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Comment by bequanna | Hacker News Reader

> I think the bigger issue is that there is a common, albeit misguided notion that UBI would create inflationary pressure.

Well, because it is perfectly intuitive to think it will cause inflation: The Fed printing money to fund Government deficit spending absolutely increases inflation. UBI is additional Government spending. Additionally, reducing the supply of labor increases the cost of labor, which causes inflation.

I think the onus is the proponents of UBI to somehow prove that if this is done at scale it will NOT cause inflation.

> On the plus side, the advancement of AI, and the threat of widespread job loss creates a positive talking point that can possibly help counteract that.

Academics have been making these doomsday "automation will cause labor surplus" predictions since forever. When exactly can we expect them to materialize? I'd love some cheaper labor so I can build an affordable home.

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> Academics have been making these doomsday "automation will cause labor surplus" predictions since forever. When exactly can we expect them to materialize?

Make a list of jobs you think are very little benefit, no benefit, or detriment to society. Whatever value function you want. Maybe you hate advertisers, maybe you like advertisers. Reality television. Loan sharks. Health insurance. Lawyers. Fast food. Facebook. Everybody's got 'em, even if they don't agree.

Call these workers (whoever you decide they are) the fakeloaders. They're doing things that don't need to be done, but which the fakeloaders need to do in order to have money in order to buy things.

How big is the fake load? Sum the hours worked by fakeloaders, and the money they draw from the rest of the economy. Write it all off as wasted. That time could have been spent by those workers doing something more beneficial, or it could have been distributed over everyone to just rest and live in. That money expressed demand for important things like food, housing, or medicine but was earned by people who ultimately didn't do any work that actually produced those things or anything else that really improved life.

Now, enter some new technology that saves labor and costs people their jobs. Some number of those people may move on to other beneficial things. But some number are going to become fakeloaders. Maybe the fake load they do is easily-trained, low-paying work. Maybe it's credential- or network-demanding, high-paying work.

The key questions are: 1) Is the fake load growing and, if it is, 2) is that growth accelerating or jerking (https://en.wikipedia.org/wiki/Jerk_(physics)) too fast?

I think this is a good, Graeber-tinged take on the labor supply and economics of automation. You can make an argument not that there’s a “real” labor shortage, merely a misallocation of labor that has undesirable consequences for consumers.

Classically, the purpose of government funds in cases like these (market incentives mismatches) is to reduce risk or spur investment in sectors where capital would not otherwise be allocated. I personally find it absurd that UBI would even be on the table when you could (presumably) use the same funds to solve market issues like these unless you think (and you’d be wrong) that the only issues with the housing or medical market are strictly related to affordability and that they could be solved by giving consumers money. I think UBI could work to spur consumption, but most Western economies aren’t suffering from a shortage there.

One dynamic that UBI could help support is keeping the labor supply tight as automation eliminates jobs. Srineck (and others) identify this imbalance of power as crucial for developing a post-capitalist economy: if Capital’s anti-human impulses are allowed to run amok unmitigated, we will see more of the same when it comes to human needs being unmet while the (inhuman) lines on the graph go up.

I think if you follow where the money goes, that will be whether UBI causes inflation or not. In the best case, it results in a virtuous cycle where growth is created and sustained. In the worst case, it further inflates the value of low supply goods. This will most likely be up to market conditions along with business models/strategies and productive capabilities of various industries and marketplaces and how they will weigh out.

In the example of housing however, I don't think UBI will help because the business model is dependent on inflating prices of homes as investment vehicles. The price must go up one way or another. What actually bring home prices down would be something like a market crash where investment expectations are muted.

Cheaper labor however comes from offshore countries that have a lower standard of living. If average wages go up, then domestic workers will expect that as a baseline. A business can pay above the average for above average workers, and vice versa. The expectation of hiring cheaper immigrant labor is getting the same level of expertise for cheaper. This does not always go to plan, which is why there is still some demand for domestic workers and their expertise. Automation may have a similar effect but without the same virtuous cycle to offshore countries as before. (Not to mention that the difference between revenue and cheaper labor cost is incentivized to be kept as business profits, which doesn't mean that prices go down since demand and supply now expects higher prices as the market baseline.)

> Cheaper labor however comes from offshore countries that have a lower standard of living.

Please explain why wages went up significantly for low income workers during the pandemic. The answer (of course) is that we artificially decreased the pool of available workers by paying people to stay home for an extended period—-exactly what UBI would like to do.

The price of labor is simple supply and demand. If we pay the lower skilled people the same amount they would make from waiting tables or swinging a hammer, why would anyone want to do that work?

I don’t get it. Why do people make these complicated, purely academic arguments in support of UBI? It’s obviously going to increase taxes and increase inflation. It’s obviously bad for the people who choose to actually work, save and pay taxes.

I think you are unsure of how UBI works. It is not paying people to stay at home, it is just a modification of tax brackets, such that people below a certain level pay negative taxes, aka receive money to live and survive. Unlike now, where everyone has to pay taxes, even the poor.

UBI does not need an increase in taxes, just a proper tiering of it, such that the ultra rich pay more to support society better. By having people who pay negative taxes, they are not burdened with living paycheck to paycheck and can focus on improving their lives. If you are working, saving and paying your proportionate taxes, UBI should not affect you in any way.

It's just a fix for rampant capitalism, where the rich are supposedly working millions of times harder than their exploited working class.

> receive money to live and survive

I’m not sure you know how generous the current welfare system is. Low income people can already receive assistance for: housing, food, internet, phones, completely free medical care and straight up cash.

Not to mention that we have made it incredibly easy to claim disability for anyone who essentially doesn’t want to work.

…but in addition to that, you’re telling me I should be giving more of my money to them? I have sympathy but I also have a limit.

Also, where are these “literally starving” people in the US? Other than mentally ill who have difficulty taking advantage of the many services available, I have yet to encounter them.

Damn I hope you step outside of your bubble soon.

Please expand of this.

Are low income people not typically eligible for all of the services I mentioned?

We live in a society that is incredibly generous to the poor.

Wages went up because almost 3 million people retired or died during the pandemic in the US. This pulled forward structural demographics that we were already headed towards.

https://www.axios.com/2022/12/16/the-missing-workers-who-are...

https://www.wsj.com/economy/jobs/labor-supply-economy-jobs-c...

Who said anything about “printing” money!?

In all serious contexts — not kids arguing on Reddit — the concept of UBI is just an adjustment of tax brackets such that people below a certain threshold pay negative tax. This is offset by higher taxes in the super rich.

It’s basically saying that Bezos does not work one million times harder than the staff working in his warehouses. Staff that are literally starving in many cases.

> just an adjustment of tax brackets such that people below a certain threshold pay negative tax

This makes sense, and I am totally for this, as a current "total naysayer" against UBI.

Infact, I wish that "negative tax" was the flag bearing. I am totally 100% for that idea.

I am against the notion of UBI because it is too all encompassing and I am not confident that a singular system can handle all of the variables.

In my view (and from my discussions) it's framed as:

- "everyone gets an extra $X amount a week."

- "even the rich people so why are you complaining."

- "studies have shown that worker engagement has actually risen or remained steady, hasn't dropped at all"

- " it was shown that it made everyone way happier and productive"

But where does the money come from?

"Small trials in Finland shows that they didn't need to get extra money it just happened and it's easy as that so why are you against it????"

The most common UBI variant is to simply give everyone the equivalent of a tax refund, no questions asked. Then, to pay for that, the tax rates at the higher income brackets go up.

Very low or zero income: the government pays you a basic income.

Low income: they still pay you, and you have to pay a negligible amount of tax on your extra income from work. Crucially, your benefits don’t disappear instantly if you get a job, unlike with many welfare programs now.

Mid-low income: you pay the same in taxes as the basic income, for a net tax rate of zero.

Higher incomes: your net tax after UBI increases proportionately to your income from work, steeper than before UBI.

Taxes are already too high.

>you pay the same in taxes as the basic income, for a net tax rate of zero

I think this is the make believe part. In Australia, we have a goods and services tax of 10% on every purchase, plus an income tax of around 19% for amounts from 18-45k (thats low/mid-low).

All in all, about 9k in tax for this low bracket. If we're paying that for all 26 million people here.. hey I guess that's probably pretty doable. Damn

There is always some point with UBI where the effective tax rate is zero — because the negative tax and the positive tax cancel out. The specifics (GST/VAT) don’t matter.

Except that isn’t what will happen.

We are already plagued by spending that is funded by deficits and not new taxes. Why? Because one of those things is MUCH easier than the other. Easy to agree to spend money, difficult or impossible to add new taxes.

This is exactly why MMT has stopped being a thing. The pandemic Federal spending deficit ballooned, contributed greatly to inflation and was not met with increased taxation like MMT said would happen. Whoops…

Academic arguments always sound great then reality hits them hard.

That has nothing to do with MMT.

You can’t give free money to people and say that has anything to do with MMT.

Which is why MMT rejects the concept of UBI

Free money via UBI won’t cause inflation because we’ll just create more taxes!

Increased government spending via MMT won’t increase inflation because we’ll just create more taxes!

Both ideas rooted in the same academic nonsense that is divorced from reality.

If you forcefully confiscated every single penny of net worth every single billionaire citizen has, every single last penny, and distributed it across the population, it would amount to a one time payment of something like 2,000 to everyone else. Simply pushing your "just tax the rich" line just doesn't remotely match up with reality. It requires an elementary level of math to see that taxing the rich more will not fund UBI. (And ignores all the negative consequences of doing so).

It's obviously not just billionaires that would be taxed at a higher rate. The increased taxes (as a percentage) would start at the zero income level. Everyone would get taxed more for their income. The offset of the fixed income part of UBI is constant, which cancels this out to a point, but the curve is always steeper.

Another compensating factor is that UBI replaces a huge swath of pre-existing social welfare programs.

Similarly, UBI is so much easier to manage that it would allow huge numbers of government staff to be made redundant. We would no longer have to have a bunch of bureaucrats tracking and allocating welfare, because everyone would be on welfare. This compensates for the cost also.

Generally speaking, pretty much everyone that would benefit from UBI is already getting roughly equivalent welfare anyway, something all western countries can already afford. Most citizens in most developed countries have a roof over their heads and aren't starving to death, even if they're unemployed.

PS: Australia went through a similar thing were a ludicrously complex set of tax codes were put into the shredder and replaced with a flat 10% VAT. Everybody screeched about prices going up 10% in the exact same way as the people arguing against UBI. Turns out some prices went down because previously the taxes were "randomly" anywhere between 0% and 30% on a product-by-product basis. It took armies of accountants and tax officials to track all that, and that had a real cost to it also. That cost was wiped out by the new, simpler, flat tax code.

But your idea of working harder falls apart though with taxing the middle class for UBI.

Bezos doesn’t work 1M harder than the average worker. But a doctor making $250k definitely works 2-5x harder (education, life and death, training, etc etc).

You’ll find lots of people for taxing Billionnaires but you’re not going to find many takers to tax the 50M people making $125k+ to fund UBI.

There’s no arithmetic model that I’ve seen shows UBI as being feasible without some level of magic.

Like I said: Most western countries are already paying the rough equivalent of UBI to their citizens, except inefficiently with an army of bureaucrats.

Image making $250K and paying $100K in taxes. With UBI, your taxes might go up 20% to 120K, but you get a flat $20K as your basic income, so net... there's zero difference.

If you make $500K and used to pay $220K in tax, then you now pay $264K in income tax but get $20 UBI, for a net tax of $244K. Your total after-tax income decreases from $280K to $256K, a mere 8.6% reduction in your disposable net income.

Are you saying you wouldn't get that job? It pays $256K after tax! Anywhere in the world with that kind of personal income, you're filthy rich, especially if you have a spouse that works.

Okay, so your spouse is an unemployed gold-digger. Guess what: she gets $20K UBI as well, so your family net income is back at $274K, for a mere $6K decrease over the original pre-UBI tax code.

I'm personally in more-or-less this boat, where my spouse is ineligible for all government benefits despite being a stay-at-home Mom, because I make too much money. This disincentivises educated, wealthy people from having kids!

You know who has too many kids? Poor, uneducated people for whom the per-child benefits are worth it. This produces generational poverty, not useful workers for the economy.

Disclaimer: Obviously this is using made-up numbers, any real implementation would have to be adjusted to each economy, existing tax levels, etc, etc...

I’m saying they the math clearly shows there aren’t enough 500k earners who will pay the tax to pay the UBI recipients.

And it frustrates me that people include whether people will or won’t take jobs paying $500k because of higher taxes. It’s not relevant to the discussion of “how will we fund UBI when the most basic calculations show it’s not possible.”

UBI is a good thing, but I think the way we fund it has to be realistically discussed.

I'm saying that most economies are already paying the equivalent amount to a UBI, or close to it.

Most counter-arguments including yours apparently is that UBI is an entirely new tax, not a replacement for existing taxes. Sure, seen like that, it's magic money that falls from the sky. In practice, it's just a simplification of welfare.

No country is paying the amount proposed. If so, please provide. It should be simple by just showing entitlement amount divided by people.

Countries pay substantial amounts but not to the level proposed by UBI amounts.

There’s an argument for just simplifying payouts by leveling and ditching the “army of bureaucrats” and paying out the costs. But that has problems like reducing payout to people who need it and also not being anywhere near $10k or $20k per person. And these seem really obvious and glaring so are peculiar that they aren’t addressed.

To make your claim show the arithmetic.

The super rich doesn’t consume, they just have a lot of money.

If you move money from a low consumer to a set of people at full consumption then you get inflation.

To move consumption you have to tax consumers not hoarders

I unfortunately agree - I would way rather see the “hoard” allocated toward real growth and investment than allocated toward weird pet projects or shareholder-attraction. The USA doesn’t have a shortage of consumption, it has resource allocation issues.

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