Suncho

> Would you agree productivity per labor hour must go up under UBI to be successful?

No. Keep in mind that labor is just one among many resources that we use in production. Our economy has a lot more resources (including labor) at its disposal than we're currently making the best use of. A successful basic income just gets the economy producing closer to its capacity by giving people more spending power to buy things.

I don't think that labor productivity is a super useful measure of economic performance. That being said, basic income would almost certainly increase labor productivity. That's because labor productivity is just a calculation of how much stuff we produced divided by the amount of labor we used. If the amount of stuff we're producing increases and the amount of labor we're using stays the same or decreases, then that's an increase in labor productivity.

I suppose you could imagine a scenario in which we have a basic income a lot more people are working. If the amount of additional labor we're using outstrips the amount of additional wealth that we're producing, it would be a decrease in labor productivity. But I think that's very unlikely to happen. And that's because the proportion of excess productive capacity in the economy is probably vastly greater than the proportion of labor we'll ever be able to activate.

Even if we had every man, woman and child working double time, we'd still probably see an increase in labor productivity under a basic income.

> Sam believes this will come through automation / AI.

It's true that technological advances increase our economy's productive capacity. But that's very different from saying that technology automatically increases our actual production levels, or our labor productivity.

In other words technological advancement allows us to produce more, but that increase in production doesn't happen on its own. We won't produce stuff unless people will buy the stuff. So automation and AI will only increase production levels (and therefore labor productivity) if there's someway to fund spending on products. That's where basic income comes in. Basic income allows people to buy things. Then that causes us to make the things for them to buy.

An interesting characteristic of the labor market is that it's generally where we expect people to get their incomes from. Technology allows resource utilization to be more efficient. Labor is no exception. So, on their own, technological advancements mean less money going toward labor, which leads to lower incomes, and hence lower levels of production.

Historically, we've come up with various ways to boost people's incomes to compensate. The biggest one is probably stimulating the private financial sector so people and firms can more easily borrow in order to spend. The firms, in turn, create jobs with that borrowed money and this distributes income to people. Basic income is a way to achieve a similar effect, but in a more stable way that doesn't create asset bubbles in the private financial sector.

Basic income can also get you further. There are only so many projects worth investing in and only so many jobs worth hiring people to do. Without a basic income, we have lots of people working at jobs that don't really contribute to the productive economy and labor productivity plummets.

> Actual labor hours will go down and wages up, due to decreased incentives to work.

It really depends. There are plenty of jobs that people would love to do, but they can't afford the low wages. Basic income would open up that possibility for people. So for those particular jobs, the wages would likely decrease. Furthermore, more people would be free to volunteer as well.

It also depends on what you count as labor. Does volunteer work count as labor? What about interning? How do you tell the difference between a hobby and volunteer work?

Certainly there are some undesirable jobs that basic income will give people the freedom to say no to. In order to get people to continue to work those jobs, you'd have to increase the wages or make that work desirable in some other way. Perhaps the costs are too high for the employer, so they decide to substitute some other resource for that labor. But is any of that a problem?

> Unless A outpaces B, productivity will decline.

Hmm. Are you calculating productivity per dollar spent on labor or productivity per hour spent on labor? I think we normally think of labor productivity as the amount of production per hour of labor.

> If it does outpace B, wages or taxes must capture all of the increase or inequality rises quickly as fewer "working" people are capturing the rewards. These wage/tax increases will then slow the growth.

I'm not following you here. Assuming that we're running an output gap (i.e. not using all the productive resources we could be using), basic income causes our economy to produce more. Its effects on wages would be complicated. Taxes are kind of separate issue.

Basic income doesn't do anything to directly address inequality, but it raises the income floor. If even the poorest among us is rich, will inequality be that big of a problem? Maybe it will still be a problem that we have to address. I don't know. But if inequality does end up being a problem, that's a separate issue and we can address separately from the problems that basic income addresses.

> I guess I don't see how UBI wouldn't decrease the labor participation rate

It could go either way. And part of it might depend on what we define as labor. If there's no minimum wage, for example, where do you draw the line between hobbies and labor? How much pay counts as a job? What does it mean to be self-employed? Does there have to be some kind of formal labor contract in place? Does any of this matter for determining the prosperity of our society?

> and then how a low participation rate economy would grow faster than a high rate one.

Economic growth isn't constrained by the amount of labor being contributed. It's constrained by the amount of spending in the economy. If labor were our limiting factor then less labor would mean less production, as you say. And at least in the developed world, except maybe in certain special cases (e.g. wartime), that hasn't been true for decades if not centuries.

Different people have different ideas of what a basic income is. The definition I first learned is that the "basic" in basic income means that it forms a base upon which you can build further in come. It's not about satisfying some level of basic needs. It can be any amount as long as everyone gets it unconditionally.

There's an optimal amount of basic income for social prosperity and it would be an amazing coincidence if that amount happened to be exactly enough to provide for people's basic needs and nothing more.

I agree that basic income won't kill ambition. But I don't think it's because we're withholding money from people. It's because people are naturally ambitious and competitive. Just because you have wealth doesn't mean you don't want more.

Maybe some people won't be ambitious, but that's not exactly a problem for those of us who are.

> Contrast to welfare where if you earn anything the welfare is taken away.

Yeah. I agree with you on this part.

> When did a fiat currency win out over gold?

It happened gradually. But wars usually put stress on the gold system. They caused the fault lines to slip, so to speak.

The US Dollar was the last major currency tied to gold and we finally severed that tie in 1972 when the Bretton Woods system ended.

And the reason it happened is that in order for prices to remain stable, we needed to be able to adjust the amount of money flowing in the economy to an extent greater than gold would allow.

> It requires government manipulation by price fixing, outright debasement and mechanisms like legal tender laws for worthless tokens to win out over a precious metal such as gold.

Yup! With the rate of economic growth outstripping the rate at which we could mine gold or spend new gold certificates into the economy, gold just simply wasn't going to cut it anymore as a stable basis for a currency. In order for markets to function smoothly, we needed a currency that could be actively managed.

I'm self taught mostly from books and MOOCs and arguing with friends of mine who are actual economists. Perhaps my lack of formal economics training is another reason not to listen to me.

If you're interested in going deep on this stuff, I highly recommend this MOOC:

https://www.coursera.org/learn/money-banking

He doesn't talk about basic income, but this class really helped me understand the nature of money and economic policy.

If you're curious about more about the economics of a deficit-funded basic income, I'm working on a paper about that. Here's the abstract:

https://drive.google.com/file/d/0B9KDLUTAOkduOXdNQWl3REw4eWc...

Feel free to email me if you're interested in reading the full paper. It's over 50 pages long, but it's not very mathy and should (hopefully) be accessible to non-economists.

> > By giving people money to spend, it unlocks the economy's potential to produce wealth for the people.

> This is a corollary to the myth that wealthy people hoard cash. They do not.

It depends on your definition of "hoard." I agree with you that they don't literally stuff it into mattresses... usually.

> 100% of their cash is invested, even the money held in a checking account (because the bank loans it out to people who spend it).

I agree. But a question we might ask ourselves is how much of that money is invested productively. In other words, how much of it flows back into the hands of the consumers for the purchase of useful wealth that benefits them? The answer is: not all of it.

Then we can ask ourselves how much of that money flows into the financial sector and accumulates there without fueling the productive economy. The answer is: some of it.

From the perspective of the productive economy, the result is the same as if rich people were stuffing their money into mattresses.

So that money needs to be replaced. Historically, to the extent that we've replaced that money, we've tried to do it through the labor market and we've been moderately successful.

One of the things we do is monetary stimulus that increases the amount of lending in the private financial sector. Some of that lending goes to the creation of jobs that we probably don't need. It also destabilizes the economy by fueling credit bubbles like the one we saw collapse in 2008.

Basic income is an alternative. If you prefer, you can think of it as a form of fiscal stimulus that would allow the Fed to normalize interest rates.

> > If the government spends and the economy responds productively to that spending, then you're fine. Taxing is a separate issue. You should only really tax when you want to remove money from a specific part of the economy.

> Or when you don't want your government to run a deficit.

Why wouldn't you want to run a deficit? What do you feel is the downside? Are there times when it's appropriate to run a deficit and times when it's not? Which times are which and how do you tell the difference?

I have my own answers to these questions. But I'm asking for your opinion.

> Or when you don't want to finance your government by printing money.

What do you feel the difference is between deficit spending and printing money?

> That always ends badly, no matter how clever the mechanism is this time, or how many people say "it's different this time".

Does it? Why do you suppose it is that many developed nations are running budget deficits? Do you feel that this is a mistake? What do you think would happen if all governments balanced their budgets?

Again, I have my own answers to these questions and I'm looking for your opinion.

> I don't think the economy works the way you think it works...

How do you think it works?

Good points.

> if you're talking about their freedom to do something...if you're talking about society in general it seems obvious that certain behaviors are bad and should be discouraged

Okay. So you want to discourage people buying cheetos and drugs. That's fine. I agree that they can both be unhealthy. What's a good way to discourage the purchase of these items?

Furthermore, pretty much any activity choose to spend your time doing can fall somewhere on the continuum of worthwhileness. And different activities are worthwhile to different extents to different people. But to what extent should we be judging people's activities and disallowing certain activities? Should it extend into how they spend their money? Does it make sense for these restrictions only to apply to poor people? Why? I'm not saying there's an easy answer here. I agree with you that some people need help making the right decisions sometimes and I agree with you that we need laws to protect people.

> but if you're going to tax me, and then give this money away to people it seems reasonable that i should have at least some say in what it's spent on

I haven't said anything about taxing you. I'm not talking about taking your money and giving it to someone else. I understand that some basic income proponents think that it has to be "funded" through tax revenue, but I feel that it's a mistake to frame things in this way. Increasing taxes doesn't increase the level of basic income we can afford.

That being said, the purpose of the government is to represent the collective interests of the people, so you absolutely should have a say in how the government spends their money (it's not your money). And if you have strong feelings about how certain types of spending will help or hurt people, then you're obviously free to voice those concerns.

But I don't see how it hurts people to give them money they can spend on anything they choose. And if we really want to deter people from buying drugs and cheetos, I'm not sure that putting absolute conditions on how poor individuals spend their income is an optimal way to achieve that.

> which just gets us back to the same discussions about what UBI evolves into and the kind of culture changes required for it to work (if it's even possible for it to work...that is not a certainty).

You've been alluding to a required culture change. What would that entail, specifically?

> This "if you give the money they'll spend it in your economy" thing is I think by no means clear. The largest cash source in Mexico is remittance payments from the US.

Well, some of the basic income will get spent in our economy. To the extent that some of it goes straight to Mexico never to return, it's roughly the equivalent of the government spending money by tossing it down a hole. That portion of the spending has no effect on our economy. This means that we can increase the amount of the basic income even further because our economy has left over capacity to absorb more spending.

> The reason I brought up the "global citizen" model is because there's a lack of skepticism and critical analysis on it and people make blanket statements like "the first country to give everyone in the world money" are actually taken seriously.

Fair enough. I am often not taken seriously when I say things like that. But that doesn't mean I haven't thought about it thoroughly. So thanks for taking me seriously and asking me questions to try to understand where I'm coming from.

> Doesn't moving out of the cities, and as you state, away from jobs exacerbate the number of people who will no longer be employed?

Depends on what you mean. A couple questions:

1. Is it a problem for people not to be employed?

2. How do we define employment? Does the pay have to be above a minimum wage? Does it have to be full time? Does volunteer work count? Etc.

We presumably all want people to find interesting and fulfilling ways to spend their time. Basic income gives people the freedom to spend their time in a meaningful way. But it doesn't directly provide meaningful activities to people.

If, after implementing a basic income, we discover that everybody's bored, then I agree with you that this a problem that we'll have to address.

But we should keep in mind that many people are miserable in their jobs already. I have a feeling that people will find interesting ways to spend their time on their own, but if they don't, it's not the end of the world. Freeing people from jobs doesn't automatically make them happy, but it's a first step.

> These new UBI based communities won't be able to provide the same economic/educational opportunities or efficiency of services that the cities can.

I don't know what you mean by UBI-based communities. It's not that the world will be segregated into UBI-based communities and non-UBI-based communities. It's all a continuum. As in today's world, there will be a continuum of people at different income levels. UBI just puts a floor on income.

As is the case today, some cities will be more desirable to live in than others. Maybe those cities have better economic/educational opportunities, as you say. But that's true already today. And because basic income will make it more affordable to live in those cities, it increases everyone's opportunity across the board.

As far as educational opportunities go though, if everyone has the freedom to spend their time how they choose, there are plenty of educational resources available out there for anyone, no matter where you live. I wrote a blog post about this a while ago:

http://www.suncho.com/blog/20140219_too_cool_for_school.html

> So non-resource limited prices may remain low, but couldn't most of it be captured by those items that are limited?

Yes. And that's a very good point. For example, we might have the resources to feed the world, but we don't have the resources to feed the world meat 24/7. The price of meat would increase, so people would substitute other forms of food.

> Like rent or health care? People could move out of the cities to avoid the rent increases, but then cost of services / taxes per person rise in those areas.

Basic income allows people to move out of the cities because "proximity to jobs" is less of an incentive for them to live there. This causes the real estate prices in expensive cities like New York and San Francisco to drop as other areas become more desirable to live in.

People wouldn't be moving out of the cities to avoid rent increases. They'd be moving out of the cities because it becomes more affordable to live outside of the cities. That, in turn, would cause rent prices in the cities to decrease.

Health care prices are an issue that basic income doesn't solve. We need to address them regardless of whether we have a basic income.

> What are the pointless jobs you're referring to?

They're everywhere. We could have let GM die. We could abandon all tariffs on imports. Any time a policymaker uses "job creation" as a selling point for a policy initiative, that means jobs that exist for the purpose of providing people with incomes.

Even the Fed has "full employment" as part of its dual mandate. The private financial sector funds small businesses that probably shouldn't exist. We still have local farms producing food when large-scale farming is far more efficient. Now that's fine if it's your hobby and that's how you want to spend your time, but we actually subsidize farming.

Hmm. Not off the top of my head. The intuition is pretty straightforward though. Imagine the difference between doubling total amount of money in the economy by either:

a. doubling the amount of money each individual person has.

b. distributing that new money evenly across every person.

In the former case, the demand curve would get steeper, no? And in the latter case, it would get flatter.

In case a, you'd decrease the price elasticity of demand and people would have an incentive to raise prices. You'd have inflation.

In case b, you'd increase the price elasticity of demand providing an incentive for producers to keep their prices lower and compete with each other on price.

Of course it all depends on where on the demand curve we're talking about. But for many of the goods we produce, their market-clearing prices are at a quantity such that they would benefit from an additional even distribution of income to every person.

> Doesn't UBI reduce the economic productivity by both driving up the cost of labor through increased taxation

No. First of all, there's no reason that basic income has to have any taxes associated with it. A common mistake people (including the government) make is to assume that government spending must be funded by taxation. It doesn't have to be.

If the government spends and the economy responds productively to that spending, then you're fine. Taxing is a separate issue. You should only really tax when you want to remove money from a specific part of the economy.

To put it succinctly, increasing taxes does not increase the amount of money the government can usefully spend unless you directly taxed the use of some resource and the spending is going to put that particular resource to use in a more desirable way.

> and lowering the supply?

Labor is a resource that goes into production just like any other resource. Depending on the context, labor can be substituted for various other resources (including foreign labor, automation, etc.).

So it's possible that some forms of labor could become more expensive under basic income. But it could just as easily go the other way. There are plenty of jobs people would love to do if only they could afford the low pay. These desirable potentially socially beneficial jobs might get cheaper.

It's hard to say exactly what the effect of basic income will be on the labor market. But, in aggregate, we do know that the economy is capable of producing at levels higher than current output levels. If we give more people the ability to spend money, we'll produce more stuff to meet the demand.

> I don't see how 1 Apple can offset 1 million unemployed, and really skeptical such a company could grow to that size/profitability under the necessary labor/tax system to support UBI.

I can understand why you're skeptical. Just keep in mind that we're currently introducing many inefficiencies into the system just as an excuse to provide people incomes through the labor market. And even then, we're still not maxing out the productive capacity of the economy.

I would encourage you to ponder what you think might happen if the government stopped trying to balance its budget and just spent as much money as the economy could absorb without causing inflation?

What amount should that be? How does the distribution of the spending affect the amount they can spend? Surely if they spent it by tossing it down a hole, there would be no limit. But there is a limit. Where does that limit come from? How do taxes factor in?

> There would be no guarantee that people would use that money for basics like housing and food.

Why would you want such a guarantee? You don't think people who need housing and food will buy housing and food with their money? I mentioned this in another comment, but I'm not aware of any kind of epidemic of people who can afford housing not buying housing.

If we do have such a problem, then I agree with you that we should help the people who are suffering from bad judgment. But why not do that in addition to providing them with a basic income?

No. And the reason is that by distributing the new money evenly, you're increasing the price elasticity of demand. Instead of increasing the amount of money people are willing to pay for goods, you're increasing the number of people who want to buy goods.

So instead of having an incentive to raise their prices, producers will have more of an incentive to produce more. And as long as you're not coming up against resource limits, prices will stay low. If producers tried to raise their prices, they'd lose customers.

Does that make sense?

> If the benefit requires other subsidies for recipients to survive, does it actually fit the definition of UBI?

Different people used different definitions of basic income. As far as I know, the most commonly accepted definition says nothing about the amount. But I have heard people say that it's not a "true" basic income if it's not above a certain level.

> Isn't the main benefit of UBI to make it so everything is streamlined into a single program and administrative overhead is reduced?

I would say no. The main benefits of basic income are increased levels of economic stability and increased levels of social prosperity.

It may end up being the case that after we implement a basic income, we discover that our society does not need some of our welfare programs. Then we can eliminate them. But that's not the main benefit of basic income.

Sorry. I'm scattering everything around. You can read more about my basic income project here:

http://www.greshm.org

If you don't feel like clicking the link, I'm developing a USD-backed basic income system that does the equivalent of deficit spending to fund a basic income.

If you think that sounds crazy, then most people agree with you.

> The question I’m interested in: How do we unlock maximum human potential?

> Last I checked, welfare does the opposite of this. It helps people merely subsist, not strive for greatness.

It depends what you mean by "human potential." I agree with you that "human potential" is not the right way to frame what basic income unlocks. By giving people money to spend, it unlocks the economy's potential to produce wealth for the people. We won't produce wealth that people won't buy and basic income allows more people to buy more wealth.

It also gives people the freedom to choose how they spend their time. We have a lot of pointless jobs in the economy that really only exist as an excuse to provide people incomes. A basic income can allow us to eliminate those jobs. The people who aren't working at those useless jobs anymore are now free to do something useful with their time.

So in that sense, basic income does unlock human potential. But by boosting demand and by doing it in a way that flattens out the demand curve, it unlocks resources in general, not just labor.

> If he weren't a millionaire and the current president of YC, would we keep seeing articles about his vision on the front page of HN? I don't think so. I don't believe his arguments are that cogent or compelling.

I agree with you that his arguments could certainly be more compelling. But he's not wrong that basic income would be a good thing.

> If you take Sam Altman out of this article, would we discuss it at all? If the answer to that is no, then why are we discussing it?

I would certainly be discussing it. Maybe nobody would be listening to me. But I've been involved with basic income since 2011 and I think it's hugely important.

1. Why is it a problem for people to spend their money how they choose? If people buy drugs and cheetos or whatever, then isn't that their call?

If people who need housing have the money to buy housing, but they're not buying buying housing, then I agree that's a problem that needs to be addressed. Do we see this in practice? Is there an epidemic of people who can afford homes but are choosing to suffer in homelessness?

If so, then maybe we can add some free level of shelter to everyone in addition to the basic income.

2. If you give the basic income to immigrants too, then they'll spend that money into your economy. This is a good thing. Withholding it from immigrants would probably be harmful.

I know you brought up the "global citizen" model. An easy way for us to achieve that model is just to start paying everyone in the world a basic income. Whichever country does this first will probably become the world's final superpower.

> If I were Sam A. instead of (or in addition to) funding UBI, I would fund R&D projects which enable people to live as off grid and self-sufficiently as possible with all the comforts of urban/suburban living without all the costs.

This would be a mistake. Self-sufficiency is very inefficient. By pooling our resources, we can live much more sustainably and prosperously.

If everybody in the world tried to live like the Amish, we'd destroy the planet in no time. That lifestyle was only sustainable when there were far fewer humans.

> The math doesn't work and has never worked. UBI proponents will never talk math because it doesn't add up, even with the most casual analysis.

I'm happy to discuss the math with you any day of the week. One of the biggest misconceptions that many people have is that the basic income (or any government funding) must somehow be funded through taxes.

That's not how money works.

There's a limit to the amount of government spending that the economy can productively absorb and that amount has very little, if anything to do with the amount of tax revenue that the government collects.

> But just to do that in the US you are talking about 3 trillion dollars (300 million x $10k for easy math) that you have to find in the budget.

If you try to do this using conventional budget math, you're not going to get the right answer.

> Now basic income advocates will say you can make up some if not most of that by cutting welfare programs

No. This is a terrible idea and it's due to the same misconception.

I agree with you that most basic income advocates don't understand the underlying economics. But the underlying economics are nevertheless sound.

> How exactly do you convince a nation which already isn't willing to pay for healthcare to pay for basic income, too?

Yup. Politically, it would be very difficult to accomplish. That's why we have to do it ourselves.

> I'd love to be wrong, but I've never seen any numbers that are workable, especially in a political climate anything like today.

If you're interested in digging deeper on how this could work, I'm working on an economics paper that describes the economics of a basic income.

Here's an abstract: https://drive.google.com/file/d/0B9KDLUTAOkduOXdNQWl3REw4eWc...

Email me if you're curious about reading the full thing.

> There could be a complete paradigm shift in the future, where machines literally take care of all needs in an automated way, but that's such a strange reality that welfare reform is honestly about the last problem we'd need to discuss.

We've been undergoing this paradigm shift for centuries. It won't reach its full potential without a basic income to allow people to take full advantage of the wealth we're already capable of producing.

I agree with your plan of gradually ramping up the amount of the basic income to find the optimal amount.

However, I would question a couple parts:

> every US resident who has been a US citizen for at least X years

Why limit it in this way?

> conditioned to willing to have employment

Why? Isn't one of the biggest benefits of basic income that it gives more people more of an option not to work?

And what does "willing to have employment" mean? Every man has his price. If you pay people enough, they will work, no?

> Doing some back of the envelope math, US gov revenue is 3.31 trillion and the population size is 323.1 million. Which leaves about $10244 per capita to play with.

The government doesn't face what we would think of as a typical budget constraint. There is a limit to how much money the government can spend, but that limit is determined by how much spending the productive economy can absorb without causing inflation or interest rates or taxes that are too high. It's the amount that closes the output gap without attempting to push past it.

The only way we can discover the appropriate amount of basic income by gradually ramping it up until further incremental increases no longer provide a benefit.

> How's that?

It's what I'm working on right now: http://www.greshm.org

> > The right question is "how do we unlock the economy's prosperity-maximizing capacity?"

> Asked and answered: free-market capitalism. Nothing has resulted in the sort of rapid prosperity we've seen recently with market capitalism spreading globally.

Capitalism can't exist without government and government can't exist without capitalism. They are yin and yang. I agree with you that capitalism is an important piece of the puzzle. By providing people with a basic income, we can make sure capitalism reaches its full potential in supporting social prosperity.

> The government can’t be trusted not to devalue our currency

Governments can often be trusted to maintain a stable value of currency. That's why fiat currency out-competed gold and why Bitcoin will never be able to compete with a well-managed fiat currency.

> we should introduce a system which makes our livelihoods dependent on the whims of bureaucrats.

There are robust ways to implement basic income that don't depend on "the whims of bureaucrats."

I largely agree with what's being said in this interview, except for a few comments:

> "But in countless ways it’s much harder to convince lawmakers and politicians to give every person in the country cash gratis than it is to guide a start-up to a nine-figure valuation."

You don't have to convince lawmakers to do it. It's possible to implement basic income without any direct government support.

> "The question I’m interested in: How do we unlock maximum human potential?"

This is almost the right question, but not exactly. The right question is "how do we unlock the economy's prosperity-maximizing capacity?" It's not about how how we get the most out of humans. It's about how we provide the most for humans.

> "Obviously, there are a lot of people who could do great things that would benefit all of us. Create art, start companies and yet they can’t."

This is true, but human labor is just one of many resources that we're not using to their full potential. By narrowly framing things just in terms of what we can get out of humans, we're limiting the possibilities of basic income.

> "One of the things that people forget is that if the robots really do come, yes, they will eliminate or change a lot of jobs, but the cost of goods and services will just go down and down and down."

Sort of. Monetary policy will prevent deflation. So the price of the things people need to buy will always remain stable. It's just that people might get more stuff for free.

> "What I would propose is a model like a company where you get a share in U.S. Inc. And then, instead of getting a fixed fee, you get a percentage of the GDP every year."

This is a mistake. The economy has the capacity to produce a certain amount of wealth for people. That amount is difficult to calculate ahead of time. Measures like GDP are probably not going to help. But the appropriate amount of basic income is always going to correspond to the amount of spending that the economy can productively respond to.

> Well, the money has to come from somewhere.

Sort of.

> If you have a homogenous group, all with the same income/wealth, then UBI would do nothing.

True. In this scenario, demand is already as elastic as it's going to get. It would basically be impossible for the economy to be operating below full productive capacity. A basic income would either cause inflation or indirectly cause people's incomes do decrease by the same amount in some other way (e.g. taxes or monetary tightening).

> You need a group of people with diversified income/wealth.

Yes. In this case, basic income would actually benefit us because it can increase quantities demanded at current prices thereby incentivizing producers to produce more stuff for people.

> The wealthier contribute more than they get from UBI, the poorer contribute less (if any) than they get from UBI.

Hmm. Not really. I'm going to push back on you here a little bit. The value of a UBI does not come from people "contributing" to it. It comes from the capacity of the economy to produce more stuff in response to the additional spending.

I think you're talking about taxation here. But I don't think it's useful to think of basic income as being funded by taxes. The amount you tax does not have any direct effect on how much basic income you can afford to provide.

> But it will never happen in America, land of absurd tax code complexity. And certainly not with a name like Universal Basic Income. It would have to be called something else to avoid triggering people.

Yup. At least politically, taxes and government spending are hopelessly intertwined. But it doesn't have to be this way. And there's nothing stopping a startup from offering a basic income. I'm skeptical that Circles is the start up to do it, but I fully believe that it can be done.

> I thought it was "universal" because it was meant to replace all social welfare programs with a basic income..

No. Universal just means everyone gets it. In fact, the word "universal" is redundant in the term "universal basic income" because "basic income" is already an income that everybody receives. It forms a base upon which you can build further income.

Some people believe that basic income should replace existing welfare programs, but it doesn't have to. After we implement a high enough basic income, we certainly might discover that we don't need some of these other welfare programs anymore. But in my opinion, there's not really any reason to shut them down ahead of time.

> But what about it requires to be at the federal level?

It's hard to implement a basic income if you don't issue your own currency. Currency is issued at the federal level, so that makes it a natural choice.

If you tried to implement it at the local level, you'd probably have to raise taxes or something... or create some kind of local or alternative currency. It's not impossible, but it's certainly less efficient.

> Does that mean smaller governments can't have UBI?

In a way, yeah. You've got to have a stable currency in which to pay the basic income. The smaller the government, the harder it is to maintain a currency. Furthermore, the amount of the basic income is constrained by the productive capacity of the economy. There's a limit to how much spending the productive economy can absorb. So if your country has a very resource-rich economy, you might be able to get away with a higher basic income.

But it's a continuum. The most efficient basic income is probably a worldwide basic income. Since the United States controls the world's reserve currency, they could probably pay everyone in the world a basic income in dollars without causing inflation or anything. But a country like Mexico couldn't do something similar.

> The theory seems to be that when people have a safety net they'll better themselves with long term skills and grow the economy.

That's certainly a theory. It's not a theory I subscribe to. Teach a man to fish and he'll fish for a lifetime. Give him fish for a lifetime and he's free to do something useful with his time.

If our economic output is constrained by demand and you give people money, they can buy the stuff we're already capable of producing. It's as simple as that.

> Some of us aren't against the idea of "free money", but I want a guarantee it's being used for good.

It's not free if it comes with such a restriction. We don't need to force people to work. If we want people to work, we can always pay them.

I agree with you that people should use their money for good. But what is the ultimate good that we care about? We care about people's well-being and the prosperity of society, right? Using money for good means spending it on things that benefit you.

> Is this only an issue if you print money to pay for the UBI? If UBI is payed for by taxes then it shouldn't devalue the currency.

The amount of money the government can spend without causing inflation has very little to do with the level of tax revenues they collect.

One way to think about it is that the economy has a certain amount of spending that it can productively respond to. Beyond that level of spending, you start running into problems such as inflation, interest rates that are too high, etc.

It doesn't matter whether you took any money from the rich to fund that spending because the rich people weren't going to spend very much of their money into the productive economy anyway. The productive economy can still absorb the same amount of spending as before.

But you're right that there does have to be some kind of mechanism to keep the currency stable and I don't see such a mechanism in Circles.