Universal basic income of £1,600 a month to be trialled in England
theguardian.com
theguardian.com
Even that link isn't a universal basic income test. It's just welfare payments, which have been around for a century at this point.
In the recent US debt ceiling deal adding means testing and work requirements basically reduces welfare outflows single digit % while increasing the bureaucracy outflows > 100% (gov workers, gov pensions, consultants)
Essentially, the tax curve starts at 0 and goes up. Why not shift it down? There's nothing special about 0.
It also automatically makes it available to every legal tax resident, regardless of whether they are in the country via a work permit, a residence permit, or citizenship. Taxing somebody and not providing them with an UBI would be unfair.
The US has a $3000 child tax credit which applies to approximately 80 million children [1]
The US has a $13,000 tax deduction, taken by >200 million people
last, Lower income folks making less than 20k already get ~40K of benefits, credits, and deductions.[2]
https://www.irs.gov/credits-deductions/individuals/child-tax...
https://www.illinoispolicy.org/illinois-warped-welfare-syste...
I think that’s why UBI is dangerous. Because if anyone for some reason ceases to receive it after the prices have inflated, then they will be effectively removed from the economy. Forced into levels of poverty we haven’t seen in the Western world. Think about not being able to afford clothes.
Someone should do a UBI trial in a restricted geographical area. Maybe a small town somewhere remote so people cannot easily leave it for shopping. I think most money would just be absorbed by companies through price hikes in the area, and they would be further disincentivised to pay their people fairly. Now the people won’t protest and riot if they are paid $0 on top of their basic income.
I think people benefit from UBI a lot. But it is too easy for corporate greed to exploit. I just can’t imagine the fiduciary responsibility to shareholders not being used to deliver value in UBI markets. It seems naive to think that business, especially big corporations, will be okay with forgoing growth. They already crap on a ton of ethics, morals, and even basic long-term business sense to deliver quarterly growth.
So I’m skeptical of UBI. I want it for the sake of humanity. But I can’t see it not being abused by corpo grift.
This is a common first thought folks new to UBI put forth.
More people with more money to spend means manufacturing volume goes up, so economies of scale go up, so the prices go down.
There can be instabilities initially as supply moves to meet demand. But folks didn't used to 'need' those things, got along without them (didn't have the money for them) and so can make their own decisions about what they'll spend their money on. The fundamental property of UBI is, let people sort out what their needs are themselves.
That property doesn't hold for housing, which makes up the largest chunk of a person's "necessities" spending.
Ny guess is that rents rise since landlords know everyone has an extra cash infusion now. Until it settles out merchants will pick over this until it is eaten up.
Was part of sales in gov subsidized market and the gov grant was a big part of figuring price. That is to say "inflating" the price for the customer.
Just human nature. UBI will be the same.
The alternative to 'a wealthier populace' is 'keep them poor', right? This argument that 'don't bother helping people, it'll just be wasted' smacks of marxism to me. Society needs the hard-working poor/slave labor class or everything will fall apart. So make sure we have the poor, at all costs!
I have a more optimistic view of society - that we're now capable of providing plenty for everybody. Due to automation etc.
Why cash? Why not a free apartment, free local transportation, free food, free doctor, and free TV. That would cover 90% of the people 100% of the time.
The reason is that cash is fungible and will therefore flow more freely to the actual recipients of the handouts, which are merchants who price necessities according to what the market will bear. If anyone would like to debate that last assertion, I'd be interested in a counter-example where the price of essentials just kept on getting lower and lower.
I'm not sure UBI is any different than all the prior plans to spend our way to prosperity. To learn the truth, we will have to ask our descendants when they are paying for all this. (Of course this assumes we don't bankrupt first.)
Might work for buying cheaper gadgets.
Doesn't work for any cost that really matters, like rent, healthcare, education, utilities, and so on.
The FRBSF has a good article about supply, demand and inflation here:
https://www.frbsf.org/economic-research/publications/economi...
Back of the envelop, there are 260 million adults in the U.S., and 1600 GBP is $2000 a month for each of them. So, that's $6.2 trillion dollars a year that manufacturing efficiencies would have to make up for, in an economy with a GDP of about $23T. And that's assuming that mechanism would even solve the inflation problem, which is hurting my head to think about.
For the UK, it works out to about one trillion a year, off a GDP of three trillion, so an amount of money roughly a third of the entire economy would have to be made up for by ... companies getting better deals buying in bulk, and workers coming up with better processes than what they have now, and... uhh... other things of that nature? That sounds like wishful thinking to me.
I'm not against UBI, I just don't understand how this response actually addresses the most obvious problem with it. In fairness, I have not seen a better argument than the one you gave. Maybe there is another one.
If I were the benevolent king, I'd personally push through some sort of guaranteed housing program. The housing would be small, modest, and safe. Everyone would be entitled to such housing if they wanted it for minimal cost, and it would be provided at no cost for those at the very bottom rungs of the economic ladder.
But it's a one dimensional view of a many dimensional problem. Some people will be able to start a business, but if UBI is pitched at comfortable survival level, many more will do nothing, and there will be a big increase in employee turnover.
The rational solution would be to pay much more and improve conditions, so the rewards for work would be much higher than now, and the pointless frustrations much lower.
But current work environments are usually geared towards creating and maintaining hierarchy, not rational effectiveness.
So I think it's likely that UBI would just raise prices of essentials and they wouldn't be any more affordable than they are now.
That's why non-uniform distribution of money doesn't have the same effect. If a country were to print £500 billion, and just hand out £500 billion to 10 wealthy people, it won't bring the same inflationary effects on housing/rentals, food, services and goods. However, if you print £10 trillions and distribute to everyone who makes more than £60K per annum, yes, housing and other stuff skyrockets.
Unlike food, fuel, etc, housing is artificially capped at a level lower than demanded, thus prices of housing (either in terms of rent, mortgage payments etc) increase to soak up every spare penny.
Our economy is not currently structured to support this, but I don't see any other options for the future. It's also quite a nice step forward in humanity to use our technology to increase everyone's quality of life.
I personally believe MMT is an option to make this happen. Print money to basically zero out all debt with inflation but provide everything someone needs to live while you do it. The first step on the path to a post-scarcity reality.
If you do that without having a post-scarcity economy/reality, surely the result will look more like mad max and not Star Trek? Zeroing out debts would be a huge boon to the rich, although they would need to invest in guns to protect the property they no longer have to pay a mortgage for.
UBI as an unconditional, liveable, income paid to everyone is not a realistic option unless or until we get to a fully post-work society in which all people no longer work, which is Sci-Fi at the moment.
It's much more realistic to organise the welfare state so that benefits kick in and guarantee that someone's income will not fall below a minimum, which more or less already exists in many European countries. That's a guaranteed basic income but only paid by the State when someone's income falls below it, e.g. because of unemployment.
UBI changes the economic model so that the minimum amount of economic participation a person can have in a month is greater than zero. Cash you can spend is equivalent to votes in how the market allocates capital, and UBI just makes sure everyone gets at least one vote (people with more money still get more votes, but nobody gets completely excluded). Once you have that mechanism in place, the idea goes, the invisible hand of the market will do a better job of solving all the other problems.
The challenge is preventing it all getting swallowed up by rentiers - landlords, lenders, basic services like healthcare and education, etc. - so it actually gives that market feedback.
Universal healthcare would also contribute to equity, probably more effectively than UBI. We should definitely do that first.
We already have universal healthcare
Either borrowing or printing money. Neither are sustainable and would collapse the value of the currency.
And where would the money go is just as important a question. The answer is 'around'. At varying speeds. The economy is a dynamic system, not a static one. The amount of money in it is one variable. The velocity of that money is another.
But the money is just a made up thing. The thing that an economy is actually FOR is to decide how the scarce resources that are available get allocated. What do we use the land, the raw materials, the precious hours of productive human labor, the capital we've already invested in, and the energy we're able to generate... what do we use all that to DO?
And like I said, UBI is a way of giving more people a vote in those decisions. So yes, that does mean the people who previously had ALL the votes are going to find they have less of a say. The 'value' of their money has gone down, in that it has less impact on resource allocation. So maybe it makes sense that such a scheme causes the currency unit to become less valuable.
But if it results in a better allocation of resources, why does that matter?
The "bureaucratic costs" argument is not something anyone that's paid any attention whatsoever to the actual numbers can make. The number of working age people who currently receive a livable income or equivalent in services from welfare programmes is a very small proportion of the total number of working age people who don't work enough to pay [non-trivial amounts of] income tax. If you're suddenly paying many more millions a livable income, you're not funding that through making a few thousand Jobcentre staff redundant.
Decreasing bureaucratic and administrative costs is one of the core tenets of NIT, it's meant to replace current welfare programs entirely and streamline everything, it wasn't dreamed up to supplement existing programs.
And decreasing bureaucratic costs whilst increasing total programme spend by at least two orders of magnitude more (or slashing all current benefit recipients' incomes to below subsistence levels) is a ridiculous priority.
This is just simply not true. NIT still has work incentivizes, UBI does not. UBI is also much more expensive and could have less inflationary effects. They are not the same. The Wikipedia article even had an entire section devoted to this.
> And decreasing bureaucratic costs whilst increasing total programme spend by at least two orders of magnitude more (or slashing all current benefit recipients' incomes to below subsistence levels) is a ridiculous priority.
It's not a "priority" it's one of the tenets of the proposal. NIT could actually be cheaper than traditional welfare programs and wasn't intended to be supplemental policy, but a replacement.
(The fact the same page contains incorrect arguments about differences illustrates why Wikipedia is not a good place to learn anything about economics...)
Neither have "work incentives". Both provide a modest work disincentive firstly by reducing an individuals' need for income, and secondly by increasing the tax burden on earned income (in the case of the UBI this work disincentive might be less if the payments were funded by something other than income tax, though this is unlikely).
NIT can only be "cheaper than existing programs" if the majority of current program recipients receive considerably less money than they currently do (in order to pay for NIT "prebates" paid out to the large number of people who are not entitled to existing welfare payments but dont pay much or any income tax either). In many cases, this would leave them homeless. As I said, a questionable priority.
May be worth submitting this on HN from @patrickc
https://twitter.com/patrickc/status/1665087620798349318
https://www.sambowman.co/p/democracy-is-the-solution-to-veto...
This 'study' has a few problems, as others have observed it doesn't warrant the U in UBI, and the 2y drop-dead timeframe will also significantly affect the outcomes, but trying to shoot this experiment in the head with 'rent in London is expensive' is to really miss the point (of both this study, and the concept of UBI).
That said, unless recipients own where they live - housing typically being your single biggest expense - I envision rents increasing because landlords naturally price what the market will bear. Even with UBI we'll eventually be back to where are now with loads of that I going to housing and too little left for anything else.
What am I missing?
More bluntly: I call BS on that argument.
But if we fix zoning issues then supply should eventually catch up to meet the increased demand and prices should more or less be stable.
I wouldn’t expect e.g. web hosting to increase in price if there were a UBI, as there’s plenty of competition and it is not in any way supply constrained.
Domain name registration on the other hand, might
If economics was just 'housing takes up all the money' well, we could dispense with those expensive college degrees for Economics.
Yes, it's such a simple question. I'm not the one missing anything.
Think about the shift towards dual income households; instead of households becoming more wealthy, society has changed such that it's difficult to survive on one income now (and for people with children, nearly impossible for most). If anything, households combining 2 incomes have a worse standard of living than a single-income household 40 years ago.
I strongly believe at this point it would be better for society to prioritize housing, feeding, and attending to the medical needs of everyone; the possibility of paying them can then come later.
You have to give it to literally everyone (or a large chunk of the population, let's say 80%) and wait a couple months to really see the effects on inflation and other metrics.
Just a handful of people is wishful thinking with little actual information received.
The best parallel for me was the stimulus checks and packages many governments gave during the pandemic, and we know how that ended on a macro-economic level.
Report with more details: https://autonomy.work/wp-content/uploads/2023/06/BASINC.pdf
Better deal if you get shortlisted for council housing, and then you take the 1600 quid, that would be alright.
The canonical example is "utilize", rather than "use". Like most violations of this maxim, utilize came about thanks to bureaucratic Official Style.
If there was a second contender for canonical example, it would have to be the use of "trial" as a verb. There are not one but TWO perfectly good words, both shorter than "trial", which cover its entire usage as a verb: "try" and "test". In fact, "trial" is the NOUN FORM of "try". And now they've converted it into a new verb form rather than just using the original verb?
Universal basic income of £1,600 a month to be TRIED in England.