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Comment by dragonwriter | Hacker News Reader

> The perverse incentives around these discontinuities is one of the worst misfeatures of programs intended to help people.

This is a key motivation for replacing many of those programs with UBI funded by progressive taxes.

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A Negative Income Tax which phases out would work too (though I think a UBI would be more popular and thus resilient to budget cuts, as Alaska has shown).

The wonderful thing about cash (UBI, NIT, EITC) is that it's easy to divide up and low-cost to distribute.

Looked into NIT a little, and as I understand it, it could basically be a linear function where Y=0 when X (income) is, for the sake of example, $40,000 yearly. Then anyone over that pays increasing income tax while anyone below receives increasing amount of money from the government instead?

Apart from whether linear actually makes sense or not in the real world.

It doesn't have to be linear, that's just the easiest model to visualize and understand it just should be smooth enough in a way that ensures no discontinuity.

I think one problem with NIT is it would likely pay out annually, when income taxes are filed. That's not very helpful if you're living paycheck to paycheck. UBI can more easily dish out money on a more frequent basis. Additionally, this was already mentioned elsewhere, but, a major argument for UBI is that not having any sort of means-testing will drastically streamline the process, reducing costs and increasing efficiency. NIT still involves means-testing.

Either that or a more progressive stance on socialist policies that provide basics to everyone. At least with socialist style policies there isn't the possibility of those spending their UBI on junk food or wine our whatever, but I really would prefer either to the current state of affairs.

Government paternalism is terrifying. People are going to screw up, and make bad choices, but having choices is better than being treated like a child your entire life.

Speaking of children, that’s who’s gonna starve if you decide to let them suffer the consequences of their parents’ poor choices. I would have personally starved to death dozens of times over if not for food stamps.

You might have been more hungry, but death by starvation in the USA is nearly unheard of. I personally have never heard of anyone - homeless or otherwise - dying of starvation in the USA. The only people I've heard of dying of starvation were stranded on a mountain or on the ocean or something.

"Well, at least there aren't a lot of people literally starving to death" isn't exactly a glowing endorsement of the system.

Especially in the UK, where there literally are people starving to death now.

People in the US who live in a comfortable six-figure-middle-class bubble really have no idea how precarious their position is.

All it takes is one expensive long-lasting serious illness and they'll be out on the street with the other people who "made poor choices."

> All it takes is one expensive long-lasting serious illness and they'll be out on the street with the other people who "made poor choices."

You declare bankruptcy, your assets are divided up among your creditors and you start over again. That's why bankruptcy exists. Several (most?) states even let one keep one's home. Maybe we need a law to prevent landlords from refusing to let based on prior bankruptcy — would have to think that through. Bankruptcy is not (or at least should not be) the end of the world.

It's hard to start over out of a box.

You won't see death by starvation. You'll see something like death by flu after malnutrition weakens immunity, or death by overdose after malnutrition weakens decisionmaking.

Starvation isn't literal in this context. One can intellectually starve a child. One can have a child be stagnant in their growth, for example by not having them play.

Oh sure, I suppose my family could have lived digging through landfills like the wretchedly poor do in Ethiopia and Indonesia and elsewhere. And perhaps I wouldn’t have died, just been left permanently physically and mentally stunted by malnutrition, certainly not coming out of the ordeal in any state to perform the fairly high-level job that I have today. The income taxes that I pay with the large-ish salary that I was able to get because my brain was not stunted by malnutrition as a child have already paid for the food stamps that the government invested in my well-being many times over, by the way. That is what welfare does: it works, and in the long run it pays off in spades.

Food stamps don't prevent children from suffering the consequences of their parents poor choices; people can and do trade those benefits for other things.

Children also get to suffer for policymakers poor choices of what the stamps should be spent on, and taxpayers get to suffer the cost of every benefit program duplicating income verification functions and other eligibility functions rather than having universal programs where the tax system takes care of the better off not getting unfair share of benefit.

I’m telling you that in my lived experience, food stamps filled my belly and prevented me from dying.

As Andrew Yang rightly said "nobody has ever wondered if shareholders would screw up, make bad choices, when receiving their dividends".

And this is the right way to look at it. In addition to being a free agent, every citizen should be treated as a shareholder in the nation.

no company that has costs well above revenue for decades is paying out dividends.

But many companies have debt that they just roll over. Not many companies aim to be debt free, because it is not necessarily a good goal. You need capital, and optimise its mix. At current rates, issuing debt is attractive.

Providing free healthcare, free education and free food to those who need it is quite different from being treated like a child.

Especially if they end up in a higher tax bracket.

It's not government paternalism that's terrifying, but cultural demonisation and paternalistic contempt for the poor, combined with unthinking adulation of the extremely rich.

The winner (re)writes the history, so that the narrative makes one the good guy.

Doubly so when a large fraction of the people receiving free healthcare, free education, and free food are, in fact, children.

I have friends who didn't pay for their house. They were lucky enough that their parents just gave it to them.

So bad to be treated like a child for their entire life. They're really suffering not having a mortgage to pay every month. Instead they're saving up for their kids college.

Giving people public access to healthcare, education, and food gives them more choices in life- not less.

Means testing is paternalism. Just giving the poor straight cash and leaving it up to them to use that to get back on their feet is probably the least paternalistic strategy I can think of that isn't just cruel and results in systemically and permanently disenfranchising large parts of the population for bad luck.

Regarding the "basics to everyone" for programs, they're typically labeled "universal", and there are a number of advantages to universal programs:

1. They tend to be more resilient to budget cuts since everyone is bought in.

2. They don't have the discontinuities mentioned in the article.

Regarding UBI, studies I've seen show that people tend to spend their money on "responsible" things (as opposed to drugs and lotto tickets): https://www.businessinsider.com/stockton-basic-income-trial-...

I disagree strongly with your idea of "poor people would just spend on drugs" but there's a nugget of reason in it - there's a high risk that UBI without rent control would just be subsidizing the landlords, without actually helping the people.

For the most part people know best where there money needs to go; most of the financial advice people see from "experts" really is oriented toward people who have money left over after paying for necessities.

As for housing, I think that this would be standard econ, really. More money means more demand, which in the absence of more supply, means higher prices. Things like housing are harder to increase the supply of than say, TVs, so yeah, they'd probably go up more than the rest. But I suspect that everyone would still be better off.

I don't think rent-controls are a good idea. On the other hand, I do think that in the long run rich people gobbling up finite land is a problem;

One thing worth noting is that UBI actually has an impact on supply,.

What people want to purchase is not simply housing - it's housing in their preferred location.

I think a big part of what makes housing desirable, for the bulk of the population, is ability to earn enough of an income nearby. If that's the case, UBI might actually directly create desirable housing (out of almost desirable housing) and increase supply.

I don't expect this effect would be large enough that UBI would put downward pressure on housing prices overall, but I don't really know.

I don't get it, what is the mechanism by which you're proposing this would happen?

Imagine a unit of housing, presently empty because it's undesirable, because there are no good job available nearby. There are some pretty good jobs, but none available that pay quite enough that competing for housing elsewhere isn't more attractive to the marginal consumer.

A UBI makes the pay matter a little less, and so makes places like that more attractive.

It doesn't, first order, cause more units to be built. But that is not the only way to increase supply.

Longer term, that kind of calculation about potential units, in places where it's easy to build, might lead to more units built. But that gets more complicated.

If this is true, it would also be futile to raise the minimum wage (which I, and most leftists I know would support), because landlords would just capture the extra wage. I don't think this is supported by data from places where the minimum wage was raised.

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