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Comment by Pxtl | Hacker News Reader

The problem is that governments don't seem to be doing the other half of universal basic income

1) Realistically, you're going to have to raise taxes to fund it, not just deepen deficits

2) You're going to have to cut many social programs as well that overlap with basic income. For some people this isn't really a good trade-off. I saw one blog-post proposing a long list of social programs such as disability support and wheelchair funds, and a local activist parent of a severely disabled child pointed out that this would devastate his family financially.

I get the appeal of an anti-bureaucratic one-size fits all solution to the social safety net, but I'm skeptical.

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It may not actually be absolutely necessary to cut taxes. Under the (dubiously named) Modern Monetary Theory, you can just print the money. That causes inflation, but that's not necessarily the worst thing in the world. It encourages people to spend money rather than hoard it.

No, you don't need to worry about hyperinflation, the big bugaboo of Chicago/Austrian economists. Hyperinflation is associated with economic collapses like wars or industry failures, where suddenly goods are in short supply. What you get out of this is ordinary inflation, not hyperinflation. If you print 1% of your economy in new money, then you get 1% inflation. Hyperinflation is a different problem.

Ordinary inflation can be dealt with in a number of ways. Taxes are one of them: you don't pay down the debt but just burn the money. You don't need a separate account book for government debt: outstanding currency is government debt.

Not all economists buy this theory. It's not mainstream, but neither is it exactly fringe. I bring it up only because the notion of a separate government account book that has to be balanced is worth reconsidering. Ditch it, and there are tradeoffs that might be worth it -- including simplifying how you handle basic income.

If the money becomes worthless and quick to deflate won't people opt for hoard stuffs instead and do barter?

Perhaps if things get way out of control, but even then not entirely. People need money to pay taxes. Individuals wishing to avoid jail is a great way to ensure a large majority of the population uses your currency.

MMT measures inflation by standard inflation measures such as consumer price index. Real Estate and land prices are not included. Look this way if you want to see where the newly printed money end up.

Btw inflation is intentionally underreported because the only way to repay government debts (under democracy) is by debasing currency and thus value od debts through inflation. It's just a hidden tax.

Austrian economists barely discuss hyperinflation. They instead endlessly talk about the distortive effects of inflation on the economy as a whole, such as decimating savings, and that the idea that a good economy is based on consumer spending is political gobbledygook believed by politicians who only listen to bad economists that tell them what they want to hear.

It would be interesting to have a discussion about some of the Austrian critiques of MMT or UBI on this site. I often see mischaracterizations and generalizations of those views here.

There is one such debate on youtube.

https://youtu.be/cUTLCDBONok

Your core assumption is that flooding the system with money will cause inflation. However, in many modern cases we do not see that occurring in the traditional sense. Recently CPI-based inflation is non existent in the large economies of the world, but asset inflation is, which exacerbates wealth/income inequality and leaves the potential for a Japanese-style "Lost Decade" (which has been going on for much longer than 10 years at this point).

Asset bubbles, misallocation of capital, and mortgaging the future to support the present are the pressing concerns with easy money that should be addressed.

It's pretty fringe; virtually all economists either Disagree or Strongly Disagree with the theory[1]. When weighted by confidence, 72% of economists strongly disagree.

Also, this works both ways — if we can MMT unlimited money to fund spending, why pay taxes at all? We should, in theory, be able to cut taxes to 0 (or as close to 0 limited by real scarcity) and MMT the entire budget.

[1] http://www.igmchicago.org/surveys/modern-monetary-theory/

If you lower taxes to 0 then there will be no demand for your money because people will start using other currencies as a medium of exchange.

Forget about cutting taxes, MMT holds that we can in theory institute a regressive UBI program that gives cash to people == to their effective income tax (thereby zeroing it out). The only limit, per MMT, is real resource scarcity.

Now skip the extra step, and have bondholders just get paid back directly by the money printer.

Some of the write-in comments were interesting such as "there are some limits such as financing the entire world's output" and "this will make it impossible to sell more bonds". I would be interested to see a debate between a mainstream and MMT economist, to hear how a MMT supporter would address these critiques.

"this will make it impossible to sell more bonds"

Forget about actually cutting taxes directly, MMT holds that we can in theory institute a regressive UBI program that gives cash to people == to their effective income tax (thereby zeroing it out). The only limit, per MMT, is real resource scarcity.

In this implementation, the bonds are still being paid back via taxes, but those taxes are coming from the Fed's printing of money.

Policymaking is hard, it's never quite fair, but those seem like awfully addressable problems to me. I mean, you don't "have" to cut disability entitlements if that's not politically feasible. Cut what you can, and adjust as needed. It's not a reason to Refuse To Get Started On The Problem, which is what nitpicky criticism like this gets used for in practice.

I mean, the core idea of the article is that direct cash benefits reduces poverty directly, in a quantifiable way (there are some numbers already!). That takes a sword directly to the Gordian knot of the policymaking kerfufflery, and that evidence and its attendent simplicity is far more (FAR more) important to achieving a solution than "getting the right solution".

Better vs. Perfect, basically.

Government never gets smaller

So lets see what bigger & better gets us.

1)stock market back to precovid levels... even though job and economic losses are widespread. That is not normal, but it is logical given the cash flooding all assets now.

2) sticky unemployment largely affecting minorities and the youngest.

3) the conversation has shifted from... where can we reduce the govt footprint?. To, should this new thing be done?

In effect - Leaders today are leaving a legacy of destruction and misery that will be reaped by our grandchildren.

Our leaders are perpetrating the largest ever robbery of future generations. Its inmoral and it is not "better"

> Cut what you can, and adjust as needed. It's not a reason to Refuse To Get Started On The Problem, which is what nitpicky criticism like this gets used for in practice.

Fair, but UBI advocates very often do things like bundle up all existing social payments, divide the total dollar value by the population size, and say "look how efficient it would be if we just gave this money away rather than having a complicated set of bureaucracies charged with disbursing it fairly!"

If the argument for how affordable UBI is hangs on this kind of logic, then yeah, it is pretty relevant to take an upfront look at what proportion of existing program funding (and associated bureaucracy) are actually candidates for being replaced like this. Some are obvious exclusions, like anything to do with mental or physical disabilities, and some are fairly clearly covered under UBI, like unemployment insurance. But a huge pool of them are pretty murky— think especially of things like child/family benefits, or anything to do with education or job retraining.

> UBI advocates very often do things like [play games with numbers to make a point]

Which is EXACTLY why the kind of data we're deriving now, based on real world policymaking, and as described in the linked article, is so important. It's impossible to refute with more funny numbers.

> If the argument for how affordable UBI is hangs on this kind of logic

It doesn't! That's the amazing thing. You guys need an entirely new kind of spin, now.

Not sure what you're accusing me of spinning here. I want UBI to work, and I want it to be affordable. But more than that, I want the underlying problem solved, which is income and wealth inequality.

What I don't want, is to see a bunch of half-baked policies rushed out the door, only to be shuttered a few years later and tossed onto the pile of "lol communism always fails" just-so stories, with the door to change closed for another generation.

Going into these kinds of major efforts with a "better vs perfect" attitude has a high risk of alienating those for whom it may well not be "better", especially if they are members of a vulnerable group that has a high reliance on the present system.

I agree. I am big supporter of some form of UBI but there needs to be some thinking along the lines of what services can or should be privatized. For example, I think housing is one that should be. I would prefer to give people rent checks than to provide public housing in food-desserts and bad school districts. But on the other side, are we going to reallocate budgets from the fire departments and let people subscribe to their own fire fighters? I don't think so.

Would be interested to hear if anyone has a ideas or a framework to think about this.

> I would prefer to give people rent checks than to provide public housing in food-desserts and bad school districts.

It maybe doesn't always work out great in practice, but at least in theory, municipal governments do have tools for addressing these problems in a deeper, longer-view way than the market and private developers can. Left to its own devices, "the market" will just abandon those food desserts and bad school districts and you end up with the same hollowed-out inner city that was such an issue in the late 20th century.

Anyway, whether you bring poor people to a rich neighbourhood (with subsidies, density bonusing), or you bring rich people to a poor neighbourhood (revitalization, gentrification), there are going to be issues, but housing policy is something that requires long term, active stewardship, I think.

> I would prefer to give people rent checks

And then rents will augment by that exact amount, screwing up those who don’t get the check and nullifying its benefit for those who do. I know from experience as this is implemented in France (it’s called the APL). Lot of rents are higher than they should for students under the pretext this social aid exists.

For a "free market" to work, you also need elastic supply which we unfortunately don't in many larger cities.

Okay, the government could say if landlords increase their rent, then we'll increase their property tax by 5-10x the amount. If they want to play that game, we'll do the same, but much worse. Let's see what they do then.

A similar relationship exists in the US between ease of getting loans for college and houses and the price of colleges and houses. I don't know if causation is fully established but they do tend to go up together.

None should be? We've experimented with privatization in the UK. No field has been a success, every one has been a failure afaik.

Trains - Worse, terrible in fact

Housing - Went from 300k houses p/y being built by councils, to 30k by their privatized replacement. Now severe housing shortage 30 years later

Medicine - Terrible, caused deaths in covid crisis, privately managed PPE stocks were a disaster

Water - Terrible, all profits have been used to pay shareholders, taken on huge debt. little investment in infrastructure, ticking time bomb before bailout needed

Energy - Crazy price increases

Prices go up, services worsen, and debts pile up. Tell me again why you think they should be privatized?

All that happens is a bunch of privileged shareholders get to mooch off the public purse.

> Energy - Crazy price increases

I certainly agree that a lot of privatisations were messed up, but but in the late 1970s the UK's nationalised industry literally only managed to produce enough electricity to keep the lights on three days a week.

It was pretty easy for Thatcher and Blair to sell the concept of privatisation when that was in widespread living memory.

https://en.wikipedia.org/wiki/Three-Day_Week

Does that look like a failing of the public sector or a oil crisis that targeted the UK specifically?

Given that the miners who were on strike all worked for the National Coal Board, and that coal was converted into electricity by the Central Electricity Generating Board, it seems like a pretty major failing of nationalised industry to me, yes.

Perhaps you failed to read the link, an oil crisis because Capitalism is fucking you over is not a strike.

In those examples, would you say they're all examples of privatization without competition, where the incumbent effectively owned the existing infrastructure and the barriers to entry for newcomers were high?

Can't speak for the UK but Tokyo seemed to do pretty well with privatized subways: https://www.bloomberg.com/news/articles/2011-10-31/why-tokyo...

Singapore has a pretty good quasi-public-but-transparent-and-subsidized healthcare system: https://www.vox.com/policy-and-politics/2017/4/25/15356118/s...

I think the jury's still out on if privatization is the primary factor for success or failure or if other complex factors determine the success/failure of these programs (I would guess the later).

Basically you can divide the economy amd businesses into

1. infrastructure and platforms (justice, roads, utilites, networks) - where privatisation results in disaster 99% of times

2. "typical businesses" - privatisation generally good idea

3. things inbetween (schools, healthcare) - neither fully privatized or centralized system works well. Usually a combination of both performs much better.

Eg. hybrid healthcare system deals with runaway costs by having a baseline health service provided by government and prevents soviet-style wasting, theft of material by employees, black markets and long lines forming by having a parallel market health system alongside.

Both can keep each other in check. One has to wonder why countries always deploy it in one of the pure forms.

Governments already do basic income, it just isn't universally distributed. Instead every little bit of new money supply is instead given to banks with corporate charters. This is done by allowing banks to create money out of thin air, money they don't have, as debt on their balance sheets whenever they "give" out a loan.

Then the people receieving this loan have to pay back this new money. In this way governments do basic income for all 5k corporate banks in the USA and it's likely very similar in other nations with fractional reserve banking.

It would not be very hard at all to simply remove this functionality from banks and evenly distribute the creation of new money supply.

3) they forget to curb the asset price inflation in real estate and land values. The basic fact that UBI proponents have been warning about.

Real estate is just a hidden land value price. Look at Japan where the price od buildings are close to zero or even below zero (cost od destruction for new project) after about 30 years even when the total price (building+land) is astronomical.

The way to curb it is through Land Value Covenants or Land Value Tax or Hong-Kong style 99year leases or something to that effect.

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