What If Andrew Yang Was Right?
theatlantic.com
theatlantic.com
But what Yang doesn't do here or in his book is make a powerful case to fiscal conservative spelling out just how universal income will avoid demolishing the economy through inflation. Until this happens, UBI is going nowhere.
Although COVID-19 is on everyone's minds right now, it wasn't too long ago that Venezuela, its hyperinflation, and empty stores were the topic of concern.
COVID-19 has brought with it store shortages, which no doubt is a massive shock to most Americans. Nobody knows when those shortages will end.
Imagine what could happen if you dropped a grand in everyone's pocket every month. Also imagine the humanitarian crisis that would result by trying to suppress consumer inflation through price controls.
If you took 100 dollars out of the pocket of every American and gave it to Warren Buffett, that would most likely be deflationary.
> But what Yang doesn't do here or in his book is make a powerful case to fiscal conservative spelling out just how universal income will avoid demolishing the economy through inflation. Until this happens, UBI is going nowhere.
So many people were predicting massive inflation from quantitative easing but that never came to pass.
To me, the scary thought is implementing UBI without a mechanism to reel it back if our model wasn’t right
I can't fathom how adding $2+ trillion every year directly to working Americans' wallets wouldn't lead to greater consumer price inflation than we've seen with QE. That doesn't actually tell us much about whether UBI is worthwhile, but I don't see the point in denying it. In fact, it's important to have that discussion because there are ways we could mitigate it. For example, most of UBI would likely get sucked up by supply-constrained markets like housing, so it's probably a good idea to combine UBI with housing reform, such as development as of right for missing middle multifamily projects.
I agree, we should have an exit plan. But we should also have an entry plan.
I don't understand how this example describes a situation where inflation is a non-issue. I used to be able to afford to drink milk; now, due to inflation, I can only afford to drink water. That sounds like inflation. What am I missing from this example?
In addition if it got to the point where someone priced milk so high that customers were abandoning that segment of the beverage market, an aspiring milk empire builder could enter the market with lower prices.
The assumption being made in the allegory is that water and milk fill the same role as “something to drink,” with no qualitative difference in consideration.
Inflation requires a persistent and durable increase in the price of a good. The first issue is that a large proportion of individuals in modern economies are barely making enough money to make ends meet. They are very sensitive to price. An increase in the price of milk would likely cause them to switch to alternatives, thus lowering demand for milk which would then bring the price back down. In effect, the constraint on the wages of the lower classes acts as a constraint on prices of goods. And the second factor, is that in these modern global economies, we have plenty of replacements for almost all types of goods. So if a drought in the mid-west causes soy prices to spike, people will just east less soy based products and switch to something cheaper for a while.
COVID-19 could disrupt that of course. But my hunch is that within a few months after the lockdowns are over, most supply chains will be back up and running. At that point we will be back to being demand constrained (perhaps significantly so if the economic impact is severe enough).
When Chavez goes nutty, people don't want his currency, it starts to crash, he prints to pay his bills, it really crashes. This is where all the inflation crisis comes.
2) The 'milk substitute' thing I think illustrates the opposite point you're trying to make. Having to give up Milk to drink water is a severely negative consequence! Projected across all of one's lifestyle and habits, it would be comparable to giving up a car to ride only the bus. Giving up Netflix for 'library books'. This implies a serious degradation in the quality of life.
If anything though, we've been concerned about deflation for a very long time, not inflation.
If everyone gave up Netflix for library books, I think that’d be a massive societal win.
Other than that, I agree with your point.
But we can choose books anytime, and we don't. So when you and I think about 'win' it must be different than what 'everyone else wants' at least in terms of how they actively chose to spend their time.
For example, even with UBI, a startup will still tend to want to locate in Silicon Valley than in, say, Amarillo Texas.
The sheer ability to grab a drink with someone who can change you life in tech does not exist in the same proportion in Amarillo as it does in Silicon Valley. Hence, housing prices will differ.
This is also why there are more oil companies in Houston than in Atlanta, despite the roughly same size metro area.
Towns need tax revenue, which doesn’t come in sufficient quantity from people happily volunteering on a UBI wage.
Would socialist free housing, utilities, food, medical care, education might work better than UBI? What incentives would make capitalism provide them?
People would just quit their job if they got all that with no effort. Then how would the government be able to pay for the free stuff if it wasn't able to tax workers?
Edit: It occurred to me the government could lock people up in work camps in order to be able to tax them.
So people end up in a situation where they are forced to work in order to survive, the same situation they are in now.
I say if you want to do UBI, add a checkbox on the tax return where a person can choose to donate $1000 to the UBI program out of their tax refund. Let the UBI recipients all have an equal share of the funds collected from that checkbox.
Your opt in situation couldn't be considered UBI.
> People would just quit their job if they got all that with no effort.
Citation needed. All previous experiments on ubi have shown the opposite. You are just painting a boogeyman, without evidence to back it up.
I think the effect on motivation is the central issue of UBI. There might need to be an adjustment. I know for myself, it can be helpful to be compelled to do something that I've been putting off. Sometimes, people don't feel they have a reason to act, but having to go to work can help. It prevents inactivity and isolation.
Perhaps a focus on mental health and intrinsic motivation will be the answer.
But I think most will naturally aim at higher goals than survival... as they do now.
Also everybody has low interest rates for their houses. It’s not only open to speculators- there are people getting almost 3% interest, which is quite low.
Case 1: With no UBI the person who works in food service has to live an hour or more out of town and commutes to work each day. This is because their pay is better in town than out of town so it's worth it financially overall. Or they simply are paying more in housing costs than they should, are feeding money up the rent chain instead of saving to say own their own house and have a tenuous living environment for a family.
Case 2: With UBI the person can just move to a place where housing costs are $300 a month and do whatever they want without worrying about how they'll support themselves in an emergency where they can't find work. They could start a business. Volunteer. Stay at home and raise kids. Take care of the neighbors kids and teach them gardening. Or work if the pay is actually high enough to justify it, which seems to push more money down to human workers over profit automatons. Hey, teachers could live and teach in cities with smaller school budgets!
Is that inflation? I suppose in the sense of rising buying power diluting the dollar some, but assuming it's paid for by a high progressive tax after a certain income amount, I think it's just wealth redistribution that levels out the overall geographical housing cost to income ratio.
I think it would reduce the power of landlords, though certainly doomsayers say it will just push up rental and house prices. I think this is possible to a point, but honestly seems too locally focused. I think a lot of people would leave where they are if they knew they could support themselves somewhere new.
$1000 a month would offset decreased pay more in an absolute sense in a lower cost of living area. This will make it feasible for a family to move safely to a new place without a job lined up. Or know that if they join a union and get fired they'll have baseline support. It's hard for me to see this as favoring anyone but lower income human workers even if it's not perfect in every way.
Its also worth mentioning that the US is very big and there are a lot of places that are just not that attractive to live in[1]. So I feel like it will be quite a while before we get to that point.
And a final point. UBI is not meant to provide free rent. It is a form of social welfare and safety net. The fact that the real estate market is so imbalanced in the US is a failure of capitalism (why aren't startups and companies moving to low-cost of living areas?) And the fact that UBI can help bring some balance to real estate markets is nice side benefit, but its main goal it to act as a counter weight to the ruthlessness of market economies.
I'm not saying it's good for San Francisco tech workers, but I don't think rent costing two thirds of your take home pay is historically typical. Based on that history I do not think landlords could effectively collude to keep prices high if people are willing and able to walk away.
What happens when the water gets privatized and you can't afford that?
https://www.foodandwaterwatch.org/insight/water-privatizatio...
>After privatization, water rates increase at about three times the rate of inflation, with an average increase of 18 percent every other year
There are two kinds of goods. The ones like computers and phones which are steadily getting cheaper and the ones like housing whose price has got inflated enormously. Remember how we tried to fix the education problem by student loans and how we tried to alleviate the housing burden by mortgage tax deduction and subsidies of interests? I don't think the problem is people are unable to afford milk or a shiny iPhone. It is the price of housing, education, and healthcare.
I don't understand how anyone ever thought that making it easier to borrow money would make things with inelastic demand more affordable. People will pay what they must to get food and shelter. If you make tertiary education non-negotiable in getting a job, then people will pay what they must to get an education. If you loan them huge sums then you just reduce price insensitivity and create a massive pricing bubble.
Some context that was left out, inflation has been stubbornly low this past decade[1]. For many of us, this feels counterintuitive based on our experience with housing, education and healthcare. But as you pointed out, globalization and industrialization has resulted in downward pressure on prices of a wide array of goods. And when you factor housing costs across the entire US population (and not just the high COL areas), the inflation math sort of pencils out[2].
And my original point was that inflation caused by UBI should not be a concern because a) the prices of iPhones and milk are constrained by forces that are beyond the impact of UBI (globalization, hyper-efficient capitalism, etc..) and because b) prices of housing, education, and healthcare have long since untethered themselves from needing to be affordable (so UBI, which largely benefits the working class and poor, will have little impact there).
[1] https://www.frbsf.org/economic-research/publications/economi...
[2] I disagree with how the Fed has handled monetary policy the past few years. Even if the inflation numbers support their moves, they seem to be willfully ignoring very large bubbles (real estate, VC) forming due to their policies.
For instance, rents are proportionally related to the income of the population. How can we prevent the extra cash flow from being translated into higher rent/housing prices? If I have that extra cash, I would certainly 'leverage' it to expand my real estate portfolio :)
That said, I don't object to UBI per se and I agree that the Fed's policy would lead to some undesirable consequences. But without addressing the problem systematically, UBI would go nowhere better, I am afraid.
Here is another angle to look at the issue from. We have been relying on monetary stimulus for the last decade to keep the economy chugging along. The landlord class has been benefiting from that via cheaper interest rates. What if, instead of lowering rates, we did a UBI and in your proposed scenario, most of that money just results in high rents. Well, we would be roughly in the same spot we are in (stimulus largely benefiting landlords), but with the key difference that people who are really struggling (living in their car for example) can use that cash to get back on their feet. Also, because the money passes through multiple peoples hands before eventually getting sucked up by the wealthy, it will actually result in higher measured economic activity (because GDP is basically measure the velocity of money).
So I guess, that is what I don't understand. Our current policy is to just shovel money to the wealthy. They in turn just bid up the price of stocks, real estate, art, yachts, super bowl tickets, etc.. creating an inflationary bubble for rich people things. With a UBI, the working class gets first dibs on that stimulus, and every one up the chain will benefit (including small businesses, which also don't bet much benefit from monetary stimulus).
This is the most basic misunderstanding of economics that I'm 95% confident you have never taken even an introduction to macro course. Demand shocks don't lead to growth, only inflation.
If you’re paying for the Ubi with taxes then there’s no inflation. Net money supply hasn’t changed (0).
If you pay for ubi by printing money then yes, inflation would be a problem. But no one has suggested that.
(0) I’m willing to entertain an argument about the velocity of money increasing from ubi but I really doubt it would be too significant.
You can’t just store wealth in a vault and have it grow.
Most companies can easily ramp up production to meet increased demand. It's not magic, it's the modern world.
Most general goods companies are demand constrained, that's why they need to do marketing campaigns to make more sales. It's only if they had too many orders and couldn't grow production that we'd have inflation. So there may be some inflation immediately but not long term.
But where it lands has. House prices and Ferraris might be cheaper. Milk and rents will be more expensive.
Even In your example if demand for houses goes down and demand for milk goes up, what prevents more land being used for dairy farming, more builders becoming farmers?
Similarly, the US government already buys up milk to create a price floor, giving the milk away to the poor and to school lunch providers.
Somehow they were able to do this without raising taxes by 50%... Turns out we have the money after all.
Similar logic to how raising tariffs doesn't hurt companies as much as they hurt customers because the cost is passed on (speaking from an American perspective, not considering tax systems like VAT).
The thing is people would still shop around for the lowest price. The vendor with the lowest price gets the business. Even opec can’t raise their prices in unison without someone cheating.
But we know economically this isn't necessarily true. Some industries are more monopolized than others. Some people aren't in areas where they have good alternative shopping choices. Goods like toilet paper have many different price points and it hasn't been a race to the bottom among the brands to become the cheapest toilet paper. "You get what you pay for" is still a common rule of thumb. Veblen goods would also rise in price.
It's my opinion that UBI would give businesses an opportunity to raise prices in certain sectors, but I concede it wouldn't be universal inflation across the board.
Competition will eventually drive prices down and lead to more consumer choice.
When everyone gets $1000 for sitting on their ass, wages have nowhere to go but up. Why go to work for minimum/low wage, if basic needs are met? Wages go up + inputs go up --> end prices go up --> even the "vendor with the lowest price" is charging much more than before.
The assumes financial excess. The reason for UBI is that there isn't excess. If 78% of Americans are living paycheck to paycheck, then that's not excess. If 63% of Americans can't afford an unexpected $500 bill, that's not excess.
You're right that inflation happens when there is excess, but given these stats, I don't buy that part of the argument. Even if these stats could be explained away from being financially irresponsible (I don't believe this is the common case), it still wouldn't be excess because people are still spending. If we don't assume excess then this argument becomes as silly as saying that giving people jobs with an income will cause inflation.
So where could this money be captured? A person that couldn't afford a car can now. I person with a $1k beater car can now buy a $5k car. Someone that was living paycheck to paycheck can now take a breath, buy a TV and a Netflix subscription. Someone that was unable to invest before could use that money to invest. The money affects everyone in different ways, but supporters of UBI think it is clear that there are already avenues to "capture" this money without inflation and that different income groups will spend the money differently. Studies have also shown that when there isn't full market capture cash injection doesn't cause meaningful rises in inflation.
Wouldn't car dealers raise their prices some value up to $1k because they know anyone coming in that month to buy a car also just received a $1k check from the government?
> Someone that was living paycheck to paycheck can now take a breath, buy a TV and a Netflix subscription.
Netflix may raise their prices knowing everyone has a little extra cash to spend, and that people would rather pay a dollar or two more than cancel.
If your streaming subscriptions, phone bill, and everything else goes up incrementally because companies begin to factor UBI income into their pricing, then without making any lifestyle changes, you'll see that overtime you're spending an extra $1k a month due to higher prices (of course it won't work out exactly like that, but the point is that some portion of your $1k UBI will go toward paying for things you were already buying, but that are now more expensive as a result of UBI-aware pricing.)
If you believe that companies won't act that way or that other market forces (such as increased competition) will renormalize prices, I can see the argument, but I don't buy it personally.
Why would they. They just got more customers. They already have a surplus of supply. In fact, you could make the argument that they could reduce car prices because with more customers you can operate on smaller margins. This is literally operating at scale. But it is hard to say, I'm just pointing out that the exact opposite could happen.
> Netflix may raise their prices knowing everyone has a little extra cash to spend, and that people would rather pay a dollar or two more than cancel.
Or look at Netflix's strategy. It is to corner the market. The classic Silicon Valley strategy. Corner the market, hemorrhage money, and then make a profit. More customers works into their plan perfectly without raising prices. In fact, now they have more competition. If every streaming service raises prices then people will have less of them and pirate more (this is already starting to happen). Even a lot of companies outside SV run a loss in the beginning, until they reach scale.
TLDR: More customers doesn't mean prices go up. Frequently it means the opposite. Scale.
I'm not convinced economy of scale applies the same way in this case. Cars (and mattresses, etc) are large and infrequent purchases dominated by preference. Dealerships make most of their money through sketchy financing and tricks.
There's a large class of financially illiterate people who routinely make massive mistakes like monthly income spend planning. Given an extra thousand per month, two hundred more on a car is both feasible and justifiable. Lifestyle creep.
I would agree if the topic was commodities like eggs or rice -- sure, I purchase by efficiency. And I'm not sure about the SV strat and dealerships. It could work in theory, but as of today dealerships are basically fungible and signal the same way as each other. I have no idea how a dealership could signal their lower marginal costs, especially survive in an industry with insane scaling costs.
Also, this has nothing to do with operating at scale
Um, wouldn't that be increased demand? More customers with more money. That's the definition of more demand.
Economics 100 forecasts a price increase under those circumstances.
But seriously, no. I literally gave you examples of this strategy happening. Here's some more companies doing it: Venmo, Move Pass, YouTube, Google, Amazon (store), Facebook, Robinhood, Vanguard, need I continue?
Simple models are great to get the basics, but if they worked for most things in the world everything would have a O1 solution. Frankly the world is more complex and can't be explained in a 10 minute lecture. That's why we have experts in subjects and why basic knowledge is drastically different than expertise knowledge.
There is still competition between car dealers, so I doubt this would happen.
Do I expect hiccups and bumps in the road? Yeah, why wouldn't I? Humans aren't perfect. Never have been, never will be. But just because there are speedbumps in my neighborhood doesn't mean I should never go to the store. I still need to eat at the end of the day.
I think before implementing UBI, we have to address the broader issue of anticompetitive behavior in American business, due largely to decades of ill-advised deregulation, coupled with regulatory bodies who refuse to prevent anticompetitive mergers. Once we have undone the damage of deregulation, then I believe it's prudent to start putting UBI proposals on the table, but not before. Otherwise we risk making the situation worse for consumers and better for rent seekers.
Putting UBI on the table today without already having a reformed regulatory framework in place from day one will result in a failed project, IMO. Opponents of UBI will use this to say that UBI is broken, instead of pointing to the real problem, that regulation is broken.
I don't think there would be this sudden collusion at such a large scale though. Would be pretty obvious and begging for a crackdown IMO.
But if the core problem is that everyone is bidding away all their financial slack on rent, then they will still take any such windfall and do the same with it, pushing themselves right back to the same (low) level of slack they have today.
Earlier advocates for poverty alleviation noted this effect early on. Winston Churchill told of a time when they got the tolls on a bridge removed, and then rents advanced by the cost of using the bridge twice a day.
http://www.landvaluetax.org/current-affairs-comment/winston-...
(search for "bridge")
So if it’s hopeless then what’s to be done?
The point is that the UBI isn't going to fix things until you first fix the dynamic that's responsible for gobbling up all the economic slack, so that should be the priority.
They said nothing like that; that might be what you think, and I'd be glad to address that, but it doesn't help the discussion when you invent arguments that were never made and expect me to have already answered them.
Real estate, unlike cars or food, can't be brought on the market to rapidly respond to demand, and people don't keep raising bids to the point where they leave a certain amount of slack in their budget.
There are ways to get around this (like with faster building and scaling up of transportation infra) but it would need to be address before throwing on a UBI, which was my point.
>If you inverse your logic it means lowering wages provides cheaper rent.
Rents generally do decline when wages fall.
I am pointing out there is an assumed and implied argument that 1) inequality is a problem and must be corrected, but 2) straight redistribution of some wealth with UBI will fail because-inflation/rents, but 3) we should have less inequality though even if we did that would put us in the similar position as with UBI where costs rebalance.
And at the end I ask, rhetorically but still, what's to be done. So here you also assume it's true without addressing it and offer no answer to how to address the gobbling up of the economic slack.
I wasn't making anything like that argument. I was saying that, if you don't address the dynamics that gobble up household economic slack, then a UBI won't produce the additional slack you're trying to produce. Three's nothing circular about that.
>And at the end I ask, rhetorically but still, what's to be done. So here you also assume it's true without addressing it and offer no answer to how to address the gobbling up of the economic slack.
In fact, the link I gave was from (the aptly named) landvaluetax.org and is from an organization that has one theory and solution for how land rents eat up slack and a solution.
And even if I didn't, it's still a valid point that the primary problem is "things that extract household slack", and needs to be address before any UBI is piled on.
I'm not saying the argument fails because there is a circular loop. I am saying there is something more to the system and we shouldn't drop consideration for UBI based on the argument that inflation will gobble up all of the increase because that argument holds true equally if we improve equality to everyone gets a wage increase.
Which really makes your point even more important. Particularly the one about land having the strongest growth pressure.
Your numbers seem fictitious to me. 78% of Americans living paycheck to paycheck? Look at what they are spending their paycheck on. One car per person. 2.1 people per house. 3.2 game consoles per person. A new laptop every 15 months. A new car every 36 months. A new $800 smartphone every 11 months.
Every low-income 10 year old I see is carrying around $1000+ of electronics and treating them like they're disposable. But our school district offers free breakfast to 100% of the students. We have student parking lots for 16 year old kids.
We're all living paycheck to paycheck, but I claim there is still huge excess. Giant houses for average families, computers, ATVs, boats, cars, TVs, 2 movies every night, 4 Amazon deliveries a week, direct access to Chinese suppliers, personal juice presses, occasional cruises.
Air-bnb and uber are not luxuries for 1%ers. These are basic human rights chiseled into the constitution.
There are, of course, truly poor people in the population. But our definition of poor sure has changed a lot in 50 years.
Show me any random collection of 10,000 Americans and I will show you $2 million/year of disposable income without sacrificing a single smartphone or smart TV.
The truth is most American's wages have gone to Health Insurance, College, and Housing.
See https://www.msn.com/en-us/money/personalfinance/this-chart-i...
2) Selection bias is a thing. While there are rich Americans living paycheck to paycheck, most of the people in this situation are not rich.
3) I'm not sure I'd consider a smartphone an expensive electronic. You can get one for under $100 and a plan that is <$20/mo. This isn't exactly breaking the bank...
4) I also wouldn't call a cell phone a luxury item in today's society. Even a smart phone. You can't get a job without a phone number, which now usually means texting included. A smart phone just means you have a single device that can also get you on the internet. Again, we're talking about a purchase that is well under $1k, has high utility, and is being held onto for years.
Sure, this isn't poor like poor in Africa, but does that really matter? We don't live in Africa. We live in a rich society, I'd like to live in a wealthy society. One where our poorest can get shelter and food. If our definition of poor becomes having constant access to housing, food, health care, and are able to do so on 40hrs/wk, and nothing more, I'd call that a success. But we're clearly not there yet. If we have that, I don't care if someone has a trillion dollars and can buy rocket ships because we're in a post scarcity society (maybe not world, but society).
I also gave recommendations for a much broader sample size in the book that spans multiple industries and geographies.
Finally, I posited a specific theory as to why 78% of Americans are living pay check to pay check...the basic social mechanisms of survival, Health, Education and Housing, have risen at a rate far exceeding inflation and have actually exceeded average income levels. These rises are due to governmental policy and not some failing of individual citizen consumers.
I would argue that if a person can't afford basics like Health, Education and Housing, the are poor. In fact, they report feeling poor; their bodies and minds exhibit the stress and anxiety of being poor. We can and should create companies and governmental policies to work to reduce this reality, rather than blaming people for their condition.
If we as a society determine that it is necessary to have a car or cell phone to contribute in a productive manner we should ensure that as many people as possible have the tools to be productive. That's just a rational policy to boost GDP, the tax base, the total size of the Market for goods and services, and trade with other countries. You know, capitalism.
You stated 1/2 your employees don't own a smart phone. That is simply not representative of the general US adult population. Additionally, all your employees earn $10/hour. Again, not representative.
Again, nobody is arguing there aren't poor people in dire situations. supportlocal4h's argument was that godelski's stats were exaggerated.
That's $200/year on average. Not exactly a compelling argument.
Why is there no incentive to undercut one's competition in this model?
either lower the tax or start offering monthly tax refunds?
would that work as an alternative or equivalent to UBI or am I thinking of something very different?
https://www.nytimes.com/2019/09/27/business/yang-warren-taxe...
It does not read like an endorsement — just an assessment that Yang's plan is better than a plan he describes as unworkable (Warren's).
In the Youtube, he says: "My own view is that a universal income financed by an efficient tax, something like a value added tax, might well be worth considering" — hardly a full-throated endorsement.
Has he said anything else that is more positive? Or more specific with regard to the amount of UBI that he thinks would be appropriate/efficient? I wouldn't call either of these things an endorsement.
"The plan is just a version of the negative income tax. Milton Freedom first proposed it...and as a student 40 years ago I thought it was a pretty good idea. And it turns out I wasn't alone in that judgement...In 1968 a 1000 economists endorsed a negative income tax along these lines. What Andrew Yang is proposing is a version of what these 1000 economists endorsed back in 1968. Could 1000 economists all be wrong? Laughs Well yes they could. But I don't think in this case they are. My own view is that a universal income financed by an efficient tax, something like a value added tax, might well be worth considering. And I'm one of the signatories...of a plan to do something similar with a carbon tax."
As in, the $1k/month thing is too big, and he thinks we should consider doing something smaller. How much smaller? We don't know for sure, but I doubt economists would support a carbon tax that would approach the level of $1,000/mo for every adult in the US. The primary purpose is to internalize the externalities of pollution, not to generate revenue.
The fact that an economist thinks a concept is worth considering is a far cry from saying they are endorsing a specific instance of one of those things. It's one thing to say he endorsed the concept. It's another thing to say he endorsed the plan. He didn't.
Essentially you seem to be saying that creating a more equal society results in higher inflation. I don't see your argument being supported by reality, I am not aware of studies showing that the North European countries have statistically higher inflation.
That said, all those monetary grants could lead to excessive demand which leads to inflation, especially in sectors of the economy that are not competitive. Whether it actually would lead to inflation and, more importantly, to how much is a question that needs to be answered empirically.
You mention Venezuela which is a totally different scenario. They had an economy overly dependent on imports paid for by the revenue from oil exports, so when the price of oil crashed, so did their economy along with it. With resulting large amounts of foreign denominated debt, their only options were to 1. default 2. print money to pay off those foreign-denominated debts. They went with option #2, and their currency collapsed. Furthermore their country has extremely weak property rights (eg. businesses being seized by the government), enormously high levels of corruption, and ridiculous price controls.
Now what does any of that have to do with UBI?
1. On the margin, UBI reduces employment and production. This contributes to inflation.
2. On the margin, UBI increases consumption of consumer staples. This contributes to inflation.
3. On the margin, UBI increases the velocity of money. This contributes to inflation.
4. Under most assumptions, UBI increases government spending. Either taxes will rise, increasing the real cost of goods and services, or the money supply will increase, contributing to inflation.
UBI advocates should not dismiss these effects outright but should argue that they are small in comparison to the benefits of UBI. The lack of proper consideration of these arguments (and other arguments) by UBI advocates is pretty dang spooky.
2. Increased demand for consumer staples, if met with increased supply won't lead to inflation, if suppliers and entrepreneurs see the increase in demand as stable, they will make investments to increase supply. As long as we allow the price seeking mechanism of the market reach equilibrium, inflation will be at most momentary.
3. Velocity of money doesn't, by itself create inflation. Said another way, it's not a sufficient condition to bring about inflation. Sometimes a massive increase in money is just hoarded and doesn't enter the economy in any real sense.
4. Taxes don't necessarily have to rise in a regressive way such as sales tax and instead could be redistribution. I suspect what we would see is less inflation in the luxury art and real estate market if taxes were increased and the proceeds redistributed.
https://www.chrisstucchio.com/blog/2019/basic_income_reduces...
https://news.ycombinator.com/item?id=22493537
2. Assuming that the equilibrium point remains at the same price level is difficult. It requires assumptions about the elasticity of demand and the elasticity of supply. Generally, if UBI has disincentivized work, you would expect less work, less supply, and a higher equilibrium price.
3. Under a constant money supply, increased velocity of money does create inflation. This is fairly standard economic theory. Increased hoarding is definitively a decrease in the velocity of money.
4. Fair enough, but it requires you to trust the politicians to pass a tax that impacts only the extremely wealthy. This is not guaranteed or even likely.
UBI as a policy is trivially putting lots of money into circulation, so it's not unreasonable for people to be worried that would be inflationary.
Venezuela is a great example of the problems of inflation, which is a big concern with UBI as a policy, that's what it has to do with UBI.
In fact, the crisis in Venezuela was driven by OPEC dropping the price of oil to keep market share and prevent US oil production from fracking and the like from being viable.
Every time you think of Venezuela, think of these issues because any model of economics without this complete picture will yield inaccurate conclusions and fear of inflation being right around the corner when that is not the case.
The DNC in their wisdom have again chosen to blank Gabbard and focus on AOC and Romney thinking about doing the same thing, although I believe there are now co sponsors and momentum for HRes897.
https://actionnetwork.org/letters/include-ubi-in-the-economi...
But it is fair to not have her in the debates when she does not meet the requirements.
It's disingenuous and she had next to 0 support anyway.
Gabbard resigned as a rising star DNC VP in 2016 to endorse Bernie Sanders over Mrs Clinton who had bought the party off with a cash infusion (largely raised by Weinstein) on the agreement she had control of party strategy and messaging, and could include multiple super delegates at the convention. Congreswoman Gabbard announced her grass roots funded presidential campaign and has run it from a mini van with volunteers, a very small paid staff and ~$1m budget.
Gabbard got great traction - most searched for via Google - in the first two TV show Q & sixty second answer commercial TV 'debates' and destroyed the Harris campaign with her debating skills in November.
Throughout the campaign, and massively increased in 2020, the DNC media has either subsequently ignored her or run negative messaging to undermine her credibility. The DNC knows reform would come if Gabbard got control.
The DNC changed their debate rules to allow 55x billionaire Bloomberg to 'run' and debate as a presidential candidate, spending incredible sums to obliterate Sanders and others before pulling out again.
The corporate puppet candidates Buttigieg, Klobochar (and subsequently Warren afterwards) pulled out just before Super Tuesday - and after tens of thousands had cast their postal ballots - to endorse Biden, the DNC's preferred candidate. The debate rules were changed again by the DNC after Gabbard won two delegates to exclude her. The only media Gabbard gets coverage on is Fox News and internet shows and podcasts.
There is a massive disinformation campaign she is constantly fighting (Russian asset, Assad and Modi supporter etc) that undermines her fundamental anti war pro diplomacy platform.
My point: if the DNC give hundreds of millions in free positive media coverage to their preferred candidates and blacklist/ blackout positive coverage of other candidates is it any surprise Gabbard has done so badly, or other future and past candidates? Many many people don't even know she is in the presidential race on ballots that still list long suspended campaigns from Harris and others.
The DNC rely on name recognition and positive media messaging to amplify their preferred candidates. This is not democracy or a level playing field.
The Gabbard platform positions: www.tulsigabbard.org
Once UBI exists, people will rely on it for survival. It will be the single most influential campaign topic.
Worse, if UBI were to get 'Obamacared' then we'd end up with a massive battle over implementation, followed by a much worse system than the one we had prior (worst of all worlds with numerous 'compromises'), and then followed by a repeal and whatever subsequent chaos comes out of it.
I don't want to imagine what would happen to the folks who find themselves reliant on UBI if it were to go down that path.
I want people to have enough money to live reasonable and modern lives. What I DO NOT want is for UBI to become a political weapon and for the people who rely on it to have it taken away suddenly.
That is a serious risk to that system that doesn't get enough attention. It could happen due to financial collapse or for political reasons. But no matter why it happens, the damage would be absolutely horrific.
Personally speaking, as a proponent of UBI, I reluctantly accept that the first versions of it will have to be state-based. If only to be able to learn from its mistakes and iterate from them to refine them further.
This is one of the reasons I'm such a cryptocurrency enthusiast, after the wake of the financial crisis and massive unemployment in Iceland they deployed, and subsequently failed, with aurora coin to try and experiment with UBI. Had we gotten more information from it would have helped to be able to have a decentralized version of it by now, but it was too much for such a poorly backed project to surmount.
> That is a serious risk to that system that doesn't get enough attention. It could happen due to financial collapse or for political reasons. But no matter why it happens, the damage would be absolutely horrific.
I think this is inevitable and not a question of if but when it will occur, UBI will not be the biggest contributing factor to the 'system' failing, either: it will have been an outcome of centuries of needless war, currency corruption and Market manipulation, ecological destruction and climate change.
its just a matter of time. At least having this in place prepares us as Species for what lies ahead, the status quo cannot be maintained, this much has to be accepted.
The transition is definitely terrifying, but the idea of getting this right has so much potential and worth the sacrifice when you realize just how broken the 'system' really is.
I think this what most don't understand when they see the Greta Thurnberg led Gen Z revolts happening all around the World, and they're dropping out of school to protest; this system is already doomed if you cannot convince the future generation play along anymore.
Your opposition is actually an example of a logical fallacy. I'm struggling to find the exact name of it. But it has to do with that fact that you are against the adoption of something positive that you agree with because of some hypothetical negative externality.
Edit: It's called the "Perfect solution fallacy" https://en.wikipedia.org/wiki/Nirvana_fallacy
The perfect solution fallacy is a related informal fallacy that occurs when an argument assumes that a solution should be rejected because some part of the problem would still exist after it were implemented.[4] This is an example of black and white thinking, in which a person fails to see the complex interplay between multiple component elements of a situation or problem, and, as a result, reduces complex problems to a pair of binary extremes.
Unfortunately, this hasn't happened, so we're stuck with various government-mandated minimum wage levels that are tied to the value of money from several years before.
Companies can now point to the law, and use this obsolete number as a metric by which to set their own salaries. What was intended to protect the laborer is therefore perversely being used to protect their corporate employer.
No, the share of returns that go to labor is constant, so productivity gains are split between labor and capital the same as returns prior to the gains are.
In the alternative, capital captures an ever greater share of the returns over time because they are incentivized to invest in those areas that creates the most return to capital.
https://krugman.blogs.nytimes.com/2010/02/13/the-case-for-hi...
so suppressing labor is certainly a consequence of our positive inflation policy. the intention can be debated, but note that various govermental units tolerated prejudiced efforts like mccarthyism and redlining too.
i'm not sure that the liberal economic polity is a distinct class from those same capital holders (but i generally disfavor left-right political framing anyways).
This is related to why minimum wage is inferior to UBI as a basic support: minimum wage is in tension with employment, especially at the low end, in a fairly direct way. UBI, while it had to be supported somehow, isn't directly in tension with employment specifically at the bottom.
I'd like to see minimum wage tied to inflation but UBI tied to a funding stream that grows with output, so that per capita benefits grow (over the long term) with per capita output. And I'd like to see minimum wage decreased from the level it is calculated at with inflation adjustments by the hourly wage equivalent of UBI (for simplicity, annual UBI/2000, so that a $12,000 annual UBI would reduce minimum wage by $6/hr from it's pre-UBI level.)
If anything it's a tax on income.
Wealth is accumulated income tax
so even if you expect an additional tax that grows at the same rate?
I live in a country that has experienced inflation over the last ten years and the reality is that income taxes have followed inflation but property taxes not, because the government doesn't update property book values as often. The result is that you can hold very expensive property while paying very low taxes. But this also happens in lots of other places: California and Proposition 13 come to mind.
I feel that way too, but remember that indexing wages to inflation made the stagflation of the 70s significantly worse (I don't believe it was the cause, though it is often blamed). That doesn't mean it's not a good idea, in particular for the minimum wage, but some further thought is required.
After the government shutdowns and lock-ins began, I started to think about our current political trends. If we keep voting for political leaders that tend towards fascism or socialism, we could end up with severe consequences.
Both camps were eager to close restaurants and stores without establishing economic fallback plans. Essentially, they indirectly removed the SMB owner/middle class. This seems like the first step towards making people solely reliant on IBU even it is promised only as a "temporary fix."
UBI and M4A would encourage me (and others) to pursue less lucrative pursuits (arts, research, gamedev, entrepreneurship, etc) but it would be hard for me to quit my nice tech job salary if there's the specter of the GOP potentially killing the benefits that enable my pursuit.
And that doesn't even compare to the effect that uncertainty has on the less fortunate.
Not to mention you lose the overhead of dealing with insurance, for you and your family.
But yeah, I could see a class of people who would use UBI to permanently slack off whereas they would be highly productive otherwise.
Edit: Note I'm from Canada and have taken healthcare for granted until I went to the US. My experience has been overwhelming positive with universal healthcare, and the only complaint is I've had to wait a few hours per emergency visit. Zero wait when serious though.
If you're highly productive, willing to live on a minimal payout, and highly prioritize time away from work, then by all rights you should already be on sabbatical eight months a year or something.
It will also suffer a death spiral because every donor will know how much every recipient gets.
If I put in 500 each month and get 200, then I'm going to look for a better place to put my donation. Not because the 200 is a bad RoI for me, but because 200 seems like such a pointless sum for everyone to be getting. I'd rather have that money funding cancer research or more pertinently, I'd rather give all 500 of it to people who need it.
Everyone will have their thresholds for what seems "worth it". The lower the payment gets, the fewer donors there will be, and the proportion of the income used for admin will rise.
I sympathize with the left far more than the right but both sides seem perfectly happy to consider the proletariat as sheep when it serves their purpose. As far as I'm concerned, UBI would be meaningful change to the system.
I think it's more that UBI will result in at best a brief reprieve from poverty. It won't be a long-term or even medium-term solution as it only treats the symptom, not the cause.
While I can celebrate anyone promising/implementing welfare programs such as UBI and the huge social benefits they bring, I am cautious of how these will play out politically.
>both sides seem perfectly happy to consider the lower classes as sheep when it serves their purpose
Just want to throw out that I disagree with this
Yes, UBI can be weaponized politically, and probably will be. But the current system is already weaponized. If it's turned against people hard enough, that only works in the left's favor. If not, it at least suggests that some degree of meaningful change is possible within the system.
>Just want to throw out that I disagree with this
Fair enough.
Regarding Obamacare, there were a lot of issues, but a large one was the 'keep your hands off my health care' crowd. These folks were convinced they had good health care and that the government would ruin it (ironically, many of them were on medicare). So right off the bat, the constituency was fractured. And for this same reason, I actually think Universal Health Care will be a much harder sell in the US than a UBI. Despite our health care systems very obvious issues, too many people think their current plan is good enough (and may not even be aware of their plans shortcomings) and are too worried that any sort of change could put them in a worse spot. With UBI, its a blank slate and a pretty easy sell. Gov: Hey America, here is $1000. Us: Okay!
Sure, because the effect will be permanent removal rather than slow whittling down of other programs people depended on, and the people that depended on them will have to make do with whatever lesser payment the government can afford to pay out to much larger numbers of net recipients of a UBI
"Hey America, here is $1000, and $2000 in extra taxes to fund all those people that didn't need welfare before" is also a surprisingly hard sell. It's only an easy sell when you assume everyone's a net beneficiary
People adjust their spending/working patterns to account for the UBI - maybe they have a child they couldn't have afforded before, or take a long-term mortgage on a home.
Then the political winds change, a politician wants to show how tough they are, and of course we shouldn't be giving UBI to people in jail/drug dealers/anti-vaxxers/millionaire executives/people without photo ID/tax dodgers...
Basically, the same way the federal government can institute a national speed limit and a national drinking age, despite not having the power to do so directly, by making federal highway funds conditional on states having those limits.
As opposed to what, private undemocratic unaccountable authoritarian institutions controlling peoples' lives?
> nce UBI exists, people will rely on it for survival.
Anybody who's dependent on their employers' paycheck is dependent on their employer for survival. How is dependence on the government any more dangerous than being dependent on a corporation?
We already have UBI, but only old people can qualify for it, and the dividend amount is proportional to how much money you made in your lifetime. It's called social security.
Extending this dividend to the rest of the population is the next logical extension of this.
Compared to the current system where some combination of the numbers in your bank account and am insurance company beaurocrat are making the decision? Yes.
Changing your employer is much simpler than changing your government.
Making changes at your place of employment is often impossible. We get direct chances to change our government every X years. And changing to a different employer often isn't that easy for many folks.
I don't think tying employment to healthcare is a good thing, but I don't think your argument gives a good reason, either.
Your picture of people picking and choosing from enticing opportunities isn't remotely true for people at the bottom where this would help.
Which is more authoritarian: 50%+1 of the people with the legal authority to imprison or kill you, or hundreds of competing firms bidding for your business or labour?
I can easily see a government abusing UBI, just like the U.S. federal government has abused highway funding e.g. to extort the states into raising the drinking age.
the truer, and more useful, dichotomy is the people vs unwieldy and overgrown institutions.
small institutions are great: your local government, your local bank, your local community center, etc. because the power disparity isn't so large that they can be kept in check and directed to do the will of the people.
large institutions, on the other hand, are irresistable to the power-hungry, and have no foolproof defense against corruption to their aims. they view people as resource to extract power from, not customers/constituents to serve.
UBI falls on the side of subjugating the people to the whims of government, reducing liberty and freedom, not extending it, as some like to argue.
(this is also why we should be against corporatism, and the favoring of capital over labor in general)
1. "private undemocratic unaccountable authoritarian institutions" are a lot of buzzwords, which don't accurately describe your local businesses. If every company was google, we could go there, but in the current reality, you're presenting a false dichotomy. The balance of power between people and their local institutions is wildly different than people and the federal government and megacorps.
2. A person can freely look for work at any time. They can upskill and seek more gainful employment, transfer into a better paying position in another company, or find employment that is more suitable to their immediate needs (part-time work for those studying as example.) You can't do that with government - unless you compete directly against the megacorps who use their power and influencer to affect elections and legislation.
Example: We got rid of net neutrality despite it being enormously popular. That's massively undemocratic and demonstrates that large institutions, government or not, don't always act in the best interests of the people.
3. Social Security is its own creature and requires a more thorough discussion. What I can say is based on my own experience - my family didn't benefit from Social Security. By the time my father was eligible for benefits, he was already on his death bed. Spousal benefits are "up to" half, meaning my father worked his entire life and my mother only got to benefit from half the 'savings.' If he had just put that money away like he did all his regular earnings my mother would be much better off.
I can't imagine my family was the only one in such a situation.
It's not a question of 'if' but 'when'. You can learn quite a bit from India's insane "reservation" policy where more than half of all opportunities (and in some cases > 80%) are 'allocated' to certain 'backward classes'. Never mind that these 'backward classes' dominate politics of the country, and are often quite rich (the 'creamy layer' in India is about $20k, in a country with per-capita GDP of 1/10 that).
The supposedly 'conspiratorial all-controlling' Brahmins are but scapegoats (like the Jews) in a propaganda story that only dates back to the British times (see Nicholas Dirks). It's depressing that the supposed 'liberal' Western media is creating a situation which very well might lead to widespread genocide and pogroms in India (this has happened before), like in Rwanda, Germany and elsewhere. The grand Hindu temples and all its wealth has already been looted by these supposed 'backward classes'; I wonder what else they'll come for next.
I'd rather see reasonable minimum wages, and higher taxes that are spent on universal health care, free education and social welfare in the usual Prioritarian way, though with very loose conditions on eligible recipients. Make it the least bureaucratic possible and the most friendly to side jobs and transitioning to self-sustenance as possible, and it will works optimally. The current systems in most countries are horrible, because they are designed to punish people who are creative and try to make money on the side - they are based on the stupid and outdated idea that you're either a successful entrepreneur, or an employee, or get social welfare. In reality, the system should allow anyone to transition between those three roles with ease, as it fits best in the current situation, and without being bogged down by existential sorrows all the time.
Could you elaborate on that a bit? How and why would it do that?
What's your opinion on Negative Income Tax?
> The current systems in most countries are horrible, because they are designed to punish people who are creative and try to make money on the side
Agreed. The number of people applying for some program while trying to hide some of their income would go down a lot if the eligibility and payout were gradual. Plus the truly heinous criminal cases would be still there to prosecute. (Eg. if someone sits on a pile of gold and lies about it on some application.)
> Could you elaborate on that a bit? How and why would it do that?
Disclaimer: I'm not an expert on UBI myself and have merely been to a talk+discussion about it, so I'm happy to be convinced otherwise or hear opposing arguments.
I see two problems. First, a realistic UBI would be at an extremely low level, barely exceeding the existence minimum. However, it would diminish employer's willingness to treat people in unqualified low-wage jobs fairly and well (in small companies they do that a lot). They would fire and hire as they see fit, because someone fired supposedly could live easily off UBI. It seems to me that a consequence of this attitude is also that wages for those jobs would sink and some of these jobs might even degrade into unpaid "internships", based on the argument that people with UBI can take those jobs to have a purpose or for personal development, but don't need them to sustain their life. In reality many of them would still depend on those jobs, though, because UBI would be too low.
Second, UBI itself does not prevent massive capital accumulation and the continuously increasing divide between rich and poor, and it does not prevent the spreading of wealth by inheritance (as opposed to merits and work). There is no obvious reason (or at least I cannot see it) why UBI would change the current trend of increasing the gap.
Taking these two issues together, I don't see how UBI can solve society's main problem, which is this increasing gap between rich and poor and all problems that come with it regarding eduction, health care, political power distribution, social mobility, renters vs. land-owners, gentrification, etc.
I'm not an economist, but Negative Income Tax seems much better to me.
The problem of too low UBI seems the biggest practical one. And if we do it somehow needs-based, then it stop being universal, which is one of the supposed advantages - that it absolutely eliminates administrative costs/problems/etc. (But of course those are very fine straw men. Rationally none of those matter. Only that we somehow synthesize a long term (eg. sustainable) strategy to solve the problems that every kind of income/wealth redistribution aims to solve.)
Of course with that attitude we're quickly back to where we are now, needs based assistance programs. Plus a lot of recommendations on how to change them. One of them is that we should stop fucking around - to use the expert terminus technicus - and just give poor people money. Yes, they might even spend it on things that give them some pleasure on the very short term. They might even buy drugs. Not that they can't do that now with some extra steps. (Buy a-okay food with assistance program, sell it for cheaper, buy booze.)
And you are exactly right, the inequality is again completely independent of UBI. It depends on taxes, labor's share of income, etc.
UBI is a magical unicorn, it is assumed to provide everything good. Especially because it's so vague most of the time. (That's why talking about NIT is much easier, it's a rather concrete form of UBI.)
At some point, a UBI will become a necessity. The most likely other options are a dystopian nightmare or a complete overhaul of our basic economic principles (i.e. a post-scarcity Star Trek-esque society)
Makes me sad to see their faces when they realize just how far along and how good the self driving trucks have become:
- https://www.youtube.com/watch?v=_iaKHeCKcq4
UBI will become a necessity because the alternative will not be pretty.
Of course this has to be balanced with the utter paternalism of determining "needs" in the first place. It clearly isn't enough on its own, and is also ripe for abuse in different ways.
I guess what I mean is that in order to fix, as Yang says, the biggest winner take all economy, you have to do something different than just throw money at it (lest the winners take that, too). The goal should be to address why we're here in the first place to make sure it doesn't happen again (at least not to this level), and not to just barely get by and bounce right back to being one inconvenience away from ruin.
[1] Household Expenditure and the Income Tax Rebates of 2001.
https://www.nber.org/papers/w10784.pdf
[2] Consumer Spending and the Economic Stimulus Payments of 2008. https://www.nber.org/papers/w16684.pdf
Although this choice is probably pretty easy mathematically, it's kind of a terrible choice to have to make, so after a while the plan changed to saying it would stack on top of some other benefits.
(But none of this matters because whatever Congress might do would be different.)
There are some social services that are necessary and beneficial but these should be built on top of a UBI foundation for maximum effectiveness.
It just provides every American with increased economic freedom. It's a good thing my doctor accepts USD :)
That $1000 check will only cover the ride to the hospital before tax.
On a more serious note, yes. Beyond basic necessities like healthcare and education, that the government would like to micromanage lives of welfare recipients feels demeaning in the extreme.
Some people do not get good enough education and do not know how to effectively allocate resources.
> There are some social services that are necessary and beneficial but these should be built on top of a UBI foundation for maximum effectiveness.
Do you mean the other way around? Necessary social services should be the foundation with UBI built on top of it. Social services can do some things better than UBI can even when assuming everyone uses their UBI completely rationally.
Because we'll have an issue when you spend your UBI on anything and then need assistance with rent, food etc pp.
Instead of trying to just "ease this", why not try to eliminate it?
Australia has the most liberal welfare in the world. Anyone over 18 can get $984 per month, and up to another $242 in rent assistance. [1]
It has nothing to do with your previous employment history, or being fired, or anything like that. In fact, you can get it if you've never had a job in your life. You need to be "actively looking for work" which in reality means fill out a few job applications and forms every week. It's easy, I've done it.
You can't live a glamorous life, but you can certainly live. Especially if you get 3-4 people in a cheap rental, you'll have enough money to surf everyday, or watch TV, or smoke weed or do whatever else you want.
Yes, there are people that do exactly that, and probably will for all time. Has it ruined the Australian economy? nope. Has there been rampant inflation? nope.
I know it's not exactly UBI because if you have a paying job you can't get this money. So it's not "extra" money for everyone, but money for those that can't/won't or don't find paying work. It's interesting because it shows what percentage of people choose to sit around and do nothing with their lives and get free money - not that many [2]. When you dig into the numbers and take out age pensioners, people with disabilities and students (who get paid to go to university), you see that about 1.2 million Australian get welfare payments, which is just less than 5% of the population.
Keep in mind Australia has extremely low violent crime rates, and has one the highest happiness indexes in the world, and Melbourne is often voted the world's most livable city (or it comes in 2nd). [4]
Here's a great breakdown of how Australia spends it's welfare money [3]
Please, look at what other countries are doing and learn from it, don't just endlessly speculate about all the terrible ways UBI (or something like the above) might destroy things.
[1] https://www.crikey.com.au/2013/01/16/dole-around-the-world-h...
[2] http://theconversation.com/factcheck-is-half-to-two-thirds-o...
[3] https://www.aihw.gov.au/reports/australias-welfare/australia...
[4] https://en.wikipedia.org/wiki/Global_Liveability_Ranking
- https://www.yang2020.com/what-is-freedom-dividend-faq/
Aside from COVID-19, we have the 4th industrial revolution in progress now. Just take a look at these truck driver's faces once they realize just how far self driving trucks are:
That could be one of the possible outcomes, yes.
Remember too that Australia only has a population of 25 million - only 7.5% of America. So even if Australia was twice as creative and innovative as America, it can still only innovate and create 15% as much as America can simply because of the size difference.
Another outcome from all this might just be that you create one of the best places to live on the planet... i.e. one of your cities has been voted world's most livable city (or second place) for decades.
This is a textbook example of a strawman argument.
If you don't want to be banned, you're welcome to email hn@ycombinator.com and give us reason to believe that you'll follow the rules in the future.
Means-tested welfare is misaligned with productivity because the money stops coming once you make more. A UBI is a more pragmatic, efficient approach to reducing wealth inequality.
I'd say having a higher standard of living is more important than being the "innovation engine of the world", however arbitrarily defined that is.
It is besides the point really isn't it? Why should the tax payer pay for someone sitting on their behind?
Why should I pay for someone else doing nothing? I am close to paying 40% of my income to tax at the moment and I've been saving for a property for years (I earn too much to have any help on buying a flat). What the studies say is absolutely irrelevant because I cannot abide the (lack of) principle itself.
You're gonna pay one way or another... Some costs will be more monetary, some will be more health/crime-related, etc, but very few of us live in countries where there is a general desire and will to force people to work.
What exactly do you suggest as the alternative?
Only because nonsense like this is allowed.
> Some costs will be more monetary, some will be more health/crime-related, etc, but very few of us live in countries where there is a general desire and will to force people to work.
You should be looking for work. If you haven't tried looking for a job you get your benefits removed. Obviously the Elderly and Disabled should get help but healthy people should be looking for work if they aren't employed.
> What exactly do you suggest as the alternative?
Get a job.
Rampant inflation or the idea that nobody would go to work are commonly held up as big reasons not to have a UBI (or something similar) so it's important to address those.
> Why should the tax payer pay for someone sitting on their behind?
There are a host of reasons, here's a few off my head:
- We accept there will always be people we will pay to sit on their behind (disabled, elderly, mentally ill, students going to university, veterans, retired government employees, etc.). It's important to recognize we already pay a huge number of people (about 5 million, or 20% of Australians according to one of my links above) to "sit on their behind"
- It gets them off the street and therefore not out committing crimes.
- Because you're happy doing what you're doing (going to work, I presume) and those people are happy doing what they're doing (nothing). So everyone is happy right now. If you force them to go to work you'll be unhappy because you'll spend all your time forcing them, and dealing with other massive societal problems like crime, and they'll be unhappy because you're making them go to work when they don't want to. So you would reduce happiness by forcing them to go to work. Also likely they'll do a terrible job at whatever work you force them to do, which is not good for society.
If you want to rebut that last point by saying "but I'm not happy (going to work)" then there is an extremely simple answer - Quit. Get the free money and do nothing all the time. Of course I already know you won't do that because it won't make you happy, and you don't want to live on $1k a month (it's good enough, but not great). Plenty of people actually do try it for a while (I did)... and then they come back to paid work again because overall for 95% of people (as proved by evidence) life is better.
Everyone is already doing what makes them happy, so leave it alone.
Remember, US tax payers are spending literally trillions of dollars on wars and bailing out banks (again)... would you rather the Australian government spend those tax dollars that way, or spend it on improving the lives of Australians who are in Australia?
You completely missed the point. I am against the principle of me (a tax payer) paying for someone else not working unless they can't work (unable to work). The inflation argument is completely irrelevant.
> If you want to rebut that last point by saying "but I'm not happy (going to work)" then there is an extremely simple answer - Quit.
It is besides the point. The principle is that I earn my way and I stand up on my own two feet. It not about liking work or not liking it. It is entirely besides the point.
> Get the free money and do nothing all the time. Of course I already know you won't do that because it won't make you happy, and you don't want to live on $1k a month (it's good enough, but not great). Plenty of people actually do try it for a while (I did)... and then they come back to paid work again because overall for 95% of people (as proved by evidence) life is better.
This is why it is irritating arguing with people like yourself. It isn't about the facts. It is about the principle. When I am working I don't want to be paying my tax for someone sitting on their behind.
> Remember, US tax payers are spending literally trillions of dollars on wars and bailing out banks (again)... would you rather the Australian government spend those tax dollars that way, or spend it on improving the lives of Australians who are in Australia?
Just because banks got bailed out in the past (which was wrong) doesn't mean it is okay to do something else that isn't ethical.
What you're saying is that your personal "principle" is more important that facts. And it seems you're saying it should be that way for all time because you think your principle is just and right - even if automation replaces a ton of jobs, or even if something else happens so people don't really have to work much anymore, your moral principle demands that everyone work.
Don't you think the world changes and that what worked before isn't necessarily going to work for all time? I mean, read a book about being a good housewife in the '60s if you want to see how far we've come in just 60 years.
I understand you're a bit put off by people getting "money for nothing" but as I said, maybe the facts here are showing you live a better life because you do pay a little for people to get money for nothing. i.e. crime is lower, people are happier, etc.
As I showed with facts, it's only 5% of the Australian population who live that way, and of course some of those would only get it until they do find a job. Certainly not all of them are slackers (of course, some are)
> When I am working I don't want to be paying my tax for someone sitting on their behind.
As I said, you need to keep it very clear in your head you are already paying for millions to do exactly that, and society as we know it would utterly crumble if we didn't. Who would pay for prisons, the elderly or handicapped?
The part I find most fascinating of all about this is how the media has conditioned people to be outraged about real and everyday people getting "money for nothing" and how they're slackers and are ruining the economy. Two pages later we learn the banks have another multi-billion dollar bailout, large companies are pay extremely little tax.
Do you honestly think it's the 5% of people who choose to be slackers to the tune of $1000 a month who are causing a problem? or are you just outraged they are actual people who get to sit and do nothing while you go to work, but you can't feel that same outrage at a faceless corporation?
They said back in the 80s and 90s The computer revolution would stop end all the office work. Now there are probably more people in offices than ever. I think automation will just create different jobs. Neither you or I will know what those are likely to be.
> Don't you think the world changes and that what worked before isn't necessarily going to work for all time? I mean, read a book about being a good housewife in the '60s if you want to see how far we've come in just 60 years.
The fact of the matter is that it isn't ethical to rely on the good people in the population to work and pay for people that can't be bothered.
> I understand you're a bit put off by people getting "money for nothing" but as I said,
No I find it to be completely unethical.
> maybe the facts here are showing you live a better life because you do pay a little for people to get money for nothing. i.e. crime is lower, people are happier, etc.
I am not living a better life. Things are largely the same for me. Those unwilling to work are living at the taxpayer's expense.
Also I don't care about happiness. There are other things that are more important than happiness. I don't care about my own happiness. Happiness is for children. This is a deeper philosophical question that I will admit I don't have the tooling for. However you keep on saying happiness like I care about it.
Also if you making arguments about Happiness isn't the best way to go on it. There are accounts of slaves being happier being slaves than being free.
> As I showed with facts, it's only 5% of the Australian population who live that way, and of course some of those would only get it until they do find a job. Certainly not all of them are slackers (of course, some are)
I've told you the "facts" are irrelevant to me (and many others). Even if it was 0.01% of the UK I still think it would be wrong. I don't want to pay for people sitting on their behind. So you are forcing me to pay almost half my income for something I deeply disagree with, because not working isn't an option for me and never will be. It has nothing to do with enjoying work or not enjoying it.
> As I said, you need to keep it very clear in your head you are already paying for millions to do exactly that, and society as we know it would utterly crumble if we didn't. Who would pay for prisons, the elderly or handicapped?
I am fine for paying for those things. Because that is what/who the state should be providing for. I am not okay for people sitting on their backside.
I don't care that theoretically there would be less crime. I couldn't care less. Also not having free money doesn't allow you to break the law.
> The part I find most fascinating of all about this is how the media has conditioned people to be outraged about real and everyday people getting "money for nothing" and how they're slackers and are ruining the economy. Two pages later we learn the banks have another multi-billion dollar bailout, large companies are pay extremely little tax.
I haven't been conditioned by anyone to think this. It is incredible insulting to be told by you that I have a problem with something because I been somehow brainwashed. Please keep on having this attitude though because it won't do you any good.
> Two pages later we learn the banks have another multi-billion dollar bailout, large companies are pay extremely little tax.
I agree they shouldn't have been bailed out.
What uk_programmer's original argument was that even if it worked, even if we could afford it, it would be wrong to make uk_programmer work for $5000/mo. and then take $1000/mo. of their money and give it to someone else.
Having a factual discussion about the implementation may be interesting, and may be worth discussing, but the argument has already been laid out on moral grounds. If you're going to continue answering the "How?" question and ignoring the "Why?" question, you're going to keep finding that you're talking across purposes from the GP.
(BTW, I think your "factual" case is severely flawed as well, but that's a story for another time.)
And that's before we even discuss shenanigans like debt jubilees and free healthcare.
Even dramatic cuts to the us military barely make a dent to these kinds of spending proposals.
Adding up all the parts, it's pretty close to a trillion a year - about 933 billion.
https://www.thebalance.com/u-s-military-budget-components-ch...
Australia is also incredibly rich in mineral wealth and has profited immensely from digging up ore and selling it to China during their construction boom. These profits haven't been enough to stop it slipping out of the top ten of the happiness index, and Melbourne lost its most liveable city spot to Vienna in 2019 because the embarrassingly high property prices prevent most people from buying a home.
[0] https://en.m.wikipedia.org/wiki/Work_for_the_Dole#Basic_Work...
During the Great Depression/Dust Bowl in the 1920's, government officials were adamantly opposed to giving cash or food to citizens. Moral hazard, and all that.
The result was that:
- there were food riots
- some Americans starved to death
- Washington, D.C. was occupied by protesters living in tent cities, and the military had to intervene to prevent government buildings from being stormed.
Sometimes, the software we maintain accumulates so much tech debt that it becomes very difficult to make any headway. By setting aside some development time to address these issues, we enable developers to gain velocity again.
In a similar way, sometimes we see poor people make illogical economic choices, simply because of a cash crunch. When people are poor, they have too many competing priorities that require urgent attention, and they find themselves caught in a series of wicked choices. A Harvard study suggests that poverty causes 13 point drop in IQ.
The right level of UBI may actually improve the way energy and capital is deployed. It also protects a lot of small employers from economic shocks by smoothing out the velocity of money.
Many readers are rightly concerned about the moral hazard introduced through redistribution of wealth. However, seen through the lens of tech debt and investment, UBI is relatively straight forward way of investing in the future.
All of these solutions are potentially workable, or a blend. I think if anything what we should focus more on is which methods (or blend of methods) works to minimize poor-dom the "most" compared to many of the others, while also balancing the overall cost to deliver said methods on society.
Ah well, it's a pity the side effects apparently include some McCarthyist caricature of communism /s
That is the way the system has been working for decades. For example, airlines have been doing stock buybacks with all their profits for the last several years, and now they don't have the money to weather 2 months of coronavirus, so they'll need a bailout. Then, watch for more stock buybacks and executive bonuses.
You're right it smells, but it's time that graft was extended to the people of this country, who will actually spend it and help the economy a bit, rather than sending it indirectly to the bank accounts of the wealthiest people in the country.
Good thing Yang's Democracy Dollars idea has no strings attached unlike that sticky lobbyist cash.
So long as we have a two-party system, we will have dumbed down political policies pandering to the brainless masses with little room for innovative progressive ideas.
Build apartment high rises and condominium complexes, that people can own, with 15 years of work. Why should we be forced to work for 30 years as a slave to pay off some bank’s mortgage?
It’s not our damn fault, that politicians are inept and can’t do the right thing, by providing affordable homes.
Socialize the housing market. This is a basic human right, but the greed of capitalism is forcing everyone to pay insane prices for their housing.
There will always be a group of individuals who are content with the minimum without making any effort. This group will not work to gain more. They are just content at not working and getting the minimum wage and additional government handouts.
My experience is from a communist country. The shoddy craftsmanship for buildings, cars, services all around in my opinion was direct result for all the promised universal basic "something". In the beginning it all seemed good and well, but as more and more people got on the UB something, the less and less production/service was done.
This is not a communist/socialist economic problem, but a human nature problem in my opinion. We always go for the least amount of effort, for the most amount of reward.
To this effect, I cannot see how to prevent UBI pushing the lowest common level of participation in the society as a producer.
As long as others work more than basic subsistence we'll be fine.
UBI isn't just about liberty and accelerating ourselves forward (though it's also about that), it's a statement that no matter how dire your circumstances, no matter how useless you are seen to our corporate overlords and private employers, that you belong to society, you are deserving of a modest respectable standard of living, and you are entitled to some of the proceeds of the wealth generated by the land with which you've been excluded.
Giving money to people instantly creates a class of beggars. Beggars with voting rights will vote for people who give them more and more and more for no more work. It's the road to ruin.
My suggestion is a set of hospitals, schools and housing that is super basic but sufficient to give people dignity and opportunity. These would be free for anyone, paid for via taxes on capital gains.
2. How does your suggestion prevent that?
As far as I know welfare is still food stamps etc i.e. not cash.
You should read up on the beggar networks in India and the exploitation that occurs when you handout money for no work.
I would disagree that a person "use" is defined solely by the type of job they have.
Study after study have proven that the greatest indicator of where you end up in life is where you start. Start in poverty odds are you will end there.
Its pretty hard for a single mom with 2 kids that works 2 jobs to also go to school, interviews etc. and make a better life. Especially when so many of the low skilled jobs provide no benefits. If she slips once, she is homeless.
Ensuring she has at least her basics met allows her to drop the second job and figure out a way to go to school or learn a skill. Or at the very least it allows her to spend time with her kids each night working on their homework and giving them a chance to break the poverty cycle.
some who can finally afford basic water food and housing start seeking medical/psych help they couldn't afford.
Some get more schooling to improve their employment prospects.
Some buy a car to start saving themselves hours a week on public transportation and therefore have more time to live.
And a small percentage don't get it and squander it.
You see the policy turning into a UK-style dole... I think you don't see the enormous benefits that reaching the point of 'having enough' can provide.
I've recently started making more than I have in the rest of my life... and besides finally paying down our household debt, and accomplishing the cash-starved household repairs, I'm starting to look at volunteering and truly giving to charities _because I can_.
Just providing basic services doesn't give people the same options, the mobility to do with their lives what makes sense in their circumstances.
The real fix is to fix capitalism, not write you a check every month for being born. We need to enforce fair markets, fair wages etc.
For those at the very bottom, I want dignity, a free education, and if still unsuccessful access to a low skill job that can pay basic bills.
You are going to have to find a different way to solve those problems than wage slavery.
Capitalism is about the accumulation and use of capital. It's amoral. It doesn't care about the unemployment rate, poverty rate, or health outcomes. It is just fine with child labor and seven day work weeks. It will offshore labor, hire contractors, and use money for buybacks before investment if the numbers make sense. Capitalism is not the answer here. Policy is. And that's fine. We can have both.
You write that as if it's some kind of natural law, as if the second clause is _obviously_ more absurd than the first. It's that the case and, if so, why?
It's not an absurd thought at all, it's a very natural solution to propose in environments like we have today. It's also been tried in many different countries in many different time periods. Leads to failure every single time.
I don't know if you realize this, but beggars already exist. There are literally people standing by the road with signs asking for money. Presumably many of them can also vote.
UBI just eliminates the physical and emotional toll of standing outside all day holding a sign, asking for money. Does that make the road to ruin you envision more likely, or more dire?
UBI will not solve begging, as much as you want it to. But giving people a clean room to stay in, good basic healthcare and a free education might.
Given that UBI increases would be coupled with tax increases, I don't actually see that being the case.
I personally think it's a sad state of our society that we let this happen. These people are either in need of help, or mental help. This is not an acceptable way of living.
1. Give help to all those who simply need some help. 2. Give mental help to those who cannot see living in filth is not a healthy state of being. 3. Let the people who just want to live "free" go live in the woods and form a co-op or something.
I unfortunately see no reason why camping on the streets or next to interstates should not be strictly enforced. But to manage this, we need social programs for #1 and #2. These people aren't all criminals, we can't simply lock them up in jail/prisons. It would also exploit them to do so. We need human programs focused on helping people, and fast.
You can't just give money to someone mentally Ill or will just squander the money and continue to make bad decisions. We will still have just as much poverty and homelessness.
Shame on the liberals for getting rid of these facilities.
I've lived on minimum wage for many years. It takes discipline to not buy booze, drugs, and electronics, and not have children that I know I can't afford.
I know many people that would be considered poor and they refuse to stop buying luxuries.
I would consider these poor life choices and the cause of a large percentage of poverty.
The real problem is that some people just can't get over the fact that some other people are just going to use drugs no matter what, so we might as well reduce the total harm involved for society.
How many of the homeless in SF/NYC that you see have kids with them?
The mental gymnastics people go through to justify homelessness and poverty is sickening.
https://www.kqed.org/news/10737399/nevada-to-pay-san-francis...
Most homeless people have had children, they just get taken away from them.
[1]https://aspe.hhs.gov/report/homeless-children-update-researc...
We should be forcing the mentally Ill into treatment, not giving them a choice to stay on the streets.
All UBI programs tested or suggested really are nothing more than allowances and cannot solve the problem. The problem is not cheap nor universal. The universal part should be, you cannot fall below this threshold, not that everyone gets the same benefits. That is only being done to sell it when people should just be told, some people need no help currently. It will be there should they need it but right now they don't.
We have many of our problems for two reasons, governments which do not respect the property rights and personal rights of their citizenry and also that there are just people in this world who cannot operate on their own.
That's the point of having it being a fixed amount: you can tax the regular income, so the effective amount they get decreases as they work more, but you don't have perverse incentives to not work.
Hard problem to solve and it wouldn't be fixed by universal income. We tried convincing homeless people to go into shelters or to at least care a bit for themselves ( free self catered infrastructure like showers ). Best solution so far is a social one where people help them find a new sense of achievement and a place in society. Drugs is also a big problem and probably where all the money from universal income would go to.
> People that have the tendency be homeless are people that don't find their place in society, the lack of order actually brings them relief.
What an insulting generalization of homeless people. Is that how you rationalize it in your head - these people find "relief" in sleeping on the sidewalk because they couldn't find their place in society?
Did you ask those homeless people why they didn't want to go to the shelter? I remember speaking with a 60+ year old homeless woman in NYC once who told me she refused to go to the shelter because it was filled with crazy people. Also you have to check out of the shelter every day, and if you don't check back in by a certain time, then they can't let you in. It shouldn't come as a surprise that many would prefer to sleep on the streets than deal with that.
> Best solution so far is a social one where people help them find a new sense of achievement and a place in society.
This is why I'm a proponent of a jobs guarantee. Anyone who wants to work should not be denied the opportunity to do so.
> Drugs is also a big problem and probably where all the money from universal income would go to.
Yes, because all homeless people are drug addicts right? /s
Societies' advancements in technology & productivity decrease the effective cost (as percentage of GDP) of meeting the very base needs of a human being. Food, cheap medicines like tylenol & antibiotics, most facets of human life are dirt cheap from a production perspective, and this trend will continue from automation.
This means someone who is currently unproductive can be subsidized to survive for 10 full years, and if there's even a small chance they become a high-productivity individual afterwards then society comes out ahead on net value. The actual numbers depend on how low we can push production costs with automation, but in the limit as human survival cost approaches zero relative to the economy, the only rational decision is to subsidize all human survival and work within that framework to encourage citizens to be even more productive. After all, if someone dies of lack of healthcare, or starves, or lives in the streets and doesn't know how to get back off the streets, that's a net loss to humanity in opportunity cost. If that person had just been subsidized through their hard times, there's a non-zero chance they become high value to society.
UBI allows us to reap these benefits in an efficient manner: using the free market. But, speaking today not in the long term, there are exceptions to the low cost of human survival which would hamper UBI from being effective.
In our (American) society, there are a few base needs that we haven't adequately driven down costs. Shelter mostly, also any healthcare that is more involved than taking a pill a day (notably: seeing a doctor). Humankind in general CAN make these costs low for the most part, but American society in particular has NOT made these costs low.
We need to address the housing & urban development crisis, and we need to address the healthcare crisis.
The housing & urban development crisis is a system of regulations and inaction that have simultaneously limited the amount of housing near desirable locations, while failing to provide efficient transportation to bring people in from less desirable locations. In other words, housing costs are dominated not by the cost to build a house, but the cost of land. This can be addressed by reforming our awful & piecemeal zoning, construction, and transportation systems and their respective regulations. Optionally, some might suggest that we try to fight against the ongoing trends of urban consolidation; if people have a reason to move to upstate new york or the midwest, instead of to NYC, then housing costs aren't a problem. But right now all economic incentives point to moving to NYC metro, given the choices, and personally I don't like to wage war against the tide of the free market.
The healthcare crisis is one of rent seeking by insurance companies upon our awful half-assed nearly-free-market approach to healthcare. Quite simply, people don't have choices (your healthcare options are restricted by your insurance, which is restricted by your employer), and no prices on anything are known ahead of time. This adds up to an ultra-inefficient system. By doing just about anything that stops the rent seeking of the insurance system upon the healthcare system so we can more efficiently treat a healthy society (there are free market solutions, but personally I would put my weight behind medicare-for-all).
In conclusion, if we give everyone $1000/mo, that's going to get funneled into bidding up rent in big cities or surprise healthcare bills. We need to solve these issues with our free market before we take a free market approach to the common welfare; until then I would advocate more targeted approaches that are less likely to invite rent seeking behavior (foodstamps and such).
On big part of this is Americans a whole need to get better with their money.
I know many people can't save because of low income (or lack thereof), but 78%? Don't forget about all those people making six figures who can't get it together.
If there were more jobs available in the backwoods, there would be the real possibility of moving there to reduce the cost of living to a smaller portion of income.
I am skeptical that 78% of Americans are "living paycheck to paycheck" unless that has been defined so loosely as to lose all useful meaning.
[1] https://www.federalreserve.gov/publications/files/2018-repor...
Gives a nice tummy feel but does nothing good for society.
Can you make it from bottom to top? Sure! But it is very unlikely, and not really something the US system is designed for. If you go from rags to riches in the US it is in spite of the system and not because of it.
Disclosure:
I live in a capitalistic society with government paid education, health care and child care. My parents are low-wage workers and in the US, they would definitely not have afforded an education for me. Here, I got a high quality masters degree paid by society _because it is a great investment_!
I will gladly pay every penny and more back into society, so that many others, like me, can have the same opportunities as me in spite of their parents income.
Gives a nice tummy feel but does nothing good for society.
"Please respond to the strongest plausible interpretation of what someone says, not a weaker one that's easier to criticize. Assume good faith."
That said, UBI is quite literal wealth redistribution. You take taxes from the haves and give the cash directly to the hands of the have nots. There's a point where it becomes unethical and/or counterproductive...but where that point is perhaps remains to be seen.
Everyone getting the same amount is symbolic equality. Symbolism can be important, though!
UBI looks far more expensive than it actually is because for many people, they'd be getting some of their own money back, similar to a tax refund. It's still expensive, though.
So in almost any practical case they will have to be running at the same time and will never truly be a net-neutral fiscal operation (assuming this is the outcome in practice) for at least the first 1-3+yrs.
Adopting UBI means increasing taxes, period. Even under ideal situations where the fiscal and productivity gains of replacing the current overly selective and bureaucratic processes, which significantly favours full-employment or zero-employment/disabilities in a black and white way with nothing in between - as opposed to the broader spectrum that markets can support when monthly deposits are not limited (including self-employed, disability, welfare, [un]employment income, etc) via far more efficient distributions systems replacing top-heavy systems, start to really take effect.
The whole "we'll just tax the 1%" hand-wavy stuff is not a good enough answer here. The amount of times that excuse has been used during political campaigns without congress doing anything significantly different is enough to be skeptical. As it then is no longer just UBI but UBI + significant tax code changes.
I personally don't think some trial runs in small parts of Canada or towns in individual states will be enough to prove much of anything. Especially given the vast amount of disparate systems these UBI systems would currently encompass across both federal/state governments in a big spectrum of economic/political environments across a large geographic area - which can't realistically be tested without it being a truly national affair. Of course federalism was designed exactly for this type of problem (individual states experimenting with policies so the cycle of progress is not forever limited to a long series of impractical all or nothing proposals across of bunch of states who disagree with each other) but the US has long ago sacrificed states government power for top heavy federal/executive run systems and this is the reality in which UBI must operate within.
> whether this could ever practically roll out while simultaneously shutting down the existing welfare/disability/etc systems
Yang's plan was for UBI to be opt-in, in exchange for waiving access to many existing programs (food stamps, etc). If he had gotten traction beyond 5%, we could've expected major pushback from the left on this; similar to M4A, in many ways it's more helpful to the lower middle class than the working class. But I suspect many would still vastly prefer check in hand, both due to the complex bureaucracy (and anxiety) of the existing system, and the elimination of poverty traps.
I think this is a reasonable way to shrink spending on existing "entitlements" without cutting them altogether; and would not only offset the cost, but grease the wheels of political viability (in a case of strange bedfellows, it aligns with the Paul Ryan / Steve Bannon "deconstruct the administrative state" playbook).
> The whole "we'll just tax the 1%" hand-wavy stuff is not a good enough answer here.
True: we'd have to raise more in tax revenue, full stop. I'd like to see a lot more enforcement and closing of loopholes within our existing tax code (Apple parking its cash in Ireland, etc). Easier said than done, I know. That aside, I think a micro-tax on high-frequency stock trades, and/or Yang's VAT, are both reasonable approaches.
My favorite strategy for raising public revenue, and wealth redistribution in particular, is the Pigovian Tax [0], which has an ancillary (primary?) benefit of setting a price on a negative externality. This is the proposed solution from "The Largest Public Statement of Economists in History" [1] on climate change; a sufficient carbon dividend could likely pay for a massive portion of UBI, though it would have to be ramped up gradually. I think there's a strong case for applying the concept in other domains as well (single-use plastics, for instance).
Finally, it's worth considering that all the hand-wavy trickle-down logic of "supply-side economics" might actually work when pointed in the other direction [2], like a stimulus package that never stops. In addition to reducing silent inefficiencies of economic struggle (addiction, short-term thinking, anxiety-induced low executive function), most of those receiving the dividend would spend it, increasing economic activity and therefore tax revenue. (There are potential problems with this model, the biggest being the risk of the lion's share going to landlords; but that opens up a whole other rabbit hole of Land Value Tax, Henry George, etc.; we arguably have a rent-seeking problem in that domain already, inducing a hidden tax on the working class with or without UBI.)
[0] https://en.wikipedia.org/wiki/Pigovian_tax
Property rights are wealth redistribution away from the commons and towards a relatively small number of individuals. Does that make them bad? Well, I'd say maybe, it depends on the details...
We need to work against the effectiveness of this rhetoric trick where only some things are labelled "redistribution" to show them in a negative light.
"This year's interstate highway funding brought to you by the Koch Brothers."
and of course UBI is literally wealth distribution. what would you consider public schools, roads, infrastructure, and other things paid with taxes?
I don't think that is what allovernow is saying at all.
> There's a point where it becomes unethical and/or counterproductive...but where that point is perhaps remains to be seen.
So, potentially
- Tax the billionaires down to 999millionaires. Not unethical or counterproductive in the slightest.
- Implement a tax that makes every worker's net income identical. Probably both counterproductive and unethical.
- Implement a tax/UBI system that puts a worker's net income below that of a non-worker. Definitely counterproductive, unsustainable and unethical.
The point that allovernow is describing is somewhere between those extremes.
The latter is IMO not ethical if it excessively punishes productive activity. In this case “impractical is unethical”, even as I’d prefer a UBI world in many ways.
This is a fundamental flaw in the argument.
1) That a 'single program' will be cheaper. Maybe, but maybe not. My government spent more than $1 Billion implementing a simple 'gun registry' for police to store gun records.
(They spent $100M on a 'judicial assessment' of Aboriginal community's historical crimes - not a single study or dollar was spent on scientific analysis, research. Just lawyers.)
2) That any way shape or form those 'other programs' will disappear or a single government worker will lose their jobs.
The most powerful bodies in the world are Public Sector Unions. Tell me, what is the turnover rate for such jobs? How often are people laid off? Fired? What salary do they earn compared to private sector peers? How often are government agencies that have lost their material relevance shut down?
So aside from all of the regular arguments about UBI, social impact, cost, redistribution ... all of the arguments about 'efficiency' are completely moot. Government projects are generally extremely inefficient - they tend to work best through regulation, and/or competitive bidding for work that can be independently assessed, or when there's a social element. For example, road work and construction: we can roughly estimate cost, there are many bidders, and it's outsourced, not done directly by gov staff. This is efficient. Public schools are roughly efficient. Garbage collection. etc.
As for the second, just because some labor unions are notoriously rent seeking doesn't mean we don't have mass changes in govt organizations. Programs are shutdown all the time. I doubt those labor unions would have a good argument against this anyway. What are they going to say? We're keeping our jobs so we can keep you from getting paid?
Society is wealth distribution. Wealth doesn't exist outside of society. The US's existence is wealth distribution. Stealing land from natives to give to settlers. Stealing african's labor and distributing the wealth among slave owners. The rights to oil, resources, etc are wealth distribution.
Also, no wealth of any significance is ever earned by an individual. I hate how people say, Bezos, Gates, etc earned their wealth. Bezos didn't earn $100 billion. There is no way one person can physically earn that much. Bezos can't physically sell 100 billion items from the dollar menu. Wealth is generated by laws and cooperation and a fair/unfair distribution of value generated. Simple as that.
Also, don't give me the "great man" bullshit. Had bezos never been born, we'd still have an amazon of some kind. Jobs death didn't end Apple. There's always a "great man" to fill any void.
> There's a point where it becomes unethical and/or counterproductive...but where that point is perhaps remains to be seen.
Agreed. It's probably impossible to reach a happy medium since people always want more and whichever side gets a slight advantage will use it to further advantage themselves until society skews to one side and collapses.
Also, the other side of the coin is at what point does wealth accumulation become unethical and/or counterproductive.
You either have debt hyperinflation, or you have taxes high enough that the universal basic income is meaningless.
It's better just to have income and wealth taxes.
no it doesnt. the US consumes a lot, but you are mistaking an accounting identity with something causal. if people decided to consume less, that means they are putting off current consumption for future consumption and saving those resources for investment to allow that to happen. don't worry - they'll consume at some point when they feel it is in their best interest (and if they don't, they basically just gave us a bunch of free labor).
all economies everywhere are driven by production. human desire is pretty much endless - you rarely have to incentive consumption. when people have the resource (ie, they produced), they will naturally consume.
the only way that long term standards of living improve is by increasing productivity (this is something virtually every economist agrees to). that is done by increasing capital stocks, machinery, technology. those are all production oriented activity.
I agree that it may discourage consumption. It’s not clear to me that this is fundamentally a bad thing, at least in terms of conspicuous consumerism
Not true. You should read the UBI policy proposal that Yang created for his POTUS run. You can find them here:
- https://www.yang2020.com/what-is-freedom-dividend-faq/ - https://www.yang2020.com/policies/the-freedom-dividend/
I think a well-designed UBI could work. The tricky part is that UBI is one of those experiments that has to be done on the large, and pulling back if it doesn't work out is challenging. Any errors in implementation and design are potentially very expensive.
[1] https://theweek.com/articles/858097/andrew-yangs-ubi-problem
When the people at the top make less money, they invest less money into new toilet paper R&D and new factories. When the people at the bottom make less money, they spend less on toilet paper, and the people at the top make less money. The balance is fragile, and if your end goal is that your citizens have access to the finest and most luxurious bathroom experience they can, then you must take care to balance the engine of capital with great precision.
This (and its inverse, "when the people at the top make more money, they invest it so it does good for the whole economy") is the foundation of trickle-down economics.
It's been empirically proven not to work over the past 40 years.
If you had a dial labelled "wealth redistribution percentage", trickle-down economics says you that if you move it towards "0%" everything will get better. What I am saying is that if you start moving it towards "100%", everything will get better, but if you keep moving it for a long time, everything will get worse again. It is not clear to me that this has been empirically proven to be false.
But the main point is 99% of people are already spending more than $1000 a month to survive, so we can afford it without spending more. It's just about how the books are balanced.
For high earners it means $1000+ in taxes. For the poorest it replaces conditional welfare.
Suggested income: $12,000
US Population: $327,200,000
Total cost for first year: $3,926,400,000,000
Total government expenditure for US: $3,800,000,000
So we would need to shut down everything the government does to afford his UBI. I personally don't feel like going for free market ICBM solutions is the best way to run an army, but each to their own.
At that point you have invented a worse welfare state.
that US government expenditure is a constantly changing number, when the government wants to buy some ICBMs they don't go cut food stamps correspondingly, they just increase the amount of government expenditure.
Call it 130MM households in the US. Exclude top 5% ~123M.
For 6 months stimulus 1k/house = 738B.
Doesn't sound like enough really for what we're facing. Less than 2008 stimulus. only ~3.6% of GDP.
This interview with Jason Furman has some other good comparisons+context and other back of napkin maths [2]
If we're talking permanent UBI lowering or even cutting benefits programs (to be replaced by UBI) could get it somewhat close to budget neutral - if you cut a lot [3]. But IMHO would never be able to cut social security etc enough to make a difference, gross tax revenue would have to be raised somehow - but not by a shocking amount.
1 https://www.stlouisfed.org/on-the-economy/2017/may/which-big... 2 https://www.vox.com/2020/3/13/21177850/coronavirus-covid-19-... 3 https://www.cnbc.com/2020/01/14/budget-neutral-universal-bas...