RJ Dragons: With a guaranteed income, what would you do? (36 hour thread)

  • Posted by a hidden member.
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    Nov 21, 2010 6:28 PM GMT
    What we might call an intriguing political Fantasy & SF idea came up that would be interesting to explore, Red and Blue Dragons together.

    It was suggested that implementing a guaranteed Minimum Annual Income (GMAI) would completely transform commerce and our own lives.

    Some might change careers entirely, Industry and employers' labor cost/price structure would be radically altered.

    In this intriguing scenario thread, we are just speculating what this alternate model economy ends up looking like, by letting the Red and Blue Dragons of RJ speculate how they themselves would make use of such an economy for opportunities.

    The Exercise:





    Describe the "best case" scenarios for yourself that you can envision in that circumstance, from your political perspective and personal experience.

    Keep yourself in your same job, change jobs, whatever you choose. How would it have changed your life course at age 20?

    Try to keep tightly focussed on how it affects you, without commenting or speculating how it affects others.

    How it would be done, hazards and pitfalls will be discussed as a separate topic.

    The resulting product of our collective imaginations, I hope, will be an interesting collaborative view of what such an economy might look like

    For this discussion, here is the scenario:

    A Guaranteed Minimum annual income has been implemented, fixing a guaranteed minimum income for everyone. It varies by where you live, and reflects the local cost of living. The amount is calculated to allow a middle class existence. After essential expenses for shelter, food and clothing one has a modest amount left over to save or spend as they desire.


    There is no longer a minimum wage, otherwise absolutely nothing else has been changed How would this transform what you do now for a living?

    RJ DRAGON RULES:

    The participants this thread are subscribing to a commitment to self discipline and respect for each other and reasoned discussion itself in pursuit of informative, stimulating discussion.



    1. Try to stay strictly on point.

    2. try always to advance the discussion.

    3. Edit yourself ruthlessly. The fewer adjectives, less likely something will be badly construed to disrupt the flow.

    4. Try not to respond to off/topic remarks.

    5. When clarifying, try not to just repeat yourself.

    6. Take your time. Before posting or responding allow for edits to occur. Re-read the previous post to see if it has been clarified or changed.

    7. After posting, [u][b]re-read and edit your post.[/u
    ][/
    b]

    8. Discussion on the topic will be summarized Monday morning.



    There is a benefit today in Little Pond for that PEI couple who lost their home, so I won't get a chance to read this until Monday morning with my coffee.

    I'm looking forward to a really fun & interesting read.



  • Posted by a hidden member.
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    Nov 21, 2010 6:48 PM GMT
    Playing devil's advocate here:

    1. Alcoholic: I would love to spend all my GMAI on booze. (Repeat for hardline drug users and whatever expensive addiction you can think of) What then afterwards when they still need food/housing/medical services?
    2. Any studies on potential effects of worsening inflation? (after all, you're giving people money rather than food stamps or social services)
    3. Potential abuses: I get my check in New York (which has a high cost of living) and I spend it in Wyoming. I marry many wives and have many children (which apparently works somewhere in this country) and get their GMAI.
    4. At what age do you stop the GMAI?
    5. GMAI proposals usually have a stipulation that either the recipient is trying to get back to work, or else after a certain period benefits are cut off. We know that unemployment is always going to be there, i.e. you will always have unemployed people, it's just a matter of how many and what type of unemployment.
    What happens to those people that just don't and can't get a job?
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    Nov 21, 2010 9:05 PM GMT
    I think it is very difficult to make the proposal add up.

    If we suppose that the proposal would be paid for by abolishing medicaid/medicare and social security, that gives us $1.2trillion per year without raising taxes.

    Suppose we use this amount to 'top up' all the incomes below a certain threshhold to that threshhold [the Global Minimum Income]. The question is then: requiring the proposal to be revenue neutral, what would that threshhold be?

    To find this, we need the income distribution of adults in the USA and the total number of returns filed. Suppose we perform the top up in such a way that we top up each return, not each individual---this is then a very conservative upper bound on the threshhold I defined above.

    The calculation is a little involved, but essentially, we try to find an income level such that the sum of the top ups required to get that level [i.e. the integral under the income distribution curve] is equal to $1.2trillion. If people want to carp, I'll send them the details.

    I find this income level to lie between $30,000 and $35,000, which is not a middle class income---it is a working class income.

    The assumption that the number of returns would stay the same is clearly very unlikely to be true. The total number. of adults [18-65] in USA is much greater than the number of tax returns, being about 208 million. The inclusion of even a small fraction of the people uncounted by the above treatment rapidly lowers the income threshhold [the Global Minimum Income].

    Furthermore, as q1w2e3 points out, the large number of obvious opportunities for arbitrage makes it very clear that this is a very inefficient intervention.

    In short, an interesting but utterly impractical idea.
  • Posted by a hidden member.
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    Nov 21, 2010 9:21 PM GMT
    TigerTimI find this income level to lie between $30,000 and $35,000, which is not a middle class income---it is a working class income.


    Hey, I can live on about $25000 a year! That is, if you're a single guy with no children, simple tastes, and no desire to give or receive gifts.

    Rent= $12000 (could be much less)
    Food= $1500 (used to be less but I eat more now) icon_razz.gif
    Gas= $600 (OK I don't drive that much, would be less if I own a bicycle)
    Utilities=$600 (mostly covered by rent)
    Phone/internet= $600
    Car insurance= $600 (even though I've NEVER had a car accident in my life)
    Medical insurance= $9000 (shouldn't even count all of it that since my office pays for part of it)
    The rest I usually spend on Wii games. icon_razz.gif


    And what about all the other state/federal unemployment benefits, food stamp programs, besides SS and Medicare/Medicaid?