The UBI already exists for the 1% | Hacker News Reader

The UBI already exists for the 1%

medium.com

8 pointspanic8 comments

I'm a big proponent of UBI or at least a negative income tax, but this is an extremely misleading representation of investing, claiming that it does not provide any value. Just because your income is not linearly tied to hours of physical labor at some task does NOT equate it to receiving a check as part of a social safety net. I think there are better arguments for this cause.

I'm not remotely sold on UBI (not sold against it either) but this article is just nonsense. It's very obviously intended to "preach to the choir" and not to discuss UBI in any serious terms or to convert anyone to the concept of UBI. In fact, for me someone who is skeptical of UBI but not against it, it pushes me further away from the idea of UBI.

"If the supporters of UBI think like this, I don't want to be anything like them"

> "If the supporters of UBI think like this, I don't want to be anything like them"

Careful with this kind of reasoning. There are really dumb statements made on every side of every issue.

I cannot find a "white paper" or policy outline on UBI. I have read OpEds on the subject in the NYT and WSJ and watched Milton Friedman explaining his "negative income tax" on YouTube and that has been the most detailed plan of all.*

Therein Friedman explains how welfare would be erased and a cash payout of $3,000 (circa 1968 mind you) to those making no income whatsoever. In todays dollars that figure would be $20,806.29

If the recipient made only $2,000 that year they would receive of a check of $1,000.

Is that workable today? The UBI enthusiasts never point to how it is going to get paid.

* https://www.youtube.com/watch?v=xtpgkX588nM

https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=3000.00&year1=...

Unfortunately, we haven't even figured out how we're paying for our existing budget.

The nice thing about an adult UBI is that it doesn't distort the market as much as our other social programs, and if its introduction means the elimination of medicare, medicaid, social security, TANF, student loans, unemployment benefits, etc. (see https://en.wikipedia.org/wiki/Social_programs_in_the_United_...), then that's a win in and of itself.

Some of the distortions I'm referring to: TANF incentivizes having more children to get a higher payout, unemployment benefits incentivize staying unemployed longer, student loans increase demand for expensive tuition (and hence each increase in loans/aid results in a relative 60% increase in tuition), etc.

To work, UBI has to be truly basic (i.e. most people would not be satisfied living on it and seek some form of supplemental income), which is difficult because people will vote for the Bernie Sanders' of the world who want to raise it -- especially retired folks.

I would prefer a negative income tax that has inherent balance. I don't know of any good white papers, but I've given it a fair amount of thought. Consider a negative 'flat' income tax such that the rate above a certain point is X% (say 15% tax rate on income above 40K) and (100-2X)% refund (e.g. 100-2*15=70% refund on income below 40K, so if you make 30K you get a 7K refund). If the formula is constitutionally locked in, and only the rate is subject to change, then voters have less incentive to raise taxes because it decreases refunds. The only incentive I haven't figured out is how to avoid getting people to vote to raise the cutoff point for paying taxes/getting a refund. Perhaps it should be locked at the (100-4X)% percentile, so with the above numbers the poorest 40% of the population would not pay taxes, which would probably put the cutoff closer to 30K. All of these numbers are arbitrary, and for the examples I've given it would basically lock in rates of 10-20%.

> welfare would be erased and a cash payout

I'm basically fine with that concept behind that. I even think we can figure out how to pay for it. But, I think a lot of people aren't behind the first half of that statement.

Since "welfare" isn't exactly a thing, we need to specifically define what programs UBI would be replacing. TANF? SNAP? Unemployment? SSI? SSDI? Medicare/Medicaid? Social Security in general? Section 8? Depending on your answers to those questions, 20000/year can either be a lot or a little.

> If the recipient made only $2,000 that year they would receive of a check of $1,000.

A marginal tax rate of 100% up to the NIT stipend? That doesn't sound like anything I've heard Friedman advocate. I'm not in a position to listen to audio right now, so I can't check the video...

Income should not be thought of as something that there is a limited amount of that society must distribute between people. That's because both money and exchange of money are never limiting factors in an economy: we can just print more money or force people to exchange money with laws. But if we print more money, there will be inflation and the money will be worth less goods; and if we force people to exchange money, they will receive little or nothing in exchange. Thus, the limiting factor is production: we can have as much money as we want and make it change hands as much as we want, but we are limited in the amount of resources and work-hours. Those are what there is a limited amount of that society must distribute.

Even if 20.2% of the income in the nation is received by 1% of people, much less than 20.2% of the production of goods and services is allocated to them. Inequality in allocation of goods and services is what we ought to care about, not inequality of income. The reason the 1% of people with highest income have so much passive income is that they invest a large part of their assets. When you invest money, you're not exchanging it for goods or services; rather, you're committing this capital in the hope of financial gain. If you invested wisely, you'll get more financial gain which you can use, hopefully as wisely, as further capital for other investments. So all of this passive income moving around has more to do with keeping the economy efficient than it has to do with living standards.

If we actually captured "the 30% of [current] national income that flows passively to capital" and handed it out to everyone in equal chunks, and (somehow) there was no more passive income after this, the economy would be in big trouble: without passive income, there are no banks, no loans, and there's no funding for public corporations. But the intent of universal basic income is to give people a basic living standard; even though the basic income is a passive income, it is not the same kind of income as the passive income that comes from capital. The capital that the passive income comes from isn't exchanged for goods or services, so if you just capture it and give it to people, you're not going to be able to use it for goods or services (which is what we need to give people a basic living standard) without removing goods or services elsewhere. It's unlikely that the national income would remain the same if we did this, think about what would happen if we printed money and gave it to people as income. There would still be passive income from capital, but goods and services would be distributed in a more equal manner.

Reply on news.ycombinator.com