If you care about poor people, why not just try to fix welfare with e.g. Negative Income Tax proposed by Milton Friedman (https://en.wikipedia.org/wiki/Negative_income_tax)?
Not “just” and not “everything”, but yes.
> Most people who work will continue to work, most people who don't, won't.
If UBI replaces or offsets, in whole or part, minimum wage, it probably increases employment immediately. The reduction in labor market friction and perverse incentives of means-tested welfare probably increases it in the long term. So, I wouldn't be confident in that description.
But even in the usual “funded by high end taxes” formulation, it increases velocity of money in the domestic economy and consumption spending, so it should produce some upward price pressure. The basic upshot of this is that the downward redistribution will compress outcomes, but raise the bottom so that less that would be assumed if you took the benefit level and compared it to pre-policy price levels.
> If you care about poor people, why not just try to fix welfare with e.g. Negative Income Tax proposed by Milton Friedman
NIT and UBI funded by progressive income taxes are identical policies.
Not really, because under UBI, literally everyone would get money from the government, hence the "U". If you remove that feature of the system it wouldn't be UBI anymore, it would just be yet another means-tested system. Unlike UBI, Friedman's negative income tax would phase out and not everyone would be eligible. With NIT, some people would get money, some would pay no taxes, and some would pay taxes.
The idea of UBI is that everybody gets it, but many/most of us will pay higher taxes that send it right back. It'll just add a little bit of overhead by moving the money around, but you don't get to keep it.
That's the worst sales pitch I've seen for it.
If most of us won't benefit, then most of us won't support it. How would it be different from one of the many means-tested welfare systems that already exist?
With a UBI, you have an ordinary tax system that isn't secretly putting higher marginal rates on lower income levels, so then e.g. everybody pays a 30% flat marginal rate. But if you're in the middle your effective rate is lower, because the UBI phases out slower -- you only paid 30% on your first $20,000 in income rather than 70%.
You were paying net taxes to fund welfare already, but now you're not paying as much and someone who makes more money than you is paying more.
Moreover, what people receive is cash rather than stupid garbage like housing projects that turn into slums (but that you still had to pay for), which makes what they receive more efficient (they can buy what they need instead of what the central planning committee thinks -- and you don't have to pay the salaries of the central planning committee or the means testing bureaucracy), which means it costs the taxpayer less for the same level of assistance.
It's a much less dramatic change than people seem to think it is, and creates a greater incentive for lower income people to work because people get to keep 70% of the marginal dollar instead of 30%.
Means tested welfare is a problem because it actively disincentives working by reducing or removing benefits as you increase income from work. It effectively reduces your hourly wage. Trading 40 hours of your time a week for work, when the effective wage of that work is about half the minimum wage, is a pretty poor tradeoff. It creates a benefit trap.
UBI has none of that. Sure, the payment from UBI is eventually matched by tax payments, but there's no sharp threshold. (Of course, UBI has to be pared with a sane progressive tax structure which doesn't also provide sharp discontinuities in tax).
Well, i hope that there are many people who choose their preferred policies based on how these influence society as a whole and not just whether they would profit from them personally.
Net tax payers won't be paying for a huge administrative bureaucracy whose entire purpose is the inefficiency of duplicating functions already performed by the progressive income tax system, namely, means testing.
Also, unlike the aggregate of existing means tested welfare programs, it won't have ranges where the rate of net loss of benefits from additional outside income exceeds 1:1, eliminating some very perverse incentive. Also, instead of effectively a mostly very high (but wildly varying with small variations in income) marginal “tax” (actually, benefit loss, but it amounts to the same thing) rate across the low income range from the means-testing impacts of public benefit programs with a drop to the low end of a system of progressive marginal rates after that, you'll have a system progressive across it's entire range, minimizing in an even more general sense the degree to which you are expending resources to inhibit the ability of people to move up and out of the bottom.
It's true, if a UBI is fully funded by increases in existing progressive taxes, not everyone will get net nominal income increases, but I think if one has a decent concern with what is being done with tax money, they still benefit.
OTOH, even if UBI is done by printing money and not funded in the fiscal sense at all, not everyone will have net real income increases, and the people that lose are the people with the smallest proportional increase in nominal income, e.g., the same people at the high end of the income scale that would lose if taxes were fubded by increased high-end taxes in a progressive system.
You know that's not what would happen, right? We would end up with our existing systems plus UBI for a long time, because people would not be willing to abolish the existing systems.
No, I don't.
> We would end up with our existing systems plus UBI for a long time, because people would not be willing to abolish the existing systems.
UBI/NIT supporters on the right tend to prefer either of UBI/NIT or abolition without replacement to current welfare programs; some actually prefer UBI/NIT, some prefer abolition but think UBI/NIT is a compromise that can get sufficient support from people more to their left to be viable, whereas straight up abolition without replacement is harder to win. Those people aren't going to want to keep existing means-tested welfare.
Opponents of UBI/NIT on the right tend to oppose means tested welfare to; if they lose and have UBI/NIT thrust upon them, they aren't going to seek retaining means-tested welfare to soften the blow.
UBI/NIT supporters on the left tend to prefer it as a replacement for at least those means-tested programs that it would eliminate eligibility for if counted against the means test, though they may prefer keeping other means-tested programs (though with much smaller caseloads, and caseload is the main driver of administrative expense in such programs.)
Basically, the constituency for retaining most existing means-tested benefit programs is left-wing opponents of UBI/NIT. But the right-wing supporters of UBI, left-wing supporters of UBI, and right-wing opponents of UBI together are almost certainly going to be a bigger block.
You forgot another voting bloc: beneficiaries of the current welfare systems, who might well get less money from UBI than they do from the current systems.
> Not really, because under UBI, literally everyone would get money from the government
Yes, really; every possible NIT is exactly equivalent to some combination of UBI + some configuration of rates of positive income tax brackets in a progressive system.
> With NIT, some people would get money, some would pay no taxes, and some would pay taxes.
With a UBI in a system that also has progressive income taxes, some people would get net money, some people would break even between UBI and taxes, and some people would pay net taxes.
UBI + progressive income taxes = NIT.
Can't tax the corporations and the rich or else they will "move elsewhere and increase unemployment" as we're made to believe so why then do I fear that the middle class worker will be hit yet again?
I'd rather we lower taxes on the workforce than increase them to give away free money.
The GP comment wasn't great either but this was much worse.
Well, why do UBI at all?
I think the goal is to simplify our means based well fare system, which can create some economically inefficient incentives.
For example, imagine someone receiving disability checks who could go back to work. Going back to work would mean they stop receiving disability checks, and they could easily end up reducing their income.
Well, later it's possible to vote for a candidate, which promise to reduce taxes by 3x and increase UBI by 3x, like at Alaska: https://www.vox.com/future-perfect/2019/9/5/20849020/alaska-...
Where would we get it from? Are there any extensive papers explaining it? I'm super curious.
How is that fair to working people with ambitions?
Negative income tax would probably not work as efficiently. What if it takes a year and a half of administratoin for the negative income tax to reach people living hand to mouth? That's a very slow tool to get money into everyone's hands...
UBI would have to be funded by a corresponding increase in high tax brackets.
> If you care about poor people, why not just try to fix welfare with e.g. Negative Income Tax proposed by Milton Friedman (https://en.wikipedia.org/wiki/Negative_income_tax)?
That's like UBI for people who can hold down a minimum wage job, but it does less to help the very worst off. Why do you prefer it over UBI?
Actually, it is exactly like UBI, under NIT you also get money if you don't have a job.
A UBI and a negative income tax can end with the exact same amount of net money dispersed to anyone, it just requires tweaking the income brackets and rates.
Intuitively it kind of makes sense that everything would get more expensive but if you consider millionaires spending on stocks, the stocks don't rise in price when the millionaires get more money, they are kind of independent. I think the same for poor people. Prices shouldn't rise because more people can afford to buy something but it makes sense that some would rise prices as more people will be able to afford the product. I guess the market and competitors is meant to keep prices down.
Of course they should, and they would. It's really econ 101. More demand = higher prices. Why wouldn't it?
If you were selling apples for $1/kg, and you have it sold daily very rapidly, wouldn't you try to make $1.1/kg? $1.2/kg? $2/kg? Until you can't sell everything you produce, or, more precisely, until you can't make more profit.
If a grocer tried to double their prices then their competitors would out compete them.
Property in SV might be a different matter although I’m guessing this is going to be cost neutral for most people there or even negative.
Do things rise in price when the people who usually buy the things have more money?
Are things more expensive in more populated areas or less?
Consumer inflation = price of consumer good increases
Consumer deflation = price of consumer good decreases
demand exceeds supply = price of consumer good increases
supply exceeds demand = price of consumer good decreases
Now use these four basic definitions to answer your comment.
>Do prices for consumer goods rise when there are more consumers?
more consumers = more demand
UBI = less people work = supply stays the same or goes down
In this scenario "demand exceeds supply" is true. Prices do rise and that rise is called inflation.
>Do things rise in price when the people who usually buy the things have more money?
Again. UBI = less people work = supply stays the same or goes down
more money = more demand
People may buy more than one product if they can afford it or they may buy a higher quality one.
In this scenario "demand exceeds supply" is true again. Prices do rise and that rise is called inflation.
If you were to introduce price controls and set a maximum price for TVs then it is possible that one person buys 3 TVs and two other people can't get a TV at all. The answer is to raise the prices until everyone who wants a TV can get one.
>Are things more expensive in more populated areas or less?
Well, it depends on what "things" you are talking about.
A UBI does not influence the amount of land available so the supply of land would be fixed but the amount of money being received through UBI grows with a greater number of people.
supply = stays the same
demand = increases as more people live in a community
Therefore we see inflation in land prices.
If you were talking about something like an iPhone that can be manufactured in China and then shipped to New York then no, it would not cause inflation because denser populations do not prevent the Chinese (or any other company that's operating outside your city) from building bigger factories and thereby increasing supply to match demand.
supply = increases with demand
demand = increases as more people live in a community
Regardless of any change in prices of those goods there will be more economic activity to meet the demand. That economic activity comes from somewhere and could increase costs, and therefore prices elsewhere in the economy. So I think some inflation is inevitable.
The rise in stock prices since the pandemic crash is largely driven by the increase in the money supply. That money sloshing around has to go somewhere, and it's poured into stocks. This is because people aren't spending as much in the lockdown, so the excess money is going into savings.
Pretty much, but that's not a flaw of UBI, that's how the economy works and if the amount of UBI is picked carefully by skilled economists it would be very easy to achieve the desired amount of inflation. Everyone is somehow scared of inflation because we have been in deflation or at least near zero inflation for at least a decade.
https://www.scottsantens.com/negative-income-tax-nit-and-unc...