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Doesn't testing this on unemployed people only quite silly. I mean the answer to the question "would poor people benefit from more money?" is quite obvious. The
by rijoja 9y ago
Doesn't testing this on unemployed people only quite silly. I mean the answer to the question "would poor people benefit from more money?" is quite obvious. The real question is whether people who already are employed would stop working had they received "free" money. I'm so disappointed in this glaring hole in the methodology!
- RealityVoid 9y agoReally, if it' only for poor people it's not basic income anymore, it's welfare.
- DataWorker 9y agoIf everyone got it then it would simply be called inflation.
- azernik 9y agoThat's not how macroeconomics works. If everyone got it and it was funded by expanding the money supply it would be inflation plus redistribution (since the new money is distributed uniformly instead of e.g. to government bondholders). If you're funding it with taxes, it's plain redistribution.
- DataWorker 9y agoSo you don’t think there would be any inflationary impact if you gave everybody, to use an extreme example, an extra 1 million dollars a month? I guess I don’t really see how that’s possible but I’ll admit much of economics is over my head.
- azernik 9y agoDepends on where that money's coming from. If you take it away from the wealthy, that reduces their a) consumption spending, and b) investment, which causes a countervailing downward pressure on prices. The total amount of money floating around, however, stays the same. This comes with some caveats, of course: This would probably cause a demand shock as spending shifts from the things the rich do to the things the newly-not-poor do - so there would probably be a short-term jump in the price of e.g. low-end smartphones and middle-end IKEA furniture, and a crash in the price of international travel and of certain investments, until the economy properly shifts over to the new production priorities. Which can be interpreted oh so hilariously from a Marxist perspective. There may be an increase in money velocity when shifting income to (on average) lower income brackets; i.e. it may be the case that money changes hands more quickly in the case of (poor people consume items, and then the places they buy it from plow that money into both investment and into the taxes necessary to fund the UBI program) than in the current case of (rich people put money into their more high-brow consumption and into investments, and the Apples and Fidelities of the world put their revenue and investments to use). That is, the same amount of money gets spent more often. And that could cause inflation. But of course the determinants of velocity of money, and its effects on inflation, are an open question in economics.
- DataWorker 9y agoBut everybody gets it, it’s not taken away from any person. The wealthy get a million dollars extra just like everyone else. Let’s also assume it’s revenue neutral, so the government doesn’t need to raise taxes. I hear that’s the claim of most ubi proponents.
- azernik 9y agoThe wealthy get a million dollars along with everyone else, and that money has to come from somewhere, so you need to tax the wealthy a lot more than a million dollars on average. Basically the way to think of it is: you're giving everyone a million dollars on average, so you need to tax everyone a million dollars on average, and the only way to make that work is to actually tax someone with, say, $5M/year in income $4M of that income to balance out the people who make only $20K/year and can't pay anywhere near their share. (That tax rate is probably impractical, but then we're looking at a pathological case for the sake of analysis anyway.) If it's revenue neutral, then that means you're taking money from other programs - which by definition spend that money. Just on different things. (And probably a lot of the same things, if you're taking that money from existing welfare programs.)
- DataWorker 9y agoThe more serious proposals I’ve heard are for revenue neutral ubi. Which means taking the money from current entitlements and giving it evenly to everyone. I’d love to hear a real economist who supports the idea and is in favor of paying for ubi by raising taxes on the wealthy. I do not know of any economists that fit that description.
- azernik 9y agoOn the contrary. Most of the "revenue neutral" claims I've heard are Americans making a politically-motivated claim to reduce libertarian/conservative opposition. Actual concrete proposals always require taxation - see e.g. the Swiss proposal (voted down in a referendum because of the taxation requirements) and this [1] overview in the Economist of the prospects of adoption in other countries. Generally, if I see a claim that a proposal for UBI is revenue neutral, I assume they're either a) left-wing Americans trying to sneak welfare hikes by right-wing Americans, or b) right-wing Americans trying to sneak a drop in net income transfer to the poor past left-wing Americans. [1] https://www.economist.com/blogs/economist-explains/2016/06/economist-explains-4 https://www.economist.com/blogs/economist-explains/2016/06/e...
- nsbq71 9y ago>I mean the answer to the question "would poor people benefit from more money?" is quite obvious. No, because: >The real question is whether people who already are employed would stop working had they received "free" money. So: will unemployed people stop looking for a job if they receive free money?
- scarmig 9y ago> will unemployed people stop looking for a job if they receive free money? That's not quite the question. The question is, will unemployed people look less for a job if they're guaranteed free money even once they get a job, compared to the status quo where they are guaranteed free money (for awhile) that stops once they get a job. There's also a follow-up question, that is something like "Will people on permanent disability start getting jobs if you stop punishing them by permanently taking away disability payments if they get a job?"
- deleted 9y ago[deleted]
- commandlinefan 9y agoI think testing it for two years is the silly part. I have complete confidence that, say, the United States could easily sustain basic income, at a livable wage, for 20, maybe 30 years, before it started to crack under the pressure of too many people collecting and too few people putting in. Of course, by then it would be too late to close the box...
- disordinary 9y agoCorrect me if I'm wrong but the length of unemployment benefit allowed in the US is six months and the unemployment rate is 4.1%, the length of unemployment benefit in New Zealand is for life and the unemployment rate is 4.6%. So on the surface it appears as though giving free money to unemployed has no impact on unemployment rates.
- Jhsto 9y agoIn Finland people receive conditional aids, sometimes amounting so much money that there is little incentive to go to work anymore, because doing so would cut your subsidies. I guess what the government wanted to see is that given it "unconditionally," would people take up low paying jobs because now they don't lose any more aids by doing so. I agree it was dumb to coin this as a UBI.
- digi_owl 9y agoYeah, another interesting aspect of UBI would be how many would quit their existing job and just subsist on UBI. The real fear of most against UBI seems to be that the majority will quit their jobs, resulting in the government losing way more in income tax than they pay out in UBI.
- um_ya 9y agoYou don't even need to test UBI to see that it won't work. You can tell by our existing system that UBI will promote people to take advantage of the system. If you're poor, you get free grants to go to college, food stamps, and all sorts of free programs. As soon as you start working, you lose all those things. This also contributes to why black families have only one parent, because the government gives more money to broken families than regular families.
- eurleif 9y agoIt sounds like you're referring to welfare cliffs. Practically the entire point of UBI is that there are no cliffs.
- jMyles 9y agoI don't know exactly how to say this without seeming insincere, but can you try your comment again? There's no part of it that makes sense to me. I think it's potentially an interesting surface for discussion, but when broken down, I can't quite find anything about it that makes enough sense to respond meaningfully.
- dragonwriter 9y ago> Doesn't testing this on unemployed people only quite silly. Not necessarily: if the purpose of the test is to determine how basic income affects outcomes over a period for the unemployed, having the experimental group to whom BI is given be exclusively drawn from the set of people unemployed at the beginning of the experiment and comparing that to a similar group of unemployed people not given BI is a fairly sane experimental design.
- scarmig 9y agoIt's important to emphasize that right now, the responsible thing is to perform extensive experiments on how UBI will affect work incentives. There are lots of unknowns, and this will give us some information to formulate later questions, once results are actually reported.
- tnzn 9y agoWhile sane, it has the drawbacks of similar experimental designs : wouldn't UBI distributed to everyone have other effects on the unemployed than UBI to 2k unemployed?
- JumpCrisscross 9y ago> Doesn't testing this on unemployed people only quite silly Testing it on a series of population subsets before testing on the entire population seems reasonable.
- deleted 9y ago[deleted]
- debt 9y agoIt's quite arrogant to outright assume Fins are so stupid as to not have thought of this.
- omg_ketchup 9y agoI'm curious if "stop working" is an appropriate measure of the potential downsides. Especially in a place like HN where work on side-projects that could become real businesses are encouraged.