
Pandemic speeds largest test yet of universal basic income - MindGods
https://www.nature.com/articles/d41586-020-01993-3
======
astura
So this isn't universal basic income, as it's means based, but this article
keeps calling it that for some reason. I really don't understand how a
temporary traditional welfare program can give us insight into what would
happen if everyone was guaranteed a monthly income - even if the richest
didn't have a net increase in income, for example, my behavior might be
different if I had a guaranteed income of $1,000/month but paid an extra
$12,000 in taxes at the end of the year (because I am high income) than if I
didn't have that monthly check and paid $12,000 less in taxes at the end of
the year.

Beyond that this is unprecedented times/circumstances so it's really difficult
to make general conclusions about this "experiment."

~~~
SmokeyHamster
>So this isn't universal basic income, as it's means based, but this article
keeps calling it that for some reason.

Yeah, I received "relief income" from the government, i.e. my own tax dollars,
even though I'm not unemployed, and am actually saving money by not having to
commute.

If this is "universal income", I fail to see how creating a massive government
bureaucracy to take my money and then give it straight back to me is
beneficial to anyone except bureaucrat middlemen performing glorified ditch-
digging jobs.

~~~
jberryman
> creating a massive government bureaucracy

Huh? This whole program was put together and executed in a matter of days, and
mostly via the bureaucracy of the IRS as I understand it.

The point of a UBI is in part that it is explicitly _not_ means tested to
avoid "welfare trap" incentives, and it's tremendously cheap to implement
relative to, say, food stamps or what's left of cash welfare in the US.

~~~
kortilla
The reply is referring to a UBI program where the rich pay it back in taxes so
it effectively becomes means tested.

~~~
derefr
That's not what "means-tested" means.

"Means-testing"—as in welfare programs—specifically refers to payouts that
have cliffs, that create bad incentives like people choosing to _not_ get jobs
because they'd lose access to the welfare payment, and end up with _less_
money than they get with no job.

Progressive taxation has no cliffs; there is never† a tax-related reason to
refuse to take a higher-paying job. You'll always be able to keep _some_ of
the additional pay. Thus, it's not "means-tested."

† Unless there's a 100% tax bracket. But I don't think there's any country
that bothers with these, because of the clearly-wonky disincentives.

~~~
jlokier
> there is never† a tax-related reason to refuse to take a higher-paying job

This is usually true but not always.

Where I live, if you as a self-employed contractor make revenue over the VAT
threshold you must start charging VAT.

If the clients are VAT registered business, they won't mind, they can reclaim
it. But if they are not VAT registered, or if they are regular people not
businesses, your price will effectively increase by 20% for them.

To avoid losing business with the people who cannot reclaim the VAT, you may
decide to lower the prices you charge to compensate.

That's a cliff. You can be better off turning down a higher-paying job (such
as a 3 month contract) that would put you over the VAT threshold, if you are
close to it and would have to lower prices to everyone else to compensate,
depending on your line of business.

~~~
viklove
The commenter you're replying to is definitely talking about the US

~~~
jlokier
I think they were talking about progressive taxation anywhere, however just to
compete the point:

In the US, sales tax is a bit like VAT in the EU.

As with VAT, there's a registration threshold, and if you reach it you may
need to lower your prices to end customers.

The sales tax registration threshold rules are called "nexus", and are a lot
more complicated than VAT!

------
interactivecode
As I understand it, the basic income idea is based on that realistically
almost everyone at some point uses government aid or finances (directly or
indirectly). basic income is just making sure that when you need to make use
of that aid, you don't have to jump through hoops, requirements and paperwork.

By giving everyone enough to live and not starve, you can do that. Without
needing bureaucracy. It goes together with other great ideas like a minimum
livable wage[0], pensions, public education and public healthcare.

If we are the rich west, why can't we just take care of everyone? we'll still
be plenty productive. And if you want more go work, go study, go for
competitive jobs.

[0]
[https://en.wikipedia.org/wiki/Living_wage](https://en.wikipedia.org/wiki/Living_wage)

~~~
snarf21
It is a very complicated issue. I'm all for needs based aid from the
government without all the bureaucracy. It would even allow us to help more
people on the fringe.

However, one thing that no one ever talks about or thinks through is that a
_lot_ of that "waste" is someone else's job and pension. If you cut 90% of the
staff at all welfare and other programs offices, those people need other jobs
or have to go on the same programs. Additionally, it is the universal part of
UBI that people struggle with. If everyone gets it, do prices just rise to
meet that reality and soak up the "free" money. We'll need regulations (and
people to enforce them) to make sure housing prices stay reasonable for lower
income people. This is why government housing exists today, the cost can be
locked. All said, I think UBI doesn't work because it can't be universal, but
we should be helping more people and the well off can afford to pay 1% more of
their largess to do so.

~~~
algo646464
> Additionally, it is the universal part of UBI that people struggle with. If
> everyone gets it, do prices just rise to meet that reality and soak up the
> "free" money.

Think about this another way: if it is true that the prices are going to rise
because of UBI, i.e. because everyone can afford the "basics"(the B of UBI),
then it means that the lower prices of today require that some people do
without these basics.

------
gavman
The one question about UBI I haven't seen a satisfactory answer for is what's
stopping landlords from raising rents to match the UBI? If everyone suddenly
has an extra $1000/month, what's stopping my landlord (together with every
other landlord in my city) from raising my rent next year by $1000/month? It's
very plausible this would not show up in small scale pilots where only a small
percent of a population received income, but would show up at scale when
everyone does.

Unless UBI comes with a massive overhaul of zoning restrictions and a shift of
the housing supply, I don't see how this doesn't end up as an indirect way of
increasing income inequality by routing the UBI from poorer tenants to
wealthier landlords.

~~~
cactus2093
What’s stopping anyone, anywhere from raising their prices by some arbitrary
amount? There are lots of examples of inelastic goods that most people would
continue to buy if the prices went up. Why aren’t the prices on those things
higher? Generally the answer is competition, and there is still competition
among landlords even if everyone suddenly has more disposable income.

~~~
nostrebored
Competition is one half of the equation here, the other half is the price
threshold of renters...

------
Pxtl
The problem is that governments don't seem to be doing the other half of
universal basic income

1) Realistically, you're going to have to raise taxes to fund it, not just
deepen deficits

2) You're going to have to cut many social programs as well that overlap with
basic income. For some people this isn't really a good trade-off. I saw one
blog-post proposing a long list of social programs such as disability support
and wheelchair funds, and a local activist parent of a severely disabled child
pointed out that this would devastate his family financially.

I get the appeal of an anti-bureaucratic one-size fits all solution to the
social safety net, but I'm skeptical.

~~~
jfengel
It may not actually be absolutely necessary to cut taxes. Under the (dubiously
named) Modern Monetary Theory, you can just print the money. That causes
inflation, but that's not necessarily the worst thing in the world. It
encourages people to spend money rather than hoard it.

No, you don't need to worry about hyperinflation, the big bugaboo of
Chicago/Austrian economists. Hyperinflation is associated with economic
collapses like wars or industry failures, where suddenly goods are in short
supply. What you get out of this is ordinary inflation, not hyperinflation. If
you print 1% of your economy in new money, then you get 1% inflation.
Hyperinflation is a different problem.

Ordinary inflation can be dealt with in a number of ways. Taxes are one of
them: you don't pay down the debt but just burn the money. You don't need a
separate account book for government debt: outstanding currency _is_
government debt.

Not all economists buy this theory. It's not mainstream, but neither is it
exactly fringe. I bring it up only because the notion of a separate government
account book that has to be balanced is worth reconsidering. Ditch it, and
there are tradeoffs that might be worth it -- including simplifying how you
handle basic income.

~~~
bhupy
It's pretty fringe; virtually all economists either Disagree or Strongly
Disagree with the theory[1]. When weighted by confidence, 72% of economists
strongly disagree.

Also, this works both ways — if we can MMT unlimited money to fund spending,
why pay taxes at all? We should, in theory, be able to cut taxes to 0 (or as
close to 0 limited by real scarcity) and MMT the entire budget.

[1] [http://www.igmchicago.org/surveys/modern-monetary-
theory/](http://www.igmchicago.org/surveys/modern-monetary-theory/)

~~~
3pt14159
If you lower taxes to 0 then there will be no demand for your money because
people will start using other currencies as a medium of exchange.

~~~
bhupy
Forget about cutting taxes, MMT holds that we can in theory institute a
regressive UBI program that gives cash to people == to their effective income
tax (thereby zeroing it out). The only limit, per MMT, is real resource
scarcity.

Now skip the extra step, and have bondholders just get paid back directly by
the money printer.

------
dfxm12
I think it's disingenuous to call this a "test". How do you control for the
pandemic? Surely, spending habits and measures of "livelihood" are affected by
COVID-19. How UBI works or doesn't work during a global crisis isn't really
indicative of how it might work out under normal circumstances, right?

~~~
ttonkytonk
It's not true UBI either, it's a "guaranteed minimum income" of about the
equivalent of $1000 for households, $500 for individuals, specifically for the
"poorest".

Personally I favor a UBI but I think it needs an intellectual basis, i.e. I am
not for "stealing from the rich". Perhaps part of this intellectual basis
could consist of an appreciation that natural resources are not distributed
equally.

~~~
gerbal
Wealth is not distributed equally either, those with a lot of resources find
it much easier to maintain and gain wealth. Wealth provides a shield against
consequences and accidents.

------
TomMarius
The minimal financial support to the most unfortunate during the quarantine (3
months) has cost my country half of its usual _annual_ budget. I don't see how
that shows UBI in a positive light.

~~~
BolexNOLA
Well it went to basically everyone (in many countries, obviously don’t know
yours) and was rushed out the door with no sustainability in mind. I’m sure it
can be retooled and refined. You can’t toss it out completely already.

~~~
TomMarius
In Czechia it went only to those severely affected by Covid and was one time
payment around a quarter less than monthly average wage. Only selected firms
have received some, also very small support.

------
eric1293
UBI would never work. It ignores basics of how humans operate. We have it in
some sense in France. The problems it tries to address are only amplified
after UBI.

~~~
gerbal
Do you mean RSA[1]? My french is quite bad, but as I understand it, the RSA is
tied closely to employment and has complicated work obligation and subsidizes
employers for keeping employees at low hours. RSA appears to be extensively
means tested as well (which UBI is not supposed to be).

[1]
[https://fr.wikipedia.org/wiki/Revenu_de_solidarité_activ](https://fr.wikipedia.org/wiki/Revenu_de_solidarité_activ)

~~~
eric1293
There are numerous independent social programs in France. RSA is one. People
could receive input from up to 3-4 social programs.

Consider CDI contracts at universities. It has become a sort of UBI. People
show up once every few weeks. Never publish papers; never teach properly;
never go to any conference; etc. Totally detached from academic life. And they
can't be fired. You know what they do with the UBI?

\-- Become members of unions. Unions were supposed to protect workers in 80s.
Now the least productive members of the institutions join unions to protect
themselves. They kill reform policies and maintain status quo.

\-- Work is associated dignity. You can't have two classes: workers and
suckers. So UBI recipients, holding into administrative roles and unable to do
meaningful work, try to fail non-UBI takers.

\-- Fail those who actually do their jobs. Otherwise, the gap is going to be
problematic.

At the end of the day, UBI would only shift the baseline. The same problems it
tries to address exist after the administration of UBI.

You would be surprised if I go over details. America's left does not
understand what it's getting into. France's system has really been an eye
opening experience for me. I highly recommend people spending time in Europe.

~~~
jostylr
That sounds more like a jobs guarantee than a UBI. Many UBI proponents are
against a jobs guarantee for fear of these kinds of outcomes.

UBI is untethered to any conditions on people. So there are no bad incentives
created by the system (no good ones created either, of course) nor is anyone
part of some group that they try to homogenize into something unproductive.

------
SirensOfTitan
I really like the idea of scaling basic-income through a series of stages,
starting with negative income tax
([https://en.wikipedia.org/wiki/Negative_income_tax](https://en.wikipedia.org/wiki/Negative_income_tax))
and moving to more encompassing strategies like guaranteed income or a social
dividend as automation makes up a larger portion of economic output.

Negative income tax has a couple advantages, namely:

* It benefits those who actually need the help the most * Shortfall checks will come from tax agencies. People who need real help can save their dignity, they're just getting a tax refund.

------
bobthechef
"The US economist Milton Friedman proposed an idea related to UBI called a
negative income tax in 1962, in which those earning under a certain amount
would receive supplemental funds from the government rather than paying tax."

The whole point of UBI is that it's universal. What Friedman is describing is
essentially a social safety net, i.e., one that only those below a certain
level of income receive.

"'If you can only qualify if your income is below this threshold, it creates a
very strong disincentive for anybody to earn above that threshold because they
would be losing their benefits,” she says. 'We call it a poverty trap.'"

Yes, and that's a major reason why poor Americans, perhaps especially the
black community, is stuck in the poverty trap. Marriage rates among blacks
were higher than rates among whites in the 1940s and we know that children
with a father in the home tend to grow up to be better adjusted and less
likely to engage in crime or remain/land in poverty. Twenty years later,
government programs coupled with the social upheaval of the sexual revolution
destroyed the black family. Now three quarters of black children are born out
of wedlock (we see something similar among poor whites, but poverty afflicts
blacks more than whites). Poor black women are discouraged from marrying
because doing so could or would cause them to lose whatever benefits they
receive.

~~~
chillacy
The NIT ends up acting similarly to UBI + increased taxes, but it has to be
phased out perfectly linearly to remove these incentive gaps.

UBI seems more simple to administer and being universal would likely make it
more resilient to cuts (as we know from other universal services).

~~~
eru
A negative income tax is not phased out at all.

You are probably familiar with income tax brackets. So for example in the US,
your first $0 – $9,525 of income per year are taxed at 10%, the next $9,526 –
$38,700 are taxed at 12%. And so on.

That applies to billionaires just as much as it applies to dishwashers. The
low brackets never get phased out. The billionaire just has most of her income
fall into the higher taxed brackets. So her average tax rate is higher than
the dishwasher's tax rate, but their first dollars are taxed exactly the same.

A (refundable) negative income tax is just another somewhat special tax
bracket placed in front of the normal progression. It never gets phased out.
It just nets out at higher incomes.

And because nothing is ever simple in taxes, here's a weird real life example
to the contrary:

The British have a weird system where they DO phase out their lowest tax
bracket, called the 'Personal Allowance' at higher income. I don't know why
they do that, instead of just raising the marginal rates.

> On 22 April 2009, the then Chancellor Alistair Darling announced in the 2009
> Budget statement that starting in April 2010, those with annual incomes over
> £100,000 would see their Personal allowance reduced by £1 for every £2
> earned over £100,000, until the Personal allowance was reduced to zero,
> which (in 2010-11) would occur at an income of £112,950. This had the effect
> of creating an anomalous effective 60% marginal tax rate in the income band
> between £100,000 and £112,950, with the marginal tax rate returning to 40%
> above £112,950. As the Personal allowance has grown over the years, this has
> resulted in a corresponding increase in the size of the effective marginal
> 60% tax band. As of 2019-20, the effective 60% marginal tax rate now arises
> for incomes between £100,000 and £125,000.

[https://en.wikipedia.org/wiki/Personal_allowance#Personal_al...](https://en.wikipedia.org/wiki/Personal_allowance#Personal_allowance_tapering)

~~~
chillacy
Apologies, I think I'm describing something more like the EITC which is phased
out. I remember reading something by Mankiew briefly describing their
equivalence.

[http://gregmankiw.blogspot.com/2016/07/a-quick-note-on-
unive...](http://gregmankiw.blogspot.com/2016/07/a-quick-note-on-univeral-
basic-income.html)

~~~
eru
No worries.

For something like an income tax, you can basically always describe any phase-
ins and phase-outs equivalently in terms of marginal rates on different
brackets without any phase-ins or outs. No matter whether you talk about EITC
or negative income taxes.

Even the British example I cited can be re-contextualised as just a 60%
marginal rate for people with around 120k GBP of income, that then slides down
again to a 45% marginal rate at a higher income. (Or something like that. You
do the arithmetic.) Even though the law as written is formulated in terms of a
phase-out.

The blog post you linked talks about exactly that reframing.

Many economists find it useful to talk in terms of the marginal rates instead
of phase-in and phase-out. Mostly because the former lends itself more to a
net perspective over all taxes and welfare programs.

When those net marginal rates approach 100% or even go over for some people,
you can immediately see that earning an extra dollar from work would make
people worse off after taxes.

That's less obvious in the other formulation.

------
NovemberWhiskey
"monthly payments ... to the nation’s _poorest families_ ... the largest test
yet of an idea called _universal_ basic income"

You keep using that word, I do not think it means what you think it means.

~~~
tgb
My understanding is that most proposals for UBI would be funded by raising
taxes making it a net-positive income increase only for the "poorest" families
(the bottom X% of tax payers, for some X). So the only difference here seems
to be a lower-than-desired X, which would be a reasonable test.

~~~
eru
Yes. Not just most proposals, but all:

Unless you get foreigners to pay for your UBI programme, it's always going to
be funded by raising taxes, shifting existence welfare around, or something
equivalent.

But a big part of some people's understanding of UBI is that you want to move
all means testing into the tax system, and out of the welfare system.

The tax people already keep track of how much money everyone makes. So we
don't need to duplicate that bureaucracy.

~~~
tgb
I added "most" specifically because one of the other threads in the comments
here is about _not_ funding it through taxes (instead, through printing
money).

~~~
eru
Well, that's just taxing people through inflation.

------
marcinzm
My biggest observation is the large scale social impact of people not needing
to work. In the US many people got unemployment benefits and were unable to
work. We also had nationwide protests by both liberals and conservatives for
various causes. Some looting in there, aggressive police response and crazy
people waving guns.

It seems to me that given UBI people will spend their time championing their
causes at the expense of those who are working (blocking areas with protests
is just that). Seems a very unstable dynamic as I'd imagine both conservatives
and liberals would escalate until mass violence breaks out.

------
rufusroflpunch
Why bother testing it? We all know where this is going. UBI is going to
happen, whether the tests are successful or not, and it's not going to look
anything like the UBI we were promised; instead of repealing social safety net
programs in favor of one payment, it's going to be just another program on top
of the pile.

------
LatteLazy
I really wish somewhere would run an actual trial on this. We've had dozens of
sub-trials (not universal, not instead of other benefits, not very long or
cancelled before end date etc). Then we would KNOW. Until then, everything is
just speculation.

------
neilwilson
We already have a widespread incomplete test of basic income. It’s called “a
state pension”.

~~~
snidane
Which is also unsustainable in the current form because it is a ponzi scheme
that works only when each next generation has more children than the previous
one.

------
allsystemsgo
Has UBI ever worked? What does success look like with a UBI program?

~~~
lacksconfidence
To me success looks like canceling the mountain of other welfare programs and
removing vast inefficiencies of bureaucracy.

------
collyw
As usual there seems to be nothing "universal" about these.

------
tkeAmarktinClss
Universal basic income requires elimination of food stamps, rent subsidies,
welfare, unemployment, etc....

None of these places are doing that.

The entire argument is that you can get rid of administration and people can
spend money on what they need.

That said, after seeing how many people listen to Dave Ramsey's Snowball
method + anti vaxxers, I'm personally convinced UBI will not work. The people
that need it the most cannot make rational decisions.

~~~
balefrost
I think part of the goal too is to remove the stigma associated with those
programs. I know some people look down on those who use food stamps, or
suspect that people use food stamps to buy lobster and filet mignon, or barter
their food stamp purchases for things that you can't buy with food stamps.

With UBI, everybody's using cash.

~~~
chooseaname
"...or suspect that people use food stamps to buy lobster and filet mignon, or
barter their food stamp purchases for things that you can't buy with food
stamps."

Rare, but it happens. The people who think this is more than a rare occurrence
are not well educated on the needs of the poor.

~~~
sethammons
Having grown up with and around welfare recipients, back when it was not an
EBT card but paper bills, it was exceptionally common to see it traded at a
loss for real money.

------
tux1968
Even though he was talking about minimum wage, Walter Williams line is
apropos: "People think minimum wage is an anti-poverty measure, but this
doesn't pass the smell test. If it did, our state department could stop all
foreign aid, they could instead say to all those countries, if you want to be
as rich as us, simply set a minimum wage for all your workers!"

Edit: He repeated this line in a documentary about him:
[https://www.youtube.com/watch?v=YZGvQcxoAPg](https://www.youtube.com/watch?v=YZGvQcxoAPg)

~~~
karpierz
I'm confused, how does that show minimum wage is not an anti-poverty measure?
Doesn't that just indicate it's an anti-poverty measure for wealthier
nation's?

~~~
tux1968
I suppose it's not an ironclad refutation of the idea, but I think it does
suggest minimum wage isn't the magic bullet one might hope. If it doesn't work
for a poor country, you had better be able to explain very convincingly why it
will work for a rich one, and not turn it into a poor one instead. And also
explain, why the techniques used to go from a poor country to a rich one...
must then be abandoned at some point.

------
linuxftw
People that champion UBI don't understand market incentives. It won't work
without price controls, and we know that price controls don't work.

Let's go crazy though, and say price controls will work. How universal is
universal? Is it $600 for every person alive, including children? How is that
going to incentivize people's behavior? If it's not for children, how is that
going to incentivize people's behavior?

Are you expected to pay housing costs out of this amount, or is that granted
separately? Would a family of 5 splitting a single family residence be
building wealth faster than a someone living in an apartment?

If you want to wreck the economy, UBI is the best way to do it.

~~~
chillacy
The answers to those questions vary by UBI proposal. Here's a proposal from a
conservative economist who might understand market incentives and how the
existing welfare programs completely distort them:
[https://www.wsj.com/articles/a-guaranteed-income-for-
every-a...](https://www.wsj.com/articles/a-guaranteed-income-for-every-
american-1464969586)

~~~
linuxftw
If you support UBI or welfare, then by definition, you do not qualify as a
'conservative economist.'

~~~
chillacy
Well, feel free to edit his wikipedia page to correct this terrible
misunderstanding...

