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I agree that the USSR had not fell because of the communism per se. It's been destroyed by the apathy, caused by people getting their basic needs covered without the need to work.

When they started - they've got a boost in productivity, even higher than the article describes. They've built up quite a lot in the 1920s-1930s. However, as the workforce become filled with the generations that took this system for granted, its effect turned into the opposite direction and by 1970s, as the last pre-revolutionary generation retired, there had been very few people left who actually wanted to do anything productive. The country went along for a while selling oil and other natural resources but the oil prices dropped in 80s and that was the end of it. There was just not enough oil any more to feed the whole country of 250M people.

Hmm, actually I think we still disagree about the reason for the fall of the USSR (I hesitate to say "disagree" because I don't hold my opinion strongly, I was tossing it out to solicit opposing opinions). What you described sounds very much like falling due to communism. I have heard a quote "They pretend to pay us, we pretend to work," and I suppose my question is which side caused the ohter. My opinion was that "they pretend to pay us" came first (the domestic economy collapsed under military spending) and "we pretend to work" followed. Do you think this is true or do you think it happened the other way around?

I cannot believe that starvation and apathy could coexist, so at some point the USSR's system must have prevented people from working for additional income, yes? In this case, the distinction between BI and communism becomes apparent: if the supply of labor falls below demand in BI, wages rise until people go back to work. Companies function as usual and are free to fire lazy workers. If food becomes more expensive, wages effectively fall until farmers can hire enough help (human or otherwise) to crank production back up again.

This is a quote from a stand up comedian, Michail Zhvanetskiy I believe. I don't think it describes the economy in the USSR very well even though it's catchy and funny.

People considered working as some out of ordinary experience. For instance there were so-called "student construction squads" (строительные отряды, ССО) that consisted of young people, usually students, who toured the countryside and doing whatever construction work they could find (and there was a lot). This was a very well paid job and you could make a year of normal salary in a few months. People joined those to make enough money to buy new furniture or car etc. and after that returned to slacking off at their government job/study. There had been many more outlets like this so there were ways of getting reward for hard work. However very few entertained the idea of doing this full time.

There have been a number of BI experiments and the results have so far been universal, initial growth followed by stagnation.

The challenge is to create productive work for these people so that they can earn an income. Some of the Chinese 'make work' projects have been interesting in that regard but they are not a final solution.

What might be a more durable system would be to create a manufacturing plant that these folks could work in. It doesn't have to be complex, could be as simple as making cinder block for building construction. It has to be run as a business in the sense that standards are set and checked and people are paid based on their production. You have to be rigidly scrupulous about keeping corruption out of it, this is a lot harder than you estimate. Ideally the production is consumed in other projects. (like building buildings or railroads or other factories).

Do you have any references to these experiments that were followed by stagnation? I only found a few experiments listed here: http://en.wikipedia.org/wiki/Basic_income_guarantee and all appeared to have positive outcomes with no mention of stagnation.

In Spain something similar has been used for decades now. It's called PER , rural employment plan, it's not exctly BI, as people Is supposed to earn the pay with days recolecting fruits or olives. But there is a lot of fraud and most people avoids doing them but they still receive the paycheck. Initially it was done to improve the poverty of that country zones, and it certainly has improved, but people has become adicted to the free money and that region is perpetually low growth figures. Peole just works the necesary to live, you must add tha the climate is pretty good and is easy to be at a terrace all day having a coffe or some beers. This system also is prone to ballot buys by local policians. Every time someone wants to reduce the payments she looses lots of votes. I think that on it's own BI will improve the living conditions of people dramatically, but on the long run will need to be substituted and complemented by other system.

Yes, OTOH, economists need to realise that "there is indeed a free lunch" at lots of places, especially in sunny and humid areas. If you can eat with almost zero effort, you will probably not put any more effort in anything. Tropical countries are very much influenced by this.

By "it's not exactly BI," you mean "it's not at all BI."

The core premise and compelling logic of BI comes from the fact that it is simple, not-gameable, and, most importantly, doesn't have huge disincentive effects at the margin as benefits phase out.

PER sounds like it runs headlong into all of those issues. By the standard you're using to critique BI using PER, I could just as well point to PER to critique markets as a whole.

It´s not just a critique, I was writing fast from the iphone and I haven´t explained my point completely. I think that in places like that small towns where people is "owned" by the landlord and a vicious circle of debt and low wages, it´s a necessary to use a system like BI to brake the chains and improve the living conditions. In fact in Spain country living conditions in certain areas, used to be quite similar to those of india(surely not that extreme, but not that far off at the beginning of the XX century). People lived in towns that where inside big landlords (most of them old nobility). The landlord used to be like a small king in their lands able to change the fate of families, that have to pay land rents. So the public wages was a big help to end that problem (that and the emigration to the cities that reduced the population). But there is moment when this no-conditions money just keeps people from improving further. You may see it as an engine starter, without it, is impossible to start the engine, if you stop it too early, the whole engine will stop again, but if you keep it engaged it will drag the engine and keep it from working properly.

What about the system that was at work in communist Poland (and other USSR sattelites, I believe)?

There was obligation to work, unless you were sick. You could choose your trade, and if you were lazy/stupid/handicapped you were offered job that weren't demanding. Salaries were centrally planed, as was prices. The end effect was - less than 1% unemployement, huge drop in efficiency, no creativity boost to speak of.

I wonder if BI experiments suffer from observer bias - if the experiment was going bad it would be stopped, or at least people participating may think it would be. It's usually small community so they know who isn't working, and they can influence him.

If you were to introduce BI on huge scale, in a way that people take it for granted, I think the results would be much worse (and much more realistic).

You leave out the part where the USSR and other centrally planned economies had to balance linear systems of billions of variables by hand (and rudimentary computers). And where they had to invent from scratch an ideal allocation of goods and services, which tended to represent what was best for the Soviet state and its bureaucrats at the expense of consumer goods and entrepreneurial capital.

People react to incentives. In the Soviet Union, "they pretended to pay us, and we pretended to work": although workers certainly received money in exchange for labor, increasing the amount of money you had did not typically increase the goods and services available to you, as the price system was so messed up that real prices were measured in waiting times and political favors.

A basic income avoids that trap because it leverages the distributed computation of the market to set prices. People will still be at least as entrepreneurial as they are now, because there's the opportunity for huge, outsized profits for both the entrepreneur and the provider of capital.

Also note that most salary workers nowadays make far in excess (typically 50k+) of what the minimum income would provide (on the order of 10k). Most of us here could work for a year, survive on what the minimum income would provide, and then have enough savings left over for nearly another decade at minimum income levels. But we don't do that, because we want more, and that wouldn't change with a minimum income.

Cite?

I try to follow BI, and although the BI experiments I've heard of certainly have had cons to go along with the pros (spiraling costs in Manitoba, for instance), "stagnation" has never been one. I'd love to see that study.

I've gone back and looked for the paper I read on BI and have yet to find it sadly. It was published in the late 90's and and I believe it came out of Harvard but I'm less confident about that origin. Basically my in-laws were big fans of South America and were thinking about emigrating to Argentina [1] in 92 - 93 and had mentioned they were experimenting with BI as a way of mitigating crime in the slums. That lead me to look into whether or not it worked and I found the article which basically confirmed my suspicions. Sadly Google Scholar doesn't have nearly as many pre-1999 journal articles as it does post 1999. Scholar did turn up this article [2] which I've downloaded to my iPad to read.

[1] They eventually moved to Brazil instead.

[2] http://esp.sagepub.com/content/12/4/307.short

One of those moments where I bemoan my lack of access to closed scientific research. =)

The abstract suggests that it is looking at means tested and conditional benefits, including programs to "guarantee a minimum income": that should not be confused with a basic income, despite the similarity in terminology.

In the literature when people refer to a guaranteed minimum income they're referring to the government supplementing a person's income up to some predefined level. This makes it significantly cheaper than a basic income, because people who "don't need it" aren't receiving the income; but a really nasty side effect of that, as with nearly all welfare programs, is that it creates incredibly steep effective marginal tax rates. The simplest design--looking at someone's income, and filling it up until it hits the desired minimum--in fact leads to a 100% marginal tax rate, because a dollar earned from work is a dollar lost in benefits.

This means there's absolutely no incentive to work before you've made the minimum; contrast it to the unconditional basic income, where even someone who's only capable of producing half the value of the basic income is fully incentivized to do that work. So you avoid the deadly (literally!) welfare trap where the government actively punishes you for finding work.

I don't know if you are in the US or not but our local city library can get journals on inter-library loan. Stanford used to have an affordable non-student library card fee but it has since gone through the roof. That said you can often do the legal part of what Aaron Schwartz did which is use the WiFi in a college library and get access to their journal subscription but this only works well if you already know what articles you want. And Google Scholar can be good for that but not as good before 1999 sadly.

I recognize the difference between BI and GMI as strategies but just so you know they are often both talked about in the same papers as they are both approaches to putting capital to work effectively amongst the poorest.

Most of the Basic Income proposals I've heard don't go as far as covering basic needs very well; meanwhile there will be money available working to provide for people who aren't able to get enough of their needs currently met. And if you want nice things, you'll still have to work.

There aren't zero parallels to the USSR, but it's really not going as far, and I expect the human responses to be different.

Neither the basic needs were covered very well in the USSR, at least as I've been growing up in 80s. E.g. jeans already had been a luxury item. Housing, medicine etc. available for the most people were way below "poor" of the western world. I grew up in a 12 m^2 room in a 3-room flat shared with another family and was lucky, because many of my parents colleagues lived in dorms.

I am aware that the BI proponents believe that jealousy is a stronger drive than apathy. And this is undoubtedly true for some fraction of humanity. I just think they overestimate how big is this fraction.

Not jealousy per-se, but the drive to want more. People work long after basic needs are met.

I admit my understanding is somewhat shallow, but I think the problem with the USSR had at least as much to do with price controls as any cash transfers. In a capitalist system with BI, if there's a labor shortage the wages paid to labor will increase and the price of goods will increase accordingly, and people will be motivated to take those jobs as the BI payments shrink in purchasing power. The HUGE advantage is that when there is a labor surplus, those people that remove themselves from the work force (voluntarily, involuntarily, or semi-voluntarily) still play a role in aggregate demand.

It does not matter what you call it but people who had their basic needs covered for generations do not just go and work because they want more. Some do, most - don't. Even as the USSR had been crumbling down and the cheap government goods had became hard to find people would rather go and line up for many hours to buy everyday groceries than do something to earn more money and buy much better goods without much hassle.

This phenomenon is not very noticeable on small scale (both in population and time). So I'd recommend paying a closer attention to the USSR history and being a bit critical to the "we overspent them" or "they did not do socialism right, duh" explanations. In my opinion, if it's been possible to overspend a superpower that had its own spaceships then overspending small fry like Libya, North Korea or Iran would not take any time at all. And free market just does not work when people have their basic needs covered. There also had been very small free market in the USSR and it was so small not because communists had been screwing with it (at least not more than the western governments screw with their markets), it's been small because most people just ignored it. If they could not find something in the government store then they would not buy it, even if they could afford the free market price.

While I'll certainly give it some more thought, and grill my acquaintances who have more than a passing familiarity with the subject (both natives and academics), I am still not sure it's a very good model for the generic circumstance of handing out some chunk of value for people to build on; there are way too many confounding factors.

Those in the USSR didn't suffer only the meeting of their needs, but also a constraining of their hopes; the cultural mythology glorified the state, not individual achievement; quotas frequently lead to poor results; and, quite importantly, I would expect that outright oppression contributes something to the breaking of a people - I believe there were several examples of groups taking initiative to better their lot and winding up dead, which seems strong incentive not to try.

What actually contributed to the "fall" of the USSR is a somewhat orthogonal question. A decline in worker efforts certainly might have contributed. I've been under the impression that a significant problem was the politicization of scientific and economic questions, in ways that just didn't square well with reality - I know that in particular they were slow to take up computers, and an ideological commitment to Lamarckian evolution lead to poor agricultural planning.

Of course, back then technology was not as well developed as it is now.

ANY solution that solves the supply-exceeds-demand issue of labor MUST either create leeches (decrease supply) or continuously grow the economy (increase demand). I think it's easier to create the leeches and call them a cost of doing business.

There is a second option on the demand side: Instead of trying to grow the economy, hoping that more demand for labor follows indirectly via the private sector, you could just create the demand for labor directly.

This is what Job Guarantee-style proposals are about: Creating a virtually infinite demand for labor at a fixed wage. This can unlock the same kind of creativity as BI is supposed to unlock if a wide enough range of things is defined as "work in the public interest" (basically, anything except sit at home and watch TV / browse reddit) and falls under the scheme.

There are other advantages (and some disadvantages). In any case, it's good to really keep all the options in mind.

I'm not convinced that the USSR failed because of communism/socialism/stalinism/capitalism/whatever. I'm no historian, but it looks like what happened is that the US fought an economic war with the USSR via an arms race.

This is a very interesting topic that I would indeed like to know more about as well. The USSR economy grew faster and more consistently over the entire period of communism than both the US (and other Western) economies, and also faster than the economies of less-well developed countries. However, because it started from a much lower base in the early 20th century, they still hadn't caught up when they finally lost this economic war.

Objectively speaking, communism worked better for them than capitalism worked for the West. They lost because they failed to call the US' bluff after both of them had already built up nuclear arsenals so large that any further arms race would have been moot.

That doesn't mean communism is universally better. In the direct comparison of West Germany vs. East Germany, which started from a comparable position after WWII, West Germany clearly wins, and many East Germans really did want to leave.

Still, this all suggests that you can't ascribe it all to "communism bad, capitalism good".

Its a lot easier to grow from a lower base, regardless of system. Hence emerging markets investment.

That would usually be a fair point, except you missed the point where USSR economic growth also beat the growth rates of less or comparably developed countries that were not communist, e.g. the Southern American countries turned capitalist under US influence.

So a point in favor of communism remains.

In any case, the true lesson is probably that communism vs. capitalism just doesn't matter as much as people want you to believe. Other factors -- such as whether institutions are inclusive (targeting the welfare of the entire population) or exploitative (transferring wealth towards a small elite) -- simply matter more.

>The USSR economy grew faster and more consistently over the entire period of communism than both the US (and other Western) economies...

That's really a problem with measures if economic growth though. Economic production measures are independent if whether that production is efficient or even necessary at all. A bridge to nowhere contributes to growth. The USSR economy was appallingly inefficient. The fact remains that the least worst method we have for ensuring efficiency in an economy is well regulated markets. The further your economy strays from either market forces (e.g. Centeal plannng) or good regulation (banking crisis), the less efficient it gets.

Bringing it back around to the basic income...

One of the biggest advantages of the basic income is that it does not run afoul of all the information and computational issues that central planning does.

You have no issues trying to balance linear systems with billions of variables, for basic income uses the huge distributed calculation embodied in the market to get to its optimal allocations.

You have no issues of deciding what exactly is the objective function to maximize in the linear system: instead of trying to figure out globally what the correct ratio of vacations to medical care to private tutors to gardeners (ad... billionum) is, you let individuals decide that. The only quantity where that comes into play is the ratio of the basic income to overall value of production. And even when that's set either too high or too low, the allocation errors propagated by it do not cascade into disaster the same way underproduction of iron by 3% would be.

Once you're in a cold war, it makes sense to play to your strengths. Capitalism, as an economic system, is better at producing weapons because it's better at producing anything, and producing a lot of weapons is a good way to get the other side to try and keep up. It's like developing a massive tolerance to alcohol so you can drink people under the table.

>Incidentally (this is unrealted because BI is not communism), I'm not convinced that the USSR failed because of communism/socialism/stalinism/capitalism/whatever. I'm no historian, but it looks like what happened is that the US fought an economic war with the USSR via an arms race. We spend a $ on our military to force them to sped a $ on theirs. They ran out of money first because they had a smaller economy coming out of WWII. This opinion is not very well researched or highly informed (I base it off starcraft strategy, heh). Please tell me if I have gone wrong; I will be neither surprised nor offended.

I don't know if you are right about this or not, but if it's true it seems ridiculous, at least in hindsight. Once you have nuclear weapons, spending money on the military, at least to deter potential invaders, won't help much more.

You're forgetting all the proxy wars where conventional weapons were used.

But that wasn't necessary for deterring invasion.