Comment by spyckie2 | Hacker News Reader

Comment by spyckie2 | Hacker News Reader

I think the 2nd/3rd+ order effects of UBI needs to be understood better. Most arguments for or against UBI look no further than first order effects, and get most of the 1st order effects wrong because they don't take into account the cascading ripples of the more indirect unknowns.

A collection of second order effect questions that people don't really have a strong cohesive argument for or against:

1) What are the impacts of UBI on cost of labor, and how will businesses react or adapt? (will UBI ultimately lower cost of labor for businesses or will it raise it? Will it cause businesses to seek out investment into AI instead to replace manpower? etc)

2) Are there any situations where UBI's cost will spiral out of control? (Do we have smart enough people modeling out long term costs of UBI in a comprehensive, risk accounting way so it doesn't become another social security)

3) What is the change in percentage of people who will couch potato with UBI? How about percent change in entrepreneurial activity with UBI? (at the very least, is it in the single digits, double digits? A fraction of 1%?)

3rd order effects:

1) What will the economy look like 20 years from now with UBI? How will the structure of society change?

2) How will UBI change how the majority of people grow up and what they end up pursuing?

3) How will UBI impact the global economic climate? (My sci-fi dystopian vision of UBI's butterfly effects, not that globalization hasn't already done this: UBI will spur one country to develop so much AI due to lack of people in the workforce, and that AI is so good that it gets exported to all countries over the world, centralizing most of the money in the world to that one country, making that one country able to afford UBI while the rest of the world is jobless and has no money to take care of their own people.)

I'm just scratching the surface of the complexity of the topic.

Your questions aren't hard.

1) People will exit the labor market, especially in cheaper jobs, since some folks currently only need to work in order to make up a small income disparity and will gladly quit their part-time jobs. Labor might get more expensive, but given how long minimum wage has been depressed, I wouldn't count on it.

2) No, UBI is as expensive to administer as the existing tax code. Also, the fuck are you talking about? Social Security has gotten cheaper to administer over time [0].

3) Who cares? Literally, it doesn't matter how many people "couch potato" or otherwise decide not to work when they already weren't in the labor market. Think about it for a bit.

4) Hopefully less wage slavery, less food insecurity, less homelessness, less wealth inequality. That is, UBI is hoped to do what it is marketed as doing.

5) In e.g. Sweden, the constant availability of funds from the government has enabled people to be more fully actualized, as they choose whether they want to go into secondary education, start a small business, buy a farm, or open an art studio. All of these are also subsidized in the USA, but poorly. UBI acts as an ideal prototype system for this sort of funding, without having to commit to a particular usage of funds.

6) Uh, we've had a global economy for centuries. All that has happened is that places with UBI and similar social programs have become well-known and globally visible. But UBI in Alaska exists [1] and does not draw people to move to Alaska, so I can easily conclude that it doesn't matter that much to the global economy.

More generally, I think that you are afraid of nothing.

[0] https://www.ssa.gov/OACT/STATS/admin.html

[1] https://en.wikipedia.org/wiki/Alaska_Permanent_Fund#Permanen...

most of your answers don't even address the questions.

1) impact on businesses?

2) not about administration, about the cost of UBI itself. cost of social security is ballooning, not administration of it

3) it's important to judge UBI's costs and impacts relative to other social programs

4) "Hopefully" it will end world hunger too and also discover the cure for cancer.

5) Sweden doesn't implement UBI though? How does looking at Sweden allow you to say how UBI will affect people growing up?

6) comparing Alaska, the 46th on the list when looking at the size of US state economies, with the US (#1 economy in the world) is not a good comparison.

It's not fear that are motivating these questions. The larger the investment, the more robust the plan needs to be and it's common sense for anyone to want to know more detail about a LTV ~100s of trillions of dollar investment.

Okay, I think I see the root of the misunderstanding. UBI can be fully paid for by taxes [0], and the resulting system is administered using existing tax authorities. In the USA, this would mean that the IRS, which already administers taxes, would incur a one-time cost of setup but no additional ongoing costs.

This means that we can analyze the impact of UBI as if it were a tax adjustment. The impact on businesses will be that, since laborers will have more job mobility, businesses will have less negotiating leverage over employees. This is a good thing.

Because cash can pay for anything, UBI is cheaper than any equivalent social program which purchases goods on behalf of recipients. When combined with the overall lower cost of administration, this makes UBI definitionally less costly and more impactful than other social programs, dollar by dollar.

Sweden is worth mentioning because, for basically any reasonable path in society that one can imagine, there is government money available to motivated citizens. This is the vaunted alternative listing of "other social programs" that your perspective values so much. Similarly, Alaska is worth mentioning because they really do send no-strings-attached money to every resident. This demonstrates that UBI does not have to disrupt the social and economic fabric of our society.

UBI is not an investment. UBI is a reassessment of taxation principles. You are not an investor, but a member of society.

[0] https://en.wikipedia.org/wiki/Negative_income_tax

> The impact on businesses will be that, since laborers will have more job mobility, businesses will have less negotiating leverage over employees. This is a good thing.

Again, 2nd order effects. Businesses will rely on employees less too. It might make businesses more capital reliant, lowering the entrepreneurship rate further. It might not, but the point is that saying it will be good because of labor mobility is like looking 1 move deep in a chess game.

> Because cash can pay for anything, UBI is cheaper than any equivalent social program which purchases goods on behalf of recipients. When combined with the overall lower cost of administration, this makes UBI definitionally less costly and more impactful than other social programs, dollar by dollar.

UBI is 3 times as much as our current social programs. It doesn't matter how cheap it is to administer if the actual allocation amount is so different. It's 15% of GDP, and yearly, not a one time cost.

I strongly disagree that increasing the budget for social programs from 800b to 2.3t is not worth thinking about the potential 2nd order effects, which was my original point.

> Sweden is worth mentioning because, for basically any reasonable path in society that one can imagine, there is government money available to motivated citizens. This is the vaunted alternative listing of "other social programs" that your perspective values so much.

I don't think Sweden avails government money the same way UBI does. If you could buy weed, alcohol, video games, vacations, travel, pets, furniture, sports equipment, or any other recreational activity in Sweden with their social programs then I would take this point more seriously.

> Similarly, Alaska is worth mentioning because they really do send no-strings-attached money to every resident. This demonstrates that UBI does not have to disrupt the social and economic fabric of our society.

Alaska's UBI is literally a dividend from an investment fund. 25% of oil's profits would be put into the fund and payed out as a dividend, and the fund was well managed, leading to around $1000 a year in peak years. This is a very different structure, both in quantity of money payed out as a dividend as well as how the money is being taken from, to what is proposed in many UBI policy implementations.

Alaska's money doesn't come as a re-distribution of tax, it's literally an investment fund. Alaska's amount is also 10x lower than most UBI proposals. When we have a $60 trillion dollar fund that we can draw 5.25% every year to pay for UBI, then I'll agree that Alaska is an example that UBI doesn't disrupt the economic fabric of our society.

Businesses are not inherently desirable; they are a concession that we haven't agreed as a society how to distribute capital. Lowering their ability to dominate laborers is morally good for basic utilitarian reasons. If it gets a little harder to run a business, oh well; I don't really have a problem with that. However, the prospect of ending the massive exploitation of the impoverished and raising some 40% of the population out of financial purgatory is far more important than any business-oriented metrics.

Looking at actual models for UBI costs [0], there is a solid argument that GDP will grow. Keeping in mind that we are currently seeing trillions of dollars in bailout money being pulled out of nowhere, I feel that complaints about the sources of money are a little facile; there are clearly enough money sinks to handle all of the wealth not currently trickling down. We can pay for it. More importantly, there's a clear gaping hole in tax revenue where corporations are not paying taxes that they could clearly afford, and this has gotten worse over time [1][2]. Going back to Obama-era corporate tax rates of 35% would be worth $473b; going back to Eisenhower-era rates of 50% would be worth $676b. Combine that with the idea that social programs wouldn't allow double-dipping into both e.g. Social Security and the Freedom Dividend [3] and everything is now paid for.

Sure, we don't have to talk about Sweden or Alaska. But it's really hard to take the core counter-argument here, the idea that giving money to folks is so harmful, without pointing out all of the places around the world where giving money to folks is not only not harmful, but positive.

[0] https://rooseveltinstitute.org/wp-content/uploads/2017/08/Mo...

[1] https://commons.wikimedia.org/wiki/File:Share_of_Federal_Rev...

[2] https://commons.wikimedia.org/wiki/File:US_Effective_Corpora...

[3] https://www.yang2020.com/what-is-freedom-dividend-faq/

judt pointing out - there's a lot of other threads you can talk about your own inspiration and topic of choice. My specific post was about the difficulty of understanding 2nd and 3rd order effects of a UBI at scale because no one studies it enough. I think you can do well to stick to topic if you are going to respond. still havent heard from you a clear a counter argument why making policy on UBI is easy or why you shouldnt look into 2nd or 3rd order effects.

i have nowhere claimed that giving money to people is harmful. in fact I love andrew yang's work on UBI and am a huge fan. He's done incredible work on the narrative on why we need it. just no one has done the work on actually creating a policy that has a sound investment thesis because its hard work. andrew yangs proposal on how we will pay for it "data is the new oil" is paper thin, especially if you dig into how Alaska pays for it. he even uses Alaska as an examole of it being affordable - again, excellent narrative, very poor policy.

you claim it isnt hard to answer these questions, and then waive off that we dont need to care about businesses, how the policy is implemented, or any second or third order effects of a massive 15% shift of economic value, and then fundamentally misrepresent my point that i am anti UBI.

you probably would grow some if you spend more time listening to other people and engaging in their arguments, not dismissing their points and putting forth your own idealogical narrative.

feel free to call me out on your own threads if i do the same to you

Honestly, you got three replies, when you deserved zero. I discussed your original questions with real people offline, and everybody else was unable to get through your first three questions without making personal attacks against you; your opinion is just that odious.

I've tried to help you see how UBI proponents have not only anticipated your line of reasoning, but have long finished figuring out things like impact on business. Quoting from the summary of the Roosevelt Institute's study:

> When paying for the policy by increasing taxes on households, the Levy model forecasts no effect on the economy. In effect, it gives to households with one hand what it is takes away with the other.

> However, when the model is adapted to include distributional effects, the economy grows, even in the tax-financed scenarios. This occurs because the distributional model incorporates the idea that an extra dollar in the hands of lower income households leads to higher spending. In other words, the households that pay more in taxes than they receive in cash assistance have a low propensity to consume, and those that receive more in assistance than they pay in taxes have a high propensity to consume.

As long as you are predisposed to look down on so many people for supposed moral failings, and look at people as "couch potatoes", you are going to have a blind spot where you don't recognize how essential cheap labor is to our way of life.

quote from the article:

> Another positive sign for UBI is that most Americans seem keen to return to their workplaces. One fear has been that UBI would lead to a couch-potato culture, with people choosing to stay at home even when they’re finally able to leave. But blue-collar service workers are continuing to brave the front lines even when faced with reasonably high risks of infection. They are not trying to get fired so they can collect unemployment. White-collar workers, meanwhile, are feeling restless and unproductive. Working from home may become more common, but most people seem eager to get back to the office — especially if the alternative is a combination workplace/schoolhouse.

I have no idea why you think I'm predisposed to look down on people as couch potatoes. The article used the term, that's why I put it in quotes. My intention with the question was actually, "great, the article says there's evidence anecdotally that it won't happen, anything more concrete?"

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