Universal Basic Income Is Superior to a $15 Minimum Wage (2019)

You're always incentivized to make marginally more money with the negative income tax because it gives you a monotonically increasing effective income vs job income curve, whereas some welfare systems end up with disincentives at various points of income where you'd make overall less by exiting the income level where you're receiving the aid (the same curve gets a negative slope or a downward jump).

Hypothetically they'd get rid of a lot of welfare programs and just institute a negative tax, which has a smooth curve upwards. More money always means you make more, just maybe not linearly.

UBI can do this too - it's not clear to me what the practical differences between UBI and "negative income tax" are.

I would surmise they mean that by giving people cash you don’t have them dependent upon any programs that dole out benefits depending on various eligibility factors. For example right now if you need food support in the US you can apply for food stamps (SNAP) but the problem is that food stamps can only be used for food and so you create a dependency on that particular program with the person needing food support. But if you give them cash you then allow the person to decide for themselves what mix of things they spend that on according to their specific needs and can probably do away with most of the specific programs that only deal with a specific benefit that may not be in the right proportion to other benefits depending on need.

Isn't the practical difference the past vs. the future? A negative income tax is based on already reported income, whereas UBI is clawed back once income is reported.

With UBI, people will be more selective in their job search. With negative tax rate not so much since you would need to work in order to benefit. I am not a fan of them because they will simply push out cost of living and the poor will be back in same relative economic disadvantage. The only realistic solution I see is free education even into adult age.

Isn't the another significant different in the logistics of distribution?

For UBI, you need to / get to have a direct line to every person/citizen. For NI, they come to you.

I honestly have no idea which one is better/easier from this perspective, it just seems like the logistics implementation is another significant difference.

> The only difference between a UBI and a negative income tax is framing.

No way.

Taxation requires benefit systems for those that are not working (unemployment, disability, maternity etc). UBI simplifies benefit systems, administratively and for the needy. The social outcomes for benefits are entirely different from what a UBI would bring.

Taxation is chunky (per year) and delayed (processing delays). There are heaps of corner cases of employment and salary changes during the year that might be equivalent over periods of many many months, but where a weekly UBI payment would make a huge difference to you if you were poor or unfortunate.

Taxation has more scope for fraud so requires much more overhead for prevention. A UBI is simple to manage - the things you need to detect are far more limited and are more easily checked and less invasively checked.

Disclaimer: I am not a UBI fan: I am just arguing against your point because it is so egregiously incorrect.

You can't buy food with a printout that says you're going to get some money next year.

Or how about the big elephant in the room that nobody seems to be bring up; the effect on small businesses that can’t afford to pay employees $15 or $20/hr. So, instead of helping the poor, these policies raise unemployment and actually are a detriment to the overall health of the economy.

Here's some studies of the effects of Seattle's minimum wage hike:

https://www.washington.edu/news/2019/02/06/two-new-studies-p...

"The most common strategic response reported by the businesses has been to raise prices or fees of child tuition and to reduce hours of or number of staff. Center directors reported that employee wages and benefits comprise the majority of business expenses and that child tuition was the primary source of business income. Thus, most businesses reported they would need a mix of strategies to accommodate increased labor costs to ensure that added expenses were not falling entirely onto the families they serve."

>To accomplish this, we assembled the entire set of published studies in this literature and identified the core estimates that support the conclusions from each study, in most cases relying on responses from the researchers who wrote these papers. Our key conclusions are: (i) there is a clear preponderance of negative estimates in the literature; (ii) this evidence is stronger for teens and young adults as well as the less-educated; (iii) the evidence from studies of directly-affected workers points even more strongly to negative employment effects; and (iv) the evidence from studies of low-wage industries is less one-sided.

https://www.nber.org/papers/w28388

Come on, when there is a labor surplus companies don't have to employ all workers. They can just pick the lowest bidders and if you deny people the ability to bid lower they might not get employed at all.

I see no reason why a direct quote from Andrew Yang (probably the best-known proponent of UBI at the present time) should be flagged to death in this conversation. Vouched -- which doesn't indicate that I necessarily agree with him. I just hate people who are making a valid contribution to the conversation being mobbed down.

>And politically, I think it’s more appealing to be able to say to everyone: You have intrinsic value.

The universality of UBI is key to its political viability. Just look at the number of people who are against forgiving college debt because they have already paid off college or are past the stage in their life in which they are personally concerned about college debt. Most people still view "fairness" as everyone being treated equally. So just give everyone an equal amount of money.

The correct solution here is to make it automatic.

>I would much rather see a universal basic services program that guarantees universal free at the point of use access to services such as housing, healthcare and education provided directly by a government body or non for profit enterprises.

I agree that creating such a program creates political incentives for increasing it over time in excess of inflation. That's a real cost that needs to be weighed against alternative approaches.

But consider what happens when you make services "free at the point of use access". The price no longer serves the purpose of summarizing and transmitting information about the good or service. The consumer of the "free" good no longer gets any information about the scarcity or quality of the resource, and the provider no longer gets any information about the demand for their good and consequently how much to produce. Prices are the primary mechanism for coordinating decisions efficiently by summarizing actionable decision making information and economizing on expensive knowledge acquisition, interpretation, and communication costs.

It should hardly be a surprise when demand and consumption of those goods and services with a zero price goes up, and supply and quality goes down. Now suddenly you need to grow large bureaucracies for rationing the resources which will inevitably miss the mark of serving disparate individual needs as efficiently as the price mechanism could in a free market.

It's the classic recipe for degrading quality and creating shortages. I believe it's much more desirable for housing, healthcare, and education to be served by the market precisely because of how important they are to people. Putting cash into people's pockets directly has a much smaller distortive effect on market operations, and allows people to express their preferences in allowing them to vote with their dollars, as opposed to "free at point of service / consumption" goods and services.

It's no accident that UBI was proposed by Friedrich Hayek, and the Negative Income Tax by Milton Friedman. You could hardly accuse either of being in favor of wealth transfers, but they both understood the profound negative consequences of distorting prices, which essentially is lying to economic decision makers about the costs and benefits of taking certain actions, resulting in inevitably less efficient allocation of scarce resources that could possibly have been used more productively elsewhere in the economy.

And that is the beauty of the separation! Once you've got the two things (minimum wage and UBI) separated, you can adjust the tax code to move around the reclaim point.

I wouldn't expect the solution to world poverty to be easily typed up on an internet message board.

So poor people need to exist because otherwise we wouldn't be able to force people to do things we ourselves wouldnt want to do? And if they are not poor they would stop being in awful servitude jobs noone wants? I guess it just sucks to be born poor then, too bad we can't help them

Do you see the irony in that the shity jobs that noone wants to do are the ones that pay less? There is another solution to give incentive there, raise the salaries for these shity jobs to attract people. It is very convinient that this shityjob-noincentive argument is being propagated by the same people who will never have to do these jobs or live by limited money.

I recently went through my mothers health failing and then subsequent death. If I didn’t have to work, I absolutely would have cared for her myself.

However, there is no way I could have quit working and keep the house in a relatively expensive area that I bought to be close to job opportunities.

UBI changes the calculus dramatically. Suddenly you can just do things for yourself .

Yeah that's a major issue that I bring up everytime UBI is discussed and that for some reason UBI proponents never address.

If UBI isn't high enough to ensure that welfare as we currently know it isn't needed anymore, then why have UBI at all? It just adds complexity to the system for no apparent gain. On the other hand if UBI is high enough to go by without working there's a lot of things that just won't get done anymore.

On the flip side, UBI will increase the revenue from those jobs. The less desirable jobs will pay more simply due to supply and demand.

UBI is the wrong tool to solve inequality because there is already an existing tool for that. It's called inflation.

Why are jobs that are needed the most paid the least? That is some sort of manufactured contradiction. If they are paid low because they are easily replaceable, why are they the most needed jobs? If they are paid low because they aren't needed, then they aren't needed and shouldn't exist.

What could a third possibility be for these jobs being paid so low, i wonder? He said, facetiously knowing the answer

> The problem with UBI is that some jobs suck but need to be done

I'm somewhat skeptical of the UBI train, but this particular objection has always rubbed me the wrong way. Those jobs should cost more.

If the only thing keeping people in a job is the threat of poverty, and they're not being paid enough otherwise to incentivize them to do the work, then that's not a free market. It's not really significantly different from holding a gun to their head or coercing them into doing the work.

What's going to happen if the people stuck in dead-end jobs retrain to work at better jobs? What's going to happen if the economy improves and suddenly they have more opportunities? The problem with underpaying essential jobs is that it forces people to think of those market outcomes as undesirable. I don't like the framing that says that if elderly-care workers retrain and have a choice whether or not to work in nursing homes, that's a bad thing. That seems very, very counter to how we should think about a healthy jobs market.

I don't want a framing that tells me that the economy becoming too good or people having too many job opportunities is a problem because those people need to be financially pressured into working underpaid jobs. To me, that's a very anti-free-market way of thinking about the economy. Jobs that are difficult or undesirable should have more compensation because they have less demand. That is the entire basis of the jobs market and of supply/demand, we shouldn't be trying to undermine those principles.

America is at risk of running out jobs, not at risk of running out of work.

It's all too easy to see a lack of infrastructure jobs, for instance, as a signal of a lack of demand. It isn't. America has crumbling infrastructure and a lack of jobs to fix it at the same time.

China turning off the trade tap will likely also stimulate the creation of jobs. iPhones will need to be made at home at some point in the not too distant future and they will still need plenty of people to do so.

Wealth re-redistribution will also stimulate demand, creating jobs. A lack of demand caused by a lack of wealth is not a "true" lack of demand.

When society starts lowering the retirement age to 50 and nobody frets about inflation ever - THAT'S when you know that full time work is really drying up. Not happening.

Why do you think we'll run out of things for people to do? The history of the last 500 years or so suggests that when old jobs get optimized out of existence, there's still plenty that needs doing. When I look around, I definitely don't see a society with no unfilled needs, so I expect we can keep going quite a spell.

>the assumption that every healthy adult should have a full-time job - is unsustainable.

Inflation makes sure that everyone can get a job. The fact people you even entertain this though is hilarious. The entire point of capitalism is to maintain growth and that growth can only be maintained by employing people.

People hate on growth but what's the alternative? Imagine being in the 15th century and saying: This is it, people will never have a full time job again, ever.

The 21th century wouldn't have happened if people thought like that. The dark ages would have lasted forever.

The reason why we have so much underemployment is quite simple. Inflation has been way too low. Honestly, we have so much inflation to do that even the measly 2% that the Fed targets is way too little. Inflation has slowly picked up and it shows. Underemployment is shrinking in the US.

Is there any evidence for this?

Most sub 15 minimum wage work produces value far in excess of the wage. This value is then captured in profit margins and stock prices.

The minimum wage also doesn't prevent people from selling dolls on Etsy or something if they really want to.

I don't know how old you are or how long you've been paying taxes, but they have been an insane labyrinth since long before Trump. My taxes actually got simpler with the increased standard deduction.

Using post WW2 times as a basis for any argument is wrong. Post WW2, there was no China as a superpower and no globalization. If businesses are forced to pay more for low-skill labor, they can do so easily by taking the jobs elsewhere, which was not the case (or at least as easily done) after WW2.

It's pretty clear that minimum wage increases are inflationary. They may not be NET inflationary in some circumstances.

Consider this thought experiment: raise the minimum wage to $2 million/hour. What happens to prices?

Sometimes I wonder where people come up with the crap like 'minimum wage isn't inflationary'.

Make minimum wage $1,000,000/hr then!