Comment by fao_ | Hacker News Reader

Comment by fao_ | Hacker News Reader

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Along the same lines, it turns out to be drastically cheaper to not means-test welfare payments and just hand out money without regard to the financial status of the claimant. That is to say, if the amount of money invested in means-testing and the current welfare system were withdrawn and put instead into a universal basic income, it would be drastically cheaper.

On top of that, but we have a well-grown mound of evidence now that universal basic income isn't just cheaper but also leads to improved socioeconomic status of the lower classes and improved health and decreased stress in communities, pretty much across the board.

But instead of actually implementing that, our government instead focuses on putting out propaganda against "welfare cheats", implementing progressively more punitive means-testing measures, and the argument around UBIs is held in a permastate of "the evidence isn't there yet, we need one more study-" (likely with the hope that the study contradicts the current body of evidence and swings against UBI, no doubt).

The conservative (and the new labour) approach is always to push towards the punitive option, to the point where I wonder if it's a pathology among people who have attended public schooling (if you're reading from the US, I mean private school).

See also:

"Basic income could cut poverty to lowest for 60 years at no net cost, according to new research " [University of York] - https://www.york.ac.uk/news-and-events/news/2022/research/ba...

Estimated cost around 6bn in Wales - https://www.futuregenerations.wales/wp-content/uploads/2021/...

Can you link to some of the studies that form this mound of evidence?

I tried a search on Google Scholar, but new information seems to dry up around 2021. After that I see a lot of people talking about it but no new evidence. This 2020 summary [0] found that much the research to that point was lacking—we've studied various components of UBI, but never all together (for example, many pilots were apparently means tested).

The biggest theoretical concern I have is inflation. The papers I can find (like this one [1]) agree that inflation will most likely occur, the question is how much. With a limited understanding of economics, I have a hard time imagining how giving everyone $1000/mo could do anything but raise prices on basic things until they are once again out of reach of our poorest people. We can't study that directly without a full scale test, but are you aware of attempts to address the question?

[0] https://basicincome.stanford.edu/uploads/Umbrella%20Review%2...

[1] https://socialprotection.org/sites/default/files/publication...

It's not as if 2021 was that long ago.

The answer to the inflation problem is to basically ignore it. The result is that poor people have enough to live, and rich people have less buying power. That's not a bug: it's the entire point. Wealth concentration is the problem.

Here in the US, the wealth owned by half of the population totals up to less than the total wealth of 50 people. Wealth concentration is beyond out of hand. It's destroying every facet of society.

> It's not as if 2021 was that long ago.

I didn't say it was, I meant that too communicate "so this 2020 summary probably isn't missing much".

Inflation in the last few years has been far worse for poor people than for the rich. Homes and rent are unaffordable. Groceries are coming in smaller and smaller (and emptier and emptier) packages for the same price. Wages at the lowest levels are stagnant, while CEO salaries continue to go up.

Yachts do not inflate beyond the capabilities of the top 50, but inflation has put real pressure on the bottom X% of the population.

Do we have reason to believe that UBI-caused inflation will be better targeted at the ultra-rich?

As one of the people impacted by losing the $150 a month extra SNAP (food stamp) money we were getting throughout the pandemic, inflation was barely noticeable while we were getting it. The effects of inflation became most noticeable when the extra $150 a month was ended, because the inflated prices never went down when the inflationary pressure was removed.

But if the extra $150/mo were never removed and the inflationary pressure never let up, I would expect it to become noticeable eventually, and UBI would exert even more inflationary pressure than pandemic-era stimulus/welfare.

When inflation does catch up to the UBI, do you just keep raising the UBI forever and ever? How does that not turn into hyperinflation?

I'm working on a business degree to try to get back into the economy myself, so when I find out the answer to your questions, I'll let you know. I suspect the answer is very complicated and difficult to implement, but there is sufficient worldwide desire for some outcome that both supports the poor and disabled while not over-encumbering the rest of society in supporting us.

I would argue that inflation has revealed an already-present problem: many people are expected to live just above the poverty line. When inflation inevitably moves that line, income must move with it proactively. We are watching that fail to happen, which I consider all the more reason to support UBI. Waiting for income to pick up the slack reactively leaves people behind the poverty line, and that's not OK.

I'm not saying we don't have a problem, but nothing you've said reassures me that UBI won't make everything worse. If you keep raising UBI to match inflation (which you'd have to do to fulfill the goal of eliminating poverty), how do you prevent that from turning into hyperinflation, where everyone's assets are completely devalued in a matter of decades?

We need to do something to raise the poor into the middle class, but eliminating the middle class altogether in the process is neither politically viable nor (for me, subjectively) desirable.

> how do you prevent that from turning into hyperinflation, where everyone's assets are completely devalued in a matter of decades?

You are welcome to provide an answer. In the mean time, do we have to stop all progress in fear of that outcome? Just like you said, we need to do something. This is the best something I have heard of. You are welcome to present any potential alternatives.

Here's what I envision happening: UBI causes inflation. UBI must increase to accommodate that inflation, because that is its original intended purpose anyway. If this was the whole story, then it would fail exactly as you predicted. Thankfully, it isn't, because there is one more variable in this equation: property value.

When the rate of inflation increases, UBI must increase to accommodate two distinct assets: goods and housing. Goods are already at pretty tight margins, so their cost will stay roughly the same relative to inflation and wages. Housing, on the other hand, is incredibly over-valued. The cost of rent has skyrocketed, with no end in sight. By increasing both UBI and inflation, the relative value of housing should decrease. Cheaper housing means cheaper rent, which means less need to grow UBI. Eventually, this system finds an equilibrium.

The problem we are seeing already is that despite ever-accelerating inflation, the rise in property value is also accelerating. This is because the wages of middle-class workers (everyone above the poverty line) has increased fast enough to accommodate it. That sounds like a good thing, until you think about the growing collection of people who are left behind the poverty line.

By redistributing the general increase of wages into UBI, middle-class workers would get relatively less income. That means that middle-class workers would not be able to afford the ever-increasing cost of rent. That sounds like a bad thing until you see the solution it provides: the market for ever-increasing rent would evaporate. Property values would finally find a ceiling, and rent would stop consuming such an outsized percentage of general income.

If you can find another way to slow the growth of property values, I'm all ears. If not, then let's give UBI a shot.

All this explanation does is reinforce my fear that UBI is about wealth redistribution from the middle class to the poor, rather than from the rich to the poor. Under the best case scenario that you describe, the rich would be largely unaffected, while the middle class would merge in with the lower classes to form a new lower class (though one that's at least over the poverty line).

This makes it politically a complete non-starter, but it also feels wrong to me. If we're going to redistribute wealth, let it be from the top down, not shared between the bottom 80%.

Doing something, anything is not guaranteed to make things better than leaving the current system intact. If UBI makes wealth and power even more centralized in the few at the top of the food chain, with the rest of us comfortably above the poverty line but more dependent (on average) on the government and on the 1%, that is not necessarily a good outcome.

The best case I described would move wealth from landlords, through the middle class, to the poor and middle class. It would accomplish that by both expanding and devaluing the middle class. Expanding the middle class would eliminate poverty (no more poor category). Devaluing the middle class would shrink the housing market (not enough high-paying renters to sustain runaway rent growth). Shrinking the housing market would move wealth from property owners back to middle-class income, which is exactly where it came from in the first place.

The primary method that the poor and middle class are exploited by the rich is housing. The benefit of middle class life is captured by rent and mortgages; then moved into the portfolio of wealthy real estate owners. If we can put that in reverse, we all win.

Ideally, UBI would move wealth back from real estate portfolios back into wages and disposable income. The middle class would be less wealthy on paper, but have more disposable income from not spending it on housing.

It's not as elegant as directly stealing from the rich and giving to the poor, but that doesn't seem possible anyway.

> the relative value of housing should decrease

Can you go into this? Sort of sounds like more money chasing a static supply, which is a situation where I wouldn't expect a decrease.

It's the demand that would change. If only X people can afford the rent or mortgage for Y homes, raising the value of each Y becomes untenable.

Right now, there is no floor for income. People who can't afford housing simply become homeless. This system functions because there are enough people who earn a high enough wage (X) to pay rent or mortgages (Y). Anyone who can't afford housing is unable to participate in the market, and has no effect on the system.

The first goal of UBI is to set a high enough income floor for every person to afford housing. That would allow the lowest income earners to participate in the housing market.

No matter where the money comes from, the higher UBI is set, the more inflated currency will be. That's the inevitable effect of putting money into circulation. The more inflated currency is, the more is needed by the poorest earners to afford the cheapest housing. The more money that is needed for housing, the more that is given through UBI.

This cycle is specific to low wage earners (UBI recipients), but inflation affects everyone. More inflation means less buying power for average income earners. Less buying power makes housing less affordable.

Everything up to this point sounds like the worst idea ever. Why would you want housing to be less affordable? Because it already is! That problem is here right now, and it's only getting worse. There is no sign that it will ever stop, because there is always room for the real estate market to grow. That room is made of income inequality. The housing crisis only affects poor people. The smaller your wage, the greater portion must be spent on a competitively priced home. The greater income inequality, the higher a competitive price is set!

If we use inflation to move wealth from the middle class (and everyone else) to the poor, then suddenly there won't be enough money in the middle class to pay competitive rent/mortgages. With no one able to pay, housing prices must drop. Once housing costs drop enough that everyone can afford housing, the cycle is complete, and both UBI and inflation growth level out.

The extra benefit is that despite the middle class losing buying power (from inflation), they get to hold onto a greater percentage of their income, because they don't have to spend as much on a hyper-inflated housing market anymore.

Of course, all of this is theoretical, and could be broken through anticompetitive real estate behavior.

Welfare is taking money from productive people and giving it to unproductive people.

In order for this to work in a democracy, you have to convince the productive people that the unproductive people are unproductive for good reasons (i.e. means testing). If you don't do this, the productive people will vote for anti-welfare politicians.

Or maybe I just "have a pathology".

How, in your system, does one define productive? Is a person who chooses to care for a disabled relative full time instead of working productive? Is a middle manager who provides little more than bureaucratic oversight (but none the less draws a salary and pays taxes) productive? Is an undiscovered-in-their-lifetime artist productive?

So you would rather burn away money than giving it to someone who doesn't deserve it?

The idea is honestly crazy to me, if you had to choose between giving money to the 70% most needy people or giving it to the 80% most needy and also to a random 20%, would you really choose the first option?

It's wildly insane to assume one can simply "know" who "needs help".

It's even worse to assume that a person - regardless of whether they can or can't easily tell - would be motivated to find out if they weren't handing out own food or money.

Your hypothetical has no relation to actual choices that voters and governments face. The point I made was that people will not vote for welfare unless it's means tested. It's really that simple.

Politics aside, I'm skeptical of UBI. UBI advocates claim that people will start companies and launch careers with their stipend. Yes, some people will do that but most will become layabouts. When the machines do all the labor, we can all become layabouts. But as long as our food, housing, healthcare and so on comes from other people's labor (and it still does) then we have an obligation to be productive.

>The point I made was that people will not vote for welfare unless it's means tested. It's really that simple.

I would agree with your point about the voters. But that just means the electorate are too stupid to realize that it is more efficient and cheaper to NOT means test.

Those who administer the means test are unionized, pensioned employees who cost the taxpayer a lot of money. The argument for UBI is that it is cheaper because you don't need all those bureaucrats/administrators who work in social services gatekeeping.

An argument against UBI, to me, is that the landlords will just raise their rents accordingly and scoop up the money. I believe that's what happened when the govt starting giving out money for low income earners to help them with their rent. I might be wrong on that.

A pragmatic question is: will it help more people than it harms?

If we implement UBI, what's forcing people to work? And if people stop working, how can we afford UBI?

I hope some country that I don't live in tries it so I can see if my intuition is right.

> people will not vote for welfare unless it's means tested

I would. We have so much wealth, food and stuff in Western countries. We could provide a basic level of comfortable living for anyone with no strings attached. We could then remove minimum wage and all the things we do to subsidise low income workers and let the market find the floor that motivates people to work for a more luxurious existence.

Not that it would ever happen. I feel like a significant number would rather people would just die rather than being poor and "lazy". Of course, if you're rich and lazy, no matter how the riches were acquired, that's fine.

> We have so much wealth, food and stuff in Western countries. We could provide a basic level of comfortable living for anyone with no strings attached. We could then remove minimum wage and all the things we do to subsidise low income workers and let the market find the floor that motivates people to work for a more luxurious existence.

1. How is a system fair in which some people work producing food and other people get that food for free? The people who work will not put up with such a system. Why should they?

2. In such a system, over time, fewer and fewer people will choose to work. The economy will shrink, the country will become poor, and it will no longer be able to afford UBI.

When we have robots performing labor then we can reassess all this. Until then, means tested welfare is the only acceptable kind.

Are you saying that you'd rather live a very basic life with no work? That's the compromise I offered - a life of basic amenities without the system hassling you, and if you want more than that then you'd need to start working.

> In such a system, over time, fewer and fewer people will choose to work. The economy will shrink, the country will become poor

I don't think this would be a change for a lot of people, I certainly want more than the basics.

> How is a system fair in which some people work producing food and other people get that food for free

Our current systems are far from fair. Probably less fair than this by a long way. If you are a farmer and produce food what do you care where it goes so long as you're compensated for it?

The government is taking money from productive people, and using it for all sorts of unproductive ends. Most people on welfare don't have enough to become productive - living is already a struggle.

The government would take the money anyway, and just redirect it to wars/innovation/PPE... it is not the 'unproductive' people - or the immigrants - that are taking most of the money. It's the wealthy abusing it to make themselves and their friends even more wealth.

Literally just read the linked research though

- "The calculations included in the full report show that extra spending (around £600 million) could be expected by putting more cash in the pockets of lower income households, via basic income."

- "This, in turn, would generate greater VAT returns for Welsh Government - a crucial source of revenue"

- "It would reduce child poverty by two thirds, to 10%"

- "With the financial protection of a basic income, a wide range of hypothetical new freedoms can become possible. People would be able to do things like finding suitable jobs, undertaking financially risky ventures such as starting a new business or developing their education or skills."

None of these quotes has anything to do with what I posted.

Normal, productive people will not sign off on their money being redistributed to unproductive people unless those people have a good reason for being unproductive. Therefore, even if such policies (welfare without means testing) are a utilitarian good, they are not politically feasible.

And if you actually read TFA, you'd find the majority of people in Wales support UBI :P

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