[anticon]

You don't mention the fact it's completely unworkable mathematically. In the UK I believe it'd cost £240 billion a year. Where the hell would anyone be able to find that money from? (Tackling tax avoidance from Starbucks isn't a credible answer).

Just to put it in context, that's twice the entire NHS's budget, or 5 times our defence spending.

[dagw]

To put it further into context £240 billion is slightly less than what the UK government spends on pensions and welfare. Since basic income would replace much of the need for pensions and welfare, it might just end up more or less balancing out.

[stephentmcm]

Note that this £240 billion will have the overheads of running the welfare system built into it too. So the actual pension checks are only a percentage of that figure, with a basic income that's not means tested the government has far less overhead.

[anticon]

The UK government currently spends around £120b on welfare (Including pensions) a year. Please don't pluck false information out of thin air.

[dagw]

I got my numbers from here:

http://www.ukpublicspending.co.uk/

Perhaps I misread the data.

[DanBC]

It would be useful if you cite your sources. People use different definitions for the various categories.

[onion2k]

We wouldn't need money for most benefits any more (pensions, income support, etc) so that's about £120bn of the £240bn found immediately. You mention the NHS - we'd be able to spend a lot less on that if people didn't have poverty-induced health problems, so there's another £35bn (assuming a 30% reduction of the £110bn). It's not unreasonable to assume that the difference of £85bn would essentially pay for itself by increasing the tax revenue from people spending their basic income. over time the country's GDP and tax revenue would increase due to people being better off (they go hand-in-hand).

This could well be cost neutral for the UK.

[bmelton]

> It's not unreasonable to assume that the difference of £85bn would essentially pay for itself by increasing the tax revenue from people spending their basic income.

If the idea is to give everybody money so that you can tax it more, you're engaging in economic waste. Without being able to increase productivity in other areas to cover the lost value, you will, hopefully slowly, but eventually trend towards zero, and a failure of the system overall.

Encouraging economic productivity in an environment in which nobody has to be productive may or may not be possible, I honestly haven't any idea, but its certainty doesn't seem terribly obvious to me.

[Haegin]

It's also worth remembering that at the moment everyone in the UK gets a tax free allowance of £10,600 and an NI free allowance of about £8000 (in 2015/16). The basic income is expected to replace that as well, which means if everyone continues to earn the same amounts that's an extra £2000 per person earning more than £10k (roughly, assuming it's now taxed at 20% in the first tax bracket). NI would be less, and is probably more complex as employers pay some of that, but just assuming that only the employees contributions are now paid on what was previously NI free you're still looking at another £1k each. It's not much individually, but when you take out the costs of administering all of that it'll add up.

[cmdkeen]

Why would poverty related health problems disappear unless the basic income is significantly higher than the current unemployment or disability benefits as you're saying those are being replaced.

A basic income doesn't remove the potential for poverty.

[anticon]

Yeah I'm sure you could find that missing £85bn down the back of a sofa in whitehall.

Sorry, but the whole idea is laughable. Not to mention the fact that it's another incentive to have more children and bigger families because the state will give you more money.

[zimpenfish]

> it's another incentive to have more children and bigger families

Should be easy to back that wild claim up with statistics. Can you?

[jackweirdy]

My inner pessimist is expecting to see a "there was this Daily Mail article one time".

Everywhere I look, I see the opposite. Families with a comfortable amount of disposable income have the 2.4 kids, but those in poverty (and particularly the working poor) have 3, or upwards. Anecdotal, but I'm yet to see evidence to the contrary

[TeMPOraL]

There's evidence on a national scale that birthrate is anticorrelated with wealth. The better off people are on average, the less kids they have.

[knodi123]

is it a smooth relationship, or is it more of a step function with 1 steps?

I always suspected that the reality was more like "people who are able to afford children and able to make long-term plans tend to have only as many children as they want, when they feel they are ready, but people who aren't able to afford children or who don't make long-term plans will tend to take a more devil-may-care attitude towards procreation."

[Retric]

This is not true; on average richer men have more children.

If you try and slice it by family you find that the 'traditional' family makes up a fairly small percentage of the population.

[exch]

https://www.youtube.com/watch?v=dymPP9RhPjw

A talk by Hans Rosling[1] on the subject.

[1]: https://en.wikipedia.org/wiki/Hans_Rosling

[zo1]

Statistics have nothing to do with it. Either the incentive exists, or it doesn't. Ask for a citation/study/logical-argument on that, not statistics.

But bear in mind: Statistics could indicate the extent that the incentive is having on the incentivized population group, if at all.

[314]

Checking the latest figures for 2016: 155B for pensions and welfare 56B. I assume the point is to replace both of those completely with the basic income so the net cost is not 240B, it is 29B. Not cheap, but not pie in the sky either. Sell a bank or two :)

[dagw]

There's an addition ~55B spent on welfare that comes from from local rather than central budgets, so that should probably be included.

[just_had_tea]

Cut defense wastage. Uh, sorry, I meant defense spending.

[s_kilk]

Less bombs, more bread.

[tosseraccount]

How did not spending on defense work out for France and Poland?

[ZenoArrow]

Worked out pretty well for Costa Rica.

http://articles.latimes.com/2013/dec/15/opinion/la-oe-barash...

[JonFish85]

Basic math:

£240 billion / 64.1 million people in the UK = £3,744/year (assuming no government overhead).

Seems low. That works out to be £312/mo/person. That certainly wouldn't seem to replace many costs (especially pensions and the like).

Let's say you wanted it to be £500/mo/person. That'd run you £384.6 billion/year. Add in, say, 5% overhead and you're at £403 billion/year. Where does that money come from? If you stick with the idea that the income is universal, you're dishing out £6,000/person/year, waiting a year, then taking it right back via taxes. Which seems incredibly wasteful, and might drive up that 5% overhead number.

[DougWebb]

You also have to factor in the fact that for most government welfare-type agencies a large portion of their budgets are spent running the bureaucracy, rather than going out to the people. Universal Basic Income greatly reduces the overhead costs. So £1 of Basic Income doesn't replace £1 of a current welfare program; it replaces £2 or £3 of the current program.

Put another way, if the current welfare spending is £120 billion/year, the recipients are only getting £40-£60 billion/year. So that's all of the Basic Income you need to replace the welfare spending, leaving you with a £60-£80 billion/year surplus.

Obviously, the actual amounts depend on the detailed overhead costs for each agency that would be replaced by a UBI program. But I'd be willing to bet on anywhere from 20% to 60% savings for each agency. UBI can be highly automated; with electronic payments and ties to a tax database, it can be as little as a smallish office of administrators and DevOps, and a server farm.

[saalweachter]

Eh, government bureaucracies in first-world aren't as inefficient as some people make a living claiming. In the US, administrative expenses for Social Security run less than 1% of the budget. Medicaid and Medicare run with similar margins. Compare this to private-sector insurance in the US, where 80-85% "medical loss ratios" (ie, the fraction of premiums paid out for medical care, as opposed to the fraction kept for administration, advertising, and profits) are common; even in the good old days (before the excesses of modern executive compensation, profits, and advertising) MLR peaked at around 95%.

The simple fact is that many social welfare programs are just expensive, because there are a lot of people being helped and the quantity of money you need to spend to make any difference is just adds up.

[logfromblammo]

Bear in mind that "administrative expenses" can mean one thing to ordinary people, and something quite different to a government-sponsored accountant.

When Medicare/Medicaid pays $150 for the same type of crutch that sells in a local pharmacy for $15, that difference does not go into "administrative expenses". I might prefer the expense of a human employee driving to Walgreens, buying a crutch off the shelf, and delivering it by hand to the patient that needs it, rather than paying a hospital that big markup just because that's the most they can charge without the benefits management program automatically denying the expense. Because even if it costs $135 in labor and transportation for a human to do all that, the mere possibility that might happen would discourage the hospital from charging significantly more than the pharmacy across the street for exactly the same item, or from charging different prices to different people based on their insurance plans.

It would even work to just give the patient $150 in cash, and tell them to buy a crutch with it and keep the change. Or carve one out of a tree branch and keep all of it. If they end up not having a crutch, it won't be because they couldn't afford it.

You can't rely on a bureaucracy's reports on itself to reveal the inefficiencies of that bureaucracy. There is just too much political pressure to cook the books.

[pekk]

What distinguishes normal accountants from these apparently corrupt "government-sponsored accountants" who "cook the books"? Do they have pointy ears or forked tongues?

[logfromblammo]

Normal accountants don't have 300 pages of federal regulations telling them exactly how they need to lie in their reports.

They have 20 pages of corporate guidelines telling them how they have to lie. Zing!

[eli_gottlieb]

The plural of anecdote is not data.

[thomnottom]

Your basic math is assuming the money is distributed to everyone. Wouldn't it make more sense to only give it to adults? That knocks out probably about 25% of the population so you're looking at 48 million. That gets us to £5000/year. Of course the article mentions differences between what single people get and what couples/families get which would also bring down the numbers.

[JonFish85]

The reason for that is to cover the cost of raising kids (in my extremely basic example). If the idea is to replace things like welfare, food stamps or whichever programs cover the cost of raising children, I think it's easiest to assume that everybody gets the same dollar amount (the de-facto average amount). There's a lot of ways to try to dice up the numbers (family size, married/unmarried, etc), but I think as a basic example, the numbers are fairly solid.

[phaemon]

I did a back of the envelope calculation on this last year (so using 2013 figures) which I've pasted below. It works out not too bad; it's certainly within the realm of reason. I think it would probably be better to start it very low, around £20 a week, and slowly scale it up and let it replace welfare payments gradually.

If you think my figures are significantly out, I'd appreciate any corrections.

--------------------------------------------------

[There were requests for "back of a napkin" calculations, so I've done some for the UK. To convert to USD, just add 50%, as a rough measure.]

Firstly, I prefer to refer to this as a "Citizen's Dividend" rather than a "Basic Income", as I know for a fact that anyone on a low income would prefer to get a guaranteed £20 a week extra rather than hear a politician say, "We can't afford to pay £75 pounds a week to everyone, so we're doing nothing." Tell me if I'm wrong. But "Basic Income" if the preferred name, so I'll refer to it as that from now on.

The UK government spends £732 billion. If we subtract £222 billion for Social Protection (we're replacing all of it with our BI), we get £510 billion required. If we add up all government income except Income Tax - Business Rates, Excise, etc - we get £481 billion.

That leaves us a shortfall of £29 billion. For the sake of simplicity, I'm going to assume that reductions in crime, the increase in VAT revenue, better health, etc are going to cover that. Let's call it close enough for government work. At the end of the day, we currently borrow £84 billion anyway, so at worst I've slashed the deficit!

Income Tax brings in £167 billion. UK population I'm going to take at 60 million. So, as a starting point, that gives us a BI of £2,783 annually, or £54 ($80) a week. Well, that's not a bad start! Let's consider what it means for actual people. Thus far:

Who loves me: - Right-wingers. I've eliminated (or vastly reduced) the deficit, effectively increased the income tax allowance by £2,783 and given them this amount in cash, while reducing welfare payments to lazy, single-mother immigrants. I should be head of the Conservative party.

- Most people on Job Seekers Allowance (unemployment benefit). While I've cut the amount they actually get, I've also cut out all the paperwork, visits to the job centre, taking money off them if they happen to earn something that week, etc etc. Money without the hassle.

- Low wage workers. This is a big boost above Working Tax Credit and is hassle free (you don't lose it by earning more). It also allows some degree of security in the event of losing their job.

Who hates me: - Left-wingers. While I've helped some low paid workers, I've also slashed benefits, there's no housing support...in short I've cut welfare while giving more money to wealthy people. I should be head of the Conservative party.

- People who're claiming several benefits. People who're on sickness benefit. Basically, all the folk who've had their income reduced below a living wage.

- Pensioners. The state pension has been cut significantly (and illegally).

Ok, I think I need to balance it a bit more. I'm going to reduce the Income Tax allowance from £10,000 (current) to £6,000. This should balance out at the end. I'm going to assume this increases income tax revenue by 25% (I've no idea if this is remotely close. If anyone can be bothered finding out, please let me know). More controversially, I'm also going to increase income tax by 25%, so the basic rate is now 25% rather than 20%.

That should give me a total revenue increase of 50% from Income Tax which gives me a BI of £4,175 annually or £80 ($120) per week.

There is a problem: we've neglected the people who require more than that either because they're owed it (e.g pensioners) or because they have extra requirements (e.g. orphaned children), so having increased the BI up to £80, I'm now going to cut it again down to £60 a week. This will cover pensioners, people claiming benefits which are currently in excess of £60 and support for vulnerable children (note that children also receive the BI, so 'child benefit' has seen a massive boost from the regular £20 per week maximum).

I'm assuming that 20% of people fall into one of the above categories, so cutting £20 off the BI gives us £160 a week to help these people. This is more than the current basic state pension (£113.10/week) so that's a fairly big increase. I don't want to complicate the calculations any further, so the small number of people who require more than this will have to be paid out of the £50 billion we haven't borrowed.

That's us at £60 per week basic income and up to £160 per week for pensioners and vulnerable people.

And I think I'll leave it there. We might still need to borrow (or cut spending elsewhere) to make up other shortfalls, but as long as these borrowings total less than £50 billion we still come out ahead. It might be more natural to cut the payment to £50 for everyone in order to free up some cash for other payments. In the real world, you wouldn't exclusively reserve Income Tax to one specific spending area anyway, but it makes things simple enough to get a rough measure.

[logfromblammo]

Do a thought experiment. Imagine that the entire UK were walled in by an impenetrable barrier enclosing the country out to the boundary of its exclusive economic zone, and every record and memory of ownership were wiped away, such that no one could be entirely certain who owned what. Stimpson J. Cat pushed the History Eraser Button.

On the morning following the event, some boffins assemble and work out an emergency plan for re-establishing a workable economy, on the assumption that one existed before everyone forgot what it was.

Now, with no memory of the past, does the UK have the land, labor, and capital to completely provide for the needs of its people? If that costs £X per year, can the people of the UK produce £X of economic output per year, and with the correct proportions of goods and services?

(For your reference, the UK represents approximately 4% of the global economy.)

I reached my own conclusion as a result. It is completely workable mathematically. It just doesn't work within the existing legal tradition. That's the one that respects property and contracts--the one we all like because it's what we rely on to assure ourselves that the car we drove to work will still be there when we knock off for the day, and the house we go back to won't be full of grubby squatters when we get there.

But as much as we like it, those with more wealth, who lack the will or the imagination to spend what they earn--to keep the production-consumption economy circulating efficiently--like it more. It keeps the grubby middle class from building ugly-but-productive anthills and beehives within sight of their beautiful-but-inefficient homes, yachts, and luxury resorts. And that is what stops the socialist schemes to erase poverty--we just don't have the stones to commit armed robbery to do it. The middle class largely pays for itself, and no more, so the only available source for the necessary resources to haul the lower classes out of poverty is the rich, including the synthetic rich people better known as corporations.

So you swallow your lofty free-market, shalt-not-steal ideals, abandon your pipe dreams of one day being in the upper class, and you tax the rich at near-extortionate rates. Naturally, they would want to flee such a tax regime. Let them. Just stop them from taking the productive capital with them as they go.

It might work out like France. It might work out like Venezuela. It might work out like the USSR. But if it doesn't work out, it won't be because it is a mathematical impossibility. It will just be because someone made a wrong assumption in one of the thousands of possible places to make a mistake when trying to re-engineer an entire national economy.

[atlih]

They would get it from economic growth among other things.