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Comment by munk-a | Hacker News Reader

I think this (COVID relief) is the closest America is going to get to a legitimate domestic experiment on UBI we're going to get for a while so it's rather heartening to see the drop in family poverty.

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If cost is not controlled I'd expect expenses of food, clothed and renting to rise after UBI being implemented.

Costs cannot be controlled. That’s not how it works. That’s how you get empty shelves.

I think some inflation will happen but not dramatically in food and clothing. We do not have many naked and starving people in America. It’s the premium consumer goods that will see higher demand - think dishwashers not Chanel.

I guess rent will be the one to go up in case of UBI.

UBI fundamentally does not solve the problems that:

a) some people do not want to live next to some other people, and are willing to pay extra for that privilege - now they have even more money to use for that purpose,

b) in the most expensive regions, demand exceeds supply a lot.

I even think that a vast majority of UBI would, at the end, accrue to landlords.

in the current context of this experiment rent dropped by 30% in SF while this was going on. Sure some of that was people fleeing dense urban areas to escape lockdowns, but also some was people decamping because the economic pressure to work in a city was lifted. UBI might be a terrible threat to landlords' incomes as people redistribute.

the drop in rent would be more attributable to the WFH policies instituted by many companies rather than any UBI imho.

It's gotta be combined with YIMBY policies, hopefully LVT.

The state can definitely influence the prices of goods (e.g. it can affect the price of money). Direct control is indeed infeasible.

> Costs cannot be controlled. That’s not how it works. That’s how you get empty shelves.

Many types of food in America are massively subsidized, including dairy[1], beef[2], and corn.

Government policies can certainly drive down prices. Direct price controls don't work, but subsidizing production most certainly works.

Though an economist would argue that a dollar saved at the market cost tax payers more than a dollar to get, due to inefficiencies, counter argument is that people who are poor pay less taxes and benefit more from reduced food prices. (At which points arguments about corn subsidizes and long term harm to the health of the citizenry are brought up.)

[1] https://www.numbeo.com/cost-of-living/country_price_rankings...

[2] https://www.numbeo.com/cost-of-living/country_price_rankings...

Sure but a subsidy is a market support. A price control is a market support. A subsidy is not a price control.

I can see the argument for the price of rent rising, but why would the prices of food and clothing rise? My understanding is that those are highly competitive markets, with low margins on top of the cost of production, at least in their non-luxury segments. Is that wrong?

Not necessarily non-luxury but also the middle brands I think. But it's difficult to prove though. As a user said the pandemic also sees a decrease in supplies so it's kinda difficult to do "tests" properly.

Food and clothing depend on other things (cost of employees, equipment, materials, etc.) When the costs of those things rise, the cost of food and clothing will have to rise.

Depends where we source them, for example American-made clothing is already prohibitively expensive to the economic demographic segments that are targeted by UBI experiments.

> Food and clothing depend on other things (cost of employees, equipment, materials, etc.) When the costs of those things rise, the cost of food and clothing will have to rise.

Not really. You're pointing to production costs, but production costs just define the price's lower bound, not the price itself.

Price depends solely on willingness to pay and pricing strategy, which is higher than the production cost when the product/service is not subsidized or a loss leader.

It seems like there are two effects we're considering at the same time:

1. UBI might increase people's willingness to pay for goods in general, and the prices of goods that are most strongly driven by willingness to pay would rise. (Rent in expensive cities might be an example of this. Milk, soap, and socks probably aren't.)

2. To the extent that UBI is paid for with higher taxes, the prices of everything would go up. This seems obviously true on average and to some extent, but the specific numbers matter a lot. For example if prices go up by 10%, but the people whom UBI is designed to help see their income rise by 20%, then UBI is achieving its stated goal. (Importantly, the hypothetical 10% rise in prices doesn't reflect wealth being burned or spent, but rather resources being moved around in some sense.)

> 1. UBI might increase people's willingness to pay for goods in general, and the prices of goods that are most strongly driven by willingness to pay would rise.

It's reasonable to assume that UBI would be linked with an increase in the demand for some goods and services, but there is no indication that this would reflect in a proportional increase in prices. For example, those who live in poverty already tend to purchase substitute goods due to lower price, which is reflected in some aspects such as the link between poverty and malnutrition. In this scenario it's likely that the increase in purchasing power from UBI would actually cause a shift in the market so that it brings down the demand for said substitute goods and instead spread the newly-found demand through other products.

The same scenario also applies to other markets, such as housing. If UBI grants you a little bit of economic freedom so that you are no longer tied to a specific job or place of residence or even access to public transportation, you can also consider moving to a better/cheaper place somewhere else without your livelihood being a constraint.

Keep in mind that one of the enablers of living frugally/off-the-grif is ensuring that you secure your financial needs. Once people are no longer forced to endure a horrible job to make ends meet, they start to make changes to improve their lives.

> Not really. You're pointing to production costs, but production costs just define the price's lower bound, not the price itself.

I was replying to a comment about how intensely competitive these markets are, and how that means margins are driven down. If your business is operating at a very low margin, and costs rise, you will necessarily raise prices, because you are already operating on the price floor.

Low margin businesses are defined by the price floor (the cost) being very close to, if not equal to, the price sold at.

I think that's one of the biggest weaknesses of using the pandemic as an experiment on UBI - it's one of the best ones we'll get for a while (and I think we have seen increases in luxury spending from most sectors which would indicate greater financial security) but at the same time we're seeing the continued echoes of supply chain shortages. It'll be hard to determine precisely why the price of meat has gone up from two prior, there are quite legitimate additional costs on production by having increased sanitary and working space requirements - and I think both sides of the UBI debate will be able to sanely say that those costs were either mostly due to the pandemic or mostly due to labour shortages driven by the covid benefit... and I don't know if we'll ever get a really clear answer.

This is going to last only as long as it will take for the labor supply pressures to squeeze out small- and medium-sized businesses for the large corporate interests to scoop up on the cheap. They're not going to permanently constrict the reserve army of labor.

I bet the new child tax credit will stay on the books. It's such a game changing boost to lower income families.

No, COVID relief isn't like UBI because most of it, the unemployment benefits, are conditional on not working.

The reason UBI is better than other welfare is it doesn't discourage working as much.

That might be true. But the payouts were more limited than a nominal UBI program, and the costs were astronomical.

The US added 20% of GDP in debt in a single year. [1]

The US Fed added 4 Trillion to it's balance sheet in 2 years [2] which is ballpark maybe 25% of GDP.

Obviously there was more than just wealth distribution in there, but what becomes clear in the calculation is the gigantic expense of UBI.

UBI doesn't work in current terms, it's not a program that can be remotely afforded without a 'total re-work of the system'. Surely there are opportunities with taxing the ultra-wealthy and considering loopholes (esp. offshore tax havens) but there's just no calculus where it works out neatly. In other words 'UBI' is not like 'child care benefits' or some kind of regular social program where can argue about the balance sheet. It's a completely different scale of costing problem.

If the US focused really hard on 'some kind of healthcare for all' (not making any statements about what that might look like) and controlling costs there, improved minimum wage, and did 'basic structural tax reform' - things might improve quite a lot. (i.e. doing the hard work of reforming normal programs we have to have would go a very long way). But I don't think there's any actual magic math that would allow for a true, enduring UBI situation. Even really well managed Oil-rich places like Norway don't quite have that, they sort it out using the more accessible, 'normal' social programs etc..

For more context 'the current payout program' which is not not 'U' in the UBI, just for about 10% of the population, is going to cost 0.5% of GDP. Meaning just that limited program, expanded to 'U' i.e. 'Universal' is 5% of GDP, every year.

Edit: finally should not that a lot of the expansion of the Fed's balance sheet amounts for 'welfare for the rich' and it's not a small amount. That's a problem as well.

[1] https://en.wikipedia.org/wiki/National_debt_of_the_United_St...

[2] https://www.federalreserve.gov/monetarypolicy/bst_recenttren...

> a legitimate domestic experiment on UBI

The pandemic spending is unsustainable.

Parent said "experiment".

A lot of people on the left do want to make the child tax credit permanent, and there is no logistical reason we couldn't do that other than political constraints.

The amount we've spent on child tax credits and toe-dipping into UBI is a drop in the bucket compared to spending $300m/day for 20 years in Afganistan without even breaking a sweat. Clearly we can handle this kind of spending, and more, especially if we increase tax enforcement on the top 1% of earners and gasp actually re-assess the capital gains tax to ensure that people like Jeff Bezos are paying at least 28% tax on their capital gains just like they would on regular income.

These programs are also an investment in the economy that pays itself forward in the form of increased social mobility, and thus increased future tax revenue, so it is by no means a net loss. It could even be the case that every $1 invested in these kinds of programs results in more than $1 in created new tax revenue a few years down the road. This is called investing in our future. A new concept, I know.

Assuming we count the $1,800 dollars of total stimulus last year as one years worth of UBI, that alone costs 5 times yearly (1.5 billion per day) what the Afghanistan war cost. Which is both much less money than what I would consider necessary for a useful UBI, and not even universal. Sure, we could have given out a $300 a year “UBI” instead of funding the war on terror (and that would have been a much more reasonable use of the money) but the scale of how much a true UBI would cost is preposterous. We are just not yet productive enough as a society to make it work, no amount of taxing the 1% could reasonably pay for a UBI.

We definitely can and should be doing more and taxing the wealthy more than we are, but even then some things are out of reach.

This is true, but I think when the tabulations are all finished, we'll discover that the war in Afghanistan really cost something north of $100 trillion -- we just aren't including everything we should be including in the tabulation currently. In these types of situations, it is very easy to exclude things like personnel and research going on at home supporting the war effort. It's also been politically convenient to fudge Afghanistan spending numbers for 20 years up until a few months ago, so we have no reason to expect the reported numbers are the full story. I say this as an ex-DOD civilian.

Nah, it's not.

Monthly lottery winners are.

If you know that 'free money' is just a temporary thing, you don't quit your job and move somewhere where that amount of money is enough to survive, and just stop working.... if ubi is permanent, and guaranteed to be "enough" to minimalistically survive, many more people would do that.

If a noteworthy number of people decided they were going to not work, the cost of labor would rise, and prices would rise until those people needed to work again.

I think this depends. If you work in a fungible occupation with limited career growth you very easily can take a year off. And most of these UBI experiment have targeted low-income folks who most likely work these kind of jobs.

Monthly lottery winners are a pretty poor basis for evaluating UBI since that is promoting an arbitrary individual to wealth - rather than providing a baseline income to a whole community. The effects of the later can easily be conceived to be quite different from targeted welfare. One of the common counter-arguments against UBI is that because the boon is applied across the board (and not just effecting the needy) that it will essentially cancel out and just cause a momentary bump in inflation - I think there are several very logical reasons that isn't the case but lottery winners are extremely poor experiments to disprove that theory.

As an example of how prevalent that counter-argument is please see all the siblings specifically about how UBI = inflation. (Also - I don't think this debate is settled - I think there are compelling reasons why UBI is not just free inflation... but there are also several reasons suggesting that it is - the UBI counter-argument is not at all illogical).

> providing a baseline income to a whole community

The rich oil sheikdoms in the Gulf are already providing a good income to all their citizens (not the working class gastarbeiters).

We should definitely observe them and learn from their experience. It is not precisely the same as UBI, but closer than anything else I can think of.

Canada has also carried out a few interesting UBI experiments with pretty positive feedback - but I think America needs to see something happen domestically to give it a serious consideration.

If only Alaska was considered "domestic" enough...

https://en.m.wikipedia.org/wiki/Alaska_Permanent_Fund

> sheikdoms in the Gulf are already providing a good income to all their citizens

which is looking to failing as soon as the price of oil drops. The saudis are now having to pay VAT to the state, for the first time recently.

UBI doesn't work if the productivity of the country would drop as a result of implementing a UBI. And i can't think of any reason why productivity would not drop, since there would definitely be some people who are currently productive, but would drop that productivity if there would be a UBI that's livable for them.

The argument that there would be a percentage who would increase their productivity (such as starting their own small business, etc) is merely speculative, since if they could start a small business, why don't they do it now, without waiting on UBI? If the UBI is what enables them to invest their time and capital, what makes UBI the only way to obtain capital, rather than seed capital? If it is _only_ UBI that can give them this seed capital, then they are effectively being subsidized by tax payers to entrepreneurship - if that was the goal, why not make that explicit, and give grants for such?

> if ubi is permanent…

The most likely outcome is that very quickly all the UBI money will be going to the few landlords and soon people will need "UBI plus a job" to pay rent and make ends meet.

And whilst the masses our back out in the wilds scrounging up their money, the landlord class will be consolidating into an every smaller group.

Inflation is what happens when too much money chases a limited supply of goods. And desirable housing is always limited.

That's why you need to fight asset inflation, reduce red tapes and increasing housing opportunities.

Sure, but it behoves advocates to UBI to say:

"We have a solution that not only includes handing outs cash to everyone forever, but to fight the associated, unavoidable rent inflation we will introduce sweeping changes to hard-earned building standards, negatively alter the character of many many neighbourhoods, and add a massive beurocracy to introduce and enforce with the power of the state all sorts of price controls."

They don't do this because obviously far fewer people would think its a good idea.

I thought the problem was with bureaucracy, especially with restrictive zoning laws, and the propensity to say no.

Rent is only affected by income/capacity to pay to the extent that supply is limited.

You could give everyone currently living in Detroit $10,000/month, and it wouldn't impact rental prices at all, because there is an abundance of supply. Do the same thing in NYC, and indeed rental prices will soar.

> The most likely outcome is that very quickly all the UBI money will be going to the few landlords and soon people will need "UBI plus a job" to pay rent and make ends meet.

This doesn't make sense. If it was the case, raising the minimum wage would have the same result, but studies have shown that people are better off when the minimum wage goes up. Landlords do not have infinite power to raise prices, because they are in competition with one another.

To the extent landlords have too much power, it's largely because we have decided to prevent the construction of new housing for many years.

> And desirable housing is always limited.

Does not have to be if you allow people to build more housing, and fix the regulations that make it overly expensive to do so.

I would argue raising minimum wage doesn't have the same effect, because the value produced by the job on this minimum wage, in totality, is still higher than the minimum wage (because if it weren't, those jobs would then be gone, and the person would end up with no job, rather than a raised minimum wage).

It depends on how much UBI is. There is plenty of housing in the US, for example -- except there isnt enough near where jobs exist. If UBI was sufficient for survival, people could migrate away from high cost areas to exurbs. There are huge swaths of housing once you go far enough, except that isnt possible if you still need to supplement UBI with a job and are hence tied to a major metro area.

If 20 quit their low wage job and one of them finally has time to study and become a researcher or doctor, I think it's worth it.

What if they become a shitty musician? And curent researchers get paid even less, because their money goes to a kid who'd rather play his ukulele inestead of working?

That's a valid argument only if you believe that a person only lives a life worth living if they have utility to others.

And honestly - the internet has democratized content creation to such an extent that a lot of really niche interests can attract funding (just, not very much).

Using Lotto Winners as your experiment has the problem of selecting only the people who play the lotto. Your data will be biased towards less fiscal responsibility.

While I'm certain that there are people who spend an irresponsible amount on lottery tickets, I don't know if those are also the lottery winners.

I'd be very interested in any statistics for that. Where I am lottery tickets cost about the same as a Starbucks coffee, and I'd bet the average lottery player buys tickets less than the average Starbucks drinker buys coffee, making me wonder about the label of "less fiscally responsible", unless we're also grouping all Starbucks drinks in there. And given the astronomically poor odds of winning, I also wonder how much more regular players win vs those who buy a ticket once every month or two - does it really help enough to be obvious in the statistics.

The lottery ticket purchase is a gamble: spend money, almost certainly get nothing, tiny chance of winning big.

The coffee purchase is just that, a purchase: spend money, get coffee.

The amounts might be similar but the transaction class is totally different.

I don't know, it's really a form of entertainment. The odd chances I do buy a ticket it's to think about what I would do if I won. I'm not expecting to win, I just like the idea.

And both are transient and rather empty - neither provide any real value outside of a brief joy.

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