The Water Room Analogy - Understanding the Logic of Full Universality
Why providing basic income to everyone, including the richest, makes sense
"You want to even give basic income to the rich?! That doesn't make any sense at all because they don't need it, it'll cost more, and you'll be taxing them only to give it back to them."
This a common response to the idea of providing everyone an unconditional basic income. Yes, everyone. That means that even Bill Gates will receive $1,000 per month (but it will be replacing his existing tax credits that far exceed $1,000 per month).
Why?
The Water Room Analogy
Imagine you enter a room full of 1,000 people. You are told water will soon be pumped into the room and those who cannot swim will drown. You have a limited amount of time and $20,000 to determine who can't swim, and how to prevent their imminent deaths. What is your best course of action?
Option 1: The way we do things now
Knowing all about how our current safety net system works, you decide to interview each and every person there. To do this, you hire 100 interviewers and pay them each $50, which is a quarter of your budget, leaving you with $15,000. Each interviewer is responsible for 10 people.
Everyone is asked if they can swim. Those who say they can't swim are given lessons in how to swim using virtual reality goggles and so an additional expenditure of $3,500 for 10 standalone VIVE headsets, which leaves you with $11,500. Some people feel they will be able to swim thanks to the lessons, but others worry they still won't be able to swim. These people ask for life vests.
"Give a man a life vest, and he can't drown for a day. Teach a man to swim, and he can't drown for a lifetime," is your response.
Makes sense, right?
Everyone can and should be forced to learn how to swim, right?
Meanwhile, one of the people in the room asks for $5,000 so he can buy an Aquaflyer Jetpack. He already has more than enough money to buy one himself, but he thinks it's important you subsidize half his cost, because of how important he is. He promises that if you give him the money, he will use it to show people how awesome jetpacks are, so they can want one enough to build one for themselves. This sounds like a cool idea (and you owe him a favor), so you hand over the cash.
Another person in the room says they've heard that terrorists from Mars are looking to blow up the room, so they need $5,000 to make the room Martian terrorist proof. You point out that the room is going to fill with water, which will most certainly kill more people than Martian terrorists ever have, but he convinces you that the danger is real and you must have a strong room if you are going to guarantee the freedom of those in it.
Now you have $1,500 left. Water begins to fill the room. There's panic. Some people are definitely going to die, but you have no idea who. People have been taught to virtually swim, but you don't really know if that will work. You don't know who has lied and who has been truthful. You don't know who really thinks they can swim but actually can't.
In a last ditch attempt to save lives, you buy 70 $20 life vests for $1,400 and give them to your interviewers to hand out only to those they believe absolutely can not swim, and who promise to continue their VR training and build their own boats out of thin air.
The remaining $100 you use to buy yourself a gun.
End Result 1: 100 people drown. Hundreds more get water in their lungs and develop pneumonia. 50 people with life vests are killed for their life vests, and hundreds more are beaten and bloodied in a frenzy of panic and rage. The guy you gave a water-propelled jetpack to gets stabbed with a pitchfork, and the guy who was afraid of Martians stands proud as a true defender of freedom in a room full of Earthling corpses.
Option 2: Unconditional Basic Income
You use your $20,000 to buy 1,000 life vests which are dropped from the ceiling.
Everyone grabs one...
And you're done.
Congratulations. You didn't need to hire any additional help and everyone is protected now whether they can swim or not.
As the room begins to fill with water, it becomes apparent that some people need some extra help. Some have trouble putting their vests on, but those next to them help with that. Some appear to be too heavy to be supported by just one vest, so those excellent swimmers who don't need a vest give them theirs.
It becomes apparent that in a room filling with water and full of a thousand people who all have life vests, it's really easy to determine who needs extra help and who doesn't, and others actually help them all on their own. It's almost like people who have their own safety secured are more willing to help others.
Laughter erupts. Here people were originally worried others would choose not to put on their life vests even when given them, i.e. instead trading them for cocaine, so they laugh at how silly it was to ever think people didn't want to actually keep living.
It's funny to think how anyone ever thought people couldn't just be given life vests.
End Result 2: ZERO people drown. A few people still get water in their lungs, but only a few. No one gets beaten or stabbed with a pitchfork. People are not only alive but happier. Some are especially creative and repurpose unused life vests to together build a raft. Others start entertaining each other with stories and jokes and riddles and poems.
Now, which scenario makes more sense to you?
Does it make more sense to spend a lot of time and resources making sure that only those who absolutely require help get it? Or does it make more sense to just guarantee everyone gets help and simply make adjustments after the fact?
What's more efficient? All the interviewers, interview equipment, calculations, personal judgments, and spending of resources on stuff we don't even need? Or is it more efficient to just skip all of that, and cover everyone, no questions asked?
If you were in this room and it was filling with water, what kind of help would you want?
If you were in this room and got a life vest along with everyone else, what would you do?
Unconditional basic income is an answer, but it's also a series of questions. What we would do with a basic income is a question we all need to ask ourselves.
For it's when we start asking ourselves this question, we begin to really think BIG.
The above analogy should help in understanding how flawed the idea of targeted assistance is. It creates artificially high marginal tax rates that can even exceed 100% on recipients, effectively trapping them on welfare. It also excludes those in need through type II errors (false negatives), and erodes social cohesion by artificially dividing the population along arbitrary lines. To read more about the need to replace conditional welfare with unconditional basic income, read this next.
I think you're reasoning is pretty sound. It takes a lot of the corruption out because if everyone gets it then you don't get to pick and choose who gets help.
Ideally I think that if we could do it in a decentralized way without the government it could be even better. Here is one idea I have if you want to take a look. https://steemit.com/cryptocurrency/@littlejoeward/universal-basic-income-through-cryptocurrency-mining
I see crypto-UBI and govt-UBI as being complementary to each other. Steemit is actually it's own good example. We know it's possible to earn $1,000 per month on Steemit, but how many people here are actually achieving that? How many people aren't even on the platform? How many people don't even have computers or smartphones to join the platform?
However, now imagine the country has UBI. Everyone starts each month with $1,000 instead of $0. Now how many people are part of the Steemit community? How many more people get computers and smartphones to make that possible? How many people have more ability to spend time on Steemit to build their Steemit incomes on top of their basic incomes?
I think Alaska shows that a UBI done by government can be extremely successful. And I also think that cryptocurrency solutions are brilliant for providing people with even more income on top of their basic income. ;)
I think you are right. I think it could be a much better system than the one we currently have. My only concern is that I'm a voluntarist so I have a moral problem with the government forcing other people to give me $1000 every month. But I think that is beside the point of this discussion. :) Plus the government is already doing that so if it is going to happen anyway, I think ubi might be a better solution. (as your article points out)
Have you seen the Grantcoin Manna concept (short post with a couple of links - https://steemit.com/basicincome/@revo/grantcoin-universal-basic-income)? They are implementing a UBI via cryptocoin. I'm keen to follow along with this one and see how it goes (i'll eventually sign up to it myself, I guess). I can't help thinking that the consensus/popular view of economics and monetary systems is arse-about. This idea that money flows from economic activity, when it is actually money in the first place that defines economic activity. It's actually a self-perpetuating system, as far as I can see. Yet this is one of the criticisms people make of cryptocurrencies. It seems to me that what Grantcoin is doing (literally creating money to meet a need) is no different to how regular fiat money systems work. And a Grantcoin-like system seems to me to be less potentially ponzi-ish than the regular monetary system, because it doesn't generate ever growing debt in its production. The regular monetary system we run now can never repay world debt (without governments either cancelling it, or just printing an amount of money equal to that debt and then repaying it), as the interest charges on debt mean that more money needs to be created to meet the debt obligations.
(edit: sorry, I see now your post mentions Grantcoin)
Hey, when you're ready to sign up you are welcome to use my referral link! :)
Cheers, I'll do that. I just want to look into it a bit more. I'm new to steemit and cryptocurrency, so I'm still trying to get my head around it all. I'm traditionally a strong privacy advocate and don't like spreading my details all over the internet. So this idea of a permanent blockchain record of everything I do and post sits a bit uneasy with me. It's going to be a matter of whether I value what Grantcoin potentially provides (to me, and society) vs having to post my phone number and picture and whatnot for the whole world to see. Having said that, my picture is already on my profile here (but I don't know enough about how all this works to know if that means it's on the blockchain or just within steemit.com).
Yeah, there is a lot to learn. I just started getting into it all about a year ago. But I just started steemit this week. I would recommend the cryptoverse podcast for learning more about cryptocurrency. It has been really helpful. https://www.cryptoversity.com/podcast/
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STOPIt would be possible to restrict the payment to only those who need it by using a progressive taxation system and taxing the basic income. You'd set a tax-free threshold at at least a liveable wage level, so that those who earn nothing additional during the year will be assured of the full basic income (tax free). I'd actually set it really high (such that at least 50% of people won't pay tax - i.e. only the top 40% say would pay tax on their UBI), so that when someone is required to repay part or all of their UBI at the end of the financial year, it will be such a tiny amount compared to their income.