
Citi's Chief Economist Recommends a Universal Basic Income - ph0rque
http://futurism.com/links/citis-chief-economist-recommends-a-universal-basic-income/
======
Frondo
When people on the far left and the far right agree, they're usually onto
something. My favorite examples are the NSA spying stuff, and this.

Lefties hate the NSA spying and love a universal basic income because the
spying tilts the power away from the people, and the income tilts toward the
people.

Righties (well, go far right enough) hate the NSA spying and love a universal
income because of government overreach in the first case, and the ability to
drastically simplify government welfare--cutting out a ton of means-tested
programs and their agencies, and replacing it all with a check each month.

Gotta love it!

~~~
commandar
>and the ability to drastically simplify government welfare--cutting out a ton
of means-tested programs and their agencies, and replacing it all with a check
each month.

As someone that leans left, this is one of the big arguments I make in favor
of UBI.

Frankly, I'm tired of arguing over the minutia of welfare, unemployment
benefits, the minimum wage, social security, etc.

Fine. Scrap most of our social assistance programs outside of healthcare and
replace them with a UBI.

The progressive in me likes it because it gives everyone a minimum safety net
and the capitalist in me likes it because it opens up entrepreneurism and the
ability to pursue potentially innovative businesses -- especially in an
economy increasingly geared toward service and information work -- to huge
portions of the population that are otherwise locked out. Active, small
businesses are good for everyone.

~~~
psaintla
The problem is, when you scrap all of those programs you immediately create
more unemployment. There are a lot of jobs supporting social services, the
hard part is going to be finding a way to phase in UBI without wrecking the
economy.

~~~
lukifer
Just for once, I want to hear a truly honest conservative politician: "We need
to drastically shrink the government, which is why when I'm elected, one-
eighth* of my constituency will be immediately unemployed!"

(Not that there isn't a good case for eliminating federal waste; but the
reality I never hear uttered in the conservative bubble is that the largest
government expense is federal employees and subcontractors.)

~~~
nickff
By that measure, the "truly honest" progressive politician would say: "we need
to drastically raise social program spending and taxes, which will
dramatically increase unemployment!"

(Not that there isn't a good case for improving federal social programs; but
the reality I never hear uttered in the progressive bubble is that the largest
government expenses are social programs like social security, medicare, and
medicaid.)

~~~
gph
I don't understand your rebuttal, how does increased spending on social
programs lead to higher unemployment? Are you suggesting that increased social
spending leads to people tactically becoming unemployed in order to gain
benefits while not working?

~~~
nickff
Romer and Romer showed that higher taxes lead to lower growth and vice-versa;
the additional taxes required to finance the social program spending will
sooner or later lead to reduced opportunities for employment.[1] Others have
shown that a larger "social safety net" leads to higher unemployment for a
variety of reasons.[2][3] It is also logical that people's aversion to
unemployment is proportional to its cost (to them), and that if it is less
costly, they will expend less time and effort in the stressful, taxing, and
unpleasant task of looking for work.

[1]
[http://eml.berkeley.edu/~dromer/papers/RomerandRomerAERJune2...](http://eml.berkeley.edu/~dromer/papers/RomerandRomerAERJune2010.pdf)

[2]
[http://www.newyorkfed.org/research/staff_reports/sr646.pdf](http://www.newyorkfed.org/research/staff_reports/sr646.pdf)

[3] [http://time.com/9009/unemployment-is-worse-than-
death/](http://time.com/9009/unemployment-is-worse-than-death/) (the point is
made more thoroughly in the author's book)

------
harryh
A challenge to anyone who thinks we should have a UBI: do the math. Show how
it can work given the current population and output of the United States.

It's not easy.

~~~
bradleyjg
I've done the math and you can get it to work. You need to make implementation
choices that will make some people very unhappy though.

First, you start with non-institutionalized adult citizens that brings you
down to a payee base of ~210M (this part will be unpopular as parents will
want to get more than other adults). Next you set the basic income at the
poverty level for a single person, $11,700. That gives you a total nominal
cost of $2.47T. You do not exempt the basic income from the normal taxation
rules. That means you get some of it back in taxes. If you figure 20% that
gives you a net cost of $1.97T. You then take a buzz saw to all social
spending aimed at US citizens, including all parts of social security (this
would be very unpopular among the elderly, near elderly and disabled). With
all parts of social security adding to more than $800B/year It's fairly easy
to find a $1T in savings there. That brings the total to under a trillion
dollars. You take a buzz saw to tax expenditures, e.g. exclusion of fringe
benefits, preferential rates for capital gains and dividends, mortgage
interest deduction, state and local tax deduction, etc. (this is also going to
be very unpopular). If you add it up, that's good for another $550B.

That leaves you with another $420B in new non-offset spending. I'm certainly
not going to to claim that's a small number, but it seems achievable. It's
about 2.3% of GDP. Maybe you can get states to kick in (or force them to
through reduced grants in aid) given that some of their social programs can
also be largely reduced or eliminated.

~~~
harryh
Yes, I might quibble with some of your numbers a bit (for example I don't
think you'll get 20% back in taxes) but I'll agree that you're in the
ballpark. I think this is a good demonstration of how massive the changes
we're talking about are. Particularly:

* The hit it will mean to many seniors standard of living due to social security cuts.

* The massive tax increases this will be on the middle class (primarily due to changes in tax deductions)

* The massive tax increase this will be on the upper middle class to rich (primarily due to changes on taxation of capital gains and dividends. Changes, by the way, that most economists oppose.)

* The additional massive tax increase that will come from somewhere to close the 2-3% GDP gap you mention.

I can see how some people might be in favor of this plan. I myself am not.

~~~
bradleyjg
I agree the what comes back in taxes is a bit of hand-wave, it's hard to find
stats on the average marginal tax rate.

I think the non-elderly middle class net effect will be close to if not a
wash. They'll lose various tax deductions, but they'll get $11,700 x
num_adults_in_household x (1 - marginal_tax_rate). And tax deductions only
kick in when they are larger than the standard deduction to begin with. You
need to be closer to the "upper middle" side of things to get there or have an
unusually large deductions.

I don't think you need to get the gap amount wholly out of new taxes, as I
said I think you can get some of it out of reduced aid to states, and/or as
suggested by the poster below, military spending cuts.

As to your overall point, I concede that it is a tough sell.

~~~
harryh
Ya, you and I are definitely within the margin of error in our analysis of the
situation. Thanks, by the way, for the very substantive comment. This is
exactly what I was hoping for. I think a lot of people just say "UBI!" with
close to no understanding of what they are proposing. I think it's very
educational for them to take a look at the real tradeoffs involved.

------
tajano
It feels like everything is getting priced exactly at the point where it feels
like I'm barely scraping by.

I make a low six figure income and live in a one bedroom apartment. I don't
drive a luxury car, or take vacations, or have many indulgences except eating
out one or two nights a week. I also don't have much money left over to save
or invest. I don't see home ownership in my future, or much improvement in my
standard of living. I'm getting older, but the idea of paying for a wedding,
or the cost of raising a child, or the cost of sending them to college scares
the hell out of me.

This is probably due, mostly, to living in an area with a high cost of living.
There are perks to living in a nice city -- my girlfriend shudders at the
thought of moving to the suburbs -- but the city bleeds us dry. It's exciting
to live in a technology hub, but the higher salary seems to be mostly an
illusion.

My point being, I wonder how quickly everything will adjust to swallow up that
basic income? Then again, I guess it's not really aimed at present-day me, but
rather at someone with a lower income for whom its utility will be much
greater.

------
pdq
> It's becoming clear that increased automation as well as the rise of
> artificial intelligence is threatening ever more jobs.

This sentence is absolute FUD. Every technical revolution over the past 300
years has been made with automation and productivity, and yet people are still
employed in new jobs in sectors that did not exist before. Employing people to
do menial obsolete jobs serves no purpose other than to delay the next
evolution of ideas and products.

With this thinking we would still be handwriting books and riding horses. In
the future when driverless cars are prominent, people will ask in astonishment
"So you used to DRIVE your own car to work?"

~~~
pcurve
I think the economist is concerned about both pace and kind of disruption
taking place. I tend to agree with you all jobs lost due automation have been
replaced with other types of jobs. Usually bullshit service sector jobs to
cite a common example. Mind you we already have some forms of universal basic
income. Social security... child credit... all conditional but nevertheless
are tax transfer

------
jqm
When you know something isn't going to happen it's ok to suggest it. This is
particularly useful if later it can be used as example of how your company is
not actually an abusive parasitic organization but really cares about meeting
people's basic needs.

------
ihsw
Contrasted with China's shifting to population growth from economic growth,
this is definitely going to resonate with Western leaders.

Honestly though, if we are go with UBI, can we ask ourselves what is really
_necessary_ in life?

Currently large sections of the population engage in secondary and post-
secondary education for the purpose of gainful employment -- to have a job
brings social and financial stability.

That will no longer be necessary, so what does that means? Will tuition rates
go down? Will universities no longer be in such demand globally?

How will this affect population growth and movement? Large sections of the
population across the world utilize visas whose conditions are tied to
education or employment, and now they will not have such opportunities.

------
nwah1
The Basic Income doesn't address the systemic issues which we usually lump
under the category of "inflation," although by that what we're really talking
about is power and privilege.

[http://ieet.org/index.php/IEET/more/miller20120327](http://ieet.org/index.php/IEET/more/miller20120327)

------
xrange
I'd like to see a an article about the potential downsides of Basic Income,
written by advocates of Basic Income. Is it all "there are no downsides",
"there are only minor downsides for the ultra-rich", "there are no possible
implementation issues", etc.. Or has someone written a thoughtful article on
what might go wrong?

~~~
sremani
Inflation? what is the incentive for someone to work? How basic is basic and
who determines what basic is? If any one observed Venezuela or for that matter
Saudi Arabia with their social welfare paid off by Oil wealth, you would be
skeptical of these social programs.

------
MichaelApproved
Off topic but I like how that website shows a new article, as you scroll down
the page. Even the URL changes to the appropriate link, so it's easy to share.
Pretty cool.

Does anyone know what the term for that technology is? I'm referring to a term
that's similar to how "responsive HTML" is a term for a website that changes
based on view port.

~~~
c5karl
"infinite scroll"

~~~
MichaelApproved
I figured infinite scroll was more a term for twitter and Facebook news feeds,
where the content is the same but you're seeing more of it. In those examples,
the URL stays the same.

I guess it would be " _infinite scroll of articles where the URL reflects the
content_ " but that still seems like a mouth full. There should be a better
term for that.

~~~
chucksmash
Infinite scroll with stateful routing?

------
raspasov
This is one of my favorite ideas. It sounds great in theory, and I'd love for
it to be tried somewhere.

Just as a note, I'm pretty libertarian leaning, but that idea is, I think, the
best compromise between pure libertarianism and the bureaucracy mess we
currently have in the world.

~~~
sremani
Its been tried in Oil rich countries like Saudi Arabia, but given the massive
growth in population and mostly relying on immigrant workers for long time,
they are now trying to balance things and once you take away some welfare from
people they do get angry and so, the royalty of Saudi Arabia are facing many
challenges.

------
cfontes
Well this will not work until 90% of the jobs are automated and we actually
don't need this many people to work anymore to produce all the wealth and food
needed or in demand.

And this will take a long while.

~~~
jokoon
I think it's already the case, the 90% you're talking about is debatable, we
already live in an age where producing food and shelter requires so few people
that you can consider those jobs are already automated in some way.

The result is that only the educated and the owners can work and be included
in the economy, and unless higher education can include everyone, well you
will always have uneducated people who will have no other opportunity jobs
than fast food and cleaning houses, which is a problem, in my opinion, for a
nation.

The UBI is just a minimum people will get no matter what, so if they get a job
it's an added income. Depending on its amount, it's a compromise between
inflation and stimulating the economy without having parts of the US not
develop. Consumer spending always has been the basis of a healthy capitalism,
and the UBI follows that logic.

------
cantastoria
I'm curious what HN readers think the yearly UBI would be (in US dollars) if
it were actually implemented?

~~~
logfromblammo
I'd guess about $10400, paid at $200 per week to the head of a household, plus
an additional $75 per full dependent.

That works out as follows:

    
    
      Household Size | Annual UBI | 2014 Poverty
      ---------------+------------+-------------
                   1 |    $10,400 |     $11,670
                   2 |    $14,300 |     $15,730
                   3 |    $18,200 |     $19,790
                   4 |    $22,100 |     $23,850
                   5 |    $26,000 |     $27,910
                   6 |    $29,900 |     $31,970
                   7 |    $33,800 |     $36,030
                   8 |    $37,700 |     $40,090
    

That's a compromise. The UBI is less than poverty level, so that the
conservatives can say that no one is getting a free ride, and people will
still need to work to get by. But it's still around 90% of poverty line, so
that the liberals can say that the government is still providing a great
safety net.

There are 123M households in the US, for a population of 319M, so the total
cost would be $200 * 123M + $75 * ( 319M - 123M ) per week, which is $39.3G,
or $2.1 trillion per year.

The U.S. had official income of $3 trillion in 2014, so UBI would cost about
68% of the federal budget.

------
api
I've been in favor of this for a long time, but I do have a more nuanced
opinion in that I'm not sure if it's "time" yet.

IMHO we're getting there, and when the (very likely) big wave of automation
hits it will be time. The true automation wave has not happened yet, and when
it hits it will make the outsourcing wave look like a minor disruption to the
employment market. I fully expect that by the year 2100 most non-skilled labor
will be obsolete.

\--

Edit:

There's one more "elephant in the living room" that I'd like to bring up in
this thread before I'm outta here. I'll leave it here at the root since it's
part of the core point I was making. Few bring up this fact since it leads to
areas that many consider non-PC or impolite to discuss.

The average IQ is 100, and intelligence and other abilities are normally
distributed within the population.

This is pretty much fixed on short-term human timescales unless we can widely
deploy genetic engineering and brain-augmentation. Not only are these things
massively hard -- probably harder than any of the crazy automation anyone is
predicting -- but they're also going to face intense opposition on both
religious and secular-ideological grounds. If you think the furor over GMO
foods is excessive and irrational, imagine the furor over GMO humans.

It's also likely that those with the strongest opposition to genetic
enhancement (on largely superstitious grounds) would be precisely those for
whom it would be most beneficial. Conversely, those most enthusiastic to adopt
it would be those who don't need it. As a result it would probably accelerate
the trend I'm discussing here.

This means that if automation and other factors are constantly conspiring to
increase the median _skill level requirements_ of labor, eventually
significant portions of humanity are simply going to fall off a cliff where
the economic value of their labor becomes zero. From a purely economic point
of view these are now worthless human beings. It doesn't matter if labor
supply exceeds demand if the labor available to fill that demand can't do the
work.

As automation gets better, this cliff will move up the bell curve. As it does,
then due to the shape of a bell curve _the number of people thus affected will
increase exponentially_. This is a recipe for blood in the streets -- and for
totalitarianism as a response.

So we have a choice.

Option #1: consign those who fall off the edge to poverty and wall them off in
ghettoes, and implement a totalitarian political regime with total
surveillance of the entire population to deal with the perpetual undercurrent
of crime and terrorism that this will create. The result basically looks like
a B-grade cyberpunk film.

Option #2: admit to ourselves that we are entering a post-capitalist early-
post-scarcity phase of development and implement some level of basic income.

I'd go with option #2. Not only is it better for humanity at large, it's also
better for me as I don't fancy living world #1 even if I did get to live in
one of the posh totalitarian enclaves.

~~~
harryh
If you look at what most people were doing in 1930 most of those jobs are
obsolete. And yet most people are still working. I'd be pretty surprised if
2015-2100 turns out to be much different from 1930 - 2015.

~~~
dionidium
That assumes that the automation trends of the next 100 years are going to
look anything at all like the automation trends of the last 100 years. I don't
think that's likely due to pretty obvious technological multipliers. Progress
isn't linear.

Additionally, I think if you spend much time around the working classes, even
today, you'll find that they're living in a world that's leaving them behind
in a way that simply wasn't true even 30 years ago.

~~~
dionidium
Also, "most people are still working" is increasingly less true:

* [http://www.forbes.com/sites/toddganos/2012/11/03/what-is-rea...](http://www.forbes.com/sites/toddganos/2012/11/03/what-is-really-happening-with-employment/)

~~~
harryh
A significantly greater percentage of the working age population is working at
a job today than 85 years ago.

~~~
dionidium
Yes, that's true, but that's almost certainly because more women work now than
ever did before. That's a one-time (enormous) increase, but there's no reason
to believe it's an indication of a longer-term trend. In fact, the data show
otherwise.

You can play around with the data here:

* [http://data.bls.gov/timeseries/LNS12300000](http://data.bls.gov/timeseries/LNS12300000)

~~~
harryh
I am unmoved by the relatively tiny short term movements you are referring to.
Basically all you have shown is that we had a relatively large recession in
2007-08.

------
eternalban
counting his sheep in his sleep, no doubt. Can't wait until humanity graduates
from the clutches of these usurers.

