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Universal Basic Income Is a Bad Idea

j_m_b 7y ago
Will a UBI be indexed to inflation? Wouldn't that lead to a vicious cycle of hyperinflation?
- viklove 7y ago
  UBI is just a concept, you'll have to look at some person/organizations specific implementation to figure this out. Try googling "Andrew Yang" if you want an answer to see how a current presidential candidate is tackling this.
- Talyen42 7y ago
  UBI is not necessarily inflationary in the first place.
- qqqwerty 7y ago
  Inflation would be very welcome right now. Zero interest-rate policy (ZIRP) seems to be the new normal, and I believe its largely due to increasing wealth inequality which is creating deflationary pressures in our economy (the wealthy can only consume so much, most of their money goes into savings). Also hyperinflation seems very unlikely with the amounts being discussed. Under an ideal UBI. Existing welfare programs would get replaced with the UBI, so that would have a neutral impact on the economy (and if UBI eliminates the welfare trap it could actually be a positive for the economy). The UBI would be a net benefit for those that are currently severely under-employed or unemployed but don't qualify for any welfare programs. But the UBI amounts proposed are fairly small, so would likely only result in a very small increase in demand for food and housing. And we have more than enough food surplus, and plenty of housing surplus in poorer areas of the country that this seems like a non-issue. [1] https://en.wikipedia.org/wiki/Zero_interest-rate_policy https://en.wikipedia.org/wiki/Zero_interest-rate_policy
- dllthomas 7y ago
  Too high a UBI might lead to inflation. In that case, if we've indexed UBI to observed or predicted inflation we could indeed wind up with a positive feedback loop and hyperinflation. So don't do that. Index to targeted inflation. If it's too high and we see more inflation than targeted, the UBI will fall in real terms. If inflation falls short of target, the real UBI will increase. Negative feedback loop - probably stability or oscillation.
benologist 7y ago
UBI is especially a terrible idea if you don't want people like Gates and Torvalds and Stallman to emerge naturally from an environment that enabled and fostered their genius every step of the way. Multi-gig-economy workers are eagerly waiting to subsidize the next generation's computers and connectivity and years needed for learning the steps between Hello World and writing software that changes the world.
- reallydude 7y ago
  > UBI is especially a terrible idea if you don't want people like Gates and Torvalds and Stallman to emerge naturally from an environment that enabled and fostered their genius every step of the way. The Pareto principle applies, regardless of UBI. High performers will emerge naturally, regardless of the system. Manipulation of systems is an element of their prominence.
viklove 7y ago
The entire article just reads like hand-waving with no real substance. > UBI advocates would argue that non-universal transfer programs are less attractive because voters will not embrace them as enthusiastically. But this criticism is unfounded. Why is it unfounded? Am I just supposed to take that on faith? The author probably should've written more than 2 sentences after this statement before moving onto his next assertion.
Talyen42 7y ago
Too many bad arguments to count here... for example, he argues: "Rather than giving everyone $1,000 per month, a guaranteed-income program would offer transfers only to individuals whose monthly income is below $1,000, thereby coming in at a mere fraction of a UBI’s cost." Can you not see the obvious problems with giving someone $1,000 so long as they aren't making above $1,000? Why would anyone making $1k continue working for zero benefit? With UBI, a minimum wage worker is still incentivized to work, as they don't lose benefits. That's kind of the point. Social safety net without getting trapped in the "net". UBI has plenty of issues, but he's not making a good case.
- 0815test 7y ago
  Indeed, the "at a mere fraction of a UBI’s cost" claim is outright ignoring the economic cost associated with very high marginal tax rates. But Acemoglu also mentions the NIT, which would work a lot better than either. And, to be fair, the best-known economic models of non-linear income taxation imply that marginal tax rates on a NIT should actually be fairly substantial (60% or so would not be out of the question!), so as to keep the break-even point from getting too high; the rates just shouldn't be as high as 100% or more!
- coldtea 7y ago
  >Can you not see the obvious problems with giving someone $1,000 so long as they aren't making above $1,000? Why would anyone making $1k continue working for zero benefit? No reason, they could stop and get the free $1000. That's not a problem, that's part of the whole idea: we don't want jobs where people make just $12/K annual salary, let them disappear...
akvadrako 7y ago
It's a good thing people are discussing UBI, but the author does not seem to understand the concept. He says: > Besides, a more sensible policy is already on offer: a negative income tax, or what is sometimes called “guaranteed basic income.” Negative income tax (NIT) and UBI are not alternatives; NIT is one possible model for implementing UBI; they become just alternate ways to describe the same math. In both cases, someone with zero income receives, say $1000. Someone with $500 in income gets something between $500 and $1000, because taxes start to kick in. The benefit continues to be positive until some inflection point, say $5000, where higher taxes end up overwhelming the initial benefit. By playing with the tax curves you can get any payout model you like and describe it as both NIT and UBI.
- KaoruAoiShiho 7y ago
  NIT has a major flaw which is a disincentive to work. That's horrible for the economy overall. So UBI is basically just NIT without the flaw.
  - coldtea 7y ago
    That's not a major flaw, it's part of the whole idea. We don't need as many people working, and we don't want people working for shitty "$1000/month or close" gigs... In fact part of the reasoning of UBI is "we're automating all kinds of jobs, and we wont need as many people working in the future, not to mention we already have tons of busywork just to keep up appearances"
    - Consultant32452 7y ago
      I think the pretend/appearances work is necessary. If we look at Price's Law, it suggests that 50% of the work is done by the square root of the population doing that job. Really, all the work could get done by just having the top productivity percentile do work. The problem is, the top percentile isn't going to do work if everyone else is getting to not at least pretend to work. I know I wouldn't.
      - 7y ago
0815test 7y ago
A bit of a clickbait title. Acemoglu does say that a 'UBI' is a bad idea, but then advocates for the NIT (Negative Income Tax), which actually works in much the same way. What he actually seems to be saying is that way too much UBI advocacy makes unrealistic claims about what a UBI-ish system might look like - and it's hard to disagree about that!
everythingswan 7y ago
I see a straw man here. It seems like you can argue against the theory or argue against the actual implementation. The latter was chosen...but with made-up parameters that make it easy to defeat. Examples "...a UBI of just $1,000 per month would cost around $4 trillion per year, which is close to the entire federal budget in 2018. Without major cost savings, US federal tax revenue would have to be doubled, which would impose massive distortionary costs on the economy..." So we need major cost savings or taxes to go up. "Sacrificing all other social programs for the sake of a UBI is a terrible idea. Such programs exist to address specific problems, such as the vulnerability of the elderly, children, and disabled people. Imagine living in a society where children still go hungry, and where those with severe health conditions are deprived of adequate care, because all the tax revenue has gone to sending monthly checks to every citizen, millionaires and billionaires included." This came our of nowhere as social programs were not mentioned before this line. It's basically fearmongering at this point. Maybe someone can help me understand what the argument here is. Perhaps I'm being harsh on the author but I just don't see how you can make this argument with genuine intentions.
- socalnate1 7y ago
  This felt like a purely semantic argument to me; as he is actually suggesting we do something rather similar to UBI: "Besides, a more sensible policy is already on offer: a negative income tax, or what is sometimes called “guaranteed basic income.” Rather than giving everyone $1,000 per month, a guaranteed-income program would offer transfers only to individuals whose monthly income is below $1,000, thereby coming in at a mere fraction of a UBI’s cost."
  - abakker 7y ago
    Yeah, that basically is semantic. UBI would achieve the same thing, but, instead of negative tax, would just credit everyone and then alter the tax rates to achieve equilibrium. Personally, the improved efficiency from simply collapsing the existing apparatus which is focused on preventing people from cheating seems likely to work. If the goal of the program was to fairly allocate a resource, rather than to prevent people from cheating it would consume a lot less overhead. that is where you can actually find some of the efficiency that the author wants. Honestly, if you cut a check to a millionaire for $1000, and then tax that person on that $1000, it doesn't work that differently from the fact that we get taxed on the value of our tax returns. it ends up being recursive anyway.
GaryNumanVevo 7y ago
I still don't understand why the US hasn't switched to a single payer system yet. We'd be paying 0 premiums for a 2-4% tax hike. I personally would love not having to worry about my health benefits between jobs!
- JustSomeNobody 7y ago
  Because of "You'll take more money out of my pocket over my cold dead body!" mentality of a lot of of the lower middle class and poor voters who still seem to think the system works for them! Oh, and stuff like this: https://www.vox.com/policy-and-politics/2019/8/31/20840700/indexing-capital-gains-to-inflation-example-donald-trump-twitter https://www.vox.com/policy-and-politics/2019/8/31/20840700/i...
  - thatoneuser 7y ago
    Yep everyone's stupid except you...
- mrlala 7y ago
  Greed. Most upper middle class / rich people don't want to increase their tax burden 2-4% for something they already have. Also ignorance. A lot of people in that realm don't even understand the burden healthcare is on most people because they have never had to worry about it.
  - thatoneuser 7y ago
    Everyone's stupid except you...
skybrian 7y ago
Note that the headline cost will be very high because much of it ends up being a partial rebate on higher taxes. (This would be true of most people with a middle-class or better income: you'd have higher taxes, but get some of the money back.) With any redistribution program, just looking at direct costs and not its effects on the economy, the average person breaks even. That's what redistribution means - there's no money being created or destroyed. The numerator and denominator don't change. But most of us are not average. Like with insurance, most people end up paying most of the time, but if you're out of work for any reason, or just working a low-paying job, then you'll benefit. And like most other insurance, the advantage is security rather than actually saving money, most of the time. Along with that security comes greater freedom. The question is a philosophical one: do you trust that most of your fellow citizens can handle freedom? Will they live in near-poverty rather than strive for more? Do you trust that if someone decides not to work, they usually have good reasons? And do you think it's worth paying in during good times in order to ensure everyone has somewhat more freedom to choose where to live and how to make a living? Or do you think that people cannot be trusted and must be controlled via the threat of financial ruin?
Aperocky 7y ago
I don't understand (or understand, but despise) the urge to misrepresent data. For instance $1000 UBI will cost 4 trillion if given to every single American, but people under 18 constitute 25% of the population, take that out, and you have 3 trillion. It's really trivial and I heard no one planning to give people starting from age 0 $1000 dollar every month. It's not a stretch to say 3 trillion is way too much but why does author feel the need to be deceiving and just make that number slightly larger is beyond me. This really discredited him in my eyes as trying to have an objective discussion about the matter.
- Mirioron 7y ago
  If UBI is to replace other social programs then why would you not pay it to children as well?
  - Aperocky 7y ago
    This is an observation on the politicians and theorist that proposed UBI, I'm not an expert but I imagine the problem would be that they're not fully independent individual, and you don't want to simply reward parents for having more kids.
rubyn00bie 7y ago
> ...a UBI of just $1,000 per month would cost around $4 trillion per year, which is close to the entire federal budget in 2018. Without major cost savings, US federal tax revenue would have to be doubled, which would impose massive distortionary costs on the economy... Last time I checked the going effective tax rate across all corporations was something like ~17%. How about corporations stop fucking us all out of the revenue they owe us; because I'm pretty sure doubling that to the expected rate of 35% would fix the funding problem.
- vanterdon 7y ago
  It's more efficient to lower corporate taxes and raise income taxes.
  - evancox100 7y ago
    I generally agree with you, but not if you add escape routes for the money so that people of means can avoid said personal income tax. See capital gains rate, owner-operated business rate, all the non-taxed perks that businesses provide to execs (e.g. using corporate jet as private jet). You also have to staff the tax collector appropriately to enforce the boundary between corporate and personal income.
    - CuriousSkeptic 7y ago
      More efficient still would be to replace income taxes with Georgian land rents.
snidane 7y ago
It's interesting to observe any UBI discussion and a total neglect of the most developed theory about UBI - the georgist economics - where UBI is refered to as a 'citizens dividend'. They state that the only and sufficient financing scheme to make UBI work are the so called monopoly taxes. Simply because if you hand out free money to the people, the monopoly service providers could hike up prices by exactly that amount given out freely to people in aggregate. Other non-monopoly providers would still be trapped in a competition so it would be more difficult for them to increase the prices after UBI implementation. Monopolies would set the prices exactly to the point where they would optimize their income by eating away all the free money suddenly given to people. This is well described by Ricardo's law of rent (1809) in the context of land rents (which are essentially land monopolies). In other words the landlords would increase the rents exactly to the aggregate amount of UBI money handed out. Interestingly enough the present day proponents of UBI don't understand this basic law. Some od them are aware of the UBI inflation problem but are not aware of this monopoly inflation problem. Andrew Yang proposes Value Added Tax to finance it, which proves he has no clue.
- bryanlarsen 7y ago
  "free money" If you print money to pay UBI you get inflation, yes. If you're paying it with VAT or Income Tax or something else you're not increasing the money supply, so broad inflation should stay unchanged. Local prices will go up and down as you reduce demand for rich person goods and increase demand for poor person goods. This would imply rent going up but one of the promises of UBI is to increase the ability of people to move to places with cheap rent, taking power from landowners.
- ksec 7y ago
  >This is well described by Ricardo's law of rent (1809) in the context of land rents (which are essentially land monopolies). In other words the landlords would increase the rents exactly to the aggregate amount of UBI money handed out. Thanks. I keep asking the same question without knowing there is actually a Law of Rent. And I have yet to see a convincing argument.
  - 7y ago
damq 7y ago
It's a bad idea for the same reason all other variants of socialism are a bad idea: it disincentivizes productivity. If it's possible to afford housing and food without working, some percentage of the population that would otherwise be working will choose to stop working.
- krapp 7y ago
  >If it's possible to afford housing and food without working, some percentage of the population that would otherwise be working will choose to stop working. Fine. Those are the people who don't actually care about their jobs beyond the bare minimum needed to get a paycheck - the people no employer actually wants to hire. Not having to work to live means having more flexibility to choose the work you want, and the labor pool consists of people who want to work. If you want to live in a meager apartment for subsistence, then you can do so on UBI. If you want a better place to live, more stuff, etc, then you can work. There would be fewer people working, yes, but let's not forget that all industries are automating as much labor away as they can, regardless. Capitalism and socialism exist on completely different axes - it was never the purpose of employment to provide employees with enough means to live, or a sense of purpose or the "dignity of honest labor." So let's stop pretending capitalism can or should provide for the social welfare.
- skinnymuch 7y ago
  But a lot of jobs aren’t that necessary. What’s your definition of productivity?
- JoeAltmaier 7y ago
  Wake up! Jobs are disappearing as automation increases. The ultimate result is no jobs and lots of goods. If we don't do something, the transition will be a mess - less and less spendable money to buy more and more available goods.
cheez 7y ago
I'm a big fan of UBI as a replacement for all sorts of welfare bureaucracy and so I was looking forward to a well thought out argument. This is the worst possible article one could write against UBI. But the article is not written for fans, to convince them otherwise, it's to prevent people from becoming fans. pg.com/submarine.html comes to mind.
- deleted 7y ago
  [deleted]
Communitivity 7y ago
Here is a radical idea, with some math as an initial take at backing it up. First, let's assume we cannot solve the problem now, or in the short term. Short term here is < 50 years. What then? Second, let's commit ~$100bn to the problem annually for that 50 years, and make that our max investment per year, not counting administrative costs. This amount would increase slightly each year as population increased. Third, divide that $100bn among the babies born that year (~4million in 2018), using trust funds to get 7% interest, compounded annually at the start of the year with no additional contributions, and untouchable until they turn 50. Do this for the babies born each year. Fourth, institute a fiscal responsibility education program with the vigor that sex ed was approached with, at elementary, middle, and college levels. No idea what the cost of this would be, but it would have to be factored in. Fifty years later the first babies born under this program will be able to access their money. Each will have roughly $1.4million, and able to live off 5% annual interest without decreasing that amount ($70k per year). Since a couple will have roughly two people, each of their children should get roughly the same amount. In other words... in fifty years there could be little to no poverty in this country, if only we could think long term. To put the $100bn into perspective, the annual defense budget for 2019 is $617bn with another $68bn for war funding. So, we could possibly eliminate poverty for $32bn more than what we are spending on the war. The above plan is all under CC-By-SA 2.0 license, by Bill Barnhill, see https://creativecommons.org/licenses/by-sa/2.0/ https://creativecommons.org/licenses/by-sa/2.0/.
- lifeisstillgood 7y ago
  1. I think that's roughly what Norway's Sovereign Wealth fund has / is doing 2. institute a fiscal responsibility education program with the vigor that sex ed was approached with, at elementary, middle, and college levels. I love that idea
logfromblammo 7y ago
The major reason why I think UBI is a bad idea is that money is a unit of measurement, not a quantum of consumable production. The flow of goods and services from producer to consumer is lubricated by money, not entirely controlled by it. That economic fluid, like blood, has to circulate in order to be useful. In many places, the flow is very asymmetric. A region has natural resources, or a cultural significance, or a coincidental concentration of skills. But for whatever reason, the value is then extracted and sent elsewhere, rather than staying in the community that produced it. Absentee landlords take their rents and spend them in a different city. Chain and franchise businesses send their profits to distant owners that spend their dividends and distributions elsewhere. Worker wages are sent to families that live in another city. Local money is spent mostly on consumables instead of development capital. When owners don't spend money where they earned it, it becomes a circulation problem. The work that people do in their own communities is then being used to develop and improve someone else's community. Coal miners in West Virginia are actually digging up million-dollar houses in Washington DC metro area. Farmers in Iowa are actually growing luxury cars in Chicago. Software developers in New Mexico are actually launching a new live-act auditorium in Las Vegas. All the work done, everywhere around the world, is developing mostly the places where the owners live, and those people don't want to live in undeveloped places, even if those places are only undeveloped because all the development potential is continually sucked out to be sent to the owners. So what is needed is universal basic ownership. If you just dump helicopter cash onto an undeveloped area, the owners can suck harder on their rent straw until they drain away all the excess. Live in a home you own, with no mortgage, and there are no checks being sent out of town for rent or interest. Buy fiber-to-the-home network access from the municipality, and the service fee is not being sent to Comcast or AT&T headquarters; it's being spent on local capital and jobs. When most of the ownership is local, it's much easier to balance the production that the community exports with the consumables that it imports. The only way to unbalance it from there is to make the community want more imports, without buying more of its exports. That extra cash in the mailbox isn't going to fix the economic problems inherent in locally unbalanced earning and spending. It is only a short term fix to tax the high-ownership individuals and move the money to where it should have been spent. It's like performing a cardiac bypass without also attempting a lifestyle intervention with the patient. That new flow route will work for a little while, and then it too will get clogged with calcified plaques, just like the others. UBI treats a symptom, instead of curing the disease, which is that too few people own too much property, and thus they literally cannot spend enough in all the communities in which they own that property to keep them all healthy.
deleted 7y ago
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doggydogs94 7y ago
If you have to do universal basic income, do it with a no cash back debit card with detailed e-receipts. My thinking is that, if people know their spending is being tracked, they are less likely to waste it.

Will a UBI be indexed to inflation? Wouldn't that lead to a vicious cycle of hyperinflation?

viklove 7y ago
UBI is just a concept, you'll have to look at some person/organizations specific implementation to figure this out. Try googling "Andrew Yang" if you want an answer to see how a current presidential candidate is tackling this.
Talyen42 7y ago
UBI is not necessarily inflationary in the first place.
qqqwerty 7y ago
Inflation would be very welcome right now. Zero interest-rate policy (ZIRP) seems to be the new normal, and I believe its largely due to increasing wealth inequality which is creating deflationary pressures in our economy (the wealthy can only consume so much, most of their money goes into savings). Also hyperinflation seems very unlikely with the amounts being discussed. Under an ideal UBI. Existing welfare programs would get replaced with the UBI, so that would have a neutral impact on the economy (and if UBI eliminates the welfare trap it could actually be a positive for the economy). The UBI would be a net benefit for those that are currently severely under-employed or unemployed but don't qualify for any welfare programs. But the UBI amounts proposed are fairly small, so would likely only result in a very small increase in demand for food and housing. And we have more than enough food surplus, and plenty of housing surplus in poorer areas of the country that this seems like a non-issue. [1] https://en.wikipedia.org/wiki/Zero_interest-rate_policy https://en.wikipedia.org/wiki/Zero_interest-rate_policy
dllthomas 7y ago
Too high a UBI might lead to inflation. In that case, if we've indexed UBI to observed or predicted inflation we could indeed wind up with a positive feedback loop and hyperinflation. So don't do that. Index to targeted inflation. If it's too high and we see more inflation than targeted, the UBI will fall in real terms. If inflation falls short of target, the real UBI will increase. Negative feedback loop - probably stability or oscillation.

UBI is especially a terrible idea if you don't want people like Gates and Torvalds and Stallman to emerge naturally from an environment that enabled and fostered their genius every step of the way. Multi-gig-economy workers are eagerly waiting to subsidize the next generation's computers and connectivity and years needed for learning the steps between Hello World and writing software that changes the world.

reallydude 7y ago
> UBI is especially a terrible idea if you don't want people like Gates and Torvalds and Stallman to emerge naturally from an environment that enabled and fostered their genius every step of the way. The Pareto principle applies, regardless of UBI. High performers will emerge naturally, regardless of the system. Manipulation of systems is an element of their prominence.

viklove 7y ago

The entire article just reads like hand-waving with no real substance. > UBI advocates would argue that non-universal transfer programs are less attractive because voters will not embrace them as enthusiastically. But this criticism is unfounded. Why is it unfounded? Am I just supposed to take that on faith? The author probably should've written more than 2 sentences after this statement before moving onto his next assertion.

Talyen42 7y ago

Too many bad arguments to count here... for example, he argues: "Rather than giving everyone $1,000 per month, a guaranteed-income program would offer transfers only to individuals whose monthly income is below $1,000, thereby coming in at a mere fraction of a UBI’s cost." Can you not see the obvious problems with giving someone $1,000 so long as they aren't making above $1,000? Why would anyone making $1k continue working for zero benefit? With UBI, a minimum wage worker is still incentivized to work, as they don't lose benefits. That's kind of the point. Social safety net without getting trapped in the "net". UBI has plenty of issues, but he's not making a good case.

0815test 7y ago
Indeed, the "at a mere fraction of a UBI’s cost" claim is outright ignoring the economic cost associated with very high marginal tax rates. But Acemoglu also mentions the NIT, which would work a lot better than either. And, to be fair, the best-known economic models of non-linear income taxation imply that marginal tax rates on a NIT should actually be fairly substantial (60% or so would not be out of the question!), so as to keep the break-even point from getting too high; the rates just shouldn't be as high as 100% or more!
coldtea 7y ago
>Can you not see the obvious problems with giving someone $1,000 so long as they aren't making above $1,000? Why would anyone making $1k continue working for zero benefit? No reason, they could stop and get the free $1000. That's not a problem, that's part of the whole idea: we don't want jobs where people make just $12/K annual salary, let them disappear...

akvadrako 7y ago

It's a good thing people are discussing UBI, but the author does not seem to understand the concept. He says: > Besides, a more sensible policy is already on offer: a negative income tax, or what is sometimes called “guaranteed basic income.” Negative income tax (NIT) and UBI are not alternatives; NIT is one possible model for implementing UBI; they become just alternate ways to describe the same math. In both cases, someone with zero income receives, say $1000. Someone with $500 in income gets something between $500 and $1000, because taxes start to kick in. The benefit continues to be positive until some inflection point, say $5000, where higher taxes end up overwhelming the initial benefit. By playing with the tax curves you can get any payout model you like and describe it as both NIT and UBI.

KaoruAoiShiho 7y ago
NIT has a major flaw which is a disincentive to work. That's horrible for the economy overall. So UBI is basically just NIT without the flaw.
- coldtea 7y ago
  That's not a major flaw, it's part of the whole idea. We don't need as many people working, and we don't want people working for shitty "$1000/month or close" gigs... In fact part of the reasoning of UBI is "we're automating all kinds of jobs, and we wont need as many people working in the future, not to mention we already have tons of busywork just to keep up appearances"
  - Consultant32452 7y ago
    I think the pretend/appearances work is necessary. If we look at Price's Law, it suggests that 50% of the work is done by the square root of the population doing that job. Really, all the work could get done by just having the top productivity percentile do work. The problem is, the top percentile isn't going to do work if everyone else is getting to not at least pretend to work. I know I wouldn't.
    - 7y ago

0815test 7y ago

A bit of a clickbait title. Acemoglu does say that a 'UBI' is a bad idea, but then advocates for the NIT (Negative Income Tax), which actually works in much the same way. What he actually seems to be saying is that way too much UBI advocacy makes unrealistic claims about what a UBI-ish system might look like - and it's hard to disagree about that!

everythingswan 7y ago

I see a straw man here. It seems like you can argue against the theory or argue against the actual implementation. The latter was chosen...but with made-up parameters that make it easy to defeat. Examples "...a UBI of just $1,000 per month would cost around $4 trillion per year, which is close to the entire federal budget in 2018. Without major cost savings, US federal tax revenue would have to be doubled, which would impose massive distortionary costs on the economy..." So we need major cost savings or taxes to go up. "Sacrificing all other social programs for the sake of a UBI is a terrible idea. Such programs exist to address specific problems, such as the vulnerability of the elderly, children, and disabled people. Imagine living in a society where children still go hungry, and where those with severe health conditions are deprived of adequate care, because all the tax revenue has gone to sending monthly checks to every citizen, millionaires and billionaires included." This came our of nowhere as social programs were not mentioned before this line. It's basically fearmongering at this point. Maybe someone can help me understand what the argument here is. Perhaps I'm being harsh on the author but I just don't see how you can make this argument with genuine intentions.

socalnate1 7y ago
This felt like a purely semantic argument to me; as he is actually suggesting we do something rather similar to UBI: "Besides, a more sensible policy is already on offer: a negative income tax, or what is sometimes called “guaranteed basic income.” Rather than giving everyone $1,000 per month, a guaranteed-income program would offer transfers only to individuals whose monthly income is below $1,000, thereby coming in at a mere fraction of a UBI’s cost."
- abakker 7y ago
  Yeah, that basically is semantic. UBI would achieve the same thing, but, instead of negative tax, would just credit everyone and then alter the tax rates to achieve equilibrium. Personally, the improved efficiency from simply collapsing the existing apparatus which is focused on preventing people from cheating seems likely to work. If the goal of the program was to fairly allocate a resource, rather than to prevent people from cheating it would consume a lot less overhead. that is where you can actually find some of the efficiency that the author wants. Honestly, if you cut a check to a millionaire for $1000, and then tax that person on that $1000, it doesn't work that differently from the fact that we get taxed on the value of our tax returns. it ends up being recursive anyway.

GaryNumanVevo 7y ago

I still don't understand why the US hasn't switched to a single payer system yet. We'd be paying 0 premiums for a 2-4% tax hike. I personally would love not having to worry about my health benefits between jobs!

JustSomeNobody 7y ago
Because of "You'll take more money out of my pocket over my cold dead body!" mentality of a lot of of the lower middle class and poor voters who still seem to think the system works for them! Oh, and stuff like this: https://www.vox.com/policy-and-politics/2019/8/31/20840700/indexing-capital-gains-to-inflation-example-donald-trump-twitter https://www.vox.com/policy-and-politics/2019/8/31/20840700/i...
- thatoneuser 7y ago
  Yep everyone's stupid except you...
mrlala 7y ago
Greed. Most upper middle class / rich people don't want to increase their tax burden 2-4% for something they already have. Also ignorance. A lot of people in that realm don't even understand the burden healthcare is on most people because they have never had to worry about it.
- thatoneuser 7y ago
  Everyone's stupid except you...

skybrian 7y ago

Note that the headline cost will be very high because much of it ends up being a partial rebate on higher taxes. (This would be true of most people with a middle-class or better income: you'd have higher taxes, but get some of the money back.) With any redistribution program, just looking at direct costs and not its effects on the economy, the average person breaks even. That's what redistribution means - there's no money being created or destroyed. The numerator and denominator don't change. But most of us are not average. Like with insurance, most people end up paying most of the time, but if you're out of work for any reason, or just working a low-paying job, then you'll benefit. And like most other insurance, the advantage is security rather than actually saving money, most of the time. Along with that security comes greater freedom. The question is a philosophical one: do you trust that most of your fellow citizens can handle freedom? Will they live in near-poverty rather than strive for more? Do you trust that if someone decides not to work, they usually have good reasons? And do you think it's worth paying in during good times in order to ensure everyone has somewhat more freedom to choose where to live and how to make a living? Or do you think that people cannot be trusted and must be controlled via the threat of financial ruin?

Aperocky 7y ago

I don't understand (or understand, but despise) the urge to misrepresent data. For instance $1000 UBI will cost 4 trillion if given to every single American, but people under 18 constitute 25% of the population, take that out, and you have 3 trillion. It's really trivial and I heard no one planning to give people starting from age 0 $1000 dollar every month. It's not a stretch to say 3 trillion is way too much but why does author feel the need to be deceiving and just make that number slightly larger is beyond me. This really discredited him in my eyes as trying to have an objective discussion about the matter.

Mirioron 7y ago
If UBI is to replace other social programs then why would you not pay it to children as well?
- Aperocky 7y ago
  This is an observation on the politicians and theorist that proposed UBI, I'm not an expert but I imagine the problem would be that they're not fully independent individual, and you don't want to simply reward parents for having more kids.

rubyn00bie 7y ago

> ...a UBI of just $1,000 per month would cost around $4 trillion per year, which is close to the entire federal budget in 2018. Without major cost savings, US federal tax revenue would have to be doubled, which would impose massive distortionary costs on the economy... Last time I checked the going effective tax rate across all corporations was something like ~17%. How about corporations stop fucking us all out of the revenue they owe us; because I'm pretty sure doubling that to the expected rate of 35% would fix the funding problem.

vanterdon 7y ago
It's more efficient to lower corporate taxes and raise income taxes.
- evancox100 7y ago
  I generally agree with you, but not if you add escape routes for the money so that people of means can avoid said personal income tax. See capital gains rate, owner-operated business rate, all the non-taxed perks that businesses provide to execs (e.g. using corporate jet as private jet). You also have to staff the tax collector appropriately to enforce the boundary between corporate and personal income.
  - CuriousSkeptic 7y ago
    More efficient still would be to replace income taxes with Georgian land rents.

snidane 7y ago

It's interesting to observe any UBI discussion and a total neglect of the most developed theory about UBI - the georgist economics - where UBI is refered to as a 'citizens dividend'. They state that the only and sufficient financing scheme to make UBI work are the so called monopoly taxes. Simply because if you hand out free money to the people, the monopoly service providers could hike up prices by exactly that amount given out freely to people in aggregate. Other non-monopoly providers would still be trapped in a competition so it would be more difficult for them to increase the prices after UBI implementation. Monopolies would set the prices exactly to the point where they would optimize their income by eating away all the free money suddenly given to people. This is well described by Ricardo's law of rent (1809) in the context of land rents (which are essentially land monopolies). In other words the landlords would increase the rents exactly to the aggregate amount of UBI money handed out. Interestingly enough the present day proponents of UBI don't understand this basic law. Some od them are aware of the UBI inflation problem but are not aware of this monopoly inflation problem. Andrew Yang proposes Value Added Tax to finance it, which proves he has no clue.

bryanlarsen 7y ago
"free money" If you print money to pay UBI you get inflation, yes. If you're paying it with VAT or Income Tax or something else you're not increasing the money supply, so broad inflation should stay unchanged. Local prices will go up and down as you reduce demand for rich person goods and increase demand for poor person goods. This would imply rent going up but one of the promises of UBI is to increase the ability of people to move to places with cheap rent, taking power from landowners.
ksec 7y ago
>This is well described by Ricardo's law of rent (1809) in the context of land rents (which are essentially land monopolies). In other words the landlords would increase the rents exactly to the aggregate amount of UBI money handed out. Thanks. I keep asking the same question without knowing there is actually a Law of Rent. And I have yet to see a convincing argument.
- 7y ago

damq 7y ago

It's a bad idea for the same reason all other variants of socialism are a bad idea: it disincentivizes productivity. If it's possible to afford housing and food without working, some percentage of the population that would otherwise be working will choose to stop working.

krapp 7y ago
>If it's possible to afford housing and food without working, some percentage of the population that would otherwise be working will choose to stop working. Fine. Those are the people who don't actually care about their jobs beyond the bare minimum needed to get a paycheck - the people no employer actually wants to hire. Not having to work to live means having more flexibility to choose the work you want, and the labor pool consists of people who want to work. If you want to live in a meager apartment for subsistence, then you can do so on UBI. If you want a better place to live, more stuff, etc, then you can work. There would be fewer people working, yes, but let's not forget that all industries are automating as much labor away as they can, regardless. Capitalism and socialism exist on completely different axes - it was never the purpose of employment to provide employees with enough means to live, or a sense of purpose or the "dignity of honest labor." So let's stop pretending capitalism can or should provide for the social welfare.
skinnymuch 7y ago
But a lot of jobs aren’t that necessary. What’s your definition of productivity?
JoeAltmaier 7y ago
Wake up! Jobs are disappearing as automation increases. The ultimate result is no jobs and lots of goods. If we don't do something, the transition will be a mess - less and less spendable money to buy more and more available goods.

cheez 7y ago

I'm a big fan of UBI as a replacement for all sorts of welfare bureaucracy and so I was looking forward to a well thought out argument. This is the worst possible article one could write against UBI. But the article is not written for fans, to convince them otherwise, it's to prevent people from becoming fans. pg.com/submarine.html comes to mind.

deleted 7y ago
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Communitivity 7y ago

Here is a radical idea, with some math as an initial take at backing it up. First, let's assume we cannot solve the problem now, or in the short term. Short term here is < 50 years. What then? Second, let's commit ~$100bn to the problem annually for that 50 years, and make that our max investment per year, not counting administrative costs. This amount would increase slightly each year as population increased. Third, divide that $100bn among the babies born that year (~4million in 2018), using trust funds to get 7% interest, compounded annually at the start of the year with no additional contributions, and untouchable until they turn 50. Do this for the babies born each year. Fourth, institute a fiscal responsibility education program with the vigor that sex ed was approached with, at elementary, middle, and college levels. No idea what the cost of this would be, but it would have to be factored in. Fifty years later the first babies born under this program will be able to access their money. Each will have roughly $1.4million, and able to live off 5% annual interest without decreasing that amount ($70k per year). Since a couple will have roughly two people, each of their children should get roughly the same amount. In other words... in fifty years there could be little to no poverty in this country, if only we could think long term. To put the $100bn into perspective, the annual defense budget for 2019 is $617bn with another $68bn for war funding. So, we could possibly eliminate poverty for $32bn more than what we are spending on the war. The above plan is all under CC-By-SA 2.0 license, by Bill Barnhill, see https://creativecommons.org/licenses/by-sa/2.0/ https://creativecommons.org/licenses/by-sa/2.0/.

lifeisstillgood 7y ago
1. I think that's roughly what Norway's Sovereign Wealth fund has / is doing 2. institute a fiscal responsibility education program with the vigor that sex ed was approached with, at elementary, middle, and college levels. I love that idea

logfromblammo 7y ago

The major reason why I think UBI is a bad idea is that money is a unit of measurement, not a quantum of consumable production. The flow of goods and services from producer to consumer is lubricated by money, not entirely controlled by it. That economic fluid, like blood, has to circulate in order to be useful. In many places, the flow is very asymmetric. A region has natural resources, or a cultural significance, or a coincidental concentration of skills. But for whatever reason, the value is then extracted and sent elsewhere, rather than staying in the community that produced it. Absentee landlords take their rents and spend them in a different city. Chain and franchise businesses send their profits to distant owners that spend their dividends and distributions elsewhere. Worker wages are sent to families that live in another city. Local money is spent mostly on consumables instead of development capital. When owners don't spend money where they earned it, it becomes a circulation problem. The work that people do in their own communities is then being used to develop and improve someone else's community. Coal miners in West Virginia are actually digging up million-dollar houses in Washington DC metro area. Farmers in Iowa are actually growing luxury cars in Chicago. Software developers in New Mexico are actually launching a new live-act auditorium in Las Vegas. All the work done, everywhere around the world, is developing mostly the places where the owners live, and those people don't want to live in undeveloped places, even if those places are only undeveloped because all the development potential is continually sucked out to be sent to the owners. So what is needed is universal basic ownership. If you just dump helicopter cash onto an undeveloped area, the owners can suck harder on their rent straw until they drain away all the excess. Live in a home you own, with no mortgage, and there are no checks being sent out of town for rent or interest. Buy fiber-to-the-home network access from the municipality, and the service fee is not being sent to Comcast or AT&T headquarters; it's being spent on local capital and jobs. When most of the ownership is local, it's much easier to balance the production that the community exports with the consumables that it imports. The only way to unbalance it from there is to make the community want more imports, without buying more of its exports. That extra cash in the mailbox isn't going to fix the economic problems inherent in locally unbalanced earning and spending. It is only a short term fix to tax the high-ownership individuals and move the money to where it should have been spent. It's like performing a cardiac bypass without also attempting a lifestyle intervention with the patient. That new flow route will work for a little while, and then it too will get clogged with calcified plaques, just like the others. UBI treats a symptom, instead of curing the disease, which is that too few people own too much property, and thus they literally cannot spend enough in all the communities in which they own that property to keep them all healthy.

deleted 7y ago

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doggydogs94 7y ago

If you have to do universal basic income, do it with a no cash back debit card with detailed e-receipts. My thinking is that, if people know their spending is being tracked, they are less likely to waste it.