We're officially launching UBI
givedirectly.org
givedirectly.org
If you’re only testing UBI on a small population, then 1) it’s not even universal, and 2) there will not be enough “beta testers” to (in)validate these criticisms.
So while this may be a “success” (how do you even measure that?) it’s not a meaningful experiment at all.
My concern is that with this we're likely looking at an even worse version of the problems seen with sending shoes to Africa [1]. Over the duration of this experiment, it's quite possible you'll create a society that abandons skills / equipment / expertise necessary to sustain an economy. That won't be a problem until the experiment ends, and then you've left people in a place far less than where you found them.
[1] http://www.djiboutijones.com/2014/02/dont-send-your-used-sho...
So I'm not seeing why you think skills will atrophy? It seems like there's more danger of that when people are poorer? (For one thing, education becomes less affordable.)
The poverty rate is just under 50%, per Wikipedia at least. If all the money is coming from the county (presumably it is), then it's going to be coming from the other 50%, and at a rate higher than neighboring (non-UBI) counties.
It will be in the rational self-interest of that non-impoverished 50% to leave. Labor will be more expensive as fewer people want to do less-desirable work due to no strong need. I don't know how freely workers can move between counties, but obviously I imagine some people in neighboring counties will want to move in for the free paycheck.
Over time, you've chased out the productive people and bolstered the less productive ones, and you're drawing from a smaller and smaller pool to pay for a larger and larger group of people.
I've always felt like UBI is unsustainable, but at least worth debating. I haven't yet seen even proposed what should be done if UBI fails this way, though.
I also don't see anything about people moving in or out.
Put plainly: It's not surprising at all that one can take a lot of voluntarily-given money and distribute it to an impoverished village in Africa, resulting in them being happy and saying they're seeking work (in the short term). Normally, though, that's called "charity" rather than a UBI experiment, and even UBI opponents will acknowledge the likelihood of that happening.
Isn't assuming this the basic failing of economics as a science? Not trying to be provocative, sincerely asking.
When the federal government started subsidizing higher ed loans, it is not some unimaginable outcome that higher ed prices will increase. Banks, colleges, students, and parents are all operating in their own self-interest, but by artificially making more money available to consumers, they are naturally willing to spend more.
It's just a sign of really bad policy when nobody is cheating the system and everyone is following the rules, but it results in really bad outcomes. And it's even worse when that happens and blame is passed to those rational actors (banks, colleges, etc.) because that further justifies bad policy.
I believe most of the money comes from outside the country, I started donating $25 a month to GiveDirectly this summer.
In the years to come technology is going to replace the need for a lot of human labor and UBI will be required to maintain a civil society.
And if solving economic problems were as simple as "just take more money from the rich people and give it to the poor people," this problem would have been solved centuries ago.
That's why we don't have any rich people any more and wealth inequality is at it's lowest point in decades, right?
> And if solving economic problems were as simple as "just take more money from the rich people and give it to the poor people," this problem would have been solved centuries ago.
When in history have we tried anything like UBI? How can we know if it works if we have never tried it?
UBI isn't inherently different. It's trying to pretend you can manipulate a market with no detrimental side effects, but it's been tried many, many times.
You seem to be of the opinion that nothing can be done to eliminate poverty, so why even try?
Plenty can be done to eliminate poverty. I'm confused why you would think large-scale involuntary wealth redistribution is the only way.
It is, by definition, not a subsidy since it does not target a subset of economic sectors.
> Plenty can be done to eliminate poverty.
Name one means of eliminating poverty without wealth re-distribution or subsidies. The only ones I know of involve sterilizing, deporting, killing or otherwise demographically elminating poor people.
Nobody's eliminated poverty yet, so it may be impossible. We do have ways of fighting it, though, which can (and does) include charitable giving (note: voluntary) and economic development of areas.
When this situation comes, the good option is that the society simply gives the new class of unemployable people their basic needs one way (like UBI) or another; the evil option is that the society doesn't give them the basic needs and they starve (since their labor has no value and they have nothing to trade for these basic needs); and the third option is that they take the basic needs in a revolution that likely destroys half of the society. Really, noone wants the second or third options, including most of the 0.1%, so we will see some mass redistribution system being implemented.
In 1917, taking all the resources from rich people and giving it to poor people wasn't enough to keep the poor people out of starvation for long and destroyed the productivity totally. In 2017, taking more money from the rich to feed the poor doesn't require even close to taking all their resources, as feeding the poor is so much cheaper compared to 1917; it would be deeply unpopular but is doable without killing the rich, and the society could sustain such level of taxation indefinitely if they wished even if nothing changed - but it's going to change, and in 2037 taking enough resources from the rich (i.e. the owners of highly automated means of production) to feed everyone UBI-style would be expected to be just a minor tax, and a boost for the economy, giving spending power to people who'd otherwise have no spending power at all.
Regarding your second paragraph: You're looking at this as a measurable global issue that will happen at a single time resolvable by a single government entity, but that's not how it will unfold.
It won't happen overnight, so there will be no point for those options to be evaluated. Let me pitch you (what I see as) a more realistic option:
Some countries will try to implement UBI. They will encounter the same problems opponents have been warning about. The productive will (over time) move to countries that don't take so much of their wealth. The people receiving more than they're contributing will have more children, will have more votes, and will vote to take more and more from the decreasing minority. Even if you can make food truly post-scarcity, housing, healthcare, and other goods/services are not.
If everything is truly post-scarcity: It'll be no problem. Those countries won't really need the wealthy. But I'm not sure true post-scarcity actually exists, and I think (especially in the US) UBI would be a moving target that only ever goes in one direction.
You're right, though, that I don't really have a solution if (e.g.) 80% of people no longer have a meaningful way to contribute to society. That may be fundamentally impossible to solve. But that may never happen and we may never have true post-scarcity, so we shouldn't be redesigning society based on the premise that wealthy people are an endless money tree, and if it's wrong, society collapses.
So it will lead to short-term inflation, and without the long-term investments in production, that inflation will continue for as long as the injections continue.
As the cash injections aren't universal, those who receive it will benefit, while the ones who don't will see their purchasing power drop significantly, and their lives worsen.
Cash injections CAN lead to inflation as an effect, but this is not a tautology (i.e. by definition).
That would be a valid result of the experiment though, in light of the fact it is completely impossible to implement UBI everywhere at once. UBI isn't useful if there isn't a path from here to there. We have no lack of wonderful utopias whose only problem is that there is no path from here to there. If UBI can't prove itself out on a smaller scale it can on no account be tried on a larger scale. If the worst some bad social engineering idea does is leave a single county worse off, then it will be doing very well as bad social engineering ideas go.
It appears from reading this post that tracking the skills of the community is already part of the plan. There are certainly predictions about this from both sides.
(I'm a skeptic, yes, but I promise to treat the results from this experiment fairly. However, bear in mind that even total success at this level still wouldn't prove to me that we should immediately adopt it at a national level; I'll need to see a larger one. But I will admit that I was at least wrong about this experiment, because I don't expect this to prove out very well either. I also expect a lot of spinning of the results to make them look as good as possible, so I reserve the right to unspin the results.
As a token of such good faith, I offer that while I remain a cryptocurrency skeptic, and a BitCoin skeptic in particular, I expected BitCoin to be totally dead by now, and it is not. I say this to demonstrate that I can indeed eat crow.)
There have been lots of previous experiments with stuff sort of similar with UBI. While there are many problems with those studies preventing their use as any sort of conclusive proof, they have been predominantly neutral or positive. Yet I don't see that accounted for in the predictions of doom and gloom any of the UBI skeptics. If this experiment goes well, you need to do more than just admit you were wrong about the experiment, you and other skeptics need to lower your confidence in your overall skepticism of UBI.
> while I remain a cryptocurrency skeptic, and a BitCoin skeptic in particular, I expected BitCoin to be totally dead by now, and it is not. I say this to demonstrate that I can indeed eat crow.)
It sounds to me like you have not eaten any crow. If you had you would say: based on my understanding of the forces at play, I thought BitCoin would be dead. BitCoin has thrived instead so my understanding of the forces at play is less than I had estimated. Based on that, I am now less skeptical (or less confident of my skepticism) of the future crypto currencies. (I share your skepticism of the future of BitCoin, but I am far less certain of that skepticism than I used to be for these exact reasons)
I don't think any of them have even raised to the level of "interesting" compared to the scale of what is being proposed ("rework the entire global economy"). I am aware of them. UBI experiments need to be about UBI, not about things that vaguely resemble it. In particular they need to be large enough that the hypothesized bad effects could even be witnessed, as most of them revolve what will happen once people are habituated to it. For them to be useful, you need to not be referring to them in the past tense because they should still be ongoing, and indeed, really just at the beginning of their run. Most of them are the equivalent of claiming free college works because they went into a single small community and promised anyone who wanted to that they could attend the first three weeks of college for free if they liked; the results hardly matter.
"If you had you would say: based on my understanding of the forces at play, I thought BitCoin would be dead. BitCoin has thrived instead so my understanding of the forces at play is less than I had estimated."
I did say that. I just used fewer words.
But it's meaningful to see what people will spend the money on, its effect on the local economy (village level), and how this compares to other ways of reducing poverty.
There are still a lot of people who think that people will stop working or spend the money on some wasteful way, and this will tell us whether that's true.
We won't even be confident the results will transfer to the same country at some later time. Lots of things can change over time alone, let alone across populations.
people will stop working or spend the money on some wasteful way
These handout incomes are to be given as "an absolute
constitutional right," and not to be withheld "under any
circumstances." This means that the
recipients are to continue to get this income not only if
they absolutely refuse to seek or take a job, but if they
throw the handout money away at the races, or spend it on
prostitutes, on whiskey, cigarettes, marijuana, heroin, or
what not. They are to be given "sufficient to live in
dignity," and it is apparently to be no business of the
taxpayers if a recipient chooses none the less to live
without dignity, and to devote his guaranteed leisure to
gambling, dissipation, drunkenness, debauchery, dope
addiction, or a life of crime
The morale case with the argument is that citizen should have their say in how their taxes are spend, and that each of one us have different goals so "living in dignity" cannot be accomplished by UBI.
Perhaps you picked a bad quote then. That quote pretty explicitly contradicts your claim.
They are to be given "sufficient to live in
dignity," and it is apparently to be no business of the
taxpayers if a recipient chooses none the less to live
without dignity
I fail to see how the subjectivity of dignity has any relation to your claim that "What does matter is where does the money come from."
UBI will never solve the economic problem of "we all should be living in dignity", ours values are subjective.
Some people will spend the money on some way that seems wasteful to you, and that's perfectly okay as well - assuming they're sane adults, it's their business to choose which of their needs matter more and spend the money as they wish; we don't want all the UBI to become a transfer to specific companies running dirt cheap apartments with a food supply program, the recipients having a choice is a good thing that facilitates competition.
Yes, UBI is not a solution to people with major addictions and mental problems; it's not intended to. It does, however, ensure that a person with a mental or drug problem that can't hold a job isn't necessarily required to get their food by begging or crime.
2) 6000 is a pretty good sample size. Given that this will be universal within these communities, we can certainly look for any evidence of local price changes.
Additionally, production costs are highly variable component of local prices and can be dwarfed by transport and retail costs (e.g. produce in the US.)
This could be a huge help people who can't find stable employment, but still want e.g. a loan to buy a home.
Your point holds until history has proven who is right. Of course, any experiment on UBI that is constrained by a financial reality of whoever conducts the study needs to limit eligibility and therefore lose the proof of universality.
But: Do you have a better design for UBI experiments, given actual constraints?
However, if it were implemented at the government level, people who used their money to increase their earning potential would have to pay increased taxes to support the UBI. The cost/benefit to extra earning changes if you keeping all your extra money, or a significant portion is going towards funding UBI. Once you do that, you may see a lot more people decide that the extra effort is not worth it.
So, this is a great experiment in directly providing money as charity. It does not really address UBI as would be implemented by governments.
No. UBI redistributes income (slightly differently than welfare). It does not create new money.
Is it “not means tested” because you and the IRS both mail each other checks instead of using net settlement?
What makes UBI different from standard progressive taxation and welfare?
With unconditional basic income, however, all the job income is extra, which is a big difference in motivation especially for people who can't hold a full-time job because of health issues or having to take care of others.
Furthermore, standard welfare systems don't handle structural unemployment well - they don't provide a long-term (decades, not months or years) means of support to able-bodied people that can't get a job. Historically, that wasn't much of a problem - able-bodied people could get a job if they really wanted most of the time; if there was an economic slump, then it went away in a couple years (and welfare could help ride it over), and if they couldn't get a job, then retraining was a solution. In the future, the situation is different, we should expect millions of people, eventually a majority of population, whose labor is economically unnecessary (it can be done by machines better if these people aren't allowed to participate) despite any reasonable retraining. This issue is(will be) new, and current methods clearly won't work.
People respond to "carrots and sticks", and UBI brings a much more sensible set of "carrots and sticks" than progressive taxation + classic welfare.
If a realistic working person's income tax liability is going to be a substantial portion of or greater than the UBI allocation, UBI is really just unemployment insurance and the disincentive to work remains.
We already have a "basic income" for working people: (personal exemption + standard deduction) * (marginal tax rate). Working people are still net taxpayers. Making them not net taxpayers is just sharply increasing the progressiveness of the progressive taxation scheme, i.e. standard liberal/Democratic politics since forever.
I'd support reframing the standard deduction, personal exemption, child tax credit, etc. as refundable credits, but this is only "income" at the bottom of the distribution.
1. There are no other concerns that we can gather info about besides "UBI might cause so much inflation that it cancels itself out" and
2. Nothing can be learned from these experiments unless they prove that the concern in #1 is unfounded.
This is just obstructionism. Using less than 100% accurate simulations to attempt to predict the outcome of implementing actions and to inform our choices has been common practice since the dawn of civilization, there's no reason that the tool is suddenly completely useless in this particular situation. This isn't a "hard science". We have massive problems with poverty and economic inequality in our society and statements like these only serve to stop the conversation that potentially leads to solving them. Why do people seem so stubbornly against seeing if a UBI works?
For example, read about Mansa Musa, who gave away so much gold in his pilgrimage to Mecca in the 1300s that he caused devaluation of money (hyperinflation) for nearly 10 years [1]. The huge influx of "free" money caused lasting damage to the functioning of the economy.
I don't doubt doubt the effectiveness of UBI. I just also believe in the efficiency of markets to absorb influxes of money while keeping the relative cost of tangible assets the same.
1. https://en.wikipedia.org/wiki/Musa_I_of_Mali#Islam_and_pilgr...
Also, inflation happens when supply can't keep up with demand. It doesn't happen when businesses can adjust by making more stuff.
An example of supply-limited inflation would be housing in some areas, but this would be countered by making it more affordable to live in lower cost areas since UBI makes people less dependent on jobs. (Consider how social security affects Florida.)
Would this run away inflation be possible in a system where we're drawing money out of the top of the economy?
In my opinion, the only way to introduce UBI at scale is slowly. If UBI does have an impact on inflation, we can scale up UBI during times of economic downturns and hold UBI steady when the economy is growing and control inflation with standard interest rate manipulations.
This is why a UBI should be resource based, rather than money based.
To my knowledge, it ain’t all sunshine and rainbows (technical term) for them either. They suffer stagnation, heavy dependency into oil money(for those in the Middle East), and it’s dsfinitely a time bomb which those in power know it’s coming.
If anyone could present some points so we could further advance this point, id be grateful
It's directly evident in schemes such as paying school children to exercise.
However, it is masked somewhat in the adult population as foreign companies are required to employ natives in senior positions. Anecdotally, the incumbents aren't famous for their work ethic.
But it's hard to argue that it's not overall positive for the local population. Healthcare, education, services etc are all excellent.
That being said, I don't think these are useful comparators. The elephant in the room is who is paying? In the case of Abu Dhabi, it's the buyers of their oil. As such, you don't have an internal tension between the net tax consumers and net tax generators. Nor do you have a significant allocation of resource issue when there is a surfeit of resource.
And I think it's the latter issue that is a critical one for UBI.
Although not equivalent, I think the example of UK child benefit is instructive. It was a universal benefit in the sense that it applied to all children regardless of parental income (it differed by birth order but that's not material to the point). While the economy was doing well, the money flowed. Post crash, the economy tightened and it was an immediate target and became means tested.
It's not clear to me that, even if you managed to get UBI implemented, it would be stable. I would expect that it would need to show tangible, widespread benefit in about one economic cycle. Otherwise, as soon as things started to slow, you'd be seeing stories about the wasters and layabouts. It wouldn't matter if there were many cf the refugee "deluge" or similar triggers.
In other words, I can see UBI lasting only if a number of other, very significant economic (cycles) and societal (selfishness) issues are resolved. Tricky.
We can't even form a useful moral argument about it until we know its effects
Look at the tax reform debate now: When they proposed taking away deductibility of mortgage interest or state and local taxes deductions, I started seeing headlines from the New York Times and Washington Post about how this a “Middle Class Tax Hike”...
I would compare UBI to the "second system syndrome" with software developers: If only we can start over with an entirely new platform rather than addressing the technical debt in the current system, all would be well.
Every single proposal of UBI has included it replacing all other welfare benefits
I think you're working from some wrong assumption who these UBI proponents are, and what their motivation is. Just to give you an idea, Wikipedia lists Elon Musk, Tim Berners-Lee, Mark Zuckerberg, Sam Altman, Bill Gross, and Tim Draper, among others. These aren't lazy know-nothings trying to get you to finance their lazy Tuesdays.
I don't have any issue with billionaires believing into UBI and sending cash to Kenyans. I don't know their true agenda, but they might gain some political influence / power when they'll try to implement this into western countries (and it will be with our money this time of course, not theirs).
It might not always be smart, or sustainable. Just as it wouldn't be smart not to do it at all. But there's no first principle of morality to reduce to. And if there were, there'd be you'd still need agreement on it for it to be meaningful.
if that's what society decides
The questions we need answered to know this are:
1) How many (what proportion) of these lazy people are there?
2) How much economic output is wasted by employers trying to filter these lazy people out of their workforce.
3) How much economic output is wasted by the systems employers have to create to force the lazy people whom they do hire to be productive.
4) How much economic output can we gain by giving non-lazy people a safety net that allows them to find ideal vocations for their talents and preferences.
Proponents of UBI generally maintain 1) is low enough to be out-weighted by 2-4) while skeptics claim it is high enough to out-weight 2-4)
Really, these questions can only be answered by data. While 2) and 3) will be very hard to measure with small/medium studies, we can start getting a pretty good idea of how big 1) and 4) are respectively. So far there have been promising indications that 1) may well be out-weighted 4), but we need more, better and larger studies to be sure.
UBI's biggest challenge will likely not be finding ways to minimize 1) vs. 4) sufficiently, but will be finding ways to overcome people's cultural and political fear of 1)
Hopefully, that brings hospital care costs down, but I'm betting their still greedy and just make 10x as much on 10x less staff.
I'm anxious for the ai revolution to just get on with already. UBI will be needed eventually, I want us to hurry and get to the breaking point where unemployment is 40% or greater across the globe because of automation so policymakers start to see that without some safety net for people there will be an uprising. I'm optimistic we can come together as a human race and solve poverty someday.
But I'm not naive, it could become a dystopian world where the rich live in lavish cities with closed walls, and everyone else lives outside those walls.
We will assess the impact of a basic income against a broad set of metrics, including:
- economic status (income, assets, standard of living)
- time use (work, education, leisure, community involvement)
- risk-taking (migrating, starting businesses)
- gender relations (especially female empowerment)
- aspirations and outlook on life Long-term basic income: 40 villages with recipients receiving roughly $0.75 (nominal) per adult per day, delivered monthly for 12 years
Short-term basic income: 80 villages with recipients receiving the same monthly amount, but only for 2 years
Lump sum payments: 80 villages with recipients receiving a lump sum payment equivalent to the total value of payments of the short-term stream
Control group: 100 villages not receiving cash transfersIs step one everyone needs a national ID in order to receive UBI?
The story that comes after UBI and other forms of socialism is that humans are greedy and terrible to each other and institutionalized theft only makes greed and corruption worse.
Oh, and the funniest part is it will look initially like a good idea because it will probably improve the lives of those who are given money in small and rare cases, and the positive effect will dwindle the more universal it becomes.
A wiser move would be to teach others how to compete more effectively, but that doesn't sell as well as free money. The people doing these programs aren't stupid and I think it is our generation's "Let them eat cake!" moment. It's certainly good marketing to do so, and I think they believe it will truly make a difference.
One last thought on my silly little rant, "Do you think Mark Zuckerberg or Bill Gates or Warren Buffet should get UBI paid out to him?"
Of course they would. That's how it works, dude.
https://en.wikipedia.org/wiki/Basic_income_pilots
The argument isn't about if UBI is good or bad. It's if UBI is better than the current social welfare structure. The question is, "is it cheaper and more efficient to just give people money and get rid of the several programs we have?".
And I'm quite sure any UBI done on a large scale will end up taking money away from those who don't need it in the form of higher taxes so it effectively balances out.
Yes it is income redistribution. That's not necessarily bad. We already do it in several forms. It helps society more than it hurts it. Most people are ambitious and don't want to live at or below the poverty line for the rest of their lives. Some do, that's unfortunate.
This distinction actually has political significance. One of the explanations that has been offered for why Social Security in the U.S. has proven so impervious to cutbacks or other political meddling is that it is universal in this sense as well; there's no maximum income at which you no longer receive Social Security benefits. This universality has helped Social Security escape the "for poor/minority/lazy people only" stigmas that peoples' prejudices attach to more selective welfare programs.
None of which is to say that you can't have a basic income project that isn't universal, of course; just that such a project is not a UBI.
Poof, no inflation.
Inflation is not necessarily a bad thing, high inflation and low inflation (or deflation) are both bad. (Specifically, it is expectations of high or low inflation are bad as they tend to compound into further increases or decreases in inflation.)
This is why the Fed in the US targets a base inflation rate of 2%, the expectation of a stable rate of inflation help keep that inflation rate stable and support economic activity.
While limiting inflation used to be the primary concern of monetary policy, we have seen more and more effort being put into limiting deflation and maintaining a healthy level of inflation.
Any increase in inflation due to UBI would be caused by UBI causing demand growth to outstrip supply growth. Yet boosting demand is exactly the tool we need to deal with economic downturns.
I think the path to introducing UBI is to legally couple UBI increases with slightly lesser minimum wage, unemployment and welfare decreases. We then give the Fed the power to trigger this as needed to stimulate the economy when needed and avoid deflation.
I think it is a positive sign that the anti-UBI skeptics seem to be shifting away from the "but people will be lazy" argument to the "but it will cause inflation" argument.
As a homeowner with a substantial but fixed-rate mortgage and a well-paying job, I would LOVE to see high inflation.
I don’t get why we’ve come up with a worse version of a 40 year old idea. Are these two ships passing in the night or were there some perceived problems with Negative Income Tax that UBI is supposed to solve.
So to me it sounds like a terrible implementation of a basic income scheme, since someone making X pays no taxes but x+n pays some fraction of n in taxes and presumably has little real incentive to work for n additional dollars when n is sufficiently small enough that x is close to x+(n - tax).
And then you've got all the bureaucracy of figuring out who earned less than x and applying whatever specific payment y to bring them up to x.
Either way, both require little extra bureaucracy.
For what it is worth, from an economic perspective, the two ideas are basically identical. In a very hypothetically scenario: If someone gets a UBI of $500 a month, and then makes $500 in income with a 20% tax, than they would net $900 for the month. With an NIT, you would design it so that they get a tax credit of $500 per month, and then every $500 in income reduces their tax credit by 20%. So that same person would get $900 of the month.
This is true of any tax scheme. NIT/UBI are intended to fix the 'welfare cliff' problem of making significantly less money by earning an extra $1 at certain point of the income curve than at higher ones, by setting a fixed marginal tax rate (even if you're a net recipient of distribution) or guaranteeing a fixed amount to everyone regardless of need, respectively. There is no discontinuity in effective marginal tax rates under NIT.
Universal Basic Income is ‘Universal’, meaning there’s no qualification to receive it. Basically it’s flat and it goes to everyone equally, rich and poor.
A negative income tax is a progressive tax system that starts off in the negatives and works itself up as you move up in brackets or (ideally) on a smooth curve or line.
It is pretty much the same thing as UBI, when you look at the numbers.
But if UBI says you get $30k/year in gross income and then if you choose not to do UBI, then you pay taxes on your income, isn't that essentially the same thing? Because if you get $30k/year in income from UBI, it wouldn't make any sense to tax an income that comes from taxes...right?
Which is not at all similar if you're poor.
Negative Income Tax is the term preferred by the right and UBI by the left, so there is probably a lot of very significant differences between any specific proposal labelled "Negative Income Tax" and any specific proposal labelled "UBI".
With UBI, it is possible to have it paid by entity other than government, but that's a different story.
Replace ACA with single-payer or something similar, with government bidding on drugs and forcing drug companies to lower their prices.
We could save a shit ton of money. We need to run government like a lean business, and we need some framework for bills that make them more like git branches, where you can't just push everything to master (i.e. an omnibus) but you need to break everything out into smaller removable parts. No more grouping things together.
Make Congress work 40 hours per week ON voting and writing new bills, make them so busy doing their job they don't have time to go out and work on getting re-elected, the people will vote on them because they do a good job and like their voting history.
Government is broken and bleeds money. $8 per ounce for a cup of coffee and $15 bagels from a caterer at a DoD outing is insane. How about we just make it bring your own coffee, or use a Keurig?
It also requires processing taxes much more frequently - an annual negative income tax payment isn't going to work, you'd need to split that to 2-4 weeks at most, so you'd need to process 12-24 "requests for negative income tax" every year for each person based on whatever income they had in the previous period; that obviously also can't be done without additional bureaucratic requirements.
Well in that case before I die I will appear sufficiently senile/disabled to allow someone else to collect UBI on my behalf and tell my next of kin to dump me in a hole without telling anyone. I have plenty of time to iron out the details.
See the problem.
You'll still need a bureaucracy. It might be smaller depending on the implementation details of UBI. I expect the amount of welfare fraud to remain constant. Given X opportunity, Y risk and Z reward there's always some subset of the population that will have no problem stealing from the government.
Negative tax creates this dissonance that if you start to earn more money you don't get as much. So then everybody tries to get around it and manipulate it so it appears they don't earn as much.
How reliable is the income tax collecting and distribution service in Kenya?
Is getting a check once per year more or less preferable to everyone getting a check?
How well does filing for an income tax return in a country with a 78% literacy rate?
A negative income tax is a nation wide program, this program takes places in a smaller geographical region, making it easier to get started, and a lower cost experiment than doing it nation wide.
Lots of pluses to UBI versus a national government ran program.
To clarify for those coming later: The negative income tax is the idea that beneath a certain amount of income, you actually are given money by the government. If you're over the amount, you get nothing, and in fact are taxed a portion of your income. Depending on how far beneath the amount you are, you might get more, or less.
But that system leaves some people in a bad spot:
* Sporadic work? Now you have to wait until after you should've gotten your money to get the money to make up for it. Without a safety net(which you almost certainly do not have), you're behind on your bills already.
* The above also applies to if you hate your job.
* You're disincentivized from working if the amount you can make is beneath the amount that would give you the negative income bracket.
* Politically, it's a lot easier when everyone can get the benefit. Less claims about abusing the system if it gives everyone the same thing.
* As an employer, giving someone just 4-6 hours a week of work isn't bad unless the employee wants something different. With a NIT it might just not be worth it to the employee.
I think though politically it’s easier to stomach if you’re of a leaning that sees government giving as a good thing.
I think politicaly you have a hard case saying we’re also giving sama and bill gates these checks (even if their effective rate still puts them under at the end of the year!)
I would hope the incentives problem would be solved with a very gradual tax curve rather than brackets for NIT.
I was on unemployment for approximately 6 months in 2008 and every $100 I made only decreased my unemployment benefit by $15-20. Anyone who thinks they can't work because their benefits will go away has such a passing familiarity with their own actual finances UBI or NIT won't help them anyway.
Well there's at least one, though you're generally right that welfare cliffs have been all but eliminated in the US.
That said, here in Charlottesville our healthcare.gov market fell apart for 2018 and the one remaining insurer's second-cheapest silver plan is a tad over $10,000 per year. Under 400% of the federal poverty level, the ACA guarantees a subsidy of the difference between the second-cheapest silver plan premium and a certain percentage of your income (sliding scale, but no higher than 9.56%). That means if you're at 400% of the poverty line, $48,240 for a single-person household in 2018, your premiums are capped at $4,612 and thus you receive a subsidy for $5,468. At 401% of the poverty line, you get nothing.
Thus, effective marginal tax rates are >100% between $48,240 and $53,709 — it does not make sense to earn any more than the lowest end of that range. A bit of an extreme case that won't hold in more functional markets, but... personally frustrating.
/rant
That's what I'm referencing.
IMHO, YMMV etc.
The biggest advantage of UBI is its simplicity. You just get your UBI, done, much easier for people to understand and for the government to manage.
But UBI's have the perceived simplicity of "I always get this", which might help encourage more people to pay in, even though the higher earners are losing money.
And what about the people that waste their UBI and can't afford to pay the rent or for food? The existing social safety nets can't go away, otherwise people who are irresponsible with their UBI will be left to starve, etc.
What do you do with people that waste their welfare benefits and can't afford to pay their subsidized (but non-zero) rent, or who sell their food stamps and can't afford food? The present programs, despite their high overhead of administration, don't solve this problem either.
> The existing social safety nets can't go away, otherwise people who are irresponsible with their UBI will be left to starve, etc.
Except that existing social safety net programs do not actually address this problem effectively. (Food banks and homeless shelters provide some mitigation and would certainly still be needed, but those aren't the kinds of programs UBI is usually promoted as replacing.)
The differences are
1) Payout schedule. We currently have no means to calculate and provide NIT payouts on a weekly or monthly basis. Annual payments (like the Alaska PFD) have problems with splurge spending since the people who need it the most tend to have the worst money management skills.
2) The shape of the curve at the bottom. While the shape is not actually inherent to either proposal, UBI proposals tend to provide greater income gains per extra dollar earned by those at the bottom of the income distribution
3) The name "Negative Income Tax" is a bit confusing. A "negative tax" is not a term we use (we use "subsidy" or "tax credit") and so it can be easily misinterpreted as a tax on those with negative income... "Universal Basic Income" is clear and easily understood.
That's not how it works in most places around the world (USA usually is the exception rather than a reflection of common practice) - in a much more common approach, the common worker has zero personal interaction with taxes, if an income tax exits, it's withheld by the employer; and only a minority (e.g. businessmen) would have some sort of tax declaration. In such systems, implementing a negative income tax is much harder, since the current taxation mechanism doesn't provide any system for interacting with these people whatsoever, and simply paying an amount receivable upon showing their ID is comparably much simpler and cheaper to implement.
As it turns out, that assumption was wrong. Across many contexts and continents, experimental tests show that the poor don’t stop trying when they are given money, and they don’t get drunk. Instead, they make productive use of the funds, feeding their families, sending their children to school, and investing in businesses and their own futures. Even a short-term infusion of capital has been shown to significantly improve long-term living standards, improve psychological well-being, and even add one year of life.
Scaling up the distributions isn't a difficult problem to solve, the universal part is.
Not if most of it is coming back in income taxes, it doesn't.
Step 2: Distribute 2200 kcal of nutritionally adequate food to every person, every day, at no additional cost to them.
Step 3: Allocate 20 m^3 of private, secure shelter to every person, with right-of-occupation intervals lasting no less than 4 years, at no additional cost to them.
Step 4: Allocate ~350 L/day for treated water and sewer lines--sufficient for cooking, cleaning, hygiene, and sanitation--to every person, at no additional cost to them.
Step 5: Distribute 800 W of electrical power to every person, at no additional cost to them.
Step 6: Allocate 50 Mb/s data network bandwidth to every person, at no additional cost to them.
Step 7: Build sufficient additional public infrastructure for transportation, healthcare, business, and recreation, such that a reasonable amount of use of those commons is available to every person at no additional cost.
Step 8: Distribute a quantity of spendable currency to every person, with no requirements for eligibility or restrictions on its use.
Starting at step 8 is, in my opinion, a recipe for inflation and rent-seeking.
UBI is, in essence, an attempt to create a mixed economic system that is communist at the bottom end and capitalist at the top end. If you do not establish the minimum quality-of-life boundary by producing or taxing-in-kind the required goods and services as an inherently governmental (+ non-profit NGO) function, the rent-seekers in the upper class can and will capture some of the benefit intended for the lower class, and possibly enough of it that the lower class can no longer solely subsist upon it.
If the subsistence-level of existence is guaranteed, there is no longer any leverage provided to a person with more resources by virtue of the poorer person needing to accept a bad deal in order to live, while the richer person can walk away from the table without meaningful consequence. Workers cannot be as easily exploited if everyone can afford to quit their jobs. Renters can always fall back to their sleeping cubicle.
In addition, providing those basic necessities for free destroys the paid market for those goods and harms economic growth.
> UBI is, in essence, an attempt to create a mixed economic system that is communist at the bottom end and capitalist at the top end.
I think you do not know what "communism" means. There is nothing in UBI about public ownership of the means of production.
> If the subsistence-level of existence is guaranteed, there is no longer any leverage provided to a person with more resources by virtue of the poorer person needing to accept a bad deal in order to live, while the richer person can walk away from the table without meaningful consequence. Workers cannot be as easily exploited if everyone can afford to quit their jobs.
This is exactly why UBI is a good thing. Workers are freed to find the most effective use of their skills (rather than relying on capitalists to do it for them) which will hopefully lead to higher economic efficiency.
You give everyone the bare minimum for free, and charge for anything on top of that. It's the freemium model applied to national economies, and the market for smartphone apps suggests that it would work fine. People complaining about pay-to-win are preferable to those complaining about pay-to-not-die.
It doesn't have to be communism where the government owns a government corn field and government trucks and government dispensaries, so that it can distribute corn to the residents. It could also be acceptance of those specific foundation goods and services in lieu of cash taxes, where your cash dividend from shares in AgriCorp is not taxed, because the company already paid that tax in the form of truckloads of UBI corn. And your dividend from TransporTech is not taxed, because the company already paid that tax by moving that UBI corn from the grain elevator to the distribution points. And your dividend from Grocerino is not taxed, because the company already paid that tax by giving up shelf space and administering the food part of the ration card system. Or maybe your salary from nonprofit FoodServ Inc is not taxed, because that company moves that UBI corn into the food deserts where the for-profit grocery stores either do not have a presence or choose to not pay their taxes in-kind.
Except those paid markets are critical for finding and creating the efficiencies that allow us to raise everyone's standard of living. We need to balance the trade relationships, but we need to do it with without destroying these markets. Indeed, balancing the trade relationship means increasing the number of choices available to the already-disadvantaged parties, which will increase the average total benefit of each trade and increase the efficiency of the overall market.
> It's the freemium model applied to national economies, and the market for smartphone apps suggests that it would work fine.
The freemium model works because there is COMPETITION among app creators to provide the correct combination of things for free that incentivized people to play so they will want to pay for more.
Relying on a bureaucracy to figure what what the "bare minimum" should be is ineffective and inefficient. There is no one set of "bare minimum" needed by everybody and trying to create a bureaucratic system to calculate the needs of the individual is enormously hard and prone to corruptions and abuse. Some people grow much of their own food and don't need assistance with that. Some people are perfectly happy living on rice and beans but want to buy lots of books. Some people have high metabolisms or expensive dietary restrictions. Some people want to live out of a van and don't need subsidized housing. Some people need to live in big cities with high property values for work. The people who have the best information as to what their "bare minimum" is are... themselves.
"Taxes in-kind" are still not communism (and they sound enormously difficult to implement, there are important reasons we use currency rather than barter). Not really sure what the point of that digression was.
You don't need a bureaucracy to figure anything out. I have already done it. Everyone gets 2 L of bottled drinking water, 2200 kcal of food, a lockable room about 8'x10'x8.5', tap water, electricity, and Internet. The utility numbers mostly came from current usage statistics, the room size is based on solitary-confinement prison cells and self-storage units, and food and water based on the generally recognized dietary subsistence level of 2000 kcal/day and 1 mL/kcal rule of thumb for drinking water. An easy way to do it is to rely on the Geneva Conventions. If you cannot supply conditions sufficient for humane treatment of refugees and prisoners of war to your own citizens and residents, your numbers are wrong.
If you don't like the food you get with your ration, sell it. I'm sure there will be a service around to collect your unwanted UBI tangible goods and resell them to someone else in exchange for a cut of the proceeds, so you can get more, different, or better of something else that you do want. If you're a petite lady, you could likely trade in your 2200 kcal of basic UBI food for enough cash to buy 1800 kcal of better food. If you don't use all your free electricity, you could use it to mine bitcoins or purify copper electrode or recharge batteries. If you don't use your tap water, you could do someone else's laundry for money. But I picked the numbers to be in the "this kinda sucks" territory for a typical American. You'll probably always want more than you get, and for that, you still need to access the paid trade markets. And if for some reason you don't already want more than you get, that's what advertising is for.
The same calculation problem exists with the cash-only vision of UBI. Someone has to decide how much is enough. But then that number constantly changes as prices adjust to what people actually buy with their "enough".
The point of the tax thing is that the US has long been conditioned to be averse to communism in any recognizable form, and a less sizeable fraction is also averse to fascism. The fact remains that whatever you want to give away for free has to be produced first, and you can't guarantee that a for-profit business would make enough as long as it is possible to earn higher profit by producing less. If the government needs 750 Tcal of food to meet its UBI requirements, it can do one of 3 things: own farming capacity sufficient to produce it, order existing agribusiness to produce at least that amount and surrender it, or tax/print whatever it takes to buy that much on the open market. If communism is unacceptable, you have to do one of the other things, and the latter has the potential to destabilize your entire monetary system.
How the heck does that work? Demanding bottled water as taxes is ridiculous. Either producing the bottles water is cheaper than paying equivalent taxes, and every company will do it or it is more expensive and nobody will do it.
Add that to the fact that you are trying to mandate the production of 4x the bottled water that the US currently uses per capita. This means there will be NO market for bottled water and thus you will have no idea the of the value of the bottled water that is being used to pay taxes.
Why mandate the production of 8x10x8.5 rooms for every citizen when most people won't want that? Why waste large amounts of energy and petrochemicals producing enough bottled water to hydrate the population? Why waste everyone's time by forcing them to engage in secondary markets to resell the goods they don't need?
> The same calculation problem exists with the cash-only vision of UBI. Someone has to decide how much is enough.
Yes, but this is a far simpler problem. We can use measures of inflation, economic growth and employment to determine the level of UBI that we can afford and that will optimize economic output.
If everyone has their own monastic cell, no one can inflate the price of their own freestanding home by being such a NIMBY that no new housing can be built. There will be enough housing, by public mandate and eminent domain, even if no luxury housing is available.
You know an easy way to produce a lot of bottled water? Use bigger bottles, and reuse them. Stamp out a bunch of stainless steel 20 L watertight containers, let's say two for every person you wish to serve, so that they have one to use while the other is being refilled, heat-sterilize them, and fill them each with 20L of tap water.
For 1000 people, you make 2000 bottles, and sterilize and refill an average of 100 per day. At the end of the year, you have produced 730 kL of bottled water, with only 40 kL of actual bottle volume. People will still demand disposable 0.5 L plastic bottles for their convenience, but they will have to pay for them, and it would definitely not be at the tap-water rates of ~$0.25 per 20 L. The value of the drinking water benefit would come from the bulk treated-water rate, because nobody needs to drink out of tiny disposable plastic bottles; they just need water at the minimum standard of purity, at the cheapest price.
It is true that there would be no cash price available for a filled 20L steel bottle, but you can still price it by adding up the costs of production. Those are not made from things that are free. So you have the wages of the programmers and machine operators for the stamping and welding robots, and the steam-cleaning robot, and the refill robot, and the delivery truck, and the truck-to-doorstep robot, and the capital expense of building them, and the operating expense of running them. Then you add 7% as ownership incentive, and that's the nominal cost. You just have to show receipts and pay stubs instead of counting up the gross revenue and dividing by number of units delivered.
It would be a workable system, provided the additional complexity is largely automated. It would be far simpler to do it via public agency and just skip all the tax calculations, but US people are more wary of communism and corruption than they are of public-private partnerships, for some strange reason.
I can't help but think that some corporate research department has already done a study on Universal Basic Income in terms of how it will affect the bottom line of the donors, and this is part of a plan to influence government policy in various parts of the world, with the ultimate end goal of lining their own pockets.
I find this to be far more believable than the idea that people are genuinely altruistic and charitable in 2017, perhaps the most vain, narcissistic, virtue signalling self-obsessed period in history, which is a period that directly follows the most egregious example of corporate greed and fraud that led to the housing crisis and wall street collapse.
I would be very skeptical of any and all data that is generated from such experiments until we know who the donors are. I think it's only fair to ask.
Now it’s time for us to do our jobs, and wait to learn.
For good arguments against UBI, cf Hazlitt : https://fee.org/articles/income-without-work/ .
- UBI is not a right because it would mean some have a duty to work and transfer wealth to others.
- Costs are always badly estimated. Proponents of UBI obviously never look at the big picture
- There's no such a thing as "living in dignity", more is always welcomed
- Old social welfare benefits will never die
- Money can't flow from rich people for a long period of time. They either stop having money or emigrate in others countries(I know, "people still work", "people still invest". That's not the problem. The problem is the marginal unit of labor/investment, and quantifying how that compares to the benefit of the UBI.)
There's also, of course, the issue of how much gets eaten away by higher rents, which everyone just assumes away.
Also, I don’t think the proponents of UBI can account for how many people would simply not work if they had the option. I love programming but there are some days where I don’t like my boss and my co-workers. I endure some discomfort but at the end of the day, I’m compensated for that. If you told me I would get 50k per year and free housing, I would probably spend most of my time snowboarding and playing video games rather sit in 1 hour planning meeting. I would probably be much more likely to do this if all my friends were snowboarding and playing video games ….
Turns out this already exists, it's just that most people, presumably you as well by the tone of your post, thinks that the people who are parasites on the working class is the poor and needy instead of the rich and powerful.
need proof? read the paradise papers or panama papers. the rich are making off like bandits without paying their fair share orders of magnitude beyond what the impoverished are consuming.
You might quit your full time job, but you would probably find some part-time programming work you enjoyed to allow you to afford good snowboards, new video games, and trips to other ski towns.
Disclaimer: I am currently doing part-time freelance work and living in a ski town.
Plus, if you truly love programming, you would still want to work on side projects and assist with open source development that you find interesting or valuable.
Nobody disputes that there are lazy people who wouldn't work if given UBI. The questions are:
1) How many of these lazy people are there?
2) How much economic output is wasted by employers trying to filter these lazy people out of their workforce.
3) How much economic output is wasted by the systems employers have to create to force the lazy people they do hire to be productive.
4) How much economic output can we gain by giving non-lazy people a safety net that allows them to find ideal vocations for their talents and preferences.
I am pretty lazy but I'm not lazy all the time. I don't think there exists such a classes of "lazy people" vs "non-lazy people". Laziness is a mood, a state. It can be altered by motivation. Income is one important motivator although arguably not the only one.
My point is, if we have welfare state with UBI, we will form in-groups and out-groups just as you describe. The taxes of all the "non-lazy” group will be unbearable high. You will hear choruses of complaints from them. They will resent those “lazy people”. Let’s add some other component like race, language or country of origin and you have society more divided than before. These are just a few of the unintended consequences I would see.
And 15k is hardly enough to sell this program politically. You can get that now on disability.
> You might quit your full time job, but you would probably find some part-time programming work you enjoyed to allow you to afford good snowboards
I can get by on a used snowboard. I could also steal on from one of those “non-lazy people” :)
Yes, "number of lazy people" is a heuristic to talk about the over effect on the productive effort put in the by population at large.
> My point is, if we have welfare state with UBI, we will form in-groups and out-groups just as you describe.
Look at the current economic demographics and tell me that we don't already have these groups? The distinctions between these groups have been widening for almost 40 years now. These groups are not based on laziness, but on systemic economic disadvantages.
I suspect we will see fairly evenly distributed continium of effort between highly motivated workers (workaholics) and un-motivated mooches (bums).
> Let’s add some other component like race, language or country of origin and you have society more divided than before.
I would expect to see UBI as a democratizing influence, especially when it comes the the creation of small businesses and the ability of acquire education. I believe UBI would help erase the economic divides that currently exist along racial lines as it would help erase some of the inherent advantages of middle and upper class citizens who already have functional support networks that provide a similar safety net to UBI.
> And 15k is hardly enough to sell this program politically. You can get that now on disability.
I expect that 15k number to be more of a mid to long term goal with UBI that it's starting point.
> the taxes of all the "non-lazy” group will be unbearable high.
That is your presumption. Tax rates of 100%, fully redirected to UBI (or spent any other way) would obviously be a huge drag on the economy. Tax rates of 0% are also huge drag on the economy since there is of government spending that stimulate and support economic activity.
Thus there is a point past which increasing taxes is ineffective, as the drag on the economy outweighs reduces the taxes collected more than the increased rate increases the taxes collected. Let's call this the point of diminishing revenue.
There is also point prior to the point of diminishing revenue. That point is where, given a certain portfolio of spending by the government, the economic boost provided by that spending no longer out weighs the economic drag due to taxes. Let's call this the point of diminishing growth.
While where is points lie is hotly debated by politicians, their existence is not particularly controversial (except among communists and anti-tax kooks).
I don't claim to know what those points are. Realistically, they will be constantly shifting and should be determined by data gathering and science rather than politicians.
Obviously, any taxes beyond the point of diminishing revenue are pointless. For UBI to be to advantageous to all members of society, both lazy and motivated, we also shouldn't tax past the point of diminishing growth. Currently, maybe this is 1000 dollars a year, possibly even as high as 10k. I doubt it is as high as 15k currently but I expect that we will get there as automation increases. The hope is that as lower levels of UBI stimulate economic growth and boost economic efficiency, we will reach the point where higher levels of UBI are affordable and advantageous more quickly.
Since we don't know what this point is, it makes sense to introduce UBI gradually and slowly increase it, paired with decreases to welfare, unemployment, disability and the minimum wage. These changes should be triggered by a organization more like the Fed than like our Congress.
> I can get by on a used snowboard. I could also steal on from one of those “non-lazy people” :)
You can already do all of this. I am proof that this "dream life" of yours is already pretty feasible (without theft even) with our skillsets. The fact that you are not pursuing this leads me to think that you don't have an accurate understanding of your own motivations.
Furthermore, plenty of people are already not working (or hardly at all)... all you need to do is eavesdrop/overhear the conversations single mothers are having; which forms to fill out, available programs, which Ministry to hit up and how (for the Canadians here), etc.
Isn't it odd how the ultra-rich trumpet UBI as an amazing godsend from government and society? A Smooth Sea Never Made a Skillful Sailor, and coddling those without the drive to hone their skills (with the money of those using their skills) will result in failure.
Ahh, so GiveDirectly is a charity? It certainly isn't universal, so calling it UBI seems misleading at best.