The first results from the biggest basic income experiment | Hacker News Reader

The first results from the biggest basic income experiment

vox.com

88 pointstoomuchtodo173 comments

It seems to me that every basic income ‘experiment’ is flawed because they don’t account for the externalities of higher taxes and the fact that the pool of recipients is limited enough that the market is unaffected. Giving a few thousand people a few thousand a month isn’t going to cause much on an impact on inflation and it’s not going to make rents go up across the market. Additionally, others outside the experiment aren’t getting taxed at a higher rate so they aren’t passing costs on to consumers.

My other main criticism is the fact that most of these experiments measure how “happy” or less anxious the recipients become. Which to me is obvious, yes, free money can do that. But again, they’re measuring the impact of limited free money without the downsides of higher taxes and market impact. Would any of these experiments demand that the recipients also lose access to any other government assistance they may be on? To my knowledge none of them do.

Edit: To put it more succinctly, they are measuring the impact of a stipend and not a basic income program.

I definitely agree the experiments are flawed. But I'd like to raise that there also are positive effects that are not accounted for. You mentioned the impact on market prices, I think the impact on prices would be net positive, because the market would become more inclined to provide products and services for people with lower incomes, where every marginal spent dollar has a much higher impact on overall well being than in higher income brackets. Market economies are more efficient when purchasing power is close to evenly distributed in the population.

If you’re getting £1000 extra a month and I say your rent is now £1000 extra a month, you can’t and won’t say no. If you say no, I’ll just get someone else in who will give me their free money.

As you’re competing with them for the same goods, you’ll have no choice but to pay the same. Meaning it’s made no difference for you as the primary costs in your life are limited by supply.

For someone who owns their own house and makes £10,000 a month, it’s meaningless. Their inflexible goods are already covered. So they’re free to spend it in holidays and working less.

If that was really the case then all surplus would already be eaten by landlords and that clearly isn't the case. In some parts rents are absolutely very high but that's not everywhere. If rents increase more apartments will be built, reducing the ability of landlords to extract rent.

But I agree that inflation is likely to increase if people get more money to spend. However, I think that would mainly be over a transitional period while the economy adapts to the new demand.

> If that was really the case then all surplus would already be eaten by landlords ...

That's what seems to be happening in at least Sydney, Australia. :(

Not all of it, but real estate does very strongly correlate with income, and for lower income quintiles it can eat the surplus.

Lower income quintiles have the surplus eaten because their consumption of raw materials and labor is break-even with their production of raw materials and labor. Even if by magic land were free and construction costs were negligible, a 1-bed 600 sq ft living space would still take a decade for the average bottom-quintile family to pay for the raw materials in the US, saving nearly everything other than rice and beans, healthcare, and other such niceties, and assuming no major calamities on the way. Landlords charging on par with that same rate in rent isn't evidence that were the bottom quintile of incomes to increase by $1k/mo their rents would as well.

That's unrealistic. If it's purely supply and demand, the premium landlords will be able to command out of that 1000 bucks will be somewhat less than the total - and perhaps significantly less, if prospective tenants are savvy enough to hold out collectively. The only way you see the entire thing co-opted for rent is if landlords were to collude and refuse to break rank on pricing. But there's no way that would happen, since it'd be illegal.

> if prospective tenants are savvy enough to hold out collectively

and why would that be the case? Seems like a hard coordination problem to me.

Because there are multiple concrete examples of class solidarity just in the past year which point to a shift in consciousness about such issues. Covid gains were stolen; good luck doing it twice in a generation (in the hypothetical case of UBI in the next few years).

But collective rent bargaining is common so it's clearly not impossible.

> If you’re getting £1000 extra a month and I say your rent is now £1000 extra a month

Two people, each making an extra 1000 a month become roommates and collectively they have an extra 500 a month. If landlords try to exploit this, make it illegal for them to ask about extra roommates (within reason).

Another positive market wide force that isn't accounted for is the added safety net will enable more businesses to start and enter the market and ensure that companies are competing. When markets become small and filled with old companies, those companies can form a nefarious "trust" where they collude and stop competing. It's like the Christmas Truce of WW1; opposing forces gradually lessened hostilities for mutual benefit, trust was built, and eventually both sides went into no-mans-land, exchanged food and prisoners, and even played games. This doesn't happen if there's a fresh flow of new soldiers through the trenches, a trust can never form and actions for mutual benefit never happen. It's good when soldiers in WW1 achieve trust and use it for peace, it's bad when a few companies in a stagnant market achieve trust and use it to cease competition (aka, collusion).

> If landlords try to exploit this, make it illegal for them to ask about extra roommates (within reason).

What does that accomplish? The landlord will ultimately find out about the extra $1,000 available to spend even without knowing of a roommate through simple price discovery.

It won’t matter. They don’t need to know about the room mates. They know everybody now has $1000 which means they simply raise the rent.

I would wager that minimum rent becomes close to if not $1000.

and? minimum rent becomes the government stipend so you now live rent-free.

the cash you make at your otherwise crappy, barely-keep-the-lights-on minimum-wage job is now going to pay for other things.

You failed to think that land lords already make money. They can get what they have plus the government minimum.

This would essentially be a wealth transfer from tax payers to land owners.

Unless they can find someone willing to rent for 900? That's how markets work. Suddenly it's more profitable than it used to be to house the homeless.

> For someone who owns their own house and makes £10,000 a month, it’s meaningless. Their inflexible goods are already covered

I disagree. Competitive middle classers would often climb up the property ladder and spend the £1,000 more on their mortgage. Mortgage payments are often a large percentage of middle class costs that constrains disposable spending (certainly true for me).

I generally agree that say rent might rise to take up any extra income from renters. But a similar dynamic occurs for owners. Especially when you look at the group level where house prices are indirectly set by householder incomes. House buyers compete with each other for how much they can pay in mortgage repayments, similarly to how renters compete with each other.

> To put it more succinctly, they are measuring the impact of a stipend and not a basic income program.

Most importantly, they're connected. As you noted, of course people are happy to get "free" money. But what happens when the markets eats up that extra and they are back to normal, or perhaps worse off? Happiness isn't going to stay high.

In theory, I like the idea of UBI but I'm also confident the market (at least in the USA) - specifically housing - is going to quickly eat up anything extra.

Why would giving everyone basic income below a certain income level immediately cause inflation to match it?

Inflation doesnt track directly to minimum wage, which seems to be a very similar principal.

Consider that some resources are naturally or artificially constrained (housing, medical care, good schools).

If everyone has more money, those things have almost limitless capacity to absorb the extra money in the form of higher rent, higher health costs, higher college fees.

UBI can help somewhat to decrease inequality (same as welfare targeted only at the poor) but if the government prints and gives everyone a million dollars, that would obviously cause inflation to the point that a million isn't that much money.

Reducing inequality will generally mean that well off people (which most software engineers are) will ultimately have less spending power.

On the other hand removing artificial constraints could make those resources cheaper for everyone. Relax zoning to build more housing. Increase residency spots to train more doctors and allow foreign licensed doctors to practice in the US more easily. Etc.

> government prints and gives everyone a million dollars

I think you might be conflating unrelated economic boogeymen.

UBI is not at all about the government "printing" money. It's a redistribution of taxes, such that the net government taxation income remains the same.

The total money supply remains constant.

It's a redistribution of taxes

It's also a replacement for other forms of financial aid. Someone currently on unemployment or other benefits won't get UBI on top of his current benefits, but instead of. Most proponents of UBI also argue that this simplification of the benefits system will bring its own savings as you will have less administrative overhead that comes with means testing and dealing with multiple overlapping systems.

Because inflation doesn’t exist, it’s an invented idea.

If nobody told you that inflation was 8%, you’d only increase your prices if you had a reason to. That reason could be increased demand, increased costs. Those could come about from increased money supply but that would be slow and unlikely.

When the government announces inflation will be 8%, everyone puts their prices up by 8% + 3%. Inflation is therefore 11%. Even though none of them even had a reason to do it.

That 11% price increase then inflates their balance sheet. This surplus lets them give it to the wealthy or splurge on stupid things like buying twitter.

The wealthy then have an inflated bank balance. This surplus lets them buy investments or splurge on stupid things.

These purchases then cause prices to increase. Which signals the government to announce that prices should increase more…

> When the government announces inflation will be 8%

This isn’t how it works. Inflation numbers are announced based on what has already happened, not what will/should happen.

I do think there’s something to the idea that it gives companies a license to raise prices, though.

I see you went to the economics school of Venezuela and Zimbabwe

Because in the 1970s, Saudi Arabia shut off oil exports to America, triggering waves of supply side inflation. This manifests both as increasing prices as well as economic stagnation, which mainstream economists thought wasn't possible. The prevailing interpretation was that this was caused by a "wage price spiral", i.e. that any wage gains by workers will trigger the inflation necessary to claw those gains back.

This is a valid assumption... in a perfectly closed economy where no new energy, material, or labor is available[0]. However, this is not actually the case for most economies - just the one where resource-cursed petrostates are deliberately conspiring to starve out democracy and we decide to let them do that. Energy literally falls on us from the sky[1], we can use it to recover disposed of material, and, if we need more than that, we've got an entire planet full of material to dig up.

In fact, states with lots of mineral or energy wealth already use UBI. Saudi Arabia and Wyoming basically have no income tax because oil and coal extraction pay for everything. Alaska goes one step further and gives state residents a dividend out of the state's permanent oil wealth fund. And, as far as I'm aware, none of these states have outsized inflation compared with the rest of the country / world.

tl;dr economists have a superstition about workers having money

[0] Not to be confused with degrowth, at least I think so?

[1] And when it isn't we have this metal called uranium that literally spews out heat from radioactive decay when you enrich it enough.

> every basic income ‘experiment’ is flawed because they don’t account for the externalities of higher taxes

I think UBI should be combined with a flat tax to achieve the same as a progressive tax but without any loopholes (because it’s so simple).

The central bank wouldn't just sit there and allow the money supply to increase unbounded. They'd turn their knobs so the money supply would remain more per less constant.

And by "turn their knobs" you mean "pull the one and only lever they have and cripple the economy with high interest rates". Universal incomes would be disastrous for economies.

Great, so I guess it’s time to try UBI on a country scale then!

Sure, you go first

Wasn't COVID in the US a large scale basic income experiment, with the stimulus checks?

(Not an American). Did those checks go to everyone? Or just people who were laid off?

There were many different checks, from both the central (federal) government and several states handed out their own too. Some of them went to everyone, others had various requirements.

I was working full time but I still got thousands of dollars for no reason. It actually kinda bugged me how wasteful and thoughtless my government was being (no surprise there). I wish they they sent my share of it to people who really needed it then, the folks who couldn't just take their work remote.

Everyone

You neglect to mention who the higher taxes would be on. I presume that the UBI isn't taxed, so in the near term, at least, such a regime would merely be reversing the upward wealth flow that we've seen since 2008. I'm fine with that, are you?

What about Alaska's permanent freedom fund?

We had a basic income experiment. Entire countries were given thousands a month for not working.

The wealthy used it to buy a nicer car. The poor shopped around on jobs but ultimately ended up in the same place.

Inflation completely destroyed the global economy and people pumped the excess money into high risk investments like pyramid schemes.

You can't support that inflation claim when supply chains were completely wrecked in an economy hyper-tuned for just-in-time production. Without the inflation claim, your comment is a nakedly political non sequitur.

A lot of people are commenting on the merits of UBI vs no UBI.

The article is mostly about lump sum vs periodic distribution and the effects it has on recipients behavior.

I recommend everyone read it - even if you’re generally against UBI (I am), it still has something to say about behavioral economics.

I don't know much about UBI. How do people generally see it being implemented?

Does everyone get the exact same, flat amount? Do only people below a certain income get it? Does the amount gradually decline based on current income? Does the amount change based on cost of living? If someone remains destitute after being given UBI - is that now more clearly "on them," or do they now qualify for additional support?

Genuinely curious. It seems like these questions are very challenging to answer in a way that feels good/fair to all involved.

(edit, follow up questions:)

- If everyone gets the same amount then how would we reach alignment on fair amount if COL in different areas is wildly different? The gap between highest/lowest rent in America is 4x - 800 vs 3200. Said differently, is there a goal outcome with UBI or is the goal to just give out some money? Are we trying to make sure just everyone's rent is covered, rent and food, or just easing the pain a little?

- If we give everyone money every month, and that money immediately goes into circulation, doesn't that just cause inflation and then we're right back to where we started?

AIUI, if it's not something everyone gets (universal) and it's not the same amount for everyone (basic), it's not UBI.

Thanks. The clarification that basic means same amount for everyone is helpful.

UBI is universal, as others have said.

There’s also the concept of “guaranteed minimum income,” which, I believe, just tops you up to the minimum income amount if you make less. In comparison, guaranteed minimum income seems much more difficult to administer (means testing and all that), and it seems like it would incentivize bad habits, in the sense that if you make less than the threshold, why not just quit your job?

If it’s given to everyone then you’re going to be subsidising the wealthy while cutting support for the poor. Supporters want it because they dream of playing xbox all day.

If it’s given to everyone then taken away based on income, that’s just a stupider version of the current system. We already give people support based on need, so why would we get rid of that just to circle back? Just make the support better if the poor are struggling.

> If it’s given to everyone then you’re going to be subsidising the wealthy while cutting support for the poor. Supporters want it because they dream of playing xbox all day.

The usual idea is that you increase (progressive) taxes such that there is some income level at which you net zero, because you are taxed an additional amount equal to the UBI.

As the other person said, the key reasoning for UBI is that you avoid a lot of forms of means testing (which prevent eligible people from getting access to the resources) and administrative costs (in terms of reviewing eligibility requirements) which can make things less efficient.

I don’t think it is obvious that it will have to come at the cost of cutting support for the poor. At least, we’d save a bit by not having any administrative costs.

It could also de-politicize this sort of support, and avoid embarrassing wastes of money, like the time Florida decided to spend more than they saved by drug testing welfare recipients.

Projects that help everyone seem easier to sell politically.

A minimum income should probably not be a fixed amount, there should be a true minimum at zero other income and the payment should decrease with increasing income but at a slower rate than the income increase. I guess that is essentially what a negative income tax is.

And we already have that, the EITC.

The U in UBI stands for Universal. Everyone gets the exact flat amount, unconditional. That means there is much less administrative cost (don't need to verify that people belong to certain income brackets for example). Overall, the theory is that it would reduce government wasteful administrative process, while being more effective at lifting people out of poverty. The experiments so far are positive.

Another key aspect of it being universal is that it doesn't disincentive work and improving one's situation. This is a huge problem with unemployment and other means-tested welfare programs. People end up in situations where they're actually worse off if they get a job or make more money.

It can’t cost more to administer something than it does to give it to everyone. That’s just inherently a ridiculous claim.

Should we give everyone hip replacements rather than bothering with appointments and need? Think of all the administration saved! Just book everyone in!

Except now you’ve spent a trillion on hip replacements, the people who actually needed them are getting less support and on a huge list, and you’re just pointlessly operating on random people.

> It can’t cost more to administer something than it does to give it to everyone. That’s just inherently a ridiculous claim.

Let's say there's three people, making $0, $10K, and $100K annually in pre-tax income.

The first person has to stand in line to get welfare. The second person has to prove that they deserve the tiny amount of of welfare they may be entitled to, chewing up the time of government bureaucrats in the process. The third person has to pay income taxes, deal with refunds, tax write-offs, etc...

All three people already involve the government, have to deal with paperwork, and this overall process generally costs non-zero money to implement.

Let's say these people pay $0, $0, and $30K in taxes, for $0, $10K, and $70K net income.

With UBI, the tax brackets are adjusted such that the person making $10K pays $5K in taxes, and the person making $100K pays $40K in taxes. These are just parameters (numbers) plugged into an existing mainframe.

The government now has an additional $15K of tax revenue.

Then everyone gets a "tax refund" of $5K, as-if they had a bunch of business expenses or whatever. Again, just a parameter in the tax dept mainframe!

Now the net incomes are: $5K, $10K, and $65K.

The beauty of this system is that no humans are involved. Nobody has to evaluate your assets, income, side-gigs, or whatever. Nobody has to care if you're "too rich" to get government assistance because everyone gets government assistance.

It's cheaper because it's just numbers plugged into a mainframe that already processes everyone's tax every year! No additional expense is required: no new department, no new staff, no new offices.

In fact, vast numbers of government drones can be made redundant, because... they're redundant now. Whatever they were getting paid before (a lot) can be added on top of the additional tax income. Billions, certainly, in most countries.

Instead of pushing paper around, they can now join the commercial workforce and hopefully be productive members of society instead of telling disabled people that they don't deserve help because they have a valuable painting on their wall they inherited from their grandmother.

It's not inherently ridiculous. Administration is a non-zero cost. Anything below that cost is cheaper to give rather than administer.

Hip operations are a weird counter example to refute UBI. They're obviously not universally applicable and are more expensive in cost and resources than the administration overhead. That's leaving aside the ethical issues of giving people unnecessary surgery.

Okay. So, in the case of America, it would either be relatively ineffective for those living in cities, or relatively enriching for those living in rural areas, yeah?

It seems challenging to get everyone to agree on a fair number.

This also depends on population density, which is lower in rural areas.

Well the U stands for universal. It is likely that taxes will fund it, so your taxes when working would probably offset it. That's my understanding.

That's where the Land Value Tax comes in... In my Georgist dreams, at least.

They just want to give free money to people, and expect that it will work our for all involved.

Money flow into poor communities of course works. Relatively little money required on global scale. And they probably were given to the organization in some sort of a grant.

What happens if you do this in a major economy using it as the source of money? We know what would happen if a bunch of money were printed. What if it was taken out of taxes and crapton of government programs were cancelled? Especially long term.

Actually we don't know what would happen if a bunch of money were printed. I assume you expect inflation.

What actually happens depends on who gets the money. If rich people get it, I would not expect much to happen. If middle income people get it, we could reasonably expect inflation. If low income people get it, that grows the economy even in a major economy.

Let me explain. Yes, if you give middle income people more money, then they can afford to pay more for widgets. So, the widget store owner can increase his income by increasing his prices: Inflation.

If low income people get the money, now they can buy the widget that they wanted. So, the widget store owner opens a widget store in a low income area and orders more widgets. The widget manufacturer puts on another shift. Both groups make more money and more people are employed.

Should the widget store owner raise his prices, fewer people can afford widgets and the store owner loses money. This won't happen.

The real world is more messy than this, but I think the principle applies.

"Inflation" is often a bugaboo used by resentful people to brand social innovation as harmful. Such people eventually hurt themselves and hurt their country.

We did that during pandemics. Mostly rich people got it. Low income people got some scraps too. Inflation happened.

It was capped at $100k of income (at least in the US) and the US median income is about $75k [1], so I'm not sure how "mostly rich people" got it when 75% of the people who received it were under the median income.

[1] https://www.census.gov/library/publications/2023/demo/p60-27...

Not sure about US. But here in europe a lot of money went into businesses.

If everybody earned the same, giving everybody the same amount of money would of course have no effect and simply be cancelled out by inflation.

But not everybody earns the same. So handing out cash to everyone should have a compressing effect of wealth.

Then quite obviously the value of that money would be reduced in a significant way, as it no longer represents goods or labor to the same degree.

I always figured UBI would basically replace and end all government poverty programs at least

I very much doubt this would happen. The kinds of folks who advocate for UBI would not want to see those who require special accommodation be cut off from assistance programs. For instance, I doubt a paraplegic would be able to support themselves with the standard UBI payment. Also keep in mind the blind get a tax break from the IRS, would such a thing be considered an assistance program?

Of course, one could imagine a compassionate government giving additional UBI money to those who are disabled. But, that would require some bureaucracy to verify claims and make adjustments. At which point we’re back to having an assistance program.

Nope landlords will just raise rents back to approximately the same level of poverty.

Interesting way to explain inflation as just greedy landlords.

My taxes have tripled in the past 5 years. Appliance, construction, repairs, insurance are all much higher.

If I was renting to people - in what world wouldn’t I be forced to raise their rent? Why would I cover that for someone when I have to pay it?

That would probably make a lot of new housing construction more economically viable. I’m not sure what the overall effects of UBI would be, but this seems like it would be a short term effect.

Economic viability isn’t what prevents new housing from being built.

Regulatory risk is the biggest component to economic viability.

If you upzone and increase supply, it becomes a buyers market and landlords have to lower their prices.

That’s true totally separate from UBI. No matter what else you do, UBI’s effect will be increased rents. In absolute terms you could overcome this by increasing supply, but 1) nothing about UBI makes increasing supply easier, and 2) UBI would reduce the positive effects on rent achieved by increasing supply.

If you want to reduce the cost of living you increase supply. UBI will not affect supply nor demand, it will just affect the existing demand’s ability to pay a higher price universally and knowably. As a landlord, I would be an idiot not to raise rents by $x soon after implementation. Every landlord knows this and so they’d all do it together, no coordination necessary.

I've noticed in the poorest HCOL areas, you've got several low income workers all chipping in for the rent. There's nothing stopping them from trying to move out on their own using their UBI funds. For first movers, they'll increase their quality of life by living by themselvesor less people, but rent prices would quickly rise. You're right in the housing. The only thing that can drop prices is incresed supply and that's not going to happen.

I think I agree with you.

We need to increase supply by upzoning and speeding up permission processes.

That will increase supply, depress prices, and solve a lot of social ill without needing UBI.

Can you point to a single reputable study that shows this would likely happen?

You need a study to see that rents are highest where income is highest and that rents rise as incomes rise?

Yes, just because you say its so doesn't make it so.

There should be studies that show when minimim wage or welfare/other forms of assistance increases that rent follows.

https://www.sciencedirect.com/science/article/abs/pii/S00941...

> Increases in state minimum wages significantly reduce the incidence of renters defaulting on their lease contracts by 1.7 percentage points over three months, relative to similar renters who did not experience an increase in the minimum wage. This represents 10.6% fewer monthly defaults. However, this effect slowly decreases over time as landlords react to wage increases by increasing rents.

Interesting, thanks!

That'd be pretty bad. E.g. government program for disabled people giving out wheelchairs. A good wheelchair is fucking expensive. No sane UBI would cover that. Yet not giving out wheelchairs would fuck over some people to say the least.

It would probably cause price inflation. I think if my landlord knew that I was receiving an extra amount of money each month, that everyone got this extra amount of money, they would naturally raise the price of my rent. Retailers would do this for certain. Otherwise it is leaving money on the table, and successful businesses tend to be very aware of this. A UBI would only work if there were massive cost controls, which would be antithetical to any capitalist-based system. UBI is an interesting theory but there is already a MUCH better option: Remove income taxes.

Would a removal of income tax not net the same result?: an increase in money supply, therefore an increase in inflation.

We could always dig at the cultural issue and work towards making greed a degenerate trait to be shunned and managed out.

You mean the greed of people who think they're entitled to the fruit of other people's labor merely by being born?

I think I'd still prefer a negative income tax over a UBI. Functionally they have the same result. But giving everyone money and clawing some of it back via taxes I think introduces unnecessary political liabilities and accounting headaches.

Negative tax, or not universal assistance seems quite reasonable. But like anything other tax system changes, it is basically impossible.

No one is going to have the will or capitol to reform the tax system even to this degree. Too many vested interests.

It’ll either have to be over a long enough timeline that technology or small movements eventually get there… or it’ll take war.

I feel like the only reason solution to debt and China is going to be war.

Why would going to war solve anything? We'd have to print more money to support war, which would put us in greater debt.

Check history my man. War is inevitable, and gives people a cause and a reason to reset things. Especially true for unsustainable, insurmountable things, like the US debt.

The US already has a negative income tax in EITC. In fact, the implementation of the EITC is the biggest argument against it; it had so many conditions as to be less effective.

The idea of UBI, to me at least, is a mind-blowing one. It’s a shame something like this doesn’t exist on a large scale already. I know I’m probably missing something important here, but can someone outline any good reasons, if any, that it hasn’t been implemented yet?

https://www.vox.com/future-perfect/2020/2/19/21112570/univer...

Exactly what qualifies for you may mean it does already exist on a large scale or doesn't.

Alaska's UBI program gave 1.3k this year, which I'm guessing many commenters here would say is too small to be a real UBI, but it is universal and has been going for almost 50 years

I wouldn't call the permanent fund a UBI. It's proceeds from the sale of oil, whereas every other UBI requires some taxation, wealth transfer, or cuts in spending elsewhere.

The permanent fund is proceeds from taxes on the sales of oil and other minerals. There's no difference here.

Why would the source of revenue make it not UBI?

Because Alaska is unique, AFAIK the only state in America that sells something. Everything else is income redistribution. The money has to come from somewhere. It's a very fine line, I agree, but the permanent fund only exists because the state can generate that income from something other than increased taxes, redistribution, or reducing spending some place else.

What if, instead of oil, the revenue came from solar energy? Or gains in automation, or land value taxes, or CO2 caps...

The point I think is that, it doesn't mind where it comes from, but debunks the main argument against, that "people don't work".

It’s cost. Multiply population by the amount and you get a huge number. The math only works if you get rid of a lot of others social programs with vested interests.

There are about 250 million adults in the US. If we give each of them $1000 a month, that's 3 trillion dollars per year. For comparison, the US government collected 2.6 trillion dollars in federal income tax in 2022.

And then imagine that the 2.6 used to include things like hospitals.

Sorry buddy, you get the $1000 a month but you no longer get medical care or disability benefit or buses. It’s all gone. Don’t you feel better off now that everyone is equal? (The rich obviously still get to go to hospital)

My thoughts are there it's not a popular idea, politically. In a lot of countries, getting money "for free" is seen badly by the people who are "working their asses off for barely surviving", and politics push more the idea that "non working people are costly" and instead "we should find a way to make them work" and UBI is seen as something that would make people "lazy".

The closest thing we had to it - welfare and unemployment benefits without work requirements or onerous means testing - were dismantled on the basis of shoddy (read: nonexistent) research and amidst an atmosphere of racism and classism, and with the current status quo perpetuated by the perverse incentives of public-private "work search support" contracts. Any analysis of resistance to the implementation of UBI should consider this history. Some reporting on the matter:

https://99percentinvisible.org/episode/magic-bureaucrat-rive...

https://revealnews.org/podcast/the-welfare-to-work-industria...

https://www.cbpp.org/research/test-work-requirements-dont-cu...

We've known for a while now that the best approach is to just give people the money needed for them to improve their circumstances (whether that be capital for business or funding for training or other support services like therapy or housing).

EDIT: And a tangential link of some special interest: https://www.npr.org/sections/codeswitch/2013/12/20/255819681...

> We've known for a while now that the best approach

Another settled science, and it for the progressive outlook. What an amazing coincidence.

Did you read his links? At least he gave some, you didn't.

Ultra progressive media outlet says UBI is great, comment posts progressive outlet sources, upvoted on a site with progressive users.

No, I’m not interested in playing that game.

I’m not trying to convince anyone of anything. Just pointing out to others that the fanatics seriously think this is a known-quantity / settled science.

> Ultra progressive ... progressive users ... fanatics

You say more about yourself than anyone else.

> ... think this is a known-quantity / settled science.

I don't think anyone thinks it is settled. Personally I don't know and I very much want to, but comments like yours do not illuminate in the least. Actual facts would be welcome

> We've known for a while now that the best approach

> I don't think anyone thinks it is settled.

Heard.

OK, ISWYM. I wouldn't make the claim it's settled but someone did and you're right. Upvoted.

It already does exist in some places in the form of sovereign wealth funds, such as the Alaska Permanent Fund [1].

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

But that is derived from profits from the sale of Alaskan oil. It is not a wealth redistribution program, increased taxes, or reductions in spending elsewhere. Alaska is also a very costly place to live. It's also the only state that actually sells something and makes a profit which it can redistribute to its citizens. Maybe if America as a whole profited from the sale of its natural resources then it could, in theory, redistribute that and call it a UBI. Either way, to implement a UBI the money has to come from somewhere which at this moment means it has to be taken from someone/something else.

The point of a UBI is not to redistribute wealth. It's to provide a minimum standard of living for everyone more efficiently than means-tested programs do.

If you're going to provide a minimum standard of living to everyone, a UBI does this with minimal distortion of incentives.

> The point of a UBI is not to redistribute wealth.

Right, technically the point is to redistribute the productive capacity of that wealth so that everyone has access to a minimum amount of its production.

But is there a meaningful difference? For all intents and purposes, capturing a share of the production is equivalent to owning a share in the wealth.

Huh? The Alaska permanent fund comes from mineral royalties, which is literally a type of tax.

Royalties are not really a tax like taxes on citizens are.

A UBI of $x/month will just yield rent increases of $x/month.

That depends on how it's paid for. If the money is printed, then yes. If it's raised through taxes, then not necessarily.

It doesn’t depend on how it’s paid for. If I am a landlord and I know that my tenants now earn an additional $600/mo, and every other tenant in my market is also earning an additional $600/mo, I would be an idiot not to raise my rents by $600/mo, and so would every other landlord.

"Well, I'm a [store, café, bar, gym, etc] owner and I know that my customers now earn an additional $600/mo, and every other customer in my market is also earning an addition $600/mo, I would be an idiot not to raise my prices by $600/mo, and so would every other owner."

"Oh, also, I'm building a new set of apartments and I discovered that when I set the rent to today's price + $300/mo then suddenly everyone was interested since everyone else on the market now takes +$600/mo."

Yes, inflation is a real concern which should be discussed, but "duh, all the money will just go to X" is far too a simplistic argument.

Store, cafe, bar, gym owners will try to raise their prices, and they’ll succeed (obviously not everyone independently by the $UBI amount).

But then ya know what will happen? The store, cafe, bar, and gyms’ landlords will raise their rent accordingly and eat approximately all of the gains that came from their price increases.

Why on earth do you think rent is so expensive near high-productivity? The buildings aren’t better. The land itself isn’t higher quality. The landlords aren’t better. It’s more expensive because it can be due to the market’s productivity, and corollary ability to pay high prices.

You're only considering the first order effect. A tax increase large enough to fund UBI would change the whole economy.

True, instead of just the low-income earners dropping out now that they have an unconditional deposit in their bank every week, now you also have a significant number of middle and high income earners consciously choosing to earn less because of the crushingly high taxes.

And competing for housing with lower-income people.

In ways that… mitigate rent increases? Say more what specific effect is relevant to this.

Well, you have the UBI increasing incomes at the lower end of the economy, which does apply upward pressure on lower-cost rents. But on the other side, you'd be decreasing the income/wealth at the top, which applies downward pressure at the high end of the market. The ultimate effect is not a straightforward calculation. I think the total size of the money supply is probably the most significant factor, and that wouldn't change if the UBI is funded by taxes.

But then you’re talking about the effects of a high marginal tax rate, not UBI.

I'm talking about the effects of wealth redistribution vs. money supply expansion. Redistribution doesn't necessarily increase prices since the total amount of purchasing power in the market doesn't change. It's certainly not as simplistic as "rent gets increased in proportion to the amount of the UBI" as you're implying.

Taking into account redistribution, the story is even more bleak, not less. Lower income housing prices will rise faster than higher income housing prices.

Why? What makes prices go up given a constant money supply?

The ability to charge more? Analogous example in minimum wage increases: https://www.sciencedirect.com/science/article/abs/pii/S00941...

Evictions went down for 3 months, then rose again back to their prior levels as landlords increased rents.

Again, it’s not clear that they’d be able to charge more given that less purchasing power for high income earners would push real estate prices (and therefore rents) downward.

In the study you posted, it’s not possible to isolate the variable. Many things could have affected the (minor) changes in rents. Not a good analysis.

Minimum wage increases purchasing power for the employed workers, but also increases unemployment, which has the opposite effect on prices.

The decreased purchasing power at the high end 1) is a consequence of taxes, not UBI itself, and 2) wouldn’t push prices down for lower income housing writ large. At the absolute margins, a high-income earner who is being taxed into lower-income housing is increasing competition among tenants for the same low-income housing, which will increase those prices.

If you want to tax high-income people into lower-income housing then just increase their taxes. What does UBI have to do with any of that?

It’s not possible to “isolate the variable” in any economic study ever, so I suppose both of us will have to argue from conjecture. My conjecture, as a landlord, is that if incomes go up in my market, that is unambiguous signal that I can increase my prices. Your conjecture is “you won’t be able to,” but I already know I’m able to. That is how I’ve already set the price I charge.

The best possible news for me, an absentee landlord, is a big company with high salaries opening an office nearby. Same as every other landlord.

> is a consequence of taxes, not UBI itself

A distinction without a difference imo. My point is that how you pay for it is what determines the impact on prices, but I think we’re basically rehashing demand-side vs. supply-side economics at this point.

> I already know I’m able to

You don’t decide the market rate by yourself. And I don’t think you’re properly accounting for how UBI impacts this in aggregate.

No, how you pay for it doesn't change UBI's effect on pricing. UBI has exactly the effect I'm describing. Separately, a tax scheme may have a different, countervailing effect, regardless of whether or not it's related to UBI. That countervailing effect could arguably overcome UBI's positive pressure on prices, but it's a totally separate effect from a separate policy and even still your explanation of the mechanism looks totally incoherent.

Please explain how taxing high-income people into low-income housing doesn't increase the prices of traditionally low-income housing.

"No, how you pay for it doesn't change UBI's effect on pricing."

I'd disagree as I think it obviously does. I doubt any economist would agree with this statement.

You're saying I'm "incoherent", but from my perspective all you've done in this conversation is confidently assert your conclusions. You're clearly very certain of your beliefs, but that's not going to convince anyone (if you care about that at all). I'm willing to reconsider my views if someone makes a compelling argument, but I haven't found yours to be convincing fwiw.

I think any economist would be able to separate the policy in question (UBI, a stipend paid directly to people) from the funding of that policy (potentially a high marginal tax rate, potentially increase in money supply -- two options you yourself identified, but there are infinite more ways to do it).

All of the downward pressure on housing prices you have theorized are coming from (one of) the proposed funding methods, not UBI. UBI doesn't have to be funded in this way, so it should be self-evident that this pressure isn't coming from UBI itself. You would get the same (alleged) effect that you're mentioning if you don't do UBI at all and instead just more steeply increase marginal tax rates. You would not get that effect at all if you implement UBI but fund it by a method other than steep marginal tax rates. So the proposed effect is coming from the tax scheme, not from UBI.

I think you're clearly not willing to reconsider your views, which frankly I get since UBI should be a really great idea. And if it would work, I would fully support it (in fact I used to). But empirical evidence of similar policies getting baked into land rent is apparently outright dismissible, and there's apparently no need for evidence of your claim that higher marginal tax rates at the top end reduce rents at the low end?

What would convince you otherwise?

Honestly I think you're being very pedantic about this. How it's paid for is a crucial aspect of UBI. It would literally be the largest and most expensive government program ever enacted and you don't think it makes any difference how those trillions of dollars are raised? Come on. There's no such thing as UBI independent of the funding for UBI and there are not "infinite" ways for a government to raise trillions of dollars. In the real world, there are two: taxes or the central bank.

I'm not actually convinced that UBI is a great idea. I lean towards supporting it but I also have reservations. The numbers involved are staggering and there would clearly be some major negative consequences. I think the benefits of unlocking so much human potential and defending against social instability created by mass AI job displacement probably outweigh those, but I'm open to counterarguments.

That said, your arguments here are just way too simplistic imo. They only work if you ignore or dismiss half the equation. Instead of addressing the argument that taxation has a very different impact on prices (including rents) than money supply expansion, you are playing word games to say "oh but that's not part of UBI".

I can see how this is opaque and totally inscrutable if one is inclined to just mix all the terms of the equation together, dismiss empirical evidence of specific components, and reflexively dismiss arguments for being "too simplistic."

Once again, I'm not ignoring or dismissing half the equation. I'm asking you to explain how the "tax" half works to yield the effect you're describing.

I did explain it dude. Taking trillions of dollars from the wealthiest would reduce real estate prices at the top of the market, offsetting (to some degree) inflation at the bottom of the market. It's not complicated. You're just hand-waving away this obvious implication of tax-funded UBI because it contradicts your argument.

Also, there is no empirical evidence supporting your argument. The one study you posted has zero statistical significance. Pretending otherwise is pseudo-science.

Got it: higher taxes on the wealthy will tax some people out of their 2nd and 3rd homes, bringing those units onto the market, and this will be a more pronounced effect on demand than UBI'ing 40 million people below the poverty line into the next rung up in the rental market, or the 80 million American adults who live with non-family roommates who will likely be seeking their own housing.

"Statistical significance," like UBI, is a very specific idea. It's not shorthand for "does it convince me." It is literally not true the study had zero statistical significance.

> higher taxes on the wealthy will tax some people out of their 2nd and 3rd homes, bringing those units onto the market

To fund UBI would impact a lot more than just super rich people with multiple homes. You'd have to tax into the upper middle class most likely to pay for it.

Do you not see the logical inconsistency in your argument? That adding all this purchasing power at the bottom of the market would have a massive impact on prices, but removing the exact same amount from the top has a only a narrow, insignificant impact.

> "Statistical significance," like UBI, is a very specific idea. It's not shorthand for "does it convince me." It is literally not true the study had zero statistical significance.

It's just a cherry-picked correlation in a massively noisy dataset, and a very weak one at that. Calling that study "empirical evidence" is a joke. You might as well cite astrological charts.

But people who have one home still need one home, right? So you're describing taxing wealthy people into competition with lower income people (lower-income housing), not taxing them out of it.

And no, there's no logical inconsistency with predicting different effects from the same purchasing power removed from the top as added to the bottom: those people have different marginal propensity to consume. As an example I've already mentioned, 80 million American adults live with non-family roommates. Those 80 million people aren't evenly distributed across income brackets, are they? Lower class people spend 30%+ of their income on their housing, often by pooling multiple incomes into a single unit. As you go up the income spectrum, roommates disappear and then % of income dedicated to housing goes down.

> It's just a cherry-picked correlation in a massively noisy dataset, and a very weak one at that.

At this point it's clear you haven't even attempted to read the paper. The data is neither cherry-picked nor noisy. The (independent) data source has 39 states in it. All 39 states are used in the study. The effect size is small, as you'd expect from small increases in minimum wage, but the correlation is extremely strong and almost certainly not due to chance.

> But people who have one home still need one home, right? So you're describing taxing wealthy people into competition with lower income people (lower-income housing), not taxing them out of it.

By this logic, if you could snap your fingers and make half of all wealthy people's net worth disappear (by some definition of wealthy), it would cause rents to go... up? You only need basic economics to know it doesn't work that way.

> And no, there's no logical inconsistency with predicting different effects from the same purchasing power removed from the top as added to the bottom

The effects would certainly be different, but how they would ultimately resolve in aggregate isn't even theoretically computable. Yet you're claiming to know what the exact impact would be. All we can say for sure is that there would be two massive countervailing effects.

> At this point it's clear you haven't even attempted to read the paper.

No I haven't because it would be a waste of time. Reading the abstract is enough to know that the premise is flawed and it can't possibly provide empirical evidence to support your hypothesis because there is no control. The same exact changes in default rates and rents could have easily occurred without the minimum wage increase due to countless other factors. It's pseudoscience.

> No I haven't because it would be a waste of time.

got it

What’s the point in reading research that, as is made clear in the abstract, can’t possibly provide evidence of causation? You’re drawing conclusions from the results, but there’s no scientific basis for those conclusions; like I said, many things could have caused those results. It’s no different from physics research that doesn’t account for environmental factors.

It’s interesting how you’ve gone from stochastic parroting general caveats around statistics (cherry-picked data, noisy data, not statistically significant, no controls, weak correlation [none of which is true]) to “not worth reading, obviously!”

That’s just arguing in bad faith and dishonesty bud.

Have a good rest of your week!

Nice deflection :)

Ultimately, I think you know now that your original point about rents going up exactly in proportion to UBI was over-simplified and wrong, but I can see that you’re someone who doesn’t like to concede a point.

It’s cool though, thanks for the discussion.

We already had a natural experiment for it over COVID. Rent didn't immediately go up. The price of everything went up sure to inflation.

The Fed understands this. As soon as the checks start flowing, interest rates will rise to keep money supply flat.

It’s not that great of a natural experiment given all the other dynamics of inflow/outflow from cities, money supply changes, and eviction moratoriums.

Rent is higher than pre-COVID basically everywhere and they continue to rise faster than inflation so I’m not sure what this “experiment” shows.

No it won’t, why would it?

Rents are set by only two things: 1) the tenant markets’ ability to pay and 2) competition with other landlords.

If every single landlord knows with certainty (2) that every single tenant in their market has increased their ability to pay (1) by $1000/mo, then every landlord independently will come to the conclusion that they can raise rents by $1000/mo.

They know the tenants are able to sustain it, and they know other landlords know the same thing.

The landlords will still be in competition, anyone who breaks with the conventional wisdom will have an easier time getting tenants. It would probably raise prices, but the laws of supply and demand don’t just go away.

Huge amounts of the demand just moves $x up the price curve, but that doesn’t suddenly conjure supply into existence, so you have the same demand willing to pay higher prices across the same supply: that’s just higher prices. In HCOL areas the vast majority of rent prices stem from land rent, and that supply is not just less elastic than demand, it’s totally fixed.

Most insidiously: the demand that will move most aggressively up the price curve is lower income people seeking better lower/middle income housing. So those prices will move the fastest.

You are making a lot of predictions from basic principles and very simple models, I’d be amazed if the market was really that simple.

It really is that simple. Here's an analogous example of minimum wage increases: https://www.sciencedirect.com/science/article/abs/pii/S00941...

Evictions went down for 3 months, then rose again back to their prior level after as rents increased.

Can you link to some study that confirms it? This sounds far too simplistic to be true, especially for something as complex and unpredictable as the economy.

It’s a special case of this: https://en.wikipedia.org/wiki/Henry_George_theorem?wprov=sft...

This says public investment will just increase aggregate land rents to at least the cost of that investment. UBI is effectively a gigantic “public investment” that is everywhere. It’ll get baked into land rents, which will then propagate into actual rents.

In a certain way every country with taxes and good welfare system has an UBI, the difference is more of an implementation detail.

There's a huge difference between typical welfare programs and UBI, in that the fundamental principle of the latter is just handing over money with no strins attached and trusting people to (on average) use it efficiently and effectively.

Social Security and Medicare comes to mind (age tested of course, Medicaid if you are in some measure of poverty) in the US. Retirees receive a monthly check as long as they're alive (worst case, they spend through it too quick and go without between monthly pay dates), and they receive healthcare regardless of their ability to manage their finances.

I see a wide swath of the population strata in my travels, and I can tell you with absolute certainty that some benefits must remain universal and UBI alone (only the fiat, no other support) is insufficient, due to combinations of lack of education, unsophistication, and mental health challenges. We don't rely on people coughing up for police and fire protection on the spot, for example.

I think that's the real conversation: what must be universal (healthcare for sure, non market housing potentially [1]), and what do we fill in with direct fiat transfers on a monthly cadence (which provides for autonomy and choice in matters where discretionary spend is involved). Non market/"socialized" housing ensures a relief valve so these aggregate support mechanisms aren't simply soaked up by rent seekers (with the potential for a "benefit rent" price spiral). You cannot hold hostage what you cannot buy and extract returns from. Think in systems.

[1] https://news.ycombinator.com/item?id=38117223

(i provide material support to and advocate for some folks very much on the margin as well as some elderly folks, so these ideas and optimal potential configurations are top of mind, strong opinions on the topic)

Not everyone gets typical welfare, only those who meet certain criteria. A UBI.. Universal by it's very name.. is given to everyone.

Depends on the country, here there is some bottom welfare tier that will support everyone who is not eligible for support by higher tiers or other means.

To me it is some combination of ridiculous, naive, and pointless. I don't have a positive view of the Western welfare state, with its excesses, inefficiencies, and catastrophic effect on incentives especially for the poorer and more dysfunctional demographics.

And you want to fix this by making it unconditional? The few who need (and warrant) state financial support will get less than they need; the many rorting the system won't even have to lift a finger to do so; the many many low-income earners disillusioned with the state of Western economies and cultures will happily down tools the moment the first payment hits their account; people like you and I who probably have no need at all for it still get paid regardless.

These stories of Kenyan entrepreneurs changing their villages with a $500 lump sum are completely irrelevant. It's absurd to think this in any way represents the way it will mess with incentive structures in the West, and the cynic in me sees it as a very transparent appeal to doe-eyed progressive types desperate to fawn over darker-skinned people enjoying tiny successes. Or grasping for any "scientific" evidence that we should give them money just for being a lazy dropout. Or playing into their fantasy that they would be a productive master artist if not for the oppressive demands of the capitalist.

It's a con. It's silly. But it makes people like me look like meanies so people like you turn out in droves to vote for the "good guy" progressives who just want to give everyone free money.

Monetary supply is finite for all who aren't members of the ruling class.

Inflation and labor demand

Poor people are usually sidled with tremendous amounts of debt. Money up front allows people to pay down debt and avoid interest. Why do people think payday loans exist?

> researchers found no evidence that any of the payments discouraged work or increased purchases of alcohol — two common criticisms of direct cash giving. In fact, so many people who used to work for wages instead started businesses that there was less competition for wage work, and overall wages in villages rose as a result.

The only part of the article that addresses pros of handouts in general.

Surely the outcome would be the same (less competition for wage work because of fewer workers, resulting in higher average wages) if all the recipients stopped working outright?

The article (or any of the linked ones) doesn’t seem to provide data on how many recipients started a business versus how many left the workforce. If the business founders were indeed very successful, that could instead be used as an argument for encouraging enterpreneurship. Perhaps through lower taxes?

There is not much evidence cutting taxes increases entrepreneurship. It’s much more plausible to me that UBI would have a much more proximal impact on the desire to start a business.

The smaller the payments, the larger the coordination problem people have to solve together to aggregate the money into a capital investment that returns growth and jobs.

Arguably, in the group who received lump sums, if only a small minority of them started businesses that employed others, they would raise the quality of life for more people than groups of people getting small payments and having to coordinate larger groups to improve their collective prospects.

Whereas, those who got a monthly stipend would very likely just come to depend on it, and maybe pursue other things like raising kids or going to school, but I'd bet the businesses kept the opportunity and wealth in the community they built it in, where the kids and educated would leave to find better ones.

Doesn’t mater if it work flawlessly - right wing politicians pretty much refuse it on an ideological basis alone.

I’ve never seen a right-leaning politician, anywhere in the world, give even an ounce of support for UBI projects. It is always met with the knee jerk “people can’t just get money for doing nothing, that’s laziness!”

There is no sin worse than so-called laziness, to these people.

Well, that's ideology for you: you oppose things you believe to be bad.

Reply on news.ycombinator.com