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Comment by Aerroon | Hacker News Reader

Somebody has to actually create all the stuff that people consume. UBI doesn't address that point. If these employers have to pay more to hire people, then prices will go up. When you have 200 million apples and 300 million people then UBI won't get the 100 million people an apple. Growing more apples does. And this same process would apply to virtually every good and service people consume.

You might be right on rent, but that would probably exacerbate the price of goods problem further since there would be fewer people willing to do those jobs.

UBI will only make people better off if more goods and services are produced as a result of it. Or alternatively, if goods and services are somehow moved from excessive consumption by the rich to the poor. But that last part is probably a drop in the bucket. Rich people still eat the same amount of food for dinner.

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Except that repeated experiments have found that raising wages and improving working conditions raises productivity and efficiency. Costs of good sold doesn't go up, so there's no need to raise prices.

People who are able to focus on their work because they can pay their bills, have good working conditions, are healthy and able to care for their families work better. Big surprise.

Of course there's an upper limit to this - if you're paying your apple pickers more than the retail price of the apples then you're going to be in trouble. But in those cases, the price of apples needs to be higher so that apple pickers can have some basic human dignity. Apples should cost more, but we have created an evil system that destroys apple pickers' lives so that the rest of us can have cheap apples. Let's not do that any more.

No large scale experiment exists for UBI.

But the experiments that have been done support it.

There's this set of objections to UBI based around "yes, ok, it works in the small scale, but it'll never work on a large scale".

If we did a large scale experiment, and it confirms that it works, the objections will move to "sure, OK, but it'll never work on a national level".

So let's just implement it and see if it works. If it doesn't work, we can always just go back to letting people starve.

> But the experiments that have been done support it.

They really, really don't. All the experiments on a small scale show is the trivial conclusion that if you give people some central government funds for a year or two, they tend to be slightly less poor at the end. None of them come remotely close to suggesting that people are so much more productive that they can cover the costs of UBI to people already out of the labour force by choice, never mind those that may choose to exit it in future.

> If it doesn't work, we can always just go back to letting people starve.

Only if the country still has the ability to change and the economy isn't permanently damaged.

I think we can always manage to let people starve.

Disingenuous argument which completely ignores the ramifications of severe economic downturn on a global stage.

> If it doesn't work, we can always just go back to letting people starve.

Elderly people already get a UBI in the form of Social Security, and that's politically impossible to cut regardless of whether it's a good or bad idea.

Once you turn it on and people get used to it, you can never turn it off in a democracy.

That's a vacuous statement. No large scale experiments have been done, so it proves nothing for or against UBI.

Small-scale experiments have been quite successful though.

> Small-scale experiments have been quite successful though.

And are absolutely useless to study the very important effects that these kinds of systems have on a nation's economy.

I'm not a fan of UBI. I agree with you that the small scale experiments are worthless.

I've looked to history for examples of actual real world attempts to guarantee some minimum quality of life for all citizens of a particular group. They consistently do well for some self selected and committed initial group and then go badly when the doors get flung open to include everyone.

One result I recall hearing about is instituting policies like "You don't work, you don't eat" in order to prevent freeloaders from utterly killing the whole system and taking everyone down with them.

>”You don’t work, you don’t eat”

Tale as old as time:

> For even when we were with you, we gave you this rule:“The one who is unwilling to work shall not eat.”

https://www.biblegateway.com/passage/?search=2%20Thessalonia...

>>Except that repeated experiments have found that raising wages and improving working conditions raises productivity and efficiency.

>No large scale experiment exists for UBI.

Non sequitur.

I know my accounting degree is getting a little dusty but in what version of the world do you think you can "raise wages" while "costs of good sold" doesn't go up?

When the supply of goods goes up too, the marginal cost of labour goes down or the percentace of product cost of labour is small.

All of those become more and more true (and are already true for a large class of products) as mechanization and automation increases.

Those things are happening anyway. They might reduce the magnitude of the effect, but prices will still go up as wages go up. Also as automation increases productivity, leading to a wealthier economy, workers move into service sectors which are labour intensive.

You can't just say, well, just reduce the amount fo labour to keep costs down. That labour still needs to be employed doing something.

I think GP is arguing that increasing someone's hourly rate will proportionally increase their work output per hour. (I don't believe this to be true.)

https://s1.q4cdn.com/806093406/files/doc_downloads/2019/05/P...

it is in fact disproportionate, raising wages raising productivity by a greater amount.

Given the evidence, do you now believe this to be true?

If wages become a smaller portion of COGS, then there’s no contradiction. Eg if you buy equipment to make the process more efficient, you can amortize that equipment into COGS and the labor component can remain flat or even decrease even with higher wages for staff.

Or your competitor can invest in equipment just the same and keep wages flat, and beat you on price. So nice sleight-of-hand but that's just an accountancy trick. Prices are still higher than they would otherwise be with stable wages.

Price isn't determined by input costs but by supply and demand..

That's a very naive take on the economic realities. Supply is very often determined by input costs. If it costs more to provide a product or service, supply drops driving up prices, which in turn can lead to a drop in demand. Depending on market elasticity, one common way the market gets out of this negative feedback loop is by compromising on quality in order to hold down prices.

You can see this in the current economy as restaurants and packaged foods suppliers in some sectors reduce the size of portions.

The cost of video cards didn't go up despite everyone getting $2000 checks! I mean, you can't actually buy one unless you want to wait in line at a Microcenter for three days, but they are still the same price.

When you only raise it for a minority of a populace. While UBI is "universal" it gets clawed back via taxes for majority of populace. So prices really only raise for the products/services that are dominated by the marginal labor rates of those whose wages are net-increased. AFAIK, that is primarily the lower-end of the restaurant industry and the non-mechanized segments of agriculture (mainly squishy fruit/veg).

In the world of 'repeated experiments' ostensibly. Perhaps some should go wreck that world's economy and leave ours alone.

> Except that repeated experiments have found that raising wages and improving working conditions raises productivity and efficiency.

Source?

>Apples should cost more, but we have created an evil system that destroys apple pickers' lives so that the rest of us can have cheap apples. Let's not do that any more.

What if raising the price of apples lowers demand, causing less jobs to he available? Presumably apple picking is the best job those workers can get, so the likely consequence is that they'll be unemployed and we'll have to substitute 100% of their income (rather than 50% or whatever if they were picking apples). That seems like a poor allocation of labor/resources.

https://s1.q4cdn.com/806093406/files/doc_downloads/2019/05/P...

This is only a fundamental problem if UBI is so high there is no incentive to work whatsoever. Every UBI proposal I've seen puts the income level at, or some small fraction above, the poverty line. The majority of adults (currently) earning more than that are unlikely to want to lower their standards of living. Some will, sure, but not most. And likewise many of those in poverty would be willing to work to raise their standing of living beyond UBI, especially if they have more of an economic cushion to find a better position.

So I don't think we need worry about everyone stopping working. What we need to consider is the marginal effect of the small population that does. If the unemployment rates doubles, what impact would that have on the economy? There is a lot to figure out with a problem like that, but it is a different caliber of problem from total economic meltdown.

Whether or not individuals benefit from UBI isn't the point. The point is that it changes the nature of money printing in our economy from being top-down to being bottom-up and it changes the dynamics of how companies operate to get those dollars. The effects on individuals and prices hardly matters at all.

Right now we have a trickle-down economy which caters primarily to the needs of institutions and big capital holders. This is why our society is so politically charged and divided and why we have such fast growing inequality.

We're already essentially giving institutions and capital holders free money through capital appreciation. We need to give some free money to those at the bottom too or else it's not fair and it will lead to a revolution sooner or later.

Yes according to the textbooks, production should go down if you remove desperation as a motivator to work, in the real world however almost every data point collected shows the opposite effect on the overall productivity, ie societies with extensive welfare schemes outproduce those who don't allow people an exit from the rat-race. Nobody have gone full UBI yet but the economies that have gone the closest to actually implementing UBI(say Scandinavia) is among the most productive and healthy economies around.

What does tend to happen when a system is put in place to provide support for those who refuses to accept any employment, is that the ability for wealth hoarders to use their hoards as a lever go gain more wealth and power declines as the bargaining power gets more even.

One of the benefits of universal(non-means-tested) welfare project is that the graft and administration overhead of those systems tend to be much lower then "charity" based welfare projects and UBI is the ultimate in low overhead universal welfare. And when you look at the structure of most post-industrial economies admin overhead and graft is more then 50% of the economy, i.e. it's by no means a given that we cannot keep up production of goods and services with even 60% of the population of UBI.

This argument is usually countered by pointing out that a lot of our production is mechanized nowadays, and this percentage is only increasing. Currently capital owners take the overwhelming majority of the gains from that, UBI tries to shift that more to everyone. UBI won't prevent more apples from being produced.

You rightly point out that that does not apply to supply-inflexible goods like housing in cities.

We already have that productivity and more, but we waste it.

Artificial scarcity is created by producing machines that intentionally break, bunkering and throwing away stuff, patent trolling and so on.

UBI alone likely won’t fix this though.

The Saudi Arabia way is to bring in third world country workers. They have tons of natural resources per capita though, so I don’t think this luxury applies to most countries in the world.

> Somebody has to actually create all the stuff that people consume. UBI doesn’t address that point.

“UBI” isn’t actually a specific plan, its a broad concept within which there are many specific plans. But the broad concept itself does address this, though many of the more detailed plans do so in…more detail.

At a high level, one of the central points of UBI as a replacement for traditional means-tested welfare (and why some of its earliest advocates were right-libertarians, not lefties, such as Milton Friedman who advocated “negative income tax” which is identical to a UBI) is that it eliminates the disincentives to earning outside income that come with the sharp (sometimes greater than 1:1 when aggregated across all benefit programs a person qualifies for) funding reductions for outside income that come with means tested benefit programs, increasing the marginal reward (and thus incentive) to work.

> Rich people still eat the same amount of food for dinner.

No, they generally don’t. Oh, sure, that might be true by mass, or even by calories; but not by labor-hours of work that went into it, or dollar cost, which is what is relevant here. And that’s true across all categories of consumption.

> “negative income tax” which is identical to a UBI

Some consider those distinct as they state the UBI would not decrease with additional earned income.

> Some consider those distinct as they state the UBI would not decrease with additional earned income.

They are the same; both have the effect that benefits are “drawn down” through marginal taxation of outside income, though Friedman’s specific NIT proposal had an exceptionally high (though still lower than the effective drawdown rates often faced by means-tested benefit recipients) marginal rate (50%) for the the below-break-even bracket (essentially, the bracket whose outside income was less than “Effective UBI”/(bottom tax rate)), which most UBI proponents would reject in favor of consistently progressive rates. But this isn’t an inherent feature of generalized negative income tax.

UBI may not decrease, but progressive taxation on income, coupled with adjusting rates (to pay for the substantial increase in federal expenditures) will have the exact same mathematical effect.

Somebody has to actually create all the stuff that people consume. UBI doesn't address that point. If these employers have to pay more to hire people, then prices will go up.

An alternative is to greatly increase temporary work visas, and make those immigrants exempt from getting UBI as a clause in their immigration visa. Of course this might lead to other issues.

Ok, this actually proves why it cannot work. UBI as a unemployment benefit replacement cannot apply to immigrants (to prevent abuse) thus we get a two class system where people pay taxes into the UBI pool but never get anything back.

However, UBI funded by taxes on bad behavior can still work but it would not act as a replacement for unemployment benefits.

people pay taxes into the UBI pool but never get anything back.

They get to live and work legally in the US and get a salary paid in US dollars. That seems to worth a lot to a lot of people. You are of course right about the very obvious two class system it will create and the long term social consequences of such a system are tricky to predict.

Edit: The US birthright citizenship rules might actually make this harder to implement.

> They get to live and work legally in the US and get a salary paid in US dollars.

If this is so good why the need for a UBI for citizens in the first place?

Because the US should want to provide a better quality of life for its citizens than what those people feeling and risking everything in a desperate attempt to get into the US have in their home countries.

The US (it’s just people) already has a higher quality of life for its citizens - that’s why people come here.

Serious question, but what's wrong with having a two class system? Wouldn't these people be better off living in the US rather than living in whatever country they are assumably leaving for economic opportunity, even if they don't have as many rights as a citizen.

There doesn't have to be something wrong with it, it's all down to the implementation details. For one, possibly extreme, example of how it could turn out badly, look at countries like Qatar and how they treat their second class workers.

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