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Universal Basic Income Is Superior to a $15 Minimum Wage (2019)
- asblknnf 6y agoand yet both are bullshit
- exabrial 6y agoKind of a self defeating claim; sorta like saying McDonalds burgers are better than Burger King. Both are pretty pretty bad for you.
- Turing_Machine 6y agoUnless you don't have any food....in which case either would be pretty welcome. I tend to agree that if we (society as a whole) determine that there should be a minimum income below which no one is allowed to fall, a UBI-type system is more equitable than a minimum wage increase. The costs of UBI fall on everyone, while the costs for minimum wage increases fall on the very business owners who tend to employ the young and/or unskilled. It's McDonalds and the local car wash (and their employees!) that take it in the neck with a minimum wage increase, not Google or Goldman Sachs.
- sdenton4 6y agoWho is 'you?' Capitalism is a social good to the extent that it solves problems and makes people's lives better. But capitalism only solves the problems of people with money: their cash is THE incentive for others to figure out how to solve their problems. If people with problems have no money, they effectively create no demand. Add wealth to the bottom tier of society and we'll generate generate demand to solve problems at the bottom, which in turn generates a supply of people to fix those problems. This is effectively what happened after WW2, driving the massive growth of the American middle class and a huge increases in standard of living. Finally, there are plenty of studies backing up minimum wage increases. The boogeyman of inflation in this context is nothing but FUD.
- jacob2484 6y agoUsing post WW2 times as a basis for any argument is wrong. Post WW2, there was no China as a superpower and no globalization. If businesses are forced to pay more for low-skill labor, they can do so easily by taking the jobs elsewhere, which was not the case (or at least as easily done) after WW2.
- BurritoAlPastor 6y agoOffshoring cheap labor already happened everywhere possible. Domestic "low-skill" labor today is overwhelmingly in restaurants, hotels, and retail. I assure you that Taco Bell is not making bean burritos on-site because it's the cheapest place to do so.
- Turing_Machine 6y agoIt's pretty clear that minimum wage increases are inflationary. They may not be NET inflationary in some circumstances. Consider this thought experiment: raise the minimum wage to $2 million/hour. What happens to prices?
- aww_dang 6y agoWhat happens to employment? For 2M/hour employers would be able to maintain sophisticated forms of automation, without the liabilities of humans. In terms of price inflation, UBI will inject the hot flows which previously stayed in capital markets into everyday consumption.
- exabrial 6y agoSometimes I wonder where people come up with the crap like 'minimum wage isn't inflationary'. Make minimum wage $1,000,000/hr then!
- pydry 6y agoAnd why does the author not support both? It's articles like this that make me wonder if the purpose of the basic income movement is to act as a sort of pipe dream spoiler for more realistic progressive policies - like a $15 minimum wage. Either that or a plan to make welfare "fairer" by ensuring that disabled veterans who can't work and tech millionaires get the same $ amount each month from the government. Especially since the author accused the $15 minimum wage "burdensome"... this is incoherent given the cost of providing, yknow, money for nothing for everyone.
- Turing_Machine 6y agoI think the idea is that while both may "get the same amount", the NET amount is, in fact, smaller for the tech millionaire than the disabled veteran, because the tech millionaire pays a much higher tax rate.
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- SpicyLemonZest 6y agoThe concern is that we're soon going to reach a point where "our current economic order" - the assumption that every healthy adult should have a full-time job - is unsustainable. I wouldn't say I oppose a $15 minimum wage, and I don't think the author would either, but we do desperately need to start thinking about our transition to a post-work society and I worry minimum wage debates are sucking up a lot of the energy towards that. We risk getting stuck in a terrible equilibrium, where many people can't get jobs but all our social safety nets are built on the assumption that they can. (There's a serious argument to be made that we're already there.)
- pydry 6y agoAmerica is at risk of running out jobs, not at risk of running out of work. It's all too easy to see a lack of infrastructure jobs, for instance, as a signal of a lack of demand. It isn't. America has crumbling infrastructure and a lack of jobs to fix it at the same time. China turning off the trade tap will likely also stimulate the creation of jobs. iPhones will need to be made at home at some point in the not too distant future and they will still need plenty of people to do so. Wealth re-redistribution will also stimulate demand, creating jobs. A lack of demand caused by a lack of wealth is not a "true" lack of demand. When society starts lowering the retirement age to 50 and nobody frets about inflation ever - THAT'S when you know that full time work is really drying up. Not happening.
- azey47 6y agoI agree UBI is better than a minimum wage, but it seems a Negative Income Tax as advocated for by Milton Friedman would be still better. It would have the desired effect of supporting the poor with guaranteed income (something minimum wage can’t do because of the labor shortage it creates, especially amongst low-skilled employees), but do so a lot more cost effectively than UBI since you wouldn’t be guaranteeing payments to people who don’t need them and would avoid any welfare trap created by existing welfare programs.
- guerrilla 6y ago> would avoid any welfare trap created by existing welfare programs. How would it do that?
- cylon13 6y agoYou're always incentivized to make marginally more money with the negative income tax because it gives you a monotonically increasing effective income vs job income curve, whereas some welfare systems end up with disincentives at various points of income where you'd make overall less by exiting the income level where you're receiving the aid (the same curve gets a negative slope or a downward jump).
- SV_BubbleTime 6y agoI hate to ask, but can you dumb this down? I still don’t really get it. Are you saying that if you have no job that 100% of your income is tax funded, but if you have even a shitty job that you still get more benefit than the job alone but this is sliding scale down to some unknown point which you no longer receive any benefit at all?
- Turing_Machine 6y agoIt's actually worse than that. There's often not any kind of sliding scale. Make $x and you get rental assistance, medical care for your kids, food aid, whatever. Make $x+1, and you get jack and shit. There's no reason for it to be that way, in a world with ubiquitous calculators and computers, but that's how it often is.
- JPKab 6y agoThe minute UBI gets instituted is the minute that politicians will arise who want to lower the quantity for one group of people and increase it for the group of people that supports them. Eventually it will end up being means tested in one form or another just like the income tax system has been made so complex by politicians favoring one group over another. I absolutely love the idea of UBI but I just don't see it surviving in a pure form with our populist and identity group focused political system.
- jnwatson 6y agoThat already happens with income tax. That’s exactly what the Trump tax cuts accomplished.
- throwawayboise 6y agoI don't know how old you are or how long you've been paying taxes, but they have been an insane labyrinth since long before Trump. My taxes actually got simpler with the increased standard deduction.
- richwater 6y agoIt will 100% just become welfare with a different coat of paint.
- rhino369 6y agoEven if they don't discriminate, what would ensure its not just used as a political tool even if an increase is overall harmful? Seems like voters have a lot of incentive to vote themselves increases.
- imtringued 6y agoThis is true. The entire value proposition of UBI lies in it's unconditional nature. The expectation that governments won't butcher it is highly unreasonable.
- overton 6y agoAuthors like this frame the UBI/minimum wage debate as if we just haven't figured out the right policy mix to fix poverty or precarity -- as if it's a problem of ideas. I propose that it's in fact a question of power -- 1) who benefits from people being poor and how much 2) power do they have? 1) Owners of capital, who don't want to see their labour costs escalate and use firing/the poverty gun as a disciplinary tool. 2) Overwhelming power, channeled through vectors such as billions spent in lobbying or campaign contributions or threats to take their capital to friendlier jurisdictions.
- vidarh 6y agoIndeed you'll find that places with high degree of union power often don't have minimum wage and far less interest in UBI, because there tends to be tariff agreements and welfare systems in place that makes these things seem rather redundant. The continuation of poverty in most of the developed world is a choice, and one that people keep voting for. As long as people keep voting to maintain poverty, it's a relatively pointless academic discussion.
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- reaperducer 6y agoLots of fun catch phrases, but unless you also propose a solution, it comes off like someone standing on a soap box in a campus quad preaching to three people.
- blackearl 6y agoI wouldn't expect the solution to world poverty to be easily typed up on an internet message board.
- reaperducer 6y agoI agree, which is why I generally stay out of these conversations. But I think it's important for people go to beyond "That's not the problem. This is the problem" and on to "But here's something we might think about that could work toward a solution." All I ever see on HN is the same talking points I've heard regurgitated in the dozen or so union halls I've been in from coast to coast over the last 30 years. Everyone gets a lot of practice shouting the right keywords, but nobody ever says anything new, or even tip-toes near a solution.
- headmelted 6y agoHonestly saying a UBI is superior to anything else is so open to interpretation that it’s just asking for it to die by being gummed up in endless debate (which is where it’s been languishing so far). Make a case that with all things considered (including government labour and other bureaucracy costs) that a UBI is fundamentally better value overall than the current system and you’d have it in two years. I think that’s a case that could be made convincingly. UBI is simple. It’s impact is therefore easily measurable. It’s self-regulating if you believe that the taxpayer will be incredibly sensitive to systemic abuse because they know they’re fundamentally paying a fixed amount directly. If abuse were becoming a problem, the public would express their distaste at the polls. It also frees up a lot of people to pursue ideas they might otherwise be prevented from exploring, which could have outsized macroeconomic benefits.
- chaganated 6y agoStruggling to put the peasants on the reservation? Make things hard enough, and they'll vote for it themselves! UBI? Capital idea!
- worldsayshi 6y agoStrong protections for unions are superior to minimum wages.
- ChuckMcM 6y agoI agree with most of the comments here about how UBI == negative tax, its really just changing the names of transfer payments in the economy. That said, the really appealing thing is that it allows wages to be unbound from the question of supporting the poor. If people are below the poverty line you can raise UBI, but you don't have to put your thumb on the scales of the labor market. But to not just re-create welfare, you have to completely dissolve the tie between UBI and taxable income. And to do that effectively you boost the marginal rates above your cut off point. You could plot that to show how much the UBI was a net increase to your annual income and then design the tax rates to have it be effectively 100% reclaimed as tax after $400K AGI or what ever number you pick.
- maxerickson 6y agoTo pay for it, it's going to be fully reclaimed at like $90,000 or lower.
- ChuckMcM 6y agoAnd that is the beauty of the separation! Once you've got the two things (minimum wage and UBI) separated, you can adjust the tax code to move around the reclaim point.
- richwater 6y agoUBI will never work because it's based on the fact that we remove all other forms of welfare, which, will never happen.
- vsskanth 6y agoCould you elaborate on why ? I've also thought about this and would like to hear your thoughts. If I were to take a guess, it would be politically connected organizations benefiting from the welfare system. I wonder what these organizations would be. Or, there might be some political calculus that makes means testing and administration more favorable to the ruling establishment.
- actualhuman 6y agoWe need to open the borders up. It is so unfair that only people who happen to live in the USA right now will get UBI. Biden needs to form military caravans to escort people across Mexico to get here as fast as possible. He can also start planes and ships from Africa. How many people can you load on an aircraft carrier? How many trips can it make a year? Let's stop messing around. It's so nationalist to talk about UBI without including those who cannot partake of it by accident of birth. Shame.
- aww_dang 6y agoIf only there was a global central bank, world wide biometric tax IDs and a one-world CBDC. They could distribute UBI to everyone without borders.
- jgalt212 6y agothe general populace would have no knowledge of wallstreetbets without UBI and WFH.
- Buttons840 6y agoHere's an alternate idea. Encourage (read: regulate) companies to offer very generous paid time off, like 3 months a year paid time off or more. People can use the time off to work a second job, and thus receive more income from working the same hours. It will also increase worker mobility, because a worker already working 2 jobs should be much more willing to take risks and try out new jobs. This will create competition between employers, because many employees will be working two jobs. If you treat your employees bad, the will request fewer hours and spend more time at their other job, or just leave. Or, the extra time off could be used for entrepreneurial pursuits. Or just to relax, etc. This is an alternate plan that has many of the same benefits as a higher minimum wage and universal basic income. I haven't hear it discussed by anyone else though.
- kryptiskt 6y agoThis is like contending that rewriting a subsystem is superior to a one-line patch. Sure, the new subsystem design might be great, but let's not block all small patches while waiting for the big rewrite.
- dghughes 6y agoAny country even conservative ones still has tax breaks, minimum wage, other social programs for people with low incomes. Combine those programs into one thing and that's essentially universal basic income.
- frongpik 6y agoWith UBI, it's going to be difficult to extract labor out of people who aren't desperate. Without UBI, the same set of people will revolt one day. I think these are the choices being considered.
- tobmlt 6y agoThinking of how economics discussion usually goes with truly lay folk in this field makes me want to build a pretty little website showing various triangle diagrams for trade, market clearing under various actions etc. Stuff from undergrad economics - mostly micro to start maybe. Maybe some international trade thrown in. It seems way-to-hard to find such simple pictures for theory anybody can understand. Then when alternatives are suggested it will be easy to see how they fit in the picture - what assumptions are modified etc. I recall from my high school and college requirements for Econ it’s likely that most US educated people had a fake “civics and Econ” class in high school (We memorized questions about Sam Walton for our Econ tests, for example) and may have had one optional class in college. That makes it easy for unsound ideas to thrive. In saying the above I make no statement about the ideas of this post. I wouldn’t hazard it online because I can’t promise to put the work in due to the above issue which I wish, similarly, I had time to address in my limited way. Since this is the internet I’ll say this: UBI seems fairly smart given the alternatives. So does Some kind of negative income tax.
- Simulacra 6y agoI'm not an economist so I would really appreciate insight into a thought I've had about UBI. Let's say your rent is $1,000 per month, and the government began a universal basic income program of $500 per month for everyone. If your landlord raises your rent by $500, are you not in the same position as you were before without the UBI? I ask this because my argument with a UBI is that it will create more money in the system, true, but there's no limitation that prevents landlords and merchants from also raising their prices with the justification that they know you have it. So to take a stab at a question: Would a UBI lead to inflation?
- imtringued 6y ago>If your landlord raises your rent by $500, are you not in the same position as you were before without the UBI? If your landlord raises your rent then it will be more profitable to build housing which then allows construction companies to employ more workers. Of course, the problem with this is that some cities have banned new construction but that's a problem with the specific city, not with the idea itself. Yes, it would drive inflation and moderate inflation drives jobs growth so everyone would benefit, except those whose net worth is invested in unproductive companies or assets.
- chaganated 6y agoIt's even worse than that, since inflation hits the poors the hardest, while the capital and professional classes have skills/assets that weather inflation quite nicely. Hard to imagine a more efficient way of neutering the poors politically and economically.
- aww_dang 6y ago>are you not in the same position as you were before without the UBI? No, now you are dependent upon the government to pay for your inflated rent. Naturally, when $500 is eaten up by price inflation, UBI proponents will demand a commensurate increase. It is easy to see how this could spiral into total dependence.
- buffaloo 6y agoWhat of the stigma of indolence?