13 ms·

Universal Basic Income Is Not Feasible

59 points by ihodes 8y ago

arebop 8y ago
The article confuses me with its enumeration of multiple points of argument that appear to amount to the same thing (UBI isn't feasible "because of the cost"; UBI isn't feasible "because taxes have to be high enough"). Also, it features seemingly contradictory arguments such as those from Feldstein, who says that UBI would require impossible tax increases and also that NIT would be fine. One argument that isn't contradicted by its proponent in the article is that of Smetters, who says the evidence is that automation replaces some particular jobs, but does not reduce the aggregate labor opportunities for the great majority of people. I don't share this optimism but I can see why those who do would be uninterested in even posing the question of feasibility for a sweeping change such as UBI.
- adrianratnapala 8y ago
  > that UBI would require impossible tax increases and also that NIT would be fine. Intuitively I had thought of the UBI and NIT as very similar except that the UBI seeks to be large enough to be a workable living income, whereas a NIT can be any positive amount (or negative, depending on which way you look at it). So conversely the tax change required to fund it need not be large -- it just depends on how ambitious you want to be.
  - 1123581321 8y ago
    This is part of the circle of miscommunication when discussing UBI. It goes like this: Q. The tax rate would be too high. A. Not if UBI is small. Q. Small amounts won’t make a difference. A. That’s why it needs to be enough to live on. Q. Then the tax rate...
    - keithnz 8y ago
      the problem is people talk about paying for it through income tax and not a wealth tax. If you look at wealth distribution, you look at how to slice enough off the top end to cover the bottom end.
      - 1123581321 8y ago
        I assume you are looking at the $50-100 trillion of theoretically seizable wealth in the United States. Unfortunately, not much of that is fungible due to the lack of buyers in that scenario.
  - akvadrako 8y ago
    UBI and Negative Income Tax are two terms for the same thing. Well, according to Wikipedia, NIT is one implementation of UBI (https://en.wikipedia.org/wiki/Negative_income_tax https://en.wikipedia.org/wiki/Negative_income_tax). I suppose that's fair, but it's the most obvious implementation. Either can be large or small; that's not part of the definition.
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dandare 8y ago
Can you give me feedback to my argument about UBI? https://www.lucidchart.com/documents/view/87d3102c-5b89-4001-9929-346873d19571 https://www.lucidchart.com/documents/view/87d3102c-5b89-4001...
- VikingCoder 8y ago
  I think "Like £10,000 a year." You then respond, "Individual poverty threshold in the UK is around £15,000 a year." That's not really an argument against UBI. You essentially said that if someone wants to live above poverty, they would need to make £5,000 a year. That's $7000, roughly. 2000 working hours in a year. So call it $3.50 an hour. Not really sure exactly when and how taxes come in, but you get the rough idea. Seems entirely do-able to me. Everything above $3.50 an hour is increasing their luxury out of the poverty threshold. Do I need to follow the rest of your flow-chart, or have I gone far enough?
  - petermcneeley 8y ago
    Im thinking this might be an elaborate troll. I was surprised it didnt just have a rick roll instead of the phrase "your version of ubi is dumb". However its likely our fault for taking a document seriously that has the word "dumb" in the title.
    - VikingCoder 8y ago
      I'm okay with people saying something is "dumb," I just request they have a well-reasoned argument for that position, and that they defend their position vigorously if it's important to them.
      - petermcneeley 8y ago
        Ya well there is no attempt at a defense yet. What im curious about is if this really just boils down to opposition to any and all forms of redistribution regardless of feasibility computations.
qntty 8y ago
Should be titled "The particular implementations of UBI that I have in mind aren't feasible".
VikingCoder 8y ago
Why was the headline modified? The article asks the question, this submission changed the headline to turn it into a statement.
- hexane360 8y ago
  It's not even the same question. The HN title substitutes "feasible" in for "good idea".
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VikingCoder 8y ago
This article makes the claim: “Thoughtful liberals and conservatives trained in economics are almost universally against the idea.” –Kent Smetters Another article makes a different claim: "Top Economists Endorse Universal Basic Income" https://www.forbes.com/sites/francescoppola/2017/08/31/top-economists-endorse-universal-basic-income/#5275f6ba15ae https://www.forbes.com/sites/francescoppola/2017/08/31/top-e... So is Kent Smetters wrong, or is Forbes citing people who are not actually "top economists", or maybe not even "trained in economics"?
Bucephalus355 8y ago
Gerald W. Johnson, a journalist who covered The New Deal during the 30’s for the Baltimore Sun, wrote that what angry poor people want is never usually money (or else they would have revolted a long time ago), but hope for a better future for either them or their children. Eric Hoffer, who wrote a book in the 50’s called “True Believer: On The Nature of Mass Movements”, had a similar argument. UBI is not a long term solution, but I appreciate it being innovative and trying at least. One of the reasons we didn’t get any financial reform in 2008 was that their simply was no other economic system/theory to turn too. Right now, before the next recession, we are developing the theories that will be chosen from once neo-Kynesian economics is shown the door in the years to come.
- otakucode 8y ago
  >One of the reasons we didn’t get any financial reform in 2008 was that their simply was no other economic system/theory to turn too. Other? I would have thought (I am no economist so I apologize if this is daft) that the sensible response would be to permit all of the banks who engaged in gambling to actually lose their bets and suffer the consequences of their own actions. Those which extended loans which could not be repaid should have entered insolvency, with the debts owed to them eliminated. Likewise, the fraudulent practices conducted should have resulted in hundreds or more of banking executives and other employees sent to prison. It would seem to me that the solution we settled upon - giving them titanic amounts of money, assisting their consolidation, and playing pretend as if the fraudulent loans issued were still owed by those who they were foisted upon, foreclosing on homes, and significantly derailing, if not destroying, the lives of hundreds of thousands of families - was the 'other economic system' here. It certainly was not the one laid out in black and white on paper and followed for a century or so. Under that one, when you extend credit to someone out of funds you do not have, then place bets on repayment while lying about the odds, you crash rather than luxuriate in the spoils of a looting of the masses.
  - badloginagain 8y ago
    > permit all of the banks who engaged in gambling to actually lose their bets When they throw the term 'too big too fail' around, they mean it in the literal sense: That the banks losing these bets would literally bring down the American -> World economy. What _is_ missing is that no one was punished, no laws were changed (or have recently been relaxed even further?), no structured breakup of the bad actors. It means theres no incentive to _not_ risk global economic collapse, even though the words global economic collapse should be incentive enough.
DonbunEf7 8y ago
Disregard feelings, acquire evidence. There is only one concrete numeric analysis among all quoted objections, and it concedes that raising taxes would be sufficient to balance the books, at least in the USA.
ggm 8y ago
My primary concern is that most people in the margins depend on rent, and shopping locally because the cost of ownership of home, and transport to bigger (cheaper) shops is above their threshold. They're trapped in the locality of poverty. Which immediately makes them prey to being exploited by inflation of costs, prices, to match the UBI guaranteed income. TL;DR what stops a landlord and local shopkeeper increasing prices until the UBI is drained?
- gregable 8y ago
  Depends on the locale. In many places, there is more housing than demand for housing, and so rent is based on the cost more than the ability to pay. In bay area markets, rent is based on the renter's ability to pay of course.
  - kromem 8y ago
    Still based on cost. The housing itself costs more in the Bay area. Rentals/housing in the Bay area (or other desirable locales) are supply constrained. The only class of goods I can think of that are not based on underlying costs are monopolies. And yes - it's unlikely that low income rentals will suddenly become supply constrained after UBI.
- patmcc 8y ago
  >>TL;DR what stops a landlord and local shopkeeper increasing prices until the UBI is drained? Rent control for the first, competition (or a high enough UBI that they can travel far enough) for the second.
  - ggm 8y ago
    So you assume that in the west, seduced by free market economics, rent control is coming back? I ask this in Australia frequently. I'm laughed out of court: nobody wants to re-introduce any constraints on market rent. "travel far enough" is the whole point: if you live in a marginalized situation, UBI is unlikely to pay the cost of transport to save money on shopping, and mechanistically, since you don't have a car and cannot pay delivery, you are stuck behind higher unit pricing exploitation. Unbelievably high numbers of people in the UK now depend on food handouts organised informally. Food stamps and Gated cards for welfare have their own problems. France recently passed laws requiring supermarkets to supply charity food from unsellable ugly fruit and vegetables, and near-dated produce. Why do you think this is? Why do you think the state is trying to force independent, semi regulated economic entities to perform a social welfare outcome? Now put UBI into the equation. You think this is axiomatically going to fix the systemic underlying problem? UBI in greece would demand the entire last 15 years historic debt be wiped out. Otherwise, its going to be grabbed by the asset-rich who have been avoiding the consequences of forcing defaults on the non-working poor.
jasode 8y ago
Which form and scope of UBI is more common in everyone's mind when people think of "UBI". Is it: 1) UBI is a replacement for the wasteful fragmented welfare programs. The "efficiency" gains by consolidating into UBI will pay for most of it and maybe a modest tax increase to round it out. Whatever _that_ amount is, that's what we call UBI. This would be less than $14k a year. It would be just enough for food, living with roommates, and riding public transportation if the recipient didn't share a car. or 2) UBI is a minimal and comfortable standard of living (home+car+food) so people don't have to work. The release from the stresses of earning a living will unleash a flurry of productivity in art, science, self-improvement. Society would flourish. This type of UBI is much more expensive... maybe about ~$30k. Which form of UBI dominates the discussion? If it's the 2nd one, I'd argue that's mathematically impossible to provide.
- scarmig 8y ago
  My impression is that 1) is what most UBI advocates support. It's certainly what I'm interested in getting data on. Furthermore, any conceivable implementation of 2) would have to go through 1) first.
- JumpCrisscross 8y ago
  I am sceptical of (1), but not certain enough to refuse experimentation. Modern computing makes administration cheap. A lot of UBI literature fails to account for those realised and potential efficiencies.
  - contravariant 8y ago
    Well, government administrations aren't exactly known for their simplicity or efficiency. Even if not, most support is send conditionally and only to certain people, this requires more checking than sending everyone an unconditional amount.
- mesozoic 8y ago
  The US budget is about 3.2 trillion. Assuming we don't default on debt or reduce military and assuming we can't remove medicare and health spending and also we don't remove other non entitlement spending you get about $2 trillion that could maybe be reshifted. There are 138 million us tax payers giving each $14k comes out to right at 2 trillion. (Ignoring for now the non tax payers which would double this number and all of the following) The troubling part though is that half of that is social security. Reducing social security payments to that would cripple retired people forced to pay into the system their whole lives and make them live at possibly 10% or less of what was promised. Not putting a lot of faith in the government. Maybe 1 is feasible under that situation but to not kill social security it would require about 30% tax hike and be an increasingly negative program for anyone making over $46k which is 30% of the population. In my opinion that is idiotic. Logistically it would be a nightmare as congress would have to simultaneously remove a boatload of spending then add a boatload more which would be battled forever. I also have doubts about the capability of many people to responsibly handle the money themselves leading to calls for more entitlement programs to be reinstated or formed. 2 is next level moronic. The increase in average income would likely drive inflation to increasing levels ultimately creating the same effective levels of wealth and poverty as before. That $30k will pay for a car/house maybe in the first year but not really in the third, fourth etc.
jadedhacker 8y ago
Why UBI is difficult to even make desirable: https://www.jacobinmag.com/2016/01/universal-basic-income-switzerland-finland-milton-friedman-kathi-weeks/ https://www.jacobinmag.com/2016/01/universal-basic-income-sw... Alternative idea, a universal job guarantee: https://dsa-lsc.org/2017/09/30/why-socialist-job-guarantees-are-better-than-universal-basic-income/ https://dsa-lsc.org/2017/09/30/why-socialist-job-guarantees-... I'm still learning about this other take as UBI seems prima facie a good thing, but there are a number of severe flaws in the idea.
- icebraining 8y ago
  Posting those two links is interesting, because as far as I can tell, they're essentially contradictory. The first says UBI is not necessarily that great, because it might not free people from working, whereas the second says it's not great, because people will no longer work! These two passages are particularly striking: Jacobin: "The kind of freedom from work (...) that an LBI envisions is, in all likelihood, not compatible with capitalism’s requirements of profitability." DSA-LSC: "With UBI (...) one's status (...) as a worker is tentative and subject to elimination."
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shireboy 8y ago
One thing I don't see addressed here or in research on the topic is the macroeconomic impact. Would a UBI cause inflation or other mechanisms to make up the difference in prices? For example, if everybody received $1000/mo would candybars eventually adjust to be $1001? This seems like something that small-scale experiments would be unable to discern.
- icebraining 8y ago
  Generally competition works to prevent that; if a company raises their candybars to suck more money, the other company will keep them lower to gain market share, forcing the first to come down again. The problematic markets are the ones where competition is already deficient. Housing is often mentioned, but I actually don't think it'd be such a problem - if you get an UBI, you're actually much more free to move to cheaper places, rather than pushing up prices in places with jobs. I'm not from the US, but if I was, I'd fear the cost of healthcare. Then again, that's probably unsustainable with or without UBI.
  - shireboy 8y ago
    I understand competition can prevent inflation and that lower competition markets will have more inflation. My thinking is that the effect on pricing would be more indirect. Maybe companies have to pay more in taxes to cover the UBI. Their costs go up, so pricing adjusts upward universally. Obviously it's way more complex than just UBI/mo + original price, but UBI _could_ be an upward pressure to prices that doesn't exist today, and that could counter the downward pressure from competition. One argument against that might be that under UBI individuals have more income to start businesses, and so more competition is added that keeps the downward pressure steady. My only points are that it _seems_ like a possible issue, and one that small-scale studies might not be suited to examine.
- lostcolony 8y ago
  Uh...of course not. Same as when an across the board tax cut gives every worker some amount of extra money, it doesn't lead to massive inflation. Besides, it's insane to assume that the price of a -single item- will jump to eat the entire cost of a payment such as UBI, because if that happens for every item, no one will be able to buy anything.
icebraining 8y ago
would require “doubling the personal income tax.” A UBI that pays every American $10,000 a year would cost about $3 trillion No, it wouldn't. Because if you give an upper middle-class American $10000 and you raise their tax bill by $12000, you neither actually spent $10k on them, nor did you actually increase his effective tax rate by that much. The idea that an UBI would literally cost the $10k for each person is to not understand basic accounting. Or to be dishonest, I guess.
- dv_dt 8y ago
  If you approach it from the Negative Income Tax implementation then it's also much less to fund because basically the tax deductions already baked into the tax code can be made at some level into something that's sourced via UBI instead of just a floating deduction. Of the remainder, you fund much of that from some subset of existing social safety net programs. It's not trivial, but I'd agree that the line was at best sloppy accounting, and at worst a dishonest criticism.
- JumpCrisscross 8y ago
  > if you give an upper middle-class American $10000 and you raise their tax bill by $12000 Can you show your math? Curious what tax rates are assumed.
  - cm2012 8y ago
    You can only do it this way if realistically, only the bottom 25% came out net positive from UBI.
  - icebraining 8y ago
    I'm not using real numbers or assuming any tax rates. All I'm saying is that if you both pay someone and also raise their taxes, only the difference is a real amount being taxed/given.
- asdsa5325 8y ago
  Also, UBI is supposed to replace other entitlements, so the cost before tax increases will not be $3 trillion, it will be ($3 trillion - all current entitlements' cost)
NPMaxwell 8y ago
Weird article: No author.
flubert 8y ago
I don't think anyone has to worry about UBI being implemented until someone comes up with a better/more persuasive name. Something like the "Robot Dividend". Compare and constrast: "Social Security" vs. "Wealth transfer from young to old".
hexane360 8y ago
>Conservative economists do not like it because it would harm economic growth, he adds. This is almost guaranteed not to be the case. For this to be true, the marginal propensity to consume of rich people would have to be higher than the MPC of poor people. >"The evidence is that robotics is a labor complement and is increasing skilled wages. While robotics are replacing some lower-skilled jobs, the most efficient response is to not kill the golden goose but to make sure we have job training programs that are effective in increasing skills." Again, this assumes that UBI "kills the golden goose", which is exactly what neoliberals don't want to do. >“I find it very hard to envision political support in this country for that kind of radical increase in taxation.” This is an argument about whether UBI is a realistic proposal, not about whether it's a "good idea" (the article's stated title). >"Instead of a UBI to help the poor, Feldstein recommends the “negative income tax” plan" How functionally different is a NIT from UBI? It seems like the author is trying to equate Feldstein's and Smetter's positions when they're actually very different. >Benjamin Lockwood (sic) favors the idea of offering a guaranteed basic income, which he says is a better term than UBI. Huh. So now your argument is just against the name UBI, not the policy itself.
tomelders 8y ago
Well the current reality isn’t feasible, but we’re doing it anyway. No one really knows wether UBI will be a succes or a failure. But then no one knows wether any policy will be a success or a failure, and there will always be supporters and fetractors on either side. Ultimately though, all that really matters is that government takes action that it believes will make society better. That’s it’s purpose. And if government believes UBI would be a net good, it should do it.
- prepend 8y ago
  How is the current reality not feasible? It seems rather successful or at least sustainable in hundreds of cultures. Economically, the current system has flaws but is self-sustaining. UBI at even low levels like $10k isn’t possible unless you somehow double tax revenue. For example 330M in the US = 3.3T. In 2017, the total revenues were 3.4T [1]. So just for basic levels, revenue would have to increase and that would really hose the economy and you would be able to raise 6.7T for very long. [1] https://www.thebalance.com/u-s-federal-budget-breakdown-3305789 https://www.thebalance.com/u-s-federal-budget-breakdown-3305...
scarmig 8y ago
> From the point of view of economists, a UBI is not feasible. Sigh. From the point of view of an economist, not economists generally. Most are open-minded about it, but want to see more evidence and experimentation. It'd be nice for Wharton to list an author of this article, if merely for the purpose of knowing their qualifications. Why do I get the impression it's some undergrad in journalism who just walked down the hall to the only economist they know?
- ihodes 8y ago
  Check out Kent Smetters if you're curious.
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TaylorAlexander 8y ago
My issue with UBI is that it does not in itself advance productivity. My vision for a future where there is enough for everyone and all of that abundance is sufficiently evenly distributed that no one is wanting for basic needs is a future where most of the productive work done in the world is done by machines and those machines are open source. The second part, where most of the machines are open source, is the critical component in my opinion that differentiates my vision from the world I think we will have if we don’t act to change course. (That world being one where proprietary machines are licensed with fees that ensure wealth is concentrated rather than distributed.) With open source productive machines being the basis of economic productivity, all engineering effort would go towards the common good of making those machines more productive. Companies would compete to manufacture the machines better than others, and would have first mover advantage on the new developments they produce. They would overall have a somewhat lower incentive to innovate, but this is offset by the larger incentive to innovate new players would have. More broadly I see intellectual property as a violation of the natural rules, and I see that we could voluntarily stop using intellectual property any time we want. It is my belief that legislative solutions will always be eventually undermined whereas solutions that bring us productivity cannot later be taken away by legislative bargaining. I also believe than any UBI implemented would always be half hearted in implementation just as minimum wage isn’t actually enough for many people to thrive on. What do you all think about the way I pose this? Where I claim that open source productive machinery is a viable alternative to UBI as a means of more broadly distributing the wealth of increased productivity?
rayiner 8y ago
> A UBI that pays every American $10,000 a year would cost about $3 trillion, Smetters says. That's assuming you provide UBI on top of Social Security. You can reduce the real cost to about $2.1 trillion by making people pick one or the other. And you can raise $2.1 trillion by raising U.S. taxes as percentage of GDP to roughly the level of the Netherlands. Even if you assume GDP will contract somewhat, you can probably do it without raising taxes above that of France.
transfire 8y ago
I've worked out the numbers and it is not impossibly expensive. First, you have to understand UBI is not intended to give someone a "comfortable lifestyle" without working. Rather, it's to give someone a "comfortable survival" without working. In other words food, roof and odd necessities. In my figures I simply pegged the UBI to a part-time (20hrs) minimum wage job. When you subtract all the welfare programs that will be made unnecessary, the remaining cost is well within reach of relatively minor tax increases. (I am particularly partial to a usury tax). One of the big problems that economists are overlooking with relation to automation of the job market is that excessive government regulation, along with antitrust-worthy corporate practice, has created a huge administrative/bureaucratic burden, and it is from this that most new jobs are being created. In other words, BS work. Just look at how many administrative employees a doctors' office now has -- and we have to go to more and more specialists too. Meanwhile our actual quality of care has gone down, not up. Another good example, which I recently learned about, it is against the law for a computer program to generate a medical diagnosis. Heaven forbid that we might not need as many doctors one day. And the best example of all. The IRS is about to make it mandatory that you get your taxes done by a service provider (personal or by software). So what motivation does the government have tp simplify tax laws after that? None. Just keep making them more complex (so big companies can loophole) and in so doing create more BS jobs.
- chipuni 8y ago
  <i>Another good example, which I recently learned about, it is against the law for a computer program to generate a medical diagnosis.</i> Here's a counterexample: https://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm604357.htm https://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/u...
whataretensors 8y ago
UBI might be able to happen on a blockchain by taking a percentage of the rewards and sharing it. One problem facing such a system would be sybil attacks. POS systems avoid this by weighting in regards to coin ownership, but in a UBI chain you would not want this since the whole point is to give to people equally.
spyckie2 8y ago
One of the arguments against UBI from a moral point of view (ignoring feasibility arguments) is that people will become lazy because they don't need to work to survive and lead to economic stagnation. It's kind of a throw back to the communist / capitalist arguments of the previous era. While this is somewhat true - there is a subset of the population that would prefer not working, UBI would also unlock the economic potential of another subset of the population who, due to debt, poor living, lack of opportunities, cannot afford to invest in themselves even though they desire to do so. Revisiting communism as seen in its historical implementation, what communism did was replace opportunity with equality. UBI appears to have no such fantasies, and just give everyone more money. People who have the desire to make a lot of money, utilize their skills to make an impact, get good at things, contribute, and grow, will not have any of that taken away from them, but will get a larger platform for them to do so. In this generation, investment is becoming the standard track for improvement, similar to college in the previous generation. It's seen as the way to grow your income, value, assets, and lifestyle. While investment is traditionally seen as stocks and asset collection, it's amazing what slight amounts of money can do to free up time. For instance, investing in laundry services, if you use your time well, can be a great investment (although, if you invest in laundry services and then use the time to play video games, you're probably the other subset of the population). Tracing back to my original point, there's definitely a tradeoff argument to make. Is unlocking the potential of some worth it, knowing that the money will be wasted by others? At what ratio is this acceptable?

59 points by ihodes 8y ago

The article confuses me with its enumeration of multiple points of argument that appear to amount to the same thing (UBI isn't feasible "because of the cost"; UBI isn't feasible "because taxes have to be high enough"). Also, it features seemingly contradictory arguments such as those from Feldstein, who says that UBI would require impossible tax increases and also that NIT would be fine. One argument that isn't contradicted by its proponent in the article is that of Smetters, who says the evidence is that automation replaces some particular jobs, but does not reduce the aggregate labor opportunities for the great majority of people. I don't share this optimism but I can see why those who do would be uninterested in even posing the question of feasibility for a sweeping change such as UBI.

adrianratnapala 8y ago
> that UBI would require impossible tax increases and also that NIT would be fine. Intuitively I had thought of the UBI and NIT as very similar except that the UBI seeks to be large enough to be a workable living income, whereas a NIT can be any positive amount (or negative, depending on which way you look at it). So conversely the tax change required to fund it need not be large -- it just depends on how ambitious you want to be.
- 1123581321 8y ago
  This is part of the circle of miscommunication when discussing UBI. It goes like this: Q. The tax rate would be too high. A. Not if UBI is small. Q. Small amounts won’t make a difference. A. That’s why it needs to be enough to live on. Q. Then the tax rate...
  - keithnz 8y ago
    the problem is people talk about paying for it through income tax and not a wealth tax. If you look at wealth distribution, you look at how to slice enough off the top end to cover the bottom end.
    - 1123581321 8y ago
      I assume you are looking at the $50-100 trillion of theoretically seizable wealth in the United States. Unfortunately, not much of that is fungible due to the lack of buyers in that scenario.
- akvadrako 8y ago
  UBI and Negative Income Tax are two terms for the same thing. Well, according to Wikipedia, NIT is one implementation of UBI (https://en.wikipedia.org/wiki/Negative_income_tax https://en.wikipedia.org/wiki/Negative_income_tax). I suppose that's fair, but it's the most obvious implementation. Either can be large or small; that's not part of the definition.

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dandare 8y ago

Can you give me feedback to my argument about UBI? https://www.lucidchart.com/documents/view/87d3102c-5b89-4001-9929-346873d19571 https://www.lucidchart.com/documents/view/87d3102c-5b89-4001...

VikingCoder 8y ago
I think "Like £10,000 a year." You then respond, "Individual poverty threshold in the UK is around £15,000 a year." That's not really an argument against UBI. You essentially said that if someone wants to live above poverty, they would need to make £5,000 a year. That's $7000, roughly. 2000 working hours in a year. So call it $3.50 an hour. Not really sure exactly when and how taxes come in, but you get the rough idea. Seems entirely do-able to me. Everything above $3.50 an hour is increasing their luxury out of the poverty threshold. Do I need to follow the rest of your flow-chart, or have I gone far enough?
- petermcneeley 8y ago
  Im thinking this might be an elaborate troll. I was surprised it didnt just have a rick roll instead of the phrase "your version of ubi is dumb". However its likely our fault for taking a document seriously that has the word "dumb" in the title.
  - VikingCoder 8y ago
    I'm okay with people saying something is "dumb," I just request they have a well-reasoned argument for that position, and that they defend their position vigorously if it's important to them.
    - petermcneeley 8y ago
      Ya well there is no attempt at a defense yet. What im curious about is if this really just boils down to opposition to any and all forms of redistribution regardless of feasibility computations.

qntty 8y ago

Should be titled "The particular implementations of UBI that I have in mind aren't feasible".

VikingCoder 8y ago

Why was the headline modified? The article asks the question, this submission changed the headline to turn it into a statement.

hexane360 8y ago
It's not even the same question. The HN title substitutes "feasible" in for "good idea".
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VikingCoder 8y ago

This article makes the claim: “Thoughtful liberals and conservatives trained in economics are almost universally against the idea.” –Kent Smetters Another article makes a different claim: "Top Economists Endorse Universal Basic Income" https://www.forbes.com/sites/francescoppola/2017/08/31/top-economists-endorse-universal-basic-income/#5275f6ba15ae https://www.forbes.com/sites/francescoppola/2017/08/31/top-e... So is Kent Smetters wrong, or is Forbes citing people who are not actually "top economists", or maybe not even "trained in economics"?

Bucephalus355 8y ago

Gerald W. Johnson, a journalist who covered The New Deal during the 30’s for the Baltimore Sun, wrote that what angry poor people want is never usually money (or else they would have revolted a long time ago), but hope for a better future for either them or their children. Eric Hoffer, who wrote a book in the 50’s called “True Believer: On The Nature of Mass Movements”, had a similar argument. UBI is not a long term solution, but I appreciate it being innovative and trying at least. One of the reasons we didn’t get any financial reform in 2008 was that their simply was no other economic system/theory to turn too. Right now, before the next recession, we are developing the theories that will be chosen from once neo-Kynesian economics is shown the door in the years to come.

otakucode 8y ago
>One of the reasons we didn’t get any financial reform in 2008 was that their simply was no other economic system/theory to turn too. Other? I would have thought (I am no economist so I apologize if this is daft) that the sensible response would be to permit all of the banks who engaged in gambling to actually lose their bets and suffer the consequences of their own actions. Those which extended loans which could not be repaid should have entered insolvency, with the debts owed to them eliminated. Likewise, the fraudulent practices conducted should have resulted in hundreds or more of banking executives and other employees sent to prison. It would seem to me that the solution we settled upon - giving them titanic amounts of money, assisting their consolidation, and playing pretend as if the fraudulent loans issued were still owed by those who they were foisted upon, foreclosing on homes, and significantly derailing, if not destroying, the lives of hundreds of thousands of families - was the 'other economic system' here. It certainly was not the one laid out in black and white on paper and followed for a century or so. Under that one, when you extend credit to someone out of funds you do not have, then place bets on repayment while lying about the odds, you crash rather than luxuriate in the spoils of a looting of the masses.
- badloginagain 8y ago
  > permit all of the banks who engaged in gambling to actually lose their bets When they throw the term 'too big too fail' around, they mean it in the literal sense: That the banks losing these bets would literally bring down the American -> World economy. What _is_ missing is that no one was punished, no laws were changed (or have recently been relaxed even further?), no structured breakup of the bad actors. It means theres no incentive to _not_ risk global economic collapse, even though the words global economic collapse should be incentive enough.

DonbunEf7 8y ago

Disregard feelings, acquire evidence. There is only one concrete numeric analysis among all quoted objections, and it concedes that raising taxes would be sufficient to balance the books, at least in the USA.

ggm 8y ago

My primary concern is that most people in the margins depend on rent, and shopping locally because the cost of ownership of home, and transport to bigger (cheaper) shops is above their threshold. They're trapped in the locality of poverty. Which immediately makes them prey to being exploited by inflation of costs, prices, to match the UBI guaranteed income. TL;DR what stops a landlord and local shopkeeper increasing prices until the UBI is drained?

gregable 8y ago
Depends on the locale. In many places, there is more housing than demand for housing, and so rent is based on the cost more than the ability to pay. In bay area markets, rent is based on the renter's ability to pay of course.
- kromem 8y ago
  Still based on cost. The housing itself costs more in the Bay area. Rentals/housing in the Bay area (or other desirable locales) are supply constrained. The only class of goods I can think of that are not based on underlying costs are monopolies. And yes - it's unlikely that low income rentals will suddenly become supply constrained after UBI.
patmcc 8y ago
>>TL;DR what stops a landlord and local shopkeeper increasing prices until the UBI is drained? Rent control for the first, competition (or a high enough UBI that they can travel far enough) for the second.
- ggm 8y ago
  So you assume that in the west, seduced by free market economics, rent control is coming back? I ask this in Australia frequently. I'm laughed out of court: nobody wants to re-introduce any constraints on market rent. "travel far enough" is the whole point: if you live in a marginalized situation, UBI is unlikely to pay the cost of transport to save money on shopping, and mechanistically, since you don't have a car and cannot pay delivery, you are stuck behind higher unit pricing exploitation. Unbelievably high numbers of people in the UK now depend on food handouts organised informally. Food stamps and Gated cards for welfare have their own problems. France recently passed laws requiring supermarkets to supply charity food from unsellable ugly fruit and vegetables, and near-dated produce. Why do you think this is? Why do you think the state is trying to force independent, semi regulated economic entities to perform a social welfare outcome? Now put UBI into the equation. You think this is axiomatically going to fix the systemic underlying problem? UBI in greece would demand the entire last 15 years historic debt be wiped out. Otherwise, its going to be grabbed by the asset-rich who have been avoiding the consequences of forcing defaults on the non-working poor.

jasode 8y ago

Which form and scope of UBI is more common in everyone's mind when people think of "UBI". Is it: 1) UBI is a replacement for the wasteful fragmented welfare programs. The "efficiency" gains by consolidating into UBI will pay for most of it and maybe a modest tax increase to round it out. Whatever _that_ amount is, that's what we call UBI. This would be less than $14k a year. It would be just enough for food, living with roommates, and riding public transportation if the recipient didn't share a car. or 2) UBI is a minimal and comfortable standard of living (home+car+food) so people don't have to work. The release from the stresses of earning a living will unleash a flurry of productivity in art, science, self-improvement. Society would flourish. This type of UBI is much more expensive... maybe about ~$30k. Which form of UBI dominates the discussion? If it's the 2nd one, I'd argue that's mathematically impossible to provide.

scarmig 8y ago
My impression is that 1) is what most UBI advocates support. It's certainly what I'm interested in getting data on. Furthermore, any conceivable implementation of 2) would have to go through 1) first.
JumpCrisscross 8y ago
I am sceptical of (1), but not certain enough to refuse experimentation. Modern computing makes administration cheap. A lot of UBI literature fails to account for those realised and potential efficiencies.
- contravariant 8y ago
  Well, government administrations aren't exactly known for their simplicity or efficiency. Even if not, most support is send conditionally and only to certain people, this requires more checking than sending everyone an unconditional amount.
mesozoic 8y ago
The US budget is about 3.2 trillion. Assuming we don't default on debt or reduce military and assuming we can't remove medicare and health spending and also we don't remove other non entitlement spending you get about $2 trillion that could maybe be reshifted. There are 138 million us tax payers giving each $14k comes out to right at 2 trillion. (Ignoring for now the non tax payers which would double this number and all of the following) The troubling part though is that half of that is social security. Reducing social security payments to that would cripple retired people forced to pay into the system their whole lives and make them live at possibly 10% or less of what was promised. Not putting a lot of faith in the government. Maybe 1 is feasible under that situation but to not kill social security it would require about 30% tax hike and be an increasingly negative program for anyone making over $46k which is 30% of the population. In my opinion that is idiotic. Logistically it would be a nightmare as congress would have to simultaneously remove a boatload of spending then add a boatload more which would be battled forever. I also have doubts about the capability of many people to responsibly handle the money themselves leading to calls for more entitlement programs to be reinstated or formed. 2 is next level moronic. The increase in average income would likely drive inflation to increasing levels ultimately creating the same effective levels of wealth and poverty as before. That $30k will pay for a car/house maybe in the first year but not really in the third, fourth etc.

jadedhacker 8y ago

Why UBI is difficult to even make desirable: https://www.jacobinmag.com/2016/01/universal-basic-income-switzerland-finland-milton-friedman-kathi-weeks/ https://www.jacobinmag.com/2016/01/universal-basic-income-sw... Alternative idea, a universal job guarantee: https://dsa-lsc.org/2017/09/30/why-socialist-job-guarantees-are-better-than-universal-basic-income/ https://dsa-lsc.org/2017/09/30/why-socialist-job-guarantees-... I'm still learning about this other take as UBI seems prima facie a good thing, but there are a number of severe flaws in the idea.

icebraining 8y ago
Posting those two links is interesting, because as far as I can tell, they're essentially contradictory. The first says UBI is not necessarily that great, because it might not free people from working, whereas the second says it's not great, because people will no longer work! These two passages are particularly striking: Jacobin: "The kind of freedom from work (...) that an LBI envisions is, in all likelihood, not compatible with capitalism’s requirements of profitability." DSA-LSC: "With UBI (...) one's status (...) as a worker is tentative and subject to elimination."

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shireboy 8y ago

One thing I don't see addressed here or in research on the topic is the macroeconomic impact. Would a UBI cause inflation or other mechanisms to make up the difference in prices? For example, if everybody received $1000/mo would candybars eventually adjust to be $1001? This seems like something that small-scale experiments would be unable to discern.

icebraining 8y ago
Generally competition works to prevent that; if a company raises their candybars to suck more money, the other company will keep them lower to gain market share, forcing the first to come down again. The problematic markets are the ones where competition is already deficient. Housing is often mentioned, but I actually don't think it'd be such a problem - if you get an UBI, you're actually much more free to move to cheaper places, rather than pushing up prices in places with jobs. I'm not from the US, but if I was, I'd fear the cost of healthcare. Then again, that's probably unsustainable with or without UBI.
- shireboy 8y ago
  I understand competition can prevent inflation and that lower competition markets will have more inflation. My thinking is that the effect on pricing would be more indirect. Maybe companies have to pay more in taxes to cover the UBI. Their costs go up, so pricing adjusts upward universally. Obviously it's way more complex than just UBI/mo + original price, but UBI _could_ be an upward pressure to prices that doesn't exist today, and that could counter the downward pressure from competition. One argument against that might be that under UBI individuals have more income to start businesses, and so more competition is added that keeps the downward pressure steady. My only points are that it _seems_ like a possible issue, and one that small-scale studies might not be suited to examine.
lostcolony 8y ago
Uh...of course not. Same as when an across the board tax cut gives every worker some amount of extra money, it doesn't lead to massive inflation. Besides, it's insane to assume that the price of a -single item- will jump to eat the entire cost of a payment such as UBI, because if that happens for every item, no one will be able to buy anything.

icebraining 8y ago

would require “doubling the personal income tax.” A UBI that pays every American $10,000 a year would cost about $3 trillion No, it wouldn't. Because if you give an upper middle-class American $10000 and you raise their tax bill by $12000, you neither actually spent $10k on them, nor did you actually increase his effective tax rate by that much. The idea that an UBI would literally cost the $10k for each person is to not understand basic accounting. Or to be dishonest, I guess.

dv_dt 8y ago
If you approach it from the Negative Income Tax implementation then it's also much less to fund because basically the tax deductions already baked into the tax code can be made at some level into something that's sourced via UBI instead of just a floating deduction. Of the remainder, you fund much of that from some subset of existing social safety net programs. It's not trivial, but I'd agree that the line was at best sloppy accounting, and at worst a dishonest criticism.
JumpCrisscross 8y ago
> if you give an upper middle-class American $10000 and you raise their tax bill by $12000 Can you show your math? Curious what tax rates are assumed.
- cm2012 8y ago
  You can only do it this way if realistically, only the bottom 25% came out net positive from UBI.
- icebraining 8y ago
  I'm not using real numbers or assuming any tax rates. All I'm saying is that if you both pay someone and also raise their taxes, only the difference is a real amount being taxed/given.
asdsa5325 8y ago
Also, UBI is supposed to replace other entitlements, so the cost before tax increases will not be $3 trillion, it will be ($3 trillion - all current entitlements' cost)

NPMaxwell 8y ago

Weird article: No author.

flubert 8y ago

I don't think anyone has to worry about UBI being implemented until someone comes up with a better/more persuasive name. Something like the "Robot Dividend". Compare and constrast: "Social Security" vs. "Wealth transfer from young to old".

hexane360 8y ago

>Conservative economists do not like it because it would harm economic growth, he adds. This is almost guaranteed not to be the case. For this to be true, the marginal propensity to consume of rich people would have to be higher than the MPC of poor people. >"The evidence is that robotics is a labor complement and is increasing skilled wages. While robotics are replacing some lower-skilled jobs, the most efficient response is to not kill the golden goose but to make sure we have job training programs that are effective in increasing skills." Again, this assumes that UBI "kills the golden goose", which is exactly what neoliberals don't want to do. >“I find it very hard to envision political support in this country for that kind of radical increase in taxation.” This is an argument about whether UBI is a realistic proposal, not about whether it's a "good idea" (the article's stated title). >"Instead of a UBI to help the poor, Feldstein recommends the “negative income tax” plan" How functionally different is a NIT from UBI? It seems like the author is trying to equate Feldstein's and Smetter's positions when they're actually very different. >Benjamin Lockwood (sic) favors the idea of offering a guaranteed basic income, which he says is a better term than UBI. Huh. So now your argument is just against the name UBI, not the policy itself.

tomelders 8y ago

Well the current reality isn’t feasible, but we’re doing it anyway. No one really knows wether UBI will be a succes or a failure. But then no one knows wether any policy will be a success or a failure, and there will always be supporters and fetractors on either side. Ultimately though, all that really matters is that government takes action that it believes will make society better. That’s it’s purpose. And if government believes UBI would be a net good, it should do it.

prepend 8y ago
How is the current reality not feasible? It seems rather successful or at least sustainable in hundreds of cultures. Economically, the current system has flaws but is self-sustaining. UBI at even low levels like $10k isn’t possible unless you somehow double tax revenue. For example 330M in the US = 3.3T. In 2017, the total revenues were 3.4T [1]. So just for basic levels, revenue would have to increase and that would really hose the economy and you would be able to raise 6.7T for very long. [1] https://www.thebalance.com/u-s-federal-budget-breakdown-3305789 https://www.thebalance.com/u-s-federal-budget-breakdown-3305...

scarmig 8y ago

> From the point of view of economists, a UBI is not feasible. Sigh. From the point of view of an economist, not economists generally. Most are open-minded about it, but want to see more evidence and experimentation. It'd be nice for Wharton to list an author of this article, if merely for the purpose of knowing their qualifications. Why do I get the impression it's some undergrad in journalism who just walked down the hall to the only economist they know?

ihodes 8y ago
Check out Kent Smetters if you're curious.

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TaylorAlexander 8y ago

My issue with UBI is that it does not in itself advance productivity. My vision for a future where there is enough for everyone and all of that abundance is sufficiently evenly distributed that no one is wanting for basic needs is a future where most of the productive work done in the world is done by machines and those machines are open source. The second part, where most of the machines are open source, is the critical component in my opinion that differentiates my vision from the world I think we will have if we don’t act to change course. (That world being one where proprietary machines are licensed with fees that ensure wealth is concentrated rather than distributed.) With open source productive machines being the basis of economic productivity, all engineering effort would go towards the common good of making those machines more productive. Companies would compete to manufacture the machines better than others, and would have first mover advantage on the new developments they produce. They would overall have a somewhat lower incentive to innovate, but this is offset by the larger incentive to innovate new players would have. More broadly I see intellectual property as a violation of the natural rules, and I see that we could voluntarily stop using intellectual property any time we want. It is my belief that legislative solutions will always be eventually undermined whereas solutions that bring us productivity cannot later be taken away by legislative bargaining. I also believe than any UBI implemented would always be half hearted in implementation just as minimum wage isn’t actually enough for many people to thrive on. What do you all think about the way I pose this? Where I claim that open source productive machinery is a viable alternative to UBI as a means of more broadly distributing the wealth of increased productivity?

rayiner 8y ago

> A UBI that pays every American $10,000 a year would cost about $3 trillion, Smetters says. That's assuming you provide UBI on top of Social Security. You can reduce the real cost to about $2.1 trillion by making people pick one or the other. And you can raise $2.1 trillion by raising U.S. taxes as percentage of GDP to roughly the level of the Netherlands. Even if you assume GDP will contract somewhat, you can probably do it without raising taxes above that of France.

transfire 8y ago

I've worked out the numbers and it is not impossibly expensive. First, you have to understand UBI is not intended to give someone a "comfortable lifestyle" without working. Rather, it's to give someone a "comfortable survival" without working. In other words food, roof and odd necessities. In my figures I simply pegged the UBI to a part-time (20hrs) minimum wage job. When you subtract all the welfare programs that will be made unnecessary, the remaining cost is well within reach of relatively minor tax increases. (I am particularly partial to a usury tax). One of the big problems that economists are overlooking with relation to automation of the job market is that excessive government regulation, along with antitrust-worthy corporate practice, has created a huge administrative/bureaucratic burden, and it is from this that most new jobs are being created. In other words, BS work. Just look at how many administrative employees a doctors' office now has -- and we have to go to more and more specialists too. Meanwhile our actual quality of care has gone down, not up. Another good example, which I recently learned about, it is against the law for a computer program to generate a medical diagnosis. Heaven forbid that we might not need as many doctors one day. And the best example of all. The IRS is about to make it mandatory that you get your taxes done by a service provider (personal or by software). So what motivation does the government have tp simplify tax laws after that? None. Just keep making them more complex (so big companies can loophole) and in so doing create more BS jobs.

chipuni 8y ago
<i>Another good example, which I recently learned about, it is against the law for a computer program to generate a medical diagnosis.</i> Here's a counterexample: https://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm604357.htm https://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/u...

whataretensors 8y ago

UBI might be able to happen on a blockchain by taking a percentage of the rewards and sharing it. One problem facing such a system would be sybil attacks. POS systems avoid this by weighting in regards to coin ownership, but in a UBI chain you would not want this since the whole point is to give to people equally.

spyckie2 8y ago

One of the arguments against UBI from a moral point of view (ignoring feasibility arguments) is that people will become lazy because they don't need to work to survive and lead to economic stagnation. It's kind of a throw back to the communist / capitalist arguments of the previous era. While this is somewhat true - there is a subset of the population that would prefer not working, UBI would also unlock the economic potential of another subset of the population who, due to debt, poor living, lack of opportunities, cannot afford to invest in themselves even though they desire to do so. Revisiting communism as seen in its historical implementation, what communism did was replace opportunity with equality. UBI appears to have no such fantasies, and just give everyone more money. People who have the desire to make a lot of money, utilize their skills to make an impact, get good at things, contribute, and grow, will not have any of that taken away from them, but will get a larger platform for them to do so. In this generation, investment is becoming the standard track for improvement, similar to college in the previous generation. It's seen as the way to grow your income, value, assets, and lifestyle. While investment is traditionally seen as stocks and asset collection, it's amazing what slight amounts of money can do to free up time. For instance, investing in laundry services, if you use your time well, can be a great investment (although, if you invest in laundry services and then use the time to play video games, you're probably the other subset of the population). Tracing back to my original point, there's definitely a tradeoff argument to make. Is unlocking the potential of some worth it, knowing that the money will be wasted by others? At what ratio is this acceptable?