    When discussing a Guaranteed Income it is important to remember that it will not eliminate lifestyles of poverty. People will still be free to make really bad choices with their Guaranteed Income. And they will.

    A guaranteed income is meant to replace the vast patchwork of other welfare systems. It is a system that is more efficient, more transparent and more predictable. It gives the individual greater freedom to use welfare in a manner that matches his values. It creates fewer (though doesn’t eliminate) unwanted incentives.

    And most importantly, it is a system that is nearly immune to political finagling. The politicians can raise it, lower it, or leave it the same. But there are NO carve-outs or exceptions or carrot-and-stick games to be played with the states. It is meant to be a tenable, straightforward, transparent method of administering welfare.

    Sadly, it won’t prevent people from ending up in situations like the one Scott described. Maybe it could create fewer of those situations, but I’m not entirely convinced. It’s still an idea worth pursuing.

  11. Dan Simon says:

    If there’s political opposition to the idea of a guaranteed basic income, that opposition stems in no small part from previous experience. America had a de facto guaranteed basic income for decades. It was abolished in 1996, by bipartisan legislation, because the overwhelming consensus was that it wasn’t working. The problem was that lots and lots of people were satisfied enough with it to build their lives around it, and eventually entire growing multi-generational communities formed around its guarantees. These communities were composed almost entirely of idle, lawless, irresponsible people with absolutely no obligations and hence no incentives to be otherwise. (Lest anyone think this description racially tinged, the writer/psychiatrist who goes by the pen name Theodore Dalrymple has eloquently documented the rise of similar communities in Britain, all of impeccably WASP stock, as a result of the generous welfare state benefits in place there.) Americans eventually grew tired of bankrolling these dysfunctional communities, and cut off their guaranteed subsidy. The results have widely been praised as salutary for both those communities and for society as a whole.

    It turns out that thinking of societies as static products of the structures imposed upon them tells us very little about real societies, which co-evolve over time with the structures that govern them. I wrote a blog post on the issue a while ago, and since my posts here get rejected if I include links, I’ll quote it instead, lightly edited:

    The Polish science fiction writer Stanislaw Lem once wrote a story about a planet where it is decided that all the inhabitants shall live and breathe underwater. The tale is an obvious satire of Communist utopianism, but its crucial lesson–that deciding on idealized ends, irrespective of either the practicality or the morality of the means to them, is a sure path to disaster–has unfortunately never really been absorbed by Western intellectuals. On the contrary, recent political philosophy has been dominated by discussions roughly as absurd as whether we should all really be breathing underwater.

    Consider, for instance, the late John Rawls, a widely revered philosopher most famous for positing the following thought experiment: imagine that you are permitted to design, top to bottom, the rules of operation for a society, with the proviso that you would then be placed in that society, in a “position” (role, social status, economic status, etc.) as yet unknown to you, and not of your choosing. How would you decide, for example, to order the allocation of wealth? Of honor? Of power? Rawls argues that the best strategy in this experiment would be to design something like a modern egalitarian welfare state, with a generous safety net to guard against the possibility of being cast in the role of indigent. Others, of course, have proposed alternative strategies.

    Well, political philosophers may love this type of question, but to me it’s of a piece with Lem’s characters’ pondering what they really should all be breathing. After all, nobody in real life is in a position to order a society per Rawls’ experiment, and any order proposed under its conditions is thus a “pure end”, blissfully disconnected from any means that might achieve it. Unanswered are such questions as, “how much change has to be imposed upon the current society to reach the desired one?” “What will be the practical effects of that change on economic prosperity, political order, or social peace?” “How much suffering will result from the transition?” And, of course, my perennial favorite: “will the new order be imposed forcibly by a dictator, stealthily by a Platonic oligarchy, or democratically by a supportive populace?” Discussing the morality or practicality of one distributive end or another without considering these questions about the morality and practicality of the means is, in my opinion, mere idle game-playing, offering no useful moral insight whatsoever.

    It is often said that “the ends justify (or do not justify) the means”. In fact, neither statement is true. Ends may or may not justify the means, but more importantly, ends and means simply cannot be teased apart and dealt with separately in evaluating the morality of the combination. And it’s not as if moral philosophers are unaware of this principle–the well-known ethical exercises referred to as “trolley problems” illustrate it perfectly. Somehow, though, the temptation to imagine a world of ends freed from the chains of their means always seems just too tempting for philosophers to ignore.

    • Multiheaded says:

      The difference between a *guaranteed* basic income and *means-tested* welfare is that means-tested = a poverty trap. For fuck’s sake, this is the basic rationale – repeated ad nauseam by rightist proponents of UBI too – and yet you don’t seem to be aware of it.

      The results have widely been praised as salutary for both those communities and for society as a whole.

      I wish someone like Ta-Nehisi Coates could personally slap some sense into you.

      Also read this re: “lazy and unmotivated”

      http://www.cracked.com/blog/the-5-stupidest-habits-you-develop-growing-up-poor/

      • social justice warlock says:

        Well, I do think there’s an additional poverty trap in unemployment leading to skill degredation leading to unemployment. Anyone who’s been unemployed can tell you how depressing and demoralizing it is, even if you have an income source to fall back on. For this reason I’d prefer universal makework (the WPA had what I consider a great model: simply tell them what your calling is, and they’ll find some use for it, real or imagined) optimized for skill development and sense of purpose. If people are already ZMP on the market they should at least have the opportunity to develop some arete.

        • grendelkhan says:

          (the WPA had what I consider a great model: simply tell them what your calling is, and they’ll find some use for it, real or imagined)

          Is there some consensus that the WPA would have done better as a basic-income program? I was under the impression that we really did need the things they built, and even where we didn’t, they turned out to, on the whole, have been worthwhile.

      • Scott Alexander says:

        Multi, banned for one week. No warning this time because you’ve gotten like five already.

          • Noumenon says:

            Can’t you surmise that it’s a combination of “I wish someone like Ta-Nehisi Coates could personally slap some sense into you” plus a pattern of bad behavior?

          • Whatever Happened to Anonymous says:

            Personally, I was more offended by the Cracked link.

          • Anonymous says:

            @Noumenon, I can surmise there’s a different standard being applied to Multi vs. rx’s, nrx’s, others on the right. I’ve seen so much worse from those guys, but because it’s directed at unspecified readers rather than a particular commenter, they get a pass.

      • Dan Simon says:

        I’ll leave you to argue it out with the folks below who explain why they think your version of “guaranteed basic income” is worse than the previously-implemented one I criticized. (Personally, I don’t think those differences have any significant effect on the issues I raised.) And I’ll leave Ta-Nehisi Coates to argue it out (or perform the suggested acts of violence) with Theodore Dalrymple. I really don’t see the need for this kind of rudeness, though.

      • poor says:

        OMG I laughed out loud when I saw the picture of the exact TV dinner I’m having tomorrow.

      • Tracy W says:

        The reason why there’s mean-testing is that giving money to everyone means either giving very little money to everyone, or very high taxes, or depending on your definitions of “little” and “high”, both.
        For example, this costing by Ed Nolan, a supporter of a UBI, by redistributing existing spending and ending three large middle-class tax deductions gets to $4,452 a person in the USA. Probably not enough to avoid the financial problems Scott is talking about.

        • Randy M says:

          And if you give BIG with very high taxes, isn’t that essentially means tested? At some income threshold the net *has* to go towards the state, or else the money is all printed or all the taxes come from corporations, which both seem like gateways to run away inflation.

          So really it’s all just quibbling about the threshold or the ease of the transition.

          • cypherpunks says:

            Yes, the main point of BIG is to soften the transition. Most welfare states have extremely high effective marginal tax rates, sometimes in excess of 100%.

          • Tracy W says:

            No, means-testing results in a high claw back for a period as incomes rise but after that marginal rates are lower and thus the work disincentive is lower.

          • cypherpunks says:

            “high claw-back” = “high effective marginal tax”

            Regardless of what you call it, it is a disincentive. Many places have effective marginal tax rates in excess of 100%, so working costs money.

    • Andrew says:

      “[M]ulti-generational communities” with “no responsibilities”? Hm, I don’t think you thought that through.

      In any case, AFDC was not ever a basic income guarantee. Like TANF still does, it lacked the fundamental characteristic of being universal rather than means-tested.

      Means-tested benefits and universal benefits are radically different in terms of economics.

      Related: http://en.wikipedia.org/wiki/Means_test

      • Dan Simon says:

        No contradiction–criminal levels of child neglect are endemic in such communities. (Again, Theodore Dalrymple is a useful source on this subject, in a setting that’s likely less emotionally fraught for American readers.)

        Again, I’ll leave the means-tested/guaranteed debate to other parts of this comment thread.

    • Harald K says:

      Yeah, that’s one area where Dalrymple is full of shit, and uses a very deliberate tunnel vision to come to his conclusions.

      No Dan Simon, if you consider pre-1996 US welfare to be guaranteed income, then what the hell do you call what I have, today, in Norway? Or would have in Sweden or Finland, or Germany, or a number of states that are not the US? You assure it’s not racism you’re peddling, and I believe you, but the only attempt to answer this disparity that I’ve ever heard, is vague handwaving towards “ethnic homogeneity”.

      The “lumpenproletariat”, the underclass that you complain about. Why are they still very much present in places like the Philippines, where there is no welfare state to speak of? And why are they such a small problem in our European welfare states?

      The only way you can conclude that it is welfare which creates the nihilistic attitudes of a segment of the lower classes, is if you throw away a ton of evidence which would challenge it.

    • grort says:

      I feel like we’ve had a number of threads like this, where Scott says basic income would be a good idea, and someone else says we’ve tried it and it didn’t work.

      I would enjoy seeing a really clear Pro-Basic-Income FAQ, with description of places basic income has been tried, and ways it has worked or not worked, and maybe responses to Theodore Dalrymple etc.

      For myself, I’ve heard some bad things about public housing — http://en.wikipedia.org/wiki/Public_housing_in_the_United_States says “housing projects have also been seen to greatly increase concentrated poverty in a community, leading to several negative externalities. As a result, many of the housing projects constructed in the 1950s and 1960s have since been torn down”. So, when people cite “giving the homeless people houses” as a good idea, it makes me wish there was a clear citation for a large-scale project where someone tried that and it actually worked long-term.

  12. eqdw says:

    Minor nitpick: The economists I stal^w follo^w read on Reddit seem not to like the basic income idea so much. They seem kind of lukewarm, and would strongly prefer a solution that doesn’t have the following two problems:

    * We can’t even afford a basic income at the level of minimum wage as it is today, without massive tax increases. Those will be at best politically intractable, and at worst a significant malus on the growth rate

    * It is a giant waste of time and money giving a UBI cheque to Bill Gates. It would be better to give $8000 to the poorest person and $0 to Bill Gates, than to give them both a $4000 UBI.

    They seem to be more in favour of a Negative Income Tax than a flat UBI. The basic difference with a NIT is that, instead of giving everyone the same amount of money, you fudge their tax rate below zero and give them back money at tax time to bring them up to some reasonable level of income. It’s easier to make this progressive to maximize welfare, it’s cheaper to implement because you aren’t wasting time giving cheques to middle class and above, and the bureaucracy costs are minimal because the IRS already does 95% of this work as it is.

    • Anonymous says:

      1. The basic income would not likely be at the level of minimum wage. It isn’t meant to be that kind of support.

      2. The problem with negative income tax is that it is so easy to game – both by tax filers and the politicians making these rules. To ensure that the system isn’t being gamed you have to set up layers of regulation and oversight. It creates perverse incentives at the margins. All in all, a negative tax rate ends up being MUCH more inefficient than just writing out 360 million identical checks.

      The EITC is preferable to the negative tax rate, but still suffers from some of the same problems.

      • Rachael says:

        If basic income isn’t at the level of minimum wage, it will be pointless. At least in the UK, the left is quite insistent that minimum wage isn’t enough to live on, hence the Living Wage campaign.

        (And if it is at minimum-wage level or higher, it will be unaffordable, as discussed above.)

        This is my main objection to UBI: that there’s no level of income that will be both affordable and acceptable.

        • Matthew O says:

          The minimum wage isn’t enough to live on if you have to work. But it would be far more than enough to live on if all you had to do all way was sit around in your apartment and read books or go to the library or the park or whatever.

          Working actually entails a lot of costs to the worker: transportation, higher publicly-acceptable standards of personal care (shaving, clothing, bathing, oitmenting, makeup for women), higher rent (because you need to be where the jobs are), medical care (from increased illness and injury due to workplace stress, and communication (such as cell phones, especially in the case of the sort of “precarious,” part-time always-on-call work that is becoming more and more popular).

          Instead, if you just need a small, comfortable roof over your head, internet access, and food, and it didn’t particularly matter where you lived for the jobs, you could easily get by with $5000 a year. (A studio apartment in my part of the country can easily be secured for $300 a month).

          Of course, all of this assumes a single adult. Throwing childcare into the mix changes this equation quite a bit. Perhaps make it a rule that having children disqualifies one from the UBI?

    • John Schilling says:

      It is a giant waste of time and money giving a UBI cheque to Bill Gates. It would be better to give $8000 to the poorest person and $0 to Bill Gates, than to give them both a $4000 UBI

      No, the $4000 you give to Bill Gates is the biggest bargain in the whole system. Because, “Look, we gave $4000 to Bill Gates, now STFU”, short-circuits all the arguments about how those people over there should get less so these people over here can have more. Those arguments, in any real political system, will wind up costing trillions in the long run, and will leave many truly needy people out in the cold.

      Economists who instead want to talk about how the perfect welfare state would be administered if we didn’t have to deal with politics, should be ridiculed and then ignored. A simple UBI or NIT is probably not politically feasible, but it’s not out of the question and its relative un-gameability would make it very appealing compared to the current alternatives.

      Wouldn’t help with the problem at hand, but that’s another matter.

      • Andrew says:

        It also costs literally nothing in time or money to “give” $4k to Bill Gates. The same measure that “gives” $4k to Bill Gates will increase Gates’s taxes by millions of dollars.

    • Harald K says:

      Sending Bill Gates a check of 8000$ and taxing him $8000 dollars less are functionally equivalent. In the tax cuts that have been over the years, no one thought to carve out an exception for Bill Gates, so why start now?

      For people who pay taxes above the UBI amount, UBI is exactly the same as progressive taxation, only implemented in a different way. And carving out an exception for the very rich would violate an important principle of UBI, that we do not peek at your income, your virtue, your family, your race etc. A big point of UBI is freeing us from the burden of determining and agreeing on what people deserve.

    • Alex Godofsky says:

      It is a giant waste of time and money giving a UBI cheque to Bill Gates. It would be better to give $8000 to the poorest person and $0 to Bill Gates, than to give them both a $4000 UBI.

      Not at all, because if you means-test the $8000 benefit so that Bill gets $0, that’s exactly the same as if you give both of them $8000 and raise Bill’s taxes by $8000.

      The effective MTR increase (which occurs somewhere in between the poorest person’s income and Bill Gates’) is the same whether the MTR is explicit in the headline tax rates or implicit in the phaseout. But it’s obviously preferable to have headline tax rates correspond more closely with the effective MTRs, rather than have a bunch of taxes hidden in phaseouts. Not only does it make the calculations easier for everyone all around, it means you are more likely to have smooth MTRs, rather than lots of weird spikes around where lawmakers randomly choose to put the phaseouts.

      * We can’t even afford a basic income at the level of minimum wage as it is today, without massive tax increases. Those will be at best politically intractable, and at worst a significant malus on the growth rate

      The issues I mentioned above are a strong argument for replacing the current set of means-tested benefits with a UBI that gives the poor an equal amount of money, on average. The increase in nominal government spending (from the fact that the government now has to pay the same money to the middle class and the rich) would be funded by an increase in the explicit tax rates, but the economic effects of this rise would be identically offset by the removal of the implicit MTR effect of the current phaseouts.

      (And as above it would be a net improvement because the system would be much more rationalized.)

      That said, I am also lukewarm to a UBI and a bit warmer towards an EITC / negative income tax, because of the basic “wait what if people just decide they don’t need jobs” worry. I would probably support some kind of 50/50 split between the two.

      • Loki says:

        I think the question is whether, actually, we have reached a point where there just isn’t useful work for everyone in our society – or at least the point where the least ‘useful’ members of society can work full-time and still not produce enough ‘usefulness’ to support them.

        If this has, in fact, happened, what are we supposed to do with those people? It seems perverse to suggest that they be forced to do work that isn’t useful to anyone. Surely we’d all be better off if they were allowed to occupy their time with things they enjoy but can’t necessarily make a living wage from, like art, parenting, and filling voluntary positions.

        • Alex Godofsky says:

          I think the question is whether, actually, we have reached a point where there just isn’t useful work for everyone in our society

          And the answer to that question is no. It has always been no, and will always be know until we live in The Culture and don’t have to worry about this anymore.

          Simple proof that it is no: people with substantially less skills than almost all Americans – including a lack of basic proficiency in English – expend considerable effort and risk their lives to come here illegally so that they can work for less than the minimum wage.

          • Nita says:

            That just proves that some of the jobs that still exist don’t require speaking English.

          • Andrew says:

            Actually, one could turn around your “simple proof” and prove exactly the opposite: there *isn’t* useful work for everyone, since *some* people *do not* expend considerable effort and risk to come here illegally. Instead, only a very small proportion of the world’s population does so.

          • Alex Godofsky says:

            Andrew: hardly, since coming to the United States is extremely costly for those people not only in terms of money and risks, but also in terms of sacrificing their connections to their homeland.

        • jaimeastorga2000 says:

          Surely we’d all be better off if they were allowed to occupy their time with things they enjoy but can’t necessarily make a living wage from, like art, parenting, and filling voluntary positions.

          But if, instead, they behave like this, perhaps we’d all be better off making them perform useless make-work just to keep them out of trouble. And it’s not like the unemployable are a homogeneous undifferentiated mass anyways… perhaps what we need is a way to sort the two categories? I bet a hipster on food stamps is very likely to belong to one group, while a single mother of three children from three different babydaddies who lives in the inner city is more likely to belong to another group. Oh, wait, but then we’d a bureaucracy to do the sorting, which brings all sorts of problems on its own. Decisions, decisions…

        • Jaskologist says:

          Surely we’d all be better off if they were allowed to occupy their time with things they enjoy but can’t necessarily make a living wage from, like art, parenting, and filling voluntary positions.

          Nobody wants to pay me to to do this thing.
          Therefore, everybody should pay me to do it.

          • The Anonymouse says:

            There is a persistent tendency to imagine that, were poor peoples’ incomes guaranteed so that they don’t have to work, those people would choose to live pleasant lives of painting, helping their neighbors, and philosophical musing.

            Experience seems to show that instead, people choose McDonald’s, X-Box, and alcohol.

          • Princess Stargirl says:

            @Anon

            People using GBI to play X-box all day does not bother me. If thats what they feel like doing I am happy they have the oppurtunity to do it.

            Drinking heavily is pretty unhealthy so I would be displeased if GBI lead to more drinking. A suffient increas ein drinking would convince me to stop supporting GBI. I am honestly not sure about how unhealthy McDonalds really is.

          • houseboatonstyx says:

            :: Surely we’d all be better off if they were allowed to occupy their time with things they enjoy but can’t necessarily make a living wage from, like art, parenting, and filling voluntary positions. ::

            Nobody wants to pay me to to do this thing.
            Therefore, everybody should pay me to do it.

            Yes, and well worth it. Baby-sitting for relatives and neighbors, helping neighbors with projects, filling volunteer positions so the library can have longer hours, driving elderly people to their appointments, errands — these are all important things that we’re missing. Help that doesn’t need appointments, work that doesn’t require a schedule or transportation or paperwork.

            When a wage-earner has to do all these things for zimself, they disrupt zis productivity, as well as wasting a lot of gasoline.

            Another useful volunteer work, would be instructing people like Paul so they don’t get in more trouble.

          • Andrew says:

            “Nobody wants to pay me to to do this thing.”

            Oh, but plenty of people do.

            They just don’t necessarily have enough money to do so.

            There are 7 billion people on the planet, and all of them have wants; but only some of them have money.

    • The UBI argument is that its a waste to means test, Gates doesn’t need the money, but it easy to administer,

      • Viliam Búr says:

        Exactly. Giving $4000 to Bill Gates is much cheaper than paying an army of bureaucrats who will make decisions about who is the new Bill Gates and who is not… and will make complicated questionnaires to find out… and people will have to fill out those questionnaires… and other people will have to check them whether they didn’t cheat when filling out the questionnaires… and new computer applications will have to be developed to process the data from the questionnaires (right now I am programming such system, one of many, and it already costs a few millions of dollars)… and so on.

        • houseboatonstyx says:

          Yes. And somehow I don’t see Bill Gates using his food stamps to buy heroin, or even waving them around at the checkout counter. He’d be more likely to toss them in a Salvation Army kettle, or something.

    • Zakharov says:

      If the basic income was paid for by an increase in income taxes, whatever you’re paying to Bill Gates will be more than made up for by Gates’ increased tax rates.

    • Thanks Scott says:

      There’s also Arnold Kling’s proposal for an at-times-negative consumption tax. The nice thing about taxing consumption, rather than income, is that taxing income disincentives becoming a productive highly-paid member of society.

      • Alex Godofsky says:

        The nice thing about taxing consumption, rather than income, is that taxing income disincentives becoming a productive highly-paid member of society.

        Not true! There is ultimately no difference whatsoever between a tax on consumption and a tax on wage income.

        Place a 20% tax on my wages: $1 of wages now buys only $0.80 of consumption, reducing my incentive to work for that additional dollar.

        Place a 25% tax on consumption: $1 of wages now buys only $0.80 of consumption, reducing my incentive to work for that additional dollar.

        The difference between a consumption tax and an income tax (not the very deliberate elision of the qualifier “wage”) is that an income tax also taxes capital income. Taxation of capital income compounds upon itself, meaning that deferred consumption is effectively taxed at a higher rate than immediate consumption. This disincentives deferring consumption, aka saving, and so is ultimately harmful in that it reduces the capital stock.

        The entire motivation behind replacing income taxes with consumption taxes is the above: to eliminate the (compound) taxation of capital income. The “negative tax” (be it income or corporate) stuff is an orthogonal issue.

        • onyomi says:

          Yes. There are so many reasons why a consumption tax is better in every way than an income tax. Besides the motivation to save, it’s much less invasive and wasteful to administer. Moreover, it should theoretically (but won’t) shut down criticisms that the rich don’t pay enough because they will always get hit by the tax when they buy stuff for personal enjoyment, but not when they save and invest, which are how rich people can help the economy for everyone else. But it’s the kind of obviously superior solution which politicians will likely never succeed in implementing due to demagoguery.

        • Alex Godofsky says:

          Note that the first paragraph of my comment was supposed to be in blockquote tags. I apparently messed them up or something and the server stripped them.

        • Harald K says:

          They are not comparable. VAT/consumption taxes are highly regressive, because poor people spend a far larger share of their income on consumption than do rich people.

          Rich people can afford to put their money in the bank, in investment funds, in government bonds. A common error is to think this is “saving” and inherently virtuous. But deferring claims on the real economy, storing up power for later use, is not without problems. In any case it’s not very virtuous if money is so plentiful for you that you’ve run out of things to spend it on.

          Rich people can also afford to spend money on non-taxed consumption, be it buying real estate in Argentina, buying a yacht in New Zealand (you didn’t think they would voluntarily pay the consumption tax on a yacht, would you?) or campaign contributions. I guarantee you those won’t be taxed.

          The only consumption taxes I support are fully refunded ones, such as James Hansen’s proposed revenue neutral carbon tax: Slap a heavy tax on the good (in this case, gasoline), take all the money collected and distribute it evenly back to the citizens. If you use more of the taxed resource(s) than average, it’s a net loss for you. If you use less than average, it’s a net positive. This neatly preserves the demand-reducing effect of a consumption tax, while compensating poor people for its regressiveness.

          • Tracy W says:

            VAT/consumption taxes are highly regressive, because poor people spend a far larger share of their income on consumption than do rich people.

            Although VAT/consumption taxes are typically imposed in high tax countries which use a chunk of the money raised to circle back to the lower income households. Or are you saying that Sweden or Germany is a worse place to be poor than the USA?

            But deferring claims on the real economy, storing up power for later use, is not without problems.

            However those problems are far fewer than the problems of no one doing any long-term investing.

            In any case it’s not very virtuous if money is so plentiful for you that you’ve run out of things to spend it on.

            The virtue of investment is because of its long-run effects on capital formation. (And, seriously, how many people run out of things to spend money on? People can buy art, build extravagently, gamble, etc.)

            Rich people can also afford to spend money on non-taxed consumption, buying a yacht in New Zealand

            I’m pretty confident about the ability of Argentina to extract tax from wealthy foreigners buying land there. Duty is owned on any yachts imported into the USA, apparently both at the federal level and the state level.

            And of course, poor people can also spend money on non-taxed consumption, eg homebrews, exchanges of babysitting services, DIY.

            or campaign contributions

            Doesn’t that get you a tax exemption on your income taxes in the USA? As does donating to the local opera house? (Maybe not, I’m not a US resident.)

          • Anonymous says:

            >Or are you saying that Sweden or Germany is a worse place to be poor than the USA?

            So what? What does this have to do with the assertion that poor people suffer a worse impact from VAT than rich people? Whether or not Sweden or Germany are better places to be poor than the USA is in NO WAY an assertion about VAT.

          • Alex Godofsky says:

            They are not comparable. VAT/consumption taxes are highly regressive, because poor people spend a far larger share of their income on consumption than do rich people.

            This is begging the question. Regressivity should be measured with respect to consumption, not income, because consumption is the real thing we actually care about. Consumption is the point. If incomes were wildly unequal but, somehow, every single person had identical consumption, there would be no “inequality” worth combating.

            Rich people can afford to put their money in the bank, in investment funds, in government bonds. A common error is to think this is “saving” and inherently virtuous. But deferring claims on the real economy, storing up power for later use, is not without problems. In any case it’s not very virtuous if money is so plentiful for you that you’ve run out of things to spend it on.

            I don’t care whether things are “virtuous” in a literal virtue-ethics sense, but increasing the total stock of capital is virtuous in the sense of “makes the world a better place”. (At current margins, obviously.)

            Rich people can also afford to spend money on non-taxed consumption, be it buying real estate in Argentina, buying a yacht in New Zealand (you didn’t think they would voluntarily pay the consumption tax on a yacht, would you?) or campaign contributions. I guarantee you those won’t be taxed.

            Then don’t put giant freaking loopholes in your consumption tax, and/or implement the economically equivalent payroll tax instead, and/or split your tax rates about equally across VAT, payroll, and consumption so as to minimize the effects of loopholes in each.

          • Tracy W says:

            Anonymous: the thing it has to do is that a consumption tax can raise revenue more efficiently than an income tax and thus can raise more revenue overall, meaning more available for redistribution. That’s why the comparison of Sweden and Germany is relevant.

            Leaving aside Pigovian taxes on things like pollution or smoking, the point of the tax system is to raise money to do things with it that we hope make people better off. If we only look at the costs of taxes, and not the benefits of the spending, then how could we justify consumption taxes or income taxes?

          • jaimeastorga2000 says:

            Rich people can afford to put their money in the bank, in investment funds, in government bonds. A common error is to think this is “saving” and inherently virtuous. But deferring claims on the real economy, storing up power for later use, is not without problems. In any case it’s not very virtuous if money is so plentiful for you that you’ve run out of things to spend it on.

            It may or may not be virtuous, but it has good consequences. Saving money in stocks and bonds and certificates of deposits means that the money is invested. It means that the money is out there in the economy creating goods and services and jobs and research. Therefore, you want rich people to keep as much of their money in savings as possible, and to spend as little of it in consumption as possible. To that end, tax consumption, not capital gains. See Eliezer Yudkowsky’s dragon parable.

          • Andrew says:

            There is nothing magically superior about “invested” money vs. “consumed” money. Both of them involve paying people to do things. The things that people are paid to do under the banner of “investment” are not necessarily superior to the things that people are paid to do under the banner of “consumption.”

            In this connection I will quote Bertrand Russell:

            One of the commonest things to do with savings is to lend them to some
            Government. In view of the fact that the bulk of the public expenditure
            of most civilized Governments consists in payment for past wars or
            preparation for future wars, the man who lends his money to a
            Government is in the same position as the bad men in Shakespeare who
            hire murderers. The net result of the man’s economical habits is to
            increase the armed forces of the State to which he lends his savings.
            Obviously it would be better if he spent the money, even if he spent it
            in drink or gambling.

            But, I shall be told, the case is quite different when savings are
            invested in industrial enterprises. When such enterprises succeed, and
            produce something useful, this may be conceded. In these days, however,
            no one will deny that most enterprises fail. That means that a large
            amount of human labor, which might have been devoted to producing
            something that could be enjoyed, was expended on producing machines
            which, when produced, lay idle and did no good to anyone. The man who
            invests his savings in a concern that goes bankrupt is therefore
            injuring others as well as himself. If he spent his money, say, in
            giving parties for his friends, they (we may hope) would get pleasure,
            and so would all those upon whom he spent money, such as the butcher,
            the baker, and the bootlegger. But if he spends it (let us say) upon
            laying down rails for surface card in some place where surface cars
            turn out not to be wanted, he has diverted a mass of labor into
            channels where it gives pleasure to no one. Nevertheless, when he
            becomes poor through failure of his investment he will be regarded as a
            victim of undeserved misfortune, whereas the gay spendthrift, who has
            spent his money philanthropically, will be despised as a fool and a
            frivolous person.

          • Jiro says:

            Andrew: Which drives my admiration for Bertrand Russell down.

            Investing in things that don’t work is inseparable from investing in things that work; you can only know that they don’t work after the fact, and investing in what people want to invest in and seeing which ones fail is how we determine which ones work and deserve more investment.

            So if you’re going to think about whether it is good for society to have investment, you have to count all the investment as a unit; the cost in investing in unsuccessful projects is part of the price we pay for the successful projects. An unsuccessful investment isn’t wasted like a party just because the particular investment failed; it bought the success of other investments by being a part of the system, and it is indeed just bad luck that this particular investor gained nothing from it.

          • Andrew says:

            Jiro, that’s not the point. The whole purpose of production is consumption. The idea that investing in a party supply company is good and valuable, whereas consuming party supplies is bad and wasteful, does not make any sense.

            It doesn’t really make any difference to the argument whether the investment succeeds or not. Suppose you invest in a company that sells beer. If your investment is successful, that success literally constitutes an increase in the consumption of beer.

            You cannot say that spending money on beer to consume is wasting it, but spending money that will be used to hire people to make beer for resale is not. Either way you’re using your money-power to direct labor and economic resources toward the production of beer.

            The investment in a railroad that nobody uses is just a particularly clear example of how labor and economic resources can be misdirected by investment and not just by consumption. And sure, you can say you’ve got to lay down a few bad rails to get the good ones. But can you say that investing in a company that sells beer is good and should be encouraged, while buying beer from that same company is bad and must be discouraged? Should the beer just be left to go bad on the shelves? Is that the ideal?

            Or put another way: if consumption is not the purpose of production, then what is the purpose?

          • Alex Godofsky says:

            Andrew: yes, the whole point of production is consumption. And investment, at current margins and for a long ways past them, leads to more production and therefore more consumption, even if you discount future consumption.

        • anon says:

          I don’t claim any understanding of economics, but isn’t the entire point of current structures to encourage consumption, not discourage it, as per Keynes? We invented factories that can produce more than people need, and people prefer to put their moneys under the mattress if they don’t absolutely have to spend them, so we keep some inflation to make sure keeping moneys in mattresses devalues them, and we build big marketing departments, to let money flow back to producers so they can keep producing?

          • Alex Godofsky says:

            This is an extremely common popular misconception about Keynesianism.

            The goal is not to encourage consumption as opposed to investment – they idea is to encourage spending on newly-produced goods (whether they are consumption goods like hamburgers or capital goods like houses) as opposed to saving money.

            If I am putting money under my mattress, inflation does encourage me to go buy something with it. But I can just as well buy a stock as a haircut; the stock price will rise with inflation, while dollars in my mattress won’t breed.

            And remember, Keynesian monetary policy works by manipulating interest rates. When you cut the interest rate, the goal is to stimulate investment by reducing the cost of capital. An investment project that wouldn’t be profitable if I had to pay 5% interest on the bonds to finance it might suddenly be worth doing if I only have to pay 3%.

          • anon says:

            Thanks for clearing that up, I had the idea that Keynesianism values consumption more than investment.

  13. I don’t see the problem with spending more money to ‘treat’ (or imprison) somebody than it would take to actually solve that person’s current problems. If you direct the money at the people who come w/ problems … as you said, unacceptable incentive. Maybe a finite lifetime benefit that convention keeps normal folks from expending for no good reason (make it humiliating or time-consuming to do so?). You’re right that it’s absurd. I’d love to cut costs managing broken people in an intelligent fashion. I imagine we’ll be facing more of them, as a changing economy generates more economically useless people.

  14. Held in Escrow says:

    I’m really not a big fan of a BiG; the one welfare program that’s shown constant success is the EitC and I think that expanding that would be far more useful. You reward work and encourage building work experience and work ethic while being politically possible

  15. (NOS = Not Otherwise Specified)

  16. Maraes says:

    This post reminds me of the poor resource allocation problem described on Red Plenty. Except this seems more perverse, since the system stretches itself in unnatural ways to not allow the money to reach the person who needs it. What reaches him are the things money should be used to access (like healthcare), but never the money itself.

    Another point that comes to mind is how close this comes to TheLastPsych’s criticism of psychiatry.

    Really thought provoking stuff.

  17. why did you delete my earlier post. maybe you didn’t like the direction i was taking the discussion.

  18. Ialdabaoth says:

    I have been in exactly this situation, rescaled for Arizona instead of Detroit (so $35K of debt, and forced into $10K of hospitalization against my will).

    I don’t think there is a good solution. My cynical “if you can’t optimize, pessimize” instinct says that we should have a service where people who are too far in debt can sell themselves to square away their debt, and be immediately and humanely killed and dissected so that their useful organs can be harvested at market price.

    My “actually humane but politically unviable” instinct says that a Basic Income Guarantee would pay for itself many times over, after a few years of subsidizing. Yes, even at $25K a year per person.

    • haishan says:

      My cynical “if you can’t optimize, pessimize” instinct says that we should have a service where people who are too far in debt can sell themselves to square away their debt

      This… is a thing, despite the best efforts of the International Community. It seems like a good idea in theory (I mean, if you’re okay with the whole “slavery” thing), but the fact that even ancient Greece and Rome outlawed it gives pause.

    • I have a slightly less drastic alternative: cancer the debt, the creditors take the hit, and are thereby disincentivised from loaning unwisely. (“But they’re corporations …you can’t punish corporations!”)

      • This already exists. It’s called “bankruptcy”.

        • houseboatonstyx says:

          Yep. The people who might give money to help the debtor pay zis debt, will get a lot more return from a boilerplate bankruptcy lawyer’s fee. And the bankruptcy will stay on zis credit rating for 10 years, making it harder to get in debt again; and the lenders, having just had their receivables cancelled, will be discouraged from predatory lending.

          • Well, except for the part where credit card companies actually seek out recently bankrupt people, because they figure the late fees and interest they can milk out of the person exceeds the risk that they’ll go bankrupt again.

            But never mind that! Bankruptcy exists for a reason, and this is that reason. More importantly, the BI doesn’t solve this problem, and I’m not sure that I understand why people are suggesting it. If the person in question already holds down a job, they are probably making more money than the BI would be anyway. If $5K is a suicide-inducing amount of debt in their current situation, it would probably also be a suicidal amount of debt if you added the BI on top. At best, you would reduce the debt-induced suicide rate by some small percent, as people right at the margin are moved from suicidal to not-suicidal by their improved conditions.

      • Brett says:

        Or just decide that the government will decline to enforce any deficiency judgments unbacked by collateral. “Oh, you say he owes you $5,000? Did he put up any collateral for that? No? Too bad!”

        • Daniel H says:

          The problem with this is that in many cases a loan without collateral is beneficial to everybody. If people were honest, this wouldn’t cause a problem, but you need somebody enforcing such a loan in that case.

          • Pat says:

            …we could introduce future consequences (agreed to in a contract) as collateral… which is then enforced by authorities — does this give us our current system?

    • Deiseach says:

      If I’m going to be killed once I’ve sold myself into debt slavery, why shouldn’t I simply kill myself and let my creditors go hang? Unless there’s a threat that “If you die in indebtedness, we will sell your children/aged parents into debt slavery and kill them to harvest their organs”, why should I benefit you (unless I do have regard for the honour of my name and wish to clear off my debts honorably, and ‘honour’ is a concept that has been scorned and mocked for a long time now).

      If I’m a living debt-slave (or indentured servant if we want to be nicer about the term), then I have some hope that once my debt is paid off, I can regain my freedom or improve my position somehow. If I’m going to be the game figure in a game of “Operation”, to hell with the lot of you, and I say that as someone who was raised that you are morally obliged to pay your just and lawful debts (from the Catechism on the Seventh Commandment (Thou Shalt Not Steal):

      2411 Contracts are subject to commutative justice which regulates exchanges between persons and between institutions in accordance with a strict respect for their rights. Commutative justice obliges strictly; it requires safeguarding property rights, paying debts, and fulfilling obligations freely contracted. Without commutative justice, no other form of justice is possible.

      One distinguishes commutative justice from legal justice which concerns what the citizen owes in fairness to the community, and from distributive justice which regulates what the community owes its citizens in proportion to their contributions and needs.

      However:

      2414 The seventh commandment forbids acts or enterprises that for any reason – selfish or ideological, commercial, or totalitarian – lead to the enslavement of human beings, to their being bought, sold and exchanged like merchandise, in disregard for their personal dignity. It is a sin against the dignity of persons and their fundamental rights to reduce them by violence to their productive value or to a source of profit. St. Paul directed a Christian master to treat his Christian slave “no longer as a slave but more than a slave, as a beloved brother, . . . both in the flesh and in the Lord.”

      • Brett says:

        You might also point out that a lot of what we’re talking about is straightforwardly usury, and while it is still morally obligatory for the debtor to pay the usurer on a freely-entered usurious contract, there’s no particular problem with the government punishing the usurer pour encourager les autres.

        • Userers need to face losses. If govts pay off, rather than cancel, debts, lenders are incentivised to loan indiscriminately , with the taxpayer ultimately footing the bill

    • Joe Teicher says:

      How is either solution better than just advising people who are that stressed about their debt to just relax and be irresponsible? Its not like anything horrible will happen if you just don’t pay it back. Worst case scenario is that your wages could get garnished but most likely a lot will be written off and forgiven or forgotten. As long as you don’t borrow from family members or loan sharks, not paying back is not the end of the world. Businesses expect that not everyone will pay them back. Its just a cost of doing business.

    • kernly says:

      I don’t think there is a good solution. My cynical “if you can’t optimize, pessimize” instinct says that we should have a service where people who are too far in debt can sell themselves to square away their debt, and be immediately and humanely killed and dissected so that their useful organs can be harvested at market price.

      Jesus dude, have you heard of bankruptcy?

  19. Irrelevant says:

    Ignoring the issue where nobody would vote for it because we’re assuming the world where I’m the deciding vote, and ignoring the issue where it’s hard to pay for because the arguments that it saves money via economic growth and better efficiency are at least colorable, there are two problems that hold me back from liking basic income.

    The first is that, given the power of entrenched bureaucratic interests, I call it a 70% chance that the actual implementation would just staple basic income over the top of all the other stuff we’re already doing and therefore fail to realize the majority of the potential benefits.

    The second is that it could easily create Saudi-style social stratification. If the basic income is sufficient to keep most unemployed Americans from wanting to be, say, an agricultural day laborer to supplement their pay, then we still have to import a bunch of immigrants to do that.

    I’m especially concerned about that second problem because it already seems to be close to reality. I temped in grape harvest positions that required fluent English in college, and they were completely starved for applicants.

    • Ialdabaoth says:

      It sounds like someone needs to invent a proper grape-harvesting machine. I bet if I wasn’t constantly struggling to make ends meet, someone like me could invent one.

      • drethelin says:

        Your problem is not that you are struggling to make ends meet, unless you include within struggling having a variety of mental issues that prevent you from making ends meet. It’s certainly possible these problems wouldn’t prevent you from making a grape harvesting machine but are preventing you from having stable employment, but hardly guaranteed.

      • Randy M says:

        Do you have a lot of experience harvesting grapes and creating machines?

      • David Hart says:

        Solution there, it seems to me, is to create machine-harvestable grapes?

        Okay, it was worth a go 🙂

      • Irrelevant says:

        You’re all getting a bit hung up on the grapes here…

        My concern isn’t that Napa won’t be able to afford to pay enough to have a work force –they just offered a few bucks more an hour until college students like me became interested, and I’m sure other wineries have Spanish-speaking supervisors– my concern is that creating multiple dead-end underclasses is a really bad idea for social stability.

  20. JonCB says:

    A while ago there was a post on popehat from Clark where he tried to give Left-Libertarianism a fair shake of the stick. I’m sure true left libertarians were all aghast at the terrible interpretation but i left the post with a general feeling of “i’d vote for that if i could”. Closest i can find to a label for this particular brand was “left-wing market anarchism”.

  21. Ialdabaoth says:

    Can I just go ahead and ask the underlying question, here?

    Why do we pretend like poor people have a right to exist, and then not actually provide them with means to exist?

    Like, “it’s important to keep workers afraid of poverty or we can’t force them to work” is basically saying “people who aren’t {Capital-owners/Sovereign}, working for a {Capital-owner/Sovereign}, or sponsored voluntarily by a {Capital-owner/Sovereign} deserve to starve”. So why don’t we come out and admit it? Why the elaborate bureaucratic charade to pretend like they have dignity and value, without actually providing them real dignity or value?

    • Andrew says:

      Admitting reality is bad PR.

    • social justice warlock says:

      bc the ideological state apparatus you describe is cheaper than using a repressive state apparatus exclusively

      • If by “cheaper” you mean more violent, then i agree. It seems possible, even likely that we will see more of the repressive side of the coin as unemployment rises and people are no better prepared to find new work or voice their grievances publicly.

      • Harald K says:

        David Graeber’s “Debt: the last 5000 years” gives a depressing picture of how much more effective it is to say “these bits of paper say that you must do this”, rather than just “do this or else”.

        That’s a book I would love to hear Scott Alexander’s opinion on, by the way.

    • ShardPhoenix says:

      >Why do we pretend like poor people have a right to exist, and then not actually provide them with means to exist?

      This seems like a pretty vague statement. Who is “we”, what exactly is a “right to exist” and where was anyone promised it, and why does that imply any obligation (on the part of whom?) to provide money/goods/services?

      • Andrew says:

        It is vague because it goes without saying. “We” is the people who control the distribution of stuff (i.e., “money/goods/services”). Even more specifically, that means the people who implement the property law (either in a direct capacity, as policemen who walk around with guns on their belts; or else indirectly, as politicians, judges, prison guards, voters, monarchs, what have you). These same people do give lip service to (or at least avoid denying) the right of the poor to exist, etc., these days. That’s not made up.

        • ShardPhoenix says:

          The “right of the poor to exist” is still far too unspecified here to avoid future equivocation. And given that ~no-one is starving to death, why is anyone complaining that the poor don’t have the “means to exist”?

          My point being that the OP seems to be using vague language to try to imply something like “society as a whole has/should have agreed that we must work and give money to allow the poor to have (my personal definition of) a satisfactory life, but we don’t do that so we’re being hypocritical.” But to me that agreement doesn’t seem to exist so neither does the hypocrisy.

          • Andrew says:

            Well, maybe there is a reference to something that doesn’t exist; or maybe you’re going out of your way to not understand what is being referred to.

    • blacktrance says:

      Why do we pretend like poor people have a right to exist, and then not actually provide them with means to exist?

      Because talk is cheap and deviance from the socially desirable is punished. If you say “Poor people don’t have a right to exist”, many people will see you as a monster, and saying “Of course poor people have a right to exist” commits you to nothing and doesn’t cost you a cent.

      Some people care, though. And some of them think that the bureaucratic charade is actually helpful, or that it’s a terrible problem and that you can’t just do nothing about it – only a monster would oppose doing something about it, right? And so the people who both care about the problem and about being effective are a minority.

    • Nita says:

      People who are against providing the means probably understand “a right to exist” as “a right not to be actively killed by us”. See also the more general concepts of positive and negative liberty.

    • kernly says:

      Why do we pretend like poor people have a right to exist, and then not actually provide them with means to exist?

      We do? It’s kinda hard to starve in America. Like, you can do it, if you’re prideful enough. But if you’re actually willing to seek out places where people give away food and/or dig through the garbage, you’re simply not going to starve. Even if you literally can’t walk, we’ve got you covered, because in that case you’d get welfare. Is that a dignified life? Well, is your typical working stiff living a dignified life? It just depends on how particular you’re being, and what you value. ‘Freegans’ seem pretty happy to me, while homeless people digging through the same garbage are totally miserable.

      I think people see people in ‘bad’ situations doing extremely badly, and assume that the situation is to blame, when in absolute terms even the poorest have better material security than anyone could dream of in past millennia. The circumstances aren’t irrelevant, but the kind of people who end up in those circumstances is a much bigger factor. People afflicted with some toxic brew of laziness and/or stupidity and/or neuroticism that makes them dive eagerly into every available pitfall and grind themselves into the sharp rocks and broken glass at the bottom.

      A good solution is to pave over particularly deep pitfalls, but it’s very important to understand that that is what you are doing. If you approach this with lies or self-deception, and act like we’re dealing with a society that railroads people into ruin, you’re going to be inefficient politically and practically. In particular, you’re going to make people whose eyes are open and watching people thrust themselves down into the muck very very very angry when you insist that they are in fact pushing and holding those people down. Your camp and their camp are going to throw insults and rocks at each other, and your opposing claims will become more and more radical – yours more and more divorced from reality, and theirs less and less charitable.

    • John Schilling says:

      Why do we pretend like poor people have a right to exist, and then not actually provide them with means to exist?

      We do provide them with the means to exist. As others have pointed out, our existing patchwork of welfare services is inefficient, but it is good enough to ensure that almost nobody in the United States or any other first-world nation actually starves or freezes to death. And I’m pretty sure that the real people behind Scott’s composite patient, did not rack up five thousand dollars in debt paying for rice and beans or any other actual necessity of existence. Nor would they be in any great danger of starvation if they declared bankruptcy or otherwise reneged on their debts.

      So my question is, why do you pretend that you are talking about poor people’s right to exist, when we really mean to assert their “right” to happiness? Existence is not enough, nor should it be. “Here’s some food, your existence for the next month is assured, now go away and so we can make sure more people exist”, leads to the hard version of the Repugnant Conclusion. We want people to be happy. We should talk sometime about how to help people be happy.

      But we don’t even pretend that people have a right to be happy. That’s fairly explicit, at least in the US. The right is only to the pursuit of happiness. If you can’t manage it for yourself, the rest of us may chose to help but we are not obligated to help. Because if we did accept any such obligation, it absolutely would be abused to an intolerable degree. “I’m not happy yet; I’ll likely commit suicide unless you give me more stuff”. “I ran up $bignum in debts pursuing happiness, clearly I cannot be happy with such a burden, so you must pay off my debt but do so without stigmatizing me”. And the really fun one lurking in the corner, “I’m not happy because attractive women won’t have sex with me”.

      Existence, yes, so long as there’s enough food etc to go around the poor will get a share, and nobody will be carting them off to the incinerators for being “useless”. Pursuit of happiness, yes, we’ll try to stay out of their way. Achievement of happiness, that’s negotiable, and the answer may be no.

      • thirqual says:

        Suggestions of going towards mandatory make-work, debts-bonds, or I’m-not-going-to-call-it-slavery-nudge-nudge-wink-wink are inconsistent with “Pursuit of happiness, yes, we’ll try to stay out of their way.”

        • John Schilling says:

          Which suggestions would these be, and why are they relevant to anything I have said?

          • thirqual says:

            The suggestions are a bit all over this thread, from posters with very different outlooks (from Dale to our resident warlock). They are relevant because ” we’ll try to stay out of their way” is wishful thinking in the best of times (say, when there is plenty of free land for people to go build their own communities). In societies changing rapidly (like ours), there will be plenty to complain about and to bolster authoritarianism, and less chance that “out of their way” will be anything but empty words.

          • John Schilling says:

            If you have a problem with Dale, or anyone else, my suggestion is that you take it up with them. Because when you implicitly hold me responsible for their words, my response is to dismiss you as an unthinking and wholly unreasonable adversary.

          • thirqual says:

            I don’t see you as responsible. I point out that your position is not taking into account the existence and prevalence of people suggesting more structured or authoritarian solutions, to the point where aiming for the former is opening the way for the later to occur.
            Cautionary, not adversary (yesh I suck at conveying tone).

    • Bureaucrats need to live, too.

  22. Sarah says:

    I don’t know how seriously to take this intuition, but my instinctive thought is “if a guy needs $5000, give him $5000.”

    Not “set up a governmental system to give him $5000.” Just…you personally. Or you and your friends with a Gofundme campaign.

    If he’s literally so unsympathetic that nobody wants to help him, not even people like you who chose to take a job helping poor people like him, not even in a culture where helping the poor is more or less seen as a virtue, then maybe the moral case for helping him isn’t that strong after all.

    But in the real world, you *do* earnestly want to help the guy. And you know exactly how you would, given the option. You just have rules and systems that require you to waste money on things that don’t help. I think this is a pretty strong argument *for* libertarianism, or even something broader like “all institutions should be small and give people on the ground lots of autonomy; bureaucracy is always the enemy.”

    Sympathy is powerful. Humans want to help likable people who fall on hard times. If we begin to suspect we’re being taken advantage of, we become less sympathetic, and less generous. “Give freely to people you feel like giving to; don’t give to people you don’t feel like giving to” isn’t a terrible heuristic. Trying to systematize who deserves what aid from the top down neglects the powerful System-1 information in each of our individual heads.

    I’ve recently acquired a personal policy of “selfish generosity” — it’s a part of my identity to be generous with my time and money towards people I like and identify with, and to cultivate my instinctive impulses to drop everything to help an ingroup member in need. And I feel free to be utterly “partial” about this; I’m going to help people more if I like them more, and less if I like them less, because it’s *my* time and money to begin with. But being selfishly generous makes me do more helping in total, and probably makes me select for more efficient (in a utilitarian sense) uses of my resources than being “impartially” generous would.

    • Andy says:

      Not “set up a governmental system to give him $5000.” Just…you personally. Or you and your friends with a Gofundme campaign.

      If he’s literally so unsympathetic that nobody wants to help him, not even people like you who chose to take a job helping poor people like him, not even in a culture where helping the poor is more or less seen as a virtue, then maybe the moral case for helping him isn’t that strong after all.

      I think the term is “coordination problem.” Especially in a world with a labor market that’s screwed up and only going to get more screwed up as time goes on, setting up a GoFundMe for every single person who needs money is going to be logistically difficult and has its own perverse incentives – much money for the sympathetic/charismatic out-of-luckers, and the ones who aren’t as sympathetic or charismatic are still stuck in the same place. a GBI at least does not select, it (if properly run!) goes the same to everybody.

      • Ialdabaoth says:

        much money for the sympathetic/charismatic out-of-luckers, and the ones who aren’t as sympathetic or charismatic are still stuck in the same place.

        True story. I managed to successfully flee to Berkeley through a $4K GoFundMe, and immediately had to justify to multiple other people that I was helped and they were not.

        It’s a crushing weight to realize that people consider me more worthy of help, but feel completely unable to justify why to others who are clearly suffering as much as I was.

        • Andy says:

          It’s a crushing weight to realize that people consider me more worthy of help, but feel completely unable to justify why to others who are clearly suffering as much as I was.

          Yep. And this is why I’m such a fervent supporter of a well-implemented GBI: it’s not charity, it’s infrastructure. It’s financial infrastructure, just as our roads and bridges are physical infrastructure, that cannot logistically be paid for privately without setting up weird and horrible incentives. Just as my heart delivers to each part of my body its portion of blood (except for that weird thing where my left pinky and ring fingers lose circulation sometimes) so we should have a financial system that delivers a base income to each and every person.

        • anon says:

          Were you the Russian person Scott mentioned a while ago?

      • Sarah says:

        Oh, *also* it would be good to set up institutions that reduce poverty in general. But the *particular* kind of perversity of “wow, there’s a person just in front of my face having a horrible time, I wish I could help him” can be solved by…just helping him. Go ahead! Don’t worry that it doesn’t scale! When there are too many unfortunates for you to help, you’ll no longer feel like helping them. I’m not proposing a solution to poverty. I’m saying that it’s perverse that we live in a highly bureaucratized society where, when a person *wants* to help another person, they get a little nagging feeling of “oh, this isn’t worth doing because it doesn’t scale, ‘We’ should do something about this in a centrally organized fashion.” You’re not going to be able to get the government to do something if you can’t get yourself or a small group to do anything.

        • chamomile geode says:

          i might be misunderstanding what you’re saying, but here goes: this comment seems to assume that the only choices are “take personal action to help someone which does not scale” and “think about bureaucracy,” and that of the two, you get to choose one. scott isn’t choosing “think about bureaucracy” over “take personal non-scaling helping action;” he is choosing “take personal helping action that scales” (ie effective altruism) over “take personal helping action that doesn’t scale,” and “thinking about bureaucracy is an unrelated choice.

          You’re not going to be able to get the government to do something if you can’t get yourself or a small group to do anything.

          scott has gotten himself to “do something” to the tune of 10% of his income; he has convinced a small group* to “do something;” does that buy him the right to try to get the government to do something?

          *not trying to minimize scott’s achievements, just trying to make a parallel

    • drethelin says:

      Being selfishly generous is more market-optimal: It’s the equivalent of just plain being selfish in terms of conveying price signals to the world about how you want it to be. This is why we have things like public orchestras, museums, and other forms of art that are sponsored by the ultra-rich: they want them to exist and can afford to pay for them. On a smaller/more broad level, people buy girl-scout cookies and donate to the girl scouts in order to allow that organization to continue to exist.

      Selfish Generosity has better externalities than selfless.

      • Andy says:

        I agree, but I don’t want Selfish Generosity to be the only option to infrastructure. It’s certainly not precluded by a GBI system.

    • rsaarelm says:

      Informal sympathy and case-by-case judgment sounds like something that would work reasonably well with populations close to Dunbar’s number and would start breaking apart in various ways the further you got from a couple hundred people in your sphere of concern. With a much larger populations, it might basically become a game of attention where charismatic extroverts who are well enough off that they can invest significant effort into being visible and appearing charity-worthy would dominate.

      • Irrelevant says:

        Whereas “formal sympathy” sounds like the thing in those really awkward and insincere notices of grievance that schools put out after a murder-suicide.

      • Slow Learner says:

        Thus, e.g., campaigns to raise money for experimental medical treatments for the cute kid with leukaemia tend to do well, especially once they get in the local paper and on the local news.
        Campaigns to get the smelly homeless man with no teeth off the street…not quite so popular.

    • someone says:

      it’s a part of my identity to be generous with my time and money towards people I like and identify with, and to cultivate my instinctive impulses to drop everything to help an ingroup member in need.

      Excellent sentiment! If we can operationalize it, we might actually become a real community. And then we can probably accomplish pretty much anything.

      Trying to systematize who deserves what aid from the top down neglects the powerful System-1 information in each of our individual heads.

      I agree. However, in practice we run into the problem of that System-1 information being corrupted or suppressed by the norms of “general society” that we’ve become accustomed to, so that we don’t do as good a job of identifying in-group members as worthy of assistance as we would “natively”. Concretely, I think general society has weakened our ability to (psychologically speaking) live in communities, with the result that we have priors on “being taken advantage of” that are far, far too high.

      Right now, there are members of our in-group that need help, or need more of it than they’re getting. And we don’t help them enough in large part because we feel “the rules” prohibit or at least discourage it. (Another component is simply naïve ignorance — the feeling that no one’s situation could be *that* bad, or they wouldn’t be in my ingroup — combined with the reluctance of the needy to draw attention to their situation and ask for help, which is very status-lowering, if largely for reasons relating to the aforementioned general-society norms.)

    • Scott Alexander says:

      1. There are rules in place preventing psychiatrists from giving money to their patients.

      2. I have enough patients like this that I can’t afford to give $5000 to each of them even if I wanted to, and many such people probably exist who aren’t my patients.

      • Sarah says:

        just for the record: this was meant as a heuristic for “more informal generosity” not “Scott personally is doing the wrong thing.”

    • Vegemeister says:

      Congratulations. You have created a very effective welfare system for moderately attractive (and above) women with internet connections.

  23. Markus Ramikin says:

    “all of my patient stories are vague composites of a bunch of people”

    Not the Hair Dryer Incident woman, I hope! Or is there no story on the Internet we can trust? 😉

    • Julie K says:

      I heard the hair dryer story 20 years ago, except it wasn’t a hair dryer, it was an iron, and it wasn’t a professional who found the solution, it was the patient’s husband. Are you sure it’s not an urban legend?

  24. Pingback: Things I read today | Draw Me This

  25. Jack V says:

    This is one of the reasons I like the basic income idea (or any equivalent way of getting people out of that sort of debt trap): it would save lots of money on hospitals, prisons, all the other inefficient things that happen. When it’s hard to take the hospital’s budget and spend it on poverty reduction.

  26. US says:

    Multimillionaires who’ve squandered most of their fortunes also commit suicide because of money issues, and those lives could presumably also be saved by giving them money. If there are X people killing themselves each year because of a debt no larger than P, then there are also Y people killing themselves because of a $(P+Q) size debt. Most people presumably implicitly agree there should be a line somewhere and that some people should (‘in equilibrium’) be ‘allowed’ to kill themselves because of money issues, though exactly where the line is to be drawn is something people will disagree about. A basic income, even assuming it would work the way proponents think it might work, would not stop people from killing themselves due to money issues.

    A net transfer of $5000 to every individual in the population would change no individual’s place in the income hierarchy (of course this is an ‘ideal’ (/unrealistic) scenario as a net transfer would be a free lunch, and that’s not how a basic income would work – you need to tax people to finance it, so the net transfer will be negative for a lot of people…). To the extent that people get into money troubles because of the acquisition of positional goods/conspicuous consumption, it might well make absolutely no difference because the prices of the relevant goods will just go up correspondingly. To the extent that people get in trouble by being shortsighted and/or systematically overestimating their ability to pay back the money they owe (e.g. by underestimating the risk of negative income shocks, such as unemployment), it also might well make no big difference even in the idealized scenario where no-one are made financially worse off by the implementation of the scheme.

    I understand your frustration – I’d be frustrated too. Though like pegnose I do wonder about how these things are done in the US; will the social workers someone like Paul gets to talk to during his admission have no useful information? If his problem is debt/money, it seems like money management education or something along those lines might be quite (sometimes even more?) helpful (than just giving him money).

  27. Ian James says:

    Scott, if you really support UBI, why don’t you consider advocating for it to be a much more important ethical task than, say, giving to charity? The amount of money redistributed via charity is peanuts compared to what we could redistribute even with a relatively modest UBI. I made this argument (with numbers!) in the comments section of “Nobody Is Perfect, Everything Is Commensurable.”

    The status quo is wonderful (of course) for the top 1%, who get to look like heroic philanthropists by voluntarily spending a lot less of their money on the poor than they would have to involuntarily spend, under a halfway decent tax-and-transfer scheme. And on top of it all, they sell us the idea that we can participate! Be your own mini-Gates by buying microloans or whatever! Am I crazy, or is this ideology at its purest?

    By the way, you’re not the first person to make the argument that our current ad-hoc “system” of dealing with poverty–via mental health care, incarceration, and (think about it) college–can be retroactively understood as a shitty form of basic income. The Last Psychiatrist did a fantastic series of posts on this called “Hipsters on Food Stamps.” She* comes down against UBI in the end, I think because she doesn’t really question her intuition that there must not be enough money to go around. There is. An army of wonks has done the math at this point, no need to go over it again.

    *TLP is anonymous, but if you spend enough time with the writing it becomes pretty clear that the author is female.

    • Anonymous says:

      Your asterisk surprised me a lot. I’ve read that blog and the author definitely struck me as male. If I had to pin down why, I’d say that the writing about women always seemed to come from someone who doesn’t like women, and the general tone was obnoxious in a way that is more typical of obnoxious men.

      So I googled. Turns out he’s been doxxed and he’s male. I won’t link but it was the obvious google query. The same search result also pointed out some context cues which may have been inserted to persuade people the author was female, so I get why you thought otherwise. (I had actually noticed some of those but chalked them up to a weird habit of slipping into fictionalised third person in the middle of a paragraph.)

    • Scott Alexander says:

      1. Not sure advocating for UBI more important than charity since UBI at best would only help Americans and most of the worst poverty is Third World.

      2. I don’t like the idea that political advocacy is more important than charity since a lot of people would counter-advocate against each other or advocate for stupid causes and get nothing done. My choices aren’t “everyone gives charity” or “everyone advocates UBI”, it’s “everyone gives charity” or “everyone advocates for thing they consider important”

      3. Much less sure that UBI would work as expected than that charity works as expected

      4. Much less sure that advocating for UBI would produce an effect than that charity would produce an effect

      5. I’m kind of doing both

    • chamomile geode says:

      i don’t think “advocate for ubi” funges with “give to charity.”

      as the taco commercial goes, ¿por qué no los dos?

  28. Salem says:

    And this is why I can never decide whether to identify as a libertarian or a liberal. On the one hand, top-down institutionalized bureaucracies seem so ridiculously inefficient at solving problems that it’s an outrage and a disaster. On the other hand, there are a lot of problems that really need solving, they don’t seem to have solved themselves yet, and governments are the only entity with enough coordination power to attempt the task.

    This is the kind of thing the more intelligent leftists say, and it really makes me tear my hair out. You are quite right that in the world as it is, markets do not solve all our problems. And you rightly observe that when the government steps in, it usually makes things worse. But because you can imagine an idealised government solving the problem, you always end up calling for the government interventions that you just stated only make the problem worse.

    The problem is that you are comparing idealised government to realistic free-markets. Of course government will always look better in that comparison – anything ideal will beat messy old reality. Idealised markets are much better than real world government too. See for example Jason Brennan. The fair comparison would be idealised government to idealised markets, or, even better, real-world government to real-world markets. I have never met anyone on the right of politics who believed that markets are any kind of panacea. Yes, there are unsolved problems, and yes they may go unsolved a long time. But you aren’t going to solve them by picking a failure of a method, just because success is conceivable that way. The slogan is, after all, “Markets fail, use markets.”

    • Harald K says:

      even better, real-world government to real-world markets.

      Ok, let’s do that. From where I live, it looks like my real world government already beats your real world market in terms of delivering the kind of society we would want to live in. To be more precise, I much prefer living in my “big government” home country than in your “less government” country, or any less government country.

      There is of course room for improvement, but from what I see, it seems more sensible to try to improve government rather than dismantling it. Whether it seems that way for Scott too, at least he’s thinking in that direction, considering a government policy (UBI).

      • Salem says:

        Ok, let’s do that. From where I live, it looks like my real world government already beats your real world market in terms of delivering the kind of society we would want to live in.

        That’s an alternative position, and worthy of debate. But I was taking for granted Scott’s earlier statement that in the real world, government interventions are “so ridiculously inefficient at solving problems that it’s an outrage and a disaster.” If you grant that, you shouldn’t favour government interventions.

        It seems to me that there are two strains within what I would broadly call the left:

        1. (Your position) Big government works. I don’t meet a lot of intelligent leftists who think this, because I live in a country that went from being big government to small government during my lifetime, and no-one wants to go back. But as popular memory of the 1970s fades, maybe this will come back into fashion.
        2. (Scott’s position) Big government doesn’t work right now, but that’s no matter – tomorrow we will run faster, stretch out our arms farther… And one fine morning… I get this all the time, and it exasperates me.

        • Harald K says:

          What country, may I ask? Mine’s Norway. I have family in the UK, and it seems to me plenty of people there would in fact like to go back.

          But it’s also a country with horrible geographic and class divisions. I am quite ready to believe you can go a long time and never meet anyone who would like to “go back”, provided you live in the right places and frequent the right circles.

          Whether your country is the UK or not, it seems most countries where someone would say what you said (“I live in a country that went from being big government to small government during my lifetime, and no-one wants to go back”) are similar – except a few Soviet satellite states where big government also came with communist dictatorship. Even in those, there are alarmingly many who wouldn’t mind going back, tyranny and all.

          • Salem says:

            I do indeed live in the UK. Naturally, the class divisions are far less severe than in the time of big government…

            “No-one” was meant as hyperbole – you are of course right that there are some people who want to go back to the 1970s, but they are few. I’ve never met one who had a university degree or was actually alive in the 1970s, because those people know about the Three Day Week, the IMF bailout, the Winter of Discontent, etc. What many people do want is a whole new wave of government solutions, which will be entirely unlike the admitted failures of the past and present.

            If you really think the time of big government in the UK was successful compared to what followed, I will be unable to persuade you otherwise in the space of this comment section. Productive discussion usually results from shared common places. That’s why I pick on (2)s rather than (1)s.

          • Harald K says:

            I did not argue that the UK government was great in 1970 by any means, but from where I stand it doesn’t look especially great now either. I thought we meant go back to “big government”, not go back to the exact policies of the 70s (which would make little sense).

            Our countries got North Sea oil at the same time, and at the time we had similar levels of income inequality. Granted, we probably got a good deal more hydrocarbon money per capita, but would you say Thatcher made better use of that windfall than Brundtland?

            My relatives are pretty well insulated from it, but looking at the conditions in the part of the country where they live… it would be a scandal in Norway if one part of the country was allowed to fall apart, socially and physically, like that. And it isn’t even the worst place in the UK by far, apparently. No Salem, I’m not trading your government for ours, much as ours could be better too.

          • EgregiousCharles says:

            According to Wikipedia, the UK government currently spends a higher percentage of GDP (48.5%) than Norway (43.9%) does, which I would think means the UK has bigger government than Norway. Norway is closer to the United States (41.6%) than it is to the UK, and is middle-low for Europe.

            This is one of the things that tends to frustrate me about economic conversation; we tend to confuse good or bad government spending with big or small government depending on political ideology. The US, where I live, currently seems to have most of the spending of a Euro-socialist country without most of the benefits. About a quarter of that is military spending.

            Norway doesn’t have a particularly big government, but it does seem to have a particularly good one.

          • Salem says:

            Why do you think that if you swapped your government for ours, that would result in Britain being less free market overall? We would lose in some areas, and gain in others. There’s a good argument to be made that the Scandinavian countries are more free market than the UK. And Norway is an extra-special case, as a petro-state on top of that.

            I quite agree that the UK government isn’t great now. But compared to the 1970s it’s the reign of Elua. I note that Norway too has liberalised considerably over the same time period. And this is what’s so strange to me about your argument. You won’t concede that the 1970s were a disaster for Britain (which leaves me with my mouth agape) but at the same time you don’t want to go back to those policies. You want some untried alternative policy that somehow magics Britain into Norway. Which is particularly convenient for you because it avoids having to learn anything from either the past or present. Well, I hate to tell you this, but if you put Norwegian policies in Britain, you wouldn’t just get Norwegian results but 718 miles to the south-east. The comparison is socialism in Britain vs a (semi) free market in Britain, not a (semi) free market in Britain vs a (semi) free market in a petrostate.

            To answer your specific question; Norway has oil revenues of around £21bn a year (2013), and a population of 5m. That’s a windfall of £4000 a head annually, which the Norwegian government has, to its credit, managed wisely. The UK has oil revenues of around £10bn a year (2013), and a population of 64m. That’s £156 a head, a trivial sum by comparison. Gas looks similar. It’s absurd to ask how the Thatcher government handled a windfall they simply didn’t receive, but they did create an ongoing windfall through the Big Bang, for which they deserve no end of credit.

          • LTP says:

            Harald, Norway has many advantages over the UK and the rest of the anglosphere that make big government more effective:

            – A much smaller population

            – A much more homogeneous population racially, culturally, ethnically, and in terms of values

            – No need to spend much money on national defense due to protection from countries like the UK, France, and the US

            I would attribute the success of the Nordic welfare states to culture rather than to Nordic states just structuring them better. It wasn’t in Norway, but Sweden, I think, where a study was done that showed that native Swedish children raised in low-income families significantly out-performed children raised in low-income families in the US, but children of poor Muslim immigrants in Sweden performed just as poorly as poor US children.

            Here’s a relevant piece comparing the US to Sweden which isn’t exactly like comparing the UK the Norway, but in the broad strokes it gets at why countries like the UK cannot be like Norway or Sweden.

          • Ahilan Nagendram says:

            I still think an excellent refutation of the welfare state has been Moldbug’s critique of post-colonialism: http://unqualified-reservations.blogspot.ca/2009/08/from-cromer-to-romer-and-back-again.html

            Unlike other Moldbug pieces, this one is well argued and well supplemented by facts. Indeed, the failure of bloated institutions is not seen only in the third world, but in the west as well. I think this particular edifice of anti-post-colonialism stands up well, and works great, like I said, as an anti-welfare state piece.

          • Ahilan Nagendram says:

            @LTP

            Culture? I think we’re forgetting the predominate role played by biology here.

    • Dude Man says:

      While I don’t support basic income, I would still like to address this point more generally. Government can often do a lousy job solving problems, but sometimes solving a problem badly is worse than letting the problem go untreated. You can analyze any given situation and determine which is the best course of action for any specific problem.

      • Ano says:

        Trying to analyze and diagnose the problems of every single poor person in the country seems like a noble but ultimately unattainable goal. That’s the idea of GBI; that most people have a better idea of how to fix their own problems with money than the government does. As crude as it is to just throw money at our problems, it might be better than wasting large amounts of time and money to do what Scott has been doing and diagnosing people with “Poverty NOS”.

    • Scott Alexander says:

      Well, part of what I’m saying is that the money the government spends could be spent more effectively.

      Given that there are already existing welfare programs, I’m not sure how saying that welfare should be done this different, better way is some kind of weird violation of principle.

  29. Leo says:

    Hi Scott,
    This is my first ever comment here. I discovered your blog a few weeks ago and I really like it. I’ve read an article or two a day ever since. One thing troubles me. There seems to be a utopian slant to a lot of what you write here. Obviously the Raikoth thing is pure, undisguised utopianism, but that kind of thinking seems to seep into discussion of more real world issues, like GBI etc. It can make some otherwise great articles sound like mere intellect flexing. Cooperation unveiled, for example, seemed pretty divorced from any kind of real situation. A lot of abstraction and hypotheticals.
    In the comments to this article you are accused (by Dan Simon) of focusing on the ends while ignoring the means. I’m wondering if you could offer (or even link to) some defense of this kind of sandbox utopianism as a useful part of policy debate. Is there an unspoken assumption I’m not privy to?

    PS: not everything on SSC is like this. Society is fixed, Biology is mutable, is a counterexample. Lithium in the water supply, hooray!

    • Sniffnoy says:

      …does everything need to be “a useful part of policy debate”? I think you’re making the mistaken assumption that that’s the point of this blog! See also the about page…

    • The Anonymouse says:

      Hey, welcome Leo! We’re happy to have you.

    • Scott Alexander says:

      I’m not sure how to distinguish “political suggestion” from “utopian political suggestion”. Unless you’re suggesting that I don’t talk about politics at all, where do you draw the line?

  30. Tracy W says:

    Stupid question time: isn’t this what we have bankruptcy law for?

    Which may well not be functioning in the USA for some reason, as an outsider American government seems to me to be massively incompetent, but, the basic idea that if someone gets into a spiral of debts that they can’t repay, then the legal system wipes out those debts strikes me as the policy solution.

    • Salem says:

      America does indeed have bankruptcy law, which is state-by-state, but generally pretty generous. But declaring bankruptcy will ruin your credit rating, which may cause you all kinds of other problems, and many people feel morally obligated to repay their debts, even though they could clear them.

      For example, a friend of mine with very little money or income was scammed by an ex-boyfriend and settled with a (for her) huge debt of more than £10,000 which she was unlikely ever to repay. She then became extremely ill, unable to work and subsisting on (irregular) benefits. Yet she kept meeting payments on that debt to the extent she couldn’t buy food, and absolutely refused to declare bankruptcy.

      • Tracy W says:

        If you think it’s morally wrong to declare bankruptcy, then why would you think it’s okay to take taxpayers’ money to repay said debts? At least with bankruptcy, the people who lose the money are the ones who took on the risk of lending you the money in the first place.

        In the case of your friend, who was the victim of a scam and yet still was going without food to make payments on the criminal debt, I kinda feel that psychiatric care would be appropriate. Or maybe a philosopher who could point out the various moral flaws in her logic.

        • Salem says:

          If you think it’s morally wrong to declare bankruptcy, then why would you think it’s okay to take taxpayers’ money to repay said debts?

          Beats me. But many people don’t have internally consistent beliefs.

          In the case of your friend, who was the victim of a scam and yet still was going without food to make payments on the criminal debt, I kinda feel that psychiatric care would be appropriate. Or maybe a philosopher who could point out the various moral flaws in her logic.

          Yet the OP is about how psychiatric care doesn’t really help such people! And I don’t think a moral philosopher would have helped either. I agree that she needed to change her behaviour, but neither I nor anyone else was able to do anything. People are tricky.

          • Tracy W says:

            Beats me. But many people don’t have internally consistent beliefs.

            Sure. But it’s one thing to say “Okay, we have a moral obligation to help people who are stuck in downward debt spirals at the expense of those who loaned them the money” and another thing to say “Okay, we have a moral obligation to help people who are stuck in downward debt spirals by bailing out their creditors at the expense of taxpayers because said people are insisting on sticking to some internally inconsistent beliefs.”

            Yet the OP is about how psychiatric care doesn’t really help such people!

            The OP was about people who had money problems that psychiatric care couldn’t solve. Your friend has money problems the legal system can solve, but she refuses to take that option. Different situation.

          • Salem says:

            I entirely agree that her reluctance to declare bankruptcy isn’t a good reason for the public to bail out her creditors.

            I don’t agree that this is “psychiatric.” Scott’s patient could have declared bankruptcy, but he preferred suicide, yet Scott says (and we must grant) that psychiatric care wasn’t going to help. It wouldn’t have helped my friend either, and going hungry is a lot less extreme than killing yourself. So if these people aren’t insane, and it’s not going to help them, how is psychiatric care the “logical case?”

            Rather than defining (admittedly poor) choices as mental illness, I think it would serve you better to consider why people make those choices. In my friend’s case, it’s because she’s struggled through a genuinely hard life in many ways, and clings fiercely to a rather tattered idea of her independence. Declaring bankruptcy would, psychologically for her, mean failing at life. She would rather go without food than do it. So it goes.

          • Tracy W says:

            Which is why I added another possibility of a philosopher to talk to your friend. It’s a particularly baffling one since by your description it was the ex-boyfriend who scammed her into this debt.

            I agree people are tricky.

    • gattsuru says:

      Bankruptcy’s actually probably overkill for this sort of situation in the United States, to the point where most bankruptcy lawyers would refuse to file barring extreme variations on the case. Because most people like Paul don’t have assets that could be readily garnished or assets that can be readily seized, the paper debt really can’t do much, especially for credit card debt which is universally unsecured. Michigan has a fairly long statute of limitations for credit card debt (six years?), but credit card companies tend to expect a lot of lossages on this sorta stuff, so Paul may well be able to negotiate them down heavily at the unspoken threat of simply ignoring the bills until they’re uncollectable. ((This is not the case for car loans, which may result in repossession.))

      The trick is that tomorrow’s debt isn’t any less suicide-inducing. His problem isn’t that he owes money today; it’s that it takes very little for him to end up owing even more tomorrow, he has nearly no cushion between income and expenses, he has little he could legally or readily do to expand the former or reduce the latter, and the only ways to work with the system are Kafkaesque.

    • Scott Alexander says:

      For reasons I can’t tell you without revealing too many private details, several of these patients have good reasons they can’t file for bankruptcy.

  31. Nestor says:

    I suspect with a basic income in place people will still manage to get themselves into crushing debt. We need to make healthcare, housing and food so cheap and abundant and ubiquitous it becomes impractical to sell.

    • Gbdub says:

      Yes! This is what I can’t get past with UBI proposals – usually they claim we can eliminate a lot of inefficient social services and just hand out the savings in direct UBI checks. The problem is that unless you simultaneously change the financial behavior of poor people, you’re still going to end up with broke people in hospitals with serious injuries and no way to pay, and unless you’re willing to let them die you’re right back to paying for Medicaid. While there is certainly some subset of the poor who are (or would be) financially responsible and have merely fallen on hard times, there are also a lot of people in a loop where they spend any temporary windfall on consumer goods instead of building savings to see them through the next crisis.

      At the same time, I think UBI is inevitable once tech is so good and energy so cheap that human manual labor ceases to make sense. At that point I think you’re going to have a large chunk of the population living idle, but that will be okay because everything they need and most of what they want is effectively free (see the Culture novels for a far future version of this – any recommended treatments of a more near-future version?). But the tech isn’t quite there yet.

      • jaimeastorga2000 says:

        see the Culture novels for a far future version of this – any recommended treatments of a more near-future version?

        Try Manna. The first half is really good.

    • kernly says:

      I suspect with a basic income in place people will still manage to get themselves into crushing debt.

      No, not really. People can still go bankrupt and with UBI they’ll still be able to afford food and shelter. For this reason it will be very difficult to get a loan on just UBI, which isn’t actually a problem.

      • Menno says:

        I’d say that’s a pretty huge problem.

        Either lenders can count the UBI as income, and use that as the basis for a loan, or they won’t and no one without a job will be able to get a loan.

        The first scenario is going to allow people to get into tremendous debt relative to their earning potential. The second will leave people much, much worse off if they need money. If you can sustain yourself (but just barely) on UBI and suddenly need money for something else, what happens?

        Find a job that requires a car or a more expansive bus pass? Sorry. Damage someone’s personal property and need to pay them? Sorry. Facing a large electric or heating bill? Sorry.

        The patchwork welfare programs we have now aren’t great, but they can’t be garnished. Yeah, it’s social engineering. But it actually guarantees food and shelter, unlike UBI. And it still leaves things like SSDI (one of the more common cash welfare programs) as income.

    • Tarrou says:

      Our poor are already obese, how much cheaper can we make food? Healthcare is already practically free, I saw a man yesterday call an ambulance because he was tired and cold and the hospital was close to where he wanted to go. Housing is also free or so inexpensive as to be indistinguishable, provided you can keep yourself from destroying your free housing or assaulting the other unfortunates living there.

      The fact that some people don’t know about these programs or are too proud/moral to use them is not an indictment of the system.

      I agree with you, except I think we accomplished that sometime around the end of the second world war.

  32. Garrett says:

    Speaking of economically efficient, wouldn’t a 50mg injection of morphine have the highest return on investment in this scenario? If we’re talking about somebody who’s net economic value is less than zero, would addressing that cheaply and painlessly result in the lowest dead-weight loss economically as well as in terms of human suffering?

    • ……because people are for efficiency, efficiency isn’t for people.

    • Tracy W says:

      Well, (a) in this scenario, the person is employed at minimum wage, so obviously their net economic value is more than zero. (Note this logic isn’t something you can reverse, even if someone isn’t employed, that doesn’t mean that their net economic value is zero.)

      b) we don’t have an economy for an economy’s sake. We have an economy to serve people.

      • Garrett says:

        I agree that somebody who has a minimum-wage job may have a net economic value greater than zero. However, in this particular case, that doesn’t appear to be true. If it was, the debt in question would be able to be readily paid off over time.
        An economy may exist to serve people. All options presented at this point in time involve transferring wealth from somebody else to support Paul. Why is this somehow a reasonable idea? If you wish to pay off his debts, you are more than welcome to do so. Creating more expenses which he won’t be able to pay off either strike me as both a waste as well as a violation of my right to property since I’m paying (fractionally) paying for it.

        • cypher says:

          Because not all people accept property as a terminal value.

          To many Consequentialists, people have value entirely independently of their economic value, and “property rights” only have value insofar as they are useful to humans, and no further.

        • JB says:

          If you asked me to rank his right to a certain minimum level of comfort which does not provoke suicide, against your right to your current collection of property, how do you think I would order them in terms of importance and moral value?

          • keranih says:

            It depends – will depriving the one person of their property provoke sucide in that person, as the threat of deprevation of funds & comfort has done to the first person?

            I don’t think it’s reasonable to assume that “one person needs material things in order to not commit sucide, so it’s acceptable to remove material things from another person.” I also don’t think it is at all reasonable to think that different people have the same need for material things.

          • Jiro says:

            “Take money from some people to give to other people so they won’t commit suicide” is equivalent to “feed the utility monster”.

            What we really want to do is ensure that people who need money the most get it (although that has its own problems). “Who would commit suicide” is not, by most people’s standards, “who would need the money the most.

  33. I also don’t see the point of going straight to UBI without implementing interim soitiins like free public healthcare. Debt arising from ill health is a solvable and solved problem.

    Free impartial financial advice is also a thing that exists.

    http://www.citizensadvice.org.uk/

    • Jon Gunnarsson says:

      How is “free” public healthcare an interim solution? As far as I can see, the two are basically orthogonal. You can have free healthcare without UBI and you can have UBI without free healthcare.

    • Scott Alexander says:

      I don’t want to reveal details but none of those things would have solved this patient’s problem.

      • Thanks Scott says:

        How common do we think these individuals who can’t declare bankruptcy and aren’t helped by any domain-specific program? Feels like optimizing for the common case is the way to go.

        • keranih says:

          This.

          Unless we’ve adequately diagnosed the issue (and Scott’s Poverty NOS hints that we haven’t) there is an excellent chance that what helps some, actively hinders others, and has no effect on a third set.

          Scott is, I think, proposing that BIG will solve most problems. Whereas, I think, society has long since determined (ie, decided for reasons which might or might not match reality) that further diagnosis is required: hence all the paper pushing and needs-assessment, in order to a) prevent preceived harm and b) reduce preceived waste.

          I think it’s very possible for a person to advocate helping others through charity, taxes, etc, who nonetheless doesn’t want expensive help going to people who either don’t need it or will be harmed by that help. IMO, this is not at all selfish.

  34. confused says:

    a lot of other people have talked about incentive problems with ubi which may or may not really be a problem. after all standard economic theory is still pretty weak in predictive power for example the numerous predictions of increased unemployment from higher minimum wages which empirically don’t seem to have happened. even from the more rigorous biological side it seems unlikely that a lump sum will encourage reproduction more than existing welfare programs

    my big question on ubi though is a bit more basal. at what point do you decide the ubi payments are high enough?

    $5000/per person is not very much money after all. it will help quite a bit on the margins but there are quite a few people who would still need much more than that. and even if they don’t ‘need’ more it is still hard to argue that people should make do on comically small amounts of money without sounding like the villain of a charles dickens novel

    but obviously there is an upper limit on how generous we can be with other people’s money before it begins actively destroying value. probably higher than most americans would assume given the tax rates in scandinavia but by the same token communism showed at least that the ceiling is somewhere lower than 100%

    so where and how do you draw the line? that’s the part which confuses me

    • social justice warlock says:

      This is a nitpick since it doesn’t actually contradict your point, but 20th century socialism (which was quite successful on a purely economic level) didn’t have anything like 100% tax rates, and some instances (like Albania) boasted of having no taxation at all. Of course there was effective taxation in the form of production of public goods and a certain amount of wage compression,* but state ownership of productive assets meant that “everything is in the public sector” did not imply “taxes are 100%.”

      In general I think it’s worth distinguishing systems that combine collective ownership with individual incentives (like worker cooperatives or actually existed socialism outside the agricultural sector,) which can be quite productive, from ones that eliminate those individual incentives (like collective farms and hippie communes,) which really do fail for the reasons people naively expect them to.

      *Arguably less incentive-relevant than in Western countries, since alongside the elimination of passive capital incomes the main income compression was between less- and more-educated occupations (which could have produced incentive problems if it led to people not seeking to get educated, but this did not seem to be a problem empirically.) Intraoccupational wage inequality, by contrast, was in many cases higher than in Western equivalents.

    • Matthew O says:

      $5000 is plenty if you don’t have to work and don’t have to pay for all of the costs associated with working (see my comment way up above on this).

      Of course, $5000 a year in San Francisco will not be sufficient, but $5000 a year in, for example, Southwest Missouri would. (Rent is $300 a month).

      • Cheap condominiums to warehouse lots of people. seems dystopian, but does anyone know of a better alternative.

      • Joe Teicher says:

        >Of course, $5000 a year in San Francisco will not be sufficient, but $5000 a year in, for example, Southwest Missouri would. (Rent is $300 a month).

        So you’d have $116.67/month for everything other than rent? I believe it would be possible to live on that but not very pleasant. Paying 72% of income for housing would feel like a crushing load. Were you thinking that 3-4 people would live in each condo? That might be more realistic.

        • Irrelevant says:

          I’ve lived on less, and it was much more pleasant than periods where I’ve had a higher income but was getting there via multiple unstable income streams.

          • Joe Teicher says:

            You lived on less than $4/day excluding housing? That’s impressive. Was it in the developed world? In the US you could have gotten food stamps worth more than $4/day. What did your budget look like?

          • Irrelevant says:

            Rural Washington. It was a six month period in which I was renting one room of a house and splitting my post-rent pay 50/50 between money I was living on and paying down school bills. I walked wherever possible (drove less than 20 miles total, bought that vehicle from a relative in high school so no car payment) and to the best of my recollection the only things I bought in those six months that weren’t food were a bottle of sunscreen, a knockoff charger for my laptop when the cable I had broke, and a pair of replacement insoles for my shoes. (All of which I got off Amazon.)

            You’re right about the food stamps though. They would have made things a lot simpler, but they never occurred to me. I assume that was the result of some subconscious level of pride blocking me from considering them.

  35. Jon Gunnarsson says:

    See, this is what annoys me about supporters of a basic income guarantee, negative income tax, universal basic income and related concepts (henceforth just UBI). While UBI supporters are good about pointing out deficiencies of and bad incentives created by existing welfare systems, they spend far too little time thinking about the bad incentives that will be created by their favoured solution. So let me list some of the problems.

    UBI is supposed to greatly cut down on bureaucracy by replacing all of the existing patchwork of welfare programmes. However, this is unlikely to happen. There is a reason why there currently exists a multitude of inefficient social programmes. This reason is the standard tragedy of public choice: concentrated benefits, dispersed costs. If you have a programme that gives some small specific subgroups of the population (whoever is targetted by the programme plus the bureaucrats administering it) a substantial benefit and imposes a very small cost on the very large group of all tax payers, this means that the small concentrated group has a strong incentive to maintain (and is possible to expand) the programme, while the large and dispersed group doesn’t really care. Unless it’s one of the largest programmes, most tax-payers won’t even know about its existence.

    Thus, whether a programme is actually efficient plays little role in its continued existence. The end effect is a huge mess of inefficient programmes. But for the same reason that the current system is so inefficient, UBI won’t be able to cut through this tangled mess. There will be lots of little pockets of resistance, fiercely defending their particular programme. They will make very convincing arguments for why their particular programme is particularly efficient and their group especially needy and deserving of aid. It doesn’t much matter how good these arguments are, only that they are made and that no one has the time to counter all of them. The likely result will not be a clean elimination of existing welfare programmes, but an even more tangled mess of old programmes plus the new UBI.

    Pre-20th century critics of democracy feared that universal suffrage would lead to poor people voting themselves the wealth of the rich, thereby making everyone poor. Why where they wrong? One reason is that the poor used to make up maybe 80% of the population, whereas nowadays something like 80% are non-poor. Another reason is that people tend to not be very selfish as voters. But probably the main reason is the kind of public choice problems mentioned above. While there are many ways in which money is redistributed from the rich to the poor, there are also numerous policies which have the reverse effect.

    Now imagine that somehow UBI supporters manage to have their way and replace all existing welfare systems with a UBI. Now people who want to help the poor or “soak the rich” through redistribution of wealth don’t have any problem. There is one single number (the height of the UBI) which determines how much redistribution there will be, so if you’re for redistribution, just vote to for whatever party says it will increase that number the most. Suddenly it becomes very easy for the poor to vote themselves the money of the rich. If you’re a socialist-leaning person this would probably be cause for celebration to you. But if you’re one of the libertarian-leaning people who support UBI because you believe it will be more efficient than the current system, this should give you pause.

    Lastly and perhaps most importantly, is the cultural effect of UBI. If welfare changes from a system of supporting those incapable of supporting themselves and their families to a basic right of every citizen, you will see a large increase in people living on the dole. In the existing welfare systems, there are many people working unpleasant jobs which pay barely more than welfare because they value being productive and self-supporting members of society and because working gives them status within their community. Destroying that cultural expectation of self-reliance is likely to lead to very bad long-term effects, such as greatly expanding the underclass.

    Aside from these theoretical arguments, we also have some empirical evidence against UBI. In the late 1960s and 70s, several experiments with income guarantees were conducted (by people very much in favour of the idea) in the US, most notably the New Jersey Income Maintenance Experiment. For the most part, the results weren’t pretty (which is probably why today’s UBI supporters tend to ignore these experiments). See for example this article: http://www.econlib.org/library/Enc1/NegativeIncomeTax.html

    If this post is unreasonably long, I blame Scott for being a bad influence 🙂

    • Roger says:

      I would suggest that one way to work around the debilitating effects of bad incentives of UBI is to design the program around requiring work if at all physically or mentally capable. Here is one take on the idea:

      http://www.morganwarstler.com/post/44789487956/guaranteed-income-choose-your-boss-the-market-based

      This incentivizes productiveness and mutually beneficial interactions yet provides a minimum working wage. Better yet, it incentivizes the employers to compete with each other to fund it.

      Now we just have to help those unable to add any value to others — a significantly smaller problem.

      • Jon Gunnarsson says:

        This is indeed an interesting model and can’t see any large and obvious flaws. (What does bother me is the casual and unsupported assumption that Corporations Are Evil And Must Be Punished.) But the model proposed here is a programme for subsidising low wage workers, not a basic income guarantee.

        • Roger says:

          Yeah, I don’t see why we wouldn’t experiment with corporations getting one wage subsidized person each and an additional one for every X employees (10/100/?)

          When I read his comment on corporations I assumed he was pandering to the hate Walmart crowd.

          The key is experimentation. We wouldn’t really know what would work and what wouldn’t until we try various things.

      • Jiro says:

        I would suggest that one way to work around the debilitating effects of bad incentives of UBI is to design the program around requiring work if at all physically or mentally capable.

        “You are capable of prostitution. We won’t pay you the basic income unless you go into prostitution.” (We could fix this up by allowing morality and human dignity exceptions to “you must work”. That, of course, has obvious holes.)

        There’s also the problem of someone using the UBI to survive while looking for a job in field B. They are told they must work, so they are forced to take job A, which prevents them from searching for job B.

        And the problem of making them take a job which pays money, but which is very costly for reasons other than salary–for instance, it requires that they now have to pay child care expenses.

    • Scott Alexander says:

      I answered some of the other points above, so I’ll focus on this part:

      “Aside from these theoretical arguments, we also have some empirical evidence against UBI. In the late 1960s and 70s, several experiments with income guarantees were conducted (by people very much in favour of the idea) in the US, most notably the New Jersey Income Maintenance Experiment. For the most part, the results weren’t pretty (which is probably why today’s UBI supporters tend to ignore these experiments). See for example this article: http://www.econlib.org/library/Enc1/NegativeIncomeTax.html

      The part of the non-pretty results that don’t seem easily fixable with a different system is that it disincentivized people to work. I agree that if our goal is to incentivize people to work, UBI will not do it. I am thinking of it mostly in the context of transition to a society where not everybody works and that’s okay.

    • Thanks Scott says:

      Native Americans on reservations could also be a good test case (people supported by casino largesse, etc.) My understanding is that results aren’t good.

      • John Schilling says:

        On the other hand, the Alaska Permanent Fund would seem to be a positive example, on both the political and social fronts. It works, nobody seems terribly inclined to tinker with it, and it doesn’t seem to disincentivize work or lead to everybody getting drunk on dividend day or any of the other negative consequences one might fear from a GBI.

        But it is only ~$2000/year at last count, and doesn’t require tapping income tax revenues, so there’s certainly room for problems to creep in if it were to be expanded to true GBI levels. So, not an existence proof for a workable GBI, but perhaps a counter to the most extreme brands of GBI-pessimism.

  36. vV_Vv says:

    What about giving free euthanasia to anyone who request it conditional on a psychiatric assessment that they are mentally competent?

    I mean, this “Paul” had no diagnosable psychiatric illness, arguably he was reasonably rational, so if he decided that killing himself was the best course of action, why shouldn’t he be allowed to do it?

  37. Arthur B. says:

    Even with a BIG people are impoverishable. You can borrow until your BIG barely covers the interest payments, and then what?

    There is a fraction of poor people who are poor because they don’t have or cannot acquire valuable skills, have a disability, or an exogenous problems, like a sick family member.

    However, a lot of poverty probably boils down to poor life codices and bad financial planning, and BIG isn’t going to help much with that.

    N=1, but read http://en.m.wikipedia.org/wiki/Reversal_of_Fortune_%282005_film%29

    • anon says:

      So you don’t let banks take money from BIG. If people want to take loans without having a job, they’ll have to go to the yakuza.

      • John Schilling says:

        Right, because that couldn’t possibly end with someone contemplating suicide. Or have we forgotten the problem we are supposedly trying to solve here?

  38. Arthur B. says:

    Even with a BIG people are impoverishable. You can borrow until your BIG barely covers the interest payments, and then what?

    There is a fraction of poor people who are poor because they sunny have or cannot acquire valuable skills, have a disability, or an exogenous problems, like a sick family member.

    However, a lot of poverty probably boils down to poor life choices and bad financial planning, and BIG isn’t going to help much with that.

    N=1, but read http://en.m.wikipedia.org/wiki/Reversal_of_Fortune_%282005_film%29

  39. Deiseach says:

    I got the impression it was in the ballpark of $5000. That might not seem like an attempt-suicide level of money to some people

    That converts out to a bit over €4,000 and while I wouldn’t kill myself over it, if I ran up such debt it would pretty much wipe out my savings. Welcome to the notion of “the working poor” 🙂

    Okay, I’m going to ask a really stupid question. If you do have social workers who see such patients, don’t they suggest budgeting services to them? And yes, I know, Social Workers Are Useless (apologies, any social workers/friends, family or loved ones of social workers, I know their problems, but I’m going at it from our side of the fence when calling in Social Protection services).

    Does your hospital not have any money advice in its accounts/financial department? We have MABS in our local government offices; often our tenants fall behind on their rent and we set up an appointment so they can get advice. But for social housing applicants who often are in poverty and have debts racked up, we recommend them to MABS as well, who help them with setting up budgets and payment schedules and will often advocate on their behalf with banks and lenders.

    I mean, there should be help out there for your patient. Banks are fecking bullies and will harass people over debts to the point of desperation, even where it’s illegal and they’re supposed to negotiate first. But there are legal avenues where the person can set up payment plans with lenders to agree to pay off loans, overdrafts, etc.

    I Googled around and there do seem to be some non-profit (that is, won’t charge or will only charge small fee) agencies for debt management in Michigan – I have no idea if these will be any help to your patient or future patients, but there are alternatives out there to “I’m in debt and I can’t repay it, I may as well kill myself”.

    Again, this is the sort of stuff social workers should be doing, steering patients/clients towards assistance. But you know yourself!

  40. Scott Santens says:

    I actually just recently wrote about this myself, and compared basic income to being a potential vaccine for poverty, saving more than it costs: https://medium.com/basic-income/universal-basic-income-as-the-social-vaccine-of-the-21st-century-d66dff39073

  41. Joseph Yaroch says:

    In training we are (or were) taught, specifically, how to deal the the emotional strain of dealing with sick patients. Unfortunately, we are taught nothing about the emotional strain of dealing with a sick society. The latter problem is more intractable.

  42. Vaniver says:

    He didn’t tell me exactly how much money this debt was, but from a couple of numbers he mentioned I got the impression it was in the ballpark of $5000. That might not seem like an attempt-suicide level of money to some people, but to this guy with his job the chance of ever paying it off seemed low enough that it wasn’t worth waiting and seeing.

    I lent about this much money to a friend to help him pay for some medical expenses that the state wouldn’t cover approximately five years ago, and he has managed to pay off about half of it over that time, in fits and spurts. I don’t remember my exact expectations when I lent it to him, but I think I expected it would take about a year to pay off, maybe two, since I was able to save roughly that much from each summer job I’d had.

    Solution there, it seems to me, is to create unimpoverishable populaces.

    I think that people have more power to impoverish themselves than this argument suggests. Yes, if the BIG (or a negative income tax, or so on) is created as a replacement for most means-tested social services, it will improve the lives of many people and probably save the taxpayers money. (It’s a good idea and I’m for it!) But I think the reason it was suggested by libertarian types is because libertarians are morally okay with Joe taking his monthly check from the government, spending it all on heroin, and starving.

    • Edward Scizorhands says:

      Instant on-demand bankruptcy would create an unimpoverishable populace. People would only be in debt if they were worried about their credit rating for future borrowing. (You could still demand liquidation of assets.)

      Otherwise, I have a big logical problem with “if people want to kill themselves over $5000 in debt, let’s give everyone $5000 to fix it.” I think this parable will make it clear:

      Baseball critic: There are too many close plays at first base! It requires the umpire to use his judgment and that’s not fair.

      Baseball designer: Okay, we will fix that by making the distance to first base 80 feet instead of 90 feet. Now, there shall be no more close calls.

      • haishan says:

        I’m not sure I get the moral of the parable; it’s likely I’m overthinking it. Is the point that there will still be close plays at first, just a different set? Is it that there really won’t be as many close plays at first, because a lot more of the best players can beat the throw to an 80-foot first base than can beat it to a 90-footer, and this makes the game less interesting? Or is it that the population of professional baseballers will adapt to trade off speed for, say, power, which also changes the game in unexpected ways?

        • I understand it to be the first one. The relevance is that people who are broke and depressed making $X/year will still be broke and depressed making $(X+n)/year, for small values of n, and large values of n bring their own problems.

    • houseboatonstyx says:

      Yes, if the BIG (or a negative income tax, or so on) is created as a replacement for most means-tested social services, it will improve the lives of many people and probably save the taxpayers money. (It’s a good idea and I’m for it!) But I think the reason it was suggested by libertarian types is because libertarians are morally okay with Joe taking his monthly check from the government, spending it all on heroin, and starving.

      A lot of people are worried about this (for less dramatic purchases), and me too. Give some people cash, and some will spend it foolishly and be cold and hungry again next week.

      My suggestion isn’t ideologicially elegant, but would be simple to implement. Expand the food stamp program to cover other basic needs. For everybody, no means test — which saves government payroll and stress for those receiving it. And Medicare too: no means test, no age test, no co-pays.

      Yes, Joe would probably find some heroin dealer to trade with. But a solution that helps millions, and saves money, shouldn’t hang up on the very few who fall through the cracks — deliberately.

  43. njnnja says:

    While I am in favor of a guaranteed income program, and also in favor of replacing most of our in-kind welfare benefits with cash, I’m not sure that another one-size fits all program is what this guy needs. His root problem wasn’t that he needed cash; his root problem was that none of the people/organizations/bureaucracies that were willing and able to help him actually knew what his specific problem was or could do anything about it – namely, he needs $5000. There will always be people with specific problems that no matter what grand machines we design will fall through the cracks. And although big cracks should be filled in to the best of our ability, sometimes the answer is much simpler.

    You saw this man, you actually spoke with him, and you listed to him. You figured out that he needed $5000. Here’s a crazy idea – you should have given him money. Maybe not entirely out of your own pocket, but go around to friends and coworkers hat in hand. Give less to charities so you are revenue neutral on the deal. Or this is 2015, maybe you are supposed to go on kickstarter where people throw money away on potato salad.

    There is a reason why this kind of one-on-one interaction used to happen between the troubled and a clergy member – more often than not, something from the donation box found its way into the hands of the poor guy. I don’t mean to make you feel guilty or responsible; you didn’t take any vows of poverty. But when you see some people who just need some money who the system is dealing with entirely wrong, and it leads you to the conclusion, “well, perhaps we should be looking at how to pass some sort of guaranteed income or negative income tax law, and how could we do that under the current political situation, and how would we deal with the moral hazard, etc.etc.etc”, then I think you might be overthinking it.

    And although I really enjoy reading your musings, whether over- or under-thought, sometimes that’s not necessary.

    • Eiko says:

      I don’t think that what you’re suggesting is a good solution for the real problem Scott’s describing, which is the general trend, not the example he chose to give of it?

      Scott does not have the money to give $5000 to everyone who is $5000 in debt and suicidal because of it. We could spread the idea that “a good and virtuous doctor would pay the debts of their suicidal patients” but even if all doctors bought on, that has the exact same flaws as having medicare pay cash payments for suicide patients, only the financial burden and the decision of whether or not the patient is really suicidal and in crushing debt or is just faking it would fall on the doctors. And what about people who suffer the same problem, but with student loans, which can be >$100,000 in some places?

      Also, Scott is (or certainly seems to be, given the things he’s written about it) an Effective Altruist, which means that even if he had taken a vow of poverty, he would most likely be giving that money to Givewell, which would in turn use it to save more people’s lives for the same amount of money, which is kind of the point?

    • anon says:

      Maybe Scott does give 5k to everyone who enters his office needing 5k, and doing that doesn’t stop him from wondering if the solution could systematized somehow?

      Also, there’s no way you don’t realize you’re asking the impossible of Scott. It would take a pretty serious effort (and time) to get 5k, especially if it’s just to give it away, and it solves the problem only until the next guy walks in. Gathering money from friends has costs, even if it doesn’t hit your wallet directly. Plus, maybe I’m an especially prideful person, but going around with a donation hat even for another person would be very agonizing.

      • keranih says:

        >>>going around with a donation hat [snip] would be very agonizing

        Well, you’re asking people to put in “a pretty serious effort (and time)” for you, is it unreasonable to expect that your attempts to collect that from them should also take some effort and time?

  44. The issue that inevitability arises in the discussion of any social welfare program is waste. I’m warming up to the idea of a UBI (universal basic income) to combat job loss due automation, but again, the issue of waste is a pertinent to the discussion. To get around this, I propose a UBI that is contingent on drastic entitlement spending cuts. This is not new, but seems fairly obvious that having two large social safety nets running concurrently would be very deleterious to the nation’s fiscal health. What is to stop parents from churning out an endless number of kids to take advantage of of the basic income, a problem that traditional welfare faces and would understandably be worse under a UBI. A second possibility is a high-IQ basic income. It would be like a government Mensa that pays its members, and anyone from rich to poor is eligible for payments provided they meet the IQ requirements. Depending on the IQ requirements, only around 5% of the country would be eligible so it would cost much less than a truly UBI. The advantage is that the money would have a higher ROI than a normal UBI because high-IQ people tend to more creative and therefore would put the money to use in ways that would could the economy and improve society, such as starting businesses, producing art, writing, etc, that otherwise may not be possible if these smart people are too busy trying to make ends meet than thinking and creating.

    • Deiseach says:

      Why should we value producing art? Take four weeks where the rubbish bins are not collected. Then ask: which do we want more urgently, a high-IQ artist or a medium to low-IQ binman on the lorries?

      In other words, I don’t think we’re in any danger of seeing the Army sent in to strike-break in order to produce new creative Tracey Emin-style gallery pieces.

    • BD Sixsmith says:

      Aren’t you essentially proposing art and academic grants without the paperwork? I support grants but I think they have to be contingent on standards. The last decades have offered us quite a lot of government-sponsored pretension and obscurantism (and from high-IQ people).

  45. Konkvistador says:

    A society respectful of suicide rights would also not have these problems.

  46. onyomi says:

    This problem seems to me to be an argument for private charity. Private charity has flexibility. If you deem that what this particular patient really needs at this particular moment is to have his credit card bill payed off, then you can do that. Yet there is no rule in place saying you have to do that for the next person who walks through the door.

    • MC says:

      This was my reaction exactly. At my church, his bills would have been paid, but the next guy who just wants some drug money would be turned away. Incentive structure solved.

  47. Jennifer says:

    I’m too busy for a long response, but to address two assertions you have made.

    1) That a centralized top down approach to solving poverty is the only way to go about it. Since that has been the approach for decades now, and you’re still in this situation, I’m not quite following.

    2) Guaranteed Basic Income might be a good idea. I’m still on the fence, however, it would not guarantee no poverty. All it takes is a cursory glance at now broke former lottery winners to realize that money alone isn’t the cure to poverty.

    • depends how you define poverty: wealth inequality or a state of mind. the later can possibly be fixed without harming society, but trying to fix the former has been tried with much failure and wrought with much suffering. We have to accept a baseline level of poverty in society.

    • cypher says:

      Really what it needs is a much larger scale test than previous ones, but still smaller than a US state.

  48. Edward Scizorhands says:

    Solution there, it seems to me, is to create unimpoverishable populaces

    I love you (platonically) just for this. Presuming you were making fun of the concept of how easy problems in one field seem to experts in another field.

  49. Gbdub says:

    The flaw in Scott’s argument is that his patient doesn’t really need $5000 – his patient needs to fundamentally alter his living situation in which cash in <<< cash out. Unless his debt is from a singular financial tragedy (which doesn't sound like the case) he's likely going to be $5000 in debt again in a few months (assuming he even spends his $5000 effectively to pay down his debt). "Give him a check" is no more a "cure" than 5 days in the psych wing is a cure for a serious mental illness. It gets him out of his current crisis but does nothing to prevent the next one.

  50. Anonymous says:

    Is requiring Name and Email intentional? If so, I would like to say I don’t understand it. Undesired posters won’t be deterred — one can enter anything in those fields and have the post submit — and it adds a measure of inconvenience to posters who previously did not use one or both of them.

    • Deiseach says:

      But even a pseudonym does make it easier to disentangle “I want to reply to Anonymous who said – ” “Excuse me, I never said any such thing!” “No, not you, the other Anonymous” “You mean me? I didn’t say it either”, “No, the other other Anonymous”

      🙂

  51. Jos says:

    Scott Sumner just posted a note on why he supports wage subsidies over a straight basic income guarantee.

    Short version – even surprisingly small unconditioned payments incent a number of people not to work, and Scott S is in the camp who believes not working is often harmful. (In a very economist style debate, I think I recall one of the marginalrevolution guys arguing that workers at the bottom of the income scale have so little productivity in the modern economy that it’s not a great *economic* loss if a bunch of them decide not to work, so we’re really having a paternalism argument on whether we know better than them whether working is good for them.)

    http://econlog.econlib.org/archives/2015/02/experiments_in.html

    • From a utilitarian point of of to view, its optimal to have the people who want to work, working , and the people who don’t want to work not working.

      • but then who pays the living expenses for these people who don’t work? Is it an optimal use of resources to subsidize the lifestyles of those who choose not to work, and if so, is there a better way than is being done now?

      • Wrong Species says:

        That seems clearly false. The one tribe that had the most success was the one that didn’t give payments to their people.

  52. Quite Likely says:

    This is true of so many aspects of American life. The problem isn’t that our education system is so terrible, it’s that kids growing up in grinding poverty are going to have problems no matter what school they go to (though of course sending the poorest kids to the worst schools as we do doesn’t exactly help). The problem isn’t that Americans are just idiots who can’t stick to a diet and thus get fat, it’s that they’re busy and poor and so go for the cheap, easy, tasty, terrible for you food. The problem isn’t that people are just too lazy to go vote, the problem is that when you’re living hand to mouth you have other things to spend your time and energy on than politics.

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  55. kernly says:

    On the one hand, top-down institutionalized bureaucracies seem so ridiculously inefficient at solving problems that it’s an outrage and a disaster.

    Relative to what? Private solutions aren’t exactly ‘efficient’ either, unless you’re cherry-picking the very best examples from that sector without doing the equivalent for the public sector.

  56. Stella says:

    I know of multiple conservative-libertarian-ish people (and I’m mostly one of them) who favor a Universal Basic Income *if* it *replaces* Medicaid/Medicare/Food stamps/etc. From that perspective, a UBI may still involve confiscating property, but because it’s simpler and more straightforward it’ll be cheaper and less open to gaming and complicated distortion of incentives. The UBI is also more libertarian than other welfare programs in the sense that it doesn’t tell the poor what to do with the money it gives them.

    Those places that have tried a UBI *have* found that it discourages working, however (as you would expect). A Negative Income Tax would theoretically fix that flaw because it would (theoretically) be structured so that at each point in the income spectrum earning more at work will mean you take home more money (as opposed to the current system, where someone getting a better job might lose their welfare benefits and end up with less). So I would prefer a NIT to UBI, but I suspect it would be even harder to implement in the real world than a UBI.

  57. Albatross says:

    I recommend starting out at state level using a sales tax rebate (ie the sales tax percentage times poverty level, paid out monthly to everyone who filed taxes and qualified). After all the TurboTax fraud, there must be a few states looking to collect money other ways. Once a few states start doing it and seeing reduced costs for Section 8, food stamps, medicaid, etc momentum will build. Agreed it is a great idea.

  58. some guy says:

    This isn’t really what this article is about, but the possibility of an extremely strong negative reaction to the mention of suicide keeps me from bringing it up with doctors, which strikes me as non-optimal.

    I have a medical condition. What is it? I don’t know. No doctor I’ve seen has been able to figure it out, either. One side effect is that I have very limited mobility, and the more I try to walk the worse the pain gets. I’ve asked about getting a wheelchair so that I can leave the house, but every doctor is very strongly against the idea because getting a wheelchair might cause my mobility to degrade. My response to that is LOLOLOLOL WAT. It’s painful enough to walk that I don’t leave the house to do anything other than see another doctor or do physical therapy. If this were the only problem I had, suicide would already be on the table because this is really miserable. But it’s much worse than that.

    The level of pain I experience from doing anything has been gradually increasing (on average) for quite some time. If that trend continues, I expect that sometime this year, it will be excruciatingly painful to interact with other humans in almost any way (talking, writing, or typing).

    The other day, I saw a doctor who seemed like my last hope in the local system. I’ve seen other doctors who haven’t been able to help. There are lots of those. A couple of them told me I should see this guy, who is, apparently, the go to doc for various mysterious conditions.

    But he couldn’t figure it out. He doesn’t have any ideas for tests to do to figure out what’s going on or any suggestions for other doctors I might see who might have ideas. He suggested a couple things that may help with some symptoms, but they don’t address the cause and aren’t going to fix the major problems. What I was thinking but didn’t say was, “if that’s all you’ve got for me, I’m going to kill myself. Not now, and not next week, and maybe not even next month, but probably in the next year. My life has disintegrated over the past couple of years, and that’s all you can do to help? If you can’t at least think of someone to refer me to who might help, you might as well stick a fork in me. I’m done”.

  59. Grant says:

    Have you read about the history of mutual-aid societies and fraternal organizations in the United States in the pre-Great Society era? David T. Beito of the University of Alabama has written extensively on the issue. I certainly agree that there the coordination problem will mean that some people don’t get treatment because private charity doesn’t scale as well as government. But on the other hand, with a government system of charity, there is a crowding out effect so people don’t rely on community groups or family as much. Thus, you get people who may have their physiological and safety needs meet, but they don’t get their higher order needs meet. In a society where people had to depend on community groups or family for their physical needs, by joining into communities they might have the chance to have their need for belonging and other higher order needs being meet.

  60. SUT says:

    That $5k medicaid expense *is* the problem. That’s $5k that cost a a waiter job at a steakhouse (livable work) vs a cashier job at arby’s. That’s $5k that doesn’t go to an Uber driver (available next week) but to a bus driver (unavailable if you haven’t been jostling for it for years).

    The economy improves only at 3%/yr, and those gains need to carefully locked-in to private market wealth creation activity. If accomplished, this will yield better outcomes for everyone. As it stands, increased public health expenditures continue to crowd-out the kind of economic solutions that can lead to rising wages (for all, not just doctors) and ameliorate situations like this over time.

    Ideas that start by distributing a flat amount of guaranteed tokens to everyone seemed doomed to failure for the simple reason that “the economy” – domestic productivity – is only improved slowly, so any attempt to arrive at a desired end stage solution immediately, will simply distort all the markets and we’ll end up worse off on efficiency and outcomes.

  61. swanknasty says:

    ‘On the one hand, top-down institutionalized bureaucracies seem so ridiculously inefficient at solving problems that it’s an outrage and a disaster’

    Based on what?

    If it’s a problem caused by market failure, then the governmental bureaucracy is the onlyavailable means of solving the problem. So, the only question is whether the cost of regulation matches the deadweight loss, making the regulation pointless.

    • onyomi says:

      Market failure doesn’t mean “when markets fail.”

      • True or false “Market failure doesn’t mean ‘when markets fail.'” would make a great essay question for an intermediate microeconomics exam.

      • swanknasty says:

        Market failure doesn’t mean “when markets fail.”

        Yes it does. A market is supposed to do one thing — allocate resources efficiently. Therefore, by definition the only way a market can fail, is when it fails to allocate resources efficiently.

        The case above intimates some sort of externality, which is a clear example of market failure.

  62. The Anonymouse says:

    Query: so, theoretically, now we have a great basic income, and everyone is receiving it.

    Whither immigration?

    • blacktrance says:

      One easy solution is only give the basic income to citizens.

      • Randy M says:

        Easy politically, or easy financially?

        • blacktrance says:

          It’s easier financially than giving it to everyone. Holding immigration policy constant, it’s easier politically too.

        • Jon Gunnarsson says:

          In many cases existing welfare programmes already exclude immigrants unless they’ve lived/worked in the country for a number of years. So this sort of discrimination against immigrants is already politically feasible.

      • LTP says:

        You still have the problem of birthright citizenship, though. Immigrants may sneak over and have kids to get the income.

        • Sniffnoy says:

          A lot of proposals for basic income have restricted it to adults. It would solve that problem, at least, assuming that few people are willing to immigrate for basic income 18 years later.

  63. grendelkhan says:

    I wonder how much of all this is due to our culture having forgotten that suicide used to be seen as a reasonable and honorable response to failure. We have an arrangement in which people are worthless (in the sense that they don’t have worth to people, and no matter how many supportive sharks you show them, they know it), but there’s no way for them to respond to that; it winds up in the “mental health” bucket, but anyone put in that situation would feel the same way.

    I’m reminded of the idea that we poisoned a generation of Americans with lead, then brutally imprisoned them when they, as we should have known, turned out violent and impulsive. Locally, everything is working as it should, but stepping back, everything is broken and the world is mad.

  64. dlr says:

    If you really have a problem on a regular basis of people being willing to kill themselves because of their debt levels, then why not spend a few minutes on the internet, finding the location of the nearest (government subsidized) law office assisting low income/no income people. Write down the name and the phone number and draw a really, really, good map, and give it to your patient.

    Tell him to go over there and ask them to file for bankruptcy for him. He could no doubt go to the library and download the filing papers himself and fill them out, and file them himself. Depending on what state you’re in, he may not even have a filing fee. But, if that seems too hard, he can get free legal advice to do the job for him.

    There is literally no down side for him. They won’t take his house (assuming he has one), or his car (assuming he has one) or any of his personal possessions, from his clothes to his bottle cap collection. It will just get rid of all his unsecured personal loans. He won’t be able to get credit for awhile, as in years, but that actually sounds like a plus to me, under the circumstances.

    He doesn’t need a check for $5,000. He needs some good advice. And you could give it to him. The whole system is already set up to relieve him of his crippling emotionally debilitating problems.

    Although I’ll be honest with you. I’m no psychiatrist, so you can ignore my opinion on this, but I’d say that anyone who is considering committing suicide because they are in debt has far bigger problems than being in debt.

  65. anon says:

    I like GBI but I don’t think I’ll live to see it happen. How is it going to be implemented? We can’t fire half the government and close all the programs since then it’d be trouble if doesn’t work, but then again GBI is only viable if it also helps minimize the bureaucracy, it can’t just be one more program on the growing pile. And what’s the smallest possible test case, ripping out some smaller country’s govt and trying it there?

    • houseboatonstyx says:

      “We can’t fire half the government and close all the programs since then it’d be trouble if doesn’t work, but then again GBI is only viable if it also helps minimize the bureaucracy, it can’t just be one more program on the growing pile. ”

      My rather boring idea is
      1. no means test or other hoops
      2. expand Medicare, Food Stamps, etc to everyone

      Initially, there would be no big layoffs because of the extra work getting all these extra people into the system, work of expansion, etc. As that tapers off, the then-surplus employees can be let down gently.

      To prevent abuse of the system, instead of limiting WHO gets the help, limit what kinds of things can be bought — as Food Stamps already disallow certain foods, drinks, supplies, etc.

      • Jon Gunnarsson says:

        The solution you propose would be far more expensive than the current welfare system. Where is all that extra money supposed to come from? Don’t forget that the US government already runs a huge deficit as it is and for the most part there isn’t political or public support for cutting anything or for raising taxes.

        • houseboatonstyx says:

          First, get a realistic figure for how much would be saved by eliminating the paperwork of means testing. Also, phase out programs that would be redundant with the BIG.

          Then, figure how much GNP would be increased with all the ex-bureaucrats put to doing productive work (and their office buildings rented out).

          Then see how the budget looks.

  66. PGD says:

    You needed to send this guy to a bankruptcy lawyer. Seriously. That’s what society should be providing, legal assistance.

    I would say any decent liberalism would reject psychiatric warehousing as a solution to social problems — the fear of actually giving people enough money to change the power equation (and ‘disrupt incentives’, or create ‘moral hazard’) is what leads to medicalization of social problems. Of course, not saying that we have a decent liberalism in this country…

    • Irrelevant says:

      American liberalism can’t even manage to reject criminal memory-holing as a solution to social problems.

  67. “On the other hand, there are a lot of problems that really need solving, they don’t seem to have solved themselves yet, and governments are the only entity with enough coordination power to attempt the task.”

    This sounds as though solving the problem means solving all of it for everyone, and nothing else counts.

    Suppose there are a thousand people in the situation you describe. One can imagine lots of ways in which the problem could be solved for one of them outside of government, whether by his church, his friends, or a generous benefactor. Does that count as not solving the problem, or as solving one thousandth of the problem?

    Over the past century, the amount of poverty in the world has declined sharply. Almost none of that decline was due to redistribution. Almost all of it was due to economic progress raising productivity and average incomes. Does that count as solving the problem? A large part of the problem—say ninety percent? Arguably, government did more to hinder the process than to help it. To take the most extreme case, Mao kept more than a billion people poor for several decades. Since his death, the per capita income of China has risen about twenty fold as a result of the government doing less, not more. The main contribution of his successors was to refrain from blocking changes that were at best disfavored, in some cases illegal, when they observed that they were working.

    So I am not sure I know what the problem is that only government can solve.

  68. Tarrou says:

    A problem like poverty is indigenous to the human condition, and isn’t going to be fixed, because it isn’t possible to fix. Any solution will be gamed into insolvency or miss some unspecified portion of the target demographic.

    This is the pessimistic and cynical macro view I take, and it has never failed to be correct. See also: violence, crime, politics, tribalism.

    However, this is not to suggest that there aren’t improvements to be made. A basic check around the world shows that culture and institutions matter a great deal. The poor in America are considerably better off than the poor in Sudan. I am, however, instinctively suspect of large, sweeping ideas that are politically impossible to implement which purport to solve everything. These are armchair-sociologist bait. I’m much more enthused by small tweaks that might have good effects farther downstream.

    And I’m depressed at how often people see another person in trouble and demand that something be done………when that thing was done, forty years ago, and it just isn’t being taken advantage of. In the case of Scott’s OP, we have bankruptcy law and debts are uncollectable after a few years. The solution is blindingly simple. Either go through the trouble of declaring bankruptcy, or just stop paying on the debt. In three years, give or take, it can’t be collected, in seven it falls off your credit. You may be bothered by collections calls, but it’s not five grand worth of annoyance. There are a whole nest of problems associated with poverty that are not this easy to solve, but this one was very simple. However, I realize that this was not the point of the post, and will post a short critique of BiG below.

    • Deiseach says:

      You may be bothered by collections calls, but it’s not five grand worth of annoyance

      You are not dealing with the people I am dealing with. People who had good jobs, had mortgages, their jobs went in the economic crash, they can’t pay their mortgage, and they are being hounded by calls from the bank and collection agencies, even where that’s illegal.

      Oh, it’s hardly that inconvenient, you say. Multiple calls EVERY DAY. Letters from the bank and collection agencies threatening legal action. Not being given any advice on your options, just pay up or else go to jail.

      Oh, and apparently in America, you can go to jail for not paying civil debt!

      You know, I really am beginning to wonder about the people on this site. You all seem like nice, decent-minded, good-intentioned folk. But you talk and talk about abstract systems and have no problem lumping a large mass of people into a category called “the poor” and saying good riddance to whatever happens about them.

      It’s probably because I’m literal-minded and slightly OCD and not near the levels of IQ on here, but I do note that I – a foreigner – was the only person to suggest concrete processes of help for future patients Scott might have in this situation. Everybody else was either “La Revolution will fix society!” or “Let the weakest go to the wall!” Oh, and everyone pretty much seems happy to write ‘Paul’ off as some kind of careless spendthrift who got himself into this situation by splashing out cheap credit on fripperies. YOU DON’T KNOW WHAT THE FUCK HAPPENED, DON’T WASH YOUR HANDS OF IT BY SAYING HE WAS POOR AND DUMB AND WASTEFUL.

      I hear a lot of talk of Elua. I don’t see much evidence of service in their name.

      On this feast of the martyr St Valentine, good luck to all we poor wretched worms who need mercy and compassion.

      • Anonymous says:

        Your work here is appreciated.

      • Tarrou says:

        No offense mate, but you seem to have missed my whole point. Perhaps I was unclear.

        Scott’s post was that:

        A: A person he knew was in bad financial condition, and was being treated psychologically for what was essentially an economic condition.

        B: Because none of the standard options seem that good, a consideration is due for some radical scheme like BiG.

        At no point did I say the poor should go to the wall. And in fact, my comments on the annoyance caused by collections is from personal experience. I am now in my twelfth year of collections for a debt that was settled before it ever went to collections. Trust me, I know exactly what goes on when collections start badgering people. There’s any number of tactics to cut down on it, but “let’s reform our entire economic system because collections agents are annoying” doesn’t strike me as a proportionate response.

        I make a sharp distinction between my feelings for the poor and my thoughts about the poor, and that is what you seem to be conflating. I feel bad for them, but I know that no amount of money will ever make most of them any less poor. I oppose BiG not because I hate the poor, but because I think it is an unrealistic way of helping them that won’t really fix much of anything.

      • houseboatonstyx says:

        Thank you very much for telling us more about the people your program helps. Apparently the grotesques you’ve been posting aren’t a proportional sampling? Could you ballpark some percentage of deserving poor class vs undeserving, and of nouveau poor (ie people laid off who are able to research their options, and will eventually pull out of this crisis)?

        Sorry if I sound flippant; rushing to coffee and reverting to my native vocabulary.

    • Anonymous says:

      A problem like poverty is indigenous to the human condition

      A consideration of hunter-gatherer tribes shows that it isn’t.

      • keranih says:

        Depends entirely on the definition of poverty. If it includes “does a person live or die” – as indicated by some upthread – oh, yes, the hunter-gatherer lifestyle includes crushing poverty and misery.

        Alternatively: there are downsides to the hunter-gatherer livestyle which, on average, outwiegh the upsides, which is why humanity has transfered from the one lifestyle to another.

  69. Tarrou says:

    Now, to the problems of BiG.

    1: Politically unpalatable except in the most homogeneous of societies. Good ideas that have no chance of implementation aren’t good ideas at all. There is a reason no one will support them.

    2: I haven’t crunched the numbers, but it seems counterintuitive that there would be enough “spare” money in an economy to give everyone in it enough to live on as in a BiG. Even if there were in one economy (say, a really big one like the US’), there certainly isn’t in say, China. Eliminating welfare and programs isn’t going to be enough, you’d also have to eliminate courts, armies, and pretty much everything other than BiG. This may sound like An-Cap heaven, but there’s a reason no one does this, see #1.

    3: The political incentives are terrible. Once implemented, it would be a ratchet where a majority of people who benefited from BiG would consistently vote increases until it was insolvent.

    4: To some, work has value in and of itself. I realize this isn’t an easy sell to the consequentialist crowd (or economists), but there is an argument to be made that work is a necessary part of human psychology and life cycle. I’ll leave that for another time.

    5: BiG does not actually solve any of the issues we have today except possibly some incentive problems and efficiency. Poor members of degenerate subcultures will still be poor members of degenerate subcultures with slightly more money than the amount they already cannot manage. It may help marginally the people who would have worked hard and been smart with their cash anyway, but get hit with bad luck (and who doesn’t want to help them?), but those folks mostly do fine anyway, given time. Crack addicts will still buy $5k worth of crack in their first week, and be done, and will the tender hearts of liberals (and the general population) be hard enough to say “nope, you had yours”? When BiG fails to eliminate cultures of poverty, violence and addiction, what recourse is there? Will not people still demand something be done, so more programs are set up, and the whole purpose of BiG is gone?

    • orangecat says:

      1. That seems to be an argument against the possibility of Social Security, Medicare, Medicaid, etc.

      2. It’s not supposed to be enough to live on by itself, except maybe if you get 3 roommates for a 2 bedroom apartment in a cheap area. But see #4.

      3. Would that be any worse than the current situation?

      4. I agree, and would argue that part of the basic income package should be abolishing the minimum wage entirely, as well as de-linking employment and health insurance. That would make it more feasible for employers to give low-skill workers a chance. And because the revised tax structure would remove the near-100% effective marginal taxes that the poor often face today, it could actually have a net positive effect on willingness to work.

      5. That’s a very good question. Charles Murray addresses it here, for example:

      But under a guaranteed basic income, he can no longer portray himself as a victim who’s helpless to do anything about it. And you’ve got to set up feedback loops where people say, “Okay, we’re not going to let you starve on the streets, but it’s time for you to get your act together. And don’t tell us that you can’t do it because we know you’ve got another check coming in in a couple of days.”

      I don’t know if that would actually happen, but it seems plausible.

      • Tarrou says:

        1: Except for the obvious, that all of those ideas got implemented (though some required massive revision), and no BiG scheme has ever been implemented. When arguing over the possibility of something being implemented, things that have actually happened are always more likely to have happened than things that haven’t.

        2: Without more research than I’m willing to do, I can only say that a bare minimum cost (say, 10k per year, per person, for easy multiplication) is roughly three trillion dollars per year for the US. Tax revenues for the US are 2.8 trillion per year, and keep in mind we also have a lot of government programs that aren’t welfare type things which still need to be financed (courts, a military, diplomacy etc.).

        3: I doubt it. Any program with diffuse costs and concentrated benefits will produce this problem. However, the burden is always on the new and radical idea to prove it is better. We’re not going to smash an economic system on the off chance it won’t be any worse.

        4: I’m not quite sure what you are saying, but I think I might agree. Clarify?

        5: It is a question Murray is proposing an answer to, one which I think is unrealistic. When we have implemented this program, some people will still be so incompetent that they will still be poor, uninsured, incapable of controlling their spending or addictions. And I seriously doubt the kind-hearted people of America will have it in them to say “you got your BiG, go die in the gutter if you spent it all on coke and whores”. Not saying we should, I’m saying the scheme doesn’t work unless just about everyone is on board with such an attitude. Otherwise BiG just becomes the baseline welfare, on top of which is stacked all the other ones we have as well, and as noted above, we already can’t afford BiG.

        • Daniel H says:

          I don’t have responses to all of these, because I’m not particularly informed on all of them, but I can contribute to some of them.

          1. I believe orangecat was saying that Social Security, Medicare, Medicaid, etc. had the same apparent political disadvantages in the past as a GBI does now. Because they were in fact all implemented, those political disadvantages must not be as important as they now appear.
          2. You seem to be talking bast each other here. For a single person, it is possible but often not comfortable to in fact live on $10k/year by itself (with extra left over if you’re careful and slightly lucky). I think orangecat is saying that even if the GBI doesn’t cover “a bare minimum cost”, it is still a big improvement. I have a different point than orangecat: it should cover a bare minimum of cost, but you can raise taxes enough on rich people to approximately balance out the extra spending (and if you do it carefully, the extra taxes will be about the same amount of money as the GBI for people who are rich enough, so they don’t lose much money with the change; it could be argued that doing this makes the “guarantee” meaningless, but the proposal should simplify and improve the marginal incentives).

          • Tarrou says:

            If you’re planning on financing BiG by raising taxes on “rich” people by an amount equal to what they’ll be getting with teh BiG………you realize that doesn’t work, right? Everyone who pays extra gets just as much. And any reasonable place where you draw the line, there are far fewer rich people than there are poor people.

            So to make up any space in the taxation shortfall, you have to raise taxes massively on the rich (assume here the middle class is basically paying for their own BiG and are revenue neutral). If we say a million dollars per year is rich, there are 400k people in the US we can tax. There are 47 million poor. With some bad napkin math, you can see that each rich person is going to have to pay for about 117 poor people, plus himself. That works out to well over a million dollars a year.

            So clearly, we need more rich people, but the farther down the income ladder you reach, the less you can tax. And no matter what, we’re talking about taxing those evil rich folk at very large percentages of their income (possibly more than 100%). Like, Laffer curve numbers. All of which makes it less likely to be implemented and harder to sustain if it were.

          • Daniel H says:

            Tarrou, my statement was assuming we replaced existing welfare programs with GBI. We already spend some money on welfare, after all. If I remember correctly, for some definition of “welfare”, the federal government spends about $5000 per citizen on welfare. This translates to about $10,000 per citizen if we make the simplifying assumption that 50% of people would get all of the GBI, and 50% would get none of it.

            That would be a terrible idea for an actual implementation, of course, because marginal incentives. There would probably be a lot of complicated changes to the tax code if this were implemented, and people who were rich enough would all see fluctuations in the tax they paid. Some people, even rich people, would end up paying less taxes; some would end up paying more. My point was that net money to the government, and even average money paid to the government for various demographics, could remain approximately.

          • Tarrou says:

            I get what you’re saying, but the point of BiG is that everyone gets it, not 50%. That’s the whole idea. If only half the people are getting it, it’s not BiG. And I don’t think 5k per year is going to cut it, although I could be wrong there. But yes, at 5k per year, the government could theoretically afford it without massive tax increase, if they cut some other programs a bit. The problem is that this means most of the poorest who already get benefits see a serious drop in effective benefits because 5k per year is a lot less than what they get with direct transfer, WIC, food stamps, heating assistance, section 8 etc. So immediately we are back to the problem that we’re going to have poor people in dire financial straits, worse than they are now. Which kind of negates the intent of the proposal.

          • Daniel H says:

            Yes, the point of GBI is that it’s guaranteed. However, nobody* is under any illusions that the money would come out of thin air. For a sustainable system, the government would need to take in money (probably through taxes). People don’t like having their taxes raised, and current tax levels only allow $5000 per person. However, if you bundle in higher taxes with the initial bill, you can keep some people at their pre-welfare levels of net government money flow in order to increase this amount for other people.

            You might argue that if you raise taxes, suddenly the income is no longer guaranteed. Any such argument would also see anybody paying more than $5000 in taxes now, if we switched to a $5000 GBI, as not getting their guaranteed money. That’s not what the guarantee is for.

            The guarantee is that everybody will get this much money, and although taxes might make you pay more to the government, everybody knows you have at least this much money available. Additionally, any reasonable GBI system would have relatively small effective marginal tax rates instead of ones over 100%, guaranteeing that earning more money always gives you more to work with. My proposal of $10,000 GBI, with half the population having taxes raised by $10,000 was meant as a simplified example of how the GBI could be larger without increasing total tax revenue; I said then it would be a bad system to implement as-is.

            * I suppose I haven’t met everybody. Nobody I’ve talked to, read, or even heard about.

          • Tarrou says:

            I’m still convinced the math doesn’t work.

            Either the BiG is low enough to afford, in which case many of the most needy get a net cut in benefits, or it is high enough to support everyone, in which case it is too expensive to contemplate.

            Look, at the $5k level, $5k is the deductible on a low level health care plan. Poor people are disproportionately in need of health care, and we’ve just eliminated Medicaid as part of the BiG. So exactly how is a poor person with any health problems supposed to pay rent, food and heating costs, while maintaining health care coverage, and the deductible is their whole income? Disabled people would be crushed. There’s just no way the people who currently live on Medicaid, Welfare and SS Disability aren’t going to get slaughtered by a $5k BiG.

            Ok, so we figure out how much people need to live at that level, and it’s (let’s say) $25k. Now we need to tax enough to get every person in the country $25k, plus enough to keep the courts running and the FBI working, the parks open, etc. Just the BiG is almost eight trillion dollars, which is well over half our GDP. Add in the rest of the government at current levels and we’re talking about the government spending roughly three quarters of GDP every year.

            This is the trap, you can’t make the BiG high enough to care for the worst off without making it too expensive. It doesn’t work, unless you discriminate by need, SES etc. Which is what we do now, and produces all those bad incentives. As I said originally, there is a reason we have the system we do. They may not be great reasons, but they are currently better than the alternative.

          • Daniel H says:

            Yes, there are reasons for the current system. Those reasons, for the most part, are somebody looked at the then-current system, said “you know, making this change would be a good idea”, and then (whether or not it actually was a good idea) convinced enough other people that it became adopted. Even if we assume that all of these people’s ideas were actually improvements, this can easily get us stuck in local optima. This, in and of itself, doesn’t mean that a GBI would be a good idea; it does, however, mean that having reasons for the current system isn’t necessarily an argument against GBI any more than having historical reasons for the government only issuing marriage licenses to heterosexual couples is an argument against allowing gay marriage (and, to avoid sidetracking, I support gay marriage but recognize that there are arguments better than “the system arose for a reason” against it). I am a fan of Chesterton’s fence in principle, but even though I don’t know precise details of why this fence was built I believe I can see enough of the reasons to propose tearing it down.

            The argument that it’s too expensive is a lot stronger. I was thinking less that $25k, but I’ll admit that I was thinking about what most people could live on (some people can and do even live on $5k comfortably; I think most people could live on $10k, if not particularly comfortably, with the right effort and education), not about what the people with more needs needed. Thinking about it more, a very natural place to put the amount received is at the national poverty line ($11,490 per individual; less if you’re in a family, but I’ll just go with the full number); I don’t know how the national poverty line was chosen, though. I ran both your number of $25k/year and the $11,490/year figure below; I’ve written up the national poverty line ones first. I still think your estimate is too high, but even it is somewhat feasible.

            Let’s start with the national poverty line, but simplify it to assume everybody is single (which is both easier to calculate and pays out more cash). This means that the government needs to spend $11.49k/person × 320 million people ≈ $3.7 trillion (after rounding up) on GBI alone. This is almost twice what the government is currently spending on welfare and healthcare. If we got rid of all healthcare and welfare spending of the government and replaced it with this amount of GBI, we’d get a total government spending of about 6.2-1.9+3.7 = 8 trillion. According to this article, the current total income tax revenue is a bit over a trillion dollars. If we get all the extra money from income tax (because it’s simpler, not because I support such a policy), and don’t tax the money we’re giving out (we could tax it, but then we’d have to give out more; this could be done in a mathematically equivalent way but is again harder to calculate), this means we need a total of about $1.8 trillion more income tax, or (after rounding up) about $3 trillion in income tax total. There are a number of ways to collect that money, but since tax brackets are harder to calculate and are meant to make things easier for the poor (which should be less necessary now), I’ll simplify and use a flat tax rate. Assuming we leave the definition of AGI the same (I think it would probably be reasonable to change some of the adjustments, but that’s harder to deal with), this gives us a tax rate of $3 trillion ÷ $8.3 trillion × 100% ≈ 37% tax rate (again rounding up). Given 2014 tax brackets, this means that single people (ignoring other filing statuses) with AGIs between $61,218 and about $1.2 million (according to the Tax Foundation summary, that’s between 25% and 50% of taxpayers, probably closer to 25%, but I didn’t look for more precise numbers) would pay more net money under this scheme than they currently do (the people who suffer the highest absolute money loss are those with an AGI of $406,750; they pay $20,888.75 more net than they would; I haven’t calculated who would suffer the highest percent loss with the conversion); note that this specific detail is an artifact of completely changing the bracketing for easy calculation, and you could spread the burden to other demographics instead.

            Above, I said we’d get all the extra required money from income tax. However, Wikipedia says that income tax revenue is only 46% of the US tax revenue. If we assume all taxes increase proportionately, then we only need 46% of the excess $1.8 trillion, or $828 billion. Rounding up, this gives us a needed $2 trillion in income tax revenue, or a (rounding up) 25% flat tax. This leaves literally every single person (and probably most people with other filing statuses) paying less (in income tax minus GBI, at least; presumably at least some people will pay more in other sources of tax, because we’re not creating or destroying money), because the increase in income tax revenue is more than covered by the GBI payed for with non–income tax sources. This would be equivalent, from a mathematical perspective, to lowering and simplifying income tax for everybody (sometimes into the negative, with tax = 25% AGI – $11,490) and raising taxes from other sources.

            Now let’s try your proposed minimum amount of $25k. This requires total spending of $8 trillion total just for GBI, or about $12.3 trillion total government expenditure. If we take all the extra expenditure and collect it from income tax, this requires $6.1 trillion more income tax, or about $7.2 trillion total income tax, for a flat rate of about 87% (everybody with an AGI higher than $34,092 would pay more on net with this system). This is obviously a much bigger problem, and would be pretty infeasible. If we assume all taxes increase proportionately, then only 46% of the extra required income comes from income tax. This means income taxes go up by about $2.8 trillion to (rounding up) about 4 trillion, or about a 50% flat tax rate (rounding up again, more than I need to because 50% is a nice number). This is higher than any bracket now, but the government is giving a lot of money, so only anybody with an AGI over $83,425 would pay more (again only in terms of income tax minus GBI). If I’d rounded down instead of up a few of those times, 45% would have at least come close to working; then anybody with an AGI over $106,916 would pay more income tax. Either way, that’s between 10% and 25% of taxpayers. Probably not politically feasible, but not completely prohibitive either.

            Again, my methodology here is simplified. I don’t account for the fact that this will have drastic changes on the economy which affect taxes available; I don’t take into account that governments can and do go into debt and have year-to-year deficits; I mix and match data from different years based on what I find; I don’t account for the fact that some of the Adjustments in AGI would change with this; I don’t account for bigger changes to tax policy like converting to more sales tax; I don’t account for the interaction between imigration and GBI; I don’t account for this type of “guarantee” often not extending to prison inmates or children (whatever my own opinions on whether or not they should be); etc. Some of these approximations make GBI easier to implement; some make it harder. Some of them are things I could have accounted for with more effort; some are things I can’t predict or even trained economists couldn’t predict. There are probably some problems with what I did that I don’t even know are problems, or other things I don’t know I don’t know. Still, I believe this is at least shows that, even if a reasonable GBI would be too expensive to implement, it takes more than some simple handwavey calculations to prove it, and there may very well be some wiggle room.

            EDIT 1: Simple formatting changes, rewrite last sentence.
            EDIT 2: Remember to add this log of edits.

          • Tarrou says:

            I don’t want to wade too far into the taxation discussion for two reasons. One, you’re basing it on the assumption that we not only scrap all welfare for BiG, but also scrap all our tax system for a flat tax. Possible in theory, but we’re moving from unlikely to truly remote possibilities. The other is that I don’t have the time or energy for more precision than handwaving maths. I do think my point stands on the basic opposition of providing for the neediest and the expense of the whole thing.

            I did have a quick gander at what the actual average value of “welfare” (all federal programs) are to the average recipient, and it gets murky quickly. There’s a hundred and sixty-odd programs, seventy two of which pay out direct benefits. Calculating this relies heavily on some partisan assumptions, with conservatives inflating the numbers and liberals lowballing the estimates.

            However, depending on the state, the overall average amount of total welfare spending recieved per household (not individual, another huge problem) is somewhere between $20k (liberal estimate) and $35k (conservative estimate). Roughly $10k of this is in Medicare spending, so my point about health care would seem to be well founded.

            I do agree that most healthy adults could live more or less on 10k per year at current PPP levels. Health care is what really throws the wrench in there. The other problem is children. If children get BiG, we have an expense problem and a perverse incentive for the poorest to knock out more and more kids (similar to what we have now). If they don’t, everything is easier, but we need to get real hard in response to sob stories about the hungry children of people with too-short time horizons. Which swings back to an earlier point, I think people are too nice (especially with “rich people’s” money) to let those who choose to mispend their BiG just starve when they screw up.

          • Daniel H says:

            Healthcare does make things a lot murkier. I’m having trouble figuring out how to adjust my calculations to work with it, but I still think it would usually fall within your $25k/year estimate assuming that the $11,490 poverty line covered everything else but didn’t touch healthcare.

            My estimates did not depend on flat tax. I calculated a flat tax rate to have some numbers to compare things to and to judge, not because I actually thought going with that option would be politically feasible. In fact, the numbers for funding all of the poverty-line GBI through income tax certainly work out better, politically, for a different approach; depending on definition, the range of people who pay more under $11,490 GBI + flat 37% income tax overlaps heavily with the middle class (who politicians are always trying to cater to).

            Even aside from the details of funding and taxation, there are certainly a lot of complex details that would need to be worked out. It seems that one way to pay attention to poor children without creating the perverse incentives is to have some kind of growth curve where younger children are assumed to need less money than adults, and there are all kinds of problems with that approach; another would be for children to not get it, but have an appeals process or something, which causes a lot of other problems.

          • There are two things I always say in the discussions, and I’ve already said EVERYBODY GETS IT THAT’S THE WHOLE POINT, so I’ll say the other one: there’s no point leapfrogging universal single payer healthcare to get to GBI. The arguments are the same for both, it’s easier to do, and you need an efficient healthcare system in place to make GBI economically feasible,

  70. moridinamael says:

    If bikeshedding describes the phenomenon where folks just trust nuclear engineers to design a nuclear plant, yet feel that they are qualified to comment on the design of a bike shed, then I think the phenomenon that’s occurring in this comment thread deserves to be called starship shedding.

    It reminds me of the heated debates I would get into in 7th grade regarding whether the Enterprise could beat a Star Destroyer. There is no empirical reality to the question, no testable predictions. There are infinite degrees of freedom for interpretation. Each sub-agreement is itself a kind of fractal startship shedding debate. How could you ever agree about Star Destroyer versus Enterprise if you can’t even form a concensus as to whether the pretend Star Destroyer shields would be effective against pretend phaser fire and photon torpedoes?

    Likewise when we construct policy proposals that involve more than one thing being different from the way things currently work, everyone feels qualified to comment because we are talking about untestable fantasy. We’re neither talking about a nuclear plant nor a bikeshed, we’re talking about a faster-than-light spaceship with matter transporters and androids. No one can claim superior qualification for their opinions on the matter of UBI for the same reason that you can’t have superior qualification regarding the relative merits of two starships from two different fictional universes.

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  72. John says:

    Interesting little fact: Richard Nixon, of all people, seriously proposed an annual guarenteed income in 1969 in tandem with Daniel Patrick Moynihan for the working poor as well as for the unemployed. This had a lot of the same reasoning you mentioned on cutting poverty while cutting bureaucracy and saving more money in the long run. A majority of the people approved of it and it got through the House nicely, but it stalled in the Senate thanks to an unholy coalition of ideological liberals, conservatives, and big interests, not to mention Nixon’s own lack of interest in lobbying and launching the Cambodian Incursion at the same time, putting the ball in the proverbial court of Congress. Nixon would end up sending it to Congress three times, and each time it would fail.

    • Douglas Knight says:

      Where did you learn that history? My understanding was that Nixon was quite happy with the EITC compromise in 1975 (which is certainly enough time for three failures before success).

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