
Universal Basic Income already exists for the 1% - kareemm
https://medium.com/@MattBruenig/the-ubi-already-exists-for-the-1-d3a49fad0580#.74muh726a
======
gfodor
This article seems transparently fallacious to me, since the income generated
for the 1% is due to investment capital. Investment capital, among a million
other attributes that differentiate it vs a state backed UBI program, is
exposed to risk. There isn't just some pile of "income" sitting there we can
harvest every year, the income the article talks about exists due to the
exchange of capital. At the end of the year, some of those investments fail
(for example, bonds default) and the income streams vanish.

The analogy to UBI completely fails. Honestly this is probably one of the most
transparently dumb UBI articles I've seen posted on HN. (Disclaimer: I support
the idea of UBI pending research outcomes.)

~~~
huac
Risk is always relative. If you have enough capital, you can afford to focus
solely on the long run, and plan positions accordingly. In general portfolio
theory managers aim to optimize an objective - for short term hedge funds
that's typically Sharpe ratio or just net return, but for long term focus
(e.g. a rich family), you focus on minimizing the probability of shortfall.

That is, your family is going to spend some x% of your wealth every year. Then
you only need to return x% on the fund (approximately) on a yearly basis.
There is very little real risk associated with this strategy, if you're rich
and needing to earn a small percent of your total assets, say 3%. Now, if your
family _isn 't_ rich, you're probably going to need to spend much more than 3%
in income, and your probability of shortfall increases dramatically.

This is similar to how college endowments work - do you think Harvard's
endowment has a high chance of going dry anytime soon? Tangentially, their
tax-free status is tied to spending 5% of the assets each year, which actually
makes their job a lot harder, and is why they need to still raise money.

~~~
h4nkoslo
"There is very little real risk associated with this strategy"

Once you get to inter-generational wealth there is catastrophic risk that is
almost uninsurable; managing that risk is extremely difficult. It is not as
simple as "buy bonds", you have to deal with things like confiscatory tax
rates, hyperinflation, default, being targeted by the government as a juicy
source of funds, fall of a government you had previously been associated with,
a dumb heir coming into control of the fortune and getting swindled...

If being rich was easy everyone would do it.

~~~
huac
There is diversifiable risk and there is non-diversifiable risk. Everyone is
subject to non-diversifiable risk, and there's plenty of risk associated with
being poor, such as not having enough food to eat.

------
traskjd
I'm in favor of trying UBI to see the impact, testing it properly.

I'm not a fan of this article however. While we are reasoning by analogy, It's
fairly well documented that most capital wealth does not survive past an
initial generation or two. There's something about creating the wealth/passive
income that creates a different behavior than being given it.

This article does nothing to discuss that. The analogy included feels like
it's just there to support a punchy headline.

This is why I'm more excited to see some real tests and results in various
countries and communities.

~~~
stretchwithme
It's easy to test. Find someone and start paying them.

Let us know how it works out.

~~~
kybernetikos
This is in fact what people are doing.

[https://www.givedirectly.org/research-on-cash-
transfers](https://www.givedirectly.org/research-on-cash-transfers)

[http://www.forbes.com/sites/timworstall/2017/01/02/finlands-...](http://www.forbes.com/sites/timworstall/2017/01/02/finlands-
basic-income-experiment-starts-really-its-testing-the-laffer-curve-for-poor-
people/#53229bbd76af)

[https://blog.ycombinator.com/basic-
income/](https://blog.ycombinator.com/basic-income/)

~~~
c0nducktr
We already did this in the 70s as well.

[https://catalog.hathitrust.org/Record/002169251](https://catalog.hathitrust.org/Record/002169251)

------
dvdhnt
While, overall, I enjoyed reading this post, I feel that this statement -

> 1 in 10 dollars of income produced in this country is paid out to the
> richest 1% without them having to work for it.

is misleading. I think this type of attitude makes it more difficult to find
common ground. Yes, that income is not produced through recent work, but it is
produced as a bi-product of previous work.

The issue is that once a person accumulates enough wealth, the difficulty to
generate value falls while the opportunities to do so rise.

~~~
crooked-v
You've overlooked how much of this wealth is inherited across generations.

~~~
smokeyj
That means they're preserving it and reinvesting it so more wealth can be
created. This is a good thing.

~~~
stretchwithme
If we consumed all of that nasty wealth, there'd be none to borrow to get a
house or education. None for startups.

People get rich by not consuming everything as soon as they get it. This is a
great thing for everybody.

And it's not just rich that accumulate. A person making minimum wage and just
saving the same amount withheld by the US social security tax would have
hundreds of thousands of dollars accumulated if they kept it in the stock
market for their entire working career.

I was curious about this a few years ago and put together this spreadsheet,
using this tax rate, rate of return and minimum wage over a 40 year period.

[https://docs.google.com/spreadsheets/d/1RlSfkW-
DKXAXtXKvZJR5...](https://docs.google.com/spreadsheets/d/1RlSfkW-
DKXAXtXKvZJR5avibx_DqZEXIZk-Wd9SpSIc/edit?usp=sharing)

------
jws
_Don’t tax labor to give money out to UBI loafers. Instead, snag society’s
capital income, which is already paid out to people without regard to whether
they work, and pay it out to everyone._

Also known as nationalizing all investments.

I think the author may not quite have a grip on capitalism.

~~~
eridius
Did you finish the article? They're not literally suggesting that all capital
income be redirected by the government, but instead suggesting that the
government should build up a fund that owns capital assets.

> _The US federal government would employ various strategies (mandatory share
> issuances, wealth taxes, counter-cyclical asset purchases, etc.) to build up
> a big wealth fund that owns capital assets._

Sure, wealth taxes does mean effectively redirecting some of the capital
income earned by other people, but that's basically what all taxes do anyway.
And I'm not sure what "mandatory share issuances" or "counter-cyclical asset
purchases" mean. But the end result is they're suggesting that the government
should own a set of capital assets rather than just relying on taking money
from citizens that own capital assets.

~~~
em500
> Did you finish the article? They're not literally suggesting that all
> capital income be redirected by the government, but instead suggesting that
> the government should build up a fund that owns capital assets.

To provide a UBI of say 12k for every adult in the country (as opposed to just
a few hundred or thousand), such a fund would need to own a large part of all
the corporations and housing stock in the country. Didn't work well for the
countries that tried it in the past.

------
imgabe
So, essentially, abolish property rights? Just have government seize the
capital from people who currently own it, or rather, seize the proceeds of the
capital which is effectively the same thing, because why would you bother
owning the capital if you weren't going to have access to the income it
produces?

I'm all in favor of Universal Basic Income, but what happens when everyone who
currently invests their money to produce this passive income decides to simply
spend it instead since they wouldn't get to use any return from their
investments?

~~~
subway
Seems like if the folks hoarding money via investments were to spend it, we'd
see much greater wealth equality.

~~~
stretchwithme
That's true. We'd all be much more equally poor.

There's also be no capital accumulating for innovation. No annoying technology
to enable people to make high salaries. And none of the annoying tax revenues
collected from them.

~~~
stretchwithme
This has been tried many times. It's called communism.

And people always try to escape it. And its eventually abandoned.

------
redmattred
Seems like a total straw man argument.

I think very few are against the idea of free money for everybody because of
the fear of moral decay if people aren't working. I think the opponents are
worried about where that money to fund UBI will come from.

Taking away people's assets to be redistributed is obviously kind of a touchy
subject.

~~~
djcapelis
I've actually seen a lot of folks argue against UBI out of the assumption that
if people don't have to work, no one will ever do anything with their lives
and we'll all go to hell with no production whatsoever. This article is
targeted at that argument. If that's not an argument against UBI you want to
make, that's great, but it's still worthwhile for the author to write
something here.

------
negamax
UBI is a well intentioned but misdirected goal. Ask for minimum social
infrastructure. Not money. Minimum social infrastructure that involves food,
education and medicine safety to a good degree (without any hint of
lavishness). We achieve that, we will solve arising problem meaningfully in my
opinion.

~~~
rjbwork
The following is a non-value judgement. We see generally better outcomes when
we just hand people cash than when we make them jump through hoops, and
partake in non standard services to acquire resources. It also generates more
administrative overhead than if we just hand them cash.

I don't know if this would hold for a universal social services
infrastructure.

My personal analysis is that I would tend towards decentralization via cash
payments, so as to enable choice, and not have the state takeover the
potential economic activities enabled by such cash payments. Nobody wants to
be given food from a government kitchen or government food box, but most
people, I would think, would not mind getting $X per week/month/year to
supplement their other income from the government.

~~~
negamax
I think your statement is spot on in context of giving cash to people in
resource stripped geographies. As charities handling social programs are
detached from ground realities.

But in context of democratic, developed states and cities; UBI/welfare is not
a good solution. Minimum social infrastructure is what we should strive
towards. So, when people fall from safety nets; that fall can be contained.
With passage of time; we can work towards elevating that net further.

------
yuhong
Thinking about it, basic income would be better than increasing credit as a
way to increase the money supply, but it is probably not particularly good
either.

------
msoad
What "universal" in UBI means actually? If we pay to some of people then it's
not universal. No matter if it's the top 1% or the poorest.

~~~
powmonk
It means taking the massive chunk that goes to the 1% and instead redistribute
it evenly to everyone (including the 1%, but this time they get a much smaller
piece)

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CyberDildonics
I didn't realize investments were the same as being payed. It is a revelation
that people who have enough money to live off of investments don't have to
fight to survive?

------
amelius
I have an idea. Can't we make national lotteries pay out in UBI, and use the
results for studies? That way, those lotteries at least serve a useful goal.

------
kevin_thibedeau
Society still benefits if those "unearned" dollars are spent domestically.

~~~
DasIch
You're right. The problem is that rich people don't spent much money, they
tend to already have most of their needs met.

Poor people on the other hand are much quicker to bring their income back into
circulation. If you want a lot of money to be spent domestically, you need to
redistribute the money to the poor.

~~~
thescribe
I feel like this implies that the rich hoard money under a mattress. Most
money held by the rich is invested in some way or another.

