3 ms·

>... $420B in new non-offset spending. ... It's about 2.3% of GDP. This assumes GDP doesn't plunge because of disincentives to work and/or skyrocketing hiring

by jasode 11y ago

>... $420B in new non-offset spending. ... It's about 2.3% of GDP. This assumes GDP doesn't plunge because of disincentives to work and/or skyrocketing hiring costs for low-wage (now medium-to-high wage) workers. We don't have solid evidence of that not happening since no country has instituted basic income on the scale of 300 million citizens. Your math model shares a common theme I see with many of these back-of-the-envelope calculations: they all assume a static economy where all the other variables that are affected by UBI -- which in turn also feed back into paying for UBI -- are unchanged. I've commented on this aspect elsewhere: https://news.ycombinator.com/item?id=10172421 https://news.ycombinator.com/item?id=10172421

dragonwriter 11y ago
> This assumes GDP doesn't plunge because of disincentives to work UBI doesn't create a disincentive to work, UBI replacing means-tested programs eliminates a disincentive to work. > and/or hiring costs for low-wage (now medium-to-high wage) to skyrocket. Why would hiring costs skyrocket? The elimination of the perverse incentives of means-tested programs should drive down low-end hiring costs.
- jasode 11y ago
  >UBI doesn't create a disincentive to work, UBI replacing means-tested programs eliminates a disincentive to work. UBI has complicated secondary effects. Some of them can be contradictory. One who gets welfare would have disincentive to work because of the loss of benefits in today's govt programs. UBI may spur some (not all) of them to join the workforce. However, another scenario is the mass populations of part-time workers earning mininum wage ($7.25) that total less than $11k a year. That's ~1500 hours of lost labor hours for those who are perfectly fine with not making more than UBI's $11k. It's definitely not as simple as saying, "UBI only creates incentives to work and never any disincentives, and GDP can only go up or stay the same instead of down."
  - dragonwriter 11y ago
    Well, here's the thing, if the level it is set at leads to output-reducing withdrawal from the workforce more than output-increasing effects, then it also leads to inflation which drives price levels up and drives people back into the workforce [0] -- its self-limiting. The bigger problem is that the economy might not yet be able to sustain a level at which UBI isn't substantially worse for the neediest populations than existing support programs -- increasing capacity through automation will get us there eventually, but its far from clear we're there now. Which is why, while I think UBI is a great idea to adopt and phase in, I don't think a big-bang short-term conversion is a good idea. [0] unless it is pegged to inflation, then if its set initially in a bad place, its stuck there. So, if you are going to index it rather than manually adjust it, don't index it to inflation, index it to output/revenue measures, not price levels.
    - nosuchthing 11y ago
      alternative to the CPI is the Billion Prices Project, born out of MIT http://bpp.mit.edu/ http://bpp.mit.edu/
      - dragonwriter 11y ago
        Its not a matter of which price measure you use, using any price measure as a control for UBI means if you set it outside the stable range the economy can support, inflation no longer acts to reduce the real value of the benefit down to the level the economy can support.
  - nosuchthing 11y ago
    "Lost labor hours" in minimum wage fields might very well be spread across a larger labor base of formerly unemployed potentially reducing crime and incarceration rates. Also, "lost labor hours" in what fields..? Reduced labor hours would not necessarily suggest reduced economic output, or a reduction in construction projects, or small business experiments.
bradleyjg 11y ago
Yes that's true. It's a very simplified, guaranteed to be wrong, calculation. But it gets us past the first order objections ("it's too expensive we couldn't afford it") to the second order objections ("the reduced incentives to work would crash the economy"). If you have a model for dynamic effects, I'm all ears. Incidentally, from the linked comment: The level of "afford" I'm thinking of is a scenario where the USA suffers zero productivity loss and the middle & upper class do not see a decline in the standard of living. This seems an unreasonable standard to apply to anything. Hardly any policy is a Pareto improvement. Applying such a tough standard amounts to very strong status quo bias.
- jasode 11y ago
  >This seems an unreasonable standard to apply to anything. Hardly any policy is a Pareto improvement. Applying such a tough standard amounts to very strong status quo bias. Sorry I wasn't clear. I wasn't making that statement as a "justification" for not implementing UBI. It was about how it's being "sold" politically. Personally, if I were to push for UBI, I'd tell people that the only realistic way we can afford it is if we all agree to take a hit in standard-of-living. I don't have irrefutable proof but that's what I think will have to happen. However, it doesn't necessarily we shouldn't do it. With the mass effects of citizens avoiding low-wage jobs, maybe it's better for society that Walmart is open 6 days a week 9am to 7pm instead of 24/7 and for Amazon-Prime to scale back to 1-week delivery instead of 2-day, etc, etc. Or Amazon-Prime costs $199/year instead of $99. If sophisticated dynamic equations show that middle & upper class will have to "suffer" a bit to provide the entire country a UBI... fine. But sell it that way to them and let everyone have open eyes going into it. I'm skeptical that we can fund UBI just by renaming existing govt assistance programs so that it ends up being virtually "free" to taxpayers.

by jasode 11y ago

dragonwriter 11y ago

> This assumes GDP doesn't plunge because of disincentives to work UBI doesn't create a disincentive to work, UBI replacing means-tested programs eliminates a disincentive to work. > and/or hiring costs for low-wage (now medium-to-high wage) to skyrocket. Why would hiring costs skyrocket? The elimination of the perverse incentives of means-tested programs should drive down low-end hiring costs.

jasode 11y ago
>UBI doesn't create a disincentive to work, UBI replacing means-tested programs eliminates a disincentive to work. UBI has complicated secondary effects. Some of them can be contradictory. One who gets welfare would have disincentive to work because of the loss of benefits in today's govt programs. UBI may spur some (not all) of them to join the workforce. However, another scenario is the mass populations of part-time workers earning mininum wage ($7.25) that total less than $11k a year. That's ~1500 hours of lost labor hours for those who are perfectly fine with not making more than UBI's $11k. It's definitely not as simple as saying, "UBI only creates incentives to work and never any disincentives, and GDP can only go up or stay the same instead of down."
- dragonwriter 11y ago
  Well, here's the thing, if the level it is set at leads to output-reducing withdrawal from the workforce more than output-increasing effects, then it also leads to inflation which drives price levels up and drives people back into the workforce [0] -- its self-limiting. The bigger problem is that the economy might not yet be able to sustain a level at which UBI isn't substantially worse for the neediest populations than existing support programs -- increasing capacity through automation will get us there eventually, but its far from clear we're there now. Which is why, while I think UBI is a great idea to adopt and phase in, I don't think a big-bang short-term conversion is a good idea. [0] unless it is pegged to inflation, then if its set initially in a bad place, its stuck there. So, if you are going to index it rather than manually adjust it, don't index it to inflation, index it to output/revenue measures, not price levels.
  - nosuchthing 11y ago
    alternative to the CPI is the Billion Prices Project, born out of MIT http://bpp.mit.edu/ http://bpp.mit.edu/
    - dragonwriter 11y ago
      Its not a matter of which price measure you use, using any price measure as a control for UBI means if you set it outside the stable range the economy can support, inflation no longer acts to reduce the real value of the benefit down to the level the economy can support.
- nosuchthing 11y ago
  "Lost labor hours" in minimum wage fields might very well be spread across a larger labor base of formerly unemployed potentially reducing crime and incarceration rates. Also, "lost labor hours" in what fields..? Reduced labor hours would not necessarily suggest reduced economic output, or a reduction in construction projects, or small business experiments.

bradleyjg 11y ago

Yes that's true. It's a very simplified, guaranteed to be wrong, calculation. But it gets us past the first order objections ("it's too expensive we couldn't afford it") to the second order objections ("the reduced incentives to work would crash the economy"). If you have a model for dynamic effects, I'm all ears. Incidentally, from the linked comment: The level of "afford" I'm thinking of is a scenario where the USA suffers zero productivity loss and the middle & upper class do not see a decline in the standard of living. This seems an unreasonable standard to apply to anything. Hardly any policy is a Pareto improvement. Applying such a tough standard amounts to very strong status quo bias.

jasode 11y ago
>This seems an unreasonable standard to apply to anything. Hardly any policy is a Pareto improvement. Applying such a tough standard amounts to very strong status quo bias. Sorry I wasn't clear. I wasn't making that statement as a "justification" for not implementing UBI. It was about how it's being "sold" politically. Personally, if I were to push for UBI, I'd tell people that the only realistic way we can afford it is if we all agree to take a hit in standard-of-living. I don't have irrefutable proof but that's what I think will have to happen. However, it doesn't necessarily we shouldn't do it. With the mass effects of citizens avoiding low-wage jobs, maybe it's better for society that Walmart is open 6 days a week 9am to 7pm instead of 24/7 and for Amazon-Prime to scale back to 1-week delivery instead of 2-day, etc, etc. Or Amazon-Prime costs $199/year instead of $99. If sophisticated dynamic equations show that middle & upper class will have to "suffer" a bit to provide the entire country a UBI... fine. But sell it that way to them and let everyone have open eyes going into it. I'm skeptical that we can fund UBI just by renaming existing govt assistance programs so that it ends up being virtually "free" to taxpayers.