The promising results of Stockton’s basic income experiment
newyorker.com
newyorker.com
They found that giving those 125 people an unconditional monthly allowance helps them survive and has a positive effect on their life.
They did not seem to research at all how to actually fund it, what kind of effect a higher tax to fund it would have, or what would happen to the government employees currently working in social welfare if they'd lose their job.
I agree the same size is small (I thought it was 525), and I'd also say there is an issue with the length of the study.
But it should still provide some useful stats on how many people give up work or start businesses or go back to school and what the impact is on crime, drug use etc...
And that's the question here: how does this effect people's economic and social behaviour?
Why would "here's an extra $9k across 18 months" tell you anything about how a low income person would respond to being promised a livable income for life?
I'd like to see a 5+ yr study specifically because that would allow people to give up low paying jobs, go get a full degree and then get a new better paying job.
18 months isn't that, obviously.
But it would allow you to go and do something. Instead of going from being a waiter to a programmer, maybe you can go from being a waiter to a basic plumber or a truck driver or start a small business or something?
We can all agree that having more cash will improve people health\community\whatever. The big question is what will people do with the opportunity no-strings-attached cash gives them. How many people will just spend the money? How many people will stop working and do nothing useful? How many people will stop working and do something very very useful?
You only need a small proportion of people to make significant changes like this (and thus pay a lot more tax) and suddenly these programs get very affordable net.
[1]actually you need an implausibly large proportion simply to offset the amount of people who already don't work and aren't entitled to benefit payments who would be eligible to receive UBI
The issue with pensions as an example of UBI is that the only people getting them are old. So they mostly already have the assets they want, they don't have careers they want to improve, they don't want to start business or earn money, they want to retire...
But this experiment which is designed to make it impossible for participants to retire off the money proves even less about people's likelihood of retiring off free money than the natural experiments where they're encouraged to do so.
A fair experiment would have at least stripped away all the other state funded benefits UBI supposedly replaces, but I guess 'UBI is good for the spending power of single-income couples but leaves the poorest people much worse off' wasn't the headline the advocacy group was shooting for...
The participants should be voting on how much to take from those among them with the higher incomes. I mean--unless we're assessing how UBI might work in a country without democracy.
We already have the issue today but it's not quite so direct.
[1] https://www.cnbc.com/2019/03/07/heres-the-share-of-income-th...
[2] https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3282661
However, people often want to live in these areas because jobs are there. The trend over the last 40 years has been for the decline of industrial areas as factories close. In most post-industrial countries there's towns and cities with really cheap housing - because there's no high paying jobs nearby. I wonder if UBI would have a longer term effect of injecting money into these areas, increasing prosperity and drawing in people who live in expensive cities but have seen their UBI get inflated to zero.
I don't think food (as in, grains and vegetables and meat) will be subject to the same inflationary problem - there's not the same fundamental supply limit that you get with housing in a city.
I think we should try it though.
That so many people in the US can’t afford housing is a spectacular social failure. It feels similar to California’s water problem; yes it’s possible to run out of the resource but if you actually look at how it’s used it’s just very very poorly allocated.
And this is really the most profound part. There isn't an argument to be made against "if people have more money to buy stuff they will be better off". Nobody can argue against that, it is true.
The _entire_ case against that sort of social spending is "but we need normal people to create more than they consume or the resources won't be available" and "this isn't fair on the people who have to support them" argued at varying levels of complexity and indirection.
If you ignore the negative outcomes then any plan is a good plan and only has positive outcomes. Duh.
There's also plenty of information indicating that if given the choice, most people actually want to work...they just don't want to be working shit jobs for shit pay for shit bosses.
I'm not saying finance is all bad, I'm saying when the financial situation is harder to understand than the so-called "real economy"...don't!
With UBI, nobody falls through the safety net and ends up with nothing to live on; you don't need an army of people assessing claimants' financial circumstances; and when someone finds a low-paid or part-time job they still keep their UBI, so there's no disincentive to work.
If you argue it's unfair that people pay for UBI, how is that different from arguing that it's unfair that people pay for means-tested social security (or poor people's medical bills)?
There's a big difference between a welfare state designed as a form of social insurance to protect people from adverse circumstances and old age, and one designed on the assumption that those who want to work owe those who don't a living, and that the only circumstance that should affect how much people receive is whether they have the right citizenship.
Aside from the fundamental ethical rationale changing from contribution based social insurance to citizenship based entitlement, UBI would also represent a much larger bill, and a lower payout to the neediest.
Nobody 'owes' anybody a living. The situation is, we can give most folks a living, without everyone working. And those that continue to work, of course are better off because they earn money for that. No unfairness at all.
I think its the old Protestant work ethic, this attitude of "folks not working are immoral". We have to get past this, to make UBI a thing.
The literal purpose of UBI is to ensure that taxpayers do owe each citizen a fixed amount set at an average living. Making that a social obligation based on birthright rather than a potential future entitlement based on need is how it's different from social insurance schemes. The assumption if you're able to work and not interested in looking for it you probably don't need the money as much as other people certainly isn't what's wrong with current welfare states.
You don't have to believe that "folks not working are immoral" to believe that helping those fortunate enough to be able to choose not to work at the expense of those that aren't [whether by reduced benefits or higher taxes] isn't what welfare states were for.
If something like VAT were used, it would change things. Without dis-incentivizing real work. This system is already in use around the world, just not in America at the moment.
I think we can consider the results of just-around-the-corner-for-200-years automation-induced mass unemployment if and when it actually happens, although I'm still unconvinced that delinking benefit income from desire to actually find work or any other kind of demonstrable need would be the best solution.
Under means-tested benefits, how many people without work are discouraged from taking low-paid or part-time work because their social security payments are clawed back, resulting in no financial gain for them?
Well the proportion will probably be smaller than the vast majority, skewed towards the asset rich when state pension ages kick in, but I don't think it'll be zero. Though even if it was zero, you've got the problem that under normal circumstances a full third of the population already doesn't work or seek benefits, and suddenly you've got to find the funds for them.
> Under means-tested benefits, how many people without work are discouraged from taking low-paid or part-time work because their social security payments are clawed back, resulting in no financial gain for them?
Relatively few even without competently-designed tapers and EITC schemes, bearing in mind the number of people receiving benefits contingent on unemployment is normally a relatively tiny fraction of the working age population.
It is a little while since my 'experiment' with benefits, but in the UK benefits are a real poverty trap. If you take a single days work you can lose a month of certain benefits. Housing benefit was the worst. The next cap was a 16 hour a week rule, that after 16 hours work you lost some of your 'working tax credit', which made you worse off unless you could jump straight to near 40 hours.
Seeing the poverty trap for myself, I am a huge fan of UBI
Not average. It's Basic. It's just enough to get by. That's the incentive to work: most people want to do more than just get by. Anyone who doesn't want that would be a drag on any system, so that's a separate problem to deal with. But there are a lot of people who can't get ahead with the current system who would do better in a UBI system, and we'd all be better off if we could get those people productive and happy.
If that's not done, then UBI would encourage migration from higher cost-of-living areas to lower cost-of-living areas. That might not be a terrible outcome; it would probably lead to balancing the cost-of-living across regions as the populations change.
There's a massive gap between wanting something and doing what it takes to get it. If you were to ask people vs. watch what they do, you'll see the truth; it's never about what people say but instead what they do.
And I'd welcome any supporting research demonstrating that, based off their actions, "most people want to do more than just get by" as stated. My anecdotal observation is that most of (working age) society actually does just enough to get by for today, this week, or maybe the month...
I think there is an entirely reasonable argument that having enough money to live on (guaranteed) would make people better off.
If a policy isn't being done to make people better off, why do it? The easiest way to maintain the status quo is to do nothing - rather than finding innovative ways to maintain stasis but with new laws.
> If you argue it's unfair that people pay for UBI, how is that different from arguing that it's unfair that people pay for means-tested social security (or poor people's medical bills)?
Yep. The argument against most social spending boils down to the same two things. Sometimes other arguments do crop up (eg, some truly foolish policies incentivise destructive behaviour).
Automation means, only the Engineers and Maintenance people need report to work to keep the goods flowing. Its been happening for 20 years, and accelerating.
The UBI may not be quite ready to deploy, but its coming. If we try it too soon, then some goods will indeed become scarcer and thus more expensive. But many things may continue just as they are. We want to make sure that's enough to keep everyone healthy and fed.
The most important thing to study is the effect of UBI on total economy. Saudi Arabia is an interesting example, since their economy pretty much runs on free oil money. Saudi nationals are notorious for having bad work ethics, and they have to import many foreign workers to run the economy. To prepare the country for a post oil world companies are now required to hire a minimum percentage of Saudi nationals.
Tumultuous transition period followed by quiet.
The same wealth that currently placates them also enables them to project power. And when the wealth disappears, infighting is more likely than outward violence.
After the initial period of reorganisation, it will settle into a state similar to other formerly-wealth now-impoverished nations.
UBI, on the other hand, rewards anyone who works on top of the UBI supplement. There is no need to choose between working and getting the "free" money everyone else is getting.
We give mothers baby formula because we want babies to have adequate nutrition. If you hand out cash, some percentage of people will buy beer instead.
We have the programs we have now because giving away cash didn’t work. Recipients drank it away and landlords gouged them.
A program like Section 8 for housing balances those issues — the landlord gets paid on time every month, but is on the hook for a minimum standard of maintenance and livability. That’s why we don’t have children in tenements anymore.
Every once in awhile politicians and academics who know everything show up with a magic wand. UBI is no different.
If UBI were to replace social services like general assistance, housing assistance, SNAP, WIC, CHIP, Medicaid etc, it would cause many people to choose eating over healthcare, or paying rent over seeing a doctor and eating.
In my opinion, general UBI needs to be issued alongside programs that target specific issues that are endemic to our current economic order. That includes programs that fight hunger, and the lack of access to affordable housing, healthcare and education.
The book goes into great length of the pathology of the welfare system and its non-profit charity profiteers. Of course that was 27 years ago.
It obviously depends on the UBI. If it covered children, it would be absolutely better for the recipients. If it does not cover children, as in Yang's plan, then it is questionable, but it still could benefit a lot because many do not get it at all:
https://medium.com/basic-income/there-is-no-policy-proposal-...
Various services are funded out of taxation at present. The higher gross tax rate would be offset by UBI (those in work would get it too), so the mean net tax rate shouldn't change much.
What would happen to the government employees currently working in social welfare if they'd lose their job is that they'd get UBI until they were given or found more productive work.
What a real basic income experiment would look like:
- Take a nominally populated county.
- Calculate a baseline income requirement necessary to live in the county.
- Completely gut all of the economic service programs (carefully without breaking federal law).
- Pool all that extra money together and divide it by the population.
- Add some sort of VAT to county sales to cover the difference between what UBI should be and how much money is in the kitty.
- Do a test run of at least 18-24 months.
Things to pay attention to:
- County sales tax receipts.
- School attendance.
- Employment, especially seasonal employment.
- Crime.
- Costs of groceries, restaurants, contractor services, etc.
- Mean age of retirement.
- Employment of those 18-25.
- Rent prices
Things to consider:
- Are state pensions on the chopping block?
- Are you going to implement basic income as UBI + earned income or the greater of the two?
- Is there any opportunity to debit federally mandated economic support from the UBI totals?
Hurdles:
- Without buy in at the state level, how are you going to prevent people from buying their groceries across county lines, or doing most of their retail online?
- Unless you pick the county properly (a proper mix of employment + age demographics), you'll have large problems on your hand.
- Serious local, national, and possibly international pressure to derail the program.
But realistically speaking, when it happens, it won't be a big national program, it will more likely look like a patchwork of different city-wide and regional programs brought under a federal banner, decades from now.
The way a worker uses a temporary stipend will be greatly influenced by the knowledge that the payments will end, at which point the worker will be required to support themselves again. With that knowledge, it makes perfect sense to spend the UBI stipend on furthering your education, paying off debt, etc. This strikes me as the logical use of a temporary UBI stipend. This is what I would do.
But is the same true about a permanent UBI stipend? Maybe, maybe not.
These experiments are not testing the impacts of a real UBI.
It will prob speed up automation. Like some 40 year old with no skills is gonna suddenly re-skill and being a computer programmer? Lol.
Just gonna be a bunch of people chilling on the taxpayers dime. Reproducing, taking up space, etc.
Everything is going to be a sharp bimodal distribution. Those that are productive, get paid a ton. Those who aren't productive and just chill all day on UBI.
An individual will have this illusion of they are fine in life, as long as UBI coming in, even though they are not productive at all.
Stability of a government is never guaranteed. What if one day, for whatever reason, whether the government go rogue, or the government has no more money or assets, decide to stop UBI. A lot of people will suddenly be unprepared to come to terms with the actual reality, that they don't have the needed marketable skills to survive in the world because they have been living off UBI all these times without cultivating themselves.
I've known people who inherited reasonable sums of money - enough to live a frugal life for a decade or so. None of them have quit their jobs and lived frugally for a decade.
What that money has allowed is security. It's allowed them to take career risks, or go back to university and retrain.
That's obviously anecdotal - my network skews educated and career driven to start with. It would be interesting to know how many people would just sit back and do nothing. It would also be interesting to know how inflationary the effect of everyone having that UBI would be - so much of the value of money comes from its relative scarcity, so maybe we'd find that if everyone has a basic income then the threshold for security just goes up.
I'm not sure how we'd establish that without trying it though.
Obviously we all have our own definitions of "productive" (I actually like to think of it more as useful rather than profitable) but my own personal opinion is that what is useful and what people get paid for have as little overlap as they've ever had, so the risk of replacing certain jobs with UBI isn't actually as much of a threat to productivity as it might seem like.
That said, "AB testing" it is really hard. The real idea behind UBI (for most advocates) is that it is a living wage granted for a very long time (something like lifetimes). $500/mo for a few months or years means that people need to still plan around that loss of income, and are unlikely to act too differently.
I like research, but I don't really see much benefit here. I think you justify UBI on these grounds: 1) administration costs are much higher for welfare states than UBI (the US spends more on anti poverty programs than it would take to distribute funds and make nobody below the US poverty line). This should appeal to fiscal conservatives. Our anti poverty programs have failed not due to resources, but rather due to centralized, command and control techniques a la ISSUE. 2) the number of people that are completely unemployable (they are not able to outcompete machines/AI at any narrow job function) will increase.
Number (2) is more speculative for most people, but having automated away many jobs myself, I can see that the only reason things are not more automated is the will of leaders to automate. Most people lack the will, but that won't stop it in the long run, only slow it.
Approximately 75 million working age US citizens are 'economically inactive' in normal times - i.e. they're not working or paying income/payroll taxes, and in most cases are ineligible for any other type of benefit. The US poverty line is 12k.
You're not finding all that extra money from admin costs
This is an authoritarian dream, and it's why cash has a big target on it.
Got a fine? Deduct it. Putting people on the take gives government significantly more leverage over them.
Next up is to incrementally pair it with a social credit score. The concept is fundamentally against free expression; it's the same old model used keep large fractions of social classes from becoming independent.
Real solutions involve decentralization and less tax on _time_, the power players want cheap labor, so they were allowed to import it. That scam is well known now, so onto plan B.
This is really a proposal for extreme centralization via hidden tax on value producers. It's a deliberate problem; hence the Hegel soluton.
Which part of “unconditional” do you not understand?
In theory you should be able to come up with some minimal necessary set of laws and policies, pass apropriate parlimentary bills once, and after that parliament becomes unncecessary, or maybe it just gathers in session once a year, to evaluate the need for new laws.
Also, to encourage long-term thinking it should be written into Constitution that any new law passed can only take effect 10 years after it was passed, not sooner.
The income tax was temporary. Right?
Consider someone hired to normalize something that is already being done. You dont need to tell them. Just pay them. Current example: https://www.mirror.co.uk/news/weird-news/hunting-humans-set-...
Heck make movies about it. Pro/con is irrelevant in the early stages.