Ask HN: What would you do with $5k/mo basic income for rest of life? | Hacker News Reader

Ask HN: What would you do with $5k/mo basic income for rest of life?

20 pointsthrow9988787 comments

If assuming that everyone was also receiving $5k/mo "UBI"...

Nothing different, because the cost of everything I buy will go up by a total of $5k/mo. Hence why UBI is flawed. My total purchasing power will be unchanged.

Edit: Maybe I missed it but... I can't find this post anywhere on the HackerNews pages anymore. That's rather funny. It was quickly pointed out how flawed a theory UBI is by multiple commenters and then poof. Funny...

It will most likely be worse as inflation will hit widely consumed products (basics) harder than least consumed ones. Quantitive easing 2.0.

Anyone said housing?

Including all the cheap housing available in the small towns which have lost population because people are leaving for the big cities for jobs?

This is so profoundly wrong on so many levels. Mind backing up your claim with some math? Thanks.

It's pretty basic economic theory of supply and demand. If the purchasing power of everyone goes up equally, the price of the same supply will also go up equally, and so in the end, nothing changes. The poor will still be poor, the middle class will still be middle class and the rich will still be rich.

The purchasing power doesn't go up equally though, the questioners proposed rate would quadruple many peoples incomes at the low end while barely being a drop in the ocean at the high end.

If the value of the $5k truly drops to $0 as you are suggesting then the value of ALL money drops to 0.

Regardless of how it plays out, by putting in place a guaranteed floor it will make the poor relatively richer that they are today and shrink the gap between the poor and the middle class.

You are correct which is what causes the problem. 5K would not affect the price of luxury items it would however affect the price of common commodities since now their largest consumption base has much higher purchasing power.

Milk is cheap because everyone drinks it and for every billionaire who wouldn’t mind paying $1000 for a gallon of milk there are 100,000 poor people that wouldn’t be able to pay more than $5. If those people would get and additional $60000 per annum to spend the prices for all basic commodities and services will go up.

UBI won’t affect the price of a $250000 car much but you should expect every basic commodity or service like food, communications, utilities, transport etc. to spike.

When the prices go up this creates an area of high profitability for a new company to enter and undercut the competition. Since most basic commodities compete primarily on price I would not expect prices to rise much higher.

Utilities have a bit more lock in due to their natural monopolies so can potentially be more of an issue however things like off grid solar+batteries are getting cheaper and cheaper every year, effectively putting a price ceiling on the electricity company. Wireless and LEO satellite internet services are starting to ramp up which will put pressure on incumbent ISPs. Most gas appliances can be replaced with electric etc.

You're assuming you will quit your job and do nothing but that is a choice. You could choose to stay in your job and continue to progress your career. Alternatively you could choose to quit and finally dedicate some real time to that project you've been dreaming of, save in the knowledge that if it fails you won't go homeless.

You misunderstood what I meant. I would still keep my job.

I would do nothing DIFFERENT than what I do now. Meaning, everything I spend my money on right now will cost more as everyone receives $5k/mo. So in the end, I won't be able to quit my job, I won't be able to work less, I won't be able to buy more than currently. Literally nothing changes. This concept is completely loss on people who believe UBI is a real thing... it's not. See the reasons as to why Universities are so expensive now. Hint: The Gov. offered more money to students, Uni's saw that there is more money out there... jack the price!

A UBI is supposed to only cover basic needs, most basic goods compete heavily on price so if the market as a whole raised their prices to take advantage of the increased available funds that would open up a space for a smaller company to capture more of the market by keeping their prices low.

The biggest risk for exploitation of UBI is in housing, but that is already a problem even without UBI.

On another note a $5k per month UBI would be excessive, I personally prefer starting with a $1k per month UBI and slowly ramping up to $2k then inflation adjusting from there.

Where do you think this money to pay for a UBI is coming from?

After reading Sam A's posts about UBI and the comments here on HN, I'm blown away. How can so many "smart" people disregard economics and be so so out of touch... Sam, if you see this, come live in Texas, or Kansas, or Georgia, or anywhere but your bubble for some time. Encourage your SV friends to do the same. I implore you to see just how out of touch with reality you are on this topic.

And NO, taxing the rich wouldn't even be able to pay for it, they don't even have enough for that. Also, the rich are mobile, there would be no more rich. We'd all be poor with our $5k/mo if you took it from the rich.

The current way of paying for federal programs is extremely unsustainable. Where will this new $5k/mo come from?

Let's start a one level up from yourself: your employer. The first place to go for the UBI money. Guess what, only two things will happen if the costs of employees goes up for an employer. 1. They reduce the work force, 2. They raise prices. But now we have unemployed people receiving only $5k/mo. This cycle will continue and the only supply of money left is the fake money the gov "prints". What happens then? Who pays for it? Maybe look at Greece/Spain/Italy... Germany has somehow been suckered into paying for a large amount of their welfare. The U.K. was smart and bailed. But what if America followed suit?

Who in the world will bail out America after that point? Who/what country will pay every American $5k/mo? Where does this end?

The ONLY way to achieve covering the basic needs for the masses is if the resources for those needs were free. Both in money and energy. Power, free and unlimited. Food, free and unlimited.

I've only skimmed the surface, and may not have provided the best examples above, but this is a topic that thousands of research papers are written on and even more discussion outside of that. It's too much. I'm still waiting for the day for someone to explain how trickle up economics works. I have yet to hear a convincing argument/example of it working, ever. It just doesn't. When was the last time a poor person offered you a job?

You asked: "Where do you think this money to pay for a UBI is coming from?"

https://en.wikipedia.org/wiki/Basic_income#Affordability gives an overview. For examples:

"A 2012 affordability study done in the Republic of Ireland by Social Justice Ireland found that basic income would be affordable with a 45 percent income tax rate. This would lead to an improvement in income for the majority of the population."

"Charles M.A. Clark estimates that the United States could support a Basic Income large enough to eliminate poverty and continue to fund all current government spending (except that which would be made redundant by the Basic Income) with a flat income tax of just under 39 percent."

You also wrote "Also, the rich are mobile, there would be no more rich."

Surprising, perhaps, but they in general aren't that mobile. They can afford to travel, certainly, but it's hard for most to uproot. Look at all the millionaires and billionaires living in New York City, even though taxes would be lower in "Texas, or Kansas, or Georgia".

Billionaires and even millionaires already lower their tax liability to the lowest possible level they don’t need to be physically mobile if they can be financially mobile.

I think Cshelton specifically means physically mobile.

For financially mobile, have a global wealth tax.

Well $5k a month is a ludicrous idea because it's higher than the GDP per capita of the United States so is obviously unworkable. But I do think there is some merit to a lower amount such as $1k per month.

I fail to see how increasing corporate tax is going to result in a downward spiral of constant layoffs. An efficient organisation should only be keeping employees who generate more value than they cost, even if the taxes on the profits were 95% this equation doesn't change. If I should be fired at 50% tax, then I should also be fired at 20% tax.

>> I'm still waiting for the day for someone to explain how trickle up economics works. I have yet to hear a convincing argument/example of it working, ever. It just doesn't. When was the last time a poor person offered you a job?

Poor people buy things, buying things shows demand for a product which creates a job to satisfy that demand. Jeff Bezos, currently the richest man in the world, isn't given his wealth by someone richer than him, he is given it by providing a service to millions of people poorer than him.

By increasing the wealth of all people you increase demand across the board and create more wealth generating opportunities for more people.

Don't bother. Some politician will get that votebank of fools thanks to social media and they will implement it.

> because the cost of everything I buy will go up by a total of $5k/mo

That isn't how it works. It isn't how it could work. Simple proof: Suppose there are two people, one of whom buys all the same things the other buys plus some more. It is not possible for both of them to find that the cost of what they buy goes up by the same $5k/month.

It is true that if $5k/mo started appearing in everyone's bank account by magic then there would be inflation. But there is no guarantee that the amount of that inflation would be such as to leave everyone in the exact same situation as before.

In particular, some people would gain relative to others. And some possible people would gain (or lose) relative to others. In particular, there would be changes to your situation relative to that of hypothetical-you-who-just-quit-their-job. Or to hypothetical-you-who-just-got-a-job-at-a-hedge-fund. Or whatever. Which might make a difference to your choices. Which is the point of the question.

How about a slow, random rollout? That should mean prices can't just be increased across the board since not everyone is getting UBI so wouldn't be willing to pay the higher cost.

EDIT: Actually, in a sensible market wouldn't competition handle this? Those who don't increase their prices would undercut their competitors, so there's no incentive to raise prices since you would just lose market share.

Pay it all to keep up with rent increases that resulted from everyone having $5000/month.

(When you call it a "basic income", that suggests everyone is getting it; "free money" would be more appropriate if you didn't mean that.)

Thanks for clarification. It's "hard-earned money"

Quit my job. Travel the world.

Although one thing that's always bothered me about the UBI idea is that if everyone else is getting this basic income, wouldn't it effectively make that 5k worthless? Perhaps someone with a greater understanding of economics could enlighten me?

It is not necessarily inflationary, just redistributive

Where does the money come from in the most common UBI scenarios? Is it the richest people subsidising the entire rest of the world?

It would come from the entire rest of the world subsidising the rich slightly less.

Could you elaborate?

UBI would cause hyper inflation if it came from 'new' money. As in, if the fed just started printing out 5k/mo/person. Most theoretical implementations of UBI suggest the money coming from taxes (taken from larger corporations) or from a reduction of funding in another area (military)

Getting money doesn't affect the costs to produce goods. If many companies increase their prices because people have more money, it leaves an opportunity for smaller companies to provide the same products with lower profit margins, or Zero profit margins because they too have basic income and don't need to siphon overhead from other people to survive.

I'd probably take six months and do nothing at all, except for maybe work on the house. Then I'd start picking up every online college degree that tickled my fancy. At some point I'd probably find some places to volunteer and help out the community. Also, maybe I'd have time to get around to music and art... probably not, but maybe.

Try to hedge against the inevitable inflation, as suddenly there is more money chasing the same amount of goods and services.

For those worried about the inflation risk: it depends on how the money is generated.

Theoretically, if it is created by, for instance, taxation (redistribution over people) or bonds (which is redistribution over time), you shouldn't risk too much overall inflation.

It will, however, change which goods increase in price. I suspect restaurants will become more expensive and yachts will be cheaper if it happened by taxation.

Having said that, inflation itself seems to be blind to the theory and does whatever it feels like.

For the purposes of this exercise, let's suppose I get $5k/mo and others don't. I think it depends on when I got it.

In my 20s -> Travel and grad school

In my 30s -> Supplementing my meager income to enjoy myself

In my 40s -> Investment

Wouldn't it be better to start investing as early as possible? I'm in my early 20s and have been thinking that if I got a time machine the first thing I'd do is go back ten years and tell myself to get a job.

Agreed. In my early 20s I was tempted to take my "signature loan" account of $10K and put it into investments, as a sort of enforced savings, and pay that off. In some ways, that's stupid, but 20+ years on, I wish I had done that.

I mean, not as much as I wish I had held onto those bitcoins I sold for $15, but still... :-)

A scenario I'm not sure has been talked about much is the notion of some kind of "Automation tax", in which industries that adopt automation that remove significant amounts of human labor pay an additional tax to offset lost jobs in order to pay for a basic income.

Ostensibly automation has the side-effect of reducing the cost of production, which should help stabilize prices against an influx of spendable currency (assuming the initial focus of basic income is needs-based versus a universal basic income).

Don't need to tax 'automation', just profits, automation is already baked into that.

I have about 7 different business ideas in my queue. I would pick the first, related to increase charitable giving, and would commit myself to that.

That's my plan too (charitable open source software). But, something else besides just work? I worked so hard past 6 years I almost don't know how to find other stuff to do.

I can relate. I've thrown myself into work and family in the past 4 years. It's been a while since I read a book or drew a picture. I was browsing around B&N today thinking I should get back to doing that.

Is it taxed?

Do we have healthcare?

Will a spouse have the same benefit?

Rent takes a fifth of that net, minimum, and you guys are talking about retiring, travel, lounging around and lives dedicated to charity?

It's not 5k a week. Am I missing something?

Given what I see here, a stinkbutt stance of a question, I'd say the greatest impact to myself would be some stress reduction, slightly relaxed job requirements and a helluva better outlook for a tired, aging body.

Start investing $5k/mo while keeping my day job.

Probably quit my job and spend time pontificating on how someone managed to provide a BMI at a level which is above the US median household income.

Sorry, that number just doesn't work, even granting a government willing to do redistribution on that level, you're looking at an outflow that is something like 3x current total government tax revenue.

Spend the rest of my life writing FOSS all day

Move to Jamaica to be closer to my family. Write code for small businesses there who need it badly but cant afford it.

I wouldn't be surprised if most types of UBI require you to spend most of your time in the US. Otherwise they be pouring free cash into other economies.

I can't remember where I read this, but I really liked the idea that UBI was compared to VC funding. I.e. most startups fail, yet investors still invest in startups because the few that succeed compensate for the ones that fail, making investment in startups still worth while.

What I read was that UBI can be seen as a government investing in it's people. Not everyone will be doing brilliant and innovative things, but, the person who'd normally would get a secure job at big corp might now feel secure enough to undertake starting something or working on an idea living in the middle of nowhere and when successful, adding an enormous amount of value to the rest of society.

So, to answer your question. I'd also be more than happy to live in the middle of nowhere working on ideas and open source etc.

Since this is talking about basic income, please allow me to digress a little and ask a few things that have been on my mind for a while. World GDP per capita is $1,400 Only need to make all people capable of 3.5X more productive, and we'd all be able to live at that rate with some universal income + universal work. Maybe the UBI idea shouldn't be decoupled from universal work. If we truly believe humans are worth giving $5K a month, surely we can devise a way that they can be given that no for free (without inflation, or whatnot, just plain old more distributed production.) Should making people more productive (distributing the means of production) be concentrated on much more than just redistributing the already existing wealth.

Consider how stable it is. Save it for now. Consider whether I might move up retirement.

Work on the many educational and political tool ideas that I have kicking around in my head. Then get involved in local volunteer work in those areas (primarily teaching).

If it was a viable option and not a flawed economic theory, I'd return to school and learn more languages/arts to go with all the STEM stuff I already know.

Assuming $5k USD per month with current purchasing power to avoid the concerns about rent inflation. $5k per month is what I’m expecting in my next job, except my next job will have (hopefully German) taxes.

I’d save as much as I can to buy (another) house, write more, and start a family.

I would do exactly what I'm doing now (building for profit companies and doing non-profit work @ spreadthevote.org) except I would be much more thoughtful between for-profit projects. I would likely work on slightly bigger problems.

Start a business. Until then, it’s debt management, making ends meet, and hopefully get enough handle on finances to be able to sufficiently save/invest for retirement. Survival vs thriving, pretty much.

Spend a little of it, save most of it.

I would quickly adjust to my new standard of living and continue doing everything else the same.

$60k/year is not near enough for those of us with a family.

Depends where you live. My wife and I lived on less than $50k. I know some families that live on $40k. We live well above that now, but our standard of living is drastically higher.

Quit my day job, work on ideas for companies, build OSS.

Retire. Relax. Perhaps tinker and work to better the internet, after I have recovered from being a desk jockey for quite a few decades.

Retire.

I'm already quite comfortable living off less than $1,000, so I would split the rest among four of my best friends.

But won't they also get $5k/mo?

Write open-source web app platforms that enforce transparent administration of schools, prisons, and local governments.

Absolutely nothing. Live happily ever after.

Woodworking.

Start small with a few tools and work my way up to a shop area.

Possibly start a shared shop area with interested friends.

Live somewhere great, have myself chauffeured everywhere, donate to some choice people.

Go back to school full-time through Grad school and keep working on side-projects.

Work part time for a NGO

Start a business making tools and machinery for makers.

Volunteer full time.

Finish some novels, work on a side business perhaps.

Pay some of my rent

Get involved in local politics.

Start going to the gym!

Why would you need basic income for that?

Presumably, 5K would cover income lost from time spend at the gym vs time spent working.

Also gym membership and insurance (just in case).

Plus, those t-shirts aren't going to rip themselves.

I would consider retiring so that I could write and open source robot trading platform that utilizes the latest advances with neural networks to analyze and successfully trade in the stock market that is simple enough for any high school graduate to use so that UBI would no longer be needed

wouldn't this fail as it became ubiquitous in the market?

Yes.

If it failed, and it would not meet the criterion of successfully trading.

A successful algorithm would likely need to be able to adjust based on the amount of capital being controlled using the algorithm and the number of parties that are using the algorithm

Is it a paradox then? At 100% ubiquity you couldn’t satisfy the criteria.

Is Alpha Zero is a paradox when it plays itself, since it can never truly beat itself?

Surely whatever strategy you discover (assuming there is even one to be discovered) would stop working as soon as lots of people started using it.

If it stopped working, then it would not meet the criterion of successfully trading.

A successful algorithm would likely need a way to tolerate increased usage of the algorithm, much like how successful human traders do so currently.

This sounds impossible. And I don't mean "really hard and will take a long time" impossible but "actually this literally cannot be done" impossible.

If computers can successfully play go better than humans (alphago), then eventually computers should be able to successfully trade stocks better than humans as well

The way to do this is to create a platform that takes care of the boring stuff and hosts the code in exchange for the right to invest in it. Then you just invest in whoever's algorithm works best... and you certainly don't require the algorithm be open source.

This sounds like www.quantopian.com, which has already been done and has not removed the need/desire for UBI. The purpose is not to capitalize on the idea myself. Rather, it is to allow unwashed masses to pay their bills themselves, which is why it should be open source.

On top of what others have commented, you simply can't get anywhere if the only data you have is historical prices

Then part of the process becomes quantifying what additional data is needed and determining how to generate or otherwise gather that data

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