would require “doubling the personal income tax.” A UBI that pays every American $10,000 a year would cost about $3 trillion
No, it wouldn't. Because if you give an upper middle-class American $10000 and you raise their tax bill by $12000, you neither actually spent $10k on them, nor did you actually increase his effective tax rate by that much.
The idea that an UBI would literally cost the $10k for each person is to not understand basic accounting. Or to be dishonest, I guess.
Yes the article is badly misinformed and not really worth consideration.
That said there are much stronger arguments against UBI. There's a strong argument that UBI combined with current housing and spending policies... would simply end up in the hands of landlords. The article doesn't even mention "rent" but have no doubt landlords and banks are always waiting in the wings to capture virtually any surplus income. In practice UBI would have to be accompanied by government housing... and down that path lies ruin.
(Note the price of food and other necessities would likely not be inflated under UBI. Suppliers in these markets would -- unless they illegally collude -- end up trying to undercut one another to gain market share. In fact there's reason to believe UBI done right would drive down prices as the market as a whole becomes more dynamic. More money, more consumers, more competition, etc. But housing suppliers know that the banks are always ready to provide mortgages no matter how much they raise prices.)
A Job Guarantee [1] would be much more effective than UBI in virtually every way. Most importantly landlords couldn't consistently capture the additional income. There's, really, no reason to simply give the money away when there's plenty of work to be done.
Also, UBI is supposed to replace other entitlements, so the cost before tax increases will not be $3 trillion, it will be ($3 trillion - all current entitlements' cost)
If you approach it from the Negative Income Tax implementation then it's also much less to fund because basically the tax deductions already baked into the tax code can be made at some level into something that's sourced via UBI instead of just a floating deduction. Of the remainder, you fund much of that from some subset of existing social safety net programs.
It's not trivial, but I'd agree that the line was at best sloppy accounting, and at worst a dishonest criticism.
I'm not sure what part of the statement you're arguing against, but there are, according to the Census, about 250M adult Americans[1] (take the 323M total pop figure, multiply by 1 minus the percent under 18 to get total pop above 18 years of age); if you give 250M people 10k/year, that's $2.5T/year, or "about $3 trillion". Now, I'm presuming we're only giving UBI to adults, but the article says "every America", in which case it would be 323M people times $10k, or $3.2T.
For "doubling the personal income tax", I originally interpreted that to mean that, to raise the $3T, we would need to double the personal income tax revenues. The federal government appears to pull in ~3$T/year in revenue, from various sources. If we presume the burden of paying for UBI to be spread proportionally among the current sources of revenue, this would indeed imply doubling the personal income tax. (That $3T would need to become $6T; if we proportionally increase each revenue source, the amount of revenue collected in the form of personal taxes must thus double. This is honestly quite an assumption; if anything, I would worry that personal income taxes would need to pull in more than its proportion, as I presume some revenue sources will be fixed, or undesirable to increase, such as borrowing.)
Your example can literally hold true, even with all of the above, AFAICT. Yes, we may charge a hypothetical person $12k, and give him back $10k, for a net of $2k. But there will also be others, presumably poorer, that are paying much less in taxes than they're getting in UBI, and that must come from somewhere…
UBI has to always be talked about with the way you are going to fund it via tax.
This article says higher income would be better off. But no, they would be worse off as over some magical amount you'd be paying out more than you'd get via the UBI.
However paying for UBI can also be done via a wealth tax. This would be ( theoretically ) the nicest way to evenly tax the wealth distribution of a nation then smooth it over the the entire population until you pull everyone up over a certain poverty line.
But a wealth tax would not be popular, and could be hard to implement effectively.
Especially if it replaces certain existing social programs. Realistically the dishonesty is to be expected from the people and institutions writing these pieces.
With monetary policy and quantitative easing we simply create money on nearly the same order of magnitude. Unfortunately this money flows primarily to investment banks and other large institutions, not to individuals.
I am much more interested in UBI as a substitute for both welfare and monetary policy, than for welfare alone. The gross anatomy of most western economies would be radically changed though, rendering most scale comparisons moot and also making it difficult to imagine how to get there from here - incumbent beneficiaries would fight it tooth and nail.
Gerald W. Johnson, a journalist who covered The New Deal during the 30’s for the Baltimore Sun, wrote that what angry poor people want is never usually money (or else they would have revolted a long time ago), but hope for a better future for either them or their children. Eric Hoffer, who wrote a book in the 50’s called “True Believer: On The Nature of Mass Movements”, had a similar argument.
UBI is not a long term solution, but I appreciate it being innovative and trying at least. One of the reasons we didn’t get any financial reform in 2008 was that their simply was no other economic system/theory to turn too. Right now, before the next recession, we are developing the theories that will be chosen from once neo-Kynesian economics is shown the door in the years to come.
> Gerald W. Johnson, a journalist who covered The New Deal during the 30’s for the Baltimore Sun, wrote that what angry poor people want is never usually money (or else they would have revolted a long time ago), but hope for a better future for either them or their children. Eric Hoffer, who wrote a book in the 50’s called “True Believer: On The Nature of Mass Movements”, had a similar argument.
Perhaps UBI on its own is not sufficient to give hope for a better future, but combined with affordable education maybe it would be?
I imagine if one could take some time off without fear of starvation (or going massively into debt) to raise one's skills, then upward mobility would be much more accessible. I don't know if UBI is the only solution but I can see how it would at least solve part of the problem.
I'm too young to have experienced it myself but my understanding is that there was a time when people could actually survive off jobs which didn't require a college degree. I don't think this is possible in most places anymore and given that college tuition has only increased, it seems like upward mobility has decreased.
I realize that college isn't necessarily the right path to upward mobility but I think you can generalize the argument to most forms of education and it would still apply.
> Gerald W. Johnson, a journalist who covered The New Deal during the 30’s for the Baltimore Sun, wrote that what angry poor people want is never usually money (or else they would have revolted a long time ago), but hope for a better future for either them or their children.
Improving upward mobility out of poverty is a big part of the motivation for replacing means-tested aid with UBI, so while that's probably true, using it as an argument against UBI ignores what it is replacing; it's not money replacing not-money, it's money with conditions that actively fight moving up with money with terms which complement moving up.
> UBI is not a long term solution
Yes, it is. It's not a complete solution, but it is a long-term one.
>One of the reasons we didn’t get any financial reform in 2008 was that their simply was no other economic system/theory to turn too.
Other? I would have thought (I am no economist so I apologize if this is daft) that the sensible response would be to permit all of the banks who engaged in gambling to actually lose their bets and suffer the consequences of their own actions. Those which extended loans which could not be repaid should have entered insolvency, with the debts owed to them eliminated. Likewise, the fraudulent practices conducted should have resulted in hundreds or more of banking executives and other employees sent to prison.
It would seem to me that the solution we settled upon - giving them titanic amounts of money, assisting their consolidation, and playing pretend as if the fraudulent loans issued were still owed by those who they were foisted upon, foreclosing on homes, and significantly derailing, if not destroying, the lives of hundreds of thousands of families - was the 'other economic system' here. It certainly was not the one laid out in black and white on paper and followed for a century or so. Under that one, when you extend credit to someone out of funds you do not have, then place bets on repayment while lying about the odds, you crash rather than luxuriate in the spoils of a looting of the masses.
We already have case studies of heirs who have led/are leading happy and fulfilling lives without ever having participated as laborers in the economy. So it is proven that the combination of (having money and not having a job) is compatible with happiness.
The misery seems to come not from curbing worst-case outcomes for everyone in society (by UBI), but from the threat of material insufficiency due to structural unemployment (which motivates UBI).
Besides, even if we get strong AI and abundant energy to obsolete the vast majority of jobs, presumably it will take a long time to eliminate the long tail. One may always hope the next great genius/virtuoso will be among one's offspring.
As computer programmers, I think the one thing it teaches is that nothing is a/the solution. I remember when the default version of rails was going to require like 7 technologies to be able to do the things people wanted.
Programming also teaches that solutions come in tiny elements, that aggregate to a solution, which is usually held together by the flimsiest of margins. I remember a talk where at one point YouTube's big trouble was exporting video thumbnails, which had I think hit the iNode limit.
Programming also teaches that solutions need to address actual problems, and usually only the directly immediate problems. We have all seen the posts of someone who thinks they can write code and just let it scale, and how that never works.
My point to this long preamble is there is that the concept of a solution to nebulous, undefined "problems" is impossible by definition.
My biggest issue (and I have several) with UBI - which full disclosure I am both a fan of and a donator to the UBI test here: https://www.givedirectly.org/basic-income - is that the only way it has a chance of working in the first world is to replace all existing welfare, up and down the government hierarchy (i.e. at ALL levels). The chances of that happening are... what's less likely than a snow flake in hell?
However, UBI as a tool of aid is fascinating. Currently, most aid is poorly measured, and not really that effective. If we could introduce a tool with lower overhead, and help the poorest of the poor for a mere fraction of what it costs in the 1st world, the results could be world changing for the 1-2 billion people with the absolute least. If that proves applicable in more expensive countries, more's the better, but even if it doesn't, and proves to be of value in specific situations, it could still be an unbelievable tool for human progress at the margins.
> what angry poor people want is never usually money, but hope for a better future for either them or their children [...] UBI is not a long term solution
This reminds me of the town hall meetings in NYC, where conservatives show up and try to convince everyone that if their rent $500 a month cheaper then it would be bad for them because they'd likely take up smoking crack and spend the extra money on drugs.
The article confuses me with its enumeration of multiple points of argument that appear to amount to the same thing (UBI isn't feasible "because of the cost"; UBI isn't feasible "because taxes have to be high enough"). Also, it features seemingly contradictory arguments such as those from Feldstein, who says that UBI would require impossible tax increases and also that NIT would be fine.
One argument that isn't contradicted by its proponent in the article is that of Smetters, who says the evidence is that automation replaces some particular jobs, but does not reduce the aggregate labor opportunities for the great majority of people. I don't share this optimism but I can see why those who do would be uninterested in even posing the question of feasibility for a sweeping change such as UBI.
> that UBI would require impossible tax increases and also that NIT would be fine.
Intuitively I had thought of the UBI and NIT as very similar except that the UBI seeks to be large enough to be a workable living income, whereas a NIT can be any positive amount (or negative, depending on which way you look at it). So conversely the tax change required to fund it need not be large -- it just depends on how ambitious you want to be.
Well the current reality isn’t feasible, but we’re doing it anyway.
No one really knows wether UBI will be a succes or a failure. But then no one knows wether any policy will be a success or a failure, and there will always be supporters and fetractors on either side.
Ultimately though, all that really matters is that government takes action that it believes will make society better. That’s it’s purpose. And if government believes UBI would be a net good, it should do it.
How is the current reality not feasible? It seems rather successful or at least sustainable in hundreds of cultures.
Economically, the current system has flaws but is self-sustaining. UBI at even low levels like $10k isn’t possible unless you somehow double tax revenue. For example 330M in the US = 3.3T. In 2017, the total revenues were 3.4T [1]. So just for basic levels, revenue would have to increase and that would really hose the economy and you would be able to raise 6.7T for very long.
Which form and scope of UBI is more common in everyone's mind when people think of "UBI". Is it:
1) UBI is a replacement for the wasteful fragmented welfare programs. The "efficiency" gains by consolidating into UBI will pay for most of it and maybe a modest tax increase to round it out. Whatever _that_ amount is, that's what we call UBI. This would be less than $14k a year. It would be just enough for food, living with roommates, and riding public transportation if the recipient didn't share a car.
or
2) UBI is a minimal and comfortable standard of living (home+car+food) so people don't have to work. The release from the stresses of earning a living will unleash a flurry of productivity in art, science, self-improvement. Society would flourish. This type of UBI is much more expensive... maybe about ~$30k.
Which form of UBI dominates the discussion? If it's the 2nd one, I'd argue that's mathematically impossible to provide.
The US budget is about 3.2 trillion. Assuming we don't default on debt or reduce military and assuming we can't remove medicare and health spending and also we don't remove other non entitlement spending you get about $2 trillion that could maybe be reshifted. There are 138 million us tax payers giving each $14k comes out to right at 2 trillion. (Ignoring for now the non tax payers which would double this number and all of the following) The troubling part though is that half of that is social security. Reducing social security payments to that would cripple retired people forced to pay into the system their whole lives and make them live at possibly 10% or less of what was promised. Not putting a lot of faith in the government.
Maybe 1 is feasible under that situation but to not kill social security it would require about 30% tax hike and be an increasingly negative program for anyone making over $46k which is 30% of the population. In my opinion that is idiotic. Logistically it would be a nightmare as congress would have to simultaneously remove a boatload of spending then add a boatload more which would be battled forever. I also have doubts about the capability of many people to responsibly handle the money themselves leading to calls for more entitlement programs to be reinstated or formed.
2 is next level moronic. The increase in average income would likely drive inflation to increasing levels ultimately creating the same effective levels of wealth and poverty as before. That $30k will pay for a car/house maybe in the first year but not really in the third, fourth etc.
I am sceptical of (1), but not certain enough to refuse experimentation. Modern computing makes administration cheap. A lot of UBI literature fails to account for those realised and potential efficiencies.
I don't think anyone has to worry about UBI being implemented until someone comes up with a better/more persuasive name. Something like the "Robot Dividend". Compare and constrast: "Social Security" vs. "Wealth transfer from young to old".
> From the point of view of economists, a UBI is not feasible.
Sigh. From the point of view of an economist, not economists generally. Most are open-minded about it, but want to see more evidence and experimentation.
It'd be nice for Wharton to list an author of this article, if merely for the purpose of knowing their qualifications. Why do I get the impression it's some undergrad in journalism who just walked down the hall to the only economist they know?
> A UBI that pays every American $10,000 a year would cost about $3 trillion, Smetters says.
That's assuming you provide UBI on top of Social Security. You can reduce the real cost to about $2.1 trillion by making people pick one or the other. And you can raise $2.1 trillion by raising U.S. taxes as percentage of GDP to roughly the level of the Netherlands. Even if you assume GDP will contract somewhat, you can probably do it without raising taxes above that of France.
I've worked out the numbers and it is not impossibly expensive. First, you have to understand UBI is not intended to give someone a "comfortable lifestyle" without working. Rather, it's to give someone a "comfortable survival" without working. In other words food, roof and odd necessities.
In my figures I simply pegged the UBI to a part-time (20hrs) minimum wage job. When you subtract all the welfare programs that will be made unnecessary, the remaining cost is well within reach of relatively minor tax increases. (I am particularly partial to a usury tax).
One of the big problems that economists are overlooking with relation to automation of the job market is that excessive government regulation, along with antitrust-worthy corporate practice, has created a huge administrative/bureaucratic burden, and it is from this that most new jobs are being created. In other words, BS work.
Just look at how many administrative employees a doctors' office now has -- and we have to go to more and more specialists too. Meanwhile our actual quality of care has gone down, not up.
Another good example, which I recently learned about, it is against the law for a computer program to generate a medical diagnosis. Heaven forbid that we might not need as many doctors one day.
And the best example of all. The IRS is about to make it mandatory that you get your taxes done by a service provider (personal or by software). So what motivation does the government have tp simplify tax laws after that? None. Just keep making them more complex (so big companies can loophole) and in so doing create more BS jobs.
My issue with UBI is that it does not in itself advance productivity. My vision for a future where there is enough for everyone and all of that abundance is sufficiently evenly distributed that no one is wanting for basic needs is a future where most of the productive work done in the world is done by machines and those machines are open source. The second part, where most of the machines are open source, is the critical component in my opinion that differentiates my vision from the world I think we will have if we don’t act to change course. (That world being one where proprietary machines are licensed with fees that ensure wealth is concentrated rather than distributed.) With open source productive machines being the basis of economic productivity, all engineering effort would go towards the common good of making those machines more productive. Companies would compete to manufacture the machines better than others, and would have first mover advantage on the new developments they produce. They would overall have a somewhat lower incentive to innovate, but this is offset by the larger incentive to innovate new players would have. More broadly I see intellectual property as a violation of the natural rules, and I see that we could voluntarily stop using intellectual property any time we want.
It is my belief that legislative solutions will always be eventually undermined whereas solutions that bring us productivity cannot later be taken away by legislative bargaining. I also believe than any UBI implemented would always be half hearted in implementation just as minimum wage isn’t actually enough for many people to thrive on.
What do you all think about the way I pose this? Where I claim that open source productive machinery is a viable alternative to UBI as a means of more broadly distributing the wealth of increased productivity?
One thing I don't see addressed here or in research on the topic is the macroeconomic impact. Would a UBI cause inflation or other mechanisms to make up the difference in prices? For example, if everybody received $1000/mo would candybars eventually adjust to be $1001? This seems like something that small-scale experiments would be unable to discern.
Generally competition works to prevent that; if a company raises their candybars to suck more money, the other company will keep them lower to gain market share, forcing the first to come down again.
The problematic markets are the ones where competition is already deficient. Housing is often mentioned, but I actually don't think it'd be such a problem - if you get an UBI, you're actually much more free to move to cheaper places, rather than pushing up prices in places with jobs.
I'm not from the US, but if I was, I'd fear the cost of healthcare. Then again, that's probably unsustainable with or without UBI.
Uh...of course not. Same as when an across the board tax cut gives every worker some amount of extra money, it doesn't lead to massive inflation.
Besides, it's insane to assume that the price of a -single item- will jump to eat the entire cost of a payment such as UBI, because if that happens for every item, no one will be able to buy anything.
Easy, right? Give people more money and money velocity will skyrocket.
Nope - in modern American society the acts of earning money and spending money are no longer coupled. (Which is partially why we didn't see massive consumer spending increases when the price of oil fell precipitously a few years back.)
I wonder about this in the UK, we have a constrained housing supply, people have to live somewhere so would the proceeds of UBI end up making landlords richer?
>Conservative economists do not like it because it would harm economic growth, he adds.
This is almost guaranteed not to be the case. For this to be true, the marginal propensity to consume of rich people would have to be higher than the MPC of poor people.
>"The evidence is that robotics is a labor complement and is increasing skilled wages. While robotics are replacing some lower-skilled jobs, the most efficient response is to not kill the golden goose but to make sure we have job training programs that are effective in increasing skills."
Again, this assumes that UBI "kills the golden goose", which is exactly what neoliberals don't want to do.
>“I find it very hard to envision political support in this country for that kind of radical increase in taxation.”
This is an argument about whether UBI is a realistic proposal, not about whether it's a "good idea" (the article's stated title).
>"Instead of a UBI to help the poor, Feldstein recommends the “negative income tax” plan"
How functionally different is a NIT from UBI? It seems like the author is trying to equate Feldstein's and Smetter's positions when they're actually very different.
>Benjamin Lockwood (sic) favors the idea of offering a guaranteed basic income, which he says is a better term than UBI.
Huh. So now your argument is just against the name UBI, not the policy itself.
Disregard feelings, acquire evidence. There is only one concrete numeric analysis among all quoted objections, and it concedes that raising taxes would be sufficient to balance the books, at least in the USA.
UBI might be able to happen on a blockchain by taking a percentage of the rewards and sharing it.
One problem facing such a system would be sybil attacks. POS systems avoid this by weighting in regards to coin ownership, but in a UBI chain you would not want this since the whole point is to give to people equally.
One of the arguments against UBI from a moral point of view (ignoring feasibility arguments) is that people will become lazy because they don't need to work to survive and lead to economic stagnation. It's kind of a throw back to the communist / capitalist arguments of the previous era.
While this is somewhat true - there is a subset of the population that would prefer not working, UBI would also unlock the economic potential of another subset of the population who, due to debt, poor living, lack of opportunities, cannot afford to invest in themselves even though they desire to do so.
Revisiting communism as seen in its historical implementation, what communism did was replace opportunity with equality. UBI appears to have no such fantasies, and just give everyone more money. People who have the desire to make a lot of money, utilize their skills to make an impact, get good at things, contribute, and grow, will not have any of that taken away from them, but will get a larger platform for them to do so.
In this generation, investment is becoming the standard track for improvement, similar to college in the previous generation. It's seen as the way to grow your income, value, assets, and lifestyle. While investment is traditionally seen as stocks and asset collection, it's amazing what slight amounts of money can do to free up time. For instance, investing in laundry services, if you use your time well, can be a great investment (although, if you invest in laundry services and then use the time to play video games, you're probably the other subset of the population).
Tracing back to my original point, there's definitely a tradeoff argument to make. Is unlocking the potential of some worth it, knowing that the money will be wasted by others? At what ratio is this acceptable?
[+] [-] icebraining|7 years ago|reply
No, it wouldn't. Because if you give an upper middle-class American $10000 and you raise their tax bill by $12000, you neither actually spent $10k on them, nor did you actually increase his effective tax rate by that much.
The idea that an UBI would literally cost the $10k for each person is to not understand basic accounting. Or to be dishonest, I guess.
[+] [-] dnomad|7 years ago|reply
That said there are much stronger arguments against UBI. There's a strong argument that UBI combined with current housing and spending policies... would simply end up in the hands of landlords. The article doesn't even mention "rent" but have no doubt landlords and banks are always waiting in the wings to capture virtually any surplus income. In practice UBI would have to be accompanied by government housing... and down that path lies ruin.
(Note the price of food and other necessities would likely not be inflated under UBI. Suppliers in these markets would -- unless they illegally collude -- end up trying to undercut one another to gain market share. In fact there's reason to believe UBI done right would drive down prices as the market as a whole becomes more dynamic. More money, more consumers, more competition, etc. But housing suppliers know that the banks are always ready to provide mortgages no matter how much they raise prices.)
A Job Guarantee [1] would be much more effective than UBI in virtually every way. Most importantly landlords couldn't consistently capture the additional income. There's, really, no reason to simply give the money away when there's plenty of work to be done.
[1] https://www.vox.com/policy-and-politics/2017/9/6/16036942/jo...
[+] [-] asdsa5325|7 years ago|reply
[+] [-] dv_dt|7 years ago|reply
It's not trivial, but I'd agree that the line was at best sloppy accounting, and at worst a dishonest criticism.
[+] [-] deathanatos|7 years ago|reply
For "doubling the personal income tax", I originally interpreted that to mean that, to raise the $3T, we would need to double the personal income tax revenues. The federal government appears to pull in ~3$T/year in revenue, from various sources. If we presume the burden of paying for UBI to be spread proportionally among the current sources of revenue, this would indeed imply doubling the personal income tax. (That $3T would need to become $6T; if we proportionally increase each revenue source, the amount of revenue collected in the form of personal taxes must thus double. This is honestly quite an assumption; if anything, I would worry that personal income taxes would need to pull in more than its proportion, as I presume some revenue sources will be fixed, or undesirable to increase, such as borrowing.)
Your example can literally hold true, even with all of the above, AFAICT. Yes, we may charge a hypothetical person $12k, and give him back $10k, for a net of $2k. But there will also be others, presumably poorer, that are paying much less in taxes than they're getting in UBI, and that must come from somewhere…
[1]: https://www.census.gov/quickfacts/fact/table/US/PST045216
[+] [-] keithnz|7 years ago|reply
This article says higher income would be better off. But no, they would be worse off as over some magical amount you'd be paying out more than you'd get via the UBI.
However paying for UBI can also be done via a wealth tax. This would be ( theoretically ) the nicest way to evenly tax the wealth distribution of a nation then smooth it over the the entire population until you pull everyone up over a certain poverty line.
But a wealth tax would not be popular, and could be hard to implement effectively.
[+] [-] petermcneeley|7 years ago|reply
[+] [-] inopinatus|7 years ago|reply
I am much more interested in UBI as a substitute for both welfare and monetary policy, than for welfare alone. The gross anatomy of most western economies would be radically changed though, rendering most scale comparisons moot and also making it difficult to imagine how to get there from here - incumbent beneficiaries would fight it tooth and nail.
[+] [-] JumpCrisscross|7 years ago|reply
Can you show your math? Curious what tax rates are assumed.
[+] [-] Bucephalus355|7 years ago|reply
UBI is not a long term solution, but I appreciate it being innovative and trying at least. One of the reasons we didn’t get any financial reform in 2008 was that their simply was no other economic system/theory to turn too. Right now, before the next recession, we are developing the theories that will be chosen from once neo-Kynesian economics is shown the door in the years to come.
[+] [-] rifung|7 years ago|reply
Perhaps UBI on its own is not sufficient to give hope for a better future, but combined with affordable education maybe it would be?
I imagine if one could take some time off without fear of starvation (or going massively into debt) to raise one's skills, then upward mobility would be much more accessible. I don't know if UBI is the only solution but I can see how it would at least solve part of the problem.
I'm too young to have experienced it myself but my understanding is that there was a time when people could actually survive off jobs which didn't require a college degree. I don't think this is possible in most places anymore and given that college tuition has only increased, it seems like upward mobility has decreased.
I realize that college isn't necessarily the right path to upward mobility but I think you can generalize the argument to most forms of education and it would still apply.
[+] [-] dragonwriter|7 years ago|reply
Improving upward mobility out of poverty is a big part of the motivation for replacing means-tested aid with UBI, so while that's probably true, using it as an argument against UBI ignores what it is replacing; it's not money replacing not-money, it's money with conditions that actively fight moving up with money with terms which complement moving up.
> UBI is not a long term solution
Yes, it is. It's not a complete solution, but it is a long-term one.
[+] [-] otakucode|7 years ago|reply
Other? I would have thought (I am no economist so I apologize if this is daft) that the sensible response would be to permit all of the banks who engaged in gambling to actually lose their bets and suffer the consequences of their own actions. Those which extended loans which could not be repaid should have entered insolvency, with the debts owed to them eliminated. Likewise, the fraudulent practices conducted should have resulted in hundreds or more of banking executives and other employees sent to prison.
It would seem to me that the solution we settled upon - giving them titanic amounts of money, assisting their consolidation, and playing pretend as if the fraudulent loans issued were still owed by those who they were foisted upon, foreclosing on homes, and significantly derailing, if not destroying, the lives of hundreds of thousands of families - was the 'other economic system' here. It certainly was not the one laid out in black and white on paper and followed for a century or so. Under that one, when you extend credit to someone out of funds you do not have, then place bets on repayment while lying about the odds, you crash rather than luxuriate in the spoils of a looting of the masses.
[+] [-] arebop|7 years ago|reply
The misery seems to come not from curbing worst-case outcomes for everyone in society (by UBI), but from the threat of material insufficiency due to structural unemployment (which motivates UBI).
Besides, even if we get strong AI and abundant energy to obsolete the vast majority of jobs, presumably it will take a long time to eliminate the long tail. One may always hope the next great genius/virtuoso will be among one's offspring.
[+] [-] T2_t2|7 years ago|reply
As computer programmers, I think the one thing it teaches is that nothing is a/the solution. I remember when the default version of rails was going to require like 7 technologies to be able to do the things people wanted.
Programming also teaches that solutions come in tiny elements, that aggregate to a solution, which is usually held together by the flimsiest of margins. I remember a talk where at one point YouTube's big trouble was exporting video thumbnails, which had I think hit the iNode limit.
Programming also teaches that solutions need to address actual problems, and usually only the directly immediate problems. We have all seen the posts of someone who thinks they can write code and just let it scale, and how that never works.
My point to this long preamble is there is that the concept of a solution to nebulous, undefined "problems" is impossible by definition.
My biggest issue (and I have several) with UBI - which full disclosure I am both a fan of and a donator to the UBI test here: https://www.givedirectly.org/basic-income - is that the only way it has a chance of working in the first world is to replace all existing welfare, up and down the government hierarchy (i.e. at ALL levels). The chances of that happening are... what's less likely than a snow flake in hell?
However, UBI as a tool of aid is fascinating. Currently, most aid is poorly measured, and not really that effective. If we could introduce a tool with lower overhead, and help the poorest of the poor for a mere fraction of what it costs in the 1st world, the results could be world changing for the 1-2 billion people with the absolute least. If that proves applicable in more expensive countries, more's the better, but even if it doesn't, and proves to be of value in specific situations, it could still be an unbelievable tool for human progress at the margins.
[+] [-] unknown|7 years ago|reply
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[+] [-] Alex3917|7 years ago|reply
This reminds me of the town hall meetings in NYC, where conservatives show up and try to convince everyone that if their rent $500 a month cheaper then it would be bad for them because they'd likely take up smoking crack and spend the extra money on drugs.
[+] [-] arebop|7 years ago|reply
One argument that isn't contradicted by its proponent in the article is that of Smetters, who says the evidence is that automation replaces some particular jobs, but does not reduce the aggregate labor opportunities for the great majority of people. I don't share this optimism but I can see why those who do would be uninterested in even posing the question of feasibility for a sweeping change such as UBI.
[+] [-] adrianratnapala|7 years ago|reply
Intuitively I had thought of the UBI and NIT as very similar except that the UBI seeks to be large enough to be a workable living income, whereas a NIT can be any positive amount (or negative, depending on which way you look at it). So conversely the tax change required to fund it need not be large -- it just depends on how ambitious you want to be.
[+] [-] VikingCoder|7 years ago|reply
[+] [-] hexane360|7 years ago|reply
[+] [-] unknown|7 years ago|reply
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[+] [-] tomelders|7 years ago|reply
No one really knows wether UBI will be a succes or a failure. But then no one knows wether any policy will be a success or a failure, and there will always be supporters and fetractors on either side.
Ultimately though, all that really matters is that government takes action that it believes will make society better. That’s it’s purpose. And if government believes UBI would be a net good, it should do it.
[+] [-] prepend|7 years ago|reply
Economically, the current system has flaws but is self-sustaining. UBI at even low levels like $10k isn’t possible unless you somehow double tax revenue. For example 330M in the US = 3.3T. In 2017, the total revenues were 3.4T [1]. So just for basic levels, revenue would have to increase and that would really hose the economy and you would be able to raise 6.7T for very long.
[1] https://www.thebalance.com/u-s-federal-budget-breakdown-3305...
[+] [-] jasode|7 years ago|reply
1) UBI is a replacement for the wasteful fragmented welfare programs. The "efficiency" gains by consolidating into UBI will pay for most of it and maybe a modest tax increase to round it out. Whatever _that_ amount is, that's what we call UBI. This would be less than $14k a year. It would be just enough for food, living with roommates, and riding public transportation if the recipient didn't share a car.
or
2) UBI is a minimal and comfortable standard of living (home+car+food) so people don't have to work. The release from the stresses of earning a living will unleash a flurry of productivity in art, science, self-improvement. Society would flourish. This type of UBI is much more expensive... maybe about ~$30k.
Which form of UBI dominates the discussion? If it's the 2nd one, I'd argue that's mathematically impossible to provide.
[+] [-] mesozoic|7 years ago|reply
Maybe 1 is feasible under that situation but to not kill social security it would require about 30% tax hike and be an increasingly negative program for anyone making over $46k which is 30% of the population. In my opinion that is idiotic. Logistically it would be a nightmare as congress would have to simultaneously remove a boatload of spending then add a boatload more which would be battled forever. I also have doubts about the capability of many people to responsibly handle the money themselves leading to calls for more entitlement programs to be reinstated or formed.
2 is next level moronic. The increase in average income would likely drive inflation to increasing levels ultimately creating the same effective levels of wealth and poverty as before. That $30k will pay for a car/house maybe in the first year but not really in the third, fourth etc.
[+] [-] JumpCrisscross|7 years ago|reply
[+] [-] scarmig|7 years ago|reply
Furthermore, any conceivable implementation of 2) would have to go through 1) first.
[+] [-] flubert|7 years ago|reply
[+] [-] scarmig|7 years ago|reply
Sigh. From the point of view of an economist, not economists generally. Most are open-minded about it, but want to see more evidence and experimentation.
It'd be nice for Wharton to list an author of this article, if merely for the purpose of knowing their qualifications. Why do I get the impression it's some undergrad in journalism who just walked down the hall to the only economist they know?
[+] [-] ihodes|7 years ago|reply
[+] [-] qntty|7 years ago|reply
[+] [-] rayiner|7 years ago|reply
That's assuming you provide UBI on top of Social Security. You can reduce the real cost to about $2.1 trillion by making people pick one or the other. And you can raise $2.1 trillion by raising U.S. taxes as percentage of GDP to roughly the level of the Netherlands. Even if you assume GDP will contract somewhat, you can probably do it without raising taxes above that of France.
[+] [-] transfire|7 years ago|reply
In my figures I simply pegged the UBI to a part-time (20hrs) minimum wage job. When you subtract all the welfare programs that will be made unnecessary, the remaining cost is well within reach of relatively minor tax increases. (I am particularly partial to a usury tax).
One of the big problems that economists are overlooking with relation to automation of the job market is that excessive government regulation, along with antitrust-worthy corporate practice, has created a huge administrative/bureaucratic burden, and it is from this that most new jobs are being created. In other words, BS work.
Just look at how many administrative employees a doctors' office now has -- and we have to go to more and more specialists too. Meanwhile our actual quality of care has gone down, not up.
Another good example, which I recently learned about, it is against the law for a computer program to generate a medical diagnosis. Heaven forbid that we might not need as many doctors one day.
And the best example of all. The IRS is about to make it mandatory that you get your taxes done by a service provider (personal or by software). So what motivation does the government have tp simplify tax laws after that? None. Just keep making them more complex (so big companies can loophole) and in so doing create more BS jobs.
[+] [-] chipuni|7 years ago|reply
Here's a counterexample:
https://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/u...
[+] [-] TaylorAlexander|7 years ago|reply
It is my belief that legislative solutions will always be eventually undermined whereas solutions that bring us productivity cannot later be taken away by legislative bargaining. I also believe than any UBI implemented would always be half hearted in implementation just as minimum wage isn’t actually enough for many people to thrive on.
What do you all think about the way I pose this? Where I claim that open source productive machinery is a viable alternative to UBI as a means of more broadly distributing the wealth of increased productivity?
[+] [-] shireboy|7 years ago|reply
[+] [-] icebraining|7 years ago|reply
The problematic markets are the ones where competition is already deficient. Housing is often mentioned, but I actually don't think it'd be such a problem - if you get an UBI, you're actually much more free to move to cheaper places, rather than pushing up prices in places with jobs.
I'm not from the US, but if I was, I'd fear the cost of healthcare. Then again, that's probably unsustainable with or without UBI.
[+] [-] lostcolony|7 years ago|reply
Besides, it's insane to assume that the price of a -single item- will jump to eat the entire cost of a payment such as UBI, because if that happens for every item, no one will be able to buy anything.
[+] [-] prostoalex|7 years ago|reply
Easy, right? Give people more money and money velocity will skyrocket.
Nope - in modern American society the acts of earning money and spending money are no longer coupled. (Which is partially why we didn't see massive consumer spending increases when the price of oil fell precipitously a few years back.)
Through credit cards and HELOCs American consumers can accumulate debt on their own schedule (and they frequently do https://www.cnbc.com/2018/02/13/total-us-household-debt-soar...) and wind it down when new cash shows up on the horizon.
Which makes money velocity unpredictable, subject to consumers' general sentiment about the economy.
[+] [-] tonyedgecombe|7 years ago|reply
[+] [-] hexane360|7 years ago|reply
This is almost guaranteed not to be the case. For this to be true, the marginal propensity to consume of rich people would have to be higher than the MPC of poor people.
>"The evidence is that robotics is a labor complement and is increasing skilled wages. While robotics are replacing some lower-skilled jobs, the most efficient response is to not kill the golden goose but to make sure we have job training programs that are effective in increasing skills."
Again, this assumes that UBI "kills the golden goose", which is exactly what neoliberals don't want to do.
>“I find it very hard to envision political support in this country for that kind of radical increase in taxation.”
This is an argument about whether UBI is a realistic proposal, not about whether it's a "good idea" (the article's stated title).
>"Instead of a UBI to help the poor, Feldstein recommends the “negative income tax” plan"
How functionally different is a NIT from UBI? It seems like the author is trying to equate Feldstein's and Smetter's positions when they're actually very different.
>Benjamin Lockwood (sic) favors the idea of offering a guaranteed basic income, which he says is a better term than UBI.
Huh. So now your argument is just against the name UBI, not the policy itself.
[+] [-] DonbunEf7|7 years ago|reply
[+] [-] whataretensors|7 years ago|reply
One problem facing such a system would be sybil attacks. POS systems avoid this by weighting in regards to coin ownership, but in a UBI chain you would not want this since the whole point is to give to people equally.
[+] [-] unknown|7 years ago|reply
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[+] [-] spyckie2|7 years ago|reply
While this is somewhat true - there is a subset of the population that would prefer not working, UBI would also unlock the economic potential of another subset of the population who, due to debt, poor living, lack of opportunities, cannot afford to invest in themselves even though they desire to do so.
Revisiting communism as seen in its historical implementation, what communism did was replace opportunity with equality. UBI appears to have no such fantasies, and just give everyone more money. People who have the desire to make a lot of money, utilize their skills to make an impact, get good at things, contribute, and grow, will not have any of that taken away from them, but will get a larger platform for them to do so.
In this generation, investment is becoming the standard track for improvement, similar to college in the previous generation. It's seen as the way to grow your income, value, assets, and lifestyle. While investment is traditionally seen as stocks and asset collection, it's amazing what slight amounts of money can do to free up time. For instance, investing in laundry services, if you use your time well, can be a great investment (although, if you invest in laundry services and then use the time to play video games, you're probably the other subset of the population).
Tracing back to my original point, there's definitely a tradeoff argument to make. Is unlocking the potential of some worth it, knowing that the money will be wasted by others? At what ratio is this acceptable?
[+] [-] VikingCoder|7 years ago|reply
“Thoughtful liberals and conservatives trained in economics are almost universally against the idea.” –Kent Smetters
Another article makes a different claim:
"Top Economists Endorse Universal Basic Income"
https://www.forbes.com/sites/francescoppola/2017/08/31/top-e...
So is Kent Smetters wrong, or is Forbes citing people who are not actually "top economists", or maybe not even "trained in economics"?
[+] [-] unknown|7 years ago|reply
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