Monday, December 21, 2015

The Case Against Basic Income

John Quiggin is writing a book about opportunity cost.  Personally, I perceive that there's a scarcity of books about opportunity cost.  So I plan on buying his book when it's published.  The more people who purchase his book... the more money he will receive.  The more money he receives... the more likely it is that he, and others, will write more books about opportunity cost.  The less money he receives... the less likely it is that he, and others, will write more books about opportunity cost.

We need profits (broadly speaking) to correctly influence people's behavior.  Low profits should discourage the associated behavior while high profits should encourage the associated behavior.   The more accurate profits are... the more benefit we will derive from everybody's behavior.

Now,  if we were mind-readers and/or omniscient... then none of this would be relevant.  I wouldn't have to be here writing down and sharing what everybody already knows.  I wouldn't have to buy Quiggin's book when it comes out.  Everybody would already know what's important to everybody else and everybody would allocate their resources accordingly.  But we really aren't mind-readers and/or omniscient.  This is why accurate communication is so fundamentally important to society.

Right now society has far too many people who are struggling to survive.  Unfortunately, there are many people who believe that the solution is to implement a basic income.  The government giving people money regardless of their behavior's benefit to society will simply discourage beneficial behavior and increase the number of people who depend on a basic income to survive.  Inaccurate communication is the cause of, rather than the solution to, the problem.

Therefore, the correct solution is to increase the accuracy of what's being communicated.  This involves eliminating the minimum wage and tearing down barriers to entry.  It also involves allowing people to choose where their taxes go.  Accurate communication is just as important for public goods as it is for private goods.

So it's really not about fairness.   Worrying about fairness is barking up the wrong tree.  What should concern us most is accuracy.  When we focus on accuracy then poverty will be quickly eliminated.

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