4 ms·

I've been sort of in favor of UBI, but these discussions have made me realize it can never work. Let's say we give everyone $50K. Why not $50 billion? I'm be

by DougN7 11y ago

I've been sort of in favor of UBI, but these discussions have made me realize it can never work. Let's say we give everyone $50K. Why not $50 billion? I'm being serious - the same effect ends up happening -- prices increase proportionately. I'm basing that on the idea that 90+% of work that happens today really does need to happen. That means that 90%+ of those working today will need to be enticed to keep working by giving them more money. Now almost everyone has more money, but the same limited supply of goods and services are available. Prices will rise -- simple supply and demand. Those on UBI will fall behind if they don't work.

dragonwriter 11y ago
> I've been sort of in favor of UBI, but these discussions have made me realize it can never work. I don't think you understand UBI, how it is intended to work, or the economics around it. > Let's say we give everyone $50K. $50K is ludicrously high for an early UBI implementation. The ambitious advocates target a per-person level that would hit at or near the federal poverty line (the more cautious advocates see getting up even to that level as a longer-term goal.) > Why not $50 billion? I'm being serious - the same effect ends up happening -- prices increase proportionately No, they don't. First, because all actual UBI proposals are redistributive (whether the money comes from existing social benefit programs including the government employees/contractors managing them being cut, or whether it comes from new taxes, or from some combination. So it doesn't change the supply of money, just where it is.) Its true that goods disproportionately demanded by the portion of the population receiving a net benefit from the implementation of the UBI can be expected to increase, but under any reasonable expectations these increases will generally be less, proportionally, than the increase in income. So, there will be a net increase in utility for the net income gainers, though somewhat less than would be expected if you considered pre-UBI price levels. But also because one purpose of UBI is to reduced the disincentive to work created by means-tested social benefit programs, where some portion of the income provided by work is lost in benefits. (In some proposals, UBI would also reduce the barrier to mutually-beneficial employment at low wages provided by minimum wage laws.)
- DougN7 11y ago
  > $50K is ludicrously high for an early UBI implementation. Sure, I was just picking a number. Let's say it's $5K per person? $25K? (Not sure how it works with families with kids). > actual UBI proposals are redistributive Honest question: is there actually that much in the system without requiring massively raising taxes? A quick look at http://www.heritage.org/research/reports/2014/12/federal-spending-by-the-numbers-2014 http://www.heritage.org/research/reports/2014/12/federal-spe... seems to show the Federal Budget is maybe 75% social programs in a broad sense, so I assume that's the money that would ultimately get retargeted. Is that enough to give everyone in the US a living income? And I don't mean in the early implementation but 20 years in when it's humming along as envisioned. > these increases will generally be less, proportionally, than the increase in income. How can that be when everyone would be making more money because UBI is added to their income as well. All labor costs would rise for everything. Everyone can't suddenly have more money and all want to go on a cruise without cruise prices increasing to the point that the same number of people that can afford it now will afford it then. I just don't see anyway this works at scale. It only works temporarily but once things hit equilibrium, we're back when we started.
  - dragonwriter 11y ago
    > is there actually that much in the system without requiring massively raising taxes? [...] And I don't mean in the early implementation but 20 years in when it's humming along as envisioned. A UBI moving from a low level to a mature, robust level able to provide a living wage -- as a matter of basic economic necessity -- requires advances in productivity. There's not productivity in the economy now to support a robust UBI. > > these increases [in the prices of goods and services] will generally be less, proportionally, than the increase in income. > How can that be when everyone would be making more money because UBI is added to their income as well. To start with, everyone will not be making more (after tax and public benefits) money. The money for a UBI (under most actual proposals) will come from reducing existing means- and behavior-tested public benefits (and associated administration) and/or increased taxes on some people. Either of these will reduce the effective income of some portion of the population -- and necessarily decrease at least some people's income by an amount greater than the UBI. Before considering the effects the redistribution has on promoting or inhibiting economic growth (e.g., by increasing domestic velocity because of where money is distributed and how and what the people receiving spend it on vs. those losing it), the average net impact on incomes should be approximately $0. > All labor costs would rise for everything. No, they won't, and those that do rise won't rise equally. And, in any case, labor costs aren't the only costs of production, so even if labor costs in the domestic market rose as a result of UBI, prices of completed goods and services would rise by less (proportionally) than the increase in labor costs. (In the long term, for goods provided in a competitive markets, where prices are driven by competition down to the cost of production.)

by DougN7 11y ago

dragonwriter 11y ago

> I've been sort of in favor of UBI, but these discussions have made me realize it can never work. I don't think you understand UBI, how it is intended to work, or the economics around it. > Let's say we give everyone $50K. $50K is ludicrously high for an early UBI implementation. The ambitious advocates target a per-person level that would hit at or near the federal poverty line (the more cautious advocates see getting up even to that level as a longer-term goal.) > Why not $50 billion? I'm being serious - the same effect ends up happening -- prices increase proportionately No, they don't. First, because all actual UBI proposals are redistributive (whether the money comes from existing social benefit programs including the government employees/contractors managing them being cut, or whether it comes from new taxes, or from some combination. So it doesn't change the supply of money, just where it is.) Its true that goods disproportionately demanded by the portion of the population receiving a net benefit from the implementation of the UBI can be expected to increase, but under any reasonable expectations these increases will generally be less, proportionally, than the increase in income. So, there will be a net increase in utility for the net income gainers, though somewhat less than would be expected if you considered pre-UBI price levels. But also because one purpose of UBI is to reduced the disincentive to work created by means-tested social benefit programs, where some portion of the income provided by work is lost in benefits. (In some proposals, UBI would also reduce the barrier to mutually-beneficial employment at low wages provided by minimum wage laws.)

DougN7 11y ago
> $50K is ludicrously high for an early UBI implementation. Sure, I was just picking a number. Let's say it's $5K per person? $25K? (Not sure how it works with families with kids). > actual UBI proposals are redistributive Honest question: is there actually that much in the system without requiring massively raising taxes? A quick look at http://www.heritage.org/research/reports/2014/12/federal-spending-by-the-numbers-2014 http://www.heritage.org/research/reports/2014/12/federal-spe... seems to show the Federal Budget is maybe 75% social programs in a broad sense, so I assume that's the money that would ultimately get retargeted. Is that enough to give everyone in the US a living income? And I don't mean in the early implementation but 20 years in when it's humming along as envisioned. > these increases will generally be less, proportionally, than the increase in income. How can that be when everyone would be making more money because UBI is added to their income as well. All labor costs would rise for everything. Everyone can't suddenly have more money and all want to go on a cruise without cruise prices increasing to the point that the same number of people that can afford it now will afford it then. I just don't see anyway this works at scale. It only works temporarily but once things hit equilibrium, we're back when we started.
- dragonwriter 11y ago
  > is there actually that much in the system without requiring massively raising taxes? [...] And I don't mean in the early implementation but 20 years in when it's humming along as envisioned. A UBI moving from a low level to a mature, robust level able to provide a living wage -- as a matter of basic economic necessity -- requires advances in productivity. There's not productivity in the economy now to support a robust UBI. > > these increases [in the prices of goods and services] will generally be less, proportionally, than the increase in income. > How can that be when everyone would be making more money because UBI is added to their income as well. To start with, everyone will not be making more (after tax and public benefits) money. The money for a UBI (under most actual proposals) will come from reducing existing means- and behavior-tested public benefits (and associated administration) and/or increased taxes on some people. Either of these will reduce the effective income of some portion of the population -- and necessarily decrease at least some people's income by an amount greater than the UBI. Before considering the effects the redistribution has on promoting or inhibiting economic growth (e.g., by increasing domestic velocity because of where money is distributed and how and what the people receiving spend it on vs. those losing it), the average net impact on incomes should be approximately $0. > All labor costs would rise for everything. No, they won't, and those that do rise won't rise equally. And, in any case, labor costs aren't the only costs of production, so even if labor costs in the domestic market rose as a result of UBI, prices of completed goods and services would rise by less (proportionally) than the increase in labor costs. (In the long term, for goods provided in a competitive markets, where prices are driven by competition down to the cost of production.)