
Top White House Economist Dismisses the Idea of a Universal Basic Income - Chinjut
http://blogs.wsj.com/economics/2016/07/07/top-white-house-economist-dismisses-the-idea-of-a-universal-basic-income/
======
percept
Woo, rough in this thread. Treading carefully, I do notice that the subject of
the article is short on concrete solutions to the (potential) problem, instead
relying on:

"“The concern is that the process of turnover, in which workers displaced by
technology find new jobs as technology gives rise to new consumer demands and
thus new jobs, could lead to sustained periods of time with a large fraction
of people not working,” he said.

Still, the solution isn’t a universal basic income, Mr. Furman said. Instead,
he focused on reforming the existing array of programs meant to help the
unemployed and the poor."

This almost seems to bolster the opposing point: yes, there's a real threat
here, but we (hand-wavy thing) have existing programs we can fix up for that.
Other than the last sentence, I don't see substance, but more of a media sound
bite.

~~~
threeseed
Only one solution exists to the threat of automation and that is: training.

People need to be able to rapidly move from unproductive or fully automated
parts of the economy to others. It's easier said than done and in the US at
least would require a massive investment in and rethinking of access to
vocational education. It needs to be free as a start.

~~~
ianai
Automated driving could unemploy millions of truck drivers. Give me one other
industry that needs millions of workers and that retrained truck drivers could
do. Or even 5. But I don't think it exists outside of creating other, large
"new deal" type programs.

~~~
IndianAstronaut
I don't see why we shouldn't do a new deal. Possibly a new deal for the space
age. There is also a tremendous amount of work to be done in the sciences as
well. Work ranging from high skill scientific experimental design to low skill
pouring of agar plates.

~~~
ianai
I am all for a new deal set of programs. The roads are all falling apart from
what I've seen. Plenty of infrastructure to be maintained. Space, sciences,
etc would all be great. Or how about just employing people to cook healthy
food for other people? As it is even restaurants have gone largely
preprocessed in the search of disminished costs.

------
intopieces
Right off the bat:

>“We should not advance a policy that is premised on giving up on the
possibility of workers’ remaining employed,” Jason Furman, chairman of the
Council of Economic Advisers, said Thursday in remarks at New York University.

Isn't the idea that people could be employed doing anything on UBI (subject to
the market demand - sans artificial restrictions)? As in, the exact opposite
of what Furman claims is the premise of the UBI system?

~~~
ubernostrum
Part of the issue is UBI poses a threat to established ways of doing things --
many businesses rely on the relative lack of social and labor mobility as a
way to provide the continual supply of low-paid unskilled workers they want.
The threat in UBI is that those workers would be able to take time out of the
labor market and get education and training or even start their own businesses
instead of settling for the "it's the only game in town" of working under the
established model.

~~~
Spooky23
Not at all. UBI is a cynical attempt to push people into even more if casual
gig jobs that are en vogue right now.

UBI lets you subsist so that you're free to drop off my groceries for beer
money.

All of the other unicorn bullshit (automation will free us from want, etc) is
the 2016 equivalent of the 1956 flying car or magical gourmet microwave
dinner.

~~~
nostrademons
I'll be very interested to see the results of the YC basic income study, and
whether people _actually_ choose to loaf around, drop off groceries for beer
money, engage in self-study, or start businesses.

I don't know which'll happen. I'm surprised to see the degree of confidence
exhibited by both sides of the debate, people who are either _sure_ it'll
result in entrepreneurial utopia or _sure_ that it'll be the end of the world
as everyone does nothing. My sense is that there's a good deal of projection
here, where people who have successfully cashed out a startup assume everyone
will build a startup, while people who wish they could do nothing but loaf
around all day assume that's what everyone else will do. Personally, I just
want to _know_ , and so I'm waiting on the data before judging.

~~~
hyperpallium
We have data: aristocrats, trust-fund babies, the idle rich, even to Roman
times. Most do nothing but follow courtly fashion; but some became politians,
scientists etc.

A huge difference is being at the bottom rather at the top. Status is a
motivator.

But AI may "solve" this[http://partiallyclips.com/comic/dome-
house/](http://partiallyclips.com/comic/dome-house/)

~~~
nostrademons
We also have data on the other side too: wealthy Google millionaires who
continue to work there, startup founders who are on their 2nd or 3rd or 4th
startup, Plato and Aristotle, etc.

Well, technically, these are all anecdotes, but the plural of "anecdote" is
"data" after all.

~~~
brbsix
There's a significant difference between wealthy Google millionaires who
continue to work there and aristocrats, trust-fund babies, the idle rich. The
former are largely self-made whereas the latter posses entirely _unearned_
wealth and status. They're two entirely different categories.

~~~
nostrademons
The point of the study is to find out whether average Americans are more like
wealthy Google millionaires or more like trust fund babies. I'm curious what
the results will be - since so many people _have to_ work to survive, we don't
really know what their inclinations would be otherwise.

~~~
hyperpallium
Sorry, re-reading my comment, I didn't actually say it, but I agree that we
need more data - I just meant we do have some data (with the privisos I
noted).

Regarding Google-millionaire data: what percentage actually does keep working?
We hear about those who do, but not of those who don't (eg Minecraft's Notch).
"Newsflash: multi-millionaire relaxes" And, confounding factor: people who
succeed amazingly well often keep doing whatever made them wealthy, well
beyond financial satisfaction. At least, one _hears_ of those cases - I don't
actually know the percentage of how often, vs. those who take it easy. [Guess
this is what brbsix meant]

Anecdatum: when I made enough from something I created, I quit. Yet, turns out
I was happier before... so was probably a mistake to quit.

------
tlb
There may be valid criticisms of UBI, but this article doesn't mention any.

> Our goal should be ... to foster the skills ... to make sure people can get
> into jobs, which would much more directly address the employment issues
> raised by [artificial intelligence] than would UBI.

That is the traditional solution, but we should question the assumption that
is it the best way of life for most people.

> “Replacing part or all of that system with a universal cash grant, which
> would go to all Americans regardless of income, would mean that relatively
> less of the system was targeted towards those at the bottom—increasing, not
> decreasing, income inequality,” Mr. Furman said.

Nonsense. You can get any level of income inequality you want by choosing
suitable numbers for UBI and tax rates. Furman is an economist, so he must
understand such basic math. This part appears to be pure FUD.

~~~
DominikR
> ... employment issues raised by [artificial intelligence] than would UBI.

I didn't know that the economic situation we are in was caused by artificial
intelligence. In fact I didn't even know that there was an artificial
intelligence or that anyone has lost his job because of that.

~~~
Retra
There are artificial intelligences all over the place, and many people have
lost their jobs to them. How many telephone switch operators do you know?
Traffic control people? Typesetters?

------
ianai
Sounds like he prefers a heavier handed approach that would result in much
more government than a UBI. I completely disagree with him. Give people the
power to choose with a basic income. That will do more for th nations wealth
than training programs ever could. It will also require employing fewer people
at the governmental level.

On the other hand, can you imagine the political fall out if he had been for
UBI?

~~~
Spooky23
Read some of the public policy literature about 1960s and 1970s cash grant
programs.

Spoiler: they failed spectacularly. Giving poor people a wad of cash and the
power to choose often leads to poor choices that negatively impacts children.

~~~
jdc
Source?

------
raz32dust
Not a lot of substance. He is basically saying that we should invest in
training the existing workforce to adapt. That can happen even with UBI.

He also says that UBI will cause wealth to be distributed equally which means
less of the total tax will go to the poorer class. This is not exactly true
because the idea is to give cold, hard cash instead of trickling down the
wealth. So the dynamic will be different, and that is the whole idea. That
just giving cash is generally better than welfare schemes.

~~~
keithnz
having free (mostly subsidized) education through to tertiary level will be
necessary in conjunction with UBI. If it is a workable idea at all.

~~~
winstonewert
Can this exist?

I know that many countries do provide free tertiary education, but in the
cases I'm aware of, its a relatively small percentage of the population that
gets tertiary degrees compared to the US.

~~~
Avelaps
In New Zealand we get interest-free student loans for up to 6 years of
tertiary education with the possibility to get living costs with a weekly sum
being part of this loan. Although you will be living marginally without an
outside source for something like pocket money (A day a week is a pretty good
compromise if you don't have savings).

Effectively, anyone that wants to get a degree can. There is no barrier
outside the academic. And this loan stays interest free until we leave the
country long-term. A small percentage is taken automatically out of your pay
when you finally start earning. It all works pretty well for us.

------
sethbannon
It seems to me some economists simply can't fathom en economic system not
fueled primarily by human labor. "Employment" is treated like a good in itself
instead of what it should be treated as: a means to the desired end of high
quality of life.

For convenience, direct link to the paper being reported on:
[https://www.whitehouse.gov/sites/default/files/page/files/20...](https://www.whitehouse.gov/sites/default/files/page/files/20160707_cea_ai_furman.pdf)

------
labster

        “Replacing part or all of that system with a universal
        cash grant, which would go to all Americans regardless of
        income, would mean that relatively less of the system was
        targeted towards those at the bottom—increasing, not 
        decreasing, income inequality,” Mr. Furman said.
    

Does he not get that the tax structure and minimum wage would need to be
changed to accommodate UBI? The welfare state needs disruption, not gradual
change.

~~~
sib
>> Does he not get that the tax structure and minimum wage would need to be
changed to accommodate UBI?

"It is difficult to get a man to understand something when his salary depends
upon his not understanding it." \- Upton Sinclair

------
baconmania
Given this man's established ideological record, I think this article reveals
more about Jason Furman's personal philosophical baises than it does about the
objective costs and benefits of UBI:
[http://articles.latimes.com/2008/jun/11/nation/na-
furman11](http://articles.latimes.com/2008/jun/11/nation/na-furman11)

------
jswny
Freakonomics also did a fantastic episode about universal basic income:
[http://freakonomics.com/podcast/mincome/](http://freakonomics.com/podcast/mincome/).

------
11thEarlOfMar
"Mr. Furman also said a universal basic income would exacerbate income
inequality, already a rising concern in the U.S. "

What am I not understanding? Wealthy persons will fund this. Sure, they may
get the $12,000 per year UBI, but their taxes will go up by much more than
that.

------
moyix
While I'm in favor of UBI (though preferably after smaller-scale experiments
and careful study), this survey of economists about one version of UBI did
give me pause:

[http://www.igmchicago.org/igm-economic-experts-panel/poll-
re...](http://www.igmchicago.org/igm-economic-experts-panel/poll-
results?SurveyID=SV_bPBNf8WXrT4jmtf)

~~~
piotrjurkiewicz
Small scale experiments are useless in the case of UBI, because introduction
of UBI in small scale will not trigger inflation.

So small scale experiments are gonna to show that UBI works well, without
negative inflationary consequences, but full scale introduction will be a
disaster.

------
jfoster
I haven't followed UBI too closely, but I don't think I've seen discussed the
inflationary effects that it (in my opinion) would likely have.

What is the breakdown of winners/losers that UBI would target? From what I
imagine, it's a bit like an upside-down bell curve. People who have close to 0
would be better off, big companies too, and everyone in the middle a bit worse
off. Is that the intention of UBI?

~~~
learc83
Inflation is pretty much the first thing that most people think about when
they look into UBI for the first time.

Here's a summary of some of the pro UBI arguments:

Most plans would be paid for by increasing taxes on the wealthy, so it doesn't
actually increase the money supply;

Prices should only increase on goods that are supply constrained;

We're already giving away billions of dollars in assistance in the form of
SNAP (food stamps), and increases in SNAP assistance don't seem to cause food
price inflation (or at least not enough to be detectable);

We also already provide huge subsidies in the form of the Earned Income Tax
Credit, which doesn't appear to have inflationary effects (again at least not
enough to notice);

The examples we have of partial basic income haven't caused large scale
inflation. Alaska hasn't seen an increase in inflation since they began
providing a partial basic income to all residents, and Kuwait didn't see an
increase in inflation when they gave every citizen $4k in 2011.

To summarize the summary, a UBI would probably cause a price increase in
supply constrained goods and services, but not nearly enough to drown out the
extra purchasing power provided to people with lower incomes.

How this affects the middle class depends on how high we set the cutoff where
you start paying more in additional taxes than you're getting in UBI, and it
depends on how income inequality and velocity of money affect the middle
class. Many economists think that increasing income equality will help the
economy as a whole, but that's open for debate (I personally think that it
will).

~~~
ianai
I doubt it's as open for debate as some people want to claim. It's pretty
sound policy. A basic income is going to have a much higher multiplier than
increased government spending on defense. No need to scratch your head or
needle data to see that.

------
nxzero
How much would it cost to provide universal basic income to the US?

~~~
adventured
Short answer: several trillion dollars.

242 million adults in the US.

Just $10,000 per adult is $2.4 trillion. That of course wouldn't come close to
being enough. Even if you assume tax redistribution of the money (rich people
getting UBI, and then having it taxed away), for $2.4 trillion you probably
would only manage to get the poorest 1/4 up to something like $15,000. Today
the poorest 1/4 are receiving a net of more than twice that sum between
Federal and State benefits.

Federal budget ($3.9 to $4.1 trillion or so depending on which year we're
talking about) minus dozens of things that won't be replaced by UBI and won't
go away (eg NASA, military, agriculture subsidies, budgets for countless
agencies like HSA or FBI, transportation, justice and so on) = you might be
lucky to break even or bleed just a few hundred billion on the budget if you
allocate $2.4 trillion to UBI. That's assuming Social Security, all housing
subsidy programs, all welfare programs, half of all social services programs,
Medicare, Medicaid, Obamacare etc etc are all ended.

The equation at the state level is a whole 'nother calculation, and would be a
very significant factor given the states budget is another ~$1.7 trillion and
represents all sorts of welfare programs and healthcare spending.

Personally I favor Warren Buffett's premise of significantly boosting the
earned income tax credit, and freezing or lowering the minimum wage. The UBI
is dramatically regressive, there's no reason to be giving the top 50% in the
US a UBI.

~~~
Yhippa
This is what I was wondering. The top 50% certainly don't need UBI. If
everyone got it wouldn't sellers immediately increase prices and we'd be right
where we started? A loaf of bread for $50.

~~~
omegaham
This is where I'm confused about the benefits of UBI.

So, say that we institute UBI, and people no longer _have_ to work. That
increases the cost of labor - you can't attract a cashier for $9.30 an hour,
so you have to pay $15 an hour or whatever.

This has to be passed right back to the consumer, so prices go up. Rent goes
up as well - maintaining property takes labor as well. Now, the UBI is no
longer sufficient to sustain a decent life, and the poor are right back to
where they started.

~~~
learc83
This argument is also used against increases in the minimum wage. Now almost
everything in economics is up for debate, but very few economists agree that
raising the minimum wage by X dollars will result in prices rising by X
dollars so that the effect is non-existent.

There are several reasons for this, the biggest is that cost of labor isn't
the only input in pricing.

Basically the cost of supply constrained goods will go up, but not enough to
outweigh the increased purchasing power for lower income earners.

~~~
getgoingnow

      very few economists agree that raising the minimum wage by X dollars will result in prices rising by X dollars so that the effect is non-existent
    

You are looking for obvious increase in prices, but raising prices is
unpopular with consumers.

Instead, companies will move the production offshore, lay people off, make
smaller packages [2], use machines, use cheaper ingredients etc. and those
things create the illusion that the price is not rising. Price is the same,
but the quality (of goods/services & of life in communities) is going down.

    
    
      cost of labor isn't the only input in pricing
    

It's the main one, since the biggest cost to most companies are employees +
suppliers (that also have their own employees). Increase in the price of labor
will certainly have an effect - if not directly on higher prices, then on
quality.

    
    
      [2] https://en.wikipedia.org/wiki/Shrinkflation

~~~
learc83
Of course it will affect price, I never said that it wouldn't. The argument is
that it doesn't have an effect large enough to negate the extra income.

------
tuna-piano
I haven't seen this anywhere , but don't we already have UBI for a large
number of people in the US? We call it social security, but it's just cash
payments to people . That program is constantly talked about being shrunk, not
expanded.

What about an expanded UBI would be different than social security? Just the
fact that people are younger or not-disabled?

For the non Americans, social security provides cash payments to those over 65
and those with long term disabilities.

~~~
ZoeZoeBee
Social Security is funded by the money workers pay as a portion of their
income over the lifetime of their employment. The elderly on Social Security
paid into this system. Unfortunately many have ended up paying in less than
they have received over the course of their retirement due to people living
longer than the actuarial tables had accounted for. Over the course of SS 80
year history it has taken in $19.0 trillion in taxes and paid out $16.1
trillion. At the moment Social Security takes in more than it pays out, but
that changes in two years when it will start running a combined deficit, it
has roughly 18 years until the combined funds are depleted, *A rosey
prediction as this is relying on data which includes a Labor Force
Participation not dropping much more than it is now, which is tough as we're
already more than a decade a head of where we should be if only Demographics
were considered, and economic growth more than we've averaged since the
Recession.

UBI is the exact opposite of Social Security
[https://www.ssa.gov/oact/trsum/](https://www.ssa.gov/oact/trsum/)

If we assume automation results in more job-losses where does the money come
to pay for it?

------
fiatjaf

        > The idea is to ensure everyone has a chance at a decent 
        > life even as technology shifts and the labor market churns, 
        > eliminating and creating millions of jobs that often 
        > require vastly different skill sets.
    

Is that REALLY the idea? To make everybody less prone to adapt to technology
changes?

------
A_COMPUTER
Mincome is not compatible with businesses and political parties that rely on
an endless stream of low-skilled immigration.

------
shams93
The only way you get the money is by sending war and shuttering the military
police industrial complex. You don't need new taxes what does it cost to run
thousands of bases and run multiple wars at the same time for over a decade.
There's plenty of money for UBI if we reorganize society away from violence.

~~~
kr7
The U.S. defence budget is ~$700 billion / year and the U.S. population is
~320 million.

Gutting the entire defence budget would be worth just over $2000 / year per
person. Not exactly enough for UBI.

------
majormajor
Seems like a nice piece of progress (if we can keep it continuing, instead of
letting it die off again) that the idea is getting this much play in public to
start with, compared to two years ago.

Don't be too upset that people aren't sold right now, just keep pushing the
conversation forward.

------
justinlardinois
Is anyone really surprised? There's almost no political support for a
universal basic income in the United States. Hopefully that will change
someday, but it's not happening any time soon.

------
gndjdnncfn
Five trillion dollars to protect inflated equities markets? Standard
procedure.

A basic income to stimulate demand and take pressure off broken labor markets?
Heresy.

~~~
ihdncj849593
Nice, I like how you ignore that the government made all its money back in a
few years plus interest.

~~~
JoeAltmaier
...and the economy would _not_ benefit from a BI? With increased spending,
decreased public support programs, better education and community
participation? Life is about more than a balance sheet.

~~~
rhino369
Couldn't UBI end up in a death spiral where it does destroy the economy? If
the BI is too generous people will stop working. Cost of goods and services go
up. Tax base shrinks. The people vote in a larger BI to make up for it?

For as little as 15k a person, I'd strongly consider never working again.

~~~
JoeAltmaier
Fewer people need to work every year. All those factory jobs? Never coming
back in this civilization. Next - fast-food, bank teller. Eventually most all
of them. We have 35M people in minimum-wage now; there are not and never will
be enough Engineering jobs for all of them (and neither would they all want
to).

We used to write fantasy stories about when robots took the yoke of work from
our shoulders. Now that its happening, we resist with all our might. I wonder
why?

~~~
rhino369
The jobs from 150 years ago have been almost entirely replaced by now. With
new jobs.

Maybe this time is different. But our current unemployment numbers aren't bad.

------
getgoingnow
Why is UBI so popular on this site? This is a site for hackers, programmers
and engineers.

Could it be the result of a decade long propaganda by VCs targeting Zuckerberg
wannabes - those who want to have UBI, so they can work on the newest
blockchain-enabled photo-sharing social local VR app ?

~~~
ekimekim
(my guess / personal opinion, I don't claim to speak for everyone)

Because so many here believe so strongly in the power of automation. Almost
all software engineers are in the business of putting people out of jobs - eg.
replacing a secretary with a mail and calendar app, replacing a business
middleman with an online marketplace, or replacing a sysadmin with cluster
management tools.

A way to resolve this cognitive dissonance of us doing a thing we think is
right (automating the world) with causing a thing we think is bad
(unemployment) is to turn unemployment into not a bad thing, which is the
promise UBI makes.

This doesn't mean we don't honestly believe it can work. But it makes us more
likely to WANT to believe it. Brains are funny things.

~~~
ZenoArrow
Increasing levels of automation certainly plays a part in the drive to explore
solutions like UBI, but it's not the only consideration. On a broader level,
the issues driving UBI are those related to social mobility and quality of
life. Those issues would exist without the drive towards automation.

To explain what I mean, imagine you're working a low-skilled, low-paid job
just to keep a roof over your head, with very few opportunities to retrain
(both in terms of free time and money). In other words, you're working just to
survive, and are not making the most of your time on Earth. UBI would give
people in that situation an avenue to retrain, as well as making it harder for
companies to keep wages low for undesirable jobs, they would have to better
compensate people for giving up their time to do a job they otherwise wouldn't
be interested in doing. None of these factors are directly derived from
increased automation.

As for whether or not UBI will be a net benefit, the answer is not completely
clear, but that's the reason small-scale experiments looking into UBI have
been started.

------
cardigan
Because income inequality is more important to this guy than providing for
people's basic needs lol

~~~
ihdncj849593
I like how well you took a very complex issue and made it feel like it's this
obvious black and white thing.

~~~
musicaldope
I like how you keep making sarcastic replies to comments in a thread you
started. It's like seeing someone litter on their own lawn.

Edit: nevermind, it's not your thread. Just shitting the place up for fun, I
guess.

------
marcoperaza
A basic income is a massive threat to the liberal welfare state. It would
totally deflate the left's institutional agenda so expect them to fight back
hard. The premise of the current welfare state is that the people, too stupid
to manage their own lives, are better off under the paternal care of
enlightened government bureaucracies. It's gonna be entertaining in ten years
to watch Republicans support the basic income and Democrats oppose it.

The debate will be about whether people should be in control of their own
lives or whether they need a paternal state to protect them from themselves.

~~~
threeseed
You sound like a Sarah Palin speech. Instead of using meaningless buzzwords
like "elite" maybe be specific about who exactly you are referring to.

That aside I don't know where you get the idea that the Republican party would
be for a universal basic income. Their current position (under Trump at least)
is to abolish the minimum wage in order to encourage everyone to work. And
they have always favoured individual responsibility and opposed government
handouts.

~~~
marcoperaza
I edited my comment to remove that bit but I'll clarify who I'm talking about:
the people who see their project as bringing more and more of our lives under
the direction of the state, because they know better than you and me how we
should live our lives. They've convinced the rank and file that this is the
best way to achieve across the board prosperity. The prospect of a hundred
years of progress toward this slow takeover being wiped out by a basic income
is the biggest threat to their project.

Also, I'm pretty sure that Trump's and probably most Republicans' position on
the minimum wage is that it's ideally set by the individual states in
accordance with the realities of their economies. A $15 federal minimum wage
would devastate vast swaths of America by effectively banning work. The
economy in much of America simply can't sustain that.

But yes, if we adopted a UBI we should most certainly eliminate the minimum
wage, since it accomplishes the same goal much more comprehensively (i.e. for
everyone as opposed to just those who have a job).

~~~
threeseed
You are making generalisations so broad that it is impossible to understand
what you are even talking about. Rank and file means how many tens of millions
of people exactly ? And since when did they all speak with one voice ?

