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Precisely the argument against UBI. If an employer knows you’re getting money from the government, it’s natural for them to cut your pay to reflect that, or rai

Precisely the argument against UBI. If an employer knows you’re getting money from the government, it’s natural for them to cut your pay to reflect that, or raise prices on consumers. Bringing us right back to where we started.

zelon88 6y ago
So the argument against UBI is that capitalists are greedy? But that is the problem UBI is supposed to solve. You have a strawman situation because it comes from the obvious side of the aisle who doesn't want UBI, but ignores the fact that with UBI would come a motley of other regulations against exactly this type of predatory capitalism that created the need for UBI in the first place. Don't worry, if UBI gains steam; nobody will forget what caused it and corporate shareholders won't be able to wiggle themselves free.
tgb 6y ago
I'm not 100% convinced on UBI but that's not the case. Employers reducing your pay by X while you receive X from UBI would be the "good outcome" because it means that you don't depend on the employer as much as before. Unemployment, whether permanent or temporary, becomes more do-able.
- zdragnar 6y ago
  Assuming UBI is funded through taxation, that is a net loss to everyone but employers and UBI administrators; whether through income or VAT taxes, you end up with less.
  - tgb 6y ago
    That's clearly dependent upon how (or who) you tax. Someone with no income will not have a net negative. And a yacht tax would fund a (miniscule) UBI that benefits everyone but the rich and yacht builders. But the main point is that you gain something nonfinancial: more options or a stability. For the record, to the extent to which I support UBI, I support my own net income decreasing to support others on it and I think any tax plan that does not involve some upper-middle class and middle class Americans paying more than they receive would be financially unviable.
    - Simulacra 6y ago
      Can I have some of your net income largess?
      - Simulacra 6y ago
        No seriously, if you're giving away net largess, can I have some?
- Simulacra 6y ago
  Employers reducing your pay by X while you receive X from UBI would be the "good outcome" because it means that you don't depend on the employer as much as before. If you are earning $2000 a month, and the company knows that you were earning $1000 a month from the government, and they cut your pay to $1000 a month, you’re still only getting $2000 a month. Your overall financial health, and way of life has not changed one bit. you have simply replaced one source of income with another. You’re still making $2000 a month, the only difference is, the corporation doesn’t have to pay you. We have simply replaced one source of income with another. You’re still making $2000 a month, the only difference is, the corporation doesn’t have to pay you. If a Toyota Camry cost $10,000, and all customers are getting $1000 a month free from the government, then raise the price of the Camry to $11,000. Services and goods have not decreased in price, and I contend they will increase, resulting in absolutely zero positive affect. So what if you don’t have to depend on that employer for that extra thousand dollars, you’re depending on the government now. Which is better, depending on the government, or the free market Services and goods have not decreased in price, and I contend they will increase, resulting in absolutely zero positive affect. So what if you don’t have to depend on that employer for that extra thousand dollars, you’re depending on the government now. Which is better, depending on the government, or the free market?
  - tgb 6y ago
    I don't understand what your comment is saying, sorry. If total income stays the same, why is the price of the Camry increasing? The point of not depending on the employer is that you can quit a bad job, start a company, etc with much less risk.
    - Simulacra 6y ago
      The question you should be asking is this: If total income stays the same, why would the price of the Camry NOT INCREASE? Is there any situation you can think of where there is more cash in the system and the price of goods decreases?
  - licebmi__at__ 6y ago
    >If you are earning $2000 a month, and the company knows that you were earning $1000 a month from the government, and they cut your pay to $1000 a month, you’re still only getting $2000 a month. Your overall financial health, and way of life has not changed one bit. you have simply replaced one source of income with another. You’re still making $2000 a month, the only difference is, the corporation doesn’t have to pay you. We have simply replaced one source of income with another. You’re still making $2000 a month, the only difference is, the corporation doesn’t have to pay you. If a Toyota Camry cost $10,000, and all customers are getting $1000 a month free from the government, then raise the price of the Camry to $11,000 I often argue that the markets do not optimize for the right outcomes, thus not so great, but even I do not think they are that stupid nor inefficient. If your standard of living has not improved (by your previous argument), why would the markets raise the price for the Toyota Camry? So they get less sales? Why would the workers agree to do the same work for less even if they are gettin extra money? An UBI will definitely shift the markets and maybe not in a good way, but that analysis seems so absurd that I consider even calling it an oversimplification to be too generous.
yarrel 6y ago
The entire point of UBI is that it reduces your need for waged employment. If employers cut your wages, UBI means that you don't have to work for them. Putting you very far ahead of where you started. (This is the "basic" part of UBI.)
- Simulacra 6y ago
  But at what point does “cut wages” equate to a null benefit from the UBI?
  - cardiffspaceman 6y ago
    If you earned exactly the UBI before the UBI started, you now have no fiscal requirement or incentive to keep that job. If your employer cut your wage to zero... you might not even have reported to work to hear about it. So that's a benefit. For most employment, especially lower-paid, I would say there is a hassle factor, and if a job doesn't pay UBI plus hassle compensation, it won't seem like a good deal to keep that job.
    - klmadfejno 6y ago
      Right, but we need those lower paid jobs to be done so we either outsource them to countries without UBI or we pay people more to do them, raising the price of goods such that the UBI is no longer sufficient to be basic... Likely a mix of both. Seems to me the inevitable future of UBI is a guaranteed below the wage that's too low to be liveable and an economy with fewer jobs for poor people. The outsourcing is a big deal for exactly the point you list. In order to get someone with no need for income to survive to work an unpleasant job, you'll need to pay them a pretty good sum because otherwise they'll spend that time investing in themselves (or just not working). Improving labor relations for the poor is a nice idea, but all that newfound employee leverage is worth exactly nothing if the process is moved to another country.
      - Simulacra 6y ago
        A UBI makes it much easier to outsource.
danans 6y ago
That incorrectly assumes completely inelastic labor and consumer product markets in response to UBI, which is false. With UBI, laborers - especially lower skilled laborers - are less incentivized to take any job just to survive, which can increase the cost of labor for the employers, and also increase the production of most consumer goods purchased with UBI - basics like diapers and cereal - which are not supply constrained, but demand constrained. Even rents might not be increased if UBI allows people to support themselves better in less expensive, typically rural areas, thereby reducing demand somewhat on housing in more expensive areas. It could, coupled with targeted investment, even enable an economic rebirth of smaller towns by bringing purchasing power back to them.
- Simulacra 6y ago
  But UBI is not isolated to anyone part of the country. If you want to have a UBI in one city, it makes perfect sense that a person is going to want to move there. Free money, is free. The point I think you missed is that despite the cheerleading for a UBI, capitalism is going to negate that rapidly. If prices rise by the amount of the UBI, then you’re just spending that money but your overall financial stability is still negated. If you know that everyone is receiving thousand dollars a month from the government for free, why not raise the car price $1000? Why not raise the rent $1000? The Fantasy of a UBI requires that you completely ignore economics, and put blind faith in the rest of the system to go along.
  - danans 6y ago
    > If you know that everyone is receiving thousand dollars a month from the government for free, why not race car price is $1000? Competition from other car-makers, which is precisely capitalism. Otherwise it would be illegal price collusion. > Why not raise the rent $1000? You can only do that if supply/demand in your area supports that, and that's often because of local restrictions on increasing housing (i.e. as seen in a variety of exclusive Bay Area hamlets). With UBI, more people would be able to choose not to inhabit these supply-constrained housing markets, which might actually temper rents in those areas. If every place implements excessive supply constraints on housing, that would again be collusion - which is another issue that should be addressed simultaneously.
deleted 6y ago
[deleted]
cma 6y ago
> Bringing us right back to where we started. Not really, since someone working no time or half-time still gets more money under that regime.
- Simulacra 6y ago
  That is true, so long as the employer does not cut their pay to rock bottom, and their landlord does not raise their rent, and the price of services and goods do not also increase UBI only makes sense in a completely static economy where nothing rises. There has never been a successful economy in the history of mankind that has been able to do that.
  - ClumsyPilot 6y ago
    You don't need a static economy for UBI to be effective, your whole idea of suppliers charging more just because they know you have more money is flawed. Thats not how real life works, your rent does not increaae when you get a raise, prices don't increase just because wages grew this year.
    - csharptwdec19 6y ago
      IDK if I fully agree with that. Possibly pedantic, definitely anecdotal, but I've always felt like the best time to buy a laptop or home appliances was right between Xmas and Tax season. For some reason it seemed like the sales just weren't as good during peak Rebate time...
    - Simulacra 6y ago
      Rent does not increase when yo get a raise, of of course not, my landlord doesn’t know that I got a raise. But if my landlord knows that everyone is getting universal basic income, then what do you expect them to do? Leave profits on the table? Your argument does not consider actual economics or societal behavior. It assumes real life will be simple: take from one to redistribute to the rest and all will be well. Yet you’ve shown zero facts or resources to back that up. UBI is a theoretical fantasy that hasn’t worked every time it’s tried.
klmadfejno 6y ago
This is probably the opposite of what would happen. If you have free living wages, especially for low level jobs, you're incentivized to try and get a better job rather than working minimum wage in unpleasant occupations. That is, now that avoiding starving to death is off the table the employers need to increase the leverage of their compensation enough to offset the opportunity cost of learning a more valuable skill, so wages will increase. The problem is that the increase in wages will necessitate higher prices to the point at which the UBI is not longer sufficient on its own, so the above mentioned effect falls off, and you find some sort of equilibrium at which poor people still need to work to survive. It's not crazy to imagine the long term impact being what you suggest though. Right now you need, say $100 paychecks to survive. In a universal non basic income, you might only need to earn $50 + your UnBI. The cunning capitalist observes here that the poor need fewer wages to live and so they get... fewer wages.
- Simulacra 6y ago
  But we haven’t seen any of that. People who were put on unemployment found they were making more not working, than people who are working, And they were quite happy to stay at home and not work.. They will take the free money that’s handed to them. I own a rental property, and I can guarantee you that if I know my tenant is earning extra money a month free from the government, I’m going to increase his rent. Why not? There’s no law against it.
  - kube-system 6y ago
    Nobody is suggesting that UBI should be as much as an existing job + $600.
    - Simulacra 6y ago
      So what should it be? $500? $100? UBI can only succeed if business and commerce goes along with it. Otherwise, all you’ve done is incentivize business to go after that money that consumers now have.
      - 6y ago
colinmhayes 6y ago
You're thinking of EITC, which would have major employer capture since it distorts labor supply. UBI has much less capture and would likely lead to less people working instead.
chrisco255 6y ago
Or it just causes inflation and it's a wash...unless it causes hyperinflation, in which case it's a catastrophe.
- egypturnash 6y ago
  Not if you, I dunno, actually resume taxing rich people and giant corporations? Create money, put it into the economy at the bottom. Take it back out when it bubbles up to the top, and destroy it. Kind of like how your body creates red blood cells that bounce around transporting oxygen for about three months before breaking them down again.
  - redisman 6y ago
    Funny how an obviously failed system (trickle down economics) is seen by the general public as valid but the opposite somehow will almost certainly destroy the economy. Even though the lower 50% of earners actually do spend the money they get on necessities rather than hoarding it in offshore accounts.
    - egypturnash 6y ago
      I think it's mostly seen as valid by people who get all their economic advice from places with an agenda set by the richest 1% of the population? Funny how that works out.
- ClumsyPilot 6y ago
  The inflation boogeyman is a bit rotten. There has been hardly any inflation in developed economies for the last thirty years. Japan and Germany have negative interest rates. Yet the political wisdom of the day says that you can print money to bail out the banks, you can print money to inflate the stock market and yhats fine, but as soon as you try any kind of UBI\ help the poor, inflation will come for us all.
  - aianus 6y ago
    The political wisdom is correct, poor people receiving UBI will actually spend that money and increase the velocity of money. That is genuinely more likely to cause inflation than bailing out a bank facing margin calls on its credit default swaps. UBI is great, but if it's paid for by printing money instead of redistributing it, it will absolutely cause inflation.
dragonwriter 6y ago
> Precisely the argument against UBI. If an employer knows you’re getting money from the government, it’s natural for them to cut your pay to reflect that Your employer is going to pay as little as the market will bear. UBI raises the minimum the market will bear for any given work (while simultaneously lowering the minimum wage necessary for any minimum level of income for an employed person) because of the declining marginal value of income. So, plausibly, it both increases wages for those who are and would otherwise be working and makes more people minimally employable (if the minimum wage is reduced to keep the minimum full-time income including UBI at the same level as pre-UBI.)

zelon88 6y ago

So the argument against UBI is that capitalists are greedy? But that is the problem UBI is supposed to solve. You have a strawman situation because it comes from the obvious side of the aisle who doesn't want UBI, but ignores the fact that with UBI would come a motley of other regulations against exactly this type of predatory capitalism that created the need for UBI in the first place. Don't worry, if UBI gains steam; nobody will forget what caused it and corporate shareholders won't be able to wiggle themselves free.

tgb 6y ago

I'm not 100% convinced on UBI but that's not the case. Employers reducing your pay by X while you receive X from UBI would be the "good outcome" because it means that you don't depend on the employer as much as before. Unemployment, whether permanent or temporary, becomes more do-able.

zdragnar 6y ago
Assuming UBI is funded through taxation, that is a net loss to everyone but employers and UBI administrators; whether through income or VAT taxes, you end up with less.
- tgb 6y ago
  That's clearly dependent upon how (or who) you tax. Someone with no income will not have a net negative. And a yacht tax would fund a (miniscule) UBI that benefits everyone but the rich and yacht builders. But the main point is that you gain something nonfinancial: more options or a stability. For the record, to the extent to which I support UBI, I support my own net income decreasing to support others on it and I think any tax plan that does not involve some upper-middle class and middle class Americans paying more than they receive would be financially unviable.
  - Simulacra 6y ago
    Can I have some of your net income largess?
    - Simulacra 6y ago
      No seriously, if you're giving away net largess, can I have some?
Simulacra 6y ago
Employers reducing your pay by X while you receive X from UBI would be the "good outcome" because it means that you don't depend on the employer as much as before. If you are earning $2000 a month, and the company knows that you were earning $1000 a month from the government, and they cut your pay to $1000 a month, you’re still only getting $2000 a month. Your overall financial health, and way of life has not changed one bit. you have simply replaced one source of income with another. You’re still making $2000 a month, the only difference is, the corporation doesn’t have to pay you. We have simply replaced one source of income with another. You’re still making $2000 a month, the only difference is, the corporation doesn’t have to pay you. If a Toyota Camry cost $10,000, and all customers are getting $1000 a month free from the government, then raise the price of the Camry to $11,000. Services and goods have not decreased in price, and I contend they will increase, resulting in absolutely zero positive affect. So what if you don’t have to depend on that employer for that extra thousand dollars, you’re depending on the government now. Which is better, depending on the government, or the free market Services and goods have not decreased in price, and I contend they will increase, resulting in absolutely zero positive affect. So what if you don’t have to depend on that employer for that extra thousand dollars, you’re depending on the government now. Which is better, depending on the government, or the free market?
- tgb 6y ago
  I don't understand what your comment is saying, sorry. If total income stays the same, why is the price of the Camry increasing? The point of not depending on the employer is that you can quit a bad job, start a company, etc with much less risk.
  - Simulacra 6y ago
    The question you should be asking is this: If total income stays the same, why would the price of the Camry NOT INCREASE? Is there any situation you can think of where there is more cash in the system and the price of goods decreases?
- licebmi__at__ 6y ago
  >If you are earning $2000 a month, and the company knows that you were earning $1000 a month from the government, and they cut your pay to $1000 a month, you’re still only getting $2000 a month. Your overall financial health, and way of life has not changed one bit. you have simply replaced one source of income with another. You’re still making $2000 a month, the only difference is, the corporation doesn’t have to pay you. We have simply replaced one source of income with another. You’re still making $2000 a month, the only difference is, the corporation doesn’t have to pay you. If a Toyota Camry cost $10,000, and all customers are getting $1000 a month free from the government, then raise the price of the Camry to $11,000 I often argue that the markets do not optimize for the right outcomes, thus not so great, but even I do not think they are that stupid nor inefficient. If your standard of living has not improved (by your previous argument), why would the markets raise the price for the Toyota Camry? So they get less sales? Why would the workers agree to do the same work for less even if they are gettin extra money? An UBI will definitely shift the markets and maybe not in a good way, but that analysis seems so absurd that I consider even calling it an oversimplification to be too generous.

yarrel 6y ago

The entire point of UBI is that it reduces your need for waged employment. If employers cut your wages, UBI means that you don't have to work for them. Putting you very far ahead of where you started. (This is the "basic" part of UBI.)

Simulacra 6y ago
But at what point does “cut wages” equate to a null benefit from the UBI?
- cardiffspaceman 6y ago
  If you earned exactly the UBI before the UBI started, you now have no fiscal requirement or incentive to keep that job. If your employer cut your wage to zero... you might not even have reported to work to hear about it. So that's a benefit. For most employment, especially lower-paid, I would say there is a hassle factor, and if a job doesn't pay UBI plus hassle compensation, it won't seem like a good deal to keep that job.
  - klmadfejno 6y ago
    Right, but we need those lower paid jobs to be done so we either outsource them to countries without UBI or we pay people more to do them, raising the price of goods such that the UBI is no longer sufficient to be basic... Likely a mix of both. Seems to me the inevitable future of UBI is a guaranteed below the wage that's too low to be liveable and an economy with fewer jobs for poor people. The outsourcing is a big deal for exactly the point you list. In order to get someone with no need for income to survive to work an unpleasant job, you'll need to pay them a pretty good sum because otherwise they'll spend that time investing in themselves (or just not working). Improving labor relations for the poor is a nice idea, but all that newfound employee leverage is worth exactly nothing if the process is moved to another country.
    - Simulacra 6y ago
      A UBI makes it much easier to outsource.

danans 6y ago

That incorrectly assumes completely inelastic labor and consumer product markets in response to UBI, which is false. With UBI, laborers - especially lower skilled laborers - are less incentivized to take any job just to survive, which can increase the cost of labor for the employers, and also increase the production of most consumer goods purchased with UBI - basics like diapers and cereal - which are not supply constrained, but demand constrained. Even rents might not be increased if UBI allows people to support themselves better in less expensive, typically rural areas, thereby reducing demand somewhat on housing in more expensive areas. It could, coupled with targeted investment, even enable an economic rebirth of smaller towns by bringing purchasing power back to them.

Simulacra 6y ago
But UBI is not isolated to anyone part of the country. If you want to have a UBI in one city, it makes perfect sense that a person is going to want to move there. Free money, is free. The point I think you missed is that despite the cheerleading for a UBI, capitalism is going to negate that rapidly. If prices rise by the amount of the UBI, then you’re just spending that money but your overall financial stability is still negated. If you know that everyone is receiving thousand dollars a month from the government for free, why not raise the car price $1000? Why not raise the rent $1000? The Fantasy of a UBI requires that you completely ignore economics, and put blind faith in the rest of the system to go along.
- danans 6y ago
  > If you know that everyone is receiving thousand dollars a month from the government for free, why not race car price is $1000? Competition from other car-makers, which is precisely capitalism. Otherwise it would be illegal price collusion. > Why not raise the rent $1000? You can only do that if supply/demand in your area supports that, and that's often because of local restrictions on increasing housing (i.e. as seen in a variety of exclusive Bay Area hamlets). With UBI, more people would be able to choose not to inhabit these supply-constrained housing markets, which might actually temper rents in those areas. If every place implements excessive supply constraints on housing, that would again be collusion - which is another issue that should be addressed simultaneously.

deleted 6y ago

[deleted]

cma 6y ago

> Bringing us right back to where we started. Not really, since someone working no time or half-time still gets more money under that regime.

Simulacra 6y ago
That is true, so long as the employer does not cut their pay to rock bottom, and their landlord does not raise their rent, and the price of services and goods do not also increase UBI only makes sense in a completely static economy where nothing rises. There has never been a successful economy in the history of mankind that has been able to do that.
- ClumsyPilot 6y ago
  You don't need a static economy for UBI to be effective, your whole idea of suppliers charging more just because they know you have more money is flawed. Thats not how real life works, your rent does not increaae when you get a raise, prices don't increase just because wages grew this year.
  - csharptwdec19 6y ago
    IDK if I fully agree with that. Possibly pedantic, definitely anecdotal, but I've always felt like the best time to buy a laptop or home appliances was right between Xmas and Tax season. For some reason it seemed like the sales just weren't as good during peak Rebate time...
  - Simulacra 6y ago
    Rent does not increase when yo get a raise, of of course not, my landlord doesn’t know that I got a raise. But if my landlord knows that everyone is getting universal basic income, then what do you expect them to do? Leave profits on the table? Your argument does not consider actual economics or societal behavior. It assumes real life will be simple: take from one to redistribute to the rest and all will be well. Yet you’ve shown zero facts or resources to back that up. UBI is a theoretical fantasy that hasn’t worked every time it’s tried.

klmadfejno 6y ago

This is probably the opposite of what would happen. If you have free living wages, especially for low level jobs, you're incentivized to try and get a better job rather than working minimum wage in unpleasant occupations. That is, now that avoiding starving to death is off the table the employers need to increase the leverage of their compensation enough to offset the opportunity cost of learning a more valuable skill, so wages will increase. The problem is that the increase in wages will necessitate higher prices to the point at which the UBI is not longer sufficient on its own, so the above mentioned effect falls off, and you find some sort of equilibrium at which poor people still need to work to survive. It's not crazy to imagine the long term impact being what you suggest though. Right now you need, say $100 paychecks to survive. In a universal non basic income, you might only need to earn $50 + your UnBI. The cunning capitalist observes here that the poor need fewer wages to live and so they get... fewer wages.

Simulacra 6y ago
But we haven’t seen any of that. People who were put on unemployment found they were making more not working, than people who are working, And they were quite happy to stay at home and not work.. They will take the free money that’s handed to them. I own a rental property, and I can guarantee you that if I know my tenant is earning extra money a month free from the government, I’m going to increase his rent. Why not? There’s no law against it.
- kube-system 6y ago
  Nobody is suggesting that UBI should be as much as an existing job + $600.
  - Simulacra 6y ago
    So what should it be? $500? $100? UBI can only succeed if business and commerce goes along with it. Otherwise, all you’ve done is incentivize business to go after that money that consumers now have.
    - 6y ago

colinmhayes 6y ago

You're thinking of EITC, which would have major employer capture since it distorts labor supply. UBI has much less capture and would likely lead to less people working instead.

chrisco255 6y ago

Or it just causes inflation and it's a wash...unless it causes hyperinflation, in which case it's a catastrophe.

egypturnash 6y ago
Not if you, I dunno, actually resume taxing rich people and giant corporations? Create money, put it into the economy at the bottom. Take it back out when it bubbles up to the top, and destroy it. Kind of like how your body creates red blood cells that bounce around transporting oxygen for about three months before breaking them down again.
- redisman 6y ago
  Funny how an obviously failed system (trickle down economics) is seen by the general public as valid but the opposite somehow will almost certainly destroy the economy. Even though the lower 50% of earners actually do spend the money they get on necessities rather than hoarding it in offshore accounts.
  - egypturnash 6y ago
    I think it's mostly seen as valid by people who get all their economic advice from places with an agenda set by the richest 1% of the population? Funny how that works out.
ClumsyPilot 6y ago
The inflation boogeyman is a bit rotten. There has been hardly any inflation in developed economies for the last thirty years. Japan and Germany have negative interest rates. Yet the political wisdom of the day says that you can print money to bail out the banks, you can print money to inflate the stock market and yhats fine, but as soon as you try any kind of UBI\ help the poor, inflation will come for us all.
- aianus 6y ago
  The political wisdom is correct, poor people receiving UBI will actually spend that money and increase the velocity of money. That is genuinely more likely to cause inflation than bailing out a bank facing margin calls on its credit default swaps. UBI is great, but if it's paid for by printing money instead of redistributing it, it will absolutely cause inflation.

dragonwriter 6y ago

> Precisely the argument against UBI. If an employer knows you’re getting money from the government, it’s natural for them to cut your pay to reflect that Your employer is going to pay as little as the market will bear. UBI raises the minimum the market will bear for any given work (while simultaneously lowering the minimum wage necessary for any minimum level of income for an employed person) because of the declining marginal value of income. So, plausibly, it both increases wages for those who are and would otherwise be working and makes more people minimally employable (if the minimum wage is reduced to keep the minimum full-time income including UBI at the same level as pre-UBI.)