What it would take to actually institute Universal Basic Income
qz.com
qz.com
@ $1 / year each : Cost less than one of several individual machines in various portions of the federal inventory (mostly things which kill people efficiently).
@ $1,000 / year each : Exceeds combination of all federal spending on healthcare and education.
@ $10,000 / year each: over 1/3rd of total federal tax receipts
@ $30,000 / year each: consumes entire federal budget
And even that figure only works out at approximately $5,000 per US Citizen per year. While worth investigating, I feel that's a far cry from what most people want when they talk about 'basic income'.
[1] Numbers based on what Google spits out when you search for US GDP.
I think the expectation is that income taxes would increase so that above a certain income level it becomes a net negative or break even at least - in that case it's pretty easy to get $1000 or $2000 / month equivalent for the bottom quarter of households or so.
It's interesting that you describe $1000/year as "Exceeds combination of all federal spending on healthcare and education." given that it would be a savings over current welfare programs - doesn't seem like a very balanced comparison.
Okay, here is the Wikipedia result (2014, in billions): https://en.wikipedia.org/wiki/2015_United_States_federal_bud...
Medicare: 519.027
Health: 450.795
With 125 million households: ((519.027 + 450.795) * 10^9)/ (125*10^6)) = $7758
Let me quote your original post:
>> $1,000 / year each : Exceeds combination of all federal spending on healthcare and education.
So how about actually providing some information about which sources you are looking at and how you are doing calculations, instead of pulling numbers out of your ass, and then offering some dismissive condescending response:
> Source: US federal budget. And 4th grade math. But mostly the budget.
When someone quite reasonably asks you to provide these - since your post as it stands really isn't contributing anything to the conversation..
If Donald Trump were smart he'd likely pursue the UBI dependent on how much money the US makes versus the number of citizens. This would definitely trigger the same kind of mentality resident in welfare states like the nordic countries to resist immigration.
How would this be addressed in the US? Would it signify a change in the immigration trend in the US?
Or alternatively, your qualification follows you as a natural-born citizen of a given country --so you as a Canadian or American, Japanese, etc., receive UBI from your [original] country no matter where you live or move to so you would never qualify for UBI from a new host country blunting the threat of people thinking new immigrants get a free ride from the new host country.
If UBI is replacing existing entitlements, that means taking away food stamps, WIC, free child annual physical / dental / vision exams (under AAC/Obamacare), tax deduction for dependents on 1040, and a host of other programs like free baby formula or car seats.
My take would be Medical, basic education [k-12], would be provided by the state and the rest, immediate things people can't skimp on [housing, food, clothing, etc.] could be covered by UBI
The question we should ask is whether children would be better off, not how much would be spent on them. It may be that money allocated more efficiently by caring parents would be more beneficial than the neglect which may occur.
99% of the recipients will probably do what's best for their kids, but due to the remaining 1% (who might struggle with drug addiction, alcohol addiction, abusive relationship where cash might be taken away, etc.) the programs are not cash-based.
With that said, a bunch of countries with demographic problems have instituted cash-based payments for children (Russia and Ukraine come to mind) with reasonable success and limited stories of abuse.
The author is assuming that you can increase revenue by imposing new taxes, but that is rarely true. Tax revenue as a percentage of GDP has been nearly constant for the last 70 years, even as tax policy has fluctuated all over the place[1].
[1] http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Doc...
This annual Report presents detailed internationally comparable data on tax revenues of OECD countries for all levels of government...
It's like the first sentence in their methodology section. Their 2014 estimates show total tax to GDP ratios of 34 countries that range from 19.5% to 50.9%. They are in no way 'relatively flat'.
EDIT: Here's a direct link to the spreadsheet -> http://www.oecd.org/tax/tax-policy/table-a-total-tax-revenue...
It's like observing that a driver keeps adjusting the gas pedal but their speed never changes and concluding that it's not possible to change a car's speed using the gas pedal. In reality, the driver is actively adjusting to local conditions (like hills) to maintain a constant speed.
Taxing 'bad things' is fine, assuming the author means taxing activities that generate negative externalities (https://en.wikipedia.org/wiki/Pigovian_tax). However I doubt that would raise sufficient revenue for a UBI. Most likely you'd have to levy taxes on large, immobile tax bases like consumption and land.
Worth noting the cost of a UBI isn't completely additive. In the most extreme form, the cost is partially offset by the abolition of unemployment welfare payments and administration, tax free thresholds, earned income tax credits etc.
Why do we need fewer financial transactions?
http://www.nytimes.com/2015/07/22/opinion/the-case-for-a-tax...
TL;DR Associate professors of philosophy who manage Facebook groups promoting UBI like the concept and think it's feasible in a number of ways. The only economist (and only full professor) interviewed says:
"UBI gets all this attention and popularity, but I haven’t seen one model that’s even on the planet of financial feasibility."
Finland has about 5.5 million in population (this counts children)
So 800 * 12 * 5.5mil = 52.8 Billion euro
Finland GDP is about 290 Billion euro and their tax take as a % GDP is 20-25%. That's at least 58 Billion euro.
So while it would take a lot of work to find the money, it seems that this statement is not really true either.
And, in theory, those previously on 'tapering welfare' now face less of a disincentive to work, so there'd be a bump in pretty much any tax revenue base correlated with GDP (i.e. almost all of them).
EDIT: Just to give you a sense of what I mean about EMTRs, here's a chart from Australia's most recent tax system review -> http://i.imgur.com/jhRYXiB.png?1 . The interaction of the tax and welfare system means low income earners face an effective marginal tax rate of almost 80% at certain points of the income range (mostly due to payment tapering).
US military spending = $1.5 trillion per year (~$700 billion for the DoD, the rest from other military and NatSec programs)
US per capita healthcare spending = $8,600/person/year (edit: corrected by caseysoftware below, that includes private and public spending)
Social Security = another ~24% of the federal budget
Interest on the national debt = 7% of the US budget
Again, rough numbers off the top of my head, but you could get a decent basic income going across the entire US just by switching to an affordable healthcare system and cutting the military budget to something on par with what the rest of the world spends. UBI would also replace and simplify a lot of the existing welfare and social security system, so that portion wouldn't even be additional spending compared to what's already happening.
The obstacles seem more political and cultural than fiscal and economic. To a large extent it's basically wanting to replace the current corporate welfare for the military-industrial complex, healthcare, college bubble, etc. systems with something that would (arguably) benefit society far more.
https://www.nationalpriorities.org/budget-basics/federal-bud...
Your $1.5T number for military isn't backed up by facts as the entire discretionary spending for all agencies is only $1.1T
US per capita healthcare spending - do you mean Medicare and Medicaid? I'm not sure how you came up with this number because $8.6k * 320M people = $2.75T which would be about 66% of the federal budget.
Social Security itself is closer to 33% of the federal budget, not the 24% you cite.
Per capita healthcare spending is similarly estimated at $8,713 for 2014 or $9,146 for 2013 depending on which of those estimates you go with.[3] Presumably that includes total healthcare spending, public and private, but the issue is how much potential savings are there to pay for a UBI (by switching to a more effective healthcare system), so I think the total is relevant still, not just medicare + medicaid.
Your 33% number for SS seems to come from the inclusion of spending on unemployment and labor. The military spending being larger than total discretionary probably comes from inclusion of veteran's benefits and other programs included in with mandatory.
The exact numbers aside, I think the larger point still stands that the money is there - once you start looking at how much money is already being spent it's not hard to imagine getting a few trillion together for a UBI. Political feasibility is another matter, I agree it probably won't happen anytime soon for that reason, but saying it's economically infeasible just seems... wrong.
[1] https://en.wikipedia.org/wiki/File:U.S._Federal_Spending_-_F...
[2] https://en.wikipedia.org/wiki/Military_budget_of_the_United_...
[3] https://en.wikipedia.org/wiki/List_of_countries_by_total_hea...
However, for whatever reason, the Oregon State Hospital hosts a copy of one of these documents (the 2010 DoD Agency Financial Report: http://www.oregonstatehospital.net/d/otherfiles/Fiscal_Year_...) Buried on page 58, in an appendix, are the actual numbers: 1.2 trillion dollars total DoD budgetary resources in 2010. The GAO have previously stated that DoD financials are so messed up that they are unauditable:
As was the case in 2010, the main obstacles to a GAO opinion on the accrual- based consolidated financial statements were: (1) serious financial management problems at the Department of Defense (DOD) that made its financial statements unauditable [http://www.gao.gov/press/financial_report_2011dec23.html]
But don't worry, the DoD have a plan to have proper financial statements by 2017... [http://www.gao.gov/highrisk/dod_financial_management/why_did...]
I don't believe we could eliminate all the social workers, but a substantial number of them.
https://portal.hud.gov/hudportal/HUD?src=/topics/rental_assi...
I really don't see how a plan like that could ever work in a democracy. You'd make too many people mad. Even if it were to everybody's long-term benefit the moment the layoffs started people would petition their state governments, who would drop out or refuse to comply with the plan, grinding the whole thing to a halt. The political will to do such a thing just isn't possible IMHO.
Should it be $5,000 per month so that the full costs of an apartment in NYC/SF so that a family could on with their lives undisturbed by unemployment? Or, should it be $500 to cover just the most fundamental needs of shelter and nourishment in the Midwest?
There are many levels in-between -- it's just as impossible to decide between $1,000 and $1,500 -- and if you went ahead to implement UBI, the conflict this would cause would halt implementation.
(Not that the above isn't contentious and probably stands no chance of being put into place; I'm just suggesting a model to address your point.)
But hey, let's wait until most of the truck drivers have lost their jobs, and are camped out in DC. That will help greatly to focus the debate.
1. $100 is roughly the same as $0 in the US; you cannot live on it at all. It does simply not pass as UBI. 2. The impossible decision to be made on the final level remains. You just put it off until tomorrow and obfuscate that this is what you're doing.
Why would you want to fix the final level? UBI can be raised continuously, tied to worker productivity levels for example.
Yes, the money should be taken away before those people fritter it away on eradicating polio, making electric cars, and building a space program.
The public good shouldn't be left in the hands of those who are only willing to contribute if doing so can increase their wealth.
Would you be willing to consistently apply this across everyone in the population, not only the wealthy?
-How much is dispensed/person/family?
-Who qualifies [every child, man and woman; when do new citizens qualify?]
-What happens when people make bad decisions about their UBI? Do we still offer assistance to people who misspend/misallocate it?
-In order to get more purchasing power out of UBI, do we move people en-masse to less costly and more dispersed places?
-Is it progressive depending on income, or is it unconditional?
-People who were once employed by the apparatus, and who may not have alternative jobs in social services, are they relegated to just getting by with UBI?
-How do we pay for all this [depending on allotment]?
My question to you is do we give every one UBI because I'm not really ok with that. If James said man I'm short on rent this month I'd give him $100 but if Mary said she need $100 for diapers and cloths I'd refuse because she has places to get that and if she's short on money its most likely her own mismanagement of cheques. I'm open to new ideas though. So help me understand why UBI is a great idea.
One way to study this might be to take a population which is on welfare, and for some of them replace their welfare with 'one string attached' basic income. The string is that if they take the BI they cannot also take welfare. However any money they earn by working doesn't affect how much BI they receive, it's a constant. Then compare them against other people in the study who were left on welfare.
The goal would be to see how many BI recipents returned to work versus welfare recipients over 1, 2, and 5 year time spans. Trying to get a sample set in the 100 - 200 people range could be very expensive but it would help establish some data with which to analyze the question of whether or not people will work or not while getting basic income.
In either case, I don't see anything special about these jobs that would make them the first to disappear in the face of UBI.
A possible example would be many cast food positions. If the workers didn't have to work together by wages would go up driving up the cost of fast-food. The higher cost would lower demand, and it might not make sense to have 10 fast food restaurants on every block.
But now we're back to one of the key criticisms of UBI - reduced labor supply leads to higher wages but reduced employment, increased prices, reduced economic activity and consequently decreased consumer surplus (which would be a bad thing).
So instead of phasing out transfer payments at the low end, you reduce bureaucracy by introducing a universal payment, and balance it out at the high end with progressive taxes.
Someone who chooses to work and earns an additional $20,000 per year would still see a real benefit from their universal payment.
Someone who chooses to work and earns an additional $200,000 per year would be taxed such that their universal payment is essentially zero.
Do you think an entity that gives you free money is going to let you be free? It is going to tell you what you can/cannot spend on, where you can and cannot go. The system would enslave you to the state.
It would be so bad it would even be impossible to opt-out.
Or limit state control by creating it under a constitutional amendment which establishes a fourth branch of government outside of congressional and executive control.
These are not unsolvable problems. The US has a large standing professional military which is civilian controlled. Many thinkers in the past would have asked, "Do you think the people that control the military will just allow the president to fire them?" Yet that has happened. Legitimacy and tradition goes pretty far.
Money, wealth, currency and value are all related but they are not the same. They are tied to each other via currency.
Just imagine a class room full of students and we have a way of grading student's work. A better grade means the student is smart. Currency is just that a system of accounting to make students work for better grades. Try distributing grades from performing students to non-performing students and see if it makes the entire class any more smarter than before? Similarly try to just boost grades ie guarantee someone a minimum grade. Now the overall grades look better but students are working the same and they are not any smarter than before.
The goal is to make the consequences of failure less severe.
It would begin with a basic income. And once it is in place, would voters every pick the candidate that promises to reduce or persist the current rate of free money? It's impossible for UBI to not explode in scope over the course of a few election cycles.
Sounds really nice overall.
The first and most basic problem is that it is currently fiscally—and perhaps administratively—impossible to construct an NIT that simultaneously
1. provides an income guarantee as generous as the cash and in-kind benefits already available to many welfare recipients in the United States,
2. provides an ostensible incentive to work (a far greater concern when benefits are to be extended beyond the traditional welfare population dominated by female-headed families), and
3. restricts coverage to any manageable proportion of the population—the so-called "break-even" problem.
These constraints are, in fact, irreconcilable as long as the median income remains within striking distance of the poverty line—a situation that has barely improved over the last two decades of slow average economic growth.
The second problem with an NIT is that the welfare system already provides a package of cash and in-kind benefits that, in many states, is worth considerably more than any likely NIT (though at the cost of excluding large groups of the poor—such as two-parent families—from eligibility). Political and humanitarian considerations prevent reducing these benefits, thus vitiating one of the NIT's attractions—the possibility of abolishing the welfare system.
[0] http://www.econlib.org/library/Enc1/NegativeIncomeTax.html
Thus, a treatment might offer a guarantee equal to half the poverty line, which was then about $8,000 for a family of four, with benefits being reduced by 50 percent of the family's income. When income was zero, the family would receive the full $4,000 (50 percent of $8,000). When income reached $8,000, the benefit would be reduced to zero and the family would "break even" (i.e., neither receive negative taxes nor pay positive taxes).
This is basically the opposite of a 'pure' NIT: where earnings do not affect the annual cash amount handed out by the government. In other words, under an NIT, the government would be sending the same amount of money to Bill Gates as they would send to its poorest citizen.
The NIT discussed above meant that recipients faced at least a 50% effective marginal tax rate on their first $8000 of earnings, which is a pretty significant disincentive to work. The whole point of an NIT is to avoid this 'welfare trap' effect.
EDIT: [225 million * 2000 * 12 = 5.4 trillion per year.]
If we're talking about the solutions mentioned in the article I suspect administrating the various types of handouts may add an additional 50% cost to that [$5.4 trillion per year.]
A basic income may work for Switzerland due to it's amazingly tiny population. (Less than half the size of L.A. County) In the United States, I would think inflation, laziness and complaints that $2,000 was not enough basic income would rule the day.
Basic income arguments usually revolve around numbers. But what of self-respect? There is something very concerning about faith in a benevolent State-parent that will feed and clothe us instead of enabling us to do so ourselves, by removing policies that keep Americans poor.
I border a poor neighbor in Los Angeles; their goals and aspirations are quite different then the readers on this site.
Problems with keeping their kids in school, gangs and teen pregnancy come to mind as the most important issues. It would not be hyperbole to say that a high percentage of this class can't name the three branches of government, the mayor of the city, let alone the governor, or their Congress member.
A basic income may provide shelter and food but they all ready have that via section 8 housing and EBT cards. What they really want is a "job ticket" to the middle class.
It seems like the perfect candidate.
The last answer comes closest. But the others aren't even close.
Lame.