
The “Giving free cash to the poor will make them lazy” theory - joeyespo
https://econstuffs.wordpress.com/2018/07/10/the-giving-free-cash-to-the-poor-will-make-them-lazy-myth/
======
ryanmercer
I wouldn't call it a myth, I'd call it a theory.

This is why basic income experiments like YC Research, the Ontario one, the
finished Namibia one etc are all important. We need to see what happens in
different cultures, in different communities, in different economies when we
give un-earned income to people with no strings attached. We need to see what
will happen.

You can absolutely bet if you give enough people free money, there will be
ones that opt to do nothing but sit around playing their ninplaybox consuming
their drug of choice. You can absolutely bet that some will use it to make
positive life changes though like improving their diet or health care, seeking
training, starting a side-hustle. We need to do these experiments for years
and years in many areas in many populations to see though what exactly will
happen.

I imagine if you took groups from the same state here in the US and gave those
in a rural community money they're going to behave differently than someone
living in an urban or downtown setting. Different if one group is in an
economically depressed community and one is in a community full of healthy
local businesses and corporate jobs.

I wouldn't call it a myth, I'd call it a theory with inadequate evidence to
support or refute it.

~~~
CiPHPerCoder
> I wouldn't call it a myth, I'd call it a theory with inadequate evidence to
> support or refute it.

I would call any theory that lacks adequate evidence to support it a myth.

~~~
babypistol
Calling it a myth implies that there is adequate evidence to refute it.

By your reasoning we could also be talking about the Giving-Free-Cash-To-The-
Poor-Will-Make-Them-Productive myth.

------
another-one-off
No problem with UBI as a theory, for all I know it might be strictly better
than the status quo. Handing money out seems to have worked out for the
banking system, hahaha. :[

The issue is that the economy is outrageously complicated and it isn't obvious
that the people who want to bring in a UBI are the same people who will be
working to bear the cost of a UBI. If it turns out to be unfair and negative,
as any ambitious economic policy can be, it could be politically very costly
verging on impossible to unwind.

~~~
baxtr
I always wondered: if UBI was reality for everybody, wouldn’t then simply all
prices go up by the UBI level and nothing changes after all?

~~~
woah
Prices for what? How would anybody coordinate this?

~~~
rarec
Rent is a big one. For example, you charge your tenants $1000 a month now. UBI
kicks in, everyone gets an extra $500. Why wouldn't a landlord up their rent
charge to $1500, or even to just $1250? Who wouldn't want to do that?

~~~
dragonwriter
> For example, you charge your tenants $1000 a month now. UBI kicks in,
> everyone gets an extra $500.

They don't, though, because UBI isn't funded by magical outside injection of
value; the maximum mean additional after-tax income in any plausible UBI
scheme (ignoring gains by induced economic growth or tax policy changes not
germane to UBI funding) is $0. In a sense, it's a means-tested program where
the means-test is within the taxing structure rather than a separate
bureaucracy.

More to the point, though, local and interregional competition on rent, the
same thing that stops landlords from capturing all the gains in income from
all sources, is what constrains this (or not, if it is absent); UBI presents
no special features in this regard.

~~~
rarec
While this is true, it is not magically funded, consider the average person.
Taxes historically are taken out every pay check. This person is now receiving
$X dollars a month "for free", insofar that it doesn't require any actual
input on their end to receive this money. Rationally, of course it's not
magical free money, but and the end of the day they do ultimately have X more
a month to spend.

~~~
dragonwriter
> While this is true, it is not magically funded, consider the average person.

Yes, do.

> Taxes historically are taken out every pay check.

And witholding formulas will be adjusted to reflect the additional taxes to
pay for UBI, so people with jobs or other income subject to withholding (with
income high enough that, at the level of approximation provided by withholding
formulas, they would pay some additional tax for UBI) will have their non-UBI
regularly-received take-home pay commensurately reduced.

> This person is now receiving $X dollars a month "for free", insofar that it
> doesn't require any actual input on their end to receive this money.
> Rationally, of course it's not magical free money, but and the end of the
> day they do ultimately have X more a month to spend.

No, even in the take home pay before filing taxes and settling up at the end
of the year sense, not everyone will get equal (or any) additional income
under a UBI scheme, and the mean will still be around $0.

~~~
rarec
>not everyone will get equal (or any) additional income under a UBI scheme

Why call it universal base income if you can price yourself out of it like you
can with normal welfare? I thought that was the entire point of the system.

~~~
erik_seaberg
The point is to avoid any effort on deciding who really needs it, and not
create perverse incentives not to work. If your tax bill exceeds your UBI,
your income is a lot higher than your UBI so you don't care that much.

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candu
There's a pernicious assumption here in equating "recreation" with "laziness".
_All_ of us deserve to have fun once in a while, regardless of socioeconomic
status. Recreation can improve mental and physical health, provide great
opportunities for social interaction, and exercise parts of our brain that
don't otherwise get exercised.

~~~
Balero
The problem is often people who work, work hard and importantly pay taxes,
don't have the time for this recreation.

So you can say that " All of us deserve to have fun once in a while,
regardless of socioeconomic status." But for someone who is working too hard
to take the time to have fun, this rings kinda hollow. And I can bet it stings
a bit to have your taxes going towards paying for someone to do the things you
don't have time to do yourself.

I went through a stint of working in cafe's recently, and one always had a
group of people who would turn up after leaving the job centre (you have to go
here to qualify for benefit money) in the early afternoon, and would just
basically hang out. Frankly I had to fight the jealousy, I wish I could spend
every afternoon hanging out with my friends. I had to remind myself how much
it sucks to be unemployed, and how nice I have it. I can imagine this could
seem unfair to someone in a more stressful position.

~~~
jimbofisher1
If you work a job that allows you no free time that is your choice. Whining
that other people have leisure time is absurd, if you want leisure get a
better job.

I am disturbed by people's aversion to taxing the wealthy. After WW2 the top
tax rate in the US was over 90% and until the 70s it was over 70% but since
then we have been systematically fooled by the wealthy to believe the absurd
"Job Creator" story and income inequality has sky rocketed as a result.

~~~
Balero
Frankly if you can't see why someone working hard would be annoyed with their
money going towards taxes that pay for people to enjoy a life that they are
not enjoying, then you are no better than someone saying "Don't be lazy, just
get a job". People do different things, some people want to make lots of money
or have a 'good' career, and sometimes you have to suffer through the bad side
of your choices. A bit of empathy goes a long way.

I don't think the place to aim for is income tax. Tax in the 70s was crazy
(the Beatles wrote a pretty famous song about it, it was in the 90%s in the
UK). Frankly I don't think income tax should ever be above 50%.

Taxing capital gains on the other hand should be higher than in the 20%s for
people "making" millions a year this way. Not to mention how easily
corporations dodge tax, or how people can inherit vast fortunes without doing
or risking a thing. Aiming at raising income tax is just pointing badly off
people against slightly better off people, all whilst the truly wealthy are
ignored.

~~~
jimbofisher1
Even the most high power CEO in the world can take long extravagant vacations.
Do you think he is crying because someone in Detroit can work part time and
relax half the week? Your argument is bizarre.

~~~
Balero
But a doctor who's had an 80 hour week, saving lives, helping people, and
spending time away from their family, can't feel it's unfair they have to pay
for someone to stay at home and relax.

The world is more than CEO's and part time workers.

~~~
jimbofisher1
How is that any different from a CEO with long hours and high pay? No one is
forcing this person to be a Heart Surgeon. They could do very well as a
Suburban GP with basically 9-5 Hours and still high pay and prestige.

I actually think you are just one of those "Taxation is Theft" libertards.

------
jeffreyrogers
Instead of UBI, which many critics are fearful of, why not switch to a voucher
system? The government gives everyone a voucher redeemable for $x for food, $x
for healthcare, etc., whatever forms of welfare we decide to provide as a
society. Then private companies can register with the government as providers
of these services and consumers can spend their vouchers wherever they want.
This solution seems like it eliminates bureaucracy by switching to a market
based system, provides a safety net for the entire population, and makes it
harder to freeload.

~~~
andrewla
> eliminates bureaucracy

Okay -- so I register with the government as a "food provider", and I take
food vouchers in exchange for non-food (like gasoline or something), and
redeem them with the government for cash money. Who is making sure that I
can't do that? We could have it strictly be an enforcement solution -- no
bureaucracy, but a huge operational burden on the justice system. Or, more
reasonably, I would have to submit to being regulated as a food provider, and
would have to meet certain standards in order to do so, and would have to file
appropriate paperwork to establish that I am doing so. Hell, as long as we're
here, we might as well make sure that I only provide healthy food, according
to what is currently thought of as healthy. Oh, and the cost of the food I
sell has to be regulated; can't have me charging $20 for a hamburger, even if
it is a "premium" one.

Anyway, long rant, but in the end, the suggested system sounds like a mountain
of bureaucracy and would probably cost way more to keep running than just
giving the money directly to people.

~~~
jeffreyrogers
> I take food vouchers in exchange for non-food (like gasoline or something),
> and redeem them with the government for cash money. Who is making sure that
> I can't do that?

You can't redeem the vouchers for cash, only for the good or service the
vouchers are designated for. So a food voucher would let you redeem it for
food. A healthcare voucher would allow you to pay a healthcare provider for
whatever services you received.

Edit: oh, you're saying you pretend to be a food provider. The solution to
that seems simple. Lifetime ban from voucher funded industries for anyone
caught doing that and forfeiture of 3x damages. That's just an example, but if
you make the punishment great enough I doubt you'll have a problem with it. It
seems like it's pretty easy to catch someone doing what you described. For one
thing, you'd have to be registered as a business to even engage in the
practice you describe.

> I would have to submit to being regulated as a food provider, and would have
> to meet certain standards in order to do so, and would have to file
> appropriate paperwork to establish that I am doing so.

Sure, but how do you think the welfare system works currently? You'll always
have bureaucracy, but you can have it in greater or lesser degrees. I contend
that my proposal would have less bureaucracy than what we currently have. You
already have to register with several state agencies if you want to run a
grocery store (at least in my state). Whole Foods doesn't find that too
onerous.

> Oh, and the cost of the food I sell has to be regulated; can't have me
> charging $20 for a hamburger, even if it is a "premium" one.

No, that's the whole point of switching to a voucher/market based system. You
as the service provider can charge whatever you want. The population, as
recipients of the vouchers, can redeem them anywhere. If you charge $20 per
hamburger you'll go out of business or change your prices.

~~~
andrewla
> You can't redeem the vouchers for cash, only for the good or service the
> vouchers are designated for

You are misunderstanding the scenario. I am a food provider. Someone buys food
from me for vouchers -- what do I do with those vouchers? I assume I exchange
them for cash from the government, otherwise, I can't pay my rent or my
employees or for cleaning products.

The problem with not regulating the $20 hamburger is that I sell a $1
hamburger for $20 in vouchers, and slip the customer $18 in cash (that I
replenish by redeeming the vouchers, as above). Yes, I'm committing fraud, and
yes, if I get caught I'll get in trouble. But if fraud is widespread then it
becomes impossible to detect.

Yes -- this is how food stamp and EBT programs work now, but they work with
huge amounts of bureaucracy, a stated non-goal in your system. So I don't
really see a differentiation here between what you're offering and what food
stamps already do (poorly).

~~~
jeffreyrogers
I realized that while you were replying and added an edit to my comment.

Yes, I agree that's a problem, but you can reduce fraud by making the
punishments severe enough. For instance: commit fraud, lifetime ban from the
industry.

I don't believe UBI is palatable to a majority of the population, but I
believe a voucher based system could be if marketed appropriately.

------
at-fates-hands
It's easy to do some research and say, "Hey, this works! Look at all the
places that did it!"

Here in the US, we already have a complex network of safety nets to take care
of the people who UBI is really targeted for. This begs the question, if you
give people a basic income, what social services people already depend on will
you get rid of?

There's no way you can keep all of the social services AND give people a basic
income, it's just not economically feasible.

~~~
awakeasleep
To implement basic income without raising taxes, the USA would have to trim
something like 10% from our defense budget.

I think you mean politically feasible. And political feasibility is something
that changes with the popular will.

Not to say we’d want to keep all our current welfare type benefits with UBI

~~~
opencl
10% of the defense budget would fund a $15 a month UBI.

edit: bad math

598 billion per year * 10% / 325 million people / 12 months/year

------
DanielBMarkham
I am quite interested in UBI and look forward to seeing more empirical data on
the various experiments being conducted.

Having said that, the "danger" of UBI is that it's a big, fat slogan that can
mean damned-near anything -- and there are a ton of people who both support
and oppose it because of the way the idea makes them feel. That makes for a
terrible environment for productive public discourse.

The only half-ass real world data I know about is the independently wealthy.
They get money every month and don't have to work. In general, people who
become that way suddenly ruin their lives. And the numbers probably aren't so
good for those who earn it and then stop to enjoy it.

This example sucks, however, as the goal of UBI (as far as I know) isn't to
replace all income. It's to cover the basic needs of people so they can be
free to study, improve their lives, and not have to spend all of their energy
in the day-to-day struggle of existence. I have no idea how it will play out
in that scenario, and I suspect that the long-term effects will be much more
pronounced than the short-term ones. This will be, after all, a major culture
shift.

I like the idea. I just don't know enough about it -- and it doesn't have
enough definition -- for me to _support_ the idea.

~~~
ohthehugemanate
No matter which version of a UBI you support, there's one key feature that I
just can't imagine happening out here in the real world. A UBI should REPLACE
most existing forms of social assistance. Food stamps, unemployment insurance,
some kinds of pensions, some kinds of child support, etc etc etc. Each one of
those is a massive public sector industry with a lot of political weight
behind it.

I live in Germany, where every market has some form of social assistance
connected to it. The task of dismantling that bureaucracy would be
outrageous... And quite a lot to spend on a relatively untested scheme like
any UBI.

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fmajid
One argument the article forgot is that efforts to help the poor with goods or
services rather than cash entail building a bureaucracy, and inevitably the
iron law of bureaucracy asserts itself, more and more of the funds are
diverted to the bureaucrats rather than the ostensible mission.

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kazinator
Giving away cash won't make people lazy; rather, it will motivate them to
maximize their take of the action, while minimizing someone else's. Scores of
people claiming to be poor will suddenly appear out of nowhere, with
outstretched empty hands.

~~~
mathnmusic
It being "Universal" means that people don't have to claim to be poor. Now,
because we have progressive taxation, claiming to be poor would indeed be
advantageous - but that's true even today.

------
simonsarris
Increased enrollment isn't the same thing as increasing work %. Some of these
other studies are testing "cash transfer for specific thing" and find that
"specific thing" increased, somewhat. That's not really what people are
arguing when they argue broader cash transfers, like Basic Income.

The _work disincentive_ of basic-income-like cash transfers, in studies so
far, is actually somewhat consistent at around 10%. Some papers referencing
this approx figure:

[https://www.dropbox.com/s/r19npwc30trejb6/Basic_Income_in_a_...](https://www.dropbox.com/s/r19npwc30trejb6/Basic_Income_in_a_Small_Town_Understanding_the_Elusive_Effects_on_Work__Calnitsky_Latner_Social_Problems_BI_in_a_small_town.pdf?dl=0)

[https://www.dropbox.com/s/oi0kv3vcya9o0ad/The_Rural_Income_M...](https://www.dropbox.com/s/oi0kv3vcya9o0ad/The_Rural_Income_Maintenance_Experiment__sr10.pdf?dl=0)

[https://www.dropbox.com/s/hkd489vcarcrorg/Findings_from_the_...](https://www.dropbox.com/s/hkd489vcarcrorg/Findings_from_the_Gary_Income_Maintenance_Experiment__Gary%20Income%20Maintenance%20Experiment.pdf?dl=0)

[https://www.dropbox.com/s/5m2k5qzgv699dfe/THE_TOWN_WITH_NO_P...](https://www.dropbox.com/s/5m2k5qzgv699dfe/THE_TOWN_WITH_NO_POVERTY_Using_Health_Administration_Data_to_Revisit_Outcomes_of_a_Canadian_Guaranteed_Annual_Income_Field_Experiment___forget-
cea%2520%282%29.pdf?dl=0)

[https://www.dropbox.com/s/dsucn7jone74g65/New_Jersey_Graduat...](https://www.dropbox.com/s/dsucn7jone74g65/New_Jersey_Graduated_Work_Incentive_Experiment__ED099531.pdf?dl=0)

I've had these sources handy since last year when I was doing research on my
own UBI-skeptic piece: [https://medium.com/@simon.sarris/after-universal-
basic-incom...](https://medium.com/@simon.sarris/after-universal-basic-income-
the-flood-217db9889c07)

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holmberd
If you are on an island where a third of the population is struggling, e.g.
bad crop yield, the whole population on the island will experience the
negative effects as a whole.

Solutions? 1\. Build a wall around the less fortunate and allow some of the
more able ones to work for less than you would otherwise pay.

2\. Share the resources of the more fortunate with the less fortunate until
they are back on their feet and are able to prosper.

A persons good fortune isn't made in a vacuum.

------
Simulacra
I feel like UBI in general is a bad idea. If you give me free money, I'm just
going to spend it or use it like any other money. If my landlord, mechanic,
etc. knows that certain people are getting extra Income, what stops them from
just raising the prices? If the landlord knows that a tenet is getting $300 a
month and extra income, what's stopping them from raising the rent $300,
completely negating the UBI concept?

~~~
antisthenes
Exactly the same thing that's stopping the landlords from raising the rent by
$300 right now - supply and demand.

If the people receiving UBI are universally spending that money on something
other than rent, then the landlords who raise their rent by the UBI amount
will become noncompetitive and fail to attract tenants.

To presume that 100% of the UBI will simply be absorbed by the landlords is
absurd, not only because of the above argument, but because for many people,
the UBI will be significant enough to swing them to home ownership instead of
renting, putting additional pressure on the landlords not to raise prices.

------
yonatron
This is very culture dependent and depends on the values of the recipients.
There are cultures of entitlement where none of that money would go to
education or entrepreneurship, just to greater levels of indulgence.

------
Alex3917
Question for conservatives: Do you really think that if your rent was a few
hundred bucks cheaper per month you’d start smoking crack?

~~~
YouAreGreat
> Question for conservatives

Are you sure UBI would actually be _against_ "conservative" interests?

With UBI, it's hard to justify salaries for much of the redistributive
bureaucracy.

With UBI, it's hard to have open borders as well.

~~~
Alex3917
> Are you sure UBI would actually be against "conservative" interests?

No, but the most common objection I hear to UBI is that people will just spend
the money on drugs. But I have yet to actually hear anyone say that they'll
start smoking crack or whatever if their rent went down a few hundred bucks a
month. So either I should start hearing people admitting that they will, or
else this objection should get dropped.

------
specialist
We could also review prior experiments.

1970s MINCOME experiment. Dauphin, Manitoba Canada
[https://en.wikipedia.org/wiki/Mincome](https://en.wikipedia.org/wiki/Mincome)

Briefly: Adults continued to work, excepting mothers with newborns. Public
health improved. Higher graduation rates. Welfare related stigma reduced.

TL;DR: Many benefits, positive ROI, no discernible downside.

Adopting UBI really is a no brainer.

~~~
tarr11
From the article:

However, some have argued these drops may be artificially low because
participants knew the guaranteed income was temporary.[6] This represents an
important limitation to the knowledge of the impact of a guaranteed annual
income; little is known about the long term effects on willingness to work.

~~~
specialist
Your point?

We shouldn't try UBI because initial positive results may not prove durable?

I'm also struggling to understand how willingness to work, especially with our
current labor glut, is more important than public health.

\---

I forgot to add:

The sole concern I have about UBI in the USA (vs Canada) is our lack of
universal healthcare. Single payer or otherwise. I can't imagine UBI working
without it.

