7 ms·

Universal Basic Income already exists for the 1%

60 points by kareemm 10y ago

dvdhnt 10y ago
While, overall, I enjoyed reading this post, I feel that this statement - > 1 in 10 dollars of income produced in this country is paid out to the richest 1% without them having to work for it. is misleading. I think this type of attitude makes it more difficult to find common ground. Yes, that income is not produced through recent work, but it is produced as a bi-product of previous work. The issue is that once a person accumulates enough wealth, the difficulty to generate value falls while the opportunities to do so rise.
- crooked-v 10y ago
  You've overlooked how much of this wealth is inherited across generations.
  - smokeyj 10y ago
    That means they're preserving it and reinvesting it so more wealth can be created. This is a good thing.
    - stretchwithme 10y ago
      If we consumed all of that nasty wealth, there'd be none to borrow to get a house or education. None for startups. People get rich by not consuming everything as soon as they get it. This is a great thing for everybody. And it's not just rich that accumulate. A person making minimum wage and just saving the same amount withheld by the US social security tax would have hundreds of thousands of dollars accumulated if they kept it in the stock market for their entire working career. I was curious about this a few years ago and put together this spreadsheet, using this tax rate, rate of return and minimum wage over a 40 year period. https://docs.google.com/spreadsheets/d/1RlSfkW-DKXAXtXKvZJR5avibx_DqZEXIZk-Wd9SpSIc/edit?usp=sharing https://docs.google.com/spreadsheets/d/1RlSfkW-DKXAXtXKvZJR5...
    - chromatic 10y ago
      What's the marginal propensity to consume and the velocity of those dollars?
  - dcherman 10y ago
    That's what the Estate Tax is for. There are ways to circumvent that via things like charitable foundations, however that's a very different debate. The author is confusing income from dividends (either of the stock or bond variety) and interest income with income simply for existing. He chooses to use Alaska, an oil rich and low population state, as a model for the rest of the country. He states that the government would somehow build up a "big wealth fund" that would deliver "returns" without specifying where those returns would come from or the amount of those returns. A fund of the size required can't easily generate large returns since that amount of money is enough to distort markets. Simple back of the napkin math is that based on the 2013 census, we have 242,470,820 adults living in the US. If we pay each of them $12,000 per year, that's $2,909,649,840,000 in additional mandatory spending every single year. That's more than Medicare and Social security combined, and that has no cost of living adjustments built in. The basic math shows that this idea is simply unrealistic as far as I can tell.
    - jljljl 10y ago
      There's a few assumptions built into your basic math. Does the benefit need to be $12,000/year? Can we phase out Social Security ($888B) Health Care spending ($602B) and other safety net services ($362B) as we phase in basic income? Setting the annual benefit to an average of $7,000 and phasing out other safety net services get's the basic math a lot closer, while theoretically helping more people than the current system. I'm not saying Basic Income is a definite win, but back of the envelope assumptions are usually too simple to dismiss or validate an idea.
      - jimmyswimmy 10y ago
        Your proposal gets the math a lot closer, although I thought social security paid more than 7k/yr... so now grandma has to take a haircut on her income and pay for Healthcare out of pocket too. I'm no social security lover but that seems extreme. The allure of UBI is interesting but I've never figured out how the math works out without making sizable reductions in quality of life for significant chunks of the population. The money has to come from somewhere... I think UBI works out to be worse than zero sum economically. Anyway I've always been a firm believer that if you can't come up with a compelling and largely accurate back of the envelope justification for your story, you're not going to get many adherents.
  - djrogers 10y ago
    Perhaps that's becuse it's not true? 80% of American millionaires are first generation rich, meaning only one in five of them have inherited their wealth. Setting that fact aside, why should my work not directly benefit my children? Providing for ones offspring is a universal motivation. [1] http://www.investopedia.com/financial-edge/0810/7-millionaire-myths.aspx http://www.investopedia.com/financial-edge/0810/7-millionair...
    - jljljl 10y ago
      Being a millionaire does not include you in the top 1% these days: http://www.cleveland.com/business/index.ssf/2016/03/us_millionaires_club_adds_3000.html http://www.cleveland.com/business/index.ssf/2016/03/us_milli... "More than 10 million U.S. households have a net worth of $1 million or more, a record high representing nearly 9 percent of all households in the country. That may sound like a small percentage, but it's one in 11 households. Instead of leading an extravagant life filled with luxuries and indulgences, a millionaire could be in your neighborhood." To be in the top 1%, you need to have a net worth somewhere between $5M - $25M (1.2 million households out of 124 million in the US)
  - adnzzzzZ 10y ago
    You've formed your opinion without looking at data. 80% of millionaires are self-made. 60-70% of billionaires are self-made.
kevin_thibedeau 10y ago
Society still benefits if those "unearned" dollars are spent domestically.
- djcapelis 10y ago
  You could say the same of every dollar everywhere no matter where it goes, so that statement is essentially meaningless.
- mertd 10y ago
  Spending capacity of a single person does not scale though. A member of top 1% does not eat 1000 hamburgers in a day because they can afford it. They might spend $1000 on a single hamburger or several million $ on a car but it is hard to see how that money trickles down rather than stay in the Veblen goods ecosystem.
- DasIch 10y ago
  You're right. The problem is that rich people don't spent much money, they tend to already have most of their needs met. Poor people on the other hand are much quicker to bring their income back into circulation. If you want a lot of money to be spent domestically, you need to redistribute the money to the poor.
  - thescribe 10y ago
    I feel like this implies that the rich hoard money under a mattress. Most money held by the rich is invested in some way or another.
jws 10y ago
Don’t tax labor to give money out to UBI loafers. Instead, snag society’s capital income, which is already paid out to people without regard to whether they work, and pay it out to everyone. Also known as nationalizing all investments. I think the author may not quite have a grip on capitalism.
- subway 10y ago
  Or the author just disagrees with capitalism.
- eridius 10y ago
  Did you finish the article? They're not literally suggesting that all capital income be redirected by the government, but instead suggesting that the government should build up a fund that owns capital assets. > The US federal government would employ various strategies (mandatory share issuances, wealth taxes, counter-cyclical asset purchases, etc.) to build up a big wealth fund that owns capital assets. Sure, wealth taxes does mean effectively redirecting some of the capital income earned by other people, but that's basically what all taxes do anyway. And I'm not sure what "mandatory share issuances" or "counter-cyclical asset purchases" mean. But the end result is they're suggesting that the government should own a set of capital assets rather than just relying on taking money from citizens that own capital assets.
  - em500 10y ago
    > Did you finish the article? They're not literally suggesting that all capital income be redirected by the government, but instead suggesting that the government should build up a fund that owns capital assets. To provide a UBI of say 12k for every adult in the country (as opposed to just a few hundred or thousand), such a fund would need to own a large part of all the corporations and housing stock in the country. Didn't work well for the countries that tried it in the past.
- eli_gottlieb 10y ago
  Who said the author likes capitalism? A lot of people don't these days: it hasn't been very nice to us.
imgabe 10y ago
So, essentially, abolish property rights? Just have government seize the capital from people who currently own it, or rather, seize the proceeds of the capital which is effectively the same thing, because why would you bother owning the capital if you weren't going to have access to the income it produces? I'm all in favor of Universal Basic Income, but what happens when everyone who currently invests their money to produce this passive income decides to simply spend it instead since they wouldn't get to use any return from their investments?
- subway 10y ago
  Seems like if the folks hoarding money via investments were to spend it, we'd see much greater wealth equality.
  - stretchwithme 10y ago
    That's true. We'd all be much more equally poor. There's also be no capital accumulating for innovation. No annoying technology to enable people to make high salaries. And none of the annoying tax revenues collected from them.
    - stretchwithme 10y ago
      This has been tried many times. It's called communism. And people always try to escape it. And its eventually abandoned.
  - forrestthewoods 10y ago
    > hoarding money > investments Pick one. Those are literal opposites.
- CodeWriter23 10y ago
  > but what happens when everyone who currently invests their money to produce this passive income decides to simply spend it instead since they wouldn't get to use any return from their investments? We would then experience true economic recovery, where everyone can access the inventory of dollars, as opposed to the current "asset based" recovery we are now experiencing. Which is basically economic recovery for those who own hard assets.
yuhong 10y ago
Thinking about it, basic income would be better than increasing credit as a way to increase the money supply, but it is probably not particularly good either.
traskjd 10y ago
I'm in favor of trying UBI to see the impact, testing it properly. I'm not a fan of this article however. While we are reasoning by analogy, It's fairly well documented that most capital wealth does not survive past an initial generation or two. There's something about creating the wealth/passive income that creates a different behavior than being given it. This article does nothing to discuss that. The analogy included feels like it's just there to support a punchy headline. This is why I'm more excited to see some real tests and results in various countries and communities.
- eridius 10y ago
  > There's something about creating the wealth/passive income that creates a different behavior than being given it. My completely uninformed opinion is that this is largely due to one of the following: 1. Kids who grow up with so much passive income that they never need to work even for luxuries. UBI won't produce this, because anyone who wants luxuries will still have to work to afford them. 2. Passive income isn't automatically self-sustaining, so if kids aren't as good as their parents at actually managing their assets and/or business, then they may simply end up spending more than they make (especially if they're trying to maintain the same lifestyle their parents had even though they can't maintain all of the income). I think this ties back into #1 as well. The article said 30% of the income is capital assets, but if kids aren't good at business (or don't want to work at all), then they're relying on capital income for nearly all of their income instead of just a portion of it, which generally isn't self-sustaining without a change in lifestyle.
- stretchwithme 10y ago
  It's easy to test. Find someone and start paying them. Let us know how it works out.
  - kybernetikos 10y ago
    This is in fact what people are doing. https://www.givedirectly.org/research-on-cash-transfers https://www.givedirectly.org/research-on-cash-transfers http://www.forbes.com/sites/timworstall/2017/01/02/finlands-basic-income-experiment-starts-really-its-testing-the-laffer-curve-for-poor-people/#53229bbd76af http://www.forbes.com/sites/timworstall/2017/01/02/finlands-... https://blog.ycombinator.com/basic-income/ https://blog.ycombinator.com/basic-income/
gfodor 10y ago
This article seems transparently fallacious to me, since the income generated for the 1% is due to investment capital. Investment capital, among a million other attributes that differentiate it vs a state backed UBI program, is exposed to risk. There isn't just some pile of "income" sitting there we can harvest every year, the income the article talks about exists due to the exchange of capital. At the end of the year, some of those investments fail (for example, bonds default) and the income streams vanish. The analogy to UBI completely fails. Honestly this is probably one of the most transparently dumb UBI articles I've seen posted on HN. (Disclaimer: I support the idea of UBI pending research outcomes.)
- Daishiman 10y ago
  When investment capital's returns turns out to be distributed in a disproportionate manner that's not actually benefitting the majority of society, we have a problem. The tables have been turned in favor of rent-seeking behavior, which is what the article complains about. This is merely a way of correcting that problem.
- huac 10y ago
  Risk is always relative. If you have enough capital, you can afford to focus solely on the long run, and plan positions accordingly. In general portfolio theory managers aim to optimize an objective - for short term hedge funds that's typically Sharpe ratio or just net return, but for long term focus (e.g. a rich family), you focus on minimizing the probability of shortfall. That is, your family is going to spend some x% of your wealth every year. Then you only need to return x% on the fund (approximately) on a yearly basis. There is very little real risk associated with this strategy, if you're rich and needing to earn a small percent of your total assets, say 3%. Now, if your family isn't rich, you're probably going to need to spend much more than 3% in income, and your probability of shortfall increases dramatically. This is similar to how college endowments work - do you think Harvard's endowment has a high chance of going dry anytime soon? Tangentially, their tax-free status is tied to spending 5% of the assets each year, which actually makes their job a lot harder, and is why they need to still raise money.
  - 10y ago
msoad 10y ago
What "universal" in UBI means actually? If we pay to some of people then it's not universal. No matter if it's the top 1% or the poorest.
- powmonk 10y ago
  It means taking the massive chunk that goes to the 1% and instead redistribute it evenly to everyone (including the 1%, but this time they get a much smaller piece)
redmattred 10y ago
Seems like a total straw man argument. I think very few are against the idea of free money for everybody because of the fear of moral decay if people aren't working. I think the opponents are worried about where that money to fund UBI will come from. Taking away people's assets to be redistributed is obviously kind of a touchy subject.
- djcapelis 10y ago
  I've actually seen a lot of folks argue against UBI out of the assumption that if people don't have to work, no one will ever do anything with their lives and we'll all go to hell with no production whatsoever. This article is targeted at that argument. If that's not an argument against UBI you want to make, that's great, but it's still worthwhile for the author to write something here.
CyberDildonics 10y ago
I didn't realize investments were the same as being payed. It is a revelation that people who have enough money to live off of investments don't have to fight to survive?
negamax 10y ago
UBI is a well intentioned but misdirected goal. Ask for minimum social infrastructure. Not money. Minimum social infrastructure that involves food, education and medicine safety to a good degree (without any hint of lavishness). We achieve that, we will solve arising problem meaningfully in my opinion.
- powmonk 10y ago
  I agree there should be a minimum social infrastructure but shouldn't there also be more? In a near future where automation has made most jobs obsolete people shouldn't have any form of luxury at all? No capital to speculate? No hobbies? Seems like a very dull future.
  - negamax 10y ago
    I am being pragmatic. Having lived (currently living) in a pseudo socialist state, I do not think UBI/welfare state is going to last. May be I am wrong in sense of not knowing how people will change given the choice. Minimum social infrastructure elevates the bottom for everyone. If people can rise from that bottom further, maybe we can work towards elevating the bottom further and further as time passes.
- rjbwork 10y ago
  The following is a non-value judgement. We see generally better outcomes when we just hand people cash than when we make them jump through hoops, and partake in non standard services to acquire resources. It also generates more administrative overhead than if we just hand them cash. I don't know if this would hold for a universal social services infrastructure. My personal analysis is that I would tend towards decentralization via cash payments, so as to enable choice, and not have the state takeover the potential economic activities enabled by such cash payments. Nobody wants to be given food from a government kitchen or government food box, but most people, I would think, would not mind getting $X per week/month/year to supplement their other income from the government.
  - negamax 10y ago
amelius 10y ago
I have an idea. Can't we make national lotteries pay out in UBI, and use the results for studies? That way, those lotteries at least serve a useful goal.

60 points by kareemm 10y ago

While, overall, I enjoyed reading this post, I feel that this statement - > 1 in 10 dollars of income produced in this country is paid out to the richest 1% without them having to work for it. is misleading. I think this type of attitude makes it more difficult to find common ground. Yes, that income is not produced through recent work, but it is produced as a bi-product of previous work. The issue is that once a person accumulates enough wealth, the difficulty to generate value falls while the opportunities to do so rise.

crooked-v 10y ago
You've overlooked how much of this wealth is inherited across generations.
- smokeyj 10y ago
  That means they're preserving it and reinvesting it so more wealth can be created. This is a good thing.
  - stretchwithme 10y ago
    If we consumed all of that nasty wealth, there'd be none to borrow to get a house or education. None for startups. People get rich by not consuming everything as soon as they get it. This is a great thing for everybody. And it's not just rich that accumulate. A person making minimum wage and just saving the same amount withheld by the US social security tax would have hundreds of thousands of dollars accumulated if they kept it in the stock market for their entire working career. I was curious about this a few years ago and put together this spreadsheet, using this tax rate, rate of return and minimum wage over a 40 year period. https://docs.google.com/spreadsheets/d/1RlSfkW-DKXAXtXKvZJR5avibx_DqZEXIZk-Wd9SpSIc/edit?usp=sharing https://docs.google.com/spreadsheets/d/1RlSfkW-DKXAXtXKvZJR5...
  - chromatic 10y ago
    What's the marginal propensity to consume and the velocity of those dollars?
- dcherman 10y ago
  That's what the Estate Tax is for. There are ways to circumvent that via things like charitable foundations, however that's a very different debate. The author is confusing income from dividends (either of the stock or bond variety) and interest income with income simply for existing. He chooses to use Alaska, an oil rich and low population state, as a model for the rest of the country. He states that the government would somehow build up a "big wealth fund" that would deliver "returns" without specifying where those returns would come from or the amount of those returns. A fund of the size required can't easily generate large returns since that amount of money is enough to distort markets. Simple back of the napkin math is that based on the 2013 census, we have 242,470,820 adults living in the US. If we pay each of them $12,000 per year, that's $2,909,649,840,000 in additional mandatory spending every single year. That's more than Medicare and Social security combined, and that has no cost of living adjustments built in. The basic math shows that this idea is simply unrealistic as far as I can tell.
  - jljljl 10y ago
    There's a few assumptions built into your basic math. Does the benefit need to be $12,000/year? Can we phase out Social Security ($888B) Health Care spending ($602B) and other safety net services ($362B) as we phase in basic income? Setting the annual benefit to an average of $7,000 and phasing out other safety net services get's the basic math a lot closer, while theoretically helping more people than the current system. I'm not saying Basic Income is a definite win, but back of the envelope assumptions are usually too simple to dismiss or validate an idea.
    - jimmyswimmy 10y ago
      Your proposal gets the math a lot closer, although I thought social security paid more than 7k/yr... so now grandma has to take a haircut on her income and pay for Healthcare out of pocket too. I'm no social security lover but that seems extreme. The allure of UBI is interesting but I've never figured out how the math works out without making sizable reductions in quality of life for significant chunks of the population. The money has to come from somewhere... I think UBI works out to be worse than zero sum economically. Anyway I've always been a firm believer that if you can't come up with a compelling and largely accurate back of the envelope justification for your story, you're not going to get many adherents.
- djrogers 10y ago
  Perhaps that's becuse it's not true? 80% of American millionaires are first generation rich, meaning only one in five of them have inherited their wealth. Setting that fact aside, why should my work not directly benefit my children? Providing for ones offspring is a universal motivation. [1] http://www.investopedia.com/financial-edge/0810/7-millionaire-myths.aspx http://www.investopedia.com/financial-edge/0810/7-millionair...
  - jljljl 10y ago
    Being a millionaire does not include you in the top 1% these days: http://www.cleveland.com/business/index.ssf/2016/03/us_millionaires_club_adds_3000.html http://www.cleveland.com/business/index.ssf/2016/03/us_milli... "More than 10 million U.S. households have a net worth of $1 million or more, a record high representing nearly 9 percent of all households in the country. That may sound like a small percentage, but it's one in 11 households. Instead of leading an extravagant life filled with luxuries and indulgences, a millionaire could be in your neighborhood." To be in the top 1%, you need to have a net worth somewhere between $5M - $25M (1.2 million households out of 124 million in the US)
- adnzzzzZ 10y ago
  You've formed your opinion without looking at data. 80% of millionaires are self-made. 60-70% of billionaires are self-made.

kevin_thibedeau 10y ago

Society still benefits if those "unearned" dollars are spent domestically.

djcapelis 10y ago
You could say the same of every dollar everywhere no matter where it goes, so that statement is essentially meaningless.
mertd 10y ago
Spending capacity of a single person does not scale though. A member of top 1% does not eat 1000 hamburgers in a day because they can afford it. They might spend $1000 on a single hamburger or several million $ on a car but it is hard to see how that money trickles down rather than stay in the Veblen goods ecosystem.
DasIch 10y ago
You're right. The problem is that rich people don't spent much money, they tend to already have most of their needs met. Poor people on the other hand are much quicker to bring their income back into circulation. If you want a lot of money to be spent domestically, you need to redistribute the money to the poor.
- thescribe 10y ago
  I feel like this implies that the rich hoard money under a mattress. Most money held by the rich is invested in some way or another.

jws 10y ago

Don’t tax labor to give money out to UBI loafers. Instead, snag society’s capital income, which is already paid out to people without regard to whether they work, and pay it out to everyone. Also known as nationalizing all investments. I think the author may not quite have a grip on capitalism.

subway 10y ago
Or the author just disagrees with capitalism.
eridius 10y ago
Did you finish the article? They're not literally suggesting that all capital income be redirected by the government, but instead suggesting that the government should build up a fund that owns capital assets. > The US federal government would employ various strategies (mandatory share issuances, wealth taxes, counter-cyclical asset purchases, etc.) to build up a big wealth fund that owns capital assets. Sure, wealth taxes does mean effectively redirecting some of the capital income earned by other people, but that's basically what all taxes do anyway. And I'm not sure what "mandatory share issuances" or "counter-cyclical asset purchases" mean. But the end result is they're suggesting that the government should own a set of capital assets rather than just relying on taking money from citizens that own capital assets.
- em500 10y ago
  > Did you finish the article? They're not literally suggesting that all capital income be redirected by the government, but instead suggesting that the government should build up a fund that owns capital assets. To provide a UBI of say 12k for every adult in the country (as opposed to just a few hundred or thousand), such a fund would need to own a large part of all the corporations and housing stock in the country. Didn't work well for the countries that tried it in the past.
eli_gottlieb 10y ago
Who said the author likes capitalism? A lot of people don't these days: it hasn't been very nice to us.

imgabe 10y ago

So, essentially, abolish property rights? Just have government seize the capital from people who currently own it, or rather, seize the proceeds of the capital which is effectively the same thing, because why would you bother owning the capital if you weren't going to have access to the income it produces? I'm all in favor of Universal Basic Income, but what happens when everyone who currently invests their money to produce this passive income decides to simply spend it instead since they wouldn't get to use any return from their investments?

subway 10y ago
Seems like if the folks hoarding money via investments were to spend it, we'd see much greater wealth equality.
- stretchwithme 10y ago
  That's true. We'd all be much more equally poor. There's also be no capital accumulating for innovation. No annoying technology to enable people to make high salaries. And none of the annoying tax revenues collected from them.
  - stretchwithme 10y ago
    This has been tried many times. It's called communism. And people always try to escape it. And its eventually abandoned.
- forrestthewoods 10y ago
  > hoarding money > investments Pick one. Those are literal opposites.
CodeWriter23 10y ago
> but what happens when everyone who currently invests their money to produce this passive income decides to simply spend it instead since they wouldn't get to use any return from their investments? We would then experience true economic recovery, where everyone can access the inventory of dollars, as opposed to the current "asset based" recovery we are now experiencing. Which is basically economic recovery for those who own hard assets.

yuhong 10y ago

Thinking about it, basic income would be better than increasing credit as a way to increase the money supply, but it is probably not particularly good either.

traskjd 10y ago

I'm in favor of trying UBI to see the impact, testing it properly. I'm not a fan of this article however. While we are reasoning by analogy, It's fairly well documented that most capital wealth does not survive past an initial generation or two. There's something about creating the wealth/passive income that creates a different behavior than being given it. This article does nothing to discuss that. The analogy included feels like it's just there to support a punchy headline. This is why I'm more excited to see some real tests and results in various countries and communities.

eridius 10y ago
> There's something about creating the wealth/passive income that creates a different behavior than being given it. My completely uninformed opinion is that this is largely due to one of the following: 1. Kids who grow up with so much passive income that they never need to work even for luxuries. UBI won't produce this, because anyone who wants luxuries will still have to work to afford them. 2. Passive income isn't automatically self-sustaining, so if kids aren't as good as their parents at actually managing their assets and/or business, then they may simply end up spending more than they make (especially if they're trying to maintain the same lifestyle their parents had even though they can't maintain all of the income). I think this ties back into #1 as well. The article said 30% of the income is capital assets, but if kids aren't good at business (or don't want to work at all), then they're relying on capital income for nearly all of their income instead of just a portion of it, which generally isn't self-sustaining without a change in lifestyle.
stretchwithme 10y ago
It's easy to test. Find someone and start paying them. Let us know how it works out.
- kybernetikos 10y ago
  This is in fact what people are doing. https://www.givedirectly.org/research-on-cash-transfers https://www.givedirectly.org/research-on-cash-transfers http://www.forbes.com/sites/timworstall/2017/01/02/finlands-basic-income-experiment-starts-really-its-testing-the-laffer-curve-for-poor-people/#53229bbd76af http://www.forbes.com/sites/timworstall/2017/01/02/finlands-... https://blog.ycombinator.com/basic-income/ https://blog.ycombinator.com/basic-income/

gfodor 10y ago

This article seems transparently fallacious to me, since the income generated for the 1% is due to investment capital. Investment capital, among a million other attributes that differentiate it vs a state backed UBI program, is exposed to risk. There isn't just some pile of "income" sitting there we can harvest every year, the income the article talks about exists due to the exchange of capital. At the end of the year, some of those investments fail (for example, bonds default) and the income streams vanish. The analogy to UBI completely fails. Honestly this is probably one of the most transparently dumb UBI articles I've seen posted on HN. (Disclaimer: I support the idea of UBI pending research outcomes.)

Daishiman 10y ago
When investment capital's returns turns out to be distributed in a disproportionate manner that's not actually benefitting the majority of society, we have a problem. The tables have been turned in favor of rent-seeking behavior, which is what the article complains about. This is merely a way of correcting that problem.
huac 10y ago
Risk is always relative. If you have enough capital, you can afford to focus solely on the long run, and plan positions accordingly. In general portfolio theory managers aim to optimize an objective - for short term hedge funds that's typically Sharpe ratio or just net return, but for long term focus (e.g. a rich family), you focus on minimizing the probability of shortfall. That is, your family is going to spend some x% of your wealth every year. Then you only need to return x% on the fund (approximately) on a yearly basis. There is very little real risk associated with this strategy, if you're rich and needing to earn a small percent of your total assets, say 3%. Now, if your family isn't rich, you're probably going to need to spend much more than 3% in income, and your probability of shortfall increases dramatically. This is similar to how college endowments work - do you think Harvard's endowment has a high chance of going dry anytime soon? Tangentially, their tax-free status is tied to spending 5% of the assets each year, which actually makes their job a lot harder, and is why they need to still raise money.
- 10y ago

msoad 10y ago

What "universal" in UBI means actually? If we pay to some of people then it's not universal. No matter if it's the top 1% or the poorest.

powmonk 10y ago
It means taking the massive chunk that goes to the 1% and instead redistribute it evenly to everyone (including the 1%, but this time they get a much smaller piece)

redmattred 10y ago

Seems like a total straw man argument. I think very few are against the idea of free money for everybody because of the fear of moral decay if people aren't working. I think the opponents are worried about where that money to fund UBI will come from. Taking away people's assets to be redistributed is obviously kind of a touchy subject.

djcapelis 10y ago
I've actually seen a lot of folks argue against UBI out of the assumption that if people don't have to work, no one will ever do anything with their lives and we'll all go to hell with no production whatsoever. This article is targeted at that argument. If that's not an argument against UBI you want to make, that's great, but it's still worthwhile for the author to write something here.

CyberDildonics 10y ago

I didn't realize investments were the same as being payed. It is a revelation that people who have enough money to live off of investments don't have to fight to survive?

negamax 10y ago

UBI is a well intentioned but misdirected goal. Ask for minimum social infrastructure. Not money. Minimum social infrastructure that involves food, education and medicine safety to a good degree (without any hint of lavishness). We achieve that, we will solve arising problem meaningfully in my opinion.

powmonk 10y ago
I agree there should be a minimum social infrastructure but shouldn't there also be more? In a near future where automation has made most jobs obsolete people shouldn't have any form of luxury at all? No capital to speculate? No hobbies? Seems like a very dull future.
- negamax 10y ago
  I am being pragmatic. Having lived (currently living) in a pseudo socialist state, I do not think UBI/welfare state is going to last. May be I am wrong in sense of not knowing how people will change given the choice. Minimum social infrastructure elevates the bottom for everyone. If people can rise from that bottom further, maybe we can work towards elevating the bottom further and further as time passes.
rjbwork 10y ago
The following is a non-value judgement. We see generally better outcomes when we just hand people cash than when we make them jump through hoops, and partake in non standard services to acquire resources. It also generates more administrative overhead than if we just hand them cash. I don't know if this would hold for a universal social services infrastructure. My personal analysis is that I would tend towards decentralization via cash payments, so as to enable choice, and not have the state takeover the potential economic activities enabled by such cash payments. Nobody wants to be given food from a government kitchen or government food box, but most people, I would think, would not mind getting $X per week/month/year to supplement their other income from the government.
- negamax 10y ago

amelius 10y ago

I have an idea. Can't we make national lotteries pay out in UBI, and use the results for studies? That way, those lotteries at least serve a useful goal.