Toward Star Trek economics

Characters in the Star Trek universe often claim that their future Earth has abolished money. Everyone gets what he needs and nobody works for money.

Unfortunately, they never explain how it may work. Clearly, not everyone can afford to own a starship.

A more reasonable scenario is that everyone is provided a basic income. This income is probably sufficiently large that nobody has ever to worry about poverty.

Many people in Switzerland think that this is a good idea. Though it sounds outrageously expensive at first, one should realize that a basic income for all makes many government programs obsolete: family allowances, welfare, unemployment benefits, housing subsidies, pensions, minimum wage, student help and so on. Many economists tell us that we can indeed afford it.

Moreover, a basic income for all has several major benefits:

  • Basic income makes it easy to start a small business or pursue your education on your own. Or work full time on your open source project for a year. Or write a book. Or take care of your sick parents. In a very real sense, it frees people.

    Though welfare and unemployment programs are nice, they come with a stigma as they are granted based on hardship. It is hard to avoid the idea that you have gotten in trouble, it might be your fault. With a basic income, it is likely that it would be far more acceptable to just take a break from work for a time.

    Overall, government programs tend to favor specific activities like full-time employment and full-time formal study as opposed to part-time employment, entrepreneurship or self-education. Basic income is far more neutral and let people more free to choose their own path.

  • Some people object that basic income would entice people to do nothing and the economy would suffer.

    But let us think this through. If you have a high income, basic income changes little to your incentives. At the other end of the scale, if you are on welfare or unemployment insurance, you already have an incentive to do nothing at all until you find a suitable (full time) job. Indeed, your welfare check might be cut if you get a job… so basic income probably increases your incentives to work in that case.

    What about people in between? If you are a single mother or an unskilled worker, you may indeed have a greater incentive to stop working under a basic income system. But maybe it is not a terrible thing if mothers stay with their babies. And do we really need to entice unskilled people to work? Their jobs are about to be taken over by robots in any case.

29 thoughts on “Toward Star Trek economics”

  1. In IT industry, a lot of resources are wasted in order to repair damages done in another IT projects. Hence, if we pay people to not work at all, productivity should rise. I sounds like a joke, but I think it could be another positive effect of a basic income.

  2. Might be of interest, there’s a related discussion going on in global poverty right now, following on the microlending trend with the even simpler idea of just giving money (no strings attached small grants instead of unsecured small loans). Decent articles on it here:

  3. There has been some talk about basic income in Finland every once in a while. It seems particularly the Green Party favors it.

    I think there are some interesting benefits. It would cut down bureaucracy a lot and offer more humane way to deal with these sort of things. It can be degrading to have to go through the machinery just to get by.

    It would take a great deal of political will for something transformative like this to happen, though.

  4. I am sympathetic to the idea. But the old question remains: Who will do the bad jobs that cannot (yet) be done by robots? At the moment, there still are plenty of those. My fear is that basic income can create a caste system of people who receive it (e.g. citizens of a country) and those who do not (e.g. foreigners or illegal immigrants). Social systems usually exclude non-citizens and this likely to be even more so when richer countries introduce a basic income and poorer countries do not.

  5. This is something I’ve been thinking about recently too. Specifically in regards to “blue collar jobs”. I have friends who graduated with Comp Sci degrees but find things like electrician or plumbing more interesting. How many people out there are like that? Will we have enough septic technicians under such a model so that everyone’s septic tanks are cleaned? Basically this model argues a do what makes you happy work scenario. So it has really interesting effects on trade labor and low end work. I’d argue also that it would have effects on housing prices hopefully driving them down so everyone can afford every size house and housing is no longer a status icon but a what do you need/like? For example I prefer older homes that incur more maintenance but many people prefer new homes which, funnily enough both senarios get back to maintance…. sorry not a really edited though stream hear kinda a brian dump. Just more to get people thinking.

  6. The market has a fantastic way to answer questions such as “who will do the necessary jobs that nobody wants to do”.

    The answer is very simple. If your job is essential and you are the only one willing to take it, then you have great bargaining power. You can ask whatever you want.

    BTW the fact that janitors don’t make millions a year should tell you that there are plenty of people willing to take these jobs. They may not look desirable to you, but who are you to say that there are not desirable in absolute terms?

    1. Come on, people need a minimum wage for a decent leaving.

      Some absolutely terrible jobs are nonetheless in high demand because a lot of people have little other choice than to beg for them. They don’t have the skill, or more importantly, they don’t have the social network to get access to better positions.

      With a minimum wage, there will be a large incentive to stop begging for such job.

      Of course you could argue that it will force to improve labor conditions : better wage, better tooling, and so it’s a good thing.

      Sure. But all these benefits do not come free : higher costs are paid by other people, be it prices, taxes, lower investments, savings on other topics, etc. Don’t ever believe the rich ones will voluntarily accept to “gain less”, we are already past the period where public good was a topic.

      At this stage, I believe a lot of people have no idea how their current decent living standard is dependent on underpaid hard jobs. Remove them from the equation, and a lot of middle-class people will feel the difference, and start becoming angry.

      1. I agree. Middle class people will have some choices left. If you want to have something done that’s unpleasant, but has to be done you can:

        a) Do it yourself.
        b) Ask somebody for the favor of doing it for you.
        c) Bribe somebody into doing it.
        d) Have a machine built to do it for you.

        So there are options. I think Basic Income won’t change a thing about it. It will encourage social networks, machine building and make unpleasant labour more expensive. All of which are great things. Trickier question is how the money-system will work to make this sustainable.

  7. @Daniel
    My point is that a bearable total expenditure (compared the total collected IRS revenue), would be too little to allow cutting other social expenditures or to make a real difference to people lives. I tried to make a simple calculation for Italy. Try for Canada. It is simply not bearable in country that is not extremely resource rich.

    If it is not bearable it means that the only way to do it is to print a lot of new money, which of course means inflation.

    By the way, nice blog, congrats.


  8. That is exactly what’s happened in Kuwait. Citizens get revenue sharing from the State’s oil production (around $50k USD per year, I think).

    Kuwaitis still go to college, own businesses, and build careers.

    And Sebastian H. is spot on… menial jobs are done by foreign laborers who live in absolute poverty.

  9. @Daniel @Israel

    Someone in Switzerland might have a problem with math. The nominal GDP per person in 2012 has been $79K (wikipedia data). Assuming “european” level of taxation (40% of GDP), they would collect $32K per person, which is more than the $33.6K they want to give per person in basic income.

    It is much more inflationary than every other public expense. You cannot cut all other public expenses.
    And you would need to put your taxation on salaries in excess of the basic income close to 80-90%.

  10. @Iannaccone

    Naturally, you have to adjust your basic income, the same way you adjust welfare or unemployment insurance. I’m sure economists can work out the ideal level given the country.

    I want to stress that government spending is not inflationary in nature. It does not “create money”.

  11. Should everyone be provided with a basic income, or get satisfaction on a set of baisc needs? Depending on cities, the same basic income may yield different “basic lifestyles”. Why pay an income instead of providing a certain quantity of “shelter”/”food”/”education/entertainment”?

  12. @Giuseppe

    I don’t understand your math.

    The per capita government spending in the Europe is over $30k per capita. Several countries spend more.

    Cut this in half. Give 15k$ to every citizen every year. (E.g., a family of 4 would receive 60k$ a year). This would effectively abolish poverty at once.

    The government keeps half its money for various programs (military, roads, etc.). Since it no longer needs to fund students, provide pensions, unemployment insurance, welfare… it can focus on its core activities.

  13. @Daniel

    Actually it is less:

    From Eurostat 2010, data pro capite:
    Italy: GDP 25.7KEUR, Gov Exp 12.9KEUR
    France: GDP 29.9KEUR, Gov Exp 16.9KEUR
    Germany: GDP 30.5KEUR, Gov. Exp 14.5 KEUR

    And it makes sense. Governements can spend – on average – what they collect as tax. In Europe roughly 40% of GDP.

    Half that money in basic income for those countries would be something like 500-650 EUR per month. Too little to really cut services and let people pay directly for them.

    I like the idea too, but simply the math cannot work for a resource-constrained country.

    Maybe there are narrower programs that could be feasible. Plus, for some sectors the economies of scale of a larger country might be larger than public sector inefficiencies. But I do not want to open another issue.


  14. @Giuseppe

    Granted, 20% of the per capita GDP might not be enough to live on comfortably… it depends on how high the per capita is… but it would certainly go a long toward improving freedom.

    I don’t think it is up to the government to solve every problem for everyone.

    I like the idea too, but simply the math cannot work for a resource-constrained country.

    Basic income can be cost-neutral to governments. So it does not really matter which country we are talking about as long as it already has a fairly sizeable tax base.

    In fact, it would be problematic in some of the very rich countries like Singapore because government spending is so tiny… so implementing basic income would require large tax increases that are likely to crush the economy.

    But, in Europe, it would be perfect since governments already have huge incomes and spendings.

  15. @Ivan

    You may think that it is stupid, but compared to what? Out of all politically feasible solutions, I submit to you that this is maybe the best.

    Some libertarians think that the government should do nothing. I would rather be a pragmatist… how do we maximize individual freedom? I think that this comes close to an ideal of some sort.

    By the way, I would personally include the children in the basic income scheme… so people would have an incentive to have more kids from this point of view. However, while there are some people who have kids for the government funding it provides, I cannot believe that this is representative of the population at large. This is a rather silly thing to do in any case… caring for children is very hard work and it is expensive. Yes, some people are dead stupid, but I don’t think we should worry about that when setting social policy.

  16. Yes I am libertarian.
    So I dont believe in transfer of wealth, but like I said I said I prefer this to welfare because it removes government parasites that distribute welfe now.

    And regarding having kids for cash… your problem ( many other people like Dawkins for example have it also) is that you believe that most people are nice and have similar morals to yours. Listen to video clip I posted and you will see that having four kids (max amount of welfare is for 4 kids) is standard operating procedure.

  17. @Ivan

    (…) your problem ( many other people like Dawkins for example have it also) is that you believe that most people are nice and have similar morals to yours.

    I don’t!

    I am saying that having lots of kids is hard work and hardly worth it financially, even with government help…

    In Montreal, you get free schooling, free healthcare, dirt cheap or free day care, government checks for this and that, extended leave from work… the privileges that parents get are almost insane… Yet very few people choose to have more than 2 kids.

    Yes, there are exceptions who choose to have lots of kids for the government help… but I think you can safely ignore them.

    I have two boys that I love very much, but I don’t think any amount of money could make me regret not having more than two. If my wife was suddenly pregnant, I’d be very happy, but I would not choose, on my own, to have a third child. I am not alone.

    Caring for my boys is a lot of work. Government money does not compensate you for that.

  18. “Yet very few people choose to have more than 2 kids.”

    I never managed to figure this out. Only rich people can afford NOT to have kids; poor people don’t have the luxury. It’s not even difficult to understand why: if you’re sick, or injured, a rich person can afford to pay for care. A poor one needs family to help.

    You’re even pointing out the empirical proof of this… and then proceed to ignore it. Do you think poor people in Africa or India would not love to have less children? The simple truth is: families with few children die out, and only those with many children manage to survive.

  19. @Popescu

    Are there people who would work without a guaranteed minimal income, but would NOT work without?

    The comparison is not “no social net” vs. basic income. We are talking replacing our current system with basic income.

    In the current system, you can definitively choose not to work and the government will provide for you. Basic income would not change that.

    Only rich people can afford NOT to have kids; poor people don’t have the luxury.

    In Canada, people can afford not to have children.

  20. @Daniel
    It is almost funny how you as a scientist use yourself(one person, not even close to average person regarding IQ, education, income… ) as an example.
    I say this because I think it is funny how many many great scientist just forget about scientific method when it comes to social data.
    So you know you probably would not steal, burn cars, or number of other things, but that is a very weak argument from scientific point.
    But then again, Im just a crazy libertarian cynic 😛

    1. I would like you to cite the sociologically sound study that feeds your moral judgement of the whole of humanity. Your conclusions seem adventurous to me, to say the least, especially using the word science to solidify your horribly vague argument. I say this having read quite a bit about criminology, behavioural psychology and economics.
      But then again, Im just a crazy libertarian too 😀

  21. I remember a big change happening in France by the early 90’s :
    government decided to help students with their housing cost.
    It would allocate a monthly sum roughly equivalent to the cost of a typical student room.

    What happened ?
    In the next 2 years, prices for students rooms doubled. The entire government help would end within landlords pocket, students would still pay about the same amount as before.

    This is inflation. Your customers can pay more ? Make them pay more.

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