Free Cash to Fight Income Inequality? Stockton, CA Is First in US to Try
nytimes.com
nytimes.com
It seems like roughly the same economics as rent control: if I, as a landlord, own rent controlled units, then I want to make as much money off them as if they were not rent controlled. Unless I can get them reclassified, the only way to do so is to raise the monthly price so that over the course of an average tenancy, the numbers add up to what I could have rented the unit for without rent control. What you end up with is effectively a Ponzi scheme.
On the other hand, let’s run the experiment the other way. We currently have significant numbers of people working with no hope of financial stability in their future. Will taxing them to fill the coffers of the rich improve their situation? Given the current situation of increasing wealth inequality seemingly exacerbating existing problems, I can’t imagine that this is a promising approach.
Since UBI is essentially the most generalized form of a benefits program, I really have to hope that it works. If it doesn’t, that seems damning to other benefits programs which are inefficiently (and IMO ineffectively, due to perverse incentives) means-tested. If it doesn’t, and if anti-UBI is virtually axiomatically a bad idea, then I’m not sure what’s left.
We really do need to be building a lot of stuff, and or fixing stuff we have already done. That work is a direct stimulus, can pay pretty well, and benefits everyone public and private alike. Additionally, the returns from it can pay down all of the expensive bombs and non returned items that we currently spend or have spent on. An example is the interstate highway project. Our current president once the toll that, which is really stupid, but similar kinds of projects will deliver similar kinds of returns. The interstate highway project is still paying us great dividends years and years after it was created. Last figure I knew was 6/8 maybe 10 times the dollar spent.
The post office still getting a lot of bad press right now, is actually exemplary and its performance in return to the public. It is entirely self-funded, doesn't take any tax dollars at all, pays good wages, has a lot of value to the public, and the benefits are worth working there.
Other self-funded public works could work the very same way. Those that use it pay for it, and we all will benefit from the economic development. An example might beat networks, another example might be first line Healthcare, there are many to choose from.
One that I've been thinking about lately is energy. Well distributed public investments in energy of all forms, managed on a higher level through something like a post office, might really pay us off, and deliver a lot of options making energy competitive and well distributed.
The key thing to understanding all of this is government has agency, it's for us, by us, and we need to employ it to our mutual good. Yes, this will compete with Private Industry, but they should be competed with, otherwise they'll accumulate wealth stuff in the bank, and complain about the lack of opportunities to invest and make returns. There's nothing wrong with any of that, but it's a stalemate. One we don't need.
I knocked this out really quick on Google Voice. I apologize in advance if this is a bit of a mess. Hopefully the gist comes through.
I do not mean the current social service programs. I mean new, improved ones, along with Public Works people building things of real value that will deliver real returns for very long periods of time.
A very large UBI could. But there's no way that's ever going to happen.
This is not true. UBI doesn't create money out of nowhere. It redistributes existing money. Poor people can afford more, and rich people can afford less, because taxes increase.
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How that actually plays out in a market like ours hasn't (can't) been fully tested, but it seems a promising idea.
This is one of the reasons why a local UBI doesn't really work.
If you have a national UBI, people can move. That landlord may try to capture the surplus in California, but with a UBI you can simply move somewhere cheaper.
People in the middle class forget that simply moving is expensive and requires a remarkable amount of cash up front.
This might be the unintended consequences of a wage/ price spiral.
First hand experience here that seems to escape the engineering brethren that have never glimpsed into sales: The same exact product is sold to every customer at a different price. Yes sometimes there is a higher demand which might push price a tad but most of the time there is not. I always enjoy when people on HN complain that so-and-so doesn't publish pricing on their website. Of course not, because then they would lower their revenue. It also removes leverage, sometimes it makes sense to sell something at a lower cost today to negotiate some terms, and then down the road either sell at volume or raise the price. Sometimes you just like someone and give them a discount. Oh its the government? Yea raise the price a LOT. etc etc.
Just because somebody has an extra 2000 dollars in their pocket every month doesn't mean they can earmark all of that money for rent; they surely have other bills that they need to pay as well. If the apartment was rentable at $X+2000, then why wasn't the landlord renting it at that price before everybody got the extra cash from UBI? Why do you think that somebody would say "Yes, now that I'm getting an extra two thousand dollars a month, my apartment is definitely worth an extra two thousand dollars a month" instead of saying "welp, rent is too high here, guess I'll move to some place else that's charging closer to what I used to pay"?
But it brings up the point that a UBI will not solve all of our problems. An extra $2000 a month doesn't help you if you don't have medical insurance and get a $500k bill from a terminal disease, for instance.
What a UBI does is removes a lot of bureaucracy around welfare for recurring costs (rent, clothes, food, gas, etc) and it addresses the scaling problem we're having with inequality. It's an imperfect solution, of course, but I haven't heard many other viable (by capitalist standards) options.
Housing is special in that everybody needs to live somewhere, and you can't take it with you anywhere. If I want to work in a certain geographical area, I simply have to live near there as well. The vast majority of the population does not have the option of remote work.
Since landlords know this, they know that if they're not already offering subsidized housing, that their tenants can afford more, so they do the rational thing and raise prices.
This was pitched as an alternative to income taxes, which deincentivie labor and reduce income and thus the ability for people to be self-reliant instead of dependent on charity or government programs, and sales taxes, which fall disproportionately on poorer people who have to spend a larger share of their income on basic needs. Even Milton Friedman, no friend of taxes, thought if George’s Single Tax proposal as “the least worst tax,” because it would (theoretically) have the least depressing effect on economic growth.
Theoretically, your landlord could not raise rents to avoid their tax burden, as the increase in rent would directly correlate with their tax burden.
George also suggested that Single Tax revenues could provide for a UBI, although the size and scope of government was much smaller in 1880.
Speaking as a junior white-collar worker whose only significant capital is held in a retirement account, the idea of a tax on economic rents (and an assumed cut in my income/payroll/sales taxes) is very appealing, far more than a paltry UBI check each month.
I'd have a much nicer van down by the river...
However, with a looming jobs crisis, the assumption of being able to go out to earn more remains to be seen.
https://en.wikipedia.org/wiki/Luxury_tax_(sports)
I guess the real difficulty would be measuring how high San Francisco's housing-supply border wall is.
If you know what the actual problems are and where the money needs to be spent, you don't need to give everyone $10,000. You may only need to give this person $2,000 for this thing, and this person $7,000 for that thing. Giving them all a lump sum is just inefficient, and does not address the myriad edge cases. Collecting data on spending could help provide efficiency.
Have any countries attempted such a big fundamental change?
> He wants to select participants who are most likely to spend their money wisely, generating stories of working poor people lifted by extra cash.
Well, that's pretty worthless.
It's brilliant if you're trying to demonstrate to people with deeply-held beliefs against BI that the principles actually work in real life.
I'm rather fond of the idea of work based programs. For example, for every $1 of W2 income you earn you receive $1 bonus, up to a cap of say $7,500.
This boosts wages on the low end and strongly encourages employment. Funding this through income taxes and you won't have to kill off risky / low profit small business with local living wage requirements.
Maybe the description could be parsed slightly differently? Some might read parent's description to be proposing a bonus on W2 income the a limit on the bonus only of $7,500. Thus an income greater than that receives the full bonus. The structural problem you have correctly identified thus does not arise!
It would make sense to assume there is some cut off, and given how government cut offs work in the past, it would be reasonable to assume the cut off will be implemented in a fashion that creates a graph where sometimes raises will result in less pay, at least when combined with existing government aid programs.
Depends how it's implemented, probably. People react differently to larger paychecks and tax refunds, for example. And certainly people react differently if you call it a bonus, even if it is just a negative income tax that would please Friedman.
> It would make sense to assume there is some cut off, and given how government cut offs work in the past, it would be reasonable to assume the cut off will be implemented in a fashion that creates a graph where sometimes raises will result in less pay, at least when combined with existing government aid programs.
That's a completely, fully, absolutely 100% reasonable comment on how poorly implemented current government aid programs are far too often implemented.
It might be a slightly less reasonable comment on the details as written of the proposition above.
The graph need not ever result in less pay, but Your rate per hour would decrease after the cap is earned out.
Somewhat harebrained perhaps, I like Friedman’s negative income tax but also want to encourage both employment and small business growth.
The more I think about it, the harder I think it is to create a program which doesn't result in this once combined with other programs. Any cutback, no matter how small, will be combined with all other cutbacks of all other programs, existing and future. As long as these benefits are independent, there is a that the sum of all the cutbacks will outweigh the raise that caused the cutbacks. Even if the max cutback was 10%, meaning it would take a 75k raise to remove all benefits, when combined with 9 other equally generous benefit programs and income tax you still end up with a loss.
When adjusting for the phase out being for optics limiting how the phase out works (as all phase outs for optics would tend to look similar to meet similar expectations), the risk of a raise resulting in lost total income isn't easily dismissed.
This is why a program that at no point has any way, shape, form, or manner of phase-out is desirable. It fully and completely avoids any kind of problem stemming from colliding cutbacks. This is such a good idea and so wise, that it was baked in to the approach proposed above!
But if it doesn't ever phase out, it is really just a tax cut, and to be exact a tax cut. I'll take having to pay 7.5k less taxes (or getting an untaxed check for 7.5k from the same people I have to write my tax check to).
However, what you call something and how you structure impacts how people react to it. Call it wages and spread it over time and people react one way. Call it a bonus and hand it out once a year and people behave differently. So while it may be more correct to call it a negative income tax, this may work against the intended economic effects.
If you’re making 500k, the income bracket increase used to fund the program would cost far more than the gain you received, but realistically it probably would be written to phase out for pure optics.
None of these "experiments" are. They all fail to simulate the biggest downfall of UBI which is that when you do it at scale, prices go up. It happens for all the same reasons that guaranteed student loans have driven up the cost of college in the past 30 years.
I wish they'd release as much data as possible regarding the experiment so other cities and countries could have actual data to look at instead of hypotheses.
I hope the results are described fairly and often, it'll be interesting to see how it turns out.
Yang is also running for president 2020 on a UBI platform, dubbed the freedom dividend.
https://www.reddit.com/r/IAmA/comments/87aa2z/iama_andrew_ya...
The people doing this justify it that they will get "valid scientific data," but they won't get any valid scientific data on how UBI performs, because they aren't doing UBI. There's a big difference between giving 100 poor people money and giving all the poor people (or even everyone) money.
A bit unrelated, but the article mentions that these ideas have been around a long time, citing Thomas More's "Utopia." However, they fail to follow up with the modern connation of the word, that utopia is unachievable. We've tried these ideas again and again, in American utopian societies of the 1800s, in communes, in Communism, and it doesn't work. Maybe it's time we stopped trying to do the same thing over and over again expecting different results the next time.
Imagining that $10k is going to solve these things is insane. Even if you took all the money you gave to each of the people in an area and added it all up, it still couldn't even pay for a fraction of the services mentioned above.
This isn't to say UBI wouldn't be helpful. But let's face it, UBI is just some academic's moon-shot that they hope will magically improve everything, without thinking through all the complex logistical issues that require more than a bigger paycheck to solve. Sure, give people money, but don't imagine for a second that it will end poverty. It may make poverty more tolerable, possibly extending it.
The whole pretext of these plans is that there is no qualifying conditions or criteria for participation. If you only give money to a group filtered for a target outcome it's (a) just another social assistance program and (b) not an experiment