Top White House Economist Dismisses the Idea of a Universal Basic Income
blogs.wsj.com
blogs.wsj.com
"“The concern is that the process of turnover, in which workers displaced by technology find new jobs as technology gives rise to new consumer demands and thus new jobs, could lead to sustained periods of time with a large fraction of people not working,” he said.
Still, the solution isn’t a universal basic income, Mr. Furman said. Instead, he focused on reforming the existing array of programs meant to help the unemployed and the poor."
This almost seems to bolster the opposing point: yes, there's a real threat here, but we (hand-wavy thing) have existing programs we can fix up for that. Other than the last sentence, I don't see substance, but more of a media sound bite.
People need to be able to rapidly move from unproductive or fully automated parts of the economy to others. It's easier said than done and in the US at least would require a massive investment in and rethinking of access to vocational education. It needs to be free as a start.
Unfortunately, paid education will inevitably work aggressively to maintain their place in the system.
The biggest problem I think is not just the availability but the motivation for people to see it through. There are great options available now for people willing to teach themselves, do online courses (free or cheap) and most don't bother.
If employers were to somehow collaborate with online course providers to create some kind of pipeline from unskilled-> skilled workers, that would be really amazing. I honestly wonder why more companies don't do that.
Easy: generic education applies to any potential employer, not just the original sponsor, and there's no legal way to force a person, once educated, to work for you. (I'm not arguing there should be, either.)
Put another way, you'd be training your competitor's employees if you were to do that. No rational actor wants (or can afford) to do that.
Here's Wikipedia on the topic: https://en.wikipedia.org/wiki/Debt_bondage
I had a friend working for Airbus who just did that, the company he moved to offered to pay him back the cost of the bailing out.
Though all the times I have seen this happening was for very specialised and well paid work, when the workers have quite a lot of leverage. It's not hard to imagine this becoming really bad if the worker does not have any leverage.
That's not the definition of a debt slave, because you're not paying back with work, you're paying back with money.
In that scenario, the business is just a loan provider. Obviously, anyone can loan anyone else money for whatever reason.
Perhaps industries rather than employers though? If there was a stronger connection between a point achieved in the pathway and the capabilities of the student? Obviously many students do placements and internships, but perhaps a great emphasis on that from the very beginning?
I think working earlier has a few advantages such as being able to cover own costs (reducing the burden on parents), getting practical experience sooner, working out whether you're even on the right path earlier, etc.
>“We should not advance a policy that is premised on giving up on the possibility of workers’ remaining employed,” Jason Furman, chairman of the Council of Economic Advisers, said Thursday in remarks at New York University.
Isn't the idea that people could be employed doing anything on UBI (subject to the market demand - sans artificial restrictions)? As in, the exact opposite of what Furman claims is the premise of the UBI system?
If you mean "a basic income, offered by the same organization in multiple places, should be adjusted for cost of living", I disagree. Moving some "extra" funds towards lower cost-of-living areas winds up being a feature - resources are shifted (slightly) away from concentrations of wealth and toward concentrations of people, where those disagree.
Frankly if the only way you can make widgets is to pay your widget-makers just enough so that they don't die, or perhaps less, then in my opinion society should reconsider how valuable it considers widgets to be, or at least whether someone else can make widgets more efficiently.
Aren't externalities costs/benefits that accrue to third parties? But this doesn't seem to be in that category.
Obviously, when adults are trying to support themselves with this kind of job, we have a problem.
My point was that not every job needs to pay a living wage.
Boots stomping faces isn't the only thing there is.
I think you've just described government in general (and the propaganda that propagates among it's Stockholm syndrome-esque sufferers).
What I'm referring to is the kinds of phenomena that the parent poster was describing, ideas like, "Work hard and play by the rules" which seems like a good idea except that it actually turns out to be a way for people who are willing and able (usually by virtue of their membership in some privileged social class) to bend or break the rules to manipulate those who are unwilling or unable to do the same.
UBI lets you subsist so that you're free to drop off my groceries for beer money.
All of the other unicorn bullshit (automation will free us from want, etc) is the 2016 equivalent of the 1956 flying car or magical gourmet microwave dinner.
Note how wages have not increased as productivity has? UBI is what fixes that. Its distributes that productivity to people so they are not slaves to capital.
Cool, let's see it then ;)
During that same period, you broadened the scope of the workforce greatly by bringing women into the mainstream workplace and ending systematic discrimination against minorities.
...and then the scope of the workforce was globalized. Talk to any private sector union steward about the biggest roadblock in negotiations -- it's the ability to leverage the liquidity of the labor market to pick up to move to Mexico, China, India, etc.
In the public sector, unions don't have that problem -- you can't outsource the cops (yet).
This would push wages up, as employers would have to pay more for the privilege of utilizing labor.
It seems that your argument is that it (UBI) will increase wages with no (or minimal?) change in productivity. Are you counting the transfer payments in your increased wages, or are you implying that wages will start growing again in addition to the payments?
I don't know which'll happen. I'm surprised to see the degree of confidence exhibited by both sides of the debate, people who are either sure it'll result in entrepreneurial utopia or sure that it'll be the end of the world as everyone does nothing. My sense is that there's a good deal of projection here, where people who have successfully cashed out a startup assume everyone will build a startup, while people who wish they could do nothing but loaf around all day assume that's what everyone else will do. Personally, I just want to know, and so I'm waiting on the data before judging.
In a situation where people are given a base amount of money that covers their cost of living expenses but provides no extra money to obtain physical resources they will turn to the creation of intellectual property.
This endeavor is low cost in material but high cost in terms of time.
A huge difference is being at the bottom rather at the top. Status is a motivator.
But AI may "solve" thishttp://partiallyclips.com/comic/dome-house/
Well, technically, these are all anecdotes, but the plural of "anecdote" is "data" after all.
Regarding Google-millionaire data: what percentage actually does keep working? We hear about those who do, but not of those who don't (eg Minecraft's Notch). "Newsflash: multi-millionaire relaxes" And, confounding factor: people who succeed amazingly well often keep doing whatever made them wealthy, well beyond financial satisfaction. At least, one hears of those cases - I don't actually know the percentage of how often, vs. those who take it easy. [Guess this is what brbsix meant]
Anecdatum: when I made enough from something I created, I quit. Yet, turns out I was happier before... so was probably a mistake to quit.
Footage and notes from a conference talk discussing the aforementioned experiment: https://www.youtube.com/watch?v=lanUMETOqWc http://www.guystanding.com/files/documents/Basic_Income_Pilo...
Early 90s immediately after the collapse of the Soviet Union provide a window into social dynamics of multiple countries where the majority of population was largely employed by government, many in some meaningless occupations (the running joke was "we pretend to work, they pretend to pay us"), others with lifetime pension guarantees - hyper-inflated currencies, general switch to barter for any meaningful financial transaction and endless parade of populist politicians promising to increase everybody's personal wealth by passing pension and government salary rate increases.
IMO, people want to work and be useful. Ignoring that drive and substituting bread & circus is a dangerous direction.
For example, like unemployment benefits, it gives breathing room to hold out for a better job. Or if they're in a union, it's something to live on during a strike. Or maybe they will take the casual job.
Who knows? How people choose to use their freedom can be hard to predict. That can be a little scary. But the point is it's their choice, not ours.
The context is important. Are these "options" given willingly or taken by force? The distinction is pretty important. It's the difference between making love (a voluntary interaction) and rape (an involuntary one). If this "unrestricted money" is to be collected by force (or the threat of it), it is most certainly coercive.
Compare with conditional transfers (you get the money but only if you meet certain requirements). That can be coercive in effect, if you need the money badly enough.
End of the day, it's sort of like social security for everyone. It may be a more equitable form of welfare, as men and intact families would be eligible.
IMO, resources would be better spent on housing subsidy, healthcare and publicly administered pensions.
If anything I am quite sure businesses would be more than happy with UBI because they would not get people who HAD TO TAKE THAT JOB and instead people who took it because they wanted it. A UBI would never be high enough to allow you to skip work unless it also provide absolute basic housing too and food.
The only way to grow an economy is to grow the private sector.
That's not yet my hypothesis, it's just a plain fact as the government sector can only exist by the taxes paid by the private sector.
My hypothesis: The government believes that too many will simply stop working (thus causing a contraction in the private sector and in the end also in the government sector - which is supposed to use its shrinking resources to pay for UBI)
Furthermore, from historical data, most of the economic miracles/expansions have been a result of large scale fiscal policies by the federal govt. of respective countries. New Deal, Marshall Plan, War Spending for WW2 etc. all provided the boost that was required to kickstart the economic engines of the respective countries and military spending continues to sustain the US economy to this day.
I love this community but really dislike the simplistic acceptance of Randian theories of economic growth and the importance of the private sector. Private sectors are most definitely important and required. But only the Government has the capacity, the resources and the will to execute something like the Manhattan Project, the Moon Mission etc. We shouldn't dismiss any sector so easily.
On the bad job front, I think a UBI could resolve an imbalance that has always perturbed me. When I was travelling, I once got a job in a laundry - I hadn't realised that laundries have dirty and clean ends, and guess where new employees start! It was disgusting, and the only positive was the space everyone gave me on the crowded bus home. Then a contract job came through compiling a report that an overseas company had promised to carry out if they got some contract. I went from a horrible job on minimum wage to a plush office job at ten times the rate, and at the time it seemed crazy that I was paid more, not less.
A UBI would seriously shake this up. Society would have to pay more to incentivise people to do the the less-glamorous jobs, which to my mind would be fairer.
It's hard to appreciate something you're surrounded by (to use an analogy, it's hard to appreciate the air if you're constantly surrounded by it, would be the same for a fish with regards to water).
With that in mind, it can be useful to point out the ingrained parts of a culture. If nothing else it allows us to re-examine deeply held beliefs to see if they stand up to scrutiny.
I don't disagree with you.
Yeah, this makes about as much sense as, say, "We should not advance a policy that is premised on giving up on the possibility of stamping out marijuana use."
> Our goal should be ... to foster the skills ... to make sure people can get into jobs, which would much more directly address the employment issues raised by [artificial intelligence] than would UBI.
That is the traditional solution, but we should question the assumption that is it the best way of life for most people.
> “Replacing part or all of that system with a universal cash grant, which would go to all Americans regardless of income, would mean that relatively less of the system was targeted towards those at the bottom—increasing, not decreasing, income inequality,” Mr. Furman said.
Nonsense. You can get any level of income inequality you want by choosing suitable numbers for UBI and tax rates. Furman is an economist, so he must understand such basic math. This part appears to be pure FUD.
Welcome to economics, a modern form of astrology where politicians ask their friends if "the math" can support a position. Of course it can, if the economist wants it to.
I didn't know that the economic situation we are in was caused by artificial intelligence. In fact I didn't even know that there was an artificial intelligence or that anyone has lost his job because of that.
On the other hand, can you imagine the political fall out if he had been for UBI?
Spoiler: they failed spectacularly. Giving poor people a wad of cash and the power to choose often leads to poor choices that negatively impacts children.
He also says that UBI will cause wealth to be distributed equally which means less of the total tax will go to the poorer class. This is not exactly true because the idea is to give cold, hard cash instead of trickling down the wealth. So the dynamic will be different, and that is the whole idea. That just giving cash is generally better than welfare schemes.
I know that many countries do provide free tertiary education, but in the cases I'm aware of, its a relatively small percentage of the population that gets tertiary degrees compared to the US.
For Germany, secondary education splits into three tracks, with the upper third choosing between a traditional University track, a more vocational Fachhochschule, or a dual work/study arrangement in the form of a "Duale Hochschule". These all offer bachelor degrees, but AFAIK only the University track offers masters and doctoral programs.
German universities are also sparser in regards to amenities and faculty/student ratios than US or UK universities, at least from what I've heard, which brings costs down further.
Graduates from lower secondary tiers also have several options.
There's the Ausbildung, where businesses train hires internally to meet requirements for certain positions. A bank may train an "Azubi" from Teller to Account Manager to Branch Manager.
Then there's the Meisterwesen, which is still reminiscent of the guilds, and mostly prevalent in the trades (e.g., Carpentry, Baking, etc.). Levels go from apprentices, to journeymen, to masters, where masters are licensed to open their own workshops/stores. My personal perception is that socially, a master carpenter is on the level of a masters graduate, but still below that of a PhD, but that's still a fair bit of social mobility considering that this route is open to anyone with any secondary school degree.
So whilst less people get a college degree, business and industry do provide routes to livable work without one.
Effectively, anyone that wants to get a degree can. There is no barrier outside the academic. And this loan stays interest free until we leave the country long-term. A small percentage is taken automatically out of your pay when you finally start earning. It all works pretty well for us.
The overwhelming majority of Universities are government operated and are subsidised. There is a fee, that can be paid upfront or be deferred to be paid through the tax system after you graduate.
In effect it's cheap(er) education with a loan system that:
- Is interest free, but indexed at CPI
- Does not survive death (i.e. your debt disappears when you die)
- Is only repayable once you reach a specified level of income.
For convenience, direct link to the paper being reported on: https://www.whitehouse.gov/sites/default/files/page/files/20...
“Replacing part or all of that system with a universal
cash grant, which would go to all Americans regardless of
income, would mean that relatively less of the system was
targeted towards those at the bottom—increasing, not
decreasing, income inequality,” Mr. Furman said.
"It is difficult to get a man to understand something when his salary depends upon his not understanding it." - Upton Sinclair
What am I not understanding? Wealthy persons will fund this. Sure, they may get the $12,000 per year UBI, but their taxes will go up by much more than that.
http://www.igmchicago.org/igm-economic-experts-panel/poll-re...
So small scale experiments are gonna to show that UBI works well, without negative inflationary consequences, but full scale introduction will be a disaster.
What is the breakdown of winners/losers that UBI would target? From what I imagine, it's a bit like an upside-down bell curve. People who have close to 0 would be better off, big companies too, and everyone in the middle a bit worse off. Is that the intention of UBI?
Here's a summary of some of the pro UBI arguments:
Most plans would be paid for by increasing taxes on the wealthy, so it doesn't actually increase the money supply;
Prices should only increase on goods that are supply constrained;
We're already giving away billions of dollars in assistance in the form of SNAP (food stamps), and increases in SNAP assistance don't seem to cause food price inflation (or at least not enough to be detectable);
We also already provide huge subsidies in the form of the Earned Income Tax Credit, which doesn't appear to have inflationary effects (again at least not enough to notice);
The examples we have of partial basic income haven't caused large scale inflation. Alaska hasn't seen an increase in inflation since they began providing a partial basic income to all residents, and Kuwait didn't see an increase in inflation when they gave every citizen $4k in 2011.
To summarize the summary, a UBI would probably cause a price increase in supply constrained goods and services, but not nearly enough to drown out the extra purchasing power provided to people with lower incomes.
How this affects the middle class depends on how high we set the cutoff where you start paying more in additional taxes than you're getting in UBI, and it depends on how income inequality and velocity of money affect the middle class. Many economists think that increasing income equality will help the economy as a whole, but that's open for debate (I personally think that it will).
242 million adults in the US.
Just $10,000 per adult is $2.4 trillion. That of course wouldn't come close to being enough. Even if you assume tax redistribution of the money (rich people getting UBI, and then having it taxed away), for $2.4 trillion you probably would only manage to get the poorest 1/4 up to something like $15,000. Today the poorest 1/4 are receiving a net of more than twice that sum between Federal and State benefits.
Federal budget ($3.9 to $4.1 trillion or so depending on which year we're talking about) minus dozens of things that won't be replaced by UBI and won't go away (eg NASA, military, agriculture subsidies, budgets for countless agencies like HSA or FBI, transportation, justice and so on) = you might be lucky to break even or bleed just a few hundred billion on the budget if you allocate $2.4 trillion to UBI. That's assuming Social Security, all housing subsidy programs, all welfare programs, half of all social services programs, Medicare, Medicaid, Obamacare etc etc are all ended.
The equation at the state level is a whole 'nother calculation, and would be a very significant factor given the states budget is another ~$1.7 trillion and represents all sorts of welfare programs and healthcare spending.
Personally I favor Warren Buffett's premise of significantly boosting the earned income tax credit, and freezing or lowering the minimum wage. The UBI is dramatically regressive, there's no reason to be giving the top 50% in the US a UBI.
So, say that we institute UBI, and people no longer have to work. That increases the cost of labor - you can't attract a cashier for $9.30 an hour, so you have to pay $15 an hour or whatever.
This has to be passed right back to the consumer, so prices go up. Rent goes up as well - maintaining property takes labor as well. Now, the UBI is no longer sufficient to sustain a decent life, and the poor are right back to where they started.
There are several reasons for this, the biggest is that cost of labor isn't the only input in pricing.
Basically the cost of supply constrained goods will go up, but not enough to outweigh the increased purchasing power for lower income earners.
very few economists agree that raising the minimum wage by X dollars will result in prices rising by X dollars so that the effect is non-existent
Instead, companies will move the production offshore, lay people off, make smaller packages [2], use machines, use cheaper ingredients etc. and those things create the illusion that the price is not rising. Price is the same, but the quality (of goods/services & of life in communities) is going down.
cost of labor isn't the only input in pricing
[2] https://en.wikipedia.org/wiki/ShrinkflationOnly if a loaf of bread is supply constrained or there are no competing bread suppliers or alternate goods.
>The top 50% certainly don't need UBI
The top 50% get a UBI, but most plans would pay for it by increasing taxes on the wealthy. There would be a cutoff, so that above a certain point you'd be paying more in extra taxes than you'd receive in UBI.
The vast majority of UBI plans definitely aren't regressive.
I can't remember seeing a single UBI plan that is regressive. The goal of almost all of them is increased income equality.
There's not really a difference in this and increasing the EITC except in perception--eliminating means testing so that everyone gets the UBI, which many people think is important.
What about an expanded UBI would be different than social security? Just the fact that people are younger or not-disabled?
For the non Americans, social security provides cash payments to those over 65 and those with long term disabilities.
UBI is the exact opposite of Social Security https://www.ssa.gov/oact/trsum/
If we assume automation results in more job-losses where does the money come to pay for it?
> The idea is to ensure everyone has a chance at a decent
> life even as technology shifts and the labor market churns,
> eliminating and creating millions of jobs that often
> require vastly different skill sets.
Gutting the entire defence budget would be worth just over $2000 / year per person. Not exactly enough for UBI.
Don't be too upset that people aren't sold right now, just keep pushing the conversation forward.
A basic income to stimulate demand and take pressure off broken labor markets? Heresy.
For as little as 15k a person, I'd strongly consider never working again.
Or big business might overthrow the government.
Or maybe people figure out it was a bad idea and elect the GOP to dismantle it.
We used to write fantasy stories about when robots took the yoke of work from our shoulders. Now that its happening, we resist with all our might. I wonder why?
Maybe this time is different. But our current unemployment numbers aren't bad.
Could it be the result of a decade long propaganda by VCs targeting Zuckerberg wannabes - those who want to have UBI, so they can work on the newest blockchain-enabled photo-sharing social local VR app ?
Because so many here believe so strongly in the power of automation. Almost all software engineers are in the business of putting people out of jobs - eg. replacing a secretary with a mail and calendar app, replacing a business middleman with an online marketplace, or replacing a sysadmin with cluster management tools.
A way to resolve this cognitive dissonance of us doing a thing we think is right (automating the world) with causing a thing we think is bad (unemployment) is to turn unemployment into not a bad thing, which is the promise UBI makes.
This doesn't mean we don't honestly believe it can work. But it makes us more likely to WANT to believe it. Brains are funny things.
To explain what I mean, imagine you're working a low-skilled, low-paid job just to keep a roof over your head, with very few opportunities to retrain (both in terms of free time and money). In other words, you're working just to survive, and are not making the most of your time on Earth. UBI would give people in that situation an avenue to retrain, as well as making it harder for companies to keep wages low for undesirable jobs, they would have to better compensate people for giving up their time to do a job they otherwise wouldn't be interested in doing. None of these factors are directly derived from increased automation.
As for whether or not UBI will be a net benefit, the answer is not completely clear, but that's the reason small-scale experiments looking into UBI have been started.
Perhaps there are VCs who advocate UBI only because they think they can make money on the small subset of people whose dream is to start a venture-funded company and take it public. But UBI helps people follow whatever dream they have, so you'd have to hate VCs an awful lot to oppose UBI for that reason.
some will be writing novels, or starting bands, or making community gardens, or teaching, or whatever.
UBI gives people the ability to follow their dreams without risk of homelessness and starvation.
So, maybe Americans could live like poets and gardeners, but first the rest of the world would have to be enslaved. Meaning, you don't trade with the Chinese and provide value in return, but enslave them. Is this a possibility? Do you think Chinese makers are going to put up with American poets and gardeners on welfare?
Edit: nevermind, it's not your thread. Just shitting the place up for fun, I guess.
The debate will be about whether people should be in control of their own lives or whether they need a paternal state to protect them from themselves.
That aside I don't know where you get the idea that the Republican party would be for a universal basic income. Their current position (under Trump at least) is to abolish the minimum wage in order to encourage everyone to work. And they have always favoured individual responsibility and opposed government handouts.
Also, I'm pretty sure that Trump's and probably most Republicans' position on the minimum wage is that it's ideally set by the individual states in accordance with the realities of their economies. A $15 federal minimum wage would devastate vast swaths of America by effectively banning work. The economy in much of America simply can't sustain that.
But yes, if we adopted a UBI we should most certainly eliminate the minimum wage, since it accomplishes the same goal much more comprehensively (i.e. for everyone as opposed to just those who have a job).
http://www.alternet.org/economy/how-richard-nixon-almost-gav...
Why didn't it happen, in the words of Canadian Professor Eveyln Forget (of the University of Manitoba, Canada) “The political right is afraid people will stop working and the left doesn't trust them to make their own choices.”
At any rate, I don't see liberals and leftists taking a unanimous stand against UBI. Opinions are divided, almost as though they are each separate individuals with their own thoughts.
For the sake of argument I guess you mean "planned economy" but you don't have to support that to support a welfare state, either. Sounds to me like you're strawmanning the hell out of liberals.
I think that, almost by definition, if you support a traditional welfare state over a UBI, you want a paternalistic state. OR you think that industries like health care are best directly run by the state (because otherwise, a UBI would allow everyone to buy coverage in the private market, if they choose to). That's a planned economy there. And "the economy" is such an overwhelming portion of what we call a society, that a planned economy is effectively a planned society in my eyes.
You are confused. Basic income is the "liberal welfare state." The people who want UBI are the same people who want a higher minimum wage and universal medical coverage.
Arguments that consist of telling people to "read more history", "educate yourself", or similar are totally worthless. You might as well not post. If you have an argument to make, then make it. Otherwise, spare me the snark.
Oh you're the person who called me "too dumb to post here" in another comment in this thread. For someone who is apparently so much more intelligent than me, you seem to have very little of substance to contribute.