Except that socialism has failed already.
Universal basic income is impossible to justify morally.
Universal basic income is impossible to justify morally.
It's pretty easy to justify morally. I mean at least as easy as any other welfare.
The net payments for UBI plus (income) taxes don't have to look to different from what many countries already do today. It's just the accounting that looks a bit different.
Whether UBI would make the problem quantitatively worse depends on the exact design of the UBI system you have in mind and the current system you want to compare it with.
We did this during Covid as furlough payments, and the result was high inflation. Wages didn’t significantly increase to match, so in my country anyway people feel that the cost if living is significantly worse post-Covid.
Anywhere that implemented UBI would also have to implement rent controls, otherwise Landlords would just see it as money on the table. But you couldn’t have controls for all prices, so inflation would still result.
Nice trick if you can pull it off.
So for the 1GBP you print, you recoup up to 20p in VAT, or less for foodstuffs.
And more money chasing the same goods and services means…?
I don't think that's how people commonly understand how UBI should be financed.
For any meaningful scheme, you would be talking about hundreds of billions.
The money that just sits untaxed on the vaults of the extremely wealthy should be taxed to finance this.
This is trickle down economics done right. Remove money from the wealthy and redistribute it to benefit society.
The extremely wealthy will also have an army of lawyers and accountants to mitigate against this, not to mention trusts and holding companies.
It’s a nice idea, but the implementation is tricky.
I’m not arguing for them, just being realistic.
No army of lawyers would save them from actually effective regulation.
Of course, if you want to do business in country X, you are subject to the laws of that country X.
But otherwise, you can leave that country and settle down elsewhere and do your business there. No matter how 'actually effective' that regulation is. (Unless you do an 'East Germany' and don't allow people to leave.)
When relevant countries act in tandem, it would work.
I would really like to see a billionaire vote with their feet to protect their wealth by moving ro Somalia or something like that.
A country can also limit their ability to operate from abroad when they move.
In real life, value producing is inherently tied to the society which allows value to be produced.
Approximately no one has vaults of gold like Scrooge McDuck. The richest people largely hold their wealth in company shares.
So you are suggesting to raise the cost of capital for companies?
Yeah, I also like to be pedantically literal when I don't have good counter arguments. I feel your pain, brother.
You can replace my "vaults of gold" analogy for propety, yachts, real estate, company shares, etc. Whatever someone holds in their own name that constitutes wealth above a certain threshold should be taxed.
> So you are suggesting to raise the cost of capital for companies?
Corporations also should contribute to society, as they also benefit from the common infrastructure.
There's this pervasive idea that "if we tax the rich they will stop investing in companies and us filthy peasants will be out of jobs" which is the bullshit of the ages. If there is demand for goods and services, there will be those that supply them.
Are you just being obtuse to deflect from the actual argument?
Basically, the people a tax is nominally levied upon don't necessarily bear the economic burden, and vice versa.
A silly example: do you think it makes a difference if your employer transfers your whole gross income into your account and you pay income taxes, or whether your employer pays the income tax first, and then transfers you the net amount?
They keep money in bonds (lending money to people, corps, govs that need it), stocks (raise the value of companies that are valuable thus letting them borrow more etc) or they consume which pays for all the poor peoples salaries
The immaturity of people when it comes to economics is a problem
That's wealth that should be taxed.
> The immaturity of people when it comes to economics is a problem
I agree. Just not in the way you imagine.
Wealth taxes are fairly controversial, and not very common around the world.
But they have been implemented in a few places, and we can look at what real world effects have been observed.
Don't let the uneducated messenger distract from UBI itself though. Proposed seriously, it's about reducing asset values and high incomes to redistribute that value to everyone who isn't losing more value than the UBI. The real argument is that it would mean short-term economic costs to build a more robust system with a bigger pool of people with the safety net and risk appetite to start/join companies.
You seem to have something very specific in mind?
I don't claim to have the answers. My point is just that there are interesting benefits that are worth weighing against those costs.
In the UK, council taxes also roughly have the right structure. Though the discount you get for unoccupied property is crazy. It's exactly the opposite of what you'd want to encourage.
Now how to finance a UBI is a good question.
A land value tax would be an interesting choice. Especially since a UBI will probably lead to higher rents.
If velocity speeds up and inflation goes up, the central bank will remove money from circulation to hit their target. If velocity goes down, the central bank will inject money into circulation.
The fiscal multiplier is zero.
(Or rather, any deviation of the fiscal multiplier from zero is evidence of an incompetent central bank.)
No. The high inflation was a result of Fed policy, not fiscal tricks like furlough payments.
> Anywhere that implemented UBI would also have to implement rent controls, otherwise Landlords would just see it as money on the table. But you couldn’t have controls for all prices, so inflation would still result.
You are right that UBI can lead to higher relative prices for rent.
And that's why you would want to pair UBI with land value taxes, not rent control.
(UBI would not lead to inflation, and would not necessarily lead to higher absolute rents. The overall level of inflation is something an inflation targeting central bank, like the Fed or ECB, controls.)
In the last place I rented (London), the private landlords were unlikely to own the land. Fixed term leasehold was overwhelming common, not freehold.
But to make LVT simpler to understand (and economically equivalent): you can imagine the government owns all the land, and rents out plots for eg 20 years at a time to the highest bidder. To help people plan better, the auctions can be done 5 years ahead of time. So leases for 2036 - 2056 will be auctioned off in 2031.
You can stagger the auctions, so a few leases get auctioned off every week.
Or are you proposing State confiscation and management of the land? I can’t quite tell from your post.
For example, you could do more or less the same thing that the UK did to abolish slavery: buy out all the existing land owners / lease holders.
I suggested 20 years as a reasonable time frame for leases. In principle, 100 years might would also work. 999 years is probably far too long.
Now, instead of auctioning off the leases, you can also have individuals officially owning the land, but instead you tax them a certain fraction of the market value of the land every year. Economically that's equivalent.
A 999 year lease is basically economically the same as owning the land. So you should more or less treat it the same.
Ask yourself when you have a normal working class person who roughly breaks even on their income vs. their spending where does all that money go?
They pay rent. And then what? They pay mortgage, they car insurance, they utilities.
One way or another the money ends up to the top of the pyramid, i.e. the wealthy individuals who own capital assets, properties, businesses etc.
You had high inflation because the government essentially printed money. But what if instead of printing that 1 trillion dollars (or however much it was), the state had actually taxed the that money off of the rich individuals and corporations and then handed that out.
The same money would again flow through the system back to the same rich people where it could be taxed again and handed out and put back into the circulation. This would not cause inflation by itself since the monetary value of the money would not be devalued.
It would require a government that actually gave a damn about its citizens and had balls to tax people and corporations and when the said corporations and individuals run the government its of course not going to happen.
UBIs don't have these problems (or, rather, they'd have some of them in different ways, but in ways that are closer to market capitalism than socialism).
You're correct in that UBI is something different than socialism.
You could theoretically have market socialism, where the only difference from market capitalism would be the lack of distinction between workers and owners. Gig economy would be its kryptonite, though: if allow it you are back to exploiting workers, if you ban it you will also ban a whole lot of actual self-employed professionals.
Although it functioned better than centrally planned socialism, it still had lots of issues related to prices, particularly of capital. Who provides capital for enterprise? In practice, the state. And this ran into the same political economy issues with centrally planned economies. What happens when a company is about to go under? Unemployment is bad, so the worker-owned company gets a bail out. Who can start a firm? Well, better make sure your company satisfies the objectives of your local government.
It’s funny whenever there is a comment like “hey, maybe we shouldn’t let individual people get so rich they can basically become thier own country.” Always get called socialists/communists. You can be capitalist while also having some care and protection for the little people.
If there was a button that I could press that would double the wealth of the 99% of people and quadruple the wealth of the top 1%, I would keep pressing it, even though it technically makes inequality worse and worse every time.
It would be morally reprehensible not to press that button.
EDIT: just be clear, I am talking about real (i.e. inflation adjusted) wealth. I am not talking about how many zeros we add to all dollar amounts.
So I am talking about the number of houses and shoes and cars we have, and the amount of ice cream and education we can enjoy.
Ironically, our society is basically continuously pushing that button today, much to the glee of the 1%.
To be clear: I was talking about real prosperity.
You are talking about nominal prosperity. And I agree: just adding a zero at the end of all dollar amounts wouldn't make anyone better off.
Alas, it's no clear that we have taxation and redistribution in the real world works like this or can even work like this: they typically don't just cleanly transfer wealth, but also destroy a lot of wealth.
To be clear: I don't say that my hypothetical button exists. This was just a Gedankenexperiment to show that increasing inequality by itself isn't all that relevant.
In reality, we observe that more business friendly places like Scandinavia or Singapore or even the US are a lot richer than places that strangle business.
Now this is partially about quantity of taxes, but even more about rules and regulations. Eg Scandinavian countries have fairly high taxes, but they are well run and business friendly.
Your morals are very strange if they don't include care for others.
I don't want to abolish all taxes, I'm not a libertarian. But giving away the money you took from somebody else needs a justification (for example to pay for the roads). And I find "income redistribution" for the sake of it not an acceptable goal.
There is some contingent of people who will just not participate in society no matter what. So the question becomes where do we set the bar - the lower this bar, the smaller that contingent.
Let's have a look at Scandinavia or Germany. They have reasonably generous welfare systems, but they are means tested. So for the sake of argument, declare them to be 'truly livable'. Especially by global standards.
Now I claim, that you can get pretty much the same net payments (of means tested welfare - taxes) that these countries have today with a system of (UBI - taxes). Basically, at the moment both taxes and welfare are means tested; you could move to UBI by moving all the means testing from welfare to taxes.
Because net payments would be pretty much the same, all incentives would stay pretty much the same as today.
See also https://en.wikipedia.org/wiki/Negative_income_tax which is one way to implement something like a UBI.
Of course, if you want to go much beyond what Germany and Scandinavia are already paying, you'd need even higher taxes or a stranger economy.
Btw, per capita the US is one of the world leaders of social welfare spending. They spend more than France. (Mostly because while France spends a higher proportion of GDP, American GDP per capita is much higher.)
Nope, in Germany you are required to work. If you can't find a job, you still have to try (and prove that), you need to stay at home / be available (and notify the state about your vacation or you might be punished by receiving less welfare) and of course you have to use up all money or wealth you have and state, in written, that you have no other sources of wealth.
So UBI would absolutely change incentives here.
Though in practice it's fairly easy to put in a token effort so your welfare won't be cut, but avoid actually getting hired.
But you are very right that the token effort is still effort.
> [...] and of course you have to use up all money or wealth you have and state, in written, that you have no other sources of wealth.
That is similar to taxing that money and wealth. But you are right.
With taxes, even crazy high, you can still accumulate wealth. Taxes slow you down, but it’s still possible.
With net-worth-ceiling to receive welfare, you’re forced you cannot accumulate wealth on welfare. And your previous wealth is gone before you get to earn welfare.
Got a nice house and BMW and decided to slow it down and live on welfare? Or, more likely, work under table and collect welfare too? Good luck with that :)
That's only true for income taxes, not for wealth taxes.
How are you going to pay those wealth taxes? (Assuming you have no income.)
Of course, same applies to welfare - you can only sell part of your stuff. But the caveat is you won't have access to welfare till you sell all of it AND spend the money you got.
Personally I like welfare-with-net-worth-threshold. Obviously it should not apply to unemployment insurance which is, well, insurance.
> Personally I like welfare-with-net-worth-threshold.
The only thing that really matters are net payments (and marginal net payments, ie how many cents can you keep from the next gross dollar you earn). It doesn't really matter whether the effective marginal tax rate is made up of income tax or a phasing out of welfare benefits or a combination of both (and throw in some other taxes etc, too).
In the name of simplicity, you might want to have a single government agency that assesses your income and net worth. Instead of having both the tax people and the welfare agencies do that and duplicate work.
(Though ideally, we'd use forms of taxation like land value tax where the government doesn't need to assess your income nor net worth in the first place.)
In euro style systems very few people receive welfare at a given time. Many people may receive it at some point in lifetime, but not at the same time. UBI would completely change the picture.
On top of that, salaries for basic jobs would need to get much higher to incentivize people to work. Thus UBI would have to be much higher as current welfare. Unless you expect citizens to live on UBI but keep services cheap with cheap migrant labor.
Not true. The 'B' in UBI means 'Basic'. UBI wil pay your rent, utilities, and food, but not much else. Now, there are some people that are willing to just exist on only the bare minimum, but that's a significant minority. The vast majority of people want more. There will be plenty of people willing to do minimum wage jobs to top-up their UBI so they can afford extras like holidays, nicer phones, meals out, etc...
The main difference would be that the security of UBI would give them more power to distch a job if they were being abused in some way, rather than being so desperate that even if their employer is abusing them they are forced to take it because they need the job to survive.
I feel like too much discussion on UBI is poisoned by the idea that the vast majority of people are bone idle and are willing to just sit at home doing nothing and just existing with the bare minumum required to live. It's just not true
No matter how you finance it, you can find other (better or worse) means to spend collected money.
In the name of simplicity, you might want to have a single government agency that assesses your income and net worth. Instead of having both the tax people and the welfare agencies do that and duplicate work.
So instead of having welfare payments phase out, you could just increase marginal income taxes by the same amount, and end up with exactly the same net payment structure.
There’s no way taxing super-rich-only would cover fair UBI. It’ll have to be much much wider. Unless 99% of jobs would become automatized.