
Universal Basic Income Is Not Feasible - ihodes
http://knowledge.wharton.upenn.edu/article/universal-basic-income-good-idea/
======
icebraining
_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.

~~~
asdsa5325
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)

~~~
prostoalex
How would it work in terms of replacing Medicare and covering high-ticket
medical procedures?

~~~
AnthonyMouse
> How would it work in terms of replacing Medicare and covering high-ticket
> medical procedures?

Medicare is an insurance system. In principle if you gave the average person
the equivalent amount of money it should be enough to buy health insurance
with.

If that isn't true in practice it's a failure of healthcare/insurance laws
rather than the UBI.

~~~
prostoalex
> In principle if you gave the average person the equivalent amount of money
> it should be enough to buy health insurance with.

So the working scenario is UBI followed by health insurance mandate? What
happens if the remainder is $0, or worse, healthcare prices (and consequently
health insurance prices) outpace UBI growth?

~~~
AnthonyMouse
> So the working scenario is UBI followed by health insurance mandate?

Don't we already have a health insurance mandate?

> What happens if the remainder is $0, or worse, healthcare prices (and
> consequently health insurance prices) outpace UBI growth?

Presumably the same thing that happens if healthcare prices outpace the
Medicare budget.

~~~
asdsa5325
>Don't we already have a health insurance mandate?

Not anymore, Congress voted to remove it

------
Bucephalus355
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.

~~~
rifung
> 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.

~~~
cix_pkez
More affordable education would be nice. Certainly not free for everyone, like
Bernie proposed. Not everyone needs college and there are definitely some
degrees that the state shouldn't pay for.

The arts are valuable and I'd love to have a country which could patronize the
arts and artists. But we don't have that kind of money. Even if we did, there
are other priorities for things we should be paying people to do.

In any case, the one argument for UBI I found somewhat convincing was that it
could be cheaper than social security, unemployment, etc all combined, because
there'd be less administrative cost.

I appreciate that some governments were willing to experiment.

Change can be good, but tests ought to be tried before large , even well-
intentioned changes to massive systems.

~~~
derblitzmann
Yeah, I generally agree. I think one thing that is often forgotten/only
mentioned in comments is trade schools. A good education in a trade can bring
about a good income. Due to the lack of people joining the trades as
university has been in vogue.

~~~
tonyedgecombe
The solution to that is universities should start teaching trades or trade
schools should rebrand as universities and offer degrees.

------
arebop
The article confuses me with its enumeration of multiple points of argument
that appear to amount to the same thing (UBI isn't feasible "because of the
cost"; UBI isn't feasible "because taxes have to be high enough"). Also, it
features seemingly contradictory arguments such as those from Feldstein, who
says that UBI would require impossible tax increases and also that NIT would
be fine.

One argument that isn't contradicted by its proponent in the article is that
of Smetters, who says the evidence is that automation replaces some particular
jobs, but does not reduce the aggregate labor opportunities for the great
majority of people. I don't share this optimism but I can see why those who do
would be uninterested in even posing the question of feasibility for a
sweeping change such as UBI.

~~~
adrianratnapala
> that UBI would require impossible tax increases and also that NIT would be
> fine.

Intuitively I had thought of the UBI and NIT as very similar except that the
UBI seeks to be large enough to be a workable living income, whereas a NIT can
be any positive amount (or negative, depending on which way you look at it).
So conversely the tax change required to fund it need not be large -- it just
depends on how ambitious you want to be.

~~~
1123581321
This is part of the circle of miscommunication when discussing UBI. It goes
like this:

Q. The tax rate would be too high.

A. Not if UBI is small.

Q. Small amounts won’t make a difference.

A. That’s why it needs to be enough to live on.

Q. Then the tax rate...

~~~
keithnz
the problem is people talk about paying for it through income tax and not a
wealth tax.

If you look at wealth distribution, you look at how to slice enough off the
top end to cover the bottom end.

~~~
1123581321
I assume you are looking at the $50-100 trillion of theoretically seizable
wealth in the United States. Unfortunately, not much of that is fungible due
to the lack of buyers in that scenario.

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

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

------
tomelders
Well the current reality isn’t feasible, but we’re doing it anyway.

No one really knows wether UBI will be a succes or a failure. But then no one
knows wether any policy will be a success or a failure, and there will always
be supporters and fetractors on either side.

Ultimately though, all that really matters is that government takes action
that it believes will make society better. That’s it’s purpose. And if
government believes UBI would be a net good, it should do it.

~~~
prepend
How is the current reality not feasible? It seems rather successful or at
least sustainable in hundreds of cultures.

Economically, the current system has flaws but is self-sustaining. UBI at even
low levels like $10k isn’t possible unless you somehow double tax revenue. For
example 330M in the US = 3.3T. In 2017, the total revenues were 3.4T [1]. So
just for basic levels, revenue would have to increase and that would really
hose the economy and you would be able to raise 6.7T for very long.

[1] [https://www.thebalance.com/u-s-federal-budget-
breakdown-3305...](https://www.thebalance.com/u-s-federal-budget-
breakdown-3305789)

------
jasode
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.

~~~
JumpCrisscross
I am sceptical of (1), but not certain enough to refuse experimentation.
Modern computing makes administration cheap. A lot of UBI literature fails to
account for those realised and potential efficiencies.

~~~
contravariant
Well, government administrations aren't exactly known for their simplicity or
efficiency.

Even if not, most support is send conditionally and only to certain people,
this requires more checking than sending everyone an unconditional amount.

------
flubert
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".

------
scarmig
> From the point of view of economists, a UBI is not feasible.

Sigh. From the point of view of _an economist_ , not economists generally.
Most are open-minded about it, but want to see more evidence and
experimentation.

It'd be nice for Wharton to list an author of this article, if merely for the
purpose of knowing their qualifications. Why do I get the impression it's some
undergrad in journalism who just walked down the hall to the only economist
they know?

~~~
ihodes
Check out Kent Smetters if you're curious.

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

------
rayiner
> A UBI that pays every American $10,000 a year would cost about $3 trillion,
> Smetters says.

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

------
transfire
I've worked out the numbers and it is not impossibly expensive. First, you
have to understand UBI is not intended to give someone a "comfortable
lifestyle" without working. Rather, it's to give someone a "comfortable
survival" without working. In other words food, roof and odd necessities.

In my figures I simply pegged the UBI to a part-time (20hrs) minimum wage job.
When you subtract all the welfare programs that will be made unnecessary, the
remaining cost is well within reach of relatively minor tax increases. (I am
particularly partial to a usury tax).

One of the big problems that economists are overlooking with relation to
automation of the job market is that excessive government regulation, along
with antitrust-worthy corporate practice, has created a huge
administrative/bureaucratic burden, and it is from this that most new jobs are
being created. In other words, BS work.

Just look at how many administrative employees a doctors' office now has --
and we have to go to more and more specialists too. Meanwhile our actual
quality of care has gone down, not up.

Another good example, which I recently learned about, it is against the law
for a computer program to generate a medical diagnosis. Heaven forbid that we
might not need as many doctors one day.

And the best example of all. The IRS is about to make it mandatory that you
get your taxes done by a service provider (personal or by software). So what
motivation does the government have tp simplify tax laws after that? None.
Just keep making them more complex (so big companies can loophole) and in so
doing create more BS jobs.

~~~
chipuni
<i>Another good example, which I recently learned about, it is against the law
for a computer program to generate a medical diagnosis.</i>

Here's a counterexample:

[https://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/u...](https://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm604357.htm)

------
TaylorAlexander
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?

------
shireboy
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.

~~~
lostcolony
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.

~~~
scarmig
Across the board tax cuts can certainly lead to inflation. More, if they're
large. Or less, depending on the extent to which they're financed by tax
increases.

~~~
lostcolony
Most of us started getting more money in our paycheck as of earlier this year;
CPI held basically steady at ~2.2% (it's actually, at least for the first
quarter, been lower than last year's first quarter,
[https://data.oecd.org/price/inflation-
cpi.htm](https://data.oecd.org/price/inflation-cpi.htm)).

------
hexane360
>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.

------
DonbunEf7
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.

------
whataretensors
UBI might be able to happen on a blockchain by taking a percentage of the
rewards and sharing it.

One problem facing such a system would be sybil attacks. POS systems avoid
this by weighting in regards to coin ownership, but in a UBI chain you would
not want this since the whole point is to give to people equally.

------
spyckie2
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?

------
VikingCoder
This article makes the claim:

“Thoughtful liberals and conservatives trained in economics are almost
universally against the idea.” –Kent Smetters

Another article makes a different claim:

"Top Economists Endorse Universal Basic Income"

[https://www.forbes.com/sites/francescoppola/2017/08/31/top-e...](https://www.forbes.com/sites/francescoppola/2017/08/31/top-
economists-endorse-universal-basic-income/#5275f6ba15ae)

So is Kent Smetters wrong, or is Forbes citing people who are not actually
"top economists", or maybe not even "trained in economics"?

------
dandare
Can you give me feedback to my argument about UBI?

[https://www.lucidchart.com/documents/view/87d3102c-5b89-4001...](https://www.lucidchart.com/documents/view/87d3102c-5b89-4001-9929-346873d19571)

~~~
VikingCoder
I think "Like £10,000 a year." You then respond, "Individual poverty threshold
in the UK is around £15,000 a year."

That's not really an argument against UBI.

You essentially said that if someone wants to live above poverty, they would
need to make £5,000 a year.

That's $7000, roughly. 2000 working hours in a year. So call it $3.50 an hour.
Not really sure exactly when and how taxes come in, but you get the rough
idea.

Seems entirely do-able to me. Everything above $3.50 an hour is increasing
their luxury out of the poverty threshold.

Do I need to follow the rest of your flow-chart, or have I gone far enough?

~~~
petermcneeley
Im thinking this might be an elaborate troll. I was surprised it didnt just
have a rick roll instead of the phrase "your version of ubi is dumb". However
its likely our fault for taking a document seriously that has the word "dumb"
in the title.

~~~
VikingCoder
I'm okay with people saying something is "dumb," I just request they have a
well-reasoned argument for that position, and that they defend their position
vigorously if it's important to them.

~~~
petermcneeley
Ya well there is no attempt at a defense yet. What im curious about is if this
really just boils down to opposition to any and all forms of redistribution
regardless of feasibility computations.

~~~
petermcneeley
I think I found the answer on another thread. \----------------------- dandare
8 days ago [-]

Becuase you first have to take the money from those who earned it.

~~~
VikingCoder
Thanks for forwarding that. In case you're curious how I'd respond to them...

Let's see roughly how much I made, for every year of my life:

45 to 30 years ago: $0 (well, maybe some allowance) 25 years ago: $5,000 in a
year 20 years ago: $25,000 a year 15 years ago: $50,000 a year 10 years ago:
$100,000 a year 5 years ago: $150,000 a year last year: $250,000 a year

Okay, now, if you ask me when I'd like to have paid less taxes - or received
some UBI... And when I'd be willing to pay taxes, and when I'd be willing to
pay it forward, the answer is very clear to me:

UBI + Free Education + Free Healthcare + Progressive Taxes

I think trying to turn someone who ends up making $40,000 a year into someone
who ends up making $70,000 a year is worth investing in them, early on in
their career.

I'm also willing to give up several things:

Minimum Wage, Union Protections, government mandates on "if you work X hours a
week, and the business has Y employees, the business needs to offer you Z
benefit"

I believe in education like Sam Seaborn [1]. I believe that automation is
really on the verge of granting us essentially infinite Supply of very many
goods and services. I believe that UBI + Progressive Taxes are the right way
to distribute the benefits of automation as fairly as possible, while still
benefiting from the advantages of a capitalistic market.

That's my stand.

[1]
[https://www.youtube.com/watch?v=xlyBfInS7ec](https://www.youtube.com/watch?v=xlyBfInS7ec)

~~~
petermcneeley
Ya thats pretty much my stand. And its pretty much the stand of Canada.
(though things might be changing)

I make just south of 150k (CAN) but could certainly afford to pay 10k more in
taxes. I think automation and various forms of AI (not really hard AI) will
make huge swaths of the public as obsolete as horses. Of course investments in
education could then possibly make some of these people productive again.

------
ggm
My primary concern is that most people in the margins depend on rent, and
shopping locally because the cost of ownership of home, and transport to
bigger (cheaper) shops is above their threshold. They're trapped in the
locality of poverty.

Which immediately makes them prey to being exploited by inflation of costs,
prices, to match the UBI guaranteed income.

TL;DR what stops a landlord and local shopkeeper increasing prices until the
UBI is drained?

~~~
kromem
How does any class of goods keep from growing in price relative to the
purchase power of the buyer vs the cost of goods sold?

Competition typically keeps pricing in check, and as long as there isn't a
monopoly or constrained supply/demand, prices are not able to rise too high.

I don't really see how/why this would be magically different.

For example, while rents in SV are sky high, that's a reflection of
constrained supply. An apple in SV costs roughly the same as an apple in
Bakersfield, despite avg income being multiples higher.

I don't really see how rentals in low income areas would become a constrained
supply after the availability of UBI. And the groceries point is just crazy
sauce.

I'm aware of very few goods outside of monopolies where the price is
determined by the spending power of the purchaser and not the cost of the
goods.

~~~
ggm
Competition is a farce in this space. I lived in rental accommodation in the
80s (a time of high inflation) and I recall well the price excess a local shop
charged to keep open. Facilities like cheque cashing, breaking cigarette
packets and selling single smokes, they all leverage huge profit for a service
you can't really go and find competition for, in any real sense.

you might as well ask why loan sharking exists.

Rentiers do not normally want to rent to people on state benefits. When they
do, they maximise the rent to the amount the state will pay, plus a small
increment. Competition keeps that increment small? sure. But if you increase
the benefit, suddenly, rents go up "everywhere" as a non-collusive event (non-
collusive? hah)

We see this in Australia in the cost of childcare, and the cost of any service
where the government gives a your-choice voucher to the client: the service
fees go up beyond the voucher.

Price/Cost disjoin is a thing. Rental is not a "goods" in that sense, its a
location-dependent (non) monopoly. So, rent, which was one of my primary
concerns, is one of the things which absent rent controls does this. And, if
you don't have a car, then if you live in a housing estate a long way from
supermarkets you are caught behind the effort to shop cheaper, rather than pay
the premium to the small number of local stores who will sell you goods you
can carry home.

its not a monopoly, until it is.

------
NPMaxwell
Weird article: No author.

------
jadedhacker
Why UBI is difficult to even make desirable:
[https://www.jacobinmag.com/2016/01/universal-basic-income-
sw...](https://www.jacobinmag.com/2016/01/universal-basic-income-switzerland-
finland-milton-friedman-kathi-weeks/)

Alternative idea, a universal job guarantee: [https://dsa-
lsc.org/2017/09/30/why-socialist-job-guarantees-...](https://dsa-
lsc.org/2017/09/30/why-socialist-job-guarantees-are-better-than-universal-
basic-income/)

I'm still learning about this other take as UBI seems prima facie a good
thing, but there are a number of severe flaws in the idea.

~~~
icebraining
Posting those two links is interesting, because as far as I can tell, they're
essentially contradictory.

The first says UBI is not necessarily that great, because it might not free
people from working, whereas the second says it's not great, because people
will no longer work!

These two passages are particularly striking:

Jacobin: _" The kind of freedom from work (...) that an LBI envisions is, in
all likelihood, not compatible with capitalism’s requirements of
profitability."_

DSA-LSC: _" With UBI (...) one's status (...) as a worker is tentative and
subject to elimination."_

