Sunday, April 10, 2016

I Am Not An Economist - Basic Income

Despite not being an economist, I am someone who cares about politics and reads far too much news from sources such as Bloomberg, Fortune, WSJ, The Economist, etc. Thus, I have opinions about economic policy. For this week's thinking to myself, I wanted to go over an econ policy idea that has been making itself increasingly loudly heard through some corners of the net. See YCombinator, Reddit with  r/BasicIncome, Vox's parade of articles on the subject, etc.

For those of you who don't read over my shoulder everything I skim on the internet, what exactly is a basic income? Wikipedia has the intro on basic income covered, but as I have seen it presented, the idea is to give every citizen, or every citizen at age of majority, a direct income. Simply a check every month or similar, with no means testing, generally so as to replace all, or most other, social programs such as social security, food stamps, welfare, etc. The amount of money that would be paid out in such a system is up for debate, with some arguing that it should be enough to survive on, and others wanting just a baseline level of aid. The minimal level of aid could be along the lines of what is already done with the Alaska Permanent Fund, or Norway's similar distribution of oil revenue through the Government Pension Fund of Norway.

Firstly, what is the reason one would want to do this? Looking at the collection of American law and regulation designed to provide aid and a reliable source of income, I see a complicated mess. As a software developer, it is the sort of situation that makes me dream of throwing it out and rewriting it from scratch, in as simplistic and direct a way as possible. Giving the same amount of money to everyone, through one singular program, with no means testing, is pretty much that ideal. Presuming it works, and is affordable, of course.

So, what might the benefits be? Beyond the simplifying of bureaucracy, there are, theoretically, a number. The system, being so simple, would be harder to corrupt. Furthermore, it removes a good share of the perverse incentives seen with many welfare systems. If you only get aid when you are below the poverty line, getting an income that would boost you above the poverty line is, if not a negative, is less of a positive than it would otherwise be.

The overall goal, of providing aid, and putting a floor on poverty is, in my mind, necessary. We've got a vast proportion of our population that's in poverty or unfortunately close to poverty. Wealth is becoming increasingly concentrated. There's a lot of risk in the future that jobs will be wiped out faster than people can train for new ones. Giving every citizen an equal amount of money will help equalize things and prevent abject poverty and social stratification.

There is the question of what to set the level of payments at. If set too low, you are providing less aid than with current systems, and some people are losing out. If set too high, you create a system that we cannot afford, and discourages people from wanting to work at all. Much as I would like to hope otherwise, I think we're at least a few years away from the futuristic utopia where robots do most of the work and we can all get by on five weeks of work a year. Maybe not too far, but not something we can just start tomorrow.

So, what could this basic income level be set at? Of all the papers about it I've seen on the net, I've seen very few with direct numbers.

As a first thought experiment, what would happen with a revenue neutral basic income? Do not change current tax rates, or total social program spending. Simply get rid of social security, food stamps, minimum wage, welfare, Medicare, Medicaid, etc, and just give every citizen a check each month. What happens then?

For the roughest of back of the napkin calculations, bear in mind I'm not an economist, it looks like we spend ~2.25-2.5 trillion per year on the programs I mentioned. And there are ~320 million Americans, ~240 million of them over the age of 18. So, if we gave each of them an even distribution of that money, that would be approximately, $10,00 a year for citizen over the age of 18. That actually lines up fairly well with what New Zealand, Finland, Canada, and the Netherlands are experimenting with,

Not enough to get by on, certainly, which mostly avoids the problem of discouraging people from working, but how would the end result work, and who suffers? If you're giving this money out to all citizens instead of some subset of citizens, there are going to be people getting less money. Looking into that, I realized that I had no idea what the max social security distribution is in the US. Apparently it's about $2,639, for people who have contributed the maximum taxable earnings for 35 working years. For maximum benefits through welfare, SNAP, Medicaid, etc, I have even less of an idea, but after a brief internet search looks like for some people is greater than one thousand a month.

Distributing all this money perfectly evenly, instead of targeting it, would thus, of course, create a number of winners and losers. Despite the efficiency gains of such a program, a number of people currently hurting the most, would have aid reduced.

Furthermore, what are the efficiency gains? There are all the potential benefits of removing perverse incentives, but measuring that is mostly up to ambiguous econ theory to debate, Then, how many fewer people would it take to administer such a program? As not-an-economist, and spending a few seconds looking on the web, I see the US currently employs 62,000 people in the Social Security Administration, and after that, sifting through docs from OPM gets complicated. I imagine a good number of jobs would no longer be needed, but hardly enough to have a sizable impact on the amount of payout such a system would be able to give.

What if you wanted to increase the amount of basic income, in order to compensate for those losing out due to decreased payments? As a basic income is being given to all people, tax burdens on people not currently receiving aid, but who would under a basic income system, could be increased without changing their effective income levels, but then it all becomes a question of tax policy.

I love the aesthetics of such a basic income plan, its ideals, and basic argument, but still need more details to have any idea how it would actually work. Glad they are experimenting with it in other parts of the world, and look forward to seeing what happens.

Monday, April 4, 2016

Investing in Cybernetics

By investing in cybernetics, I mean more the purchasing of medical devices to plug into your body, less so the buying stock in companies that make cybernetic components. Though I may want to do that.

This week, after taking care of a work project that had consumed a good share of my free time the last month or two, I finally got around to a number of the items on my to-do list that I'd been ignoring. One of which was plugging in my new Dexcom G5 continuous glucose monitor. Now I have not one, but two Bluetooth enabled devices that plug in underneath my skin. Woo! It's the 21st Century alright. Not long until my eyes glow and I can punch through walls, right?

I've been a type 1 diabetic for a little more than 24 years now. This is cause for a moderate amount of watching my diet, frequently testing my blood sugar via finger pricks, and adjusting insulin dosages five to ten times a day. For the most part it's an inconvenience, admittedly with a constant dread that my long term health will suffer. Frequently though the blood sugars do something unexpected, either spiking high and leaving me feeling like shit for hours, or crashing low and leaving me with less than full mental faculties, sweating profusely and stubbornly refusing aid while my friends have to consider wrestling me to the ground to stuff food into my mouth. Occasionally with the screaming seizures or sprinting off into the woods. Ah, memories!

Thank you all, family, friends, and loved ones who have dealt with me in those situations.

About four or five years ago, after one such attack, I made my first such investment in cybernetics, moving away from the traditional usage of syringes for insulin injections. I got a Medtronic insulin pump, and Enlite continuous glucose monitor. The insulin pump was a wonderful success, and dramatically improved my blood sugar control. The pump has the benefit of having a varying basal rate, that continuously drips a background level of insulin into me, that can be easily calibrated. It talks wirelessly with my blood testing kit, and calculates, based on the time of day and how much I tell it I eat, in order to give me a more proper amount of insulin.  Further, it remembers how much insulin has been injected into me. I had been doing this all in my head between the age of seven and twenty six, but the machine is a bit less prone to forget or overlook those important details.

Medtronic's Enlite CGM sensor system unfortunately left something to be desired. This was four years ago, and I'm sure Medtronic's tech has improved a good bit in the meantime, but the sensor then was so poor that I stopped using it after a few months.

For those of you not the most familiar with diabetes, a continuous glucose monitor is a system designed to, well, continuously monitor your blood glucose level. The ones on the market, both then, and now, do so with subcutaneous sensor that you implant in yourself for some number of days, and has a wireless/Bluetooth communication system, to beep out your blood sugar every minute or five.

As I was saying, the previous one I had left many things to be desired. Only lasted three days, had to be attached to the body with tape, easily fell off, and was inaccurate to the point of not being worth the trouble. I tossed it.

Over the years, the technology seems to have improved. Fellow diabetics recommended the newer Dexcom brand systems to me, and I finally took them up on their suggestion. The differences, though minor when describing them, add up to something that is exponentially better. The Dexcom G5 attaches without requiring additional tape wrapped over the top, and is a good share smaller and more comfortable. Most importantly, it has proved far more accurate, and to have less of a lag.

I have yet to see this Dexcom G5 be off by more than twenty percentage points or so, its alert system is timely, and in the week I've had it has kept my blood sugar in a much tighter range than I would normally be under. Don't think I've had a blood sugar above 190, and haven't had anything low without being awake and able to respond to it quickly.

The also checking while asleep is a significant benefit, one that of course existed in the previous CGM system I had, but with the added benefit of greater accuracy, and not waking me up without cause.

Managing blood sugars is a lot of dealing with lag. Insulin gets injected into your subcutaneous fat, and even with the quicker acting insulins, Humalog for me, it only starts to really have an effect half an hour after injection, peak effect perhaps hour and a half later, continuing effect out three or four hours. Eating food also has a similar lag time for raising your blood sugars. Non-diabetic bodies are a lot better with dealing with this, because pancreases are plugged in more directly to the arteries and veins, and can sense and respond to blood sugars much more quickly. Us diabetics though, with our putting insulin into subcutaneous fat, and with the continuous glucose monitors sensing the blood sugars in that tissue, we are on a delay.

Hence, once of the the great benefits of a continuous glucose monitor that happens to be accurate is that it can give you not just your close to current blood sugar, but the rate and direction of change. The derivative of your blood sugar, to think about high school calculus. Us diabetics are going to have the lag time in adjusting to our blood sugars, but being able to see the direction of change gives the ability to predict where it'll be in the next hour and to get ahead of it.

My other compliments to Dexcom are the very excellent UI, ease of viewing the data, and general ease of use.

Of course it's not perfect yet. Won't be perfect until we finally get around to curing diabetes, which has been promised to me as "five years away" since I was diagnosed in 1992. For more direct criticisms, I am irritated that there is software to access the data from the sensor for iOS devices but not Android. As an Android dev who often sees Android apps not started until a year or two after the iOS versions, I understand, but damn. Related, it's made by a different company than Medtronic, so it doesn't talk directly to my insulin pump, and I'm manually feeding data between the two. Sure be nice to have an open API for the two to plug into. Bloody corporate competition, and/or overzealous FDA regulation. Additionally, it's another thing sticking out of my skin, and I certainly can't do jujitsu with it. Then again, have to peel of the insulin pump insertion sight anyways to be able to do that, but now with two such peripherals stuck into my body, makes that sport less than practical. Some day, they'll either cure it, or it'll be subdermal. Then I'll get the Deus Ex future I've been hoping for since 2000.