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Top White House Economist Dismisses the Idea of a Universal Basic Income
- jswny 10y agoFreakonomics also did a fantastic episode about universal basic income: http://freakonomics.com/podcast/mincome/ http://freakonomics.com/podcast/mincome/.
- ihdncj849593 10y ago..."TechCrunch also did a fantastic analysis about the future of machine learning algorithms." That's how you sound... Please don't bring in pop-econ sources to validate your points...
- jswny 10y agoI didn't make any points. What are you talking about?
- ihdncj849593 10y agoWhy would you bring in probably the least authoritative source on the topic you could? I thought this forum had higher standards than that. Why not just link to the actual research mentioned, such as "universal basic income versus unemployment insurance" published by FRB St Louis?
- deleted 10y ago[deleted]
- dexterdog 10y agoProbably just Paul Krugman talking points.
- johanneskanybal 10y agopretty simple really. he doesn't understand what's happening. hardly controversial comming fron the white house.
- ihdncj849593 10y agoCare to actually explain what he doesn't understand since you are so wise?
- adrenalinelol 10y agoEconomic is a social science, it's subject to people's opinions and interpretations. There are economists today (at the PhD level) who will look you in the eye and tell you recessions don't exist. Not mainstream, but not also not a "quack theory". UBI for most people is just another label for welfare. I agree with the premise that most people don't quite understand how much automations will eventually disrupt the entire labor force.
- cardigan 10y agoBecause income inequality is more important to this guy than providing for people's basic needs lol
- ihdncj849593 10y agoI like how well you took a very complex issue and made it feel like it's this obvious black and white thing.
- musicaldope 10y agoI like how you keep making sarcastic replies to comments in a thread you started. It's like seeing someone litter on their own lawn. Edit: nevermind, it's not your thread. Just shitting the place up for fun, I guess.
- gndjdnncfn 10y agoFive trillion dollars to protect inflated equities markets? Standard procedure. A basic income to stimulate demand and take pressure off broken labor markets? Heresy.
- ihdncj849593 10y agoNice, I like how you ignore that the government made all its money back in a few years plus interest.
- gnrwhrhn 10y agoYou apparently don't know what you're talking about because that's not how QE works.
- JoeAltmaier 10y ago...and the economy would not benefit from a BI? With increased spending, decreased public support programs, better education and community participation? Life is about more than a balance sheet.
- rhino369 10y agoCouldn't UBI end up in a death spiral where it does destroy the economy? If the BI is too generous people will stop working. Cost of goods and services go up. Tax base shrinks. The people vote in a larger BI to make up for it? For as little as 15k a person, I'd strongly consider never working again.
- marcoperaza 10y agoA basic income is a massive threat to the liberal welfare state. It would totally deflate the left's institutional agenda so expect them to fight back hard. The premise of the current welfare state is that the people, too stupid to manage their own lives, are better off under the paternal care of enlightened government bureaucracies. It's gonna be entertaining in ten years to watch Republicans support the basic income and Democrats oppose it. The debate will be about whether people should be in control of their own lives or whether they need a paternal state to protect them from themselves.
- maxaf 10y agoHope there's enough popcorn for both of us.
- matthewmcg 10y agoSome Republicans undoubtedly support principled, market based, small-l liberal solutions to social problems. But a lot of others just seem to want lower taxes. I would expect them to oppose basic income as just another "big government" initiative. These are folks that think taxation is the moral equivalent of theft after all.
- marcoperaza 10y agoI think that even among that crowd there's an increasing acceptance that redistribution is a fait accompli and that now the next best thing is to dismantle the bureaucracy. Give it a few more years.
- threeseed 10y agoYou sound like a Sarah Palin speech. Instead of using meaningless buzzwords like "elite" maybe be specific about who exactly you are referring to. That aside I don't know where you get the idea that the Republican party would be for a universal basic income. Their current position (under Trump at least) is to abolish the minimum wage in order to encourage everyone to work. And they have always favoured individual responsibility and opposed government handouts.
- gnrwhrhn 10y agoFive trillion dollars to protect inflated equities markets? Standard procedure. A basic income to stimulate demand and take pressure off broken labor markets? Heresy.
- raz32dust 10y agoNot a lot of substance. He is basically saying that we should invest in training the existing workforce to adapt. That can happen even with UBI. He also says that UBI will cause wealth to be distributed equally which means less of the total tax will go to the poorer class. This is not exactly true because the idea is to give cold, hard cash instead of trickling down the wealth. So the dynamic will be different, and that is the whole idea. That just giving cash is generally better than welfare schemes.
- keithnz 10y agohaving free (mostly subsidized) education through to tertiary level will be necessary in conjunction with UBI. If it is a workable idea at all.
- winstonewert 10y agoCan this exist? I know that many countries do provide free tertiary education, but in the cases I'm aware of, its a relatively small percentage of the population that gets tertiary degrees compared to the US.
- 50CNT 10y agoI've heard Germany brought up as an example for free tertiary education, so this might be applicable. For Germany, secondary education splits into three tracks, with the upper third choosing between a traditional University track, a more vocational Fachhochschule, or a dual work/study arrangement in the form of a "Duale Hochschule". These all offer bachelor degrees, but AFAIK only the University track offers masters and doctoral programs. German universities are also sparser in regards to amenities and faculty/student ratios than US or UK universities, at least from what I've heard, which brings costs down further. Graduates from lower secondary tiers also have several options. There's the Ausbildung, where businesses train hires internally to meet requirements for certain positions. A bank may train an "Azubi" from Teller to Account Manager to Branch Manager. Then there's the Meisterwesen, which is still reminiscent of the guilds, and mostly prevalent in the trades (e.g., Carpentry, Baking, etc.). Levels go from apprentices, to journeymen, to masters, where masters are licensed to open their own workshops/stores. My personal perception is that socially, a master carpenter is on the level of a masters graduate, but still below that of a PhD, but that's still a fair bit of social mobility considering that this route is open to anyone with any secondary school degree. So whilst less people get a college degree, business and industry do provide routes to livable work without one.
- labster 10y ago“Replacing part or all of that system with a universal cash grant, which would go to all Americans regardless of income, would mean that relatively less of the system was targeted towards those at the bottom—increasing, not decreasing, income inequality,” Mr. Furman said. Does he not get that the tax structure and minimum wage would need to be changed to accommodate UBI? The welfare state needs disruption, not gradual change.
- fiatjaf 10y agoDon't you get it is impossible that that will happen? It is much more likely that you'll get UBI AND a bigger welfare state.
- taneq 10y agoBut if you assume UBI as a part of a package deal which includes tax reform and changes to minimum wage then it's much harder to write it off as clearly unviable.
- sib 10y ago>> Does he not get that the tax structure and minimum wage would need to be changed to accommodate UBI? "It is difficult to get a man to understand something when his salary depends upon his not understanding it." - Upton Sinclair
- percept 10y agoWoo, rough in this thread. Treading carefully, I do notice that the subject of the article is short on concrete solutions to the (potential) problem, instead relying on: "“The concern is that the process of turnover, in which workers displaced by technology find new jobs as technology gives rise to new consumer demands and thus new jobs, could lead to sustained periods of time with a large fraction of people not working,” he said. Still, the solution isn’t a universal basic income, Mr. Furman said. Instead, he focused on reforming the existing array of programs meant to help the unemployed and the poor." This almost seems to bolster the opposing point: yes, there's a real threat here, but we (hand-wavy thing) have existing programs we can fix up for that. Other than the last sentence, I don't see substance, but more of a media sound bite.
- percept 10y agoAlso, don't forget: election year. Shuffle to the middle, don't freak out vested interests.
- threeseed 10y agoOnly one solution exists to the threat of automation and that is: training. People need to be able to rapidly move from unproductive or fully automated parts of the economy to others. It's easier said than done and in the US at least would require a massive investment in and rethinking of access to vocational education. It needs to be free as a start.
- ianai 10y agoAutomated driving could unemploy millions of truck drivers. Give me one other industry that needs millions of workers and that retrained truck drivers could do. Or even 5. But I don't think it exists outside of creating other, large "new deal" type programs.
- IndianAstronaut 10y agoI don't see why we shouldn't do a new deal. Possibly a new deal for the space age. There is also a tremendous amount of work to be done in the sciences as well. Work ranging from high skill scientific experimental design to low skill pouring of agar plates.
- ianai 10y agoSounds like he prefers a heavier handed approach that would result in much more government than a UBI. I completely disagree with him. Give people the power to choose with a basic income. That will do more for th nations wealth than training programs ever could. It will also require employing fewer people at the governmental level. On the other hand, can you imagine the political fall out if he had been for UBI?
- intopieces 10y agoRight off the bat: >“We should not advance a policy that is premised on giving up on the possibility of workers’ remaining employed,” Jason Furman, chairman of the Council of Economic Advisers, said Thursday in remarks at New York University. Isn't the idea that people could be employed doing anything on UBI (subject to the market demand - sans artificial restrictions)? As in, the exact opposite of what Furman claims is the premise of the UBI system?
- ubernostrum 10y agoPart of the issue is UBI poses a threat to established ways of doing things -- many businesses rely on the relative lack of social and labor mobility as a way to provide the continual supply of low-paid unskilled workers they want. The threat in UBI is that those workers would be able to take time out of the labor market and get education and training or even start their own businesses instead of settling for the "it's the only game in town" of working under the established model.
- cle 10y agoI've been skeptically positive towards UBI, but this sounds like a real problem with UBI, to me. Do you think there is merit to this concern?
- ianai 10y agoIf your strategy for employing labor includes anything other than the monetary recouperation for someone's time then your entire labor strategy is perverse.
- iand 10y agoCan you clarify the question? It sounds like you think UBI's problem is that it removes the "continual supply of low-paid unskilled workers [the businesses] want".
- Consultant32452 10y agoIt's not a real threat, because as UBI is slowly ratcheted up to actually be a livable wage automation will replace all of that unskilled labor. If we instituted a UBI right now it might be something really low, like maybe $200/mo. A person might work fewer hours at their shitty no-skill low wage job, but they aren't going to quit.
- tlb 10y agoThere may be valid criticisms of UBI, but this article doesn't mention any. > Our goal should be ... to foster the skills ... to make sure people can get into jobs, which would much more directly address the employment issues raised by [artificial intelligence] than would UBI. That is the traditional solution, but we should question the assumption that is it the best way of life for most people. > “Replacing part or all of that system with a universal cash grant, which would go to all Americans regardless of income, would mean that relatively less of the system was targeted towards those at the bottom—increasing, not decreasing, income inequality,” Mr. Furman said. Nonsense. You can get any level of income inequality you want by choosing suitable numbers for UBI and tax rates. Furman is an economist, so he must understand such basic math. This part appears to be pure FUD.
- nefitty 10y agoFUD /fəd/ noun Fear, uncertainty and doubt (often shortened to FUD) is a disinformation strategy used in sales, marketing, public relations, politics and propaganda. FUD is generally a strategy to influence perception by disseminating negative and dubious or false information and a manifestation of the appeal to fear.
- chongli 10y agoThis part appears to be pure FUD. Welcome to economics, a modern form of astrology where politicians ask their friends if "the math" can support a position. Of course it can, if the economist wants it to.
- DominikR 10y ago> ... employment issues raised by [artificial intelligence] than would UBI. I didn't know that the economic situation we are in was caused by artificial intelligence. In fact I didn't even know that there was an artificial intelligence or that anyone has lost his job because of that.
- Retra 10y agoThere are artificial intelligences all over the place, and many people have lost their jobs to them. How many telephone switch operators do you know? Traffic control people? Typesetters?
- baconmania 10y agoGiven this man's established ideological record, I think this article reveals more about Jason Furman's personal philosophical baises than it does about the objective costs and benefits of UBI: http://articles.latimes.com/2008/jun/11/nation/na-furman11 http://articles.latimes.com/2008/jun/11/nation/na-furman11
- fiatjaf 10y ago> The idea is to ensure everyone has a chance at a decent > life even as technology shifts and the labor market churns, > eliminating and creating millions of jobs that often > require vastly different skill sets. Is that REALLY the idea? To make everybody less prone to adapt to technology changes?
- nxzero 10y agoHow much would it cost to provide universal basic income to the US?
- adventured 10y agoShort answer: several trillion dollars. 242 million adults in the US. Just $10,000 per adult is $2.4 trillion. That of course wouldn't come close to being enough. Even if you assume tax redistribution of the money (rich people getting UBI, and then having it taxed away), for $2.4 trillion you probably would only manage to get the poorest 1/4 up to something like $15,000. Today the poorest 1/4 are receiving a net of more than twice that sum between Federal and State benefits. Federal budget ($3.9 to $4.1 trillion or so depending on which year we're talking about) minus dozens of things that won't be replaced by UBI and won't go away (eg NASA, military, agriculture subsidies, budgets for countless agencies like HSA or FBI, transportation, justice and so on) = you might be lucky to break even or bleed just a few hundred billion on the budget if you allocate $2.4 trillion to UBI. That's assuming Social Security, all housing subsidy programs, all welfare programs, half of all social services programs, Medicare, Medicaid, Obamacare etc etc are all ended. The equation at the state level is a whole 'nother calculation, and would be a very significant factor given the states budget is another ~$1.7 trillion and represents all sorts of welfare programs and healthcare spending. Personally I favor Warren Buffett's premise of significantly boosting the earned income tax credit, and freezing or lowering the minimum wage. The UBI is dramatically regressive, there's no reason to be giving the top 50% in the US a UBI.
- Yhippa 10y agoThis is what I was wondering. The top 50% certainly don't need UBI. If everyone got it wouldn't sellers immediately increase prices and we'd be right where we started? A loaf of bread for $50.
- omegaham 10y agoThis is where I'm confused about the benefits of UBI. So, say that we institute UBI, and people no longer have to work. That increases the cost of labor - you can't attract a cashier for $9.30 an hour, so you have to pay $15 an hour or whatever. This has to be passed right back to the consumer, so prices go up. Rent goes up as well - maintaining property takes labor as well. Now, the UBI is no longer sufficient to sustain a decent life, and the poor are right back to where they started.
- moyix 10y agoWhile I'm in favor of UBI (though preferably after smaller-scale experiments and careful study), this survey of economists about one version of UBI did give me pause: http://www.igmchicago.org/igm-economic-experts-panel/poll-results?SurveyID=SV_bPBNf8WXrT4jmtf http://www.igmchicago.org/igm-economic-experts-panel/poll-re...
- piotrjurkiewicz 10y agoSmall scale experiments are useless in the case of UBI, because introduction of UBI in small scale will not trigger inflation. So small scale experiments are gonna to show that UBI works well, without negative inflationary consequences, but full scale introduction will be a disaster.
- justinlardinois 10y agoIs anyone really surprised? There's almost no political support for a universal basic income in the United States. Hopefully that will change someday, but it's not happening any time soon.
- majormajor 10y agoSeems like a nice piece of progress (if we can keep it continuing, instead of letting it die off again) that the idea is getting this much play in public to start with, compared to two years ago. Don't be too upset that people aren't sold right now, just keep pushing the conversation forward.
- shams93 10y agoThe only way you get the money is by sending war and shuttering the military police industrial complex. You don't need new taxes what does it cost to run thousands of bases and run multiple wars at the same time for over a decade. There's plenty of money for UBI if we reorganize society away from violence.
- kr7 10y agoThe U.S. defence budget is ~$700 billion / year and the U.S. population is ~320 million. Gutting the entire defence budget would be worth just over $2000 / year per person. Not exactly enough for UBI.
- sethbannon 10y agoIt seems to me some economists simply can't fathom en economic system not fueled primarily by human labor. "Employment" is treated like a good in itself instead of what it should be treated as: a means to the desired end of high quality of life. For convenience, direct link to the paper being reported on: https://www.whitehouse.gov/sites/default/files/page/files/20160707_cea_ai_furman.pdf https://www.whitehouse.gov/sites/default/files/page/files/20...
- getgoingnow 10y agoWhy is UBI so popular on this site? This is a site for hackers, programmers and engineers. Could it be the result of a decade long propaganda by VCs targeting Zuckerberg wannabes - those who want to have UBI, so they can work on the newest blockchain-enabled photo-sharing social local VR app ?
- Yhippa 10y agoI wonder the same thing. I am not saying disagree. I think the YC experiment is interesting and I really want to see the results. On the other hand I wonder what they stand to gain from it?
- ekimekim 10y ago(my guess / personal opinion, I don't claim to speak for everyone) Because so many here believe so strongly in the power of automation. Almost all software engineers are in the business of putting people out of jobs - eg. replacing a secretary with a mail and calendar app, replacing a business middleman with an online marketplace, or replacing a sysadmin with cluster management tools. A way to resolve this cognitive dissonance of us doing a thing we think is right (automating the world) with causing a thing we think is bad (unemployment) is to turn unemployment into not a bad thing, which is the promise UBI makes. This doesn't mean we don't honestly believe it can work. But it makes us more likely to WANT to believe it. Brains are funny things.
- ZenoArrow 10y agoIncreasing levels of automation certainly plays a part in the drive to explore solutions like UBI, but it's not the only consideration. On a broader level, the issues driving UBI are those related to social mobility and quality of life. Those issues would exist without the drive towards automation. To explain what I mean, imagine you're working a low-skilled, low-paid job just to keep a roof over your head, with very few opportunities to retrain (both in terms of free time and money). In other words, you're working just to survive, and are not making the most of your time on Earth. UBI would give people in that situation an avenue to retrain, as well as making it harder for companies to keep wages low for undesirable jobs, they would have to better compensate people for giving up their time to do a job they otherwise wouldn't be interested in doing. None of these factors are directly derived from increased automation. As for whether or not UBI will be a net benefit, the answer is not completely clear, but that's the reason small-scale experiments looking into UBI have been started.
- jfoster 10y agoI haven't followed UBI too closely, but I don't think I've seen discussed the inflationary effects that it (in my opinion) would likely have. What is the breakdown of winners/losers that UBI would target? From what I imagine, it's a bit like an upside-down bell curve. People who have close to 0 would be better off, big companies too, and everyone in the middle a bit worse off. Is that the intention of UBI?
- learc83 10y agoInflation is pretty much the first thing that most people think about when they look into UBI for the first time. Here's a summary of some of the pro UBI arguments: Most plans would be paid for by increasing taxes on the wealthy, so it doesn't actually increase the money supply; Prices should only increase on goods that are supply constrained; We're already giving away billions of dollars in assistance in the form of SNAP (food stamps), and increases in SNAP assistance don't seem to cause food price inflation (or at least not enough to be detectable); We also already provide huge subsidies in the form of the Earned Income Tax Credit, which doesn't appear to have inflationary effects (again at least not enough to notice); The examples we have of partial basic income haven't caused large scale inflation. Alaska hasn't seen an increase in inflation since they began providing a partial basic income to all residents, and Kuwait didn't see an increase in inflation when they gave every citizen $4k in 2011. To summarize the summary, a UBI would probably cause a price increase in supply constrained goods and services, but not nearly enough to drown out the extra purchasing power provided to people with lower incomes. How this affects the middle class depends on how high we set the cutoff where you start paying more in additional taxes than you're getting in UBI, and it depends on how income inequality and velocity of money affect the middle class. Many economists think that increasing income equality will help the economy as a whole, but that's open for debate (I personally think that it will).
- ianai 10y agoI doubt it's as open for debate as some people want to claim. It's pretty sound policy. A basic income is going to have a much higher multiplier than increased government spending on defense. No need to scratch your head or needle data to see that.
- tuna-piano 10y agoI haven't seen this anywhere , but don't we already have UBI for a large number of people in the US? We call it social security, but it's just cash payments to people . That program is constantly talked about being shrunk, not expanded. What about an expanded UBI would be different than social security? Just the fact that people are younger or not-disabled? For the non Americans, social security provides cash payments to those over 65 and those with long term disabilities.
- ZoeZoeBee 10y agoSocial Security is funded by the money workers pay as a portion of their income over the lifetime of their employment. The elderly on Social Security paid into this system. Unfortunately many have ended up paying in less than they have received over the course of their retirement due to people living longer than the actuarial tables had accounted for. Over the course of SS 80 year history it has taken in $19.0 trillion in taxes and paid out $16.1 trillion. At the moment Social Security takes in more than it pays out, but that changes in two years when it will start running a combined deficit, it has roughly 18 years until the combined funds are depleted, *A rosey prediction as this is relying on data which includes a Labor Force Participation not dropping much more than it is now, which is tough as we're already more than a decade a head of where we should be if only Demographics were considered, and economic growth more than we've averaged since the Recession. UBI is the exact opposite of Social Security https://www.ssa.gov/oact/trsum/ https://www.ssa.gov/oact/trsum/ If we assume automation results in more job-losses where does the money come to pay for it?
- 11thEarlOfMar 10y ago"Mr. Furman also said a universal basic income would exacerbate income inequality, already a rising concern in the U.S. " What am I not understanding? Wealthy persons will fund this. Sure, they may get the $12,000 per year UBI, but their taxes will go up by much more than that.
- A_COMPUTER 10y agoMincome is not compatible with businesses and political parties that rely on an endless stream of low-skilled immigration.